Doolkoora Pty Ltd v Stumpy Gully Holdings Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S ECI 2022 02243

DOOLKOORA PTY LTD (ACN 606 167 444)	First Appellant
PENINSULA PROPERTY GROUP AUST PTY LTD (ACN 620 720 130)	Second Appellant
v
STUMPY GULLY HOLDINGS PTY LTD (ACN 614 628 616)	Respondent

-----

JUDGE:	Gray J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 and 28 July 2023
DATE OF JUDGMENT:	29 March 2024; revised 10 April 2024
CASE MAY BE CITED AS:	Doolkoora Pty Ltd & Anor v Stumpy Gully Holdings Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 155

---

JUDICIAL REVIEW AND APPEALS — Victorian Civil and Administrative Tribunal Act 1998 s 148 — Property Law Act 1958 ss 19A, 28A, 53, 222, 225, 228 — Sale or division of land — Application by co-owner of land — Claim of tenancy in common in equity by reason of resulting trust — Garnett v Jessop [2012] VCAT 156 — VCAT jurisdiction — Presumption of resulting trust from contributions to purchase — No pre-existing relationship between contributors to the purchase — Presumption of resulting trust not precluded, displaced or rebutted by VCAT’s findings about the actual intentions of the contributors — Claim of fixed-term lease subject to Retail Leases Act 2003 — Finding of ostensible authority — Finding of oral agreement to enter into fixed-term lease — Errors of law in understanding of applicable principles and application to facts.

---

APPEARANCES:	Counsel	Solicitors
For the Appellants	S Stuckey KC M Sharkey A Mobrici	DSA Law
For the Respondent	D Williams KC J Oswald-Jacobs	Carroll Goldsmith Lawyers

TABLE OF CONTENTS

A. Introduction................................................................................................................................... 1

B. The facts.......................................................................................................................................... 3

C. The VCAT decision.................................................................................................................... 10

D. The application for leave to appeal to this Court................................................................. 15

E. Consideration............................................................................................................................... 18

Ground 1: Did VCAT have jurisdiction to make orders under PLA pt IV?....................... 18
The legislation.................................................................................................................... 19
Appellants’ notice of appeal............................................................................................ 23
Key concepts....................................................................................................................... 23
Appellants’ contentions.................................................................................................... 25
Previous consideration..................................................................................................... 28
Analysis............................................................................................................................... 33
Principles of statutory interpretation................................................................ 33
Preliminary points................................................................................................ 34
Flaws in the appellants’ contentions................................................................. 35
Conclusion — VCAT had jurisdiction............................................................... 41

Introduction to questions/grounds 2–5.................................................................................. 42
Ground 2: Did VCAT’s findings preclude a presumption of resulting trust from arising? 42
Appellants’ contentions.................................................................................................... 43
VCAT’s approach.............................................................................................................. 44
Applicable principles........................................................................................................ 45
Calverley................................................................................................................ 46
Vlahos..................................................................................................................... 46
Bosanac.................................................................................................................. 48
Analysis............................................................................................................................... 51

Ground 3: Did VCAT’s findings displace or rebut any such presumption?...................... 58
Appellants’ contentions.................................................................................................... 59
Applicable principles........................................................................................................ 60
Analysis............................................................................................................................... 60
Did VCAT err in its approach by addressing sub-issues?............................. 61
Is common intention and a direct relationship required?.............................. 62
Did VCAT fail to consider the lack of a relevant relationship, common goals, or common intention?............................................................................................. 62
Did VCAT err by failing to consider SGH’s intention at the time of its payments?................................................................................................................................ 65
Did VCAT err in failing to find the presumption rebutted on the ground that there was no common intention?................................................................................ 67

Ground 4: Did VCAT err in imputing the solicitor’s knowledge to the appellants?........ 67
Appellants’ contentions.................................................................................................... 68
VCAT’s approach.............................................................................................................. 68
Is ground 4 material to the outcome?............................................................................. 73
No determination on the merits of ground 4................................................................ 74

Ground 5: Did VCAT err in determining the parties’ respective interests under the resulting trust?.............................................................................................................................................. 74
Appellants’ contentions.................................................................................................... 74
VCAT’s approach.............................................................................................................. 74
Issues for determination................................................................................................... 75
Analysis............................................................................................................................... 75

Introduction to questions/grounds 6 and 7............................................................................ 77
Ground 6: Did VCAT err in concluding that Mr Forrest had ostensible authority from Doolkoora to bind it to an oral agreement for lease with SGH?.................................................... 79
Appellants’ contentions.................................................................................................... 79
VCAT’s approach.............................................................................................................. 80
The applicable principles.................................................................................................. 86
Analysis............................................................................................................................... 89
Analysis of the parties’ competing submissions.............................................. 89
The key facts and their proper characterisation.............................................. 96

Ground 7: Did VCAT err in concluding that an oral agreement for lease was reached between the parties?................................................................................................................................ 99

F. Conclusion and orders.............................................................................................................. 105

HIS HONOUR:

A purchase of land can be funded by multiple contributors. Those contributors might deal only through an intermediary. This case illustrates what can go wrong when a land acquisition occurs over an extended period and the contributors do not deal directly with each other. The confusion in this case had an additional dimension. One of the contributors wished to continue conducting a business on the land. Did the dealings through the intermediary result in an enforceable agreement for that contributor to have a lease of the land and options for fixed terms totalling up to nine years?

A. Introduction

Parliament recognises that people who own property together might wish to go their separate ways, and provides a process for enabling them to divide their interests. Variants of this process have existed in England since Tudor times. In Victoria, the process is set out in the Property Law Act 1958 (PLA), pt IV divs 1 and 2. These provisions enable a ‘co-owner’ of land or goods to apply for orders from the Victorian Civil and Administrative Tribunal (VCAT) for partition or sale. A ‘co-owner’ of land is defined as ‘a person who has an interest in land with one or more other persons as … joint tenants or … tenants in common’.

The appellants in this proceeding (separately, Doolkoora and Peninsula) are registered proprietors as tenants in common of land in Balnarring on the Mornington Peninsula (the land) on which the respondent (SGH) operates a service station business.[1]
[1]SGH operates the service station business pursuant to injunctions granted by VCAT.

SGH has no registered interest on the title to the land maintained by the Registrar of Titles under the Transfer of Land Act 1958 (TLA).

The courts recognise that a contributor to a purchase[2] can have equity in land through a resulting trust. SGH applied for orders under PLA pt IV claiming to be an equitable tenant in common with Doolkoora and Peninsula under a resulting trust. SGH paid the deposit for the purchase. The balance was paid by Doolkoora, for itself and Peninsula, both of which were latecomers to the transaction. They became the registered proprietors of the land.
[2]Referred to in some of the case law as ‘purchaser’, but I will generally use the term ‘contributor’.

SGH had three directors. Two of them (the Turnleys) never had any direct dealings with Doolkoora or its sole director (Ms Fraser). The Turnleys knew of their existence but not their identities. They knew nothing of Peninsula. The purchase was managed by an intermediary (Mr Forrest), who was the third director of SGH and the sole director of Peninsula. Mr Forrest was named in the contract as purchaser. Mr Forrest established Peninsula without informing the Turnleys.

At the various times when the contributors paid their money toward the purchase, they each had expectations of becoming owners of the land.

VCAT’s final orders included a declaration that SGH is an ‘equitable co-owner’ as to a certain proportion of the land, and that Doolkoora and Peninsula hold their interest in the land on a resulting trust to this extent. On the basis of this declaration, VCAT made orders for the sale of the land pursuant to s 228(2)(a) of the PLA.

VCAT found that, by reason of Mr Forrest having actual authority on behalf of Peninsula and ostensible authority on behalf of Doolkoora, those companies made a binding agreement with SGH to lease the land. VCAT declared that SGH entered into a valid, subsisting and enforceable agreement for lease with Doolkoora and Peninsula in respect of the land with certain terms, including an initial three-year term and two three-year options to extend, and ordered the respondents to enter into a lease with those and other terms pursuant to s 91(1)(a) of the Retail Leases Act 2003 (RLA) or by way of final mandatory injunction. The order for sale under s 228(2)(a) of the PLA is subject to the lease.

Doolkoora and Peninsula seek leave to appeal on questions of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) from orders made by VCAT in SGH’s favour after a proceeding in VCAT commenced by SGH. The grounds of appeal raise the following questions of law:

1) Did VCAT have jurisdiction to make orders under PLA pt IV?
2) Did VCAT’s findings about the following matters preclude a presumption of resulting trust from arising:
(a) the parties’ actual intentions in making their contributions to the purchase of the land?
(b) the absence of any pre-existing relationship or involvement in the transaction between the contributors and purchasers?
3) Did VCAT’s findings ‘displace’ (or rebut) any such presumption?
4) Did VCAT err in imputing to Doolkoora its solicitor’s knowledge in reaching its conclusion that SGH was the beneficiary of a resulting trust?
5) Did VCAT err in determining the parties’ respective interests under the resulting trust?
6) Did VCAT err in concluding that Mr Forrest had ostensible authority from Doolkoora to bind it to an oral agreement for lease with SGH?
7) Did VCAT err in concluding that an oral agreement for lease was reached between the parties?

I have decided to grant leave to appeal in relation to all except ground 4, and to allow the appeal from grounds 5, 6 and 7. The appeal will otherwise be dismissed.

B. The facts

The facts are complicated and the findings made by VCAT are dispersed over a long decision.[3] In order to place the questions in the appeal in context, a chronological narrative of the facts found by VCAT is required, in somewhat more detail than is usual for an appeal under s 148 of the VCAT Act.
[3]Stumpy Gully Holding Pty Ltd v Doolkoora Pty Ltd (Building and Property) [2022] VCAT 564 (VCAT decision).

In about July 2016, the owners of a service station business known as ‘Balnarring Motors’, and the land on which it operated, engaged an agent to sell the land and business. This evidently attracted the interest of Stewart Forrest, who lived and worked in the area. In about mid July 2016, Mr Forrest informed Kimball Turnley (Mr Turnley) that he had identified an opportunity to purchase the service station business and the freehold on which it was operated.

Mr Forrest had been acquainted for some years with Mr Turnley and his son Craig Turnley (Mr C Turnley) (together, the Turnleys). Mr C Turnley had at one time worked for a labour hire company owned by Mr Forrest, and Mr Forrest had subsequently sold that company to CITEK Group Pty Ltd (CITEK), owned by Mr Turnley and his spouse. Later, from about October 2015, Mr Forrest and the Turnleys became involved in a three-way joint venture proposal for a restaurant business in Balnarring. By July 2016, that project was under way.

Mr Forrest made a proposal to Mr Turnley that Mr Forrest and the Turnleys should acquire the service station business and land in three equal shares, whether by holdings in a company or otherwise. In July 2016 an informal and oral ‘Acquisition Agreement’ to that effect was reached between them. One of its terms was that Mr Turnley would provide funding to purchase the business and the deposit for the land. Mr Forrest gave evidence before VCAT that there were more terms, including a condition precedent that Mr Turnley would provide all the funding for the purchase. This account was disputed by the Turnleys. Doolkoora and Peninsula relied on Mr Forrest’s evidence in contending that the alleged condition precedent had not been fulfilled and SGH was thereby disentitled from obtaining any interest in the land. VCAT addressed this issue in its decision, calling it the alleged condition precedent.

On 29 July 2016, Mr Forrest made an offer in writing to the owners and vendors’ agent to purchase the service station business and the land.

The purchase price for the land was $960,000, of which three $50,000 deposit payments were required: on signing, six months later and nine months later. The purchase price for the business was $90,000 (based on fuel stocks at the time), of which a deposit of $9,000 was payable on signing and the balance on settlement in six months or on possession.

The original form of the contract of sale of the land required that ‘this agreement be completed contemporaneously with or earlier’ than a contract for the sale of the business, and if that contract were to be rescinded or terminated, the vendor would be able to rescind the agreement for the sale of the land also. Upon payment of the first two deposit amounts, and purchase of the business, the contract provided for the purchaser to occupy the land for no extra fee and to be responsible for outgoings from that time.

Also on 29 July 2016, Mr Turnley caused CITEK to pay $50,000 to the agent of the vendor of the service station, being the first instalment on a deposit under the land purchase contract.[4]
[4]This was later treated to be a payment on behalf of SGH and after SGH’s incorporation was recorded as a debt to CITEK. Counsel for the appellants suggested that it might not be clear how this could be a payment on behalf of SGH, but there was no ground of appeal on this basis.

Mr Forrest’s offer was accepted. The agreements for the purchase by Mr Forrest (or nominee) of the land and business became unconditional during the week beginning 8 August 2016. Settlement of the purchase of the land was due in 12 months, which meant August 2017. Mr Forrest was the named purchaser on both written agreements. Mr Forrest instructed a solicitor, David Gibbs of DGA solicitors, in relation to these agreements and was invoiced for this work. Mr Turnley paid the invoice.

On 19 August 2016, the written agreements for the purchase of the land and business were amended by deed. This included the deletion from the business purchase agreement of a condition that had enabled the vendor of the business to rescind that agreement if the land purchase was not also completed, and altering the composition of the purchase price in that agreement by adding a value for goodwill of the business and adjusting the value of stock downward. The overall purchase price was left unchanged.[5]
[5]VCAT decision [93]–[97].

SGH was incorporated on 5 September 2016 for the purpose of purchasing the land and business as a joint venture operating the business. Its directors were Mr Turnley, Mr C Turnley and, initially, Mr Forrest’s spouse, representing Mr Forrest’s interests.[6] The directors were shareholders in equal proportions.[7]
[6]VCAT decision [24], [26]–[27], [105].
[7]VCAT decision [25], [104].

There were discussions between the Turnleys and Mr Forrest about the development and fit-out of the restaurant business. Over the same period, there were communications between the Turnleys and Mr Forrest about the purchase of the service station land and business, and the Turnleys had dealings with the vendors and with the petrol supplier about the business.[8] In mid-October 2016, Mr Turnley agreed with the vendors that settlement of the purchase of the business would be on 1 December 2016.[9]
[8]VCAT decision [76]–[113].
[9]VCAT decision [111].

On 28–29 November 2016, Mr Turnley transferred $100,000 from his superannuation account via personal bank accounts to CITEK, and then arranged for CITEK to transfer $120,000 to SGH as a loan.[10]
[10]VCAT decision [114].

On 2 December 2016, SGH made two payments to the vendor’s agent: $66,000 for the purchase of the business, being the balance owing after an adjustment for less fuel remaining on the premises; and $50,000, being the second instalment of deposit on the purchase of the land. Mr Turnley took possession of the business premises for SGH on that day. As mentioned in paragraph 18 above, the written contract of sale of the land conferred a licence to occupy the land for no fee.

On 20 December 2016, Mr Forrest succeeded his spouse as director of SGH. From this date to 1 September 2017, Mr Forrest was one of SGH’s three directors, along with Mr Turnley and Mr C Turnley.

Also on 20 December 2016, Mr Turnley caused SGH to make a third payment of $50,000 to the vendor of the land.

This left an outstanding balance of $810,000. Mr Turnley indicated to Mr Forrest that he was unable to raise and pay that amount for the purchase of the land by the required settlement date of around August 2017. Discussions about options for finding a source of funds to pay the balance of the purchase price on the land ensued, and Mr Forrest told Mr Turnley in about May 2017 that he had found another investor, who would pay the balance. Mr Forrest did not reveal the investor’s identity, but it later became clear that this was Belinda Fraser.

On 8 or 9 June 2017, SGH entered into a ten-year supply agreement with a new supplier, Petrogas Australia Pty Ltd, for the supply of ‘Mobil’ fuel for the service station business.

VCAT received evidence that in early July 2017, Mr Forrest told Ms Fraser that his partners had failed to secure the funding that was required to pay the balance of the purchase price, and that if Ms Fraser or an entity nominated by her paid the balance of the purchase price, she or that entity would own the business and the land outright. Doolkoora and Peninsula contended before VCAT that this constituted a binding agreement between them and SGH to that effect, called in the VCAT proceeding the alleged SGH/Fraser relinquishment agreement. VCAT addressed this issue in its decision.

On 25 July 2017, there was a meeting between the Turnleys and Mr Forrest at which Mr Forrest said that he had found an investor for the balance of the purchase price. VCAT found that Mr Turnley and Mr Forrest agreed in about July 2017 that the new investor could become a part owner of the land with SGH.[11]
[11]VCAT decision [366], [369]–[370].

Again, Mr Forrest did not reveal Ms Fraser’s identity as the investor, or the identities of the two entities related to her by which the investment was to occur. The first of these was Doolkoora, which had been incorporated in 2015, its sole director and shareholder being at all relevant times Ms Fraser. The second was Peninsula.

Peninsula was incorporated on 27 July 2017, with Ms Fraser and Mr Forrest as its shareholders and directors. However, Ms Fraser’s directorship terminated almost immediately, this occurring on the same day — 27 July 2017.[12]
[12]VCAT decision [33]–[36].

During most of the subsequent events of relevance to this case, Mr Forrest was Peninsula’s sole director and secretary, only relinquishing those offices on 8 February 2018, when Ms Fraser assumed them.

Before VCAT, Mr Forrest gave evidence that there was more to the discussions he had with the Turnleys in July 2017 about the terms on which the new investor would be involved in the purchase. On the basis of Mr Forrest’s evidence, Doolkoora and Peninsula contended that in about July 2017, an agreement had been reached between Mr Forrest and the Turnleys to relinquish any interest SGH might have acquired from its contributions to the purchase. In the VCAT proceeding this was called the alleged SGH/Forrest relinquishment agreement. VCAT addressed this issue in its decision.

At a time in late 2017 not revealed by the findings of VCAT, Mr Gibbs started to act for Ms Fraser. The evidence before the Court does not reveal the terms of this retainer.

On 1 August 2017, VCAT found, ‘Doolkoora and Peninsula’ paid the balance of the purchase price for the land[13] of $810,000.[14] They also paid stamp duty, which VCAT referred to as being ‘$80,000’.[15] It was Ms Fraser and Doolkoora who provided these amounts.[16]
[13]VCAT decision [138].
[14]VCAT decision [239].
[15]VCAT decision [239]. However, in the appeal in this Court, in response to ground 5, SGH pointed out that stamp duty on a purchase of land in Victoria at a dutiable value of $960,000 was not $80,000, but was $52,670. This issue is addressed in the consideration of ground 5, below.
[16]Although VCAT found that the payments were made by both Doolkoora and Peninsula, the evidence indicated they were made by Doolkoora for both appellants. See Ms Fraser’s Statement No 2 [9], Application Book 640, reproduced in VCAT decision [254].

On 7 August 2017, there were oral communications between Mr Forrest and Mr Turnley which VCAT found to constitute the offer on behalf of Doolkoora and Peninsula for the agreement for lease under challenge in this appeal. VCAT found this was an offer to enter into an agreement for lease for a three-year period with options for renewal of two further three-year periods, and on the other terms referred to in VCAT’s orders.[17] Monthly rent was to be paid to Mr Gibbs. Mr Turnley caused SGH to immediately send to Mr Gibbs the rent for August. In its decision, VCAT considered whether these events amounted to an agreement for lease, calling this the agreement for lease claim.
[17]VCAT order 2, VCAT decision [64], [359], [381], [455], [458]–[459].

In the second half of August 2017, SGH spent money on an upgrade of the service station and on converting it to a ‘Mobil’ branded service station.

On 1 September 2017, Mr Forrest ceased to be a director of SGH.

On 2 September 2017, Doolkoora and Peninsula became registered proprietors in fee simple as tenants in common of the land.

In September, October, November, and December 2017, Mr Turnley caused SGH to pay further amounts of monthly rent to Mr Gibbs and, in some months, outgoings as directed by Mr Forrest.

On 19 December 2017, Mr Gibbs’ firm wrote on behalf of Doolkoora (but not Peninsula) to Mr Turnley, offering a lease for $130,000 rent per annum on condition that Mr Turnley or his associated entity pay $250,000 to purchase the Balnarring Motors business. Mr Turnley’s evidence to VCAT was that he considered these terms to be inconsistent with the terms discussed and agreed with Mr Forrest in August 2017, and to be unworkable.

On 8 February 2018, Doolkoora became sole shareholder of Peninsula, Mr Forrest ceased to be the sole director and secretary of Peninsula, and Ms Fraser assumed these offices.

On 3 April 2018, Doolkoora and Peninsula served a notice to quit the land on SGH. This caused SGH to commence a proceeding in VCAT.

C. The VCAT decision

On 21 May 2018, VCAT granted an interlocutory injunction allowing SGH to continue to occupy the land.

Mr Forrest played no role in the proceeding in this Court. However, he featured in the VCAT proceeding.

In November 2018, VCAT made directions for a final hearing in May 2019. At this time, Mr Forrest was a respondent in the VCAT proceeding.[18] However, after providing three witness statements and after the hearing had commenced in May 2019, Mr Forrest announced that he had become a bankrupt.[19] It appears that Mr Forrest ceased to be a party to the VCAT proceeding at some time after this.
[18]VCAT decision [304].
[19]VCAT decision [310], [311]–[314].

The hearing resumed in December 2019 and was later adjourned to February 2020. After the hearing resumed in February 2020, Mr Forrest attended the hearing but did not adopt a further proposed statement containing evidence Doolkoora and Peninsula sought to adduce from him. Subject to certain excisions, his earlier witness statements were accepted into evidence.[20]
[20]VCAT decision [319]–[322].

Based largely on the points of claim and defence of the parties, the issues VCAT identified for determination, and its conclusions on those issues, were as follows.

First, was SGH (by itself or, as alleged, by CITEK on SGH’s behalf), by making payments between amounting to $150,000 towards the purchase of the land, entitled to claim that Doolkoora and Peninsula held their interest in the land on a purchase money resulting trust in favour of SGH (the resulting trust claim)? VCAT addressed this question over the course of 60 pages, comprising more than half of its reasons for decision. VCAT answered this question by addressing four ‘sub-issues’. These were:

(a) Was it agreed between Mr Forrest and Mr Turnley, as part of the conversations in July 2016 comprising the Acquisition Agreement, that any interest in the land that may have accrued to SGH upon making contributions by way of payment of the deposit toward the purchase price of the land, was conditional upon the alleged condition precedent?

(b) Did Mr Forrest and Mr Turnley expressly agree in about July 2017 on the alleged SGH/Forrest relinquishment agreement?

(c) Was SGH in any event bound by Mr Forrest’s alleged representation to Ms Fraser on behalf of the respondents in early July 2017 to the effect of the alleged SGH/Fraser relinquishment agreement?

(d) Did SGH make a financial contribution towards purchase of the land pursuant to the Land Purchase Contract, such that a resulting trust arose in favour of SGH in proportion to the contribution of funds made by SGH for the purchase of the land?

VCAT addressed the first three of the above sub-issues before identifying the principles applicable to the raising of presumptions about purchase money resulting trusts and deciding that such a presumption arose in this case.

VCAT’s reasons for decision on the first three sub-issues were in summary as follows:

(a) VCAT found that Doolkoora and Peninsula failed to prove the alleged condition precedent. In the course of considering the issues, amongst other things, VCAT dismissed as ‘not proven’ a contention by Mr Forrest that SGH and Mr Turnley were to be compensated for the $150,000 deposit by having free occupation of the land, conducting the business and deriving cashflow during the period from December 2016 to settlement in August 2017, and accepted Mr Turnley’s evidence to the contrary. VCAT also considered that Mr Forrest’s conduct in preparing the only document that referred to the alleged condition precedent, the ‘Balnarring Motors Deed’, supported VCAT’s preference for the evidence of the Turnleys.

(b) VCAT concluded that Doolkoora and Peninsula had not proved the SGH/Forrest relinquishment agreement. VCAT preferred Mr Turnley’s evidence to Mr Forrest’s and found that contextual evidence supported Mr Turnley’s account.

(c) VCAT found there was insufficient evidence that Mr Forrest, on behalf of SGH, entered into the alleged SGH/Fraser relinquishment agreement with Ms Fraser. VCAT did not accept that Mr Forrest acted within the scope of ostensible authority as SGH’s agent in any discussion with Ms Fraser about that topic. VCAT said it was ‘not persuaded that Ms Fraser had a proper basis for assuming that Mr Forrest had authority on behalf of SGH to enter into the alleged SGH/Fraser relinquishment agreement’, and ‘Ms Fraser was not entitled to rely on the representations of Mr Forrest because she should have known or suspected that any assumption that Mr Forrest could bind SGH was incorrect’. I address this issue in more detail in my analysis of ground 4 below.

(d) As to the fourth and final sub-issue, VCAT upheld SGH’s resulting trust claim. VCAT decided that Doolkoora and Peninsula held the land on a resulting trust for SGH to the extent of its $150,000 contribution to the purchase. VCAT found that the first payment of $50,000 was a pre-incorporation payment made on behalf of SGH, referred briefly to the applicable principles, and found that a resulting trust arose in favour of SGH upon paying each of the three $50,000 instalments, concluding that Doolkoora and Peninsula held their shares in the land subject to that resulting trust.

Second, was SGH entitled as equitable co-owner to an order for the sale of the land pursuant to s 228(2)(a) of the PLA, and division of the proceeds in accordance with the respective contributions of the co-owners (the order for sale claim)? VCAT answered this affirmatively, in SGH’s favour, and made a calculation of the proportion in which the land was held on a resulting trust for the benefit of SGH as a tenant in common. There is no separate appeal in relation to the order for sale claim. However, VCAT’s order for sale depends on the resulting trust claim.

Third, did SGH have an agreement, made on 7 August 2017, for lease of the land with Doolkoora and Peninsula from a date in August 2017 (and if so, what date) and, if so, on what other terms, as alleged in the agreement for lease claim? VCAT found that there was such an agreement. VCAT found that, when communicating with the Turnleys about SGH entering into a lease over the land to conduct the service station business, Mr Forrest was acting with ostensible authority to bind Doolkoora and actual authority to bind Peninsula. As a result, VCAT found that Doolkoora and Peninsula reached an oral agreement with SGH to enter into a retail lease over the land. VCAT made findings about its terms.

VCAT made no findings on a potential fourth issue as to whether there was an agreement by parol for a lease. This issue was couched as an alternative to the third issue.

VCAT also noted a dispute about ownership of the business, which VCAT decided it did not have jurisdiction to determine. There was no appeal from this ruling. The ownership of the business is therefore also excluded from the subject matter of this appeal.

On 19 May 2022, VCAT made its final orders in the proceeding, which (as amended by a further order on 10 June 2022) were as follows:

1. It is declared that the applicant is an equitable co-owner of land at 2994 Frankston Flinders Road, Balnarring, Victoria (“the land”), as to an undivided fifteen ninety-sixths of the land, and that the respondents hold their interest in the land on a resulting trust to this extent for and on behalf of the applicant.
2. It is declared that on or about 7 August 2017, the applicant entered into a valid, subsisting and enforceable agreement for lease with the respondents in respect of the land, containing the following terms:
(a) the lease would provide that the applicant would pay to the respondents rent of $9,166 plus GST per month;
(b) in addition to the payment of rent, the applicant would also pay the respondents outgoings in respect of the land;
(c) the initial term of the lease would be three years commencing 1 August 2017;
(d) the applicant would have the right to exercise two options to extend the term of the lease for a further three years in respect of each option (such that if both options were duly exercised, the lease will extend to 31 July 2026);
(e) the rent will be increased in line with the CPI at the commencement of each new year of the term, and that rent reviews be conducted to market at the commencement of each new term;
(f) such further terms and conditions (as are not inconsistent with the above terms) as are usual in leases of premises for use as service stations which sell car and truck fuel and related goods, and which also provide services to retail customers; and
(g) the parties will enter into a written lease between the applicant as lessee on the one hand and the respondents as lessors (being the registered proprietors of the land from 2 September 2017), and containing the above terms, and such other terms as are implied by the Retail Leases Act 2003 (Vic).

3. Pursuant to the power to do so in s 91(1)(a) of the Retail Leases Act 2003 alternatively by way of final mandatory injunction, the respondents must enter into a lease with the applicant containing the above terms, and such further terms and conditions as are usual in leases of premises for use as service stations which sell car and truck fuel and related goods, and provide services to retail customers. In the event that the parties cannot agree on the full extent of these further terms, liberty to apply to the Tribunal.
4. By consent, Mr Kimball Turnley of the applicant must provide the guarantee stipulated in the LIV Lease, if required by the respondents.
5. It is declared that by its conduct, the applicant exercised its first option to extend the term of the lease to 31 July 2023.
6. Pursuant to s 228(2)(a) of the Property Law Act 1958, the Tribunal orders that the land be sold, but subject to the agreement for lease declared by order 2, or the lease contemplated by order 3, to the effect that the proceeds of sale will be applied as follows, and in the following priority:
(a) Payment of the real estate agent’s commission or fee, including the auctioneer’s fee and other expenses of sale;
(b) the discharge of any registered encumbrance on the land;
(c) payment of any outstanding rates, charges, taxes and imposts which have not already been paid by the respondents;
(d) payment of the reasonable legal costs associated with the sale and conveyance of the land;
(e) the net balance to be paid to the parties in the following proportions:

To the applicant

Fifteen ninety-sixths of the net balance, but from which must be deducted outgoings from 1 September 2017 for which the applicant is liable to pay to the respondents, and paid to the respondents

To the respondents

The balance of the net balance, from which must be deducted the amount described in order 3(f)[21], and paid to the applicant.

[21]I infer that this is a slip and is intended to refer to order 6(f).

(f) payment to the applicant of a fifteen ninety-sixths share of the net income derived from the land since 1 August 2017 (being the date that the respondents settled their purchase of the land), or from such other date that the respondents first received income from the land.

7. Liberty to apply in respect of the other terms of sale, including liberty to apply to the principal registrar to obtain the Tribunal’s pro-forma terms of sale as may assist the parties to effect the requirements of order 6.
8. The respondents and/or their agents are permanently restrained from taking any action to recover possession of the land in reliance upon their notice to quit dated 3 April 2018.
9. Costs reserved. Should there be any application for costs, the parties must confer with a view to reaching agreement on the dates for the filing and exchange of written submissions, failing which the Tribunal will make orders.
10. Liberty to apply generally, including for assessment of applicable outgoings payable by the applicant to the extent that they have not been paid by the applicant, and for assessment of income payable to the applicant by the respondents.

D. The application for leave to appeal to this Court

By their amended notice of appeal (the notice of appeal) the appellants seek leave to appeal to the Court from VCAT’s orders. The appellants seek orders granting leave and allowing the appeal, dismissing the proceeding in VCAT between them and SGH, and that SGH pay their costs of this proceeding and the proceeding in VCAT.

As already noted, the proceeding is brought under s 148 of the VCAT Act. Section 148(1) provides that a person may seek leave to appeal from a decision of VCAT on a question of law.

I am required to determine whether leave should be granted and, if so, whether the orders of VCAT or any of them should be set aside or varied.

The seven questions and grounds of the notice of appeal are substantially reproduced, issue by issue, in the ‘Consideration’ section of these reasons. I have considered the parties’ submissions, both oral and written.[22]
[22]Appellants’ submissions dated 2 March 2023 (Appellants’ First Outline); respondents’ submissions dated 4 May 2023 (SGH’s First Outline); appellants’ reply submissions dated 30 June 2023 (Appellants’ Second Outline); appellants’ post-hearing submissions regarding legislative history and indefeasibility of title dated 25 August 2023 (Appellants’ Third Outline); respondent’s post-hearing submissions regarding unidentified principals dated 1 September 2023 (SGH’s Second Outline); appellants’ post-hearing submissions regarding unidentified but disclosed principals dated 9 September 2023 (Appellants’ Fourth Outline); and respondent’s submissions in response to Appellants’ Third Outline in relation to legislative history and indefeasibility of title dated 10 September 2023 (SGH’s Third Outline).

Before I explain my consideration of the issues, there is a threshold matter raised by the parties as to the function of the Court in an appeal under s 148 of the VCAT Act.

The appeal is limited to questions of law. The identification of a question of law is not merely a precondition to the exercise of a right to appeal, but the subject matter of the appeal itself.[23] The appeal does not extend to correction of alleged errors of fact unless VCAT made a finding of fact that was not open to it.[24] However, the limits of the Court’s function in a proceeding under s 148 do not altogether prevent a court from considering mixed questions of fact and law. In some circumstances, it will be permissible to consider whether VCAT erred in law in reaching conclusions on mixed questions of fact and law.[25] Generally speaking, whether primary facts as found fall within a statutory provision properly construed is a question of law,[26] and the same is true of a legal test arising at common law or in equity.[27]
[23]Miller v Martin [2021] VSCA 108, [71], citing Patsuris v Gippsland and Southern Rural Water Corporation [2016] VSCA 109, [44].
[24]Tanah Merah Vic Pty Ltd v Owners’ Corporation No 1 of PS631436T [2021] VSCA 72, [198]; Miller v Martin [2021] VSCA 108, [72]; Heng Yang Developments Pty Ltd v Red Earth Developments (Aust) Pty Ltd [2022] VSC 231, [40].
[25]See Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771, [50] (Warren CJ); Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315, [192].
[26]Hope v Bathurst City Council (1980) 144 CR 1, 7; Collector of Customs v Pozzolanic (1993) 43 FCR 280, 287; FCT v Trail Bros Steel & Plastics (2010) 186 FCR 410, [13]; Vetter v Lake Macquarie City Council (2001) 202 CLR 439, [24] (Gleeson CJ, Gummow and Callinan JJ); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771, [48] (Warren CJ), [167]–[168] (Whelan JA); but compare S v Crimes Compensation Tribunal [1998] 1 VR 83, 89. The Court of Appeal’s decision in Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771 was reversed on appeal on different grounds, without affecting the remarks noted here: see (2016) 260 CLR 1, [24]–[27], [69].
[27]Vetter v Lake Macquarie City Council (2001) 202 CLR 439, [24] (Gleeson CJ, Gummow and Callinan JJ); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771, [167]–[168] (Whelan JA).

SGH submitted that an element of the appellants’ contentions in support of ground 2, and the entirety of ground 7, are beyond the scope of s 148 of the VCAT Act.

In my view, these grounds consist of questions of law in that they dispute VCAT’s understanding of applicable legal (and equitable) principles, or contend that VCAT erred in applying those principles to the facts as found, or that the findings of VCAT were not open.

It is worth saying something more about the principle that, generally speaking, whether facts as found fall within a legal description is a question of law. SGH relied on the decision of the New South Wales Court of Appeal in Thomas and Naaz.[28] The appellants submitted that this case should not be followed. The reason for this submission appears to be that the case might be thought to qualify this principle more restrictively than Victorian authorities. I do not think there is any real difference of approach to the principles. The Court in that case indicated that an appeal on a question of law is available where the characterisation of found facts is one that bears ‘a particular legal meaning’.[29]
[28]Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40, [32]–[34], [48]–[58] (Thomas and Naaz).
[29]Thomas and Naaz [54].

Although the issues raised by SGH concern the application of principles of equity and contract law (rather than statute), they involve the characterisation of facts with descriptions that bear ‘a particular legal meaning’. It is this that matters.

Thus, the question of whether the facts found by VCAT are to be characterised as giving rise to the presumption of a resulting trust is a question of law, as is the question of whether the facts found by VCAT would be understood by a reasonable observer to amount to the making of a legally binding agreement for the lease of land.

I interpret all the grounds of the appeal, including the ones impugned by SGH, as falling within the permissible scope of a s 148 appeal.

I address the question of whether I should grant leave to appeal at the same time as determining whether the appeal on each question and ground is to be upheld.

E. Consideration

This section is divided into seven parts, in which I address each of the grounds of the appeal in turn.

Ground 1: Did VCAT have jurisdiction to make orders under PLA pt IV?

In its written submissions, SGH submitted that leave to appeal on this ground should be refused on the basis that the appellants had not made submissions to VCAT objecting to its jurisdiction. However, as SGH’s counsel rightly acknowledged at the hearing, even if the appellants had not agitated the issue below, I would in any case have to address it. That is because the issue raises a statutory interpretation issue of general application and raises doubt about whether VCAT had jurisdiction to make some of its orders.[30]
[30]See Tucci v Victorian Civil and Administrative Tribunal & Anor [2010] VSC 425.

In any event, the appellants did raise the issue before VCAT. By their points of defence in the VCAT proceeding, Doolkoora and Peninsula contended that VCAT did not have jurisdiction to adjudicate the issue as to whether SGH ‘[holds] an equitable interest in the land’. VCAT dismissed that contention, on the basis that an ‘interest’ in land for the purposes of s 222 of the PLA ‘has been held to include a beneficial interest’, citing Garnett v Jessop.[31]
[31][2012] VCAT 156 (Garnett).

The validity of four of VCAT’s orders depend on whether it had jurisdiction under PLA pt IV.[32] VCAT possesses no general equitable jurisdiction.[33] If it had no jurisdiction under PLA pt IV, those orders would be invalid and would have to be set aside.
[32]The declaration in order 1, the order for sale pursuant to s 228(2)(a) of the PLA in order 6, and ancillary orders relating to the sale in orders 7 and 10.
[33]Herald and Weekly Times Pty Ltd v Victoria (2006) 25 VAR 124, 134; McLeod v Marina Operations Pty Ltd [2006] VCAT 2537, [34].

The jurisdictional issue was of significance not only in this case but for future cases. It was reasonably arguable. I have decided to grant leave to appeal on ground 1.

For the reasons explained in this section, and having considered the merits of ground 1 in detail, I have decided to dismiss it. I have concluded that VCAT had jurisdiction to hear and determine SGH’s claim to an equitable interest in the land as an element of deciding SGH’s claim for orders under PLA pt IV div 2 in relation to the land, and that VCAT had jurisdiction to make related orders under those provisions.

The legislation

PLA pt IV applies to all land in Victoria, and is not limited to land registered under the TLA.[34] Within PLA pt IV, s 225(1) provides relevantly that ‘a co-owner of land or goods may apply to VCAT for an order or orders under this Division to be made in respect of that land or those goods’. An application may request either sale and division of proceeds, or physical division, or a combination of both.[35] ‘Co-owner’ is defined as:[36]

… a person who has an interest in land or goods with one or more other persons as—
(a) joint tenants; or
(b) tenants in common;…

[34]PLA s 221.

[35]PLA s 225(2).

[36]PLA s 222.

‘Land’ has the same meaning as it has in the Interpretation of Legislation Act 1984.[37] The Interpretation of Legislation Act 1984 contains the following inclusive definition of land, which applies ‘unless the contrary intention appears’:[38]

land includes buildings and other structures permanently affixed to land, land covered with water, and any estate, interest, easement, servitude, privilege or right in or over land…

[37]PLA s 222.

[38]Interpretation of Legislation Act 1984 s 38.

The parties to an application to VCAT must include all co-owners.[39] The substantive powers of VCAT are set out in s 228:
[39]PLA s 226.

228     What can VCAT order?
(1)       In any proceeding under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs.
(2)       Without limiting VCAT's powers, it may order—
(a)       the sale of the land or goods and the division of the proceeds of sale among the co-owners; or
(b)       the physical division of the land or goods among the co-owners; or
(c)       that a combination of the matters specified in paragraphs (a) and (b) occurs.

VCAT is to make an order for sale and division of proceeds ‘unless VCAT considers that it would be more just and fair to make an order’ for physical division.[40] In a proceeding for sale or division of land or goods, VCAT has power to appoint or remove trustees and give them directions,[41] and certain other specific powers relating to sale.[42]
[40]PLA s 229(1).
[41]PLA s 231.
[42]See PLA s 232.

In a proceeding for sale or division, VCAT may also make various orders as to compensation and accounting.[43] One of these is that ‘one or more co-owners account to the other co-owners in accordance with section 28A’,[44] which in turn provides:
[43]See PLA s 233.
[44]PLA s 233(1)(b).

28A Liability of co-owner to account
(1) A co-owner is liable, in respect of the receipt by him or her of more than his or her just or proportionate share according to his or her interest in the property, to account to any other co-owner of the property.
(2) In this section, co-owner means a joint tenant, whether at law or in equity, or a tenant in common, whether at law or in equity, of any property.

Section 28A is in pt II of the PLA, entitled ‘The general law of property and conveyancing’, within div 1, entitled ‘General principles’. There are different definitions of ‘property’ in PLA pt II and PLA pt IV but they are to very similar effect. In pt II, ‘property’ is inclusively defined, unless inconsistent with the context or subject matter, as ‘any thing in action, and any interest in real or personal property’.[45] In pt IV, ‘property’ is defined in exhaustive terms, but the definition includes ‘real and personal property, including any estate or interest in real or personal property’, ‘a thing in action’, and ‘a right with respect to property’.[46]
[45]PLA s 18(1).
[46]PLA s 222.

PLA pt IV div 3 is entitled ‘Accounting’. It enables a co-owner of land or goods to apply for an accounting in accordance with s 28A, whether or not an application for sale or division is also made.[47]
[47]PLA s 234.

PLA pt IV div 4 is entitled ‘Jurisdiction’. Its principal provision is s 234C, which is intended to alter or vary the Supreme Court’s jurisdiction recognised by s 85 of the Constitution Act 1975.[48] The Supreme Court and the County Court do not have jurisdiction to hear an application under pt IV, subject to the following exceptions.[49]

(a) The Supreme Court and the County Court have jurisdiction to hear an application under pt IV if the application relates to Administration and Probate Act 1958 pt IV, the Partnership Act 1958, or ‘Part IX’ (sic) of the PLA.[50] There is no longer any pt IX in the PLA. I take this to be a reference to the Relationships Act 2008 pt 3.3.[51] This jurisdiction is exclusive of VCAT.[52]

(b) Also, the Supreme Court and the County Court have jurisdiction to hear an application under pt IV if the issue of co-ownership arises in the course of a proceeding otherwise commenced in those courts, or special circumstances exist which justify them hearing the application.[53] Special circumstances include complexity.[54]

[48]PLA s 234G.

[49]PLA s 234C(1).

[50]PLA s 234C(2).

[51]See Relationships Act 2008 s 72, which repealed PLA pt IX.

[52]PLA s 234C(3).

[53]PLA s 234C(4).

[54]PLA s 234C(5).

It is also relevant to note ss 19A and 53 of the PLA. Section 19A was enacted when the historical ‘Statute of Uses’ was repealed in Victoria in 1980.[55] The Victorian Law Reform Commission has noted that sub-ss 19A(1) and (2) are obscure and may be redundant.[56] Nevertheless, ss 19A(1) and (2) refer to the creation of equitable interests in land. Subsections 19A(3) and (4) provide that a resulting trust for the grantor of a voluntary conveyance shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee, but this does not limit or affect the operation of any principle or rule of equity relating to the implication of resulting trusts.
[55]Statute of Uses 1535, 27 Hen 8, c 10. The Statute of Uses converted the equitable interests of beneficiaries into equivalent legal estates, as a measure against tax avoidance. Later, the Statute of Uses was circumvented and eventually repealed — see B Edgeworth, Butt’s Land Law (7^th ed, 2017) [4.40]–[4.60]. The Statute of Uses was repealed in Victoria in 1980 by the Imperial Act Application Act 1980 s 5, and s 19A of the PLA was inserted by the Imperial Law Re-Enactment Act 1980 at the same time. Section 19A in effect reverses the operation of the Statute of Uses and confirms that interests in land that would have been legal interests under the Statute of Uses are capable of being created as equitable interests. See also Victorian Law Reform Commission, Review of the Property Law Act 1958: Consultation Paper (2010) 90.
[56]Victorian Law Reform Commission, Review of the Property Law Act 1958: Consultation Paper (2010) 90.

Section 53 is the modern manifestation of an aspect of the ‘Statute of Frauds’.[57] Subsection 53(1) imposes requirements of writing and a signature for disposition of any ‘interest in land’, ‘declaration of trust respecting any land or interest therein’, or disposition of an ‘equitable interest’ or trust, subject to ‘the provisions hereinafter contained with respect to the creation of interest in land by parol’. Subsection 53(2) provides that the section ‘shall not affect the creation or operation of resulting, implied or constructive trusts’.
[57]Statute of Frauds 1677, 29 Car 2, c 3; see Victorian Law Reform Commission, Review of the Property Law Act 1958: Consultation Paper (2010) 54.

Appellants’ notice of appeal

The notice of appeal and written submissions describe the first question of law and ground raised by the proceeding in the following terms:

Did the Tribunal have jurisdiction under s. 225 of the PL Act to make the orders [1], [6], [7] and [10] appealed from?
Grounds
(a) Section 225 of the Property Law Act 1958 confers jurisdiction upon the Tribunal (and takes it away from this Honourable Court) upon application by a “co-owner”, defined as:
co-owner means a person who has an interest in land or goods with one or more other persons as—
(a) joint tenants; or
(b) tenants in common;

(b) Joint tenancies and tenancies in common are legal forms of title held by co-owners. They do not encompass the relationship between a trustee and a cestui que trust. The claim was not within the statutory jurisdiction conferred on the Tribunal and the decision of the Tribunal is therefore a nullity. The Appellants’ objection to such jurisdiction should not have been dismissed.

Some of the expressions in ground 1 require explanation.

Key concepts

The relationship between a trustee and a cestui qui trust (beneficiary) has long been recognised in equity. The relationship can, depending on the trust, give rise to the beneficiary having an equitable interest in the land held by the trustee.[58] There is a debate about whether equitable interests are personal or proprietary. They have characteristics of both. They are personal because they constrain the ways in which the legal owner of the land can exercise legal rights over the land. In this way, equitable interests are described as being ‘impressed upon’ the legal estate, not carved out of it.[59] Property is not regarded as being divided into two separate legal and equitable estates that must each have an owner.[60] However, equitable interests in land have proprietary characteristics too. They can be enforced against third parties taking legal ownership in some circumstances, and assigned.[61] Equity followed the law by enforcing an analogous array of estates as existed at common law.[62] These equitable interests are ‘annexed to’ the land.[63] Where there is no other person entitled to the benefit of the land, the legal owner holds an absolute and unqualified legal title.[64] There is a recognised principle that owners of fee simple estates in land cannot hold them on trust for themselves, ‘at least where coextensive and commensurate legal and equitable interests are concerned’.[65]
[58]B Edgeworth, Butt’s Land Law (7^th ed, 2017) ch 4 [4.80]-[4.140].
[59]DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, 474 (Brennan J).
[60]JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5^th ed, 2015) [4.090]-[4.100]; Commissioner for Stamp Duties (Qld) v Livingston [1965] AC 694, 712 (Viscount Radcliffe).
[61]DKLRHolding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 518-519 [13]-[15] (Hope JA); B Edgeworth, Butt’s Land Law (7^th ed, 2017) ch 4 [4.120].
[62]B Edgeworth, Butt’s Land Law (7^th ed, 2017) ch 4 [4.30], [4.110].
[63]DKLRHolding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 518-519 [13]-[15] (Hope JA). Although the Court of Appeal’s decision was varied in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, Hope JA’s summary of these principles was not affected.
[64]DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, 463-4 (Aickin J).
[65]DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 519 [16] (Hope JA).

Trusts are typically express, and in most cases, in written form. That is, they are constituted by words expressed by an owner of property about how that person intends the property to be held for the benefit of others. However, in some circumstances equity will also ‘imply’ trusts such as resulting trusts. This case is concerned with the form of resulting trust known as the ‘purchase money resulting trust’.[66] Equity has developed principles for the implication of a purchase money resulting trust. I address them in my analysis of ground 2 below.[67]
[66]B Edgeworth, Butt’s Land Law (7^th ed, 2017) ch 4 [4.150]-[4.160].
[67]See especially Calverley v Green (1984) 155 CLR 242 (Calverley); Vlahos Pty Ltd v Vlahos [2017] VSCA 166 (Vlahos); and Bosanac v Federal Commissioner of Taxation (2022) 275 CLR 37 (Bosanac).

Both common law and equity recognise that two or more persons can hold land as ‘tenants in common’ of the fee simple estate (or lesser legal estates), each having a proportionate interest in the estate. Their respective interests are not fixed to different parts of the land — they are all said to each have an ‘undivided’ share. They each have a right to occupy the whole of the land. But each has a proportionate share of ownership of the land, and together those shares make up the whole. The shares of each may be separately transferred to others, or inherited.[68]
[68]B Edgeworth, Butt’s Land Law (7^th ed, 2017) ch 6 [6.20].

Where tenants in common are registered under the TLA as such on the title to the fee simple estate in land, they are tenants in common in law. Equity recognises that persons may be tenants in common in an equitable interest in land inconsistently with the details appearing on the Register. For example, in certain circumstances, persons registered as ‘joint tenants’ might be treated as having equitable interests as tenants in common in fixed proportions of the fee simple estate. In such a case, they might be described as holding the land on trust ‘for themselves as tenants in common’ in the appropriate proportions.[69] This is an exception to the principle that trustees cannot hold legal title ‘on trust for themselves’.
[69]Calverley 246 (Gibbs CJ); B Edgeworth, Butt’s Land Law (7^th ed, 2017) ch 6 [6.140].

Appellants’ contentions

The key steps in the appellants’ jurisdictional objection were as follows.

(a) First, it is not to the point that the definition of ‘land’ in the Interpretation of Legislation Act 1984 and pt IV of the PLA is broad enough to include a beneficial interest; the interest in question must be one that is held between ‘joint tenants’ or ‘tenants in common’.

(b) Second, the relationship between trustee and beneficiary is not a joint tenancy or tenancy in common.

(c) Third, the jurisdiction conferred on VCAT is subject to the same limitations as the statutory jurisdiction previously conferred on the courts by earlier forms of the partition and sale statutes that had applied in Victoria and England. In applying those statutes, the courts did not treat trustees and beneficiaries as joint tenants or tenants in common who could apply for partition or sale of co-owned interests. This point was explained in detail in the appellants’ submissions as follows:

(i) The statutory right to partition of property on the application of joint tenants and tenants in common was first conferred by statutes enacted in 1535 and 1540 during the reign of Henry VIII (the Tudor Acts).[70] In such applications, the courts were empowered to order sale and division of the proceeds in 1868.[71] The sale and division provisions became part of the law of Victoria through Victorian legislation in 1890.[72] The Tudor Acts were reenacted in Victoria in 1922.[73] The language of the Tudor Acts was modernised in Victoria in 1928 and remained in that form until 2005, in then s 221 of the PLA.[74] Prior to amendment of the PLA in 2005, s 221 was the ‘lineal descendant’ of the Tudor Acts.
[70]31 Hen 8, c 1 (1539); 32 Hen 8, c 32 (1540).
[71]Partition Act 1868 (UK) ss 3–5.
[72]Partition Act 1890 ss 3–7, 11–16.
[73]Imperial Acts Application Act 1922 pt II div 22.
[74]Property Law Act 1928; Property Law Act 1958.

(ii) The terminology in the Tudor Acts ‘clearly related only to the legal interests in land’.

(iii) The Tudor Acts extended the availability of a common law writ known as the ‘writ of partition’ to joint tenants and tenants in common. It was a common law writ, suggesting that the right was only available to legal owners.

(iv) Equity provided a remedy of partition where the Tudor Acts made it available at law. The process in equity was more flexible and convenient.

(v) Whether under common law writ of partition or in a proceeding in equity, ‘the type of tenure which was subject to partition was the legal title to the land’. The basis for this contention is an 1820 case, Miller v Warmington,[75] in which it was ‘explicitly said that it would be fatal to an action for partition if the plaintiff’s title was a purely equitable one’, and ‘where the plaintiff held an equitable estate’ partition would be refused.
[75]Miller v Warmington (1820) 1 JAC & W; 37 ER 452, 455, 456 (Miller v Warmington).

(vi) The legislative history ‘provides no occasion for thinking that the 1928 or 1958 reenactments intended to tacitly expand that operation to extend the right of partition to trust estates’.

(d) Fourth, when the new provisions were enacted in 2005, ‘the right to apply to VCAT for a sale or division was confined to a class defined using the same language’, indicating that ‘the same meaning was intended’. There was no indication that Parliament intended to expand the scope of the provisions in 2005.[76]

[76]See Property (Co-ownership) Act 2005 and Victorian Law Reform Commission, Disputes Between Co-Owners (Report, 7 March 2002).

The appellants also pointed out that the law of trusts has never conferred a general power on the courts to bring a trust to an end. Nor does the Trustee Act 1958 contain such a power, outside the circumstances envisaged in Saunders v Vautier,[77] as supplemented by the conferral of power under s 63A of that Act on the Court to make directions on behalf of some beneficiaries.
[77]Saunders v Vautier (1841) 41 ER 482 (Saunders).

The appellants also observed that the statutory mechanism for sale and division of co-owned interests in property in three of the Australian jurisdictions refers expressly to ownership in the form of joint tenancy or tenancy in common ‘whether at law or in equity’.[78] The mechanism involves the declaration of a statutory trust for sale of the property. The appellants pointed to the express inclusion of a reference to equitable interests in the legislation in these states, and contrasted this with the absence of any such reference in the Victorian legislation.
[78]New South Wales, Queensland and the Northern Territory.

Previous consideration

As briefly noted above, in deciding that its jurisdiction was properly invoked, VCAT followed Garnett. Before turning to Garnett, I will address a number of preceding authorities that appear relevant. There are also two authorities since Garnett worth mentioning.

The first case in this line of authority is Dawson v Gallant Valley Pty Ltd (Real Property).[79] In that case, Deputy President Macnamara (as his Honour then was) considered the same question about the jurisdiction of VCAT under PLA pt IV that arises here. Deputy President Macnamara acknowledged that historically there had been ‘a very strong tendency in Anglo-Australian law for adjudication on trusts and interests in land to be the sole province of superior courts of record’.[80] However, there were countervailing considerations. VCAT had been given a wide range of equitable remedies to administer and in a proceeding under PLA pt IV, VCAT Act sch 1 cl 66A required VCAT to be constituted by a member who has knowledge of or experience in property law matters. This indicated that Parliament might have entrusted jurisdiction to VCAT to adjudicate upon equitable interests in order to give a speedy and economical form of adjudication. Taking a purposive approach, he did not accept that only legal co-owners may apply. He also rejected a submission that only ‘admitted equitable interests’ are properly the subject of pt IV.[81]
[79][2008] VCAT 1183 (Dawson).
[80]Dawson [16].
[81]Dawson [18].

The second case is Krsteski & Anor v Jovanoski.[82] This was an appeal under s 148 of the VCAT Act from a decision of VCAT, again constituted by Deputy President Macnamara.
[82][2011] VSC 166 (Krsteski).

VCAT had granted an order for sale of a rural property and division of the proceeds on the application of a woman whose father had been the registered proprietor of the land as tenant in common as to a half share in the property. She sued as administratrix of his will. The other half share of the property was registered to the Krsteskis.

The Krsteskis appealed from VCAT’s orders. Their appeal raised a question that was in a sense almost the reverse of the jurisdictional objection in the present case. They argued that ‘co-owner’ under PLA s 225 must ‘as a matter of logic’ exclude owners of purely legal interests, on the grounds that the function conferred on s 228 was concerned with beneficial ownership. In short, ‘the expression “co-owner” should be construed to mean only those kinds of co-owners who would be entitled to partition.’[83] The appellants argued that the father’s interest in the property had been a bare legal one, and he had held his legal share of the property on an express or resulting trust for the family, who held the other half of the legal title to the property. Macaulay J rejected this argument, holding that VCAT’s jurisdiction was engaged ‘by proof that [the daughter] had an interest in the land, legal or beneficial, with [the appellants] either as joint tenant or tenant in common’.[84]
[83]Krsteski [41].
[84]Krsteski [44].

Garnett is the third in the line of relevant authorities. This was an application for the sale and division of land between the respondent, who was the registered proprietor of a property, and an applicant who claimed a 10% interest in the property pursuant to a constructive or resulting trust. It raised precisely the same point as the jurisdictional argument here, on similar facts. VCAT was again constituted by his Honour Judge Macnamara, who was now Vice President, together with Dr French, a member.

His Honour Judge Macnamara VP and Dr French accepted that VCAT had no inherent or equitable jurisdiction, but said it did have ‘what may look like equitable powers’ that come from statute.[85] They concluded that those powers were engaged in the case before them. They reasoned that the definition of ‘land’ in the Interpretation of Legislation Act 1984 extended to equitable estates and interests:[86]

“any” means “any”’ and does not discriminate between legal and equitable estates and interests … if Parliament had intended to exclude equitable estates and interests it could have done so but it [did] not.

[85]Garnett [8].

[86]Garnett [19].

They said further that, even without considering the definition of ‘land’, the definition of ‘co-owner’ on its face refers to a person with an ‘interest’ in land or goods as a joint tenant or tenant in common. The ordinary meaning of this term includes equitable as well as legal interests.[87]
[87]Garnett [20].

His Honour Judge Macnamara VP and Dr French referred to the legislative amendment that led to the current form of PLA pt IV, the Property (Co-ownership) Act 2005 and the second reading speech in support of the relevant bill. The identified purpose of the amendment was to ‘provide for the transfer of jurisdiction for co-ownership disputes from the Supreme and County Courts’ to VCAT, and ‘to ensure that these disputes can be dealt with in a more accessible and affordable form for dispute resolution’.[88] Judge Macnamara VP and Dr French then made the following point (emphasis added):

In light of s 234C and the intention that the Tribunal have the chief jurisdiction in relation to applications under Part IV, it would seem strange if it were limited only to exercising this jurisdiction in relation to persons who are legal co-owners of land. If this were so, in hearing applications under Part IV, the Supreme Court would be similarly limited to only being able to make orders for sale and division of proceeds etc, in relation to legal co-owners of land. This is because the Supreme Court’s powers to make such orders come from Part IV of the Act and are not inherent.

[88]Garnett [35]–[36]; clause 1 of the Explanatory Memorandum, Property (Co-ownership) Bill 2005; second reading speech: Victoria, Parliamentary Debates, Legislative Assembly, 14 September 2005, 879–80.

The appellants in the present appeal did not dispute the correctness of this point. They submitted, however, that it is unsurprising that neither the courts nor VCAT should have been given power to determine an application for partition or sale and division at the behest of equitable co-owners. They said this would amount to a power to terminate a trust without the consent of all beneficiaries, a power that the courts have never had. I address this issue below.

Judge Macnamara VP and Dr French also addressed the disparity between s 28A(2) and the definition of ‘co-owner’ in s 222. Only s 28A(2) includes the words ‘whether at law or in equity’. Did the omission of these words from the definition of ‘co-owner’ in s 222 mean that only legal ownership was intended in pt IV? They thought not, pointing to the references to s 28A within pt IV, in ss 233 and 234. They said that ‘the incorporation by reference of s 28A in these provisions, without expressly limiting its application to legal co-owners for the purposes of Part IV, supports the view that the definition of co-owner in s 222 is not so limited’,[89] and that the reference to ‘interest’ in s 222 encompasses equitable interests.[90]
[89]Garnett [44].
[90]Garnett [45].

The appellants in the present appeal also submitted that Judge Macnamara VP and Dr French incorrectly drew support from the decision in Krsteski, by characterising that case as one where the applicant under s 225 had only had an equitable interest in the property.[91] The appellants submitted that, properly understood, Krsteski did not raise as an essential issue for determination the question of whether an equitable tenant in common could be regarded as a co-owner under s 225, because the applicant in that case was administratrix of the estate of the registered proprietor. She was therefore entitled to a legal interest in the land, not merely an equitable one. I think the appellants are correct to point out that the applicant in that case had a right to a legal interest as administratrix, and so the issue essential to determination in Krsteski was not the same issue as the one in this case. However, I do not think Judge Macnamara and Dr French erred in their understanding of Krsteski. The remarks of Macaulay J were supportive of their construction of s 222, even though they were obiter dicta insofar as they indicated that the owner of a purely equitable interest in land could be a co-owner.
[91]See Garnett [51]–[54].

The fourth case, Miller v Martin,[92] was another appeal from VCAT to this Court, this time constituted by Mukhtar AsJ. The case involved a claim that a trust arose between registered tenants in common. No party submitted that VCAT lacked jurisdiction. Mukhtar AsJ noted that:[93]

…although the Act does not confer power to grant equitable relief and remedies, I do not think there is a jurisdictional problem here or in any case where the Tribunal in exercise of its statutory jurisdiction to do what is ’just and fair’ has to make findings, along the way, about the nature and extent of interests in land according to equitable doctrine or principles.

[92][2018] VSC 444 (Miller).

[93]Miller [8].

His Honour concluded that in order to exercise its jurisdiction under PLA pt IV and to ensure a just and fair sale or division, ‘there will be a necessity intrinsic to that task … to determine the nature and extent of existing interests in the co-owned property be they at law or in equity’.[94]
[94]Miller [152].

The appellants in the proceeding before me submitted that it was implicit in his Honour’s reasoning that, if the application was brought by someone who was not already a co-owner, VCAT did not obtain jurisdiction under s 225 to entertain a claim that the legal owner held the property or a proportion of it on trust for them simply because relief was sought by way of sale. I do not agree with this reading of Mukhtar AsJ’s reasons. As SGH argued, any remarks he made giving this impression were simply reflecting the facts of the case, which involved tenants in common at law.

The fifth and final case is Stewart v Owen.[95] The applicant and respondent were co-owners as registered tenants in common of a residential property.
[95](2020) 60 VR 341 (Stewart).

The appellants submitted that, like Miller, Stewart implies that VCAT could not obtain jurisdiction under s 225 from a claim that the legal owner holds the property or part of it on trust for an applicant. I do not consider that either case implies this. The issue did not arise in either case. The discussion in each case was limited to the consideration of equitable interests in the course of the court’s evaluation of what would be a just and fair determination under s 228. In my view, the cases are both neutral on the issue for determination before me.

In summary, there are obiter remarks of this Court (Macaulay J in Krsteski) that support a broad interpretation of ‘co-owner’ in PLA s 222, and a line of VCAT decisions to that effect, ending in the closely reasoned decision of Judge Macnamara VP and Dr French in Garnett. There are no other authorities dealing squarely with the issue.

Analysis

I will address each of the key steps in the appellants’ contentions in the order they appear in paragraph 94 above. Before doing so, I will explain what I regard to be the key principles needed to resolve the jurisdictional objection. I regard the issue as one that is to be resolved by the orthodox application of principles of statutory interpretation. When that is done, many of the complex issues of legislative history and analysis of equitable principles raised by the appellants fall away.

Principles of statutory interpretation

Statutory interpretation is the process of ascertaining the meaning of provisions enacted by legislative bodies.[96] The statutory interpretation process must begin and end with the text used.[97] Where the words of a provision are clear, unambiguous, and can be intelligibly applied to the subject matter, the provision must be given its ordinary and grammatical meaning — in such cases, Parliament’s intention has been expressed ‘with unambiguous clarity in the language used’.[98] The text must be interpreted in its context, and context should be considered at first instance, rather than at a later stage when ambiguity might arise.[99] The context includes the purpose Parliament intended to achieve, as discerned from the legislation itself, and relevant extrinsic material.[100] The legislative context includes the statute as a whole, with an assumption that Parliament intends interrelated provisions to operate coherently, giving effect to ‘harmonious goals’.[101] To discern legislative intention, it may be instructive to consider the legislative history and antecedents of the provision in question.[102] Legislative history and extrinsic materials cannot displace the meaning of the statutory text.[103]

Preliminary points

[96]The Court of Appeal summarised the principles of statutory interpretation in AB v Independent Broad-based Anti-corruption Commission [2022] VSCA 283, [123] and Vicinity Funds Re Ltd v Commissioner of State Revenue [2022] VSCA 176, [69]–[70]. See also James v The King [2023] VSCA 34, [28].

[97]R v A2 (2019) 269 CLR 507, [32]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, [47]; Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503, [39] (Consolidated Media Holdings); Thiess v Collector of Customs (2014) 250 CLR 664, [22]; Treasurer of Victoria v Tabcorp Holdings Ltd [2014] VSCA 143, [99]–[102] (Tabcorp).

[98]Tabcorp [2], [6].

[99]CIC Insurance Ltd v Bankstown Football Club Limited (1997) 187 CLR 384, [88] (CIC).

[100]Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, [69] (Project Blue Sky); CIC [88]; Consolidated Media Holdings [39].

[101]Project Blue Sky [69]–[70].

[102]Consolidated Media Holdings [39]; Tabcorp [2].

[103]Consolidated Media Holdings [39].

As the legislation here makes clear, only a ‘co-owner’ of land or goods may apply to VCAT under PLA s 225, and all other co-owners are to be parties to the application.

Every decision-making body has a duty, and therefore a power, to decide whether its jurisdiction has been properly invoked.[104] This means VCAT has power to decide whether an applicant under s 225 is a ‘co-owner’.
[104]Re Nash [No 2] (2017) 263 CLR 443, 450 [16], quoting Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398, 415; see also R v Federal Court of Australia; ex parte WA National Football League (1979) 143 CLR 190, 215 (Gibbs J).

Much of the hearing before VCAT involved evidence and argument about whether SGH was a co-owner. It may seem strange that so much effort might be involved in ascertaining a matter which is a precondition of the validity of an application to VCAT under pt IV. Presumably, also, it was not intended by Parliament for it to be difficult for an applicant to identify other ‘co-owners’, so the applicant can join them as respondents in any proceeding under s 225. Do these features of the legislation suggest that only legal (and not merely equitable) owners can be a ‘co-owner’? In the case of land, this would mean a registered interest. Or, if an unregistered, merely equitable form of co-ownership could suffice in some circumstances, would Parliament have intended a limit, avoiding complex hearings on this threshold matter? Would the scope of s 225 perhaps be limited to uncontroversial equitable interests that have been formally admitted or are otherwise incontrovertible?

The appellants submitted that, in any event, an agent cannot clothe himself with ostensible authority, and that nothing Ms Fraser did amounted to a representation that Mr Forrest was her agent.

The appellants also submitted that, contrary to the principles applicable to ostensible authority of agents, VCAT failed to consider whether the principals (Ms Fraser and Doolkoora) knew of and acquiesced in Mr Forrest holding himself out as their agent, or make any findings to that effect.[247]
[247]Appellants’ First Outline [150]–[152], citing Clayton Robard 60; Quickfund (Australia) Pty Ltd v Chatswood Appliance Spare Parts Pty Ltd [2013] NSWSC 646, [23] (Quickfund).

SGH submitted that the four matters relied upon by VCAT amounted to conduct by Ms Fraser that met the requirement that the principal has represented the alleged agent to be authorised. SGH pointed out that a person could be an agent for both parties to a transaction.

SGH submitted that by treating Mr Forrest as the intermediary for conveying information to the Turnleys, and by giving Mr Forrest an ‘instruction’, Ms Fraser must be taken to have known Mr Forrest would hold himself out as her agent.

SGH relied on Gurtner v Beaton. However, if the principle described in that case is part of Australian law, it merely describes an underlying rationale for the principles of ostensible authority and does not lay down criteria on which findings should be reached.

The essence of the matters relied on by VCAT were as follows: Ms Fraser had stated to Mr Forrest the terms on which SGH could remain on the land, told (‘instructed’) him to convey this to the other directors, and had said that she did not wish to deal directly with them or for them to know her identity for a time. As regards any direct dealings with Mr Forrest’s co-directors and ‘business partners’, she decided to remain deliberately silent for a time, to allow her to obtain advice before embarking on negotiations over a long term lease.

To echo Hodgson JA’s remarks in Essington, the question is whether something like a representation by silence was made in these circumstances. Did ‘the circumstances call for some action by the principal to ensure that persons [were] not misled by the agent’? In my view, they did not. There was nothing suggesting to Ms Fraser that Mr Forrest was holding himself out as Ms Fraser’s agent. Absent such circumstances, she cannot be said to have made any representation clothing Mr Forrest with apparent authority to negotiate a fixed-term lease.

In my view, the matter of knowledge and acquiescence on the part of Ms Fraser was an essential requirement of the success of SGH’s claim that Mr Forrest had her ostensible authority to enter into a fixed-term lease.

There is no evidence that she knew or ought to have known that Mr Forrest was holding himself out as her agent, or that she acquiesced in any such thing, and VCAT did not make any finding that she did.

I infer from the absence of any express finding on this point that VCAT did not consider it. The probable reason for this is that VCAT misunderstood its importance amongst principles relating to ostensible authority in a case of this kind. In my view, with respect, this was a legal error.

Perhaps this suffices to uphold ground 6. However, for abundant certainty, I go further: would the factual material that was before VCAT dictate a conclusion that Ms Fraser had the requisite knowledge to support a finding of ostensible authority? Ms Fraser knew that Mr Forrest would be discussing the topic of a lease. Is this enough? I think not.

Ms Fraser’s written evidence was unchallenged by any cross-examination. It contained no reference to her having any knowledge that Mr Forrest was representing to the Turnleys that she would agree or had agreed to a long fixed-term lease. A long fixed-term lease is a very different thing to a month-to-month lease. Even more importantly, Ms Fraser could not have had any basis for thinking Mr Forrest would purport to be her agent. She did not give evidence of any discussion with Mr Forrest that would reasonably have led her to believe that he might purport to enter into a fixed-term lease on her behalf with the Turnleys or SGH. I address the relevant aspects of the statements in the paragraphs below.

Ms Fraser said that on or about 7 July 2017, Mr Forrest told her that there was a company in occupation of the land, that his wife owned 30% of the company, that he was a director of it and the others involved were his partners from the restaurant venture, and that they would like to stay on the land and continue to operate the business.[248] She said that because Mr Forrest told her he was a director of the company in occupation and operating the business, ‘I assumed he had the capacity to negotiate with me on its behalf and to legally bind that company in the event we reached an agreement’.[249]
[248]Ms Fraser’s Statement No 2 [4(c)–(d)], Application Book 639.
[249]Ms Fraser’s Statement No 2 [5], Application Book 640.

Ms Fraser said that on or about 19 July 2017, she and Mr Forrest had another conversation in which she said she was going away and wanted her identity to remain undisclosed, and she did not want to meet the occupants until she returned.[250] She said in response to a request from Mr Forrest that ‘he and his partners be allowed to continue to stay in the premises and conduct the Balnarring Motors business’:[251]

… I said I was prepared to leave them in there … until I returned from overseas and had time to seek legal and accounting advice. Given I had been told there was no lease in place at that time and they were not paying rent I told [Mr Forrest] I would allow a month by month lease with monthly rental payments calculated on the basis of an annual rental of $110,000 per annum. Payments were to be paid to D. Gibbs Lawyers.

[250]Ms Fraser’s Statement No 2 [6(b)], Application 640.

[251]Ms Fraser’s Statement No 2 [6(c)], Application 640.

Ms Fraser said, later in the same witness statement, that this was the only ‘instruction’ she gave Mr Forrest ‘in relation to he and his partners occupying the [land], namely I told him to pass on to them I would allow them to remain in occupation and conduct the business on a month-to-month arrangement until I had time to consider the matter further’. She said, ‘[a]t no stage did I have any discussion with him along the lines of the agreement for lease referred to in [SGH’s] Points of Claim and Witness Statements’.[252]
[252]Ms Fraser’s Statement No 2 [10], Application Book 641.

Ms Fraser also said, in an earlier and more roughly drafted statement, that at the time of settlement of the purchase of the land (around 1 August 2017), Mr Forrest told her that his ‘business partners’ (naming the Turnleys):

operated the business SGH at the premises under a verbal agreement that [Mr Forrest] could provide due to the licence to him in the sale contracts. This was provided as [the Turnleys] had initially agreed to supply deposits and secure funding for settlement. [The Turnleys] were being paid by the business to run the business in the lead up to settlement’.[253]

[253]Ms Fraser’s Statement No 1 [36], Application Book 594 .

She said that vacant possession was not provided to her companies at settlement due to the pre-existing agreement between the vendor and Mr Forrest permitting occupation without fee, and that she understood that Mr Forrest ‘granted permission to [SGH] to occupy the site and run the service station and mechanics business from December 2016 under the express condition that [Mr Turnley] provide funding for settlement’.[254] Ms Fraser referred to the agreement under which SGH continued to occupy the land after settlement in the following terms (emphasis added):[255]

[Mr Forrest] ceased to be a director of SGH in October 2017, post settlement and post the verbal agreement that I made with him that SGH could continue to occupy the site on a month to month occupation until the terms of a lease were agreed …

[254]Ms Fraser’s Statement No 1 [63], Application Book 598.

[255]Ms Fraser’s Statement No 1 [65], Application Book 598.

My reading of Ms Fraser’s unchallenged written evidence (summarised above) is that she believed herself to be informing Mr Forrest, in his capacity as a representative of SGH, that SGH could have a month-to-month lease calculated on the basis of an annualised rental of $110,000. She also considered that she had made an agreement with Mr Forrest, acting for SGH, to that effect. This makes sense: elsewhere in her written evidence, she says she knew Mr Forrest to be a director of SGH, and therefore authorised to represent SGH. In the absence of cross-examination, no other interpretation of her evidence was open. This is not a conclusion that relies on ss 128 and 129 of the Corporations Act.

A great deal of weight appears to have been placed by VCAT on the word ‘instruction’, as used by Ms Fraser when referring back to what she said to Mr Forrest on 19 July 2017. That she had ‘instructed’ him was one of the four matters said to support the finding that Ms Fraser clothed Mr Forrest with ostensible authority to act as her agent. However, neither of these words were used by her in her discussion with Mr Forrest. ‘Instruction’ was merely a way she chose to refer to what she had said to Mr Forrest. Immediately after using that word, she said what she meant by it: ‘namely I told him to pass on to them …’. On its own, her choice of the word ‘instruction’ is insignificant. It was simply her word for passing information on to others. It is far too slender a foundation for a finding that Ms Fraser believed she was ‘instructing’ Mr Forrest to act as her agent in entering into an agreement for a fixed-term lease, or knew Mr Forrest would do so.

In short, it would not have been open to VCAT to find that Ms Fraser knew that Mr Forrest would represent or was representing to the other directors of SGH that he was Ms Fraser’s agent with authority to bind her or her company to a fixed-term lease agreement. And there is no basis on which it could have been open to VCAT to find that Ms Fraser failed to prevent or otherwise acquiesced in Mr Forrest doing so. None of the matters I have identified from Ms Fraser’s evidence is capable of supporting a finding that Ms Fraser knew that Mr Forrest was representing to SGH’s other directors that he was the new investor’s agent, alone or in any combination.

The key facts and their proper characterisation

In my view, from 25 July 2017, Mr Forrest was SGH’s authorised agent in dealing with the new investor and her entity over a lease of the land. After discussion with Ms Fraser, Mr Forrest falsely reported back to his directors that the new investor had agreed on a fixed-term lease at a specified monthly amount. This was a report that the agreement had been reached. Alternatively it might have meant the investor was willing to make an agreement on that basis. Either way, it was a report of the investor’s position, not an offer by an agent on the investor’s behalf. The best characterisation, and indeed the only characterisation of the discussion that I regard as open on the evidence, is that Mr Forrest was purporting to act as the conduit for communication from the new investor to the other directors, but not as her agent.

The meeting on 25 July 2017 was significant in this regard. As already noted, it was a discussion between the three directors of SGH, relating to obtaining a lease from the new investor (who was expected to become the majority owner of the land). In this context, the natural meaning to be accorded to the ‘agreement’ between the three men was that SGH had adopted an agreed course of action as to its dealings with the new investor relating to the lease. That agreed course of action was that Mr Forrest would, on behalf of SGH, endeavour to obtain a lease for SGH from the unidentified investor, having regard to the terms discussed in the meeting on 25 July 2017. In other words, SGH authorised Mr Forrest to negotiate the terms of a lease, giving him parameters for that negotiation.

What then of the discussion between Mr Forrest and Mr Turnley on 7 August 2017? Was there anything said that would have changed the role of Mr Forrest in the reasonable perception of an observer in Mr Turnley’s position? I think not. It can only be understood in the context established by the directors’ course of action agreed on 25 July 2017. It was not even a meeting of all the directors. Mr C Turnley was not present. Mr Forrest remained a co-director of SGH with the Turnleys and bound to act in the best interests of SGH. Although in rare circumstances a co-director might become an agent of a third party, it would require very clear evidence to this effect, and probably consent of the co-directors, for that to occur. There were no clear statements by Mr Forrest or anyone else that he was assuming such a role. In the absence of very clear statements, the reasonable observer would have expected Mr Forrest to have set out to negotiate the lease with the investor on SGH’s behalf, and then to be reporting back on the outcome. That characterisation accords most readily with the words VCAT found to have been used during the conversation between Mr Forrest and Mr Turnley on 7 August 2017.

Of course, there was an unsavoury twist in the facts. As it happens, unknown to Mr Turnley, on the findings of VCAT, Mr Forrest had since about July 2017 been acting inconsistently with the best interests of SGH and his duties as a director of that company. He had set up a new entity (Peninsula) with a view to that entity taking an ownership interest in the land with the new investor and to the exclusion of SGH, telling the new investor that SGH had relinquished its interests in the land. That conduct, as found by VCAT, might have led to the success of various claims against Mr Forrest had he not declared himself to be bankrupt and been removed as a respondent to the VCAT proceeding. However, those findings are not capable of informing the analysis of Mr Forrest’s words to Mr Turnley in the course of determining whether Mr Forrest had the ostensible authority of Ms Fraser to bind Doolkoora to an agreement for a fixed-term lease. That is because none of these matters were known to Mr Turnley. Rather, Mr Forrest’s words to Mr Turnley should be interpreted as the words of a co-director of SGH.

On the applicable principles, the question of Mr Turnley’s subjective understanding of Mr Forrest’s role is relevant, provided it was reasonable, because the principles of ostensible authority are a type of estoppel by representation: Mr Turnley (representing SGH) must, acting reasonably, have relied on the relevant representation of authority by taking a step to its detriment in the form of entering into the contract.

VCAT found that ‘Mr Turnley understood Mr Forrest to be representing the [appellants’]’ and that this was reasonable.[256] I do not accept that it was open for VCAT to find any such understanding was reasonable. Further, on Mr Turnley’s written evidence, there was no basis for finding that, even subjectively, he held any such understanding.
[256]VCAT decision [458].

What of Mr Turnley’s oral evidence on this topic?

Mr Turnley was cross-examined about the discussions with Mr Forrest on 25 July 2017 and 7 August 2017. He said that after 25 July 2017 his understanding was that Mr Forrest ‘was negotiating with his friend that — he put forward that that’s what the lease would be about’.[257] This is consistent with the course of action agreed between the directors of SGH on 25 July 2017: Mr Forrest, on behalf of SGH, was to endeavour to obtain a lease from the new investor.
[257]Transcript 800 (12 February 2020), Application Book 1686.

During cross-examination, Mr Turnley was not asked about his state of mind concerning the role of Mr Forrest at the time of the conversation between them on 7 August 2017. That is not surprising, because even though SGH bore the onus of proof on this issue, Mr Turnley’s written evidence had not addressed it.

As noted above, the re-examination relating to Mr Turnley’s understanding of Mr Forrest’s role during the discussion on 7 August 2017 was somewhat interrupted and is in places difficult to follow. In my view, the evidence elicited from Mr Turnley on the point was confused and unclear. In places it was affected by interruptions and the manner in which questions were put. It has no probative weight.

For these reasons:

(a) I do not consider that it was open on the evidence for VCAT to make the finding that Mr Turnley believed Mr Forrest to be the investor’s agent authorised to make an offer to Mr Turnley on 7 August 2017, still less that any such belief was reasonable.

(b) I do not consider that the discussion VCAT found to have occurred would objectively have led to the appearance that Mr Forrest was the unknown investor’s agent, or that he was making an offer on her behalf.

(c) The matters relied upon by VCAT, including the representations made by Mr Forrest to Mr Turnley on 7 August 2017, were incapable of supporting VCAT’s finding that Mr Forrest had ostensible authority to offer a legally binding agreement for a fixed-term lease of three years with two further options for SGH extended on Ms Fraser’s and Doolkoora’s behalf.

The appeal on ground 6 will be allowed.

Ground 7: Did VCAT err in concluding that an oral agreement for lease was reached between the parties?

For the reasons in the preceding section, I am satisfied that VCAT erred in finding that Mr Forrest’s words to Mr Turnley on 7 August 2017 bound Doolkoora.

It was uncontroversial that the authority of both registered proprietors was required for a valid and enforceable agreement for lease to arise.

It follows that VCAT erred in finding that a valid agreement for a fixed-term lease was made between SGH and the appellants on 7 August 2017. For that reason alone, I have decided to grant leave and allow ground 7 of the appeal.

The notice of appeal described the seventh question and ground in the proceeding as follows:

Did the Tribunal err in concluding that, on the factual findings that it made, there was an oral agreement reached between the Appellants and the Respondent for a lease for a term of three years with two options of three years each?
Grounds
(a) The Tribunal found that an oral agreement for a lease was made in a telephone conversation that occurred between Forrest and Mr Turnley senior on 7 August 2017. As noted, they were co-directors of the Respondent. Mr Turnley was unaware of the identity of the new proprietors of the land, and unaware that Forrest was a director of one of them.
(b) The conversation accepted by the Tribunal was not one in which Forrest purported to be negotiating on behalf of the owners, with Turnley acting on behalf of the Respondent. It was instead a communication by Forrest to Turnley about what the proprietors wanted or would accept. Objectively, it was a discussion between the directors of the Respondent about the terms of a lease that they might be able to obtain.
(c) The fact of agreement is an objective one assessed from the perspective of a third-party bystander, possessed of the common knowledge of the parties. The Tribunal did not apply such a test. Had it done so it would have found no objective agreement for a lease in that conversation.

Much of the detail of ground 7 was based on the reasonable perception of Mr Forrest’s communication to Mr Turnley on 7 August 2017 in circumstances where Mr Forrest was a co-director of SGH and did not say he was representing the new investor. For the reasons I have explained on ground 6, I accept that these aspects of ground 7 are correct and that ground 7 should be upheld.

If I were required to determine ground 7 on an alternative and standalone basis, I would in any event decide to allow it. In what follows, I give brief reasons for this. These reasons assume that, contrary to my conclusion on ground 6, Mr Forrest was (somehow) Ms Fraser’s and Doolkoora’s ostensible agent.

SGH submitted that this ground comprised an impermissible question of fact.

The test for whether a binding agreement has been reached is, relevantly, whether a reasonable observer would understand, from the parties’ communicated words and conduct and other objective circumstances, that the parties had reached agreement on all essential matters and that they intended the agreement to be binding.[258]
[258]Sully v Englisch [2022] VSCA 184, [62], [76], [78]; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, [31], [266]; Thorby v Goldberg (1964) 112 CLR 597, 607; Merritt v Merritt [1970] 2 All ER 760, 762.

The appellants’ challenge focused on the failure of VCAT to apply this test. SGH’s responding submissions did not squarely grapple with this challenge. Instead, SGH’s submissions largely defended VCAT’s conclusion that agreement had been reached on essential terms.

On the issue of essential terms for an agreement for lease, VCAT followed an earlier decision of VCAT, Australvic.[259] In my opinion, the facts of that case are distinguishable. There was much clearer evidence in Australvic that agreement was reached on essential terms.
[259]Australvic Finance Pty Ltd v Elcheikh & Ors (Retail Tenancies) [2010] VCAT 956.

In any event, the identification of essential terms and agreement on them is not the central issue raised by this ground. The central issue is whether VCAT applied the required test, and whether its conclusion met the required test. Identification of essential terms is an important element in applying the test but not all there is to it. The absence of shared communication on terms (whether essential or not), and a lack of clarity about express terms, are also relevant matters.

Although findings of fact were involved in VCAT’s conclusion that a binding agreement was reached, the question of whether VCAT applied the correct test in finding that a binding agreement was formed was a question of law. Likewise, the conclusion that a binding agreement was reached was a conclusion of law. The High Court has made it clear that a conclusion that facts as found amount to the formation of a legally binding agreement is a question of law.[260]
[260]Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited (2014) 45 VR 771, [49]–[52] (Warren CJ) and [169] (Whelan J). Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, [24]–[27], [69].

In context, the words spoken by Mr Forrest to Mr Turnley during their telephone call on 7 August 2017 were insufficient for a binding agreement to have been reached between them for a lease of the land for a three-year term with two options to renew.

As the appellants submitted, there was no mechanism for rent increases, no provision for commencing rent levels in each option period, no provision for insurance, no provision for maintenance of installation, and uncertainty about outgoings. It is true that VCAT decided to imply many of these provisions. However, the fact that they were not clearly communicated is highly relevant to the application of the required test.

The appellants also pointed out that there was no attempt to comply with the requirement of the RLA for a written lease.[261] There is no indication in the evidence that either Mr Turnley or Mr Forrest knew of this requirement. It is unclear whether this matter would be taken into account by the reasonable observer in forming an impression as to whether a binding agreement was reached, and so I put it to one side.
[261]RLA s 16.

I have extracted the evidence of Mr Turnley, accepted by VCAT, of what was said in the conversation on 7 August 2017 in paragraph 331 above. VCAT characterised it as an offer by the owners which was accepted by SGH when Mr Turnley immediately caused SGH to pay the monthly amount of $10,093.33 plus GST specified by Mr Forrest.

The information conveyed by Mr Forrest was unclear as to the treatment of outgoings. Were outgoings to be ‘included’ in the figure specified by Mr Forrest, in the sense that there would be no additional cost to SGH provided it paid ‘$10,083.33 plus GST’ per month? Or was there to be a monthly calculation of the outgoings, so they could be ‘included’ in the monthly payments to be made by SGH, over and above that amount? This lack of certainty led to communications in September and October 2017 between Mr Forrest and Mr Turnley,[262] indicating that there had been no clear ‘agreement’ on the matter on 7 August 2017, or even ‘on or about’ 7 August 2017.
[262]VCAT decision [386]–[388].

There was additional uncertainty as to the monthly payment specified by Mr Forrest. Although the figure was clearly stated as being ‘$10,083.33 plus GST’, the further communications in September and October 2017 indicated this was not agreed.[263] There was confusion whether GST was included or excluded in the ’$10,083.33’ mentioned by Mr Forrest. The revision of the figure for rent indicates that agreement had not been reached on or about 7 August 2017 on that matter either.
[263]VCAT decision [386]–[388].

Further, it is inconceivable that the parties would have entered into an oral agreement of up to nine years’ duration, involving two options for renewal, without some detail as to an expressly agreed mechanism for review of rental levels, in particular upon renewals, and some agreed detail on responsibility for maintenance and repair of service station installations, and insurance.

These provisions may not technically have been irreducible, essential terms of all agreements for leases, according to general principles. Provisions about such matters may, in an appropriate case once agreement is correctly found to exist, be capable of implication. But this can only occur once the test for a binding agreement is met in all the objective circumstances. The absence of express agreement on those matters in this case should have informed the application of the required test. It does not appear that VCAT addressed this issue. In any event, it is a matter of law on which I am required to form a view for myself. I am satisfied that the absence of express agreement on these matters weighs heavily against the conclusion that an agreement was reached on the basis of what Mr Forrest said on 7 August 2017 combined with SGH’s immediate payment of the specified amount.

Mr Turnley’s prompt payment of one month’s rent on 7 August 2017 does not indicate that a binding agreement for a long term lease was made on (or about) that day. In context, I do not construe it as a step signifying SGH’s intention to enter into legal relations by accepting an offer. It is more naturally explained as Mr Turnley’s response to the report from Mr Forrest that he had secured the investor’s agreement. Alternatively, it could have been a payment reflecting the new investor’s requirements in anticipation that agreement would be reached. It is far from being an unequivocal acceptance of an offer for a long term lease.

SGH also pointed out that VCAT relied on expenditure on installation and signage on the land by SGH in late August 2017.[264] VCAT drew on this in support of its finding that a binding agreement for a fixed term lease had been reached on 7 August 2017. In my view, the expenditure by SGH in late August signifies only that Mr Turnley had a subjective belief that an agreement for a long term lease was in place (based on Mr Forrest’s untrue report to him to that effect on 7 August 2017), or alternatively a mere expectation that the new investor would agree to one. The expenditure by SGH in late August does not tend to prove that a binding agreement arose from mutually observable words and conduct of Mr Forrest and the Turnleys on or about 7 August 2017.
[264]SGH’s First Outline [105].

For these reasons, I am satisfied that, from the perspective of a third-party observer possessed of the common knowledge of the parties, no objective agreement for a lease arose from the conversation between Mr Turnley and Mr Forrest on 7 August 2017. VCAT erred in two different senses. First, I am satisfied that VCAT placed an incorrect legal characterisation on the facts it found. As already noted, that is an error of law,[265] and is sufficient to result in ground 7 succeeding. Further, and in any event, I am satisfied that VCAT reached a conclusion that was not open to it.
[265]Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, [24]–[27], [69].

In short, I have decided that the appellants have demonstrated that VCAT erred as claimed in the notice of appeal.

I will grant leave and allow ground 7 of the appeal.

F. Conclusion and orders

I have decided to grant leave to appeal in relation to all grounds except ground 4, and to allow the appeal from grounds 5, 6 and 7. I will vary VCAT’s orders to reflect my conclusion, arising from ground 5, that the proportion in which the appellants hold the land on a resulting trust for the benefit of SGH is 14.81%. VCAT’s orders relating to the lease will be set aside. The appeal will otherwise be dismissed.

The parties will be heard on the form of orders that will most appropriately give effect to these reasons, on any appropriate consequential orders, and on costs.

To the applicant	Fifteen ninety-sixths of the net balance, but from which must be deducted outgoings from 1 September 2017 for which the applicant is liable to pay to the respondents, and paid to the respondents
To the respondents	The balance of the net balance, from which must be deducted the amount described in order 3(f)[21], and paid to the applicant.

[2024] VSC 155

29 March 2024; revised 10 April 2024