Court of Appeal (WA)|2000-02-16|Before: Murray J, Ipp J, Templeman J

Sorna Pty Ltd v Flint & Anor [2000] WASCA 22 (16 February 2000)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SORNA PTY LTD -v- FLINT & ANOR [2000] WASCA 22

Equity - Equitable interests in mining tenements - Tenements acquired by parties together providing funds and services - Legal interest in tenements in the name of one party - Whether resulting trust to be found in favour of other party - Whether legal interests held subject to constructive trust - Effect of requirement of Mining Act 1978 (WA) s 119 that equitable interest in mining tenements to be in writing - Rules governing taxation of costs in Warden's Court

Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137

Breedon v Kongras, unreported; Library No 960570; 25 September 1996

Chan v Zaccharia (1984) 153 CLR 178

Chilcotin Pty Ltd & Anor v Cenelage Pty Ltd & Ors [1999] NSWCA 11

Coulton Holcombe [1995] HCA 5; (1986) 182 CLR 1

Crocker Consolidated Pty Ltd v Wille [1988] WAR 187

Devries & Anor v Australian National Railways Commission & Anor (1993) 177 CLR 472

Gissing v Gissing [1970] UKHL 3; [1971] AC 886

Hazlett v Rasmussen [1973] WAR 141

Hunter Resources Ltd v Melville [1988] HCA 5; (1987) 164 CLR 234

Klahn v Talbot, unreported; FCt SCt of WA; Library No 950628; 20 November 1995

Robinson v Robinson [1961] WAR 56

Rochefoucauld v Boustead [1897] 1 CH 196

UDC Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1

University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481

Washbourne v SEC (1992) 8 WAR 188

1 IPP J: I have had the benefit of reading in draft form the reasons to be published by Murray J. I wish to give my own reasons concerning the application of s 119(2) of the Mining Act (WA) and s 34 of the Property Law Act (WA). Otherwise, I agree, with respect, with everything Murray J has said and with his proposed disposition of the appeal.

2 The appellant is the legal holder of certain mining tenements. Essentially, the respondents' contention as plaintiffs in the Warden's Court was that they had entered into an oral contract with the appellant whereby they would provide certain moneys for the maintenance of the tenements and it would hold the tenements on trust for them. They claimed a declaration that the appellant was their trustee for the tenements. The appellant conceded that it held an 80 per cent interest in the tenements as trustee for the respondents but asserted that it was the holder of an equitable interest in the remaining 20 per cent. The sole question in dispute was whether the appellant held that 20 per cent equitable interest, as claimed by it.

3 There was an inherent peculiarity in the issues as they developed. On the one hand, the appellant denied the oral contract alleged by the respondents, and indeed claimed that, as the equitable interest asserted by the respondents was said to arise by reason of the oral contract, it was unenforceable for want of writing. The appellant relied in this respect on s 119(2) of the Mining Act (WA), which provides:

"A legal or equitable interest in or affecting a mining tenement is not capable of being created, assigned, effected or dealt with, whether directly or indirectly, except by an instrument in writing signed by the person creating, assigning or otherwise dealing with the interest."

On the other hand, the appellant conceded that the respondents were the beneficial holders of an 80 per cent interest in the tenements, albeit it did not explain the basis of this concession. As this anomaly was not raised by either party, and as it was common cause that the respondents were the beneficial holders of an 80 per cent interest in the tenements, it is not necessary to refer to it again. I shall deal with the issues that arose on this basis, adopted as it was by all the parties.

4 In response to the appellant's reliance on s 119(2) of the Mining Act, the respondents contended that the section did not operate to prevent equity from enforcing the express trust, the subject of the oral contract, by imposing a constructive trust in the same terms as the oral contract (cf Stowe v Stowe (1995) 15 WAR 363 at 367). The respondents submitted that s 119(2) did not have the effect contended for by the appellant. They relied on s 34 of the Property Law Act (WA) which provides:

"(1) Subject to the provisions hereinafter contained in this Act with respect to the creation of interests in land by parol -

(a) no interest in land is capable of being created or disposed of except by writing signed by the person creating or conveying the interest, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;

(2) This section does not affect the creation or operation of resulting, implied or constructive trusts."

The respondents contended that s 34(2) should be construed as positively providing that, despite what is contained in s 34(1), resulting, implied or constructive trusts may be created by oral contracts. Their argument was that s 119(2) of the Mining Act should be read as having the same effect as s 34(2) so construed, alternatively that s 34 applied to mining tenements, generally.

5 In support of their submission concerning the proper construction of s 34(2) and its application to mining tenements, the respondents referred to St Barbara Mines Ltd v Oates, unreported; SCt of WA; Library No 970026; 6 February 1997, a decision of Master Sanderson. The learned Master held therein, following Redden v Wilks [1979] WAR 161, that the High Court, in Adamson v Hayes [1972] WAR 116, had found that s 34(1) of the Property Law Act applied to oral contracts for the sale of land. The learned Master held that s 34 applied, similarly, to contracts relating to the creation of equitable interests in mining tenements, and held that, in consequence a constructive trust arose upon an oral contract creating an interest in a mining tenement.

6 I would comment as follows on the reasoning in St Barbara Mines Ltd v Oates.

7 In Marist Bros Community Inc v Harvey Shire Council (1994) 14 WAR 69 Pidgeon and Seaman JJ held that Redden v Wilks was incorrect and declined to follow it. They held, in effect, that the High Court in Adamson v Hayes considered only the "pooling" (or conveying) aspect of the agreement, the subject of that case, and did not deal with executory contracts for the sale of land. Their Honours were of the opinion that s 34 concerned only the creation of interests and dealings in land, and not the entering into of contracts for the sale of land. They followed the reasoning of Kennedy J in Abjornson v Urban Newspapers Ltd [1989] WAR 191 at 200, where his Honour said that s 34 of the Property Law Act:

" ... is essentially directed to the creation of interests in land. It is not directed to agreements as such. A number of judgments in Adamson v Hayes [1973] HCA 6; (1973) 130 CLR 276 made this distinction."

8 I agree with Murray J that s 119(2) of the Mining Act is the statutory provision that applies to the creation, assignment, effecting or dealing with mining tenements and that s 34 of the Property Law Act has no application thereto. But even if it could be said that s 34 has some relevance to mining tenements, that relevance could not be as submitted by the respondents. As s 34 is directed only to the creation of interests and dealings in land, it could not - even arguably - be said to have any application to executory contracts relating to interests in mining tenements.

9 Moreover, the reasoning of the majority in Marist Bros Community Inc v Harvey Shire Council is entirely inconsistent with the argument that s 34(2) positively empowers the creation, by oral contracts, of resulting, implied or constructive trusts. Once it is accepted that s 34(1) applies only to the creation of interests and dealings in land, it follows that s 34(2) is concerned only with resulting, implied or constructive trusts that might arise from such dealings. In other words, s 34(1) is not concerned with resulting, implied or constructive trusts that might arise from executory contracts, and s 34(2) - accordingly - does not apply to trusts that so arise. Section 34(2) has no positive empowering effect. Its purpose is merely to exempt the creation or operation of resulting, implied or constructive trusts from the provisions contained in s 34(1).

10 Accordingly, in my opinion, s 34 is irrelevant to the circumstances obtaining in the present case.

11 The question, then, is whether s 119(2) precludes the creation of a constructive trust created by the oral contract as contended for by the respondents. In my opinion, the answer is apparent from the remarks of Kennedy J in Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 162. His Honour was dealing with s 80 of the Petroleum (Submerged Lands) Act 1967 (WA), which is in terms similar to s 119(2). Kennedy J said:

"The purpose of s 80 is to prevent legal or equitable interests in permits from being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing. It does not provide that oral agreements shall be of no force: cf s 81(2). Accordingly, although an oral agreement may not, for example, assign an interest in a permit, this is not to say that it does not create a personal right in contract. I consider that it does."

12 I would adopt, with respect, his Honour's approach. Section 119(2) prevents legal or equitable interests in permits from being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing. Accordingly, the section prevents the creation of the express trust orally agreed upon by the parties. It also prevents the creation of any equitable interest being created by construing a trust.

13 Additionally, as s 119(2) does not apply to contracts, the parties' personal rights in contract remain. The respondents' legitimate interests are protected adequately by their contractual rights. There is, therefore, in any event, no reason for equity to require the existence of a constructive trust: cf Daly v The Sydney Stock Exchange Ltd [1986] HCA 25; (1986) 160 CLR 371 per Gibbs CJ at 379 - 380.

14 In the circumstances I consider that the respondents' claim for a constructive trust fails.

15 I agree with the orders proposed by Murray J. The order that the respondents are entitled to an 80 per cent equitable interest in the tenements should be made in the light of the appellant's agreement that, should the appeal succeed, an order in such terms should be made.

16 MURRAY J: This is an appeal and cross-appeal from the decision of a single Judge of this Court by which his Honour allowed an appeal from a decision of a warden sitting at Meekatharra. His Honour remitted the matter for further hearing and determination by the warden in accordance with his Honour's reasons for judgment which, apart from the substantive matter at issue, also dealt with a question arising with respect to the taxation of costs awarded by the warden.

17 The matter before the warden was initiated by plaint taken out by the respondents, who seem at all times to have acted through or being represented by Mr Flint. In general terms their action before the warden was concerned with a number of prospecting licences and an exploration licence, together with some further applications for exploration licences, all of which were in the name of the appellant ("Sorna"). The respondents' contention before the warden was that although those mining tenements were in the name of Sorna they had a 100 per cent beneficial interest in them. They sought a declaration that Sorna held the tenements as their trustee. They pleaded in each case that the legal interest of Sorna was held "as bare trustee, alternatively resulting or constructive trustee", for them.

18 That plaint was defended, Sorna contending that although the respondents had an 80 per cent interest in the relevant tenements it was beneficially entitled to the other 20 per cent interest. Sorna contended that that position was reached by way of an express oral agreement between Mr Flint and the principal of Sorna, Mr Del Fante, made some time between February and June 1995.

19 It is clear that the warden found the evidence led before him both for the respondents in support of their plaint and Sorna defending it, to be unsatisfactory. In support of the plaint Mr Flint was called and one other witness, a Mr Kestel, who had been involved in what was effectively a type of joint venture and who gave evidence that while he was ill in hospital he received a visit from Mr Del Fante. A dispute between Mr Del Fante and Mr Flint was discussed but Mr Kestel said Mr Del Fante at that time made no claim to any beneficial interest in the tenements. This was peripheral evidence at best. For Sorna both Mr and Mrs Del Fante gave evidence. Mrs Del Fante spoke of a discussion which she said was reported to her by her husband in the presence of Flint in which it was confirmed that Sorna would hold the tenements as to 20 per cent beneficially for itself and as to 80 per cent beneficially for the respondents.

20 The resolution of the case in the end turned very much on the competing evidence of Flint and Del Fante together with the consideration of some documentary evidence. Without descending into the detail of the evidence it is sufficient to note that the warden found that there was an informal undocumented relationship between the parties with respect to the acquisition and holding of the mining tenements. His Worship described it as being somewhat in the nature of a joint venture to which both parties had a contribution to make, but he found himself unable to determine with any certainty what the terms of the agreement between the parties were. As his Worship put it:

"On the evidence, I find that even if Flint and Del Fante had clearly in their own minds the terms of their agreement (and it seems to me that both were prepared to shift their ground to take advantage of particular circumstances) there was no meeting of minds at any particular point in time which could be taken as establishing a definite agreement."

21 In the end, having regard to his incapacity to fully accept the account of either party, his Worship made only limited findings of fact. He considered that it was established that in late 1993 or early in 1994 some concerns arose out of the joint venture in which Flint and Del Fante were involved with Kestel. This was a predatory arrangement to identify tenements held by other parties in respect of which prescribed expenditure conditions or other conditions of working had not been complied with. If the ground was thought to be of value a process of application through the warden's court, known as "plainting", would be undertaken so as to achieve the transfer of the tenements into the names of the joint venturers. As can be well imagined it is the sort of process which attracts resentment and a desire in the plainted party to be revenged if an opportunity presents itself.

22 Flint became concerned that his own tenements, which might be similarly vulnerable to being plainted, might be targeted in retaliation. From this concern, together with a view that it would be desirable for all the tenements to be in one name, a loose arrangement was made between Flint and Del Fante by which Del Fante made available a shelf company, Sorna, to hold the tenements and make applications which would otherwise have been in the names of the respondents, thereby preventing a third party from identifying the fact that they were interested in those tenements and applications. There was no documentary material which recorded this agreement. But that was not the difficulty confronting his Worship.

23 The warden was able to find on the evidence that the loose undocumented arrangement between the parties was such that Flint found it desirable, for the reasons expressed above and also because he became gravely ill, that although the respondents would fund the process of acquiring and holding the tenements using Sorna as the vehicle, Del Fante, the principal of Sorna, would in effect hold the tenements and provide management services in respect of them through a business he operated known as Corporate Tenement Services. Such work as was required to be done in respect of the tenements would be paid for by the respondents.

24 Although it was at least clear in the mind of the warden that the parties agreed that the legal interest in the tenements was to be held by Sorna, the question was whether the arrangement was such, apart from the remuneration to be provided to somebody, presumably Sorna, for the management services provided by Del Fante through his business, that Sorna was to hold the tenements upon some agreed basis, upon a contractual arrangement not involving any interest in the tenements, or upon an agreement conferring a beneficial interest therein, and if so in what form.

25 As to that his Worship's reasons make it abundantly clear that he was unable to accept the evidence of either Flint or Del Fante, in Del Fante's case even though it was to a degree supported by Mrs Del Fante. Flint's evidence was that there was an agreement that 20 per cent of the net proceeds of the sale of any tenements introduced into the ownership of Sorna by Del Fante was to be paid to Sorna. That of course was not an agreement which suggested any interest in the tenements as they were held. And so it was Flint's case that although Sorna had the legal interest in the tenements the entire beneficial interest therein was the property of the respondents. Hence their claim that the legal interest was held by Sorna by way of resulting or constructive trust.

26 On the other hand Del Fante's evidence was that there was an express agreement that the beneficial interest in the whole of the tenements held by Sorna was as to 20 per cent that of Sorna and as to 80 per cent that of Flint "across the board on all the tenements". This of course was an asserted agreement that the beneficial interest in the tenements as they were held was split, and it was said to apply to all the tenements, not simply those introduced to the arrangement by Sorna or Del Fante.

27 The legal effect of that evidence is probably that Sorna held the legal interest in all the tenements and applications as to 80 per cent of their value on a resulting trust in favour of the respondents. That was the declaration made by the warden, which he supported entirely upon the basis that it matched the extent to which on behalf of Sorna there was an admission against its interest. It will be appreciated that it was not Sorna's case that the entire beneficial interest remained with it, at one with its legal interest in the tenements in question.

28 Although the warden discussed in detail the evidence with respect to each group of tenements it is not necessary for these reasons that I re-examine that material. I simply note that the argument between the parties before the warden was effectively as to whether the respondents were entitled to the declaration they sought in respect of the further 20 per cent of the value of the tenements as to which there was no admission that they had a beneficial interest.

29 The respondents' case was that as it was clear on the evidence that they were to pay the whole of the cost of acquiring and holding the tenements, a presumption in support of their claim arose in their favour, ie that the whole of the tenements was held by Sorna on a resulting trust for them. His Worship did not accept that proposition. In effect, he held that the presumption was rebutted because of the evidence accepted by both parties that each was to make a contribution to the acquisition and holding of the tenements, the respondents by the expenditure of money and Sorna by the services it was to provide by way of the identification of some of the tenements and the management of all of them.

30 Upon that view his Worship considered that it was for the respondents to make out their case and establish the extent of their beneficial interest in the tenements. This of course, his Worship found they failed to do beyond the 80 per cent which represented the extent of their admitted interest; hence the declarations he made, at the same time ordering that the respondents pay Sorna's costs of the plaint to be taxed on Division 2 of the Non-Routine Scale of Costs under the Local Courts Act after the date of Sorna's admission. The maximum of Sorna's discretionary costs of the plaint was increased by 50 per cent pursuant to the Local Court Rules 1961 O 37 r 6A(1).

31 From those orders the respondents appealed under the Mining Act 1978 s 147 to a single Judge of this Court. It is unnecessary that I set out the grounds of appeal. They alleged error by the warden in not holding that Sorna held the tenements upon a resulting trust for the respondents. The presumption of trust arising out of the respondents' payment of the whole of the costs of acquisition of the tenements was relied upon. It was submitted that if, as the warden said, he was unable to make a finding as to the terms of the agreement between the parties, if any, then it could not be said that the presumption of trust was rebutted. Other grounds of appeal attacked the warden's failure to make findings of fact upon that issue and suggested that the respondents' version of the facts should have been accepted.

32 In any event the challenge to the costs order was that costs should have been awarded to the respondents because they were obliged to issue the plaint and they succeeded, even on his Worship's finding, to the extent of 80 per cent of their claim. A further error in relation to costs was said to be the making of the orders under O 37 r 6A(1) of the Local Court Rules. As to the substantive issue on this appeal it will be noticed that the respondents did not assert that the learned warden fell into error by failing to declare that Sorna held the tenements as to 100 per cent of their value upon a constructive rather than a resulting trust for them.

33 The appeal succeeded both in respect of the substantive declaration made by the warden and in respect of the complaints about his order for the payment of costs. As to the substantive issue his Honour expressed the view that the presumption of a trust as to 100 per cent of the tenements arising out of the payment of the acquisition costs would apply despite Sorna's contribution of services with respect to the acquisition and management of the tenements. The onus to rebut that presumption remained on Sorna and unless findings of fact could be made in respect of the 20 per cent of the value of the tenements at issue favourably to Sorna then the respondents' claim would succeed. The making of those findings his Honour thought, was a matter for the warden and he therefore remitted the case to the warden for further consideration in the light of his Honour's reasons.

34 It followed in his Honour's view that the order for costs should be set aside and left to be ultimately determined by the warden when the case was eventually finalised. His Honour did however go on to record his views as to the proper basis for an award of costs by the warden to assist his Worship with a resolution of that issue. His Honour held that the power to increase the allowances in respect of an award of costs under the Local Court Rules O 37 r 6A(1) was not available to the warden.

35 From those orders Sorna appeals to this Court on grounds which contend that his Honour erred in not concluding that the nature of the relationship between the parties was established to be such as to preclude a declaration of trust. Further it is contended that s 119(2) of the Mining Act would preclude a declaration of trust, as would the general law, in the absence of fraud in the broad equitable sense. There is no suggestion, so it is argued, that such a finding could or should have been made in this case. Further, it is submitted that his Honour erred in taking the view that the matter should be remitted to the warden to make necessary findings of fact. It is contended that if such findings were open and available they should have been made by the Judge on appeal, given that the appeal is by way of rehearing. Finally, his Honour's views upon the taxation of costs generally and his conclusion that there was no discretion to increase costs by reference to the provisions of O 37 r 6A(1) of the Local Court Rules are said to involve him in error.

36 It is convenient to start with the Mining Act 1978 s 119(2), a provision which the respondents clearly appreciated needed to be overcome if their plaint was to succeed before the warden to any degree. Consideration of this provision is made more difficult, I think, because of the concession made by Sorna in its defence and maintained thereafter that it was only entitled to a 20 per cent interest in the tenements, the balance being the property of the respondents (see defence par 3, par 9, par 23 and par 24).

37 Without going in detail to the relevant provisions of the Mining Act it is clear that title to the ground the subject of a mining tenement is rooted in the grant made in accordance with the statutory procedures: Hot Holdings Pty Ltd v Creasy (1995) 185 CLR 149. By definition, in s 8(1), a mining tenement may take various forms depending upon the form of the grant under the Act, but whatever form it takes the tenement "includes the specified piece of land in respect of which the mining tenement is so granted or required". The tenement itself is of course a form of property and by the Act s 119(1), subject to the Act, it may be sold, encumbered, transmitted or otherwise disposed of, such a disposition carrying with it the interest in the land which the tenement represents. But by s 119(2):

"A legal or equitable interest in or affecting a mining tenement is not capable of being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing and signed by the person creating, assigning or otherwise dealing with the interest."

38 In St Barbara Mines Ltd v Oates, unreported; SCt of WA; Library No 970026; 6 February 1997 Master Sanderson held that s 119(2) did not preclude the parol creation of equitable interests in mining tenements by way of trust. Putting shortly the gravamen of the decision of the learned Master, and without I hope doing it any disservice, the Master did not reach that view in reliance upon the body of law concerned with the operation of the Statute of Frauds (Imp) 1677 s 4, continued in force in this State by the Law Reform (Statute of Frauds) Act 1962 (WA) s 2, which holds it to be an exception to the operation of the statute that it is sought to be relied upon in a way which would make the statutory dictates about formality an instrument of fraud or unconscionability in themselves.

39 The Master was of the view that the creation by parol of equitable interests in mining tenements was governed by the Property Law Act 1969 (WA) s 34. Section 34(1) provides that no interest in land is capable of being created or disposed of except by writing, by will or by operation of law, and a declaration of trust as to any land or interest therein is to be in writing, as is any disposition of an equitable interest or trust. But s 34(2) expressly provides that the section "does not affect the creation or operation of resulting, implied or constructive trusts".

40 In my opinion the view of the Master, which appealed to the single Judge of this Court, but about which the warden had distinct reservations, is not correct. Section 34 of the Property Law Act may certainly have the effect that by resulting, implied or constructive trust a parol interest in the land or the interest therein conferred by the grant of the mining tenement may be created, but that is because of the express terms of s 34(2) and s 119(2) of the Mining Act contains no qualification such as s 34(2) of the Property Law Act. In my opinion s 119(2) is a later and particular provision governing the form by which both legal and equitable interests in or affecting mining tenements may be created or dealt with.

41 It follows in my opinion that in accordance with the plain wording of the subsection an oral agreement having the effect of purporting to create an equitable interest in a mining tenement by way of implied or resulting trust or a constructive trust arising by implication from the common intention of the parties will not be legally effective. I should make it clear that I see the respondents' claim in this case as being for an implied or resulting trust in the sense that the trust is said to arise out of the intention of the respondents or indeed the common intention of both parties to the transaction, and so it is said to result from the way they dealt with each other or it is to be implied by operation of law because of their common intention.

42 That is not to say that it is inappropriate, as senior counsel for the respondents put it to us in argument, that the respondents seek to rely upon a constructive trust, but in that event it seems to me they are again seeking to rely upon a trust arising by implication from the common intention of the parties by the application of the central principle that equity will imply a trust in such circumstances where it would otherwise be unconscionable to allow the holder of the legal title to retain sole legal and beneficial ownership of the property in question: Maharaj v Jai Chand [1986] AC 898, 907; Stowe v Stowe (1995) 15 WAR 363, 367-8. In that sense the term "constructive trust" is not being used in the sense of "a remedial institution which equity imposes regardless of actual or presumed agreement or intention", as discussed by Deane J in Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, 614. That is not the type of trust upon which the respondents seek to rely according to their pleaded case or the evidence led in support of it.

43 In my opinion there is nothing contrary to the view of s 119(2) which I have set out above in the decision of the Full Court in Tunza Holdings Pty Ltd v Haoma Mining NL, unreported; FCt SCt of WA; Library No 970720; 18 December 1997. In that case Malcolm CJ, with whom Ipp and Murray JJ agreed, at 14 said of s 119 that:

"It has been accepted that a provision of this kind allows for the enforcement of equitable interests which are evidenced in writing and will not preclude the enforcement of personal rights in contract or in equity against the registered holder of a mining tenement. Assuming, without deciding, that where a tenement is held upon a constructive trust, it is open to a court to grant relief because constructive trusts arising by operation of law will generally prevail over statutory requirements of form for dealings in the absence of clear language to the contrary, I do not consider that this advances the case."

This is clearly an obiter observation, restricted to equitable interests which are evidenced in writing and possibly to that form of constructive trust, irrelevant in my view to this case, where the trust is truly a remedial institution in the terms described by Deane J.

44 In speaking of equitable interests evidenced in writing Malcolm CJ cited two earlier decisions of this Court, Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 and Swan Resources Ltd v Southern Pacific Hotel Corporation Energy Pty Ltd [1983] WAR 39. Those cases concerned the Petroleum (Submerged Lands) Acts of 1967 enacted by the Commonwealth and by WA. Those Acts contain s 80 and s 81. Section 80 is in almost identical terms to s 119(2) of the Mining Act, as follows:

"A legal or equitable interest in or affecting an existing or future permit, licence, pipeline licence or access authority is not capable of being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing."

Section 81 deals with written instruments by which such an interest in or affecting such a permit, licence or authority is created, and provides that the instrument is of no force until approved and registered by the responsible authority. It was upon s 81 that the Swan Resources case turned and so that decision is of little assistance in the present case where the equitable interest was not said to be created in writing.

45 However, Terrex Resources was a case concerned with an oral agreement which was said to be ineffectual by reason of the provisions of s 80 as well as pursuant to s 81. The Court did not uphold the argument in relation to s 80. As Kennedy J said at 162:

In my opinion that view is consistent with what I have said about s 119(2).

46 Putting it shortly, the respondents' claim was for a 100 per cent interest in the mining tenements in question as a result of the alleged oral agreement canvassed in the evidence. In truth, regardless of the concession made by Sorna that claim could not succeed by reason of the operation of the Mining Act s 119(2). That is not to say that a differently formulated claim in contract might not have been put in such a way as to seek the relief of an order that the mining tenements be conveyed to the respondents. But no such claim was made or agreement ever pleaded, no doubt for good reason, having regard to the form which the respondents' plaint did take.

47 For this reason alone, in my opinion, the appeal should be allowed. The warden's conclusion might have been that, despite the concession in the defence, upon this ground the respondents' claim should have been dismissed, but as neither party seeks to upset Sorna's concession of an 80 per cent interest in the tenements to the respondents the substantive orders made by the warden may remain in place. However, in case it should prove to be useful I propose to express my views about the respondents' claim on the basis that s 119(2) of the Mining Act does not operate to defeat it.

48 I have explained that in my view the respondents' claim was for a beneficial or equitable interest in the mining tenements to the extent of 100 per cent by way of resulting trust, or alternatively by way of a constructive trust arising out of the proposition that the common intention of the parties was proved to be such as to make it unconscionable not to imply a trust of the kind asserted, by operation of law. The fundamental difficulty with the proposition however, in my opinion, is that the warden found a loose arrangement, of the nature of a joint venture, that the parties' beneficial interests in the tenements held by Sorna was 20:80 as between Sorna and the respondents respectively. He so found solely upon the basis of the concession made in the pleadings by Sorna because he was not prepared to rely upon the evidence of Flint, Del Fante or Mrs Del Fante to determine what the true nature of the arrangement between the parties was.

49 The respondents have argued throughout that even in that event they were entitled to succeed because it was undisputed that they paid all the costs of acquisition and maintenance of the tenements and upon that ground it is to be presumed and found that the tenements were acquired and held in the name of Sorna on a resulting trust for the respondents.

50 In support of this argument the respondents relied particularly on the decision of the High Court in Calverley v Green [1984] HCA 81; (1984) 155 CLR 242. That was a case where, in the view of the Court, a man and a woman had jointly contributed to the acquisition of a house in which they were to live together. That conclusion arose from the fact that although the man paid the deposit and met all the repayments due under a mortgage, the woman was jointly liable for the mortgage payments and that was taken to be a contribution by her. In the judgments of their Honours there are a number of references to the presumption of trust.

51 Two presumptions were identified in respect of the acquisition of property. The first, when the proper conclusion is that property has been acquired solely by the financial resources of one person and then put into the name of another, is that the other holds the legal estate on a resulting trust for the former. The second presumption, in a case such as Calverley v Green was found to be, is that where both parties make financial contributions to the acquisition of the property the party who holds the legal estate will be held to do so on a resulting trust for both parties, their respective interests being proportionate to the value of their contributions.

52 But throughout the case there is a clear acceptance that to refer to those presumptions is to do no more than to speak of a standardised inference which may be drawn from the evidence as to the manner in which the property was acquired. The inference is as to the intention of the party who makes the sole contribution to the acquisition of the property which is then vested in the other, or as to the common intention of both parties. So it is that the presumption of trust may be rebutted by evidence to the contrary as to the relevant intention, or indeed, simply by evidence of the nature of the relationship between the parties if that is such as to raise what is described in the cases as the presumption of advancement.

53 Again, to refer to that presumption is to say no more than that the facts as found may show that the conclusion properly to be inferred is that the relevant intention of the parties, or the settlor, having regard to the relationship between the parties, was that the act of one in acquiring the property and placing it in the name of the other was a gift for the advancement of the other party. A number of relationships have been said to give rise to such a presumption. Where such a presumption is relied upon it is really because it provides an inference that the equitable interest follows the legal estate and is at home with the legal title or, as it has been put in the authorities, that there is an "absence of any reason for assuming that a trust arose". But the important point is that any evidence may be relied upon to rebut the presumption of a resulting trust in either form.

54 It is important to remember that these are not presumptions of law but mere evidentiary presumptions. As Lord Upjohn put it in Vandervel v Inland Revenue Commissioners [1967] 2 AC 312 when speaking of the presumption of a trust arising:

"But this is only a presumption and is easily rebutted. All the relevant facts and circumstances can be considered in order to ascertain [the] intentions with a view to rebutting this presumption."

"In reality the so-called presumption of a resulting trust is no more than a long stop to provide the answer when the relevant facts and circumstances fail to yield a solution."

55 The same point was made by Deane and Gummow JJ in Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538 at 547 where their Honours said:

"The presumptions operate to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase."

56 Here there was in effect a paucity of evidence because the learned warden felt that he could not rely upon the evidence of Flint. But his Worship, while appreciating the effect of the presumption to place the burden of proof, said that he did not accept the proposition to which the presumption led him. It was then that he spoke of the nature of the relationship being "more in the nature of a joint venture pursuant to which Flint and [Sorna] (through Del Fante) were each to provide certain monies or perform certain services". The finding was that the tenements were acquired and held pursuant to that joint venture. Having concluded that the presumption was rebutted in that way his Worship was right to remind himself that the onus of proof to support their claim rested on the respondents. As I have mentioned, he found that claim only to be supportable to the degree admitted by Sorna.

57 In my view, there is no error in this process and for that reason also the appeal should be allowed and the orders made by the warden restored. The single Judge of this Court, in my respectful opinion, erred in expressing the view that the warden had to make some positive finding about the remaining 20 per cent interest in the tenements which was at issue between the parties. The warden did so by allowing the matter to be determined upon a correct view as to where the onus of proof lay in the circumstances as he found them to be.

58 There is a cross-appeal which takes issue with the conclusions of the learned Judge which led him to remit the matter to the warden to be further dealt with according to law. It is contended that his Honour should have made the necessary findings to determine the matter and should have done so upon the basis that in the circumstances as they were before the Warden, Sorna did not rebut the presumption of a resulting trust. It follows from what I have written above that if the appeal should be allowed the cross-appeal must be dismissed in relation to the substantive issues raised.

59 I turn then to the issue raised with respect to costs. This being civil litigation by way of plaint before a warden's court, s 134(2) of the Mining Act provides in part that costs "shall be in the discretion of the warden and the amount thereof may be determined by the warden or taxed, as the warden may direct". As to the process of taxation the Mining Regulations 1981 reg 128(1) provides a direction to the warden's court that when ordering the payment of costs those costs shall be in accordance with the costs allowed under the Local Court Rules 1961.

60 We are talking of course, of the professional costs of legal practitioners and in 1987 the Legal Practitioners Act 1893 (WA) was amended by the insertion of Part VI which established the Legal Costs Committee and by s 58W gave it the power to make determinations regulating the remuneration of practitioners in respect of contentious business carried out in or for the purpose of proceedings before a number of courts, including a Local Court but not including a warden's court, although it is clear that now, under s 58W(1a), the Committee would have such a power in respect of warden's courts. That is because the Mining Act s 162(2)(r), the regulation making power, refers to a determination under s 58W of the Legal Practitioners Act in providing a power to make regulations to regulate the practice and procedure in wardens' courts and in particular "the fees and costs of the proceedings therein fixed by determinations under section 58W of the Legal Practitioners Act 1893". However, it appears that no such determination has been made and so what we are left with is reg 128 and its reference to costs allowed under the Local Court Rules.

61 However, determinations have been made by the Committee since 1988 with respect to the costs of practitioners in proceedings in Local Courts. The latest determination is that published in the Government Gazette of 25 March 1997, 1607-16 as amended by the Government Gazette of 16 December 1997, 7333-4. By the Legal Practitioners Act s 58ZB(1), that having occurred, the taxation of bills of costs and every aspect of the remuneration of practitioners is to be regulated by the determination. By s 58ZB(2) where such determination is in force "any other subsidiary legislation fixing or purporting to regulate the remuneration of practitioners in respect of that kind of business shall be of no force or effect". Therefore reg 128 of the Mining Regulations is of no further assistance.

62 The process of taxation is governed by the relevant determination of the Legal Costs Committee. A scale of costs known as the Local Court Scale of Costs 1997 is published as a schedule to the determination. The determination provides that:

"Subject to the provision of the Local Courts Act 1904 and to the Legal Practitioners Act 1893 permitting a solicitor to make a written agreement as to costs with a client, the costs of or in relation to a party to an action or other proceeding in a Local Court (inclusive of counsel fees but exclusive of other disbursements) -

(a) recoverable by one party from another party; or

(b) payable by a party to that party's own solicitor,

shall not exceed the amounts set out in the Scale of Costs."

The reference to the Local Courts Act would include the Rules of Court as subsidiary legislation: Interpretation Act 1984 (WA) s 46(1), so that those rules are continued in effect and the operation of the costs determination is made subject to their provisions.

63 I have quoted above the relevant portion of the costs order made by the warden in favour of the appellant and against the respondents. The terms of that order make it clear that his Worship was referring to the 1997 Local Courts Scale of Costs fixed by the determination of the Legal Costs Committee. By that scale for the first time two divisions were introduced into the scale and in each division a further subdivision of matters into "routine" and "non-routine" matters was provided. But it is not the general terms of the order that taxation should be based on Division 2 of the non-routine portion of the Scale of Costs which was challenged by the respondents on their appeal to the single Judge.

64 The particulars of their grounds show that, putting to one side a special order in relation to counsel's fee which appears to have attracted little debate or interest thereafter, and their complaint that they should have been awarded their costs against Sorna (not presently relevant), the gravamen of the complaint was with respect to that portion of the order which increased the maximum costs which might be awarded to the appellant on taxation by 50 per cent pursuant to the Local Court Rules 1961 O 37 r 6A(1). That subrule provides:

"Notwithstanding any other provision of these Rules, where the value of the sum recovered in, or the subject matter of, an action or matter exceeds $6,000, the Magistrate, upon application, may order that, by reason of the complexity or importance of the case or for any other good and sufficient reason, discretionary costs shall be increased by not more than 100 per cent."

65 The difficulty with the warden's order is that there is nothing now upon which this subrule may operate. By r 6A(3) "discretionary costs" were defined as costs allowable under items of the former scale of costs provided in the Local Court Rules themselves. That scale is gone and there is nothing in the current costs scale by the determination of the Legal Costs Committee which would give any capacity to apply r 6A(1) to that determination. That was the view expressed by Parker J in Mossensons (a firm) v Coastline Associates, unreported; SCt of WA; Library No 970144; 8 April 1997. With respect, that view is clearly right and was accepted to be so by the single Judge who heard the appeal in this case.

66 Of course, his Honour remitted the whole matter of costs to be dealt with finally upon the basis of the determination by the warden of the substantive issues dealt with in his Honour's judgment, and that order I would set aside. It follows of course, that although his Honour's order remitting the question of costs should also be set aside, in my view the appeal to him against so much of the costs order as increased the maximum available on taxation by 50 per cent pursuant to the Local Court Rules O 37 r 6A(1) rightly succeeded.

67 Sorna argues before this Court that because the warden has a general discretion in relation to costs under the Mining Act s 134(2), guided by the current determination of the Legal Costs Committee, the learned Judge erred in concluding that the Warden had no discretion to increase costs by reference to the provisions of O 37 r 6A(1) of the Local Court Rules. However, in my opinion, this argument cannot succeed. The costs determination governed the exercise of discretion subject only to relevant provisions of the Local Courts Act and Rules. Those rules provided no capacity to generally increase the allowances under the scale and in my view it follows that the general discretionary power to award costs to be taxed could not properly be exercised to do so. I would not allow the appeal on this ground.

68 In my opinion, however, the appeal should be allowed and the cross-appeal dismissed. The orders made by the warden's court on 19 November 1998 should be restored except that the order numbered (viii) should be amended by deleting the words "and the maximum of the Defendant's discretionary costs of the Plaint be increased by 50%, pursuant to O 37 R 6A(1) of the Local Court Rules, 1961".

69 TEMPLEMAN J: I have had the advantage of reading in draft the reasons which have been published by Ipp and Murray JJ. I agree that s 119(2) of the Mining Act 1979 precludes the respondents from claiming any beneficial interest in the subject tenements arising out of the oral agreement on which they rely.

70 I also agree with Murray J in relation to the costs issue.

71 Having regard to the facts found by the learned Mining Warden and to the concession made by the appellant that it held the tenements to the extent of an 80 per cent beneficial interest upon trust for the first respondents, the learned Warden was correct to make a declaration in those terms.

72 I would therefore allow the appeal to the extent proposed by Murray J. The cross-appeal should be dismissed.

(Submerged Lands) Act 1967(WA)

Reform (Statute of Frauds) Act 1962

Practitioners Act 1893

Sorna Pty Ltd v Flint & Anor [2000] WASCA 22

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (121 paragraphs)

Sorna Pty Ltd v Flint & Anor [2000] WASCA 22 (16 February 2000)

Parties

Legislation Cited (6)

Cases Cited (19)