Catalyst Townsville SPV No 1 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers appointed);; Catalyst Corinda SPV No 2 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers..
[2025] QSC 255
•3 October 2025
SUPREME COURT OF QUEENSLAND
CITATION:
Catalyst Townsville SPV No 1 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers appointed);
Catalyst Corinda SPV No 2 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers appointed);
The Presbyterian Church of Queensland (receivers and managers appointed) v Catalyst Carina SPV Pty Ltd & Anor [2025] QSC 255
PARTIES:
In BS 5900 of 2021:
CATALYST TOWNSVILLE SPV NO 1 PTY LTD (AS TRUSTEE FOR THE CATALYST TOWNSVILLE SPV NO 1 TRUST)
ACN 621 858 839(plaintiff)
v
THE PRESBYTERIAN CHURCH OF QUEENSLAND (RECEIVERS AND MANAGERS APPOINTED)(defendant)
ATTORNEY-GENERAL OF QUEENSLAND
(intervener)
In BS 12562 of 2021:
CATALYST CORINDA SPV NO 2 PTY LTD (AS TRUSTEE FOR THE CATALYST CORINDA SPV NO 2 TRUST)
ACN 623 429 247
(plaintiff)
v
THE PRESBYTERIAN CHURCH OF QUEENSLAND (RECEIVERS AND MANAGERS APPOINTED)(defendant)
ATTORNEY-GENERAL OF QUEENSLAND
(intervener)
In BS 14920 of 2021:
THE PRESBYTERIAN CHURCH OF QUEENSLAND (RECEIVERS AND MANAGERS APPOINTED)
(plaintiff)
v
CATALYST CARINA SPV PTY LTD (AS TRUSTEE FOR THE CATALYST CARINA SPV TRUST)
ACN 629 754 632
(first defendant)CATALYST FINANCE SPV PTY LTD (AS TRUSTEE FOR THE CATALYST FINANCE SPV TRUST)
ACN 629 766 936
(second defendant)
ATTORNEY-GENERAL OF QUEENSLAND(intervener)
FILE NO/S:
BS 5900 of 2021
BS 12562 of 2021BS 14920 of 2021
DIVISION:
Trial Division
PROCEEDING:
Claim and Statement of Claim
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
3 October 2025
DELIVERED AT:
Brisbane
HEARING DATES:
6, 7, 8, 9, 10, 13, 14, 15, 16, 20, 21, 22, 23, and 24 November 2023, and 1 and 2 February 2024. Final documents tendered on 29 February 2024.
JUDGE:
Bradley J
ORDERS:
THE COURT DIRECTS THAT:
1. Within fourteen days, the plaintiff in BS 5900 of 2021, the plaintiff in BS 12562 of 2021, and the defendants in BS 14920 of 2021:
(a) prepare a draft judgment or order in their respective proceeding:
(i) to reflect the published reasons;
(ii) to deal with interest on any judgment sum; and
(iii) to include any order as to costs; and
(b) provide a copy of the draft to the other parties in the proceeding, including the intervenor.
2. Within 14 days of receiving a draft judgment or order, each of the parties in each proceeding is to:
(a) confer in person or by electronic means with the other parties about the draft judgment or order; and
(b) advise the Court whether the party agrees:
(i) that the terms of the draft reflect the published reasons;
(ii) on the draft provisions dealing with interest on any judgment sum; and
(iii) on any order as to costs.
3. Within 14 days of advising the Court in accordance with paragraph 2(b) above, any party that has advised the Court it does not agree about any of the matters in paragraph 2(b)(i) to (iii) above is to file and serve written submissions (limited to ten pages in length) as to the judgment or order the party contends should be made in their proceeding (or proceedings), and attach a copy of the draft judgment(s) or order(s) the party contends should be made.
4. If any party serves written submissions in accordance with paragraph 3 above, then within 14 days any other party to the same proceeding is to file and serve written submissions (limited to ten pages in length) as to the judgment or order the party contends should be made in the proceeding.
CATCHWORDS:
CHURCHES AND RELIGIOUS ASSOCIATIONS – CHURCH PROPERTY AND TRUSTS – TRUSTEES AND MANAGEMENT – where a corporation named “The Presbyterian Church of Queensland” is the common party in proceedings BS 5900 of 2021, BS 12562 of 2021 and BS 14920 of 2021 (the Corporation) – where the Corporation is distinct from the unincorporated religious association also known as “The Presbyterian Church of Queensland” (the Church), which is a church, and is not a party to any of the proceedings – where the Corporation owed substantial sums to the adversarial parties (the Catalyst parties) in these proceedings and was unable to pay them from readily available funds – where Court appointed receivers (the Receivers) conducted the case for the Corporation in each proceeding – where the Corporation transacted with one or more of the Catalyst parties in separate dealings concerned with the development of various retirement and aged care facilities across Queensland – where proceeding BS 5900 of 2021 concerns dealings as between the Corporation and Catalyst Townsville, associated with land in Townsville – where proceeding BS 12562 of 2021 concerns dealings as between the Corporation and Catalyst Corinda, associated with land in Corinda – where proceeding BS 14920 of 2021 concerns dealings as between the Corporation and Catalyst Carina, associated with land in Carina – where the Receivers contend the Corporation held the Carina and Townsville land as trustee of a specific charitable purpose trust – where the Attorney-General was given leave to intervene in the proceedings – where the Attorney-General contends the Corporation held the Carina and Townsville land on a different specific charitable purpose trust than alleged by the Receivers – where the Receivers contend, in the alternative, that the Corporation held the Carina and Townsville land on either the trust alleged by the Attorney-General or on trust for the charitable purposes of the Church – whether the Corporation held property as trustee for the purposes of the Church
CHARITIES – CHARITABLE PURPOSES – ADVANCEMENT OF RELIGION – RELIEF OF AGED, IMPOTENT AND POOR – where the Corporation held property as trustee for the purposes of the Church – whether the purposes of the Church were charitable purposes – whether the general charitable purposes of the Church included the provision of relief and assistance to the aged and infirm
CHARITIES – TRUSTEES OF CHARITIES – POWERS AND DUTIES – where the Corporation had no purposes of its own – where the Corporation, from time to time, held property as trustee for the general charitable purposes of the Church – where the Receivers contend the Catalyst parties cannot enforce any of their debt and damages claims because the Corporation lacked power to enter into the agreements with each of the Catalyst parties, or because the Corporation had breached its duties as a trustee when it entered into those agreements – where the Receivers contend that in its dealings with the Catalyst parties, the Corporation did not exercise the degree of caution expected of a trustee of property held for charitable purposes – whether the Corporation dealt with the trust property in accordance with the Church’s constitution – whether the Corporation exercised the caution, conservatism and restraint expected of it as trustee of a charitable purpose trust – whether each of the agreements made as between the Corporation and the Catalyst parties were imprudent, hazardous, and wholly unsuitable for a trustee of a charitable purpose trust such that the Corporation breached its duties as trustee
EQUITY – GENERAL PRINCIPLES – UNCONSCIONABILITY, UNCONSCIONABLE DEALINGS AND OTHER FORMS OF EQUITABLE FRAUD – where the Receivers claimed equitable compensation and an account of profits from the Catalyst parties – where the Receivers contend the Catalyst parties acted unconscionably in persuading the Corporation to contract with them – where the Receivers contend the Catalyst parties acted unconscionably in pursuing their claims in these proceedings – whether the Catalyst parties unduly influenced or pressured the Corporation in relation to their transactions or agreements with the Corporation – whether the Catalyst parties’ pursuit of their claims in these proceedings was conduct sufficiently outside the societal norms of acceptable commercial behaviour so as to warrant condemnation as unconscionable
Aged Care Act 1997 (Cth), ch 3A, s 52N-1
Associations Incorporation Act 1981 (Qld), s 144
Australian Charities and Not-for-profits Commission Act 2012 (Cth), s 205-5
Competition and Consumer Act 2010 (Cth), sch 2, s 22(1), (2)
Australian Securities and Investments Commission Act 2001 (Cth), s 12CA, s 12CB, s 12CC
Corporations Act 2001 (Cth), s 420
Human Rights Act 2019 (Qld), s 20, s 48(1)
Presbyterian Church of Australia Act 1971 (Qld), s 3, s 5, sch pt II, sch pt III
Presbyterian Church Property Act 1909 (Qld), s 2, s 3
Religious Educational and Charitable Institutions Act 1861 (Qld), s 1
Uniting Church in Australia Act 1977 (Qld), s 24
Amey & Ors v Fifer [1971] 1 NSWLR 685, cited
Amos v Brunton (1897) 14 WN 69; 18 LR (NSW) Eq 184, cited
Attorney-General (NSW) (Ex rel Elisha) v Holy Apostolic & Catholic Church of the East (Assyrian) Australian NSW Parish Association (1989) 37 NSWLR 293, cited
Attorney-General (Qld) (Ex rel Nye) v Cathedral Church of Brisbane (1977) 136 CLR 353; [1977] HCA 15, consideredAttorney General v Great Eastern Railway Co (1880) 5 App Cas 473; [1874-80] All ER Rep Ext 1459, cited
Attorney-General v Pearson (1817) 3 Mer 353, cited
Attorney-General (NSW) (Ex rel McLeod) v Grant (1976) 135 CLR 587; [1976] HCA 38, consideredAttorney-General v The South Sea Company (1841) 4 Beav 453; [1841] 49 ER 414, considered
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18, considered
Bailey v Uniting Church in Australia Property Trust (Qld) [1984] 1 Qd R 42, considered
Bonanza Creek Gold Mining Co v The King [1916] 1 AC 566, cited
Commissioner of Taxation of the Commonwealth of Australia v Bargwanna (2012) 244 CLR 655; [2012] HCA 11, cited
Doctor Warren’s Case (1835) Grindrod’s Compendium, 371, cited
Drummond v Attorney-General (1849) 2 HL Cas 837; [1849] 9 ER 1312, consideredElder’s Trustee & Executor Co Ltd v Higgins (1963) 113 CLR 426; [1963] HCA 48, cited
Frackelton v Macqueen [1909] St R Qd 89, cited
Free Church of Scotland (General Assembly) v Lord Overtoun [1904] AC 515, cited
Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Dobrijevic (2017) 94 NSWLR 340; [2017] NSWCA 28, considered
Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238, considered
In re Clergy Orphan Corporation (No 2) [1894] 3 Ch 145, citedIncorporated Society v Price (1844) 1 Jo & Lat 498, cited
Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25, cited
Karger v Paul [1984] VR 161, cited
Long v Bishop of Capetown (1863) 1 Moore NS 411; [1863] 15 ER 756, cited
Macqueen v Frackelton (1909) 8 CLR 673; [1909] HCA 28, considered
McSwaine v Lascelles [1895] AC 618, cited
Melbourne Jewish Orphan and Children’s Aid Society Inc v ANZ Executors and Trustee Company Limited [2007] VSC 26, cited
Milligan v Mitchell (1837) 3 My & Cr 72; [1837] 40 ER 852, citedOvidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6, considered
Presbyterian Church (NSW) Property Trust v Ryde Municipal Council [1978] 2 NSWLR 387, considered
President and Scholars of the College of St Mary Magdalen, Oxford v Attorney-General (1857) 6 HL Cas 189; [1859] 10 ER 1257, cited
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, cited
Radmanovich v Nedeljkovic [2003] NSWSC 350, cited
Re General Assembly of the Presbyterian Church of Queensland [1981] QSC 438, cited
Re St Bride’s, Fleet Street, Church or Parish Estate (1877) 35 Ch D 147, cited
Re James Stewarts’ Will Trusts [1962] QWN 24, cited
Re Stable [1957] St R Qd 90, distinguished
Re the Trusts Act of 1984 and the appointment of a new trustee in respect of the Assemblies of God in Australia (Ayr Assembly); Sirris v Malamoo [1985] QSCFC 61 (BC8521013), cited
Re Travis; Mant v Attorney-General [1911] St R Qd 216, consideredSalehi v Salehi [2023] VSC 535, cited
Serbian Orthodox Ecclesiastic School Community “Saint Nikolas” Queensland v Vlaislavljevic [1970] Qd R 386, cited Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82, cited
Thorne v Kennedy (2017) 263 CLR 85, cited
Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565; [2007] NSWCA 117, cited
Victoria Park Golf Course Inc (2001) 118 LGERA 107; [2001] QCA 528, cited
Warringah Shire Council v Salvation Army (NSW) Property Trust (1943) 15 LGR (NSW) 91, considered
Watson v Jones 80 US 679 (1871), citedCOUNSEL:
M R Hodge KC, with D C Clarry, E L Beechey, J D Byrnes, and D P Davison, for the plaintiff in BS 5900 of 2021, the plaintiff in BS 12562 of 2021, and the defendants in BS 14920 of 2021.
A M Pomerenke KC and A C Stumer KC, with S J Webster and S L Walpole, for the defendant in BS 5900 of 2021, the defendant in BS 12562 of 2021, and the plaintiff in BS 14920 of 2021.
A L Wheatley KC, with B J McEniery, for the intervener in BS 5900 of 2021, BS 12562 of 2021, and BS 14920 of 2021.
SOLICITORS:
Corrs Chambers Westgarth for the plaintiff in BS 5900 of 2021, for the plaintiff in BS 12562 of 2021, and for the defendants in BS 14920 of 2021.
Allens for the defendant in BS 5900 of 2021, for the defendant in BS 12562 of 2021, and for the plaintiff in BS 14920 of 2021.
Crown Law for the intervener in BS 5900 of 2021, BS 12562 of 2021, and BS 14920 of 2021.
INDEX
The participants in the proceedings
The brief facts about the transactions
Townsville
Corinda
Carina
Events after the Carina lease
The Catalyst parties’ claims
The Receivers’ claims
Summary of Findings
The alleged charitable purpose trusts
The Corporation’s dealings with the Catalyst parties
The Catalyst parties and alleged breaches of trust
Alleged unconscionable conduct in the transactions
Alleged unconscionable conduct in the proceedings
AEFIPs amounts
Rent and outgoings
Outcome of the proceedings
The alleged charitable purpose trusts
Legal nature of the Church
Denominational Union 1900-1901
Interdenominational Union 1971-1977
The General Assembly
Finance Board
Property Board
Legal nature of the Corporation
The RECI Act and letters patent
The Church and the Corporation
The Officeholders
Property held for the purposes of a church
The Corporation’s use of property allegedly held on a more specific charitable purpose trust
Before the interdenominational union: 1920s to 1970s
The interdenominational union: 1970s and 1980s
Creation of the PresCare Board and the PresCare organisation
The Church’s exit from St Andrew’s Hospital
The Carina land
The Townsville land
The Corinda land
Consideration of the contentions of the Attorney – the Aged Care Trust
Consideration of the contentions of the Receivers – the PresCare Constitution Trust
Conclusion on the alleged charitable purpose trusts
The dealings with the Catalyst parties
The Townsville agreements
From first contact with Catalyst to the PresCare Board authorisation
The Corinda agreements
From expression of interest to heads of agreement
Negotiation of the transaction documents
KPMG advice after completion
Events after KPMG advice
The adjustment amount claimed under cl 9.2 of the Corinda development agreement
The Corinda AEFIP payments
The Carina agreements
CBA debt before negotiations for the Carina agreements
Initial contact with Catalyst Carina
Advice from KPMG
Further breaches of the CBA Facilities
Further contact with Catalyst Carina
Further advice from KPMG
Further contact with Catalyst Carina and introduction of Catalyst Finance
The Catalyst parties’ alleged breach of trust
The Receivers’ breach of trust claims
Knowledge of a breach of trust
Honesty and good faith
Special restrictions of the sale of trust property including land
Hazardous or speculative investment
Imprudent, hazardous, and wholly unsuitable agreements with substantial risk
Alleged unconscionable conduct in the transactions
The Receivers’ unconscionable conduct claims
Catalyst’s position
The Corporation’s position
CEO Mr Skelton
CFO Mr Lynch
Financial Controller Mr Playford
COO Mr Bosel
GM Property Development Ms Wilkinson
General Counsel Ms Hickey
KPMG
McCullough Robertson
Board supervision
The information
The transactions
Alleged exploitation
Alleged unconscionable conduct in the proceedings
Conclusion on unconscionable conduct claims
Rent and outgoings
Corinda triple net lease
Townsville and Carina RACFs
Final disposition
The participants in the proceedings
A corporation with the name “The Presbyterian Church of Queensland” is the common party in each of these three proceedings.[1] It is not a church, but a corporation aggregate comprised of three religious officeholders (collectively, the Officeholders). It is convenient to refer to this entity as the Corporation. This title distinguishes it from the unincorporated religious association also known as “The Presbyterian Church of Queensland”, which is a church, and is not a party to any of the proceedings. It is convenient to refer to this religious association as the Church.
[1]It is the defendant in BS 5900 of 2021 and in BS 12562 of 2021. It is the plaintiff in BS 14920 of 2021.
In May 2021, the Court appointed Michael Owen and Philip Carter of PricewaterhouseCoopers (the Receivers) as receivers and managers of all the assets, property, and undertakings of the Corporation. Since then, the Receivers have had power to bring or defend any proceedings for the purpose of obtaining the objective for which they were appointed.[2] In each proceeding, the Receivers conducted the case for the Corporation. In these reasons, for convenience, the claims, defences, contentions, and submissions made on behalf of the Corporation in the proceedings are referred to as the claims, defences, contentions and submissions of the Receivers, and counsel for the Corporation are referred to as counsel for the Receivers.
[2]Corporations Act 2001 (Cth), s 420(2)(k).
The Court appointed the Receivers on the basis that the Corporation owed substantial sums to the adversarial parties in these proceedings and was unable to pay them from readily available funds. It is convenient to refer to those adversaries collectively as the Catalyst parties. Each of the Catalyst parties was a special purpose company and the trustee of a specific trust. Each was related to the other Catalyst parties as a subsidiary of a common parent company.[3]
[3]By the commencement of these proceedings, the common parent was M.H. Carnegie & Co Management Pty Ltd (Carnegie).
The Court gave the Attorney-General (the Attorney) leave to intervene in the three proceedings to assist the Court on three matters raised by the Receivers. These were:
(a)the existence and composition of any alleged charitable trust or trusts;
(b)whether the transactions between the Corporation and the Catalyst parties are liable to be set aside as having been ultra vires or void, or alternatively, entered into by the Corporation in breach of trust; and
(c)the remedies available to the Corporation.
Otherwise, the Attorney did not seek to become a party. In particular, the Attorney did not seek to enforce any charitable purpose trust or grant her fiat to another person to do so, despite alleged breaches of trust, including by the Corporation as trustee, some allegedly induced by one of the Catalyst parties.
The brief facts about the transactions
Most of the relevant facts about the transactions involving the Corporation and one or more of the Catalyst parties are not in dispute. They are set out in some detail at [208] to[353] below. In each proceeding the relevant dealings had a specific geographic focus. In BS 5900 of 2021 the dealings concerned land in Townsville; in BS 12562 of 2021, land in Corinda; and in BS 14920 of 2021, land in Carina.
Townsville
In December 2017, a Catalyst party[4] (Catalyst Townsville) paid the Corporation $1.5 million to buy vacant land at Douglas in Townsville (the Townsville land). The Corporation agreed to lease the land from Catalyst Townsville for a term of 40 years and to pay all expenses related to the land, including insurance, land taxes, rates, utilities, and maintenance. The parties called this a triple net lease. They agreed on the rent and a mechanism by which the Corporation could repurchase the land during the lease. Catalyst Townsville agreed to advance funds to the Corporation to pay for the construction of a retirement and aged care facility (RACF) on the Townsville land (the Townsville RACF). The two parties agreed on a schedule of Advance Equity Funding Instalment Payments (AEFIPs) over ten years, by which the Corporation would repay the loan. The Corporation engaged a builder[5] (Woollam) to construct the Townsville RACF.
[4]The plaintiff in BS 5900 of 2021, Catalyst Townsville SPV No 1 Pty Ltd (as trustee for the Catalyst Townsville SPV No 1 Trust).
[5]T. F. Woollam and Sons Pty Ltd.
Between December 2017 and September 2019, Catalyst Townsville advanced about $31 million to the Corporation to pay Woollam for that work. The Corporation occupied the Townsville land and operated the Townsville RACF from about 20 March 2019 until 6 October 2021.
Corinda
In April 2018, another Catalyst party[6] (Catalyst Corinda) bought vacant land at Corinda in Brisbane (the Corinda land) from an unrelated company[7] for $4.2 million. At the end of April 2018, the Corporation agreed to lease the Corinda land from Catalyst Corinda under a 40-year triple net lease. They agreed on the rent and a mechanism by which the Corporation could purchase the Corinda land during the lease. Catalyst Corinda agreed to advance between $28 and $35 million to the Corporation to pay for the construction of an RACF on the Corinda land (the Corinda RACF). The Corporation agreed to give Catalyst Corinda notice of the total amount it intended to borrow to construct the Corinda RACF closer to practical completion. Catalyst Corinda agreed to give the Corporation a schedule setting out the AEFIPs over ten years, by which the Corporation would repay the loan. Catalyst Corinda undertook that the schedule would use the same calculation methodology used for the loan to construct the Townsville RACF.
[6]The plaintiff in BS 12562 of 2021 Catalyst Corinda SPV No 2 Pty Ltd (as trustee for the Catalyst Corinda SPV No 2 Trust).
[7]Although the Corporation had once owned this land, it had sold it almost 20 years before Catalyst Corinda acquired it.
Between December 2018 and May 2020, Catalyst Corinda advanced the Corporation about $25 million for the Corporation to pay Woollam to build the Corinda RACF. Shortly before practical completion, Catalyst Corinda agreed to forebear, for a period of 12 months from practical completion, from seeking to recover any amount owing by the Corporation. On 3 April 2020, Woollam completed the Corinda RACF. The Corporation never occupied or operated it.
Carina
In December 2018, another Catalyst party[8] (Catalyst Finance) loaned $27 million to the Corporation to enable it to repay a loan the Corporation owed to the Commonwealth Bank (CBA). The Corporation gave Catalyst Finance security over land it owned at Carina. Between 2008 and 2009, the Corporation had built an RACF (the Carina RACF) on part of that land (the Carina land). In September 2019, Catalyst Finance loaned another $500,000 to the Corporation, secured in the same way.
[8]Catalyst Finance SPV Pty Ltd (as trustee for the Catalyst Finance SPV Trust).
In April 2020, the Corporation sold the Carina land to another Catalyst party[9] (Catalyst Carina) for $33 million. The Corporation used most of the proceeds from the sale to repay the $27.5 million loan from Catalyst Finance. The Corporation agreed to lease the Carina land from Catalyst Carina under a 40-year triple net lease. They agreed on the rent and a mechanism by which the Corporation could purchase the Carina land during the lease. The Corporation occupied and operated the Carina RACF under the lease from about 21 April 2020 until 6 October 2021.
[9]Catalyst Carina SPV Pty Ltd (as trustee for the Catalyst Carina SPV Trust).
Events after the Carina lease
Within a year of the sale of the Carina land, it was clear that the Corporation would not be able to operate the Townsville, Corinda, and Carina RACFs, and meet its obligations to the Catalyst parties under the three triple net leases and the two AEFIPs schedules.
In December 2020, the Corporation told the Catalyst parties that it held at least some of its assets as a trustee. In January 2021, the Corporation wrote to the Catalyst parties about legal advice it had received “regarding certain assets that [the Corporation] holds on trust and which are not available to [the Corporation] generally.” The Corporation set out a proposal that the Corporation would make “available to Catalyst the total net financial capacity from its denominational (available) assets.” The concepts of denominational property and congregational property are considered at [91] below.
On 9 April 2021, the Corporation and the Catalyst parties agreed to compromise the Catalyst parties’ then claims on terms in a written agreement (the HOA). The HOA was subject to a condition precedent,[10] which was not satisfied or waived by the agreed date.[11] The compromise did not become effective.
[10]That the Commonwealth provide certain funding.
[11]12 May 2021. This date had been extended by agreement from 23 April 2021.
However, the parties had agreed to be bound by some terms of the HOA regardless of satisfaction of the condition precedent. Those binding terms included terms to the effect that an amount of $12.39 million, payable by the Corporation to Catalyst Townsville in certain circumstances, and another amount (now determined to be $14.36 million), payable by the Corporation to Catalyst Corinda in certain circumstances, “will be deemed to be immediately due and payable” by the Corporation to the relevant Catalyst party on termination of the HOA. These amounts are collectively referred to as the AEFIP Payout Amounts.
On 12 May 2021, the HOA was terminated save for the terms referred to in [16] above, which remained operative. That day, the Court appointed the Receivers on the basis that the Corporation owed the AEFIP Payout Amounts to two of the Catalyst parties and was unable to pay them from readily available funds.
Under the Receivers’ control, the Corporation continued to pay rent and outgoings pursuant to the Townsville and Carina triple net leases until 30 June 2021. The Corporation did not pay rent after this date. On 26 July 2021, Catalyst Townsville and Catalyst Carina terminated those leases. Catalyst Corinda terminated its triple net lease the same day.
The Corporation continued to occupy and operate the Townsville and Carina RACFs until 6 October 2021. That day, the relevant Catalyst parties completed the sale of the Townsville, Corinda, and Carina land, including the RACFs, to an unrelated company[12] for about $100 million.
[12]St Vincent’s Care Services Ltd (St Vincent’s). In the period up to December 2021, the Receivers sold chattels associated with the operation of the RACFs on the Townsville and Carina land to St Vincent’s.
The Catalyst parties’ claims
Catalyst Townsville and Catalyst Corinda claimed the AEFIP Payout Amounts as debts owed by the Corporation.
Catalyst Townsville and Catalyst Carina claimed rent and outgoings payable under the Townsville and Carina triple net leases for the period from 1 to 25 July 2021.[13]
[13]Townsville lease: $100,186.90 rent and $42,476.64 outgoings. Carina lease: $153,913.05 rent and $67,188.47 outgoings.
They also claimed a further amount[14] from the Corporation, contending that the Corporation had occupied the Townsville[15] and Carina[16] RACFs from 26 July to 6 October 2021 under an implied agreement with each of them that the Corporation would continue to pay rent and outgoings. Alternatively, they claimed this amount as restitutionary damages based on an alleged understanding that the Corporation was obliged to pay something for the continued occupation of the RACFs.
[14]$1,002,788.68.
[15]The claim for Townsville is $364,152.99 for occupation rent; and $50,036.14 for outgoings.
[16]The claim for Carina is $513,729.07 for occupation rent; and $74,870.48 for outgoings.
Catalyst Corinda also claimed five unpaid AEFIPs[17] and rent and outgoings under the Corinda triple net lease for the period from 3 April 2020 to 25 July 2021[18].
[17]5 x $567,000 = $2,835,000.
[18]$1,185,318.50 rent and $139,740.80 outgoings.
As counsel for the Catalyst parties noted, there was little reference to the Catalyst parties’ claims during the trial. The focus of the opening submissions, the three weeks of evidence, the closing written submissions (which totalled 981 pages in length), and the final oral submissions was the defences, counterclaims, claims, and allegations of the Receivers directed to defeat the Catalyst parties’ claims.
The Receivers’ claims
The Receivers contended that the Corporation held the Carina land and the Townsville land as trustee of a specific charitable purpose trust that the Receivers called the PresCare Constitution Trust (the PC Trust). In the alternative, the Receivers contended that the Corporation held the land on the trust alleged by the Attorney (see [26] below). In the further alternative, they contended the land was held on trust for the charitable purposes of the Church.
As intervener, the Attorney submitted that the Corporation held the relevant land as trustee of a different specific charitable purpose trust, which the Attorney called the Aged Care Trust (the AC Trust). In the alternative, the Attorney submitted that the property was held on the PC Trust.
The Receivers alleged that the Catalyst parties could not enforce any of their claims because the Corporation lacked power to enter into the agreements with each of the Catalyst parties, or because the Corporation had breached its duties as a trustee when it entered into those agreements.
The Receivers alleged each agreement with a Catalyst party was imprudent, hazardous, and wholly unsuitable for a trustee of a charitable purpose trust. They alleged that the Corporation did not exercise the caution, conservatism and restraint expected of it as trustee of a charitable purpose trust. They alleged that, in entering into those agreements, the Corporation exposed the trust property to substantial risk without any reasonably assured outweighing benefit.
The Receivers also contended that Catalyst Townsville and Catalyst Carina could not enforce their respective contractual rights over the Townsville land and the Carina land because the related transactions were not beneficial to the charitable purposes of the PC Trust or any of the alternatively alleged trusts.
As well, the Receivers alleged that Catalyst Townsville and Catalyst Carina purchased the land knowing of circumstances that would have indicated to an honest and reasonable person that the Corporation was a trustee of a charitable purpose trust and that the transactions were in breach of trust. The Receivers also alleged that the Catalyst parties induced the Corporation to breach its duties as trustee.
Separately, the Receivers alleged that the Catalyst parties acted unconscionably in their dealings with the Corporation, in persuading it to contract with them, and in the terms of the agreements. They also alleged that Catalyst Corinda pressured the Corporation to make the agreements about the Corinda land.
Finally, the Receivers contended that the Catalyst parties had acted unconscionably in pursuing their claims in these proceedings, given the internal rate of return the Catalyst parties enjoyed on the funds invested through the transactions.
On these bases, the Receivers claimed equitable compensation and an account of profits from the Catalyst parties. The Receivers also asked the Court to rescind the land sale, triple net lease, and finance agreement for the Townsville land and most of the agreements about the Corinda land.
Summary of Findings
For the reasons that follow, the parties’ claims should be determined in this way.
The alleged charitable purpose trusts
The Corporation did not hold the Carina land or Townsville land (or any other relevant property) as trustee of the alleged PC Trust or the alleged AC Trust.
From time to time, the Corporation held property, including the relevant estates or interests in the Corinda, Carina, and Townsville land, for the charitable purposes of the Church and in accordance with the Church’s constitution. The Receivers called this a general charitable trust for the purposes of the Church.
The Corporation only acted as a trustee. It had no purposes of its own, distinct from its role to hold property as trustee for the purposes of the Church.
The Corporation’s dealings with the Catalyst parties
The Corporation sold the Townsville and Carina land to the relevant Catalyst parties, leased that land and the Corinda land, and applied other property to meet its obligations under the transactions with the Catalyst parties, for the charitable purposes of the Church and in accordance with the Church’s constitution.
The evidence did not show that, in doing so, the Corporation acted other than in good faith, responsibly and reasonably, and exercising the degree of caution expected of a trustee of property held for such charitable purposes.
The Corporation applied the moneys raised by the sale of the Townsville and Carina land for those charitable purposes, including discharging debts incurred for those charitable purposes. It did so in accordance with the Church’s constitution.
The Corporation’s transactions with the Catalyst parties were not imprudent, hazardous, or wholly unsuitable for the Corporation acting as trustee of property for the charitable purposes of the Church.
The evidence did not support the Receivers’ suggestion that the Corporation sold the Townsville or the Carina land at an undervalue.
In doing these things, the Corporation did not breach the duties it owed as trustee of the relevant property. The same conclusion would be reached, had the Corporation held the relevant property as trustee of the alleged AC Trust or the alleged PC Trust.
In the circumstances found at [38] to[43] above, the Corporation had power to complete the transactions with the Catalyst parties.[19]
[19]Including the sale and lease back of the Townsville land, the borrowing to finance building the Townsville RACF, the lease of the Corinda land, the borrowing to finance building the Corinda RACF, and the charging and the sale and lease back of the Carina land.
The Catalyst parties and alleged breaches of trust
The Catalyst parties did not have subjective knowledge of circumstances that would indicate to an honest and reasonable person that the Corporation’s entry into the Townsville, Corinda or Carina transactions was a misapplication of trust property or a transfer of property in breach of trust.
In the circumstances set out in [38] to [44] above, the Catalyst parties did not induce or procure the Corporation to breach the duties it owed as trustee of the relevant land and other property.
Alleged unconscionable conduct in the transactions
The relative strengths of the bargaining positions of the Corporation and the Catalyst parties were not such that the Corporation was at a situational disadvantage. The Corporation did not suffer from an asymmetry of information in any of the transactions with the Catalyst parties.
The PresCare executives acting for the Corporation were able to understand the documents relating to the transactions. Through them, the Corporation had access to and the benefit of internal and external professional advice on the transactions and the documents. Those acting for the Corporation and those advising them were aware they were proposing that the Corporation transact with each of the Catalyst parties in a manner that was commercial in nature, namely selling and leasing land, and borrowing funds to build new RACFs or to repay existing debts. They did not ask any of the Catalyst parties to transact with the Corporation on terms other than commercial terms and the Catalyst parties did not offer to do so.
The Catalyst parties did not take advantage of any disadvantage or lack of information on the part of those acting for and advising the Corporation in a way that calls for the Court to protect the Corporation.
The Catalyst parties did not victimise the Corporation or engage in conduct that resulted in the Corporation being required to comply with conditions that were not reasonably necessary for the protection of the Catalyst parties’ legitimate interests. There was no satisfactory evidence to the contrary. There was evidence, albeit limited, that another provider of equivalent facilities and services did so on similar terms.
The Catalyst parties did not exercise undue influence on or pressure the Corporation in relation to the transactions or agreements. They did not use unfair tactics.
In the circumstances found at [47] to [51] above, none of the Catalyst parties conducted itself in a way sufficiently outside the societal norms of acceptable commercial behaviour to warrant condemnation of its conduct as offensive to conscience.
Alleged unconscionable conduct in the proceedings
Before those acting for the Corporation began to negotiate any transaction documents with any of the Catalyst parties, they knew the Catalyst parties’ purpose was to attract funds to make long-term investments in aged care facilities with agreed rates of return on the investors’ funds. It was obvious that, if the Corporation defaulted on a triple net lease or the AEFIPs, it would deny the Catalyst parties this outcome.
The Catalyst parties spent months negotiating the relevant transaction documents with those acting for the Corporation. Before the first legally binding agreement was made, between Catalyst Townsville and the Corporation, it was apparent to those acting for the Corporation that what became the AEFIPs could operate to the benefit of Catalyst Townsville if the Corporation defaulted or exercised the right to purchase the land early in the term of the triple net lease. These were the circumstances in which the Corporation and Catalyst Townsville agreed on the calculation of what became the AEFIP Payout Amounts and when they would become due and payable.
The Receivers did not show that the internal rates of return to any of the Catalyst parties over the period it held its investment in the Townsville, Corinda, or Carina land ameliorated the consequences of the loss of a lower longer-term rate of return to an extent that would make it unconscionable for the relevant Catalyst party to insist on it legal rights.
By the HOA, the Corporation agreed the circumstances in which the AEFIP Payout Amounts would become due and payable. Before then, the Corporation had offered to make all the denominational property available to satisfy the debts claimed by the Catalyst parties.
In the circumstances found at [53] to [56] above, the Catalyst parties’ pursuit of their claims in these proceedings was not conduct sufficiently outside the societal norms of acceptable commercial behaviour so as to warrant condemnation as unconscionable.
AEFIPs amounts
The AEFIP Payout Amounts became due and payable under the HOA when it was terminated on 12 May 2021.
The amount due to Catalyst Corinda was not fixed until the AEFIP Schedule was provided on 4 June 2021. This also fixed the amount of the quarterly AEFIPs to repay the Catalyst Corinda loan that had accrued since completion of the Corinda RACF and confirmed the adjustment amount payable to Catalyst Corinda.
Rent and outgoings
Although the Corporation did not occupy the Corinda RACF, under the triple net lease it became liable to pay rent and outgoings to Catalyst Corinda from the construction completion date of 3 April 2020. Catalyst Corinda terminated the lease on 25 July 2021. The rent payable for the period 3 April 2020 to 25 July 2021 is $1,185,318.50. The outgoings payable for that period are $139,740.80.
The Corporation did not impliedly agree with Catalyst Townsville or Catalyst Carina that the Corporation would pay rent and outgoings for the further period, during which the Corporation occupied and operated the Townsville RACF or the Carina RACF after 25 July 2021. Nor did the Corporation occupy or operate the RACFs on the understanding that it was obliged to pay something for the occupation of the property. The Corporation’s continued operation of each RACF from 26 July to 6 October 2021 benefited the relevant Catalyst party. This allowed it to sell the Townsville or the Carina land with the RACF as a going concern, without incurring the cost of operating the RACFs over that period. The Corporation does not owe the Catalyst parties the $1,002,788.68 claimed for “occupation rent” and outgoings for this period.
Outcome of the proceedings
The Receivers have failed in their defences (in BS 5900 of 2021 and BS 12562 of 2021) and their claim (in BS 14920 of 2021) and the Catalyst parties have failed in their claims for occupation rent and outgoings, but otherwise succeeded in their claims (in BS 5900 of 2021 and BS 12562 of 2021) and their counterclaim (in BS 14920 of 2021).
The reasons for these findings are set out below.
The alleged charitable purpose trusts
Counsel for the Attorney submitted that the Corporation constituted itself as trustee of the AC Trust in about 1929, when the Corporation received a gift of real property from William Robert Black. Counsel for the Receivers submitted that, in about 1998 or 1999, the Corporation constituted itself as trustee of the PC Trust. By each, it was contended that the Corporation held the Carina land (from 1999 or from 2006) and Townsville land (from January 2016) as trustee of the alleged trust.
No declaration of trust, no deed of gift, no testamentary bequest, and no other trust instrument was produced for either of these alleged specific charitable purpose trusts.
In the absence of evidence that either trust was created, the Attorney and the Receivers relied on the legal nature of the Church and the Corporation and their dealings with relevant property to propound their respective cases. The existence, terms, and nature of any trust on which the Corporation held the relevant property may be discerned from how the Corporation dealt with the property, said to have been the subject of each alleged trust.[20] These matters are considered below.
[20]Radmanovich v Nedeljkovic [2003] NSWSC 350 at [151]-[153] (Barrett J); Re St Bride’s Fleet Street (1877) 35 Ch D 147 (Jessel MR).
Legal nature of the Church
In November 1863, Christian adherents within the presbyterian tradition met in Brisbane and formed the Church.[21] They were ministers and elders from local congregations deriving from the Church of Scotland,[22] the Free Church of Scotland[23] and the United Presbyterian Church of Scotland.[24] The ministers and elders formed the Church on the basis of a written instrument (the 1863 Basis of Union)[25] and certain rules and forms of procedure (the Code).[26]
[21]The derivation of the various presbyterian churches with which the persons who formed the Church had formerly worshipped are of historical interest only. However, the Church was never an established church. The relevant conduct occurred after the grant of a representative legislature and responsible government in Queensland. It follows that the body of law relating to real property (and certain other property) held by an established church for its purposes and the exercise by the Crown of prerogative power independent of legislative authorisation has little relevance for the present disputes.
[22]Established in 1560 during the Scottish Reformation. In 1840, a Synod of Australia in connexion with the established Church of Scotland was formed pursuant to a recommendation of the General Assembly of the Church of Scotland: Presbyterian Temporalities Act 1840 (NSW) 4 Vic No. 18.
[23]Formed in 1843 by a schism from the Church of Scotland.
[24]Formed in 1847 by the merger of the United Associate Synod of the Secession Church (United Secession Church) with the Presbytery of Relief (Relief Church). The United Secession Church had been formed in 1820 by the union of two groups (the New Licht Burghers and the New Licht Anti-Burghers) that had emerged following the first secession from the Church of Scotland in 1732-33. The Relief Church was founded in 1761 in the second secession from the Church of Scotland.
[25]In some documents, this instrument is referred to as the “Articles of Union”.
[26]The Code comprised the Rules and Forms of Procedure of the Victorian Presbyterian Church “as far as they were applicable to the Church in Queensland.” At the times material for these proceedings, the Code was titled “The Presbyterian Church of Queensland Standing Orders and Rules and Forms of Procedure”.
The 1863 Basis of Union identified the scriptures in the Old and New Testaments as the Supreme Standard, and the Westminster Confession of Faith[27] (which it called the Church’s confession of faith), as the Subordinate Standard, of the Church. The Church’s fundamental tenets of faith in the Westminster Confession included its form of internal government by synod or assembly of ministers and elders.[28] This distinguishes churches in the presbyterian tradition from churches in the episcopal tradition, where bishops have higher or final authority, and from those in the congregational tradition, where final authority lies with the whole body of the church or congregation.[29] The ministers and elders constituted themselves as the Synod of the Church and appointed the first Moderator. The Church has upheld this form of government since its formation.
[27]The Westminster Confession of Faith agreed upon by the assembly of Divines at Westminster, with the assistance of Commissioners from The Church of Scotland. This statement was approved by the General Assembly of the Church of Scotland in 1647. It was ratified by the Confession of Faith Ratification Act 1690 (Scotland) [1690 c 7].
[28]Westminster Confession, Ch XXXI, cl I, III, and Ch XXV, cl VI.
[29]Attorney-General (NSW) (Ex rel Elisha) v Holy Apostolic & Catholic Church of the East (Assyrian) Australian NSW Parish Association (1989) 37 NSWLR 293 at 314–315 (Young J), adopting the categorisation of Miller J in Watson v Jones 80 US 679 (1871). This formulation was cited with apparent approval by Payne JA in Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Dobrijevic (Dobrijevic) (2017) 94 NSWLR 340, 360-361 [110]-[111] (Ward and Gleeson JJA agreeing).
Since its formation, the Church has been a voluntary unincorporated association. It has no legal personality distinct from its members from time to time.[30] The Church could not contract with a legal person, and any attempt to do so would be a nullity.[31] It could not acquire or hold property. An individual or a body corporate could hold property on trust for the purposes of the Church because the advancement of religion[32] is prima facie a charitable purpose, and the Church’s purposes likely included other charitable objects.
[30]Amos v Brunton (1897) 18 LR (NSW) Eq 184, 186-7; 14 WN (NSW) 69, 70 (Manning CJ in Eq); Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565, 576 [47]-[48] (Mason P; Ipp and McColl JJA agreeing).
[31]Amey & Ors v Fifer & Ors [1971] 1 NSWLR 685, 685-686 (Sugerman P; Mason JA and Taylor AJA agreeing).
[32]It has been assumed that the courts have no means of judging whether a religion is or is not for the public good, save for extreme cases. The courts proceed on the assumption that a trust for the advancement of religion is in the public interest, provided the religious beliefs, principles, observances or standards of conduct that are not illegal or contrary to law.
In 1868, the Church renamed the Synod as the General Assembly.[33] The General Assembly has the power to set down rules and directions for the government of the Church. Since 1863, these have been set out in the Code which the General Assembly has amended from time to time.
[33]Re General Assembly of the Presbyterian Church of Queensland [1981] QSC 439 at [2] (Campbell J).
Denominational Union 1900-1901
In 1900, the Church agreed to unite with other churches in the presbyterian tradition in the colonies of New South Wales, Victoria, and Tasmania and the Province of South Australia, by adopting a common Basis of Union and Articles of Agreement (together the 1900 Basis of Union). It shared the features of the 1863 Basis of Union noted at [67] and [68] above.
In July 1901, by a Deed of Union, the Church surrendered to the Presbyterian Church of Australia (the National Church) the power to determine finally in matters of doctrine, worship, and discipline. By this denominational union, the Church and presbyterian churches in New South Wales, Victoria, South Australia, Tasmania, and also Western Australia, became the members of the National Church. Like the Church, the National Church was an unincorporated association.
The denominational union was facilitated by legislation in Queensland[34] and the other colonial Parliaments,[35] which gave the 1900 Basis of Union full force and effect of law from 24 July 1901. As a constituent part of the National Church, the Church was governed under the 1900 Basis of Union, which set out how the National Church and the Church were organised and the way in which they could make decisions.
[34]Presbyterian Church of Australia Act 1900 (Qld).
[35]See, for example: Presbyterian Church of Australia Act 1900 (NSW), s 1.
In the 1900 Basis of Union, the constitution of the National Church established a “federal ecclesiastical structure”,[36] such that:
“The local General Assemblies shall retain their present names, and their autonomy shall not be further interfered with than is needful to give effect to the [1900] Basis of Union”.
[36]See the Preamble to the Presbyterian Church of Australia Act 1971 (Qld). The “federal” description of the denominational union was that of Isaacs J in Macqueen v Frackelton (1909) 8 CLR 673 (Macqueen), 705. It was adopted by Gibbs J in Attorney-General (NSW) (Ex rel McLeod)v Grant (1976) 135 CLR 587, 592. Clause 11 of the 1900 Basis of Union was similarly summarised by Chubb J in Frackelton v Macqueen [1909] St R Qd 89, 125, which was quoted without challenge by Griffith CJ in Macqueen at 683.
Interdenominational Union 1971-1977
In 1971, the Church agreed with the other members of the National Church to offer Church congregations and members the opportunity to become part of a larger church including adherents to other Christian churches outside the presbyterian tradition. The offer was facilitated by the Presbyterian Church of Australia Act 1971 (Qld) (the PCA Act) and similar legislation in other States.
The PCA Act authorised the general assembly of the National Church to negotiate with other branches of the Christian church with a view to entering into an interdenominational union.[37] In the event of an interdenominational union, the PCA Act required the general assembly of the National Church to provide just and equitable safeguards of the rights of certain communicants who did not support the interdenominational union and were able to continue as a congregation or as congregations within a national church under the 1900 Basis of Union (the Continuing National Church), and not as part of the church to be formed by the interdenominational union.
[37]PCA Act, Schedule, Part III, s 15.
The PCA Act also gave statutory effect to amendments to the 1900 Basis of Union in a form set out in a schedule and reflected in the Code. It is convenient to refer to this as the 1971 Basis of Union. This included that each of the State-based synods (including the General Assembly of the Church) was authorised to “exercise executive, administrative, pastoral and disciplinary functions over the Church within their bounds”, subject to the 1971 Basis of Union.[38] The General Assembly continued to be the final decision-maker “except in cases of doctrine and/or discipline that carry deposition or excommunication as possible judgments”, which were reserved to the general assembly of the Continuing National Church. [39] This did not affect the relevant matters noted at [67] to [74] above about the 1863 Basis of Union and the 1900 Basis of Union, which remained unchanged.
[38]PCA Act, Schedule, Part II, s 9(4).
[39]PCA Act, Schedule, Part II, s 13.
In 1977, the interdenominational union proceeded with the formation of the Uniting Church in Australia (the Uniting Church). Since then, the Church has comprised the congregations of the Continuing National Church in Queensland under the 1971 Basis of Union. This development affected property the Corporation then held on trust for the Church in the way considered at [139] to [146] below.
The General Assembly
The General Assembly governs the Church. It meets annually, and otherwise if convened.
The General Assembly may appoint from time to time:
“such committees as they think fit, prescribing membership, purpose and duties and giving other directions usually in the form of regulations.”[40]
[40]PCA Act, Schedule, Part II, s 12.
The General Assembly allocates responsibility for property and funds to its committees and boards by specific resolution or by including specific provision in the Code. These bodies then administer the allocated property or funds as authorised by the General Assembly.
The committees and boards established by the General Assembly supervise the various “departments” also established by the General Assembly. Those “departments” sit within the “Church office” composed of groups of staff with identified duties.
The General Assembly appoints a Commission of Assembly (the Commission) that supervises the committees and boards of the General Assembly between those meetings and transacts any “emergent and urgent business so that the work of the Church may not be retarded.”
Like the General Assembly, none of its committees, boards or the Commission is a legal entity. Nor is any department.
Among the boards that featured in the dealings between the Corporation and the Catalyst parties were the Finance Board and the Property Board.
Finance Board
The General Assembly elects the members of the Finance and Administration Board[41] (the Finance Board). The Finance Board has primary responsibility for the finances of the Church. It appoints the key management staff of the Church’s Finance and Administration Department and the auditor of the accounts and books of the General Assembly, its committees, and boards.
[41]Formerly the “Board of Finance”.
The Finance Board reports to the General Assembly on the balances of the various funds and accounts. It directs the investment of the Church’s funds, and it administers those funds and the enterprises and projects allocated to it by the General Assembly. Subject to a decision of the General Assembly, the Finance Board determines the rates of interest, the terms and conditions, and the security, on which the Corporation may borrow from time to time.
From time to time, the Corporation may borrow such sums of money, at such rates of interest, and upon such terms and conditions, and upon such security as the Finance Board or the General Assembly may determine. The approval of the Property Board must first be obtained, if the security is a mortgage of land.
Property Board
The General Assembly elects the members of the Property Board. The Property Board has administrative oversight of all denominational property of the Church and works cooperatively with the Finance Board in relation to all financial matters relating to property. The Property Board advises on the acquisition of land for future development of the Church and consults with the other relevant Church bodies before granting approval. It may also authorise any Church agency to administer a particular property on its behalf from time to time.
The Property Board approves the vesting in the Corporation of any land gifted to or acquired by a Church body. It may approve a request that the Corporation hold land on trust for the Church. With the prior approval of the Property Board, all land gifted to or acquired by a congregation, charge, or board or committee of the General Assembly is to be vested in the Corporation.
The Code distinguishes “congregational property” from “denominational property”.
(a)Property held by the Corporation (or other trustees) for the purposes of a particular congregation of the Church is congregational property. When the Corporation holds congregational property, it “can only be sold, mortgaged, purchased or dealt with in any way whatsoever provided the action is carried out in terms of … the Code.”
(b)Property held by the Corporation for the charitable purposes of the Church is denominational property. Denominational property is “given over” to the committees and boards of the General Assembly to which the General Assembly has allocated responsibility. The Code provides that, “[t]hese bodies do not own any property but simply administer such property as authorised by the Assembly.” Indeed:
“the Assembly has the power to change the body that administratively runs and/or uses the particular resource by changing the necessary sections of the Code, either Rules, Regulations or Constitutions.”
Gregory Rodgers[42] explained his understanding that denominational property was “owned by the State Church”, and congregational property was “owned by a congregation.”
[42]Former Moderator, PresCare Board chair and member, and Finance Board member.
The consent of the Property Board is required for the investment of Church funds by way of the purchase, sale, lease or mortgage of any freehold or leasehold property.
The approval of the Property Board is required before the Corporation may grant security over land for any borrowing.
Legal nature of the Corporation
The RECI Act and letters patent
By the Religious Educational and Charitable Institutions Act 1861 (Qld) (the RECI Act), the Parliament authorised the Governor, with the advice of the Executive Council (relevantly) to:
“issue Letters Patent … and therein to declare that any person or persons and their successors for ever holding any religious … office … to which he or they shall have been duly called or appointed in accordance with the rights laws rules or usages of the community or institution to which such person or persons should belong … shall be a body corporate by such name and style as may in and by the said Letters Patent be given to such Corporation and such person or persons shall by that name have perpetual succession and a common seal.”[43]
[43]RECI Act, s 1.
The officers of any unincorporated charitable body could request letters patent under the RECI Act provisions.
In 1876, the Corporation was incorporated by letters patent issued pursuant to the RECI Act.[44] The letters patent recited the above provision from the RECI Act and then two factual matters:
(a)First, that it had been represented to the Crown that three named persons[45] “hold and exercise the offices of Moderator, Clerk, and Treasurer of the Presbyterian Church of Queensland” and had been appointed to those respective offices “in accordance with the rites, laws, rules, and usages of the said General Assembly of the Presbyterian Church of Queensland.”
(b)Second, that it had also been represented to the Crown that the Officeholders “are desirous of being incorporated and designated by the style of THE PRESBYTERIAN CHURCH OF QUEENSLAND” under the RECI Act and “have complied with the provisions thereof, entitling [them] in that behalf.”
[44]Although the RECI Act was repealed in stages from 1908 to 1981, letters patent under the RECI Act continue in full force and effect and continue to be subject to the RECI Act by operation of the Associations Incorporation Act 1981 (Qld), s 144.
[45]Rev William Lambie Nelson, Rev Charles Ogg, and James Bryden.
The declaration in the letters patent was that the Officeholders and their “successors for ever” shall be “a Body Corporate by the name and style of THE PRESBYTERIAN CHURCH OF QUEENSLAND.”
Since 1876, the Corporation has consisted of the individuals from time to time who were successors of the original three in holding the religious offices of Moderator, Clerk and Treasurer of the Church, to which offices they had been “duly called or appointed in accordance with the rites laws rules or usages” of the General Assembly.
By the RECI Act, the Parliament gave certain powers to persons declared to be a corporation. Relevantly, these include power:
“to receive purchase acquire and possess to them and their successors … to and for the uses and purposes of the said Corporation and of the religious … institution or body or association of persons by which such person or persons and their successors shall be so called or appointed any messuages lands tenements and hereditaments of what nature kind or quality soever”
and:
“to receive purchase acquire and possess to and for the same uses and purposes any goods chattels gifts or benefactions whatsoever”.[46]
[46]RECI Act, s 1.
In the context of the RECI Act, I accept the submissions of the Receivers and the Attorney that “uses” are trusts, and “purposes” are relevant religious, educational, or charitable purposes. I reject, as anachronistic, the Catalyst parties’ submission that “uses” bears the common contemporary meaning of ways property might be applied.
I also reject the Catalyst parties’ submission that the RECI Act authorised the Officeholders to obtain and deal with property for the “purposes” of the Corporation.
Properly construed, the unpunctuated RECI Act provisions give such a corporation power to receive, hold and deal with property as trustee of a trust (“to … the uses … of the said Corporation”) for the charitable purposes of the unincorporated association in which the persons who are the corporation hold their offices (“the religious or secular institution or body or association of persons by which such person or persons and their successors shall be so called or appointed”) in accordance with the association’s constitution.[47]
[47]Bailey v Uniting Church in Aust Property Trust (Qld) [1984] 1 Qd R 42 (Bailey) at 47 (McPherson J).
Although this involves a somewhat distributive reading of the RECI Act provisions, it is the proper construction of the Act, for the following reasons:
(a)A relevant unincorporated association (such as the Church) can have religious, educational, or charitable purposes. It is not a legal person and cannot hold property as a trustee. So, it can have “purposes” but not “uses”.
(b)A RECI Act corporation (such as the Corporation) can hold property on trust for the charitable purposes of an unincorporated association (such as the Church). It can have “uses”.[48]
(c)The RECI Act did not require a RECI Act corporation (such as the Corporation) to have a constitution. A RECI Act corporation may have no constitution separate from the constitutional documents of the unincorporated association (such as, in the case of the Church, the Basis of Union and the Code) for whose purposes it was incorporated and whose appointed officers are the corporation. Nothing in the RECI Act indicates a legislative intention that a RECI Act corporation, once declared, could have a purpose of its own, distinct from the purposes of the unincorporated association for whose purposes it may hold property. A RECI Act corporation need not have “purposes”.
(d)This interpretation is consistent with the express purpose of the RECI Act, namely “to provide facilities for the transmission and management of estates properties and effects granted or dedicated to religious educational or charitable uses”. It provides a coherent operation of the RECI Act consistent with that distinct purpose.
(e)It gives meaning to every word in the provision.[49]
(f)It accords with the conclusion reached by McPherson J in Bailey, that such a corporation:
“fulfils its intended role, which is that of a repository of the property of the association, holding or acquiring that property, as s. 1 provides, ‘for the uses or purposes of the Corporation and of the religious or secular institution or body or association of persons’ by which the office holders and their successors are appointed; or in other words, on trusts (which are, having regard to the title to the Act, ordinarily charitable) that accord with the purposes and constitution of the unincorporated association.”[50]
(g)A RECI Act corporation has the rights and powers the Crown is authorised to confer by letters patent under the RECI Act. As a matter of statutory interpretation, a RECI Act corporation may do “whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorized” save for things expressly prohibited.[51] Such ancillary rights and powers may be taken to be indirectly or impliedly authorised by the express grant. A RECI Act corporation could not undertake a trust beyond the object for which it was established.[52]
(h)The RECI Act predated the Companies Act 1862 (UK),[53] which was the first enactment to provide for the incorporation of companies limited by guarantee and for the incorporation of “associations” not formed for the purpose of business or trading as companies limited by guarantee or by shares. That Act, and Queensland statutes adopting its provisions, allowed for the incorporation of a proprietary company limited by shares with charitable purposes[54] or a company limited by guarantee with charitable objects. Each could hold property for its own charitable purposes identified in its constitution.
[48]It cannot hold property on trust for an unincorporated body as such because the unincorporated body is not a legal entity or a charitable purpose.
[49]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [71] (McHugh, Gummow, Kirby and Hayne JJ).
[50][1984] 1 Qd R 42 at 47, citing WB Campbell J in Serbian Orthodox Ecclesiastic School Community “Saint Nikolas” Queensland v Vlaislavljevic [1970] Qd R 386 at 393.
[51]Attorney General v Great Eastern Railway Co (1880) 5 App Cas 473 at 478 (Selborne LC).
[52]Incorporated Society v Price (1844) 1 Jo & Lat 498.
[53]25 & 26 Vict c 89.
[54]Such as the corporations considered by Parker J in Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238 (Grain Technology (No 3)).
In addition to receiving and holding property as trustee for the charitable purposes of the unincorporated appointing entity, the RECI Act also gave such a corporation power:
“to mortgage charge or alienate all or any of the said messuages lands tenements hereditaments goods chattels gifts or benefactions provided such a mortgage charge or alienation be not contrary to the gift grant or dedication of the original donor or of the constitution of such body or association of persons and that the moneys to be raised thereby shall be applied to the same uses and purposes”.
For the reasons noted at [104] above, the provision should be construed in the same manner as in [101] above, so the effect of it is that:
(a)A RECI Act corporation holding property on an express trust must not mortgage, charge or alienate it in breach of the terms of the express trust (“contrary to the gift grant or dedication of the original donor”) and the moneys raised by the dealing must be applied to the same express trust (“the same uses”);
(b)A RECI Act corporation holding property for the charitable purposes of an unincorporated entity, but not on an express trust, must not mortgage, charge or alienate it in a way contrary to the constitution of the unincorporated entity (“such body or association of persons”) that appointed the persons who are the corporation; and
(c)A RECI Act corporation must apply moneys raised by a mortgage, charge or alienation of property, held as trustee of a trust (whether for the charitable purposes of an unincorporated entity or for more specific purposes) for the same purposes.
A RECI Act corporation (like the Corporation) otherwise has the powers of a natural person, subject to any limitation in its constitution.[55] The only constitutional documents of the Corporation are the letters patent and the relevant provisions in the Code.
[55]Victoria Park Golf Course Inc [2001] QCA 528 at [9] (McPherson JA), citing Bonanza Creek Gold Mining Co v The King [1916] 1 AC 566, 583. See also: Re the Trusts Act of 1984 and the appointment of a new trustee in respect of the Assemblies of God in Australia (Ayr Assembly); Sirris v Malamoo [1985] QSCFC 61 (BC8521013) at pp 6-7 (McPherson J for the Full Court).
As the Attorney submitted, the RECI Act did not authorise the Crown to create or declare a trust. It merely “facilitated the creation of trustee corporations.” The letters patent recorded the Officeholders’ desire to be incorporated as the Corporation under the RECI Act. In that form they could receive, purchase, or acquire property as trustee of a trust for the charitable purposes of the Church in accordance with the constitution of the Church.
Unlike Acts for the benefit of a particular church or unincorporated body, the RECI Act did not authorise the Crown to vest property in a corporation declared by letters patent. The legal holders of relevant property had to take some action to vest the property in the RECI Act corporation. Property could be transferred from an existing trustee who held it on trust for a relevant purpose, or it could be given to the RECI Act corporation by a donor or bequeathed by a testator to be held on trust for that purpose.
There is no evidence for the Attorney’s contention that a “Church Religious Trust” was “created upon founding of the Church” in 1863 with the sole purpose of “the advancement of religion in accordance with the tenets of Presbyterianism”. No settlor, no declaration of trust, no trust property, and no trustee of such a trust has been identified. Before the Corporation was incorporated, Parliament had created trusts to hold specific property on trust for particular congregations of the Church.
When the Parliament enacted the Presbyterian Church Property Act 1909 (Qld) (the 1909 Act), it empowered the General Assembly to declare that the 1909 Act applied to any:
“real or leasehold property now or hereafter held by any person in trust for the Presbyterian Church of Queensland generally, … or for any other purpose in connection with that church”.[56]
[56]Presbyterian Church Property Act 1909 (Qld), Definition of “Church Property” in s 2.
The effect of such a declaration would be to vest the real property estate or interest in the Corporation “absolutely”.[57] With the consent of a congregation of the Church, the General Assembly could also vest in the Corporation, any property held on trust for the purposes of the congregation (or for a purpose in connection with the congregation).
[57]Presbyterian Church Property Act 1909 (Qld), s 3.
The Catalyst parties submitted that the 1909 Act operated so that, when property was vested “absolutely” in the Corporation, both the legal and the beneficial interests were vested. I reject this submission. The 1909 Act does not evidence a legislative intention to extinguish an existing charitable trust or to allow the Corporation to deal with property, formerly held on trust, free from the legal and equitable restraints that applied to it as trust property. It operates to vest the absolute estate or complete legal interest in the Corporation, without a complete beneficial interest.[58] The property remains trust property, whether held for the purposes of the Church or of a particular congregation. The decision in Re James Stewarts’ Will Trusts[59] may be understood to treat the “absolutely” in the 1909 Act in the same way.
[58]cf Re Stable [1957] St R Qd 90, 98, 112 (Jeffriess AJ).
[59][1962] QWN 24.
The Church and the Corporation
As the Receivers and the Attorney submitted, the Church and the Corporation are inextricably connected. The Code deals with the link between the Church and the Corporation, in respect of property, in the following relevant ways.
The Officeholders
In the Code, the Church recognises the Officeholders for the time being as forming the Corporation. The Officeholders are not a board or committee of the General Assembly. Nor do they otherwise constitute a decision-making body within the Church. As a group, they do not have governance powers under the Code.[60]
[60]In this respect, the Corporation is quite different from the corporation the subject of Re Travis; Mant v Attorney-General [1911] St R Qd 216 FC, which was the synod or “governing body” of the Church of England for the Diocese of Brisbane.
The General Assembly, the Finance Board, and the Property Board may give directions to the Officeholders to sign and seal documents with the Common Seal of the Corporation. They must report every sealing to the Finance Board.
Together with the Deputy Clerk, the Officeholders are Officers of the General Assembly or “Assembly Officers”. As such, they have:
“the right to participate with the privileges of an associated member (…) at all meetings of, and consultations with, Assembly appointed Committees and Boards of which they are not ex officio members.”
The Receivers submitted that the Officeholders owed fiduciary duties as members of a trustee corporation. This may be accepted, but says little about the content of their duties, and less about the scope for them to exercise power independently of the General Assembly or its boards and committees in accordance with the Code.
The right of the General Assembly to govern the Church and decide on its activities and priorities is necessary to the continuance of the Church as a presbyterian association. To afford the Officeholders, as the Corporation, a power to determine where and how trust property is to be applied for the charitable purposes of the Church, would be to give the Officeholders a power contrary to “the fundamental tenets or doctrine of the 1900 Basis of Union which formed the terms (or some part of them) subject to which the property had been held in trust since 1900”.[61] The RECI Act does not express an intention to take away or modify a fundamental tenet or doctrine of a religious association as a condition of using the facility offered by the Act.[62] Absent an express intention, the Court should interpret the RECI Act to not infringe freedom of religion in such a way.[63]
[61]Bailey at 50 (McPherson J).
[62]cf Bailey at 44 (Sheahan J).
[63]Human Rights Act 2019 (Qld), s 20, s 48(1).
The Corporation was to apply the property, held on trust for the purposes of the Church, as the General Assembly directed, in accordance with the Code. The General Assembly, through its internal governance processes, could determine where and in what manner such property was to be applied.
This is consistent with the evidence led by the Receivers from General Assembly and Finance Board member Mr Knapp, that the Officeholders were:
“the signatory body of the Corporation, who affix signatures and seals to documents as necessary and … act at the direction of the Congregations or General Assembly and its Boards and Committees.”
In this sense, the Corporation (and its three members) might be thought to be in an analogous position to the trust (and trustees) considered by Street J in Warringah Shire Council v Salvation Army (NSW) Property Trust.[64] There, the legislature had vested in trustees “every asset in New South Wales which belonged to the Salvation Army in the year 1929” and had given the trustees “the widest powers of management and control … for the purpose of furthering the aims and objects of the Salvation Army”.
[64](1943) 15 LGR (NSW) 91.
His Honour concluded that the purpose and design of the Act was to vest the title to the property in the trustees “for the purpose of convenience of management and administration, and for facilitating the use or disposal of any such property”, and that the object of the creation of the statutory corporation was “to render certain the title of all the Army’s property and assets in this State”. In whatever the trustees did with their statutory powers “the benefit must go to the Salvation Army”. As his Honour noted:
“The Trustees in one sense are agents for the Army, although this is not an accurate way of describing their legal position. The fact that the title of the property was vested in them constituted them, in name and in fact, as trustees, but the whole of their powers were designed to be exercised for the single purpose of furthering the aims and objects of the Army, and under the control and power of direction possessed by the Army through the General. While the legal ownership was in the Trustees, the beneficial ownership in every sense of the term was in the Salvation Army, and the Legislature itself by the language which [it] has used … clearly recognized that it was the Salvation Army which was properly to be regarded as the body beneficially entitled under the trusts created by the Act in question.”[65]
[65]At 99.
This is consistent with the submission put for the Receivers in the opening that the Church adopted “the mechanism provided by the RECI Act to solve the common church problem”:
“How are we going to put church property in church ownership? We will do it by this corporation and this corporation will hold the church property on trust for the purposes of the church.”
Considered as trustees, the Officeholders were obliged to act “with the care of an ordinary prudent businessperson” and inform themselves of matters which are relevant to a decision, including advice from appropriate expert advisers.[66] They were not under a duty to avoid incurring risks, which are an inevitable aspect of buying and selling land, constructing buildings, and providing facilities and services to the aged and infirm. It is desirable that trustees in doubt as to a course of action should seek judicial advice rather than proceed and then seek relief.[67]
[66]Commissioner of Taxation v Bargwanna (2012) 244 CLR 655, 661-2 [10]-[11].
[67](2012) 244 CLR 655, 663 [14].
If, at any time, the Officeholders were concerned that a direction of the General Assembly[68] about property may not be for the purposes of the Church or may not have been given in accordance with Church constitution and practice, then, as the Corporation, they could seek judicial advice, like any other trustee.
[68]Or such a direction of the Commission or a board or committee of the General Assembly.
Property held for the purposes of a church
The Court applies the ordinary law relating to trusts for charitable purposes to persons holding property on trust for the purposes of a church. However, in construing any instruments relating to such property, the Court looks at the instrument as part and parcel of the whole machinery by which the church is kept together and carried on.[69]
[69]Doctor Warren’s Case (1835) Grindrod’s Compendium, 371, 373, 376; Long v Bishop of Cape Town (1863) 1 Moo PCC (NS) 411, 461.
As Griffith CJ explained, the mutual relations and obligations of church members are “regulated by the terms of an agreement or consensual compact to which they are parties.”[70] In Bailey, McPherson J explained the “social compact” by which members joined as a church:
“That agreement or compact embodies or includes, expressly or by implication, certain tenets of faith or common beliefs as well as the form of government adopted for the regulation of the affairs of the individuals who comprise that church. It is these features, as well as the name and history, that serve to identify a particular church and to distinguish it from other churches.”[71]
[70]Macqueen (1909) 8 CLR 673, 679.
[71]Bailey at 45. The committees and boards are required to present an annual report to the General Assembly about the work under their care.
This approach accords with Professor Scruton’s observation that:
“Religion is a way of life, involving customs and ceremonies that validate what matters to us, and which reinforce the attachments by which we live. It is both a faith and a form of membership, in which the destiny of the individual is bound up with that of a community. And that is a way in which the ordinary, the everyday and the unsurprising are rescued from the flow of time and re-made as sacrosanct. A religion has its accumulations of dogma, but dogmas make no real sense when detached from the community that adheres to them, being not neutral statements of fact, but collective bids for salvation.”[72]
[72]Scruton, R, Our Church: A personal history of the Church of England, Atlantic Books, London 2012, p 6.
In ASIC v Kobelt,[143] Gaegler J explained unconscionable conduct according to the common law and then statutory unconscionability, by reference to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act):
[143](2019) 267 CLR 1 (Kobelt).
“In Australia, the central concern of a court administering equity in identifying conduct as unconscionable has long been understood to be to relieve against a stronger party to a transaction exploiting some special disadvantage which has operated to impair the ability of a weaker party to form a judgment as to his or her interests.
Section 12CA of the [ASIC Act] gives statutory expression to that equitable conception of unconscionable conduct. The section’s prohibition against engaging in conduct in relation to financial services that is “unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories” operates to impose an additional statutory sanction on conduct that is unconscionable in equity. Suggestions that its reference to conduct that is unconscionable within the meaning of the unwritten law imports some more expansive and less precise denotation are contradicted by extrinsic material explaining the precise choice of statutory language and have been properly refuted.
Section 12CB of the ASIC Act does something more. The section’s prohibition against engaging in conduct in connection with the supply or possible supply of financial services ‘that is, in all the circumstances, unconscionable’ is expressed to be ‘not limited by the unwritten law of the States and Territories relating to unconscionable conduct’. Those words make clear that the statutory conception of unconscionable conduct is unconfined to conduct that is remediable on that basis by a court exercising jurisdiction in equity. Furthermore, determination by a court exercising jurisdiction in a matter arising under the section of whether conduct is, in all the circumstances, unconscionable is required by s 12CC to be informed by the numerous considerations specified in that section, each of which has the potential to bear positively or negatively on the characterisation of conduct as conduct that is or is not unconscionable, and each of which must be taken into account if and to the extent that it is applicable in all the circumstances.
…
The correct perspective, in my opinion, is that unambiguously adopted by the Full Court of the Federal Court in relation to materially identical provisions in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [[144]]. The correct perspective is that s 12CB operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of a court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standard in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances.
The Commonwealth Parliament’s appropriation in s 12CB of the terminology of courts administering equity in the expression of the normative standard which the section prescribes serves to signify the gravity of the conduct necessary to be found by a court in order to be satisfied of a breach of that standard. ‘Unconscionability’, as has been long and well understood, ‘is not a slight matter, and behaviour is only unconscionable where there is some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person’s legal rights’.
…
… what Parliament’s appropriation of the terminology of equity in the expression of the normative standard in s 12CB does not do is to authorise a court exercising jurisdiction in a matter arising under that section to dilute the gravity of the equitable conception of unconscionable conduct so as to produce a form of equity-lite. The appropriation of the terminology of equity does not allow a court to adopt a process of reasoning which starts with the equitable conception of unconscionable conduct, involving exploitation of a special disadvantage, and then uses considerations identified in s 12CC to water down the court’s assessment of what amounts to a special disadvantage or to allow the court to arrive more easily at an assessment that conduct amounts to exploitation.
[The] conduct proscribed by the section as unconscionable is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience. …
The judgment required of a court exercising jurisdiction in a matter arising under s 12CB is a heavy one. For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society. Those values are not entirely confined to, or entirely removed from, the values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct. They include respect for the dignity and autonomy and equality of individuals. They include respect for the cultural diversity of communities.”[145] (citation omitted)
[144][2013] ATPR 42-447 at 43,463 [23], 43,467 [41].
[145]At 36-40 [81]-[83], [87]-[90], [92]-[93].
The Receivers alleged that the Catalyst parties acted unconscionably in persuading the Corporation to transact with them, and that the Catalyst parties pressured the Corporation to transact about the Corinda land.
The Receivers failed to make good these allegations.
Catalyst’s position
When negotiations with the PresCare executives began, Catalyst was just two individuals, Mr Laboo and Mr Cunningham. Mr Laboo had degrees in law and mathematics. Mr Cunningham in accountancy. They both had experience in finance. Mr Laboo had management experience in the retirement and aged care, and childcare sectors. They had not engaged any external professional advisers or consultants.
During the negotiations, the Catalyst parties were working out the detail and testing the feasibility of a new way of investing in RACFs. They had only an idea, their enthusiasm, and no real working capital. The Catalyst model was untested. They faced the challenge of persuading potential RACF operators to adopt the Catalyst model and persuading investors to fund the RACF operators willing to use it. Until and unless they did so, the Catalyst parties had no income. Mr Laboo and Mr Cunningham were working on the negotiations with only the hope that their idea would bear fruit, and the Catalyst parties (and the Catalyst model) would become valuable.
On 26 June 2017, Catalyst signed a “Terms Sheet” with Carnegie, under which Carnegie was to assist the Catalyst parties in raising funds from investors. On 27 July 2017, Carnegie introduced Sunsuper to the Catalyst model and Townsville proposal. On 4 October 2017, Carnegie established the “Carnegie Catalyst Healthcare Real Estate Trust”. From 22 December 2017, Sunsuper would provide funding through this trust for the Townsville transaction. It is likely from this time that the Catalyst parties had access to funds to remunerate Mr Laboo and Mr Cunningham for their work and to cover expenses incurred to that point in time.
The Corporation’s position
Throughout the negotiations with the Catalyst parties, the Corporation was well-resourced. It had over 60 people working in the PresCare department as corporate support for its RACFs and broader aged care services businesses. These staff and their predecessors had been managing five or six RACFs for 10 to 15 years. The PresCare-operated RACFs were generating about $80 million in annual revenue and employed over 900 staff.
Since April 2009, PresCare staff had been administering the Carina RACF, known as Vela, which the Corporation had built on the vacant Carina land in 2008-2009. It had administered a retirement living facility at Corinda developed by the Corporation, which it had sold in 2016 for $26.4 million.
Since 2014, through the PresCare executives, the Corporation had been exploring developing an RACF on the Townsville land. Since the end of 2015, they had the advice of Bentleys about two models for operating an RACF on the site.
Some gauge of the resources available to the Corporation may be gained from the senior PresCare staff and other advisers. Some of these are noted below.
CEO Mr Skelton
Mr Skelton remained as the full-time PresCare CEO until 20 February 2020. Mr Skelton had 20 years’ experience in aged care. He was a qualified CPA with a degree in Business, an MBA in strategic management, and a member of the Australian Institute of Company Directors. Mr Skelton’s duties included managing the overall operations and identifying potential opportunities for those operations to improve, grow, and diversify. He had overseen a period of rapid growth of PresCare operations between 2013 and 2015. Before the first contact with the Catalyst parties, Mr Skelton was working on plans to build and operate new RACFs, including at Townsville and Corinda. He was on the Finance Board and was a Director/Governor of St Andrews Toowoomba Hospital.
The Receivers did not call Mr Skelton. I reject the Receivers’ submission that the Court should infer that, under Mr Skelton, PresCare was not “transaction literate”.
CFO Mr Lynch
Mr Lynch was full-time PresCare CFO from early 2012 until December 2018. He had been a chartered accountant since 1985. He had experience as a director of finance and CFO in other organisations before he joined as a PresCare executive. He had been an auditor, and had worked in finance management roles in the not-for-profit sector, as well as in business management and tax services. As CFO, he was generally responsible for all aspects of the finances, including arranging external funding and managing the relationship with financiers, modelling the financial implications that proposed transactions were expected to have on finances, briefing the PresCare Board in relation to the financial position and the financial implications of proposed transactions, and briefing the Finance Board from time to time in relation to those matters. As well as the PresCare operations, Mr Lynch’s team did the finance and accounting work for the Church. So, he had an oversight of the financial affairs of the Church (and so the Corporation) as a whole.
The head office staff working under Mr Lynch included about ten qualified accountants and business advisers, who were financially qualified and literate.
Financial Controller Mr Playford
Mr Playford was the PresCare Financial Controller from June 2017 to March 2020. He was experienced in financially modelling commercial transactions. He assisted Mr Lynch in analysing financial information and projections provided by the Catalyst parties about the Townsville and Corinda transactions. The Receivers did not call Mr Playford.
COO Mr Bosel
Until mid-2017, Mr Bosel was PresCare COO. He had 18 years’ experience in the UK Aged Care industry, including on a number of UK advisory and industry boards, and in senior positions in major companies. He had worked in the Australian retirement industry since 2006. He also had consultancy roles for aged care related projects in Australia and Singapore.
GM Property Development Ms Wilkinson
Ms Wilkinson was PresCare general manager of property development. Ms Wilkinson was responsible for managing operations related to potential new RACFs and upgrades to existing RACFs.
General Counsel Ms Hickey
Ms Hickey was PresCare General Counsel from about May 2017 until May 2019. The Corporation had external lawyers who had been acting and advising and had provided legally qualified staff to work on secondment within the PresCare office. The Receivers did not call Ms Hickey.
KPMG
In addition to Bentleys’ advice on developing an RACF on the Townsville land, the Corporation engaged KPMG to provide independent advice on the Townsville transaction, on the specific differences that emerged in the Corinda transaction, and on the Carina transaction. The Receivers did not call any of the KPMG partners or staff involved in advising the PresCare Board and PresCare executives.[146]
[146]In particular, Mr Zubrik, Ms Manouchehri and Mr Ford were not called.
McCullough Robertson
Ms Hickey and other PresCare executives were advised by McCullough Robertson. The team at McCullough Robertson who advised Ms Hickey and the PresCare officers included a partner, Ms Conlon, a senior associate, Ms Chan, and a lawyer, Mr McPhee.[147]
[147]The Receivers did not call Ms Conlon or any of the McCullough Robertson staff.
Board supervision
The work of the PresCare organisation was also supervised by three General Assembly boards: the PresCare Board, the Finance Board and, to some extent, the Property Board.
Between 2013 and 2020 the common figure across all three boards was Mr Harris. He was Treasurer of the General Assembly, and so was chairman of the Finance Board and an ex officio member of the other boards for the whole of this period.[148] Mr Harris was a chartered accountant and registered auditor. He had been head partner of the Gold Coast office of KPMG Peat Marwick (and its predecessor firms) from 1981 to 1996, when he retired at 65 years of age. He had continued to work as a financial planner from 1996 to 2012.
[148]As Treasurer, Mr Harris was one of the Officeholders who constituted the Corporation.
Mr Harris was called and gave evidence. He impressed as an astute and careful person. This likely reflected his long experience as an accountant and adviser. He was a frank and honest witness. As the relevant events occurred some years ago, appropriately Mr Harris deferred to contemporaneous written records of them. His deference to the collective decisions of the General Assembly and its boards was in keeping with the presbyterian form of government. In this respect, I do not regard his answers as an attempt “to diffuse attribution”.
According to Mr Harris, the PresCare Board understood the importance of “economies of scale” and took opportunities to increase the scale of the RACF operations. He also said the Board had a preference to “create greenfield sites”.
Unlike Mr Harris, the other Board members, including the Moderators and Clerks of the General Assembly, did not have backgrounds in finance or commerce.
The information
Mr Skelton and Mr Lynch knew the Townsville transaction was the Catalyst parties’ first transaction and the first transaction using the Catalyst model. When Mr Laboo or Mr Cunningham referred to a 0.5% establishment fee as “usual”, it is unlikely Mr Skelton and Mr Lynch were misled into thinking the Catalyst parties had done like transactions before and charged that fee for them, as the Receivers alleged. Mr Skelton and Mr Lynch had been dealing with other potential financiers for the Townsville RACF. Sensibly, they would have understood it as a usual fee for arranging financing for such a large project involving a land purchase, long-term lease, and construction finance.
The Corporation was much better placed than the Catalyst parties to assess the risks involved in the operation of the RACFs. The transactions were developed, examined, and concluded using models originally developed for the Corporation by its auditors and advisers Bentleys, before any dealings with the Catalyst parties. After negotiations with Catalyst began, Mr Playford further developed and updated the models with reviews and input from KPMG.
When the Catalyst parties began seeking funds to invest in the Townsville RACF, Mr Cunningham of Catalyst told Mr Lynch that “a number of banks” Catalyst had approached had expressed concerns about the level of demand for beds in Townsville and, later, that the banks were asking for greater historical information about EBITDA per bed on the Corporation’s RACFs. As the Receivers describe it, in substance this was a concern about the assumption that the Townsville RACF would produce starting annual EBITDA per bed of $17,000. Catalyst raised these concerns with Mr Lynch because he represented an experienced RACF operator, which had supplied the original information in the model for the Townsville RACF.
In March 2017, during due diligence for the Townsville transaction, Mr Lynch had given Mr Cunningham the December 2016 and January 2017 PresCare management accounts for the former DSM RACFs that were still operating and the Carina RACF that had been added to the PresCare operations. Overall, the RACFs were expected to make a loss of $1.249 million for the 2016/2017 financial year. The newer Carina RACF was expected to achieve EBITDA of $17,000 per bed. The older facilities were not. Mr Cunningham told Mr Laboo that this “gives some comfort around” a $17,000 EBITDA per bed for the proposed Townsville RACF, given the age of the existing PresCare portfolio.
The agreements for all the transactions were executed before the Corporation, through the PresCare staff, began to operate the Townsville RACF, the first of the Catalyst-funded RACFs. The relevant decisions were made on the basis of forecasts and models of what might be expected to occur when the Corporation, through PresCare, began to operate the RACFs.
The Receivers did not allege that Mr Laboo or Mr Cunningham deliberately withheld any relevant information from the PresCare executives or their advisers to take advantage of the Corporation. Nor was that contention put to them in cross-examination.
The transactions
The transactions with the Catalyst parties were new, but not difficult to understand. The Receivers’ characterisation of them as “sophisticated new inventions of cutting-edge fund managers” overstated the position. In Townsville and Carina, the Corporation was exchanging freehold titles for 40-year leasehold interests. In Corinda, it was taking a 40-year lease.
In each instance, the Corporation was borrowing to finance the construction of the RACFs on the land, which it could use for 40 years, in a way that allowed it to make two types of payment. One characterised as rent and the other as a capital payment. The parties shared an understanding that this division would allow the Corporation to use income to make rent payments over the term of the lease and to draw on RADs to make the capital payments over the agreed period of about ten years.
The Catalyst parties were seeking a long-term return on its investment (comprised of the land purchase and the construction loan) to meet the preference of superannuation fund managers, such as Sunsuper. The Corporation, through the PresCare Board, was seeking to build and operate newer, larger RACFs, and diversify away from the older, loss-making portfolio of RACFs it had taken over from the DSM. It also had a short-term goal: to refinance or repay an existing debt owed to the CBA.
The Corporation had the benefit of internal and external advice on the transactions and the documents. Those acting for the Corporation were able to understand the documents relating to the transactions. In this way, the Corporation was able to know, with a reasonable degree of certainty, the risks it would undertake in transacting with the Catalyst parties.
The Corporation, relying on the advice of the experienced PresCare executives, contracted with the Catalyst parties to fund those plans and to refinance the existing CBA debt. The Corporation was not tied or under any obligation to contract with a Catalyst party for any of the relevant transactions. The continuation of the relationship across two further sites was not the involuntary consequence of the Townsville transactions. These were choices made by the Corporation, with the benefit of advice. Those acting for the Corporation had explored traditional bank finance options as a means of funding ambitious plans to expand its aged care offering. They knew of the option to defer those plans (or revise them) until traditional funding sources became available. There was no element of exploitation or predation,[149] when assessed against the normative standard of acceptable commercial behaviour.
[149]Kobelt (2019) 267 CLR 1, 17-18 [15] (Keifel CJ and Bell J), citing Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 427 [124] and Thorne v Kennedy (2017) 263 CLR 85 at 103 [38].
Given the nature of the dealings and the relevant experience and resources available to the Corporation, through the PresCare executives, the PresCare Board, KPMG and McCullough Robertson, as between the Corporation and the Catalyst parties, the Corporation did not suffer from an “asymmetry of information” in any of the transactions, as the Receivers contended. The Catalyst parties did not take advantage of any disadvantage or lack of information on the part of the Corporation on any topic in a way that calls for the Court to protect the Corporation from the consequences of its decisions.
The relative strengths of the bargaining positions of the Corporation and the Catalyst parties were not such that the Corporation was at a “situational disadvantage”.
Alleged exploitation
Having heard the oral evidence of Mr Laboo and Mr Cunningham, I am satisfied that they genuinely believed in the merits of the Catalyst model and behaved honestly in their dealings with the Corporation. They planned to use the model to attract investment in other RACFs with other not-for-profit operators. In their exchanges with the Corporation, through the PresCare executives, the Catalyst parties exhibited good faith and fair dealing. There was no trickery or sharp practice on the part of the Catalyst parties. There was no evidence that they victimised the Corporation. The Receivers failed to prove their allegations that the Catalyst parties engaged in conduct that resulted in the Corporation being required to comply with conditions that were not reasonably necessary for the protection of the Catalyst parties’ legitimate interests.
Although the Catalyst parties wanted faster decisions and commitments from the Corporation about each of the transactions, the Corporation took its time. None of the witnesses holding positions in the Church or PresCare at the relevant times said they were pressured by Mr Laboo or Mr Cunningham.
In November 2017, the negotiations between the PresCare executives and Catalyst Corinda, initiated by Mr Skelton eight months earlier, were continuing without an end in sight. Mr Laboo identified “pressure PresCare” as amongst potential options. Mr Laboo did not choose that option. He recommended “continue to pursue PresCare with urgency” for execution of a heads of agreement. It seems he had in mind a December 2017 deadline. The negotiations dragged on regardless. The Corinda heads of agreement would not be signed until 27 March 2018. The building contract would not be signed until 31 October 2018. The first draw-down on the construction loan would not be until January 2019. I reject the Receivers’ submission that this course of action by Catalyst was “an application of pressure” and their contention that it could be “properly characterised as against conscience.” Regrettably, this is typical of some of the Receivers’ overwrought submissions.
There was no evidence the Catalyst parties exercised undue influence or pressure on the Corporation. There was no evidence they used unfair tactics in relation to the transactions.
There was no evidence of any element of exploitation by the Catalyst parties in the dealings between any of them and the Corporation. The Catalyst parties’ dealings with the Corporation did not have the effect of being exploitative and unfair. The indicia of unconscionability in s 22(1) and (2) of the Australian Consumer Law were not present.
Alleged unconscionable conduct in the proceedings
The Receivers also alleged that the Catalyst parties have acted unconscionably in pursuing their claims in these proceedings, given the internal rate of return the Catalyst parties enjoyed on the funds invested through the transactions.
The Corporation knew the Catalyst parties’ purpose was to make long-term investments in real property, between 10 and 40 years, with agreed rates of return on the funds of the investors in the CHRET. As Mr Laboo explained, one of the fundamental premises of the Catalyst model was to hold the underlying property long term and derive long-term income from the capital invested. When the Corporation defaulted, it denied the Catalyst parties this outcome.
The Receivers did not show that the internal rates of return to the Catalyst parties over the short period of their investments ameliorated the adverse consequences of the loss of a lower long-term rate of return to an extent that would make it unconscionable for the Catalyst parties to insist on their legal rights. The Receivers’ submissions seem to treat the short-term capital gains on the sale of the RACFs as the same as the anticipated return on funds intended to be invested over one to four decades. The former were subject to property price variations and government policy decisions, and other less predictable factors. The Catalyst parties were not seeking investments with those risks. The Corporation’s defaults forced that outcome, but it left the Catalyst parties to seek out, examine, and procure replacement investments with the attendant costs and delay.
Before binding agreements were made, it was apparent to those acting for the Corporation that the AEFIP Payout Amounts could operate to the apparent benefit of the Catalyst parties if the Corporation defaulted early in the term of the leases. By the HOA, the Corporation agreed to pay the AEFIP Payout Amounts claimed by the Catalyst parties (and that this agreement would be legally binding) after the Corporation knew it could not continue to operate the RACFs and meet its contractual obligations to the Catalyst parties, if the conditions in the HOA were not satisfied.
There is no element of “double dipping” in seeking to recover moneys owed and unpaid.
In the circumstances, the Catalyst parties’ pursuit of their claims in these proceedings was not unconscionable.
Conclusion on unconscionable conduct claims
Considering the evidence as a whole, the Receivers failed to prove that, in any respect, the Catalyst parties conducted themselves in a way sufficiently outside the societal norms of acceptable commercial behaviour as to warrant condemnation of their conduct as offensive to conscience.
Rent and outgoings
Corinda triple net lease
Although the Corporation did not occupy the Corinda RACF, under the triple net lease it became liable to pay rent and outgoings to Catalyst Corinda from the construction completion date of 3 April 2020. During the forbearance period, Catalyst Corinda made no demand for rent or outgoings and the Corporation paid none.
The Catalyst parties terminated the triple net leases on 26 July 2021. The rent payable for the period 3 April 2020 to 25 July 2021 is $1,185,318.50. The outgoings payable for that period are $139,740.80.
Townsville and Carina RACFs
Catalyst Townsville and Catalyst Carina do not assert any express agreement that the Corporation would pay rent and outgoings for any further period during which the Corporation might occupy and operate the RACFs on the Townsville and Carina land. They assert an implied agreement to that effect or an understanding on those terms.
I do not accept the Catalyst parties’ submission that the Corporation, by continuing to occupy and operate the RACFs, and the relevant Catalyst parties, by not recovering possession of the RACFs from the Corporation, impliedly agreed that the Corporation would pay rent and outgoings to the relevant Catalyst parties or shared an understanding that the Corporation would pay for its continued occupation and use of the RACFs.
Residents occupied the Townsville and Carina RACFs. The lives of those residents would have been severely disrupted without an operator of their RACF. The Corporation, through the PresCare organisation, continued to occupy and operate the RACFs from 26 July to 6 October 2021. This conduct by the Corporation allowed the relevant Catalyst parties to sell the Townsville and Carina land with the RACFs as going concerns. It allowed the residents of the RACFs to continue to have the services essential for them to remain in the RACFs. The Corporation’s conduct saved the relevant Catalyst parties the costs of operating the RACFs themselves or paying others to do so.
This is a sufficient explanation for why the Catalyst parties did not seek to recover possession of the Townsville and Carina RACFs until completion of the sale to the incoming owner and operator. It is a more compelling explanation for the conduct of the parties than an implied agreement or understanding asserted by the Catalyst parties.
Catalyst Townsville and Catalyst Carina relied on the decision in Salehi v Salehi.[150] As Chernov JA explained in Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd,[151] the restitutionary claim also depended on the existence of an agreement between the parties to the effect that the occupant will be the tenant of the owner and pay for its occupation.[152] Here, the circumstances negative the implication of an agreement to pay for the occupation.
[150][2023] VSC 535 (Daly AsJ).
[151][2006] VSCA 6.
[152]At [22].
It follows that the Corporation does not owe the relevant Catalyst parties the additional $1,002,788.68 they claimed for “occupation rent” and outgoings for this further period or restitutionary damages.
Final disposition
For the above reasons, it appears that:
(a)In BS 5900 of 2021, Catalyst Townsville should have judgment against the Corporation for the agreed AEFIP Payout Amount of $12,390,000.00, together with interest on that amount from 13 May 2021, and the amount of the unpaid rent of $100,186.90 and the unpaid outgoings of $42,476.64 (in each case for the period from 1 July 2021 to 25 July 2021) under the Townsville triple net lease, together with interest on those amounts from 26 July 2021;
(b)In BS 12562 of 2021, Catalyst Corinda should have judgment against the Corporation for the AEFIP Payout Amount of $14,360,000.00, the difference between the Elected Corinda Cost and the Actual Corinda Cost of $426,916.26, the five AEFIPs totalling $2,835,000, together with interest on each of those amounts from 4 June 2021, and the unpaid rent of $1,185,318.50 and unpaid outgoings of $139,740.80 due under the Corinda triple net lease, together with interest from 26 July 2021; and
(c)In BS 14920 of 2021, Catalyst Carina should have judgment against the Corporation for the amount of the unpaid rent of $153,913.05 and unpaid outgoings of $67,188.47 (in each case for the period from 1 July 2021 to 25 July 2021) due under the Carina triple net lease, together with interest on those amounts from 26 July 2021.
However, the Catalyst parties requested an opportunity to prepare draft orders for each proceeding following the publication of the reasons for judgment. It was envisaged that these draft orders would include the calculation of interest in respect of the sums owing by the Corporation to each Catalyst party in respect of the claims and counterclaim. The Catalyst parties also requested an opportunity to make submissions as to the costs of the proceedings, including the costs in respect of the intervention of the Attorney General.
In light of these requests, and the possibility that typographical errors or other slips may have found their way into these reasons, the Court should make directions providing for the preparation of draft orders, conferral between the parties’ legal representatives about the drafts, and short written submissions in respect of any points of difference.
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