Duke Unley Pty Ltd & Ors v The Corporation of the City of Unley [2022] HCATrans 65 (12 April 2022)

Last Updated: 19 April 2022

[2022] HCATrans 065

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A34 of 2021

B e t w e e n -

DUKE UNLEY PTY LTD

First Applicant

DUKE UNLEY 184 PTY LTD

Second Applicant

DUKE CONSTRUCTIONS PTY LTD

Third Applicant

DUKE NOMINEES PTY LTD

Fourth Applicant

and

THE CORPORATION OF THE CITY OF UNLEY

Respondent

Application for special leave to appeal

KEANE J
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON TUESDAY, 12 APRIL 2022, AT 1.35 PM

Copyright in the High Court of Australia

____________________

KEANE J: In accordance with the Court’s protocol when sitting remotely, I will announce the parties’ appearances.

MR R.J. WHITINGTON, QC appears with MR D.F. O’LEARY, SC for the applicants. (instructed by Griffins Lawyers)

MR M.J. RODER, QC appears with MR S.A. EVANS for the respondent. (instructed by Cowell Clarke)

KEANE J: Yes, Mr Whitington.

MR WHITINGTON: Thank you, your Honour. This case, the applicants say, affords the Court an opportunity to review the basis of its decision in Bathurst City Council v PWC Properties. That decision has the potential to have a significant effect on the decision‑making of governmental authorities, particularly local government authorities, in connection with planning and development arrangements.

The applicants here contend that Bathurst involved the application of basic principles derived from the law of trusts adapted to accommodate an arrangement struck between a developer and a local government council. The Court of Appeal below, on the other hand, thought the decision essentially turned on no more than the application of a particular section in the Local Government Act 1919 (NSW), that is, section 526, as the source of the council’s obligations in that case. The applicants submit that, in that respect, the Court of Appeal misunderstood and misapplied the approach of this Court in Bathurst. It may be useful to explain that, to recapitulate the facts in the two cases.

The present case involves a group of shopkeepers and traders on a retail shopping strip in suburban Adelaide who came together in 1971 to present a development proposal to the respondent council in the form of what was called a memorial under the Local Government Act 1934. The memorialists undertook to pay for the improvements and maintenance of a parcel of council land, with a frontage to Unley Road, if the council agreed to develop it as a carpark for their collective benefit. The council resolved in 1973 to do the work. The carpark was established, and the memorialists and certain other ratepayers in the area benefited - who benefit, paid the agreed contribution by way of a special rate charged over 10 years.

KEANE J: But there is nothing in the legislation, Mr Whitington, is there, to suggest that by doing that they acquired a beneficial interest in the land?

MR WHITINGTON: Nothing in the legislation ‑ ‑ ‑

KEANE J: They got a benefit, in terms of the improvement, and the improvement that that no doubt produced to their businesses, but where do we find in the legislation any indication of any intention that they were to get a beneficial interest in the land?

MR WHITINGTON: Well, there is not any in the legislation, but we say similarly in Bathurst there was no intention to be found in the relevant legislation when the developer conveyed two parcels of land in exchange for a credit of about 52, I think, car‑parking spaces against its development obligation of 60 car‑parking spaces. There was nothing in that arrangement or in that legislation that expressly, we say, treated that arrangement as giving rise to a trust.

In our respectful submission, the Court in Bathurst found the trust – which he had called a statutory trust or sometimes a public trust – in the arrangement itself, that is, extrinsic to the legislation, and then concluded that that extrinsic trust, based on those extrinsic circumstances, qualified as a trust for the purpose of the relevant legislation in New South Wales.

Our argument really here is by parity of reasoning, that in circumstances where persons have paid for the development of the carpark, even though they have not conveyed the land to the council, they can acquire a relevant interest in the nature of what the High Court called a trust or a statutory trust such as to preclude the local council now – the respondent council – under the relevant legislation ‑ ‑ ‑

KEANE J: But in Bathurst it was held that the council accepted and held the lots for a public purpose, and the trust was held for the public purpose – not for the benefit of particular groups. The idea that a local authority holds property for the benefit of individuals is very difficult to square with the obligation of public authorities to act in the public interest.

MR WHITINGTON: We understand that, your Honour, but here there was clearly a public purpose to benefit the community – the wider community - in creating a carpark for the – paid for by the memorialists – but to serve the benefit of the retail community in that area, and that was the public purpose, just as the public purpose in Bathurst was to facilitate the creation of a carpark said to be central to a shopping precinct that the council desired to construct.

In each case there was a public benefit around that public purpose, that is, to create carparking to facilitate a shopping precinct. In Bathurst it was called a town planning purpose. Here, we would say it is similarly a general planning purpose to facilitate shopping in an area where this council wanted to encourage shopping for the benefit of those memorialists and for that public purpose. So, your Honour, the ultimate question is ‑ ‑ ‑

STEWARD J: Mr Whitington, do you take the view that Bathurst refers to a trust in its equitable manifestation, or is it just simply using the word “trust” to describe the particular basis upon which land was held by the council in accordance with the statutory regime then in place in New South Wales?

MR WHITINGTON: Not the latter, if your Honour pleases. The High Court said in Bathurst at paragraph 47 that the expression “trust” in the relevant statutory provisions clause 6(2)(b) of the transitional provision was not to be understood wholly in a technical sense. Now, the observe of that is that the finding of a trust in that case was not wholly divorced from basic principle – and that basic principle necessarily had to be found in the law of trusts.

STEWARD J: Although they do say at paragraph 67 that the word “trust” in clause 6(2)(b) did not impose:

a trust obligation as understood in private law, may fairly be described as a “statutory trust” which bound the land and controlled what otherwise would have been the freedom of disposition -

So they seem to be juxtaposing the statutory regime, which gives rise to responsibilities, duties and obligations on the part of the local government authority, and what is a trust at private law.

MR WHITINGTON: But you see the obligation in that case arose not under statute but it arose from the dealing between the developer and its predecessor and the council under which they agreed to transfer parcels of land – so that the council could create a carparking space, including with those parcels of land, and that the developer would be credited with a number of carparking spaces as a result ‑ ‑ ‑

STEWARD J: But was not the source of the council’s obligation to hold land on that basis section 526 of the Local Government Act?

MR WHITINGTON: That reflected an obligation to deal with land conveyed and held on a trust. But that simply reflected the position arrived at by some exogenous condition – in that case a dealing. In other words, all the legislation did was fasten onto the existence of a trust. There had to be an anterior basis for finding a trust – some exogenous basis. In our respectful submission, that was found in Bathurst by reference to the relevant dealing.

That relevant dealing did, as it happens, involve a conveyance of lands to be held by the council on the terms of that dealing, but the High Court did not require that there would be a conveyance – it did not suggest that the fact of the conveyance was determinative. Indeed, the High Court used the expression – I think in paragraph 44 – that this is particularly so where there is a conveyance.

So, the relevant, or the critical issue, we say, to understand about Bathurst, is that the trust comes first. The legislation then fastens onto the trust and enables it to be enforced. The significance of the trust, in that case, and in this case, we would say, is that it was a trust for a purpose, not a trust for persons, and so the High Court had to find a way to identify a trust, and we say it did that in basic principle, but having found the trust, legislation fastened onto it, not the other way around.

The High Court explored various avenues for the identification of the underlying trust. It observed that no case was now advanced that it was an express trust. It observed that below the Court of Appeal had found for a form of constructive trust, and on appeal to the High Court, what was advanced was a constructive form of the charitable trust. The High Court was therefore engaged in an exploration of basic principles concerning the law of trusts, but ultimately found that it was not a suitable result to find a charitable trust on a constructive trust basis, for various reasons.

So it was then that the High Court moved on to a consideration of another basis to find the trust, and concluded that it was a trust for public purposes and could therefore be called a public trust, or even statutory trust, but as I say, the primary answer to your Honour’s question is that what was found fitted with the legislative description of a trust in section 526, and not that section 526 descended on the arrangement and created the trust.

We say that is the critical feature of Bathurst, and a critical feature that was misunderstood by the Court of Appeal in paragraphs 70 and 71 of their reasons, because there the Court of Appeal seemed to assume that the High Court had found in Bathurst that the trust it found was generated by section 526, when in fact, we say, on a proper understanding of the High Court’s reasons, particularly from paragraphs 44 to 47 of Bathurst, the High Court was not finding that the trust was generated by any statute.

It was finding that the trust was generated by the underlying conduct and dealing, and it then could meet the description of the expression “trust” in the statute on the basis that that description did not need necessarily to conform to the notion of a trust in private law, but in fact could conform to a slightly expanded and slightly different notion of a trust, and particularly, a trust for public purposes.

So, the ultimate question, we say, that could be resolved on an appeal in this case, is whether, in fact, the High Court in Bathurst simply found a trust dictated by a statute or whether, as we say, it was the other way around – they found a trust on basic principle which they then found could be accommodated to the statute. To make that good, one can go to paragraph 67, for instance, of the reasons in Bathurst where one has the ultimate conclusion of the Court and the ultimate conclusion was that the expression “trust” in clause 6.2(b) was:

apt to include those governmental responsibilities which, whilst not imposing a trust obligation as understood in private law, may fairly be described as a “statutory trust” –

or trust for statutory purposes which was enforceable against the council to prevent it from engaging in a dealing in the land – inconsistent with those responsibilities.

Now, that, we say, makes it plain that the High Court looked to underlying principle and the underlying facts and then found a trust which met the description in clause 6.2(b) – and not the other way around. The Court went on to observe that there was no beneficial owner of these nominated carparking spaces and no beneficial owner with standing – in a court of equity – to enforce observance by the council of the dedication of the loss to the provision of carparking spaces. But they went on to hold it would have been open to the Attorney‑General to enforce the trust so found.

We say such a conclusion was necessary to make a finding of a purpose trust complete, otherwise the Court would have been in the position where it was asserting the potential for a trust – and an unenforceable trust which would be no trust at all.

When one has regard to that conclusion at paragraph 67, it is clear when one reads it in conjunction with paragraph 54 – where they are dealing with the expression “land subject to a trust” - and in conjunction with the preceding paragraphs 44 to 48, it is clear that the intervention of the Attorney‑General was to be justified on the basis of the existence of a trust and not simply the existence of those nominated lots being a public place.

So, the short point then, I suppose, is that we say the Full Court – I am sorry, the Court of Appeal, put the cart before the horse. They made two critical points justifying the dismissal of the applicants’ appeal. The first was that the source of the Bathurst Council’s obligations relating to the use of the two allotments of the carparking credits was section 526 of the Local Government Act (NSW) and the second point, to bolster the first, was that equity did not recognise a separate species of public trust as contended for by the applicants because, if it had, it would have been explicitly recognised in Bathurst and other cases.

But our point is there are two difficulties with that analysis. The first, as I have explained, is that section 526 and indeed clause 6(2)(b) were not generative of the trust found in Bathurst. Rather the trust was found on the application of general principle, to which clause 6 applied. As to the second point, it is a curious notion that the High Court should have suggested that if equity recognised such a species of trust anterior to the legislation, it may be expected that this would have been explicitly recognised by the High Court in Bathurst. In our submission, that is a question‑begging and circular proposition as it assumes that the Court would not have embarked upon an analysis which recognised a public trust without actually labelling the trust as found a new species of trust.

But the fact of the matter is the Court may not have considered it was engaging any particular novel exercise. So, the real question is not one of labels, we would say. It is one of substance - did this Court in Bathurst recognise generally a species of public trust to which specific statutory obligations could attach? We say the answer to that question is, of course, yes.

To come back to Justice Keane’s point right at the beginning, when one carefully picks over Bathurst, one can see that nothing turned in particular on the conveyance of the land to the council. What was relevant was the agreement or the arrangement to use the conveyed land for the purpose of the carpark. We say that this case is effectively on all‑fours. If the Court pleases.

KEANE J: Thanks, Mr Whitington. The Court will adjourn briefly to consider the course it will take in this matter.

AT 1.56 PM SHORT ADJOURNMENT

UPON RESUMING AT 1.58 PM:

KEANE J: We need not trouble you, Mr Roder.

The Court considers that the decision of the Court of Appeal is not attended with sufficient doubt to warrant the grant of special leave to appeal. The application is refused with costs.

The Court will adjourn until tomorrow at 9.30 am. Adjourn the Court please.

AT 1.58 PM THE MATTER WAS CONCLUDED