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[2024] VSC 155
General information, not legal advice.
Supreme Court of Victoria
2024-03-29
Gray J
Original judgment source is linked above.
JUDICIAL REVIEW AND APPEALS - Victorian Civil and Administrative Tribunal Act 1998 s 148 - Property Law Act 1958 ss 19A, 28A, 53, 222, 225, - Sale or division of land - Application by co-owner of land - Claim of tenancy in common in equity by reason of resulting trust - - VCAT jurisdiction - Presumption of resulting trust from contributions to purchase - No pre-existing relationship between contributors to the purchase - Presumption of resulting trust not precluded, displaced or rebutted by VCAT's findings about the actual intentions of the contributors - Claim of fixed-term lease subject to - Finding of ostensible authority - Finding of oral agreement to enter into fixed-term lease - Errors of law in understanding of applicable principles and application to facts.
1 A purchase of land can be funded by multiple contributors. Those contributors might deal only through an intermediary. This case illustrates what can go wrong when a land acquisition occurs over an extended period and the contributors do not deal directly with each other. The confusion in this case had an additional dimension. One of the contributors wished to continue conducting a business on the land. Did the dealings through the intermediary result in an enforceable agreement for that contributor to have a lease of the land and options for fixed terms totalling up to nine years?
2 Parliament recognises that people who own property together might wish to go their separate ways, and provides a process for enabling them to divide their interests. Variants of this process have existed in England since Tudor times. In Victoria, the process is set out in the Property Law Act 1958 (PLA), pt IV divs 1 and 2. These provisions enable a 'co-owner' of land or goods to apply for orders from the Victorian Civil and Administrative Tribunal (VCAT) for partition or sale. A 'co-owner' of land is defined as 'a person who has an interest in land with one or more other persons as ... joint tenants or ... tenants in common'.
3 The appellants in this proceeding (separately**, Doolkoora** and Peninsula) are registered proprietors as tenants in common of land in Balnarring on the Mornington Peninsula (the land) on which the respondent (SGH) operates a service station business.[1]
4 SGH has no registered interest on the title to the land maintained by the Registrar of Titles under the Transfer of Land Act 1958 (TLA).
5 The courts recognise that a contributor to a purchase[2] can have equity in land through a resulting trust. SGH applied for orders under PLA pt IV claiming to be an equitable tenant in common with Doolkoora and Peninsula under a resulting trust. SGH paid the deposit for the purchase. The balance was paid by Doolkoora, for itself and Peninsula, both of which were latecomers to the transaction. They became the registered proprietors of the land.
6 SGH had three directors. Two of them (the Turnleys) never had any direct dealings with Doolkoora or its sole director (Ms Fraser). The Turnleys knew of their existence but not their identities. They knew nothing of Peninsula. The purchase was managed by an intermediary (Mr Forrest), who was the third director of SGH and the sole director of Peninsula. Mr Forrest was named in the contract as purchaser. Mr Forrest established Peninsula without informing the Turnleys.
7 At the various times when the contributors paid their money toward the purchase, they each had expectations of becoming owners of the land.
8 VCAT's final orders included a declaration that SGH is an 'equitable co-owner' as to a certain proportion of the land, and that Doolkoora and Peninsula hold their interest in the land on a resulting trust to this extent. On the basis of this declaration, VCAT made orders for the sale of the land pursuant to s 228(2)(a) of the PLA.
9 VCAT found that, by reason of Mr Forrest having actual authority on behalf of Peninsula and ostensible authority on behalf of Doolkoora, those companies made a binding agreement with SGH to lease the land. VCAT declared that SGH entered into a valid, subsisting and enforceable agreement for lease with Doolkoora and Peninsula in respect of the land with certain terms, including an initial three-year term and two three-year options to extend, and ordered the respondents to enter into a lease with those and other terms pursuant to s 91(1)(a) of the Retail Leases Act 2003 (RLA) or by way of final mandatory injunction. The order for sale under s 228(2)(a) of the PLA is subject to the lease.
10 Doolkoora and Peninsula seek leave to appeal on questions of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) from orders made by VCAT in SGH's favour after a proceeding in VCAT commenced by SGH. The grounds of appeal raise the following questions of law:
(a) the parties' actual intentions in making their contributions to the purchase of the land?
(b) the absence of any pre-existing relationship or involvement in the transaction between the contributors and purchasers?
11 I have decided to grant leave to appeal in relation to all except ground 4, and to allow the appeal from grounds 5, 6 and 7. The appeal will otherwise be dismissed.
12 The facts are complicated and the findings made by VCAT are dispersed over a long decision.[3] In order to place the questions in the appeal in context, a chronological narrative of the facts found by VCAT is required, in somewhat more detail than is usual for an appeal under s 148 of the VCAT Act.
13 In about July 2016, the owners of a service station business known as 'Balnarring Motors', and the land on which it operated, engaged an agent to sell the land and business. This evidently attracted the interest of Stewart Forrest, who lived and worked in the area. In about mid July 2016, Mr Forrest informed Kimball Turnley (Mr Turnley) that he had identified an opportunity to purchase the service station business and the freehold on which it was operated.
14 Mr Forrest had been acquainted for some years with Mr Turnley and his son Craig Turnley (Mr C Turnley) (together, the Turnleys). Mr C Turnley had at one time worked for a labour hire company owned by Mr Forrest, and Mr Forrest had subsequently sold that company to CITEK Group Pty Ltd (CITEK), owned by Mr Turnley and his spouse. Later, from about October 2015, Mr Forrest and the Turnleys became involved in a three-way joint venture proposal for a restaurant business in Balnarring. By July 2016, that project was under way.
15 Mr Forrest made a proposal to Mr Turnley that Mr Forrest and the Turnleys should acquire the service station business and land in three equal shares, whether by holdings in a company or otherwise. In July 2016 an informal and oral 'Acquisition Agreement' to that effect was reached between them. One of its terms was that Mr Turnley would provide funding to purchase the business and the deposit for the land. Mr Forrest gave evidence before VCAT that there were more terms, including a condition precedent that Mr Turnley would provide all the funding for the purchase. This account was disputed by the Turnleys. Doolkoora and Peninsula relied on Mr Forrest's evidence in contending that the alleged condition precedent had not been fulfilled and SGH was thereby disentitled from obtaining any interest in the land. VCAT addressed this issue in its decision, calling it the alleged condition precedent.
16 On 29 July 2016, Mr Forrest made an offer in writing to the owners and vendors' agent to purchase the service station business and the land.
17 The purchase price for the land was $960,000, of which three $50,000 deposit payments were required: on signing, six months later and nine months later. The purchase price for the business was $90,000 (based on fuel stocks at the time), of which a deposit of $9,000 was payable on signing and the balance on settlement in six months or on possession.
18 The original form of the contract of sale of the land required that 'this agreement be completed contemporaneously with or earlier' than a contract for the sale of the business, and if that contract were to be rescinded or terminated, the vendor would be able to rescind the agreement for the sale of the land also. Upon payment of the first two deposit amounts, and purchase of the business, the contract provided for the purchaser to occupy the land for no extra fee and to be responsible for outgoings from that time.
19 Also on 29 July 2016, Mr Turnley caused CITEK to pay $50,000 to the agent of the vendor of the service station, being the first instalment on a deposit under the land purchase contract.[4]
20 Mr Forrest's offer was accepted. The agreements for the purchase by Mr Forrest (or nominee) of the land and business became unconditional during the week beginning 8 August 2016. Settlement of the purchase of the land was due in 12 months, which meant August 2017. Mr Forrest was the named purchaser on both written agreements. Mr Forrest instructed a solicitor, David Gibbs of DGA solicitors, in relation to these agreements and was invoiced for this work. Mr Turnley paid the invoice.
21 On 19 August 2016, the written agreements for the purchase of the land and business were amended by deed. This included the deletion from the business purchase agreement of a condition that had enabled the vendor of the business to rescind that agreement if the land purchase was not also completed, and altering the composition of the purchase price in that agreement by adding a value for goodwill of the business and adjusting the value of stock downward. The overall purchase price was left unchanged.[5]
22 SGH was incorporated on 5 September 2016 for the purpose of purchasing the land and business as a joint venture operating the business. Its directors were Mr Turnley, Mr C Turnley and, initially, Mr Forrest's spouse, representing Mr Forrest's interests.[6] The directors were shareholders in equal proportions.[7]
23 There were discussions between the Turnleys and Mr Forrest about the development and fit-out of the restaurant business. Over the same period, there were communications between the Turnleys and Mr Forrest about the purchase of the service station land and business, and the Turnleys had dealings with the vendors and with the petrol supplier about the business.[8] In mid-October 2016, Mr Turnley agreed with the vendors that settlement of the purchase of the business would be on 1 December 2016.[9]
24 On 28-29 November 2016, Mr Turnley transferred $100,000 from his superannuation account via personal bank accounts to CITEK, and then arranged for CITEK to transfer $120,000 to SGH as a loan.[10]
25 On 2 December 2016, SGH made two payments to the vendor's agent: $66,000 for the purchase of the business, being the balance owing after an adjustment for less fuel remaining on the premises; and $50,000, being the second instalment of deposit on the purchase of the land. Mr Turnley took possession of the business premises for SGH on that day. As mentioned in paragraph 18 above, the written contract of sale of the land conferred a licence to occupy the land for no fee.
26 On 20 December 2016, Mr Forrest succeeded his spouse as director of SGH. From this date to 1 September 2017, Mr Forrest was one of SGH's three directors, along with Mr Turnley and Mr C Turnley.
27 Also on 20 December 2016, Mr Turnley caused SGH to make a third payment of $50,000 to the vendor of the land.
28 This left an outstanding balance of $810,000. Mr Turnley indicated to Mr Forrest that he was unable to raise and pay that amount for the purchase of the land by the required settlement date of around August 2017. Discussions about options for finding a source of funds to pay the balance of the purchase price on the land ensued, and Mr Forrest told Mr Turnley in about May 2017 that he had found another investor, who would pay the balance. Mr Forrest did not reveal the investor's identity, but it later became clear that this was Belinda Fraser.
29 On 8 or 9 June 2017, SGH entered into a ten-year supply agreement with a new supplier, Petrogas Australia Pty Ltd, for the supply of 'Mobil' fuel for the service station business.
30 VCAT received evidence that in early July 2017, Mr Forrest told Ms Fraser that his partners had failed to secure the funding that was required to pay the balance of the purchase price, and that if Ms Fraser or an entity nominated by her paid the balance of the purchase price, she or that entity would own the business and the land outright. Doolkoora and Peninsula contended before VCAT that this constituted a binding agreement between them and SGH to that effect, called in the VCAT proceeding the alleged SGH/Fraser relinquishment agreement. VCAT addressed this issue in its decision.
31 On 25 July 2017, there was a meeting between the Turnleys and Mr Forrest at which Mr Forrest said that he had found an investor for the balance of the purchase price. VCAT found that Mr Turnley and Mr Forrest agreed in about July 2017 that the new investor could become a part owner of the land with SGH.[11]
32 Again, Mr Forrest did not reveal Ms Fraser's identity as the investor, or the identities of the two entities related to her by which the investment was to occur. The first of these was Doolkoora, which had been incorporated in 2015, its sole director and shareholder being at all relevant times Ms Fraser. The second was Peninsula.
33 Peninsula was incorporated on 27 July 2017, with Ms Fraser and Mr Forrest as its shareholders and directors. However, Ms Fraser's directorship terminated almost immediately, this occurring on the same day - 27 July 2017.[12]
34 During most of the subsequent events of relevance to this case, Mr Forrest was Peninsula's sole director and secretary, only relinquishing those offices on 8 February 2018, when Ms Fraser assumed them.
35 Before VCAT, Mr Forrest gave evidence that there was more to the discussions he had with the Turnleys in July 2017 about the terms on which the new investor would be involved in the purchase. On the basis of Mr Forrest's evidence, Doolkoora and Peninsula contended that in about July 2017, an agreement had been reached between Mr Forrest and the Turnleys to relinquish any interest SGH might have acquired from its contributions to the purchase. In the VCAT proceeding this was called the alleged SGH/Forrest relinquishment agreement. VCAT addressed this issue in its decision.
36 At a time in late 2017 not revealed by the findings of VCAT, Mr Gibbs started to act for Ms Fraser. The evidence before the Court does not reveal the terms of this retainer.
38 On 7 August 2017, there were oral communications between Mr Forrest and Mr Turnley which VCAT found to constitute the offer on behalf of Doolkoora and Peninsula for the agreement for lease under challenge in this appeal. VCAT found this was an offer to enter into an agreement for lease for a three-year period with options for renewal of two further three-year periods, and on the other terms referred to in VCAT's orders.[17] Monthly rent was to be paid to Mr Gibbs. Mr Turnley caused SGH to immediately send to Mr Gibbs the rent for August. In its decision, VCAT considered whether these events amounted to an agreement for lease, calling this the agreement for lease claim.
39 In the second half of August 2017, SGH spent money on an upgrade of the service station and on converting it to a 'Mobil' branded service station.
40 On 1 September 2017, Mr Forrest ceased to be a director of SGH.
41 On 2 September 2017, Doolkoora and Peninsula became registered proprietors in fee simple as tenants in common of the land.
42 In September, October, November, and December 2017, Mr Turnley caused SGH to pay further amounts of monthly rent to Mr Gibbs and, in some months, outgoings as directed by Mr Forrest.
43 On 19 December 2017, Mr Gibbs' firm wrote on behalf of Doolkoora (but not Peninsula) to Mr Turnley, offering a lease for $130,000 rent per annum on condition that Mr Turnley or his associated entity pay $250,000 to purchase the Balnarring Motors business. Mr Turnley's evidence to VCAT was that he considered these terms to be inconsistent with the terms discussed and agreed with Mr Forrest in August 2017, and to be unworkable.
44 On 8 February 2018, Doolkoora became sole shareholder of Peninsula, Mr Forrest ceased to be the sole director and secretary of Peninsula, and Ms Fraser assumed these offices.
45 On 3 April 2018, Doolkoora and Peninsula served a notice to quit the land on SGH. This caused SGH to commence a proceeding in VCAT.
46 On 21 May 2018, VCAT granted an interlocutory injunction allowing SGH to continue to occupy the land.
47 Mr Forrest played no role in the proceeding in this Court. However, he featured in the VCAT proceeding.
48 In November 2018, VCAT made directions for a final hearing in May 2019. At this time, Mr Forrest was a respondent in the VCAT proceeding.[18] However, after providing three witness statements and after the hearing had commenced in May 2019, Mr Forrest announced that he had become a bankrupt.[19] It appears that Mr Forrest ceased to be a party to the VCAT proceeding at some time after this.
49 The hearing resumed in December 2019 and was later adjourned to February 2020. After the hearing resumed in February 2020, Mr Forrest attended the hearing but did not adopt a further proposed statement containing evidence Doolkoora and Peninsula sought to adduce from him. Subject to certain excisions, his earlier witness statements were accepted into evidence.[20]
50 Based largely on the points of claim and defence of the parties, the issues VCAT identified for determination, and its conclusions on those issues, were as follows.
51 First, was SGH (by itself or, as alleged, by CITEK on SGH's behalf), by making payments between amounting to $150,000 towards the purchase of the land, entitled to claim that Doolkoora and Peninsula held their interest in the land on a purchase money resulting trust in favour of SGH (the resulting trust claim)? VCAT addressed this question over the course of 60 pages, comprising more than half of its reasons for decision. VCAT answered this question by addressing four 'sub-issues'. These were:
(a) Was it agreed between Mr Forrest and Mr Turnley, as part of the conversations in July 2016 comprising the Acquisition Agreement, that any interest in the land that may have accrued to SGH upon making contributions by way of payment of the deposit toward the purchase price of the land, was conditional upon the alleged condition precedent?
(b) Did Mr Forrest and Mr Turnley expressly agree in about July 2017 on the alleged SGH/Forrest relinquishment agreement?
(c) Was SGH in any event bound by Mr Forrest's alleged representation to Ms Fraser on behalf of the respondents in early July 2017 to the effect of the alleged SGH/Fraser relinquishment agreement?
(d) Did SGH make a financial contribution towards purchase of the land pursuant to the Land Purchase Contract, such that a resulting trust arose in favour of SGH in proportion to the contribution of funds made by SGH for the purchase of the land?
52 VCAT addressed the first three of the above sub-issues before identifying the principles applicable to the raising of presumptions about purchase money resulting trusts and deciding that such a presumption arose in this case.
53 VCAT's reasons for decision on the first three sub-issues were in summary as follows:
(a) VCAT found that Doolkoora and Peninsula failed to prove the alleged condition precedent. In the course of considering the issues, amongst other things, VCAT dismissed as 'not proven' a contention by Mr Forrest that SGH and Mr Turnley were to be compensated for the $150,000 deposit by having free occupation of the land, conducting the business and deriving cashflow during the period from December 2016 to settlement in August 2017, and accepted Mr Turnley's evidence to the contrary. VCAT also considered that Mr Forrest's conduct in preparing the only document that referred to the alleged condition precedent, the 'Balnarring Motors Deed', supported VCAT's preference for the evidence of the Turnleys.
(b) VCAT concluded that Doolkoora and Peninsula had not proved the SGH/Forrest relinquishment agreement. VCAT preferred Mr Turnley's evidence to Mr Forrest's and found that contextual evidence supported Mr Turnley's account.
(c) VCAT found there was insufficient evidence that Mr Forrest, on behalf of SGH, entered into the alleged SGH/Fraser relinquishment agreement with Ms Fraser. VCAT did not accept that Mr Forrest acted within the scope of ostensible authority as SGH's agent in any discussion with Ms Fraser about that topic. VCAT said it was 'not persuaded that Ms Fraser had a proper basis for assuming that Mr Forrest had authority on behalf of SGH to enter into the alleged SGH/Fraser relinquishment agreement', and 'Ms Fraser was not entitled to rely on the representations of Mr Forrest because she should have known or suspected that any assumption that Mr Forrest could bind SGH was incorrect'. I address this issue in more detail in my analysis of ground 4 below.
(d) As to the fourth and final sub-issue, VCAT upheld SGH's resulting trust claim. VCAT decided that Doolkoora and Peninsula held the land on a resulting trust for SGH to the extent of its $150,000 contribution to the purchase. VCAT found that the first payment of $50,000 was a pre-incorporation payment made on behalf of SGH, referred briefly to the applicable principles, and found that a resulting trust arose in favour of SGH upon paying each of the three $50,000 instalments, concluding that Doolkoora and Peninsula held their shares in the land subject to that resulting trust.
54 Second, was SGH entitled as equitable co-owner to an order for the sale of the land pursuant to s 228(2)(a) of the PLA, and division of the proceeds in accordance with the respective contributions of the co-owners (the order for sale claim)? VCAT answered this affirmatively, in SGH's favour, and made a calculation of the proportion in which the land was held on a resulting trust for the benefit of SGH as a tenant in common. There is no separate appeal in relation to the order for sale claim. However, VCAT's order for sale depends on the resulting trust claim.
55 Third, did SGH have an agreement, made on 7 August 2017, for lease of the land with Doolkoora and Peninsula from a date in August 2017 (and if so, what date) and, if so, on what other terms, as alleged in the agreement for lease claim? VCAT found that there was such an agreement. VCAT found that, when communicating with the Turnleys about SGH entering into a lease over the land to conduct the service station business, Mr Forrest was acting with ostensible authority to bind Doolkoora and actual authority to bind Peninsula. As a result, VCAT found that Doolkoora and Peninsula reached an oral agreement with SGH to enter into a retail lease over the land. VCAT made findings about its terms.
56 VCAT made no findings on a potential fourth issue as to whether there was an agreement by parol for a lease. This issue was couched as an alternative to the third issue.
57 VCAT also noted a dispute about ownership of the business, which VCAT decided it did not have jurisdiction to determine. There was no appeal from this ruling. The ownership of the business is therefore also excluded from the subject matter of this appeal.
58 On 19 May 2022, VCAT made its final orders in the proceeding, which (as amended by a further order on 10 June 2022) were as follows:
1. It is declared that the applicant is an equitable co-owner of land at 2994 Frankston Flinders Road, Balnarring, Victoria ("the land"), as to an undivided fifteen ninety-sixths of the land, and that the respondents hold their interest in the land on a resulting trust to this extent for and on behalf of the applicant.
2. It is declared that on or about 7 August 2017, the applicant entered into a valid, subsisting and enforceable agreement for lease with the respondents in respect of the land, containing the following terms:
(a) the lease would provide that the applicant would pay to the respondents rent of $9,166 plus GST per month;
(b) in addition to the payment of rent, the applicant would also pay the respondents outgoings in respect of the land;
(c) the initial term of the lease would be three years commencing 1 August 2017;
(d) the applicant would have the right to exercise two options to extend the term of the lease for a further three years in respect of each option (such that if both options were duly exercised, the lease will extend to 31 July 2026);
(e) the rent will be increased in line with the CPI at the commencement of each new year of the term, and that rent reviews be conducted to market at the commencement of each new term;
(f) such further terms and conditions (as are not inconsistent with the above terms) as are usual in leases of premises for use as service stations which sell car and truck fuel and related goods, and which also provide services to retail customers; and
(g) the parties will enter into a written lease between the applicant as lessee on the one hand and the respondents as lessors (being the registered proprietors of the land from 2 September 2017), and containing the above terms, and such other terms as are implied by the Retail Leases Act 2003 (Vic).
3. Pursuant to the power to do so in s 91(1)(a) of the Retail Leases Act 2003 alternatively by way of final mandatory injunction, the respondents must enter into a lease with the applicant containing the above terms, and such further terms and conditions as are usual in leases of premises for use as service stations which sell car and truck fuel and related goods, and provide services to retail customers. In the event that the parties cannot agree on the full extent of these further terms, liberty to apply to the Tribunal.
4. By consent, Mr Kimball Turnley of the applicant must provide the guarantee stipulated in the LIV Lease, if required by the respondents.
5. It is declared that by its conduct, the applicant exercised its first option to extend the term of the lease to 31 July 2023.
6. Pursuant to s 228(2)(a) of the Property Law Act 1958, the Tribunal orders that the land be sold, but subject to the agreement for lease declared by order 2**,** or the lease contemplated by order 3, to the effect that the proceeds of sale will be applied as follows, and in the following priority:
(a) Payment of the real estate agent's commission or fee, including the auctioneer's fee and other expenses of sale;
(b) the discharge of any registered encumbrance on the land;
(c) payment of any outstanding rates, charges, taxes and imposts which have not already been paid by the respondents;
(d) payment of the reasonable legal costs associated with the sale and conveyance of the land;
(e) the net balance to be paid to the parties in the following proportions:
Fifteen ninety-sixths of the net balance, but from which must be deducted outgoings from 1 September 2017 for which the applicant is liable to pay to the respondents, and paid to the respondents
The balance of the net balance, from which must be deducted the amount described in order 3(f)[21], and paid to the applicant.
(f) payment to the applicant of a fifteen ninety-sixths share of the net income derived from the land since 1 August 2017 (being the date that the respondents settled their purchase of the land), or from such other date that the respondents first received income from the land.
7. Liberty to apply in respect of the other terms of sale, including liberty to apply to the principal registrar to obtain the Tribunal's pro-forma terms of sale as may assist the parties to effect the requirements of order 6.
8. The respondents and/or their agents are permanently restrained from taking any action to recover possession of the land in reliance upon their notice to quit dated 3 April 2018.
9. Costs reserved. Should there be any application for costs, the parties must confer with a view to reaching agreement on the dates for the filing and exchange of written submissions, failing which the Tribunal will make orders.
10. Liberty to apply generally, including for assessment of applicable outgoings payable by the applicant to the extent that they have not been paid by the applicant, and for assessment of income payable to the applicant by the respondents.
D. The application for leave to appeal to this Court
59 By their amended notice of appeal (the notice of appeal) the appellants seek leave to appeal to the Court from VCAT's orders. The appellants seek orders granting leave and allowing the appeal, dismissing the proceeding in VCAT between them and SGH, and that SGH pay their costs of this proceeding and the proceeding in VCAT.
60 As already noted, the proceeding is brought under s 148 of the VCAT Act. Section 148(1) provides that a person may seek leave to appeal from a decision of VCAT on a question of law.
61 I am required to determine whether leave should be granted and, if so, whether the orders of VCAT or any of them should be set aside or varied.
62 The seven questions and grounds of the notice of appeal are substantially reproduced, issue by issue, in the 'Consideration' section of these reasons. I have considered the parties' submissions, both oral and written.[22]
63 Before I explain my consideration of the issues, there is a threshold matter raised by the parties as to the function of the Court in an appeal under s 148 of the VCAT Act.
64 The appeal is limited to questions of law. The identification of a question of law is not merely a precondition to the exercise of a right to appeal, but the subject matter of the appeal itself.[23] The appeal does not extend to correction of alleged errors of fact unless VCAT made a finding of fact that was not open to it.[24] However, the limits of the Court's function in a proceeding under s 148 do not altogether prevent a court from considering mixed questions of fact and law. In some circumstances, it will be permissible to consider whether VCAT erred in law in reaching conclusions on mixed questions of fact and law.[25] Generally speaking, whether primary facts as found fall within a statutory provision properly construed is a question of law,[26] and the same is true of a legal test arising at common law or in equity.[27]
65 SGH submitted that an element of the appellants' contentions in support of ground 2, and the entirety of ground 7, are beyond the scope of s 148 of the VCAT Act.
66 In my view, these grounds consist of questions of law in that they dispute VCAT's understanding of applicable legal (and equitable) principles, or contend that VCAT erred in applying those principles to the facts as found, or that the findings of VCAT were not open.
67 It is worth saying something more about the principle that, generally speaking, whether facts as found fall within a legal description is a question of law. SGH relied on the decision of the New South Wales Court of Appeal in Thomas and Naaz.[28] The appellants submitted that this case should not be followed. The reason for this submission appears to be that the case might be thought to qualify this principle more restrictively than Victorian authorities. I do not think there is any real difference of approach to the principles. The Court in that case indicated that an appeal on a question of law is available where the characterisation of found facts is one that bears 'a particular legal meaning'.[29]
68 Although the issues raised by SGH concern the application of principles of equity and contract law (rather than statute), they involve the characterisation of facts with descriptions that bear 'a particular legal meaning'. It is this that matters.
69 Thus, the question of whether the facts found by VCAT are to be characterised as giving rise to the presumption of a resulting trust is a question of law, as is the question of whether the facts found by VCAT would be understood by a reasonable observer to amount to the making of a legally binding agreement for the lease of land.
70 I interpret all the grounds of the appeal, including the ones impugned by SGH, as falling within the permissible scope of a s 148 appeal.
71 I address the question of whether I should grant leave to appeal at the same time as determining whether the appeal on each question and ground is to be upheld.
72 This section is divided into seven parts, in which I address each of the grounds of the appeal in turn.
Ground 1: Did VCAT have jurisdiction to make orders under PLA pt IV?
73 In its written submissions, SGH submitted that leave to appeal on this ground should be refused on the basis that the appellants had not made submissions to VCAT objecting to its jurisdiction. However, as SGH's counsel rightly acknowledged at the hearing, even if the appellants had not agitated the issue below, I would in any case have to address it. That is because the issue raises a statutory interpretation issue of general application and raises doubt about whether VCAT had jurisdiction to make some of its orders.[30]
74 In any event, the appellants did raise the issue before VCAT. By their points of defence in the VCAT proceeding, Doolkoora and Peninsula contended that VCAT did not have jurisdiction to adjudicate the issue as to whether SGH '[holds] an equitable interest in the land'. VCAT dismissed that contention, on the basis that an 'interest' in land for the purposes of s 222 of the PLA 'has been held to include a beneficial interest', citing Garnett v Jessop.[31]
76 The jurisdictional issue was of significance not only in this case but for future cases. It was reasonably arguable. I have decided to grant leave to appeal on ground 1.
77 For the reasons explained in this section, and having considered the merits of ground 1 in detail, I have decided to dismiss it. I have concluded that VCAT had jurisdiction to hear and determine SGH's claim to an equitable interest in the land as an element of deciding SGH's claim for orders under PLA pt IV div 2 in relation to the land, and that VCAT had jurisdiction to make related orders under those provisions.
78 PLA pt IV applies to all land in Victoria, and is not limited to land registered under the TLA.[34] Within PLA pt IV, s 225(1) provides relevantly that 'a co-owner of land or goods may apply to VCAT for an order or orders under this Division to be made in respect of that land or those goods'. An application may request either sale and division of proceeds, or physical division, or a combination of both.[35] 'Co-owner' is defined as:[36]
... a person who has an interest in land or goods with one or more other persons as -
(a) joint tenants; or
(b) tenants in common;...
79 'Land' has the same meaning as it has in the Interpretation of Legislation Act 1984.[37] The Interpretation of Legislation Act 1984 contains the following inclusive definition of land, which applies 'unless the contrary intention appears':[38]
land includes buildings and other structures permanently affixed to land, land covered with water, and any estate, interest, easement, servitude, privilege or right in or over land...
80 The parties to an application to VCAT must include all co-owners.[39] The substantive powers of VCAT are set out in s 228:
(1) In any proceeding under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs.
(2) Without limiting VCAT's powers, it may order -
(a) the sale of the land or goods and the division of the proceeds of sale among the co-owners; or
(b) the physical division of the land or goods among the co-owners; or
(c) that a combination of the matters specified in paragraphs (a) and (b) occurs.
81 VCAT is to make an order for sale and division of proceeds 'unless VCAT considers that it would be more just and fair to make an order' for physical division.[40] In a proceeding for sale or division of land or goods, VCAT has power to appoint or remove trustees and give them directions,[41] and certain other specific powers relating to sale.[42]
28A Liability of co-owner to account
(1) A co-owner is liable, in respect of the receipt by him or her of more than his or her just or proportionate share according to his or her interest in the property, to account to any other co-owner of the property.
(2) In this section, co-owner means a joint tenant, whether at law or in equity, or a tenant in common, whether at law or in equity, of any property.
83 Section 28A is in pt II of the PLA, entitled 'The general law of property and conveyancing', within div 1, entitled 'General principles'. There are different definitions of 'property' in PLA pt II and PLA pt IV but they are to very similar effect. In pt II, 'property' is inclusively defined, unless inconsistent with the context or subject matter, as 'any thing in action, and any interest in real or personal property'.[45] In pt IV, 'property' is defined in exhaustive terms, but the definition includes 'real and personal property, including any estate or interest in real or personal property', 'a thing in action', and 'a right with respect to property'.[46]
85 PLA pt IV div 4 is entitled 'Jurisdiction'. Its principal provision is s 234C, which is intended to alter or vary the Supreme Court's jurisdiction recognised by s 85 of the Constitution Act 1975.[48] The Supreme Court and the County Court do not have jurisdiction to hear an application under pt IV, subject to the following exceptions.[49]
(a) The Supreme Court and the County Court have jurisdiction to hear an application under pt IV if the application relates to Administration and Probate Act 1958 pt IV, the Partnership Act 1958, or 'Part IX' (sic) of the PLA.[50] There is no longer any pt IX in the PLA. I take this to be a reference to the Relationships Act 2008 pt 3.3.[51] This jurisdiction is exclusive of VCAT.[52]
(b) Also, the Supreme Court and the County Court have jurisdiction to hear an application under pt IV if the issue of co-ownership arises in the course of a proceeding otherwise commenced in those courts, or special circumstances exist which justify them hearing the application.[53] Special circumstances include complexity.[54]
86 It is also relevant to note ss 19A and 53 of the PLA. Section 19A was enacted when the historical 'Statute of Uses' was repealed in Victoria in 1980.[55] The Victorian Law Reform Commission has noted that sub-ss 19A(1) and (2) are obscure and may be redundant.[56] Nevertheless, ss 19A(1) and (2) refer to the creation of equitable interests in land. Subsections 19A(3) and (4) provide that a resulting trust for the grantor of a voluntary conveyance shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee, but this does not limit or affect the operation of any principle or rule of equity relating to the implication of resulting trusts.
87 Section 53 is the modern manifestation of an aspect of the 'Statute of Frauds'.[57] Subsection 53(1) imposes requirements of writing and a signature for disposition of any 'interest in land', 'declaration of trust respecting any land or interest therein', or disposition of an 'equitable interest' or trust, subject to 'the provisions hereinafter contained with respect to the creation of interest in land by parol'. Subsection 53(2) provides that the section 'shall not affect the creation or operation of resulting, implied or constructive trusts'.
88 The notice of appeal and written submissions describe the first question of law and ground raised by the proceeding in the following terms:
Did the Tribunal have jurisdiction under s. 225 of the PL Act to make the orders [1], [6], [7] and [10] appealed from?
Grounds
(a) Section 225 of the Property Law Act 1958 confers jurisdiction upon the Tribunal (and takes it away from this Honourable Court) upon application by a "co-owner", defined as:
co-owner _means a person who has an interest in land or goods with one or more other persons as - _
(a) joint tenants; or
(b) tenants in common;
(b) Joint tenancies and tenancies in common are legal forms of title held by co-owners. They do not encompass the relationship between a trustee and a cestui que trust. The claim was not within the statutory jurisdiction conferred on the Tribunal and the decision of the Tribunal is therefore a nullity. The Appellants' objection to such jurisdiction should not have been dismissed.
89 Some of the expressions in ground 1 require explanation.
90 The relationship between a trustee and a cestui qui trust (beneficiary) has long been recognised in equity. The relationship can, depending on the trust, give rise to the beneficiary having an equitable interest in the land held by the trustee.[58] There is a debate about whether equitable interests are personal or proprietary. They have characteristics of both. They are personal because they constrain the ways in which the legal owner of the land can exercise legal rights over the land. In this way, equitable interests are described as being 'impressed upon' the legal estate, not carved out of it.[59] Property is not regarded as being divided into two separate legal and equitable estates that must each have an owner.[60] However, equitable interests in land have proprietary characteristics too. They can be enforced against third parties taking legal ownership in some circumstances, and assigned.[61] Equity followed the law by enforcing an analogous array of estates as existed at common law.[62] These equitable interests are 'annexed to' the land.[63] Where there is no other person entitled to the benefit of the land, the legal owner holds an absolute and unqualified legal title.[64] There is a recognised principle that owners of fee simple estates in land cannot hold them on trust for themselves, 'at least where coextensive and commensurate legal and equitable interests are concerned'.[65]
91 Trusts are typically express, and in most cases, in written form. That is, they are constituted by words expressed by an owner of property about how that person intends the property to be held for the benefit of others. However, in some circumstances equity will also 'imply' trusts such as resulting trusts. This case is concerned with the form of resulting trust known as the 'purchase money resulting trust'.[66] Equity has developed principles for the implication of a purchase money resulting trust. I address them in my analysis of ground 2 below.[67]
92 Both common law and equity recognise that two or more persons can hold land as 'tenants in common' of the fee simple estate (or lesser legal estates), each having a proportionate interest in the estate. Their respective interests are not fixed to different parts of the land - they are all said to each have an 'undivided' share. They each have a right to occupy the whole of the land. But each has a proportionate share of ownership of the land, and together those shares make up the whole. The shares of each may be separately transferred to others, or inherited.[68]
93 Where tenants in common are registered under the TLA as such on the title to the fee simple estate in land, they are tenants in common in law. Equity recognises that persons may be tenants in common in an equitable interest in land inconsistently with the details appearing on the Register. For example, in certain circumstances, persons registered as 'joint tenants' might be treated as having equitable interests as tenants in common in fixed proportions of the fee simple estate. In such a case, they might be described as holding the land on trust 'for themselves as tenants in common' in the appropriate proportions.[69] This is an exception to the principle that trustees cannot hold legal title 'on trust for themselves'.
94 The key steps in the appellants' jurisdictional objection were as follows.
(a) First, it is not to the point that the definition of 'land' in the Interpretation of Legislation Act 1984 and pt IV of the PLA is broad enough to include a beneficial interest; the interest in question must be one that is held between 'joint tenants' or 'tenants in common'.
(b) Second, the relationship between trustee and beneficiary is not a joint tenancy or tenancy in common.
(c) Third, the jurisdiction conferred on VCAT is subject to the same limitations as the statutory jurisdiction previously conferred on the courts by earlier forms of the partition and sale statutes that had applied in Victoria and England. In applying those statutes, the courts did not treat trustees and beneficiaries as joint tenants or tenants in common who could apply for partition or sale of co-owned interests. This point was explained in detail in the appellants' submissions as follows:
(i) The statutory right to partition of property on the application of joint tenants and tenants in common was first conferred by statutes enacted in 1535 and 1540 during the reign of Henry VIII (the Tudor Acts).[70] In such applications, the courts were empowered to order sale and division of the proceeds in 1868.[71] The sale and division provisions became part of the law of Victoria through Victorian legislation in 1890.[72] The Tudor Acts were reenacted in Victoria in 1922.[73] The language of the Tudor Acts was modernised in Victoria in 1928 and remained in that form until 2005, in then s 221 of the PLA.[74] Prior to amendment of the PLA in 2005, s 221 was the 'lineal descendant' of the Tudor Acts.
(ii) The terminology in the Tudor Acts 'clearly related only to the legal interests in land'.
(iii) The Tudor Acts extended the availability of a common law writ known as the 'writ of partition' to joint tenants and tenants in common. It was a common law writ, suggesting that the right was only available to legal owners.
(iv) Equity provided a remedy of partition where the Tudor Acts made it available at law. The process in equity was more flexible and convenient.
(v) Whether under common law writ of partition or in a proceeding in equity, 'the type of tenure which was subject to partition was the legal title to the land'. The basis for this contention is an 1820 case, Miller v Warmington,[75] in which it was 'explicitly said that it would be fatal to an action for partition if the plaintiff's title was a purely equitable one', and 'where the plaintiff held an equitable estate' partition would be refused.
(vi) The legislative history 'provides no occasion for thinking that the 1928 or 1958 reenactments intended to tacitly expand that operation to extend the right of partition to trust estates'.
(d) Fourth, when the new provisions were enacted in 2005, 'the right to apply to VCAT for a sale or division was confined to a class defined using the same language', indicating that 'the same meaning was intended'. There was no indication that Parliament intended to expand the scope of the provisions in 2005.[76]
95 The appellants also pointed out that the law of trusts has never conferred a general power on the courts to bring a trust to an end. Nor does the Trustee Act 1958 contain such a power, outside the circumstances envisaged in Saunders v Vautier,[77] as supplemented by the conferral of power under s 63A of that Act on the Court to make directions on behalf of some beneficiaries.
96 The appellants also observed that the statutory mechanism for sale and division of co-owned interests in property in three of the Australian jurisdictions refers expressly to ownership in the form of joint tenancy or tenancy in common 'whether at law or in equity'.[78] The mechanism involves the declaration of a statutory trust for sale of the property. The appellants pointed to the express inclusion of a reference to equitable interests in the legislation in these states, and contrasted this with the absence of any such reference in the Victorian legislation.
97 As briefly noted above, in deciding that its jurisdiction was properly invoked, VCAT followed Garnett. Before turning to Garnett, I will address a number of preceding authorities that appear relevant. There are also two authorities since Garnett worth mentioning.
98 The first case in this line of authority is Dawson v Gallant Valley Pty Ltd (Real Property).[79] In that case, Deputy President Macnamara (as his Honour then was) considered the same question about the jurisdiction of VCAT under PLA pt IV that arises here. Deputy President Macnamara acknowledged that historically there had been 'a very strong tendency in Anglo-Australian law for adjudication on trusts and interests in land to be the sole province of superior courts of record'.[80] However, there were countervailing considerations. VCAT had been given a wide range of equitable remedies to administer and in a proceeding under PLA pt IV, VCAT Act sch 1 cl 66A required VCAT to be constituted by a member who has knowledge of or experience in property law matters. This indicated that Parliament might have entrusted jurisdiction to VCAT to adjudicate upon equitable interests in order to give a speedy and economical form of adjudication. Taking a purposive approach, he did not accept that only legal co-owners may apply. He also rejected a submission that only 'admitted equitable interests' are properly the subject of pt IV.[81]
99 The second case is Krsteski & Anor v Jovanoski.[82] This was an appeal under s 148 of the VCAT Act from a decision of VCAT, again constituted by Deputy President Macnamara.
100 VCAT had granted an order for sale of a rural property and division of the proceeds on the application of a woman whose father had been the registered proprietor of the land as tenant in common as to a half share in the property. She sued as administratrix of his will. The other half share of the property was registered to the Krsteskis.
101 The Krsteskis appealed from VCAT's orders. Their appeal raised a question that was in a sense almost the reverse of the jurisdictional objection in the present case. They argued that 'co-owner' under PLA s 225 must 'as a matter of logic' exclude owners of purely legal interests, on the grounds that the function conferred on s 228 was concerned with beneficial ownership. In short, 'the expression "co-owner" should be construed to mean only those kinds of co-owners who would be entitled to partition.'[83] The appellants argued that the father's interest in the property had been a bare legal one, and he had held his legal share of the property on an express or resulting trust for the family, who held the other half of the legal title to the property. Macaulay J rejected this argument, holding that VCAT's jurisdiction was engaged 'by proof that [the daughter] had an interest in the land, legal or beneficial, with [the appellants] either as joint tenant or tenant in common'.[84]
102 Garnett is the third in the line of relevant authorities. This was an application for the sale and division of land between the respondent, who was the registered proprietor of a property, and an applicant who claimed a 10% interest in the property pursuant to a constructive or resulting trust. It raised precisely the same point as the jurisdictional argument here, on similar facts. VCAT was again constituted by his Honour Judge Macnamara, who was now Vice President, together with Dr French, a member.
103 His Honour Judge Macnamara VP and Dr French accepted that VCAT had no inherent or equitable jurisdiction, but said it did have 'what may look like equitable powers' that come from statute.[85] They concluded that those powers were engaged in the case before them. They reasoned that the definition of 'land' in the Interpretation of Legislation Act 1984 extended to equitable estates and interests:[86]
"any" means "any"' and does not discriminate between legal and equitable estates and interests ... if Parliament had intended to exclude equitable estates and interests it could have done so but it [did] not.
104 They said further that, even without considering the definition of 'land', the definition of 'co-owner' on its face refers to a person with an 'interest' in land or goods as a joint tenant or tenant in common. The ordinary meaning of this term includes equitable as well as legal interests.[87]
105 His Honour Judge Macnamara VP and Dr French referred to the legislative amendment that led to the current form of PLA pt IV, the Property (Co-ownership) Act 2005 and the second reading speech in support of the relevant bill. The identified purpose of the amendment was to 'provide for the transfer of jurisdiction for co-ownership disputes from the Supreme and County Courts' to VCAT, and 'to ensure that these disputes can be dealt with in a more accessible and affordable form for dispute resolution'.[88] Judge Macnamara VP and Dr French then made the following point (emphasis added):
In light of s 234C and the intention that the Tribunal have the chief jurisdiction in relation to applications under Part IV, it would seem strange if it were limited only to exercising this jurisdiction in relation to persons who are legal co-owners of land. If this were so, in hearing applications under Part IV, the Supreme Court would be similarly limited to only being able to make orders for sale and division of proceeds etc, in relation to legal co-owners of land. This is because the Supreme Court's powers to make such orders come from Part IV of the Act and are not inherent.
106 The appellants in the present appeal did not dispute the correctness of this point. They submitted, however, that it is unsurprising that neither the courts nor VCAT should have been given power to determine an application for partition or sale and division at the behest of equitable co-owners. They said this would amount to a power to terminate a trust without the consent of all beneficiaries, a power that the courts have never had. I address this issue below.
107 Judge Macnamara VP and Dr French also addressed the disparity between s 28A(2) and the definition of 'co-owner' in s 222. Only s 28A(2) includes the words 'whether at law or in equity'. Did the omission of these words from the definition of 'co-owner' in s 222 mean that only legal ownership was intended in pt IV? They thought not, pointing to the references to s 28A within pt IV, in ss 233 and 234. They said that 'the incorporation by reference of s 28A in these provisions, without expressly limiting its application to legal co-owners for the purposes of Part IV, supports the view that the definition of co-owner in s 222 is not so limited',[89] and that the reference to 'interest' in s 222 encompasses equitable interests.[90]
108 The appellants in the present appeal also submitted that Judge Macnamara VP and Dr French incorrectly drew support from the decision in Krsteski, by characterising that case as one where the applicant under s 225 had only had an equitable interest in the property.[91] The appellants submitted that, properly understood, Krsteski did not raise as an essential issue for determination the question of whether an equitable tenant in common could be regarded as a co-owner under s 225, because the applicant in that case was administratrix of the estate of the registered proprietor. She was therefore entitled to a legal interest in the land, not merely an equitable one. I think the appellants are correct to point out that the applicant in that case had a right to a legal interest as administratrix, and so the issue essential to determination in Krsteski was not the same issue as the one in this case. However, I do not think Judge Macnamara and Dr French erred in their understanding of Krsteski. The remarks of Macaulay J were supportive of their construction of s 222, even though they were obiter dicta insofar as they indicated that the owner of a purely equitable interest in land could be a co-owner.
...although the Act does not confer power to grant equitable relief and remedies, I do not think there is a jurisdictional problem here or in any case where the Tribunal in exercise of its statutory jurisdiction to do what is 'just and fair' has to make findings, along the way, about the nature and extent of interests in land according to equitable doctrine or principles.
110 His Honour concluded that in order to exercise its jurisdiction under PLA pt IV and to ensure a just and fair sale or division, 'there will be a necessity intrinsic to that task ... to determine the nature and extent of existing interests in the co-owned property be they at law or in equity'.[94]
111 The appellants in the proceeding before me submitted that it was implicit in his Honour's reasoning that, if the application was brought by someone who was not already a co-owner, VCAT did not obtain jurisdiction under s 225 to entertain a claim that the legal owner held the property or a proportion of it on trust for them simply because relief was sought by way of sale. I do not agree with this reading of Mukhtar AsJ's reasons. As SGH argued, any remarks he made giving this impression were simply reflecting the facts of the case, which involved tenants in common at law.
112 The fifth and final case is Stewart v Owen.[95] The applicant and respondent were co-owners as registered tenants in common of a residential property.
113 The appellants submitted that, like Miller, Stewart implies that VCAT could not obtain jurisdiction under s 225 from a claim that the legal owner holds the property or part of it on trust for an applicant. I do not consider that either case implies this. The issue did not arise in either case. The discussion in each case was limited to the consideration of equitable interests in the course of the court's evaluation of what would be a just and fair determination under s 228. In my view, the cases are both neutral on the issue for determination before me.
114 In summary, there are obiter remarks of this Court (Macaulay J in Krsteski) that support a broad interpretation of 'co-owner' in PLA s 222, and a line of VCAT decisions to that effect, ending in the closely reasoned decision of Judge Macnamara VP and Dr French in Garnett. There are no other authorities dealing squarely with the issue.
115 I will address each of the key steps in the appellants' contentions in the order they appear in paragraph 94 above. Before doing so, I will explain what I regard to be the key principles needed to resolve the jurisdictional objection. I regard the issue as one that is to be resolved by the orthodox application of principles of statutory interpretation. When that is done, many of the complex issues of legislative history and analysis of equitable principles raised by the appellants fall away.
116 Statutory interpretation is the process of ascertaining the meaning of provisions enacted by legislative bodies.[96] The statutory interpretation process must begin and end with the text used.[97] Where the words of a provision are clear, unambiguous, and can be intelligibly applied to the subject matter, the provision must be given its ordinary and grammatical meaning - in such cases, Parliament's intention has been expressed 'with unambiguous clarity in the language used'.[98] The text must be interpreted in its context, and context should be considered at first instance, rather than at a later stage when ambiguity might arise.[99] The context includes the purpose Parliament intended to achieve, as discerned from the legislation itself, and relevant extrinsic material.[100] The legislative context includes the statute as a whole, with an assumption that Parliament intends interrelated provisions to operate coherently, giving effect to 'harmonious goals'.[101] To discern legislative intention, it may be instructive to consider the legislative history and antecedents of the provision in question.[102] Legislative history and extrinsic materials cannot displace the meaning of the statutory text.[103]
117 As the legislation here makes clear, only a 'co-owner' of land or goods may apply to VCAT under PLA s 225, and all other co-owners are to be parties to the application.
118 Every decision-making body has a duty, and therefore a power, to decide whether its jurisdiction has been properly invoked.[104] This means VCAT has power to decide whether an applicant under s 225 is a 'co-owner'.
119 Much of the hearing before VCAT involved evidence and argument about whether SGH was a co-owner. It may seem strange that so much effort might be involved in ascertaining a matter which is a precondition of the validity of an application to VCAT under pt IV. Presumably, also, it was not intended by Parliament for it to be difficult for an applicant to identify other 'co-owners', so the applicant can join them as respondents in any proceeding under s 225. Do these features of the legislation suggest that only legal (and not merely equitable) owners can be a 'co-owner'? In the case of land, this would mean a registered interest. Or, if an unregistered, merely equitable form of co-ownership could suffice in some circumstances, would Parliament have intended a limit, avoiding complex hearings on this threshold matter? Would the scope of s 225 perhaps be limited to uncontroversial equitable interests that have been formally admitted or are otherwise incontrovertible?
120 I do not think that either form of limitation can be discerned from the fact that an inquiry into whether a person is a co-owner may be complex. The key reason for this is that it is clear that pt IV div 2 requires VCAT to conduct potentially complex inquiries into the nature, extent and ownership of equitable interests in an application under s 225 in any event. Section 228 requires VCAT, in determining an application under s 225, to consider a 'just and fair' sale or division. The authorities establish that this can involve consideration of claims about the existence and extent of equitable and unregistered interests in land.
121 The parties made competing submissions about a report of the Victorian Law Reform Commission (VLRC Report)[105] and its effects on the interpretation of PLA pt IV. Broadly, the appellants submitted that nothing in the VLRC Report suggested that it contemplated reforms that would confer power on VCAT to determine allegations of trusts or exercise powers of sale in respect of trust property. The respondents, conversely, submitted that the report implicitly recommended that VCAT should have these powers. In my view, the VLRC Report is essentially neutral on the constructional point at issue here and of no real assistance. In any event, resort to extrinsic materials cannot subvert a reasonable textual construction.[106] I have not relied on the VLRC Report in reaching my conclusions.
123 First, I agree with the appellants that it is not to the point that the definition of 'land' in the Interpretation of Legislation Act 1984 and pt IV of the PLA is broad enough to include a beneficial interest; the interest in question must be one that is held between 'joint tenants' or 'tenants in common'.
124 However, this is immaterial. The key point is that the definition of 'co-owner' in PLA s 222 is a person who has 'an interest in land' with another as a tenant in common. What does the PLA, read as a whole, say about the scope of this expression? Does it include an equitable interest shared with another? In my view, it does.
125 For example, s 19A of the PLA treats 'equitable interests' as 'interests in land'. Further, it specifically deals with and preserves the principles of equity relating to the implication of resulting trusts. Section 53 of the PLA is similar in this regard.
126 Another indication to this effect is s 28A, extracted above. Section 28A(1) refers to the receipt by a co-owner of more than his or her 'just or proportionate share according to his or her interest in the property'. Section 28A(2) provides that, in s 28A, a co-owner includes 'a tenant in common, whether at law or in equity, of any property'. An equitable tenancy in common is clearly treated as an interest in property in this section.
127 The appellants addressed s 28A by submitting that I should rely on the difference in language between the definition of 'co-owner' in that section when compared with the definition of 'co-owner' in s 222. They submitted that the difference must be a deliberate choice by Parliament to include equitable interests for the purposes of s 28A and to exclude them from s 222. I do not accept this submission for the following four reasons.
(a) It is not only the express reference to equity that is omitted from s 222 - there is no reference to law either. This makes it unlikely that Parliament intended to exclude an equitable interest from being a qualifying interest for the purposes of s 222, and was simply adopting a shorthand for both legal and equitable interests.
(b) As already mentioned, the reference to 'interest' in s 222 on its face encompasses equitable as well as legal interests.
(c) The two provisions were enacted at different times by different amending legislation. Parliament is less likely to have given consideration to the potential nuances of omitting the phrase 'whether at law or in equity' from s 222.
(d) The embedding of an avenue for an application for an accounting under s 28A in the course of a proceeding under PLA pt IV div 2 is suggestive that an interest under s 222 is to be read as an interest 'whether at law or in equity', consistently with the scope of s 28A. This last point is not decisive on its own: it would not be impossible for Parliament to provide access during a proceeding available in limited circumstances to a mechanism that may otherwise be available more broadly. However, it seems odd that Parliament would have intended this here. Consistency between s 28A and s 222 seems more likely to have been intended. And when considered with the preceding three points, this impression is reinforced.
128 Second, the relationship between trustee and beneficiary is not to be equated with a joint tenancy or tenancy in common. The appellants emphasised the requirement in s 222 that in order to be a 'co-owner', a person must hold an interest in land with one or more others as joint tenants or tenants in common. They contended that the relationship between a trustee and beneficiary is not a joint tenancy or a tenancy in common.
129 The appellants submitted that, where a trustee holds land on trust for a beneficiary, it is a fallacy to describe the beneficiary as holding any estate in the land. The appellants contended that a beneficial interest in a parcel of land is not a form of ownership at all. In particular, the appellants contended that the definition of 'co-owner' in PLA pt IV does not include the interest of a beneficiary of a trust. Rather, the appellants contended, equity imposes constraints on the manner in which the trustee can exercise legal powers over land, without abstracting any proprietary estate from the ownership of the trustee. In this regard, the appellants relied on DKLR Holding Co (No 2) Pty Ltd and Commissioner of State Revenue v Lend Lease Funds Management Ltd.[107]
130 The appellants relied on the analysis of Aickin J in DKLR in the High Court for the proposition that the interest of Doolkoora and Peninsula was not the same as the beneficial interest that would be enjoyed by SGH under a resulting trust. The appellants contended that a trustee cannot hold on trust for itself: if it holds an unqualified legal title, it is a fallacy to say that it holds an equitable interest on trust for itself. On this basis, the appellants contended, the (alleged) beneficial interest of SGH was not held together with the legal interest held by Doolkoora and Peninsula.
131 The appellants tended to characterise the jurisdictional issue as turning on the point that the relationship between trustee and beneficiary is not one of co-owners in the land or in any estate in the land. For example, the appellants characterised SGH's claim of co-ownership before VCAT as relying on 'the allegation of the relationship of trustee and beneficiary between the Appellants and SGH'. I agree that the relationship between a trustee and beneficiary is not a joint tenancy or a tenancy in common. However, that does not resolve the question of VCAT's jurisdiction raised in this proceeding. The issue is more nuanced. The appellants' characterisation of SGH's submission to VCAT is not sufficiently precise. The submission SGH made to VCAT was that the existence of a trustee and beneficiary relationship did not preclude the parties being regarded as tenants in common, not that its existence equated to a tenancy in common.
132 In my view, to be co-owners (and specifically tenants in common) within the meaning of s 222, two or more persons must hold shares in the same interest in the relevant land.
133 The real question is, can a trustee who holds a proportional interest in land on a resulting trust for the benefit of another be described as a tenant in common in that interest with that other person? For the reasons that follow, the answer is yes: in that situation, the trustee is a tenant in common in equity with the other person.
134 In my view, DKLR does not support the appellants' contrary contention. The analysis of Aickin J was that 'if one person has both the legal estate and the entire beneficial interest ... he holds an entire and unqualified legal interest and not two separate interests'.[108] However, his Honour did not address the scenario that arises in the present case. That scenario involved the trustee holding a proportion of the beneficial interest in the land for another person. In those circumstances, it could be said that the trustee holds the beneficial interest in part for that other person and in part for itself. As mentioned in paragraph 93 above, this is an exception to the rule that trustees cannot hold property 'on trust for themselves'. To the extent that they both enjoy a portion of the beneficial interest, they are persons who hold an interest in land together and are therefore co-owners within PLA s 222.
135 Thirdly and fourthly, the appellants submitted that the historical provisions had never been applied by the courts to interests held by beneficiaries in a manner which treated the beneficiaries and trustees as joint tenants or tenants in common, and when pt IV was enacted in 2005 there was no legislative intention to alter this limitation.
136 I accept the accuracy of the appellants' identification of the historical provisions, and that the provision for partition or sale of co-owned property in Victoria prior to the 2005 amendment, namely PLA s 221, was the 'lineal descendant' of the Tudor Acts. It is not clear, however, that the Tudor Acts could only be invoked by an applicant who had a legal interest in land.
137 The appellants relied on Miller v Warmington for the proposition that the applicant must already have legal title before applying for a partition or sale. I doubt that the case should be read that way. The passage of key relevance to the present case was as follows:
The remainder of the prayer is for a commission in the nature of a writ of partition; but this proceeds from a mistaken view of the subject. Partition can only be between joint-tenants, tenants in common, or coparceners; ... but the principle is the unity and entirety of possession, that each party has an undivided interest in, and a right over the whole, ... and hence also it is necessary for them to make conveyances to each other, after their portions are set out. The same rules that prevail at law are adopted in equity, and it is only on the same grounds that you can apply to this Court. Besides, it is essential to partition to have the legal title before the Court; it would be a decisive answer that your title is only equitable, for then how could the conveyances be made, if any should be necessary? ...[109]
138 Transfer of legal title in England required proof of a chain of deeds. Earlier in the report of the case, it was noted that evidence of title to the land was not before the court. In the absence of evidence of this kind, it would be beyond the powers of the court to give effect to any partition by ordering conveyances. In addition, the passage rests on the proposition that to be co-owners as either joint tenants or tenants in common, the respective co-owners would have to share an interest in the right to possess the entirety of the land in question. The report also demonstrates that this was not the case in Miller v Warmington: the case involved separate ownership of two different parcels of adjoining land, albeit their boundary had become obscured.
139 On my reading, the decision in Miller v Warmington stands for the proposition that the court must have the means before it for ordering a conveyance of legal title and does not stand for the broader proposition urged by the appellants.
140 In Taylor v Grange, Fry J referred to this point in terms suggesting that an equitable owner could apply for partition. Fry J said that 'no doubt an equitable owner may obtain a decree for partition if he be entitled to call for a legal estate, which would have entitled him to a partition at Common Law'.[110]
141 The appellants also submitted that the courts have never, in their trust and equitable jurisdiction, had a general power to bring a trust to an end by partitioning trust property amongst beneficiaries or order its sale and a division of the proceeds.[111] In cases where trusts are brought to an end, the appellants characterised the font of authority as Saunders, assisted by limited statutory authority to make directions on behalf of certain beneficiaries or potential beneficiaries. These principles do not permit the ending of a trust without regard to the terms of the trust.
142 So much may be accepted. However, in my view, there is nothing inconsistent with these principles entailed by interpreting PLA pt IV div 2 in the manner I have described. The power of VCAT to make an order under PLA s 228(1) is not unfettered. Such orders must be directed to the object of ensuring a just and fair sale and division of proceeds. It would be impermissible for VCAT to ignore the terms of an express trust governing the property in question.
144 The jurisdictional issue is to be resolved by the orthodox application of principles of statutory interpretation to the current form of the legislation. Part IV is to be interpreted in its context, which includes cognate provisions of the PLA.[113] In my view, read as a whole, the PLA provides a clear statement of parliamentary intention that there can be tenants in common of an equitable estate in land for the purposes of the PLA, and that this can be regarded as an interest in land. The difference in drafting between the definitions of 'co-owner' in ss 28A(2) and 222 do not demonstrate a parliamentary intention to exclude equitable tenants in common from the latter.
145 For the above reasons, I conclude that VCAT had jurisdiction to hear and determine SGH's application under PLA pt IV div 2, and to make orders 1, 6, 7 and 10.
146 Having concluded that VCAT had jurisdiction to determine SGH's application under PLA pt IV div 2, I turn to the next four grounds. Each of these relates to the manner in which VCAT exercised that jurisdiction.
147 The appellants submitted that VCAT erred in two principal ways. They are closely related, and some of the submissions in the appeal related to both at once.
(a) By ground 2, the appellants contended that the presumption of a resulting trust could not arise on the facts found by VCAT.
(b) By ground 3, they contended that if a presumption could arise, it was in any event 'displaced' because VCAT made findings about the actual intentions of both SGH on the one hand, and Doolkoora and Peninsula on the other, and these intentions were inconsistent with the presumption. The word 'displaced' in this context means, or at least includes, 'rebutted'.
148 Grounds 4 and 5 are more confined. Ground 4 relates to an aspect of VCAT's treatment of the third sub-issue of the resulting trust claim: its rejection of the alleged SGH/Fraser relinquishment agreement. As already noted, it concerns VCAT's imputation of Mr Gibbs' knowledge of the transaction to Ms Fraser. Ground 5 relates to the calculation of the percentage representing the proportional equitable interests of the tenants in common under the resulting trust VCAT found to exist.
Ground 2: Did VCAT's findings preclude a presumption of resulting trust from arising?
150 Ground 2 raised significant issues and was fairly arguable. I have decided to grant leave to appeal in respect of ground 2.
151 However, for the reasons explained in this section below, and having considered the merits of ground 2 in detail, I have decided to dismiss the appeal on this ground. I have concluded that VCAT's findings did not preclude the presumption of a resulting trust from arising.
152 The notice of appeal set out question and ground 2 as follows:
Was a presumption of resulting trust capable of arising in the face of the factual findings made by the Tribunal?
Grounds
(a) The Tribunal made findings that that there were three payments made towards the deposit, one by a company called CITEK on 29 July 2016 before the Respondent was incorporated that was later treated as a loan in the books of the Respondent, and two further made by the Respondent on 2 December 2016 and on 12 May 2017. On the Tribunal's findings each payment occurred before the Appellants had any knowledge or involvement in the transaction.
(b) The Tribunal made numerous factual findings, the essence of which was that, at the time the three payments were made, they were made pursuant to an oral agreement between Forrest and the Turnleys that contemplated the Land being acquired in the name of the Respondent, which was incorporated to be their corporate vehicle on 6 September 2016.
(c) By the time the Land was in fact acquired by the Appellants, the Tribunal found that none of the parties to that joint venture had the funds to complete the purchase, and the joint venturers and the Respondent were aware that another person was completing the purchase. The Respondent resolved to seek a lease of the Land prior to the settlement from whoever was purchasing it.
(d) As a resulting trust is one implied from a dealing with land or property that is otherwise unexplained, the Tribunal's findings as to the Respondent's actual intention left no scope for raising a presumption that the Respondent intended, by payment of any of the instalments, to create a trust as to 15/96ths for its own benefit. It played no part in the Appellants' registration as title holders of the Land, which occurred because the Respondent could no longer acquire title in its own name.
153 The gist of ground 2 in the notice of appeal was that a resulting trust is only implied if a dealing is otherwise unexplained by the evidence, but here VCAT made findings on the evidence about the parties' intentions precluding this.
154 In their submissions, the appellants went further, contending that presumption of a resulting trust cannot arise without a pre-existing relationship between the relevant contributors and purchasers. SGH did not complain of any prejudice. I will treat this contention as being implied by grounds 2 and 3 of the amended notice of appeal. In this regard, paragraph (a) extracted above relies on the fact that the payments made by or on behalf of SGH all occurred before the appellants had any knowledge of or involvement in the transaction.
155 The appellants gave supporting reasons for their contention that there must be some form of relationship between parties before there can be an inference that the payment was made with the intention that the person acquiring the property would hold it on trust. The appellants submitted that the presumptions inherent in a resulting trust simply did not arise for consideration in such a case because 'the parties were strangers to each other'. They said only where the parties know each other might they be presumed to have an intention in their dealing with each other. They submitted, 'the resulting trust is not remedial, but endeavours to give effect to the parties' actual intentions, albeit presumed'.
156 This is the crux of the applicant's submission in support of ground 2. It raises a fundamental question about the nature of a resulting trust and proposes that such a trust cannot arise unless the contributors and the legal title holder can be inferred to have had an actual intention that the property be held on trust.
157 As already outlined, VCAT's approach involved addressing the alleged condition precedent, the alleged SGH/Forrest relinquishment agreement and the alleged SGH/Fraser relinquishment agreement, before turning to the 'fourth sub-issue', which comprised whether a presumption of resulting trust arose and whether it was rebutted.
158 The passage in which VCAT addressed the fourth and final sub-issue was relatively brief. VCAT set out the competing claims of the parties, made a finding that the first payment of $50,000 was a pre-incorporation payment made on behalf of SGH, and found that the total contribution of SGH in respect of the purchase of the land was $150,000.[114] VCAT then referred in brief terms to the presumption that a resulting trust arises where one person provides the purchase price of a property, which is conveyed into the name of another, and noted that the presumption is rebuttable.[115]
159 VCAT found that Doolkoora and Peninsula had failed to rebut the presumption, referring to its earlier findings rejecting the alleged condition precedent.[116] VCAT also referred to its earlier rejection of the alleged SGH/Forrest relinquishment agreement and alleged SGH/Fraser relinquishment agreement, concluding that Doolkoora and Peninsula failed to demonstrate that SGH had renounced its interest in the land.[117]
160 VCAT concluded that a resulting trust arose in favour of SGH upon paying each of the $50,000 instalments, and that Doolkoora and Peninsula 'hold their shares in the land subject to a resulting trust in favour of SGH to the extent of its total contribution of $150,000 towards the purchase price of the land'.[118]
161 The facts of this case are unusual. Based on VCAT's findings, the guiding minds behind the entities that contributed to the purchase, the Turnleys and Ms Fraser,[119] never had any direct dealings between each other. Mr Forrest did not accurately convey information between them. There was no scope for an accurate, shared understanding between the Turnleys and Ms Fraser about how the land would be owned between them and their companies. Can a presumption of resulting trust arise in such circumstances?
162 The parties referred in particular to three leading authorities on purchase money resulting trusts that are binding upon me: the High Court's recent decision in Bosanac v Commissioner of Taxation (Bosanac), [120] the High Court's earlier decision in Calverley v Green (Calverley),[121] and the Court of Appeal's decision in Vlahos Pty Ltd v Vlahos (Vlahos).[122]
163 In Calverley, an unmarried couple purchased a house with a mortgage under which they were jointly liable to make repayments. They were registered as joint proprietors. The Court recognised that in equity, a presumption arose that where two or more persons contribute in unequal shares to the purchase of a property which is conveyed to them in their joint names, they hold the legal estate in trust for themselves as tenants in common in proportion to their contributions.[123] The presumption can be rebutted by evidence of intention of the 'purchaser' (the contributor), or if more than one, evidence of their common intention.[124] Gibbs CJ said that even if the parties had no common intention, the intentions of each may be proved, for the purpose of proving or negating that one intended to make a gift to the other.[125] Deane J said that it was no longer good law to generalise that the presumption 'should not give way to slight circumstances'.[126]
164 The Court allowed an appeal from the New South Wales Court of Appeal on the ground that the Court of Appeal had not started with the presumption of resulting trust before turning to the question of whether the presumption was rebutted by evidence of a contrary common intention on the part of the contributors to the purchase.[127]
165 In Vlahos, the County Court (Cosgrave J) determined a dispute that had arisen in relation to a mixed commercial and residential property that had been purchased and held in the name of the corporate trustee of a family trust some years earlier. One of the family had contributed to the purchase. The Court held that a presumption of resulting trust arose from the contribution and was not rebutted. The Court decided that the property was held by the corporate trustee on a resulting trust for the benefit of the contributing family member in the proportion the contribution bore to the original purchase cost.
166 An appeal to the Court of Appeal was dismissed. Giving the judgment of the Court of Appeal, Kyrou JA described the circumstances in which the presumption of a 'purchase money resulting trust' will arise.[128] Kyrou JA did not say that a pre-existing relationship is required, or that there must be a basis for inferring what the common intention of the contributors and purchaser must be. Relevantly, all that is required was that 'two or more parties make ... financial contributions to the purchase price [and] the property is conveyed into the name of only one of them'. In that situation, 'there is a presumption that the parties take a beneficial interest in the property as tenants in common in shares that are proportionate to their respective financial contributions to the purchase price', including stamp duty and registration fees.[129]
167 If that presumption arises, it may be rebutted by evidence of the common intention of the contributors and purchasers. Kyrou JA explained that the presumption can be rebutted in the following relevant circumstances:
Where two or more parties financially contribute to the purchase price and the legal title does not reflect their respective contributions, the presumption of resulting trust can be rebutted by evidence that, at the time the contributions were made, the parties had a common intention that the beneficial interests are to be the same as the legal interests.[130] Ordinarily, whether a common intention existed at that time is not to be determined by reference to the subjective, uncommunicated intentions of the parties. Rather, it is to be inferred by reference to the parties' words and conduct and the prevailing context at that time, including the relationship that then existed between the parties.[131]
168 In Vlahos, the family member's contribution had been about 22% of the costs of acquiring the property held in the family trust. The primary judge did not accept that the family member had made this contribution with the intention of it being a loan. On appeal, Kyrou JA considered whether the evidence established a 'common intention' that the contribution was a gift. Kyrou JA concluded that the applicants had failed to establish this, and so the presumption of resulting trust stood unrebutted.[132] Kyrou JA said 'if, on the totality of the evidence, no inference could be drawn about the common intention ... at the time the Property was purchased, the presumption would not be displaced and would govern the outcome of the proceeding', and it was 'not for [the minority contributor] to establish any inference'.[133]
169 Bosanac was decided after VCAT made its decision in this case. The appellants submitted that, according to Bosanac, the inference of a resulting trust cannot arise where a plaintiff has led evidence that 'establish[es] an objective intention or the lack of an objective intention to create a trust'.[134] It only arises if there is a 'paucity of evidence' as to such an intention.[135] These quotes are taken from the joint reasons for judgment of Gordon and Edelman JJ. It is necessary also to consider the joint reasons of Kiefel CJ and Gleeson J, and the judgment of Gageler J (as his Honour then was), and the context in which the case arose.
170 Like most of the leading resulting trust cases in recent times, Bosanac concerned a property purchased in the course of a domestic relationship. The property was held in the name of Ms Bosanac, and the Commissioner was a creditor of her former spouse, Mr Bosanac. The Commissioner alleged that Mr Bosanac had contributed to the purchase of the property and that the presumption of a resulting trust arose as to half of the beneficial interest. The Commissioner contended that the counter-presumption of advancement (where a person who contributes to property held by another is under an obligation to support that other person) was no longer part of the law. At first instance, the Federal Court concluded that the husband held the property on a resulting trust and that no advancement had been intended. The Full Court reversed this decision. The High Court in turn reversed the Full Court's decision.
171 Much of the reasoning in Bosanac concerned the so-called presumption of advancement, and is immaterial to the issues before me. But much of the reasoning is presently relevant. In my respectful view, there is a difference in approach between Gordon and Edelman JJ and the other three members of the Court.
172 Kiefel CJ and Gleeson J said that a trust of a legal estate in property taken in the name of another is taken to 'result' to the person who advances the purchase money.[136] The presumption can be rebutted by evidence from which it may be inferred that there was no intention on the part of the person providing the purchase money to have an interest in land or other property held on trust for him or her.[137] The presumption cannot prevail over the actual intention of the party paying the purchase price as established by the overall evidence.[138] Where more than one person pays the purchase price, regard is necessarily had to evidence of each of their intentions.[139] The question of intention is entirely one of fact and concerns the intention manifested by the person or persons who contributed funds towards the purchase of the property, which for the most part will be made out by the circumstances.[140]
173 Gageler J spoke of the need for an 'objectively manifested intention' that property be held in whole or in part for the benefit of another.[141] His Honour said there is 'an ancient presumption of equity' that arises 'where property is purchased by one or more persons using funds contributed in whole or in part by one or more other persons'.[142] It is anachronistic, but 'the weight of history is too great' for a judicial abrogation.[143] Unless there is consideration for the contribution, the presumption is that everyone concerned in the purchase transaction intended the property to be held at and from the time of purchase for the benefit of the contributors as tenants in common in proportion to their respective contributions.[144] The presumption is a presumption of fact functionally akin to a civil onus of proof.[145] It will yield to actual intention to the contrary found on the balance of probabilities as an inference drawn from the totality of the evidence.[146] The weight to be given to the fact of a contribution having been made to the purchase price in drawing an inference as to actual intention will vary according to the totality of the circumstances of the case. Whether any and if so what inference is to be drawn about the actual intention of the contributor and purchaser falls to be determined as an ordinary question of fact on the balance of probabilities.[147]
174 Gordon and Edelman JJ said that the presumption of a resulting trust arises by 'objective intention'.[148] The presumption of resulting trust is a weak presumption.[149] Where contrary evidence exists, no probative force should be attached to the presumption.[150] The objective facts determine its position and significance (if any).[151] The inference 'cannot arise where a plaintiff has led evidence that tends to establish an objective intention or the lack of an objective intention to create a trust'.[152] It is necessary to start with the objective facts. The question may be framed: 'what were the parties' words or conduct at the time of the transaction or so immediately thereafter as to constitute part of the transaction - the objective facts?'[153] Where the objective facts based on the evidence led by the plaintiff tend to establish an objective intention that the provider of part of the purchase price would hold an equitable interest as to a particular proportion of the property, there will be an express trust, and that is the case the defendant has to meet.[154] Where the objective facts based on evidence led by the plaintiff establishes even weakly an objective intention inconsistent with a declaration of trust, the presumption of resulting trust will not arise.[155] Where the objective facts based on the evidence led by the plaintiff are neutral, truly equivocal, non-existent or uninformative as to the objective intentions of the parties, then, consistent with the weak presumption of resulting trust, an inference can be drawn of a declaration of trust by the provider of part of the purchase price. That weak inference will be the case that the defendant has to meet.[156]
175 In different ways, the three judgments in Bosanac each re-orient the principles by which presumptions of resulting trusts are drawn toward the particular factual circumstances of the case at hand, emphasising the anachronistic and weak nature of the presumption.
176 The joint reasons of Gordon and Edelman JJ do so in a way that accords the least scope for a rebuttable presumption of resulting trust to arise in the first place. Their Honours mandate starting with the intention of the parties, as objectively inferred from their words and conduct in or immediately after the transaction. The inference of trust will only be drawn if the person claiming the trust has not led evidence that either 'tends to establish an objective intention or the lack of an objective intention to create a trust'.[157] On their Honours' approach, there is little room for a rebuttable presumption to arise from the fact of a contribution per se. The other judgments in Bosanac provide more room for a rebuttable presumption to arise from the fact of a contribution.
177 Care is needed in discerning the principles that can be drawn from the cases and applied to the present case. Most of the cases concern matrimonial properties, and even Vlahos arose in the context of the acquisition of property by arrangements made within an extended family. The present case does not arise in a family context. It is a case where a purchase for commercial purposes was managed by a person who made no contribution of funds to the purchase price and instead arranged for disparate contributors to provide those funds, thereby discharging contractual obligations he had assumed. Does this mean that a resulting trust cannot arise in a case like the present one? The parties did not cite any case where a court has considered and applied the principles of resulting trusts to a scenario of this kind.
178 The appellants assert that the presumption of a resulting trust cannot arise without a foundation for inferring a common intention. They say that, in the absence of a relationship, it was 'not possible for the parties to objectively communicate their respective states of mind to each other'.[158] They therefore say that a pre-existing relationship is required between all the contributors before a resulting trust can be presumed. However, there is no decided authority of which I am aware that requires this. I do not regard the circumstances in which a resulting trust can arise as being closed in this way.
179 The appellants referred to authorities in which 'the parties were in a direct relationship at the time of entry into the purchase of the property in dispute. They knew each other and might be presumed to have an intention in relation to their dealing with each other'.[159] In particular, the appellants referred to two cases in support of a contention that the courts require the presence of a 'common intention' for a resulting trust, one of which was Calverley.
180 I do not read Calverley as laying down a rule that there must be a common understanding between contributors before a resulting trust can arise. On the contrary, the decisions of four members of the Court turned on the need to start with the question of whether the presumption of resulting trust arises from a contribution, before turning to whether the presumption is rebutted by evidence of a contrary common intention. The appellants' submissions invert that order and reverse the onus. Further, Calverley does not lay down any rule that there must be a relationship between contributors. The facts of the case involved a relationship, and gave rise to the possibility of a common intention, but these were simply features of the facts. The Court was not asked to decide whether these were essential features of resulting trusts in all cases.
181 The second was Gissing.[160] This was another case concerning the purchase of a home in which a couple lived together. Lord Diplock made remarks which, on one view, seem to say that a 'common intention' is 'required' to create a resulting trust.[161] In this regard, Lord Diplock said 'effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw ... and not to any subjective intention or absence of intention, and it is for the court to decide what those inferences are'.[162]
182 I do not read Lord Diplock's remarks as recognising a rule that there must be a relationship or a common intention. It seems more likely that Lord Diplock was merely responding to the issues raised by the facts before him rather than laying down a general rule.
183 There was no mention of any such requirement in Vlahos or in Calverley. On my reading of Vlahos, the absence of a relationship between contributors, and the inability to infer a common intention, are matters that might be relevant to rebutting the presumption of a resulting trust. However, they are not matters that would prevent the presumption arising. The same is true of Calverley. The principles articulated in Vlahos are expressed broadly enough to apply to other circumstances.
184 Has Bosanac materially altered the principles I am required to apply to this appeal? I think not.
185 Bosanac does not address this issue directly, merely noting that the intentions of all contributing parties are relevant. In a case of commercial land acquisition involving multiple contributors managed by an intermediary, I see no reason why equity would not imply a resulting trust.
186 SGH submitted that even if the approach of Gordon and Edelman JJ in Bosanac is taken, the outcome is the same.
187 Here, VCAT drew a presumption from the fact that SGH had made a contribution of $150,000 to the purchase price, and rejected the contention that its free occupation of the land pending settlement was adequate consideration. VCAT then relied on its rejection of the appellants' alleged condition precedent and alleged relinquishment agreements in support of its conclusion that the evidence did not rebut the presumption.
188 I accept that the joint reasons of Gordon and Edelman JJ in Bosanac might require a different approach to the one VCAT adopted here, in that their Honours mandate starting with analysis of the plaintiff's evidence about the parties' intentions. However, in my view, the reasons of the other members of the Court do not require this. Even if the approach of starting with the objective facts relating to intention were to have been taken, I am not persuaded that the outcome would have been different.
189 The fact that the majority of, and perhaps all, decided cases about resulting trusts have involved parties that knew each other does not mean that there is a limitation on when equity will imply a resulting trust. In my view, it may do so where the contributor has had no direct dealings with the acquirer of legal title and their only dealings have been through an intermediary. If it is a necessary feature of such a case that there must be evidence that the acquirer of legal title knew of the other party's contribution,[163] then there was such evidence here. I address this point further under ground 4, below.
190 In short, on the current state of the authorities, it is not necessary to reach findings about the parties' shared intentions, or to be satisfied that there is a pre-existing direct relationship between them, before the presumption of a resulting trust can arise. It was open to VCAT to find that the presumption can arise from SGH's contribution before asking itself whether that presumption was rebutted by the evidence as to objectively discernible inconsistent intention or common intention. There was evidence before VCAT of the contributions made by SGH in this case. Its finding that SGH contributed $150,000 to the purchase was open to it. It was open to VCAT to find that the presumption arose. Ground 2 therefore fails.
191 Further or in the alternative, if a pre-existing relationship was required, SGH advanced two additional contentions.
192 Both alternative contentions relied on the relationship that undoubtedly existed between SGH on the one hand, and Mr Forrest on the other.
193 First, SGH submitted that this relationship would suffice, because it entailed a relationship between SGH and Peninsula, as Mr Forrest was its guiding mind.
194 Secondly, SGH submitted that the relationship with Mr Forrest was sufficient for another reason. He was the person legally entitled to complete the purchase. SGH submitted that he became subject to equitable obligations owed to SGH as a result of SGH's contributions to the purchase. When he assigned his entitlement to purchase the land to Doolkoora and Peninsula at settlement, he could assign no more than he already had (nemo dat quod non habet). The assignment was encumbered with any obligations he had as resulting trustee in favour of SGH.
195 Strictly speaking, I do not consider it necessary to determine either of these further or alternative contentions. To summarise my reasoning above, that is because I consider that the principles in the cases do not require a pre-existing direct relationship between all contributors to the purchase, or between them and the acquirers of legal title. In my view, dealings of the kind in this case culminating in an acquisition co-ordinated by an intermediary who controls the nomination of legal title are within the principles described in the cases. And, if knowledge of the existence of each contributor and the quantum of the contribution is required, then there was evidence meeting this requirement too, as explained in more detail in relation to ground 4, below.
196 If I am wrong in this conclusion, and if a direct relationship is required, then I would accept SGH's first alternative contention.
197 Peninsula acquired legal title as tenant in common of a one-half interest in the fee simple of the land. SGH pointed out that its primary contention before VCAT was that Peninsula held this interest as trustee for SGH on a resulting trust. The contention that both Doolkoora and Peninsula were trustees was in fact an alternative contention. VCAT did not explain why it opted to make findings only on the alternative contention. It expressed no conclusions on the primary contention.
198 Consistently with its primary contention before VCAT, SGH submitted on the appeal before me that it would suffice if Peninsula alone were fixed with the role of trustee of SGH's beneficial interest. SGH submitted that if Peninsula alone were regarded as being the sole trustee of the interest represented by SGH's contribution to the purchase, this would still lead to SGH having a beneficial interest in the same proportion of the overall fee simple. SGH had made a contribution of $150,000 to the total cost of acquisition of the land. It did not matter whether it was represented by a smaller percentage of the overall land as held by both Doolkoora and Peninsula, or a percentage of double the size in half of the land, as held by Peninsula alone.
199 As a matter of arithmetic, I am satisfied that it is immaterial whether the beneficial interest representing SGH's $150,000 contribution to the overall acquisition is held through Peninsula's one-half legal interest as tenant in common of the legal estate in the land, or both Peninsula's and Doolkoora's interests.
200 However, senior counsel for the appellants objected that, if VCAT were to have adopted this path or reasoning, it would have been necessary for VCAT to consider the possibility that Peninsula itself held its share of the legal estate on a resulting trust for the benefit of Doolkoora, on the basis that Peninsula had made no contribution to the purchase price, and it was Doolkoora which provided the balance of the purchase price at settlement.
201 I agree with SGH that, through Mr Forrest, SGH had a direct relationship with Peninsula, which ended up holding legal title as tenant in common as to a half interest in the land. If I was wrong in my primary reasons for rejecting ground 2 of the appeal, I am nevertheless satisfied that Peninsula's legal interest would be held on a resulting trust in favour of SGH to the extent of a beneficial interest representing the proportion of its $150,000 contribution to half the total acquisition cost of the land. The outcome would effectively be the same whether Peninsula alone is trustee, or whether Doolkoora and Peninsula are both trustees.
202 Although senior counsel for the appellants objected that VCAT could not have reached this conclusion without considering a further claim of resulting trust (between Peninsula as trustee and Doolkoora as cestui que trust), this submission was not developed. VCAT made no findings on, and made no reference to, any such submission. The appellants did not take me to any material demonstrating that they made submissions or led evidence to that effect before VCAT. I assume that the appellants did not make such a claim before VCAT, or at least did not do so squarely and in detail.
203 If a direct relationship was required (contrary to my primary reasoning on ground 2) and if my conclusion on SGH's first alternative contention were also to be wrong, I would not be prepared to determine SGH's second alternative contention. SGH's second alternative contention raises complex questions relating to Torrens indefeasibility and would require more detailed factual findings and more developed legal analysis. I have not formed any conclusions on this contention.
204 One of the issues raised by the appeal on this ground, and by SGH's second alternative contention, concerned the time at which a contributor's intention should be ascertained. The parties were agreed that the relevant time is when each contribution was made. In a protracted transaction, I see no reason why the intention must be discerned or characterised at a single point in time. The transaction constituting the acquisition of the land here took place over more than 12 months. SGH's submissions about timing led to a complex analysis of the nature of the interest Mr Forrest held under the contract for the purchase of the land at the time each contribution was made by or on behalf of SGH, and how it might be said a trust arose over that interest. That analysis may be correct, but does not seem to be required by the principles articulated in cases such as Vlahos, Calverley and Bosanac. A broader brush may be employed. Even though Gissing was a very different case, the cautionary remarks of Lord Diplock about being 'unreasonably legalistic' where resulting trusts are concerned, and the weight that should be given to the 'economic realities' of a transaction, are instructive.[164]
205 For completeness, I note that at times during their submissions, the appellants suggested that the first $50,000 contribution to the deposit for the purchase of the land might not have been properly regarded as a contribution by SGH. The payment was made by CITEK. VCAT treated it as a payment on behalf of SGH and as giving rise to a pre-incorporation loan by CITEK to SGH. There was no formal appeal from this finding, and the argument was not developed. I am not persuaded that VCAT made any error in making this finding. VCAT's quantification of SGH's contribution to the purchase of $150,000 therefore stands unaffected by this appeal.
Ground 3: Did VCAT's findings displace or rebut any such presumption?
206 Ground 3 was closely related to ground 2. Ground 3 was also fairly arguable. I have decided to grant leave to appeal in respect of ground 3.
207 However, for the reasons explained in this section below, and having considered the merits of ground 3 in detail, I have decided to dismiss it. I have concluded that VCAT's findings did not displace or rebut the presumption of a resulting trust that arose in the case.
208 The notice of appeal described ground 3 as follows:
Did the factual findings made by the Tribunal displace any presumption of resulting trust that might otherwise have arisen?
Grounds
(a) Alternatively to the second question, even if the mere fact of payment in those circumstances was capable of raising a presumption of an intention by the Respondent that the Appellants should hold some portion of the land on trust for the Respondent, the facts found by the Tribunal showed that in fact the Respondent's intention at the time of payment was to become the registered proprietor of the whole of the land and that intention had been abandoned by the time of settlement.
(b) The intention of the Appellants was to hold the Land for their own benefit. The Tribunal's findings about the parties' intentions displaces any presumption that might otherwise arise.
209 I categorise the appellants' contentions in support of ground 3 as follows:
(a) the appellants contended that, in analysing the evidence and setting out its reasons, VCAT distilled its task into a series of sub-issues, and this led it into the error of not considering whether the evidence disclosed the parties' actual intentions, where the intentions of all parties who contributed are material;
(b) largely replicating their submissions in support of ground 2, the appellants contended that a party claiming a resulting trust cannot rely on 'uncommunicated intent', and there 'must be evidence of a common intention', and a relationship;
(c) the appellants contended that VCAT failed to consider the lack of a relationship between alleged trustee (Doolkoora and Peninsula) and alleged beneficiary or cestui que trust (SGH) and that these parties were 'pursuing quite separate goals in ignorance of each other', leading to the displacement or rebuttal of any presumption.
(d) the appellants contended that VCAT was required, but failed, to consider SGH's intention at the time each of its payments was made;
(e) the appellants contended that on the factual findings made by VCAT, there was no common intention between the Turnleys and SGH on the one hand and Ms Fraser and the appellants on the other, because:
(i) at the time SGH made its payments, it intended to obtain full legal and beneficial ownership of the land for itself as the vehicle of a joint venture between the Turnleys and Mr Forrest; and
(ii) at the time Ms Fraser and the appellants made theirs, they intended to obtain full legal and beneficial ownership of the land for themselves, to the exclusion of the earlier contributors; and
(iii) there was no assignment or other function performed by SGH leading to the registration of the appellants as owners of the land and the Turnleys had no relationship with or knowledge of Ms Fraser, Doolkoora and Peninsula.
210 As already noted in relation to ground 2 above, where the presumption of resulting trust arises, proof of an actual common intention inconsistent with the resulting trust will rebut the presumption. The onus rests on the party denying the resulting trust. The strength of any presumption of resulting trust will vary from case to case, as will the weight of evidence required to rebut the presumption.[165]
211 Whether the evidence rebutted the presumption of a resulting trust was quintessentially a question of fact for VCAT to resolve. Provided VCAT did not misunderstand the applicable principles or reach a conclusion that was not open on the evidence, no appeal will be available under s 148 of the VCAT Act.
Did VCAT err in its approach by addressing sub-issues?
213 VCAT found that, for the reasons it gave for its rejection of the alleged condition precedent and the alleged relinquishment agreements, the presumption of a resulting trust in favour of SGH was not rebutted by the evidence.
214 Pleadings are not required in VCAT proceedings unless VCAT chooses to adopt them.[166] However, VCAT's reasons identified the issues for determination by reference to points of claim and defence filed by the parties, as well as the parties' final submissions. The final iterations of these documents were included in the court book for the appeal.
215 I was not taken to transcripts of hearings in which points of claim and defence were ordered, but I will assume this is what occurred.
216 VCAT has broad discretion to regulate its own procedure.[167] There was no suggestion that VCAT should not have ordered points of claim and defence. There was no suggestion that VCAT erred in managing the identification of the issues for hearing and determination by points of claim and defence. And having adopted this approach, there is no suggestion that VCAT erred in identifying the alleged condition precedent and the alleged relinquishment agreement as critical issues for determination.
217 VCAT's approach treated the 'sub-issues' it identified as the ways in which the appellants sought to rebut the presumption of resulting trust. This was appropriate, because the appellants bore the burden of proof and onus of persuasion on the issue of rebuttal of the presumption. The appellants did not demonstrate on appeal that this approach was inconsistent with the points of claim and defence before VCAT. I conclude that VCAT's approach to the identification of the issues was open to it.
Is common intention and a direct relationship required?
219 The appellants' submissions before me sought to elevate the proof of a common intention to something that was an essential precondition of a resulting trust. As I read the authorities, this is not so. Proof of a common intention inconsistent with a resulting trust is a way of rebutting the presumption of a resulting trust, once that presumption arises. Accepting that, where it has arisen, the presumption of resulting trust is a weak presumption,[168] it still has work to do once it arises. The presumption having arisen here, the appellants had the burden of establishing an inconsistent common intention attributable to the parties, or at least an inconsistent intention on the part of SGH. By rejecting the alleged condition precedent and relinquishment agreements, VCAT found that the appellants had failed to discharge that burden. These conclusions were open to VCAT.
220 For the reasons I have already explained in the context of ground 2, I also do not accept the appellants' related contention that there must be a direct pre-existing relationship between contributors for a resulting trust to arise. I have already explained my view that a transaction managed by an intermediary can give rise to a resulting trust without the contributors coming into direct contact. If knowledge of the respective contributions is required, then that requirement was met on the evidence here.
221 The appellants have not demonstrated that VCAT erred on this issue.
Did VCAT fail to consider the lack of a relevant relationship, common goals, or common intention?
222 This issue is closely connected with the preceding one. In the paragraphs that follow, I address the appellants' contention summarised in paragraph 209(c) above, to the effect that it is the lack of any relationship between Doolkoora and Peninsula and SGH that matters, and that they were 'pursuing quite separate goals in ignorance of each other'.
223 In my view, there are exaggerations involved in these descriptions of the facts and VCAT's findings. They are not precisely correct.
224 There was a direct relationship between SGH and Peninsula's guiding mind, Mr Forrest. That means there was a relationship between SGH and Peninsula, even though SGH's majority directors did not know that Mr Forrest had established Peninsula or the role he had in mind for it.
225 The appellants are correct to say that by the time of settlement, SGH and the appellants had separate 'goals'. Indeed they had conflicting ones. However, it is not precisely correct to say that SGH and the appellants were pursuing their different goals 'in ignorance' of each other. Further, the applicable principles require a wider inquiry, not limited to a party's goals.
226 My reading of VCAT's findings about the intentions of SGH is as follows. SGH intended, from the outset, to obtain ownership of the land in accordance with its contribution to the purchase. Initially its majority directors expected that they would be able to obtain sufficient finance for this to be the entirety of the ownership, and later they modified this expectation downward, to accommodate the unidentified new investor as majority owner. The majority directors, the Turnleys, never intended to relinquish any rights to part ownership.
227 Before VCAT, there was evidence from Ms Fraser that she knew, by settlement, of the contribution that had been made by the Turnleys as directors of SGH, and that it was evidently made on behalf of SGH. VCAT found that she was not entitled to rely on Mr Forrest's representation to her that SGH would relinquish its rights arising from that contribution. On my reading, VCAT accepted that she was told this by Mr Forrest, but found she was unable to rely on this as a representation made with the authority of SGH. I return to this point in further detail in the course of discussing ground 4, especially at paragraphs 252 to 258 below.
228 The point creates a difficult forensic issue: Ms Fraser knew of the contribution of SGH and was not entitled to conclude that SGH relinquished its rights as contributor. What, then, was Ms Fraser's state of mind for the purposes of applying the principles governing the rebuttal of the presumption of a resulting trust?
229 Ms Fraser's 'goal' was undoubtedly to obtain clear title for the appellants, but she also had knowledge of information that was inconsistent with this occurring. In these rather murky circumstances it is not precisely clear what Ms Fraser's state of mind was. If in referring to the parties' 'intentions', the authorities are speaking broadly, then it is not entirely clear on the facts before VCAT, and on its findings, what Ms Fraser's 'intention' might have been. Ms Fraser gave no oral evidence, and her written evidence is affected by VCAT's finding that she was not entitled to rely on what Mr Forrest told her about SGH relinquishing its rights.
230 As for Mr Forrest (and his company, Peninsula), his 'goal' would best be described as excluding the Turnleys and SGH from the acquisition of the land, by securing registration and full beneficial ownership for Peninsula and for Doolkoora. He had formed this goal without disclosure to his co-directors and in evident disregard of SGH's best interests. His state of mind can be taken to have encompassed an awareness that he was seeking to achieve his goals by excluding SGH. In these complicated circumstances, it is not clear what Mr Forrest's 'intention' was, for the purposes of applying the principles governing the rebuttal of presumptions of resulting trusts. In any event, it may be that no weight could have been put on any intention he had to exclude SGH, as this involved acting against the interests of a company to which he owed fiduciary duties as one of its directors.
231 Before VCAT, the appellants bore the onus of rebutting the presumption arising from SGH's $150,000 contribution to the purchase. In determining whether the appellants had rebutted the presumption, the attribution of weight to the intentions of the contributors and alleged trustees was a matter for VCAT. It is not clear to me whether VCAT was compelled to give any particular weight to the intentions of Ms Fraser (and her company) or Mr Forrest (and his). As to SGH, in my view its intentions were not inconsistent with the resulting trust it later alleged to have arisen. It did not declare an express trust over its contribution, but its words and actions support the drawing of an inference of trust.
232 In this appeal, the appellants have not demonstrated that VCAT misunderstood the principles applicable to the rebuttal issue, or that the conclusion reached by VCAT was not open on the evidence before VCAT.
Did VCAT err by failing to consider SGH's intention at the time of its payments?
234 I have already mentioned this point in paragraph 204, above. Although the parties were agreed that the relevant time at which VCAT should determine whether a resulting trust arose and the intentions of the parties was when each contributing payment was made, I do not think this is entirely correct. The cases are not precise as to the timing of ascertainment of that intention. They merely say that it must be in the transaction. In a protracted transaction, I see no reason why the intention must be discerned or characterised immutably at a single point in time.
235 The intention of the contributor at the time a payment toward acquisition is made is no doubt important and to be given significant weight. In the case of the pre-incorporation payment that was made on SGH's behalf, its promoters' intentions would be relevant, as would the intentions of its majority directors once SGH was incorporated. However, I do not accept that the characterisation of the purpose, or 'objective intention'[169] for a contributor's payment, is something that can only ever be discerned from evidence that is contemporaneous with the act of payment.
236 A transaction to acquire land may consist of numerous steps and payments. Although the 12-month timeframe of the transaction in the present case was relatively protracted, transactions taking place over a period of time are commonplace and rarely would the entirety of a transaction take place in an instant. The authorities speak of what may be inferred from words or conduct in the 'transaction', or 'so immediately thereafter as to constitute part of the transaction'.[170] In doing so, they allow scope for intentions that take shape or vary over the course of the transaction. This was such a case.
237 What were SGH's intentions over the course of the transaction? Upon the incorporation of SGH, its majority directors and directing minds (the Turnleys) appear to have expected and intended it to obtain full legal and beneficial title to the land. That intention actuated SGH's first contribution to the deposit (made on its behalf by CITEK through a pre-incorporation loan), and at least the first of its subsequent two payments. By the time of settlement in August 2017, the Turnleys no longer expected and intended that SGH would receive full ownership. However, the precise manner in which SGH would hold its partial ownership interest appears not to have been discussed between the Turnleys and Mr Forrest, who became a co-director of SGH in December 2016. There was a growing realisation in the period of May to July 2017 of the need for a new investor. However, that is not to say there was ever an intention on the part of the majority of the directors that SGH would not obtain ownership in accordance with its contribution. And on VCAT's findings rejecting the alleged relinquishment agreements, there was no common intention that SGH should be excluded from beneficial ownership. Although that became Mr Forrest's intention, and (on my reading) Ms Fraser's too, it remained 'uncommunicated' to SGH's majority directors. As far as SGH's intentions were concerned, the precise form in which ownership would be divided and held between SGH and the unidentified new investor remained unclear.
238 The facts outlined in the preceding paragraph neither tend to prove nor preclude an intention of a declaration of trust arising over the benefit flowing from SGH's contribution to the acquisition. They are truly equivocal.
239 In these circumstances, it was open to VCAT to find that the presumption was not rebutted. This is so irrespective of whether the approach of Gordon and Edelman JJ is adopted, or whether the approach of the majority in Bosanac and in earlier cases including Calverley and Vlahos is adopted.
Did VCAT err in failing to find the presumption rebutted on the ground that there was no common intention?
240 These paragraphs relate to the appellants' contention summarised in paragraph 209(e) above. The appellants' submissions rely on the proposition that, without a common intention shared with the appellants that SGH would obtain a beneficial interest, the presumption is rebutted. For reasons already explained, this is inconsistent with the applicable principles. On my view of the cases, it fell to the appellants to demonstrate that the contributors to the purchase had a common intention that was inconsistent with the resulting trust. No such common intention was established, and so the presumption stood unrebutted.
241 In conclusion, Doolkoora and Peninsula contended before VCAT that the Turnleys had agreed with Mr Forrest, and SGH had agreed with Ms Fraser, to relinquish any interest in the land owed to SGH by reason of its contribution. This was in effect an attempt to rebut the presumption that a resulting trust arose by proof of an inconsistent common intention. That attempt failed. They did not discharge their onus of establishing an inconsistent common intention, and the presumption of resulting trust stood. It was not necessary for VCAT to make any further findings about the intentions of the parties at different times during the transaction in order for the presumption to stand.
Ground 4: Did VCAT err in imputing the solicitor's knowledge to the appellants?
243 The appellants contended that ground 4 was material to the outcome of the appeal, and SGH disputed this. If a ground cannot affect the outcome of an appeal, in my view leave to appeal should be refused.
244 The question of whether ground 4 was material to the outcome of the appeal was a question of some complexity and necessitated detailed analysis of VCAT's reasons for decision.
245 For the reasons explained in this section below, and having considered the relevant aspects of VCAT's decision, I have concluded that ground 4 cannot affect the outcome of the appeal. I will refuse leave to appeal on ground 4.
246 The notice of appeal described the fourth question and ground in the following terms:
Did the Tribunal fail to make the necessary factual findings required to fix the Appellants with a solicitor's knowledge that the Respondent had paid any money towards the purchase?
Grounds
(a) The Tribunal fixed both of the Appellants with the knowledge of a solicitor, Mr Gibb[s], that the Respondent had, or might have, made payments toward the price of the Land, as a necessary step to finding liability.
(b) The test for fixing a principal with knowledge of an agent requires that the knowledge is acquired by the agent while performing the retainer for the principal. The Tribunal identified a series of documents and statements as forming the basis for an apparent inference that Mr Gibb[s] knew or suspected that such payments had been made. They were all matters that occurred before the Appellants retained him or after settlement of the purchase.
(c) The Tribunal did not make findings identifying when he commenced to act for the Appellants or that Mr Gibb[s] acquired knowledge whilst acting for the Appellants at any time prior to settlement of the sale.
247 VCAT relied on the imputation of Mr Gibbs' knowledge to Ms Fraser in the course of a further or alternative line of reasoning in support of its conclusion rejecting the alleged SGH/Fraser relinquishment agreement. Because VCAT relied on its rejection of the alleged relinquishment agreements in the course of finding that the presumption of a resulting trust was not rebutted, it is necessary to consider precisely how VCAT used its imputation of Mr Gibbs' knowledge to Ms Fraser. Was it material to VCAT's rejection of the alleged SGH/Fraser relinquishment agreement?
248 During closing submissions before VCAT, in support of the alleged SGH/Fraser relinquishment agreement, counsel for Doolkoora and Peninsula relied on ss 128(1) and 129(2) of the Corporations Act 2001 (Cth) (Corporations Act).[171] Counsel argued that, as Mr Forrest had told Ms Fraser he was a director of SGH, Ms Fraser was entitled to assume that he had authority to bind SGH. Sections 128 and 129 relevantly provided:
Section 128 Entitlement to Make Assumptions
128(1) [Entitlement]
A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.
...
128(4) [Knowledge or suspicion]
A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect.
...
Section 129 Assumptions that can be made under section 128
...
129(2)
A person may assume that anyone who appears, from information provided by the company that is available at ASIC, to be a director of the company..:
(a) has been duly appointed; and
(b) has authority to exercise the powers and perform the duties customarily exercised or performed by a director ...of a similar company.
249 VCAT noted three responding contentions on behalf of SGH, and after considering the evidence, later accepted all three:
(a) there was no sufficient evidence that Mr Forrest on behalf of SGH entered into an agreement with Ms Fraser to the effect alleged, in which Mr Forrest was acting as a director or agent of SGH;[172]
(b) even if there was evidence of Ms Fraser dealing with Mr Forrest as a director of SGH, there was no evidence of Ms Fraser having conducted an ASIC company search of SGH, as required by s 129(2) of the Corporations Act;[173] and
(c) even if that finding was wrong, the nature of the alleged SGH/Fraser relinquishment agreement was not of a type customarily entered into by a director of a similar company to SGH, within the meaning of s 129(2) of the Corporations Act, and therefore Ms Fraser was not entitled to make the assumption that Mr Forrest had authority to enter into it on behalf of SGH.[174]
250 It was only in considering the third issue, which was further and in the alternative to the other two, that VCAT considered whether Ms Fraser could be imputed with Mr Gibbs' knowledge of SGH's contributions to the transaction.
251 VCAT said, 'Ms Fraser's knowledge that SGH had invested $246,000 in the business and the land ... is an important component of my conclusion as to the non-customary nature of the alleged SGH-Fraser agreement'.[175]
252 VCAT then correctly noted that Ms Fraser's written evidence showed that 'Ms Fraser was aware of the amounts that had already been paid for the business ("around $90,000") and as a deposit on the land ("$150,000")' but went on to say 'no part of her evidence goes go [sic] so far as to state whether she had any knowledge as to the source of such payments'. My reading of this characterisation of Ms Fraser's evidence is that VCAT did not consider Ms Fraser to have been told precisely who, from amongst the Turnleys and SGH, paid the deposits, and in what combination. However, she clearly knew that the Turnleys had paid 'deposits', and the most obvious interpretation of her written evidence is that they had paid the entirety of the $150,000 as directors of SGH and on its behalf. The extracts below were reproduced in modified form in VCAT's decision:[176]
(a) Ms Fraser said relevantly in her first statement at [36] and [41]:[177]
At the time of settlement, Stewart Forrest explained to me that his business partners Kim Turnley and Craig Turnley operated the business SGH at the premises under a verbal agreement that Stewart could provide due to the licence to him in the sale contracts. This was provided as Craig and Kim Turnley had initially agreed to supply deposits and secure funding for settlement. Kim Turnley and his family were being paid by the business to run the business in the lead up to settlement.
...
Stewart Forrest advised me pre settlement that the other directors of SGH Pty Ltd agreed to forfeit the[ir][178] deposits as they had not secured funding. ...
(b) In her second statement, Ms Fraser gave an account of her conversation with Mr Forrest on about 7 July 2017 that included the following, at [4](a), (c) and (d) of Ms Fraser's second statement:[179]
(a) his partners had failed to find the funding that was required to pay the balance of the purchase price of the Land and the stamp duty, and they had told him it was now his problem, not theirs;
...
(c) he said the amount needed to settle the contract for the purchase of the Land, which was to occur at the end of the month, was $890,000 including stamp duty, and that $150,000 deposit had been paid on the Land and around $90,000 had been paid on the Business. He said his wife...owned 30% of the company that was in occupation due to a licence from him and that they would like to stay on the Land and continue to operate the Business;
(d) he was a director of that company and the other people involved were his partners from the Gourmet Paddock business.
...
253 VCAT found that Ms Fraser should be imputed with the knowledge of Mr Gibbs that SGH had already paid $96,000 for the business and $150,000 for the land,[180] and therefore that the proposal Mr Forrest was making that SGH's interest in the land should be extinguished was not a customary exercise of power within the meaning of s 129(2). For this reason, VCAT was 'not persuaded' that Ms Fraser had 'a proper basis for assuming that Mr Forrest had authority on behalf of SGH to enter into the alleged SGH/Fraser relinquishment agreement'.[181]
254 VCAT also addressed an estoppel argument put in the alternative to the alleged SGH/Fraser relinquishment agreement on the basis of Mr Forrest's representations to the same effect, finding that:[182]
Ms Fraser was not entitled to rely on the representations of Mr Forrest because she should have known or suspected that any assumption that Mr Forrest could bind SGH was incorrect.
255 It is necessary to return to a related topic: the 'Balnarring Motors Deed'. As already mentioned, VCAT considered this deed when addressing the alleged condition precedent. VCAT also mentioned it in the course of its reasoning rejecting the alleged SGH/Fraser relinquishment agreement.[183] The deed was made between Mr Forrest, his spouse, Ms Fraser and Doolkoora and bore the date 28 July 2017. VCAT noted that the deed purported to extinguish any beneficial interest that may have been acquired by SGH in the land by reason of paying the deposit.[184] Later in its reasons for decision, after considering the surrounding evidence, VCAT ultimately recorded a finding that it was not signed on the date it bore and commented on its unreliability, stating that:[185]
... the dating of the Balnarring Motors Deed as "28th July Two Thousand and Seventeen" was an attempt by Mr Forrest and Ms Fraser to reconstruct the circumstances applying at the end of July 2017, concerning their then proposed partnership. The fact of the process having been deemed necessary by Mr Forrest, and being irregular business practice, puts in doubt his credibility when giving evidence of facts and circumstances occurring in late July/early August 2017.
256 The appellants submit that, implicitly, VCAT must have accepted that Ms Fraser and Doolkoora were ignorant of the contributions to the purchase of the land that had been made by SGH. In support of this implication, the appellants rely on the fact that VCAT went to the trouble of imputing Mr Gibbs' knowledge of this fact to Ms Fraser.
257 This is a slender basis for such an implication. I do not accept it. VCAT could just as easily have been exercising an abundance of thoroughness in dealing with the submissions the parties had advanced before it.
258 In any event, no such implication can stand in the face of the extracts from Ms Fraser's written evidence extracted in VCAT's decision.[186] They include, relevantly, the passages reproduced earlier in this section of my reasons, at paragraph 252 above. Those extracts show that Ms Fraser knew of the contributions.
259 On the basis of my analysis of VCAT's approach, I consider ground 4 to be immaterial to the outcome of the appeal, for two reasons.
260 Firstly, at most, the imputation of Mr Gibbs' knowledge of SGH's contributions was only relevant to VCAT's consideration of the third contention summarised in paragraph 249 above. That contention was further or in the alternative to the preceding two. VCAT rejected both of those, and there is no appeal from those rejections.
261 Secondly, even if Ms Fraser's knowledge of SGH's contribution of $150,000 to the acquisition of the land is somehow material to VCAT's conclusions, Ms Fraser's own witness statements provided evidence that Ms Fraser knew about it.
263 The parties made competing submissions about the application of the principles concerning the imputation of solicitors' knowledge to clients, drawn from relevant case law.[187] As leave will be refused in relation to ground 4, it is unnecessary to determine the merits of these submissions.
Ground 5: Did VCAT err in determining the parties' respective interests under the resulting trust?
264 SGH did not dispute that leave should be granted on this ground and, to some extent, that the appeal should be allowed. SGH did not agree with the appellants' contentions in their entirety, or on the outcome urged by the appellants.
265 The notice of appeal described the fifth question and ground in the proceeding as follows:
Did the Tribunal err in calculating the parties' respective interests under the trust that it held arose, in failing to take account the $80,000 it found had been paid by the First Appellant in respect of stamp duty?
Grounds
(a) The Tribunal held that the Respondent had paid $150,000 towards the price of $960,000, while the First Respondent paid the balance of $810,000 and $80,000 in stamp duty. It held that there was a resulting trust in favour of the Respondent of 15/96ths.
(b) In assessing the percentage shares of parties where a resulting trust is alleged, all those costs and expenses paid in acquiring the property, including stamp duty, must be brought to account. The correct percentage, if a trust arose, should therefore be 15/104ths held by the Respondent.
266 VCAT found that Doolkoora contributed $80,000 in 'stamp duty', but omitted to take that into account in calculating the proportion of the SGH's interest as equitable tenant in common in the land. VCAT only took the appellants' contribution of $810,000 into account.
267 There are two or possibly three issues to consider.
268 First, did VCAT err in making orders on the basis that the appellants' contribution to the acquisition of the land was $810,000? Second, if so, what was the correct proportion of SGH's beneficial interest in the land?
269 The potential third issue is an issue I have already mentioned, in paragraph 205 above, but I will mention it here for completeness, in case it is intended to be encompassed by ground 5. It relates to whether VCAT erred in law in finding that SGH's contribution to the acquisition of the land was $150,000.
270 The first issue is, in effect, whether VCAT erred in law in failing to take into account any amount for stamp duty.
271 SGH concedes that VCAT erred in not taking stamp duty into account. As Vlahos makes clear, stamp duty is an acquisition cost for the purposes of purchase money resulting trusts and must be taken into account. VCAT erred in failing to take into account stamp duty paid by Doolkoora. This is an error of law.
272 The second issue is, in effect, the amount that should be taken into account for stamp duty. SGH's concession is a limited one. SGH does not concede that '$80,000' in purported stamp duty should be taken into account.
273 The appellants submit that VCAT made a finding of fact that this amount was paid, and the Court on appeal cannot vary it.
274 VCAT's finding that Doolkoora paid '$80,000' might have been a finding of fact, but its characterisation of this amount as a payment of stamp duty involved an error of law. That is because the characterisation of the amount as a payment of stamp duty was a conclusion of law, or at least a finding partially based on a conclusion of law. That is because the characterisation of the payment as being for stamp duty can only be resolved by referring to the relevant statute, s 28(1) of the Duties Act 2000. That subsection provides that the rate on transfer of land of a dutiable value of between $130,000 and $960,000 is '$2,870 plus 6% of that part of the dutiable value that exceeds $130,000'. When that calculation is performed in accordance with law, it is clear that VCAT erred in treating $80,000 as 'stamp duty' on the purchase.
275 The amount of stamp duty on the correct application of s 28(1) to a purchase price of $960,000 would have been $52,670. I am compelled to take notice of this.
276 It appears that VCAT drew on a witness statement of Ms Fraser[188] in finding that $80,000 had been paid by Doolkoora in 'stamp duty'. The appellants did not take me to any evidence as to what may have comprised the balance of the $80,000 or for that matter any other evidence that $80,000 was in fact the amount paid. It may have been paid, and the balance might have comprised allowable transaction costs that could be treated as contributions to the acquisition, but I cannot assume these things. The evidence only permits me to include the amount of $52,670, being the extent to which the amount in question comprised stamp duty.
277 As already mentioned in paragraph 205 above, at times during the appellants' submissions it appeared that they were disputing VCAT's treatment of CITEK's first $50,000 payment as being made on behalf of SGH and giving rise to a pre-incorporation loan from C[189]K to SGH.189 My interpretation of ground 5 is that there is no appeal from VCAT's treatment of this amount, or from its finding that the amount SGH contributed to the purchase of the land was $150,000. If I were to be wrong about that, I am in any event not satisfied that VCAT made any error of law in its treatment of CITEK's payment and its conclusion that SGH contributed $150,000 to the purchase of the land.
278 Therefore, on a correct application of law and equity, the proportion of SGH's beneficial interest in the land is $150,000 / $1,012,670 ($960,000 + $52,670), or 14.81%.
279 I will grant leave to the appellants in respect of ground 5, and allow the appeal in part, varying VCAT's orders in accordance with this re-calculation.
280 Ground 6 and 7 challenge VCAT's acceptance of SGH's agreement for lease claim.
281 It was uncontroversial before VCAT that the land was 'retail premises' within the meaning of that the RLA.[190] VCAT's final orders 2(g) and 3 relied on specific powers conferred under that Act. Those orders depended upon there being a lease to which that Act applied. A 'lease' for the purposes of the RLA includes an agreement for lease, whether oral or in writing.[191] VCAT declared in order 2 that on or about 7 August 2017 SGH entered into a valid, subsisting and enforceable agreement for lease with the appellants.
282 This declaration relevantly rested on the findings VCAT made to the following effect.
(a) There was a meeting on 25 July 2017 between the Turnleys and Mr Forrest at which Mr Forrest took it upon himself to endeavour to obtain the new investor's agreement to a lease that mirrored the Petrogas supply agreement of 10 years.[192]
(b) In response to a request from Mr Forrest that he and his partners be allowed to continue to stay on the land and conduct the business, Ms Fraser told Mr Forrest that she was prepared to permit him and his partners to have a monthly lease, based on $110,000 per annum rent until she returned from overseas and had time to seek legal and accounting advice. She did not want to meet the Turnleys until she returned from overseas.[193]
(c) She told (or gave an 'instruction' to) Mr Forrest to tell his partners the terms on which SGH could occupy the land.[194]
(d) On 7 August 2017, in a telephone call between Mr Forrest and Mr Turnley, Mr Forrest told Mr Turnley that the new investor who was now part owner of the land had agreed to the lease on the terms of rental of $10,083.33 plus GST per month, which included outgoings and was payable to Mr Gibbs' trust account and an initial term of three years with options of two further terms with three years each.[195]
(e) Mr Turnley arranged for SGH to make a rent payment on 7 August 2017 in the amount of $10,083.33 plus GST.[196]
(f) Communications between Mr Forrest and Mr Turnley after 7 August 2017 were not inconsistent with an agreement having been reached.[197]
(g) SGH spent money on improvements of the land in late August 2017.[198]
(h) VCAT preferred Mr Turnley's evidence over Mr Forrest's.[199]
(i) VCAT accepted that Mr Turnley was seeking a long term lease consistent with the Petrogas agreement.[200]
(j) The essential terms of the agreement were certain.[201]
(k) Mr Forrest had ostensible authority to bind Doolkoora.[202]
283 In conclusions that are impugned by grounds 6 and 7, VCAT reached findings that Mr Forrest was clothed with the ostensible authority of Doolkoora in his discussion with Mr Turnley on 7 August 2017, and that a binding agreement came into existence between SGH and the appellants on that date upon SGH paying the specified amount into Mr Gibbs' trust account.[203]
284 Grounds 6 and 7 overlap, but might be regarded as potentially alternative challenges to VCAT's acceptance of the agreement for lease claim. The focus of ground 6 is on whether Mr Forrest had Doolkoora's ostensible authority and the focus of ground 7 is on whether, from the objective circumstances, an agreement was reached. If Mr Forrest did not have ostensible authority, then clearly no agreement was reached. For completeness, I have addressed ground 7 on the alternative footing that it might be regarded as a ground not solely depending on the outcome of ground 6.
Ground 6: Did VCAT err in concluding that Mr Forrest had ostensible authority from Doolkoora to bind it to an oral agreement for lease with SGH?
285 For the reasons explained in this section below, I have decided to grant leave and allow the appeal on this ground. I have decided that VCAT erred in law in concluding that Mr Forrest had ostensible authority from Doolkoora to bind it to an oral agreement for a lease with SGH.
286 In support of their contention that VCAT erred in finding that Mr Forrest had ostensible authority to bind Doolkoora, the notice of appeal states relevantly as follows:
...
(b) An agent cannot clothe himself with authority by his own conduct. [SGH]'s dealings with [Doolkoora and Peninsula] were via Forrest, who was one of [SGH's] directors and therefore able to represent it. Treating him as the agent of [Doolkoora and Peninsula] is counter-intuitive, given that in speaking with him [they] were speaking with [SGH]. The other directors of [SGH] had no dealings with [Doolkoora and Peninsula], or even any knowledge of their identity.
(c) The Tribunal did not identify any objective conduct on the part of [Doolkoora] whereby it held Forrest out as its agent or as having authority to bind them. The Tribunal's reasons for this finding do not logically support it.
287 The appellants contended that it was 'not open' to VCAT to find that Mr Forrest had ostensible authority and erred in so finding, and that the lease fails as one of the necessary parties did not agree to it.[204]
288 In my view, the conclusion VCAT reached on the facts it found was a conclusion on a question of law. Strictly speaking, if I am persuaded that VCAT's conclusion was incorrect, that is sufficient for the appeal to succeed. For abundant caution, however, I will also consider whether VCAT's conclusion was not open to it. I address the detail of their supporting submissions, and SGH's responses, in the course of my analysis below.
289 VCAT referred to various principles applicable to the doctrine of ostensible authority.[205]
290 With one exception, on the appeal there was no controversy about VCAT's summation of the applicable principles. The exception was that one of the passages extracted by VCAT included a quote from Gurtner v Beaton,[206] and it is not clear whether the principle quoted forms part of the law relating to ostensible authority in Australia.
291 VCAT found that Mr Forrest had actual authority to bind Peninsula,[207] a finding that is not the subject of appeal.
292 VCAT reached its critical findings in a passage comprising nine further paragraphs.[208] VCAT identified aspects of the evidence of Mr Turnley and Mr Forrest relating to their discussion on 7 August 2017 and found that Mr Forrest had 'made it clear' that he was negotiating as agent on behalf of the new owners. VCAT also found that 'Mr Turnley reasonably inferred that the communication by Mr Forrest was made on behalf of Doolkoora', arising from Ms Fraser's conduct in:[209]
(a) using Mr Forrest as the only point of contact between Doolkoora and SGH/the other directors of SGH in relation to the terms on which SGH would be allowed to remain on the land after settlement, including her expectation that SGH would only be granted a month-to-month lease;[210]
(b) choosing not to disclose her identity, or the identity of Doolkoora, to Mr Forrest's "partners"[211] (which the Turnleys "respected"[212]), with whom she was aware Mr Forrest was negotiating on behalf of the new owners;
(c) choosing not to meet with Mr Forrest's "partners"[213]; and
(d) "instructing" Mr Forrest as to what to say to them.[214]
Ms Fraser in her capacity as the director of Doolkoora represented to SGH and Mr Forrest's "partners" (being the majority of the directors of SGH) that Mr Forrest could speak for her and/or any entity that she controlled.
294 It is unclear what VCAT relied upon as the representation to this effect by Ms Fraser. I will assume that VCAT intended this as a conclusion based on the four preceding sub-paragraphs, reproduced above.
295 VCAT found Ms Fraser therefore clothed Mr Forrest with authority to represent her and Doolkoora. VCAT said:
She was responsible for putting Mr Forrest in the position where Mr Forrest could, as I have found, enter into an agreement for lease on behalf of the respondents within the scope of his ostensible authority, and notwithstanding that, on her own evidence, it was contrary to the instructions that she gave to Mr Forrest.[216]
296 VCAT rejected submissions by the appellants, including a submission that Mr Forrest was acting as agent of SGH to the exclusion of acting on behalf of the appellants.[217]
297 VCAT concluded that, in the key telephone discussion between Mr Forrest and Mr Turnley on 7 August 2017, Mr Turnley was entitled to rely on the offer conveyed by Mr Forrest as having come from the new investor.[218] Mr Turnley caused SGH to immediately pay to Mr Gibbs the monthly amount specified. VCAT found this was acceptance by SGH of the offer.[219]
298 In addition to this passage, in my view, the following facts found by VCAT provide critical context for the events of 7 August 2017.
299 As noted in the introduction to these grounds, there had been a meeting on 25 July 2017 at which the directors of SGH discussed obtaining a lease for SGH to conduct the business on the land.[220] Mr Forrest was a director of SGH at the time, and remained one until 1 September 2017. On 25 July 2017, VCAT found, 'Mr Forrest was in no position ... to enter into any lease arrangement on behalf of the then unidentified investor'. Mr Forrest 'took it upon himself to endeavour to obtain the unknown investor's agreement to a lease that mirrored the Petrogas supply agreement of 10 years'.[221]
300 As to the Petrogas supply agreement, Mr Turnley on behalf of SGH engaged with Petrogas Pty Ltd (supplying Mobil fuel) from about November 2016, with a view to switching the supplier of fuel to the business from Caltex to Mobil. This involved Mr Turnley signing a credit agreement with Petrogas in which he assumed personal liability and culminated in SGH (through Mr Forrest) entering a 10-year supply agreement with Petrogas on 9 June 2017 and notifying Caltex of the switch on 30 June 2017.[222]
301 VCAT's conclusions about the outcomes of the meeting on 25 July 2017 were:[223]
I find from Mr Turnley's evidence therefore, that at the meeting on 25 July 2017, he and Mr C Turnley, in their capacity as directors of SGH, agreed with Mr Forrest that:
(a) Mr Forrest should endeavour to obtain a lease from the unidentified investor for a term that mirrored the Petrogas Supply Agreement;[224]
(b) SGH could afford to pay rent of about $110,000 per annum plus GST (or $9,166.66 plus GST per month),[225] but that Mr Forrest said that outgoings would also have to be paid;[226]
(c) that SGH would endeavour to obtain a lease in part by exercising such rights as it was going to have as part owner of the land, and that Mr Forrest would ensure that the new part owner, the unidentified investor, would agree to a lease.[227]
302 As I read the word 'agreed' in the introductory words of the above passage, VCAT was saying no more than that the Turnleys and Mr Forrest agreed on a course of action.
303 The finding reproduced in paragraph 301 above, at sub-paragraph (c), is odd. How could Mr Forrest 'ensure' that the new part owner would agree to a lease? In my view, this finding is qualified by VCAT's findings in the preceding paragraph of its decision, to the effect that Mr Forrest was not in a position to enter into a lease on behalf of the investor and would endeavour to obtain one from the new investor. It is also necessary to consider the transcript footnoted by VCAT in support of sub-paragraph (c). That transcript was part of Mr Turnley's re-examination by SGH's counsel. Read in context, the transcript does not support the finding, for the following reasons.
304 It is necessary to start at the preceding page.[228] Counsel for SGH was responding to something raised by VCAT, with leading submissions being made in the presence of the witness, followed by a question related to that submission. Counsel said:
[VCAT]: I read it that whomsoever became owner of the land, when it happened it would be desirable for SGH to be granted a lease that mirrored the Petrogas supply agreement. That's my take away.
[Counsel for SGH]: Yes, but the evidence is that on 25 July 15 Mr Turnley's evidence is that - both Mr Turnley's evidence is - that they anticipated in the next few days that Stumpy Gully Holdings would be an owner of the land given their agreement with Mr Forrest.
[VCAT]: Yes.
[Counsel for SGH]: So they agreed as directors that's what Stumpy Gully Holdings would do, it would of course ensure that it got a lease. My question then to Mr Turnley was: what else needed to fall into place for the lease to be actually agreed? Could you answer that question, Mr Turnley?---We had a - have a side lease that the terms of three by three, or termed by - in line of the Petrogas agreement and then to give at that length, and also a dollar figure that we could work with.
But how would that agreement come about?---By Mr Forrest organising that lease with the undisclosed purchaser.
305 It is only after these exchanges that the passage relied on by VCAT in support of its finding appears:[229]
[Counsel for SGH]: You have said that Stumpy Gully Holdings had agreed that as an owner it would make sure it got a lease, and you have just given evidence that you then expected the other bit to fall into place - was that Mr Forrest would ensure that the new owner, the unidentified investor, would agree to a lease. Is that correct?---Yes.
306 Read in its context, the relevant evidence was that Mr Turnley expected Mr Forrest to be able to organise a lease with the new investor. It was only in this sense that he agreed with counsel's proposition that Mr Forrest would 'ensure' that the new investor would agree to a lease.
307 The next part of the re-examination of Mr Turnley relates to Mr Turnley's understanding of Mr Forrest's role during the discussion on 7 August 2017. It was somewhat interrupted and is in places difficult to follow, and responses were sought to highly suggestive propositions.
308 Mr Turnley was asked during re-examination by counsel for SGH:
Your evidence is that on 7 August Mr Forrest told you that the unidentified investor had agreed to a lease on the terms set out in paragraph 73?---Yes.
309 Mr Turnley was then asked an important question about his understanding of Mr Forrest's role, albeit not in a way that directly reflected the preceding question and answer. The next question he was asked attributed the act of 'agreeing to those terms' to Mr Forrest. He was asked:
In your mind on 7 August 2017 when agreeing with those terms, who was Mr Forrest representing?--- -
He was representing the unidentified - he was representing both parties as far as I - he delivered what we - as a director of the agreement that I identified that he had an agreement with the unidentified - -
311 Further questions then elicited evidence from Mr Turnley that he believed Mr Forrest was representing both the new investor and SGH as director.[230]
312 In the circumstances, it is doubtful that any probative value could be attached to Mr Turnley's above evidence. If anything, Mr Turnley seemed to be saying that he understood that an agreement had already been reached with the new investor. I return to this point in my analysis below.
313 Mr Turnley was then asked by counsel for SGH, 'Why did you have that belief that he was representing the unidentified investor?', to which Mr Turnley responded:[231]
He knew so much and was my contact person. I kept - anything on the lease, he was the one that was able to - - -
314 VCAT observed that this answer was vague and unhelpful. Soon after, counsel for SGH asked, 'How on 7 August did you believe he was able to agree a lease? What gave him the right to agree a lease on 7 August 2017 on behalf of Stumpy Gully Holdings?'. Mr Turnley responded, 'I believed that he had the authority'. In response to a question from VCAT, Mr Turnley then confirmed that he, too, was a director of SGH at the time. VCAT remarked on the artificiality of the suggestion that an agreement for a lease was sought in the discussion between the two directors.[232]
315 The general principles concerning apparent or ostensible authority have been explained in numerous cases of high authority. In Pacific Carriers Limited v BNP Paribas, the High Court summarised the principles as follows:[233]
Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. 'The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting he is not bound by the contract'. ... It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. ... That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representation or conduct commonly takes the form of the setting up of an organisation or structure consistent with the company's constitution. ... In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by the principal, to consider the principal's conduct as a whole.
317 In Clayton Robard,[236] the general principles of ostensible authority drawn from Freeman & Lockyer were explained and applied by Kirby P in a case relying on representations made by an intermediary without any direct dealing between the principal and the contracting party. Kirby P said:
(a) the intermediary must profess to act on behalf of the principal;
(b) the principal 'must be shown to know of and to acquiesce in the intermediary's professing to act on its behalf to become bound by such profession', making the principal responsible for the intermediary's representation.[237]
318 The result is: 'Accordingly, as against the other contracting party, who has altered his position in reliance on the representation, the company is estopped from denying the truth of the representation'.[238] The onus of proof rests on the party asserting that it relied on an intermediary's ostensible authority to bind the principal.[239]
320 In Flexirent, Whelan J summarised the general principles drawn from leading cases dating back to 1910.[242] Flexirent concerned the ostensible authority of an intermediary making insurance arrangements for a business with insurers. Whelan J directed much attention to the implications of corporate structures and repetitive commercial arrangements, matters that do not arise here. However, Whelan J identified the following requirements relevant to the present case:[243]
(a) Apparent authority operates as an estoppel preventing a principal from asserting that the principal is not bound by a contract where the principal has held the agent out as having authority.
(b) The holding out may ... be specific to a particular transaction. ...
(c) The holding out must be conduct by the principal, not the agent. A third party cannot rely upon the agent's own representation as to authority. But this does not mean that the agent's conduct is to be ignored. The principal may hold out the agent as having authority by permitting the agent to act in a certain way or to make representations about himself or herself, or the principal may hold the agent out by equipping or arming the agent with a document or thing which enables the agent to assert authority with the hallmark of authenticity.
(d) The holding out may also result from permitting an agent to act in a certain manner, or by equipping or arming the agent, or by a failure to take proper safeguards against misrepresentation by the agent.
(e) The principal's conduct is to be assessed as a whole and in its totality.
(f) ... In a particular case a known limitation upon an agent's authority might prevent an estoppel from arising. ...
321 Essington Investments is closer to the present facts. The case arose as a result of the conduct of an 'intermediary' between two property developers, Essington and Regency. The intermediary worked with Essington and developed a draft agreement for the sale of a property by Essington to Regency. The intermediary provided the draft to Regency, who signed it and sent the signed copy by facsimile transmission to the intermediary, instructing him not to provide the copy to Essington, but only to show it to Essington, for the purposes of demonstrating the utility of further negotiation. The intermediary initially told Essington that he held the executed copy but was not in a position to forward it to Essington. A few days later, he sent it to Essington without a cover sheet. Essington in turn signed it, and returned it to the intermediary, contending that a binding agreement had thereby come into existence.
322 By majority, the Court of Appeal found that the intermediary did not have ostensible authority to bind Regency, each member of the majority giving a different reason. Hodgson JA analysed the case as a potential case of representation by silence. Hodgson JA said:
[44] It is to be noted that the representation of authority must either be made, or at least be permitted to be made, by the principal. In the present case, all the relevant representations were made by the agent, so that the real question is whether they were themselves authorised by the principal and so made by the principal, or were relevantly 'permitted' to be made by the principal. ...
[45] In my opinion, one circumstance in which it may be said that representations are permitted to be made is where a principal knows that an agent engaged on the principal's behalf is making representations as to the agent's authority, is able to prevent such representations being made or countermand them, but does not do so. There is arguably, in these circumstances, something like a representation by silence: the circumstances call for some action by the principal to ensure that persons are not misled by the agent, and the principal does not take that action.[244]
323 The appellants submitted that VCAT's conclusion was inconsistent with:
(a) Mr Forrest's role as director of SGH, his signing of the Petrogas agreement in that capacity, and his role as the agent of SGH appointed by the other directors on 25 July 2017 to obtain a lease from the unidentified new investor (Ms Fraser);
(b) other relevant facts found by VCAT, in relation to various communications between Mr Turnley and Mr Forrest relating to the topic of the lease after the 25 July 2017 meeting, and after the 7 August 2017 discussion between them;
(c) the fact that the Turnleys did not know of Peninsula.
324 The second and third of these contentions are not of great importance to the resolution of this appeal ground, in my view. However, the fact that Mr Forrest was a director of SGH, and this was known to Ms Fraser and the Turnleys, was very significant.
325 On this issue, SGH submitted that VCAT had found that Ms Fraser was not permitted to assume that Mr Forrest was acting as SGH's agent. However, that finding was made in a markedly different context, that of the alleged SGH/Fraser relinquishment agreement.
326 The basis for that finding was that Ms Fraser should have known that in purporting to relinquish SGH's rights, Mr Forrest was not exercising the customary powers of a director of a company of the kind, for the purposes of ss 128 and 129 of the Corporations Act. The discussion about SGH's continued occupation of the land was entirely different. Mr Forrest was seeking something on SGH's behalf, not purporting to relinquish something.
327 The appellants submitted that there was no suggestion in the evidence that Mr Forrest indicated that he was representing any of the other entities (Ms Fraser or the appellants) when communicating with the Turnleys about the lease. This is a matter that turns on VCAT's findings about the words Mr Forrest used, especially during the conversation with Mr Turnley on 7 August 2017.
328 SGH's submissions did not grapple with this point. Rather, they focused on Ms Fraser having described her words to Mr Forrest as an 'instruction' and sought to establish an equivalence between an intermediary and an agent. In my view, a person may be a conduit of information without being an ostensible agent.
329 Did Mr Forrest represent to Mr Turnley that he was the unidentified new investor's agent for the purpose of negotiating and entering into a fixed-term lease on her or her company's behalf?
330 In my view, on the facts as found by VCAT, there was no express representation that Mr Forrest was the agent of the new investor, and in my view no implied one either.
331 The words attributed to Mr Forrest in VCAT's findings of what was said on 7 August 2017 do not amount to any such thing. VCAT accepted Mr Turnley's evidence.[245] Mr Turnley's written evidence of the call was limited to the following extract (emphasis added):
(a) rental of $10,083.33 plus GST per month, which included outgoings and was payable to Gibbs's trust account (emphasis added); and
(b) an initial term of three years with options for two further terms of three years each.
332 VCAT also referred to evidence of Mr Forrest that on 7 August 2017 he told Mr Turnley 'the amount of money that Ms Fraser wanted to be paid', and VCAT relied on this as making it 'clear' that Mr Forrest was negotiating on Ms Fraser's behalf.[246] But these were not the words that VCAT found were actually spoken on 7 August 2017. Mr Turnley's evidence accepted by VCAT was materially different: Mr Forrest said the investor 'had agreed' to a lease to SGH.
333 These words are most naturally understood as conveying a statement of fact, not as negotiating on behalf of the investor or making an offer on their behalf. Further, it is most naturally to be understood as a statement that the investor has agreed to an offer put on behalf of SGH, or in the alternative perhaps a report as to what the new investor said they would accept. Either of these characterisations is consistent with the course of action SGH's directors had agreed upon on 25 July 2017. They had then agreed that Mr Forrest should endeavour to procure a lease for SGH at a level of rent SGH could afford. Mr Forrest was, to Mr Turnley's knowledge, a co‑director of SGH when implementing that agreed course of action. He would reasonably have understood Mr Forrest to be reporting back, in that capacity. He would not have reasonably understood Mr Forrest to be making an offer or otherwise negotiating on the new investor's behalf.
334 The appellants submitted that, in any event, an agent cannot clothe himself with ostensible authority, and that nothing Ms Fraser did amounted to a representation that Mr Forrest was her agent.
335 The appellants also submitted that, contrary to the principles applicable to ostensible authority of agents, VCAT failed to consider whether the principals (Ms Fraser and Doolkoora) knew of and acquiesced in Mr Forrest holding himself out as their agent, or make any findings to that effect.[247]
336 SGH submitted that the four matters relied upon by VCAT amounted to conduct by Ms Fraser that met the requirement that the principal has represented the alleged agent to be authorised. SGH pointed out that a person could be an agent for both parties to a transaction.
337 SGH submitted that by treating Mr Forrest as the intermediary for conveying information to the Turnleys, and by giving Mr Forrest an 'instruction', Ms Fraser must be taken to have known Mr Forrest would hold himself out as her agent.
338 SGH relied on Gurtner v Beaton. However, if the principle described in that case is part of Australian law, it merely describes an underlying rationale for the principles of ostensible authority and does not lay down criteria on which findings should be reached.
339 The essence of the matters relied on by VCAT were as follows: Ms Fraser had stated to Mr Forrest the terms on which SGH could remain on the land, told ('instructed') him to convey this to the other directors, and had said that she did not wish to deal directly with them or for them to know her identity for a time. As regards any direct dealings with Mr Forrest's co-directors and 'business partners', she decided to remain deliberately silent for a time, to allow her to obtain advice before embarking on negotiations over a long term lease.
340 To echo Hodgson JA's remarks in Essington, the question is whether something like a representation by silence was made in these circumstances. Did 'the circumstances call for some action by the principal to ensure that persons [were] not misled by the agent'? In my view, they did not. There was nothing suggesting to Ms Fraser that Mr Forrest was holding himself out as Ms Fraser's agent. Absent such circumstances, she cannot be said to have made any representation clothing Mr Forrest with apparent authority to negotiate a fixed-term lease.
341 In my view, the matter of knowledge and acquiescence on the part of Ms Fraser was an essential requirement of the success of SGH's claim that Mr Forrest had her ostensible authority to enter into a fixed-term lease.
342 There is no evidence that she knew or ought to have known that Mr Forrest was holding himself out as her agent, or that she acquiesced in any such thing, and VCAT did not make any finding that she did.
343 I infer from the absence of any express finding on this point that VCAT did not consider it. The probable reason for this is that VCAT misunderstood its importance amongst principles relating to ostensible authority in a case of this kind. In my view, with respect, this was a legal error.
344 Perhaps this suffices to uphold ground 6. However, for abundant certainty, I go further: would the factual material that was before VCAT dictate a conclusion that Ms Fraser had the requisite knowledge to support a finding of ostensible authority? Ms Fraser knew that Mr Forrest would be discussing the topic of a lease. Is this enough? I think not.
345 Ms Fraser's written evidence was unchallenged by any cross-examination. It contained no reference to her having any knowledge that Mr Forrest was representing to the Turnleys that she would agree or had agreed to a long fixed-term lease. A long fixed-term lease is a very different thing to a month-to-month lease. Even more importantly, Ms Fraser could not have had any basis for thinking Mr Forrest would purport to be her agent. She did not give evidence of any discussion with Mr Forrest that would reasonably have led her to believe that he might purport to enter into a fixed-term lease on her behalf with the Turnleys or SGH. I address the relevant aspects of the statements in the paragraphs below.
346 Ms Fraser said that on or about 7 July 2017, Mr Forrest told her that there was a company in occupation of the land, that his wife owned 30% of the company, that he was a director of it and the others involved were his partners from the restaurant venture, and that they would like to stay on the land and continue to operate the business.[248] She said that because Mr Forrest told her he was a director of the company in occupation and operating the business, 'I assumed he had the capacity to negotiate with me on its behalf and to legally bind that company in the event we reached an agreement'.[249]
347 Ms Fraser said that on or about 19 July 2017, she and Mr Forrest had another conversation in which she said she was going away and wanted her identity to remain undisclosed, and she did not want to meet the occupants until she returned.[250] She said in response to a request from Mr Forrest that 'he and his partners be allowed to continue to stay in the premises and conduct the Balnarring Motors business':[251]
... I said I was prepared to leave them in there ... until I returned from overseas and had time to seek legal and accounting advice. Given I had been told there was no lease in place at that time and they were not paying rent I told [Mr Forrest] I would allow a month by month lease with monthly rental payments calculated on the basis of an annual rental of $110,000 per annum. Payments were to be paid to D. Gibbs Lawyers.
348 Ms Fraser said, later in the same witness statement, that this was the only 'instruction' she gave Mr Forrest 'in relation to he and his partners occupying the [land], namely I told him to pass on to them I would allow them to remain in occupation and conduct the business on a month-to-month arrangement until I had time to consider the matter further'. She said, '[a]t no stage did I have any discussion with him along the lines of the agreement for lease referred to in [SGH's] Points of Claim and Witness Statements'.[252]
349 Ms Fraser also said, in an earlier and more roughly drafted statement, that at the time of settlement of the purchase of the land (around 1 August 2017), Mr Forrest told her that his 'business partners' (naming the Turnleys):
operated the business SGH at the premises under a verbal agreement that [Mr Forrest] could provide due to the licence to him in the sale contracts. This was provided as [the Turnleys] had initially agreed to supply deposits and secure funding for settlement. [The Turnleys] were being paid by the business to run the business in the lead up to settlement'.[253]
350 She said that vacant possession was not provided to her companies at settlement due to the pre-existing agreement between the vendor and Mr Forrest permitting occupation without fee, and that she understood that Mr Forrest 'granted permission to [SGH] to occupy the site and run the service station and mechanics business from December 2016 under the express condition that [Mr Turnley] provide funding for settlement'.[254] Ms Fraser referred to the agreement under which SGH continued to occupy the land after settlement in the following terms (emphasis added):[255]
[Mr Forrest] ceased to be a director of SGH in October 2017, post settlement and post the verbal agreement that I made with him that SGH could continue to occupy the site on a month to month occupation until the terms of a lease were agreed ...
351 My reading of Ms Fraser's unchallenged written evidence (summarised above) is that she believed herself to be informing Mr Forrest, in his capacity as a representative of SGH, that SGH could have a month-to-month lease calculated on the basis of an annualised rental of $110,000. She also considered that she had made an agreement with Mr Forrest, acting for SGH, to that effect. This makes sense: elsewhere in her written evidence, she says she knew Mr Forrest to be a director of SGH, and therefore authorised to represent SGH. In the absence of cross-examination, no other interpretation of her evidence was open. This is not a conclusion that relies on ss 128 and 129 of the Corporations Act.
352 A great deal of weight appears to have been placed by VCAT on the word 'instruction', as used by Ms Fraser when referring back to what she said to Mr Forrest on 19 July 2017. That she had 'instructed' him was one of the four matters said to support the finding that Ms Fraser clothed Mr Forrest with ostensible authority to act as her agent. However, neither of these words were used by her in her discussion with Mr Forrest. 'Instruction' was merely a way she chose to refer to what she had said to Mr Forrest. Immediately after using that word, she said what she meant by it: 'namely I told him to pass on to them ...'. On its own, her choice of the word 'instruction' is insignificant. It was simply her word for passing information on to others. It is far too slender a foundation for a finding that Ms Fraser believed she was 'instructing' Mr Forrest to act as her agent in entering into an agreement for a fixed-term lease, or knew Mr Forrest would do so.
353 In short, it would not have been open to VCAT to find that Ms Fraser knew that Mr Forrest would represent or was representing to the other directors of SGH that he was Ms Fraser's agent with authority to bind her or her company to a fixed-term lease agreement. And there is no basis on which it could have been open to VCAT to find that Ms Fraser failed to prevent or otherwise acquiesced in Mr Forrest doing so. None of the matters I have identified from Ms Fraser's evidence is capable of supporting a finding that Ms Fraser knew that Mr Forrest was representing to SGH's other directors that he was the new investor's agent, alone or in any combination.
354 In my view, from 25 July 2017, Mr Forrest was SGH's authorised agent in dealing with the new investor and her entity over a lease of the land. After discussion with Ms Fraser, Mr Forrest falsely reported back to his directors that the new investor had agreed on a fixed-term lease at a specified monthly amount. This was a report that the agreement had been reached. Alternatively it might have meant the investor was willing to make an agreement on that basis. Either way, it was a report of the investor's position, not an offer by an agent on the investor's behalf. The best characterisation, and indeed the only characterisation of the discussion that I regard as open on the evidence, is that Mr Forrest was purporting to act as the conduit for communication from the new investor to the other directors, but not as her agent.
355 The meeting on 25 July 2017 was significant in this regard. As already noted, it was a discussion between the three directors of SGH, relating to obtaining a lease from the new investor (who was expected to become the majority owner of the land). In this context, the natural meaning to be accorded to the 'agreement' between the three men was that SGH had adopted an agreed course of action as to its dealings with the new investor relating to the lease. That agreed course of action was that Mr Forrest would, on behalf of SGH, endeavour to obtain a lease for SGH from the unidentified investor, having regard to the terms discussed in the meeting on 25 July 2017. In other words, SGH authorised Mr Forrest to negotiate the terms of a lease, giving him parameters for that negotiation.
356 What then of the discussion between Mr Forrest and Mr Turnley on 7 August 2017? Was there anything said that would have changed the role of Mr Forrest in the reasonable perception of an observer in Mr Turnley's position? I think not. It can only be understood in the context established by the directors' course of action agreed on 25 July 2017. It was not even a meeting of all the directors. Mr C Turnley was not present. Mr Forrest remained a co-director of SGH with the Turnleys and bound to act in the best interests of SGH. Although in rare circumstances a co-director might become an agent of a third party, it would require very clear evidence to this effect, and probably consent of the co-directors, for that to occur. There were no clear statements by Mr Forrest or anyone else that he was assuming such a role. In the absence of very clear statements, the reasonable observer would have expected Mr Forrest to have set out to negotiate the lease with the investor on SGH's behalf, and then to be reporting back on the outcome. That characterisation accords most readily with the words VCAT found to have been used during the conversation between Mr Forrest and Mr Turnley on 7 August 2017.
357 Of course, there was an unsavoury twist in the facts. As it happens, unknown to Mr Turnley, on the findings of VCAT, Mr Forrest had since about July 2017 been acting inconsistently with the best interests of SGH and his duties as a director of that company. He had set up a new entity (Peninsula) with a view to that entity taking an ownership interest in the land with the new investor and to the exclusion of SGH, telling the new investor that SGH had relinquished its interests in the land. That conduct, as found by VCAT, might have led to the success of various claims against Mr Forrest had he not declared himself to be bankrupt and been removed as a respondent to the VCAT proceeding. However, those findings are not capable of informing the analysis of Mr Forrest's words to Mr Turnley in the course of determining whether Mr Forrest had the ostensible authority of Ms Fraser to bind Doolkoora to an agreement for a fixed-term lease. That is because none of these matters were known to Mr Turnley. Rather, Mr Forrest's words to Mr Turnley should be interpreted as the words of a co-director of SGH.
358 On the applicable principles, the question of Mr Turnley's subjective understanding of Mr Forrest's role is relevant, provided it was reasonable, because the principles of ostensible authority are a type of estoppel by representation: Mr Turnley (representing SGH) must, acting reasonably, have relied on the relevant representation of authority by taking a step to its detriment in the form of entering into the contract.
359 VCAT found that 'Mr Turnley understood Mr Forrest to be representing the [appellants']' and that this was reasonable.[256] I do not accept that it was open for VCAT to find any such understanding was reasonable. Further, on Mr Turnley's written evidence, there was no basis for finding that, even subjectively, he held any such understanding.
360 What of Mr Turnley's oral evidence on this topic?
361 Mr Turnley was cross-examined about the discussions with Mr Forrest on 25 July 2017 and 7 August 2017. He said that after 25 July 2017 his understanding was that Mr Forrest 'was negotiating with his friend that - he put forward that that's what the lease would be about'.[257] This is consistent with the course of action agreed between the directors of SGH on 25 July 2017: Mr Forrest, on behalf of SGH, was to endeavour to obtain a lease from the new investor.
362 During cross-examination, Mr Turnley was not asked about his state of mind concerning the role of Mr Forrest at the time of the conversation between them on 7 August 2017. That is not surprising, because even though SGH bore the onus of proof on this issue, Mr Turnley's written evidence had not addressed it.
363 As noted above, the re-examination relating to Mr Turnley's understanding of Mr Forrest's role during the discussion on 7 August 2017 was somewhat interrupted and is in places difficult to follow. In my view, the evidence elicited from Mr Turnley on the point was confused and unclear. In places it was affected by interruptions and the manner in which questions were put. It has no probative weight.
(a) I do not consider that it was open on the evidence for VCAT to make the finding that Mr Turnley believed Mr Forrest to be the investor's agent authorised to make an offer to Mr Turnley on 7 August 2017, still less that any such belief was reasonable.
(b) I do not consider that the discussion VCAT found to have occurred would objectively have led to the appearance that Mr Forrest was the unknown investor's agent, or that he was making an offer on her behalf.
(c) The matters relied upon by VCAT, including the representations made by Mr Forrest to Mr Turnley on 7 August 2017, were incapable of supporting VCAT's finding that Mr Forrest had ostensible authority to offer a legally binding agreement for a fixed-term lease of three years with two further options for SGH extended on Ms Fraser's and Doolkoora's behalf.
Ground 7: Did VCAT err in concluding that an oral agreement for lease was reached between the parties?
366 For the reasons in the preceding section, I am satisfied that VCAT erred in finding that Mr Forrest's words to Mr Turnley on 7 August 2017 bound Doolkoora.
367 It was uncontroversial that the authority of both registered proprietors was required for a valid and enforceable agreement for lease to arise.
368 It follows that VCAT erred in finding that a valid agreement for a fixed-term lease was made between SGH and the appellants on 7 August 2017. For that reason alone, I have decided to grant leave and allow ground 7 of the appeal.
369 The notice of appeal described the seventh question and ground in the proceeding as follows:
Did the Tribunal err in concluding that, on the factual findings that it made, there was an oral agreement reached between the Appellants and the Respondent for a lease for a term of three years with two options of three years each?
Grounds
(a) The Tribunal found that an oral agreement for a lease was made in a telephone conversation that occurred between Forrest and Mr Turnley senior on 7 August 2017. As noted, they were co-directors of the Respondent. Mr Turnley was unaware of the identity of the new proprietors of the land, and unaware that Forrest was a director of one of them.
(b) The conversation accepted by the Tribunal was not one in which Forrest purported to be negotiating on behalf of the owners, with Turnley acting on behalf of the Respondent. It was instead a communication by Forrest to Turnley about what the proprietors wanted or would accept. Objectively, it was a discussion between the directors of the Respondent about the terms of a lease that they might be able to obtain.
(c) The fact of agreement is an objective one assessed from the perspective of a third-party bystander, possessed of the common knowledge of the parties. The Tribunal did not apply such a test. Had it done so it would have found no objective agreement for a lease in that conversation.
370 Much of the detail of ground 7 was based on the reasonable perception of Mr Forrest's communication to Mr Turnley on 7 August 2017 in circumstances where Mr Forrest was a co-director of SGH and did not say he was representing the new investor. For the reasons I have explained on ground 6, I accept that these aspects of ground 7 are correct and that ground 7 should be upheld.
371 If I were required to determine ground 7 on an alternative and standalone basis, I would in any event decide to allow it. In what follows, I give brief reasons for this. These reasons assume that, contrary to my conclusion on ground 6, Mr Forrest was (somehow) Ms Fraser's and Doolkoora's ostensible agent.
372 SGH submitted that this ground comprised an impermissible question of fact.
373 The test for whether a binding agreement has been reached is, relevantly, whether a reasonable observer would understand, from the parties' communicated words and conduct and other objective circumstances, that the parties had reached agreement on all essential matters and that they intended the agreement to be binding.[258]
374 The appellants' challenge focused on the failure of VCAT to apply this test. SGH's responding submissions did not squarely grapple with this challenge. Instead, SGH's submissions largely defended VCAT's conclusion that agreement had been reached on essential terms.
375 On the issue of essential terms for an agreement for lease, VCAT followed an earlier decision of VCAT, Australvic.[259] In my opinion, the facts of that case are distinguishable. There was much clearer evidence in Australvic that agreement was reached on essential terms.
376 In any event, the identification of essential terms and agreement on them is not the central issue raised by this ground. The central issue is whether VCAT applied the required test, and whether its conclusion met the required test. Identification of essential terms is an important element in applying the test but not all there is to it. The absence of shared communication on terms (whether essential or not), and a lack of clarity about express terms, are also relevant matters.
377 Although findings of fact were involved in VCAT's conclusion that a binding agreement was reached, the question of whether VCAT applied the correct test in finding that a binding agreement was formed was a question of law. Likewise, the conclusion that a binding agreement was reached was a conclusion of law. The High Court has made it clear that a conclusion that facts as found amount to the formation of a legally binding agreement is a question of law.[260]
378 In context, the words spoken by Mr Forrest to Mr Turnley during their telephone call on 7 August 2017 were insufficient for a binding agreement to have been reached between them for a lease of the land for a three-year term with two options to renew.
379 As the appellants submitted, there was no mechanism for rent increases, no provision for commencing rent levels in each option period, no provision for insurance, no provision for maintenance of installation, and uncertainty about outgoings. It is true that VCAT decided to imply many of these provisions. However, the fact that they were not clearly communicated is highly relevant to the application of the required test.
380 The appellants also pointed out that there was no attempt to comply with the requirement of the RLA for a written lease.[261] There is no indication in the evidence that either Mr Turnley or Mr Forrest knew of this requirement. It is unclear whether this matter would be taken into account by the reasonable observer in forming an impression as to whether a binding agreement was reached, and so I put it to one side.
381 I have extracted the evidence of Mr Turnley, accepted by VCAT, of what was said in the conversation on 7 August 2017 in paragraph 331 above. VCAT characterised it as an offer by the owners which was accepted by SGH when Mr Turnley immediately caused SGH to pay the monthly amount of $10,093.33 plus GST specified by Mr Forrest.
382 The information conveyed by Mr Forrest was unclear as to the treatment of outgoings. Were outgoings to be 'included' in the figure specified by Mr Forrest, in the sense that there would be no additional cost to SGH provided it paid '$10,083.33 plus GST' per month? Or was there to be a monthly calculation of the outgoings, so they could be 'included' in the monthly payments to be made by SGH, over and above that amount? This lack of certainty led to communications in September and October 2017 between Mr Forrest and Mr Turnley,[262] indicating that there had been no clear 'agreement' on the matter on 7 August 2017, or even 'on or about' 7 August 2017.
383 There was additional uncertainty as to the monthly payment specified by Mr Forrest. Although the figure was clearly stated as being '$10,083.33 plus GST', the further communications in September and October 2017 indicated this was not agreed.[263] There was confusion whether GST was included or excluded in the '$10,083.33' mentioned by Mr Forrest. The revision of the figure for rent indicates that agreement had not been reached on or about 7 August 2017 on that matter either.
384 Further, it is inconceivable that the parties would have entered into an oral agreement of up to nine years' duration, involving two options for renewal, without some detail as to an expressly agreed mechanism for review of rental levels, in particular upon renewals, and some agreed detail on responsibility for maintenance and repair of service station installations, and insurance.
385 These provisions may not technically have been irreducible, essential terms of all agreements for leases, according to general principles. Provisions about such matters may, in an appropriate case once agreement is correctly found to exist, be capable of implication. But this can only occur once the test for a binding agreement is met in all the objective circumstances. The absence of express agreement on those matters in this case should have informed the application of the required test. It does not appear that VCAT addressed this issue. In any event, it is a matter of law on which I am required to form a view for myself. I am satisfied that the absence of express agreement on these matters weighs heavily against the conclusion that an agreement was reached on the basis of what Mr Forrest said on 7 August 2017 combined with SGH's immediate payment of the specified amount.
386 Mr Turnley's prompt payment of one month's rent on 7 August 2017 does not indicate that a binding agreement for a long term lease was made on (or about) that day. In context, I do not construe it as a step signifying SGH's intention to enter into legal relations by accepting an offer. It is more naturally explained as Mr Turnley's response to the report from Mr Forrest that he had secured the investor's agreement. Alternatively, it could have been a payment reflecting the new investor's requirements in anticipation that agreement would be reached. It is far from being an unequivocal acceptance of an offer for a long term lease.
387 SGH also pointed out that VCAT relied on expenditure on installation and signage on the land by SGH in late August 2017.[264] VCAT drew on this in support of its finding that a binding agreement for a fixed term lease had been reached on 7 August 2017. In my view, the expenditure by SGH in late August signifies only that Mr Turnley had a subjective belief that an agreement for a long term lease was in place (based on Mr Forrest's untrue report to him to that effect on 7 August 2017), or alternatively a mere expectation that the new investor would agree to one. The expenditure by SGH in late August does not tend to prove that a binding agreement arose from mutually observable words and conduct of Mr Forrest and the Turnleys on or about 7 August 2017.
388 For these reasons, I am satisfied that, from the perspective of a third-party observer possessed of the common knowledge of the parties, no objective agreement for a lease arose from the conversation between Mr Turnley and Mr Forrest on 7 August 2017. VCAT erred in two different senses. First, I am satisfied that VCAT placed an incorrect legal characterisation on the facts it found. As already noted, that is an error of law,[265] and is sufficient to result in ground 7 succeeding. Further, and in any event, I am satisfied that VCAT reached a conclusion that was not open to it.
389 In short, I have decided that the appellants have demonstrated that VCAT erred as claimed in the notice of appeal.
390 I will grant leave and allow ground 7 of the appeal.
391 I have decided to grant leave to appeal in relation to all grounds except ground 4, and to allow the appeal from grounds 5, 6 and 7. I will vary VCAT's orders to reflect my conclusion, arising from ground 5, that the proportion in which the appellants hold the land on a resulting trust for the benefit of SGH is 14.81%. VCAT's orders relating to the lease will be set aside. The appeal will otherwise be dismissed.
392 The parties will be heard on the form of orders that will most appropriately give effect to these reasons, on any appropriate consequential orders, and on costs.
[1] SGH operates the service station business pursuant to injunctions granted by VCAT.
[2] Referred to in some of the case law as 'purchaser', but I will generally use the term 'contributor'.
[3] Stumpy Gully Holding Pty Ltd v Doolkoora Pty Ltd (Building and Property) [2022] VCAT 564 (VCAT decision).
[4] This was later treated to be a payment on behalf of SGH and after SGH's incorporation was recorded as a debt to CITEK. Counsel for the appellants suggested that it might not be clear how this could be a payment on behalf of SGH, but there was no ground of appeal on this basis.
[6] VCAT decision [24], [26]-[27], [105].
[11] VCAT decision [366], [369]-[370].
[15] VCAT decision [239]. However, in the appeal in this Court, in response to ground 5, SGH pointed out that stamp duty on a purchase of land in Victoria at a dutiable value of $960,000 was not $80,000, but was $52,670. This issue is addressed in the consideration of ground 5, below.
[16] Although VCAT found that the payments were made by both Doolkoora and Peninsula, the evidence indicated they were made by Doolkoora for both appellants. See Ms Fraser's Statement No 2 [9], Application Book 640, reproduced in VCAT decision [254].
[17] VCAT order 2, VCAT decision [64], [359], [381], [455], [458]-[459].
[19] VCAT decision [310], [311]-[314].
[21] I infer that this is a slip and is intended to refer to order 6(f).
[22] Appellants' submissions dated 2 March 2023 (Appellants' First Outline); respondents' submissions dated 4 May 2023 (SGH's First Outline); appellants' reply submissions dated 30 June 2023 (Appellants' Second Outline); appellants' post-hearing submissions regarding legislative history and indefeasibility of title dated 25 August 2023 (Appellants' Third Outline); respondent's post-hearing submissions regarding unidentified principals dated 1 September 2023 (SGH's Second Outline); appellants' post-hearing submissions regarding unidentified but disclosed principals dated 9 September 2023 (Appellants' Fourth Outline); and respondent's submissions in response to Appellants' Third Outline in relation to legislative history and indefeasibility of title dated 10 September 2023 (SGH's Third Outline).
[23] Miller v Martin [2021] VSCA 108, [71], citing Patsuris v Gippsland and Southern Rural Water Corporation [2016] VSCA 109, [44].
[24] Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T [2021] VSCA 72, [198]; Miller v Martin [2021] VSCA 108, [72]; Heng Yang Developments Pty Ltd v Red Earth Developments (Aust) Pty Ltd [2022] VSC 231, [40].
[25] See Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd [2014] VSCA 353; (2014) 45 VR 771, [50] (Warren CJ); Haritos v Federal Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315, [192].
[26] Hope v Bathurst City Council (1980) 144 CR 1, 7; Collector of Customs v Pozzolanic [1993] FCA 356; (1993) 43 FCR 280, 287; FCT v Trail Bros Steel & Plastics [2010] FCAFC 94; (2010) 186 FCR 410, [13]; Vetter v Lake Macquarie City Council (2001) 202 CLR 439, [24] (Gleeson CJ, Gummow and Callinan JJ); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd [2014] VSCA 353; (2014) 45 VR 771, [48] (Warren CJ), [167]-[168] (Whelan JA); but compare S v Crimes Compensation Tribunal [1998] 1 VR 83, 89. The Court of Appeal's decision in Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd [2014] VSCA 353; (2014) 45 VR 771 was reversed on appeal on different grounds, without affecting the remarks noted here: see [2016] HCA 26; (2016) 260 CLR 1, [24]-[27], [69].
[27] Vetter v Lake Macquarie City Council (2001) 202 CLR 439, [24] (Gleeson CJ, Gummow and Callinan JJ); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd [2014] VSCA 353; (2014) 45 VR 771, [167]-[168] (Whelan JA).
[28] Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40, [32]-[34], [48]-[58] (Thomas and Naaz).
[30] See Tucci v Victorian Civil and Administrative Tribunal & Anor [2010] VSC 425.
[31] [2012] VCAT 156 (Garnett).
[32] The declaration in order 1, the order for sale pursuant to s 228(2)(a) of the PLA in order 6, and ancillary orders relating to the sale in orders 7 and 10.
[33] Herald and Weekly Times Pty Ltd v Victoria [2006] VSCA 146; (2006) 25 VAR 124, 134; McLeod v Marina Operations Pty Ltd [2006] VCAT 2537, [34].
[51] See Relationships Act 2008 s 72, which repealed PLA pt IX.
[55] Statute of Uses 1535, 27 Hen 8, c 10. The Statute of Uses converted the equitable interests of beneficiaries into equivalent legal estates, as a measure against tax avoidance. Later, the Statute of Uses was circumvented and eventually repealed - see B Edgeworth, Butt's Land Law (7th ed, 2017) [4.40]-[4.60]. The Statute of Uses was repealed in Victoria in 1980 by the Imperial Act Application Act 1980 s 5, and s 19A of the PLA was inserted by the Imperial Law Re-Enactment Act 1980 at the same time. Section 19A in effect reverses the operation of the Statute of Uses and confirms that interests in land that would have been legal interests under the Statute of Uses are capable of being created as equitable interests. See also Victorian Law Reform Commission, Review of the Property Law Act 1958: Consultation Paper (2010) 90.
[56] Victorian Law Reform Commission, Review of the Property Law Act 1958: Consultation Paper (2010) 90.
[57] Statute of Frauds 1677, 29 Car 2, c 3; see Victorian Law Reform Commission, Review of the Property Law Act 1958: Consultation Paper (2010) 54.
[58] B Edgeworth, Butt's Land Law (7th ed, 2017) ch 4 [4.80]−[4.140].
[59] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, 474 (Brennan J).
[60] JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, 2015) [4.090]−[4.100]; Commissioner for Stamp Duties (Qld) v Livingston [1965] AC 694, 712 (Viscount Radcliffe).
[61] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 518−519 [13]−[15] (Hope JA); B Edgeworth, Butt's Land Law (7th ed, 2017) ch 4 [4.120].
[62] B Edgeworth, Butt's Land Law (7th ed, 2017) ch 4 [4.30], [4.110].
[63] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 518−519 [13]−[15] (Hope JA). Although the Court of Appeal's decision was varied in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, Hope JA's summary of these principles was not affected.
[64] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, 463−4 (Aickin J).
[65] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 519 [16] (Hope JA).
[66] B Edgeworth, Butt's Land Law (7th ed, 2017) ch 4 [4.150]−[4.160].
[67] See especially Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 (Calverley); Vlahos Pty Ltd v Vlahos [2017] VSCA 166 (Vlahos); and Bosanac v Federal Commissioner of Taxation [2022] HCA 34; (2022) 275 CLR 37 (Bosanac).
[68] B Edgeworth, Butt's Land Law (7th ed, 2017) ch 6 [6.20].
[69] Calverley 246 (Gibbs CJ); B Edgeworth, Butt's Land Law (7th ed, 2017) ch 6 [6.140].
[70] 31 Hen 8, c 1 (1539); 32 Hen 8, c 32 (1540).
[72] Partition Act 1890 ss 3-7, 11-16.
[75] Miller v Warmington (1820) 1 JAC & W; 37 ER 452, 455, 456 (Miller v Warmington).
[76] See Property (Co-ownership) Act 2005 and Victorian Law Reform Commission, Disputes Between Co-Owners (Report, 7 March 2002).
[77] Saunders v Vautier (1841) 41 ER 482 (Saunders).
[78] New South Wales, Queensland and the Northern Territory.
[79] [2008] VCAT 1183 (Dawson).
[82] [2011] VSC 166 (Krsteski).
[88] Garnett [35]-[36]; clause 1 of the Explanatory Memorandum, Property (Co-ownership) Bill 2005; second reading speech: Victoria, Parliamentary Debates, Legislative Assembly, 14 September 2005, 879-80.
[92] [2018] VSC 444 (Miller).
[95] (2020) 60 VR 341 (Stewart).
[96] The Court of Appeal summarised the principles of statutory interpretation in AB v Independent Broad-based Anti-corruption Commission [2022] VSCA 283, [123] and Vicinity Funds Re Ltd v Commissioner of State Revenue [2022] VSCA 176, [69]-[70]. See also James v The King [2023] VSCA 34, [28].
[97] R v A2 [2019] HCA 35; (2019) 269 CLR 507, [32]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27, [47]; Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503, [39] (Consolidated Media Holdings); Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664, [22]; Treasurer of Victoria v Tabcorp Holdings Ltd [2014] VSCA 143, [99]-[102] (Tabcorp).
[99] CIC Insurance Ltd v Bankstown Football Club Limited (1997) 187 CLR 384, [88] (CIC).
[100] Project Blue Sky v Australian Broadcasting Authority [1998] HCA 35; (1998) 194 CLR 355, [69] (Project Blue Sky); CIC [88]; Consolidated Media Holdings [39].
[101] Project Blue Sky [69]-[70].
[102] Consolidated Media Holdings [39]; Tabcorp [2].
[103] Consolidated Media Holdings [39].
[104] Re Nash [No 2] [2017] HCA 52; (2017) 263 CLR 443, 450 [16], quoting Federated Engine-Drivers and Firemen's Association of Australasia v Broken Hill Pty Co Ltd [1911] HCA 31; (1911) 12 CLR 398, 415; see also R v Federal Court of Australia; ex parte WA National Football League (1979) 143 CLR 190, 215 (Gibbs J).
[105] Victorian Law Reform Commission, Disputes Between Co-Owners (Report, 7 March 2002).
[106] Consolidated Media Holdings [39]; see also Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252, [33]-[34].
[107] See DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 518-519; Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204, 233. See also DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, 443 referring to the timing of 'severance of the legal and equitable interests' (Gibbs CJ), 461 (Mason J).
[108] See also DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, 463 (Aickin J).
[109] Miller v Warmington 456 (emphasis added).
[110] (1879) 13 CD 223, 227 (emphasis added).
[112] See Conveyancing Act 1919 (NSW) s 66G; Property Law Act 1974 (Qld) s 38; Law of Property Act 2000 (NT) s 40.
[113] CIC [88]; Project Blue Sky [69]-[70].
[115] VCAT decision [286]-[287], citing: Black Uhlans Inv v NSW Crime Commission [2002] NSWSC 1060, [129]; Calverley; Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 (Gibbs CJ) (Muschinski); Vlahos [63].
[119] See Tesco Supermarkets Ltd v Nattras [1971] UKHL 1; [1972] AC 153.
[123] Calverley 246 (Gibbs CJ), 257-8 (Mason and Brennan JJ), 266-7 (Deane J).
[124] Calverley 251 (Gibbs CJ), 261-2 (Mason and Brennan JJ), 269-71 (Deane J).
[127] Calverley 253 (Gibbs CJ), 262 (Mason and Brennan JJ), 269, 271 (Deane J).
[130] Vlahos [60] citing: Calverley 251, 258, 261-2, 269-70; Muschinski 590, 612; Sivritas v Sivritas [2008] VSC 580; (2008) 23 VR 349, 371 [119] (Sivritas).
[131] Vlahos [60] (emphasis added) citing: Calverley 261-2, 269; Sivritas 372 [122].
[134] Bosanac [105] (Gordon and Edelman JJ).
[135] Bosanac [105] (Gordon and Edelman JJ).
[136] Bosanac [12], citing Dyer v Dyer [1788] EWHC J8; (1788) 2 Cox Eq Cas 92, 93; [1788] EWHC J8; 30 ER 42, 43.
[137] Bosanac [13], citing: Stewart Dawson and Co (Victoria) Pty Ltd v The Commissioner of Land Tax [1933] HCA 4; (1933) 48 CLR 683, 690; Calverley 251; Nelson v Nelson (1995) 184 CLR 538, 547 (Nelson).
[138] Bosanac [13] citing Muschinski 612.
[140] Bosanac [32] citing Martin v Martin [1959] HCA 62; (1959) 110 CLR 297, 304.
[141] Bosanac [44] citing: Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 275-6 [58]-[60], 286-90 [105]-[115]; Gissing v Gissing [1970] UKHL 3; [1971] AC 886, 906 (Gissing).
[149] Bosanac [98] citing Calverley 265-6.
[152] Bosanac [105] citing: Muschinski 612; Vandervell v Inland Revenue Commissioners [1966] UKHL 3; [1967] 2 AC 291, 313 (Vandervell); Pettitt v Pettitt [1969] UKHL 5; [1970] AC 777, 815 (Pettitt).
[153] Bosanac [106] citing: Calverley 262, Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353, 365.
[155] Bosanac [109] citing: S v S [1972] AC 24, 41; Pettitt 823; Muschinski 612; Goodman v Gallant [1985] EWCA Civ 15; [1986] Fam 106, 110-11 (Goodman).
[156] Bosanac [110] citing: Pettitt 823; Calverley 266; Muschinski 612; Goodman 110-11; Nelson 547.
[157] Bosanac [105] citing: Muschinski 612; Vandervell 313; Pettitt 815. This phrase is explained in more detail by Gordon and Edelman JJ in Bosanac [108]-[109].
[158] Appellants' Second Outline [60].
[159] Appellants' First Outline [76], [78]-[79].
[162] Gissing 906. These remarks were approved by Gibbs CJ in Calverley at 261-2.
[163] D Heydon and M Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016) [12.10]: 'It has been said that a person does not become a trustee under a resulting trust until that person is aware of the circumstances which gave rise to it', citing: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12; [1996] AC 669, 705-6; cf Re Vinogradoff [1935] WN 68; Re Diplock [1948] Ch 465.
[165] Vlahos [61] citing: Calverley 255, 270; Muschinski 612; Sivritas 372 [120]; cf Pettitt 814. See also Bosanac [13], [64]-[66], [110].
[168] Bosanac [102]-[103], [110] (Gordon and Edelman JJ).
[169] Bosanac [80], [94], [106] (Gordon and Edelman JJ).
[170] Bosanac [106]; Calverley 262.
[172] VCAT decision [250(a)], [255]-[258].
[178] In the VCAT decision, the word 'the' is amended to 'their'. This is immaterial to my conclusions.
[186] VCAT decision [253], extracting paragraphs including [36] and [41] of Ms Fraser's first witness statement, VCAT decision [254], extracting paragraphs including [4](c) of Ms Fraser's second witness statement.
[187] Taylor v Yorkshire Insurance Co Ltd [1913] 2 IR 1, 20; Najjar v Haines (1991) 25 NSWLR 224.
[188] VCAT decision [254] at paragraph 9 of the extracted text, which relevantly states: 'Doolkoora paid $810,000 to buy the [land] and $80,000 stamp duty on the purchase...'.
[192] See VCAT decision [368]-[369].
[193] VCAT decision [399]-[400], [459(a)-(c)].
[194] VCAT decision [399]-[400], [459(d)].
[203] VCAT decision [435]-[445], [460], [464], [475].
[204] Appellants' First Outline [160].
[205] VCAT decision [449]-[453], quoting from or citing authorities including: Chitty on Contracts (Thomson Reuters Sweet & Maxwell, 33rd ed) vol 2, Specific Contracts [31.043], [31.061]; a judgment of the Court of Appeal for England and Wales which has been identified as Sino Channel Asia Ltd v Dana Shipping & Trading Pte Singapore [2017] EWCA Civ 1703, [58]-[59]; Essington Investments Pty Ltd v Regency Property Pty Ltd [2004] NSWCA 375 (Essington Investments); Flexirent Capital Pty Ltd v EBS Consulting Pty Ltd [2007] VSC 158, [203] (Flexirent); Combulk Pty Ltd v TNT Management Pty Ltd [1993] FCA 126, [16], [20]-[21]; Lysaght Bros & Co Ltd v Falk [1905] HCA 7; (1905) 2 CLR 421, 430-431; Pourzand v Telstra Corp Ltd [2014] WASCA 14, [84]; British Marine PLC v Wollongong Coal Ltd (2015) FCA 403, [213]; Sydney Water Corp v Makucha [2010] NSWSC 114, [57].
[206] [1993] 2 Lloyd's Rep 369, 379 (Gurtner v Beaton): 'where the Court has to decide which of two innocent parties is to suffer for the wrongdoing of a third party the Court will incline towards placing the burden on the party who was responsible for putting the wrongdoer in the position in which he could commit the wrong'.
[210] VCAT's original footnote states: 'On Ms Fraser's version of events'.
[211] VCAT's original footnote states: 'Ms Fraser was aware that Mr Forrest was dealing with third parties -Mr Forrest's "partners"'.
[212] VCAT's original footnote gives a transcript reference that is immaterial to this appeal.
[222] VCAT decision [120], [210(a)-(e)], [210(g)], [210(i)], [354]-[356].
[224] VCAT's original footnote states: 'Transcript, pp 797, 909, 944. This is the finding also advocated by Mr Kewley'.
[225] VCAT's original footnote states: 'Transcript, pp 871-2, 890'.
[226] VCAT's original footnote states: 'Transcript, p 871'.
[227] VCAT's original footnote states: 'Transcript, p 912'.
[228] Transcript 911 (13 February 2020), Application Book 1798.
[229] Transcript 911-12 (13 February 2020), Application Book 1798-9.
[230] Transcript 912 (13 February 2020), Application Book 1799.
[231] Transcript 913 (13 February 2020), Application Book 1800.
[232] Transcript 914 (13 February 2020), Application Book 1801.
[233] [2004] HCA 35; (2004) 218 CLR 451, 466-7 [36].
[234] Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964) 2 QB 480, 502 (Diplock LJ) (Freeman & Lockyer).
[235] Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd [1975] HCA 49; (1975) 133 CLR 72, 78; Northside Developments Pty Ltd v Registrar-General (1990) 10 CLR 146; see Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, 466-7 [36].
[236] Clayton Robard & Anor v Siu (1987) 6 ACLC 57, 59-60 (Kirby P) (Clayton Robard).
[237] Clayton Robard 60 (Kirby P, quoting from Freeman & Lockyer).
[238] Clayton Robard 60 (Kirby P, quoting from Freeman & Lockyer).
[239] Dal Pont, Law of Agency (Lexis Nexis Australia, 4th ed, 2020) [20.7], citing: Robinson v Tyson [1888] NSWLawRp 48; (1888) 9 LR (NSW) 297, 308 (Windeyer J); Farquharson Bros & Co v C King & Co [1902] UKLawRpAC 26; [1902] AC 325, 341 (Lord Lindley); Hoare v McCarthy [1916] HCA 65; (1916) 22 CLR 296, 303 (Griffith CJ), 305 (Isaacs J); and other cases.
[244] Essington [44]-[45] (emphasis added).
[247] Appellants' First Outline [150]-[152], citing Clayton Robard 60; Quickfund (Australia) Pty Ltd v Chatswood Appliance Spare Parts Pty Ltd [2013] NSWSC 646, [23] (Quickfund).
[248] Ms Fraser's Statement No 2 [4(c)-(d)], Application Book 639.
[249] Ms Fraser's Statement No 2 [5], Application Book 640.
[250] Ms Fraser's Statement No 2 [6(b)], Application 640.
[251] Ms Fraser's Statement No 2 [6(c)], Application 640.
[252] Ms Fraser's Statement No 2 [10], Application Book 641.
[253] Ms Fraser's Statement No 1 [36], Application Book 594 .
[254] Ms Fraser's Statement No 1 [63], Application Book 598.
[255] Ms Fraser's Statement No 1 [65], Application Book 598.
[257] Transcript 800 (12 February 2020), Application Book 1686.
[258] Sully v Englisch [2022] VSCA 184, [62], [76], [78]; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1, [31], [266]; Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597, 607; Merritt v Merritt [1970] EWCA Civ 6; [1970] 2 All ER 760, 762.
[259] Australvic Finance Pty Ltd v Elcheikh & Ors (Retail Tenancies) [2010] VCAT 956.
[260] Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited [2014] VSCA 353; (2014) 45 VR 771, [49]-[52] (Warren CJ) and [169] (Whelan J). Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1, [24]-[27], [69].
[265] Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1, [24]-[27], [69].
Doolkoora Pty Ltd & Anor
Stumpy Gully Holdings Pty Ltd [2024] VSC 155
(2014) 45 VR 771
(2015) 233 FCR 315
(1993) 43 FCR 280
(2010) 186 FCR 410
(2001) 202 CLR 439
(2016) 260 CLR 1
(1982) 149 CLR 431
(1984) 155 CLR 242
(2022) 275 CLR 37
(2020) 60 VR 341
(2019) 269 CLR 507
(2009) 239 CLR 27
(2012) 250 CLR 503
(2014) 250 CLR 664
(1997) 187 CLR 384
(1998) 194 CLR 355
(2017) 263 CLR 443
(1911) 12 CLR 398
(1979) 143 CLR 190
(2010) 241 CLR 252
(2011) 33 VR 204
(1985) 160 CLR 583
(2008) 23 VR 349
(1933) 48 CLR 683
(1995) 184 CLR 538
(1959) 110 CLR 297
(2011) 243 CLR 253
(1956) 95 CLR 353
(1991) 25 NSWLR 224
(1905) 2 CLR 421
(2004) 218 CLR 451
(1975) 133 CLR 72
(1990) 10 CLR 146
(1916) 22 CLR 296
(1964) 112 CLR 597