Orr v Ford

[1988] HCATrans 99

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No Bl2 of 1988

B e t w e e n -

JOHN STUART ORR

Applicant

and

BRIAN HUBIRD FORD and PHILIP

STRUGNELL as Executors of the

Will of the late FRANCIS WILLIAM

STONE

Respondents

Application for special leave to

appeal

MASON CJ

Orr

BRENNAN J

DEANE J

TRANSCRIPT OF PROCEEDINGS

,;\T SYDNEY ON FRIDAY, 13 MAY 1988, AT 9.44 AM

Copyright in the High Court of Australia

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MR G.L. DAVIES, QC:  May it please the Court, I appear with

my learned friend, MR R. BAIN, for the applicant.

(instructed by Cannan & Peterson)

MR R. CHESTERMAN, QC:  May it please Your Honour, I appear

with my learned friend,MR D. RYAN, for the respondents.

(instructed by T.W. Biggs & Biggs)

MASON CJ:	Yes, Mr Davies.
MR DAVIES:	May it please the Court, the main question both

at the trial and on the appeal before the Full Court of Queensland was whether provisions of the LAND ACT which did three things; first, provide that a person

who, in respect of a specified holding, is a trustee

shall not be competent to hold it - that is section 91;

secondly, provide that a person who holds such land

as a trustee shall be liable to forfeitures prescribed -

that is section 296(2) ; and thirdly provided the minister

with a discretion to forfeit any such holding or to

waive liability to forfeiture upon liability being

established - that is section 297(2). whether

the combination of those provisions had
the effect that there being any such trust in
respect of such holding the trust was unenforceable
by the beneficiary against the trustee, leaving
the trustee, though his interest was subject to

the risk of forfeiture, freed of-his_ equitable

obligati~u to the beneficiary.

Your Honours, can I take you to the relevant

provisions and could I hand up some copies of those to

the Court. Can I hand up three copies of those

provisions. First, Your Honours, section 91 says relevantly:

Subject to this Act -

and then (b):

Any -

.....

(ii) person who in respect of the land .....

held ..... is a trustee ..... for any other person,

shall not be competent to ..... hold any selection.

Then, if I can take you from there to section 296.

First of all the general provision, subsection (1) says:

The right or title of any person to any

holding ..... held by him ..... by fraud upon

this Act shall be liable to be forfeited.

And (2) is the specific provision which says that:

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Any person who ..... holds as a trustee ..... for any other person -

"any selection", which is the relevant holding - and

it goes on on the following page -

shall be deemed to ..... hold the holding ..... by

fraud upon this Act, and shall be liable in

respect of such holding ..... to the forfeitures

prescribed.

Then if I can take you from there to section 297, which are the forfeitures prescribed. Section 297

says:

Where the Minister at any time has reason to believe that the lease of a holding is liable

to be forfeited ..... he may refer the matter to

the Court for hearing and determination.

The Minister shall give ..... notice of his

intention -

and then subsection (2):

If upon the final decision of the matter any

such liability to forfeiture is established

the Minister may in his discretion -

(a) reconnnend ..... that the lease be forfeited; or

(b) waive the liability to forfeiture.

Now, that is not the only case where there is deemed

to be a fruad upon the Act and forfeiture is a

consequence. By way of example, if I could take you

back to section 296(3), because it was also relevant
in this case, at least at the trial level though not

before the Full Court, it provides that any person who

acquires any holding shall within three months of

acquisition either present a transfer to the minister

or agreement of transfer or a notice to the minister

and if he has not done that he is deemed to have
connnitted a fraud upon the Act.

Your Honours, the Full Court held that those

provisions did have those two effects: that is that
it rendered the trust unenforceable but left the
trustee/leasee no more than liable to the risk of

forfeiture of his interest and that appears, if I

can take Your Honours to the judgment of the Full Court,

in really two sentences. The first appears at page 36

where they say, towards the end of the fourth last line:

just as Dr. Stone's lease subsists unless and

until the Minister sees fit to effect aforfeiture.

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So they accept the continuing subsistence of

Dr Stone's lease, but then they conclude, at the

bottom of page 39 - or at least Mr Justice Thomas

concludes - and his was, in effect, the judgment of
the Court, he concludes by considering that -

Ryan J. was correct in declining to give effect to the trust which he found would

otherwise have existed.

Your Honours, the contrary contention is that

those provisions are intended only to render liable to

forfeiture the interest of the leasee/trustee, leaving

that question ultimately to the discretion of the

minister. The argument of the applicant in that

respect was and would be that those sections, sections 91

and 296(2) are directed to the interest of the leasee

only and not to the relationship between the leasee and

his beneficiary. And, indeed, if I can take Your Honours

by way of illustration to another similar provision

which has the same form, that is, says it shall not be

competent but then again goes on to render liable to

forfeiture, sections 92 and 296(4). Section 92,

Your Honours will see, says that:

a person shall not be competent to hold two

or more grazing homestead perpetual leases -

having greater than a specified aggregate area, but then,

having said that you shall not be competent to do that,

it goes on in section 296(4) to say that, in that event,

they are liable to forfeiture which indicates, in our

respectful submission, that that was the intended

consequence of saying it shall not be competent; that

the consequence was intended to be, and intended only

to be, the liability to forfeiture.

BRENNAN J:	Mr Davies, does 296(3) apply to the interest of the applicant?
MR DAVIES: Yes, Your Honour.

BRENNAN J: What would then be the work for 296(3) to do if the

view expressed by Mr Justice Thomas is correct?

MR DAVIES:  None, Your Honour. If Mr Justice Thomas is correct

and both were the case then there would be no room for

the application of section 296(3).

Your Honours, the question is of importance in

Queensland because, as Mr Burke deposes in his

affidavit - - -

MASON CJ:  Mr Davies, I think at this stage we may hear what

Mr Chesterman has to say in response to the application.

MR DAVIES:  If, Your Honour pleases.

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MASON CJ: Yes, Mr Chesterman.

MR CHESTERMAN:  Your Honours, in our submission the Full Court

was right. We concede the point that it is an

important one, but we submit the Full Court is right and for the reasons given by the court, particularly

those reasons at page 39 of the record, starting at

line 15, because what the applicant sought in the

litigation was enforcement of the trust which the trial

judge found to have been created. But section 91

provides that no person shall be competent to be a

trustee of land which comprises a selection.

So what the applicant sought was an order that

the respondents, the executors of the will of Dr Stone,

hold the land as trustees when the Act expressly says

that they shall not be competent, and no other person
shall be competent, to hold the land as trustee.

Furthermore, section 296 of the Act provides that

persons who hold a selection as trustee do so by fraud

upon the Act. So the effect of giving the order or

making the order sought would be that the respondents

would hold the land by fraud upon the Act, so that the

order sought really cannot be made.

We submit that the Full Court was right in finding

that sections91 and 296(2) express a clear intent or

policy that there shall not be trusts of land which are

selections under the LAND ACT. And we would submit,

Your Honours, that that policy is reinforced if one

has regard to the terms of section 235, particularly

subsection (4) of that section.	May we pass up copies
of that section to Your Honours.

MASON CJ: Thank you.

MR CHESTERMAN:  The effect of the section overall is to make

some exceptions to the prohibition against land holding

on trust, really to make allowance for the fact that

where a landholder dies, a leasee dies, his executors	will hold it no doubt on trust for the beneficiaries.	But subsection (4) creates an express and limited
exception against the prohibition contained in section 91
and also the prohibition contained in section 54, which
is a like prohibition in relation to a different class
of Crown lease, preferential pastorla.l holdings. The
point we make, Your Honours, is that the legislation in singling out and specifying the only mode of exception
to the prohibition against trust, is reinforcing the
view that there shall not be trust except in the one
specified manner allowed; that is, it must be a trust
for children or grandchildren under the age of 18. The trust must have the consent of the minister before it
is created and the only mode of creation is by transfer of the lease on trust. That is it cannot be a creation
of a trust after the leasee has acquired his interest.

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He must acquire it on trust and with the prior approval

of the Minister.

DEANE J:  Mr Chesterman, if the current decision as to trusts

stands, what is the position as to the question of

your clients' liability to refund the money? Is that

conceded or is that an issue that has not been raised?

MR CHESTERMAN:  Your Honour, the money has never been asked for.

No doubt litigation would commence to recover the

money. That is, with respect, a different point.

DEANE J: That has not been dealt with at all?

MR CHESTERMAN:  No, it has not been, Your Honour. The only

relief sought has been for a declaration	that the
property, the grazing estate, is held on	trust as to
half for the applicant.

Your Honours, we submit the appropriate principles

are those set out by this Court in a decision dealing

with the Queensland LAND ACT, AMERICAN DAIRY QUEEN (Q'LD)

PTY LTD V BLUE RIO PTY LTD, 147 CLR 677, particularly in

the judgment of Your Honour the Chief Justice at

pages 682 to 683.	We have copies of that authority for
Your Honours.

MASON CJ:	Thank you.
MR CHESTERMAN:	The passage in question appears at the bottom

of page 682 where Your Honour said:

The general rule is that the courts will

construe a statute in conformity with the

common law and will not attribute to it an

intention to alter common law principles

unless such an intention is manifested according

to the true construction of the statute. This

rule certainly applies to the principles of the

common law governing the creation and disposition

of rights of property. Indeed, there is some

ground for thinking that the general rule has

added force in its application to common law

principles respecting property rights.

We accept,Your Honours, with respect that unless the

LAND ACT, by express provision or necessary implication,

abrogates trusts of land under the Act then there can

be such a trust. But we submit one could not find a

clearer expression of legislative policy against trusts

than the wording used in sections 91 and 296, coupled

with the express allowance of one mode only of creating

trusts of the land.

MASON CJ: The problem is this, is it not: the ultimate sanction

for non-compliance with the Act is the exercise of the

power· of forfeiture?

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MR CHESTERMAN: But, Your Honour, that is with respect to the

legal estate. What is forfeited in the event there

has been a contravention of section 91 or section 296

is that the leasee's legal estate is forfeited and is

liable to forfeiture. The trust is never valid and can

never subsist because of the fact that the Act says

that no one shall be competent to be a trustee and those

who hold as trustees do so by fraud upon the Act.

There is no need to make provision in the statute

for the abolition of the trust because, by the force enforceable, but the leasee may lose his legal estate
of the statute itself, there can be no such valid trust.

as well.

BRENNAN J: Is the legal estate presently liable to forfeiture

by reason of the trust?

MR CHESTERMAN:  Your Honour, I suppose it is, in theory.

BRENNAN J: What is it that makes it liable to forfeiture?

MR CHESTERMAN:  The fact that it was held in trust.

BRENNAN J: Well, then the proposition that there cannot be a

trust is at odds with that result, is it not?

MR CHESTERMAN:  No, with respect, because of what this Court said

in RV HOPKINS, which was again, I think, a decision on

the Queensland LAND ACT. RV HOPKINS, 20 CLR 465. Again,

we have copies for Your Honours. The point of this case

was that there were proceedings taken in the land court

to forfeit a lease because it was held on trust and

the point that went to the High Court, this Court, was

whether there was sufficient evidence to allow a finding

that there was a trust and before he dealt with that

point the Chief Justice Sir Samuel Griffith said,

at page 470, in the second-last paragraph, the last whole

paragraph on that page and half-way into the paragraph:

Before referring to the evidence relied upon

by the Land Appeal Court and by the appellant

to establish the.alleged trust, I remark that

the question must be determined irrespective

of the consideration that such a trust would

be illegal and unenforceable. A provision

forbidding die C.4iiatj on of a trust rnder the penalty of

forfeiture of the estate would otherwise be

contradictory and futile.

His Honour set out the terms of the legislation which

is the precursor to the present Act on the page 468 of the report. Section 59 was then the relevant section.

I need not, I think, read it out to Your Honours. But

the point of it is that there can be a trust but

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nevertheless it is an illegal and unenforceable trust

and existence of that trust renders the legal estate

liable to forfeiture but nevertheless the trust itself

cannot be enforced and what these proceedings sought

was to have enforced that illegal trust.

Your Honours, I do not know that I can say anything

more.

MASON CJ: Thank you, Mr Chesterman. Yes, Mr Davies.

MR DAVIES: Your Honours, what our learned friend has said, in

our respectful submission, demonstrates the importance

and perhaps even difficulty of the question. But in

our respectful submission, if our learned friend is

correct in saying that incompetence in section 91

means automatic disqualification, then incompetence in

section 92 must have the same meaning and clearly that

is not so. Section 92, which is the one which says

that you should not have more than an aggregate of so

many hectares of a particular holding, like section 91,

provides as the consequence of what is said to be

incompetence the liability to forfeiture because, as

I said earlier, Your Honours, it has its comparable

provision in section 296(4).

So, in our respectful submission, incompetence

or lack of competence in section 91 is intended to mean,

and mean no more than, the consequence that the interest

is liable to forfeiture. Your Honours, I do not think

there is anything else I can usefully add.

MASON CJ:  The Court will grant special leave in this case.

AT 10.03 AM THE MATTER WAS ADJOURNED SINE DIE

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