Victoria v Sutton

Victoria v Sutton - [1998] HCA 56 - HCA 1997 case summary — Zoe

[169]

The substantial subject matter of the dispute concerns a number of parcels of real property in Carlton, in Melbourne, in the State of Victoria. The registered titles to those properties stand in the names of persons who are said to be members of the BLF. It was not contested that those persons held such interest as trustees for the BLF prior to its deregistration. Since then, by inference, they continued to do so presumably for the members of the unincorporated association which continued in existence after the deregistration of the BLF was effected [80] . The Court was told that the properties and funds were valuable, being worth around $3 million to $4 million. If, apart from the dispute as to the devolution of the assets and liabilities of the BLF, the unincorporated association has now successfully achieved amalgamation with the CFMEU, it was not clear what the Custodian, consistent with his limited duties under the Order, would propose should be done with the valuable properties. If they did not pass to the amalgamated organisation (the CFMEU) it is uncertain who would take the benefit of them. From the evidence at trial it appears that the properties, or most of them, had been occupied as BLF premises by the continuing association. Their natural terminus would seem to be, as Wilcox CJ observed, with the industrial organisation which will henceforth represent the industrial interests of the erstwhile members of the BLF [81] . The appellants shrank from a submission that, after the amalgamation had been effected, the funds and properties were bona vacantia or without a lawful owner. However, no hint was given by them as to the alternative disposition which either the Custodian or the State of Victoria had in mind. By the same token, it was not contested (as Dr Sharp had stated in an affidavit filed at first instance) that the Custodian had never been consulted about, nor had he consented to, any disposition of the BLF funds or property in terms of the amalgamation agreement signed by the office-holders of the CFMEU and the BLF [82] . When the purported dealings in the funds and property of the BLF came to the notice of Dr Sharp he did not exhaust the powers afforded to him by the Order, to get in all of the assets of the BLF. Specifically, in relation to the real property, he failed to secure the vesting in his own name, as Custodian, of the legal title to the several properties in Carlton. Instead, he appears to have been content to rely upon the filing of Queen's caveats [83] which were lodged to signify his interest in the title to the properties. He also relied on his construction of the Order. That construction was that "void" meant void ab initio and hence that any dealings whatever by the trustees, or anyone else on behalf of the BLF or its members, would be void as against the Custodian. When under the amalgamation agreement between the BLF and the CFMEU [84] , it was agreed that the assets and liabilities of the BLF should "merge with" the assets and liabilities of the CFMEU and be taken to have become assets and liabilities of that body, the Custodian promptly objected. But he did so on the basis that the purported disposition of funds and property were "void" [85] .

[196]

Even if, contrary to the foregoing, it was possible to reinterpret the Custodian's conduct in filing pleadings and defending proceedings as an exercise of the option provided for in the Order, such conduct would, on the face of things, only constitute an exercise of the option in relation to the parties to the proceedings. As the trustees were not parties, it is difficult to see how the pleadings or proceedings could amount to an election effective against them. The Custodian's defence, in any case, represented an assertion of his primary interpretation of the Order. It did not convey on its face any decision of the Custodian to exercise an option to avoid the disposition of transactions which he was asserting were already void. During the hearing before Wilcox CJ, counsel for the respondents made it plain that, if a different position was asserted for the Custodian, they required him to "elicit" it. The written submissions for the Custodian took a position which could not have been clearer. They said: No situation has arisen or can arise whereby the Custodian is called upon to exercise his powers under paragraph 2 to treat a disposition as void. At several later points in the trial, the issue was raised again. The respondents repeatedly made it plain that, if an "election" by the Custodian was asserted, that claim ought to be made clear and evidence adduced. If such a claim was to be made, the respondents at trial insisted on the right to cross-examine Dr Sharp about it. To permit the appellants, after the trial, to change their position and to assert that the Custodian's conduct was actually directed at exercising an option which he had at all times disclaimed, presents at least two elements of procedural unfairness to the respondents. The first is that they have lost the chance of cross-examining the late Dr Sharp: a right which they had expressly reserved. The second is that they have almost certainly lost remedies which they might have pursued under the Administrative Law Act 1978 Vict to obtain judicial review of the Custodian's purported exercise of his statutory powers. This Court should not permit such procedural unfairness over the objection of the respondents [102] . There are perfectly good explanations for the conduct of the Custodian which do not betoken the exercise of an option to avoid the dispositions of funds or property of the BLF in terms of the power conferred on him by the Order.

[203]

There are several answers to these arguments. I shall deal first with those which concern their substance. It is true that the Order contemplated that "[p]ossession, custody and control of the funds and property of BLF" were committed to the Custodian (Order, cl 1). However, it also proceeded to recognise that certain dispositions of such funds and properties might continue to be made subject (as I have held) to being avoided at the option of the Custodian (Order, cl 2). The Custodian was armed with powers under the Order to take possession, custody and control of the funds and property [104] and under the Supplemental Order to "vest in himself as Custodian any funds or property" (cl 2). Until such powers were exhausted, the differentiation between the legal and beneficial interests in the property of the BLF in Victoria was virtually assured. The legal interest in the real property held by the trustees might be in their name. The beneficial interest would be enjoyed by the BLF association and its members. By the Order, that beneficial interest was committed to the Custodian. It was that interest with which Wilcox CJ was concerned. Having found that (by the amalgamation agreement) such BLF interests had merged with the assets and liabilities of the CFMEU, his Honour was understandably minded to provide, by his orders, for the beneficial interests in the funds and property. The reference in the terms of Order 4 to the funds and property makes it plain that all that the Custodian was required to do was to "vest in CFMEU the said funds and property" (emphasis added). As the beneficial interest in the real estate committed to the Custodian was all that he then held, and as that interest was notified by the Queen's caveats lodged by the Custodian, by inference, "all things necessary" would involve the removal of such caveats. Only then would it be open to the trustees, in accordance with a lawful resolution of the BLF, to convey the legal title to the real property to the CFMEU or to such persons as under the rules of the CFMEU were entitled to hold real property on behalf of that organisation. In the event that there was any uncertainty concerning the requirements of Declaration 3 and Order 4 they could be clarified, as Order 5 contemplated, by a single judge of the Industrial Relations Court. It is not appropriate that such a matter should concern this Court.

[209]

The predecessor to s 258 [108] was enacted following the report of the Committee of Inquiry on Co-ordinated Industrial Organisations [109] . It was the product of widespread frustration with the invalidation, following litigation, of the actions of industrial organisations performed by the officials of those organisations in good faith, but in a manner that rendered them technically invalid [110] . Such litigation had caused enormous dislocation. It encouraged expensive and often meritless proceedings which the Parliament, advised by the Committee, was determined, where appropriate, to remedy. Although the terms of the provision enacted by Parliament differed from what was proposed by the Committee [111] , it is nonetheless appropriate to have regard to the history and purpose of s 258. This background makes it clear that the provision should not be given a narrow construction. Nor should its operation be defeated by the same kind of meritless technicalities which gave birth to the enactment in the first place. By s 258(6), the Industrial Relations Court was empowered to determine what notices should be given to other persons of the intention to make an application for an order under the section. Pursuant to that provision, the Industrial Relations Court in these proceedings ordered notices to be given to individuals and, through newspaper advertisements, to the public. Notices were specifically given to the trustees. As this Court was informed, the trustees appeared before the Industrial Relations Court. They consented to the making of the declarations and orders by that Court. In such circumstances, their absence from the record, and for that matter the absence of other officers and members of the BLF, is now immaterial. If, belatedly, it were considered in some way material and that could be shown, the party contending as much could doubtless chance its arm under Order 5 reserving liberty to apply. Neither the objection to the form of the orders nor to the parties in the proceedings before the Industrial Relations Court has any merit which this Court needs to address. The form of the orders point also fails.

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Judgment (212 paragraphs)

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Cases Cited (39)