Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd

[2006] NSWSC 856

CITATION:	Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd & Anor [2006] NSWSC 856
HEARING DATE(S):	31/07/06, 02/08/06
JUDGMENT DATE :	28 August 2006
JUDGMENT OF:	Gzell J
DECISION:	Council's proceedings including claim to indemnity to be dismissed. Mortgagee's cross claims to be dismissed save for orders for withdrawal of the caveats.
CATCHWORDS:	ABORIGINALS - Land Rights - Local Aboriginal Land Council in joint venture to develop its land - Council transfers land to a trustee of a unit trust in which it holds the only units with rights to income and capital - Trustee and joint venture partner enter into loan agreement - Trustee mortgages land to lender - Trustee and joint venture partner in default - Lender obtains judgment against both - Council seeks recovery of land - Disposals of land not in accordance with the Aboriginal Land Rights Act 1983 are void under s 40(2) - Transfer did not comply - A certificate issued by the secretary of a Local Aboriginal Land Council that disposal of land did not contravene s 40D is conclusive evidence in favour of any person except a person who had notice of the contravention under s 40D(2) - Certificate issued - Principles of construction of such a certificate - Whether a proper certificate under s 40D(2) - Whether notice of contravention is actual or constructive - Whether mortgagee had notice - Whether Council had a beneficial interest in the land as unit holder - Whether that interest mortgaged in contravention of the Act - Whether the certificate covered such a mortgage - Whether transfer and mortgage a composite transaction - Whether mortgage element a dealing otherwise with the land in contravention of the Act - Whether the certificate covered such dealing - Whether trustee borrowed from mortgagee as agent for the Council as disclosed principal - Whether caveats by the Council and the Registrar-General should be withdrawn - Whether Council entitled to indemnity from joint venture partner on grounds of unjust enrichment
LEGISLATION CITED:	Aboriginal Land Rights Act 1983 Corporations Act 2001 (Cth) Real Property Act 1900 Fair Trading Act 1987 Companies Act 1961 (Qld)
CASES CITED:	Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284 National Australia Bank Ltd v Sampson, NSWSC, unreported, 9 September 1991 State Bank of New South Wales Ltd v Chia (2000) 50 NSWLR 587 Darkingung Local Aboriginal Land Council v Minister for Natural Resources (1985) 58 LGRA 298 Wilde v Australian Trade Equipment Co Pty Ltd (1980-1981) 145 CLR 590 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 Saunders v Vautier (1841) 4 Beav 115 (49 ER 282) Saunders v Vautier (1841) Cr & Ph 249 (41 ER 482) CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 80 ALJR 519 Abbey National Building Society v Cann [1991] AC 56 Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 ADC v White Construction (ACT) [1999] NSWSC 43 McBride v Sandland (1918) 25 CLR 69 J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 Notaras v Sly and Weigall [2005] ANZ ConvR 614 Topey Vander Have Pty Ltd v Mass Constructions Pty Ltd (2002) 55 IPR 542 Pavey & Mathews Pty Ltd v Paul (1987) 162 CLR 221 Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, 4th ed, LexisNexis Butterworths, Australia, 2002 Jacobs’ Law of Trusts in Australia, 7th ed, LexisNexis Butterworths, Australia, 2006
PARTIES:	Koompahtoo Aboriginal Land Council - Plaintiff, 3rd Cross Defendant to 1st Cross Claim, 1st Cross Defendant to 2nd Cross Claim, 3rd Cross Claimant KLALC Property & Investment Pty Ltd - 1st Defendant, 1st Cross Defendant to 1st Cross Claim LKM Capital Ltd - 2nd Defendant, 1st Cross Claimant, 2nd Cross Claimant Sanpine Pty Ltd - 2nd Cross Defendant to 1st Cross Claim, 2nd Cross Defendant to 2nd Cross Claim, Cross Defendant to 3rd Cross Claim The Registrar General of New South Wales - 4th Cross Defendant to 1st Cross Claim
FILE NUMBER(S):	SC 2573/03
COUNSEL:	Mr B A Coles QC/ Mr G A Sirtes - Koompahtoo Local Aboriginal Land Council Mr R G Forster SC/ Mr R Hollo/ Mr M O'Meara - LKM Capital Ltd Mr T Hale/ Ms A Mitchelmore - Sanpine Pty Ltd Mr P Walsh - The Registrar General of New South Wales
SOLICITORS:	Bartier Perry - Koompahtoo Local Aboriginal Land Council Baldwin Oates & Tidbury, Solicitors - KLALC Property & Invetment Pty Ltd Henry Davis York, Lawyers - LKM Capital Ltd K C Hall, Solicitor for the Registrar General, Solari Legal, Solicitors - Sanpine Pty Ltd Department of Lands - The Registrar General of New South Wales

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

MONDAY 28 AUGUST 2006

2573/03 KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL v KLALC PROPERTY & INVESTMENT PTY LTD & ANOR

JUDGMENT

Introduction

1 Koompahtoo Local Aboriginal Land Council was the registered proprietor of lot 556 at Morisset, New South Wales. A claim to the land by the Council was granted by the Crown Lands Minister under the Aboriginal Land Rights Act 1983, s 36.

2 In July 1997, the Council entered into a joint venture agreement with Sanpine Pty Ltd to develop part of lot 556 as a residential subdivision.

3 In November 1998, Sanpine as borrower and the Council as mortgagor entered into a loan agreement with Inteq Custodians Ltd under which Inteq agreed to lend $780,000 to Sanpine and the Council agreed to provide a first registered mortgage over lot 556.

4 In December 1998, the Council resolved to change the use of part of lot 556 to residential development and to mortgage the lot. In February 1999, the New South Wales Aboriginal Land Council resolved to approve the proposed change of use of portion of lot 556 to residential development and approved the mortgage of the land to Inteq.

5 The Council granted a mortgage to Inteq in February 1999 which was registered. In October 1999, Inteq changed its name to Cardinal Financial Securities Ltd.

6 In October 2000, a supplemental joint venture agreement was executed between the Council and Sanpine to take account of a decision to develop the joint venture site as a staged, integrated community development on a larger part of the land. The original stage one land was of 64 hectares. The supplemental agreement increased the total area to 162.5 hectares.

7 In March 2001, KLALC Property & Investment Pty Ltd was constituted trustee of the Koompahtoo Property & Investment Trust in which the initial unit holders were members of the Council. They held all the Class “A” units and the Council held the only Class “B” and Class “C” units. The Class “A” conferred total and exclusive rights to vote on the appointment or removal of the trustee. The sole rights to distribution of trust income/profits were conferred on the Class B” units and the sole rights to distributions of trust capital, on the Class “C” units.

8 On 30 March 2001, the Council transferred an estate in fee simple in lot 556 to KLALC as trustee for $850,000. The transfer was registered. On the same day, the secretary of the Council issued a certificate certifying that the disposal did not contravene the Aboriginal Land Rights Act 1983, s 40D.

9 There had been no meeting of the Council at which a vote for the disposal of lot 556 had been passed by not less than 80% of the members present and voting. The approval of the New South Wales Aboriginal Land Council had not been obtained to the sale, and the relevant New South Wales Government Ministers had not been notified of the proposed sale.

10 The Council mortgage to Cardinal was, amongst a series of other mortgages, transferred to LKM Capital Ltd.

11 In April 2001, LKM as lender and the Trustee and Sanpine as borrowers, entered into a loan agreement for $1,650,000. The Trustee granted a mortgage over lot 556 to LKM. That mortgage was registered, the Council mortgage transferred from Cardinal to LKM was discharged, and the discharge was also registered.

12 In November 2001, LKM made a further advance of $300,000 and a variation of mortgage to $1,950,000 was executed and registered.

13 In April 2002, the Registrar-General of New South Wales lodged a caveat over lot 556, as did the administrator of the Council in March 2003.

14 LKM obtained judgments in the amount of $2,697,853.50 against Sanpine and against the Trustee. No amount of principal or interest has been paid to LKM.

15 The Trustee did not appear at trial. It had been deregistered, but shortly before the hearing, I made an order under the Corporations Act 2001 (Cth), s 601AH(2) that ASIC reinstate its registration.

Issues

16 The Council argued that the sale of lot 556 to the Trustee was void as it infringed the provisions of the Aboriginal Land Rights Act 1983 with the consequence that the mortgage of the land by the Trustee to LKM was also void. LKM argued that it and the Trustee were protected from any breach of the Aboriginal Land Rights Act 1983 by reason of the certificate of 30 March 2001.

17 The Council’s secondary argument was that it had a beneficial interest in lot 556 as beneficiary of the Koompahtoo Trust and that interest was mortgaged contrary to the provisions of the Aboriginal Land Rights Act 1983 with the consequence that the mortgage by the Trustee to LKM was void. LKM argued that the certificate of 30 March 2001 not only applied to a disposal by way of sale, but also to a mortgage.

18 The Council also argued that the transfer of lot 556 to the Trustee and the Trustee’s mortgage of it to LKM was a composite transaction or the Council had the expectation when it transferred the land to the Trustee that the mortgage would occur and in either case it otherwise dealt with the land in contravention of the Aboriginal Land Rights Act 1983, s 40(1).

19 LKM also claimed that it had indefeasible title under its mortgage in terms of the Real Property Act 1900. The Council argued that the Aboriginal Land Rights Act 1983 overrode the Real Property Act 1900.

20 LKM sought judgment against the Council on the basis that it lent the moneys to the Trustee as agent for the Council as a disclosed principal.

21 If the mortgage was void, LKM claimed damages for misleading and deceptive conduct in terms of the Fair Trading Act 1987 and an equitable estoppel based on the Council’s representations that there had been compliance with the Aboriginal Land Rights Act 1983, that LKM was entitled to register its mortgage, and that the Trustee was entitled to grant the mortgage.

22 In the further alterative, LKM claimed that the Council had been unjustly enriched by the advances made by LKM and it was entitled to reimbursement.

23 If the Court ordered the Council to pay damages in respect of the moneys advanced by LKM, or declared that LKM was lawfully in possession of lot 556, the Council claimed that Sanpine had been unjustly enriched because the moneys paid pursuant to the Inteq loan and the subsequent LKM loan were received by Sanpine for its benefit. The Council claimed that Sanpine was obliged to indemnify it in respect of such moneys as might be found to be payable by the Council to LKM.

24 Sanpine argued that moneys borrowed from Inteq and LKM were for the purposes of the joint venture and were spent for the purposes of the joint venture. It argued that it received no benefit at the expense of the Council in circumstances which would make it unjust that Sanpine retain any benefit.

25 LKM sought orders that the Registrar-General and the Council remove the caveats they had lodged over lot 556.

26 The Registrar-General argued that the Aboriginal Land Rights Act 1983 did not override the system of registration of title under the Real Property Act 1900 and, in particular, that it did not defeat LKM’s interest under its registered mortgage.

The Aboriginal land rights provisions

27 The Aboriginal Land Rights Act 1983, s 40 restricted the right of an Aboriginal Land Council to sell or otherwise dispose of land. So far is material for present purposes, s 40 was in the following terms:

“(1) The New South Wales Aboriginal Land Council or a Local Aboriginal Land Council may not sell, exchange, lease, dispose of, mortgage or otherwise deal with land vested in it, except in accordance with this Division.
(2) Any sale, exchange, lease, disposal or mortgage of, or other dealing with, land in contravention of this Division is void.”

28 The divisional requirements for sale or other disposal of land by a Local Aboriginal Land Council were contained in s 40D. It was in the following terms:

“(1) A Local Aboriginal Land Council may, subject to the provisions of any other Act, sell, exchange, mortgage or otherwise dispose of land vested in it if:
(a) at a meeting of the Council specifically called for the purpose (being a meeting at which a quorum was present) not less than 80 per cent of the members of the Council present and voting have determined that the land is not of cultural significance to Aborigines of the area and should be disposed of, and
(b) the New South Wales Aboriginal Land Council has approved of the proposed disposal, and
(c) (Repealed)
(d) in the case of the disposal of land transferred to an Aboriginal Land Council under section 36, both the Crown Lands Minister referred to in that section and the Minister have been notified of the proposed disposal.
(2) A certificate in the prescribed form (if any), purporting to be signed by the Secretary of the Local Aboriginal Land Council and certifying that the disposal by the Council of land specified in the certificate does not contravene this section, is conclusive evidence of that fact in favour of any person (whether or not the person is the person to whom the certificate was issued) except a person who had notice, when the certificate was issued, that the disposal of the land did contravene this section.
(3) For the purposes of this section, land is of cultural significance to Aborigines if the land is significant in terms of the traditions, observances, customs, beliefs or history of Aborigines.”

The requirements of a certificate

29 It was common ground that the sale of lot 556 by the Council to the Trustee did not comply with the requirements of the Aboriginal Land Rights Act 1983, s 40D(1). LKM asserted that it was protected by the certificate of 30 March 2001. The Council argued that the certificate did not comply with the requirements of s 40D(2).

30 The Council argued that the certificate was premature. It was dated 30 March 2001, the same day as the transfer from the Council to the Trustee. It was submitted that it was impossible to certify that a disposition that had not occurred did not contravene the section and, hence, the Aboriginal Land Rights Act 1983, s 40D(2) was concerned with a completed disposal and the certificate was wholly ineffectual.

31 I reject those submissions. The Aboriginal Land Rights Act 1983, s 40D(1) contains a number of prerequisites to a valid disposal of land by a Local Aboriginal Land Council. Those prerequisites having been met, there is no reason why a certificate cannot issue under s 40D(2) prior to the disposal in question. The Council’s submissions, if correct, would defeat the purpose of the certificate that there had been compliance with the requirements of the section and there was no need for the holder of the certificate to inquire whether those requirements had in fact been met.

32 At the time of the transfer of lot 556 to the Trustee there was no prescribed form for a certificate under the Aboriginal Land Rights Act 1983, s 40D(2). The certificate on the letterhead of the Council was in these terms:

“Date: 30 March 2001___________
TO WHOM IT MAY CONCERN
Re: Lot 556 Deposited Plan 729949
I, Veronika Bailey___________________________________________
Secretary of Koompahtoo Local Aboriginal Land Council Incorporated hereby certify that the disposal by way of sale, exchange, mortgage or otherwise by the Land Council of the land specified above does not contravene Section 40D of the Aboriginal Land Rights Act, 1983 in that the land is not of cultural significance to Aboriginal people of the area.
Yours faithfully,
KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL Incorporated


Secretary.”

Ms Bailey signed the document above the word “Secretary.”

33 The Council submitted that precise compliance with the Aboriginal Land Rights Act 1983, s 40D(2) was required and the certificate failed that requirement.

34 As to the former proposition, reference was made to Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284. A deed charging a company’s assets contained a provision that a statement signed by a person within any of several classes of the amount owing or secured by the charge was conclusive. At 289, Young J referred to his earlier decision in National Australia Bank Ltd v Sampson, NSWSC, unreported, 9 September 1991 and said that clauses providing for certificates of that nature must be strictly construed, the reasons being that parties who have agreed to forego their rights to dispute the quantum claimed by the other party to the financial transaction, expect that the certificate will be given fairly and in proper form.

35 His Honour concluded that there was no compliance with the clause. One of his reasons for this conclusion, at 289, was that a statement was required and what was proffered was a certificate. In State Bank of New South Wales Ltd v Chia (2000) 50 NSWLR 587 at [252], Einstein J respectfully declined to follow this aspect of the decision. I respectfully agree with Einstein J. The purpose of such clauses is to produce a statement in the sense of a written communication of specified information. In my view, it matters not what form the statement takes if it communicates in writing the specified information.

36 A like approach of strict compliance was adopted by Bignold J in Darkingung Local Aboriginal Land Council v Minister for Natural Resources (1985) 58 LGRA 298. Section 36(3) of the Aboriginal Land Rights Act 1983 provided that one or more Local Aboriginal Land Councils might make a claim for land within its or their area or, with the approval of the Registrar, outside its or their area. Section 36(5) provided that a Crown Lands Minister to whom a claim for lands had been referred should, if satisfied that the whole or part only of the lands claimed were claimable Crown lands, grant the claim by transferring to the claimant the whole or that part of the lands claimed.

37 “Claimable Crown lands” were defined in the Aboriginal Land Rights Act 1983, s 36(1) to be, amongst other lands, lands not needed, nor likely to be needed, for an essential public purpose. Section 36(8)(b) provided that a certificate by a Crown Lands Minister, after consultation with the Minister administering the Act, stating that any land the subject of a claim under the section and specified in the certificate as needed or likely to be needed for an essential public purpose, should be accepted as final and conclusive evidence of the matter set out in the certificate and should not be called into question in any proceedings nor liable to appeal or review on any grounds whatever.

38 The certificate considered by Bignold J certified that the land was needed, and likely to be needed, for an essential public purpose. At 315 his Honour concluded that the use of the word “and” rather than “or” was fatal and the document was not a certificate for the purposes of the Aboriginal Land Rights Act 1983, s 36(8).

39 With respect to his Honour, I doubt that I would have arrived at the same conclusion. But I do not need to decide that question for there is, to my mind, a distinction between the certificate in question before him and the certificate here in question.

40 In each of the above cases, the effect of the certificate was to deprive the recipient of any inquiry that might have revealed an error and might have resulted in the recipient achieving a more beneficial result. The purpose was to exclude the inquiry.

41 That is not the purpose of the certificate in the instant circumstances. It is not to deprive the recipient of inquiry, but rather to relieve from that necessity. The recipient may make inquiry if that is wished. There is no preclusion from doing so. But the certificate saves the need for such inquiry. A recipient is placed in the position that it is conclusively established that the preclusive provision of the Aboriginal Land Rights Act 1983, s 40(2) is overcome. The certificate conclusively establishes that the prerequisites in s 40D(1) have been accomplished and the embargo upon free disposal of land vested in a Local Aboriginal Land Council is overcome.

42 LKM sought to differentiate between what it termed unilateral certificates permitting one party, unilaterally and conclusively, to affect the rights of another person and protective certificates, providing protection or certainty to another person who relied on the validity of certain actions of the person issuing the certificate.

43 I doubt that the authorities establish this dichotomy. In my view the question in each case is one of construction having regard to the purpose of the provision in question.

44 LKM referred to Wilde v Australian Trade Equipment Co Pty Ltd (1980-1981) 145 CLR 590. The Companies Act, 1961 (Qld), s 100(1) provided that where a charge was created by a company, there should be lodged with the Commissioner for registration within 30 days after the creation of the charge, a statement of prescribed particulars. If there was no compliance with the section, the charge was void against the liquidator and any creditor of the company. The company granted a charge but it was not registered.

45 The Companies Act, 1961 (Qld), s 106 provided that the Court, on being satisfied that the omission to register a charge within time was accidental, due to inadvertence, or to some other sufficient cause, or was not of a nature to prejudice the position of creditors or shareholders, or that on other grounds it was just and equitable to grant relief, might order that the time for registration be extended. An order was made on the ex parte application of the grantee of the charge extending the time for registration, and the charge was then registered.

46 Section 103(2) of the Companies Act, 1961 (Qld) provided that the Commissioner should issue a certificate of every registration and the certificate should be conclusive evidence of compliance with the requirements as to registration. The certificate stated that a bill of sale of a specified date was registered on another specified date, more than 30 days after the grant of the charge.

47 The company was subsequently wound up and the liquidators applied for a declaration that the charge was void against them. It was held that the registration affected in compliance with the order extending time was valid and continued to be valid despite an order setting aside the extension of time. At 604, Stephen, Murphy and Wilson JJ, with whom Aickin J agreed, said that it could not be said, having regard to the certificate, that the charge was not validly registered so as to be void against the liquidator. Their Honours said that although it was always appropriate to go behind the certificate to the instrument itself to discover the details concerning the charge, and to any order of the court to discover any terms and conditions that might have been imposed on late registration, one cannot go behind the certificate to challenge the propriety of the registration itself. Any other conclusion would amount to a denial of the plain words of the section.

48 The Council invoked the observation of Gibbs J, that a certificate cannot be conclusive evidence of something that its own words contradict. But his Honour was in dissent.

49 LKM made reference to Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. Leases were demised for 10 years from and including 13 January 1992. The leases contained terms that the tenant could determine the lease by serving not less than six months notice in writing to expire on the third anniversary of the term commencement date. By letters dated 24 June 1994 the tenant gave notices to determine both leases on 12 January 1995.

50 In was held by a majority of the House of Lords that the construction of the notices had to be approached objectively and the question was how a reasonable recipient would have understood them bearing in mind their context; that the purpose of the notices was to inform the landlord of the tenant’s decision to determine the leases in accordance with the break clauses; that a reasonable recipient with knowledge of the terms of the leases and of the third anniversary date, would have been left in no doubt that the tenant wished to determine the leases on 13 January 1995 but had wrongly described it as 12 January, and that, accordingly, the notices were effective.

51 In my view, in the absence of a prescribed form, a certificate answers the description in the Aboriginal Lands Rights Act 1983, s 40D(2) if it certifies to the matter specified in the subsection.

The validity of the certificate

52 The Council submitted that what is required is an unequivocal, unqualified assertion of statutory compliance. It was submitted that the certificate was qualified by the statement that the land was not of cultural significance to Aboriginal people of the area. That constituted a qualification, so it was submitted, because it was but one of the prerequisites in the Aboriginal Lands Rights Act 1983, s 40D(1). It was submitted that the certificate should be read as one certifying only to that prerequisite.

53 I reject that submission. It is inconsistent with the language of the certificate taken as a whole. The secretary of the Council could not have certified that there was no contravention of s 40D of the Aboriginal Lands Rights Act 1983 if the only matter to which reference is made in s 40D(1) that had occurred was the determination that the land was not of cultural significance to Aborigines in the area. It must be assumed that in giving her certificate, the secretary was aware of the requirements of s 40D(1). In certifying that the disposal of lot 556 did not contravene s 40D she must be taken to have had in mind the other requirements of s 40D(1).

54 In my view, the addition of the reference to the land not having cultural significance for Aboriginal people is explanatory in nature and does not constitute a qualification upon the secretary’s certification that s 40D of the Aboriginal Lands Rights Act 1983 had not been contravened. That is the specified information that is to be communicated by a certificate that has force under s 40D(2). In my opinion, that was the certification made by the secretary, and the addition of the explanation does not rob the certificate of statutory effect.

55 In my view, therefore, notwithstanding the failure of the Council to comply with the requirements of the Aboriginal Land Rights Act 1983, s 40D(1) when it transferred lot 556 to the Trustee, the certificate of the secretary of the Council of 30 March 2001 protected LKM from the voiding of the transaction under s 40(2) if it had no notice that the disposal did contravene the section. The certificate also protected the Trustee if it had no such notice.

Notice of non-compliance

56 The Council submitted that a person was not entitled to the protection of the conclusive effect of a certificate under the Aboriginal Lands Rights Act 1983, s 40D(2) if the person had constructive notice that the disposal of the land contravened s 40D(1).

57 It has been said that a person is deemed to have constructive notice of all matters of which he would have received notice if he had made the investigations usually made in similar transactions and of which he would have received notice had he investigated a relevant fact which had come to his notice and into which a reasonable man ought to have inquired (Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, 4th ed, LexisNexis Butterworths, Australia, 2002 at [8-270]. See, also, Jacobs’ Law of Trusts in Australia, 7th ed, LexisNexis Butterworths, Australia, 2006 at [1337]).

58 As is pointed out by the authors, constructive notice arises if investigations that are usually made in similar transactions, are not made. The very purpose of a conclusive certificate is to avoid the necessity of making investigation. If investigation is not called for, a failure to do so cannot, in my view, impute to a person making no investigation the knowledge he or she would have acquired had the investigation been made. I am of the view that the failure to make investigation upon receipt of the certificate here in question was not sufficient to impute knowledge of the Council’s failure to comply with the statute to LKM or, for that matter, to the Trustee.

59 Rolf Koops, a solicitor, was a director of LKM. His firm of solicitors acted for LKM in respect of its dealings with the Trustee and Sanpine. Mr Koops was cross-examined. He was aware of the requirements of the Aboriginal Land Rights Act 1983. He said he saw no irregularity in the certificate and relied upon it to cause LKM to lend money to the Koompahtoo Trust.

60 It was submitted that this evidence should be treated with circumspection. It was submitted that Mr Koops should have been put on inquiry by the limitation patent on the face of the certificate.

61 Since I have found, however, that the certificate was not deficient, this submission of the Council falls away. Furthermore, in light of the purpose of the certificate to obviate inquiry, it was perfectly open to Mr Koops, not perceiving any irregularity in it, to rely upon the certificate and make no further inquiry.

62 There was no evidence to suggest that LKM had actual notice of the Council’s failure to comply with the Aboriginal Land Rights Act 1983, s 40D(1).

63 William Edward Smith was chairman of the Council and sole director of the Trustee when the transfer of lot 556 took place. He and Stephen Griffin affixed and witnessed the seal of the Trustee to the transfer. They also affixed and witnessed the seal of the Council to the transfer. It was submitted that notice of non-compliance with the statutory requirements should be imputed to him from these facts. I do not impute actual notice to Mr Smith. He may well have delegated the requirement to comply with the Aboriginal Land Rights Act 1983, s 40D(1) to someone else. No affidavit of his was read and he did not otherwise give evidence. Nor did anyone else give evidence relating to Mr Smith’s state of knowledge.

64 Mr Griffin signed the transfer of lot 556 as a director of the Trustee. He was premature in his assumption of office. His appointment as a director occurred later. He was Treasurer and an alternative regional representative of the Council. I was invited to impute notice of the Council’s non-compliance with the Aboriginal Land Rights Act 1983, s 40D(1) on the basis of this evidence alone. I decline to do so. Actual notice cannot be inferred from this flimsy base.

65 In the circumstances, I am of the view that the Council has failed to establish either against LKM or against the Trustee that the transfer of lot 556 to the Trustee was void with the consequence that the mortgage by the Trustee to LKM was also void.

The Council’s beneficial interest in lot 556

66 The Council’s secondary argument was that the mortgage by the Trustee to LKM infringed the Aboriginal Land Rights Act 1983, s 40(1) because land was defined in s 4(1) to include any estate or interest in land and under the terms of the Koompahtoo Trust the Council had a beneficial interest in lot 556. The consequence was, it was submitted, that the mortgage by the Trustee to LKM was void under s 40(2) unless it complied with the requirements of s 40D(1), and it did not.

67 Whether the Council as sole unit holder of those units having the entire right to income and corpus invoked the rule in Saunders v Vautier (1841) 4 Beav 115 (49 ER 282), affirmed at (1841) Cr & Ph 240 (41 ER 482) will depend upon the terms of the trust deed granting rights of reimbursement or exoneration upon the Trustee (CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 at [51]. See, also, Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 80 ALJR 519).

68 Even if it could be said that the Trustee’s grant of the mortgage to LKM constituted a mortgage of a beneficial interest in lot 556 held by the Council, that mortgage was not effected by a Local Aboriginal Land Council. It was effected by the Trustee. The embargo in the Aboriginal Land Rights Act 1983, s 40(1) is limited to a mortgage effected by a Local Aboriginal Land Council.

The composite transaction and the expectation

69 The Council argued that the transfer by it to the Trustee and the mortgage by the Trustee to LKM was a composite transaction. Reference was made to Abbey National Building Society v Cann [1991] AC 56. In that case the House of Lords held that where a purchaser relied on a financial institution loan for completion of his purchase, the transactions of acquiring the legal estate and granting a charge were one indivisible transaction, at least where there had been a prior agreement to grant the charge on the legal estate when obtained. There was no scintilla temporis during which the legal estate vested in the purchaser free of the charge and an estoppel affecting the purchaser could be “fed” by the acquisition of the legal estate so as to become binding on, and take priority over the interest of, the chargee.

70 In this case, however, there is no direct evidence of a prior agreement on the Trustee’s part to grant the mortgage to finance the acquisition. Furthermore, the transfer was effected on 30 March 2001 and the mortgage was not granted until 10 April 2001. That gap was hardly a scintilla temporis.

71 But even if the mortgage is to be treated as part of a composite transaction, the certificate of 30 March 2001 applied to a disposal by way of sale, exchange, mortgage or otherwise by the Council so that, in my view, LKM was protected by the certificate from any invalidity in the grant of the mortgage.

72 The Council also submitted that by transferring lot 556 to the Trustee with the expectation that it would become mortgaged to LKM, the Council otherwise dealt with land vested in it in contravention of the Aboriginal Land Rights Act 1983, s 40(1).

73 Again, even if the transaction could be thus characterised, the certificate covered a disposal by way of sale, exchange, mortgage or otherwise.

The new issue

74 In written submissions in reply to LKM’s submissions on the Council’s interest in lot 556 under the Koompahtoo Trust, the Council sought to raise a new issue that was not pleaded nor argued during the hearing. It argued that the Trustee received lot 556 in consequence of an illegal transaction and held it as constructive trustee for the Council as the rightful owner.

75 That matter ought to have been raised at trial. It was too late to raise it in written submissions in reply granted on a limited basis that did not include the raising of new issues.

76 In any event, it ill behoves the Council to raise such an argument being the author of the alleged illegality. Had it been necessary for me to consider the issue, I would have granted no relief on the basis that one who comes to equity must do so with clean hands (Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650) or on the basis that no man can take advantage of his own wrong (ADC v White Construction (ACT) [1999] NSWSC 43 at [89]-[99] or on the basis that Equity will not allow a statute to be used as a cloak for fraud (McBride v Sandland (1918) 25 CLR 69 at 77-78; J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282)

Other Defences of LKM

77 The Council’s entire case against LKM depended upon its establishing that its transfer of lot 556 to the Trustee or the Trustee’s mortgage of the land to LKM was void. It having failed in both respects, its amended summons against LKM must be dismissed.

78 It becomes unnecessary to consider the other defences of LKM.

79 Similar considerations apply to the Trustee. The Council’s claim against it depended upon the Council establishing that its transfer of lot 556 to the Trustee was void. Notwithstanding that the Trustee did not appear at trial, the Council’s proceedings must be dismissed against the Trustee as well.

The Council as disclosed principal

80 LKM sought a judgment against the Council for repayment of principal and interest under the loan agreement with the Trustee and Sanpine on the basis that the Trustee was agent for the Council as a disclosed principal.

81 This argument was advanced on the basis that the Council remained a party to the joint venture agreement with Sanpine under which it had obligations and entitlements with respect to the residential development of portion of lot 556. The moneys were advanced by LKM under the loan agreement between it, the Trustee and Sanpine. It was pointed out that the members of the Council created the Koompahtoo Trust for the benefit, both as to capital and as to income, of the Council and they voted to form the Trustee which accepted its appointment.

82 In my view, those circumstances are insufficient to constitute the Council the disclosed principal under the loan agreement with LKM. The Trustee was a separate legal entity from the Council and it entered into the loan agreement as one of the two borrowers. There is nothing on the face of that agreement that constituted the Trustee an agent for the Council. Nor was any evidence led, apart from the matters above mentioned, from which it might be inferred that the loan was made to the Trustee on behalf of the Council.

83 I reject LKM’s claim against the Council under the loan agreement.

LKM’s representational claims

84 The claims by LKM under the Fair Trading Act 1987 for misleading and deceptive conduct were raised on the basis that its primary defence under the Aboriginal Land Rights Act 1983, s 40D(2) or its alternative defence under the Real Property Act 1900, s 42 and s 43 failed.

85 Since I have confirmed its defence under the Aboriginal Land Rights Act 1983 there is no need to consider this alternative claim.

86 Similar considerations arise with respect to its alternative claim in estoppel.

87 Its proceedings by way of cross claim in these respects should be dismissed.

The LKM unjust enrichment claim

88 In the further alternative, LKM claimed that the Council had been unjustly enriched by the advances made by it to the Trustee and Sanpine and LKM was entitled to reimbursement.

89 This claim was premised upon findings that the transfer from the Council to the Trustee did not comply with the Aboriginal Land Rights Act 1983, s 40D, the Trustee was not entitled to be the registered proprietor of lot 556, LKM was not entitled to a valid and enforceable first registered mortgage, or LKM was not entitled to be registered as mortgagee of lot 556.

90 Since I have found that the certificate of 30 March 2001 was conclusive evidence in favour of any person, except one with actual notice, that the transfer from the Council to the Trustee did not contravene the Aboriginal Land Rights Act 1983, s 40D it follows that the Trustee was entitled to be the registered proprietor of lot 556, LKM was entitled to a valid and enforceable first registered mortgage, and LKM was entitled to be registered as mortgagee of lot 556.

91 In those circumstances the claim of unjust enrichment against the Council is not called in question and that part of LKM’s proceedings should be dismissed.

LKM’s claims for the removal of caveats

92 In light of my finding as to the efficacy of the certificate of 30 March 2001, the caveat lodged by the administrator of the Council over lot 556 has no substance. LKM is entitled to an order that the Council withdraw that caveat.

93 The caveat lodged by the Registrar-General with respect to lot 556 forbad the registration of any dealing affecting the land pending referral to a named officer. The Real Property Act 1900, s 12(1)(e) entitles the Registrar-General to record a caveat for the prevention of any improper dealing.

94 Similar considerations apply to that caveat. Since I have found that the certificate of 30 March 2001 is conclusive evidence that there was no contravention of the Aboriginal Land Rights Act 1983, s 40D(1), it follows that the registration of the transfer from the Council to the Trustee and the registration of the mortgage from the Trustee to LKM were not improper dealings.

95 The Registrar-General made no submissions that the caveat should not be removed.

96 In my view, therefore, LKM is entitled to an order that the Registrar-General withdraw his caveat.

Judicial sale of lot 556

97 In its pleading, LKM sought an order for judicial sale of lot 556. That claim was not pressed in the submission. I will hear the parties as to whether it is appropriate to make such an order.

Possession of lot 556

98 LKM also sought an order against the Trustee for possession of lot 556. Again, this relief was not pressed in submission and I will hear the parties as to whether such an order should be made.

LKM’s second cross claim

99 By way of a second cross claim LKM sought a declaration that the Council was not entitled to rely on the provisions of the Aboriginal Land Rights Act 1983 with respect to the transactions in question and an injunction restraining it from that reliance.

100 I doubt that the second cross claim raised a new issue in this regard since estoppel had been raised under its first cross claim.

101 Under the second cross claim LKM also sought an order that in the event that the transfer from the Council to the Trustee was set aside, an order substituting the Council as mortgagor of the second mortgage was sought.

102 Because I have taken the view that the certificate of 30 March 2001 prevents any argument that the transfer from the Council to the Trustee was void, the occasion for this relief does not arise.

103 In any event, it is difficult to see why the Council should be substituted as mortgagor when LKM as mortgagee dealt with the Trustee as mortgagor.

104 In the circumstances LKM’s second cross claim as against the Council should be dismissed.

The Council’s third cross claim

105 By a third cross claim, the Council argued that if it was held liable to LKM in respect of moneys advanced by LKM to the Trustee and Sanpine, or if it was held that LKM was entitled to possession of lot 556, the Council would suffer loss and damage in consequence of a benefit said to have been derived by Sanpine.

106 I have held that the Council is not liable to LKM with respect to moneys advanced by it to the Trustee and Sanpine.

107 Preparatory to exercising the power of sale over lot 556 under the Real Property Act 1900, s 58(1), LKM issued to the Trustee a notice under s 57(2)(b).

108 In its pleading, but not in submission, the Council asserted that the notice issued by LKM was defective.

109 However, there had been a dispensation from the requirement of notice under the Real Property Act 1900, s 57(2)(b) in the memorandum of mortgage pursuant to s 58A and that dispensation was effective (Notaras v Sly and Weigall [2005] ANZ ConvR 614 at 8618-622).

110 There seems no good reason, therefore, why, as against the Council, LKM should not be entitled to exercise a power of sale and if that was what was meant in the pleading as an entitlement to possession, the Council’s claim against Sanpine was enlivened.

111 The basis of the claim was that the moneys advanced by LKM to the Trustee and Sanpine were applied to the benefit of Sanpine alone, it was unjustly enriched and, in consequence, it was liable to indemnify the Council with respect to any loss suffered by it in consequence of the Court holding that LKM was entitled to possession of lot 556.

112 Sanpine defended these assertions in the third cross claim. It made reference to Topey Vander Have Pty Ltd v Mass Constructions Pty Ltd (2002) 55 IPR 542 in which Spigelman CJ noted that in order to establish a claim in restitution it is necessary to show that there was a benefit obtained by one party at the expense of the other, together with some element of injustice. It was submitted that the evidence established that the funds received by Sanpine under the loan from LKM were used for the purpose of the joint venture.

113 It was not suggested in the evidence that any of the funds were retained by Sanpine. Terence Henry Lawler was appointed administrator of the Council. He gave evidence and was cross-examined. He compiled a schedule of how moneys advanced under the loan from LKM had been expended. He was satisfied that $2.2 million was, in effect, expended. His criticism was that not all the expenditure provided a benefit to the Council. For example, he had serious doubts as to whether the Council obtained sufficient value for money for the $396,000 paid for Aboriginal consulting, although he did not doubt that the services were rendered.

114 In Pavey & Mathews Pty Ltd v Paul (1987) 162 CLR 221 at 256-257, Deane J described unjust enrichment as a unifying legal concept that explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff.

115 The evidence revealed a qualm on the part of the administrator of the Council that it had not received value for money. But there was no suggestion that Sanpine had received a benefit where the Council had not and, further, there was no suggestion that a benefit was received by Sanpine at the expense of the Council. Nor was there an attempt to place the matter within a recognised category that acknowledges an unjustness in the retention by Sanpine of any such benefit.

116 In my view, the Council failed to establish an entitlement against Sanpine to the indemnity it claimed in its third cross claim.

117 It follows that the Council’s third cross claim against Sanpine should be dismissed.

Indefeasibility of title

118 As already mentioned, LKM claimed that the combined effect of the Real Property Act 1900, s 41 and s 42 was to give it an indefeasible interest as mortgagee on registration of its mortgage. The Registrar-General’s submissions supported this proposition. The Council argued that the Aboriginal Land Rights Act 1983, s 40(2) overrides the Real Property Act 1900, s 41 and s 42. Both LKM and the Registrar-General have submitted to the contrary. Each of the parties has provided detailed written submissions on this issue.

119 The question is an important one. It deserves better attention than obiter dicta from me. Since I have found that the Trustee and LKM are protected by the certificate issued under the Aboriginal Land Rights Act 1983, s 40D(2), there is no need for me to consider the question whether the Aboriginal Land Rights Act 1983 overrides the Real Property Act 1900 and I do not do so.

Conclusion

120 The Council has failed to establish any entitlement to relief and its amended summons and third cross claim should be dismissed.

121 LKM is not entitled to judgment in any sum against the Council. It is entitled to an order that the caveat lodged by the Council over lot 556 be withdrawn. It is entitled to a similar order against the Registrar-General. I will hear further submissions with respect to its claim to orders for possession and judicial sale of lot 556. In other respects, LKM’s first cross claim should be dismissed. Its second cross claim should also be dismissed.

122 I will hear the parties on the terms of appropriate orders and I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons.

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