Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors; Hillig v Darkinjung Pty Ltd & Ors; Darkinjung Local Aboriginal Land Council v Warner & Ors - [2006] NSWSC 1008 - NSWSC 2006 case summary — Zoe

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Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors; Hillig v Darkinjung Pty Ltd & Ors; Darkinjung Local Aboriginal Land Council v Warner & Ors

[2006] NSWSC 1008

Supreme Court of NSW|2006-10-03|Before: Barrett J

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Court

Supreme Court of NSW

Decision date

2006-10-03

Before

Barrett J

Source

Original judgment source is linked above.

Judgment (80 paragraphs)

[1]

Introduction 1 Darkinjung Local Aboriginal Land Council ("DLALC") is the local Aboriginal land council constituted by s.50 of the Aboriginal Land Rights Act 1983 ("ALR Act") for the area designated pursuant to s.49 as the Darkinjung local Aboriginal land council area. That area is situated on the Central Coast of the State. The administrative centre of DLALC has been at Wyong. 2 By virtue of s.50(2) of the Act, DLALC is a body corporate. By virtue of s.53, its members are the adult Aboriginal persons who are listed on the local Aboriginal land council membership roll for the Darkinjung local aboriginal land council area. In accordance with s.62, DLALC has a chairman, a secretary and a treasurer. Now, however, Mr Peter Hillig is the administrator of DLALC, having been appointed by the Minister for Aboriginal Affairs pursuant to s.222(1)(b) of the ALR Act on 2 May 2006 for a term of six months. 3 By virtue of s.222(4) of the ALR Act, Mr Hillig has, during his appointment as administrator: "all, or such part as is specified in the administrator's instrument of appointment, of the functions of the Council conferred or imposed by or under this Act, to the exclusion of the Council". 4 The instrument appointing Mr Hillig says: "The Administrator must administer all of the functions of the Local Aboriginal Land Council in accordance with the Aboriginal Land Rights Act 1983 ('ALRA'), the Aboriginal Land Rights Regulation 2002 ('ALRR') and relevant laws." 5 The instrument also says: "The Administrator shall discharge all the functions and exercise all the powers of LALC as necessary in the best interests of the LALC and consistently within [sic] the provisions of the ALRA, the ALRR and relevant laws." 6 In 2002, DLALC sold waterfront land at North Entrance to Mirvac Projects Pty Ltd ("Mirvac"). The sale yielded proceeds of just over $42 million which became payable by instalments. A large part of the instalments received by DLALC before Mr Hillig's appointment - in fact, somewhat more than $25 million - was, in four separate payments, transferred by DLALC to Darkinjung Pty Limited ("DPL"), a company registered under the Corporations Act 2001 (Cth) which was at the time of each transfer of funds (and has remained) the trustee under a trust instrument dated 9 March 2004. The trust of which DPL is trustee was established at the instigation of DLALC. It is a trust created by settlement, the settlor being Mr Hanrahan of National Management Consultants ("NMC"), an adviser to DLALC, who paid ten dollars to DPL to be held upon the trusts stated in the trust instrument of 9 March 2004 to which he and DPL were parties. I shall refer to these trusts compendiously as "the Trust" and to the instrument of 9 March 2004 as "the Trust Deed". That instrument was amended on 29 November 2005. I shall refer to the amended version as "the Amended Trust Deed". 7 In purported execution of the Trust and in purported exercise of powers conferred by the Trust Deed, DPL expended parts of the moneys received from DLALC in funding a number of other companies which, like DPL itself, were registered under the Corporations Act. Those companies are Darkinjung Cattle Company Pty Limited ("CattleCo"), Darkinjung Housing Pty Limited ("HousingCo"), Darkinjung Funeral Fund Pty Limited ("FuneralCo") and Darkinjung Projects Pty Limited ("ProjectCo"). The last three of these companies were referred to in the course of the hearing as "the Enterprise Companies". I shall use the same terminology. 8 Each of the Enterprise Companies has DLALC as its sole shareholder. CattleCo, by contrast, is a joint venture company. The shares in it are held as to 75% by DPL and as to the remaining 25% by an unrelated entity engaged in primary production, Outback Beef Australia Pty Ltd ("Outback Beef"). Details of the several payments made by DPL to the Enterprise Companies and CattleCo in the period August 2004 to May 2005 will be mentioned presently. 9 CattleCo is engaged in the business of beef production. Its operations are centred on the Culcairn district in the south of the State. FuneralCo has obtained the official approvals needed to establish a contributory funeral fund. It is proposed that the fund provide money towards the cost of funerals of contributors and their family members. The funerals will be conducted by outside service providers. HousingCo is in the process of establishing a housing assistance scheme intended to provide rental housing on the basis that the tenant may in due course be given assistance by way of loan to purchase the property. The activities of ProjectCo did not emerge with any great clarity from the evidence. It appears to be merely a "banker". 10 On or about 13 May 2006 the directors of each of the Enterprise Companies appointed administrators under Part 5.3A of the Corporations Act. 11 The actions of DLALC in applying its funds (being proceeds of the sale of the North Entrance land to Mirvac Projects) in the ways I have described, together with consequential matters involving the Enterprise Companies and CattleCo, became the subject of several proceedings in this court. The proceedings are: (a) 5634/05 (commenced by summons filed on 28 October 2005) in which DPL, as plaintiff, seeks against DLALC, the Enterprise Companies, CattleCo and the New South Wales Aboriginal Land Council ("NSWALC") declaratory relief as to the validity of payments made by DLALC to DPL (the claims were later reformulated and are now set out in a further amended summons filed on 27 July 2006 and amended points of claim filed on 11 May 2006); (b) 2842/06 (commenced on 19 May 2006) in which Mr Hillig, as administrator of DLALC, the sole member of DPL, seeks, by reference to Corporations Act provisions concerning oppression, unfair prejudice and the like, winding up of DPL and either repeal of DPL's constitution or its modification "by removal of provisions entrenching control of the incumbent directors", together with declaratory relief to the effect that the trust of which DPL is supposedly the trustee is wholly or partially void and that the payments made by DLALC to DPL were void; and (c) 3528/06 (commenced by originating process filed on 3 July 2006) in which DLALC seeks declarations to the effect that the appointment of administrators of each of ProjectCo, FuneralCo and HousingCo under Part 5.3A of the Corporations Act was invalid or, in the alternative, an order that the administration end. 12 Mr S.D. Epstein SC and Mr D.A.C. Robertson of counsel appeared for DPL. Mr D.H. Murr SC and Mr D.A. Smallbone of counsel appeared for Mr Hillig in his capacity as administrator of DLALC under the ALR Act. Mr J.K. Kirk of counsel appeared for NSWALC. Ms T.L. Jowett of counsel appeared for CattleCo in substantially the same interest as Mr Epstein and Mr Robertson, although, of course, with particular reference to sums paid by DPL to CattleCo. The Enterprise Companies and their administrators under the Corporations Act were represented by Mr G. Lucarelli of counsel who was excused at the start of the hearing. The issues 13 There is a degree of overlap between the several proceedings. Taken as a whole, they raise a number of core issues concerning the Trust and the application of funds of DLALC. Those issues are, in summary, as follows: 1. Whether the Trust was wholly void from its inception. 2. Whether the Trust is, as to all or some of its provisions, a valid charitable trust. 3. Whether, in transferring money to DPL to be held upon the trusts of the Trust, DLALC acted within its authority and capacity. 4. Whether such of that money as is still held by DPL is held by it in trust for DLALC. 5. Whether the whole of the funds and assets of DPL is: (a) held upon trust for DLALC; or (b) charged with repayment to DLALC of all sums paid by DLALC to DPL. 6. Whether, in making payments to CattleCo, HousingCo, FuneralCo and ProjectCo, DPL acted within its powers as trustee of the Trust (assuming the Trust to be valid). 7. Whether such of the moneys paid by DPL to each of CattleCo, HousingCo, FuneralCo and ProjectCo as is still held by the recipient company is held by that recipient company on trust for DLALC. 14 There are also some discrete issues in the proceedings concerning the Corporations Act claims. These claims are brought by Mr Hillig, as administrator of DLALC, having regard to DLALC's position as the sole member of each of DPL, FuneralCo, HousingCo and ProjectCo. He seeks in respect of DPL an order that it be wound up and an order appointing a liquidator. In relation to each of FuneralCo, HousingCo and ProjectCo, Mr Hillig attacks the appointment of voluntary administrators under Part 5.3A of the Corporations Act. In that respect, he advances two alternative propositions: first, that each appointment was invalid and of no effect because an essential statutory prerequisite was not satisfied; and, alternatively, that if any such appointment was validly made, the administration should be terminated by an order made by the court under the Corporations Act. 15 The desirable course is to defer consideration of the Corporations Act matters until completion of discussion and analysis of the claims concerning the Trust and the application of funds of DLALC to and through DPL in its ostensible capacity as trustee of the Trust. The pleadings 16 Because evidence was led on a large number of matters, it is desirable to amplify upon the broad statement of issues set out at paragraph [13] above. Mr Epstein SC, who appeared with Mr Robertson for DPL, emphasised the need for continuing awareness of the pleaded issues. 17 The relief claimed by DPL in 5834/05 is declaratory only. It seeks declarations to the effect that money paid by DLALC to DPL was, upon receipt by DPL, held by it upon the trusts stated in the Trust Deed; that so much of that money as DPL still holds is held upon the trusts stated in the Trust Deed as subsequently amended on 29 November 2005; and that each part of the money subsequently paid by DPL to an Enterprise Company or CattleCo was "validly loaned pursuant to the Trust Deed". 18 DPL's amended points of claim refer to two sums paid by DLALC to DPL. There were, in fact, four transfers of funds and the proceedings were conducted on the basis that DPL's first claim relates to the four relevant sums. The points of claim also refer to seven payments made by DPL out of the moneys it received from DLALC. The following table shows the sequence of the four payments by DLALC to DPL and the seven payments by DPL. The former are identified by asterisk: *15 July 2004: $19,582,713.36 paid by DLALC to DPL. 8 August 2004: $300,000.00 paid by DPL to National Management Consultants Trust Account. 19 August 2004: $5,000,000.00 paid by DPL "pursuant to a loan agreement to the second defendant" (i.e, CattleCo). *27 October 2004: $69,100.00 paid by DLALC to DPL. 18 May 2005: $3,318,950.81 paid by DPL to National Management Consultants Trust Account. 18 May 2005: $5,000,000.00 paid by DPL "pursuant to a loan agreement to Darkinjung Housing Pty Limited". 18 May 2005: $1,500,000.00 paid by DPL "pursuant to a loan agreement to Darkinjung Funeral Fund Pty Limited". 22 June 2005: $2,185,542.90 paid to National Management Consultants Trust Account "pursuant to a loan agreement to Darkinjung Projects Pty Limited on behalf of the first defendant [DLALC] for its future operation". *7 July 2005: $5,453,375.25 paid by DLALC to DPL. *7 July 2005: a further $651,907.00 paid by DLALC to DPL. 23 August 2005: $500,000.00 paid by DPL "from the National Management Consultants Trust Account pursuant to a loan agreement to Darkinjung Projects Pty Limited".

[2]

19 DPL says, in support of its application, that the payments by DLALC to DPL were "validly made under s.51 of the Act [i..e, the ALR Act] and one or more of either [sic] ss.52(1)(g)(ii), 52(1)(k) and 52(1)(m) of the Act". CattleCo, as a defendant, contends in points of defence that the payment of $19,582,713.26 by DLALC to DPL on 15 July 2004 and the payment of $5,000,000.00 by DPL to CattleCo on 19 August 2004 were authorised pursuant to s.52(1)(g)(ii) of the ALR Act by a resolution passed at a meeting of DLALC on 13 April 2004. 20 DLALC and NSWALC say, in their respective points of defence, that the transfers of funds by DLALC to DPL were not authorised by the ALR Act; that no decision (or no sufficiently clear decision) was taken by DLALC to divest itself of legal and beneficial ownership of the moneys transferred by DLALC to DPL; that such, if any, decision as DLALC may have made was not made for a purpose authorised by the ALR Act or was made having regard to considerations (and so as to produce effects) inconsistent with the ALR Act and the Aboriginal Land Rights Regulation 2002 (which I shall refer to as the "ALR Regulation"). 21 The issue of the validity of the Trust (either in whole or in part) is raised by a cross-summons filed by DLALC in proceedings 5634/05 and by the originating process filed by DLALC in proceedings 2842/06. The principal matters pleaded in support of the proposition that the Trust is invalid are that it is, in terms, a trust for purposes rather than persons, that the purposes are not purposes that would benefit the public and are accordingly not charitable - or, alternatively, that only some of those purposes are properly regarded as charitable. It is also pleaded that, to the extent that the Trust Deed purports to allow DPL, as trustee, to exercise functions conferred by provisions of the ALR Act, its provisions are ineffective because such functions "cannot be exercised by a private trustee", with the result that the trust is illegal and void. 22 The attacks upon the validity of actions of DLALC in transferring moneys to DPL and upon the validity of the Trust also play a large part in proceedings 2842/06 in which oppression, unfair prejudice and the like within DPL are alleged by Mr Hillig as administrator of DLALC, having regard to DLALC's position as the sole member of DPL. As I have said, the desirable course is to defer consideration of the Corporations Act matters until conclusions on the central issues concerning transfers of funds and the Trust have been stated. The ultra vires contentions 23 Mr Hillig, as administrator of DLALC, and NSWALC attack the transfers of funds by DLALC to DPL on three broad grounds, each of which comes under the general heading of "ultra vires". 24 The first contention is that, having regard to the status of DLALC as a corporation created and governed by the ALR Act, it had no power, authority or capacity to make the four transfers of funds to DPL purportedly made by it. 25 The second contention is that, even if it is possible to identify a particular object, function or power of DLALC as sufficient, in terms, to enable it to transfer the funds, each transfer was inconsistent with the scheme of the ALR Act and must therefore be taken to have been unauthorised. 26 The third contention is that the transfers of funds were made for improper and impermissible purposes. 27 The fourth contention is that, even if DLALC had power to make the transfers of funds and the transfers were authorised by the ALR Act, there was never any decision by DLALC to make any of the transfers, with the result that no such transfer was a corporate act of DLALC. 28 The essential starting point in the consideration of these arguments is an examination of the provisions of the ALR Act and the ALR Regulations. The Aboriginal Land Rights Act 29 The ALR Act contains a both a preamble and a statement of its purposes. The preamble is as follows: "An Act to repeal the Aborigines Act 1969 and to make provisions with respect to the land rights of Aborigines, including provisions for or with respect to the constitution of Aboriginal Land Councils, the vesting of land in those Councils, the acquisition of land by or for those Councils and the allocations of funds to and by those Councils; to amend certain other Acts; and to make provisions for certain other purposes.

[7]

BE it therefore enacted by the Queen's Most Excellent Majesty, by and with the advice and consent of the Legislative Council and Legislative Assembly of New South Wales in Parliament assembled, and by the authority of the same, as follows:" 30 The statement of the Act's purposes appears in s.3: "The purposes of this Act are as follows: (a) to provide land rights for Aboriginal persons in New South Wales, (b) to provide for representative Aboriginal Land Councils in New South Wales, (c) to vest land in those Councils, (d) to provide for the acquisition of land by or for those Councils and the allocation of funds to and by those Councils." 31 The preamble and the statement of purposes in s.3 will become relevant, both under s.33 of the Interpretation Act 1987 (which requires that preference be given to a construction that promotes the purpose or object of a statute) and according to accepted canons of construction, should doubt or ambiguity be encountered in interpreting the Act. 32 Provision is made by the ALR Act for the creation of Aboriginal land councils at three levels. First, there are local Aboriginal land councils such as DLALC. Representatives of councils of this kind within a particular region then constitute a regional Aboriginal land council. Representatives of the several regional councils form the membership of the New South Wales Aboriginal Land Council. 33 A local Aboriginal land council has as its members, by virtue of s.53, the adult Aboriginal persons who are listed on the local Aboriginal land council roll for the particular local Aboriginal land council area - here, the Darkinjung area. Detailed provision is made in s.54 and related sections for the keeping of such rolls and the listing of persons' names and addresses on it. Provision is also made for the appointment of a chairperson, a secretary and a treasurer of a local Aboriginal land council. Particular tasks and responsibilities are assigned by the Act to the individual holders of these offices, but they do not constitute a board or governing body. 34 The objects and functions of a local Aboriginal land council are those stated in, respectively, s.51 and s.52 of the ALR Act. A council is empowered by s.82 to delegate to any person or body any of its functions other than a function that that section makes non-delegable. The power of delegation may be exercised, conformably with s.82, only by resolution of the council, being, obviously enough, a resolution passed at a meeting of the council convened and held in accordance with the provisions of the Act. 35 This brings to the fore an important aspect of the statutory scheme. Unless a particular matter is either placed by the Act within the province of one of the three officers or delegated in accordance with s.82, that matter may only be dealt with by the council itself at a meeting. The central role played by such meetings in the affairs of a local Aboriginal land council is emphasised by s.73 which requires that an ordinary meeting of the council be held at least once in every three months and that annual meetings also be held. 36 Section 51 is as follows: " Objects of Local Aboriginal Land Councils (cf clause 5 of Schedule 1 to 1996 Regulation)

[9]

(1) The functions of a Local Aboriginal Land Council are as follows: (a) in accordance with any regulations, to acquire land and to use, manage, control, hold or dispose of, or otherwise deal with, land vested in or acquired by the Council, (b) to negotiate the acquisition by the Council or by the Council and one or more other Local Aboriginal Land Councils of lands of cultural significance to Aboriginal persons that are listed in Schedule 14 to the NPW Act and the lease of those lands to the Minister administering that Act, (c) to submit proposals to the Director-General of National Parks and Wildlife for the listing in that Schedule of other lands of cultural significance to Aboriginal persons that are reserved or dedicated under the NPW Act, (d) to negotiate the lease by the Council or by the Council and one or more other Local Aboriginal Land Councils of lands to which section 36A applies to the Minister administering the NPW Act, (e) to make applications in writing to the New South Wales Aboriginal Land Council for the acquisition by the New South Wales Aboriginal Land Council of land on behalf of, or to be vested in, the Local Aboriginal Land Council, (f) to make applications in writing to the New South Wales Aboriginal Land Council or other persons or bodies for the granting of funds for the payment of the costs and expenses of the Local Aboriginal Land Council, (g) to implement the wishes of its members (as decided at a meeting of the Council) with respect to: (i) the acquisition, management, use, control and disposal of land, and (ii) the acquisition, establishment and operation of enterprises (including enterprises that promote employment and employment training as a means of obtaining self-sufficiency for Aboriginal persons), (h) to consider applications to prospect or mine for minerals on its land and to make recommendations to the New South Wales Aboriginal Land Council in respect of such applications, (i) to make claims to Crown lands, (j) to acquire, construct, upgrade or extend residential accommodation for Aboriginal persons in its area, (k) to protect the interests of Aboriginal persons in its area in relation to the acquisition, management, use, control and disposal of its land, (l) to negotiate with persons desiring to use, occupy or gain access to any part of its land, (m) to promote the protection of Aboriginal culture and the heritage of Aboriginal persons in its area, (n) to ensure that no part of the income or property of the Council is transferred directly or indirectly by way of dividend or bonus or otherwise by way of profit to members of the Council (nothing in this paragraph prevents the payment in good faith of remuneration to any officer or member of staff of the Council), (o) such other functions as are conferred or imposed on it by or under this or any other Act. Note. Section 50 of the Interpretation Act 1987 provides for the powers of a statutory corporation.

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(2) A Local Aboriginal Land Council must, when exercising its functions with respect to lands that are the subject of a lease, or proposed lease, under Part 4A of the NPW Act, act in the best interests of the Aboriginal owners of the lands concerned. Note. Part 4A of the NPW Act deals with lands, reserved or dedicated under that Act, that are vested in an Aboriginal Land Council or Councils and are leased by that Council or those Councils to the Minister administering that Act." 38 This conferral of "functions" must be read in the light of s.4(2) of the ALR Act: "A reference in this Act to: (a) a function includes a reference to a power, authority and duty, and (b) the exercise of a function includes, where the function is a duty, a reference to the performance of the duty." 39 All but six of the functions specified in s.52 are expressly concerned with land. The exceptions are the functions referred to in paragraphs (f), (g)(ii), (j), (m), (n) and (o) of s.51(1). Paragraphs (n) and (o) are not concerned with particular functions and may be left to one side for present purposes. Paragraph (j), although not referring expressly to land, is obviously concerned with premises upon or forming part of land. Paragraph (f) is concerned with finding a necessary aspect of the attainment of the specified objects within the context created by the Act. Paragraph (m) refers to matters which are likely to have a connection with land, given the significance of land to Aborigines in the way stated in clauses (2) and (3) of the preamble to the Act. 40 The only provision of s.51(1) which, when read in isolation, may be regarded as not concerned with land is paragraph (g)(ii) - assuming that paragraph (g)(ii) is properly seen as referring to a function separate from that specified in paragraph (g)(i). Paragraph (g) as a whole refers to a function of implementing the wishes of the council's members (as decided at a meeting of the council) with respect to the matter specified in subparagraph (i) "and" the matter specified in subparagraph (ii). It is possible that any particular expression of wishes must relate to both matters. On balance, however, I am satisfied that any such interpretation represents a straining of the statutory language. If the two subparagraphs were linked in that way, an enterprise of the kind referred to in subparagraph (ii) could be established only as part of an event or series of events involving the acquisition, management, use, control or disposal of land as referred to in subparagraph (i). The two subparagraphs of the equivalent provision in the ALR Act as it stood before extensive amendments of 2001 (s.12(d)) were assumed by Gaudron, Gummow and Kirby JJ in Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Ltd (1998) 194 CLR 247 at p.252 to refer to and confer separate functions, each of which took its content from an expression of members' wishes. 41 A significant feature of paragraph (g) is that it is the only paragraph which causes a function to be defined by means of an expression of members' wishes as decided at a meeting of the council. The paragraph contemplates, in essence, a three-step process: first, the members formulate and express wishes with respect to a matter within subparagraph (i) or (ii); second, implementation of the wishes thus formulated and expressed assumes, by virtue of s.52(1)(g), the status of a function of the council; and, third, the council, by decisions of the members, performs that function. 42 I refer next to a number of provisions of the ALR Act conferring powers on a local Aboriginal land council: 1. Section 36(3) empowers a local Aboriginal land council to make a claim for land within its area. 2. Section 38(1) empowers such a council to purchase, take on lease or hold property and to acquire property by gift, devise or bequest; but (a) land may be purchased only if conditions in s.38(1A) are met; and (b) under s.38(4) property other than land may be purchased or taken on lease only in connection with the use, development or improvement of land, although this restriction is expressed not to limit the council's function under any other provision of the Act. 3. Under s.40 and subsequent sections, a council has power to dispose of land (by sale, exchange, lease, mortgage or otherwise), subject to stated restrictions and controls. 4. Section 41 is a significant provision. I set it out in full: ' Powers of Aboriginal Land Councils with respect to property Subject to this Act, an Aboriginal Land Council may do or suffer in relation to its property any act or thing that it could lawfully do or suffer if it were a natural person having, in the case of land, the same estate or interest in the property as the Council and, in particular, but without prejudice to the generality of the foregoing, it may do or suffer any such act or thing to enable it to: (a) improve, or cause to be improved, any land vested in it, or (b) explore for and exploit, or cause to be explored for or exploited, mineral resources, or other natural resources, vested in it." 5. Under s.47, a council may, subject to other legislation, negotiate agreements with owners or occupiers of land to permit particular Aborigines or groups of Aborigines to have access to land for the purpose of hunting, fishing or gathering on the land. 6. Section 78 empowers a council to employ staff and engage consultants as necessary to enable the council to exercise its functions. Sections 80 and 81 require appointment and engagement on merit. 43 It is common ground that DLALC is a "statutory corporation" within the meaning of the Interpretation Act 1987 and that s.50(1) of that Act is therefore relevant: "(1) A statutory corporation: (a) has perpetual succession, (b) shall have a seal, (c) may take proceedings and be proceeded against in its corporate name, (d) may, for the purpose of enabling it to exercise its functions, purchase, exchange, take on lease, hold, dispose of and otherwise deal with property, and (e) may do and suffer all other things that bodies corporate may, by law, do and suffer and that are necessary for, or incidental to, the exercise of its functions." 44 Section 50(4) provides: "This section applies to a statutory corporation in addition to, and without limiting the effect of, any provision of the Act by or under which the corporation is constituted." 45 The statutory structure is thus such that the objects of a local Aboriginal land council are those described in s.51 of the ALR Act; that the functions described in s.52 are to be performed by the local Aboriginal land council; and that powers gathered from a number of provisions of the Act (and from the Interpretation Act) are made available to the council. The ALR Act also imposes duties and responsibilities upon a local Aboriginal land council. Provisions not so far mentioned create a system of public oversight, supervision and accountability within which a council must operate. 46 The ALR Act imposes financial controls. Division 2 of Part 8 of the ALR Act requires books of account to be kept and financial statements to be prepared and audited. Budgets must be prepared. Reports must be made periodically to the New South Wales Aboriginal Land Council. Section 152 deals with bank accounts of a local Aboriginal land council and payments into and out of such accounts: " Local Aboriginal Land Council Accounts (cf former section 31)

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(6) For the avoidance of doubt, the audited financial statements prepared and furnished to the New South Wales Aboriginal Land Council under this section must include information relating to all the Council's funding and operations and not merely funding received from, and operations funded by, the New South Wales Aboriginal Land Council. 48 The matter of budgets is dealt with in s.158. A local Aboriginal land council which receives funds from NSWALC must, under s.159, report to NSWALC regarding expenditure of those funds. 49 I pass now to another important aspect of the ALR Act, namely, what might be termed official oversight and public accountability. Part 10 of the ALR Act is headed "Honesty and disclosure of interests". Part 10 lays down probity standards, requires the adoption of codes of conduct and imposes duties of disclosure. It establishes and regulates the Aboriginal Land Councils Pecuniary Interest Tribunal. Under Part 10, the Registrar appointed under the Act is given certain functions regarding complaints of failure to disclose a pecuniary interest. The Registrar may refer a complaint to the Aboriginal Land Councils Pecuniary Interest Tribunal. There is a right of appeal to this court from a decision of the Tribunal. 50 Part 11 is concerned with investigation of the affairs of the Aboriginal land councils. The Minister may appoint an investigator to investigate the affairs of a council. The Minister also has power to appoint an administrator of a land council. The powers of investigators and administrators are comprehensively dealt with in Part 11. 51 Under Part 12 of the Act, the Registrar may direct an Aboriginal land council (or an officer or councillor) to comply with a provision of the ALR Act or the ALR Regulation. Any failure to comply may be referred by the Registrar to the Land and Environment Court. The Trust 52 As I have said, the Trust was created by an instrument dated 9 March 2004 and settlement of ten dollars by Mr Hanrahan upon DPL as trustee. The Trust Deed was amended in November 2005 but, since all transfers of funds by DLALC to DPL took place before the amendment, it is necessary to have regard to the March 2004 version only. 53 The Trust Deed is concerned with the "Trust Fund", that is, the initially settled ten dollars and "all other money and property which is received by the Trustee for the purposes of inclusion in the Trust Fund or which otherwise may form part of the Trust Fund in accordance with this Deed". By clause 2(b), DPL declared that "it holds and will hold the Trust Fund on the terms and conditions of this deed. Clause 3.1 is as follows: " Purpose The purpose for which the Trust is established is to improve, protect and foster the best interests of Aboriginal persons within the Relevant Area and other persons who are members of the Council by doing any act that the Council had the power to do as at the Commencement Date, or has the power to do from time to time (and at the relevant time), which as at the Commencement Date includes, without limitation: (a) relieving poverty of Aboriginal persons in the Relevant Area; (b) improving the health of the Aboriginal persons in the Relevant Area; (c) educating and training the Aboriginal persons in the Relevant Area; (d) addressing the welfare of the Aboriginal persons in the Relevant Area; (e) acquiring, constructing, upgrading or extending residential accommodation for Aboriginal persons who are in necessitous circumstances in the Relevant Area; (f) protecting the interests of Aboriginal persons in the Relevant Area in relation to the acquisition, management, use, control and disposal of the Council's land; (g) promoting the protection of Aboriginal culture and the heritage of Aboriginal persons in the Relevant Area; and (h) acquiring, establishing and operating enterprises for the benefit of the community to the extent that the acquisition, establishment and operation of such enterprises is not inconsistent with paragraphs (a) to (g)." 54 The purpose thus described in clause 3.1 is designated the "Sole Purpose". The modes of application of income and capital are set out in clauses 4 and 5: " 4. INCOME 4.1 Distribution (a) The Trustee must hold the Income of each Financial Year which is available for distribution on trust to pay or apply or set aside the whole or part thereof for the Sole Purpose in such shares and in such manner as the Trustee may determine in its discretion. (b) In exercising its discretion under paragraph (a), the Trustee must have regard to (but is under no obligation to follow) any recommendation put to it by the Council. 4.2 Accumulation The trustee may, having regard to the Sole Purpose, in its discretion, decide to accumulate the whole or part of the Income of a Financial Year. Such accumulation forms part of the Capital. 5. CAPITAL 5.1 Distribution of Capital Until the Trust is wound up, the Trustee holds the capital of the Trust to be used for the Sole Purpose. 5.2 Manner of Distribution Capital may be distributed as determined by the Trustee or on winding up of the Trust: (a) in any manner consistent with the Sole Purpose in which Income may be paid, applied or set aside under this deed; or (b) by transfer or distribution in specie of any asset in the Trust Fund for the Sole Purpose. 5.3 No resulting trust A determination of the Trustee under this clause 5 is not effective to the extent the determination: (a) creates a resulting trust in favour of: (i) the Settlor; (ii) a person who has transferred property to the Trustee for other than full consideration; (iii) a person who has made a gift of money to the Trustee by way of accretion to the Trust fund; or (b) creates a resulting trust which would result in a liability arising at any time under any applicable law on account of death or estate duties or an imposition or tax arising by reference to the death of a person." 55 The references in clauses 3.1 and 4.1(b) to the "Council" are a reference to DLALC. The references to the "Relevant Area" is a reference to the area designated pursuant to s.49 of the ALR Act as the Darkinjung local Aboriginal land council area. Other references in the Trust Deed to the "Council" are as follows: 1. Clause 3.2 precludes transfer of property or income of the Trust to members of the Council (but with an exception for remuneration paid in good faith to a trustee or a director of a corporate trustee). 2. Under clause 7, variation of the Trust Deed is not effective unless approved in a certain way by the Council. 3. By clause 8.3(b), the power to appoint a new trustee in consequence of removal is vested in the Council. 4. Clause 8.3(c) says that any new trustee must be a company having certain attributes, including that three directors must be members of the Council or Aboriginal persons living in the Relevant Area. 5. The power of removing a trustee is, by clause 8.6, vested in the Council but requires the adoption of a particular procedure within the Council. 6. Clause 9.2(c) is in these terms: "The Trustee may be paid remuneration greater than as provided in paragraph (b) by a resolution of the Trustee, provided that if at the time of such resolution the Council holds any shares in the Trustee, the Trustee must also have first procured a resolution approving such remuneration to have been passed at an extraordinary meeting (as that term is used in the Aboriginal Land Rights Act) of the Council (at which a quorum is present) by a majority of 80% of the members present and voting at the meeting." 7. The catalogue of powers of the Trustee in clause 13 concludes with a proviso that: "notwithstanding any other provision of this deed, the Trustee may not do any act which the Council could not have done as at the Commencement Date." 56 The Trust Deed defines "Financial Year" as a year ending on 30 June. "Income" is defined in a way that pays attention to certain provisions of income tax legislation. Clause 11 of the Trust Deed requires the Trustee to prepare financial statements for each Financial Year, including "a profit and loss account as at the end of each Financial Year" setting out "all … Income". 57 It is clear that the Trust is wholly a purpose trust, in that the trust property is directed to be held for the purpose or object specified in clause 3.1. No person is a beneficiary. In particular, while DLALC is, by the Trust Deed, given certain functions, it is not a beneficiary. Nor can DLALC determine, compel or control particular applications of trust property by the Trustee or other actions of the Trustee. The most DLALC can do is to make recommendations as to the application of income, which recommendations the Trustee is not obliged to follow, although it must "have regard to" them. The constitution of DPL 58 DPL is a proprietary company registered as such under the Corporations Act. DLALC is and has always been the sole member of DPL. 59 In its present form, the constitution of DPL contains some unusual provisions calculated to make certain actions and decisions within or in relation to DPL ineffective unless approved or confirm in a certain way by members of DLALC. I set out in full the provisions in question: " 4.1 Transfer of shares (a) Subject to this constitution and to the rights or restrictions attached to any shares or class of shares, a member may transfer all or any of the member's shares by an instrument in writing in any usual form or in any other form that the directors approve, except where the member is the Council, in which case the company must also have procured a resolution to transfer such shares to have been passed at an extraordinary meeting (as that time is used in the Aboriginal Land Rights Act) of the Council (at which a quorum is present), by a majority of 66% of the members present and voting at that meeting."

[21]

" 5.10 Resolutions of single member company If the company has only one member, the company may pass a resolution by the member recording it and signing the record. That record is to be taken as a minute of the passing of that resolution. " 6.1 Appointment and removal of directors (a) Subject to rule 6.1, there must be five directors. (b) The directors in office on the date that this constitution was adopted by the company continue in office but on the terms and conditions set out in this constitution. (c) At all times: (i) there must be more Internal Directors than External Directors; and (ii) no more than one director may be an officer (as that term is defined in the Aboriginal Land Rights Act) of the Council. (d) The company may by resolution increase or reduce the number of directors, provided that if at the time of such resolution the Council holds any shares, the resolution of the company is conditional on the Council passing a resolution (prior to the resolution by the company or within one month after the passing of a resolution by the company) in materially the same terms as the resolution passed by the company by a majority of 66% of the members present and voting at such meeting. (e) Subject to rule 6.1(f), the company may appoint or remove a director provided that if at the time of such appointment ore removal the Council holds any shares, the resolution of the company is conditional on the Council passing a resolution (prior to the resolution by the company or within one month after the passing of a resolution of the company) in materially similar terms as the resolution passed by the company by a majority of 66% of the members present and voting at such meeting. The resolution of the Council must also authorise the person being appointed as a director to act in the best interest of the company. (f) Subject to rules 6.1(a) and 6.1(c), the directors may appoint any natural person to be a director, either to fill a casual vacancy or as an additional to the existing directors, but the total number of directors must not at any time exceed the maximum number allowed under this constitution. (g) Subject to rule 6.2 and to the terms of any agreement entered into between the company and the relevant director, a director holds office until the director dies or is removed from office pursuant to rule 6.1(e)."

[23]

Decisions of DLALC 61 It is necessary to refer next to certain decisions made by DLALC. Evidence was given by a number of witnesses about the reasons for the decisions and the circumstances in which they were made. I do not need, at this point, to go into those matters. But it is appropriate to refer to some matters of context and background that are uncontroversial. 62 The contract under which Mirvac eventually purchased the North Entrance land was made on 24 September 2002. An option to purchase was granted at that point and an option fee was paid. At a meeting of DLALC on 12 October 2002, the members decided to explore the options available regarding the establishment of a trust to hold various assets of DLALC. A working group (which evolved into the "Trust Committee") was formed to consult with Mr Hanrahan, an adviser to DLALC, and Gilbert+Tobin, solicitors. A meeting of DLALC on 17 December 2002 received a recommendation for the establishment of a trust. 63 Throughout most of 2003, steps were taken to develop the trust proposal. The Trust Committee received a final draft of the trust deed and the constitution of the trustee company in November 2003. These were approved in principle at a meeting of DLALC on 11 November 2003. Final approval was given at a meeting of DLALC on 17 January 2004. The minutes of the latter meeting record the following: " Agenda Item 1. Trust Deed Document Tony Hanrahan presented the Document by way of hand outs. General discussion took place. + Motion that the members propose the five (5) Directors by [sic] composed of two persons who are not members of the council, but must have outstanding business experience and the Chairperson of DLALC and two (2) members of DLALC. + Moved V Graf, Seconded by C Hammond, 1 abstain A Van den Berg, carried. + Motion to accept the Trust Deed as presented with the Amendment + Moved A Van den Berg, Seconded by R Sutherland, carried" 64 And later: " Agenda Item 2. Trust Constitution Tony presented the Constitution. General discussion took place regarding 2 Meeting Procedures - general consensus to agree to two meetings 6 (6.1). + Motion that the members resolve to remove 6.15 Clause (c) from the Constitution + Moved R Sutherland, Seconded by J McEwen, carried + Motion to accept the name of Darkinjung Limited as the Company name + Moved V Graf, Seconded by R Sutherland, carried + Motion to accept the Trust Constitution as presented with Amendments + Moved J Smith, Seconded by B Bunting, carried ** PLEASE NOTE: That the members have agreed to the Documents and have agreed to any further amendments to be made." 65 At a meeting of DLALC on 9 March 2004, certain decisions were made about the composition of the board of the trustee company. Under the heading "Treasurer's Report", the minutes of the meeting record the following: " Treasurer's Report: Tammy presented the Treasurers Report + Motion to pay NMC and Gilbert and Tobin the outstanding amounts owed + Moved D Pross, Seconded by V Graf, carried + Motion to issue the deposit of $500,000.00 into the DLALC Main Account + Moved D Pross, Seconded by V Graf carried + Motion for the second amount of monies from Mirvac be paid into the Trust Account + Moved D Pross, Seconded by P Peterson, carried" 66 A meeting of DLALC held on 13 April 2004 was informed that DPL (which had been incorporated on 2 March 2004) had become trustee of the new trust, that meetings of the board of directors had taken place and that the trust had under consideration a joint venture with Outback Beef, something that had been discussed at earlier DLALC meetings. 67 The minutes of a meeting of DLALC held on 14 December 2004 record several relevant matters: "Funeral Fund, at this stage it is only a registered company + Resolution the members resolve that they wish the council to do what is necessary to acquire, establish and operate an enterprise that can provide funeral fund services to DLALC members and their immediate families who live in the DLALC area + Moved Jenny Hayes, Seconded by Wayne Cook, carried" "DLALC Housing + Resolution 1 A Company called 'Darkinjung Housing Company Pty Ltd' is established to cater for DLALC sustainable housing + Moved Veronica Graf, Seconded by Robyn Sutherland, carried" + Resolution 2 Funds from the second payment from Mirvac (to be determined) due in the first half of 2005 be applied to the DLALC sustainable housing project and the funeral fund, + Moved Veronica Graf, Seconded by Robyn Sutherland carried" Ultra vires - general principle 68 Mr Hillig (on behalf of DLALC) and NSWALC contend that the four transfers of funds by DLALC to DPL were inconsistent with what are sometimes termed principles of "narrow ultra vires". They argue that the transfers were beyond the statutorily authorised scope of activities of DLALC. That contention raises a number of issues about the authority and powers of statutory corporations. 69 As Bowen LJ explained in Baroness Wenlock v The River Dee Company (1883) 36 ChD 674n (at p.685), a corporation created by Royal Charter was, at least from the time of the Case of Suttons Hospital (1612) 10 Co Rep 23a (at p.30b); 77 ER 960 (at p.970), regarded by the common law as clothed with all the powers of a natural person or, at least, so many of them as a corporation is, of its nature, capable of exercising. Corporations created by statue, his Lordship observed, stood in a different light: "When you come to corporations created by statute, the question seems to me entirely different, and I do not think it is quite satisfactory to say that you must take the statute as if it had created a corporation at common law, and then see whether it took away any of the incidents of a corporation at common law, because that begs the question, and it not only begs the question, but it states what is an untruth, namely, that the statute does create a corporation at common law. It does nothing of the sort. It creates a statutory corporation, which may or may not be meant to possess all or more or less of the qualities with which a corporation at common law is endowed. Therefore, to say that you must assume that it has got everything which it would have at common law unless the statute takes it away is, I think, to travel on a wrong line of thought. What you have to do is to find out what this statutory creature is and what it is meant to do; and to find out what this statutory creature is you must look at the statute only, because there, and there alone, is found the definition of this new creature. It is no use to consider the question of whether you are going to classify it under the head of common law corporations. Looking at this statutory creature one has to find out what are its powers, what is its vitality, what it can do. It is made up of persons who can act within certain limits, but in order to ascertain what are the limits, we must look to the statute. The corporation cannot go beyond the statute, for the best of all reasons, that it is a simple statutory creature, and if you look at the case in that way you will see that the legal consequences are exactly the same as if you treat it as having certain powers given to it by statute, and being prohibited from using certain other powers which it otherwise might have had." 70 This approach was endorsed when the case went to the House of Lords: Baroness Wenlock v The River Dee Company (1885) 10 App Cas 354. The principle that corporations created by or pursuant to statute possess only the powers expressed or implied in the constating instruments had already been recognised by the House of Lords in relation to both commercial corporations incorporated and enabled directly by statute (Attorney-General v Great Eastern Railway Company (1880) 5 App Cas 473) and companies incorporated by registration under the Companies Act 1862 (Eng) (Ashbury Carriage & Iron Company (Limited) v Riche (1875) LR 7 HL 653). 71 In modern times, the same principle has been applied by courts of the highest authority to a corporation created by statute for public purposes (Kathleen Investments (Australia) Ltd v Australian Atomic Energy Authority (1977) 139 CLR 117), a corporation brought into existence for private purposes by virtue of strata titles legislation (Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 (1994) 179 CLR 597), a corporation which, although created by Royal Charter, resulted from an exercise of the prerogative in accordance with statute for public purposes (Hazell v Hammersmith & Fulham London Borough Council [1992] 2 AC 1) and a statutory body formed under trade union legislation (Williams v Hursey (1959) 103 CLR 30). The applicability of the principles to a local Aboriginal land council such as DLALC was recognised by Campbell J in Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365. 72 In all cases where a corporation owes its existence to a statute, it is open to the corporation to do only those things that the statute contemplates are to be done by it. It is commonplace for a founding and enabling statute to contain express statements with respect to the purposes, objects, functions, powers and duties of the corporation. Those express statements, together with the necessary implications to which they give rise, are the source of the corporation's authority and capacity and the limits upon them. Where the corporation purports to act beyond the field of its authority and capacity thus defined, its acts are void. Ultra vires - functions, objects and powers - discussion 73 In contending that the several transfers of funds by DLALC to DPL were beyond power, Mr Hillig and NSWALC rely on the decision of McLelland CJ in Eq in Aboriginal Community Benefit Fund Pty Ltd v Batemans Bay Local Aboriginal Land Council (1997) 42 NSWLR 593. That case involved the powers of NSWALC under the ALR Act as it existed in May 1996. At issue was the question whether NSWALC had power to indemnify a local Aboriginal land council against liabilities arising out of the operation of an "enterprise" by that council. His Honour held that there was no power. This was because the giving of such an indemnity did not fall within any of the functions conferred on NSWALC by the Act as it then stood. The essence of the decision in this respect appears from the following passage (at p.598): "In my opinion the New South Wales Aboriginal Land Council does not have the legal capacity to give such an indemnity. To indemnify a Local Aboriginal Land Council against liabilities arising out of the operation by that council of an 'enterprise' under s 12(d)(ii) of the 1983 Act (as the ALC scheme must for this purpose be considered) does not fall within any of the functions described in s 23(1)(f) and s 23(1)(h) of the 1983 Act, nor is it 'necessary for, or incidental to, the exercise of' any such function: see Interpretation Act 1987, s 50(1)(e).

[24]

It was argued on behalf of the defendants that a power in the New South Wales Aboriginal Land Council to give such an indemnity to a Local Aboriginal Land Council arises by 'reasonable implication' from a consideration of the general supervisory role of the New South Wales Aboriginal Land Council appearing from various parts of the 1983 Act, considered in association with specific provisions such as s 23(h) and s 40 C : cf Re Honey Pool of Western Australia [No 2] (1988) 14 ACLR 621. I cannot agree with this proposition. In my view there is no adequate basis for any such implication." 74 McLelland CJ in Eq here expressed a conclusion corresponding with his observation by way of obiter dictum at an earlier stage of the same proceedings (see Aboriginal Community Benefit Fund Pty Ltd v Batemans Bay Local Aboriginal Land Council (1996) 22 ACSR 56 at pp.63-64): "It is therefore inappropriate in these proceedings to make any definitive determination as to the legality of the ALC scheme. However, I should record my misgivings in this regard. It seems to me strongly arguable that there is a basic flaw in the ALC scheme, in that its validity appears clearly to be dependent on the purported indemnity by NSWALC of the Batemans Bay LALC, and the provision of substantial funds from the NSWALC pursuant to that indemnity. There are real difficulties in regarding the provision of that indemnity as within the functions of the NSWALC and, in particular, within the terms of s 23(h) of the Aboriginal Land Rights Act 1983 (NSW) 'to make grants … to … Aborigines', since it is the Batemans Bay LALC, the body corporate, not 'Aborigines' as such, which is the person to be indemnified. Furthermore, if payments direct to beneficiaries under the ALC scheme, otherwise than on behalf of the Batemans Bay LALC, were in contemplation, despite the legal structure of that scheme, those beneficiaries are not confined to 'Aborigines' (assuming that expression to mean the same as 'Aboriginals' as defined in the Aboriginal Land Rights Act ) since they include the spouses and children of Aboriginals as so defined. If the indemnity is invalid, then the contention that the purported exemption of the Batemans Bay LALC under s 11 of the Funeral Funds Act is invalid by reason of the addition of the qualification 'as trustee for the NSW Aboriginal Land Council's Funeral Contribution Fund' has considerable force." 75 According to this approach, as applied to the present case, it is the statement of functions in s.52 of the ALR Act in its present form that delimits the capacity and authority of a local Aboriginal land council such as DLALC. 76 It was submitted on behalf of DPL that any such approach is not consistent with the ALR Act as it now stands. The legislation considered by McLelland CJ in Eq stated the functions of NSWALC and the functions of a local Aboriginal land council. Provisions conferring certain specific powers of an incidental kind supplemented the provisions stating functions. Subject to that supplementation, the statement of functions alone indicated the permitted sphere of activity of relevant land councils. But in Mr Epstein's submission, there was a radical change in the statutory scheme governing local Aboriginal land councils when the Aboriginal Land Rights Amendment Act 2001 caused the principal Act to contain, in addition to a statement of functions, a statement of the objects of each such land council. The statement of objects was contained in the new s.51 added by the Act of 2001 (see paragraph [36] above). Section 51 put into statutory form a provision with respect to objects which had previously formed part of the model rules which the ALR Regulation caused to be applicable to any local Aboriginal land council which did not adopt rules of its own in conformity with the optional procedures in the Act. 77 The submission made on behalf of DPL is that inclusion in the Act of a statement of the objects of a local Aboriginal land council had a significant effect on the legal capacity and authority of every local Aboriginal land council in existence at the time of the enactment of s.51. It is said that principles of ultra vires applicable to corporations have always paid attention to a corporation's objects rather than its functions. The decision of McLelland CJ in Eq fixed upon the statutory statement of functions as a determinant of legal capacity merely because there was no statement of objects and the statute provided no other means for ascertaining the scope of the authorised activities. The addition in 2001 of a statement of objects means that it is no longer necessary or appropriate to regard the statement of functions as playing the role in which it was cast by McLelland CJ in Eq. According to this submission, the stage is now occupied by the statement of objects alone. 78 As Mr Epstein observed, the word "objects" has particular currency in this area of the law because ss.8, 9 and 10 of the Companies Act 1862 (Eng) (adopting the approach first taken in the Joint Stock Companies Act 1856 (Eng)) required the memorandum of association of a company created by registration under that Act to contain a statement of "the objects for which the proposed company is to be established" - a requirement which, in Australia, continued until omitted from the Companies Act 1981 (Cth) and corresponding State and Territory Codes by s.33 of the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (Cth). That requirement, it is said, was really a reflection of approaches already well established by 1862 which involved delineation of the legal capacity of statutory corporations by reference to their objects. 79 In the Ashbury case (above), in which the House of Lords applied principles of ultra vires to corporations created by registration under the Companies Act 1862 (Eng), Lord Selborne said (at p.693) that "a statutory corporation, created by an Act of Parliament for a particular purpose, is limited, as to all its powers, by the purposes of its incorporation as defined in that Act". This is a reflection of the principle that had been applied to statutory corporations created before the advent of general companies legislation. Thus, in Bagshaw v The Eastern Union Railway Company (1850) 2 Mac & G 389; 42 ER 151, Lord Cottenham LC said that persons "who subscribed for the purposes specified by the Acts have a right to have their money applied to such purposes" and that the court would intervene to keep the company, "in the application of its money, to those purposes for which it was said it was to be advanced". 80 In Lyde v Eastern Bengal Railway Company (1866) 36 Beav 10; 55 ER 1059, the Master of the Rolls, Lord Romilly, entertained an application for an injunction to restrain the application of company funds "in obtaining powers from Parliament foreign to the objects and purposes of the company as originally established". His Lordship described it as "quite settled now" that "a company established for one purpose cannot, against the will of a dissentient minority, however small, undertake a business foreign to the objects of the original company". 81 To like effect was the observation of Lord Cranworth LC, in Eastern Counties Railway Co v Hawkes (1855) 5 HL Cas 331; 10 ER 928: "It must, therefore, be now considered as a well settled doctrine that a company incorporated by Act of Parliament for a special purpose cannot devote any part of its funds to objects unauthorised by the terms of its incorporation, however desirable such an application may appear to be." 82 This observation followed a reference to the decision of the Exchequer Chamber in MacGregor v The Official Manager of the Deal & Dover Railway Company (1852) 22 LJQB 69 where it was observed by Alderson B that it had been laid down by the Court of Common Pleas in East Anglian Railways Co v Eastern Counties Railway Co (1951) 11 CB 775; 138 ER 680 that "a railway company incorporated by act of parliament is bound to apply all the funds of the company for the purposes directed and provided for by that act, and for no other purpose whatsoever". 83 Reference was also made in submissions to Salomons v Laing (1850) 12 Beav 339; 50 ER 1091 which concerned an application to restrain a railway company's acquisition of shares in another railway company. Lord Langdale MR said: "A railway company, incorporated by an Act of Parliament, is bound to apply all the monies and property of the company for the purpose directed and provided for by the Act and for no other purpose whatever … Any application of or dealing with the capital, or any part of the capital, or any funds or money of the company, which comes under the control or management of the directors or governing body of the company, in any manner not distinctly authorised by the Act, is, in my opinion, an illegal application or dealing … I am of opinion, that if, as in this case, the directors are proceeding upon an illegal principle, and for purposes not authorised by the Act, to involve the company or the shareholders of the company, or any of them, in liabilities to which the shareholders or any shareholder never consented, relief may and ought to be given in this court." 84 The idea that it was "illegal" for a corporation created by statute to act beyond the purposes for which it was created was disapproved by the House of Lords in the Ashbury case (above). In earlier years, there had been something of a conflict between what might today be termed a public law view and a private law view of ultra vires. Founding statutes often defined purposes, objects and powers by statements of what was to be "lawful" and what was not to be "lawful". Thus, in The National Bank of Australasia v Cherry (1870) LR 3 PC 299, the Privy Council was called upon to consider an Act of the legislature of South Australia which incorporated "the South Australian Branch of the National Bank of Australasia" and authorised it to carry on the ordinary business of bankers. The statute then set out a number of things concerning advances and property which "it shall be lawful for the Corporation to do", with a concluding proviso: "Provided always, that save and except as hereinbefore specially authorised, it shall not be lawful for the said Corporation to advance or lend any money on the security of lands or houses or ships, or on pledges of merchandise, nor to own ships." 85 The Privy Council held (at p.307) that, although "there are considerations of public policy involved in this clause", those considerations "look to and deal with the management of the Bank, and have for their object the limitation of the powers and authority of the Bank", the "object of the Legislature" in enacting the proviso being "to make it something ultra vires the Bank to take, upon the occasion of contracts for those advances, securities of the kind mentioned in this section". 86 The distinction between illegality and ultra vires was later succinctly stated by Buckley LJ in Re Birbank Permanent Building Society [1912] 2 Ch 183 at p.232: "A transaction which is illegal is forbidden by law. A transaction which is ultra vires is precluded by the incompetence of the actor. The act may be a perfectly legal act, but is one which that person cannot do" 87 The fact that the competence (and therefore incompetence) of the actor derives from statute does not mean that law forbids things beyond the sphere of competence. The competence is the competence of the particular person. Illegality affects all persons. The distinction was recognised in the joint judgment of Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ in Northern Territory v Mengel (1995) 185 CLR 307 at p.336 where, in considering the expression "unlawful act" as used in Beaudesert Shire Council v Smith (1966) 120 CLR 145, their Honours considered it pertinent to ask whether it referred to "an act forbidden by law or, simply, an unauthorised act in the sense of an act that is ultra vires and void". 88 Mr Epstein placed emphasis upon the importance the case law accords to "objects" - as well as "purposes" which, I accept, may be taken to be a synonym of "objects". Looking at the cases over the quarter century to 1875, we find references to "the purposes specified by the Acts" (Bagshaw, 1850), "the purpose directed and provided for by the Act and for no other purpose whatsoever" (Salomons v Laing, 1850; East Anglian Railways Co, 1851), "objects unauthorised by the terms of its incorporation" (Eastern Counties Railway Co, 1855), "foreign to the objects of the original company" (Lyde, 1866) and "the purpose of its incorporation as defined in that Act" (Ashbury, 1875). It follows, in Mr Epstein's submission, that, if the incorporating Act contains an express statement of the corporation's objects, it is that statement alone that delineates the permitted field of activity. 89 Any such approach is too narrow. The inquiry is not confined to the corporation's objects. The real message from the cases about corporations created and empowered by statute is that the permitted field of activity and the corporation's capacity are to be discovered from the statute as a whole. 90 The statute considered by the High Court in Kathleen Investments (Australia) Ltd v Australian Atomic Energy Authority (above) created a body corporate which it declared capable of acquiring, holding and disposing of real and personal property and of suing and being sued in its corporate name (s.8(2)). Section 18 conferred particular powers, as well as "power to do all things that are necessary or convenient to be done for or in connection with the performance of its functions". Section 17(1) of the Act began, "Subject to this Act, the functions of the Commission are …". Section 17(4) was in these terms: "The functions of the Commission specified in sub-section (1) of this section shall be performed only-- (a) for the purpose of ensuring the provision of-- (i) uranium or atomic energy for the defence of the Commonwealth; (ii) uranium to be supplied by or on behalf of the Commonwealth to the Government of another country or to an authority acting on behalf of the Government or Governments of another country or countries; or (iii) uranium or atomic energy for any other purpose of the Commonwealth; (b) for the purpose of ensuring that uranium from sources in Australia is not disposed of in a manner that may be prejudicial to the defence of the Commonwealth; (c) in a manner incidental to the performance of the functions of the Commission for the purposes specified in the last two preceding paragraphs; or (d) in or in relation to a Territory of the Commonwealth." 91 The question before the High Court upon demurrer was whether the statutory corporation was authorised to take up shares in a particular company incorporated under the general companies legislation. The way in which the statutory provisions defined and limited the corporation's capacity and authority was addressed by the court. It is relevant to quote from two of the judgments. 92 Gibbs J said (at p.138): "It follows from what I have said that the Commission has not an unfettered power to take up shares in any company no matter what the circumstances. Although no limitation is expressed in s. 8 (2), that provision has to be read in the context provided by the Act as a whole, and it cannot be doubted that the Commission can use the capacity with which it is endowed by that sub-section only for the purpose of carrying out the functions which the Act casts upon it. Similarly the powers conferred by s. 18 are to be exercised only so far as is necessary for or in connexion with the performance of its functions. The limitation effected by s. 17 (4) is important--it prevents the Act, and the Commission, from going beyond constitutional power. If the Commission acquired shares in a company for a purpose which had no connexion with the functions defined by s. 17, its action would be unconstitutional as well as unauthorized." 93 Stephen J said (at pp.142-3): "In the present case, whatever effect it might be appropriate to have given to s. 8 (2) were it standing alone, its operation as a grant of power to acquire and hold real and personal property, must, I think, be restricted by reference to the terms of ss. 17 and 18 of the Act. A later and more detailed examination of these sections will be necessary but for present purposes it is enough to refer to the powers which they grant, including a power to purchase and dispose of land, which powers are expressly restricted by reference to that which is necessary or convenient for the performance of the Commission's functions, those functions being in turn quite narrowly confined by the interaction of sub-ss. (1) and (4) of s. 17. In those circumstances and in that context s. 8 (2) should not, I think, be understood as conferring any power to acquire and hold property otherwise than in situations which would be authorized by the interplay of ss. 17 and 18, which are the provisions of the Act expressly concerned with the functions and powers of the Commission." 94 The statutory provisions under consideration in the Kathleen Investments case referred to functions, purposes and powers. Accepting that "objects" and "purposes" are synonymous, those provisions thus bear some broad similarity to the provisions with which I am concerned. There are also important differences. I have quoted the passages from the judgments in Kathleen Investments to emphasise the need to consider the statutory scheme as a whole. Parliament effects incorporation for some purpose. Any statutory statement of the corporation's objects will be material to the discovery of Parliament's purpose. In some cases, a statement of objects will be the only indicator of the permitted field of activity. This was the case in relation to companies created by registration under general companies legislation before 1983. In other cases (such as the Aboriginal Community Benefit Fund case discussed at paragraphs [73] and [74] above), a statement of functions and ancillary powers may be the only indicator. But where, as in the Kathleen Investments case, there are statutory statements of powers, functions and purposes (or objects) of the corporation, the task is to construe the statute as a whole in the way explained by Bowen LJ in Baroness Wenlock v The River Dee Co (above): "Looking at the statutory creature one has to find out what are its powers, what is its vitality, what it can do. It is made up of persons who can act within certain limits, but in order to ascertain what are the limits, we must look at the statute." 95 When this approach is taken in the present case, the statement of the objects of a local Aboriginal land council in s.51 of the ALR Act is seen to be one of several factors relevant to any decision about the capacity of such a council and the permitted scope of its activities. Another highly relevant factor is the statement of functions in s.52. Also pertinent are provisions about powers and the expenditure of money. It is the statute as a whole that marks out the boundaries. 96 I have no doubt that its objects limit the functions of a local Aboriginal land council. Such a council may not lawfully perform a s.52 function in furtherance of some object beyond those specified in s.51. But I am also of the opinion that the functions of a local Aboriginal land council do not include functions not specified in s.52 that may nevertheless be considered conducive to the attainment of the s.51 objects. On the view I take of the statute as a whole, a local Aboriginal land council is authorised to perform the s.52 functions, provided that in so doing it acts within the s.51 objects; and it likewise has authority to pursue the attainment of the s.51 objects, provided that in doing so it does not perform functions beyond the s.52 functions. 97 Provisions conferring powers on a local Aboriginal land council do not allow it to operate beyond the scope of its objects and functions. It was faintly suggested on behalf of DPL (although not pleaded) that s.41 of the ALR Act alone justified the transfers of funds by DLALC to DPL. That section says that a council may do or suffer in relation to its "property" (which, by force of s.21 of the Interpretation Act, includes money) "any act or thing that it could lawfully do or suffer if it were a natural person". A natural person can lawfully squander his or her money at will. But that does not mean that, by virtue of s.41, a local Aboriginal land council may deal with its money or other property in ways that are not conducive to the attainment of its objects and the performance of its functions. Section 41, after all, begins with the words, "Subject to this Act …". Its role as facilitating what the Act otherwise allows is thus made clear. 98 Such a limitation upon broad powers accords with the approach taken by the Supreme Court of Canada in Communities Economic Development Fund v Canadian Pickles Corporation [1991] 3 SCR 388. That case concerned a statutory corporation the objects of which, as set out in the relevant Act, were to encourage the economic development of "remote and isolated communities" in Manitoba. It made a loan to a company that operated in a part of southern Manitoba that was neither remote nor isolated. An attempt was made to uphold the loan by reference to the following provision of general corporations legislation imported by the founding statute: "A corporation has the capacity and, subject to this Act, the rights powers and privileges of a natural person." 99 In a judgment delivered by Iacobucci J, the Supreme Court of Canada saw the central question as whether the corporation was "expressly or impliedly granted the power to act outside its statutory objects" concerned with remote and isolated communities. Material to the conclusion that it was not was the existence of a specific provision prohibiting the making of loans in contravention of the Act. That provision created a limit on the corporation's powers. But the conclusion also rested on a broader basis explained in the earlier Supreme Court decision in Canadian Bank of Commerce v Cudworth Rural Telephone Co [1923] SCR 618. 100 The latter case involved a corporation formed under special legislation of Saskatchewan. The Act explicitly set out the means by which the corporation could raise money. Those means did not include the issue of promissory notes. Also applicable, however, was a provision giving the company all the powers of a corporation incorporated by Royal charter, that is, all the powers of a natural person that a corporation, of its nature, is capable of exercising. It was held that the raising of money by the issue of promissory notes was nevertheless ultra vires. Duff J said: "In declaring in section 14 that the companies referred to are to have the capacities of a common law corporation, the legislature cannot be supposed to have intended to abrogate the restrictions and prohibitions which the legislature itself has shewn an intention to impose upon such companies. A company created by charter … is necessarily subject to the restrictions imposed upon it by the legislature, and where the enactment imposing such restrictions evinces an intention that a given transaction shall not be entered into, then any attempt on the part of the company to enter into such a transaction must be inoperative in law." 101 To the same effect are the observations of Nicholson J, as a judge of the Supreme Court of Western Australia, in Re The Honey Pool of Western Australia (No 2) (1988) 14 ACLR 621 concerning an argument that a statutory corporation's transfer of the whole of its undertaking could be supported by a provision declaring it "capable of doing and suffering all such things as bodies corporate may lawfully do and suffer". In rejecting that contention, Nicholson J said: "The applicants contend that full effect should be given to the plain words in this section. For them it is contended that because a company can sell and transfer its undertaking, so can the Honey Pool. For the participants it is said that the section cannot be read so as to destroy the Act. For the applicants it is said that to read the section in that way is to treat the Honey Pool as if in fact it were a public authority.

[25]

In my opinion the section cannot be read as if it were enacted independently of the remaining provisions of the Act. It does not have the effect of vesting in the Honey Pool the freedom to act as if it were a body corporate without statutory powers." 102 Again, therefore, the need to construe the statute as a whole is emphasised. As Barwick CJ pointed out in the Kathleen Investments case (at p.128), there is a difference between a statutory corporation's functions and authority and its powers or capacity. While the powers or capacity may be broad, they can be exercised only within the confines of the functions and authority conferred by the statute. The general concept - and the one reflected in the ALR Act - is that statutory corporations are created for purposes and are given powers calculated to enable them to perform their statutory functions in pursuit of those purposes. 103 In the present case, the authority of a local Aboriginal land council is the authority to perform the s.52 functions in pursuit of the s.51 objects or, to put it the other way, to pursue the s.51 objects by performing the s.52 functions. Sections 51 and 52 must be read together to discover the scope of corporate authority. In exercise of that authority - that is, in performing the s.52 functions in pursuit of the s.51 objects or pursuing the s.51 objects by performing the s.52 functions - a local Aboriginal land council may exercise the powers conferred by the ALR Act, including the s.41 power, as well at the power derived from s.50 of the Interpretation Act. But any such power may not be exercised otherwise than as a means of pursuing the s.51 objects and performing the s.52 functions in the ways I have described. 104 What I have just said may be re-cast in the form of three negative propositions: first, a local Aboriginal land council must not do anything that lies beyond the scope of the s.51 objects; second, a local Aboriginal land council must not do anything that does not involve the performance of a s.52 function; and, third, a local Aboriginal land council must not exercise any of the powers conferred by the ALR Act (and s.50 of the Interpretation Act) except in doing things that are within the scope of both the s.51 objects and the s.52 functions. The "must" in each of these propositions is intended to indicate a limit upon authority and capacity. Ultra vires - functions, objects and powers - conclusions 105 The four payments made by DLALC to DPL are identified by asterisk at paragraph [18] above. It is common ground that each payment was made in furtherance of a common intention that DPL should hold the moneys received from DLALC upon the trusts stated in the Trust Deed and that those moneys should be assets of the Trust. It is also common ground that, apart from the nominal sum settled by the settlor, the moneys received from DLALC are the only assets the Trust has ever had. 106 The times at which payments were made by DLALC to DPL and the times at which DPL made payments out of the funds received by it, as trustee, from DLALC appear from the table set out in paragraph [18] above. Several things are clear. A large sum of money remains unexpended and unapplied in the hands of DPL, as trustee. This money is invested. The main applications of funds by DPL, as trustee, have been applications to fund CattleCo and the Enterprise Companies by way of loan. DLALC, by making the four payments to DPL, put it out of its power to control and direct the future disposition of the moneys transferred into the ownership of DPL. It is not suggested that DPL contracted with DLALC at the time of receipt that DPL would apply the moneys received in particular ways or would deal with them only as DLALC requested or directed. Any such contract may, in any event, have involved an impermissible fettering of the discretions of DPL as trustee. Nor did the terms of the Trust require DPL, as trustee, to obey any instructions of DLALC, a non-beneficiary whose members were also non-beneficiaries. Once received by DPL, the moneys came under the sole control of DPL and it was DPL alone who could determine what was to be done with them, subject always to the constraints and duties to which it was subject as a trustee (and, as to income, to having regard to any recommendation of DLALC). 107 The question to be addressed by reference to the s.51 objects and the s.52 functions is therefore whether DLALC acted within the scope of its statutory authority in transferring money to the trustee of a purpose trust having purposes corresponding, either wholly or in certain respects, with the statutory functions of DLALC. 108 It may be said at once that augmenting of a trust fund dedicated to the welfare of Aboriginal persons within DLALC's area and other persons who are members of DLALC was something that fell within DLALC's s.51 objects. Those objects do not distinguish among means of acting to improve, protect and foster the best interests of such persons. But, as I have said, pursuit of the s.51 objects may only be undertaken by means of performance of the s.52 functions. It is therefore necessary to identify which of the s.52 functions were performed by means of DLALC's payments to DPL. 109 It is the contention of DPL that the payments were made to it by DLALC in exercise of one or more of the s.52(1)(g)(ii) function, the s.52 (1)(k) function and the s.52(1)(m) function. I shall consider these in reverse order. 110 The question posed by s.52(1)(m) is whether each transfer of funds by DLALC to DPL entailed performance by DLALC of a function of promoting the protection of Aboriginal culture and the heritage of Aboriginal persons in DLALC's area. I can see no basis on which an affirmative answer can be given to that question. In the hands of DPL as trustee of the Trust, the funds received from DLALC might, at DPL's discretion, have been applied in various ways. They might possibly have been applied in promoting the protection of Aboriginal culture and the heritage of Aboriginal persons in DLALC's area (although, in saying that, I do not mean to state a conclusion as to the charitable character of any such purpose). They might have been applied in other ways, depending entirely on decisions made by DPL. While it is possible to argue that funds applicable for the advancement and benefit of a particular person are properly applied if subjected to new trusts beneficial to that person (see, for example, Pilkington v Inland Revenue Commissioners [1964] AC 612), any such conclusion would be available here only if the trusts concerned were such that trust moneys had to be applied, without the exercise of any discretion, in ways exclusively directed towards the promotion and protection of Aboriginal culture and the heritage of Aboriginal persons in DLALC's area. Only then would it be possible to characterise the payment of the funds to the trustee as an exercise of the function of DLALC concerned with those particular matters. We are not concerned here with broad concepts such as advancement and benefit. The statutory function pays attention to particularly defined matters of protection and promotion, so that it is necessary to see some clear and direct connection between the decision to act in performance of the function and an identifiable consequence in terms of such matters. There was no such clear and direct connection between any of the payments by DLALC and DPL and any identified matter concerning Aboriginal culture and heritage. 111 Reliance is next placed on s.52(1)(k) and DLALC's function of protecting the interests of Aboriginal people in its area in relation to the acquisition, management, use, control and disposal of land. Again, there was no clear and direct connection between any of the payments made by DLALC to DPL and anything involving the protection of the relevant interests. There was, as in the case just discussed, nothing at all to ensure that the transferred moneys would be applied for any such purpose. The conclusion must be the same as in relation to s.52(1)(m). 112 I consider next the s.52(1)(g)(ii) function. As I have said at paragraph [40] above, s.52(1)(g)(i) and s.52(1)(g)(ii) involve separate functions each of which takes its content from an expression of members' wishes. It is s.52(1)(g)(ii) upon which reliance is placed. The question in relation to each transfer of funds by DLALC to DPL is therefore whether the transfer was made to implement the wishes of DLALC's members (as decided at a meeting of DLALC) and, if so, whether the wishes expressed by members were wishes "with respect to" the "acquisition, establishment and operation of enterprises". 113 The preoccupation of the words just quoted is not with the acquisition, establishment and operation of enterprises at large, so that any expression of members "with respect to" the acquisition, establishment or operation of any enterprise whatsoever causes the expression of wishes to assume the character of a function of DLALC. The s.52(1)(g)(ii) function is concerned with the acquisition, establishment and operation of enterprises by and for the benefit of DLALC. If it were otherwise, the section would allow the implementation of members' wishes "with respect to" the acquisition of enterprises by, say, BHP Billiton, with the result that DLALC could legitimately implement the wishes of members that it make loans at interest to finance the takeover by BHP Billiton of some other enterprise. Wishes that DLALC become a takeover financier in that way would be wishes "with respect to the … acquisition … of enterprises", but no one could sensibly suggest that they were wishes of the kind to which s.52(1)(g)(ii) refers. 114 I am prepared to think (and I did not understand Mr Hillig or NSWALC to suggest otherwise) that s.52(1)(g)(ii) will support action by DLALC, in conformity with expressed wishes of members, to acquire, establish and operate enterprises through companies wholly owned, controlled and managed by DLALC. This would be consistent with the approach taken in Howarth v McMahon (1951) 82 CLR 442. If such a company were formed by DLALC and it were proposed to establish an enterprise through it, DLALC could properly give financial assistance for the establishment or operation of the enterprise by making a loan to the company or providing subscription moneys for shares to be issued to it, provided that the activities of the company were appropriately channelled. Those actions would properly be seen as within the relevant concepts of acquisition, establishment and operation as functions of DLALC. What has happened here is far removed from that. It is true, at least in the case of FuneralCo, HousingCo and ProjectCo, that DLALC has caused to be formed a company which is wholly owned and controlled by it. That has been done with minimal outlay of DLALC funds. It may also be accepted that FuneralCo and HousingCo have undertaken activities that may fairly be regarded as "enterprises" (the position in relation to ProjectCo is much less clear: it seems to have done nothing except receive and outlay money). But the transfer of funds by DLALC to DPL did not, in any sense, represent a step in the acquisition, establishment or operation of any such enterprise. 115 The position is no better in relation to CattleCo. There too, the expenditure by way of loan to CattleCo (and whatever expenditure was involved in acquiring the 75% shareholding interest) represented expenditure by DPL, not by DLALC. In the case of CattleCo, the relevant enterprise is arguably not one established by DLALC, given its joint venture nature and the 25% shareholding interest of Outback Beef. It might not, for that reason, be a legitimate object of the performance of DLALC's s.52 functions. But even if it is, the position again is that DLALC simply did not do anything to acquire, establish or operate CattleCo's enterprise by transferring funds to DPL which, in exercise of its own decision-making, gave financial assistance to CattleCo and its enterprise. 116 In transferring the funds to DPL, DLALC achieved its purpose of subjecting the funds to the dominion of DPL. It understood DPL to be the trustee of a charitable trust. It therefore recognised that DPL was not free to apply the transferred funds or any part of them as DLALC wished - much less as it directed. Again, there was no connection between any of the payments made by DLALC to DPL and the application of those moneys to the acquisition, establishment or operation of any enterprise of DLALC. If funds were ultimately found to have been applied in that way, it would only be because DPL had so applied part of the moneys held in trust by it and had done so according to its own decision and its own discretion. The application would not be an application by DLALC. 117 Implicit in what I have said about each of ss.52(1)(m), 52(1)(k) and 52(1)(g)(ii) is the proposition that it is beside the point, in deciding whether moneys were paid by DLALC in the performance of the particular function, that DPL, as trustee of the Trust, may have applied part of the trust fund towards such an object (again, I do not mean to state a conclusion that it did). The intention apparent on the face of clause 3.1 of the Trust Deed is that purposes to which trust property could be devoted consistently with the Trust Deed should be in certain respects purposes consistent with the performance of functions corresponding with DLALC's functions under s.52. But the simple fact is that DLALC, in transferring funds to DPL, did not apply any part of those funds in or towards the performance of any of its own functions. It made those funds available to DPL so that DPL might, according to DPL's own decisions, deploy the funds in the furtherance of the purposes for which DPL was permitted to act. Decisions that caused funds to be applied by DPL towards those objects were decisions of DPL alone. And, given its duties as a trustee, it was in no position to accept fetters upon its discretion to make decisions as to the application of trust funds. 118 I therefore do not accept that the making of the several payments by DLALC involved expenditure by DLALC in the performance of any of the functions referred to in ss.52(1)(m), 52(1)(k) and 52(1)(g)(ii). Regardless of the expectations that DLALC may have had as to how DPL would act, the reality was that, in parting with its money, it relinquished both ownership of the money and the power to control its application. In doing so, it could in no way be said to be exercising any of the functions mentioned. I consider irrelevant to this part of the inquiry the question whether the purposes towards which DPL purportedly expended funds received from DLALC were valid charitable purposes. 119 There was extensive reference in submissions to s.152(3) of the ALR Act which allows only certain payments to be made out of the account of a local Aboriginal land council. It was contended that s.152(3)(c), referring to "any other payments authorised by or under this or any other Act". I need say only that, in light of my conclusion that it was beyond the authority and capacity of DLALC to make the four payments to DPL, resort to DLALC's bank account in order to permit the payments to be made was contrary to s.152(3). Ultra vires - evading the legislative scheme - discussion 120 The second basis of attack on the actions of DLALC in transferring funds to DPL is that those actions were inconsistent with the scheme of the ALR Act and must for that reason be taken to have been unauthorised. The focus here is not upon the specific objects, functions and powers of DLALC as a statutory corporation. It is, rather, on DLALC's duties and responsibilities and the public policy to which the ALR Act gives effect. 121 The transfers by DLALC put at the disposal of DPL as trustee more than $25 million of money that, in the hands of DLALC, was required to be dealt with in accordance with the ALR Act. The intention, obviously enough, was that DPL, by executing the trusts of the Trust Deed and applying the funds towards the purposes set out in the Trust Deed, would achieve results generally of a kind that DLALC could have achieved by making applications of the funds itself. It was intended that DPL, as trustee, would, in that respect, replace DLALC. This raises an issue discussed in a number of cases involving purported relinquishment of statutory functions by statutory corporations. I begin with some older decisions of the Supreme Court of the United States concerning the duties and responsibilities of railway companies. 122 The decision of the Supreme Court in New York & Maryland Line Railroad Co v Winans 58 US 30 (1854) involved an arrangement between two railway companies created by statute under which one effectively supplanted and performed all the statutory functions of the other. The statutory charter of the plaintiff company authorised and required it to construct and operate a particular railway. After constructing the railway, the plaintiff entered into the operating arrangement with the other company on the basis of a division of profits between them. The court (by the judgment of Campbell J, at p.39) rejected the proposition that "the duties imposed upon the plaintiff by the charter, are fulfilled by the construction of the road, and that by alienating its right to use, and its powers of control and supervision, it may avoid further responsibility". The judgment continued (at p.39): "But those acts involve an overturn of the relations which the charter has arranged between the corporation and the community. Important franchises were conferred upon the corporation to enable it to provide the facilities to communication and intercourse, required for the public convenience. Corporate management and control over these were prescribed, and corporate responsibility for their insufficiency provided, as a remuneration to the community for their grant." 123 The principle was re-stated by Miller J in delivering the judgment of the Supreme Court in Thomas v West Jersey Railroad Company 101 US 71 (1870) (at p.83): "The principle is that where a corporation, like a railroad company, has granted to it by charter a franchise intended in large measure to be exercised for the public good, the due performance of those functions being the consideration of the public grant, any contract which disables the corporation from performing those functions which undertakes, without the consent of the State, to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the burden which it imposes, is a violation of the contract with the State, and is void as against public policy." 124 There was reference in both these United States cases to a number of earlier English cases. One is the decision of the Vice Chancellor (Parker) in Winch v The Birkenhead Lancashire and Cheshire Junction Railway Company (1852) 5 De G & Sm 562; 64 ER 1243 which concerned a proposed agreement between two railway companies incorporated by statute by which one (Birkenhead Lancashire and Cheshire) was to allow the other (London and North-Western) to work its lines and use its property (with minor exceptions) for a term of 99 years. After noting that the agreement would entail the consequence that the second company would have exclusive use of the line and other property and that the first company would no longer operate the railway, the Vice Chancellor said (at ER p.1251): "I think that it is impossible that that can be carried out without delegation or transfer to the London and North-Western Railway Company of some, at least, of the duties and powers which are given exclusively to the Birkenhead Railway Company by their Acts of Parliament. It appears to me, although the Birkenhead Company are not all bound to be carriers, that what is called working the line is a duty that is imposed by the Act of Parliament upon them; and it appears to me, therefore, that the agreement is that they shall part with certain statutory powers which they have no authority to part with, and, moreover, that they are to part with them to a body who, by their constitution, cannot accept them. The London and North-Western Railway Company, as I understand its constitution and objects, cannot, without further authority from Parliament, undertake the working of another line of railway." 125 The Vice Chancellor also said (at ER p.1252): "It seems to me that it is not a simple incapacity on the part of the London and North-Western Railway Company to undertake the working of this railway, but that it is against the policy of these Acts of Parliament. I think, therefore, that the agreement making the property over to them is an agreement savouring of illegality, which any shareholder in the Birkenhead Railway Company has a right to ask this Court to restrain." 126 To the same effect are observations in the House of Lords in Birkdale District Electric Supply Co Ltd v Corporation of Southport [1926] AC 354, a case involving an electric supply corporation constituted by statute. It is sufficient to quote from the speech of the Earl of Birkenhead (at p.364): "[I]f a person or public body is entrusted by the Legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties." 127 In Morrison v Shire of Morwell [1948] VLR 73, the Supreme Court of Victoria held to be ultra vires a local government corporation an arrangement by which it purported to cede to an unincorporated body, to the exclusion of the corporation itself, complete management and control of a town hall which, according to the applicable statute, it had a duty to manage and control. The basis for the decision appears in the judgment of O'Bryan J (at p.79): "From what I have said it is plain that it was entitled to build the Morwell Town Hall for the purposes defined in section 193, and primarily the hall is there to be used for those purposes. It is, of course, given wide powers of leasing and licensing its use for other purposes, but the use to which the town hall is put, and the question whether it is to be leased or a licence granted for its use is a matter for the council to consider. The duty of management is cast upon the council. Moreover, part of the ordinary revenue of the municipality consists of moneys received by the council for the use of its town hall - see section 242. For the purpose of carrying out these duties the council may employ agents, but, if it does so, it must retain control of the exercise of its statutory duties and powers. The Town Hall Committee set up by the agreement with the Mechanics Institute was, in my opinion, intended to be given complete management and control of the town hall to the exclusion of the council. There is a good deal to suggest that the secretary's report gave this committee entire control of the town hall to the exclusion of the council. There is a good deal to suggest that the secretary's report gave this committee entire control over all receipts from the letting of the hall which were left after the small amounts provided for in the report had been paid, and also that the arrangement was intended to be perpetual. But even if neither of these results was intended, I am of opinion that the council by adopting this report purported to enter into an arrangement which was incompatible with the due exercise of its powers and the discharge of its duties under the Local Government Act with respect to this hall." 128 This line of authority was cited by Marks J in Attorney-General for the State of Victoria v Housing Commission (1979) 44 LGRA 258 at p.274: "The application of the principle above adverted to compels me, in the light of my findings of fact, to the conclusion that even if the H.C.V. had the power to do itself what was involved in carrying out 'the approved scheme' it acted ultra vires in abdicating control and supervision of it whether to the U.L.C., the ministerial council or otherwise."

[28]

This system of local self-government is, of course, based on race, but this is only an acknowledgment of the obvious purpose and effect of the 1983 Act. It reflects the tribal or clan structure of Aboriginal communities and the communal nature of their land ownership. The system has parallels with those which apply to the Maori in New Zealand and indigenous Fijians in Fiji. This view does not depend on, but is strengthened by, the parallel provisions in the 1983 and 1993 Acts. The system established by the 1983 Act is a democratic one, as an examination of its provisions demonstrates." 131 A local Aboriginal land council must thus be regarded as part of "a system of local government" for not only its members but also other Aboriginal persons who reside in its area. The council's activities are centred mainly on land and the connection between land and the Aboriginal persons concerned. Those activities are to be carried on by means of the democratic processes provided for in the ALR Act. It follows, in my view, that a local Aboriginal land council is a body committed to promote the welfare and interests of a section of the public or, as s.51 puts it, to "improve, protect and foster the best interests of" that section of the public. Because of this public character, the principles against divestment and abandonment of statutory duties and responsibilities apply. 132 Pursuit of the s.51 objects by performance of the s.52 functions (or performance of the s.52 functions in pursuit of the s.51 objects) is not merely a right, power or capacity of DLALC. It is also a duty and responsibility of DLALC. The duty and the responsibility are to be discharged by DLALC itself, subject only to the limited power to delegate created by s.82. The statutory intention is that application of land council funds in the performance of s.52 functions and the furtherance of s.51 objects is something to be decided in accordance with the ALR Act, with those funds being held in the ways the ALR Act allows and requires until so applied. Any arrangement which causes land council property to be vested in another person for application in accordance with future decisions of that person - albeit in ways that may in whole or in part correspond with the land council's s.52 functions and be consistent with its s.51 objects - entails an impermissible abdication of statutory responsibility, an impermissible shifting of statutory decision-making, an impermissible side-stepping of statutory controls and therefore a subversion of the statutory intention. 133 Important aspects of the statutory scheme governing local Aboriginal land councils were identified in submissions made on behalf of Mr Hillig and NSWALC. First, there is a principle of member control, with members' wishes being expressed through resolutions passed at duly convened meetings. Second, there are principles of accountability reflected in provisions about appointment and removal of office-bearers, availability of council records for inspection by members at such times as the council directs and provisions with respect to the frequency of meetings. Third, there are principles regarding the safeguarding and application of funds reflected in provisions requiring payment of all moneys into an account with a bank or other recognised deposit-taking institution and regulating the ways in which moneys may be expended. The model rules (which apply to DLALC) include restrictions on the signing of cheques and a requirement that all bills and accounts be presented to the council for approval or ratification, with full details of all approvals and ratifications being recorded in the minutes of the relevant meeting. 134 Fourth, there is the very important point that local Aboriginal land councils operate under a system of official scrutiny. I need not refer in detail to the provisions in Part 10 of the ALR Act concerning oversight by the Aboriginal Land Councils Pecuniary Interest Tribunal; the provisions in Part 11 as to the power of the Minister to appoint investigators and administrators and the powers of investigators and administrators so appointed; or the powers of the Registrar appointed under the ALR Act to issue compliance directions under Part 12. These provisions have already been noticed and are an important part of the statutory scheme. 135 I accept the submission that the effect of the trust structure and the transfers of funds by DLALC to DPL for deployment within the trust structure were an impermissible abandonment by DLALC of its statutory duties and responsibilities with respect to a large part of its property. The transfers put that property beyond the controls and decision-making regimes to which Parliament intended that it should be subject. There was no attempt by DPL, in argument, to rely on the power of delegation under s.82. Nor could there be. DLALC did not purport to delegate any of its own functions. Rather, its objective was to put the property in question entirely out of its ownership and beyond its reach and to subject the property to a regime which, while in some respects contemplating applications of funds in ways corresponding with those open to DLALC under the ALR Act, involved decision-making and control otherwise than by DLALC. 136 Reverting to the language of the case law, we see, in the four transfers of funds by DLALC to DPL for deployment within the trust structure, action which, viewed objectively, overturned the relations which the ALR Act had arranged between DLALC and both its own community and the community at large; action which, viewed objectively, involved DLALC's relieving itself of the burden imposed on it by the ALR Act and divesting itself of its statutory powers and duties; and action which, viewed objectively, was against the policy of the ALR Act because of DLALC's abdicating control and supervision of matters which that Act requires to be controlled and supervised by it. Above all, we see action which, viewed objectively, removed from a particular regime of statutory control and oversight property that Parliament has directed be subject to that control and oversight. 137 The question whether DPL is "controlled" by DLALC was debated before me. That question is not relevant to this part of the case. Even if DPL is so "controlled", the effect of the transfers of DLALC's funds to it is that the decision-making organ of DLALC, being a meeting of its members, can no longer determine how those funds in DPL's hands are applied or how they are conserved. The funds are no longer subject to the wider supervisory regime created by the ALR Act. 138 Attempted evasion of the statutory scheme is an additional ground for holding that the four transfers of funds by DLALC to DPL were not authorised by law. In stating this conclusion, I must emphasise that it has nothing to do with intention or purpose. Those matters are relevant to "broad ultra vires" yet to be addressed. The conclusion is based on actual results and effects, which are objectively determined matters going to conformity with the statute.

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Ultra vires - improper purpose 139 Mr Hillig and NSWALC also base their case on "broad ultra vires" involving an abuse of power rather than an absence of power. This basis of attack is explained as follows in an article by Kanaga Dharmananda, "Ultra Vires Goes Ultra Violet" (1997) 71 ALJ 622 at p.623: "Further, the term 'ultra vires' is used to refer to those situations where the company has legal capacity to enter into a transaction, and the persons representing the company have the requisite authority, but the transaction is poisoned by the impropriety of the purpose for which the company's representatives act or by the lack of corporate benefit. This is ultra vires in the sense of perverted power. It is this aspect of the doctrine of ultra vires which has attracted most interest." 140 It is contended by Mr Hillig and NSWALC that the transfers of funds by DLALC to DPL were actuated by an impermissible purpose of removing those funds from controlled statutory decision-making within DLALC and putting them under the control of a particular group of persons, being the persons able to direct decision-making within the structure based on DPL and the Trust. Reference was made in submissions to various aspects of the evidence in this respect. Several witnesses gave relevant evidence: 1. Mr Bradford said in cross-examination that the purpose of the establishment of the Trust and the transfers of DLALC funds to DPL was the funding of CattleCo and the Enterprise Companies. 2. Ms Graf said that one purpose actuating the transfer of funds was to obtain a return better than that which could be obtained through bank deposit. She also saw the establishment of the Trust and transfer of funds to it as a means of imposing a "layer of assessment" over DLALC decisions concerning the funds. 3. Witnesses including Mr Bradford and Mr Hanrahan referred to a purpose of ensuring that the substantial funds received from Mirvac were not, by one means or another, taken from DLALC by NSWALC or the State Government. 4. Mr Bradford, Mr Hanrahan, Ms Graf and Ms Hayes all referred to fears that a small group of DLALC members might, by concerted action, misapply DLALC funds. The witnesses referred to the fact that decisions about application of funds (or on anything else) may be made at any meeting of a local Aboriginal land council, that, under s.78 of the ALR Act , a quorum for a meeting is as few as ten members and that, under s.77, decisions are by a simple majority of votes cast. It was pointed out by these witnesses that a "factional element" of perhaps as few as six members might assume control over the disposition of the funds. 5. There was at least a suggestion that there was a motivating purpose of causing property to be held "that is not subject to the provisions of the Aboriginal Land Rights Act ". This was referred to in a discussion paper referred to by Mr Hanrahan. 141 The broad ultra vires now under discussion involves the proposition that powers lawfully available were used for purposes other than those for which they were conferred, and that the purposes actually pursued were therefore impermissible purposes. The purpose to be discovered is the purpose of DLALC. As was submitted by counsel for DPL, that purpose, as it related to each of the four transfers of funds by DLALC to DPL, must be found on the balance of probabilities and on the basis of the evidence. 142 Local Aboriginal land councils were described in submissions as "single-organ corporations". This is because such a council has only one deliberating and decision-making body, being the members assembled at a meeting convened and conducted in accordance with the ALR Act. Delegates and agents may act for the corporation, but every delegate or agent will derive his or her authority to do so from a decision made by members in the way I have described. 143 It was submitted on behalf of DPL that the purpose for which a local Aboriginal land council is to be regarded as having acted in a particular case is to be discovered in the way described by Moffitt P in Parramatta City Council v Hale (1982) 47 LGRA 319, a case concerning an attack on a decision of a local government council to grant a development approval. I quote from his Honour's judgment (at p.345): "Where a collegiate body exercises the power of the consent authority under s.91 and does so by its resolution, as the appellant Council did … the question … is whether that collegiate body took each of the relevant s.90(1) matters into consideration in passing that consent resolution. It is the state of mind of that body in passing that resolution which is in question … In the end … whatever may be the difficulties of proof, it is the collegiate body, functioning as such in passing the consent resolution, which must take the matters in question into consideration. … The exercise of power by a person or a collegiate body under s.91(1) is executive in nature and so is governed by different considerations to be exercised of legislative power. A decision come to by a legislative body does not depend for its validity upon the consideration, or lack of it, by the legislative body … It is otherwise with the decision of an executive nature by a collegiate body. A decision or consideration given concerning it by a group, whether or not it be some kind of caucus or other informal body, but which does not act as the collegiate body and is extraneous to its meeting, whether or not constituted by a majority of the individuals of the collegiate body or by persons who control that majority, is in no sense a consideration by the collegiate body of the decision or matters relating to it which may later be given by the collegiate body."

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144 This approach, if correct, makes relevant evidence of the thought processes of the persons who voted. In the case of company directors (where individual fiduciary duties apply), the question whether they exercised their powers bona fide in what they considered the interests of the company and not for any collateral purpose is a question of fact. In Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50, it was said by Clarke and Cripps JJA at p.247 that one cannot substitute an objective test ("How would an intelligent and honest man have acted?") for the factual question raised in the particular proceedings. The nature of the factual inquiry was described by their Honours in the following passage at p.148 (the issue was, broadly speaking, whether the directors had considered the separate interests of the company or merely the interests of the group of which it was part): "It may be that if a director bluntly states that he or she did not consider the interests of the particular company at all and solely had regard to the interests of the group then difficulties would arise in resolving that factual question. But the position will rarely be such a black and white one and it would usually be possible to discern whether in deciding to take certain action for the benefit of the group the directors perceived, and were justified in their perception, that in so doing they were acting for the benefit of the particular company. On the other hand it may be possible to discern that the directors embarked on a course to support the group unconcerned about the detrimental effect of the action on the particular company or were prepared to sacrifice that company for the good of the other companies in the group. A careful analysis of the factual situation will usually reveal the answer to the factual question posed although no doubt on some occasions the problem may very well be a difficult one." 145 So described, any analogous process in relation to a local Aboriginal land council may at once be seen to present difficulties. Speaking of Moffitt P's "collegiate mind" approach, Basten JA (with whom Handley JA and Hunt AJA agreed) said in Kindimindi Investments Pty Ltd v Lane Cove Council (2006) 143 LGERA 277 at pp.294-295: "In the course of his judgment in Hale , Moffitt P used a phrase which has been echoed in the present grounds of appeal, namely that it was necessary for the relevant matters to be considered by 'the collegiate mind' of the Council: 47 LGRA at 345. Where, as in the present case, the Council members were divided in their opinions, it is unlikely to be helpful to identify issues in terms of a fictitious concept of this kind. It is also apt to cause confusion as to the kind of evidence which may be persuasive in determining the state of a 'collegiate mind'. Thus, in the present case, evidence was tendered from two councillors who said that they had not had a sufficient opportunity to come to grips with the matters required to be determined in order to make a decision with respect to the application. That evidence was supported by the objective circumstances concerning the time which councillors had had to consider the Hanson report and its attachments, and the fact that the amendments to the proposed conditions contained in the Hanson report were only distributed on the night of the meeting, although, as his Honour found, the circulated summary 'largely reflected the changes sought by Woolworths in its letter dated 16 December 2004'. 146 One issue in the Kindimindi case was whether a local government council had or had not taken a relevant matter into account in making a decision. In illustrating the difficulties in applying Moffitt P's "collegiate mind" test, Basten JA referred to reasoning of some members of the High Court in IW v City of Perth (1997) 191 CLR 1 where a similar question (in fact, the question whether a decision was affected by an impermissible consideration) had arisen. There had been 13 votes against approval of a particular application and 12 votes in favour. On one view (accepted by Toohey J), a finding that the decision could not stand would have followed had it been found that the decision of one of the 13 was affected by the impermissible factor. 147 Gummow J adopted a similar approach but noted that a different conclusion may be reached where a decision is attacked on the basis of bias. In situations of that kind, bias on the part of one member only may be enough to vitiate the decision because "in bias cases the court does not enter into difficult evidentiary questions as to the extent to which the person in question may have influenced the decision". 148 Kirby J identified four possible approaches to the problem. His Honour's observations must be understood against the background that five of the 13 councillors who voted against the application were found to have done so on the basis of an impermissible factor. Kirby J said at p.62: "Four views therefore compete for acceptance. First, that it is enough to show that 'but for' the votes of the five councillors, affected by the unlawful consideration, the application would have been granted and discrimination avoided. Secondly, that the 'ground' of the Council's refusal lies in the state of mind of the majority of the councillors. Thirdly, that it lies in the mind of the majority of the majority refusing the application (ie 7 of the 13 persons who voted against it and not 5). Fourthly, that it is unascertainable or, at least, unascertained." 149 But the process of discovering the purpose for which a collegiate body make a particular decision is not merely an exercise in discovering the individual motivations of its members. The approach the court must take is that indicated by Dixon J in Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee (1945) 72 CLR 37 at p.82: "But where purpose is not made expressly, or by necessary intendment, a condition of the exercise of the power, then it is necessary to consider the composition of the body, and, if it is a deliberative assembly, to distinguish between the motives actuating individual members and the purpose disclosed by the character and operation of the measure in relation to the actual facts and circumstances. In In re the Mayor &c. of the City of Hawthorn; Ex parte Co-operative Brick Co. Ltd. 156 at pp. 51, 52, speaking of a by-law of an elective municipal council, Cussen J. said: "So far as the question of bad faith is concerned, if it is meant by this that individual councillors were actuated by improper motives in giving their votes, I find no evidence of the fact, and even if there was, I find great difficulty in seeing how such a contention could be given effect to. Each councillor may be actuated by many reasons, each having some different reasons from the others, and it seems to me almost, if not quite, impossible to penetrate into their minds. It must at least be necessary to show that the improper motive was the sole or dominant one, and that but for it a majority would have voted against adopting the by-law. The ratepayers and councillors honestly voting for the by-law would be placed in a false position if the by-law could, perhaps after a long time, be upset on such a ground. These considerations make one think that the furthest the Court can go is to look at the object and effect of the by-law, to be gathered from its language, and possibly by applying it in a general way to the existing state of legislation, and to the conditions of things existing in the locality." On this point the judgments in the Supreme Court were approved in this Court." 150 Thus, although statements about the motives or subjective intentions of individual members of the body are relevant, the body's purpose is to be judged by reference to the character and operation of the decision in relation to the facts and circumstances surrounding it. 151 Such evidence as there is of actual motives and intentions of individuals points to a conclusion that impermissible purposes actuated the corporate decisions that DLALC funds should be transferred to DPL. Each of the motives or intentions outlined at paragraph [140] above is clearly foreign to decision-making by a local Aboriginal land council with respect to deployment of its assets. Mr Epstein submitted on behalf of DPL, however, that evidence of the thinking and intentions of these few individuals is insufficient to justify a finding as to the purpose of any collegiate decision. That may well be so. It would be wrong to ascribe to the collegiate decision a purpose corresponding with the motives of a few members, even though they may have been influential members. But, as was recognised in the Arthur Yates case, evidence of those matters is of some relevance in determining the purpose of the body. 152 When the character and operation of the decisions in relation to the surrounding facts and circumstances are examined, however, the indication provided by the evidence of individual motivation (unreliable as that indication is, in isolation) is strengthened and confirmed. For reasons already canvassed, the decisions to transfer money from DLALC to DPL were not objectively justified by resort to any object, function or power of DLALC. The absence of proper purpose is thus manifest. 153 I am therefore satisfied that, as Mr Hillig and NSWALC contend, the transfers of funds were actuated by the improper purpose of removing the moneys in question from the ambit of decision-making within the statutory confines of DLALC and to place them instead within the decision-making structure based on DPL and the Trust, being a decision-making structure not presided over by members of DLALC. Alleged lack of DLALC corporate decisions 154 Mr Hillig and NSWALC also attack the several transfers of funds by DLALC to DPL on the basis that there was never any valid and effective decision of DLALC to make any of the transfers. 155 Mr Kirk, counsel for NSWALC, made the main submissions on this matter. His submissions were adopted by counsel for Mr Hillig. Mr Kirk referred to provisions of the ALR Act and the model rules (which apply to DLALC) regarding the keeping of minutes of meetings. The requirements are comprehensive. They entail recording of not only the resolutions passed by the meeting but also all motions put to the meeting and all amendments to motions, together with the names of proposers and seconders. Mr Kirk drew attention to the decision in Harvey v Adelaide & Hindmarsh Tramway Company (1881) 15 SALR 136. That case concerned a resolution of shareholders, "That the proposed extension of the Company's tramway, as explained by the Chairman, be, and is, hereby approved". The resolution was held "bad and insufficient" - mainly, it seems, because, in the context, it would not "necessarily convey to every shareholder's mind that it referred to this particular line to Henley Beach, and not to the lines to New Thebarton and the Grange, which were spoken of at the same time, and had been spoken of as extensions". 156 Mr Kirk also referred to some decisions of an essentially administrative law kind concerning the need for precision in statutory notices and licence conditions. He noted that the decision-making function of DLALC is likewise a statutory function. 157 DPL contends that the transfer of $19,582,713.36 by DLALC was authorised by a resolution passed at a meeting of members of DLALC on 9 March 2004. The resolution is set out at paragraph [65] above. For ease of reference, I set it out again: " Treasurer's Report: Tammy presented the Treasurers Report + Motion to pay NMC and Gilbert and Tobin the outstanding amounts owed + Moved D Pross, Seconded by V Graf, carried + Motion to issue the deposit of $500,000.00 into the DLALC Main Account + Moved D Pross, Seconded by V Graf carried + Motion for the second amount of monies from Mirvac be paid into the Trust Account + Moved D Pross, Seconded by P Peterson, carried" 158 It was submitted on behalf of NSWALC that there are three reasons why this resolution was insufficient to support the payment. First, it refers to "the Trust Account" and that introduces uncertainty not only because of juxtaposition with "Main Account" in the preceding resolution but also because, according to the evidence, DLALC maintained a "trust account" of some kind with NMC, having earlier maintained a "trust account" with Mr Hanrahan's previous firm, Sims Partners. Second, the resolution does not show any intention of DLALC to part with ownership of the money. To pay into a "trust account" carries connotations of retention of beneficial ownership, something that would have been consistent with an NMC report considered at the meeting of 9 March 2004 which referred to establishment of the Trust "to protect the DLALC's assets". The third reason is an extension of the second. Reference was made to evidence given by several members of DLALC that made it clear that they were under the impression that money paid to the Trust would still be owned by, and subject to decision-making by, DLALC and would be controlled by its members. In this way, it was said, members were likely to have misunderstood what was really happening. 159 There is also the point that the resolution of 9 March 2004 did not identify the money to be transferred. It refers merely to the "second amount of monies from Mirvac". The uncertainty involved in this description is, it is said, accentuated by the fact that, in the NMC report of 8 March 2004 discussed at the meeting, there was reference to no less than six sums received or to be received from Mirvac, being a non-refundable option fee of $390,000 said to have been paid in September 2002, an amount of $21.57 million payable "on approval of the Development Agreement", three annual payments, each of $7 million, on anniversaries of the approval of the development agreement, a further $1.5 million to be paid when "consent is given to the Development Application" and $500,000 within ten days after provision of advice "that consent has been given". 160 It was submitted on behalf of DPL that the contentions of NSWALC cannot be accepted and that the resolution of 9 March 2004, although not expertly drafted, was clear enough as to its meaning and intention. I accept that submission. I do so for two main reasons. First, the resolution was passed at the very meeting at which the proposal centred on the Trust was discussed. The Trust Deed was executed on the same day, 9 March 2004. That being so, there can have been no real doubt about the meaning of "the Trust Account". It was the "account" of the "trust" the meeting had discussed. Second, in the light of the series of seven payments to which I have referred as mentioned in the NMC report of 8 March 2004, there can have been no doubt as to the meaning of "the second amount of monies from Mirvac". The option fee had been received in September 2002. The next expected payment - which would be $21.57 million - was therefore clearly the second. 161 That some members may have had an imperfect or incorrect appreciation of which the Trust structure entailed is, to my mind, beside the point. I am satisfied that the resolution of DLALC members passed at the meeting of 9 March 2004 was sufficient to support and authorise the payment of $19,582,713.36 by DLALC to DPL on 15 July 2004. It should also be taken to extend to the payment of $69,100.00 on 27 October 2004. The two together are somewhat less than the second Mirvac payment. 162 NSWALC also submitted that the making of two payments by DLALC to DPL on 7 July 2005 was not duly authorised by DLALC. The amounts involved were $5,453,375.25 and $651,907.00. DPL contends that the authorising resolution is that of 14 December 2004 set out at paragraph [67] above: "Funeral Fund, at this stage it is only a registered company + Resolution the members resolve that they wish the council to do what is necessary to acquire, establish and operate an enterprise that can provide funeral fund services to DLALC members and their immediate families who live in the DLALC area + Moved Jenny Hayes, Seconded by Wayne Cook, carried" "DLALC Housing + Resolution 1 A Company called 'Darkinjung Housing Company Pty Ltd' is established to cater for DLALC sustainable housing + Moved Veronica Graf, Seconded by Robyn Sutherland, carried" + Resolution 2 Funds from the second payment from Mirvac (to be determined) due in the first half of 2005 be applied to the DLALC sustainable housing project and the funeral fund, + Moved Veronica Graf, Seconded by Robyn Sutherland carried" 163 Three points are made in support of the argument that this was inadequate. First, there is reference to "the second payment from Mirvac" - which is wording similar to that used in the resolution of 9 March 2004 on the basis of which some $20 million had already been transferred. I do not accept this as a serious point of criticism since the NMC report considered at the 14 December 2004 meeting referred to an expectation of receipt of "the second payment of approximately $6,500,000 in the first half of 2005". Second, it is said that there was no explicit reference to transfer to DPL but I am satisfied that the context was one in which there was an understanding or expectation that the "sustainable housing project" and the "funeral fund" would come under the financial auspices of DPL in the context of the Trust structure. Third, it is noted that, even if there was authority for a transfer of funds to DPL for those two purposes, nothing was done to ensure or require that the funds were channelled accordingly. That is a matter with which I have dealt already. It does not go to the sufficiency of authorisation. 164 I am not satisfied that the attack on the adequacy of the decisions for the transfer of funds by DLALC is made good. It has not been shown that those funds were transferred to DPL in the absence of a corporate decision of DLALC to transfer them.

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Matters relevant to the validity of the Trust 165 I turn next to the question of the validity of the Trust as a charitable trust. Some submissions were to the effect that because the transfer of funds to the Trust involved subversion of the statutory scheme, the Trust must be regarded as illegal. I do not accept those submissions. Action by DLALC merely to set up the Trust - or, at least, to create, by retaining lawyers and consultants, a context in which Mr Hanrahan could make the settlement presumably using his own ten dollars - did not involve subversion of the statutory scheme. The action that attracts that criticism (see paragraphs [130] and following above) is the transfer of substantial funds in relation to which DLALC was thereby disabled from performing its statutory duties and responsibilities. That action would be beyond authority and capacity regardless of the identity or nature of the transferee - whether an individual or a corporation and whether acting in a representative or trustee capacity or otherwise. The Trust itself, in my view, has to be judged against the ordinary criteria applicable to charitable trusts, regardless of the provisions of the ALR Act. 166 In addition and as discussed at paragraphs [84] to [87] above, action by a statutory corporation beyond authority and capacity should not be regarded as unlawful in such a way as to produce consequences in terms of statutory illegality. 167 In addressing the question whether property held by DPL pursuant to the Trust Deed is held upon a charitable trust, I start with the well-known passage in the speech of Lord Macnaghten in Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 at p.583 (reflecting categorisation stated by Sir Samuel Romilly in the course of his argument in Morice v Bishop of Durham (1805) 10 Ves Jun 521; 32 ER 947): "'Charity' in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads." 168 This is a distillation of the purposes within (or caught by the "spirit and intendment" of) the preamble to the statute 43 Eliz I c.8 which refers to the relief of the aged, impotent, and poor; the maintenance of schools of learning, and free scholars in universities; the repair of bridges, ports, havens, causeways, churches, seabanks, and highways; the education and preferment of orphans; the relief, stock or maintenance of houses of correction; the marriage of poor maids; the support, aid and help of young tradesmen, handicraftsmen, and persons decayed; the relief, or redemption, of prisoners or captives; the aid or ease of any poor inhabitants concerning payment of fifteens, setting out of soldiers, and other taxes. 169 A purpose falling within any of the categories referred to by Lord Macnaghten is charitable, provided that it is a purpose beneficial to the public or, at least, a section of the public delineated otherwise than by personal relationship. Examples given in the seventh edition (2006) of "Jacobs' Law of Trusts in Australia" (by J D Heydon and M J Leeming) at p.161 include the daughters of missionaries (German v Chapman (1877) 7 ChD 271) and "orphan lads being Australians" (Attorney-General v Perpetual Trustee Co Ltd (1940) 63 CLR 209). Lord Macnaghten referred, at p.580, to "trusts of a public nature". 170 To the extent that a trust purpose involves the relief of poverty, the advancement of education or the advancement of religion, the only "public" requirement is that just stated. As well as being of the particular character, the purpose must be beneficial to the public or a section of the public. But when it comes to Lord Macnaghten's fourth category, the requirement that the purpose be beneficial to the public or a section of the public is joined by a similar but wider requirement central to the delineation of the fourth category itself, that is, that the purpose be beneficial to the community. It may be said that the "public" requirement applying to the first three classes is subsumed in the essence of the fourth class. 171 The relevant concept of benefit to the community is illustrated by an example given in "Jacobs' Law of Trusts in Australia" at pp.179-180: "[A] trust to build a bridge is a good charitable trust under the fourth class, providing the bridge is intended for all members of the public who, having regard to the situation of the bridge, are capable of enjoying its use. In fact, such members of the public may be very few. But when the enjoyment of the use of the bridge is limited by the terms of the trust to a section of the public - to give an example quoted by Lord Simonds in his speech, to 'impecunious Methodists' - that section of the public, however sufficient to support a trust for the relief of poverty or the advancement of religion, is not sufficient to support a trust to build a bridge, which could only be valid under the fourth class." [emphasis added] 172 The distinction is, as Lord Simonds observed in Inland Revenue Commissioners v Baddeley [1955] AC 572 at p.592, between "a form of relief extended to the whole community yet, by its very nature, advantageous only to the few, and a form of relief accorded to a selected few out of a larger number equally willing and able to take advantage of it". In Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316 (at p.324), Dixon J described the characteristics of the fourth class in these terms: "Sir Samuel Romilly describes the class as being for the advancement of objects of general public utility and says it is the most difficult. In this now familiar classification of charitable gifts, the fourth class, as has often been pointed out, does not attempt to define a charitable object. It is no more than a final class into which various objects fall that are not comprised in the first three classes, but are nevertheless charitable. It has been found impossible to give an exhaustive definition of what amounts to a charitable purpose, but the authorities indicate the attributes that are to be looked for. The gift must proceed from altruistic motives or from benevolent or philanthropic motives. It must be directed to purposes that are for the benefit of the community or a considerable section or class of the community. The purposes must tend to the improvement of society from some point of view which may reasonably be adopted by the donor. The manner in which this tendency may be manifested is not defined by any closed category. It is capable of great, if not infinite, variation. It may be by the relief of misfortune; by raising moral standards or outlook; by arousing intellectual or aesthetic interests; by general or special education; by promoting religion; or by aiming at some other betterment of the community. The purposes must be lawful and must be consonant with the received notions of morality and propriety." 173 It is necessary now to examine clause 3.1 of the Trust Deed. The class of persons whose welfare is envisaged by the terms of clause 3.1 is "Aboriginal persons within the Relevant Area and other persons who are members of the Council". The expression "Relevant Area" is defined as the area in the notification designating the Darkinjung local Aboriginal land council area pursuant to s.49 of the ALR Act. "Council" is defined to mean DLALC. "Aboriginal persons" is not defined. It take it to have its ordinary meaning and note that, to the extent that the class of persons is described so as to include "other persons who are members of the Council", it is in any event confined to adult "Aboriginal persons" as defined by the ALR Act: see s.53 of the ALR Act. 174 The main aspect of the purpose defined by reference to this group of persons appears from the opening words of clause 3.1: "The purpose for which the Trust is established is to improve, protect and foster the best interests of [the class of persons mentioned at paragraph [173]." 175 Clause 3.1 then goes on to describe the means by which the trustee is to effectuate that purpose: "… by doing any act that the Council had the power to do as at the Commencement Date [ie, 9 March 2004] or has the power to do from time to time (and at the relevant time)." 176 Then follow paragraphs (a) to (h) which are introduced by the words: "… which as at the Commencement Date includes, without limitation …" 177 This, it seems to me, is intended to indicate that each thing described in paragraphs (a) to (h) is an "act that the Council had the power to do as at the Commencement Date". That indication is, however, inaccurate. There are several reasons for this. First, paragraphs (a) to (h) refer to a number of things that are not (and were not as at 9 March 2004) within the statutory authority and capacity of DLALC. The first four paragraphs - which refer to relieving poverty, improving health, improving education and training and "addressing … welfare" - are examples. None of those descriptions corresponds with any object, function or power of DLALC under the ALR Act and therefore cannot properly be said to be an "act that the Council had the power to do at the Commencement Date". 178 Second and in the same way, paragraph (e) places a gloss on the function specified in s.52(1)(j) of the ALR Act by referring to Aboriginal persons in the relevant area "who are in necessitous circumstances". The reference to "necessitous circumstances" means that the description in clause 3.1 is narrower than the description in s.52(1)(j), although it is no doubt true that the s.52(1)(j) function extends the relevant matters concerning residential accommodation for persons "in necessitous circumstances" as well as persons not "in necessitous circumstances". 179 Third, paragraph (h) refers to the acquisition, establishment and operation of enterprises but in doing so departs from the description of the function in s.52(1)(g)(ii) in three ways: (a) there is no reference to expressions of the wishes of the members of DLALC; (b) there is an added requirement that the acquisition, establishment and operation of enterprises be "for the benefit of the community"; and (c) there is an added requirement that the acquisition, establishment and operation of the enterprises is "not inconsistent with" paragraphs (a) to (g). 180 The lack of correspondence between the list of acts in paragraphs (a) to (h) of clause 3.1 and the descriptions of functions of DLALC in s.52(1) of the ALR Act poses a particular problem of construction. To the extent that the paragraph (a) to (h) descriptions are broader than the s.52(1) functions, what is the significance of the fact that the former are therefore not within the clause 3.1 words, "… any act that the Council had the power to do at the Commencement Date"? In other words, do those words cause to be disregarded such elements of the descriptions in paragraphs (a) to (h) as involve acts that DLALC did not have power to do at 9 March 2004, or does the particular reference in paragraph (a) to (h) impliedly broaden the opening description? As I have already noted, paragraphs (a) to (d) provide a good example of the way in which this question arises, given that there is nothing in the ALR Act that brings within the authority and capacity of DLALC acts of relieving poverty, improving health, education, training or "addressing … welfare".

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181 I propose to consider the nature and quality of clause 3.1 according to each of the two possible approaches to the construction of the clause. Let it be assumed that, upon the correct construction of clause 3.1, the purpose for which property is to be held on trust is a purpose corresponding with and comprehending all the objects functions and powers of DLALC, as a local Aboriginal land council. In determining whether that purpose is charitable, the focus must be on the purpose itself, not what DLALC actually does. 182 The question whether the objects, functions and powers of a local Aboriginal land council under the ALR Act as it stood before the 2002 amendments were such as to make the council a "public charity" for the purposes of the Local Government Act 1993 was considered in Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120. Bignold J approached the matter by reference to Lord Macnaghten's test. His Honour expressed the opinion that certain aspects of the objects and functions were of a charitable nature. Reference was made to the pre-2001 provision corresponding with the present s.52(1)(j). A function of providing housing assistance as there prescribed was seen as entailing the relief of poverty. Bignold J also accepted that some other aspects of the objects and functions "could be accommodated under the fourth head in Pemsel, especially given the widespread recognition in the common law of Australia of the plight of Aborigines in the Australian community in terms of their socio-economic status, opportunities for advancement, and the legacy of dispossession that was the inevitable result of British settlement in this country". This thinking is consistent with cases such as Re Mathew [1951] VLR 226 and Re Bryning [1976] VR 100. His Honour continued (at pp.125-126): "The interpretation of the purposes contained within the preamble to the Statute of Elizabeth has been recognised to be subject to an 'evolutionary process' that is sensitive to the societal context in which a court is called upon to determine 'whether a particular purpose is sufficiently analogous to these listed purposes to be regarded as charitable by the law': per Lord Wilberforce in Scottish Burial Reform & Cremation Society v Glasgow Corporation [1968] AC 138. Accordingly it is merely to give due recognition to the evolutionary nature of this process of drawing analogues with those purposes contained within the preamble to conclude that in Australia at the present time, a trust for the advancement of Aboriginal people is a charitable trust within the fourth limb of Pemsel's case. This conclusion is supported by authority. Thus Aboriginal Hostels Ltd v Darwin City Council Nader J stated: 'The fact that the purposes of accommodation are in respect of Aboriginal persons gives a special character to these purposes which renders an otherwise neutral purpose charitable.' In the earlier case of Re Bryning [1976] VR 100, in the course of deciding whether a gift in a will to the Australian Aboriginal League was for a charitable purpose, Lush J had said: 'The concession [that it was indeed a charitable purpose] is if I may say so, correct. In Re Mathew [1951] VLR 226 at 232 , O'Bryan J, in dealing with a similar problem, said: "Australian Aborigines are notoriously in the community a class which, generally speaking, is in need of protection and assistance".' I respectfully agree with these dicta.

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While there is not a 'legal presumption' (as was submitted by the applicant), that Aborigines are in general afflicted by necessitous circumstances, this is certainly a judicially noticeable fact that has influenced Australian courts in their identification of charitable purposes. Accordingly, in this case, functions such as those in s 12(f) of the Act ('to make claims for Crown Lands') or s 12(h) ('to protect the interest of Aborigines in [the land council's] area in relation to the acquisition, management, use, control and disposal of its land'), and objects such as cl 5(a) of the Model Rules ('to improve, protect and foster the best interest of the Council's members and all Aboriginal people within the Council's area') are arguably charitable in nature." 183 From that point, Bignold J went on to hold that the local Aboriginal land council was not a "public charity". This was because there were objects and functions that were neither charitable nor merely ancillary, incidental or concomitant to what he termed "the general overarching - but not all pervading - charitable purpose of advancing Aboriginal people in the land council area". There was thus an application of the general rule of equity that a purpose trust fails as a charitable trust if charitable and non-charitable objects alike are benefited indiscriminately so that it is possible for the trust property to be devoted wholly to non-charitable objects: see, for example, Morice v Bishop of Durham (above). 184 The Charitable Trusts Act 1993 had no application to the circumstances under consideration in the Dareton LALC case. The question was whether the "public charity" concept in the Local Government Act was satisfied. Had the issue been the validity of a trust as a charitable trust, s.23 of the Charitable Trusts Act would have caused matters to viewed in such a way that application of trust property to the non-charitable purposes was not allowed, with the result that the trust was valid to the extent of the charitable objects. 185 I respectfully accept the analysis in the Dareton LALC case and regard it is applicable to this case. It is true that the objects, functions and powers of a local Aboriginal land council today differ somewhat from those that applied in 1995. Changes were made by the 2001 amending Act. But the conceptual framework is the same and the specifications of objects, functions and powers are sufficiently similar to mean that he same hybrid characterization of purposes as part charitable and part non-charitable would be made today. 186 On this basis, if the "Sole Purpose" stated in clause 3.1 of the Trust Deed is properly regarded as reflecting no more and no less than the objects, functions and powers of DLALC at 9 March 2004 (the "Commencement Date"), as derived from the enabling legislation at that time (and as in force today, there having been no relevant amendment in the meantime), the conclusion indicated by the Dareton LALC case is that the Trust is a valid charitable trust, but with so much of the clause 3.1 purpose as reflects the part of the statutory objects, functions and powers not of a truly charitable character excised pursuant to s.23 of the Charitable Trusts Act, so that the Trust Deed takes affect as if it permitted application of trust property only towards so much of the stated purpose as is truly charitable. 187 I now consider the alternative assumption, that is, that clause 3.1, upon its proper construction, specifies a purpose which includes the elements in paragraphs (a) to (h) whether or not they are properly regarded as reflective of objects, functions and powers of DLALC at the Commencement Date. The general conclusion must be the same. Certain aspects of the clause 3.1 purpose are, on that approach, clearly charitable - for example, to improve, protect and foster the best interests of the defined Aboriginal group by "relieving poverty" within the group (clause 3.1(a)) (although I do note, in that connection, that clause 3.2 would preclude effectuation of that purpose by means such as direct grants to members of DLALC). Again, however, s.23 of the Charitable Trusts Act would cause to be disregarded and excluded such parts of the total purpose as are not truly charitable. 188 On either assumption as to the correct construction of clause 3.1, therefore, the question whether a valid charitable trust exists would be answered in the affirmative, but with the rider that, by virtue of s.23 of the Charitable Trusts Act, aspects of the purpose that are not truly charitable not qualify for the application of trust property. 189 The real question, in this context, is whether a truly charitable character attaches to the aspect of the purpose corresponding with s.52(1)(g)(ii) of the ALR Act (on the first assumption) or stated in paragraph (h) of clause 3.1 (on the second assumption). This is because the actual expenditure of funds by DPL was concerned with the establishment and operation of enterprises. 190 Bignold J did not address the part of the statutory functions existing before 2002 which corresponded with the function now referred to in s.52(1)(g)(ii). But, even allowing for its association with the advancement of the interests of Aboriginal people of the relevant area, the purpose of giving effect to the wishes of members of the council "with respect to" acquiring, establishing and operating "enterprises" is not obviously charitable. The word "enterprises" generally connotes activities of a commercial and business kind: see Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 at pp.344-345. Establishment of a profit-making undertaking in accordance with members wishes would be sanctioned by s.52(1)(g)(ii). That would be within the s.51 objects if the profits came home to the council, since enhancement of its funds would be consistent with the improvement of the interests of its members. But establishment of the profit-making undertaking would on no view be charitable. It is perhaps conceivable that some rare species of "enterprise" would be of a charitable nature. But that is not sufficient to cause the part of the clause 3.1 purpose corresponding with the s.52(1)(g)(ii) function related to any such rare type of "enterprise" to be saved by s.23 of the Charitable Trusts Act. For the section to operate, it must be possible to distinguish the non-charitable parts of the purpose from those which are charitable in such a way that the trust instrument is, as it were, re-written to incorporate the distinction: see generally Public Trustee v Attorney General of New South Wales (1997) 42 NSWLR 600. In the present case, this could not be done by the simple but ineffective expedient of adding a notional proviso to the effect that the purpose of giving effect to the expressed wishes of members of DLALC regarding establishment, acquisition and operation of "enterprises" is to be read down so as not to exceed the boundary of charity. 191 On the alternative assumption (that is, that the clause 3.1 purpose includes the improvement, protection and fostering of the interests of the defined Aboriginal group "by doing" all the things in paragraphs (a) to (h)), one additional factor must be taken into account. As has been noticed already, the paragraph (h) description refers to "acquiring, establishing and operating enterprises for the benefit of the community" and thereby describes a field of activity much narrower than that envisaged by s.52(1)(g)(ii). The reference here to "the community" must be a reference to the community as a whole. The benefit in contemplation is benefit beyond the defined Aboriginal group. A profit making enterprise that produced financial returns for the land council would not benefit the community to which reference is made. The field of activity envisaged by paragraph (h) is, in reality, extremely narrow. The act of acquiring, establishing or operating an enterprise must be not only conducive to the promotion of the interests of the particular Aboriginal group but also productive of benefit to the community. That narrow purpose related to benefit to the community - for example, by establishing an enterprise devoted to the search for a cure for cancer - might well be charitable within Lord Macnaghten's fourth class. 192 I am of the opinion that, to the extent that the clause 3.1 purpose as a whole is charitable according to the first construction, it is not part of that charitable purpose to make expenditure related to the establishment, acquisition and operation of enterprises in accordance with the expressed wishes of the members of DLALC. I am also of the opinion that, to the extent that the clause 3.1 purpose as a whole is charitable according to the second construction, it is not part of that purpose to establish, acquire and operate enterprises merely for the benefit of the particular Aboriginal group. In other words, pursuit of the purpose of establishing, acquiring and operating the enterprises centred upon CattleCo and the Enterprise Companies was not part of the residuum of charitable purpose under clause 3.1, whichever of the two approaches to its construction is correct. 193 In any event and as I shall now explain, I am of the view that the payments made by DPL to CattleCo and the Enterprise Companies did not represent the exercise by DPL of any function or power arising from the Trust Deed. To explain why I say this, I must refer in the first place to the relevant resolutions of the DPL board.

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The resolutions of the DPL board 194 At a meeting held on 4 August 2004, the directors of DPL discussed "DCC's funding application circulated previously". "DCC" refers to CattleCo. The following resolution was passed: "That $5 million of funds currently in DPL's 30 day bank bill be paid to DCC subject to: + The parties finalising the shareholders agreement; + Payment not being made to DCC until the 30 day bank bill matures (6 August 2004)" 195 This resolution did not ascribe any character to the payment it authorised. It was merely a resolution that the sum mentioned "be paid to DCC". Other evidence shows that the payment eventually made was made by way of loan and that that was the intention of the directors in authorising it. I say this because, at an earlier stage of the meeting (and as reflected in the first condition set out in the quoted resolution), the directors had discussed the proposed shareholders agreement relating to CattleCo. That agreement is dated 20 August 2004. It contemplated the making of a loan of $5 million by DPL to CattleCo on the terms set out in the agreement's Schedule 2. The agreement also contained certain acknowledgments of the parties to it (DPL and Outback Beef) regarding the purposes for which the loan was provided, that is, "to provide the seed capital for DCC". 196 The payment of money by DPL to FuneralCo was the subject of a resolution passed by the directors of DPL at a meeting held on 14 April 2005. That resolution was in the following terms: "To transfer $1.5m in accordance with the direction of the members of DLALC at general meeting on 12th April 2005, from the trusts accounts into the Darkinjung Funeral Fund Pty Ltd accounts, and to give 5 days notice to the registrar [presumably, the Registrar under the ALR Act ] prior to the transaction." 197 At the same meeting on 14 April 2005, the directors of DPL passed the following resolution in relation to HousingCo: "To transfer $5.0m in accordance with the direction of the members of DLALC at general meeting on 12th April 2005 from the trusts accounts into the Darkinjung Housing Pty Ltd accounts and to give 5 days notice to the registrar prior to the transaction." 198 The matter of payments to FuneralCo and HousingCo was also dealt with in a resolution of the directors of DPL passed at a meeting held on 13 May 2005: "That the board approves transfer of $8,865,542.94 to be transferred at the earliest convenience to disbursements of $1.5M to NMC Funeral Fund, $5M to NMC Housing and the balance to NMC's trust account." 199 The payments to FuneralCo and HousingCo were also by way of loan. The agreement with FuneralCo is dated 2 August 2005. The agreement with HousingCo is dated 18 May 2005. 200 To the extent that each of the resolutions of the directors of DPL passed at the meeting of 14 April 2005 refers to "the direction of the members of DLALC at general meeting on 12th April 2005", its intention is not altogether clear. The only part of the minutes of the meeting of DLALC held on 12 April 2005 that appears to be relevant is the following: "The Chairman read out the Treasurer's report. Treasurer absent. Trust Costs and Office Expenditure noted in address. DALC Budget and funding releases to DLALC $900,000 immediately $400,000 quarterly July $400,000 quarterly Oct $400,000 quarterly April $400,000 Quarterly Chairman mentioned $6.5 million needs to be split between $5 million housing company & funeral fund $1.5 million. Motion: Treasurer's report be accepted Moved:- Wayne Cook Seconded:- Alan Vandenberg Careered [sic]" 201 This was, in terms, a resolution of DLALC to accept the treasurer's report. On the face of the minutes, that report did not refer to proposed payments to FuneralCo and HousingCo. Those companies were referred to (although not by name) only in something that the chairman "mentioned" apparently in the course of delivering the treasurer's report in the treasurer's absence. It is therefore difficult to see that the meeting of DLALC on 12 April 2005 in reality resolved to make the "directions" referred to in the subsequent resolutions of the directors of DPL. 202 As far as payments by DPL to ProfjectCo are concerned, the only minutes of the DPL board to which I have been referred are minutes of a meeting of 1 June 2006. The meeting on that day resolved ("as Resolution 1") that "all payments and receipts from 1 July 2005 to date, of the DLALC Trust as outlined in the attached bank register be re-endorsed by the Trustees". Then followed "Resolution 2": "Without detracting from the generality of Resolution 1 above, that the separate loans of funds to Darkinjung Projects Pty Limited previously approved by the Trustee now be re-endorsed and ratified by the Trustees. a) The first loan being an amount of $2.185 million to be held on behalf of the DLALC by Darkinjung Projects to be transferred to DLALC as and when needed and approved by the Trustees; b) and the second loan of $500K to be used for the running costs of Darkinjung Projects Pty Ltd." 203 Again, the documentary evidence shows that the moneys paid by DPL to ProjectCo were paid by way of loan. There are two loan agreements, one dated 22 June 2005 ($2,185,542.90) and the other dated 25 August 2005 ($500,000). Reasons why the transfers by DPL did not accord with the Trust Deed 204 It is thus clear that, with the exception of whatever outlay was made for shares in CattleCo, all payments made by DPL to CattleCo and the Enterprise Companies were payments by way of loan. But the loans were not, according to the terms of any DPL board resolution or the relevant loan agreement between DPL and the borrowing company, tied to any purpose or made subject to any restriction as to use and application of the moneys lent. Because, in the cases involving FuneralCo and HousingCo, the DPL board minute referred to an analogous decision of DLALC, it may be possible to infer an expectation on the part of the DPL board that the loan proceeds would be applied in a manner consistent with the intention of DLALC in causing the Enterprise Companies to be formed as wholly owned subsidiaries of DLALC itself. But an expectation by the directors of a company acting as trustee that funds lent by that company will be used for a particular purpose is by no means the same thing as an application of those funds by the trustee for that purpose. 205 There is nothing in the evidence to suggest that the objects and capacity of any of the Enterprise Companies are restricted in any way. Each should therefore be presumed to have, in accordance with s.124 of the Corporations Act, the legal capacity and powers of a natural person. It follows that each Enterprise Company, having received the loan proceeds and not being constrained by the terms on which the loan was advanced, was free to spend or otherwise apply those proceeds in any way at all. It is true that the duties of the directors of each company would have provided some measure of assurance that funds would not be applied except for purposes beneficial to the company. But subject to that, it was possible that the funds might be applied anywhere within (or, for that matter, substantially beyond) the long list of specific objects ranging alphabetically from "accident insurance" to "workmen's homes" appearing in the several precedent clauses for memoranda of association at pp.314 to 368 of the 17th edition (1956) of "Palmer's Company Precedents". 206 Slightly different considerations apply in the case of CattleCo. In that case, the intention of DPL may be taken to have been shaped by the shareholders agreement with Outback Beef. But even then there could be no assurance that CattleCo would not branch out into some completely new field of endeavour. 207 The crucial point is that, in the case of each Enterprise Company and CattleCo, there was no stipulation by DPL regarding the ways in which the moneys lent were to be spent and therefore no attempt to ensure that the moneys would be used for any particular purpose at all, whether or not the clause 3.1 purpose or an aspect of it. This is the first reason why the payments cannot be regarded as having been made by way of effectuation of any aspect of the clause 3.1 purpose or by way of exercise of any function or power arising from the Trust Deed. 208 I refer next to the second basis on which the making of the payments by DPL, as trustee, to CattleCo and the Enterprise Companies failed to be an effectuation of the aspect of the clause 3.1 purpose reflected either in clause 3.1 (h) or by the adoption of the function specified in s.52(1)(g)(ii) of the ALR Act. Clause 3.1 as a whole, on either construction, refers to improving, protecting and fostering the best interests of the defined Aboriginal group "by doing" certain acts, including the acts of acquiring, establishing and operating enterprises. By lending money to a company that conducts (or proposes to conduct) an enterprise, the lender does not "acquire, establish or operate" that enterprise. The lender acquires no more than a right to repayment. 209 What I have just said needs to be qualified as regards the apparently small outlay by DPL to take up shares in CattleCo. That, clearly enough, did involve the acquisition of a 75% shareholder in the company. But DPL did not thereby acquire any "enterprise". It acquired a shareholding in a company which, at the time, was the proposed vehicle for a joint venture enterprise in respect of which it would not enjoy full ownership and control. 210 The third reason why the actions actually taken by DPL were not in accord with the Trust Deed is also a consequence of the payments being by way of loan. Under clause 4 of the Trust Deed, the Trustee is to hold "the Income of each Financial Year which is available for distribution on trust to pay or apply or set aside the whole or any part thereof for the Sole Purpose" unless the trustee elects under clause 4.2 to accumulate and add to capital the whole or some part of that income. Under clause 5.1, the Trustee "holds the Capital of the Trust to be used for the Sole Purpose". Clause 5.2 specifies the manner of such "use": capital may be "distributed" by the Trustee in any manner in which income may be "paid, applied or set aside"; and there is also a power to "transfer or distribution in specie any asset". So far as capital moneys are concerned, therefore, use for the Sole Purpose must be such that the moneys are "distributed". 211 The evidence does not indicate whether the moneys in the hands of DPL as trustee that were paid to the Enterprise Companies and CattleCo were income or capital. But it is clear that they must have been wholly or, at least, overwhelmingly capital. The Trust was established on 9 March 2004. It received a sum of $19,582,713.36 from DLALC on 15 July 2004 and transferred funds to CattleCo on 19 August 2004 ($5,000,000). DPL received a further $69,100 from DLALC on 27 October 2004. The payments by DPL to FuneralCo ($1,500,000) and HousingCo ($5,000,000) were made on 18 May 2004. The larger of the payments to ProjectCo ($2,185,542.90) was made by DPL on 22 June 2005. All these receipts and payments by DPL, as trustee, occurred within a single "Financial Year", as defined by the Trust Deed, being the year ended 30 June 2005. It may well be that the funds received by DPL generated investment returns (by way of interest, for example) during that "Financial Year". But the income of the year - and hence what the Trust Deed defines as "Income", having regard to tax law provisions - could not have been ascertained until after 30 June 2005. Resort by the trustee to "Income" would have had to await quantification of income after 30 June 2005. 212 In any event, even if one assumes a generous rate of return by way of interest on the investment of roughly $20 million (or the residue of it) from the various periods between receipt of funds by DPL from DLALC and outlay of those funds, it was simply not possible to generate, in the time available, sufficient income to cover more than a small part of the funds outlaid by DPL. 213 I have mentioned these matters about "Income" and the way it is dealt with by the Trust Deed to emphasise the point that, if not all, then substantially all of the moneys outlaid by DPL were capital. The Trustee's power in respect of capital (disregarding in specie transactions) is a power to "distribute". 214 The Trust Deed contains no provision under which trust moneys may be lent for "the Sole Purpose". Where payments are concerned, capital may only be "distributed". There is, in clause 13(a) a power to "raise or give financial accommodation" but it is only an incidental and restricted power. This is made clear by the opening and closing words of clause 13: "The Trustee has all powers and legal capacity to carry out its functions and duties under this deed including the power to: (a) raise or give financial accommodation; … provided that, notwithstanding any other provision of this deed, the Trustee may not do any act which the Council could not have done as at the Commencement Date." 215 The core functions and duties of the Trustee are, in essence, to hold the trust property for the "Sole Purpose", to "pay", "apply" and "set aside" income for the "Sole Purpose" and, so far as non-specie activities are concerned, to "distribute" capital for the "Sole Purpose". There are no doubt ancillary or subsidiary functions and duties, such as to keep accounts and records and to invest funds not immediately required. It may be that a power to "give financial accommodation" could be exercised as an adjunct to one of the ancillary or subsidiary functions and duties. But that is not what happened here. 216 In making the payments to CattleCo and the Enterprise Companies, DPL lent money (or, in the case of the CattleCo shareholding, expended it as purchase or subscription moneys). DPL did not "pay", "apply", "set aside" or "distribute" in the way the Trust Deed has in contemplation. This case is distinguishable from Flynn v Mamarika (1996) 130 FLR 219 where it was held that the trustee of a trust somewhat analogous with the present might make loans. In that case, however, there was a power to "use" the funds "in such manner and to such extent and upon such terms and conditions as from time to time may seem expedient to the trustee". That, clearly enough, is a much broader power than the power with which I am here concerned. 217 My conclusions with respect to the Trust are thus, first, that its validity is not affected by the circumstance that DLALC acted beyond authority and capacity in transferring the several sums to DPL to be held upon the trusts of the Trust Deed; second, that there are fundamental difficulties in construing the part of clause 3.1 which attempts to equate the trust purpose with the functions of DLALC; third, that the aspect of the clause 3.1 power relied upon to support funding of CattleCo and the Enterprise Companies by application of moneys received by DPL ostensibly as trustee is not charitable; and, fourth, that outlay of moneys in the way in which they were actually outlaid did not represent effectuation of the clause 3.1 purpose or exercise by DPL of any function or power arising from the Trust Deed. Results to this point 218 I pause to consider the implications of my findings to date for the claims in the several proceedings. 219 In proceedings 5834/05, the first claims by DPL are claims for declarations that the moneys transferred by DLALC to DPL was held by DPL "on trust … for the Darkinjung Local Aboriginal Land Council Trust, pursuant to the Trust Deed dated 9 March 2004" and that the part of those moneys still held by DPL is held on trust in that way. In proceedings 2842/06, Mr Hillig, as administrator of DLALC, seeks a declaration that the four payments made by DLALC to DPL and identified by asterisk at paragraph [18] above were beyond the powers of DLALC and the moneys were received, and are held, by DPL upon trust for DLALC, together with a declaration that the whole of the funds and assets of DPL are held by it upon trust for DLALC (or are charged with repayment to DLALC of the sum of $25,757,095.01) - or, in the alternative, a declaration that the whole of the funds of DPL and assets acquired by means of the outlay of the funds is held by DPL upon trust for DLALC. There is also a claim, among others, for judgment against DPL in the sum of $25,757,095.01 as moneys had and received by DPL to the use of DLALC. 220 The findings I have made and the conclusions I have reached may be briefly re-stated. First, I have concluded that, even though the transfers of funds were duly sanctioned by resolutions passed at meetings of DLALC, it was beyond the statutory authority and capacity of DLALC for it to make the four transfers to DPL and that the decisions to transfer were made for an improper and extraneous purpose. I have also concluded that the Trust is a charitable trust (in the sense that at least part of the "Sole Purpose" is charitable) but that, to the extent that trust moneys were lent by DPL, as trustee, to CattleCo and the Enterprise Companies (and, in the case of CattleCo, outlaid as subscription moneys for shares), the expenditure was neither made in furtherance of any aspect of the charitable purpose nor made in a form that the Trust Deed permitted the trustee to make. 221 The desirable course, in my judgment, is that the parties now consider the implications of these findings and conclusions with a view to making further submissions as to the relief which, in light of them, is warranted in relation to the claims other than the Corporations Act claims. Distillation of the conclusions will allow that question to be addressed in a more focussed way. 222 The same is, I think, generally true in relation to the claim advanced by Mr Hillig, on behalf of DLALC, for a winding up order in respect of DPL and the alternative claim for an order that DPL's constitution be modified, being claims based on alleged "oppression" and unfair prejudice within ss.232 and 233 of the Corporations Act. If, in the light of my findings and conclusions, the appropriate outcome is such that DLALC recovers from DPL the unexpended balance of the sums paid by DLALC to DPL, together with the unexpended balance of the moneys lent by DPL to CattleCo and the Enterprise Companies, it may be that there is no utility in any such Corporations Act relief. I say this because a large part of the grounds relied upon by Mr Hillig in that part of the proceedings involves inability of DLALC to recover and possess the funds transferred to DPL (the other main basis is the operation of the provisions of the constitution set out at paragraph [59] above). If full recovery and restitution were the correct result of the claims other than the claims based on ss.232 and 233 of the Corporations Act, the situation might well be seen to be one in which DLALC is not prejudiced by its position as the sole shareholder of a company which effectively has no assets beneficially owned by it and is the trustee of a trust all assets of which are held for DLALC. These are matters on which further submissions should be made in conjunction with those concerning the relief that is appropriate to be granted in response to the claims already mentioned. 223 I should add in relation to the ss.232 and 233 claims that the apparent ability of Mr Hillig, as administrator, to cause DLALC to pass, merely by the signing of a document pursuant to s.249B(1), a special resolution under s.461(1)(a) and thereby to provide a clearcut and simple ground for the making of a winding up order is a factor that I continue to regard as highly relevant to that part of the case. Mr Hillig resorted to that procedure to pass the special resolutions considered by Austin J in Hillig v Darkinjung Pty Ltd (above). His Honour found the resolutions to be invalid but the grounds did not include resort to the procedure made available by s.249B(1). 224 There is, however, one remaining and discrete Corporations Act matter with which it is appropriate to deal at once. I refer to the claims by Mr Hillig, on behalf of DLALC, for orders declaring void or terminating the Part 5.3A administrations of the Enterprise Companies. The Part 5.3A appointments - background 225 The directors of FuneralCo resolved on 13 May 2006 that administrators should be appointed under Part 5.3A of the Corporations Act. A corresponding resolution was purportedly passed by the directors of ProjectCo on 14 May 2006. In the case of HousingCo, a resolution was passed on either 13 or 14 May 2006. 226 In each case, the directors' resolution was the culmination of a series of events that began on 10 May 2006. Mr Hillig had become the administrator of DLALC on 2 May 2006. By letter of 10 May 2006, he conveyed two requests to each of the Enterprise Companies. DLALC was, of course, the sole member of each company. Mr Hillig's letter asked that certain documents of the particular company be provided to him. His second request was in these terms: "… I request that you do not make any payments from the bank accounts of the company without my approval". 227 Two days later, on 12 May 2006, each of the Enterprise Companies received from DPL a letter signed by Mr Pross, a director of that company. The letters were in corresponding terms and it is sufficient to quote the letter sent to FuneralCo: "Due to the recent appointment of an Administrator to the Darkinjung Local Aboriginal Land Council, DFFPL [ie, FuneralCo] has been requested to cease any further disbursements from its accounts without the Administrator's prior approval. That being the case, DFFPL as the borrower has ceased in our opinion to continue to operate and conduct the funeral fund business to our satisfaction, and is therefore in breach of clause 3 of the Deed of Loan dated 2 August 2005." 228 These letters had regard to the terms of the loan agreements between DPL and the Enterprise Companies. The loan agreements are referred to at paragraphs [199] and [203] above. The agreements were all substantially in the same form, except for amounts and names. The agreement between DPL and each Enterprise Company contains two provisions about repayment of the principal sum. One concerns certain insolvency events and may be ignored for present purposes. The other is clause 3. The respective forms of clause 3 are: FuneralCo : "The PRINCIPAL AMOUNT is not payable whilst the BORROWER is continuing to operate and conduct the funeral fund business." HousingCo : "The PRINCIPAL AMOUNT is not payable whilst the BORROWER is continuing to operate and conduct the operations of Darkinjung Housing Pty Ltd." ProjectCo : "The PRINCIPAL AMOUNT is not payable whilst the BORROWER is continuing to operate and conduct projects on behalf of the Darkinjung Local Aboriginal Land Council." 229 It is this clause 3 that is referred to in the letter of 12 May 2006 sent by DPL to the relevant Enterprise Company. Each such letter was based on a twofold premise: first, that, upon its proper construction, clause 3 of the relevant loan agreement required immediate repayment of the principal sum if the particular Enterprise Company ceased to "operate and conduct" the activity mentioned in clause 3; and, second, that as a necessary consequence of its receipt of Mr Hillig's letter of 10 May 2006 requesting that no payments be made from its bank accounts without Mr Hillig's approval, each Enterprise Company had ceased to "operate and conduct" the activity referred to in clause 3. A threshold issue 230 Before proceeding further with a consideration of Mr Hillig's claims in respect of the appointment of administrators of each Enterprise Company I should deal with a matter raised by DPL. 231 DPL acknowledges that it has no direct involvement in the proceedings in which the appointment of voluntary administrators to the Enterprise Companies is challenged. It nevertheless adopted, without objection by Mr Hillig, the role of contradictor in relation to Mr Hillig's applications in proceedings 3528/06. 232 In that capacity, DPL has ventilated a threshold issue. It says that, in the absence of the directors of the Enterprise Companies as parties, the court should not make findings or orders that the resolutions appointing administrators were invalid. Mr Robertson of counsel submitted on behalf of DPL that the circumstances attract the operation of a principle stated by the Full Federal Court in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at p.524 that "an order which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party". The court also said (at p.425): "It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties." 233 It is said that any order declaring void a voluntary administration or the resolution which supposedly gave rise to it will, as it were, reinstate the directors retrospectively to the time of commencement of the purported administration; also that nullification of the administration could leave directors exposed to claims for reimbursement to the companies of the costs of the administration. 234 Contrary submissions were made by Mr Smallbone of counsel on behalf of Mr Hillig. As to the first matter, he said that an order declaring void an administration (or the resolution of directors initiating it) would not have the effect of reinstating directors. In the case of a valid Part 5.3A administration, the directors continue in office (s.437(2)(c)), although their functions are effectively superseded, for the most part, by those of the administrator. And in the case of an invalid administration a fortiori they are seen to have continued in office throughout. This must be so. The matter need not be pursued. 235 In relation to the second matter and possible exposure of the directors, reference was made in written submissions filed for DPL to suggestions in decided cases that a liquidator into whose hands a company would revert if the court terminated a deed of company arrangement may be a necessary party to the termination application (Bovis Lend Lease Pty Ltd v Wily (2003) 47 ACSR 351 at p.357), that a director may be a necessary party to proceedings in which an issue arose as to whether a voluntary administration had terminated (Australasian Memory Ltd v Brien (1998) 29 ACSR 344 at p.363) and that a deed administrator may be a necessary party to proceedings in which it was alleged that a deed of company arrangement had not terminated (ACN 002 596 509 Pty Ltd v Minshull (2005) 53 ACSR 598 at p.602). 236 These submissions by DPL were supported by reference to the decision in Colonial Mutual Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418 and the question whether the bankrupt was a necessary party to proceedings in which the trustee in bankruptcy sought to recover moneys from the defendant on the basis that those moneys formed part of the property of the bankrupt. The primary judge's conclusion that the bankrupt was properly a party was affirmed by the Full Federal Court on the basis that the trustee's case rested on serious allegations which, if proved in criminal proceedings, would expose him to a penalty of imprisonment. In Prentice v Cummins (2002) 194 ALR 94, however, it was said that the position is otherwise where possible criminal sanctions are not involved. 237 I am not satisfied that the directors of each Enterprise Company have such an interest in the outcome of this part of these proceedings as to make it necessary that they be parties. There is no possibility of criminal sanctions. The most significant point - and the one emphasised by Mr Smallbone in his submissions - is that the directors, as non-parties, will not be bound by any findings in these proceedings. Should some attempt be made to sheet home to them personally liability for the consequences of an appointment of voluntary administrators found to have been invalid, they would have full opportunity to argue the propriety of what they had done and to point to extenuating circumstances. The person by whom the allegations were made would derive no support from findings made in these present proceedings, at least so far as concerns the responsibility or liability of individual directors. 238 I am accordingly of the opinion that Mr Hillig is not precluded from pursuing in proceedings 3528/06, as now constituted, his claim for an order that the purported appointment of administrators of each Enterprise Company was invalid. When I refer to Mr Hillig, in that connection, I am of course referring to DLALC and to Mr Hillig's capacity as its administrator under the ALR Act to perform DLALC's functions and to exercise its powers as he has done by initiating those proceedings. 239 To the extent that Mr Hillig seeks, in the alternative, an order under the Corporations Act terminating each Part 5.3A administration, I am satisfied that DLALC has the necessary standing. As the sole member of each Enterprise Company, DLALC has standing for the purposes of s.447A (being the provision under which any terminating order would be made) by virtue of s.447A(4)(f) referring to "any other interested person". The interest of the sole member is obvious. The legal issues relevant to the voluntary administrations 240 DLALC, as plaintiff in proceedings 3528/06, seeks, in the alternative, orders that the several appointments of voluntary administrators are "invalid, void and of no effect" and orders that each voluntary administration should end. 241 Orders of the first kind are sought by reference to principles discussed in Kazar v Duus (1998) 29 ACSR 321. As Merkel J emphasised in that case, the statutory ability of a company to appoint an administrator under Part 5.3A does not arise unless the company's board has passed a resolution as described in s.436A. That section is as follows: " Company may appoint administrator if board thinks it is or will become insolvent

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(2) Subsection (1) does not apply to a company that is already being wound up." 242 It is, as Merkel J observed (at p.333), a precondition to the exercise of the power to appoint that the board form an opinion as to solvency or likely insolvency of the company and that the opinion "be bona fide and genuinely formed". His Honour referred to the statement of Santow J in Wagner v International Health Promotions Pty Ltd (1994) 15 ACSR 419 at p.421 that s.436A requires a "concluded" rather than a tentative opinion. Merkel J also accepted that the opinion must involve one of three conclusions with respect to insolvency - "actual", "likely" or "actual or likely". Merkel J also said (at p.334): "Thus, the validity of the decision to appoint Kazar as an administrator of Goolburri pursuant to s 436A of the CL requires that: • Goolburri's governing committee form a genuine, bona fide and concluded opinion as to insolvency, that is, Goolburri is or is likely to be unable to pay its debts as and when they become due and payable; • in forming the requisite opinion, the governing committee address the question formulated in the section and not err in law in doing so." 243 He then described the task of the court in such a case (also at p.334): "The task of the court is to determine, having regard to the actual facts and circumstances, whether on the balance of probabilities the opinion required to be formed by the repository of the power (that is, the governing committee) as a condition of its exercise, has been formed. Although statements as to subjective intention must be relevant the court must approach its task of classification of the conduct in question objectively." 244 These approaches have been approved in later cases: see, in particular, Downey v Crawford (2004) 51 ACSR 182; McMaster v Eznut Pty Ltd [2006] WASC 109. 245 In Kazar v Duus, Merkel J also pointed out that a decision to appoint voluntary administrators may be vitiated by improper purpose. His Honour said (at p.335): "A statutory power must be exercised for the purpose for which it was conferred. If the power is exercised for more than one purpose, where one of those purposes is improper, the exercise of the power will be vitiated if the improper purpose was a substantial purpose in the sense that the decision would not have been made but for the ulterior purpose: see Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 41 ALR 467 at 468, and Thompson v Council of the Municipality of Randwick (1950) 81 CLR 87 at 106, cf Knuckey v FCT (16 September 1988, Fed C of A, Black CJ, Tamberlin and Goldberg JJ, unreported at 11-13)." 246 After observing that an appointment of an administrator must be in furtherance of the object of Part 5.3A stated in s.436A, Merkel J said that the power of appointment would be invalidly exercised if exercised "for a purpose unrelated to that object but for an ulterior and extraneous purpose", since the ulterior and extraneous purpose would be an improper purpose. 247 Improper or ulterior purpose is also a basis on which an order terminating a voluntary administration may be made. Section 447A(2)(b) gives, as an example of the orders that may be made under s.447A, an order that "because provisions of this Part are being abused … the administration is to end": see, for example, Aloridge Pty Ltd v Christianos (1994) 13 ACSR 99; Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391. DPL's decision to send the letters of 12 May 2006 248 I return now to the substance of Mr Hillig's challenge to the appointment of the voluntary administrators. It is clear that the decision that DPL should send the letters of 12 May 2006 to the Enterprise Companies was not taken at a meeting of the directors of DPL. I say this because of a resolution recorded in the minutes of a meeting of the directors of DPL on 1 June 2006: "That the Trustees [sic] endorse their previous decision made 12 May 2006 out of session to recall the loans from Darkinjung Housing Pty Ltd, Darkinjung Funeral Pty Ltd and Darkinjung Projects Pty Ltd as a result of their belief that these companies would not be able to function in the manner and for the purpose which they were established as a direct result of the demands made by Mr Hillig in his letters of 10 May and phone calls to the Directors of these companies." 249 The reference here to Mr Hillig's letters of 10 May 2006 is clear enough. The reference to "phone calls to the directors of those companies" should be briefly explained. Mr Vandenberg, a director of HousingCo, testified to having had a telephone conversation with Mr Hillig soon after Mr Hillig's appointment in which Mr Hillig said words to the effect, "I want my money". Mr Pross, a director of DPL but not of any of the Enterprise Companies, said that he happened to be with Mr Vandenberg when this telephone conversation took place and overheard what was said. His account is consistent with Mr Vandenberg's. Mr Hillig says that he did not speak to Mr Vandenberg at all during the relevant period. It seems clear, however, that his assistant Mr Newman did. Mr Vandenberg was prepared to accept that, although he thought it was Mr Hillig on the telephone, it was in fact Mr Newman. He had not actually met either of them at that time. A file note made by Mr Newman of a conversation with Mr Vandenberg on 12 May 2006 suggests strongly that it was he with whom Mr Vandenberg spoke on the occasion in question. Mr Newman's note does not contain words such as "I want my money"; but I accept that there was, within the DLALC community at the time, a strong apprehension that Mr Hillig would try to recover the funds that DLALC had transferred into the Trust and which had, in part, been lent to the Enterprise Companies. 250 I am satisfied that the directors of DPL had informal discussions that caused the letters of 12 May 2006 to be sent to the Enterprise Companies. It is clear that DPL, by means of those letters, represented to each Enterprise Company that it was entitled to call up its loan and, in exercise of that entitlement, actually did so. 251 Mr Pross, the signatory of the 12 May 2006 letters, said in evidence that calling up of the Enterprise Company loans was one of several suggestions made by Mr Boardman of NMC. The cross-examination continued: "Q. It was suggested that a consequence of this would then be to facilitate putting voluntary administrators into the Enterprise companies; is that right? A. Yes.

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Q. You don't comply with anything unless it suits you, do you? A. I do. I take offence to that." 261 All the evidence on the matter points clearly to the conclusion that the DPL directors agreed to a course of action involving the making of demand for repayment of the loan principal by each Enterprise Company when each director either knew that there was no foundation in the loan agreement for such action or did not turn his mind to the matter. The predominating purpose was one of repatriating funds to DCL, without regard for the validity of the asserted basis for doing so. FuneralCo 262 I next consider events within FuneralCo following receipt of Mr Pross's letter of 12 May 2006. The directors of FuneralCo were Ms Hammond, Ms Sinclair, Ms O'Brien and Mr Cook. They met the next day, 13 May 2006. All were present. Ms Hammond, a director, gives the following account in her affidavit: "Jeffrey Bradford was invited to attend the initial stages of the meeting for the purpose of informing the directors of the background to the recall of the loan. He did attend, and said words to the effect: 'The DLALC Administrator has directed that all expenditure by subsidiary companies (including Funerals) is to cease unless he gives prior approval. Moreover, the Administrator apparently intends to take control of the companies and their funds. In those circumstances DPL, as trustee of the funds which have been loaned to Funerals, needs to protect the trust assets against the possibility that they could be lost to the trust, whether by being appropriated by the Administrator or by being wasted through an entity which could no longer operate either at all or in the manner envisaged as the basis for the loan having been made. Therefore DPL has decided it should recall the loans.'" 263 Mr Bradford accepted in cross-examination that this is a fair account of what he said. Ms Hammond's affidavit has annexed to it two sets of minutes of the meeting of FuneralCo's directors. One set appears to be a pro forma prepared in advance in which the date and place of the meeting have been inserted in handwriting. This set contains formal resolutions apt for any Part 5.3A appointment by directors. The other set of minutes was clearly prepared as a reflection of actual events. This other set of minutes reads in part as follows: "A letter received from Administrator Smith Hancock [Mr Hillig's firm] informs all Darkinjung companies to cease all expenditure unless given prior approval by Administrator. · The Administrator is currently the sole member of DLALC and can be the Director of the other Darkinjung companies. · A letter has been received from David Pross one of the Directors of Darkinjung Pty Ltd asking for immediate payment of the $1.5M loan. To continue with Darkinjung Funeral Fund (DFF) a voluntary Administrator through the Commonwealth should be appointed. A Voluntary administrator Appointment Document has been e-mailed to Nicole to pass onto DFF Directors for approval and signatures. The voluntary administrators being Anthony Warner and Cliff Sanderson of CRS Warner Sanderson of Sydney. · No State laws are enforceable after appointment of a Commonwealth Administrator. · Current Directors will most likely be sacked directly following the May 23rd DLALC meeting. · If Voluntary Administrator is not appointed to DFF all monies in DFF Bank Accounts will pass straight to DLALC and not the Trust (Darkinjung Pty Ltd). · Directors and staff will be liable for all monies spent to date by DFF with a 'please explain'." 264 The initials "JB" appear before a colon at the start of the passage just quoted. Mr Bradford accepted in cross-examination that he had been at part of the meeting and had spoken words to the effect set out, up to and including the end of the second bullet point ("… asking for immediate payment of the $1.5M loan"). His evidence was that the balance of the extract does not represent things he said, although he accepted that it does, to some extent, reflect opinions and views he holds. 265 It is significant that the minutes quoted above say nothing about solvency or any likelihood or possibility of insolvency. It is true that those matters are referred to in the minutes I have described as pro forma. There is reference there, in what I believe to be resolutions drafted and typed before the event, to an opinion of the directors that the company "is insolvent or is likely to become insolvent at some future time". But in the version which obviously records what actually happened, the clear preoccupation is not with the state of the company's solvency but with how to "continue with Darkinjung Funeral Fund (DFF)". Indeed, those minutes do not contemplate that Funeral Co will repay DPL in accordance with DPL's demand supposedly made pursuant to the loan agreement. The minutes record the following: "If Voluntary Administrator is not appointed to DFF all monies in DFF Bank Accounts will pass straight to DLALC and not the Trust (Darkinjung Pty Ltd)." 266 Ms Hammond said in cross-examination that she considered this part of the minutes as not "written well" because the money would go first to DPL. She also confirmed that, subject to that qualification, the four bullet points at the end of the minutes correctly recorded things done at the meeting. The cross-examination continued: "Q. Those were all matters that people were keen to avoid if it were possible to avoid, is that right? A. No, it was about - it was about keeping the Funeral Fund operating for the members. We took great exception and we didn't want that threatened. We didn't want to lose that Funeral Fund. This was ours, and we were very proud of it.

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Q. As far as you observed from the other directors, that was their principal concern in deciding to appoint voluntary administrators? A. Yes." 267 An instrument of appointment addressed to Mr Warner and Mr Sanderson is signed by all four directors. They state that it was resolved at a meeting of the board that the company "is insolvent". HousingCo 268 I refer next to the events involving HousingCo. Evidence of those events was given by Mr Vandenberg, one of the directors (the others are Mr Aidon and Ms Sutherland). According to his evidence, HousingCo's development had reached a point by early May 2006 where the concept of a housing scheme for DLALC members had been adopted and planning to retain one of two companies with expertise in the provision of housing assistance was well advanced. 269 Mr Vandenberg confirmed receipt by him of a letter from Mr Hillig on or about 10 May 2006 containing a request in the same terms as those quoted at paragraph [227] above. Mr Vandenberg acknowledged that the request was no more than a request and that HousingCo could have declined to act in accordance with it. But he was not sure what authority, if any, Mr Hillig had over HousingCo by virtue of his appointment as administrator of DLALC. He did not seek any legal advice on that matter. Mr Hillig's request raised in him a fear that HousingCo might not be able to operate. Apart from the concern about the future, Mr Vandenberg did not see the letter as having any immediate impact on the day to day activities. 270 The relevant loan agreement between DPL and HousingCo is the agreement dated 18 May 2005 to which reference has already been made. It related to the loan of $5 million. Mr Vandenberg gave evidence that he was aware of clause 3 and was of the view that the letter from Mr Hillig might in the future cause to happen the event there mentioned. He accepted that there was no such immediate effect, merely a possibility. He said that he considered whether DPL was entitled to call up the loan. 271 A meeting of the directors of HousingCo was held on the weekend of Saturday 13 May 2006 and Sunday 14 May 2006, that is, immediately after receipt of the letter of 12 May 2006 from DPL purporting to call up the loan. Mr Vandenberg and his co-directors, Mr Aidon and Ms Sutherland, were all present. He says that they went through the loan agreement. He also suggested in his evidence that, despite the understanding that there was no more than a possibility that the letter from Mr Hillig might in future cause the clause 3 event to happen, the directors decided to proceed on the footing that the event had happened. They consulted Mr Boardman of NMC about options. He did not make any recommendation or give any advice. Mr Vandenberg does not recall whether the question of HousingCo's solvency was addressed by the directors of HousingCo at their meeting. 272 According to Mr Vandenberg, it was Mr Aidon who suggested the need for a meeting of the directors of HousingCo to consider the letter from Mr Pross. The concept of appointment of voluntary administrators was, he said, presented as an option, but he was unable to identify any other option. 273 Mr Vandenberg further gave evidence that Mr Aidon, in discussion with his co-directors of HousingCo, expressed the opinion that voluntary administrators should be appointed. Mr Vandenberg also said in evidence that he regarded the company as insolvent because the loan had been called up, even though he did not actively turn his mind to the question of legal rights and legal obligations in relation to the loan and the validity or otherwise of the demand by DPL. 274 Two versions of the minutes of this meeting of the directors of HousingCo are in evidence. One is signed; the other is not. It may be that the signed version is the final version and that the unsigned version was superseded by it. If that is so (and I am prepared to think that it is), the differences between the two are revealing. A suggestion that the unsigned version was in the nature of an agenda to map out in advance what was to be done cannot be accepted. This is because it records matters of discussion that could not possibly have been foretold. The signed minutes are an amplified version of the unsigned minutes. The likelihood is that the unsigned minutes were prepared after the event and that they were later amplified and then signed. 275 The unsigned minutes suggest that the meeting was held on 14 May 2006 (a Sunday) at 4 pm. The signed minutes show the meeting having occurred on 14 and 15 May 2006 (Sunday and Monday) "at 4 pm". Mr Vandenberg referred to discussions on Saturday and Sunday. It is not necessary to come to any concluded view about when the meeting was held. The stronger likelihood is that it was held on the Sunday. 276 The two versions of the minutes correspond in many respects. Each contains under the heading "Correspondence" the following: "The Secretary tabled a recent letter from the Administrator requesting DHPL expenditure cease. The Secretary also tabled a recent letter from the Darkingjung Trust which noted a Trust concern. The issue raised by the Trust makes reference to the Administrator's letter requesting no further expenditure which effectively makes the DHPL inoperative. The Trust has subsequently requested the return of funds." 277 Under a heading "Discussion" there follows, in each set of minutes: "The Directors discussed theirs [sic] rights and duties as Directors to protect the DHPL as well as their obligations to the members of DLALC to secure the housing programme. The Directors considered the various options available to them. 1. Do nothing and await the Supreme Court Decision on Trust. 2. Delegate their powers to the Trust. 3. Appointment a [sic] Voluntary Administrator. The Directors considered option one to be irresponsible given the recent appointment of an Administrator to DLALC. Option 2 should have a directive from a general meeting of members and this was not feasible. Option 3 was accepted." 278 The two versions of the minutes then differ in the recording of resolutions. In the unsigned minutes, the only resolution is as follows: "DHPL acknowledges 12th May 2006 Darkinjung Trust correspondence and has resolved to seek the immediate appointment of a voluntary administrator." 279 In the signed minutes, there are two resolutions. The first is: "DHPL acknowledges 12th May 2006 Darkinjung Trust correspondence and has resolved to seek the immediate appointment of a voluntary administrator given the likelihood that the company would become insolvent once funds are returned." 280 The second resolution, as recorded in the signed minutes, is: "That Anthony Warner and Cliff Sanderson having consented to be appointed to be appointed [sic] by the DHPL Board as Joint and Several Voluntary Administrators of the company under Part 5.3A of the Corporations Act 2001, the appointment will take effect by the company issuing a written notice appointing as Joint and Several Voluntary Administrators." 281 These two versions of the minutes raise the distinct possibility that, in reality, the directors did not turn their minds at all to the question of the company's insolvency or any likelihood of future insolvency. The form of resolution in the signed minutes to "seek the immediate appointment of a voluntary administrator" states a basis for the appointment ("given the likelihood that the company would become insolvent once funds are returned"). The corresponding form of resolution in the unsigned minutes contains no such explanation. In both cases, the narrative of discussion immediately preceding the resolution is the same. It shows no concern at all with the question of insolvency or likely future insolvency. It also shows that three options were considered, namely, await the decision of the court concerning the Trust, delegate the powers of the directors of HousingCo to the Trust and appoint a voluntary administrator. The first and second options were rejected - the first because it was considered "irresponsible given the recent appointment of an Administrator to DLALC"; and the second (whatever it meant) because of a perceived need for "a directive from a general meeting of members" (presumably, members of DLALC) and "this was not feasible". Then follows the simple statement: "Option 3 was accepted". This leaves the unmistakeable impression that Option 3 was chosen by default and without any attention being paid to the matter of solvency or likely future insolvency necessary to be addressed in connection with any appointment of administrators under Part 5.3A of the Corporations Act. 282 Even if one accepts that the resolution in fact passed was the resolution concluding with the words "given the likelihood that the company would become insolvent once funds are returned" (see paragraph [279] above), the situation is still one in which it is not evident from the minutes that the directors turned their minds to the crucial question, that is, whether HousingCo was obliged to comply with DPL's demand for repayment of the loan. The decision therefore appears to have been a decision that if and when HousingCo, of its own volition, "returned" the funds, it would "become insolvent". 283 An instrument of appointment addressed to Mr Warner and Mr Sanderson is signed by all of Mr Vandenberg, Mr Aidon and Ms Sutherland. In it they say that they have resolved that the company is "effectively insolvent". ProjectCo 284 There are in evidence minutes of a meeting of ProjectCo held on 14 May 2006. The minutes are of the same pro forma type as I have referred to in the description of the FuneralCo meeting. In fact, the document is in exactly the same form as that for FuneralCo, save for the company name and ACN in the heading, the names of the persons listed as present and the name of the person "appointed as the chairman of the meeting". That the names of those present were inserted in advance is testified by the fact that, in the ProjectCo document, the word "absent" has been written against the name of Mr Cook in the typewritten list of persons present. This appears to have been written by Mr Bradford who has signed the minutes as chairman and also appears to have completed in hand blank spaces for the place at which the meeting was held ("Wyong NSW") and the date ("14th May 2006"). In the event, therefore, two out of a total board of three were present. 285 Because these minutes are in the same form as one of the sets of minutes for FuneralCo, they record the passing of a resolution expressing the "opinion of the directors" that "the company is insolvent or likely to become insolvent". Otherwise, they throw no light on the basis upon which the directors resolved to appoint administrators. 286 The minutes record the presence of two directors at the meeting, Mr Bradford and Ms Miles. Mr Cook, as I have said, is recorded as "absent". This raises a question about the efficacy of a resolution in the following terms recorded in the minutes: "It was agreed by the directors that the notice requirements for a meeting of directors be waived for this meeting and the directors agreed that the meeting had been properly convened." 287 It was submitted on behalf of Mr Hillig, and I accept, that if Mr Cook did not have notice of the meeting or did not in fact agree to the other directors proceeding without him, the meeting of directors was not duly convened. Proper notice in such a way as to let all members of a body know when and where a meeting is to be held is one of the prerequisites to a validly constituted meeting, unless a particular member has let it be known that he is willing for a meeting to be held without notice to him. 288 Under s.436A(1) of the Corporations Act, the power of a company, by writing, to appoint an administrator arises only if "the board has resolved" certain things. Where those things are purportedly done at a meeting, they are not validly and properly done unless the meeting is duly constituted. Here, the evidence points to the conclusion that the meeting was not validly constituted and that there was accordingly no resolution of the board. 289 Ms Miles did not give evidence. Mr Bradford's evidence touched only slightly on the particular matter of the ProjectCo purported meeting. I have already referred to his testimony about the approach taken by the directors of DPL and about what he said when he attended the FuneralCo meeting. I am prepared to think that, in the ProjectCo context, he merely followed through with the intentions explained in those contexts. 290 The instrument of appointment addressed to Mr Warner and Mr Sanderson is signed by Mr Bradford and Ms Miles. There is a space for Mr Cook's signature but it is blank. The document says that the board of directors has resolved that the company "is insolvent". Further factual findings in relation to the Part 5.3A matters 291 It is clear that Mr Bradford played a dominant role in the events of the period 12 to 14 May 2006. He was particularly experienced in Aboriginal land council matters. He had served as chief executive officer of NSWALC from April 2000 until December 2002. He had previously been the chairman of another local Aboriginal land council. It is clear that he had been heavily involved in the development of the structure based on the Trust and the Enterprise Companies. He had been a member of DLALC's Trust Subcommittee since March 2003, having referred at a meeting of DLALC in the previous month to the "pitfalls in establishing a trust". 292 One matter meriting particular attention is why Mr Bradford, experienced and knowledgeable as he was, could possibly have thought that Mr Hillig's letters of 10 May 2006 to the Enterprise Companies involved an element of compulsion or coercion - in other words, how he could possibly have construed a relatively mild and polite request as an irresistible command leading inevitably to the conclusion that there had been a sudden break in the continuity of the operations of the Enterprise Companies of the kind referred to in clause 3 of each loan agreement. 293 Mr Bradford was cross-examined about a number of situations involving DLALC and its affairs in which he had shown himself to be anything but compliant in the face of requests. He was taken to a request dated 22 July 2004 by NSWALC for an undertaking that DLALC would not transfer further funds to DPL and an undertaking that DPL would not transfer further funds to the other bodies until the legality of the trust had been established. His response was that he had not replied to the request and that transfers of funds had continued thereafter. It was put to him that he totally ignored the request but he denied that, saying that his reaction had been to seek legal advice which confirmed that there was no legal impediment to continuation of transfers of funds.

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294 When asked whether he had similarly sought legal advice upon receipt of Mr Hillig's letter of 10 May 2006, Mr Bradford gave a negative answer, thus making it clear that the events which led to the demands by DPL upon the Enterprise Companies and the decisions of the boards of those companies to appoint administrators were embarked upon without legal advice. 295 In the same vein, Mr Bradford was taken to a letter of 11 May 2005 written by him in response to a letter of 6 May 2005 from the Chief Executive Officer of NSWALC. The letter of 6 May 2005 was of four pages and referred to four matters. One of them was the possibility that certain motions at meetings of DLALC involved breach of the Protected Disclosures Act 1994. The last paragraph on page 2 of the letter (which carried on to page 3) reads as follows: "A breach of section 20 of the PDA is not merely an administrative error but, rather, constitutes an offence punishable by up to 12 months imprisonment. For this reason, and given the stated reasons for taking the action set out in the correspondence, NSWALC would have hoped that DLALC might have exercised more caution in taking the action which it apparently has." 296 This relatively mild admonishment prompted a far from mild response from Mr Bradford in his letter of 11 May 2005: "I refer to correspondence under your hand dated 6th May 2005 and forwarded by facsimile to Darkinjung's CEO Mr. Damien Aidon the evening of Friday 6th May 2005 and provided to me Monday 9th May 2005. Having perused said correspondence I believe it fair to say that such is little more than 4 pages of unadulterated drivel. I have little doubt as to you not being the author but merely the goose who affixed his signature. In the last paragraph on page 2 attention is drawn to the part that a breach of section 20 of the Public Disclosures Act is an offence punishable by up to 12 months imprisonment so what! is such meant to strike the fear of God into us? For the record please be advised that I am quite partial to prison tucker and a regulated lifestyle having in the past been subject to two stays at one of Her Majesty's maximum security establishments a far cry from a stay at the state run motel that a breach of the P.D.A. would attract, in fact when compared with my previous incarceration such would be little more than a Sunday school picnic. To coin a phrase used by lags from the past '12 months I could do that standing on my head'. The prospect of 12 months free board and lodging is given, my current employment situation quite appealing. In the future if it is at all possible it would be appreciated if correspondence emanating from your organization were to be of substance and not just meaningless drivel which [sic] the author's firm is no doubt handsomely remunerated. There is an old adage which goes 'those that can do those that can't talk about it'. I believe that if NSWALC's top echelon wish to avoid becoming a bigger joke than that which they are already seen to be then they would do well to adhere to the above adage." 297 The evidence leaves no doubt that Mr Bradford well knew the difference between a request and an assertion of obligation; that he well knew how to decline or ignore a request; and that he could be forceful in the extreme in rejecting propositions he did not like. 298 I also reject the possibility that Mr Bradford saw the requests made by Mr Hillig to the Enterprise Companies as amounting to command or compulsion because of respect Mr Bradford had for Mr Hillig and the office he occupied. Rather, Mr Bradford showed utter contempt for Mr Hillig and his office. This was made clear by a message from Mr Bradford disseminated electronically throughout the Aboriginal network on 20 July 2006: " Network Message Hillig Strikes Again - but his days are numbered. Not satisfied with his contemptible and revolting actions of Monday 18th July 2000 where without warning he (Hillig) summarily sacked Darkinjung CEO Mr Damien Aidon whilst he (Aidon) was on sorry business, yesterday Hillig again without warning struck again terminating the employment of activist and long time Darkinjung member Ms Veronica Graf. Hillig the darling of one time one term minister Orkopolous is a control freak who appears to demonstrate symptoms of a number of personality disorders. If I was a medical practitioner and qualified to comment which I am not, however, if I were I would probably say that Hillig definitely suffers from the 'Little willie Syndrome'. I strongly suggest that Hillig view the latest black film, 'Ten Canoes'. When terminating Ms Graf he never had the guts to front up and carry out his dirty work himself, (little willie men can't handle strong black people, especially women). Instead he had Igore his sniveling [sic] lackey advise Ms Graf she was finished. However Ms Graf has advised that she has no intention of leaving her position and will continue to front up and continue performing the important tasks which the members appointed her to undertake. The sacking of Ms Graf is no doubt in retaliation for her getting on top of him (little willie men can't stand women being on top) in relation to a ruling by the Registrar that is not the Chairperson of Darkinjung and must elect a member to Chair each meeting of the Council - on both occasions Ms Graf was elected by the members to that position relegating Hillig to the dunces corner - He can't stand it and he advised he won't be holding any further meeting until the Registrars ruling has been clarified, I presume he will wish the to court to rule I say, bring it on. Hillig's no show may also have something to do with an incident that occurred last Friday when four white men of stocky build entered the Land Council looking for Hillig. When advised by the receptionist that he was not there but possibly at his Parramatta office, they said 'not interested, do you have his home address'? The receptionist advised that she did not and they left in a black BMW with Victorian plates. It would appear that others share our feelings of Hillig, ahhh one can only hope. In any event Hillig will be easily found, as next week he will be in the Supreme Court from Tuesday through Friday. Jeffrey Bradford" 299 Mr Bradford deliberately chose to misconstrue the request in Mr Hillig's letters of 10 May 2006 as command or compulsion when, as he knew perfectly well, that was not its character. It is likely that it was he who invented the deliberate non sequitur that the making of the request by Mr Hillig somehow broke the continuity of the operations and businesses of the Enterprise Companies when, as he well knew, that was not the effect at all. I say this because, on the evidence, none of the other DPL directors really turned their minds to the matter. They were more concerned with generalised fears about Mr Hillig "getting his hands on" money they saw as owned by the Aboriginal community and preserving the enterprises of which they were, with justification, proud. Mr Bradford concocted what he knew to be a false basis for asserting that the debts owed to DPL by the Enterprise Companies had become payable and for a calling up of those debts by DPL. Those within DPL involved in making the calls were content to fall in with the plan devised by Mr Bradford. And likewise, those within the Enterprise Companies who acted to appoint administrators acted in pursuance of the plan conceived by Mr Bradford and based on the false premise he had chosen to embrace and propound. 300 Some witnesses referred to Mr Boardman of NMC as the source of a suggestion that the Enterprise Companies might appoint voluntary administrators. Mr Boardman did not give evidence. The likelihood, in my view, is that NMC, which had been heavily involved in the creation of the structure based on DPL, the Trust and the Enterprise Companies, together with Mr Bradford, merely gave advice in accordance with the master plan. Mr Hanrahan confirm that NMC had prepared the letters of demand. If, as he testified, he considered the action of calling up the loans "hasty", he certainly does not seem to have done anything to press that view on anyone. 301 The ultimate aim of the plan for the Enterprise Companies came out during Mr Bradford's cross-examination. After he had eventually conceded that the letters of 10 May 2006 conveyed nothing more than a request and that it would have been possible to reply simply that the request would not be complied with, the cross-examination continued: "Q. It was always open to you, if you needed advice as to the extent this request was binding on you and the consequences it might have, it was open for you to get legal advice from Mr Cunliffe or whoever in relation to that? A. We could have sought legal advice.

[78]

HIS HONOUR: Q. Does that answer mean yes, does it? A. Yes." 303 The way in which Commonwealth law prevails over State law in case of inconsistency played a large part in Mr Bradford's thinking as a whole. This is shown by a letter he wrote to the Premier on 15 May 2006: "Dear Premier, I have written to you before about your Minister for Aboriginal Affairs' vendetta against Darkinjung Local Aboriginal Land Council. In this he has had the vindictive support of officials at the New South Wales Land Council who we believe hate us. Now your Minister has put in an administrator, I am out of office, but all the related entities being established under Commonwealth law will be harder nuts to crack. We will see to that." 304 Mr Bradford accepted in cross-examination that he had been aware for a long time that Commonwealth law takes precedence over State law in case of inconsistency. He also made it clear that he regarded companies registered under and created by the Corporations Act of the Commonwealth as able to withstand controls imposed by State law to which bodies created by State level might be subjected. Conclusions in relation to voluntary administrations 305 I am satisfied that the events leading up to and culminating in the appointment of administrators by the directors of the Enterprise Companies under Part 5.3A of the Corporations Act were a deliberate contrivance intended to create what can only be described as a false pretext for their appointment. Even if clause 3 of each loan agreement provides, on a proper construction, that the principal sum is immediately payable if the borrower company ceases to operate and conduct its business (and I note that clause 3 does not actually say this in a positive way), there was simply no basis for any rational view that the mere request in Mr Hillig's letter of 10 May 2006 to each Enterprise Company had brought about such a cessation or was even remotely capable of doing so in the future. 306 The directors of DPL, giving effect to a plan which I consider to have been conceived principally by Mr Bradford, required payment of the principal sum by each Enterprise Company when no legal basis for doing so existed. Those directors either knew that there was no basis for any such demand or did not turn their minds to the question. And the directors of each Enterprise Company in due course went along with the plan. They did not seek legal advice as to the validity and propriety of DPL's demand. They did not pause to consider to any great extent the Enterprise Company's separate position or to question the assertion of DPL that the principal sum was immediately payable. To the extent that they turned their minds at all to the question of insolvency or possible future insolvency which should have been central to their decision to appoint administrators under Part 5.3A of the Corporations Act, they took uncritically and at face value the false proposition that the demand by DPL represented an immediate and pressing financial obligation. The directors of each of the companies failed to give genuine consideration to the solvency question, with the result that they did not form the opinion essential to valid appointment of administrators. In the case of ProjectCo there was not even a duly convened meeting of the directors. 307 The directors of each Enterprise Company were concerned to protect the company from Mr Hillig whom they saw as a threat. They believed that he would pursue action to dismantle the structure based on DPL, the Trust and the Enterprise Companies. It was with a view to thwarting that that the directors acted in each case. It is not clear that Mr Bradford had communicated to them the longer term plan of re-taking possession of the companies from the administrators through a deed of company arrangement. Nor is it clear that they were privy to the thinking which regarded officials appointed under Commonwealth law as more powerful than those appointed under State law. But whether they knew of those aspects of the thinking or not, they willingly and deliberately went along with a plan that involved appointment of voluntary administrators for the purpose of insulating the Enterprise Companies from the influence of the sole member DLALC after its functions and powers had passed into the hands of an administrator appointed under the ALR Act. That was an irrelevant and impermissible purpose. 308 DLALC has made out an entitlement to the principal order sought in respect of each Enterprise Company, that is, an order that the voluntary administration is invalid, void and of no effect. Disposition 309 On all claims other than the claims of Mr Hillig, on behalf of DLALC, for orders in respect of the Part 5.3A administrations of FuneralCo, HousingCo and ProjectCo, I shall receive further submissions as outlined at paragraphs [221] and [222] above. 310 In relation to the claims concerning Part 5.3A administration, I make orders 1, 2, 3 and 4 in the originating process filed in proceedings 3528/06. **********

Legislation Cited (4)

Companies and Securities Legislation (Miscellaneous Amendments) Act 1983(Cth)

Corporations Act 2001(Cth)

Aboriginal Land Rights Act 1983(NSW)

Companies Act 1981(Cth)

Cases Cited (28)

CITATION : Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council & Ors; Hillig v Darkinjung Pty Ltd & Ors; Darkinjung Local Aboriginal Land Council v Warner & Ors [2006] NSWSC 1008 This decision has been amended. Please see the end of the judgment for a list of the amendments.

Aboriginal Community Benefit Fund Pty Ltd v Batemans Bay Local Aboriginal Land Council (1996) 22 ACSR 56 Aboriginal Community Benefit Fund Pty Ltd v Batemans Bay Local Aboriginal Land Council (1997) 42 NSWLR 593 ACN 002 596 509 Pty Ltd v Minshull (2005) 53 ACSR 598 Aloridge Pty Ltd v Christianos (1994) 13 ACSR 99 Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee (1945) 72 CLR 37 Ashbury Carriage & Iron Company (Limited) v Riche (1875) LR 7 HL 653 Attorney-General v Great Eastern Railway Company (1880) 5 App Cas 473 Attorney-General v Perpetual Trustee Co Ltd (1940) 63 CLR 209 Attorney-General for the State of Victoria v Housing Commission (1979) 44 LGRA 258 Australasian Memory Ltd v Brien (1998) 29 ACSR 344 Bagshaw v The Eastern Union Railway Company (1850) 2 Mac & G 389; 42 ER 151 Barby v Perpetual Trustee Co Ltd (1937) 58 CLR 316 Baroness Wenlock v The River Dee Company (1883) 36 ChD 674n Baroness Wenlock v The River Dee Company (1885) 10 App Cas 354 Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Ltd (1998) 194 CLR 247 Beaudesert Shire Council v Smith (1966) 120 CLR 145 Birkdale District Electric Supply Co Ltd v Corporation of Southport [1926] AC 354 Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391 Bovis Lend Lease Pty Ltd v Wily (2003) 47 ACSR 351 Canadian Bank of Commerce v Cudworth Rural Telephone Co [1923] SCR 618 Case of Suttons Hospital (1612) 10 Co Rep 23a; 77 ER 960 Colonial Mutual Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418 Communities Economic Development Fund v Canadian Pickles Corporation [1991] 3 SCR 388 Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 Downey v Crawford (2004) 51 ACSR 182 East Anglian Railways Co v Eastern Counties Railway Co (1951) 11 CB 775; 138 ER 680 Eastern Counties Railway Co v Hawkes (1855) 5 HL Cas 331; 10 ER 928 Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 Flynn v Mamarika (1996) 130 FLR 219 German v Chapman (1877) 7 ChD 271 Harvey v Adelaide & Hindmarsh Tramway Company (1881) 15 SALR 136 CASES CITED : Hazell v Hammersmith & Fulham London Borough Council [1992] 2 AC 1 Hillig v Darkinjung Pty Ltd (2006) 57 ACSR 733 Howarth v McMahon (1951) 82 CLR 442 Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 (1994) 179 CLR 597 Inland Revenue Commissioners v Baddeley [1955] AC 572 IW v City of Perth (1997) 191 CLR 1 Kathleen Investments (Australia) Ltd v Australian Atomic Energy Authority (1977) 139 CLR 117 Kazar v Duus (1998) 29 ACSR 321 Kindimindi Investments Pty Ltd v Lane Cove Council (2006) 143 LGERA 277 Lyde v Eastern Bengal Railway Company (1866) 36 Beav 10; 55 ER 1059 MacGregor v The Official Manager of the Deal & Dover Railway Company (1852) 22 LJQB 69 McMaster v Eznut Pty Ltd [2006] WASC 109 Morice v Bishop of Durham (1805) 10 Ves Jun 521; 32 ER 947 Morrison v Shire of Morwell [1948] VLR 73 New South Wales Aboriginal Land Council v Jones (1998) 43 NSWLR 300 New York & Maryland Line Railroad Co v Winans 58 US 30 (1854) News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 Northern Territory v Mengel (1995) 185 CLR 307 Parramatta City Council v Hale (1982) 47 LGRA 319 Pilkington v Inland Revenue Commissioners [1964] AC 612 Prentice v Cummins (2002) 194 ALR 94 Public Trustee v Attorney General of New South Wales (1997) 42 NSWLR 600 Re Birbank Permanent Building Society [1912] 2 Ch 183 Re Bryning [1976] VR 100 Re Mathew [1951] VLR 226 Re The Honey Pool of Western Australia (No 2) (1988) 14 ACLR 621 Salomons v Laing (1850) 12 Beav 339; 50 ER 1091 Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365 The National Bank of Australasia v Cherry (1870) LR 3 PC 299 Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 Thomas v West Jersey Railroad Company 101 US 71 (1870) Wagner v International Health Promotions Pty Ltd (1994) 15 ACSR 419 Williams v Hursey (1959) 103 CLR 30 Winch v The Birkenhead Lancashire and Cheshire Junction Railway Company (1852) 5 De G & Sm 562; 64 ER 1243

[2006] WASC 109

(1997) 42 NSWLR 593

(1945) 72 CLR 37

(1940) 63 CLR 209

(1937) 58 CLR 316

(1998) 194 CLR 247

(1966) 120 CLR 145

(1998) 82 FCR 418

(1995) 89 LGERA 120

(1993) 32 NSWLR 50

(1996) 130 FLR 219

(1951) 82 CLR 442

(1994) 179 CLR 597

(1997) 191 CLR 1

(1977) 139 CLR 117

(2006) 143 LGERA 277

(1998) 43 NSWLR 300

(1996) 64 FCR 410

(1995) 185 CLR 307

(2002) 194 ALR 94

(1997) 42 NSWLR 600

(1990) 171 CLR 338

(1959) 103 CLR 30

(1982) 41 ALR 467

(1950) 81 CLR 87

[2005] NSWSC 365