Halloran and Others v Minister Administering the National Parks and Wildlife Act 1974

Land and Environment Court (NSW)|2007-03-29|Before: Talbot J, Mr J

CITATION : Halloran and Others v Minister Administering the National Parks and Wildlife Act 1974 [2007] NSWLEC 155

APPLICANTS Warren Halloran Sealark Pty Limited PARTIES : Companies in the Schedule of Ownership

RESPONDENT Minister Administering the National Parks and Wildlife Act 1974

Conveyancing Act 1919 s 23C LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991 s 37 Stamp Duties Act 1920 NSW s 29(3), s 44(1),(2)

Autodesk Inc and another v Dyason and Others (1992-1993) 176 CLR 300 ; Halloran and Ors v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; CASES CITED: Halloran and Ors v Minister Administering National Parks and Wildlife Act 1974 (1999) 105 LGERA 405; Henderson v Henderson (1843) 3 Hare 100; Minister Administering National Parks and Wildlife Act 1974 v Halloran and Ors [2004] NSWCA 118

APPLICANTS Mr J E Robson SC SOLICITORS Blake Dawson Waldron LEGAL REPRESENTATIVES:

RESPONDENT Mr J A Ayling SC with Mr H R Sorensen (Barrister) SOLICITORS Crown Solicitor's Office

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30282 of 1998 Halloran and Ors v Minister Administering the National Parks and Wildlife Act 1974

JUDGMENT 1 Talbot J: Following a decision by the High Court delivered on 9 February 2006, Halloran and Others v Minister Administering National Parks And Wildlife Act 1974 [2006] HCA 3, the matter has been returned to this Court for hearing.

2 In the original proceedings before this Court Halloran v Minister Administering National Parks and Wildlife Act 1974 (1999) 105 LGERA 405, I held that the Court was satisfied that the applicant Pacinette Pty Ltd had established that it is an owner of an interest in land the subject of the notice of acquisition published in the Government Gazette on 19 June 1998 and was entitled for the purpose of the proceedings to maintain its claim under s 37 Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).

3 The Court of Appeal declared, without reservation, in absolute terms that Pacinette is not the owner and that the claimants are not entitled to maintain claims under s 37(Minister Administering National Parks And Wildlife Act 1974 v Halloran and Ors 12 BPR 22; [2004] NSWCA 118). 4 The High Court made the following orders varying the orders entered by the Court of Appeal on 17 August 2004:- Order 2 of the Order of the Court of Appeal entered 17 August 2004 should be varied so as to read:-

Declare that upon the admissible evidence tendered at the proceeding before Talbot J the applicant, Pacinette Pty Ltd, has not established that it is the owner of an interest in the land the subject of the Notice of Acquisition published in the Government Gazette dated 19 June 1998 and is entitled for the purposes of these proceedings to maintain its claim under s 37 of the Land Acquisition (Just Terms Compensation) Act 1991 in respect of nominated lots 140, 1629 and 1063.

Order 3 of that Order should be varied so as to read:-

Declare that upon the admissible evidence tendered at the proceeding before Talbot J , the Beneficial Ownership Claimants in Class 2 referred to in the Amended Points of Claim dated 28 December 2000 have not established that they are entitled to maintain claims under s 37 of the Land Acquisition (Just Terms Compensation) Act 1991 in respect of land resumed by Notices of Acquisition published in the Government Gazette on 19 June 1998 and on 18 September 1998.

5 The orders of the Court of Appeal are qualified by the High Court's reference to the admissible evidence failing to establish that Pacinette Pty Ltd is the owner of a relevant interest in the subject land or that the Beneficial Ownership Claimants are entitled to maintain the relevant claims. 6 There has been no substantive hearing. The original argument before me and subsequently in the Court of Appeal and the High Court related only to a preliminary question posed by an amended Notice Of Motion dated 11 March 1999 whereby the applicants sought declarations and orders that the various applicants were owners within the meaning of that term in s 37 of the Just Terms Act.

7 The decision in the Court of Appeal was confined to a consideration of the effect of a series of transactions which took place in May 1998. Justice Bryson who delivered the judgment for the Court of Appeal held that the relevant meetings and transactions upon which the applicants rely did not take place and accordingly, no interest was created in the land for Pacinette. In the light of that finding it was not necessary for the Court of Appeal to deal with the question whether stamp duty was payable in respect of the transactions. Following a finding by the High Court that stamp duty is payable the applicant Pacinette Pty Ltd has caused the relevant duty to be paid.

8 Pursuant to Notice of Motion filed 14 November 2006, the applicants now move the Court for the following orders: -

That the following question be determined as a preliminary question of law: Is Pacinette Pty Limited an owner of an interest in land the subject of the notice of acquisition and published in the Government Gazette dated 19 June 1998 and entitled for the purposes of these proceedings to maintain its claim under section 37 of the Land Acquisition (Just Terms Compensation) Act 1991?

To the extent necessary to determine the question above, leave be granted to reopen the issue determined by Justice Talbot on 9 December 1999 on the grounds set out in the affidavit of Clare Frances Collett sworn 13 November 2006.

9 The Minister, as respondent, opposes the making of the orders and pursuant to directions made by me on 12 December 2006 has stipulated the following further questions to be determined on the motion: - "3 Whether this Court has power to adjudicate an issue in these proceedings already determined by the Court of Appeal as varied by the High Court of Australia.

If the answer to question 3 is in the affirmative, whether this Court has power to: a) grant leave to reopen the issue determined by it on 9 December given the determination of that date has been set aside by order of the Court of Appeal and substituted by a determination of the Court of Appeal as varied by the High Court. b) receive further evidence in respect of the same issue

Whether the subsequent payment of stamp duty in respect of the "Pacinette transaction" is a inconsequential matter only, given the finding of the Court of Appeal to the effect that the said transaction did not occur, which finding was not reversed by the High Court.

Whether taking into account the findings of the Court of Appeal and the High Court in these proceedings the subsequent payment of the stamp duty thereupon negates the consequences of estoppels arising from findings to the effect that the transaction did not take place or that if it did take place it was ineffective to convey a beneficial interest as the case may be." 10 Although the questions now posed appear to be confined to the future conduct of the proceedings in this Court, it is necessary to understand the effect of the decisions by the High Court and the Court of Appeal. The parties have made conflicting submissions in that respect.

The Argument and Findings in the High Court 11 A description of the land acquired by compulsory acquisition that triggered the claims made under the Just Terms Act and the history of the acquisition itself are uncontroversially explained in my original judgment and in the subsequent judgments of the Court of Appeal and the High Court.

12 The nature of the applicants' claim is summarised succinctly at [16] and [17] by the High Court as follows: [16] The present appellants claimed compensation of more than $46.7m. They alleged that some of those individuals and companies included as appellants held no more than a bare legal title to parts of the resumed land but that the remaining appellants (all of them corporations controlled by the first appellant, Mr Warren Halloran) had at the date of the relevant notice in the Gazette an equitable interest in one or more of the parcels of land which thereby attracted an entitlement to compensation under s 37 of the Compensation Act.

[17] The equitable interests in question were said to have been created or acquired as a result of events occurring during May 1998. This was after the giving of the initial notices in February 1997, to which reference has been made, and after the scheme of arrangement, to which reference will be made. In the approach that we take, the question for this Court is whether the Court of Appeal erred in concluding that the appellants had not established, within the available evidence, as a result of the May events described by the minister as steps taken in pursuance of a "scheme", that the equitable interest had been created or acquired so as to attract the entitlement to compensation upon subsequent resumption. 13 The High Court records the contentions made to it by the Minister at [55], [56], [57], [58] as follows:- [55] First, the minister contends, as the Court of Appeal held, that Talbot J erred because the evidence and agreed facts do not establish that the steps said to have taken place in May 1998 actually occurred. The submission was developed by saying that, because the elaborate and sequential steps (particularly respecting the drawing, acceptance and negotiation of a bill of exchange) had not been taken, the scheme had not been implemented in accordance with its design; as a result, Pacinette had held at the resumption date no compensable equitable interest.

[56] Several points should be made immediately concerning the width of the minister's first contention. One is that it is not said that the transactions were integers in a scheme which was a "sham" in the received sense given in the authorities referred to in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd . Another is that the minister accepts that contractual assent may be inferred from conduct, and that, any requisite statutory formalities apart, company directors may act informally and may manifest unanimous consent without the passage of formal resolutions. In that regard, the minister accepts the authorities collected by Powell JA in MYT Engineering Pty Ltd v Mulcon Pty Ltd . Furthermore, the mere fact that a number of meetings are held simultaneously does not deprive the resolutions of efficacy. If, for example, three people are the sole shareholders in each of a number of companies, however large that number may be, they could effectively resolve, on a single occasion, in their capacities as the shareholders of all those companies, in a manner binding all those companies; assuming, of course, that the subject-matter of such resolution was otherwise within the power of a general meeting of the shareholders of each company.

[57] The minister's second contention is that if, contrary to the first contention, all the steps in the scheme actually occurred, they were ineffective to vest the equitable interests for which Pacinette claims compensation because there was a fatal want of compliance with statutory formalities. The statutory formalities were those made necessary by s 23C of the Conveyancing Act.

[58] Thirdly, if neither of the two above objections succeeds in supporting dismissal of the appeal, the minister further contended in oral submissions noted above that because stamp duty which was properly exigible was not paid, proof of the transaction relied upon for the first event was denied by s 29(3) of the Stamp Duties Act. For reasons which will be stated after dealing with further matters, it is upon this third ground that the appeal should be dismissed.

14 The High Court summarises the particular intended five steps to set up the Pacinette Property Trust and the issue of A Class units to the company Sealark at [49] and a further 18 steps intended to vest in Pacinette the beneficial interest in land previously owned by Sealark at [50]. For the purpose of clarity, steps (vi) - (x) are identified as "the first event" referred to in the Minister's submissions and the balance as "the second event".

15 Rather than any change in the beneficial ownership of the relevant subject- matter, (the equitable interest of Sealark,) being brought about as the consequence of the issue of units in a unit trust as contended by the applicants, the High Court held at [81] that "the change was brought about, and was the consequence of, the fact that the consideration (no matter what form that consideration took) was provided by Pacinette to Sealark. The change was thus the consequence of the operation of the doctrines of constructive trusts or of the use of statutes as instruments of fraud or both".

16 In the result s 44(1) Stamp Duties Act 1920 applied to the first event and s 29(3) was engaged so that there was no admissible evidence in the compensation proceedings of the occurrence of the first event. Accordingly there was no relevant subject-matter upon which the second event might operate [82].

17 The majority concluded at [87] and [88] in the following terms:- [87] The proceedings in the Land and Environment Court are still on foot. Upon resumption of those proceedings, it may be open to the appellants, without foundering upon principles of issue estoppel and related doctrines, to remove the sterilising effect of the revenue legislation by compliance with Div 3A of the Stamp Duties Act and payment of stamp duty and fines to the satisfaction of the commissioner. We express no view as to whether that course would be open to the appellants, a matter upon which submissions were not made, but the possibility re-emphasises the need for attention to the precise issue set aside for separate determination by Talbot J. This in terms fixed upon what was established by the admissible evidence.

[88] The order of the Court of Appeal should be varied to reflect that state of affairs.

18 Heydon J agreed with the orders proposed by the majority except in one respect which he explained at [93] and [94] as follows:- [93] Step (viii) created a contract to transfer Sealark's equitable interest in the land to Pacinette in return for the issue by Pacinette in favour of Sealark of 79,000 $1 A Class units. At that moment a constructive trust arose and the beneficial ownership of Sealark's equitable interest changed, at least to some extent. The interest of Pacinette as purchaser was commensurate with its ability to protect that interest by obtaining specific performance. In the present circumstances there was no impairment of that ability by reason of any termination of the contract by Sealark as vendor. Hence there is no circularity, and no other difficulty, in viewing Pacinette as having obtained an interest under a constructive trust in such a way as to change the beneficial ownership of Sealark's equitable interest to some extent. It is unnecessary to consider whether the creation of a beneficial interest in Pacinette by way of constructive trust in consequence of step (viii) meant that there was nothing more of Sealark's equitable interest in the land to pass in consequence of steps (ix) and (x), or whether after step (viii) but before steps (ix) and (x) Sealark retained some equitable title which only passed when steps (ix) and (x) took place.

[94] To the extent that any change in beneficial ownership took place when steps (ix) and (x) were carried out -- the allotment of the 79,000 $1 A Class units and the issue of the certificate relating to them -- that was a change that occurred as the consequence of the issue of units in a unit trust scheme within the meaning of s 44(2)(d). However, this does not assist the appellants. A different change in beneficial ownership occurred earlier, at step (viii). That change in beneficial ownership, occurring when the constructive trust arose as the consequence of the promise to issue units in the unit trust scheme, was not a change in beneficial ownership occurring as the consequence of the issue of those units. It was only a change occurring as the consequence of the promise to issue them. Hence, s 44(2)(d) does not apply. Therefore, s 29(3) prevents proof of step (viii). That in turn prevents establishment of Sealark's acceptance of Pacinette's offer to buy Sealark's equitable interest in the land. In consequence it is impossible to prove the passing of that equitable interest, and the scheme thus fails at that point.

19 Heydon J went further and identified what he foresaw could be several difficulties that might be encountered by the applicants if they elected to pay the outstanding stamp duty. He referred to the consequences of the majority reasoning at [97]: - [97] The reasoning of the majority, whether or not qualified in the respect just described, leads to the conclusion that the orders proposed should be made. Any attempt by the appellants to outflank s 29(3) by paying the stamp duty not yet paid would have to overcome several difficulties. One may be the conventional understanding that the trial of a separate question is a process, subject to relevant rules of court, having all the finality of any other trial. Another may be the apparent failure of the appellants to leave open the possibility of payment in the event that their arguments against the application of s 29(3) failed, whether at trial or on appeal, by reserving liberty to reopen their case in that connection. A third is the difficulty in inviting the Land and Environment Court to apply the reasoning of Talbot J favourable to the appellants' case that the purported transactions had in fact occurred in the face of the Court of Appeal's reasoning that they had not -- reasoning which the majority in this court has not determined to be wrong. There may be further difficulties. However, as the majority have said, no submissions were made to this court about the possibility of the appellants attempting at this late stage to mend their hand by paying the stamp duty, let alone any difficulties attending that attempt, and nothing further need be said about these matters.

20 My Ayling SC, who appears for the Minister, seeks to rationalise the contrasting subjunctive mood of the High Court in its initial discussion regarding some particular intended steps to change beneficial ownership and the perfect tense subsequently used to describe what further steps occurred. He says it was an unintended distinction. He surmises that it came about because the Court was attempting to avoid itself making an impermissible finding of fact on appeal or to be seen to be upholding a complaint by Halloran that the finding by the Court of Appeal represented impermissible fact finding. Mr Ayling therefore submits that the High Court was proceeding only to the point where it could decide whether, if the events occurred, stamp duty would be payable. There was no finding that the facts relied upon by the applicants occurred. Mr Robson SC, as will be explained, disagrees with the submission made by Mr Ayling. He says that the intentions of the High Court must be discerned from what is written. The Applicants' position

21 In the first place Mr Robson distinguishes what has been decided by each of the three courts so far.

22 This Court was asked whether Pacinette had established on the admissible evidence tendered at the hearing that it is an owner of an interest in land and entitled to maintain its claim under s 37 of the Just Terms Act.

23 As the High Court noted at [84] the Court of Appeal went further than returning a negative answer to the separate question and ordered that there be a declaration that Pacinette is not the owner of an interest in the land and is not entitled to maintain its claim under s 37.

24 It is apparent from paragraph [86] and the analysis undertaken by the High Court from paragraph [66] to [82] that the High Court's determination rested on a resolution of the stamp duty question. In so doing it recognised the prospect that the applicants may be able to remove "the sterilising effect of the revenue legislation". It was specifically noted at [67] that the opinion of the Court of Appeal that the purported transactions did not occur did not compel the further conclusion that Pacinette did not hold a compensable equitable interest. The majority went on to define what that compensable interest might be in the event that the relevant evidence was admissible.

25 In the end the High Court concluded at [74] that whichever form of reasoning be employed the result is that in the circumstances postulated, there has been a change in the "beneficial ownership". Further it may be said that as a result of the first event there would be a "direct passage" of the beneficial ownership to Pacinette and that disregarding the second event as superfluous, this sufficed to identify a compensable equitable interest in Pacinette at the time of the resumption of the land [76].

26 Because the applicants were unable to prove that the first event occurred by dint of the sterilising effect of s 29(3) of the Stamp Duties Act 1920 the applicants have not established by admissible evidence the occurrence of what has been described as "the first event" [77,82]. Hence given the basis upon which the appeal was decided in the High Court, declaratory relief cast in the absolute terms of that given by the Court of Appeal was considered to be inappropriate [86].

27 Mr Robson identifies paragraphs [66] and [67] as what he refers to as the lynchpin of the High Court's decision. According to him, the whole concept for the principles adopted by the High Court springs from these paragraphs. The majority in the High Court said: - [66] The parties agreed, for the valuable consideration of mutual promises of future performance, that the several intended steps would thereafter be taken. A failure to consummate that agreement in its terms would not necessarily discharge equity from any further concern with the matter where, as in this case, an issue is presented for later curial determination whether one or other or none of the parties subsequently held an equitable interest compensable upon resumption by a public authority. If one or more of the parties had released its equitable rights, or perhaps, for reason of a defence of laches, acquiescence, delay or estoppel, had lost its claim to equitable protection, that would be another matter. But no such case was presented by the minister.

[67] The Court of Appeal allowed the appeal because of its opinion that the purported transactions did not occur. We will assume, without deciding the point, that it was open, on the limited appeal before that court, for the Court of Appeal to proceed to that conclusion. However, that conclusion did not compel the further conclusion that Pacinette and the other appellants did not hold a compensable equitable interest. 28 Setting aside the possibility of nice questions regarding ratio decidendi and obiter dicta, Mr Robson submits that the High Court provides a powerful and persuasive argument that needs to be mounted for the purpose of dealing with the threshold question raised in this Court as a preliminary issue. Even if the decision of the Court of Appeal cannot be set aside in its entirety nevertheless, the reasoning of the High Court establishes that the Court of Appeal did not have the necessary material before it to make the decision that it did regarding the efficacy of the transactions.

29 Mr Robson emphasises two important matters that need to be taken into account in determining the future course of the proceedings in this Court.

30 They are:- 1. That until the High Court delivered its decision there had been no finding by any Court that stamp duty was payable. Furthermore, the Commissioner of Stamp Duties came to the view that no duty was payable (Court of Appeal 106).

The potential interest of Pacinette identified by the High Court was not foreshadowed by any submission or argument put by or on behalf of either party. 31 Mr Robson also develops an argument out of paragraphs [55], [56] and [57] of the High Court judgment to the effect that the Court is dismissive of the Minister's contention that the evidence and the agreed facts do not establish that the steps said to have taken place in May 1998 actually occurred. It thereafter proceeds to separately deal with the issue that proof of the transaction relied upon for the first event was denied by s 29(3) Stamp Duties Act being the ground upon which the Court ultimately concluded the appeal should be dismissed.

32 Mr Robson contends that no analysis based upon an argument attempting to distinguish the initial subjunctive mood from the perfect tense of the language used can detract from the findings made in paragraphs [66] and [67] being the basis for the High Court's decision. He sees no support for the contention put by Mr Ayling that the High Court was being delicate and polite and careful not to criticise the Court of Appeal.

33 Mr Robson says the Court of Appeal finding in relation to the steps taken in May 1998 cannot stand alongside the reasoning by the High Court in paragraphs [65], [66], [67], [70] and [72]. After emphasising in paragraph [65] that equity does not work to defeat the lawful intention of parties, the majority in the Court observed that equity prefers substance to form. Therefore, even if there was no written contract for the sale by Sealark to Pacinette, for stamp duty considerations, there was a written offer accepted by Sealark and recorded in the minutes and the issue of a certificate for units in the unit trust which was the consideration moving to Sealark.

34 The attitude of the Court of appeal is particularly reflected in the observations made by Bryson JA in paragraphs 46 and following. Then at [90], Justice Bryson found it impossible to conclude that Sealark incurred liability as a constructive trustee or that a constructive trust should be imposed on Sealark. Mr Robson relies upon what the High Court majority said at [67] to show that it did not accept the pejorative remarks regarding the value of documents made by the Court of Appeal. Accordingly the findings by the Court of Appeal cannot stand with the conclusion that stamp duty was attracted by the transactions even though the change in interest in the land occurred at a different point to that contended by the applicants in argument.

35 Mr Robson also argues that the decision of the Court of Appeal does not withstand the result in the High Court because the Court of Appeal proceeded on a basis that relied upon a finding of factual nullity or mistake (leaving aside the question of impermissible fact finding). The High Court was able to make a determination without making reference to the findings of the Court of Appeal. Therefore, he says, the analysis by the Court of Appeal is either otiose or wrong.

36 Effectively, the High Court proceeded on the basis that the holding of the actual meetings was not necessary and that the interest that arose did not depend upon the efficacy of meetings which the Court of Appeal found did not take place. What the High Court decided in effect is in paragraph [58] namely that the appeal be dismissed because stamp duty which was properly exigible was not paid and therefore proof of the transaction relied upon for the first event was denied by s 29(3) of the Stamp Duties Act. The High Court nonetheless made it clear from the reasons that it gave what it would find if the evidence became admissible.

37 Mr Robson says that in any event it is clear from paragraphs [66] to [82] that the High Court implicitly disagreed with the result of what the Court of Appeal decided. It carried out a fundamentally different analysis of the manner in which the equitable interest was transferred. Therefore the two decisions cannot stand together. Even though the reasoning of the High Court is in part subjunctive or contingent upon proof of certain facts, what the High Court says quite plainly is that once those facts are proved, a certain legal result follows. 38 Finally Mr Robson describes the argument put by Mr Ayling as an awkward textual analysis that is tortuous and semantic. It is also based upon an unfounded supposition that the High Court was attempting, (but not admitting,) to address what was impermissible fact finding by Justice Bryson. To the contrary, Mr Robson asserts that the language used by the High Court is perfectly appropriate for the discussion of "the first event" and its legal consequences in circumstances where, due to s 29 (3), it could not yet be proved by admissible evidence. The Respondent's position 39 My Ayling equates the course taken by the High Court to "tight-rope walking" whereby it was seeking to identify a legal question it could safely answer as it was not in a position in a class three appeal to correct errors of fact. It therefore concentrated on disposing of the question of law raised on the basis of liability for stamp duty and in particular whether s 44(2) of the Stamp Duties Act applied. As the High Court was not prepared to find on a factual basis that the Court of Appeal reached an incorrect decision, it answered the preliminary question raised in this Court as a question of law. Nevertheless he says the qualification placed on the declarations made by the Court of Appeal in respect of the admissible evidence did not alter the effect of the declaratory relief given by the Court of Appeal.

40 In paragraphs [69] to [71] the High Court reflects upon the design and purpose of the proposed scheme to cause a change in the beneficial ownership in the absence of a written contract, for what it says might be called stamp duty considerations. By taking this approach, Mr Ayling suggests the High Court was being careful not to contradict the reasons given by Justice Bryson. When the majority stated that "a change in the relationship between Sealark and Pacinette took place" at [72] Mr Ayling submits they intended only to foreshadow what would have taken place. This, he says, is confirmed by the use of the phrase "in the circumstances postulated" in paragraph [74], which again suggests that everything that went before were not findings of fact. It is a hypothetical that arises from the Court confining its decision to the question of stamp duty. The analysis was only undertaken to decide whether if the events occurred stamp duty was payable. Not that the events occurred. This can in his view be the only explanation for the shift between the subjunctive mood and the perfect tense.

41 In the result if Mr Ayling is correct this Court is left with a decision of fact by the Court of Appeal that cannot be overcome.

42 According to Mr Ayling, rather than going as far as the Court of Appeal did and determining that there was no transaction, the High Court elected to deal with the hypothetical position. So that if there was a transaction then stamp duty was payable. In the absence of the payment of the duty, the relevant evidence was not admissible.

43 He says the High Court dealt with "the second event" first to demonstrate that not all of the intended steps were taken. In particular there were issues relating to the issue and endorsement of a bill of exchange. It found that the evidence about the way in which the documents were signed precludes a finding that there was at any particular point either a delivery of the bill or a negotiation of the bill by endorsement and delivery [63]. However, from [69] onwards the High Court's analysis of "the first event" demonstrates that a change in the relationship between Sealark and Pacinette took place. The Court identified and accepted that consideration for the sale was provided to Sealark. The status of the bill of exchange had no bearing on that decision.

44 By proceeding in the above way Mr Ayling says the High Court placed itself in the position that it could modify the declaration made by the Court of Appeal without embarking upon an impermissible course of fact finding. Therefore, it is the Minister's position that the preliminary question asked in this Court and the question now raised by the Notice of Motion has been finally determined for the purposes of the proceedings by order 2 of the Court of Appeal made on 6 August 2004 as varied by the High Court on 9 February 2006 namely, that the preliminary question is answered in the negative. What the High Court decided 45 I do not accept the view that the High Court may have inadvertently or by design, attempted to step around the decision of the Court of Appeal on the basis suggested by Mr Ayling.

46 Paragraphs [69] to [71] analyse the design for "the first event" in order to understand what was the intention of the parties in order to give effect to the principle of equity referred to in paragraph [65]. That is, equity does not work to defeat the lawful intentions of parties.

47 From paragraph [72] to [75] the High Court explained the effect of the provision of consideration to Sealark and the nature of that consideration. Rather than anything to do with the bill of exchange discussed earlier, the consideration was the issue of a certificate for units in a unit trust.

48 It was not necessary for the High Court to disturb the Court of Appeal finding because it could rely on the written offer accepted by Sealark and recorded in minutes and the issue of a certificate for the units. The latter was the consideration that gave rise to the constructive trust binding Sealark in favour of Pacinette. Once those facts had been established, "the second event" became superfluous. The "first event" sufficed to identify a compensable equitable interest in Pacinette at the time of the resumption of the land [76].

49 The dissection by the High Court and its conclusion does not rely on the transactions, which the Court of Appeal held had never taken place. The essential element upon which the High Court relies is the clear expression of intention to make an immediate disposition provided there was valuable consideration. No proof of a transaction was required to create that element.

50 However, as the High Court decided at [77], the conclusion requires proof that "the first event" had occurred and as that depended upon proof of written materials, that proof was not available as a consequence of the sterilising operation of s 29(3) of the Stamp Duties Act. In that respect s 44(1) was satisfied but as the change in the beneficial ownership of the equitable interest of Sealark was not brought about as the consequence of the issue of units in a unit trust, s 44(2) could not be called in aid. The result that Pacinette held the equitable interest was the consequence of the equitable doctrines and principles identified by the High Court because consideration (no matter what form that consideration took) was provided by Pacinette to Sealark [81].

51 In my view the decisions of the Court of Appeal and the High Court can stand together. They are respectively based on separate and distinct findings in respect of different matters. The High Court clearly disagreed with the Court of Appeal's view on the effect of records appearing in the minutes of meetings. If the facts are established by admissible evidence Sealark was in the position as a trustee for Pacinette under a bare trust involving no duty and was unable to assert lack of efficacy for want of compliance with s 23C of the Conveyancing Act 1919 [72] and [73].

52 In order for the circumstances to be proved, the applicant needed to overcome the sterilising operation of s 29(3) Stamp Duties Act 1920 by the payment of duty. The observations made by the majority at [87] and by Heydon J at [93] in effect do no more than alert the parties and this Court to the prospective difficulties that may have to be overcome before the interest of Pacinette can be recognised in these proceedings. Whether the Questions can now be determined 53. There are two possible avenues raised by the applicant in order to have the questions determined. Either the question now posed can be treated as a new question based upon novel grounds and argument not previously advanced or that leave be granted to reopen. 54. It was not argued before me that Pacinette acquired a relevant interest in the manner identified by the High Court. Nor does the Court of Appeal make any reference to the prospect of an interest of that type. The parties do not suggest otherwise and it appears to be common ground that an argument was never put to that effect. The evidentiary basis for the applicants' case is now changed. Although the material in respect of the scheme and transactions has been analysed by each Court in succession, that evidence technically was never properly before any Court. It was held by the High Court not to be admissible.

As I apprehend their present position, the applicants do not seek to rely on any alleged transaction which the Court of Appeal held did not occur. The documents upon which they now seek to rely have been presumably stamped with the appropriate duty and are available to be tendered and admitted into evidence for the purpose of determining the preliminary question with the benefit of all the relevant evidence for the first time. The legal efficacy of the documents in the context of s 37 has not been determined by the High Court except in respect of the liability for stamp duty and the relevance of the payment of outstanding duty upon the admissibility of the evidence.

Because the factual or evidential basis for the question asked in the present notice of motion is materially different from the factual or evidential basis for the declarations of the High Court, the applicants contend that it is not correct to classify the present notice of motion as "asking the same question" or seeking to redetermine issues already determined in the proceedings. This is said to be because the facts forming the component steps of the transfer of equitable ownership were not proved in the High Court by admissible evidence (and hence not decided by the Court) due to the operation of s 29(3) of the Stamp Duties Act. Whereas this is precisely what is now proposed. The respondent takes the opposite view and argues that the Motion Question in substance raises the same question as was determined at the hearing in respect of paragraph 1 of the applicants' Amended Notice of Motion dated 11 March 1999 and the applicants are therefore estopped from re-litigating a decided question.

A critical point raised by the respondent is that stamp duty was an issue at first instance before me, in the Court of Appeal and in the High Court. The design of the scheme was that, the dealings should not generate liability to stamp duty. Payment of stamp duty was not made until after all rights of appeal in relation to answering the Preliminary Question had been exhausted. In these circumstances payment per se cannot now have the effect of rendering the documents admissible for the purpose of the proceedings because that issue having been litigated to its conclusion is now closed. Notwithstanding duty has now been paid, an issue estoppel also precludes the documents being accepted as admissible evidence in the proceedings.

The question asked at first instance and the declaration made by the High Court are capable of being distinguished from the unqualified declaration made by the Court of Appeal and subsequently set aside. The Court of Appeal declaration, if allowed to stand, could have closed off all possibilities of further argument. The High Court did not do that when it confirmed its declaration to a consideration of admissible evidence tendered at the proceeding before me. The litigation remains on foot. Effectively the evidence was wrongly admitted. It was not open for it to be considered by me. The hearing is set to continue based on the evidence that is properly admissible before me at the further hearing.

The current question is not referable to admissible evidence. It seeks an answer in unqualified terms. According to my understanding of what happened in the High Court the majority was careful to confine the declaration to "the admissible evidence tendered at the proceeding before Talbot J". That is not the present intention. The Notice of Motion omits the internal qualification. Therefore the questions will be decided by reference to the evidence admitted at the further hearing.
The power to allow a party to reopen is discretionary. As Mason CJ said in Autodesk Inc and another v Dyason and Others (1992-1993) 176 CLR 300 at 302 "the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue where a Court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or law". If the applicants are in truth seeking to reopen in this case then it would be in circumstances where there was clearly a misapprehension in this Court regarding the effect of s 29(3) of the Stamp Duties Act. Moreover there was a misapprehension at first instance regarding the facts upon which the Court of Appeal ruled and ultimately those facts which formed the basis for the High Court's decision. It is not reasonable to regard the conduct of the applicants as neglect or default. The applicants have at all times relied on the whole of the evidence they now propose to rely on. It is not a case where the same parties are seeking permission to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest but which was not brought forward (Henderson v Henderson (1843) 3 Hare 100 at 114-5). No party or Court recognised the particular interest arising out of a constructive trust until the High Court analysed the events that took place in May 1998. The impediment to proof has been removed by the payment of stamp duty. In the context of the tender of evidence it is not a new case. There is no prejudice to the respondent that cannot sound in costs.

Strictly speaking it can be argued that there is no judgment or finding in this Court to set aside or to reopen because the High Court made its decision based upon the admissible evidence before this Court. That determination effectively set aside the earlier judgment. If that is not correct and it is necessary for the applicants to have leave to reopen then I am prepared to grant that leave on the principles enunciated by Mason CJ in Autodesk and reiterated by the other members of the Court. Because the Court of Appeal decision stands in regard to the status of the purported transactions, the leave cannot extend to proving the transactions that the Court of Appeal found not to exist. However the applicants should be given leave to rely on the documents involved in steps (i) to (x) specified by the majority at [49] and [50].

The High Court identified 23 separate steps at [50]. The "first event" (steps vi to x) may be established by evidence of the written offer by Pacinette, as trustee, to Sealark, the acceptance of the offer recorded in the minutes of Sealark and the issue of a certificate for 79,000 $1 A class units in The Pacinette Property Trust to Sealark as consideration for the proposed purchase of the land. The essence of the decision of the Court of Appeal is found in the judgment of Bryson JA at [28] where his Honour decided to address "whether the transactions on which the legal conclusions contended for by the respondents had taken place in fact". His Honour then made express findings that the relevant meetings in respect of the offer and acceptance did not take place. The High Court clearly disagreed with that proposition when at [56] it affirmed the capacity of directors and shareholders to make decisions in the way that they did on 14 May 1998. The decision by the Court of Appeal in respect of the holding of the meetings cannot stand against the contrary approach by the High Court. Answers to Preliminary Question
The questions raised by the Notice of Motion and those questions drafted by the Respondent are addressed to the whole of the series of events that took place in May 1998 whereas I am satisfied the Court of Appeal has negated the effect of the alleged transactions by its finding that they did not occur except in respect of the underlying events in steps (i) to (x) recognised by the High Court.

The High Court recognised at [59] that not all of the various intended steps were taken. In particular, the steps constituting "the second event" (xi to xxiii) involving the issue and redemption of units that were to be taken in consideration of dealings with the bill of exchange. The "second event" included the issue and redemption of units distinct from those referred to above in respect of "the first event".

It was as a consequence of "what happened at the offices of the solicitors" that the High Court concluded the parties expressed assent to the taking of the various steps and "agreed, for the valuable consideration of mutual promises of future performance that the several intended steps would thereafter be taken". That agreement provided the basis for the High Court's acceptance that there was relevantly "a change in the 'beneficial ownership'" [74] " as a consequence of the issue of units in a unit trust" [81].

It is appropriate therefore that the questions posed by the Notice of Motion and the additional questions generated by the respondent be answered in a way that recognises the prospect that the applicants are entitled to rely only on evidence confined solely to proof of "the first event" and for the question in 1 to be considered on the basis of that evidence alone. If that involves a reopening then leave should be granted to the extent necessary to deal with question 1 in that way. The answers to questions 1 and 2 are therefore answered in the affirmative subject to that qualification. The scope of the evidence can be determined at the hearing. The ambit of the payment of stamp duty may also be relevant.

The separate extended questions raised by the respondent are self-evidently answered by the manner in which the judgment by the Court of Appeal and the High Court have been construed. Question 3 should be answered on the basis that this Court does not have power to adjudicate an issue otherwise than in accordance with the determination of the Court of Appeal as varied by the High Court. The consequence of the decisions of both Courts has been identified. There is a distinction between the respective decisions at least in respect of the efficacy of relevant meetings and the effect of resolutions recorded in minutes. As a consequence of the answer to question 3, it technically may be necessary to grant leave to reopen.
The answer to question 4 is that to the extent necessary to deal with what the High Court described as "the first event" this Court has the power to grant leave to reopen and to receive further evidence in respect thereof, there being no admissible evidence presently before the it.
In relation to questions 5 and 6 I am satisfied that the payment of stamp duty overcomes the effect of s 29(3) of the Stamp Duties Act where the liability for stamp duty has been satisfied. The consequence of any alleged estoppels extends only to matters finally determined by the Court of Appeal and confirmed or not set aside by the High Court. The facts and circumstances upon which the applicants can rely in respect of "the first event" have been identified in these reasons and do not need to be repeated. The applicants are not estopped from relying on "the first event".

The matter will be listed for further mention and directions in 14 days to allow the parties to consider the answers in respect of the questions.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

(1999) 105 LGERA 405

At a glance

Court

Decision date

Before

Source

Judgment (82 paragraphs)

Parties

Cases Cited (3)