Mercier Rouse Street Pty Ltd v Burness

SUPREME COURT OF VICTORIA
COURT OF APPEAL

S APCI 2014 0007

MERCIER ROUSE STREET PTY LTD (ACN 114 623 675)	Appellant
v
PAUL ANDREW BURNESS IN HIS CAPACITY AS LIQUIDATOR OF ZINC PORT MELBOURNE PTY LTD (IN LIQUIDATION) (ACN 125 312 852)	First Respondent
and ZINC PORT MELBOURNE PTY LTD (IN LIQUIDATION) and ANDREW WILLIAM BECK IN HIS CAPACITY AS RECEIVER AND MANAGER OF ZINC PORT MELBOURNE PTY LTD (IN LIQUIDATION)(RECEIVER AND MANAGER APPOINTED)(ACN 125 312 852) and EQUITY-ONE MORTGAGE FUND LIMITED (ACN 186 720 941) and JULDIC PTY LTD and JULIANNA O’BRYAN and RICHARD O’BRYAN	Second Respondent Third Respondent Fifth Respondent Sixth Respondent Seventh Respondent Eighth Respondent

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JUDGES:	WARREN CJ, NEAVE and SANTAMARIA JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	8 September 2014
DATE OF JUDGMENT:	12 February 2015
MEDIUM NEUTRAL CITATION:	[2015] VSCA 8
JUDGMENT APPEALED FROM:	[2013] VSC 599

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VENDOR AND PURCHASER – Joint venture deed – Construction of block of apartments – Entitlements of party to deed of particular apartments – Execution of deed – Whether manager of joint venture trustee of apartment for party entitled to apartment – Whether provisions of deed manifest intention that manager hold apartments on trust for party – Whether manager held beneficial interest in apartment – Entitlement of party to transfer of apartment upon payment of contribution amount – Whether party had paid contribution amount – Lysaght v Edwards (1876) 2 Ch D 499; CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98.

ADMINISTRATIVE LAW – Victorian Civil and Administrative Tribunal – Jurisdiction – Orders judgments and declarations – Whether VCAT possessed of jurisdiction to order specific performance of contract of sale – Procedural fairness – VCAT ordering personal relief when proprietary relief sought – Whether order made in excess of VCAT’s jurisdiction – Whether order void and of no effect - Fair Trading Act 1999 (Vic) – Morris v Riverwild Management Pty Ltd (2011) 38 VR 103.

CONTRACT – Election – Purchase of apartment – Payment of purchase price – Application in Victorian Civil and Administrative Tribunal for proprietary relief – Grant of personal relief – Application in Federal Court for appointment of liquidator of vendor – Application by purchaser to be joined as supporting creditor – Application by supporting creditor that provisional liquidator be appointed to manager – Whether exercise of inconsistent rights – Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr M S Osborne QC with Mr K R Hickie	B2B Lawyers
For the First and Second Respondents	Mr N Lucarelli QC with Mr J Kohn	Mason Black Lawyers
For the Third and Fifth Respondents	Mr T Woodward SC with Mr S T Pitt	Mills Oakley Lawyers
For the Sixth, Seventh and Eighth Respondents	Mr C G Juebner	SBA Law

warren CJ:

I have had the benefit of reading in draft form the reasons for judgment of Santamaria JA. Save for his Honour’s conclusion that the Victorian Civil and Administrative Tribunal (‘VCAT’) did not have jurisdiction to hear and determine the seventh and eighth respondents’ application dated 17 May 2011 (the ‘VCAT application’), I agree with his Honour, for the reasons that he gives, that the appeal should be dismissed.

Given the result reached by the Court, in my view it is not necessary in this case to determine the question of whether VCAT had the requisite jurisdiction.

The relevant definition of ‘services’ in s 2 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) includes ‘rights in relation to, and interests in, real or personal property’ that are ‘provided, granted or conferred in trade or commerce’. However, the question of whether the VCAT application related to the supply of a right or interest of this kind is not necessarily straightforward and was not the subject of full argument before the Court. In this context, I do not express a concluded view as to whether VCAT had jurisdiction to hear and determine that application.

NEAVE JA:

I have had the advantage of reading the draft judgment of Santamaria JA. Apart from his conclusion that the definition of services in the Fair Trading Act 1999 does not confer jurisdiction on VCAT to determine a dispute arising out of a contract for the sale of an interest in land, I agree with his reasons for concluding that the appeal should be dismissed and with the orders he proposes.

I note that, it might have been argued that, even if the dispute would normally fall within the jurisdiction of VCAT, on the facts of this case it did not do so. Arguably this was not a consumer and trader dispute, because the O’Bryan’s

contract to purchase an interest in an apartment on the property was part of a broader arrangement in which they advanced funds for the development.

Leaving aside that issue, my tentative view is that the definition of services originally in the Fair Trading Act 1999 and later incorporated by reference to Schedule 2 of the Competition and Consumer Act 2010 (Cth), includes a dispute between a purchaser and vendor arising out of a contract for the sale of an interest in land. Although the point was not fully argued in Sigma Constructions (Vic) Pty Ltd v Maryvell Investments Pty Ltd,[1] in that case Batt JA (with whom Vincent and Nettle JJA agreed) remarked that:

the definition of ‘services’ requires one to consider the question, at least principally, from the point of view of the supplier. Thus, the sale of a purely domestic dwelling by its owner to a developer or trader in real estate might not involve the provision in trade and commerce of rights in relation to real property, whereas if the parties were reversed, it almost certainly would.[2]

[1](2004) 22 VAR 279.

[2]Ibid 287–288[22].

The plain words of the definition of services include ‘rights in relation to, and interests in real and personal property.’ There is a strong argument that these words should not be read down because ‘services’ is normally an inapt expression to describe the one-off transfer of an interest in property. The drafting style is an enlarging one, which adds a meaning which would otherwise not be included in the defined term.[3]
[3]Francis Bennion, Statutory Interpretation (LexisNexis, 5^th ed, 2008) 561, 573-574. A simple example beloved of law lecturers is where the expression ‘dog’ is defined to include a cat or a horse.

My tentative view that the VCAT had jurisdiction to determine disputes between consumers and traders arising out of contracts for the sale of land is reinforced by the fact that s 108 of the Fair Trading Act 1999, as it stood at the relevant time, empowered VCAT to make an order in the nature of an order for specific performance in the context of a consumer and trader disputes. Orders for specific

performance (or orders of that nature) are generally sought and granted to give effect to contracts for the sale of land. Such an order will only be made to enforce a contract for the sale of goods, where the goods are unique or have some special value to the person buying them. Thus, the provision empowering VCAT to make such an order supports the conclusion that a definition of services which explicitly includes rights in relation to, and interests in, real property, should be read literally.

SANTAMARIA JA:

In 2007, Michael Emery (‘Emery’), Richard O’Bryan and persons associated with AM Port Melbourne Pty Ltd (‘AMPM’) became involved in the purchase of the property situated at 117-123 Rouse Street, Port Melbourne (‘the property’) and in the construction on it of a block of apartments (‘the Building’). In order to further their project, a Partnership Deed was executed and, later, a Joint Venture Deed. In doing so, they used several existing corporate bodies and incorporated others. They placed Zinc Port Melbourne Pty Ltd (‘Zinc’) at the heart of the project. Zinc was to hold all the assets of the project and to be its Manager. Eventually, the project was completed; a large number of apartments were constructed on the property. Zinc became the registered owner of them.

In 2007 and 2008, the parents of Richard O’Bryan (‘the O’Bryans’) provided part of the funding for the project, and, eventually, they became entitled to have unit 210 transferred to them.

In September 2010, the parties to the Joint Venture Deed executed an ‘Exit Deed’ pursuant to which AMPM left the joint venture. In order to facilitate its departure and to reconcile mutual financial obligations, a ‘worksheet’ was prepared that became of some significance in the proceedings.

In December 2010, Zinc entered into several facility agreements with Equity-One Mortgage Fund Limited (‘Equity-One’). Equity-One took real property

mortgages over some of the apartments registered in the name of Zinc. Under the mortgages, Zinc, as mortgagor, gave a charge over the property of which it was the beneficial owner. Equity-One also took a registered charge over the whole of the assets and undertaking of Zinc.

In November 2011, the remaining parties to the joint venture decided to dissolve it; to that end they executed a Separation Deed. At some point, a dispute arose between Emery and Richard O’Bryan, and they stopped co-operating with each other. The particulars of their dispute were not explored in the proceeding.

In May 2011, the O’Bryans applied VCAT for orders that Zinc comply with its contract to transfer unit 210 to them. Late in 2011, the Deputy Commissioner of Taxation applied to the Federal Court of Australia for the appointment of a liquidator to Zinc. In December 2011, VCAT, instead of ordering specific performance, ordered Zinc to pay the O’Bryans $1.2 million. In February 2012, the O’Bryans applied to be joined as supporting creditors to the Deputy Commissioner’s application. They also applied for the appointment of a provisional liquidator to Zinc. The Federal Court ordered that a provisional liquidator be appointed, and, a few days later, ordered that Zinc be wound up. Upon the appointment of the liquidator, Equity-One appointed receivers over the whole of Zinc’s assets and undertaking.

Disputes have arisen as to the beneficial ownership of some of the apartments that are registered in the name of Zinc.

First, the question has arisen whether units 208 and 301 were owned beneficially by Zinc when it gave the charge to Equity-One such that Equity-One has security over those apartments. Mercier Rouse Street Pty Ltd (‘Mercier Rouse’) (Emery) has claimed that, when Zinc gave its charge, it was beneficially entitled to those units and that, therefore, those units did not fall within the Equity-One charge. There are three bases to Mercier Rouse’s claim: (a) the terms of the Joint Venture Deed; (b) the terms of the Separation Deed; and (c) its claim to have paid all that it was required to pay to secure the transfer to it of the legal title in the two units.

Second, the O’Bryans claim to be beneficially entitled to unit 210 and have sought an order in the present proceeding that the apartment be transferred to them. The liquidator and Mercier Rouse have resisted the O’Bryans’ claim. They do not suggest that the O’Bryans have failed to pay for the unit. Rather, they contend that, when Zinc failed to transfer the unit to them, the O’Bryans had a choice of remedies and that, in pursuing their remedies both in VCAT and in the Federal Court, they made an election that prevents them now from pursuing a proprietary remedy in the present proceeding.

The judge decided that Mercier Rouse was not the holder of the beneficial interest in units 208 and 301. He also decided that the O’Bryans were entitled to the transfer to them of unit 210. Mercier Rouse has appealed both decisions.

For the reasons that follow, both appeals should be dismissed.

The various parties and entities

The following description of the various parties is taken from the reasons of the judge.[4]
[4]Paul Andrew Burness (In his capacity as liquidator of Zinc Port Melbourne Pty Ltd (In liq) v Zinc Port Melbourne Pty Ltd (In liq) and Mercier Rouse Street Pty Ltd & Ors [2013] VSC 599 (‘Reasons’).

Mercier Rouse is a company under the effective management and control of Emery. It acted as the trustee of the Mercier Rouse Street Trust (‘the Emery Trust’).

Cymbol Rouse Street Pty Ltd (’Cymbol Rouse’) is a company under the effective management and control of Richard O’Bryan. It acted as the trustee of the Cymbol Rouse Street Trust (’the O’Bryan Trust’).

AM Port Melbourne Pty Ltd (‘AMPM’) was a party to the Partnership Deed and the Joint Venture Deed. It was an entity controlled by Ashe Morgan Winthrop.

119 Rouse Street Pty Ltd (‘119 Rouse Street’) was a company jointly controlled by Emery and Richard O’Bryan. 119 Rouse Street held all the shares in Zinc.

The O’Bryans controlled Juldic Pty Ltd (‘Juldic’).

Paul Andrew Burness (‘Burness’) was appointed the liquidator of Zinc.

Andrew Beck (‘Beck’) and Glenn Anthony Crisp (‘Crisp’) were appointed by Equity-One as receivers over the whole of Zinc’s assets and undertaking.

The establishment of the partnership and the joint venture

In May 2007, 119 Rouse Street was incorporated. Emery and Richard O’Bryan were appointed as its initial directors.

Similarly, in May 2007, Zinc was incorporated. The initial shareholders were 119 Rouse Street and AMPM. On the same day, Emery was appointed a director of Zinc.

By a contract dated 24 May 2007, Zinc agreed to sell unit 210 to Mrs O’Bryan or her nominee.[5]
[5]In his reasons (at [15]), the judge says ‘Although that is the contract date, the precise date on which it was executed is not clear.’

By a partnership deed dated 25 May 2007, (‘the Partnership Deed’), 119 Rouse Street and AMPM as partners agreed to establish a partnership known as the Rouse Street Partnership and to appoint Zinc as the Manager of the partnership. The recitals to the deed indicate that, through the Manager, the partners were to fund the payment of an option to purchase, and to complete the purchase of, the property and, then, to develop on it the Building. Zinc was to hold all the partnership assets as agent and to receive all income and receipts as agent for the partners.

Pursuant to an undated Joint Venture Deed (which contained a provision that it was to commence on 18 August 2007) made between them, Mercier Rouse, Cymbol Rouse, Zinc, 119 Rouse Street and AMPM formed an unincorporated joint venture to purchase and develop the Building. Zinc was appointed as the Manager of the Joint Venture. The Building was to comprise 83 dwellings. Zinc was to construct, develop and market them.

The Joint Venture Deed identified:

(a) 6 units, which included units 208 and 301, as Emery Dwellings;

(b) 6 units, which included units 117 and 210, as O’Bryan Dwellings.

The balance of the dwellings were identified as Partnership Dwellings. If these units were not sold, the deed provided that these were to be transferred to the respective participants as appropriate.

Advance of funds by Juldic

By a loan agreement dated 4 October 2007, Juldic agreed to lend $100,000 to 119 Rouse Street.

By a note subscription agreement dated July 2008, Juldic provided a further sum of $750,000 to 119 Rouse Street. The agreement was executed by Emery and Richard O’Bryan on behalf of 119 Rouse Street. The agreement contained the following provision:

It is understood by all parties to the agreements that at the time of repayment of monies Richard and Julianna O’Bryan will be offered for purchase an apartment in the development known as 119 Rouse Pty Ltd. The specific unit offered will be as per agreement between [Richard O’Bryan] and Michael Emery.

The Exit Deed

On 20 September 2010, Zinc, Mercier Rouse, Cymbol Rouse, 119 Rouse Street and AMPM entered into an Exit Deed pursuant to which AMPM exited the joint venture and the partnership in return for a payment of a relinquishment fee totalling $6.15 million. Upon the departure of AMPM, a replacement financier was required to assist in the completion of the project.

The Equity-One facility agreements and charges

On 21 December 2010, Equity-One entered into a facility agreement and guarantee with Zinc by which it agreed to lend to Zinc the sum of $632,500 secured by a registered first mortgage over unit 210 (an O’Bryan dwelling) and a deed of charge granted by Zinc over its assets and undertaking.

On 21 December 2010, Equity-One entered into a further facility agreement and guarantee with Zinc by which it agreed to lend to Zinc the sum of $1,267,500 secured by a registered first mortgage over unit 117[6] (also an O’Bryan dwelling) and a further deed of charge granted by Zinc over its assets and undertaking.
[6]Sometimes known as ‘Townhouse 6’.

The charging clause in the deed of charge dated 21 December 2010 pursuant to which Zinc charged its assets and undertaking was in the following terms:

3(1)The Mortgagor [Zinc] as beneficial owner and, if the Mortgagor is the trustee in any schedule item 2 [sic], in its capacity as trustee of that trust HEREBY CHARGES in favour of the Mortgagee with the payment of the moneys hereby secured the whole of its undertaking and assets whatsoever and wheresoever both present and future including the goodwill of its business and its uncalled and called but unpaid capital including all premiums.[7]

[7]The schedule ‘item 2’ refers to Zinc Port Melbourne Pty Ltd ACN 125 312 852 .

On 23 December 2010, the deed of charge was registered with ASIC.

On the hearing of the appeal, it was not in dispute that, thereafter, Equity-One held registered first mortgages over units 117 and 210.[8] Mercier Rouse, however, did dispute that, when it created the charge in favour Equity-One, Zinc held any beneficial interest in units 208 and 301.[9]
[8]Units 117 and 210 were originally identified in the Joint Venture Deed as ‘O’Bryan Dwellings’.
[9]Units 208 and 301 were originally identified in the Joint Venture Deed as ‘Emery Dwellings’.

The VCAT proceeding

On 17 May 2011, the O’Bryans made an application in VCAT against Zinc. In the originating process, the O’Bryans applied for an order that Zinc be required to ‘comply with contract’. In an annexure to the application, the O’Bryans said they wanted an order that unit 210 be transferred to them and registered in their names.

The November 2011 Separation Deed

Late in 2011, Emery and the Emery companies (which included Mercier Rouse), Richard O’Bryan and the Richard O’Bryan companies (which included Cymbol Rouse) and the Emery/O’Bryan companies (which included Zinc) decided to sever their business associations.[10] To that end, on 10 November 2011, they executed a Separation Deed (‘the November 2011 Separation Deed’).
[10]Recital H to the November 2011 deed.

The November 2011 Separation Deed set out how the participants were to sever their business associations and provided among other things:

(a) pursuant to clause 4.1(a), Zinc was to transfer unit 117 to Cymbol Rouse and, simultaneously with that transfer, the O’Bryan companies were to fund the discharge of the Equity-One mortgage;

(b) pursuant to clause 4.1(b), Zinc was to transfer unit 210 to Juldic (or its nominee) and, simultaneously with that transfer, the O’Bryan companies were to fund the discharge of the Equity-One mortgage;

(c) pursuant to clause 4.3, Zinc was to transfer units 208 and 301 to Mercier Rouse free of any encumbrances and, simultaneously with that transfer, the Emery and O’Bryan companies were to fund the discharge of any mortgage over those units.[11]

[11]The November separation deed defined ‘Zinc Settlement Date’ to mean ’10 May 2012’. Clause 4.3 provided:

On the first to occur of the Zinc Settlement Date, or the expiry of 7 days after an MR request so to do Zinc must transfer Lots B 301 and C 208 to Mercier Rouse Street Pty Ltd, or to its nominee, and free of all Encumbrances, and, in that event, simultaneously with such transfer, the E O’B Companies must fund the discharge of any mortgage over those lots; and …’

Federal Court proceedings

In 2011, the Deputy Commissioner of Taxation commenced proceedings in the Federal Court of Australia to wind up Zinc on the basis of an unpaid tax debt.

Order in VCAT proceedings

On 21 December 2011, and notwithstanding the order the O’Bryans had sought, VCAT ordered Zinc to pay them the sum of $1.2 million in respect of a debt for the transfer of unit 210 (‘the VCAT order’).[12]
[12]In the VCAT proceeding, Mr and Mrs O’Bryan had contended that they had paid $1.2 million for unit 210, but that the unit had not been transferred to them.

Mercier Rouse applies for transfer of units 208 and 301

In February 2012, Emery, on behalf of Mercier Rouse, requested that Zinc transfer title to units 208 and 301 to Mercier Rouse pursuant to clause 4.3 of the November 2011 Separation Deed.

On behalf of Zinc, Emery signed the transfer, but Richard O’Bryan refused to do so.

Mercier Rouse commences proceedings in the Supreme Court

On 16 February 2012, Mercier Rouse and Emery commenced proceedings in the Supreme Court of Victoria against Richard O’Bryan seeking, among other things, an order that he complete the execution of the transfer by Zinc of units 208 and 301 to Mercier Rouse.

O’Bryans’ solicitor sends letter of demand

It seems that Emery was similarly refusing to cooperate in the transfer of unit 210 to the O’Bryans. On 22 February 2012, the O’Bryans’ solicitors wrote to Zinc as well as to Richard O’Bryan and Emery. They said:

…
We are instructed that on or around 24 May 2007, Zinc Port Melbourne Pty Ltd (Zinc) and Julianna entered into a Contract of Sale for the sale and purchase for the Property (Contract).
On 14 December 2010, the Contract was amended by way of Deed of Rectification & Confirmation of Contract Conditions.
On or about 22 December 2010 Julianna and Richard [O’Bryan] paid Zinc the sum of $1,200,000 for the purchase of the Property. Caveats were lodged by Julianna on 4 January 2011 and a further caveat was lodged by Julianna on 19 October 2011. These caveats have never been challenged by Zinc.
We are instructed that the title to the Property was never transferred to our client and that, instead, on 23 December 2010, a mortgage was registered over the Property in favour of Equity-One Mortgage Fund Limited (Equity) with the consent of Zinc. Our client was aware that Zinc intended to lodge a mortgage but was assured that the mortgage was only for a short period of time, following which the title would then be transferred to our client.
We are instructed that our client has made numerous requests to have the mortgage removed from the Property and the title to the Property transferred into her name, with no success.
We are instructed that on or around 17 May 2011 Julianna lodged an application with the Victorian Civil and Administrative Tribunal (VCAT) for the removal of the mortgage and the transfer of the Property to Julianna and her husband, Richard.
On 21 December 2011, Member Buchanan of VCAT made an order requiring Zinc to pay Julianna and Richard the sum of $1,200,000. VCAT also made a finding that Zinc had been served with a copy of the application and notice of the hearing on 21 December 2011.
Accordingly, we are instructed to demand payment of the sum $1,200,000 on or before 28 February 2012.
In the alternative, our clients are prepared to consider accepting the immediate transfer of the title to the Property into their names, following removal of the mortgage by Zinc at its cost, rather than payment of the sum of $1,200,000.

It will be noticed that the demand was for the payment of $1.2 million, alternatively, for the transfer of unit 210 to the O’Bryans.

The O’Bryans appear as supporting creditors in the Federal Court

By an interlocutory process issued in the Federal Court and dated 24 February 2012, the O’Bryans, as supporting creditors, sought leave to intervene in the Federal Court proceeding. They also sought the appointment of provisional liquidators.

Appointment of liquidator to Zinc

On 27 February 2012, in the face of opposition from Mercier Rouse and Emery, the Federal Court ordered that a provisional liquidator be appointed to Zinc.

On 1 March 2012, the Federal Court ordered that Burness be appointed liquidator of Zinc.

As a result, Mercier Rouse discontinued the Supreme Court proceeding; it had become moot.

Equity-One appoints receivers

On 23 March 2012, Equity-One served a notice to pay upon Zinc pursuant to s 76 of the Transfer of Land Act1958.

By a letter of demand dated 13 April 2012, Equity-One sought repayment of the amounts due under the mortgages dated 21 December 2010.

By deed dated 1 May 2012, Equity-One appointed Beck and Crisp as receivers of the assets and undertaking of Zinc. The receivers have contended that the terms of the charge attached to all of the apartments, including units 208 and 301.

Present proceedings

On 7 May 2012, the liquidator commenced the present proceedings in which he sought directions pursuant to s 479(3) of the Corporations Act2001 (Cth) with respect to the sale and distribution of proceeds of four properties of which Zinc was the registered proprietor:

(a) unit 208;

(b) unit 301;

(c) unit 210; and

(d) unit 117.

In June 2012, there were four counterclaims:

(1) On 8 June 1012, Mercier Rouse, filed a counterclaim against the liquidator, Zinc, Equity-One, the receivers, Juldic, and the O’Bryans in which Mercier Rouse sought declarations as follows:

(a) that units 208 and 301 were held by Zinc on trust for Mercier Rouse;

(b) that because those apartments were held on trust for Mercier Rouse, they did not fall within the scope of the Equity-One charge;

(c) any rights of Juldic and the O’Bryans as against Zinc were limited to rights as a creditor.

(2) By counterclaim filed 21 June 2012, the O’Bryans sought a declaration and an order for the transfer of unit 210 to them, subject to the registered first mortgage in favour of Equity-One. The O’Bryans claimed to have purchased unit 210 pursuant to a contract of sale bearing the date 24 May 2007 for the price of $1.2 million.

(3) By counterclaim dated 22 June 2012, Equity-One and the receivers sought declarations to the effect that each of the apartments were subject to the Equity-One charge.

(4) By counterclaim dated 28 June 1012, Cymbol Rouse sought relief with respect to units 117 and 210 in substantially the same terms as Mercier Rouse, but relating to units 117 and 210.

Cymbol Rouse (Richard O’Bryan) was given leave to discontinue its counterclaim and did not take any further part in the proceeding. Accordingly, no counterclaim in relation to unit 117 was prosecuted.

In substance, there were two separate claims.

The first claim relates to units 208 and 301. Mercier Rouse (Emery) contended that Zinc held the two dwellings on trust for it, and, as the units were not held beneficially by Zinc, they did not fall under the charge that Zinc gave to Equity-One. That trust arose either upon entry into the Joint Venture Deed or because there was an implied intention to create a trust. Mercier Rouse contended that, upon entry into an agreement for the transfer of land, Lysaght v Edwards[13] held that an equitable interest immediately arises in favour of the purchaser. Alternatively, it contended that that was the intention of the parties when they entered into the Joint Venture Deed. Finally, it contended that, in so far as the payment of the Contribution Amount was a condition precedent to the transfer, it had paid the Contribution Amount. Mercier Rouse also contended that, by reason of the execution of the November 2011 Separation Deed, the other parties were estopped from denying that it paid the Contribution Amount. The Separation Deed itself provided for the transfer of those properties to Mercier Rouse.
[13](1876) 2 Ch D 499.

The second claim relates to unit 210. The O’Bryans contended that they lent money to Richard O’Bryan. They said they had a right to unit 210 arising under an agreement that they would be offered it for purchase. They claimed that they paid the money, but that the property was never transferred to them. By their counterclaim, they sought a declaration of their entitlement to a transfer together with an order that the unit be transferred to them. The liquidator and Mercier Rouse opposed their application on the basis that, having elected to pursue other remedies, particularly a remedy in damages, they could no longer seek a proprietary remedy.

At the hearing of the appeal, the O’Bryans said that VCAT had no jurisdiction to make the order that it did. Alternatively, they contended that VCAT denied them procedural fairness and that, as a result, its order was made without jurisdiction and is a nullity. Finally, they contended that their participation in the Federal Court proceedings did not involve their adopting positions inconsistent with their present claim for proprietary relief.

Judgment below

On 7 November 2013, the judge delivered his reasons and invited submissions as to the form of the orders and declarations to be made. In the reasons, he held that:

(a) the charge in favour of Equity-One only applied to property

beneficially owned by Zinc, and that no estoppel arose.[14]
[14]Reasons [137]–[140]. The charging clause is set out at Reasons [50]. See [40]. The judge held (at Reasons [137]–[140] (citations omitted)):
Accordingly, in this instance, Zinc only charged assets and undertaking which it beneficially owned.
Given that a construction of the charging clause is relatively straightforward and inconsistent with the notion of charging property held on trust, I determine that the circumstances do not warrant recourse to extrinsic or other material in accordance with the judgment of Mason J in Codelfa.
Counsel for Equity-One submitted that as the charge given in favour of Equity-One was additional security to the real property mortgages I ought to consider the commercial circumstances. In particular Mr Koutsoumidis [the managing director of Equity-One] gave the following evidence (on which he was not cross-examined):
(a)if Zinc had disclosed that it held any of its assets on trust for any other person or entity prior to the execution of the loan documents, Equity-One would not have proceeded with the loans;
(b)if Mr Koutsoumidis was aware of any trust over any of the property of Zinc he would have caused this to be identified in item 2 so that the security provided included the properties alleged to have been held on trust.
No estoppel arises by reason of the provision of the declarations and requisition on title. However, given Mr Koutsoumidis’ evidence about what would have happened if the trust was disclosed and given the specific responses that no trust subsisted, it might have been open for Equity-One to seek rectification of the charging clause.
This holding was not challenged in the appeal.

(b) units 208 and 301 were not held by Zinc on trust for Mercier Rouse because Mercier Rouse had not established that it had paid the Contribution Amount, which the judge found was required to be paid before Mercier Rouse acquired a beneficial interest in units 208 and 301;[15]
[15]Reasons [107]-[120].

(c) although the Equity-One charge did not attach to property owned by Zinc on trust for others unless the trust was identified in the schedule to the charge, because of the holding as referred to in sub-paragraph (a), units 208 and 301 were subject to the Equity-One charge;[16]
[16]Reasons [121], [144(c)].

(d) the O’Bryans were entitled to a transfer of unit 210, subject to the Equity-One mortgage;[17]

(e) further to sub-paragraph (c), the fact that the O’Bryans had obtained a judgment at VCAT for $1.2 million and, subsequently, had sought and obtained the appointment of a provisional liquidator for Zinc, did not constitute an election between inconsistent remedies such that they were precluded from obtaining a transfer of unit 210.[18]

[17]Reasons [85]-[96], [144(d)].

[18]Reasons [97]-[106].

Units 208 and 301 (the Mercier Rouse / Emery claim)

In its grounds of appeal, Mercier Rouse complained that the judge did not deal with the argument that, irrespective of whether the Contribution Amount had been paid, Zinc held units 208 and 301 on trust for Mercier Rouse as and from the execution of the Joint Venture Deed, which, presumably took place sometime in 2007.[19] As at that date, Mercier Rouse contended that Zinc created a charge in favour of Equity-One on the basis that the Joint Venture Deed constituted a specifically enforceable contract to convey a legal estate in land.[20] In such a case, Mercier Rouse contended, relying on Lysaght v Edwards,[21] that equity treats the beneficial interest as passing upon execution. It submitted that the judge, by holding[22] that Mercier Rouse was entitled to call for the transfer upon payment of the Contribution Amount but not before, confused the transfer of legal title with the question of beneficial ownership.
[19]The Joint Venture deed is undated, but it provides that it is to commence on 18 August 2007.
[20]Notice of appeal grounds 1 and 2.
[21](1876) 2 Ch D 499.
[22]Reasons [108].

Mercier Rouse also complained that the judge did not deal with the argument, ‘much less explain by a discernible process of reasoning’, why the terms of the Joint Venture Deed itself did not evince an intention that Zinc held units 208 and 301 on trust for Mercier Rouse.[23] Mercier Rouse said that the question whether parties intend that a trust relationship be established depends upon whether the writing manifests an intention to create a trust. A trust can be created without use of the word ‘trust’.[24] It said that the Joint Venture Deed was ‘replete with indicia to the effect that Zinc held legal title to unit 301 and unit 208 as nominee (a phrase customarily analogous to trustee) for Mercier Rouse’.[25] Similarly, it said that ‘[t]he essential attributes of a trust are that a particular item of property is held by a person […] for the benefit of some different person ...’.[26] It is a strong indication that the party intended to make themselves a trustee of that property where the party holding legal title to the property is required to keep and account for it separately.[27] It said that the fact that the parties have distinguished in their agreement between the legal title to the asset and the beneficial interest in the asset is also an indicia of an intention to create a trust.[28] Referring to the Joint Venture Deed, Mercier Rouse said that it was replete with indicia of an intention that Zinc (as trustee) was to hold units 208 and 301 on behalf of Mercier Rouse as and from 18 August 2007, well before the creation of the Equity-One charges.[29]
[23]Notice of appeal grounds 3 and 4.
[24]Commissioner of State Revenue (Vic) v Snowy Hydro Ltd [2012] VSCA 145, [103].
[25]Mercier Rouse said that the use of the word ‘nominee’ is also instructive and often used as being more or less synonymous with trustee. It referred to Body Corporate No 1 v Renaissance Assets Pty Ltd (2004) 11 VR 41, [36]–[38].
[26]Anson v Anson [2004] NSWSC 766, [21].
[27]Commissioner of State Revenue (Vic) v Snowy Hydro Ltd [2012] VSCA 145, [103]; Cohen v Cohen (1929) 42 CLR 91,100-101; Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415, 423.
[28]Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415, 424.
[29]In particular, Mercier Rouse submitted that the judge did not refer in his reasoning to the following provisions of the Joint Venture Deed which indicated that this was so: recital G (when read in the context of recitals H, I, clauses 6.1 and 9.1, schedule 2, clauses 21.1, 21.2 and 21.4 and 21.6).

Mercier Rouse said that, in holding that it was entitled to call for a transfer upon payment of the Contribution Amount, but not otherwise, the judge confused the issue as to when Mercier Rouse was entitled to call for the transfer of legal ownership of the relevant dwelling, with the question whether, prior to the transfer of the legal interest, Zinc held its interest in the Emery Dwellings on trust for Mercier Rouse. This was the critical issue because the Equity-One charge only applied to property beneficially owned by Zinc.[30]
[30]Mercier Rouse referred to Reasons [108].

Next, Mercier Rouse contended that, in any event, even if it had not paid the Contribution Amount, the parties to the November 2011 Separation Deed, (which included Zinc) had provided for units 208 and 301 to be transferred to Mercier Rouse on request in accordance with clause 4.3 and not upon payment of the Contribution Amount. The November 2011 Separation Deed remained in full force and effect as at the date of the trial and remains to this day, binding all parties to it including Zinc and the liquidator.[31] In such circumstances, Mercier Rouse contended that the conclusion by the judge that the deed did not bind the liquidator and that to contend to the contrary was a ‘non sequitur’, lacked legal foundation and is otherwise unexplained. In an appropriate case, a liquidator may seek to have a deed set aside on the basis that it constituted some form of avoidable transaction within the meaning of Division 2 of the Corporations Act2001 (Cth). In the event that such an order is made, the deed is set aside and, at that point, becomes non-binding. However, the liquidator had advanced no such contention and nor was there any basis to do so.
[31]Reasons [119].

Finally, Mercier Rouse contended that the judge erred in concluding that it had not discharged the onus upon it of establishing that it had paid the Contribution Amount.[32] The submissions in support of this contention are set out below.[33]
[32]Notice of appeal ground 5.
[33][112] and [145]-[149] below.

Partnership Deed

On 25 May 2007 (which was before the commencement of the Joint Venture Deed), Zinc, 119 Rouse Street and AMPM executed the Partnership Deed.[34] The Partnership Deed defined Zinc as ‘the Manager’ and contained the following provisions:
[34]The Joint Venture Deed followed the Partnership Deed in time, but does not seem to have replaced it. There are several provisions in the Joint Venture Deed that refer to provisions in the Partnership Deed. There is no provision in either deed that purports to resolve any inconsistency between them.

RECITALS
A.The Manager is a company incorporated under the Corporations Act having an issued share capital of 12 shares held:
A.16 shares by the Emery Entity;
A.26 shares by the AMW Entity.[35]
[35]‘AMW Entity’ was the vehicle for the Ashe Morgan Winthrop interests.

B.The Manager is the grantee under an option deed dated 3 October 2003 (Option) in respect of land described in Certificate of Title Volume 9623 Folio 982, Volume 5492 Folio 255, Volume 4846 Folio 097, Volume 9088 Folio 979 and being known as and situate at 117-123 Rouse Street, Port Melbourne, Victoria (Property).
C.The Emery Entity and AMW Entity (Partners) have agreed to establish a partnership known as the Rouse Street Partnership (Partnership) and to appoint the Manager as the manager of the Partnership.
D.Through the Manager the Partners intend to:
D.1fund the continued payment of option fees under the Option and fund consultant and marketing costs required to achieve a minimum pre-sale hurdle agreed by the Partners;
D.2complete the purchase of the Property via exercise of the Option;
D.2develop a number of multistorey residential buildings (Building) on the Property consisting of approximately 83 dwellings (Dwellings); and
D.3sell the Dwellings to third parties.

E.The purchase of the Property, development of the Building and the sale of the Dwellings is the current business (Business) of the Partnership. The Partners may choose to engage in other businesses from time to time.

F.The Partners agree that the Business will be conducted and run by the Manager subject to the terms and conditions of this Deed.
G.The Partners agree to control and supervise the Manager and to carry on the Business in a partnership subject to the terms and conditions of this Deed.
H.To assist in the payment of the purchase price for the Property and development costs of the Building the Partners propose to secure third party finance.
I.To supplement third party funding of the project the Partners have agreed to provide advances to the Business in the proportions set out in this Deed.
J.The parties hereto wish to formalise the arrangements between them.

1. DEFINITIONS
…
Partnership means the partnership formed by the Partners under this Deed to carry on the Business.
Partnership Assets means the assets referred to in clause 19.
…
Project Costs means all budgeted costs in clause 25 (further details of which are set out in Annexure 1).
…
6.MANAGER TO HOLD PARTNERSHIP ASSETS AND ACT AS AGENT
6.1The Manager acknowledges and agrees with the Partners that:
6.1.1the Manager will hold all Partnership Assets on behalf of the Partners as agent; and
6.1.2all income or receipts received by the Manager for the Business will be received by the Manager as agent for the Partners.

6.2The Partners agree that following a resolution of the Management Committee the Manager can charge and encumber the Partnership Assets which are held by it on behalf of the Partners.

...
18. DISTRIBUTION OF SALE PROCEEDS
Proceeds received by the Manager from the sale of the Dwellings will be distributed in the following order after set-off of relevant Project Costs:
18.1 to any Bank that provides senior debt under a Bank Facility;
18.2to any Bank that provides mezzanine debt under a Bank Facility, or any other finance provider that provides preferred equity in relation to the Project;
18.3to the Emery Entity and AMW Entity in proportion but without preference to repay any Additional Equity Advance;
18.4to Emery Entity and AMW Entity in proportion but without preference to repay any Aggregate Equity Amount;
18.5to the Emery Entity and AMW Entity in proportion but without preference to repay any Coupon;
18.6to the Emery Entity and AMW Entity equally without preference to pay Partnership Profits, but only up to an aggregate amount of $5,000,000 in total;
18.7to the Emery Entity in the amount of $1,250,000;
18.8to the Emery Entity and AMW Entity equally without preference in the amount of $1,150,000; and
18.9if any proceeds remain, to the Emery Entity and AMW Entity without preference to pay Partnership Profits in the proportions:
18.9.160% to the Emery Entity;
18.9.240% to the AMW Entity.

…

19. PARTNERSHIP ASSETS
19.1Jointly Held
The Partnership Assets must be held by the Partners as tenants in common in the Proportion. The interests of the Partners in any Partnership Assets held as agent by the Manager in accordance with clause 6 are held by the Partners as tenants in common in the Proportion.
19.2Assets
The Partnership Assets comprise the following to the exclusion of all other assets:
19.2.1the Capital;

19.2.2 the Planning Permit;
19.2.3any other assets acquired by the Manager for the Business or using the funds of the Partnership; and
19.2.4any other assets acquired by the Partners for the Business or using the funds of the Partnership.

19.3Records of Partnership Assets
The Partners must record the details of any assets acquired for the purpose of clause 19.2.3 and 19.2.4 in the books of the Partnership immediately after the acquisition.
25.PROJECT COSTS
25.1Scope of Costs
The budgeted Project Costs shall include but not be limited to:
25.1.1all architects, surveyors and other consultants’ fees incurred in relation to the design of the Building and the preparation and completion of the Plans and Specifications and the final surveys;
25.1.2the Land Costs;
25.1.3any GST Amount;
25.1.4the Construction Costs;
25.1.5the Finance Costs;
25.1.6marketing and advertising costs;
25.1.7sales commissions;
25.1.8headwork and authorities fees and contributions;
25.1.9the Quantity Surveyor Costs.

25.2Annexure 1
Further details of the budgeted Project Costs are set out in Annexure 1 of this Deed.

25.3Apportionment
The Project Costs shall be borne by the Partners in the Proportion for the purposes of the calculation of the Partnership Profits or Partnership Losses.

Joint Venture Deed

The Joint Venture Deed is dated ‘2009’.[36] Zinc was defined as the Manager. The deed contains the following recitals and provisions:
[36]Under item 2 of Schedule 1, the Deed is said to have commenced on 18 August 2007.

RECITALS
A.The Partnership was established on 25 May 2007 pursuant to the Partnership Deed with the Emery Entity and the AMW Entity as partners (Partners).
B.The business of the Partnership is to purchase the Property pursuant to the Option, develop the Building and sell the Dwellings to third parties (Business).
C.The Manager is the manager of the Partnership.
D.On 18 August 2007 the Partnership invited the Emery Trust and the O’Bryan Trust to form an unincorporated joint venture (Joint Venture) to purchase the Property and develop the Building.
E.The Partnership, the Emery Trust and the O’Bryan Trust (Participants) wish to appoint the Manager as manager of the Joint Venture (in addition to its management of the Partnership).
F.The Participants will each contribute the following to the Joint Venture:
F.1the Partnership will contribute the right to acquire the Property pursuant to the Option, expertise in property development and funding by way of capital contributions;
F.2the Emery Trust will contribute funding by way of capital contributions; and
F.3the O’Bryan Trust will contribute funding by way of capital contributions.

G.In return for their respective contributions to the Joint Venture each Participant’s Interest in the Joint Venture assets on and from the Commencement Date will be:
G.1     Emery Trust — 8.29%;
G.2     O’Bryan Trust — 9.08%; and
G.3     Partnership — 82.63%.
H.The parties intend for each Participant’s Interest to be satisfied via an allocation of the Dwellings at Project completion as below:
H.1the Emery Trust: the Emery Dwellings;
H.2the O’Bryan Trust: the O’Bryan Dwellings; and
H.3the Partnership: the Partnership Dwellings.

I.The Partnership will appoint Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Joint Venture) as its agent to sell the Partnership Dwellings. The Emery Dwellings and O’Bryan Dwellings will otherwise be dealt with in accordance with the terms and conditions of this Deed.
J.The Participants agree to control and supervise the Manager and to carry out the Project subject to the terms and conditions of this Deed.
K.The parties enter into this Deed to record and give effect to their common intentions.

1. DEFINITIONS
In this Deed unless expressed or implied to the contrary:
...
Contribution Amount means the amount of $5,326,689 payable by the Emery Trust and O’Bryan Trust to the Partnership pursuant to clause 21.4.
…
Dispose means to sell, transfer, delegate, assign, licence, mortgage, charge or otherwise encumber.
Dwellings means the 83 dwellings forming part of the Building, together with the common property related thereto, created upon registration of the plan of subdivision relating to the Property and defined in the certificates of title issued further to the registration of that plan.
Emery Dwellings means the 6 Dwellings to which the Emery Trust is entitled pursuant to clause 21 and identified as the Emery Dwellings in Schedule 2.[37]
[37]Schedule 2 contains a table. Relevantly, under the heading ‘Entity’ there is an allocation of apartments in Building B and Building C to Emery and O’Bryan. Apartment 301 in Building B is allocated to Emery as is apartment 208 in Building C. In all, six apartments were designated as Emery apartments and six apartments designated as O’Bryan apartments. At the bottom of schedule 2, there is a heading ‘JV Proportion based upon Internal Areas’. The internal area for the Emery units is 8.29% which corresponds to the figure in recital G.
…
Participants means the Partnership, the Emery Trust and the O’Bryan Trust.
Partners means the Emery Entity and the AMW Entity.
Partnership means the partnership formed by the Partners under the Partnership Deed to carry on the Business.
Partnership Deed means the partnership deed between the Manager and the Partners dated 25 May 2007.
Project means the purchase of the Property and development of the Building consisting of approximately 83 Dwellings.
Project Costs has the same meaning as set out in the Partnership Deed.
...

6. MANAGER TO ACT AS NOMINEE
6.1 Status
The Manager acknowledges and agrees with the Participants that:
6.1.1it will hold all assets, including the Property and the Dwellings, of the Joint Venture as nominee for the Participants in the following proportions:
6.1.1.18.29% for the Emery Trust;
6.1.1.29.08% for the O’Bryan Trust;
6.1.1.382.63% for the Partnership; and

6.1.2all income or receipts received by the Manager for the Joint Venture will be held by the Manager as agent for the Participants.

6.2 Nomination under Option
The Participants agree that:
6.2.1on or before 5 December 2007 the Manager will be nominated under the Option by 117 Rouse Street Pty Ltd ACN 105 783 720 as substitute grantee of the benefit of the Option; and
6.2.2the nomination of Zinc Port Melbourne Pty Ltd will be in its capacity as manager of the Joint Venture and not as manager of the Partnership.

7. JOINT VENTURE ASSETS
7.1 Jointly held
The Joint Venture Assets must be held by the Participants jointly.

7.2      Assets
The Joint Venture Assets comprise the following to the exclusion of all other assets:
7.2.1    the Capital;
7.2.2    the Planning Permit;
7.2.3any other assets acquired by the Manager for the Project or using the funds of the Joint Venture; and
7.2.4any other assets acquired by the Participants for the Project or using the funds of the Joint Venture.

7.3 Records of Joint Venture Assets
The Participants must record the details of any assets acquired for the purpose of clause 7.2.3 and 7.2.4 in the books of the Joint Venture immediately after the acquisition.

…
9.        JOINT VENTURE INTEREST
9.1      Joint Venture Interest
The parties acknowledge and agree that each Participant’s Interest in the Joint Venture and the assets of the Joint Venture (including the Property and Dwellings as relevant) on and from the Commencement Date is as follows:
9.1.1    the Emery Trust — 8.29%;
9.1.2    the O’Bryan Trust — 9.08%; and
9.1.3    the Partnership — 82.634%.

9.2 Change in proportion
The Participants may change the proportions set out in clause 9.1 but only following a Unanimous Resolution of the Management Committee.[38]
[38]The Commencement Date was 18 August 2007.

…
13. QUANTITY SURVEYOR
…
13.3 Determination of the Allocated Project Cost
Upon completion of construction of the Dwellings the Participants must determine the Allocated Project Cost.

…
15. GST
15.1 Manager as agent for Partnership
15.1.1Immediately upon execution of this Deed, Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Partnership) and Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Joint Venture) must enter into a Subdivision 153-B Agreement.
15.1.2In accordance with the Subdivision 153-B Agreement, Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Joint Venture) will:
15.1.2.1act as agent for the Partnership in accounting for GST in relation to the Project;
15.1.2.2make all taxable supplies and creditable acquisitions in relation to the Project and the Dwellings.

15.1.3If Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Joint Venture) is or becomes liable to pay to the Australian Taxation Office (ATO) an amount in the nature of, or on account of, or in relation to, GST because of the arrangement agreed to in clause 15.1.1 including entering into a Subdivision 153-B Agreement, Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Partnership) agrees to indemnify it and pay any GST to the ATO within 7 days of written demand (including any associated fine, penalty or interest amount imposed as a result of no fault of Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Joint Venture)).
15.1.4Zinc Port Melbourne Pty Ltd (in its capacity as manager of the Partnership) warrants that it is registered for GST.

…
18. MANAGEMENT COMMITTEE
18.1 Establishment of Management Committee
The Participants shall cooperate to promptly establish the Management Committee.

18.2 Members
18.2.1Each Partner shall be entitled to appoint one Member of the Management Committee. The Emery Trust and the O’Bryan Trust will not be entitled to appoint a Member of the Management Committee.
18.2.2Each Partner may replace its representative on the Management Committee or appoint an alternate representative in the place of that representative for the Term.

…
18.6 Powers of the Management Committee
Subject to this Deed, the Management Committee has the power to direct the Manager as to how to conduct and manage the Project as it considers appropriate and the Management Committee has the power to:
18.6.1establish policies for the operation of the Project including policies relating to staffing, depreciation and the insurance of assets;
18.6.2dispose of and acquire any assets of the Joint Venture or approve any expenditure for any property of the Joint Venture; and
18.6.3annually review and, if agreed, adjust the Management Fee.

…
19 MAJOR DECISIONS
19.1The Participants agree that each of the matters referred to in clause 19.2 shall be a Major Decision and shall require a Unanimous Resolution of the Management Committee at a duly constituted meeting of the Management Committee.
19.2The following decisions will be Major Decisions in accordance with this Deed:
…
19.2.11the granting of any mortgage, charge or other encumbrance over any of the Joint Venture Assets.
…

…

21. ALLOCATION OF DWELLINGS AT PROJECT COMPLETION
21.1 Allocation of Dwellings
Subject to clauses 21.3, 21.4, 21.5 and 21.6, at the direction of the Management Committee:
21.1.1the Manager must take all steps necessary to register legal ownership of the Emery Dwellings in the Emery Trust;
21.1.2the Manager must take all steps necessary to register legal ownership of the O’Bryan Dwellings in the O’Bryan Trust; and
21.1.3the Manager must deal with the Partnership Dwellings in accordance with the terms of the Agency Agreement.

21.2Emery and O’Bryan Dwellings
Following a resolution by the Management Committee in accordance with clause 21.1 that the Manager must register legal ownership of the Emery Dwellings in the Emery Trust and O’Bryan Dwellings in the O’Bryan Trust, but subject to clauses 21.4, 21.5 and 21.6:
21.2.1the Contribution Amount must be paid in accordance with clause 21.4;
21.2.2the Emery Trust must take a transfer of the Emery Dwellings; and
21.2.3the O’Bryan Trust must take a transfer of the O’Bryan Dwellings.

The Emery Trust and O’Bryan Trust must take all steps reasonably requested by the Manager to effect the transfers contemplated under clause 21.1.1 and 21.1.2, including the execution of all necessary documents requested by the Manager.

21.3 Stamp Duty
21.3.1Subject to clause 21.3.2, the Emery Trust and O’Bryan Trust will be liable for any duty liability that arises as a consequence of clauses 21.1.1 or 21.1.2.
21.3.2The Emery Trust and the O’Bryan Trust agree to indemnify and keep indemnified Zinc Port Melbourne Pty Ltd (in its capacity as manager of Partnership), the Partners and the Partnership for any duty liability (including interest, fees and penalties) in excess of the duty liability that the Partnership would otherwise have incurred had:
21.3.2.1the Joint Venture not been entered into; or
21.3.2.2ownership in the Emery Dwellings and the O’Bryan Dwellings not vested in the Emery Trust and the O’Bryan Trust in accordance with clause 21.1.1 and 21.1.2.

21.3.3The Emery Trust and the O’Bryan Trust will be responsible for any application (including all costs associated with making any application), that is required to be made to the Commissioner of State Revenue (Victoria) in relation to the transfers contemplated in clause 2.1.1 and 21.1.2.

21.4     Contribution Amount
21.4.1The Emery Trust and O’Bryan Trust agree to pay to the Partnership the Contribution Amount before legal ownership of any of the Dwellings is registered in accordance with clause 21.1.1 or 21.1.2.
21.4.2Subject to clause 22, each trust is liable for, and responsible for the payment of, the following amount as part of the Contribution Amount:
21.4.2.1$2,541,719.26:           Emery Trust;
21.4.2.2$2,784,969.74:           O’Bryan Trust.

21.4.3If only one of the trusts referred to in clause 21.4.2 pays the part of the Contribution Amount for which it is liable (Paying Trust), the Manager may take steps in accordance with clause 21.1 to transfer the Dwellings to which the Paying Trust is entitled to the exclusion of the trust that fails to pay its part of the Contribution Amount (Non-paying Trust).
21.4.4For the avoidance of doubt, a Paying Trust is not liable for the part of the Contribution Amount for which a Non-paying Trust is liable.

21.5 Guarantees and Indemnities
Immediately upon execution of this Deed, the Emery Trust and the O’Bryan Trust must procure the following persons to enter into a Deed of Guarantee and Indemnity to guarantee the obligations of each trust to pay the Contribution Amount, take a transfer of Dwellings in accordance with clause 21.1.1 or 21.1.2 and pay any Shortfall (as defined in clause 21.6.4):
21.5.1 Emery Trust — Michael Emery; and
21.5.2 O’Bryan Trust — Richard John Joseph O’Bryan.

21.6 Failure to Take Transfers
21.6.1In the event that the Emery Trust or the O’Bryan Trust or both (Defaulting Transferee) fail to pay the Contribution Amount in accordance with clause 21.4 or otherwise refuse or fail for any reason (following payment of a Contribution Amount) to take a transfer of Dwellings (in whole or part) in accordance with clause 21.1 and 21.2, the Manager may:
21.6.1.1call upon a Deed of Guarantee and Indemnity entered into by a person under clause 21.5 for purposes of securing payment of the Contribution Amount or ensuring a transfer occurs; or
21.6.1.2sell the Emery Dwellings and/or the O’Bryan Dwellings (as relevant).

21.6.2If the Manager elects to sell Dwellings pursuant to clause 21.6.1.2, it must deal with the sale proceeds as follows:
21.6.2.1if the sale is made because a Contribution Amount has not been paid in accordance with clause 21.4, it will distribute the proceeds from the sale of each Dwelling to the Partnership for distribution in accordance with the terms of the Partnership Deed;
21.6.2.2if the sale is made because either (or both) the Emery Trust or O’Bryan Trust refuse or fail (following payment of a Contribution Amount in accordance with clause 21.4) to take a transfer of a Dwelling, it will distribute the proceeds from the sale of each Dwelling to the relevant trust as if the trust had accepted the transfer of the Dwelling.

21.6.3Prior to the distribution of any sale proceeds in accordance with clause 21.6.2, the Manager is entitled to deduct its reasonable costs incurred in relation to the sale of a Dwelling and the cost of any third party engaged by the Manager to assist it with the sale process.
21.6.4The Emery Trust and O’Bryan Trust each agree that if the Manager sells a Dwelling in accordance with clause 21.6.2 for an amount that is less than the list price for the Dwelling set out in Schedule 2 (Shortfall), it will indemnify the Manager for the Shortfall. If the Emery Trust or O’Bryan Trust (as relevant) fail to pay the Shortfall to the Manger, the Manager may call upon a Deed of Guarantee and Indemnity entered into by a person under clause 21.5 for payment of the Shortfall.

…
22. CONTRIBUTION AMOUNT
22.1 Payment of Amount
Upon completion of the Project, but prior to the transfer of any Dwelling in accordance with clause 21.2, the Emery Trust and O’Bryan Trust must pay to the Partnership the Contribution Amount in accordance with clause 21.4.

22.2 Determination of Amount
The parties acknowledge and agree that:
22.2.1the methodology for the calculation of the Contribution Amount is set out in Schedule 4;
22.2.2the quantum of the Contribution Amount as determined in Schedule 4 may change if the amount provided for construction costs (Assumed Construction Cost) is greater or less than the actual construction costs for the Project (Actual Construction Cost);
22.2.3if the Actual Construction Cost is greater than the Assumed Construction Cost, the Contribution Amount will increase;
22.2.4if the Actual Construction Cost is less than the Assumed Construction Cost, the Contribution Amount will decrease.

22.3 Management Committee determination
The parties agree that the Management Committee will determine, before the transfer of any Dwelling under clause 21, the Contribution Amount pursuant to clause 22.2.

…
23. NO SALE OF DWELLINGS
23.1The Emery Trust and the O’Bryan Trust may not dispose of an interest in the Emery Dwellings or the O’Bryan Dwellings, as the case may be, without the prior written consent of the Partnership.
23.2The Partnership must not unreasonably withhold its consent under this clause 23.[39]
[39]Schedule 5 is entitled ‘Zinc Apartment Information List’. The schedule suggests that unit 208 in Building B has been ‘Contracted’ for the sale price stipulated in the schedule. It also suggests that unit 301 in Building C has been ‘Exchanged’ for the stipulated price. Mercier Rouse submitted that the schedule shows that the two units had either been sold or were the subject of a contract and that the form of sale is ‘an Emery/O’Bryan internal sale’.

…
29. TERMINATION OF JOINT VENTURE
…
29.3 Consequences of Termination
29.3.1If the Joint Venture is terminated pursuant to clause 29.1 then:
29.3.1.1the Manager must take a general account of the Joint Venture Assets and liabilities;
29.3.1.2the Manager must realise all Joint Venture Assets on behalf of the Partnership; and

…
30. DISPOSAL OF ASSETS BY MANAGER
The parties acknowledge and agree that, in realising any assets of the Joint Venture in accordance with clauses 18.6.2 and 29.3.1.2, the Manager will act as agent of each Participant.

31. THE MANAGER’S RESPONSIBILITIES AND INDEMNITIES
31.1The Manager will not be liable for any loss which may be sustained by the Joint Venture unless that loss is caused by the Manager’s own deceit, neglect or default.
31.2The Manager is entitled to be indemnified out of the Joint Venture from and against any expense, claim, obligation or liability that may be properly incurred by the Manager whilst acting in its capacity as manager of the Joint Venture except to the extent that any such expense, claim, obligation or liability is attributable to the Manager’s own deceit, neglect or default.
31.3The Manager is not responsible for any loss incurred as a result of any act, deceit, neglect, mistake or default except to the extent that the loss is attributable to the Manager’s own deceit, neglect or default.

Schedule 4

It will be noticed that clause 21.1 provides for Zinc to take all steps necessary to register legal ownership of the Emery Dwellings and the O’Bryan Dwellings to the respective trusts and the Partnership Dwellings ‘in accordance with the terms of the Agency Agreement’. Clause 21.4 provides for each of the Emery Trust and the O’Bryan Trust to pay to the partnership ‘the Contribution Amount before legal ownership of any of the Dwellings is registered in accordance with clause 21.1.1 or 21.1.2’. Clause 21.4.2 stipulates the Contribution Amount for each of the Emery Trust and the O’Bryan Trust.[40] However, clause 21.4.2 is subject to clause 22. Clause 22 provides for the adjustment of the Contribution Amount. In clause 22.2, the parties acknowledge and agree that the methodology for the calculation of the Contribution Amount is set out in Schedule 4. The rest of clause 22.2 provides for the adjustment of the Contribution Amount depending upon whether or not the Actual Construction Cost is greater or less than the Assumed Construction Cost. Clause 22.3 provides that the determination of the Contribution Amount is a matter for the Management Committee.
[40]The two amounts total $5,326,689 which is the amount that forms part of the definition of Contribution Amount in the definitions in clause 1 of the Deed.

Schedule 4 is annexure A to these reasons. Examination of Schedule 4 identifies the steps which must be taken, presumably by the Management Committee under clause 22.3, to determine the final Contribution Amount. Schedule 4 comprises a series of entries against each of which particular dollar values have been assigned. Obviously, those values are estimates which stand to be changed depending upon what proved to be the Actual Construction Cost of the project. The schedule identifies eight steps which are required to be taken in order to identify what is referred to as the last entry in the schedule as the ‘Net Contribution Required’. In the schedule, that figure is $5,326,689 which is identical to the figure that forms part of the ‘Contribution Amount’ in the definition of that term in the deed.

The first four steps are directed to the determination of something called the ‘Net Development Result’. Step 5 commences with the ‘Net Development Result’ and demonstrates the steps which must be taken (under clause 18 of the Partnership Deed) in order to establish the ‘Total Notional Partnership Entitlement’. Step 6 commences with the ‘Total Notional Partnership Entitlement’ and demonstrates the steps required to identify the ‘AMW Entity Entitlement’. Step 7 provides for the calculation of the ‘Emery Entity Trust and the O’Bryan Trust Entitlement’. Step 7 involves the deduction of the ‘AMW Entity Entitlement’ from the ‘Net Development Result’ attributable to the partnership under step 1. Step 8 identifies the ‘Emery Trust and O’Bryan Trust Contribution to Cost of Construction’. Step 8 arrives at the ‘Net Contribution Required’ by taking the ‘cost of construction attributable to the Emery Trust and O’Bryan Trust and deducting from it an interest income offset and the ‘Emery Trust and the O’Bryan Trust Entitlement.’

When the Actual Construction Costs come in together with the value of various proceeds, an adjustment to the Contribution Amount will be able to be determined by the Management Committee.

Clause 22.1 provides that the Emery Trust and the O’Bryan Trust must pay to the partnership the Contribution Amount ‘prior to the transfer of any Dwelling’.

Did Mercier Rouse acquire an equitable interest in units 208 and 301 on the execution of the Joint Venture Deed?

Mercier contended that, in so far as ‘the Joint Venture Deed constituted a specifically enforceable contract to convey a legal estate in land … equity treats the beneficial interest (as opposed to the legal interest) as passing on the execution of the contract’. In support of that proposition, Mercier Rouse cited Lysaght v Edwards.[41] In that case, Jessel MR said:

… the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser …[42]

[41](1876) 2 Ch D 499. It also referred to Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712; RH Maudsley and EH Burn, Maudsley & Burn’s Land Law (LexisNexis UK, 7^th ed, 1998) 79.

[42](1876) 2 Ch D 499, 506.

In opposition, the liquidator submitted that Lysaght v Edwards (at least in so far as stands as authority for the proposition relied on by Mercier Rouse) is no longer good law. He submitted that specific performance of the transfer would not have been granted at the time of entering the Joint Venture Deed since there were conditions precedent that had not been fulfilled, most importantly, the calculation and payment of the Contribution Amount.

In oral submissions, counsel for Mercier Rouse agreed that the recent Australian authorities have said that the description of the ‘purchaser’s interest as that of a beneficiary and the vendor’s interest of that of trustee’ was not overly helpful. However, he said that those cases did recognise that ‘the purchaser does have an interest … which survives for as long as it’s an interest which is capable of being enforced by an action for specific performance’.

A contract for the sale of land does not create a trust of the estate in favour of the purchaser in the sense that the vendor has rights and obligations equivalent to those of a trustee. Under a contract for the sale of land, the purchaser acquires a right to seek specific performance of the contract.

In Chang v Registrar of Titles,[43] Jacobs J said:

Moreover, it is doubtful whether a vendor under a contract of sale can properly be described as a trustee within the meaning of the Trustee Act unless settlement has taken place and all that remains to be done is to transfer or convey an outstanding legal estate. It is true that a vendor at the stage of contract where the contract is enforceable by specific performance has at times been described as a trustee: see, e.g. Shaw v Foster; Lysaght v Edwards; and if by that no more is meant than that the purchaser is regarded by equity as the beneficial owner of the estate of which the vendor is the legal owner then there is no difficulty in describing the vendor as a trustee. However, if by such a description it is sought to transpose into the law of vendor and purchaser the law governing the rights and duties of trustees, statutory or otherwise, considerable difficulties arise. The present case is an example of the confusion which can arise from giving this description to a party to a contract for the sale of land assumed to be capable of specific performance simply because he has the obligation under the contract to transfer property to the other party on completion of the contract and because equity regards the other as beneficial owner. Where there are rights outstanding on both sides, the description of the vendor as a trustee tends to conceal the essentially contractual relationship which, rather than the relationship of trustee and beneficiary, governs the rights and duties of the respective parties.[44]

[43](1976) 137 CLR 177.

[44]Ibid 189–190 (citations omitted).

In Kern Corporation Ltd v Walter Reid Trading Pty Ltd,[45] Deane J said:

For limited purposes, the distinction between legal title and beneficial ownership may provide a useful reference point in describing the position of the ordinary unpaid vendor of land under an uncompleted contract of sale. However, and with due respect to some past statements of high authority to the contrary, it is wrong to characterize the position of such a vendor as that of a trustee. True it is that, pending payment of the purchase price, the purchaser has an equitable interest in the land which reflects the extent to which equitable remedies are available to protect his contractual rights and that the vendor is under obligations in equity which attach to the land. None the less, the vendor himself retains a continuing beneficial estate in the land which transcends any ‘lien’ for unpaid purchase money to which he may be entitled in equity after completion. Pending completion, he is beneficially entitled to possession and use. Pending completion, he is beneficially entitled to the rents and profits. If the purchaser enters upon the land without the vendor's permission and without authority under the contract, the vendor can maintain, for his own benefit, an action for trespass against the purchaser. While the practical significance of those continuing beneficial rights of the vendor may vary according to particular circumstances (e.g. whether completion is already overdue or is not due for some lengthy period), it is both inaccurate and misleading to speak of the unpaid vendor under an uncompleted contract as a trustee for the purchaser: see, generally, per Brett L.J., Rayner v Preston and Waters, The Constructive Trust, (1964). There is authority for the view that, after completion has actually taken place, some of the equitable rights of the purchaser, which (in their entirety) then constitute beneficial ownership, relate back to the date of the contract. But there is no relation back of beneficial ownership in the sense that the vendor is retrospectively deprived of his beneficial right, pending payment of the full purchase price, to the possession, use, rents and profits of the land. Regardless of whether his rights be viewed in the perspective of foresight (i.e. before completion) or hindsight (i.e. after completion), the ordinary unpaid vendor of land is not a trustee of the land for the purchaser. Nor is it accurate to refer to such a vendor as a ‘trustee sub modo’ unless the disarming mystique of the added Latin is treated as a warrant for essential misdescription.[46]

[45](1987) 163 CLR 164.

[46]Ibid 191–192 (citations omitted).

In Tanwar Enterprises Pty Ltd v Cauchi,[47] Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ referred to Lysaght v Edwards[48] and said that the analogies drawn in that case with trusts and mortgages were ‘no longer accepted’.[49] The majority in Tanwar Enterprises Pty Ltd v Cauchi referred with approval to the passages of Jacobs J in Chang v Registrar of Titles[50] and Deane J in Kern Corporation Ltd v Walter Reid Trading Pty Ltd.[51] Further, they approved the observations of Gaudron J in Stern v McArthur[52] that the interests of the buyer is ‘commensurate with the availability of specific performance’ of the contract.[53]
[47](2003) 217 CLR 315.
[48](1876) 2 Ch D 499.
[49](2003) 217 CLR 315, 332[53].
[50](1976) 137 CLR 177.
[51](1987) 163 CLR 164.
[52](1988) 165 CLR 489, 537–538.
[53](2003) 217 CLR 315, 333[53]. Having regard to the decision in Tanwar Enterprises Pty Ltd v Cauchi, cases such as Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712 are no longer good law.

The first basis upon which Mercier Rouse contends that it held a beneficial interest in units 208 and 301 must be rejected.

Do the provisions of the Joint Venture Deed manifest an intention that Zinc was to hold units 208 and 301 on trust for Mercier Rouse?

Mercier Rouse submitted that the provisions of the Joint Venture Deed support the proposition that parties, by the language that they used in the Joint Venture Deed, evidenced an intention that Zinc's title to unit 301 and unit 208 was to be a legal title only and that the beneficial interest in those properties lay exclusively with Mercier Rouse.[54]
[54]The exact nature of the claim by Mercier Rouse appears in its Counterclaim dated 8 June 2012. Paragraphs 13 to 16 are as follows:
13.By reason of the matters above [the above matters comprise various terms and provisions of the Joint Venture Deed], at all relevant times from 18 August 2007, alternatively from the Completion Date, Lot B301 has been held on trust by Zinc for Mercier Rouse (and no other beneficiary)(‘the Lot B301 Trust’) and Lot C208 has been held on trust by Zinc for Mercier Rouse (and no other beneficiary) (‘the Lot C208 Trust’).
14.By reason of the matters above, Mercier Rouse has at all relevant times been entitled to:
(a)terminate each of the Lot B301 Trust and the Lot C208 Trust;
(b)require Zinc to transfer the legal title to each of the said lots to Mercier Rouse.
15.In February 2012, Mercier Rouse made such a request, alternatively hereby requests, that Zinc transfer the legal title to the Mercier Rouse Property.
[Particulars are provided]
16.Further, in February 2012, Mercier Rouse terminated the Lot B301 Trust and the Lot C208 Trust, alternatively hereby terminates each of the said trusts.
[Particulars are provided]
(emphasis added).
To the same effect, in its written outline of submissions in the appeal (dated 12 May 2014), Mercier Rouse said (at [16]): ‘The Joint Venture Deed was replete with indicia to the effect that Zinc held legal title to 301 and 208 as nominee (a phrase customarily analogous to trustee) for Mercier Rouse.’ (emphasis in original).

During oral argument, senior counsel for Mercier Rouse advanced the following propositions:

(1) Courts will recognise the existence of a trust in a commercial setting, notwithstanding the absence of an express intention to create a trust when it appears from the language construed in context that the parties so intended.[55]
[55]Commissioner of State Revenue (Vic) v Snowy Hydro Ltd [2012] VSCA 145, [83].

(2) Formal words are not necessary to create a trust.[56]
[56]Ibid [103].

(3) A strong indicator of an intention to create a trust is if a party is required to hold the asset for the benefit of the other person, and that the holder of the legal title is required to keep an account for it separately.[57]
[57]Ibid.

(4) The use of the word ‘nominee’ is instructive and is often used as being more or less synonymous with ‘trustee’.[58]

(5) The fact that the parties have distinguished in their agreement between legal title and beneficial interest is also indicative of an intention to create a trust.[59]

(6) The one transaction may give rise to both contractual rights and to a trust relationship.[60]

[58]Body Corporate No 1 v Renaissance Assets Pty Ltd (2004) 11 VR, [36].

[59]Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415, 424.

[60]Ibid 425.

In oral argument, senior counsel for Mercier Rouse also referred to Recitals G and H and to clauses 6.1.1, 9.1, 18, 21, 22, 23 and Schedule 5. Close examination of those provisions, he said ‘support the proposition that parties by the language that they used in the Joint Venture Deed evidenced an intention that Zinc's title to units 301 and 208 was to be a legal title only and that the beneficial interest in those properties lay with Mercier Rouse’.

It was also contended that that construction of the provisions of the Joint Venture Deed accords with the objective acts of Mercier Rouse, Cymbol Rouse and Zinc. Counsel referred to evidence given by Emery who had deposed:

Consistently with Mercier’s status as beneficial owner, Mercier entered into an exclusive leasing and managing authority for residential property with RPM Real Estate with respect to each of lots C208 and B301. Mercier entered into lease agreement in relation to lots B301 and C208, and received all of the rent in accordance with those lease agreements, from February 2010 until the appointment of Receivers to Zinc by Equity-One, when the Receivers required the rent to be paid to the liquidator … Mercier lodged caveats over lots B301 and C208 noting Mercier’s beneficial interest in those properties.

Ms O’Bryan:Mm.

In the oral submissions, counsel for the O’Bryans said:

What occurred at VCAT was really from the perspective of the administration of justice quite disastrous. The hearing was so informal and had complete disregard ultimately for the process that ought to be engaged in, in a hearing, that my clients ultimately were significantly disadvantaged as a result.
…
[Mrs O’Bryan] came to the Tribunal seeking a transfer of a property. She told the member that [Zinc] has no money, she told the member also … that she is not a lawyer, she's an accountant. She said that they hadn't yet lost anything and without the Tribunal explaining in fact that it had the jurisdiction if that is the case, to order specific performance under s.108 of the Fair Trading Act, the Tribunal Member made an order that $1.2 million be paid and without ever enquiring what Mr O'Bryan's position was in relation to that.

On the strength of the transcript, counsel submitted that VCAT had denied natural justice to the O’Bryans and, thus, had exceeded its jurisdiction. They had applied for a specific order and ‘despite the fact that it must have been obvious to the Member that … Zinc has no money, this award of $1.2 million was almost, completely uncertain of ever being satisfied. No explanation was given at all to Mrs O’Bryan what the consequences would be of making an order completely different to that which she sought and no attempt was made … to seek the consent of Mr O’Bryan to the making of that order’. Counsel referred to Morris v Riverwild Management Pty Ltd.[149]
[149](2011) 38 VR 103. He also referred to Downes v Maxwell Richard Rhys & Co Pty Ltd [2014] VSCA 193 in which it was decided that, in order to prevent procedural unfairness, a judge must provide reasonable advice and assistance to an unrepresented party.

At the time of the hearing, Division 7 of Part 4 of the VCAT Act contained the following provisions:

97                  Tribunal must act fairly
The Tribunal must act fairly and according to the substantial merits of the case in all proceedings.
98                  General procedure
(1)       The Tribunal—
(a)       is bound by the rules of natural justice;
(b)is not bound by the rules of evidence or any practices or procedures applicable to courts of record, except to the extent that it adopts those rules, practices or procedures;

(c) may inform itself on any matter as it sees fit;
(d)must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of this Act and the enabling enactment and a proper consideration of the matters before it permit.

(2)Without limiting subsection (1)(b), the Tribunal may admit into evidence the contents of any document despite the non-compliance with any time limit or other requirement specified in the rules in relation to that document or service of it.
(3)Subject to this Act, the regulations and the rules, the Tribunal may regulate its own procedure.
(4)Subsection (1)(a) does not apply to the extent that this Act or an enabling enactment authorises, whether expressly or by implication, a departure from the rules of natural justice.

Notwithstanding the injunction that VCAT ‘conduct each proceeding with as little formality and technicality’, it must act fairly. Far from being delivered from the obligation to give natural justice, it is expressly bound to do so. It did not act fairly in this case. While the member seems plainly to have been motivated by a desire to act expeditiously, pragmatically and without formality, he was asked to do only one thing: order that Zinc perform its obligations under the contract. He was not asked to order that Zinc pay damages. True, Mrs O’Bryan did not protest when the member turned what was, in effect, an application for the specific performance of the sale of land into an application for return of the purchase price, but even a lawyer might have been mystified by what took place.

Effect of the VCAT order

In Morris v Riverwild Management Pty Ltd,[150] Riverwild brought a proceeding in VCAT against Morris and against other parties arising out of alleged defects in the design and construction of a property development. In the event, the proceedings were settled. Morris agreed to pay an amount to Riverwild ‘together with Riverwild’s party-and-party costs’. Each of the other parties agreed to pay sums to Riverwild that were ‘inclusive of interest and costs’. The amount of each of those sums was not dissected as between interest and costs. The assessment of Morris’s obligation to pay party-and-party costs was referred to a registrar in VCAT. In the event, the registrar referred a question of law to a senior member asking whether ‘items of costs [should] be reduced by any (and if so to what) amount or proportion of the amount otherwise properly payable’. Morris applied to VCAT for declarations and injunctions restraining Riverwild from recovering from him any costs incurred by Riverwild in pursuing its claim against both Morris and the other parties other than his pro rata share of those common costs. During the course of the hearing before the senior member of the question of law, Morris abandoned his claim for a declaration and an injunction for the purposes of the hearing while, at the same time, indicating that they might be pursued later.
[150](2011) 38 VR 103.

The senior member answered the question of law, but also determined Morris’s applications for a declaration and for an injunction by dismissing them. Orders were made for the assessment of costs. Riverwild registered these orders in the Supreme Court.

Morris appealed to the Supreme Court seeking a declaration that the costs order had been satisfied in whole or in part by reason of the settlement sums paid to Riverwild by the other parties and an injunction restraining Riverwild from seeking to recover on the costs order in so far as to do so would constitute double recovery of common costs already recovered. A judge held that the principle against double recovery applied and that it would have been appropriate to pro rata the payments made by the other parties in VCAT between damages and costs. However, he held that the issue had been determined by VCAT and Morris was estopped from raising it again.

Morris appealed to the Court of Appeal arguing that the judge had erred in holding that he was estopped by the decision of VCAT from contending that he was entitled to a declaration and injunction by reason of the decision of VCAT to dismiss his application for that relief there. In allowing Morris’s appeal, the Court of Appeal held that, although VCAT had the jurisdiction to make a declaration along the lines originally sought by Morris, it had erred when it proceeded to determine his application for the declaration after he had said that he was not pressing it. The Court held that the decision of VCAT to proceed with the determination of the claim without first giving his counsel notice of its intention to do so was a breach of the rules of procedural fairness and, as such, involved a jurisdictional error. In so far as the determination of the claim for a declaration involved such a jurisdictional error, the determination should be considered as no decision at all. Therefore, Morris was not estopped from pursuing his claim for a declaration in the Supreme Court. In their joint judgment, Nettle and Redlich JJA said:

In those circumstances, even though the issue of declaratory relief was before VCAT in the sense that it had been claimed in the application, and in that sense may be said to have been within VCAT’s jurisdiction, it was a breach of the audi alteram partem or hearing rule of natural justice, and thus a denial of procedural fairness, for VCAT to proceed to decide the issue. It should not have done so without first informing counsel that it intended to do so and giving counsel a reasonable opportunity to present evidence and argument in support of the claim. By doing so, it committed a jurisdictional error.[151]

[151]Ibid 421-422 [31] (citations omitted).

Nettle and Redlich JJA then considered the effect of the VCAT decision and, in particular, whether decisions of VCAT taken in breach of the rules of procedural fairness should be taken as valid until set aside. Having considered Craig v South Australia,[152] Returned & Services League Of Australia (Victoria Sub-Branch) Inc v Liquor Licensing Commission,[153] and Re Refugee Review Tribunal; Ex parte Aala[154] they referred to Minister for Immigration & Multicultural Affairs v Bhardwaj[155] and, in particular to Hayne J’s opinion ‘that the validity of [the decisions of administrative tribunals] may be contested not only directly in proceedings for judicial review but also collaterally in other proceedings’.[156] In Minister for Immigration & Multicultural Affairs v Bhardwaj,[157] Hayne J said:

In general, judicial orders of superior courts of record are valid until they are set aside on appeal, even if they are made in excess of jurisdiction. By contrast, administrative acts and decisions are subject to challenge in proceedings where the validity of that act or decision is merely an incident in deciding other issues. If there is no challenge to the validity of an administrative act or decision, whether directly by proceedings for judicial review or collaterally in some other proceeding in which its validity is raised incidentally, the act or decision may be presumed to be valid. But again, that is a presumption which operates, chiefly, in circumstances where there is no challenge to the legal effect of what has been done. Where there is a challenge, the presumption may serve only to identify and emphasise the need for proof of some invalidating feature before a conclusion of invalidity may be reached. It is not a presumption which may be understood as affording all administrative acts and decisions validity and binding effect until they are set aside. For that reason, there is no useful analogy to be drawn with the decisions of the Court concerning the effect of judgments and orders of the Federal Court of Australia made in proceedings in which that Court had no constitutionally valid jurisdiction.
This is not to adopt what has sometimes been called a ‘theory of absolute nullity’ or to argue from an a priori classification of what has been done as being ‘void’, ‘voidable’ or a ‘nullity’. It is to recognise that, if a court would have set the decision aside, what was done by the Tribunal is not to be given the same legal significance as would be attached to a decision that was not liable to be set aside. In particular, it is to recognise that if the decision would be set aside for jurisdictional error, the statutory power given to the Tribunal has not been exercised.[158]

[152](1995) 184 CLR 163.

[153][1999] 2 VR 203.

[154](2000) 204 CLR 82, 89 [5] (Gleeson CJ), 101 [41] (Gaudron and Gummow JJ), 143 [169] (Hayne J) and 153 [210] (Callinan J).

[155](2002) 209 CLR 597.

[156]Morris v Riverwild Management Pty Ltd (2011) 38 VR 103, 113 [38].

[157](2002) 209 CLR 597.

[158]Ibid 645-646 [151]–[152] (emphasis in original)(citations omitted).

In the event, Nettle and Redlich JJA said:

Quite apart from the want of jurisdiction, as the parties had not presented the issues of the injunction and declaration to the tribunal for final determination, the decision could not give rise to an estoppel. The course adopted by both counsel during the hearing meant that the grant of declaratory or injunctive relief were no longer points distinctly and directly in issue. A determination ‘on the merits’ was neither required or possible once the parties withdrew from making submissions on those issues. They did not need to be decided to resolve the matters that the parties were then seeking to have determined. No estoppel could therefore arise.
Contrary, therefore, to the conclusion reached by the judge, who did not have the benefit of the arguments advanced on appeal, we take the view that Mr Morris was not estopped by the VCAT decision from claiming the declaratory relief which he sought at first instance.[159]

[159]Morris v Riverwild Management Pty Ltd (2011) 38 VR 103, 113[40]–114[41].

In a separate judgment in which he concurred in the decision of the other judges, Weinberg JA discussed the question whether decisions of VCAT, either in its original jurisdiction or in its review jurisdiction, were capable of giving rise to any form of estoppel and, in particular cause of action estoppel and issue estoppel. After a review of various authorities, he concluded that ‘the weight of recent authority suggests that issue estoppel can arise out of decisions made by administrative tribunals and, in particular, bodies such as VCAT’.[160] For that reason, he considered that the judge was ‘entirely correct in considering whether an issue estoppel arose in this case’.[161] However, he concluded:

… for the reasons given by Nettle and Redlich JJA, [the judge] ought to have concluded that no such estoppel had in fact arisen.[162]

[160]Ibid 122[85].

[161]Ibid 122[86].

[162]Ibid.

In the present case, the departure from the rules of procedural fairness was egregious. It can hardly be doubted that, had Mrs O’Bryan applied to the Court to set aside the decision made in VCAT or appealed under s 148 of the VCAT Act, she would have been successful. Any contention that Mrs O’Bryan was estopped from seeking a proprietary remedy in the present proceeding should be rejected.

The decision of VCAT involved a jurisdictional error and as such, may be regarded as no decision at all. Nevertheless, in the absence of any application to set aside the decision, it appears that the order of VCAT remains capable of enforcement and, prima facie, affords the O’Bryans a right to a remedy in respect of their claim.

I am satisfied that the notice of contention filed by the O’Bryans in this proceeding constitutes a collateral challenge to the validity of the VCAT decision of the kind described by Hayne J in Minister for Immigration & Multicultural Affairs v Bhardwaj[163] - indeed it expressly asserts that the order was made without jurisdiction and is invalid and of no legal effect. In the circumstances, it is appropriate that this Court make a declaration confirming that the VCAT order is a nullity and is incapable of enforcement.[164]
[163](2002) 209 CLR 597.
[164]In Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, Mason CJ, Dawson, Toohey and Gaudron JJ said (at 581–2): It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which ‘[i]t is neither possible nor desirable to fetter ... by laying down rules as to the manner of its exercise.’ However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have ‘a real interest’ and relief will not be granted if the question ‘is purely hypothetical’, if relief is ‘claimed in relation to circumstances that (have) not occurred and might never happen’ or if ‘the Court's declaration will produce no foreseeable consequences for the parties’ (citations omitted).
In his separate judgment, Brennan J said (at 596): The circumstances that call for the making of a declaration are not present if there be no real controversy to be determined. The characteristics of a controversy fit for determination by judicial declaration were stated by Viscount Dunedin in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd: ‘The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.’ (citations omitted).

Having determined that the VCAT decision is a nullity, any contention that it is an abuse of process for the O’Bryans to seek a proprietary remedy in this proceeding cannot be sustained. The O’Bryans are not seeking to litigate anew a case which has already been disposed of by earlier proceedings.[165]
[165]In Walton v Gardiner (1993) 177 CLR 378, Mason CJ, Deane and Dawson JJ said (at 393): ‘proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.’ (citations omitted).

It remains to consider whether, by their conduct, the O’Bryans made an election to pursue their right to damages to the exclusion of their right to seek specific performance. It is to be recalled that Mercier Rouse has contended that, because of what Mrs O’Bryan initiated in VCAT and because she acquiesced in the VCAT order, the O’Bryans are estopped from seeking a proprietary remedy with respect to unit 210.

The proceedings in VCAT

When one examines what the O’Bryans did in VCAT (as opposed to what was done to them) it is not possible to conclude that they elected unequivocally to treat the contract of sale as at an end (thereby foregoing their right to claim specific performance) and to claim damages for its breach. As indicated above, the box which Mrs O’Bryan ticked on the VCAT form entitled ‘Application to Civil Claims List’, was ‘Order to comply with contract’. Against the box headed ‘Describe the goods or services purchased or provided’, there was the entry ‘See attached’. The attachment has been extracted in full above. At no point does it include any claim for damages or payment. The critical words are:

This application to VCAT is to ensure that the Units employed as security on the Elisabeth (sic) St project are returned to Zinc and either sold or mortgaged to release the mortgage on C210. The C210 property to be registered in the names of R J and J L O’Bryan.

The O’Bryans were seeking an order that the property be transferred to them and registered in their names; they had not accepted any repudiation by Zinc and elected to seek a remedy in damages.

O’Bryans’ solicitor’s letter

On 22 February 2012, the O’Bryans’ solicitors wrote to Zinc. The text of that letter is set out above.[166] It is true that in that letter reference is made to the order from VCAT that Zinc pay the O’Bryans $1.2 million together with a demand that the sum be paid. However, the letter continues with a demand, in the alternative, that the O’Bryans ‘are prepared to consider accepting the immediate transfer of the title to [unit 210] into their names, following removal of the mortgage by Zinc at its cost, rather than payment of the sum of $1.2 million’. It is not possible to read that letter as an unequivocal election to be paid either damages or the judgment sum, let alone an unequivocal renunciation of the right to specific performance.
[166]See [51] above.

The proceedings in the Federal Court

Even if VCAT had jurisdiction to hear and determine the O’Bryans application and had properly exercised that jurisdiction, the conduct of the O’Bryans in the proceedings in the Federal Court did not disentitle them from pursuing proprietary relief in the Supreme Court proceedings. In particular, there was no inconsistency between what the O’Bryans did in the Federal Court and what they sought before VCAT.

By interlocutory process dated 24 February 2012 filed in the proceedings commenced by the Deputy Commissioner of Taxation, the O’Bryans applied for leave to intervene in the proceeding or alternatively to be added as defendants.

Mercier Rouse contended that, ‘the obtaining of the VCAT order and the assertion of creditor status [in the Federal Court proceeding] constituted a binding election between inconsistent remedies’ and that ‘such a binding election is final’. It referred to Sargent v ASL Developments Ltd.[167]
[167](1974) 131 CLR 634.

The O’Bryans made their application pursuant to s 459P of the Corporations Act 2001 (Cth). Section 459 confers standing on a broad category of persons to apply to the Court for a company to be wound up in insolvency. Section 459P(1)(b) confers standing on ‘a creditor (even if the creditor is a secured creditor or is only a contingent or prospective creditor)’.

Section 472 of the Corporations Act 2001 (Cth) provides:

(1)On an order being made for the winding up of a company, the Court may appoint an official liquidator to be liquidator of the company.
(2)The Court may appoint an official liquidator provisionally at any time after the filing of a winding up application and before the making of a winding up order or, if there is an appeal against a winding up order, before a decision in the appeal is made.
(3)A liquidator appointed provisionally has or may exercise such functions and powers:
(a)as are conferred on him or her by this Act or by rules of the Court that appointed him or her; or

(b) as the Court specifies in the order appointing him or her.

(4) A liquidator of a company appointed provisionally also has:
(a) power to carry on the company's business; and
(b)the powers that a liquidator of the company would have under paragraph 477(1)(d), subsection 477(2) (except paragraph 477(2)(m)) and subsection 477(3) if the company were being wound up in insolvency or by the Court.

(5)Subsections 477(2A) and (2B) apply in relation to a company's provisional liquidator, with such modifications (if any) as the circumstances require, as if he or she were a liquidator appointed for the purposes of a winding up in insolvency or by the Court.
(6)The exercise by a company's provisional liquidator of the powers conferred by subsection (4) is subject to the control of the Court, and a creditor or contributory, or ASIC, may apply to the Court in relation to the exercise or proposed exercise of any of those powers.

The task of a liquidator is to realize the assets of a company and distribute them, first, among the creditors and, then, among the contributories. The task of a provisional liquidator is to preserve the company’s assets and to maintain ‘the status quo pending the disposal of the application when undertakings by the directors to do so will not suffice’.[168]
[168]HAJ Ford, RP Austin and IM Ramsay, LexisNexis Butterworths, Ford’s Principles of Corporations Law, vol 2 (at Service 87) [27.102].

Affidavit of Mrs O’Bryan

The interlocutory process in the Federal Court was supported by an affidavit affirmed by Mrs O’Bryan on 24 February 2012. In that affidavit, she described how she and her husband had paid ‘an amount of $1.2 million in satisfaction of the purchase price, but Zinc did not transfer the title to the Apartment to us’. She said that, on 23 December 2010, Zinc had mortgaged the Apartment to Equity-One. She said that, from 22 December 2010, she had asked Zinc to transfer the title of the Apartment to herself and her husband and to have Zinc pay out and discharge the mortgage. Mrs O’Bryan said that Emery had given her assurances that once the Equity-One mortgage was discharged, Zinc would arrange for the title to the apartment to be transferred, but that, despite those assurances, ‘the title to the Apartment was not and still has not been transferred to me and my husband, and the Equity-One mortgage remains on the title’. She described the application that she and her husband made in VCAT on 17 May 2011. She said that she ‘did not have legal representation in that application’. She described the order that VCAT made that Zinc pay $1.2 million to her husband and herself. She referred to the letter sent by her solicitors dated 22 February 2012 in which, as she put it, the letter demanded ‘payment of the amount $1.2 million or, alternatively, the transfer of clear title to the Apartment’. Mrs O’Bryan said that she had instructed her solicitors ‘to file and serve a notice of appearance as a supporting creditor based on the VCAT judgment debt’. She referred to the Supreme Court proceeding which had been commenced by Mercier Rouse.[169] Finally, she deposed:

I believe that there are significant and ongoing disputes between my son and Mr Emery, who are the only two directors of Zinc. In addition to the disagreement described in Mr Emery’s affidavit, my son has told me that he and Mr Emery are unable to agree on how Zinc’s debt to the Commissioner is to be paid, and that they cannot agree to the transfer to me and my husband the title to the Apartment. My son has forwarded me emails passing between him, Mr Emery and Danny Oberklajd …
I have read the affidavit filed by Mr Emery in the Supreme Court proceeding. I understand that he seeks to have apartments B301 and C208 transferred to his company Mercier Rouse Street Pty Ltd (MRS) and that MRS will then provide a third party with registered mortgages over the properties to secure repayment of funds to be advanced to MRS. I am concerned that such acts would permanently deprive any liquidator who might be appointed on or after Thursday’s hearing from the ability to deal with those apartments. I understand that the apartments are the subject of the agreement that is [exhibited] to Mr Emery’s affidavit in the Supreme Court Proceeding, but I am concerned that a liquidator of Zinc should investigate the affairs of the company, including that agreement, to determine what rights my husband and I have against Zinc and what assets are available to satisfy the claims of its creditors (including us).
[169]The proceeding was the proceeding commenced by Mercier Rouse and Emery on 16 February 2012, see [50] above.

The hearing in the Federal Court

It seems plain that, in making her affidavit, Mrs O’Bryan was applying to have a provisional liquidator appointed in order to preserve the assets of Zinc pending the appointment of a liquidator.

During the course of submissions before Justice North in the Federal Court, counsel for the O’Bryans informed the Court that his clients were significant creditors of Zinc either because of the VCAT judgment or they were contingent creditors because of their rights to insist on specific performance and damages in lieu if the existing mortgage did not allow them to get the apartment. During submissions before the Federal Court, the transcript reveals the following:

Counsel (O’Bryans):

What we do know is, Zinc is a debtor of my clients in one way or another, either a judgment debtor or a contingent debtor by reason of my client’s rights to insist on a specific performance and damages in lieu if the existing mortgage doesn’t allow them to get their apartment.

…

Counsel (O’Bryans):

Whatever the status of the VCAT judgment, they are a significant creditor of this company and Mr Emery’s evidence regarding the circumstances in which they took their interest in the property and ... their VCAT judgment and their interest in the property is intended to be vindicated may all bear on something, but they don’t bear on my client’s status as a creditor of the company or their ability to seek it being wound up.

…

The Court:

Yes. Well, ultimately your client’s interest is to obtain the apartment or your money back.

Counsel (O’Bryans):

Yes.

The Court:

That’s through the simplicity of your situation.

Counsel (O’Bryans):

That’s right.

The Court:

There is a whole lot of goings on that you know something or some little about, perhaps, but at the end of the day that’s your claim.

Counsel (O’Bryans):

That’s correct, and my client’s position is they’re more likely to achieve one of those results if assets stay in the company.

The Court:

Yes. Well, that’s the imminent danger that you rely on, and then I suppose for becoming a party you simply say, well, your interests are such that they should be represented in the winding up proceeding.

…

Counsel (O’Bryans):

The vice that my clients seek to avoid, in seeking the appointment of a provisional liquidator, is the disposal of assets of the company pending the winding up. That could only be achieved via the court’s intervention through the appointment of a liquidator or via a Mareva injunction. And a Mareva order could hardly be described as a lesser remedy.

…

Counsel (Mercier Rouse):

It’s that property that Mr O’Bryan Senior and Mrs O’Bryan have an interest in. What Mr O’Bryan Junior and Mr O’Bryan Senior, and Mrs O’Bryan are seeking to do, in substance, by this application is to freeze two other properties which are beneficially owned by my client ...

…

Counsel (Mercier Rouse):

No, your Honour is, of course, right. If they decide to seek a damages remedy that would be accepting that they weren’t entitled to ownership of the property.

…

Counsel (O’Bryans):

... [counsel for Mercier Rouse]’s other principal argument is that there is a contest about my client’s status as creditors. What he doesn’t contest is that at some stage my client has paid $1.2 million to Zinc. He also doesn’t contest that they are counterparties to a signed contract by which the apartment was to be transferred. My submission is my clients are creditors who are either entitled to apply for the winding up of Zinc if the VCAT judgment is regular, because they are judgment creditors for $1.2 million.

The Court:

But, I mean, the trouble is that the judgment doesn’t make any sense at all. I don’t know what it’s ...

Counsel (O’Bryans):

There are difficulties. I beg your pardon, your Honour. I shouldn’t interrupt you.

The Court:

The position is unexplained and confused and, I mean, on the one hand, I mean, you come along saying, ‘Protect the property,’ but you’re really not clear in respect of what. (sic) You know, what legal right? I mean, I don’t really, frankly, take much notice of the VCAT judgment. It just doesn’t make much sense in the picture that is painted.

Analysis

In Agricultural and Rural Finance Pty Ltd v Gardiner,[170] Gummow, Hayne and Kiefel JJ explained the doctrine of election:

The doctrine of election is long established at common law. As Jordan CJ pointed out in O'Connor v SP Bray Ltd, ‘[s]ince the days of the Year Books it has been recognised that you cannot have the egg and the halfpenny too’. If, then, something happens which gives rise to the existence of two alternative rights, and one of those rights is satisfied, the other is no longer available. A breach of contract by one party always gives the other party a right to recover damages for the breach. If serious, the breach will give the innocent party the right to treat the contract as at an end. But the innocent party need not accept the repudiatory breach and avoid the contract; the innocent party may choose to insist upon further performance. And as Craine v Colonial Mutual Fire Insurance Co Ltd shows, the exercise, despite knowledge of a breach entitling one party to be discharged from its future performance, of rights available only if the contract subsists, will constitute an election to maintain the contract on foot.[171]

[170](2008) 238 CLR 570.

[171]Ibid 589[58] (citations omitted).

For there to be an election at common law there must be a right which enables a person ‘to exercise alternative and inconsistent rights’.[172] In United Australia Ltd v Barclays Bank Ltd,[173] Lord Atkin said: ‘… if a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge he has done an unequivocal act showing that he has chosen the one he cannot afterwards pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose’.[174] The right must be exercised: ‘[e]ssential to the making of an election is communication to the party affected by words or conduct of the choice thereby made and it is accepted that once an election is made it cannot be retracted’.[175] An ambiguous claim ‘both to avoid the contract and to have the benefit of its performance, does not amount to an avoidance’.[176]
[172]Sargent v ASL Developments Ltd (1974) 131 CLR 634, 655 (Mason J). In that case, Stephen J explained why an election having been made it cannot be withdrawn. He said (at 647):
There can then be no question of detriment having to be shown before the elector is prevented from seeking to enforce the alternative and vanished right. I conclude that at least in the case of election between affirmation of a contract or its disaffirmation pursuant to rights conferred by that contract detriment to the other party is not a necessary element in election, whatever may be the position in other election situations. Although concerned with election in quite different circumstances, the judgment in Myers v Ross [(1935) 10 F Supp 409, 411], makes the point succinctly when it is said that an election ‘knowingly made, cannot be withdrawn even though it has not been acted upon by another to his prejudice’ and this because ‘Estoppel depends upon what a party causes his adversary to do. Waiver by election depends upon what the party himself intends to do, and has done.’
[173][1941] AC 1.
[174]Ibid 30.
[175]Sargent v ASL Developments Ltd (1974) 131 CLR 634, 655-656.
[176]O’Connor v SP Bray Ltd (1936) 36 SR (NSW) 248, 261 (Jordan CJ).

When we examine what the O’Bryans did in bringing their proceedings in VCAT, in instructing their solicitors to send a letter of demand and in their bringing and conduct of the proceedings in the Federal Court, it cannot be said that they made an election to pursue a remedy in damages.

For these reasons, the contention that the O’Bryans lost their right to seek specific performance of their contract to purchase unit 210 must be rejected. The appeal by Mercier Rouse with respect to the O’Bryans rights to unit 210 should be dismissed.

---

SCHEDULE OF PARTIES

MERCIER ROUSE STREET PTY LTD v PAUL ANDREW BURNESS & ORS

MERCIER ROUSE STREET PTY LTD (ACN 114 623 675)	Appellant
v
PAUL ANDREW BURNESS IN HIS CAPACITY AS LIQUIDATOR OF ZINC PORT MELBOURNE PTY LTD (IN LIQUIDATION) (ACN 125 312 852)	First Respondent
ZINC PORT MELBOURNE PTY LTD (IN LIQUIDATION)	Second Respondent
ANDREW WILLIAM BECK IN HIS CAPACITY AS RECEIVER AND MANAGER OF ZINC PORT MELBOURNE PTY LTD (IN LIQUIDATION)(RECEIVER AND MANAGER APPOINTED)(ACN 125 312 852)	Third Respondent
EQUITY-ONE MORTGAGE FUND LIMITED (ACN 186 720 941)	Fifth Respondent
JULDIC PTY LTD	Sixth Respondent
JULIANNA O’BRYAN	Seventh Respondent
RICHARD O’BRYAN	Eighth Respondent

Counsel (O’Bryans):	What we do know is, Zinc is a debtor of my clients in one way or another, either a judgment debtor or a contingent debtor by reason of my client’s rights to insist on a specific performance and damages in lieu if the existing mortgage doesn’t allow them to get their apartment.
…
Counsel (O’Bryans):	Whatever the status of the VCAT judgment, they are a significant creditor of this company and Mr Emery’s evidence regarding the circumstances in which they took their interest in the property and ... their VCAT judgment and their interest in the property is intended to be vindicated may all bear on something, but they don’t bear on my client’s status as a creditor of the company or their ability to seek it being wound up.
…
The Court:	Yes. Well, ultimately your client’s interest is to obtain the apartment or your money back.
Counsel (O’Bryans):	Yes.
The Court:	That’s through the simplicity of your situation.
Counsel (O’Bryans):	That’s right.
The Court:	There is a whole lot of goings on that you know something or some little about, perhaps, but at the end of the day that’s your claim.
Counsel (O’Bryans):	That’s correct, and my client’s position is they’re more likely to achieve one of those results if assets stay in the company.
The Court:	Yes. Well, that’s the imminent danger that you rely on, and then I suppose for becoming a party you simply say, well, your interests are such that they should be represented in the winding up proceeding.
…
Counsel (O’Bryans):	The vice that my clients seek to avoid, in seeking the appointment of a provisional liquidator, is the disposal of assets of the company pending the winding up. That could only be achieved via the court’s intervention through the appointment of a liquidator or via a Mareva injunction. And a Mareva order could hardly be described as a lesser remedy.
…
Counsel (Mercier Rouse):	It’s that property that Mr O’Bryan Senior and Mrs O’Bryan have an interest in. What Mr O’Bryan Junior and Mr O’Bryan Senior, and Mrs O’Bryan are seeking to do, in substance, by this application is to freeze two other properties which are beneficially owned by my client ...
…
Counsel (Mercier Rouse):	No, your Honour is, of course, right. If they decide to seek a damages remedy that would be accepting that they weren’t entitled to ownership of the property.
…
Counsel (O’Bryans):	... [counsel for Mercier Rouse]’s other principal argument is that there is a contest about my client’s status as creditors. What he doesn’t contest is that at some stage my client has paid $1.2 million to Zinc. He also doesn’t contest that they are counterparties to a signed contract by which the apartment was to be transferred. My submission is my clients are creditors who are either entitled to apply for the winding up of Zinc if the VCAT judgment is regular, because they are judgment creditors for $1.2 million.
The Court:	But, I mean, the trouble is that the judgment doesn’t make any sense at all. I don’t know what it’s ...
Counsel (O’Bryans):	There are difficulties. I beg your pardon, your Honour. I shouldn’t interrupt you.
The Court:	The position is unexplained and confused and, I mean, on the one hand, I mean, you come along saying, ‘Protect the property,’ but you’re really not clear in respect of what. (sic) You know, what legal right? I mean, I don’t really, frankly, take much notice of the VCAT judgment. It just doesn’t make much sense in the picture that is painted.

[2015] VSCA 8

12 February 2015