Connelly v Mdas Limited
[2025] VCC 848
•24 June 2025
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-21-02403
| ROBERT CONNELLY | Plaintiff |
| v | |
| MDAS LIMITED (ACN 602 202 139) (FORMERLY MILDURA ABORIGINAL CORPORATION) | First Defendant |
| COMMONWEALTH OF AUSTRALIA | Second Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13-16, 19-20 May 2025; 10 June 2025 | |
DATE OF JUDGMENT: | 24 June 2025 | |
CASE MAY BE CITED AS: | Connelly v MDAS Limited & Anor | |
MEDIUM NEUTRAL CITATION: | [2025] VCC 848 | |
REASONS FOR JUDGMENT
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Subject:APPLICATION FOR SPECIFIC PERFORMANCE
Catchwords: Application for specific performance – Formal contract of sale executed on behalf of vendor and purchaser expressing time to be “of the essence” – blank in panel nominating date for completion – Whether contract void for uncertainty – Provision restricting exercise of default rights by aggrieved party requiring service of notice before cancellation of contract for default or non-performance – Time not truly of the essence – Mortgage by purchaser under contract in favour of vendor expressed to cover entire purchase price repayable interest-free by instalments of $100 per week in 25 years – Purchaser director or committee member of vendor association – Whether contract voidable for breach of fiduciary duty – Whether purchaser declared his interest and absented himself from committee’s decision – Whether committee approved the transaction – Chief Executive having unlimited authority to engage in property transactions on behalf of association, whether extending to grant of interest-free vendor terms as provided for in mortgage back by vendor in favour of purchaser association – Whether purchaser excluded from entitlement to specific performance on the basis of “lack of clean hands” – Whether maxim “He who seeks equity must do equity” – Whether barred by common law maxim “ex turpi causa non oritur actio” – Associations Incorporation Reform Act 2012 ss80 and 81 – Finding that vendor’s committee considered and approved sale transaction with disclosure of interest by purchaser committee member despite unavailability of minutes to this effect – Decree of specific performance granted.
Legislation Cited: Associations Incorporation Act1981 (Vic); Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth); Corporations Act2001 (Cth); Estate Agents (Contracts) Regulations 2008 (Vic); Residential Tenancies Act1997 (Vic); Sale of Land Act1962 (Vic); Transfer of Land Act1958 (Vic); Associations Incorporation Reform Act2012 (Vic)
Cases Cited:Blaauw v Watkins (1914) 33 NZLR 1375;
FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343;
Masters v Cameron (1954) 91 CLR 353;
McKenzie v McDonald [1927] VLR 134
Mehmet v Benson (1965) 113 CLR 295;
Meyers v Casey (1913) 17 CLR 90;
Simic v NSW Land and Housing Corporation (2016) 260 CLR 85;
Smith v Jenkins (1970) 119 CLR 397;
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315;
Judgment: 1. Within 14 days the parties must bring in short minutes to give effect to these reasons.
2. Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr Justin P Wheelahan | JF Legal |
| For the First Defendant | Mr Matthew J Stirling | Cosgriff Lawyers |
| For the Second Defendant | No appearance |
HIS HONOUR:
Background
1By a residential tenancy agreement under the Residential Tenancies Act1997 dated 16 March 2012 a landlord described as “Mildura Aboriginal Corp” let premises at 83 Chapman Street, Swan Hill, jointly to two tenants, namely Nathalie Connelly and Robert Connelly. The agreement included a handwritten notation:
“New tenancy done due to her son Robert Connelly coming on to the tenancy agreement.” (Court Book (“CB”) 108)
2Mr Connelly is the plaintiff in this proceeding, and Mrs Nathalie Connelly is his mother. The rental provided for in the agreement was $95 per week (CB 107-108).
3Mrs Connelly vacated the property in “2015 or ... 2016”, leaving Mr Connelly as the sole occupant (Transcript (“T”) 81). The rental was subsequently modified to $100 per week. According to Mr Connelly, this change took place some time in 2014 (ibid). Nevertheless, a rental ledger print-out produced by the first defendant (to which I will refer as “MDAS”) relative to 83 Chapman Street showed weekly payments of $100 per week from as early as 4 July 2013. The Court Book includes another residential tenancy agreement signed on behalf of the landlord but not by the single named tenant, Mr Connelly, providing for payment of rental of $100 per week effective 14 July 2012 (CB 109-110).
4Mildura Aboriginal Corporation Incorporated, an association incorporated under the Victorian Associations Incorporation Act1981, entered into a deed described as “Purposes Agreement” (Deed as to use of land with charge) with the Commonwealth of Australia dated 17 March 2008. The deed referred to a number of residential properties in the Swan Hill area which were, according to Recital A of the deed, purchased by “Swan Hill and District Aboriginal Co Operative (In Liquidation)” with funds provided by the Commonwealth upon terms that the properties were not to be transferred without the permission of the Commonwealth. According to Recital C, the Commonwealth consented to a transfer of the properties to the Mildura Aboriginal Corporation (“MAC”). Recital D of the deed stated:
“The parties wish to provide that the Property will be used for the continued benefit of Aboriginal and Torres Strait Islander persons and communities.” (CB 91)
5By Covenant 3(a), MAC covenanted with and undertook to the Commonwealth:
“To use the property for rental accommodation purposes for the continued benefit of Aboriginal and Torres Strait Islander peoples and communities ... only and not to use it or permit it to be used for any other use without first having the written consent of the [Commonwealth].” (CB 92)
683 Chapman Street was one of the properties affected by the terms of the deed and governed by it (CB 93). Clause 5 of the deed provided that MAC:
“hereby grants in favour of the [Commonwealth] a charge over all its estate and interest in the Property to secure repayment of the Original Funding pursuant to this Deed or any other agreement or arrangement between the [Commonwealth] ... and [MAC].” (CB 93)
7The Purposes Agreement was executed as a deed under MAC’s common seal, attested to by three of its directors and by a “duly authorised delegate” of the Commonwealth (CB 94).
8The registered proprietor of the Chapman Street property comprised in Certificate of Title Volume 11143 Folio 034 was MAC, subject to Caveat AG660446A lodged on behalf of the Commonwealth of Australia (CB 685). This caveat, affecting the title to 83 Chapman Street and extending to the other properties that were the subject of the “Purposes Agreement”, claimed in favour of the Commonwealth “an equitable interest as chargee” pursuant to the terms of the Purposes Agreement, and prohibited dealings with the title to 83 Chapman Street “ABSOLUTELY, excepting a Transfer to or by direction of the Caveator” (CB 101).
9Mr Connelly was a director of MAC. According to its financial report for the year ending 30 June 2014, he was a director of the Corporation “throughout the year and at the date of [the] report” (CB 1313). As such, he represented the Indigenous community in Swan Hill (T88).
10Around the middle of 2013 – that is, some 12 months prior to his execution of the documents which are the subject of the present proceeding – Mr Connelly said that he saw a publication by MAC or MDAS by way of a notification to tenants:
“[I]f tenants were interested in a rent-to-buy scheme that MACI [viz Mildura Aboriginal Corporation Incorporated – MAC] was putting together, and if so, to contact ... John Rogers, who was the manager of the housing sector”. (Transcript (“T”) 82)
11Mr Connelly said he looked at this document “and obviously everyone would rather pay off a house, rather than pay dead money in rent.” (Ibid) He said he discussed the matter with his mother, who told him “Don’t trust them”, but he rang Mr Rogers. (T82-83) Mr Rogers told him “there would be a valuer coming. That was at a later date. That was a few months down the track, after I had the initial discussions.” (T83) He said the valuer came “four, five, six months later ... but it was before the end of 2013”. (Ibid)
12Mr Malcolm Swan, a certified practising valuer, practising as part of Boyd-Law & Wood Valuers, furnished a valuation of 83 Chapman Street, Swan Hill, to Mr Rogers of MAC. He said that:
“[A]n inspection of the subject holding was carried out on the 27th of September 2013.” (CB 452)
13After describing the layout of the property, he continued:
“Our inspection revealed that the dwelling is generally in fair to poor condition and is in need of significant repairs and maintenance.” (Ibid)
14He said the property allotment was 1,100 square metres, which he described as being a “large allotment”. (CB 452-453) He concluded:
“Based on the evidence available the Valuer is of the opinion that the current market value of the freehold interest in the subject property on a GST exclusive basis as at the date of inspection is in the range of $130,000 to 140,000 (One Hundred and Thirty Thousand to One Hundred and Forty Thousand Dollars).” (CB 453)
15Mr Connelly said:
“The evaluation [sic] was to gain a value of the property for the sale of 83 Chapman Street.” (T85)
16Mr Connelly was unable to produce the “notice to tenants” or “newsletter” which he said invited tenants like him and his mother to participate in a rent-to-buy scheme. He said he asked the first defendant MDAS for a copy “because MDAS does keep such records”, but none of the newsletters given to him was the one to which he referred. (T264, L9-12)
17For reasons which will be explained, a precise narrative as to how matters progressed relative to No 83 is difficult to reconstruct, though the progressive availability of further documents in the course of the trial and after the close of evidence has provided some further elucidation. Those now in control of the first defendant MDAS, which is, as will be explained, effectively the successor of MAC, do not deny outright that there was some discussion relative to a rent-to-buy arrangement, but they deny that such a scheme was formally adopted and implemented.
18Mr Portelli became the Secretary of MAC on 31 May 2013. He seems to have continued in that role until MAC was deregistered on 28 July 2015. (CB 1259) It seems he was also a Director of MAC during the same period. (CB 332) Mr Portelli said that there was a discussion of a “rent-to-buy” scheme at what had been scheduled as a Board meeting which did not proceed for lack of a quorum. The scheme was advocated by MAC’s Chief Executive Officer, Mr Rudy Kirby, but “there wasn’t a majority in favour of what Mr Kirby was advocating”. (T515, L18 – T516, L8) These events happened in early 2014 (T517, L17), though Mr Portelli could not be more specific (ibid, L19-20). Because of the lack of a quorum the discussions were not minuted (T518, L9-12). There were four Board members present: Mr Portelli, Mr Connelly, Mr Keith Hampton (the Chairman) and a Mr Mitchell. Mr Rudy Kirby was present as Chief Executive but was not a member of the Board (Ibid, L16-28).
19Mr Lim acted as General Manager of Corporate Services. He said that he was employed in that capacity by MDAS, which would appear to be a reference to the first defendant in this proceeding, in the period 2013 to 2015. Whether that be true or not, it would seem that he performed the function of General Manager of Corporate Services for MAC in that period. (T151, L30-46)
20On 22 May 2014, Mr Lim sent an email to Mr Nick Davies, who was a practitioner at the firm Watson Legal which acted for MAC, enquiring “Hows [sic] the rent to buy contract going?” (CB 681) Mr Davies replied some eight minutes later, at 4.26pm, saying “We’ll need the address first. I don’t think you have given me this yet?” (CB 682) Mr Lim gave evidence for the plaintiff. Understandably, he had little detailed recollection of events which occurred over a decade ago. The following morning, namely 23 May 2014, Mr Lim sent an email to another MAC officer, Mr John Rogers: “John, Could you provide Rob Connolys [sic] address please. Thanks” (CB 683).
21Asked about these emails, Mr Lim said “My recollection was that he [Mr Kirby] wanted a template copy of a rent-to-buy contract”. (T157) Mr Lim agreed that his reference to a template meant “a proforma. Not necessarily adapted to a particular transaction ... – one that could be used as a basis for any particular future transaction?” (Ibid) Given that the email correspondence from Mr Davies and ultimately to Mr Rogers sought the address of a particular tenant, Mr Lim’s recollection on this point would seem to be faulty. It is plain that what was “in the works” was not a template or a set of precedent documents, but documentation for a particular transaction involving Mr Connelly.
22By letter dated 13 June 2014 from Watson Legal Services, reference “NPD” (presumably Mr Nick Davies), the firm stated:
“We refer to the above matter. We enclose:
1Vendors Statement in duplicate
2Contract of Sale in duplicate
3Mortgage of Land in duplicate
Please note that, in accordance with your instructions:
•The price $130,000;
•The mortgage payment will be $100 per week throughout the life of the mortgage;
•The mortgage will take 25 years to pay off; and
•The mortgage is interest-free (0.00%).
...” (CB 686)
23The documents forwarded were as described. The contract of sale for 83 Chapman Street was signed by Mr Connelly as purchaser and by Mr Kirby as CEO of MAC on 16 July 2014 (CB 687). The particulars of sale did not name a “vendor’s estate agent”. The vendor was shown as Mildura Aboriginal Corporation, with JR Watson Legal Services as its “legal practitioner or conveyancer”. No person was identified as “purchaser’s legal practitioner or conveyancer”. (CB 688)
24Despite the statement in the covering letter, the typescript for the price showed it as $135,000 with a nil deposit. This figure was amended in handwriting, initialled by Mr Kirby and Mr Connelly, so as to read $130,000. There was no deposit, with the balance of the purchase price “payable at settlement”. The typescript stated “SETTLEMENT (general condition 10) is due on”, and then a blank. The blank was not completed. A box which might have designated the contract a “terms contract” for the purposes of the Sale of Land Act 1962 stood blank, with the consequence that the contract was to be regarded as a cash rather than a terms contract (CB 689). There were some two pages of special conditions which deleted the general conditions of contract in certain respects, replacing them with alternative provisions (CB 691-692).
25The contract also included the general conditions prescribed by the Estate Agents (Contracts) Regulations 2008. The package of documents also included a document styled “Mortgage of Land” in accordance with s74 of the Transfer of Land Act 1958 in registrable form providing for it to be lodged for registration by “JR Watson Legal Services”. The mortgage secured a principal sum of $130,000 repayable by weekly instalments of “$100 each commencing [blank] 2014”. The rate of interest was shown to be 0.00 per cent per annum. The mortgage was left undated. Mr Connelly’s signature, witnessed by Mr Kirby, was applied and dated 16 July 2014. There was a provision for execution by MAC expressed to be in accordance with s38 of the Associations Incorporation Reform Act 2012: that is, signature by two Board members (CB 714-715).
26As noted earlier, since Mr Kirby was not a member of MAC’s Board, it would not have been competent for him to sign on behalf of MAC as part of that execution clause. The mortgage, therefore, stood unexecuted by MAC.
27Mr Portelli, who, it will be recalled, was in 2014 both Secretary and a Board Member of MAC, accepted that as CEO Mr Kirby had power generally to engage on behalf of MAC in property transactions without monetary limit. At that time Mr Portelli advocated a rule that the Chief Executive Officer’s power to engage in property transactions should be limited to a face value of $100,000. He said:
“As a Board director, I was pushing for a delegation matrix that the CEO would only have a capacity of 100,000 to be able to spend at his discretion or her discretion” (T530, L22-24),
but that rule was not adopted and was not in force (ibid, L28).
28There was debate as to precisely what the effect of the documents prepared by Mr Davies for MAC and at least partly executed might have been. The form of contract of sale of land seemed to provide for a cash contract with no deposit. There was no provision for payment of the purchase price in instalments. The accompanying mortgage would appear to be intended to document a deemed loan by MAC to Mr Connelly of the purchase price, repayable according to the provisions of the mortgage. The contract was unconditional, in the sense that it established no conditions precedent either to the contract’s taking effect nor for performance by either of the parties. General Condition 16.1 stated “Time is of the essence of this contract.” (CB 696) As we will see, the first defendant through its counsel, Mr Stirling, contends that this provision, allied with the absence of any nominated time for payment of the purchase price, rendered the contract void for uncertainty.
29According to Mr Connelly, on 16 July 2014, the date which the documents bear, he was “at the Swan Hill Resort”, having been phoned to attend by Mr Kirby in relation to the contracts of sale for 83 Chapman Street. (T91) He said Mr Kirby made a telephone call to the finance manager, Mr Lim, and amended the price on the contract to $130,000, with Mr Connelly and Mr Kirby initialling the amendment. (T93) Mr Connelly said:
“I asked whether or not I needed a lawyer, and it was stated that, no, as stated before, MDAS [presumably MAC] would be covering all lawyer costs for tenants to purchase the properties. Then I also asked whether I could pay the property off sooner rather than later? He said, yes that would be possible. Of recollection, that’s about that he just stated if I was happy with the document that we could sign it, or sign them.” (T94)
30The transaction document would appear to be a very favourable one to Mr Connelly, and perhaps equally unfavourable to MAC. The price was at the lower end of the 2013 valuation range. No deposit was payable, no interest, and a 25-year term for payment was provided for.
31Mr Connelly’s account as to how this occurred was that, in effect, these advantageous terms were pressed upon him by Mr Kirby, or, if not pressed, at least included at his initiative (T278, L26 – T279, L5; T291, L11 – T292, L10).
32Documents produced by way of late discovery after the conclusion of the evidence put a somewhat different perspective on these matters. In an email dated 13 January 2014, Mr Connelly made the following proposal:
“Hi David,
This email is a letter of offer to purchase 83 Chapman Street Swan Hill.
As you are aware the valuation appraisal for 83 Chapman is $130,000 to $140,000, I wish to offer M.D.A.S the sum of $130,000 for the property. I am offering to acquire the property through the rent to buy scheme offered by M.D.A.S, and I am offering to make payments of $100 per week, I am not in a financial position to pay a deposit, I am currently employed with the DEECD as a K.E.S.O in the Swan Hill and Kerang areas and my employment is full time, I would be in a position to adjust my weekly payments within 6 years as currently I will be financially restrained as I am paying for my children to further their education opportunities i.e. University.
Please contact me regarding my offer via my mobile phone thanks....
Regards Rob Connelly” (CB 1534)
33In an email dated 31 January 2014, subject “Rob Connelly”, Chief Executive Officer Mr Kirby told Mr Lim:
“Hi David
Lock him in and ensure we have a clear “contract/mortgage” over the property and the terms need to be clear;
Mortgagee is responsible for;
•Insurance on the property and must provide proof of insurance annually;
•All Outgoings on the property (Rates etc.);
•All repairs and maintenance on the property;
•Clear repayment schedule (Timeframe and amounts)
Regards Rudy” (CB 1533)
34It is likely that the word “mortgagee” in Mr Kirby’s email was a slip and should have read “mortgagor”.
35Following execution of the document package, it seems that for the balance of 2014 and for a considerable time thereafter Mr Connelly took no action to see to the implementation of the rent-to-buy arrangement. Having been assured that MAC would arrange legal representation for him, Mr Connelly took no action to progress the transaction. In particular, assuming that Watson Legal was to act for him as well as for MAC, he made no contact with that firm. (T182, L15-28)
36On 9 November 2016, Mr Kirby sent Mr Connelly an email “re 83 Chapman Street Swan Hill”, stating, inter alia:
“[W]hat I’m saying is there was no Board minutes to prove to the Cwlth to lift the caveat, yes the Board agreed to sell it back in 2014, plus the criteria from the cwlth to lift the caveat you must also have a current valuation not less than 6 weeks old I think or there about. For the Board to have the authority to sell the property we MUST meet the conditions set by the Cwlth under the terms of their Caveat. Otherwise the Board cannot sell it and has no authority to sell the property if we don’t meet their criteria as they hold the caveat over the property. Hope that makes sense.” (CB 965)
37In 2016 a series of matters was raised by Mr Kirby and others on the first defendant’s side as to various preconditions to the completion of sale of 83 Chapman Street. Mr Lou Leo of the Commonwealth department (presumably the Department of Prime Minister and Cabinet) sent an email to Mr Adam De Lacy of MDAS setting out some seventeen requirements which an Indigenous housing organisation was required to deal with to obtain permission from the Commonwealth for the disposal of one of its properties. The list was as follows:
“1.Formal letter requesting sale
2. Reason/s why property is to be sold (already confirmed you are selling to tenant)
3. If the property is tenanted and what will happen to the tenants (current tenant is purchasing property?)
4. Whether the property is to be sold on the open market or to the tenants (If to the tenants is this at a discounted price?)
5. If property is to be sold to tenants –
1.letter of request from tenants requesting purchase of property (this should be included in your request package)
2.Stat Dec from current tenants stating he/she is not current home owner (this should be included in your request package)
3.Evidence tenants have necessary funds and can secure a home loan to undertake the purchase (this should be included in your request package)
6. How organisation intends to utilise the proceeds from the sale of the property (this should be included in your request package)
7. Current number of rental properties held by the organisation (this should be included in your request package)
8. Will the proceeds be sufficient to purchase replacement properties (if applicable)
9. If proceeds will not be used to purchase replacement properties statement confirming rental stock is sufficient for demand
10. Expected timeframes
11. Board Meeting Agenda listing item for discussion
12. Board Meeting minutes where the sale of the property is discussed and endorsed (advise this has already endorsed)
13. Housing policy rules to dispose of Assets (ICHO rules or organisation rules). (need a copy with request package)
14. Balance Sheet/current asset base (this should be included in your request package)
15. Copies of property valuations from registered valuer (valuation must be current – within 90 days of property disposal request) (this should be included in your request package)
16. Copies of original purchase documentation (dept has documentation)
17. When available, signed copies of the Contracts of Sale (time of sale)” (CB 972)
38This laundry list imposed obligations predominantly on the putative vendor organisation. In the case of 83 Chapman Street, the requirement most pertinent to Mr Connelly was No 5. It would not have been possible in 2016 for Mr Connelly honestly to declare that he was not a home owner. At that time he owned a residence in a place called Reedy Lake. Mr Connelly said that this property “has no services. It doesn’t have water. It doesn’t have power. It doesn’t have services from the shire.” He said it was “more than a shack”, but accessible along “a six-kilometre driveway of dirt which is impassable when it’s wet” (T188, L12-24). He said he disposed of this property two or three years ago for the price of $190,000. (T458, L12-15) Mr Connelly said that in late 2015 Mr Kirby told him that the 2014 contract “was null and void” (T459, L5-6) because the conditions of “the Commonwealth’s caveat hadn’t been ... met; they couldn’t sell the property without the Commonwealth’s approval” (T459, L5-11).
39During this time, aside from being a Director of MAC, Mr Connelly was a permanent officer of MAC or MDAS. He was at various times “Manager Farming Enterprises, Menera and Speewa”, signing an employment agreement with “Mallee District Aboriginal Services” (CB 178). He was on a temporary basis “Executive Operations Officer” for MDAS for the period 14 September 2015 to 14 December 2015 (CB 195), signing an agreement in that respect (CB 197). His employment with MDAS ceased on 10 March 2017 (CB 175).
40By an email dated 4 May 2016 addressed to Mr Kirby, Mr Connelly referred to a discussion at a “meeting last week”, claiming an entitlement for $30,000 as a bonus or “percentage” arising out of his employment, continuing:
“[C]an you please separate my Farming Enterprise percentage 30k in the following manor [sic].... 20k as a deposit for the property at 83 Chapman Street Swan Hill, this will need to be provided in a letter from you with the MDAS letter head and you [sic] signature just stating that to whom it my concern, that I have placed a 20k deposit on the property, can I please be sent this letter via email and the original lette [sic] via mail.
Also can you please place 10k into my bank account, this account is the same bank account as my salary....this will need to be under my Australian Business Number the ABN is as follows ...” (CB 841)
41Just over an hour later, Mr Kirby responded:
“I will follow up with Trudi to process.” (Ibid)
42Mr Kirby provided an email two days later, namely 6 May 2016, addressed to Mr Connelly, saying:
“We acknowledge deposit of $20,000 towards the property.” (CB 842)
43The subject heading was “83 Chapman St Swan Hill”. Mr Kirby also provided the letter “To Whom It May Concern”. (CB 845) The balance of $10,000 was paid as requested to Mr Connelly’s bank account. (CB 1377)
44In 2015 – that is, the year after Mr Kirby and Mr Connelly signed the sale contract for 83 Chapman Street – according to Mr Connelly, he and Mr Kirby had a conversation in the MDAS board room in Mildura in which Mr Kirby told Mr Connelly “that the contract was basically null and void, due to the fact that it hadn’t met the conditions of the Commonwealth to take the caveat or something like that” (T116). Mr Connelly said “that I wasn’t interested in participating in a new process as I’d already had a contract, and that was their problem, not mine”. (T117) To say that Mr Connelly “had” a contract was to speak metaphorically. In July 2014 he left both copies of the contract, the mortgage, and the vendor statement, with Mr Kirby. (Ibid)
45Eventually Mr Connelly obtained a copy of the 2014 document from Mr Lim. (T118) This was before a Board meeting of MDAS in February 2016 which dealt with Mr Connelly’s situation relative to the Chapman Street property.
46There would seem to be an inconsistency in Mr Kirby’s position, asserting in 2015 that the sale agreement signed the previous year was “null and void”, and the following year, 2016, making arrangements for a $20,000 deposit to be credited to Mr Connelly’s purchase account. Mr Connelly said that this apparent inconsistency was explained by the fact that Mr Kirby “was trying to get me [Mr Connelly] to engage in the process of a new contract, and the Commonwealth issues everything else”. (T1215) In that respect, Mr Kirby sent an email to Mr Connelly dated 9 November 2016 stating:
“Just progressing the sale internally and the following question was asked as to the options to progress the sale:
Option 1:
MDAS obtains an evaluation [sic] now on 83 Chapman and we sell based on the evaluation price. (NOTE: we cannot do the scope of works proposed to the property as this will impact on the valuation of the property and not reflect the value)
Option 2:
We complete the upgrades to the property as per the scope of works and then have the evaluation of property done and sell at that price.
What’s your thoughts on the preferred option?” (CB 940)
47An inspection of the property at 83 Chapman Street had shown it to be in need of extensive and expensive refurbishment. Mr Connelly’s response later the same day was as follows:
“Rudy as discussed with you yesterday I won’t be in a position to apply for a bank loan once I start the share farming..so I cant wait for the upgrades to be carried out and then got a valuation once its completed, then send it to the Commonwealth and wait for a response etc etc etc.” (CB 941)
48This seems to be a step back by Mr Connelly from the position that he said in his evidence to the Court he had taken: namely, that he was entitled to purchase 83 Chapman Street for $130,000 pursuant to the 2014 contract, and it was not competent for MDAS to introduce new conditions or to vary the price by reference to a further valuation. Challenged on this point, Mr Connelly pointed to an email that he sent to Mr Kirby on the same day, about 45 minutes later, which stated:
“Hi Rudy..My thoughts are the scopes of works be carried out and we do the evaluation now and i buy it for the contract price that has been signed off on..we have been living at 83 Chapman street for a well over 12 yrs and no upgrades have been done other then the aircon an oven and some of the roof even though it was listed for upgrades a number of times and funds where received for it but no upgrades carried out (some of this was before your time) the property was signed to me in 2014 so ive been paying rent for three years when it could have gone to the mortgage for Chapman because mdas staff where incompetent (david lim and john rogers).so the scope of works are basically overdue upgrades that mdas should have been doing over the past 12 yrs + and have just kept promising to do and not delivered. ..however the rent has always been payed on time even though the house was substandard and the only damage from us was a window in all that time...unless you want to deduct the rent ive payed since mdas signed it to me from the evaluation and no upgrades..happy to discuss” (CB 943)
49In a letter dated 3 April 2017 addressed to Mr Connelly, Mr Kirby said inter alia:
“As you are fully aware, MDAS is unable to sell the property due to the Commonwealth Caveat on the property. To enable MDAS to sell the property MDAS and the proposed purchaser must meet the guidelines set by the Commonwealth under the policy “Disposal of Properties with a Commonwealth Caveat”.
We note to date we have not received any further supporting material from you and therefore we are unable to proceed with the request to the Commonwealth. Under the circumstances we have decided to rescind/withdraw our proposal to sell the property to you as the tenant. We note you have a current residential tenancy agreement signed on 15 June 2015 and continue to pay rent in accordance with the agreement.” (CB 1063)
50Around this time Mr Connelly’s employment with MDAS was terminated. He brought a wrongful dismissal proceeding before the Commonwealth Fair Work Commission which was the subject of a telephone conference before a conciliator fixed 10 May 2017. (CB 1064-1065) Preparatory to this process it would seem Mr Kirby prepared a lengthy single-spaced 2½-page email denouncing Mr Connelly’s employment performance and seeking to justify his dismissal. (CB 1060-1062)
51Mr Connelly’s termination of employment obviously gave rise to acrimony. He made reports and allegations against a number of people, including Chief Executive Officer Mr Kirby and Board Chairman Mr Hampton. Ultimately, though, it would seem by reason of other matters, both Mr Keith Hampton, the Chairman of the Board at relevant times, and Mr Kirby, were expelled as members of MDAS with effect from 5 August 2024. (CB 1531-32) This was in the wake of an investigation into the affairs of MDAS by IBAC: that is, the Independent Broad-based Anti-corruption Commission (T594, L12-17).
52Mr Connelly said that the sale of 83 Chapman Street to him was approved at a MAC Board meeting. Since he had a conflict of interest, but was serving as a MAC Director at the time, he was required to vacate the council chamber whilst the matter was under discussion. (T90) No Board authorisation can be located, though the first defendant conceded that the records of MAC’s Board meetings may be incomplete. Ms Jane Capogreco, who at the relevant time was responsible for the preparation of the minutes of MAC, emailed Mr Connelly on 29 January 2018 stating:
“I have looked through all the minutes we have for 2013, and I am unable to find a reference to this [viz, a Board approval for the sale to Mr Connelly of Chapman Street]. Fyi, this is around the time we had our IT crash, so not sure if this may have had something to do with it.” (CB 809)
53She remarked, however, in the same email, that:
“I found an email from Rudy [Kirby] to David L [Lim] on 19/12/2013 saying the sale of the above “property under rent-buy that was approved by the Board subject to no restrictions on the title”.” (Ibid)
54There are minutes for a meeting of the Directors of MAC on 21 August 2013 (CB 404). The last item was to set the date for the next meeting as being 18 September 2013 at 2pm at Mungo Lodge (CB 407). No minutes could be found of that meeting. Since the valuation of 83 Chapman Street which led to the fixing of the price for the 2014 contract occurred in September 2013, there must be a possibility that the issue of the sale to Mr Connelly of that property arose at a meeting on 18 September 2013, the minutes of which have been mislaid or lost in the “IT crash”.
55Following the breakdown in relations between MAC/MDAS and Mr Connelly arising out of the differences over the sale of 83 Chapman Street and the termination of his employment, there have been multiple attempts to obtain an order of eviction from No 83 from the Victorian Civil and Administrative Tribunal, which has exclusive jurisdiction over tenancy arrangements under the Residential Tenancies Act 1997.
56Most pertinently, on 17 April 2019 an application was brought in the name of Mallee District Aboriginal Services for an order of eviction. Member K Campana dismissed MDAS’s application, finding that:
“The relationship between the Applicant [MDAS] and the Respondent [Mr Connelly] is one of vendor and purchaser and mortgagor and mortgagee pursuant to a Contract of Sale and other documentation entered into by the parties in 2014.
...
The Respondent [Mr Connelly] was a tenant prior to entering into the “Rent To Buy” scheme.” (CB 1171)
Mr Kirby
57The key to getting to the bottom of precisely what did and did not happen relative to the actual or proposed but abortive disposition of No 83 to Mr Connelly would depend crucially on the evidence of Mr Rudy Kirby. Mr Wheelahan told me that his instructors were simply unable to track down Mr Kirby. Mr Stirling said the issues with securing Mr Kirby’s attendance as a witness were more complex. He said Mr Kirby had been admitted to hospital during 2024 for treatment of a substance-abuse problem. MAC had purchased what was presumably a superior residence in its region of operation known as “The Grange” with a view to attracting a resident doctor. No doctor took up residence, and Mr Kirby and his family commenced occupation and ultimately purchased under some kind of rent-to-buy arrangement. Mr Portelli said that Mr Rudy Kirby continues to reside in the community, albeit at the back of The Grange, with his family resident at the front. It has been a sad fall for him from a powerful and responsible position in the Indigenous community. (T553, L27 – T554, L1) A narrative of the events relative to the present dispute without input from Mr Kirby is as unsatisfying as a performance of Hamlet without the Prince.
This proceeding
58By writ dated 10 June 2021, Mr Connelly brought this proceeding against the first defendant MDAS, referring to it as “formerly Mildura Aboriginal Corporation”, seeking a declaration that the 2014 contract was valid and enforceable, specific performance, or alternatively damages. A summons from the plaintiff dated 8 June 2023 sought to add the Commonwealth of Australia as a second defendant. An amended writ dated 12 October 2023 included the Commonwealth as the second defendant.
59The Australian Government Solicitor, on behalf of the Commonwealth, advised Mr Connelly’s then solicitors, by letter dated 7 July 2023:
“The Commonwealth neither consents to nor opposes the declaration sought by the plaintiff against the first defendant, or specific performance of the alleged Contract. If the Court ultimately orders specific performance of the alleged Contract, the Commonwealth will, on application of the first defendant, give unconditional consent to the removal of the Commonwealth Caveat.” (CB 1246)
60The proceeding has had a number of trial dates which for a variety of reasons have had to be vacated. Mr Connelly sought the vacation of this latest trial date, presumably upon the basis that he was not fully prepared to put on his best case. A further adjournment was stoutly resisted by counsel for the first defendant. This opposition was successful before a Judicial Registrar, and the trial proceeded. However, at the outset of the hearing the first defendant sought and obtained leave to amend its defence so as to advance, for the first time, an allegation that the document styled “Contract of Sale” signed in July 2014 was void as a contract for uncertainty having regard to the absence of an express and definite date for completion, allied with a boilerplate provision in the general conditions that time was of the essence. Despite vigorous opposition from Mr Wheelahan on behalf of Mr Connelly, I gave leave for this amendment to be made. Regrettably, though perhaps predictably, this led to a dizzying process of pleading amendment and counter-amendment, the addition of competing estoppel claims, and so on.
The entities
61As noted, the contract which Mr Connelly seeks to enforce was made with an incorporated organisation known as Mildura Aboriginal Corporation Incorporated, a body incorporated under the Victorian Associations Incorporation Act 1981. That corporation was deregistered with effect from 28 July 2015. (CB 1259) The proceeding has been brought against the first defendant, MDAS Limited, ACN 602 202 139, on the basis that that entity was “formerly Mildura Aboriginal Corporation”.
62Statutes providing for the incorporation of bodies typically also allow such bodies to change their names, subject to appropriate formalities. The deregistration of Mallee Aboriginal Community Incorporated indicates that the transition, if such it be, from that association to the present first defendant was not a mere matter of change of name. The first defendant is incorporated under a different statute of a different jurisdiction, being the Commonwealth Corporations Act 2001.
63These matters are the subject of specific treatment in the Second Further Amended Statement of Claim. According to this document, MAC was registered as the sole proprietor of the Chapman Street property on 29 July 2009 (Clause 2F, CB 4).
64According to paragraph 2H, on 7 October 2014 Mallee District Aboriginal Services Limited (ACN 602 202 139) was incorporated. This company is the first defendant in the present proceeding.
65According to paragraphs 2I and 2J, that company changed its name to Mallee District Aboriginal Services: that is, the word “Limited” was omitted, so, if the company was a company limited by guarantee and a non-profit, the omission of the word “Limited” was authorised by the Corporations Act.
66According to paragraph 2G:
“In or about the financial year ended 30 June 2015, [the Commonwealth of Australia] directed [MAC] to transition to a company limited by guarantee incorporated under the [Corporations] Act.” (CB 4)
67According to paragraph 2K, the certificate of title for Chapman Street was cancelled on 16 March 2016, and MDAS was registered as the sole proprietor. This was said to have been effected by dealing AM623436L (CB 5).
68Section 45.1 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 provides for the arrangements and reconstructions provisions of the Corporations Act to apply to Aboriginal and Torres Strait Islander corporations. This expression extends to Aboriginal and Torres Strait Islander corporations registered under the 2006 Act. It may be that some steps authorised by these applied provisions from the Corporations Act were relied on to effect the “transition” from MAC to MDAS. Whatever the facts as to these structural matters, this proceeding was argued on both sides upon the assumption that MDAS was successor to MAC in owning the same property as MAC had owned prior to its deregistration, and that MDAS was subject to the same liabilities as MAC was prior to its deregistration.
69Cross-examining Ms Murray (the current chairperson of MDAS), Mr Wheelahan took her to a financial report for MAC for the year ending 30 June 2015 at CB 1328. He then took her to a similar report for Mallee District Aboriginal Services Ltd, the first defendant, at CB 1350. The total equity for both entities was approximately the same: approximately $22,000,000 for MAC on 30 June 2015 and approximately $21,000,000 for MDAS on 30 June 2016. Ms Murray agreed that the two balance sheets were recording “the same package of assets”. (T588) The effect seems to be that at or prior to its deregistration, MAC had its assets vested in MDAS.
70Mr Wheelahan, in his Closing Submissions (paragraph 18), said that the transition of MAC (a body incorporated under the Victorian Associations Incorporation Act) to MDAS (a company limited by guarantee incorporated under the Corporations Act) was effected via Part 8 of the Associations Incorporation Reform Act 2012. Section 115 of that statute provides, inter alia:
“(2)The transfer of incorporation by an incorporated association does not affect the identity of the association which is taken to be the same body before and after the transfer.
(3) Any right or claim by or against an incorporated association existing immediately before its transfer of incorporation may be continued by or against the prescribed body corporate formed by the transfer in the name of the incorporated association or in the name of the prescribed body corporate.
(4) Without limiting the generality of subsections (2) and (3), nothing in section 114(1) affects—
(a)any right, privilege, obligation or liability acquired or incurred under this Act; or
(b)any penalty, forfeiture or punishment incurred in respect of any offence committed against this Act; or
(c)any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment.
(5) Any investigation, legal proceeding or remedy referred to in subsection (4)(c) may be instituted, continued or enforced and any penalty, forfeiture or punishment may be imposed as if the incorporated association had not ceased to be incorporated under this Act.”
71These provisions would seem to maintain the continuing identity of MAC as it transitioned to being MDAS. They would also justify as accurate the description of the present first defendant as being formerly MAC. These provisions would also appear to have the effect of rendering the first defendant liable for the obligations (if any) undertaken by MAC and not otherwise discharged.
72Mr Wheelahan (Closing Submissions, paragraph 17) referred to what he said was an “express concession” by MDAS’s counsel “that there was no break in continuity between MAC and [MDAS]”. (T47, L1393) In light of that concession, it would seem that MDAS’s plea that the contract between MAC and Mr Connelly, if otherwise enforceable and not having previously been discharged, was discharged by the termination of MAC’s incorporation under the Victorian Associations Incorporation Act. During Mr Wheelahan’s opening, Mr Stirling, on behalf of the defendant, conceded that it was no part of his client’s case that Mr Connelly’s claim in contract against the first defendant, MDAS, failed for lack of continuity between MDAS and MAC. (T47, L1384-1393) It would seem therefore that this element of the first defendant’s pleadings is no longer pressed.
The pleadings
Statement of Claim
73By his Second Further Amended Statement of Claim, hereafter referred to as the Statement of Claim, Mr Connelly alleged the incorporation of MDAS and the processes whereby it became registered proprietor of the property at No 83 Chapman Street, Swan Hill. Next, he referred to the deed between MAC and the Commonwealth relative to the use of No 83 Chapman Street and other properties, referring to the Commonwealth’s interest in the property as chargee. Next, it is said that apart from the Commonwealth’s caveat under the Purposes Agreement, Mr Connelly, the plaintiff, lodged his own caveat on 3 July 2017.
74It is said that Mr Connelly “commenced occupation” of the Chapman Street property “on or around 16 March 2012” under a residential tenancy agreement.
75At paragraph 6 of the Statement of Claim it is alleged that in or around 2014 Mr Connelly entered into a “rent-to-buy” agreement with “the Defendant”. It was said that the terms of the rent-to-buy agreement were set out in “correspondence” sent to Mr Connelly “by the Defendant” which is no longer in Mr Connelly’s possession. The arrangement alleged was that the purchase price for the property was $130,000, payable subject to an interest-free mortgage providing for the payment of a principal sum of $130,000 by way of weekly instalments of $100 each. It was said this agreement was “formalised” by a contract of sale of real estate, a vendor statement, and a mortgage of land executed by Mr Connelly and the defendant on 16 July 2014. According to the Statement of Claim, the contract provided that no deposit was payable by Mr Connelly and $130,000 was payable at settlement, and the defendant warranted:
“(i)it had, or by the due date for settlement would have, the right to sell the Property (general condition 2.3(a));
(ii) it would, at settlement, be the holder of an unencumbered estate in fee simple in the Property (general condition 2.3(e));
(iii) it had no knowledge of any notice or order affecting the Property which would not be dealt with at settlement other than the usual rate notices and any land tax notices (general condition 2.4(d))” (Clause 9(c), CB 8)
76There was a further term alleged that “the Defendant would obtain any necessary consent or license required for the sale (general condition 5)”, and that it would execute and deliver to Mr Connelly on the date of settlement a transfer of land.
77As to the mortgage, it was said that there were terms to the effect that no deposit was payable by Mr Connelly, and the rate of interest was zero per cent per annum, with Mr Connelly making weekly payments of $100 “towards the purchase of the Property pursuant to the Contract and Mortgage in the total amount of $39,700.00 ...”
78It was said that the sale of the Chapman Street property to Mr Connelly was acknowledged by MDAS “on 17 February 2016 and 9 November 2016” by emails from Mr Rudolph Kirby, Chief Executive Officer of the defendant, dated 17 February 2016 and 9 November 2016.
79Further, it was said that “on or around 4 May 2016” Mr Connelly paid a sum of $20,000 towards the purchase of the property pursuant to the contract.
80Next, it was alleged that in breach of the contract the defendant had failed to perform, and in particular had:
“(a)failed to ensure that it had, or would have, the right to sell the Property by the due date for settlement;
(b) failed to be the holder of an unencumbered estate in fee simple in the Property;
(c) failed to secure the release of the Commonwealth Caveat; and
(d) failed to obtain the necessary consent of the Commonwealth of Australia for the removal of the Commonwealth Caveat.” (Clause 14, CB 10)
81It was said “in about April 2017” MDAS had purported to rescind the contract on the basis of the Commonwealth caveat in circumstances where it was alleged there was no entitlement to rescind.
82By paragraph 17 of the Statement of Claim it is said that Mr Connelly is, and was at all material times, “ready, willing and able to complete the Contract”.
83Next, a series of attempts to evict Mr Connelly made by MDAS was alleged, asserting that these attempts were made without proper entitlement.
84The Commonwealth had stated by letter from the Australian Government Solicitor dated 2 June 2023 that it did not wish to participate in this proceeding and would not remove the caveat “unless directed to by Court order”, with the Commonwealth being excused from attendance by order of Judicial Registrar Bennett on 20 July 2023. It is said it may be inferred that the Commonwealth “will not oppose the removal of the caveat if specific performance of the contract is ordered”. An order removing the Commonwealth caveat pursuant to s90(3) of the Transfer of Land Act was sought.
85There then followed a further claim expressed to be made under the contract, alleging at length a variety of terms of the contract and stating that MDAS was “the successor entity to MAC”, alleging the payment of $20,000 previously referred to, and concluding “In the premises, the sum of $110,000 remains outstanding under the Contract.”
86The alleged rescission of the contract in April 2017 by MDAS was alleged to be a repudiation which Mr Connelly did not accept. It was said he remains ready, willing and able to perform the contract.
87Against MDAS, Mr Connelly sought: a declaration that the 2014 contract was valid and enforceable; specific performance of that contract; damages for breach of contract “in lieu of or in addition to specific performance”; costs; and further and other relief. An order for the removal of the Commonwealth’s caveat was sought as against the Commonwealth.
Defence
88MDAS by its “Further Amended Defence to the Second Further Amended Statement of Claim and Counterclaim” dated 13 May 2025 admitted certain formal matters. As to the issues of “succession” between MAC and MDAS, it admitted these allegations “subject to production of the relevant documents which prove the matters pleaded under [the relevant subparas]”. It said that the assets of MAC vested in ASIC upon MAC’s deregistration “by operation of s. 601AD(2) of the Corporations Act 2001”. It was said that since the vendor under the contract was deregistered, and the property subject to that contract had vested in the Australian Securities and Investments Commission by operation of law, the contract was thereby discharged.
89Further, it was said that “both parties to any contract that was entered into in relation to 83 Chapman Street were bound by the terms and conditions of the [Commonwealth] Purposes Agreement ... and any other requirements imposed by the Commonwealth in relation to the sale or transfer of the land.”
90According to MDAS, the contract “did not contain a date for completion, which was an essential term, and in the premises the alleged contract fails for want of certainty.”
91As to the contract (presumably assuming, contrary to the previous plea, that it was enforceable), it was said that “both parties were obliged to comply with the terms, conditions and requirements established by the Commonwealth in relation to the property under the Purposes Agreement dated 17 March 2008 and any other requirements imposed by the Commonwealth in relation to the sale or transfer of the land, or the removal of the caveat”. Further, it was said that “if the plaintiff [Mr Connelly] did not settle within a reasonable time the settlement sum had to be adjusted to a figure set by a valuation within 30 days of settlement as required by the Commonwealth as the original funder of the property”. It was said Mr Connelly admitted in an email of 9 November 2016 “that he was aware of the requirement that the property had to be subjected to a recent (30 days) valuation to establish purchase price if he was in a position to settle”.
92As to the mortgage, MDAS said that neither it nor MAC executed such a mortgage. Further, it was said “the absence of any time for payment and the fact that the parties did not enter into a mortgage renders the alleged contract incomplete.”
93MDAS admitted the making of instalment payments by Mr Connelly, but said they were rental payments pursuant to a residential tenancy agreement between Mr Connelly and MAC. MDAS referred to Mr Connelly’s statement in an email of 9 November 2016 that “he had been paying rent over the previous 3 years at $100 per week”: that these payments were rental and had not gone to payment of a purchase price for the property; therefore, none of the payments alleged by Mr Connelly was made pursuant to the mortgage.
94Further, according to MDAS, its Board “did not at any time approve the sale of the property subject to an interest free mortgage between [Mr Connelly] as mortgagee and [MDAS] as mortgagor in the principal sum of $130,000 payable by way of weekly instalments of $100.” [It appears the pleader has reversed the roles of mortgagor and mortgagee. If there is a mortgage, MDAS or MAC would be mortgagee, and Mr Connelly would be mortgagor.] MDAS said that since Mr Connelly had informed Mr Kirby of MDAS “that he would not be able to obtain a bank loan to pay the purchase price”, he was unable to perform his obligations as purchaser under the contract, and at no time did he advise “that he had obtained or could obtain finance to pay the purchase price or that he could otherwise perform his obligations as purchaser under the contract of sale”.
95According to MDAS, the alleged payment of $20,000 “was not made in accordance with any term of the contract of sale”. It denied that Mr Connelly was “at any time ready, willing, and able to pay the purchase price”, and did not in fact pay the purchase price. In any event, it was said “the property the subject of the contract vested in ASIC upon the deregistration of MAC on 28 July 2015”. It said that Mr Kirby had accepted Mr Connelly’s repudiation of the contract by virtue of his letter dated 3 April 2017. It denied the alleged finding by the Victorian Civil and Administrative Tribunal, and said it was entitled to evict Mr Connelly by the various notices.
96As to the second set of claims pursuant to the contract of sale, MDAS denied them.
97Finally, it said that Mr Connelly was “disentitled” from seeking specific performance because of his failure to perform, delay and/or laches, lack of clean hands, and/or disentitling conduct.
98In the course of granting leave to file this pleading, I sought and obtained confirmation from Mr Stirling that the phrase “disentitling conduct” was merely an elaboration of the allegation of “lack of clean hands”: viz, that it added nothing. (T9−10)
99Each of the allegations in the defence was relied upon and repeated as constituting a counterclaim.
Reply
100By its amended reply to the Second Amended Defence and Second Amended Defence to Counterclaim, subject to a general joining of issues, Mr Connelly alleged that “if, and only if” a reasonable time for settlement could not be implied into the contract, the allegation that the lack of a date for settlement invalidated the contract was precluded by estoppel by reason of a series of matters numbered 1−6 culminating in the allegation that the implication of a reasonable time for settlement “has been accepted in all previous pleadings of the [first] Defendant filed in this proceeding”. Alternatively, it was said that the failure to insert a date for settlement was the result of a common mistake, and the contract ought to be rectified so that “the settlement is to be performed within a reasonable time”.
101As to the Amended Defence to Counterclaim, it was said that by reason of a series of representations Mr Connelly had been induced to take action and change his position in detrimental reliance that he would have a proprietary interest in the Chapman Street property “upon settlement” and he would “suffer detriment if [the first defendant] were permitted to depart from the assumption” and it would be “unjust or unconscionable for [the first defendant] to depart from the assumption”. Accordingly, the first defendant was “estopped from denying that Mr Connelly has an equitable right to possess and occupy the Property”. Mr Connelly also relied on the finding by Member Campana of the Victorian Civil and Administrative Tribunal on 17 April 2024.
102He had admitted that he owed fiduciary obligations to MAC but denied that he was “obliged to disclose his ownership of the Reedy Lake property”.
Rejoinder
103With the Court’s leave, MDAS filed a rejoinder styled “Rejoinder to Amended Reply” and dated 29 May 2025.
104In the rejoinder, MDAS alleged that the claim for estoppel made in paragraph 1 of the reply was “vague, embarrassing and bad at law” as failing to identify with any precision “what the alleged representations of MAC were”. MDAS denied the making of any representations “to the effect alleged”, and said there were no clear representations “to the effect alleged by the plaintiff”. Moreover, it was said that the alleged representations were “inconsistent with the contract of sale signed by the parties”, and Mr Connelly was not induced by any of the alleged representations to act “because he was already a tenant of 83 Chapman Street and had been since 2012”. Further, it was said that he had suffered no detriment:
“as he has continued to reside at the premises at the same rental of $100 per week and MAC / MDAS has continued to pay for all upkeep costs, rates and services relating to the property between 2014 and 2025.”
105It was said in fact Mr Connelly had “gained significant financial benefits and suffered no detriment”.
106As to paragraph 2 of the reply, it said that the claim for rectification was “vague, embarrassing and bad at law” and failed to “identify with any precision what the omission or mistake in the contract was, or what the precise terms of the proposed rectification should be”.
107Further, it said the suggested rectification was “inconsistent with the terms of the three alternative contracts pleaded by the plaintiff”, and there was no common intention “to the effect pleaded by the plaintiff”, and the rectification sought was “inconsistent with the terms of the contract of sale signed by the parties”.
Conclusions
Certainty of contract
108As noted above, a primary contention on the part of MDAS is that what purports to be a contract for the sale of land is void for uncertainty. This contention was based on a passage from the work Victorian Land Contracts (2020) by Messrs David P Lloyd and William F Rimmer, who are members of the Victorian Bar. At paragraph [5.20] the learned authors state:
“The quest for a binding contract of sale of land entails finding sufficient certainty as to the “four Ps”. The first three of these are the property (that is to say, the land), the parties (to the contract) and the (sale) price. The fourth is (the date for) possession, which in the case of a “cash contract” generally equates to the date for payment of the whole of the price as this is the event triggering the purchaser’s entitlement to possession. ... It has already been noted that, if time is not expressed to be of the essence, in the absence of a stipulated time for payment the common law will readily imply a term to the effect that payment is to be made within a reasonable time. [Citing Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20, 25] ... Where time is expressed to be of the essence and a date for payment of the price is not fixed in the particulars of sale or elsewhere in the contract then, assuming rectification is not available to supply it, the agreement will be incomplete as to the fourth element and will fail for want of certainty as to its essential terms. The essential terms must be set out in the contract itself or in some other memorandum or note for the purposes of s 26 of the Instruments Act 1958”. (Page 27)
109Mr Stirling contends that this is the situation with the present document styled “Contract”. It states that time is of the essence, but identifies no date for the payment of the balance of purchase price or the giving of possession. The authority cited by Lloyd and Rimmer for the proposition that in the circumstance where time is stated to be of the essence of a contract the lack of a date for the payment of the balance of purchase price and the giving of possession renders the contract void for uncertainty is the decision of the High Court in Masters v Cameron (1954) 91 CLR 353, 360. Mr Stirling on behalf of MDAS relied on these principles and authorities. (Closing Submissions, paragraphs 13-17)
110Masters v Cameron (1954) 91 CLR 353 is one of the High Court’s seminal decisions in the law of contract. In the decades since it was published it has been resorted to on innumerable occasions to characterise alleged contractual agreements as falling within one of three categories: the first two of which entail enforceable contracts, the third of which leads to a finding of no contract. The contract considered by the Court was determined by their Honours to fall into the third category. The document executed and relied upon as a contract included the statement:
“This agreement is made subject to the preparation of a formal contract of sale which shall be acceptable to my solicitors on the above terms and conditions, and to the giving of possession on or about the Fifteenth Day of March 1952.” ((1954) 91 CLR 353, 359)
111The Court, Dixon CJ, McTiernan and Kitto JJ, postulated the celebrated “trifurcation” of preliminary or informal contractual arrangements at (1954) 91 CLR 353, 360 as follows:
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common.”
112On the following page their Honours said:
“Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: ... The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document ... or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed.”
113It may be accepted that the “essentials” for a contract before the sale of land are the identity of the land, the parties, the price, and the time for performance, viz what Messrs Lloyd and Rimmer describe as the “four Ps”. Since in informal “open contracts” the law implies that performance will take place within a reasonable time, why should the law decline to make that implication here? At paragraph 2 of the outline of his closing submissions, Mr Wheelahan said, having reviewed the circumstances surrounding the execution of the document styled “Contract of Sale”:
“The irresistible inference is that settlement would occur within a reasonable time: enabling MAC to remove the caveat; the transfer of clear legal Torrens title to Mr Connelly; and the registration of MAC’s mortgage providing security over the Property until Mr Connelly paid off the mortgage in full over 25 years. The entire purchase price would be regarded as having been paid in cash on settlement shortly after the signing of the contract. The $100.00 mortgage repayments Mr Connelly (characterised as “rent to buy”) would be paying off a mortgage debt in effect for money lent to Mr Connelly by MAC, not the purchase price.”
114The document or memorandum in Masters v Cameron held to fall into the third of the three categories postulated by their Honours, and therefore not constituting an enforceable contract, did not state that time was of the essence. I respectfully disagree, therefore, that this celebrated decision of the Court can be regarded in itself as authority for the proposition for which the learned authors cite it.
115The statement in the standard terms used for the sale of land in Victoria that “time is of the essence” is highly qualified. First, it is one of the general conditions – that is, boilerplate – rather than one of the special transaction-specific conditions. Secondly, clause 27.1 of the general conditions provides:
“A party is not entitled to exercise any rights arising from the other party’s default, other than the right to receive interest and the right to sue for money owing, until the other party is given and fails to comply with a written default notice.”
116The following clause, 27.2, requires the notice to provide the defaulting party with 14 days to remedy the default. (CB 697)
117For many years the standard conditions upon which land was sold in Victoria were to be found in Table A to the Seventh Schedule of the Transfer of Land Act 1958 headed “General conditions of sale of land under the Transfer of Land Act 1958”. Clause 6(1) of Table A provided:
“Time shall be of the essence of this Contract in all respects provided however that if the purchaser makes default in the observance of any of the terms or conditions hereof the vendor shall not be entitled to exercise any of his rights or remedies arising out of such default (including his common law rights) other than his right to sue for the recovery of any moneys then owing unless and until he serves on the purchaser a notice in writing specifying the default and stating his intention to exercise his rights and remedies unless the default is remedied within a period of not less than fourteen days from the date of the service of such notice and the purchaser fails within such period to remedy the default.”
118The current provisions are less wordy but to the same effect.
119The effect of rendering time of the essence is to entitle the non-defaulting party to a contract to terminate the contract upon the other’s failure to perform his, her or its obligations on the stipulated day: Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. To provide, as this contract did, that “time is of the essence”, but that the party offended by a lack of timely performance is precluded from cancelling the contract without serving a 14-day default notice (the functional equivalent of a notice to complete which would be required if time were not of the essence or had ceased to be) on the defaulting party, robs the provision of almost its entire meaning and operation.
120Speaking of the provision quoted from Table A, Mr Stonham in his work The Law of Vendor and Purchaser (1964) said:
“This clause avoids arguments upon a matter which is often one of degree and not necessarily of substance, as to whether the time specified in the notice making time of the essence is in all respects reasonable; but does it promote fairness? ... Its merits, presumably supposed by its draftsman, are debatable.” (739, Footnote 11)
121He deplored what he described as “the growing tendency of some printed forms of conditions of sale to make time, in all cases, of the essence”, remarking:
“All too frequently, the undoubted benefits and wisdom of the equitable rule [that time is not to be presumed to be of the essence] are discarded, without a full appreciation of them.” (739, Footnote 11)
122With the proviso which this contract includes restricting the enforcement of the rule that time is of the essence, its presence is little more than vestigial. It seems a great leap, therefore, to avoid the entire operation of a legal contract in its full formality based on the presence of this boilerplate clause.
123In the course of his discussion on these sorts of clauses at 739 of his work, Mr Stonham referred to a decision of Cooper J sitting as a judge of the New Zealand Supreme Court in Blaauw v Watkins (1914) 33 NZLR 1375. In that case the sale was of a leasehold interest granted by a statutory New Zealand authority known as the “School Commissioners of the Auckland Provincial Education District”. By the time of the sale the School Commissioners had been abolished and the freehold interest in the subject land was vested in the Crown and managed through an authority known as the Land Board. The contract provided that time was to be of the essence of the obligations under its terms. The transfer required the consent of the Land Board, which was initially refused but granted upon reconsideration. The contract provided for the payment of the balance of the purchase price within one month from the date of the agreement, provided the School Commissioners’ consent was by that time had and obtained. The purchaser cancelled the contract after the lapse of one month and before the Land Board’s consent on reconsideration. The vendor sought and obtained a decree of specific performance. Cooper J said:
“In my opinion the clause which purports to make time of the essence of the contract can have no application to those provisions of the agreement which relate to the payment of the purchase-money and to the time for giving and taking possession. No definite date is fixed for either event. The effect of the proviso in the clause relating to the payment of the purchase-money was to make the purchase-money, remaining after the deposit of £10 was paid, payable at an indefinite period—namely, within one month from the date of the agreement only if within that time the consent of the lessors was obtained. Possession was to be given and taken on “the day of settlement”. The parties clearly contemplated that this consent of the Board might not be obtained within the month.” ((1914) 33 NZLR 1375 at 1379)
124This decision is clearly analogous to the case before me where the contract simply fails to fix a date for settlement. Given that the purchaser was at all times in possession of the house, the issue of possession or a date therefor did not arise.
125The contract is not void for uncertainty.
126A related argument advanced by Mr Stirling (Outline of Closing Submissions, paragraphs 18-19) was that the contract was unenforceable as incomplete. At paragraph 18, Mr Stirling said:
“Connelly states that he was careful in reading and executing the documents, yet he did not make the simple addition of writing in the contract that the price was to be paid at $100 per week over 25 years.”
127Save as to the omission of a settlement date, the contract is, in my view, in no respect incomplete. It is in the form of a cash contract for sale. It conforms to the written offer made by Mr Connelly in so far as, in combination with the mortgage, it assumes that the entire balance of the purchase price, minus any amount held to have been paid as a deposit, would forthwith be paid by a loan from MAC by way of vendor finance as set out in the mortgage. Had the transaction proceeded to a traditional settlement in 2014 (in my understanding, traditional conveyancing settlements were not displaced by the current bank-controlled system), the effective “round robin” could have been documented by the use of a settlement statement and disbursement authority or authorities.
Post-contractual conduct
128Mr Stirling contended (Closing Submissions, paragraph 19):
“Connelly’s conduct post-contract is inconsistent with him having considered that he had a concluded deal and reinforces how incomplete the contract was. There are several examples of this: (i) his failure to call on MAC for settlement or for a transfer of the property; (ii) his failure to call on MAC to execute the mortgage; (iii) his signing of a new residential tenancy agreement in 2015 (if the Court concludes as much); (iv) his various attempts to obtain loan finance from late 2015; (v) his acknowledgement in his email of 9 November 2016 that he had in fact been paying “rent for the last 3 years” and had not been paying off the property. It is also odd that MAC would have offered to put in a new kitchen in 2014 after the sale if Connelly was intended to be the new (and registered) owner from July 2014.”
129Whilst post-contractual conduct is generally not admissible to assist in the construction of a written contract (FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343), this rule does not preclude a consideration of putatively post-contractual matters for the purpose of ascertaining whether a contract was in fact made. In the present case, it must be a difficult task to sustain a contention that no contract was made by reference to such matters in the face of a formal document executed by both parties. In the immediate aftermath of the signature of the contract in July 2014, it is plain that Mr Connelly took no initiative to progress matters. Mr Stirling contended, in closing oral arguments, that this inaction may have been dictated by a desire on Mr Connelly’s part to avoid becoming subject to statutory and insurance outgoings and the maintenance costs of the property. If that is a correct interpretation, it might go to support some contention of abandonment or laches. In itself it would not negate the existence of a complete contract.
130As to Mr Connelly’s “failure to call on MAC to execute the mortgage”, there was no reason why he should have sought to have MAC execute the mortgage or even be aware that MAC had not executed the mortgage. He signed and executed the documents in all the places requiring his signature, and left the documents with Mr Kirby. Someone in his position could legitimately assume that Mr Kirby, as chief executive and representative of MAC, would “take it from there”.
131As to the execution of a residential tenancy agreement in 2015 (which Mr Connelly denied), pending settlement of his purchase and gaining a right to possession under the contract of sale, there would be nothing inappropriate in his securing his continuing right to possession of the property pending settlement by executing a residential tenancy agreement. Mr Connelly said it was a matter which he raised with Mr Kirby as to whether he could pay off the purchase price of the property early, and was assured that he could. Accordingly, attempts to obtain loan finance from late 2015 onwards are not inconsistent with the existence of an enforceable contract. As to the admission (CB 943) in 2016 that Mr Connelly had been “paying rent” for three years, again this is an appropriate characterisation of his obligations pending completion of the 2014 contract.
132It is convenient at this point to consider the relative situation of MDAS/MAC on the one hand, and Mr Connelly on the other, upon the footing of the findings that I have made that, according to general contractual principles, they had entered into an enforceable contract for the sale of No 83 and a mortgage back to secure the whole of the purchase price. Pending completion, which it is common ground has not occurred, Mr Connelly would have no right of possession under the terms of the contract of sale. The mortgage could only come into operation after transfer of title to Mr Connelly, such that he could mortgage it back to MAC/MDAS to secure the 100 per cent vendor finance. Were he to continue to reside at No 83, as in fact he did, his right to do so would have to be bestowed by a lease or licence agreement. Hence, as noted above, if Mr Connelly did execute a residential tenancy agreement in 2015 with the contract incomplete, this would not be inconsistent with his having the entitlements of a purchaser under the contract. Again, since the mortgage could not take effect until after completion of the sale/purchase transaction which has not occurred, any payments which he might have made by way of the $100-per-week instalments would be rent, and not in reduction of the $130,000 purchase price.
133I accept Mr Portelli’s account of these matters as the only evidence on the subject, and conclude therefore that Mr Kirby in 2013/2014 had actual authority to commit MAC to both the sale contract and the mortgage embodying interest-free vendor finance. No “statute of frauds” provision has been pleaded with respect to the mortgage. Therefore, the lack of execution by MAC in accordance with the terms of the Associations Incorporation Reform Act 2012 is a mere formality. Mr Kirby was entitled to connect MAC to this arrangement; therefore, the members were required to cooperate to give effect to the obligations which the Chief Executive had adopted on behalf of the Association.
168Certainly, the way things have “panned out” for Mr Connelly remaining in occupancy at No 83 without having to bear the burden of occupancy costs has been to his advantage. In achieving this result, he has, so far as I can see, committed no offence, nor initiated or committed a breach of contract. From 2015 onwards, MAC/MDAS’s position as to the 2014 contract is that it is “null and void”. It resists, and continues to resist, completion of the contract which would subject Mr Connelly to responsibility for the ownership expenses of No 83. Subject to the issue of breach of fiduciary duty which I deal with separately, there is no inherent wrong in Mr Connelly’s doing a good deal for himself, entailing interest-free 100 per cent vendor finance etc.
169As to the $20,000 which Mr Connelly claims as a credit against the purchase price, and which he says was sourced from a bonus to which he was entitled, there is no clear material on the operation of Commonwealth taxation law. I took Mr Connelly’s evidence to be that the treatment of this $20,000 was an effective piece of tax avoidance, not tax evasion. I am somewhat sceptical as to whether his view that he had effectively avoided the tax was correct. However, I do not think the evidence establishes that Mr Connelly has been guilty of any deliberate tax evasion.
170For all these reasons, I conclude that the maxim that he who comes to equity must come with clean hands is not in itself a bar to Mr Connelly’s success in this proceeding.
171Mr Stirling also referred to and relied upon the equitable maxim which he framed as “He who seeks equity must do equity”. The editors of Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (5th ed) deal with this equitable maxim, framing it as “Those who seek equity must do equity”. At paragraph [3-050] they say:
“This is one of the most important of the maxims of equity. It prescribes that justice shall be reciprocal between the parties to an equity suit. Since time beyond memory, it has applied to plaintiffs who seek relief in a court of equity; it still does so today. No plaintiff can get an equitable remedy unless that plaintiff fulfils his or her own legal and equitable obligations arising out of the subject matter of the dispute. This maxim draws attention to the origins of equity in a ‘court of conscience’. It serves to point to a very important distinction between equity and the law, namely the ability of equity to give conditional relief. At law all remedies (apart from the prerogative writs) are non-discretionary and consist of either an unconditional verdict for the plaintiff in a specified sum of money or an unconditional verdict for the defendant. Equity, on the other hand, is flexible.”
172So, for instance, a tenant seeking an injunction to restrain his eviction may be required to give an undertaking to perform and observe the covenants under the lease binding upon him, or rectify any breaches of those covenants, as a condition of the grant of the injunction. The same principle applies to the grant of an order for specific performance.
173Mr Connelly cannot succeed in obtaining such a decree without performing his own obligations under the arrangements for which he seeks specific performance. The effect of any decree for specific performance which might be obtained in this proceeding would necessarily entail its being conditional upon and non-operative unless Mr Connelly performs his obligations to MDAS by paying the amount of the purchase price found to be outstanding and payable as at the settlement date, and undertaking other related obligations such as adjusting the statutory outgoings for No 83.
174In the circumstances of this case, and based upon the findings which I have already made, since settlement of the contract of sale has not occurred there are no outstanding and unperformed obligations on Mr Connelly’s part. If the decree is made, he will of course be required to perform his concurrent obligations as at the date of settlement. It is not obvious what relevance to MDAS’s case in opposition to Mr Connelly’s case the maxim might have.
175MDAS’s defence refers to laches. That issue is not raised in Mr Stirling’s final submissions. I treat it as not being pressed.
Rectification
176As noted in my summary of the pleadings above, Mr Connelly seeks (as I would understand it, as a “fallback position”) rectification of the contract of sale so as to include an express obligation for the contract to be completed within a reasonable time. In light of my conclusion that, in the circumstances, such an obligation is implied by law, that issue is not reached.
177Mr Stirling included the heading in his final submissions above paragraph 42, “Rectification based on common mistake cannot be made out”. It would seem that this heading should refer to “common intention” as the text of paragraph 42 would indicate. He referred to a passage from the High Court’s decision in Simic v NSW Land and Housing Corporation (2016) 260 CLR 85, observing at paragraph 44:
“It is simply impossible – amongst the lack of clarity and incompleteness about the terms of the transaction – to discern any clear or convincing proof of any common intention.”
178In the circumstances, it is unnecessary for me to express a view as to the correctness of this contention.
Breach of fiduciary duty
179This brings me to a consideration of the final and perhaps crucial matter: the contention that “the contract was procured by Connelly in breach of fiduciary duty”. (Closing Submissions, paragraphs 27-34) In paragraph 34, having reviewed the evidence which he said made good that proposition, and referred to certain texts and authorities, he concluded:
“For these reasons, the contract (if found to exist) is to be either set aside for having been procured by Connelly’s breach of fiduciary duty, alternatively equity would not assist Connelly by ordering specific performance of a bargain which was entered into in such circumstances.”
180Responding to queries from the Bench, Mr Stirling filed a supplementary outline during his closing address. He referred to the 5th edition of Meagher, Gummow and Lehane’s Equity Doctrines & Remedies to which I have already made extensive reference, referring to the statement at paragraph [5-180]:
“Purchases of these kinds [viz by trustees of trust property] are always voidable at the instance of a beneficiary.”
181At [5-180] the learned editors state the rules governing dealings with trust property by trustees of the trust property. The editors continue:
“It is otherwise where a trustee purchases the beneficial interest of a beneficiary. It is also otherwise where an agent or other fiduciary purchases from the principal. Purchases of those kinds are voidable by the beneficiary unless the fiduciary can establish that the circumstances are such that the purchase should not be set aside. It has been said in relation to a purchase by a trustee from a beneficiary, that in order to establish this, the trustee must show:
(a) that the trustee gave full value for the interest, unless it is proved that the beneficiary intended to make a gift to the trustee, in which case it must be shown that the beneficiary knew the value of the gift;
(b) that, before the trustee purchased, the trustee disclosed all information which should affect the judgment of the beneficiary;
(c) that, if the trustee held a position in relation to the beneficiary which resulted in the beneficiary reposing confidence in the trustee’s judgment, the trustee gave to the beneficiary the full benefit of that judgment;
(d) that the beneficiary, although not necessarily having independent advice, was ‘at arm’s length’ from the trustee.”
182At [5-185] the editors referred, by way of illustration of the principle, to a decision of Sir Owen Dixon sitting as an acting judge of the Supreme Court of Victoria in McKenzie v McDonald [1927] VLR 134 where an estate agent purchased a small rural farm from his principal, a widow, by way of exchange for a property in Melbourne. The defendant agent resold the farm at a profit, and the Court found that the price ascribed to the Melbourne property was excessive. The farm sale had been completed, and third-party interests intervened. The remedy ordered by the Court was the payment of equitable compensation. As to the Melbourne property, Sir Owen found that the agent had “grossly overestimated the value of the shop”. He continued:
“In these circumstances, the plaintiff was entitled to have the agreement of exchange of the 25th September 1925 set aside.”
183He noted the intervention of third-party interests as regarded the farm ([1927] VLR 134, 146). His Honour gave the defendant the option, should he wish to do so, to repurchase the shop for the same value which had been ascribed to it in the exchange agreement ([1927] VLR 134, 147). This was in effect setting the agreement aside, something which his Honour was plainly minded to do with respect to the farm had it not been for the intervention of third-party interests.
184Mr Wheelahan, on behalf of the plaintiff, urged me to accept Mr Connelly’s evidence that at a Board meeting of MAC in early 2014 he (Mr Connelly) was required to withdraw whilst the issue of the sale to him of No 83 was discussed, and that following the discussion on this subject he was congratulated by Mr Portelli. (T91, L978) He said (Closing Submissions, paragraph 48) that I should prefer this evidence to what he said was Mr Portelli’s somewhat unclear recollection that this did not happen. He referred to an exchange in cross-examination (T539, L9-14) where he put to Mr Portelli that the Board had discussed the sale of No 83 to Mr Connelly “in early 2014”, with Mr Portelli disagreeing with the proposition. He then asked Mr Portelli:
“And you’re not sure whether he [viz, Mr Connelly] excluded himself or not.”
185And Mr Portelli replied:
“Yeah. I’m not sure, I’m not 100 per cent at all.”
186Earlier (Closing Submissions, paragraph 42), Mr Wheelahan said that had the matter been raised at a Board meeting with Mr Connelly withdrawing based on a conflict of interest, this would have had the effect of “sterilising any allegation of a conflict of interest and breach of fiduciary duties”.
187In considering these matters, the first issue is to determine whether, at the relevant time and as regards the sale of No 83, Mr Connelly owed MAC any fiduciary duties. Mr Stirling contended (Closing Submissions, paragraph 9(8)(iii)) that Mr Connelly was a director of MAC “for the entire year commencing 1 July 2013 to 30 June 2014”. He referred to MAC’s 2014 Annual Report (CB 1284), referring to Mr Connelly’s directorship at CB 1313. This appears to be an accurate reading of the Annual Report. Somewhat confusingly, earlier in the same paragraph at 9(8)(i), Mr Stirling said of Mr Connelly:
“he commenced sitting as a board-member of MAC on 3 April 2013 and thereafter attending on 26 April 2013, 10 May 2013, 22 May 2013, 14 June 2013, 24 June 2013, 3 July 2013, 21 August 2013 and 20 November 2013.”
188He referred to Board minutes of MAC at CB 342, 360, 370, 381, 394, 396, 402, 404, 412 and 420.
189I raised this apparent inconsistency with Mr Stirling in the course of oral argument. As best I could understand his position, it was that there was a distinction between being a “Board member” and being a “director”. The rules, constitution, or other governing document of MAC was not put into evidence. Without suggesting it is impossible that MAC had so elaborate an organisational system as to involve not merely a group of directors but also a separate body of individuals known as “the Board”, it is in my view highly unlikely that such is the case. A consideration of the minutes themselves scarcely clarifies matters. The minutes of a meeting which occurred on 14 March 2013 describes the meeting as being “SPECIAL sitting - Executive/Board meeting”, as do the immediately-following several sets of minutes in the Court Book. At CB 413 we find minutes of a meeting that occurred on 20 November 2013 which is characterised as “Committee Meeting” (CB 413).
190Mr Stirling also sought to derive fiduciary duties owed by Mr Connelly to MAC from his employment relationship, contending in the same paragraph of his Closing Submissions at 9(8)(ii) that Mr Connelly “was an employee / manager of MAC from at least ... 7 May 2013”. He referred to Mr Connelly’s having subscribed to a document styled “Fraud (Risk) and Corruption Policy” at CB 264-272. This document provided, inter alia:
“All Board and staff members have a responsibility to act in a professional manner and in accordance with the Code of Conduct and Code of Ethics policies.” (CB 265)
191This document characterised as “Fraudulent and Corrupt activities” which were prohibited:
“Sale or Disposal of Assets, Information or Services at Less than Fair Value”. (CB 267)
Under the heading “Managing Conflict of Interest”, the document stated:
“Mildura Aboriginal Corporation Board and staff members may find themselves in a situation where there is a potential conflict of interest between their governance/employment and their outside activities or interests. The Mildura Aboriginal Corporation Board and Staff, Conflict of Interest policies provide guidance in this area.” (CB 271)
192I was not taken, and I do not believe that the document referred to in the “Fraud (Risk) and Corruption Policy” as “The Mildura Aboriginal Corporation Board and Staff, Conflict of Interest” policy which is said to provide guidance on these matters (cf CB 271).
193The Associations Incorporation Reform Act 2012 proceeds upon the basis that the body discharging the role analogous to the Board of Directors of an ordinary trading company is described as the “committee”: see s77 and following. Pertinently, s80 of the Act provides as follows:
“80 Disclosure of material personal interest
(1)A member of the committee of an incorporated association who has a material personal interest in a matter being considered at a committee meeting must, as soon as the member becomes aware of his or her interest in the matter, disclose the nature and extent of that interest to the committee.
Penalty: 10 penalty units.
(2)A member of the committee of an incorporated association who has a material personal interest in a matter being considered at a committee meeting must disclose the nature and extent of his or her interest in the matter at the next general meeting of the association.
Penalty: 10 penalty units.
(3)Subsections (1) and (2) do not apply in respect of a material personal interest—
(a) that exists only because the member—
(i)is an employee of the association; or
(ii)belongs to a class of persons for whose benefit the association is established; or
(b) that the member has in common with all, or a substantial proportion of, the members of the association.
(4)If a member of the committee of an incorporated association discloses a material personal interest in a contract or proposed contract, in accordance with this section and the member has complied with section 81(1) or the member's interest is not required to be disclosed because of subsection (3)—
(a) the contract is not liable to be avoided by the association on any ground arising from the fiduciary relationship between the member and the association; and
(b) the member is not liable to account for profits derived from the contract.
(5)A disclosure of a material personal interest required by subsection (1) or (2) must give details of—
(a) the nature and extent of the interest; and
(b) the relation of the interest to the activities of the incorporated association.
(6)The details referred to in subsection (5) must be recorded in the minutes of the committee meeting at which the material personal interest is disclosed.”
194Section 81 deals with the mode of determination of matters in which a committee member has a personal interest, and provides as follows:
“81 Matter on which committee member has material personal interest
(1)A member of the committee of an incorporated association who has a material personal interest in a matter being considered at a committee meeting must not—
(a) be present while the matter is being considered at the meeting; or
(b) vote on the matter.
Penalty: 10 penalty units.
(2)Subsection (1) does not apply in respect of a material personal interest—
(a) that exists only because the member belongs to a class of person for whose benefit the association is established; or
(b) that the member has in common with all, or a substantial proportion of, the members of the association.
(3)If there are not enough committee members to form a quorum to consider a matter because of subsection (1)—
(a) one or more committee members (including those who have a material personal interest in the matter) may call a general meeting; and
(b) the general meeting may pass a resolution to deal with the matter.”
195Despite the differing terminology, I proceed on the basis that in so far as MAC’s annual report described Mr Connelly as a “director”, he was a committee member for the purposes of the 2012 Act.
196Without going to the detail of the authorities cited by Mr Stirling in support of the proposition that Mr Connelly owed fiduciary duties to MAC, I accept that he did. He was either a director or in a position analogous to a director of a company incorporated under the Corporations Act (which MDAS now is). There is a wealth of case law to the effect that company directors owe fiduciary duties to their companies. By analogy, a committee member would have a similar duty to the incorporated association in which he or she holds office. The sections of the 2012 Act which I have quoted are consistent with that view, and proceed from its correctness.
197Consequently, if the transaction with Mr Connelly went forward simply on the basis of Mr Kirby’s plenary authority to engage in property transactions and without reference to the committee, the contract would be voidable at the option of MAC/MDAS. If, however, the regime prescribed by ss80 and 81 of the 2012 Act has been observed, then by virtue of s80(4) the contract and the associated mortgage would be immunised from attack based on breach of fiduciary duty. The evidence is regrettably uncertain on this topic. There are no minutes which indicate that the appropriate steps were taken. Mr Portelli remembers no such steps being taken at a meeting, and in particular denies Mr Connelly’s account of Mr Portelli’s having shaken hands with Mr Connelly after the matter was dealt with by the Board/committee.
198On the other hand, as Mr Wheelahan observed, there are agenda for meetings for which no minutes exist: in particular September 2013, February 2014 and April 2014. Mr Wheelahan, as I understood his contentions, favoured the view that the appropriate steps were taken, and some time in early 2014, which is consistent with Mr Connelly’s having initiated the sale process by means of a letter of offer dated 13 January 2014: see [32] above.
199On the other hand, Ms Capogreco, who seems to have been the minutes secretary for MAC, referred to having seen an email from Mr Kirby dated 19 December 2013 saying that the sale of No 83 under a rent-buy arrangement “was approved by the Board subject to no restrictions on the title”. (See [53] above)
200As regards the evidence of Mr Portelli and Mr Connelly, I regarded Mr Portelli as being a more straightforward witness, and one without any obvious axe to grind. Mr Connelly had a clear financial interest in giving whatever evidence was required to establish the contract and mortgage as valid obligations of MAC/MDAS.
201More pertinently, Mr Connelly propounded a letter of support for his account of events in typed form over the name of Mr Portelli at CB 1248. Mr Portelli denied having authored it (T507, L1-7). Mr Connelly was extensively cross-examined as to the provenance of this unsigned document, which he said had been composed by Mr Portelli but not signed by him. I found his account of these matters unconvincing (T234-6). If it were simply a matter of weighing the relative credibility of the two witnesses, I would favour the account given by Mr Portelli. However, a finding that the relevant steps as to disclosure of interest were taken does not depend crucially upon the credibility of this contentious document. I believe it is likely that the necessary formalities took place at a Board/committee meeting of MAC some time in the second half of 2013, perhaps in September. This would be consistent with the fact that the valuation by reference to which the price was fixed in the contract took place in September of 2013. It is also consistent with the email from Ms Capogreco at [53] above. It would be unsurprising if Mr Portelli did not remember a matter not of crucial significance to him over a decade after the event.
202Aside from the mere technical “conflict of interest” involved in the sale transaction between MAC and Mr Connelly, and Mr Connelly’s status as an “insider” and one owing a fiduciary duty to MAC, Mr Stirling (Closing Submissions, paragraphs 32-34) said the sale transaction was offensive to the rules as to fiduciaries because it was so disadvantageous to MAC. He referred to an exchange between me and Mr Connelly at T357, L29 – T358, L20, where I put it to Mr Connelly that the sale of No 83 to him on the long-term interest-free term described was subversive of MAC’s mission to provide rental accommodation to the Indigenous community. Mr Connelly agreed. In re‑examination he said that in so answering he was unaware that a matter had to have the effect of undermining MAC’s mission to be “subversive”. Mr Connelly disagreed, effectively taking back the concession he had given earlier. (T463, L27 – T464, L8) I am sceptical that Mr Connelly did not know the meaning of the word “subversive” or that if he were ignorant of its meaning he would not have responded to my question that he did not understand it.
203More generally, taking $130,000 as a fair price for No 83 in 2013-14, a promise to pay that amount by interest-free instalments over 25 years must represent a sale of No 83 at a substantial undervalue. Nevertheless, s80(4)(a) immunises the sale contract and the mortgage from attack “on any ground arising from the fiduciary relationship between the member and the association” and is apt to cover all the matters urged by Mr Stirling as fiduciary breaches by Mr Connelly. I should add that it must also be at least arguable, and perhaps more than arguable, that Mr Connelly was under no obligation to disclose a personal interest in the relevant contracts because he belonged “to a class of persons for whose benefit the association [was] established”, viz the Mallee Indigenous community: s80(3)(a)(ii). The immunising effect of ss(4) extends not only to instances where disclosure is made but also to instances where ss(3) removes any obligation to make disclosure.
204In light of these findings, a decree for specific performance should be granted in the terms discussed above.
Estoppel
205In so far as Mr Connelly contended in his Reply to the Second Amended Defence that he had relied to his detriment upon statements or representations made on behalf of the first defendant, I accept Mr Stirling’s contention in the rejoinder which he filed that, in the circumstances, no reliance to detriment by Mr Connelly has been shown. His situation on the face of it has been favourable. The rental which he has been paying remained unchanged over more than a decade, despite the capital value of No 83’s having more than doubled. There was no evidence, for instance, that he had outlaid his own funds to improve No 83 in reliance upon some assurance that he would become its outright owner rather than a mere tenant. In so far as the reply also makes reference to the determination of VCAT in declining to make an order for possession in favour of the first defendant and against Mr Connelly that he was a purchaser of No 83, this accords with the findings which I have made. In the circumstances, it is unnecessary for me to say anything as to whether my conclusions in that regard were mandated by issue estoppel deriving from the VCAT determination without regard to the matters which have led me to the same conclusion independently.
Disposition
206I will direct the parties within 14 days to bring in short minutes to give effect to these reasons.
Costs
207I have heard no submissions on the question of costs, and so I will reserve them.
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Certificate
I certify that these 57 pages are a true copy of the judgment of his Honour Judge Macnamara delivered on 24 June 2025.Dated: 24 June 2025
Jodie Daniel
Associate to His Honour Judge Macnamara
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