Editors --- "Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd [2006] NSWSC 856 - Case Summary" [2006] AUIndigLawRpr 71; (2006) 10(4) Australian Indigenous Law Reporter 66

• Koompahtoo Aboriginal Land Council v KLALC Property & Investment Ltd
• Facts:
• Held, dismissing the Council’s claim for indemnification and dismissing the mortgagee’s cross claims, ordering that the caveats be removed:

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Koompahtoo Aboriginal Land Council v KLALC Property & Investment Ltd

Supreme Court of New South Wales (Gzell J)

28 August 2006

[2006] NSWSC 856

Land Rights — Aboriginal Land Rights Act 1983 (NSW) —Local Aboriginal Land Council in joint venture to develop its land — Council seeks recovery of land after transfers to trustee — Whether Council continues to have a beneficial interest in the land

Facts:

Koompahtoo Local Aboriginal Land Council was the registered proprietor of Lot 556 at Morriset and Lot 11 at Fennell Bay in NSW under the Aboriginal Land Rights Act 1983 (NSW) (‘NSW Land Rights Act’). In July 1997 it entered into a joint venture agreement with Sanpine Pty Ltd to develop part of the lots in separate agreements.

In March 2001 a new entity, KLALC Property and Investment Pty Ltd, was constituted trustee of the Koompahtoo Property and Investment Trust. In March 2001, the Council transferred both estates in fee simple to the trustee. The transfers were registered and the secretary of the Council issued certificates certifying that their disposal did not contravene s 40D of the NSW Land Rights Act. However, there had been no meeting of 80% of the Council to vote for the approval of these sales. Further, the approval of the NSW Aboriginal Land Council had not been obtained for the sales and the relevant NSW Government Ministers had not been notified.

In April 2001, the Trustee and Sanpine as joint borrowers entered into an agreement with LKM Capital Limited to mortgage the two properties. In 2002, the Registrar-General of NSW lodged caveats over the land, as did the administrator of the Council in 2003.

The Council argued that the sale of land to the Trustee was void as it infringed the provisions of the NSW Land Rights Act and that consequentially the mortgage of the land by the Trustee to LKM was also void. It also argued that Sanpine was obliged to indemnify it in respect of such moneys as might be found to be payable by the Council to LKM. LKM made various cross-claims and sought orders that the Registrar-General and the Council remove their caveats.

Held, dismissing the Council’s claim for indemnification and dismissing the mortgagee’s cross claims, ordering that the caveats be removed:

1. The purpose of a certificate prepared pursuant to s 40D(2) of the NSW Land Rights Act is to absolve the holder of the certificate from inquiring whether the requirements of s 40D(1) are met. As such, a failure to make investigation as to the veracity of the certificate was not sufficient to impute knowledge or constructive notice to the Trustee or LKM that the Council’s transfers were not compliant with statutory provisions: [31], [41], [58].

2. The certificates also protected LKM from the voiding of the transactions under s 40(2) if it had no notice that the disposals did contravene section 40D(1). The certificates also protected the Trustee if it had no such notice: [55].

3. The Council’s argument that the Trustee received property in consequence of an illegal transaction and held it as constructive trustee for the Council as the rightful owner contravenes the doctrine that one who comes to equity must do so with clean hands since Council seeks to rely on its own illegal act: [74]–[76].

4. Even if the Trustee’s grants of mortgage to LKM constituted mortgages of a beneficial interest, the embargo on this transaction in s 40(1) of the NSW Land Rights Act is limited to a mortgage effected by a Local Aboriginal Land Council, and does not apply since the mortgages were effected by the Trustee: [68].

5. The transfers by the Council to the Trustee and the mortgages by the Trustee to LKM were not composite transactions both because there was no direct evidence of a prior agreement on the Trustee’s part to grant the mortgages to finance the acquisition, and because of the time gap between the effecting of the transfers and the grant of mortgages: [69]–[70], Abbey National Building Society v Cann [1990] UKHL 3; [1991] AC 56.

6. There is nothing on the face of the loan agreements between LKM, the Trustee and Sanpine which construe that the Trustee acted as an agent for the Council: [80]–[83].

7. In light of the findings as to the efficacy of the certificates of March 2001, LKM is entitled to orders that the Council and Registrar-General withdraw their caveats: [92], [94]–[96].

8. LKM’s cross-claim of unjust enrichment and application for a declaration that the Council was not entitled to rely on the provisions of the NSW Land Rights Act with respect to the transactions in question should be dismissed given the findings as to the efficacy of the certificates: [99], [102], [104].

This headnote, while listed as deriving from the judgment cited as Koompahtoo Aboriginal Land Council v KLALC Property & Investment Ltd [2006] NSWSC 856, also takes in the holdings of Koompahtoo Aboriginal Land Council v KLALC Property & Investment Ltd [2006] NSWSC 863 and Koompahtoo Local Aboriginal Land Council v KLALC Property and Investment Pty Ltd (No 2) [2006] NSWSC 885.

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Koompahtoo Aboriginal Land Council v KLALC Property & Investment Ltd & Anor

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