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

2 At the same time on 29 March 2007 I granted leave for the applicant to reopen its case to the extent necessary to deal with the above question following the payment of stamp duty in accordance with the decision of the High Court. 3 At first instance (at 425 [138]) I expressed the opinion that, on balance, a constructive trust came into existence when Sealark Pty Ltd as the owner of relevant land purported to exchange the land for units in a trust fund of which Pacinette Pty Ltd was the trustee. 4 Bryson JA who delivered judgment on behalf of the Court of Appeal found that because, in his opinion, relevant meetings did not occur, written offers which were purportedly authorised were not delivered and the oral acceptances upon which the scheme depended were never made, they could not produce a result which the transactions would have produced had they ever taken place [74]. As a consequence of the finding that the purported transactions did not occur, the appeal from this Court was allowed and declarations were made to the effect that Pacinette Pty Ltd was not the owner of an interest in the land and therefore could not maintain a claim under s 37 of the Land Acquisition (Just Terms Compensation) Act 1991 following compulsory acquisition of the land by the respondent. 5 Without deciding the point the High Court assumed that it was open, "on the limited appeal before that Court" for the Court of Appeal to proceed to the conclusion that the purported transactions did not occur. However, the majority then observed at [67] "that conclusion did not compel the further conclusion that Pacinette and the other appellants did not hold a compensable equitable interest." Ultimately the majority held that a change in the beneficial ownership of the relevant subject matter, the equitable interest of Sealark, was brought about. It was the result of the fact that consideration (no matter what form that consideration took) was provided by Pacinette to Sealark. The change was the consequence of the doctrines of constructive trusts or of the use of statutes as instruments of fraud or both [81]. 6 Heydon J agreed with the majority reasoning except in one respect. He found it unnecessary to consider the prospect that a further change in interest occurred as a consequence of the issue of units in a unit trust scheme following the earlier and different change in beneficial ownership which occurred when the directors of Sealark resolved to accept a written offer from Pacinette to buy the land in consideration of the allotment of the units. As the change arose only as a consequence of the promise to issue units in the unit trust scheme, s 44(2)(d) of the Stamp Duties Act did not apply and s 29(3) was engaged to bar the admission of any documentary evidence without the payment of stamp duty. This in turn prevented establishment of Sealark's acceptance of Pacinette's offer and as a consequence it was impossible to prove the passing of Sealark's equitable interest in the land and the scheme failed at that point. 7 Accordingly the analysis undertaken by the High Court resulted only in a finding that when the beneficial ownership of the relevant land changed, that event attracted the payment of stamp duty which had not been paid and accordingly, could not be proved in evidence. The Court of Appeal decision on the other hand, concentrated on the effect of the "purported transactions". 8 In response to a contention by the Minister that the evidence and agreed facts did not establish that the steps said to have taken place actually occurred the majority in the High Court made several points. Firstly, that the Minister did not contend the transactions were integers in a scheme which was a "sham". Further that contractual assent may be inferred from conduct by directors acting informally. That the High Court proceeded on a different tack to the Court of Appeal is clear from paragraph [67] of the judgment where, as I said earlier, after assuming, without deciding the point, that it was open for the Court of Appeal to conclude that the purported transactions did not occur that nevertheless did not compel the conclusion that Pacinette did not hold a compensable equitable interest. Thereafter the majority proceeded with its reasoning to reach the conclusion in [81] referred to above which is not, in any material respect, disturbed by the separate observations made by Heydon J. 9 The Minister in these remitted proceedings continues to concentrate on the effect of the undisturbed decision by the Court of Appeal in respect of the efficacy of the purported transactions. On the other hand the applicant no longer relies on the effect of the transactions and confines its argument to the effect of the consequence of the operation of the equitable doctrine referred to by the majority in [81] and Heydon J at [91] and [93]. The payment of Stamp Duty 10 Notwithstanding previous advice from the Office of State Revenue (OSR) that the Pacinette transaction was considered not liable to duty, the Chief Commissioner of State Revenue advised the solicitors for the applicant by letter 22 June 2006 after having regard to the judgment by the High Court and given the history of the matter, that he was prepared to accept a proposal to lodge a statement under s 44A of the Stamp Duties Act 1920. A Statement dated 9 August 2006 was lodged with the OSR on 6 September 2006 and duty was paid on the transaction. The Statement under s 44A described the nature of the transaction solely by reference to the reasons of the High Court decision which was attached as Annexure B. The Statement was assessed and stamped with duty in the sum of $1,272.50. On 20 June 2007 a second cheque in the sum of $1,272.50 was paid to the OSR as fine/interest. The relevant parcels of land the subject of the Statement under s 44A are Lot 140 DP 11388, Lot 1629 DP 113826 and Lot 1063 DP 11387. 11 There is now no dispute from the Minister that appropriate stamp duty has been paid in respect of the interest in the land referred to in the s 44A Statement. The Arguments 12 It is the applicant's case that the documents now re-tendered and the oral evidence given at the first hearing may now be considered by the Court, but for a different purpose. 13 Mr Robson SC contends that a number of matters can be deduced from the judgment of the majority in the High Court to support a finding that Pacinette now holds a relevant interest in the land. First, by the rejection of the width of the Minister's contentions that the scheme had not been implemented but, if in fact the events occurred, they were ineffective. Secondly, that irrespective of the effect of the steps taken, the majority recognised at [59] that the parties expressed assent to the taking of the various intended steps and that equity does not work to defeat the lawful intentions of parties. Therefore the conclusion by the Court of Appeal that purported transactions did not occur, did not compel the further conclusion that Pacinette did hold a compensable equitable interest [67]. 14 The applicant therefore no longer relies upon the scheme involving the transactions. Following the reasoning of the High Court, it maintains the interest arose as a consequence of the conduct of the parties expressing an intention that equity would recognise. The fact that consideration was provided brought about the change as a consequence of the operation of equitable principles that gave rise to a constructive trust. With its regard for substance rather than form Mr Robson says equity will recognise the trust, as to do otherwise would defeat the intention of the parties. I agree. 15 The thrust of the respondent's case is maintained. Namely that the applicant is not entitled to rely upon the adoption of postulated or assumed facts by the High Court as a formal finding that those facts occurred. The signing of a document which purports to record the events is not of itself evidence that the events actually occurred. Moreover, there is no evidence of any oral communication on behalf of Sealark that amounted to acceptance of the offer to purchase the land made on behalf of Pacinette. Although the High Court expressed an opinion that a statement of intention can effect a transfer of interest, the respondent contends that proof of such an event has not occurred. 16 In order to resolve the issues now before me it is imperative that I be satisfied that the persons who controlled both Sealark and Pacinette "both as controllers of the corporators of those companies and as directors, agree(d) that the steps be taken" (High Court at [59]). Whether or not the actual steps were taken is another matter. The High Court recognised that the parties agreed, for the valuable consideration of mutual promises of future performance that the several intended steps would thereafter be taken ([59] and [66]). The finding by the Court of Appeal that the transaction did not occur is not fatal to the proof of the making of mutual promises of future performance. 17 Both counsel, Mr Robson SC and Mr Ayling SC, rely on parts of the oral evidence given at the 1999 hearing for the purpose of supporting their arguments at this hearing. 18 Ross Edward Seller a solicitor partner in the firm of Gadens Lawyers, gave evidence that persons present at meetings held at his office on 11 May 1998 were himself, Gabriel Cleary, a solicitor assisting, Warren Halloran, Phillip Howell and Earleen Kenny. After trawling through Mr Seller's evidence, Mr Ayling emphasised that at no point is there evidence of Mr Howell accepting the offer on behalf of Sealark. I am invited therefore to conclude that acceptance of the tender did not happen. Other evidence of what occurred at the meetings can be gleaned from my first judgment at 410. The identity of the various role players is explained at paragraphs [20] to [22]. 19 Mr Ayling also notes that the letter of instruction to Mr Howell from Gadens Lawyers and the Procedure Sheet prepared to facilitate the execution of the documents makes no reference to a formal acceptance of the offer. Mr Ayling asserts that although Mr Howell swore an affidavit on 23 February 1999, his evidence does not elucidate what happened at the meetings. Relying on the finding by Bryson JA at [46] and the perusal of the documents therein referred, he makes the further point that beyond what the Court of Appeal found that no meetings took place, there are no events confirming the offer and acceptance took place. 20 According to Mr Ayling a careful reading of a further affidavit sworn by Mr Howell on 4 June 1999, discloses no statement by the deponent that he conveyed an oral communication that enables him to say he had accepted the offer orally. At [47] Bryson JA also found that a statutory declaration by Ms Kenny on 22 May 1998 to the effect that she was present at a meeting of directors and "heard Warren Halloran and Phillip Howell hold a meeting which resolved to accept a written offer by The Pacinette Property Trust to sell the property" and a statement by the offeror to the offeree that possession of the property had been delivered to the offeree were untrue, because, as he had already found, there was in fact no meeting. Accordingly, Ms Kenny was not present at any meeting and therefore did not hear Mr Halloran and Mr Howell hold a meeting or make a resolution. 21 Mr Ayling relies on the expectation that if there was an acceptance of the offer communicated, it would have happened during the course of a meeting and Mr Seller would have given sworn evidence to that effect. Accordingly, it is the Minister's position that as the applicant has not proved that the offer made in writing was accepted orally, it cannot establish that the transaction about which the High Court hypothesised, took place. If the transaction did not take place, there was no transfer of an interest to Pacinette. Observations by Bryson JA at [52] and [72] are adopted by the respondent as further confirmation that this Court should find that the actual acceptance of an offer did not take place and that the process undertaken lacked any commercial reality in which case the alleged occurrence of an oral acceptance of the offer is a fiction. 22 The starting point of the applicant's submission in respect of the present question is that the issue of stamp duty is no longer relevant. The High Court was constrained by the non payment of stamp duty but nevertheless made it clear that the interest which arose as a consequence of the change in the beneficial ownership of the land came out of the mutual promises between Pacinette and Sealark. Not from any transaction. Irrespective of the legal niceties, the finding of the High Court was relief driven. According to Mr Robson, the High Court was able to proceed without having to deal with the reasoning and findings by the Court of Appeal disclosed in the judgment of Bryson JA. It was able to reach a conclusion without having to find that any of the transactions relied on by the applicant heretofore actually took place. The principles of equity created the interest. However it could not be finally determined until the outstanding obligation in relation to stamp duty had been satisfied. In the course of its deliberations regarding the liability for stamp duty, the High Court reached a conclusion that stamp duty was payable, as a consequence of the fact that the consideration was provided by Pacinette to Sealark. Mr Robson argues that it was necessary for the majority in the High Court to carry out the analysis, as it did up to paragraph [79], in order to determine that the stamp duty was payable as a consequence of the result identified in paragraphs [81] and [82]. 23 Mr Robson takes issue with the way in which Mr Ayling attempted to show that there was no evidence of an oral acceptance of the offer by Sealark. As he rightly points out, the evidence in the 1999 hearing concentrated on the applicant's then case that relied upon the proof of the various transactions and the contention by the Minister that there was no proof that the events relied upon ever occurred. At [55] and [57] and [58] the High Court identified the contentions of the Minister that fastened upon a failure to establish the steps, said to have taken place in May 1998, actually occurred. But if they did they were ineffective to vest the equitable interests for which Pacinette claims compensation and finally, that stamp duty which was properly exigible, was not paid. It was only on the third ground that the appeal to the High Court was dismissed. The majority did not accept the sweeping condemnation of the efficacy of the events relied upon maintained by Bryson JA at [56]. Ultimately of course they reached their conclusion at [81] after an invitation, extended through the Registrar for both parties to make further submissions in writing, as such conclusion was not a conclusion contended for by either party. The conclusion regarding the passing of beneficial ownership in the land was as Mr Robson suggests, a side wind to the central issue decided by the High Court namely, that stamp duty was payable and that accordingly, evidence in relation to the first event was not admissible before me. 24 However, that does not diminish the strength of the finding by the High Court in relation to the passing of an interest, certainly to the extent that I am not obliged to follow the same reasoning. Fundamental to the conclusion is what the High Court stated at [59] as follows:-

29 It is not necessary to reach a definitive conclusion on this last point because the applicant is not seeking to prove that the transactions took place but rather that there were mutual promises between Sealark and Pacinette that constituted the relevant consideration to support intervention by equity and that the subsequent act of the issue of the units in a unit trust was a manifestation of the satisfaction of the promise made by Pacinette. 30 The principle of equity relied upon, but no elaborated in the High Court, is helpfully explained in Meaghen Gummow and Lehane's Equity Doctrines and Remedies, at [6-020] [6-020] Except for writing, where that is required by s 23C of the Conveyancing Act 1919 (NSW) (Chapter 7) and unless s 12 of that Act requires writing and notice in certain cases (see [6-025] -[6-045]), no formality is required for the assignment of equitable property, merely "a clear expression of an intention to make an immediate disposition": Norman V FCT (1963) 109 CLR 9 at 30; [1964] ALR 131 at 149per Windeyer J. See also NT Power Generation Lty Ltd v Trevor (2000) 23 WAR 482 at 488-9; BC200006331; [2000] WASC 254. Such an assignment need not purport to be an assignment or use the language of an assignment: An equitable assignment does not always take that form. It may be addressed to the debtor. It may be couched in the language of command. It may be a courteous request. It may assume the form of mere permission. The language is immaterial if the meaning is plain. [ William Brandt's Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454 at 462; [1904-7] All ER Rep 345 at 350 per Lord Macnaghten; Elders Pastoral Ltd v Bank of New Zealand [1991] 1 NZLR 385 at 387 per Lord Templeman; cf Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614; [1936] ALR 198; and see [6-430].] 31 Irrespective of whether the meetings are to be regarded in the manner preferred by the Court of Appeal the High Court took a more pragmatic approach by acknowledging commercial and practical reality at [56]. It recognised that an event can be manifest without passage of formal resolutions. Furthermore the simultaneous occurrence of meetings does not deprive resolutions of efficacy. Minutes of a meeting of Sealark on 14 May 1998 confirm that it was resolved that the company should accept the offer made by the Trustee (Pacinette). That the acceptance was communicated to Pacinette is recorded in the minutes of a meeting of the directors of Pacinette on the same day who thereupon resolved to allot units in the trust to Sealark. 32 Although the High Court technically may have left the finding of the Court of Appeal in respect of the "transactions" intact it clearly dissented from and disagreed with that part of the Court of Appeal judgment that related to the holding of the relevant meetings. The Minister has not put an argument that the subject matter of the resolutions was not within the power of the persons recorded as attending the meetings. 33 Moreover the evidence of acceptance of the offer is reflected in the affidavit of Mr Howell sworn 4 June 1999 as follows:- 14. A meeting of the directors of Sealark Pty Limited was held between me and Warren Halloran, with Earleen Kenny the company secretary in attendance, at which it was resolved that to accept the offer from Pacinette Pty Limited as trustee of the Pacinette Property Trust and sell the Land for consideration comprising the allotment of Seventy Nine Thousand One Dollar ($1.00) A Class Units in the Pcinette Property Trust. A copy of the minutes of the meeting of directors is at Tab 8 of PGH 2. 15. A meeting of the directors of Pacinette Pty Limited as trustee of the Pacinette Property Trust was held between me and Warren Halloran, with Earleen Kenny the company secretary in attendance, at which it was confirmed that Sealark Pty Limited had accepted the written offer and resolved to allot the Seventy Nine Thousand One Dollar ($1.00) A Class Units in the Pacinette Property Trust to Sealark Pty Limited. A copy of the minutes of the meeting of directors and the unit certificate are at Tabs 9 and 10 respectively of PGH 2. 34 Notwithstanding arguments about whether the language used is conducive to the establishment of a formal contract or agreement it is nevertheless probative of conduct which discloses an acceptance of the offer from Pacinette and the communication of the acceptance following which Pacinette acted to issue a certificate for units in the trust. 35 Mr Howell was cross-examined, in the context of the issues in contention at first instance. There is no evidence to gainsay the submission on behalf of the applicant that either the meetings took place in a manner sufficient at least to prove the necessary conduct to support an offer and acceptance or that the record of the decisions supports the applicant's present case. However I am satisfied that the meetings occurred in a manner that was sufficient to satisfy the criteria adopted by the majority at [56]. The formal records by way of minutes and the affidavit and oral evidence by Mr Howell and Mr Seller support that conclusion. The Result 36 The conclusion by the High Court that an interest passed between Sealark and Pacinette is sufficient firstly, to establish that Pacinette held a compensable interest and secondly, to attract payment of stamp duty. It follows that this Court will adopt that reasoning. It is not necessary to go behind the Court of Appeal decision in order to resolve the issue, as the manifestation of the necessary intention is in the documents albeit that the parties may have failed to achieve their ultimate purpose at the various meetings by completing the proposed transactions. Equity would require that they honour the intention expressed by the exchange of mutual promises. Accordingly, a relevant interest was created in favour of Pacinette and the company is entitled to claim compensation from the respondent as a consequence of the compulsory acquisition of that interest. 37 The determination is made only in respect of Lot 140 DP 11388, Lot 1629 DP 113826 and Lot 1063 DP 11387 to which the duly stamped s 44 Statement relates. There is no admissible evidence at this stage to support a similar finding in respect of any other land. 38 The answer to the question is therefore in the affirmative as I have been satisfied that Pacinette Pty Ltd is an owner of an interest in the abovementioned Lots the subject of 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 s 37 of the Land Acquisition (Just Terms Compensation) Act 1991.

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