Jackson v Salisbury

[2000] FCA 1102

FEDERAL COURT OF AUSTRALIA

Jackson v Salisbury [2000] FCA 1102

BANKRUPTCY - property vested in bankrupt at bankruptcy - bankrupt’s moiety interest in Crown lease property transferred to third party shortly before bankruptcy - transfer not registered - bankrupt remained registered owner of moiety interest in property - whether transfer occurred or whether payment to bankrupt by third party was merely a loan - whether Minister of Lands consented to the transfer - extent of bankrupt’s property which vested in trustee - whether trustee obtained some equitable interest in property by reason of s 135 of Bankruptcy Act 1966 (Cth) on basis that he may have disclaimed transfer as an “unprofitable contract” or may have had a lien for any expenses bankrupt had paid in respect of property between transfer and bankruptcy - significance of interest in property being retransferred from third party back to the respondent after discharge from bankruptcy - whether valid transfer of third party’s legal and equitable interest back to bankrupt.

Bankruptcy Act 1966 (Cth) ss 58(1), 81, 133(1A), 133(1AB), 133(4), 133(5A)
Crown Lands Act 1929 ss 225, 226, 227(1), Pt 12
Evidence Act 1995 (Cth) s 62 and s 63

Hill v O’Brien (1938) 61 CLR 96 considered
Hensley v Reschke (1914) 18 CLR 452 considered
In re Symon; Public Trustee v Symon [1944] SASR 102 referred to
Harrington v Keene (1975) 11 SASR 361 referred to
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 referred to
Forster v Jododex Aust Pty Ltd (1972) 127 CLR 421 referred to
University of New South Wales v Moorehouse & Angus Robertson (Publishers) Pty Ltd (1975) 133 CLR 1 referred to

IN THE MATTER OF RONALD FRANCIS DESMOND SALISBURY

JACKSON v SALISBURY
S 7178 OF 1999

MANSFIELD J
9 AUGUST 2000
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 7178 OF 1999

IN THE MATTER OF RONALD FRANCIS DESMOND SALISBURY

BETWEEN:	JOHN HENDERSON JACKSON APPLICANT
AND:	RONALD FRANCIS DESMOND SALISBURY RESPONDENT
JUDGE:	MANSFIELD J
DATE OF ORDER:	9 AUGUST 2000
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1.        The application is dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	S 7178 OF 1999

IN THE MATTER OF RONALD FRANCIS DESMOND SALISBURY

BETWEEN:	JOHN HENDERSON JACKSON APPLICANT
AND:	RONALD FRANCIS DESMOND SALISBURY RESPONDENT

JUDGE:	MANSFIELD J
DATE:	9 AUGUST 2000
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1. The applicant is a registered trustee in bankruptcy.

2. The respondent became bankrupt on 18 March 1983 on his own petition under the Bankruptcy Act 1966 (Cth) (“the Act”). The applicant was appointed the trustee of the bankrupt estate of the respondent on that date. On 18 March 1986, the respondent was discharged from bankruptcy by the elapse of time. The administration of the estate was routine. It was completed on 6 February 1989, when the applicant filed with the Registry his final account of receipts and payments in respect of his administration.

3. This proceeding concerns property which the applicant alleges was property of the respondent at the time of his bankruptcy, and not declared or disclosed to the applicant.  The property in issue is the respondent’s moiety interest as tenant in common with Peter Francis Burns (“Mr Burns”) in Crown Lease Perpetual No. 16501 being the land in Crown Lease Register Book Volume 892 Folio 37 (“the property”).  The respondent and Mr Burns jointly acquired that Crown Lease for $12,000 in 1968.  The respondent remained registered as the holder of that moiety interest both at the time of his bankruptcy and at the time of his discharge.  The respondent did not disclose any interest in the property in his statement of affairs provided to the applicant.  A routine search by the applicant’s staff of the respondent’s interests in real property did not disclose his interest in the property.

4. The respondent remained registered as the owner of his moiety interest in the property at all material times.  He claims that he disposed of that interest to Mr Burns in 1979 for $20,000.  In a generic sense, I shall call that “the 1979 transaction”.  In 1986, following his discharge from bankruptcy, the respondent became the registered owner of Mr Burns’ moiety interest in the property.  He was thereby the registered lessee of the whole of the property.  He claims that, as part of that transaction, Mr Burns retransferred to him the equity in that moiety which was the subject of the 1979 transactions.  I shall call that “the 1986 transaction”, also in a generic sense.

5. The Register Book Volume and Folio of the property records a number of dealings.  They include transfer of the lease to the respondent and to Mr Burns on 12 January 1968.  The property was mortgaged to the vendors, but that mortgage was subsequently discharged.  There were a number of other underleases granted, consistent with the respondent’s evidence that the property was “subdivided” into twenty-two allotments which were then underleased for twenty-five years (generally ending in 1994 or 1996).  Many underleases are to Mr Burns or to the respondent.  He said that about ten of those underleases were to third parties directed to procuring sufficient funds to pay for the purchase of the lease.  There are various dealings with the underleases.  A caveat was lodged by Mr Burns on 20 July 1982 to protect his claim over the interest of the respondent in the property consequent upon the 1979 transaction.

6. The history of the property after the respondent’s bankruptcy is a little complex.  On 22 December 1986, the caveat lodged by Mr Burns was withdrawn, and a transfer of Mr Burns’ one undivided moiety in the property to the respondent was registered.  He thereby became, according to the title, the sole owner of the lease.

7. On 20 September 1988, the lease of the property was surrendered.  At the same time, pursuant to an Agreement for Sale and Purchase in respect of the property, the Minister of Lands agreed to sell to the respondent for $10,500 freehold title to the property.  Certificate of Title Register Book Volume 1625 Folio 49 was duly issued to reflect that transaction.  Subsequently the Agreement for Sale and Purchase was itself surrendered, on the grant of the freehold title to the respondent in the property.  Register Book Volume 4370 Folio 107 records that grant.  That title was subsequently cancelled and converted to a computerised title.

8. On 28 April 1995, the property was vested in the Ron Salisbury Family Trust, of which the trustees were initially the respondent and his wife Patricia Dawn Salisbury.  Later his sons Philip John Salisbury and Ronald David Salisbury became trustees.  On 5 August 1999, the trustees lodged a caveat in support of that interest, disclosing that it was created by Deed of Family Trust dated 28 April 1995.  Subsequently, on 19 November 1999, the trustees of the Ron Salisbury Family Trust resigned and Macrotrans Pty Ltd (“Macrotrans”) was appointed as the new trustee of the Ron Salisbury Family Trust.

9. Macrotrans has been given notice of this proceeding and has filed an appearance and participated in it.  That is because its apparent interest as the owner of the property as trustee for the Ron Salisbury Family Trust may be affected by the orders which the applicant seeks.

10. The respondent claims that the 1979 transaction involved him selling his interest in the property to Mr Burns in mid June 1979 for $20,000, when both he and Mr Burns signed a contract and a transfer to that effect.  The applicant disputes that that transaction took place in that way.  He contends that the 1979 transaction involved the respondent borrowing $20,000 from Mr Burns at about that time, and that the transfer of the respondent’s interest in the property was given as security for that loan so that the respondent retained legal title to his half of the property and the equity of redemption.  As noted, no transfer of the respondent’s interest in the property to Mr Burns was registered in 1979 or at any subsequent time.

11. The applicant also contends that, even if the 1979 transaction occurred as claimed by the respondent, because the transfer was of Crown land under the Crown Lands Act 1929 (SA) (“the Crown Lands Act”), it required the consent of the Minister of Lands (“the Minister”) to have any force and effect. Section 225 of the Crown Lands Act provides that no transfer of a lease shall have any force or effect unless the Minister has consented to the transfer. Section 226 provides that an agreement for the transfer of a lease is null and void after the expiration of one year from its making unless the Minister has consented in writing to the transfer. Section 227(1) provides:

    “Notwithstanding any law or usage to the contrary it is hereby declared that any prohibition, express or implied, contained in this Act, or in any lease or agreement issued under this Act or any repealed Act, against the transferring, assignment, or subletting of land comprised in any such lease or agreement without the consent of the Minister first had in each case, shall be construed to extend to and to include the prohibition of -

    (a)every form of alienation, or attempted alienation, without such consent as aforesaid, of the land comprised in the lease or agreement; and

    (b)the mere parting, before such consent is actually obtained, with the possession of the land, or any part thereof, in pursuance of any agreement for the alienation thereof, whether the said agreement is executory or otherwise and whether the same is or is not enforceable in law, and whether or not the said alienation is thereby agreed to be made subject to such consent,

    and upon any breach of any such prohibition as hereby extended the Minister shall have the same powers of re-entry and forfeiture as in the case of a breach of any such prohibition as hereinbefore first mentioned.”

12. The applicant contends that no consent was given by the Minister to the transfer and no consent in writing was given to the agreement, so that any agreement to transfer the respondent’s interest in the property became null and void in 1980 (one year after the transfer was executed).  Consequently, he contends, the respondent at the time of his bankruptcy was entitled to a moiety interest in the property which then vested in the applicant as his trustee and became property available to his creditors on 18 March 1983.

13. In Hill v O’Brien (1938) 61 CLR 96 at 103 (“Hill”), Latham CJ observed that s 227 of the Crown Lands Act was originally enacted after the decision of the High Court in Hensley v Reschke (1914) 18 CLR 452 (“Hensley”).  Hensley held that equitable assignments did not fall within the prohibition of s 226, and that s 226 did not prohibit the letting of a proposed purchaser into possession before the registration of a transfer to which consent had been given. In Hill, Latham CJ at 105 said that, if the effect of a share-farming agreement was to transfer any interest in Crown leasehold land, that agreement was invalid and that any alienation or attempted alienation of the land was also invalid. The majority (Rich, Dixon and McTiernan JJ) held that the share-farming agreement in question did not transfer any interest in the farming land but created only contractual rights between its parties. See also In re Symon; Public Trustee v Symon [1944] SASR 102 at 107-108 per Mayo J; Harrington v Keene (1975) 11 SASR 361 at 369-370 per Jacobs J.

14. There is a further alternative claim of the applicant in respect of the respondent’s moiety interest in the property following upon the 1979 transaction.  It is based upon the assumptions that the 1979 transaction involved the respondent agreeing to sell the property to Mr Burns for valuable consideration, and that the contract had been fully performed by the respondent when he received the price of $20,000 and provided an executed transfer and the duplicate Certificate of Title and lease to Mr Burns, and that the Minister had consented in writing to that agreement and to that transfer.  The applicant contends that:

    (a)either the interest of the respondent in the property at the time of his bankruptcy was greater than the bare legal title because he may also have a lien for any expenses he had paid in respect of the property between 1979 and 1983, or

    (b)because the applicant could or might have been able to disclaim the agreement as an “unprofitable contract”, or by leave, upon his appointment as the trustee of the respondent’s estate, those statutory rights to disclaim the agreement mean that he “acquires a bare legal title coupled with a power to enlarge that title into a full equitable estate”. That ‘right’ to disclaim a contract was said to itself give rise to an equitable interest in the property, by reason of s 133(1A) of the Act.

    Thus, the applicant claims to have had an equitable interest in the property (notwithstanding the Minister’s consent to the 1979 transaction) from the time of the respondent’s bankruptcy.

15. The claim based upon the 1986 transaction is made even if the applicant was entitled to no more than a bare legal interest in the property at any time during the respondent’s bankruptcy.  There was no relevant dealing with the property during the bankruptcy.  It is a claim which, upon the basis on which it is made, has no obvious merit.

16. The appellant claims that the 1986 transaction involved the respondent acquiring only Mr Burns’ registered moiety interest in the property. He says that Mr Burns’ unregistered equitable interest in the other moiety interest, the subject of the 1979 transaction, was not retransferred nor agreed to be retransferred to the respondent. Alternatively, he contends, if that interest was agreed to be transferred to the respondent, the Minister’s consent to that retransfer was not procured so that agreement to retransfer is null and void under ss 225, 226 and 227 of the Crown Lands Act. In either event, the equity in that moiety interest did not reside with the respondent at any material time, and at best from the respondent’s point of view rested with Mr Burns (and, following his death in 1997, with Mr Burns’ estate). The applicant then contends that the respondent, in opposition to this claim, cannot set up the equity of Mr Burns or of his estate to defeat the applicant’s claim. Moreover, he contends, as it is apparent from the evidence that Mr Burns’ estate claims no interest in that moiety, or indeed in the property at all, he should be entitled to be registered as the holder of the full legal and equitable interest in that moiety of the property. It is said that the respondent did not receive the equitable interest by the 1986 transaction, and Mr Burns or his estate have since abandoned their equitable interest in that moiety.

17. The unattractive feature of that proposition is that the applicant now claims to be entitled to the legal and equitable interest in one moiety of the property, even though (on the assumption made) the interest of the respondent at the time of his bankruptcy and during his bankruptcy was no more than a bare legal interest in that moiety.  Indeed, he maintains that claim even if it be accepted that the respondent paid for that moiety interest as part of the 1986 transaction, and later paid the Minister for the grant of the freehold interest in the property and even though the respondent has expended considerable sums on improving the property (as the evidence indicates) since 1986.

18. The applicant’s final submissions were that the 1986 transaction rendered it unnecessary for the Court to determine the true nature of the 1979 transaction, or to determine whether the Minister had consented to the 1979 transaction. That position does not, however, reflect the terms of the application, which primarily seeks a declaration that the transfer executed to give effect to, or as part of, the 1979 transaction was null and void by virtue of the operation of s 227 of the Crown Lands Act. Indeed, it also sought orders that as a result of the acquisition in 1986 of Mr Burns’ moiety interest in the property, the applicant was entitled to the legal and equitable interest in the whole of the property, and not just in one moiety interest. That claim was not finally pursued. That position also does not reflect the course of preparation for the hearing, or the course of evidence at the hearing. The listing of the matter for hearing was deferred from time to time precisely because the applicant was endeavouring to obtain clear evidence as to whether the Minister’s consent was given to the 1979 transaction, and most of the evidence at the trial was directed to the nature of the 1979 transaction and whether the Minister’s consent was given to it.

    Findings about the 1979 transaction

19. I accept the evidence that the respondent signed a memorandum of transfer of his half-interest in the property to Mr Burns (“the 1979 transfer”).  I find that he signed that transfer in about mid June 1979 and that it was later dated 29 October 1979.

20. The respondent’s evidence is that he agreed in about June 1979 to sell his interest in the property to Mr Burns for $20,000.  He further said that in about June 1979 both he and Mr Burns signed a contract for the sale and purchase of that interest, signed the 1979 transfer (then undated), and that Mr Burns paid the $20,000 price.  The respondent explained that he and Mr Burns, and their families, had been close friends for many years and that he and Mr Burns had also been close business associates over many years.  In June 1979, the respondent was about to undergo a serious heart operation.  He was putting his affairs in order.  He agreed with Mr Burns to sell his interest in the property to get some funds to better secure certain income earning properties to provide for his family if the operation did not go well.  Mr Burns’ business was as that of a real estate agent, and he employed experienced land brokers on his staff.  The respondent left it to Mr Burns to attend to the procuring of the Minister’s consent, and the registration of the transfer.  He did not then think further about those aspects.  The fact of the execution of the 1979 transfer and its handing over, and the payment of the price, before the Minister’s consent was obtained was a consequence of, or a reflection, of the friendship between the two men.

21. I accept the respondent’s evidence on those matters.  He impressed me as an honest and straightforward person, and his evidence as to the nature of the documents he signed in mid 1979 is confirmed by the independent evidence of Norma Margaret Williams (“Ms Williams”).  In Mr Burns’ statements of his assets, which he prepared at the end of each financial year, the property is shown as an asset for each of the years 1980 to 1987.  That description adds only a little to my conclusion, as the property is referred to as “Mannum Farm” without clearly showing that it refers to all or only to one half of the property, and the statements of assets prior to 1980 are not in evidence.

22. Ms Williams is a retired conveyancer.  She was a conveyancer in South Australia until 1996 when she retired.  She was employed in 1979 by Mr Burns in his real estate business Peter F Burns Pty Ltd, and as part of her employment she performed conveyancing work for Mr Burns in connection with his personal real estate matters.  She was aware of the interests of Mr Burns and of the respondent in the property.  She ceased working for Mr Burns in about 1980.

23. Although the applicant submitted that I should reject her evidence as unreliable, I found Ms Williams to be an impressive witness.  She was direct and to the point.  Her description of what she had done and the documents she had handled had a firm ring of accuracy.  I formed the clear impression that she would say what she could reliably recall, and would acknowledge when she was not clear in her recollection.  She had a particular reason to recall the 1979 transaction as it was the first job she had done for Mr Burns, and she sought some advice from another land broker in the office about certain steps she was required to undertake.  It was also the first time she had had to get the Minister’s consent to a transfer.  The applicant criticised her evidence in part because she said that she had seen the Minister’s consent to the 1979 transaction, whereas her affidavit said that in about October 1979 she “learned that the consent had been received”.  I do not consider that there is any inconsistency in those two pieces of evidence.  Nor did she acknowledge inconsistency.  She played a part in preparing her affidavit, and said that she sought to convey by it that she had seen the consent.  I accept that she was endeavouring to convey that fact by the expression in her affidavit.

1. The applicant also contended that her communications with the respondent had “encouraged her to remember”, that is to fabricate, what had occurred in respect of the 1979 transaction and that she had only been prepared to give evidence after she had learned that the officers of the Minister could not positively indicate whether or not the Minister’s consent had been given to the 1979 transaction.  Both those factors also, along with other less significant aspects, were said to support the contention that Ms Williams’ evidence was unreliable.  I do not accept those submissions.  Ms Williams described her discussions with the respondent in relation to the matter.  She did not shy away from the fact that, when initially asked what she recalled of the 1979 transaction, she recalled little and did not wish to become involved.  She described that she had then, with the opportunity of thinking about the matter, been able to recall in detail the 1979 transaction before any further contact with the respondent.  I accept her evidence.  As I have noted, there were particular circumstances why it might have stood out in her memory.

2. I also accept that, although she was urged by the respondent to provide information in relation to the 1979 transaction, she reported in her affidavit and in her evidence only what she recalled, and that her recollection is reliable.  Her evidence does not contain any confabulation, far less fabrication.  Her reluctance to become involved, or to give evidence, persisted up to the hearing (as she acknowledged), but I accept that her preparedness ultimately to give evidence was prompted not by the removal of any fear that she might be contradicted by officers of the Minister, but because she became aware that the truth might not emerge without her evidence whereas she had previously believed officers of the Minister would be able to establish that the Minister’s consent was given to the 1979 transaction.

3. Ms Williams was told by Mr Burns in June 1979 that the respondent had sold to Mr Burns his half-interest in the property.  She saw a contract note to that effect.  She was asked to prepare the memorandum of transfer.  She prepared the memorandum of transfer (which I find was the 1979 transfer).  She obtained the pro forma form, and then prepared an application for the consent of the Minister to the 1979 transfer.  In about June 1979, she forwarded that application for the consent of the Minister to the department.  The consent was then given, and sent to Peter F Burns Pty Ltd.  It was put into the relevant file.  It was not then drawn to Ms Williams’ attention.  She only saw it in the file when she made enquiries as to why the consent was taking so long to come through.  I find that it was dated only when she became aware of that consent.  Ms Williams saw the consent in the file many times after that, together with the executed contract and the 1979 transfer also duly executed.  She no longer knows the whereabouts of that file.  Ms Williams said that the lessees’ copy of the Crown lease and certain copies of certain underleases were not able to be located.  It was for that reason that the transfer was not lodged at the Lands Titles Office for registration in 1979.

4. The evidence as to the practice of the Crown Lands Department in South Australia at the material time was given by David Wayne Haslam (“Mr Haslam”). He is a senior property officer at the Department of Crown Lands at Murray Bridge in South Australia. “Crown Lands SA” has the general responsibility for Crown Land administration, including the processing of applications for Ministerial consent to transfers and other dealings with Crown leases and interests in Crown leases which are required by Pt 12 of the Crown Lands Act.

5. Mr Haslam was requested to investigate whether a consent to the 1979 transfer was granted by the Minister.  He searched the records of Crown Lands SA at Murray Bridge for that purpose. He made inquiries of the offices of Crown Lands SA in Berri and in Adelaide, and with officers of the former “Land Office” to try to discover whether any records now exist of the Minister having consented to the 1979 transfer.  He has not located any record of Ministerial consent to the 1979 transfer.  However, he says that it is not the common practice of Crown Lands SA to retain records of Ministerial consents to transfers in 1979.  The searches that he has conducted have not revealed any complete records prior to 1982.  Consequently he is unable to say whether or not Ministerial consent was given to the 1979 transfer.  His evidence does not provide any basis for rejecting the evidence of Ms Williams to which I have referred.  He was cross-examined by counsel for the applicant about a record which is called the Land Data Bank record of the Land Ownership and Tenure System concerning the property.  It does not record any consent given by the Minister to the 1979 transaction.  Mr Haslam was aware of that record when he provided his affidavit, the effect of which is set out above.  He clearly regarded the Land Data Bank record as not being reliable for determining whether the Minister had consented to the 1979 transfer.  It does not cause me to doubt the reliability of Ms Williams’ evidence.

6. Mr Burns died in October 1997.  The respondent, in his endeavour to obtain confirmation of his evidence about the 1979 transfer, sought information from Peter F Burns Real Estate Pty Ltd.  Peter Charles Burns (“Mr Burns’ son”) gave evidence that in 1997 he had gone through all the old files that Mr Burns had kept.  His secondary evidence of those records assisted him in asserting that the 1979 transaction had occurred as the respondent described.  However I do not propose to place any weight upon that evidence, because I am not satisfied that it represents any real recollection of Mr Burns’ son on the matters to which the letter refers.  I accept his evidence that Mr Burns’ primary records were destroyed in 1997 or 1998 following a review of them by members of his family.  Any records relating to the 1979 transaction, including the seeking of the Minister’s consent to the 1979 transfer, were then destroyed.  Mr Burns’ son also said that one of the files destroyed following Mr Burns’ death was a file relating to the property.  He did not then check its contents.  He had no reason to do so.  I am satisfied that the destruction of those records at the time was entirely coincidental and was not related to the fact of these proceedings.

7. The absence of Mr Burns’ records confirming the respondent’s version of events in respect of the 1979 transaction, including the absence of any records indicating the consent of the Minister having been obtained at that time to the 1979 transfer, is explained.  I draw no inference adverse to the respondent by reason of their absence.  Moreover, as Ms Williams’ evidence provides an explanation for the failure to register the 1979 transfer in 1979 or subsequently, I do not draw any inference adverse to the respondent by reason of the failure to register that transfer.  I also do not draw any inference adverse to the respondent from his inability to produce any documents relating to the 1979 transfer.  When, or just before, he became bankrupt, the respondent’s family companies went into liquidation.  I accept that the liquidator took possession of the filing cabinets then held in his office, and that the materials then taken included any papers the respondent had concerning the property, including the 1979 transaction.  The respondent speculated that, following the completion of the liquidation of those companies, his records were then passed by the liquidator to the applicant.  There is no evidence to confirm that that occurred.  It probably does not matter.  I accept that the respondent has not received back from the liquidator his primary records.

8. The foundation for the contention of the applicant that the 1979 transaction was a loan secured by the 1979 transfer was information provided by the respondent to the applicant at an interview on 10 June 1998. The respondent attended that interview at the applicant’s request. The applicant recorded that the respondent then said that in 1979 he borrowed $20,000 from Mr Burns, the security for which was a transfer of his interest in the property. At an examination conducted on 5 March 1999 under s 81 of the Act, the respondent gave evidence consistent with his evidence on the hearing of this matter. The respondent was unclear what he had told the applicant on 10 June 1998. I accept that, at that time, he had not had cause to address the 1979 transaction for many years and that the information he gave to the applicant may have been inaccurate. I am confident that the applicant recorded the respondent’s replies accurately, but I am satisfied upon the whole of the evidence that those replies given on 10 June 1998 in relation to the nature of the 1979 transaction were erroneous in fact.

9. Mr Burns’ son also gave evidence about his father’s experience and practice. I have no reason to reject that evidence. I accept that Mr Burns was an experienced land agent, whose work included frequent dealings with land including Crown leases. He engaged in buying and selling properties both as a land agent, and on his own behalf. He was familiar with the technical and legal requirements for buying and selling Crown leases, including the requirement under the Crown Lands Act to obtain the Minister’s consent to transfers of any interest. It was contended that that information, standing alone, makes it probable Mr Burns would have sought the consent of the Minister to the 1979 transfer. I have not placed any weight on that evidence. It has been unnecessary to do so.

10. For those reasons, I find that the 1979 transaction involved the respondent selling to Mr Burns his moiety interest in the property.  I also find that the agreement to that effect was entered into in June 1979, and that shortly thereafter the 1979 transfer was signed (but not dated) and Mr Burns paid the purchase price of $20,000.  I also find that by October 1979, the Minister had consented to that proposed transfer.  Shortly after Ms Williams learnt of that consent, the 1979 transfer was dated.  It was never registered.  However, from at least October 1979 the respondent had no more than a bare legal title in the moiety interest in the property in his name.  The equity in that moiety interest had passed to Mr Burns.

11. Accordingly, the interest in the property of the respondent which vested in the applicant upon bankruptcy under s 58(1) of the Act was no more than that bare legal title to that moiety interest. There was no relevant dealing in the property during the respondent’s bankruptcy. The interest in the property to which the applicant remained entitled at the time the respondent was discharged from bankruptcy remained a bare legal title in that moiety. The equity in that moiety remained with Mr Burns. That equitable interest was “protected” by the caveat lodged on 20 July 1982.

12. In my judgment, s 133(1A) of the Act did not operate to create an equitable interest in the property in favour of the applicant at all, far less one greater than the equitable interest of Mr Burns, by reason of his appointment as trustee of the bankrupt estate of the respondent. The proposition is unsupported by any authority to which I was referred. The plain words of s 133 (1A) do not lend themselves to the contention. The right (subject to the leave of the Court: s 133(5A)) to disclaim a contract, as expressed, does not indicate any intention to create an equitable interest in real property merely because the contract relates to real property. It would be surprising if that incidental effect were intended, depending upon whether or not the contract related to real property, especially as both s 133(1AB) and s 133(4) show that the legislature directed its attention to matters relating to real property. I am also of the opinion that the respondent had no residual equity in, or equitable lien over, the property at the date of his bankruptcy. There is no evidence to suggest to the contrary, and in particular there is no evidence of the respondent having paid any expenses in respect of the property so as to give rise to any such lien. The evidence of the relationship between the respondent and Mr Burns, and their families, tends rather to indicate that there would have been no issue about Mr Burns’ paying the recurrent outgoings in respect of the property from 1979.

    The 1986 transaction

13. It is clear that Mr Burns’ registered half interest in the property was transferred to the respondent on 19 November 1986, the date of the transfer, after his discharge from bankruptcy on 18 March 1986.  That transfer was effected with the consent of the Minister.

14. Although the instrument of transfer records the consideration for that transfer as $43,000, I accept the respondent’s evidence that Mr Burns agreed to sell and convey to the applicant his registered half interest in the property, and his unregistered equitable half interest in the property (the result of the 1979 transaction), for $43,000. I further find, on the respondent’s evidence, that that purchase price was arrived at by treating each undivided moiety as having the same value as at 1979, namely $20,000, and adding $3,000 for the costs associated with the transfer. Those findings are confirmed, to some degree, by Mr Burns’ statement of assets at 1991 (the next statement of assets in evidence after 1987) not containing any reference to the property, and by Mr Burns having discussed with his son in 1986 the proposed sale. Mr Burns told his son that he was proposing to sell “the farm” (meaning the whole of the property) to the respondent if Mr Burns’ own family had no objection. That first hand hearsay of Mr Burns’ intention is admissible in the circumstances: ss 62 and 63 of the Evidence Act 1995 (Cth).

15. Both the respondent and Mr Burns’ son were aware that the implementation of the 1986 transaction was left to a licensed land broker to effectuate.  Their evidence suggested that it may have been Ms Williams who effected the 1986 transaction.  She was not asked about the terms of the consent to the 1986 transaction.  Mr Haslam also was not asked about the terms of that consent.  The terms upon which the Minister’s consent was sought are not in evidence.  Nor are the terms of the consent itself.  It is clear that the Minister in 1988 regarded the respondent as the registered lessee of the whole of the property, and a person with whom he could deal in relation to the grant of the freehold title in the property.  There is no hint that the Minister believed that the equitable interest in one half of the property which, with his consent, was to be transferred or was transferred to Mr Burns in 1979 remained separate from the registered legal interest of the respondent after the 1986 transaction.  Those matters lead me to the conclusion that the Minister’s consent to the 1986 transaction included consent not only to the transfer of Mr Burns’ moiety interest in the property but also to the transfer of Mr Burns’ equitable interest in that moiety in the property of which the respondent had remained throughout as the bare legal owner.

16. Accordingly, in my judgment, from the performance of the 1986 transaction, the legal and equitable interest in the property vested in the respondent until later transferred to the trustees of the Ron Salisbury Family Trust.

    Conclusion

17. In the light of those findings, the applicant was entitled to no more than the bare legal title to one moiety interest in the property from the respondent’s bankruptcy on and from 18 March 1983. That was the extent of the respondent’s property which was divisible amongst his creditors under s 116 of the Act. During his bankruptcy, the respondent’s interest in the property did not alter. In practical terms it had no value. The respondent failed to disclose to the applicant in his statement of affairs any interest in the property. The respondent says he did not disclose it because he did not, in a practical sense, have any interest.

18. The applicant seeks a declaration that, at the commencement of the respondent’s bankruptcy on 18 March 1983 the respondent held an interest as tenant in common in one undivided moiety in the property, and that that property was divisible amongst the respondent’s creditors for the purposes of s 116(1) of the Act. I can see no utility in making that declaration at this point in time, as there was no value in that mere legal interest as at that date: see generally Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Forster v Jododex Aust Pty Ltd (1972) 127 CLR 421; University of New South Wales v Moorehouse & Angus Robertson (Publishers) Pty Ltd (1975) 133 CLR 1. I have found that, as a result of the 1986 transaction, the respondent with the consent of the Minister became the registered lessee in law and in equity of the whole of the property. His opposition to the applicant’s claim does not seek to establish a jus tertii in Mr Burns or his estate.  It establishes his, and his successor’s, full interest in the property.  There is furthermore no competing equity which, on my findings, the applicant can property assert.  Those considerations also militate against the grant of the declaratory order sought.

19. In my judgment, this application should be dismissed.

I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate:

Dated:             9 August 2000

Counsel for the Applicant:	Mr M Manetta
Solicitors for the Applicant:	Manuel Fuller Merrigan
Counsel for the Respondent:	Ms E Huxtable
Solicitors for the Respondent:	Nicholls Gervasi
Counsel for the Intervener:	Mr T Preston
Solicitors for the Intervener:	Thomson Playford
Date of Hearing:	22 & 23 June 2000
Date of Judgment:	9 August 2000