Speers Point RSL Club Ltd v The Returned and Services League of Australia (NSW Branch)

[2012] NSWSC 1011

Supreme Court

New South Wales

Medium Neutral Citation:

Speers Point RSL Club Ltd v The Returned and Services League of Australia (NSW Branch) [2012] NSWSC 1011

Hearing dates:

29 & 30 November, 1 & 2 December 2011

Decision date:

29 August 2012

Jurisdiction:

Equity Division

Before:

Slattery J

Decision:

Plaintiff's claim dismissed. Directions made for filing submissions in relation to costs.

Catchwords:

EQUITY - equitable remedies - trusts and trustees - plaintiff R.S.L. Club claims to have funded the acquisition of three properties adjacent to Club premises - the three properties purchased in the names of trustees of the local Sub-Branch of the NSW R.S.L. - whether the three properties are held by the trustees on resulting, express or constructive trust for the plaintiff Club - whether plaintiff entitled to relief under Real Property Act, s 45D or in promissory estoppel in respect of the three properties.

Legislation Cited:

Companies Act 1961 (NSW)
Conveyancing Act 1919 (NSW), s 23C
Limitation Act 1969 (NSW), s 27(2)
Liquor Act 1912 (NSW), s 134B
Public Accountants Registration Act 1945 (NSW)
Real Property Act 1900 (NSW), s 45D
Registered Clubs Act 1976 (NSW)
Returned and Services League of Australia (New South Wales Branch) Incorporation Act 1935 (NSW)

Cases Cited:

Austotel Pty Ltd v Franklins Self Serve- Pty Limited (1989) 16 NSWLR 582
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Bartlett v Ryan [2000] NSWSC 807
Baumgartner v Baumgartner (1987) 164 CLR 137
Calverley v Green (1984) 155 CLR 242
Ciavarella v Polimeni [2008] NSWSC 234
Dillwyn v Llewelyn (1862) 45 ER 1285
Dowse v Wynyard Holdings Ltd [1962] NSWR 252
ER Ives Investment Limited v High [1967] 2 QB 379
Giumelli v Giumelli (1999) 196 CLR 101
McBride v Sandland (1918) 25 CLR 69 Muschinski v Dodds (1985) 160 CLR 583
Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464
Napier v Public Trustee (WA) (1980) 32 ALR 153
Ramsden v Dyson & Thornton (1866) LR1HL 129
Walton's Stores (Interstate) Limited v Maher (1988) 164 CLR 387

Texts Cited:

Jacob's Law of Trusts, 7th ed, LexisNexis Butterworths, 2006, [1210]

Category:

Principal judgment

Parties:

Plaintiff:- Speers Point RSL Club Ltd
First Defendant:- The Returned and Services League of Australia (NSW Branch)
Second Defendant:- Lyle Alan Dalton
Third Defendant:- Aubrey Fitzsimmons
Fourth Defendant:- Anne Walker
Fifth Defendant:- Registrar-General

Representation:

Counsel:

Plaintiff:- D. Stack
First to Fourth Defendants:- D.Murr SC, L. Tyndall, M. Avenell
Fifth Defendant:- Submitting appearance
Solicitors:

Plaintiff:- Craig Powell, Thomson Playford Cutlers
First to Fourth Defendants:- Mark Bowen, Bowen Legal
Fifth Defendant:- submitting appearance

File Number(s):

2010/00071935

Publication restriction:

No

Judgment

1. Residents of the Lake Macquarie districts of Boolaroo and Speers Point served in Australian Forces during World Wars I and II. Upon return from active service they formed local Boolaroo and Speers Point Sub-Branches of the Returned and Services League of Australia. These were consolidated into a single local Sub-Branch by about 1952 ("the Sub-Branch"). More precisely, this was a Sub-Branch of the New South Wales State Branch of the Returned and Services League of Australia ("the State Branch"), a body, which had been incorporated by an Act of the NSW Parliament in 1935. In common with many local communities throughout Australia, the returned services personnel of Boolaroo and Speers Point also formed a local RSL Club, an unincorporated association they called "the Boolaroo and Speers Point RSL and Citizens Club" ("the Club").

1. The Club, now incorporated as the "Speers Point RSL Club Limited", has taken various forms and names since its inception. On 20 February 1965, the Club began trading as an unincorporated association known as the "Boolaroo Speers Point RSL & Citizens Club" and later as the "Speers Point RSL Citizens Club". The Club's activities undoubtedly existed in some form before 1965. On 16 November 1972, the Club was incorporated as a company limited by guarantee, under the name "Speers Point RSL Club Limited", the Club's current corporate structure and corporate name, although it trades under the name "The Five Islands Recreation Club".

1. In these proceedings, the plaintiff Club claims against the Sub-Branch and the State Branch that it is the beneficial owner of three blocks of land, which currently provide car-parking accommodation for other land, on which the Club's own Clubhouse is built ("the Clubhouse property"). The three disputed blocks of land, respectively, the "Edith Street property", the "Speers Street property", and the "Main Road property" were purchased between 1966 and 1972 in the name of trustees of the Sub-Branch. The Club is now the registered proprietor of the Clubhouse property but not of the three disputed properties. The Club claims to be the beneficial owner of all three disputed properties. In response to the Club's case the Sub-Branch and the State Branch contend that the Sub-Branch is the beneficial owner of these three properties. This is the main issue for trial.

1. There are five defendants to the Club's proceedings. The State Branch is the first defendant. The second, third and fourth defendants, respectively Mr Lyle Dalton, Mr Aubrey Fitzsimmons and Ms Anne Walker are the present trustees of the Sub-Branch. The fifth defendant, the Registrar-General has filed a submitting appearance.

1. This case essentially involves a contest about the inferences that should be drawn from historical documents and the legal consequences of these inferences. A number of witnesses gave oral evidence. But except in minor respects the oral evidence does not bear closely on the issues for the Court's determination.

1. In analysis of Club and Sub-Branch events and documents dating back to the 1950's, the Court has been much assisted by detailed and helpful written and oral submissions from the legal representatives of all parties. Mr D. Stack of counsel instructed by Thomson Playford Cutlers represented the plaintiff. And Mr D. Murr SC, Mr L. Tyndall and Ms M. Avenell instructed by Bowen Legal appeared for the defendants.

1. First, it is necessary to identify the three disputed properties and the issues that arise in respect to each. Determination of the issues then requires an historical account covering the Club and the Sub-Branch, the acquisition of the Clubhouse property and each of the three disputed properties, and the parties' dealings with them since their first acquisition. Finally, these reasons determine the relief for which the Club contends.

The Edith Street, Speers Street and Main Road Properties and the Issues

1. The three disputed properties are closely proximate to the Clubhouse property. The Edith Street property was acquired in March 1966, the Speers Street property in July 1968, and the Main Road property in December 1972. Since acquisition they have mostly, but not exclusively, been operated to provide car-parking facilities ancillary to the Club's main trading activities. All three purchases were effected through transfers into the names of trustees of the Sub-Branch. Events surrounding the acquisition of each of these properties are analysed in these reasons in the order of their acquisition.

1. All three properties are located centrally in Speers Point, a district at the northern end of Lake Macquarie. The principal thoroughfare in Speers Point, Main Road, runs in a north-south direction. The Clubhouse stands on the western side of Main Road at its intersection with Speers Street, which runs to the east, forming a "T" intersection with Main Road. The Main Road property is situated immediately to the north of the Club on the western side Main Road. The Speers Street property lies on the southern side of Speers Street, about half a block away from its corner with Main Road. Thus, the Main Road property abuts the northern boundary of the Clubhouse property. Persons parking on the Speers Street property, wishing to access the Clubhouse, must walk along the Speers Street footpath and across Main Road.

1. Edith Street runs in a north-south direction and parallel to and to the west of Main Road. The Edith Street property abuts the western boundary of the Clubhouse property near its northwestern corner. The Edith Street property has a frontage to the west, facing into Edith Street and is located at the intersection of Edith Street and Mary Street, which runs along the southwestern boundary of the Clubhouse property.

1. The Club's principal case is that the registered proprietors of the three properties, the Sub-Branch trustees, the second and third and fourth defendants, hold the properties on a resulting trust for the Club. The Club's contention is that it directly funded the acquisition of the three properties. The defendants dispute that the Club funds paid for the acquisition of any of the three properties. They contend that the evidence is more consistent with the Club donating funds to the Sub-Branch or otherwise funding the Sub-Branch so that the Sub-Branch could then itself acquire each of the three properties with its own funds.

1. The Edith Street property - March 1966. The transfer of the Edith Street property took place in March 1966. The Club says it paid the whole of the purchase price of the Edith Street property as well as the conveyancing costs associated with its acquisition. At the time of the acquisition of the Edith Street property the Club was not yet incorporated. The purchase took place in the names of three persons, Herbert Mitchell, Charles Stanley Cooper and Andrew Fulton who were then trustees of the Sub-Branch.

1. Very few documents survive from the records of the Club and the Sub-Branch or from contemporary conveyancing documents, to tell the story of this acquisition. Such documents as exist are identified in the Court's determination of the points at issue. The Club contends that it took out a mortgage or otherwise directly funded the acquisition of this Edith Street property. The Club also points to the Edith Street property being contemporaneously recorded as an asset in the Club's balance sheet. But the Sub-Branch and the State Branch dispute these contentions, saying that the evidence supports the conclusion that the Sub-Branch paid the purchase price of the Edith Street property and that the entry of the Edith Street property into the Club's balance sheet at the time was just an error.

1. The Speers Street property - July 1968. The Speers Street property was purchased in July 1968. Contemporaneous evidence about its acquisition is equally sparse. The property was transferred to trustees of the Sub-Branch, Charles Stanley Cooper, John Thomas Ward and Allan James Pitts. The Club contends that it directly funded the acquisition of the Speers Street property, which was conveyed into the names of the trustees of the Sub-Branch. The defendants dispute this contention and point out that the Speer Street property was not entered into the Club's balance sheet at the time of acquisition and has not appeared there at any time since.

1. The Main Road Property - December 1972. The Main Road property was purchased in December 1972. Again it was conveyed into the names of the trustees of the Sub-Branch, Messrs Cooper, Pitts and Ward. The Club contends that its cash flow ultimately funded the acquisition of the Main Road property. The Club had the operational capacity to generate far more cash flow than the Sub-Branch in these times. So there was considerable evidentiary justification for the Club's contention that its funds enabled the purchase of the Main Road property to occur. This was also the case with both the Edith Street and Speers Street properties. But the defendants' contention was that the surviving documentation is more consistent with the Club lending or donating funds to the Sub-Branch so that the Sub-Branch could acquire the Main Road property.

1. The Club's contentions were not limited to seeking to make out a resulting trust over the three disputed properties. In the alternative, the Club contended it was beneficially entitled to the three disputed properties on other grounds, many of which partly relied upon conduct after the acquisition of the three properties. The Club claimed possessory title over the three properties and sought relief under Real Property Act 1900, s 45D that it be made the registered proprietor of the properties. The Club contended that in the circumstances the Sub-Branch intended to create and did create an express trust over the three properties to make them available for the Club's purposes. The Club also contended that the application of doctrines of constructive trust and estoppel led to the conclusion that three properties should permanently be made available to it.

Development of this Dispute

1. The parties to this legal dispute now operate at arms length to the point of seeking the Court's determination of their respective legal rights. It was common ground that theirs was not always an arms-length relationship. There was undoubtedly a special relationship between the Sub-Branch and the Club, in the 1960's and 1970's, as no doubt there was between many other sub-branches of the State Branch and many other local clubs. Even after the Club's incorporation in November 1972, the Club and the Sub-Branch neither very obviously nor always consistently operated as arms-length commercial parties.

1. Indeed at a deeper level, much is explained in this case by recognising something, which was perhaps not fully seen by all those involved in the Sub-Branch's and the Club's administration in the late 1960s and the early 1970s. The executive of the Club and of the Sub-Branch did not perhaps immediately appreciate: (1) that the incorporation of the Club in November 1972 effected a legal separation of its affairs from those of the Sub-Branch; and (2) that local demographic and other changes would further sharpen the differences between the interests of the Club and Sub-Branch over coming years.

1. From the 1960's up until the last decade, the two organisations, the Club and the Sub-Branch, evolved in different directions. But up to the early 1970s the different interests of the two were only barely discernible. Before the Club's incorporation in November 1972, "the Club" published accounts. But in practice substantially the same executive personnel held some property for Sub-Branch purposes and as "the Club" held other property for more specific Club-related purposes.

1. This deep overlap in executive personnel is evident at the time of the acquisition of each of the three disputed properties. The respective board members and trustees of the Club and the Sub-Branch were almost but not wholly identical during the subject property acquisitions. Mr Cooper was both the President of the Club and President/Trustee of the Sub-Branch for the whole six years from 1966 to 1973, after which he continued for one more year as President/Trustee of the Sub-Branch.

1. At the acquisition of the Edith Street property in 1966 the transferees, Messrs Mitchell, Cooper and Fulton were respectively the President (Cooper) and Treasurer (Mitchell) of both organisations. Although in 1966, Mr Fulton was only a Trustee of the Sub-Branch, and not a member of the board of the Club.

1. At the acquisition of the Speers Street property in 1968 the transferees, Messrs Cooper, Ward and Pitts were respectively the President (Cooper) and a Trustee/board member (Ward) of both organisations. Only Mr Pitts was a trustee of the Sub-Branch and not a member of the board of the Club.

1. At the acquisition of the Main Road property, despite the incorporation of the Club in November 1972 a similar pattern emerges. The transferees of the Main Road property, Messrs Cooper, Pitts and Ward were respectively the President (Cooper) and Trustee/Board-member (Pitts) of both organisations. Only Mr Ward was in December 1972 a trustee of the Sub-Branch and not a member of the board of the Club.

1. Understandably in the 1970's the actors in the governance of the Club and the Sub-Branch did not actively work towards separating out the respective interests of the two organisations. But what is equally clear from the evidence analysed in these reasons is that some of the members of the governing bodies of the two organisations did appreciate the evolving differences in the interests of each organisation and accordingly sought to place their affairs in corresponding better legal order.

1. Moreover, some patterns emerge in the early governance of the two organisations from which it may be inferred that their respective boards were aware of their different interests. One such pattern was clear at the time of the acquisition of the three disputed properties. One of the persons into whose name each property was conveyed was only a Sub-Branch Trustee and not a board member. Unless it was accidental, this structure of transferees expresses a preference for the interests of the Sub-Branch over the Club in case of possible disagreement.

1. Undoubtedly shifting demographics and the passing of many veterans meant that the Club, which was initially incorporated as a retreat for returned servicemen, became more widely community based. The interests of the members of the Sub-Branch and the Club membership began to diverge. That divergence became a litigated contest when on 1 September 2009 at a meeting of the Sub-Branch a motion to appoint an agent to sell the three disputed properties was defeated by a margin of 20 votes to 12. The Club commenced these proceedings against the Sub-Branch and the State Branch later the same month.

1. The State Branch's contention was that the parties' relationship in the 1960's and early 1970's was so different from an arms-length commercial relationship that the Club and the Sub-Branch should simply be regarded as somewhat like two branches of the same enterprise, or different companies in a corporate group. Using this analogy the State Branch contended that even though one company within a corporate group may advance the purchase price for a property and a different company may hold the property so acquired, that may simply be a matter of internal corporate arrangement within the corporate group as a whole. The Sub-Branch then contended that this was really just a case of funding and acquiring properties through various emanations of the Sub-Branch and that the principles of equity relating to resulting trusts do not apply.

1. On the other hand, the Club contends that principles of resulting trusts are applicable to this dispute. Ultimately it is not necessary in this case for the Court to resolve a dry debate about the overall characterisation of the parties' relationship in the 1960's and 1970's and whether and when it was and ceased to be an arms-length relationship. Rather the Court must resolve the concrete question of whether or not the Club's pleaded resulting trust case and its case for other equitable relief is made out. The nature of the relationship between the parties, and its arms-length characteristics, or otherwise, at different times are matters the Court may take into account but they are not decisive in the Court's analysis, as the defendants have suggested.

1. These reasons must now make findings covering an extensive period of the State Branch's and the Club's history from just after World War II up until the present time.

The Sub-Branch, the Club and the State Branch - 1945 to 2012

1. Detailed historical findings are required to resolve the legal issues between the parties. It is necessary briefly to survey the material put before the Court covering a lengthy period. This material is covered partly in deference to the quality of the work of the legal advisors on both sides and partly because only with an appreciation of this material can the points at issue be comfortably decided. The narrative that follows in this section represents the Court's findings about the events of that period. It is clear from the narrative where those findings are the product of a contest between the Club and the defendants.

1. Not all the historical evidence is available. This makes the Court's drawing of inferences from the available materials at times difficult. The poor quality of the evidence available to the Court is not due to any lack of diligence on the part of the parties. The defendants searched the State Branch's head office files and Sub-Branch files and extracted relevant materials. The Club relied upon documents in its own possession and issued a subpoena to the Lake Macquarie Council for any surviving relevant documents in the hands of the Council.

1. Generally the Court was not prepared to draw an inference that absent documents were never created. Given the passage of time the absence of documents was as plausibly explained by accidental loss over time, as it was by their not having been created in the first place. At times the Court must express an historian's caution and recognise that there may be countless reasons why documents are not available over a long period. Within a voluntary organisation such as the Sub-Branch and another such as the Club, where much voluntary time was committed in the early days, it is it is understandable that archival and document management systems were not a priority in the day-to-day management of those volunteers.

1. There is also contemporaneous (mid 1960's) evidence giving cause for concern about poor record keeping both within the Club and the Sub-Branch. In May 1966 two members of the Sub-Branch complained to the State Branch about how the Sub-Branch and its associated Club were being conducted. Their complaints to the State Branch included comments of "a marked laxity of Sub-Branch administration in that the Executive Officers are not carrying out their duties; no proper minutes being kept in that resolutions of the meetings are not properly recorded; there is not vetting of applications for membership or transfers; Sub-Branch has a very bad name in the area and many staunch R.S.L. minded members have left; there is no division between Sub-Branch and Club activities".

1. Similar allegations were made about the poor administration of the associated Club and its compliance with Club licensing and gaming laws. This May 1966 report was to be considered by State Branch. It is not evident whether the complaints of the two Sub-Branch members were either investigated or substantiated. Little weight, of course, can be placed upon an uncontested complaint from so long ago. But the existence of such documents weakens an inference that might otherwise be available about the existence of documents based upon ordinary principles of orderly and efficient administration. Of particular importance is a possibility of the lack of proper administrative division between Sub-Branch and Club activities. It perhaps explains some difficulties that are now being encountered in retrospective analysis of the period.

The Early Days - Formation of the Sub-Branch and Incorporation of the Club

1. The earliest relevant event in the narrative is the incorporation of the first defendant in 1935. The State Branch is incorporated under the Returned and Services League of Australia (New South Wales Branch) Incorporation Act 1935. By 1935 World War I veterans had formed large state-based organisations throughout Australia, of which the first defendant was one. This gave legal form to the associations that had begun to form 1916 in Australia, when the first wounded soldiers returned from World War I battlefields.

1. The first defendant, the State Branch, amended its constitution from time to time after 1935. The developing constitution is in evidence. A comprehensive change to that constitution took place in 1966 and 1967. These changes are analysed later in these reasons. But one common feature of the otherwise changing State Branch constitution was its capacity to form Sub-Branches in various metropolitan, suburban and regional areas of New South Wales. These Sub-Branches are all unincorporated bodies governed by the first defendant, the State Branch.

1. The structure of the Sub-Branch, represented in this case by the second, third and fourth defendants, was typical of such sub-branches formed throughout the State of New South Wales. The property of sub-branches was generally held in the name of trustees who were replaced from time to time.

1. By 1945 the State Branch had given a charter to the "Boolaroo & District Sub-Branch" to operate as one of its sub-branches and also to the "Speers Point Warners Bay Sub-Branch" to operate as another of its sub-branches. The two sub-branches were consolidated in about 1952 to form the Sub-Branch as it is currently known, "the Boolaroo Speers Point RSL Sub-Branch".

1. By 1965 the Sub-Branch had formed an unincorporated Club which began trading under the name "Boolaroo Speers Point RSL and Citizens Club". But the Club traded before this. The evidence shows that the Club's operations were outgrowing an old Clubhouse. And in 1963 the Club was considering acquiring larger premises.

1. Amendments to the Liquor Act 1912 (NSW) in November 1972 required the Club to incorporate. And it did so on 16 November 1972 in the name "Speers Point RSL Club Limited" under the Companies Act 1961 (NSW). Upon incorporation all the property of the unincorporated Club vested in the incorporated Club: Liquor Act, s 134B and the Club's Memorandum of Association, clause 3(b). The Club is now a registered club within the Registered Clubs Act 1976 (NSW).

The State Branch's Constitution

1. The source materials for inferences about the parties' intentions are wider than just the records of the Club and the Sub-Branch. Their dealings took place, I infer, with general knowledge on both sides of the requirements of the State Branch's constitution. The State Branch had a constitution throughout the whole period under examination in these reasons. That constitution underwent a major consolidation in 1966-1967 and was adopted by the 50th State Congress of the State Branch in 1966 and amended by the State and National Congress in 1967. This Constitution governed the Sub-Branch and the State Branch from that time and was current during the relevant events of the late 1960's and 1970's. Unless otherwise indicated these reasons refer to the State Branch's 1966-1967 Constitution. In respect of the purchase of the Edith Street property and other preceding events earlier editions of the State Branch's Constitution are sometimes relevant.

1. The State Branch's constitution clause 63, (g)(i) (and its predecessors) explains much of the correspondence between the Sub-Branch and the State Branch under examination:-

"(g)(i)No property vested in Sub-Branch Trustees or in any other persons on its behalf, Women's Auxiliary or Club formed under these rules shall be sold, transferred, conveyed, alienated, mortgaged, leased, or given to any person or corporation without State Council/Executive consent being first obtained, provided that this shall not effect any bona-fide donation (not being an amount greater than $200) being made by any Sub-Branch, Women's Auxiliary or Club in any one financial year to any body or organisation furthering League objects providing that total amount of donations to all such bodies shall not exceed $1,000 in any one financial year.

(ii)No property, either real or personal, at a cost exceeding $200 shall be acquired without written consent of State Council or State Executive, nor shall any land be acquired under a lease of any kind without consent as aforesaid."

1. In its dealings with third parties, including the Club, the Sub-Branch was not master of its own destiny. It could not decide itself, according to its own perception of local requirements, how it would deal with the Club. It was itself governed by the constitution of the State Branch. All matters relating to the acquisition and mortgaging of Sub-Branch property, being property "vested in Sub-Branch Trustees", whether or not held for the benefit of the Club, required the State Branch's consent.

1. Little evidence about the rationale for clause 63(g) now exists, other than what can be drawn from the wider text of the constitution, and from the provision itself. It is reasonable, in my view, to infer from these sources that the State Branch's policy was to ensure that property was bought and held in the name of Sub-Branch members to provide some degree of protection of the assets for the benefit of the Sub-Branch, against the uncertainties of commercial operations involving those assets. As will be seen from later correspondence this inference is well supported by approximately contemporaneous correspondence.

The Purchase of the Clubhouse - November 1963 to March 1964

1. The purchase of the current Clubhouse in early 1964 starts the account of property purchases involving the Sub-Branch and the Club. It is a cameo of the relationship between the Sub-Branch and its Club and the State Branch in relation to local club and sub-branch business.

1. The opportunity to acquire the current Clubhouse property, the site of an old picture theatre, emerged in November 1963. The Secretary of the Sub-Branch, Mr S. Holyhead, wrote to State Secretary of the State Branch, Mr W. G. Osmond on 15 November 1963, seeking approval for a scheme to sell the existing old Clubhouse and to complete the acquisition of the picture theatre on the Clubhouse property for conversion into a new Clubhouse. The letter is reproduced below in the form in which it is in evidence (excluding a certain handwritten notes):-

"Speers Point R.S.L Club"

S. HOLYHEAD15.11.1963.

The State Secretary,

Mr. W. G. Osmond,

Dear Sir,

On behalf of the above Club S/BRANCH I am seeking the right to sell the property owned by the above Club S/BRANCH for the purpose of getting finance to build another Club under the same name on the site of the old picture Theatre the property being purchased under the name of the Speers Point R.S.L.

The Club has paid £6.000. on this property and still owe £9.000. which we hope to raise by the sale of the old Club House.

The urgent need for this appeal is the fact that if we do not make an effort to vacate the premises that we now occupy the Police will make an objection to our license at the end of the year.

We feel sure that if we are able to get into these new Club Rooms that the Speers Point R.S.L will grow to ourexpectations (sic) and I feel sure into a Club that the R.S.L. will be (sic) justly proud.

We will forward to you as requested a set of plans and specifications also the balance sheets for the last three years.

An early reply to this appeal would be appreciated.

Yours Sincerely,

(signature)

Secretary"

1. The copy of Mr Holyhead's 15 November 1963 letter, held among the records in the State Branch, has the word "Club" crossed out both in the letterhead itself and in the text of the letter. The word is replaced with the abbreviation "S/Branch" meaning no doubt "Sub-Branch". It is unclear whether the word "Club" was removed and replaced by "S/Branch" before or after the letter was sent. But it may be inferred from the terms of his reply of 20 November 1963 that the State Secretary Mr Osmond treated his correspondent as being the Sub-Branch, not the Club. Throughout the whole period of the acquisition of the Clubhouse property, followed by the three disputed properties, Mr Holyhead was the Honorary Secretary of the Sub-Branch and Mr Osmond was the State Secretary of the State Branch.

1. By the time Mr Osmond wrote back it was clear to Mr Holyhead that he was corresponding with the State Branch on the subject of the Club premises in his capacity as the Honorary Secretary of the Sub-Branch. Mr Osmond's letter back of 20 November 1963 said:-

"20th November, 1963

Mr. S. Holyhead,

Hon. Secretary,

Boolaroo-Speers Point Sub-Branch,

R.S.S. & A.I.L.A.,

P.O. Box 20,

Boolaroo.N.S.W.

Dear Mr. Holyhead:

I refer to your letter of 15th instant, in which application was made by your Sub-Branch to sell certain properties and apply the proceeds to the completion of the purchase of the local theatre, for the purpose of constructing new Clubrooms.

In this regard I have now made arrangements with Mr. I.T.S. Reid, Solicitor, to meet us at your Club at approximately 1 p.m. on Wednesday, 27th November, and to examine the project. I will be accompanied by Mr. Yeo, the State President, and the State Branch Accountant, and possibly the State Hon. Treasurer, so that the opportunity is created for members of your Executive Committee and other Members to meet the State President and other officials.

The proposition laid before me on your visit yesterday will be submitted to the State Executive tonight for consideration, and you will be advised accordingly.

As requested, I have been pleased to arrange for the parcel of stationery ordered by you to be forwarded.

Yours faithfully,

(signature)

W.G. OSMOND

State Secretaty."

1. Mr Osmond's letter of 20 November 1963 also foreshadowed there would be a meeting of the State Executive that night to consider the proposal. Minutes of the State Branch dated 20 November 1963 record that such a meeting took place and passed a resolution in the following terms:-

"(v) Boolaroo-Speers Point (72/266)

Application to sell property and purchase picture theatre.

RESOLVED:'That approval be granted for sale of the existing property on which Club is built, at a figure satisfactory to the State Branch, and proceeds be used for purchase of picture theatre, land and building, or building of new Club premises, providing the new property vests in the Trustees of the Sub-branch as owners.'"

1. The State Branch's resolution of 20 November 1963 appears to be a straightforward application of the predecessor of State Branch constitution, clause 63(g), granting approval to the sale of the Old Clubhouse property. Indeed this correspondence about the purchase of the new Clubhouse is at least one basis to infer, as I do, that members of the Sub-Branch at the time were well aware of the requirements of clause 63(g) and its predecessors.

The Edith Street Property - March 1966

1. The Edith Street property was purchased in March 1966. The Club contends that preparations for the purchase were well under way by November 1965, when the Club was seeking to borrow money from the Commonwealth Bank to fund the purchase of the Edith Street property. In contrast the defendants' say that the Club's November 1965 dealings with the Commonwealth Bank were unrelated to the purchase of the Edith Street property. The Club relies upon a letter dated 22 November 1965, in which the Club applied to the Commonwealth Bank, which approved a loan of £18,000 (Commonwealth Trading Bank) and £10,000 (Commonwealth Savings Bank) in response to what the Commonwealth Bank Manager described as "your recent request for a loan to assist your Club". The defendants contend that all the Club was doing at this time was re-financing existing loan facilities.

1. The acquisition of the Edith Street property certainly occurred at the same time as the re-financing of the mortgages over the Clubhouse property. But for the reasons which follow, I conclude that this November 1965 correspondence with the Commonwealth Bank did not relate to the purchase of the Edith Street property. Analysis of this correspondence with the Commonwealth Bank is important, because without it the Club's case that it directly raised the funds to acquire the Edith Street property rests on few contemporaneous documents.

1. The Commonwealth Bank wrote to the Club on 22 November 1965 in the following terms:-

"The Manager

Boolaroo Speers Point R.S.L. & Citizens Club,

SPEERS POINT N.S.W.

Dear Mr. Holyhead,

Application for Loan

We refer to your recent request for a loan to assist your Club. Our Head Office has advised that a total of £28,000 has been approved. Of this amount the Commonwealth Trading Bank has granted £18,000 and the Commonwealth Savings Bank of £10,000.

Conditions of the loan are:-

Commonwealth Trading Bank of Australia, £18,000

3.Clearance being effected within 5 years.

4.An interest rate of 7 1/4 % p.a.

5.Written Consent of the State Council of the R.S.L. to be obtained to the pledging of the property by the Trustee of the obtained to the pledging of the property by the Trustee of the Sub-Branch (Rule 28 of the R.S.L. Constitution)

6.Mortgages to the C.S.B. and C.T.B. ranking ahead of the existing charges to Boolaroo Theatres whose written consent should now be sought. Preparation of the formal deed of postponement to permit this priority will be the Club's responsibility and legal advice in this regard should be sought in due course.

It is proposed to implement the loan in the name of the Committee of the Club against security of third party mortgages by the Trustees of the Sub-Branch and a mortgage over the Club's lease. Certain resolutions will need to be passed by the Club and Sub-Branch and you will be further advised in this regard.

Commonwealth Savings Bank of Australia £10,00

7.Registered 1st mortgage over Sub-Branch property.

8.Half yearly payments of £625 to cover principal and interest, a term approximately 12 years.

9.Interest rate 7% being liable for review at the end of the initial three years in the light of the rate applicable to similar loans at that time and at any time thereafter.

Please advise us whether this offer is acceptable to your Club, and also the full details of the relative title deeds.

Yours faithfully,

Manager."

1. The Commonwealth Bank's 22 November 1965 financing proposal was forwarded to the State Secretary by the Club's Honorary Secretary Mr Holyhead on 7 February 1966. In the forwarding letter Mr Holyhead says to Mr Osmond:-

"Dear Sir,

I wish to make a request on behalf of the Boolaroo-Speers Point R.S.L. Sub Branch regarding a mortgage on the property known as Boolaroo-Speers Point R.S.L. & Citizens' Club.

You will find enclosed a proposition from the Commonwealth Trading Bank regarding a loan and I feel sure, if permission is granted, it will mean a tremendous saving to the Club's finances. At present we are paying 1 ½ % per month on £36,000.

You can readily see, when you peruse the proposition from the Bank, that there is quite a difference regards the percentage on the loan. I hope it meets with your approval and permission is granted so that I can make final arrangements regarding this matter. All that has been required by the Commonwealth Bank has been adhered to and we now only await your approval to complete the transaction.

Yours faithfully,

......................

(Hon. Secretary)"

1. The Commonwealth Bank's proposal of 7 ¼ per cent per annum was objectively better than the Club's existing arrangements of 1 ½ per cent per month, which the Club had sourced from internal funding routinely supplied by the State Branch on application by its various Sub-Branches.

1. The Commonwealth Bank's terms of approval for this loan indicate what discussions must have taken place prior to completion of the transaction. The Commonwealth Trading Bank of Australia advance was offered at an interest rate of 7 ¼ per cent per annum with clearance to be effected within 5 years. But the Commonwealth Bank's approval was also conditional upon "written consent of the State Council of the R.S.L. to be obtained to the pledging of the property of the Trustee of the Sub-Branch (Rule 28 of the R.S.L. Constitution)".

1. The Commonwealth Bank required the Commonwealth Trading Bank and Commonwealth Savings Bank mortgages to rank ahead of the existing vendor finance charges in favour of Boolaroo Theatres, evidenced by a formal deed of postponement. A charge had previously been taken by the vendor to the Club over the Clubhouse property, comprised of the former picture theatre, to secure the vendor financing of the sale of the premises to the Club. The method of implementation of the proposed Commonwealth Bank loan was instructive. The bank's letter explained, "It is proposed to implement the loan in the name of the Committee of the Club against security of the party mortgages by the Trustees of the Sub-Branch and a mortgage over the Club's lease. Certain resolutions will need to be passed by the Club and the Sub-Branch and you will be further advised in this regard".

1. Two things flow from the terms of the Commonwealth Bank's letter. The Club recognised that the consent of the State Branch was required to the transaction under the State Branch's constitution: clause 28 being the 1965 predecessor of what became clause 63 in the 1966 constitution. Secondly, the Sub-Branch trustees were providing the security for the advances by way of third party mortgage. The Clubhouse property title was in the Sub-Branch trustees name at this time. There is no apparent mention of the fact that the Club itself may have an interest in that property and that the mortgage would therefore not wholly be of a third party nature.

1. The timing and internal documentary evidence from the State Branch suggests that the Sub-Branch's 7 February 1965 request related to the Commonwealth Bank correspondence was made and then considered by the State Branch on 9 February 1966 to grant the necessary permission in the following terms:-

"IBoolaroo-Speers Point(72/266)

Application by Sub-Branch for permission to transfer existing mortgage loan from the lending authority to the Commonwealth Trading Bank of Australia and the Commonwealth Savings Bank of Australia. The loan would be implemented in the name of the Committee of the Club against security of 3rd party mortgages by the Trustees of the Sub-Branch and a mortgage over the Club's lease. The Sub-Branch had [advised] their present financial commitment and if permission is granted by State Executive for the transfer of bank finance, a considerable saving would be effected.

RESOLVED: 'That the necessary permission be granted'."

1. This resolution is decisively against the Club's contention that this was part of raising funds for the purchase of the Edith Street property. It does not mention the Edith Street property. It was merely to re-finance at a better interest rate.

1. The Club's acquisition of the Edith Street property was internally authorised by resolutions in late February 1966 and, the Club argues, a further resolution in March 1966. The first of these resolutions was passed on 22 February 1966. The Club's committee then resolved that the Club's Secretary-Manager and the Club's solicitor approach the Commonwealth Bank for a loan to purchase "the property at the rear of the Club" then owned by Mr and Mrs Smith. This was the Edith Street property.

1. The Secretary-Manager's discussions with the Bank were apparently successful. For on 27 February 1966 the Club's Committee met again and received a report "on purchase of cottage" given by Mr Holyhead, the Secretary-Manager. The minutes record a motion seconded and carried "Sec Manager go ahead re purchase of cottage".

1. Further negotiations with the Commonwealth Bank took place. But they seemed to have taken place in conjunction with discussions about the re-financing of the Club's own property. At a further Club committee meeting on 29 March 1966 a motion appears to have been carried in the form "notification of passing of property to borrow loan from Bank to take over mortgage of Boolaroo-Speers Point R.S.L. and Citizens Club", although the word "carried" is crossed out in the minutes, the words appearing next to the motion, (as per document) tend to indicate that a motion was passed in some form, although the document actually recording the motion is now missing. The Club's case was that the Club's Committee was recording in the 29 March 1966 resolution the Commonwealth Bank's approval for the Club's loan application for the purchase of the Edith Street property. But this 29 March 1966 resolution does not expressly refer to the Edith Street property. And the form of the resolution is equally consistent with the re-financing of the existing mortgages over the Clubhouse. There is no internal evidence to connect the 27 March 1966 motion with the Edith Street property, unlike the 22 February 1966 motion. I infer that the 27 March 1966 resolution does not relate to the Edith Street property but rather to the re-financing of the Clubhouse property, which was taking place at the same time.

1. Thus, the Club sourced evidence about the financial arrangements for the purchase and funding of the Edith Street property is really very limited. The evidence is the Club's Committee motions of 22 and 27 February 1966. Additional information about the Committee motion of 22 February 1966 is the following-

"Sec Manager and solicitor approached Manager of Boolaroo Comm Bank to see if they can get loan re-purchase of house at rear of Club - also Mr Mitchell to accompany them."

1. This motion was noted as "carried". There of course had already been some contact with the Commonwealth Bank at that time in relation to the Clubhouse property. This is referred to elsewhere and earlier in the same 22 February 1966 minutes, "loan from Bank be left in hands of Sec Manager & Treasurer to give a report".

1. But this Committee Meeting of 22 February 1966 contemplated that a general meeting be called. The Committee Meeting resolved that a "special meeting to be called to discuss purchase and loan for property at rear of Club"; the resolution being noted as carried. There are no surviving agendas, motions or minutes in relation to such a general meeting, if one was ever held. Nor is the holding of such a general meeting referred to in later Club documents in relation to the Edith Street property.

1. The defendants contend that all that this material in relation to the Edith Street property establishes is there was discussion within Executive of the Club about obtaining a loan for the purchase of the Edith Street property. But the defendants say it cannot be inferred that a loan was actually obtained by the Club for the purchase of the property. I accept this submission. The materials do not establish a final Club decision to proceed with external finance with the Commonwealth Bank or any other financial institution to fund the Club's acquisition of the Edith Street property.

1. Aspects of the title of the Edith Street property also assist the inference for which the defendants contend. When the conveyancing for the acquisition of the Edith Street property was completed there is no title-based evidence to suggest that the Commonwealth Bank took a mortgage over the property. Of course, that may mean that the bank took a mortgage but the mortgage was not registered. But that seems an unlikely hypothesis. At the same time the Commonwealth Bank was registering a mortgage over the main Clubhouse property to secure the Club's borrowings. Both properties serve the Club's purposes. The same bank was advancing money to acquire or develop them both. It is difficult to see why the same registration policy would not be applied to both properties, the Edith Street property and the Clubhouse property. From the available materials I cannot infer that the Club itself borrowed money from the Commonwealth Bank to acquire the Edith Street property.

1. How did the Club pay for the Edith Street property? The purchase was probably ultimately funded from cashflow which the Club generated. There is no evidence of the Sub-Branch having revenue generating operations sufficient to accumulate the $8,000 purchase price of the Edith Street property. But how this was accounted for between the Club and the Sub-Branch is partly explained by the conveyancing documents.

1. The Edith Street property conveyancing documents assist the defendants' contentions. The original contract for sale of land from the owner of the Edith Street property, Ellen Gertrude Atkins, to the Sub-Branch trustees is not available. But the Memorandum of Transfer dated 1 March 1966 is available and relevantly provided as follows:-

"MEMORANDUM OF TRANSFER

(REAL PROPERTY ACT, 1990)

I, ELLEN GERTRUDE ATKINS

(herein called transferor)

being registered as the proprietor of an estate in fee simple in the land hereinafter described, subject, however, to such encumbrances, liens and interests as are notified hereunder, in consideration of FOUR THOUSAND POUNDS EIGHT THOUSAND DOLLARS.

(£ $8000.00) (the recent whereof is hereby acknowledged) paid to me by

HERBERT MITCHELL, CHARLES STANLEY COOPER and ANDREW FULTON

do hereby transfer to

HERBERT MITCHELL of Third Street, Boolaroo, Retired Builder,

CHARLES STANLEY COOPER of Boolaroo, Labourer and ANDREW

FULTON of Cumberland Street, Teralba, Barman

(herein called transferee) As joint tenants

ALL such my Estate and Interest in ALL the land mentioned in the schedule following:-"

1. The consideration of $8,000 (also expressed as £4,000 due to the introduction of decimal currency the previous month) is declared to have been "paid by Herbert Mitchell, Charles Stanley Cooper and Andrew Fulton". The consideration was not declared to be payable by the Club. I infer that the Club did not make direct payment of the consideration to the vendor but that it was paid by the trustees of the Sub-Branch in that capacity. The three transferees whose signatures are witnessed on the Memorandum of Transfer "certify this transfer to be correct for the purposes of the Real Property Act". And conveyancing practice was for the Memorandum of Transfer to be prepared by the transferee's solicitor who would have been in a position to know the source of funds. Moreover, the named transferees did not wholly coincide with the then board of the unincorporated association trading as the Club. Mr Fulton was only a trustee of the Sub-Branch. His position on the Edith Street conveyance was somewhat anomalous, if the property was intended to be conveyed to the three transferees to be held for the Club.

Edith Street Property Post Acquisition -1966 to 1974

1. The puzzle of documents missing in February - March 1966 is partly solved by later events. In the 8 years until about 1974 many of the same personnel who were involved in the Edith Street purchase continued in the administration of the Club and of the Sub-Branch. Their transactions in this subsequent period throw light on what they intended in March 1966.

1. The 1 March 1966 Memorandum of Transfer of the Edith Street property transferred the land to Herbert Mitchell, Charles Stanley Cooper and Andrew Fulton. These three men were each involved in the Club and the Sub-Branch for a number of years after 1966. Herbert Mitchell was the Treasurer of the Sub-Branch from 1966-1967, a Trustee of the Sub-Branch from 1966-1967 and the Treasurer of the Club in 1966. Charles Stanley Cooper was the President of the Sub-Branch from 1965-1974, a Trustee of the Sub-Branch from 1966-1974 and President of the Club from 1965-1973 (although it is not clear whether he was the President of the Club in 1971). Mr Cooper died in office in 1974. Andrew Fulton was a Trustee of the Sub-Branch in 1966. The subsequent documents relevant to the Edith Street property consist of communications with the State Branch, Club balance sheets and local Council documents.

1. The Sub-Branch sought financial accommodation from the State Branch in November 1968 to fund extensions to the Clubhouse. In doing so the Sub-Branch asserted its ownership of the Edith Street property. On behalf of the Sub-Branch Mr Holyhead signed on 3 November 1968 what was a standard application form, an "Application for Permission to Obtain Financial Accommodation for Sub-Branch Purposes". Mr Holyhead executed this Application for Financial Accommodation as the Sub-Branch Honorary Secretary, seeking $25,000 in finance from the State Branch. The need to do "extensions to the Club" Mr Holyhead explained was the "reason finance is required". But the Club's financial problems were more specific, as Mr Holyhead set out: the advance was needed "for extensions to the Club and owing to the fact that the Club just donated $9,000 to the Sub-Branch for the purchase of a house". The $9,000 "just donated" was not for the Edith Street property, but for the Speers Street property, the consideration for which was $9,000, a matter to which these reasons will return when the Speers Street purchase is considered.

1. The Sub-Branch includes the Edith Street property among its assets in this November 1968 Application for Financial Accommodation. The November 1968 Application represented to the State Branch that the assets of the Sub-Branch were $155,750 and liabilities were $19,198, leaving the Sub-Branch with net assets of $136,552. The standard Application for Financial Accommodation form asked the Sub-Branch to "give 7[a] general description of [a] premises owned by Sub-Branch". The Club's answer in this November 1968 Application includes "Smith property, Speers Street $8,000" a reference to the address of and the consideration paid for the Edith Street property. A number of other questions were asked about the Club property in this Application, which are dealt with elsewhere in these reasons. But Mr Holyhead was here clearly claiming that the Edith Street property was a Sub-Branch asset. Given that in 1968 Mr Holyhead was also the Club's Secretary-Manager, what he did at the same time with the Club's accounts presents something of a puzzle.

1. The Club published an annual balance sheet. The Club's balance sheets between 1968 and 1972 supports the Club's contentions that the Club beneficially owned the Edith Street property. In the Club's annual report for 1968, published on 31 December 1968, the Edith Street property, described as "Smith's house", is listed as an asset of the Club. Among assets, which include furniture and fittings ($33,704), Club buildings ($166,671.72) and working capital totalling $226,914.67, is an entry "Smith house.... $8,000". The Club's balance sheet was prepared by an accountant registered under the Public Accountants Registration Act 1945. The balance sheet for 31 December 1970 prepared by the same public accountant discloses total assets of a similar order, $268,769.75. The Edith Street property was again described in the 1970 balance sheet as "Smith house property at cost...$8,000".

1. How is this to be reconciled? On the one hand in November 1968 Mr Holyhead is telling the State Branch that the Edith Street property was a Sub-Branch asset. Yet in the December 1968 Club accounts he is representing to the wider local Speers Point community of Club users that the Edith Street property is a Club asset. The answer more probably lies in the different purposes of the two documents. In the Club's December 1968 Annual Report, which would no doubt be read by the Club's regular users, Mr Holyhead was representing that the Edith Street property was an asset available for the Club's future purposes. After all, Club members and patrons were then no doubt keen to see that the money they were spending at the Club was building up assets which could be made available for the Club's financial future. In the contrast the audience for the November 1968 Application for Financial Accommodation was only the State Branch, which was interested to see that assets were being acquired in the Sub-Branch's name and were being held safely by the Sub-Branch away from risky adventures.

1. But Mr Holyhead was not being two-faced. I infer he believed, as must the Club's board who would have authorised the December 1968 accounts, that it was legitimate at that time to include the Edith Street property as a Club asset, because the Sub-Branch could be relied on to make it available for Club purposes when called upon to do so.

1. But in contrasting these two documents it must not be overlooked why Mr Holyhead was making the November 1968 application. He was acting in accordance with what he thought was his duty under the State Branch Constitution, clause 63(g) to seek State Branch approval for a dealing with Sub-Branch property. In performance of that duty he was unlikely to have misled the State Branch as to the Sub-Branch's assets. He was probably quite comfortable, and without qualification, to describe to the State Branch the Edith Street property as a Sub-Branch asset. He could do so because he also probably knew that before the Sub-Branch could make the Edith Street property available in the future to the Club, at the Club's request to secure Club borrowings, he would still have to go back to the State Branch to seek its further permission for a Sub-Branch transaction.

1. The Club also dealt with the Council about the use of the Edith Street property in the years following its 1966 purchase. On 13 August 1969 the Council's records indicate that the Club was intending to make good on promises made at the time the Club had extended the Clubhouse. The Club said to the Council in this correspondence:-

"You may recollect that we promised to make available a carpark within 12 months of completion of the Club's extension. After making a few enquiries we feel that the block belonging to us in Speers Street adjoining the Golden Fleece Garage...would be more suitable as it can park 50 to 60 cars in this space. Would you please place this before Council for consideration."

1. The Club did not distinguish in this correspondence between the Sub-Branch's beneficial ownership and its own beneficial ownership of what was clearly the Speers Street property. The Council took the view for planning reasons that the Club should establish its carpark on the adjoining Edith Street property, not on land that was distant from the Clubhouse, such as the Speers Street property.

1. Thus, the proposal emerged within Council to use the Edith Street property as a Club carpark, instead of the Speers Street property. Council minutes of 28 November 1970 considered the result of its comparative consideration of the Speers Street property and the Edith Street property for carparking. The Council's minute records discussions that must have taken place between Council officers and Club representatives in which Club personnel were treating the Edith Street property as able to have its use and development controlled by the Club:-

"The development on and within the residential zone along Mary and Edith Streets, adjoining the Neighbourhood Business zone, comprises dwellings. Lot 15 is owned by the R.S.L. land for car parking. Obviously the club desires to extend the existing clubhouse onto the land. However, Council has required Lot 15 to be used for car parking in relation to additions approved of in 1968."

1. But despite the Club's wishes, the Council expressed its preference for using the Edith Street property over the Speers Street property for carparking purposes. I infer from these dealings with the Council that the Club's board believed that there would be no difficulty with the Sub-Branch making the Edith Street property available for the Club's purposes on some mutually convenient terms. That may well have been their view at the time. But that does not mean that the Club did not regard the property as the Sub-Branch's property both legally and beneficially.

1. By February 1972, the Club's Committee and the Sub-Branch trustees had begun to appreciate that their interests were diverging, or would soon be diverging. The Sub-Branch's papers include a notice of extraordinary general meeting of the Club's members scheduled for Sunday, 27 February 1972. The well-drafted notice of meeting gives notice of three resolutions with respect to the Edith Street property, the Clubhouse property and the Old Clubhouse property. All resolutions were to similar effect, which is sufficiently described in the following extract from the resolution relating to the Edith Street property. To explain the need for the first resolution the notice of meeting recited that at the time of the purchase of the Edith Street property, "it was at the time of acquisition of such premises always intended that the legal and equitable ownership thereof should vest in the Boolaroo-Speers Point R.S.L. Sub-Branch (and its Trustees) and WHEREAS by mutual mistake the legal and equitable ownership of the said premises was vested in the Boolaroo-Speers Point R.S.L & Citizens Club and WHEREAS it is desired to rectify such error". The resolution that the notice of meeting then proposed was a declaration: (1) that the Club holds the Edith Street property "beneficially on behalf of the Boolaroo-Speers Point R.S.L. Sub-Branch"; and (2) "that such lands be conveyed to such Sub-Branch (and its trustees) forthwith".

1. There is no other evidence that this meeting was actually held or that this and the other two resolutions were passed or that any deeds to give effect to them were ever brought into existence. The resolutions indicated above have the words "move" handwritten next to them, as though the notice of meeting had been used as an aide memoire for action by a person attending the meeting. Whether that member moved the resolutions and whether they were indeed passed remains unknown. The Club's minute books from the period have not survived. All that can be inferred from the surviving document, which is a signed (by Mr Holyhead the Club's Secretary-Manager) copy of a notice of the proposed meeting, is that the issue was probably put before an extraordinary general meeting on 27 February 1972 in an atmosphere where some Sub-Branch members thought that the Club was assuming ownership over what was regarded by them as really Sub-Branch property. The division reflected within this litigation was present at least in minor profile in February 1972.

1. Moreover, as the Edith Street property title stood in February 1972 the resolution was not really necessary nor useful in the form in which it was drafted. The resolution sought to convey the Edith Street property to the Sub-Branch trustees. But legal title was already in their names. It would not be surprising if someone realised at or before this 27 February 1972 meeting that passing these proposed resolutions was not very useful.

1. The better inference is that this resolution was not passed. I draw this conclusion for two further reasons. First, there is no subsequent reference in any document in evidence to the resolution having been passed. It is the kind of resolution which, were it passed, could be expected later to have been referred to in some way. The resolution represented the victory of certainty for the Sub-Branch's claimed legal and beneficial interest in the properties over what otherwise was continuing ambiguity and differences of view. I infer from the form of the notice of proposed extraordinary general meeting that the Sub-Branch's members wanted to put the Sub-Branch's beneficial ownership of the Edith Street property beyond doubt. If the resolution had been passed, it is difficult to imagine Sub-Branch trustees not later using such a resolution against the Club during the events that followed in the 1970's. From the fact that it was not so used I infer that the proposed 27 February 1972 resolution was probably not passed.

1. But I infer that the resolution was prepared for an extraordinary general meeting of the Club. Its preparation, at least supports an inference that many Sub-Branch members and Club members saw the Edith Street property as beneficially owned by the Sub-Branch, even though perhaps not all of them saw it that way.

1. There is perhaps another reason to conclude that an extraordinary general meeting did not vote to pass a resolution about the Edith Street property. In contrast to a vote of Club members, what neither seems to have occurred is that the Committee of the Sub-Branch directed the transfer of the property from the Club to the Sub-Branch. This is evident from examination of the Club's balance sheet for the year ending 31 December 1972. The Edith Street property last appears in the Club's balance sheet for the year ending 31 December 1971. The following year, in place of the property itself, a loan is recorded in the Club's balance sheet as owing from the Sub-Branch to the Club, a loan that includes the written down value of the Edith Street property. The details were the following.

1. The 1971 Club balance sheet, divided non-current assets into fixed assets and affiliated Club loans. The balance sheet recorded fixed assets as follows: -

$18,728 - poker machines

$35,518 - plant and furniture

$177,693.12 - freehold land and buildings (Club premises)

$8,000 - Smith property (note 2)

$239,939.12

1. In that year the Club's Affiliated Loan Account was $16,564.00, reflecting a loan then owing from the Club to the Sub-Branch.

1. The following year, in the balance sheet for 31 December 1972, the Club premises and the Edith Street property are removed from the list of fixed assets. But the entry for Affiliated Club Loans changes (from $16,654.00) to $171,056.92. The explanation for removal of these two fixed assets from the balance sheet appears from Note 2 to the 1972 balance sheet, which says "The Club premises and Smith property have been transferred at the direction of the Committee to the Boolaroo - Speers Point R.S.L. Sub-Branch. The values of these properties are now represented in the loan account due to the Club from the R.S.L. Sub-Branch". Thus, balance sheet Note 2 asks the reader to treat the $171,056.92 as a loan due to the Club from the Sub-Branch.

1. The arithmetic of this change can be reconciled within about $2,000. A reasonable reconciliation of the fixed asset changes in the Club's 1971 and 1972 balance sheets is possible the following way. Removal of the fixed assets and affiliated Club loans from the 1971 balance sheet involves a subtraction of $169,129.12 (being $177,693.12 plus $8,000 less $16,654.00) in value. The 1972 balance sheet includes among Affiliated Club Loans, as an asset, a loan of $171,056.92 owing from the Sub-Branch to the Club. There is a discrepancy of $1,927.80 ($171,056.92 less $169,129.12) in the figures which cannot be identified 40 years later. But Note 2 makes the Club's and the Sub-Branch's intent clear. The Edith Street property was no longer to be a Club asset, neither legally or equitably. This arithmetic reconciles well with the Sub-Branch's late 1972 balance sheet (discussed later in these reasons in relation to the Main Road property) that also shows the Sub-Branch acknowledged the debt of $171,056.92 to the Club at that time.

The Speers Street Property - July 1968

1. The Speers Street property was purchased in July 1968. The Memorandum of Transfer dated 29 July 1968 in evidence and assists in inferring the source of the consideration for the purchase. The Memorandum of Transfer relevantly provides:-

"MEMORANDUM OF TRANSFER

(REAL PROPERT ACT, 1900)

$8.00

13/8/68

I, MARGARET AMELIA SPENCER of Merewether Married Woman

(herein called transferor)

being registered as the proprietor of an estate in fee simple in the land hereinafter described, subject, however, to such encumbrances, liens and interests as are notified hereunder, in consideration of

NINE THOUSAND DOLLAR

($9,000.00) (the receipt whereof is hereby acknowledged) paid to me by

CHARLES STANLEY COOPER, JOHN THOMAS WARD and ALLAN JAMES PITTS

do hereby transfer to

CHARLES STANLEY COOPER of 46 Edith Street, Speers Point, Foreman,

JOHN THOMAS WARD of 4 Princess Street Argenton Sheet Metal Worker, and

ALLAN JAMES PITTS of 3 Attunga Place Charlestown, Manager

(herein called transferee) as Joint Tenants

ALL such my Estate and Interest in ALL the land mentioned in the schedule following:-"

1. As with the Edith Street property, the drafter of the Memorandum of Transfer before its submission to the vendor for execution described the consideration of $9,000 as being paid "by Charles Stanley Cooper, John Thomas Ward and Allan James Pitts", who were the trustees of the Sub-Branch in July 1968. If the Club had provided the consideration the Memorandum of Transfer could have identified that the source of the consideration was different from the Sub-Branch trustee transferees, although the Club was not then incorporated. Thus, I infer from the choice of declaration of the payment of consideration in the form of the Memorandum of Transfer, that the transferees used Sub-Branch funds to acquire the Speers Street property.

1. Another aspect of the November 1968 Application for Financial Accommodation, which has already been examined in relation to the Edith Street property, again becomes relevant. About four months after the purchase of the Speers Street property the Sub-Branch applied to the State Branch to finance extensions to the Club, seeking the identified loan of $25,000. Mr Holyhead signed the application, which described the reason finance was required as "for extensions to the Club and owing to the fact that the Club just donated $9,000 to the Sub-Branch in the purchase of the house". At the time of its purchase the Speers Street property did have a house erected on it. I accept the evidence that the reference to "house" in this November 1968 Application is a reference to a donation for the acquisition of the Speers Street property. That inference is clear in part also because the $9,000 "just donated" is the same consideration provided for in the Speers Street property Memorandum of Transfer. The same connection is then made in a letter of February 1973 referred to below.

1. Analysis in relation to the Speers Street property is more straightforward than it is with respect to the Edith Street property. The Club has never sought to include the Speers Street property as an asset in its own balance sheet. The Club's financial report for the calendar year 31 December 1968 presents a balance sheet which does not include the Speers Street properties but yet records Smith house (the Edith Street property) as an asset at cost of $8,000 and the Club building for $166,671.72. Given its then recent acquisition, the omission of the Speers Street property from the Club's 1968 balance sheet by the same accountants who included the Edith Street property, is unlikely to have been accidental.

1. But I infer that the acquisition of the Speers Street property is included elsewhere in the Club's 1968 financial statements. Although not specified in any note, the income and expenditure account for that year has an entry "donations...$9,553.59". This is the fourth largest item of expenditure among 30 other items of expenditure, and is a sufficiently large item to cover the donation to the Sub-Branch of the consideration sufficient for the Sub-Branch then to purchase the Speers Street property. But there is no other evidence from 1968 that this is what happened. But the Sub-Branch submits that this is what it must be. And I accept that submission. There is no evidence of the Club making any other donation of that order at that time.

1. The Club's 1970 balance sheet presents a similar picture. The Edith Street property, is again described as the "Smith House Property" and continues to appear among the Club's assets, "at cost" at $8,000. But there is again no reference in the 31 December 1970 Club accounts to the Speers Street property.

1. The notice of the meeting scheduled for 27 February 1972 interestingly refers to the Edith Street property, to the Clubhouse property and to the old Club premises. The Main Road property had not been purchased at that time. But the Speers Street property had been acquired. Yet the Speers Street property also does not appear in this notice of extraordinary general meeting. The defendant submits, persuasively in my view, that the reason for this was, consistently with the other materials, that the parties were aware that this property was already vested in the Sub-Branch, not the Club and there was no active dispute about that.

1. But there is persuasive 1973 evidence that the Club had indeed donated the Speers Street property to the Sub-Branch. On 19 February that year the Club wrote to the Assistant State Secretary of the State Branch in the following terms:-

"Dear Sir,

Please find enclosed application to obtain permission for loan.

I would like to state that the Club also purchased for the Sub Branch a $9,000.00 block of ground for a car park which had to be done when we extended to the new Club, all properties have now been transferred to the Sub Branch.

Yours faithfully,

signature

S. Holyhead

Hon Secretary"

1. At the time of this letter Mr Cooper, one of the transferees of the Speers Street property was still President of the Club. Mr Holyhead continuing as its Honorary Secretary was the signatory of the letter. This letter is itself reasonably clear evidence of the donation having occurred.

The Main Road Property - December 1972

1. The Main Road property was purchased in December 1972. As will be seen, it was purchased at about the same time as important adjustments were made in the accounts of the Club in relation to the Edith Street property, adjustments which are best dealt with as part of the narrative of later accounting transactions.

1. November/December 1972 was an important time for the Club. Having commenced trading in 1965 as an unincorporated association, on 16 November 1972, the Club was incorporated as a company limited by a guarantee. This was the occasion for making a number of accounting adjustments in the Club's December 1972 accounts. The existing treasurer of the Club, Mr Bill Ramsay, who for five years, had been treasurer of the Club whilst it traded as an unincorporated association, had to retire that year. He said in the December 1972 annual report, "I am not eligible to nominate again as a director of Speers Point R.S.L Club Limited. So I am standing down and doing so I wish my successor a happy association with the Directors, Staff and members alike".

1. The move from trading as an unincorporated association to incorporation and the imminent change of treasurers was not unnaturally an occasion to make a number of accounting adjustments. These adjustments were done under the authority of the treasurer, Mr Ramsay, who had also been treasurer when the Speers Street and Main Road properties had been acquired, but who had not been the treasurer when the Edith Street property had been acquired. After 1972, Mr Ramsay continued on as the treasurer of the unincorporated Sub-Branch but retired as treasurer of the Club in 1973. It is difficult to know at such a distance but it may have been the looming prospect of accounting changes at the end of 1972 that also prompted the Club's February 1972 extraordinary general meeting.

1. There are no surviving Club or Sub-Branch resolutions evidencing decisions in relation to the purchase of the Main Road property. But the Memorandum of Transfer dated 20 December 1972 still exists. It is unclear the contracts for the sale of this property were exchanged. But only a few weeks after the Club's incorporation the Memorandum of Transfer of the Main Road property was drawn, nominating the trustees of the Sub-Branch as transferees. It records the transferors transferring the subject property upon the following terms and to the transferees described as follows:-

"MEMORANDUM OF TRANSFER

REAL PROPERTY ACT 1900

(a) WILLIAM HENRY RICHARDSON of Speers Point Storekeeper and DAPHNE MAVIS RICHARDSON his wife

hereinafter referred to as the TRANSFEROR

being registered proprietor of an estate in fee simple

in the land hereinafter described, subject to the following encumbrances and interests

...

in consideration of TWENTY THOUSAND DOLLARS....($20,000)

(the receipt whereof is hereby acknowledged), paid to the transferor by Charles Stanley Cooper, Allan James Pitts, John Thomas Ward

hereby transfers to

(a) CHARLES STANLEY COOPER of 46 Edith Street, Speers Point, Retired Steelworker, ALLAN JAMES PITTS of 3 Attunga Place, Charlestown, Manager, and JOHN THOMAS WARD of 4 Princes Street, Argenton/Plumber, as joint tenants.

Hereinafter referred to as the TRANSFEREE

"

1. The transfer of the Main Road property to the Sub-Branch trustees was not registered until 1 May 1973. Precisely when the contract for sale of the Main Road property from Mr and Mrs Richardson to the transferees was completed, is unclear. It may have pre-dated the Club's incorporation. But the incorporated Club could have been nominated as purchaser under the contract, prior to completion. I infer from the fact the Club was not so nominated that the parties intended the Main Road property to be transferred to the Sub-Branch, not the Club.

1. But there was a contest between the parties as to the significance of a number of documents created in January 1973 to the Main Road property purchase. The Club said that these documents supported its case in relation to the Main Road purchase, that the Club had raised funds with the Commonwealth Bank to complete the purchase. The defendants said that the documents related to an entirely different transaction, that the Club was nevertheless negotiating with the Commonwealth Bank at the same time, namely the re-financing of the Clubhouse property. For the reasons that follow I find the defendant's submissions the more persuasive in relation to these documents, namely, the Club's Board of Management Minutes of 2 January 1973 and a letter from the Commonwealth Trading Bank of Australia to the Club of 22 December 1972.

1. The Club's 2 January 1973 Board of Management Minutes record a resolution that "the Company [the Club] accept the offer of a loan of $12,250 from the Commonwealth Savings Bank of Australia on the Bank's usual terms and conditions for loans of this nature and on the following terms and conditions to pay out the debt on loan no. 2-414210-09, in the name of the unincorporated Boolaroo-Speers Point R.S.L & Citizens Club". The terms proposed were for a registered mortgage first over Certificate of Title Volume 3194 Folio 157 and Volume 4489 Folio 81, the titles to the Clubhouse property. The Club's case was that the Club was raising this money to acquire the Main Road property.

1. There are several problems with the Club's contention here. First, if this resolution and the mortgage were connected with the Main Road purchase one would expect the Commonwealth Bank to be taking a mortgage over the Main Road property. But the titles the Commonwealth Bank was proposing to take as mortgage security were not those of the Main Road property, which was Certificate of Title Volume 6658 Folio 245. This is more consistent with re-financing of existing Club property.

1. Secondly, the contemporaneous documents better support the inference that the Club needed to reconfigure its loan and security documents with the Commonwealth Bank upon incorporation, as would be expected, rather than to fund the purchase of the Main Road property. Indeed this precise purpose for the $12,250 advance and reflecting proposed terms identical to those in the 2 January 1973 resolution are contained in the Bank's letter of 22 December 1972 to the Club in the following terms:-

"LOAN NO 2-414210-09

As a result of Incorporation of the Club the Bank has advised approval of Loan No 2-414847-04 for $12250 to pay out the existing loan plus interest from 1/10/1972.

To complete the necessary formalities we are holding enclose the following documents for execution "

1. Thirdly, the defendants contend with some force that there are other separate resolutions that were passed on 2 January 1973 and which the Commonwealth Bank framed to accommodate funding the funding of the purchase of the Main Road property. These resolutions are the following:-

"FORM OF RESOLUTION TO BE PASSED AT A DULY CONSTIITUTED MEETING OF THE COMMITTEE OF THE BOOLAROO- SPEERS POINT R.S.L. SUB BRANCH.

2-1-73

That in consideration of the Commonwealth Trading Bank of Australia agreeing to provide an additional advance of fifteen thousand dollars ($15,000) to the committee of Boolaroo Speers Point R.S.L. and Citizens Club on that Bank's usual terms and conditions for the purpose of purchasing land to be used as a car park and eventual extensions of clubs buildings, the Sub Branch is hereby authorised to consent the existing mortgage to the said Bank being applied as security for the aforesaid advance and the Trustees of the said Sub Branch are further authorised to execute all such documents as may be required by the said bank.

FORM OF RESOLUTION TO BE PASSED AT A DULY CONSTITUTED MEETING OF THE COMMITTEE OF THE BOOLAROO SPEERS POINT R.S.L. AND CITIZENS CLUB

That the Committee of the Club is hereby authorised and instructed to borrow and additional fifteen thousand dollars ($15,000) by way of a fully Drawn Loan from the Commonwealth Trading Bank of Australia on the Banks usual terms and conditions for the purpose of purchasing land to be used as a car park and eventual extensions of club buildings and that the trustees of the club be authorised and instructed to execute all such document as may be required by the Said Bank and, in particular to execute a mortgage over the property being purchased."

1. The State Branch's letter of 30 April 1975 unambiguously affirms between the State Branch and the Sub-Branch, the State Branch's view that property used by the Club belonged beneficially to the Sub-Branch. This expression of view arose in connection with the issue of the possible improvement to the Club's premises. Under the later heading "(d) Property Improvement" in the 30 April 1975 letter Mr Osmond, the State Secretary said to Mr Holyhead:-

"There is no reason whatsoever why the Sub Branch should not undertake a building and/or extension programme...

The financial accommodation can be obtained in two ways, firstly by the Sub Branch using their own property as security and obtaining the necessary finance to pay the Bank through rental from the Club. Or secondly the Club to obtain the loan using the Sub Branch property as security. In this way the rental would remain at its existing level and the Club would repay the Bank directly. Whichever method was employed it is necessary to submit a standard Application to Obtain Finance for Sub Branch Purposes. I am enclosing two of these forms, on copy of which should accompany the Sub Branch request for State Branch approval. If it was decided that the Club should obtain the loan, it will in addition, be necessary to forward copies of the Balance Sheets and Profit and Loss Accounts for the past three years."

1. It is to be inferred from this passage that as a result of the face-to-face meeting in late April 1975 between State Branch and Sub-Branch representatives that both sides understood that the Clubhouse property was the property of the Sub-Branch but that if the property was to be improved for use by the Club that could be done using revenues from the Club. Club extensions could be funded from Club revenues in one of two quite different ways: (1) by the Sub-Branch itself seeking to qualify for bank funding by arrangement with the Club to receive rent from the Club; or (2) for the Club to approach the bank, putting forward its own revenues, and using the Sub-Branch property as in effect a third party security. Either way there is no doubt that the text of the letter is asserting that the property is that of the Sub-Branch.

1. Two supplementary ideas emerge from the letter. First, improvement of the property would be funded out of the Club's cashflow. Secondly, the Club would continue to have the use of the property concerned. The letter seems to focus on the Clubhouse property which was naturally the principal concern to all parties.

1. But the letter also deals with the moneys owed by the Sub-Branch to the Club which arose, as these reasons have shown: from the Sub-Branch's acquisition of the Edith Street, Main Road and Clubhouse properties and the transfer of the Club's interest in those properties to the Sub-Branch; and from the corresponding accretion to "Affiliated Club Loans" in the Club's balance sheet. The Speers Street property in contrast appears to have been acquired by the Sub-Branch as a result of a straight-out donation of funds by the Club, without the creation of loan entries between the two organisations.

1. On 30 April 1975 Mr Osmond for the State Branch and the Sub-Branch and Club representatives discussed the cancelling of this debt. The State Branch proposed that the debt must be cancelled "by means of repayment from rental received from the Club". Otherwise the State Branch warned that both the Sub-Branch and the Club could be exposed to considerable Gift Duty expense.

1. The 30 April 1975 letter also made clear the State Branch's views about the disputed Clubhouse property lease: there should be linkage between the lease rental and the reduction or writing off of the debt. Mr Osmond explained:-

"In Clause 24 the rental should not be inserted until the position in respect of the outstanding interest free loan is clear. If as I stated earlier there is no way in which the debt can be liquidated except from rental received then of course the rental will have to be $12,000.00 per annum of which $10,000.00 or more is repaid to the Club as an instalment off the loan.

If however the loan can be liquidated in a lump sum, the rental can be then $1,200.00 per annum."

1. Essentially, the State Branch saw two options: (1) leave the rent at $12,000 per annum and use the rental proceeds to reduce the Affiliated Club Loans over time; or (2), reduce the rent to $1,200 per annum immediately but in consideration for that, write off the loans immediately. These options became the focus of debate for some years to come.

1. On 27 July 1975 the Sub-Branch resolved to ask the Club to sign the "new prepared leases" and that "we the Sub-Branch make a fresh start". The Sub-Branch seemed to be facing up to the State Branch's request that the rent be increased and the debt be written off over time. But by September 1975 a lease of the Clubhouse property from the State Branch to the Club was executed at a rental for 10 years at $1,300 per annum. This lower-end rent created an expectation in the Sub-Branch that the debt would be written off. But it took five years before it happened.

1. Various inconclusive meetings and resolutions followed over the next three years: the Sub-Branch resolved to ask the Club to eliminate the debt (22 February 1976); the Sub-Branch resolved to discuss the debt with the State Branch (26 September 1976); the State Branch deferred meeting awaiting a legal opinion (21 October 1976); amidst concern that the Sub-Branch debt to the Club had then recently risen from $187,368.31 to $232,135.54, the Sub-Branch indicated to the Club that it "would not approve further [building] improvements until the liability is written off" (6 March 1978); the State Branch invited consideration of an opinion from Mr John Kearney QC (as his Honour then was) as to eliminating the debt including by holding a meeting of Club shareholders to donate the sum to the Sub-Branch (12 April 1978); and, the board of the Club resolved in principle to write off the existing debt (then said still to be $187,000) "over the term of the Club lease" (18 April 1978).

1. Moves to write off the debt gained momentum in 1979. Correspondence and meetings on 21 March, 28 August, 30 October, 10 December and 13 December 1979 reflected a growing but unformalised consensus that the Sub-Branch's debt to the Club be written off.

1. Then at the Club's Annual General meeting held on 27 April 1980 the Club finally resolved to write the debt off. A motion was carried to the effect "that the Club forgo the right to be paid the sum of $185,668.31 shown in the books of account as owing by the Boolaroo Speers Point R.S.L. Sub-Branch to the Speers Point R.S.L. Club Limited". The formality and deliberateness with which this was done indicates in my view that the Club and its members well appreciated they were writing off a genuine asset with real value to the Club.

1. Importantly, there is no indication at the time of and leading up to this writing off resolution that the Club's board believed it had the benefit of any asset, other than this debt, associated with the properties acquired in the 1960's and 1970's. Had the Club believed it retained any kind of equitable interest of the type that it now asserts, this was the time to proclaim it, to the Club's own members and to the Sub-Branch and the State Branch. But that did not happen. I infer it did not happen because the Club had no then belief that it had such continuing interest in the properties, or any of them.

1. The bargain the Club and the Sub-Branch made to trade a rent reduction for a debt write off was not formalised into a single legal document. But the intent is clear from the course of events. And the Club's Annual General Meeting resolution of 27 April 1980 authorising writing off the debt is its final necessary step in performance of the bargain.

1. The lack of greater formality though, left one thing less than clear. The reduced-rent lease was over the Clubhouse property only, not the Edith Street, Speers Street and Main Road properties. The Sub-Branch continued to make them available without charge to the Club. The terms on which the Sub-Branch's licence of these properties to the Club might continue was not the subject of correspondence at the time.

1. The parties may have assumed that the carparks on these properties were an accommodation to the lease whilst it continued: Dowse v Wynyard Holdings Ltd [1962] NSWR 252. But there is certainly no basis in the evidence to say that the Club expressly asserted a continuing equitable interest in these properties as part of this bargain on the associated lease.

Sub-Branch's Sale of the Clubhouse Property to the Club - 1990 to 1991

1. The Sub-Branch sold the Clubhouse property to the Club in 1991. The Edith Street, Speers Street and Main Road properties were not sold to the Club at the same time. General commercial pressures and the convenience of the Club owning its own properties seem to have been driving forces for the change at this time. A few of the events of this period throw light upon the issues joined between the parties. But the period 1990-1991 is 25 years after the first of the properties was transferred. Over those 25 years the governance of the Sub-Branch and the Club had almost entirely changed. A cautious approach has been taken in drawing inferences from this period.

1. The Club seemed to have initiated the idea of the purchase in November 1988. On 29 November 1988 a resolution was put before the Club, apparently in General Meeting for the Club to purchase from the Sub-Branch "all real estate presently known by the Sub-Branch" other than the Youth Club, being the Old Clubhouse premises. A supplementary proposed motion was that the Club would grant the Sub-Branch a licence to use the Club premises for nominal consideration, so that the Sub-Branch could hold its meetings. The proposed consideration expressed for the purchase was $100,000. It is not clear on the evidence, and in what circumstances, this resolution was passed.

1. There was a Sub-Branch meeting on 29 April 1990 that discussed the issue. In general business, Mr Forster is said to have "reported on the transfer of the Club property, the money to be held by R.S.L. Club. One hundred thousand dollars. The Sub-Branch to receive the interest twelve and a half per cent every three months. This arrangement to be reviewed every 12 months". The minutes record this motion as having been carried. The trustees seem to have reported the sale to this meeting as a fait accompli.

1. The Sub-Branch and the Club jointly commissioned a valuation report of the Clubhouse property from Warren D Skelton, a Valuation Consultant, which report was delivered on 20 June 1990. The description of the property, the plans and the title documents show that it was only the Clubhouse property, its improvements and inventory which were valued. The valuer assumed that for the purposes of his valuation "the only carparking would be for a few cars along the northern boundary of the building". His opinion of the estimated current market value of $350,000, valued as commercial premises, did not include the three disputed properties.

1. But the Club contracted to buy the property for $100,000. An agreement for the sale of the Clubhouse property for this lesser consideration was made between the trustees of the Sub-Branch as vendors and the purchaser on 20 August 1990. Again, as with the earlier valuation, it was only the lots which constituted the Clubhouse property that were the subject of this contract. But the contract was apparently signed without the approval of the State Branch, which resulted in a query from the State Branch in April 1991.

1. The Club and the Sub-Branch jointly engaged solicitors, Messrs Borthwick, Wilson, Smith and Bates Solicitors, to reply to the State Branch's query, which they did on 17 May 1991. Their solicitor's letter set out the history of the matter. The solicitor's letter explained that the resolution of the Sub-Branch meeting of the 29 April 1990 was to be explained on the basis that despite their previous differences of opinion "by 1990 all parties had come to the realisation that the only logical step was for the Club to own everything". The Sub-Branch was not being demanding at the time. The solicitor's letter reported to the State Branch "the Sub-Branch believes that there is no point in it having anything more than $100,000 in cash. That would enable it to carry out all its normal functions and make its usual charitable donations etc. That is why it wishes to proceed with the matter, even though the buildings are now no doubt worth much more". This letter does not report upon what happened to the three disputed properties. But it may be inferred they were not the subject of negotiations. A degree of general goodwill appeared to have emerged on both sides.

1. The solicitor's letter provoked an immediate response from Mr Osmond at the State Branch. The solicitor's letter seemed to have been the first occasion the State Branch had been told that the Sub-Branch had sold the Clubhouse at a considerable undervalue. The State Branch reminded the Sub-Branch trustees of their duties as trustees. Correspondence then went back and forth about the issue.

1. The Sub-Branch trustees were not backward in their own defence. The then President of the Sub-Branch explained by letter on 27 May 1991 how the trustees had handled the sale of their property. In doing so he said the following:-

"The Trustees feel they are acting for the benefit of the Sub Branch by selling these premises, as the income from the $100,000.00 would be far better to service the charities they support, bearing in mind that we still would own all car parks and Youth Club property."

1. This was not a time for the Sub-Branch to mislead the State Branch. The Sub-Branch did not reveal it had any obligation to the Club in respect of the Edith Street, Speers Street and Main Road properties, then being used for carparking.

1. Ultimately, the dispute between Sub-Branch and State Branch about the sale petered out. In a series of resolutions in July and August 1991 the Sub-Branch reaffirmed and the State Branch approved what had occurred. Neither side re-visited the terms of the sale.

1. None of the 1990-1991 dealings give any support for the conclusion that the Sub-Branch held the three disputed properties beneficially for the Club. The best that can be said about the history at this time is that the three properties were excised from the sale. They did not need to be sold. The trustees of the Sub-Branch were quite willing to continue to make the properties available to the Club for either a nominal consideration or for a consideration to be reconsidered from time to time. Future arrangements about these properties were not agreed.

The Plaintiff's Claimed Relief

1. The plaintiff claims equitable relief in five separate pleaded categories: (1) resulting trust; (2) possessory title; (3) express trust; (4) constructive trust; and (5) estoppel.

(1) The Resulting Trust Case

1. The plaintiff claims that the Club is as a matter of law the true owner of the property because it should be inferred, that all the funds necessary for the purchase of the properties, that all the funds necessary for the conversion of the properties into carparking, and that all the funding of the expenses associated with maintaining the properties including Council water rates, insurance and the like, have been sourced from or paid for by the Club. Moreover, the plaintiff claims the Club has been in exclusive occupation of the three carpark properties since their acquisition and has since then acted as the sole owner.

1. The defendants contend that the Club cannot establish that either the Club borrowed the money and paid for the Edith Street property, the Speers Street property, or the Main Road property.

Applicable Legal Principles - Resulting Trust

1. The High Court stated the law with respect to resulting trusts in Napier v Public Trustee (WA) (1980) 32 ALR 153, in which Aicken J (with whom Steven, Mason and Murphy JJ concurred) stated at 158:-

"The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be. This proposition is subject to the exception that in the case of transfers to a wife or a child (including someone with respect to whom the transferor or purchaser stands in loco parentis) there is a presumption of advancement so that the beneficial as well as the legal interest will pass. Each of the presumptions may be rebutted by evidence."

1. For a resulting trust to arise it is necessary for "a purchaser" to pay the vendor and direct the transfer of the property into the name of another: see Jacob's Law of Trusts, 7th ed, LexisNexis Butterworths, 2006, [1210]. The principles stated by Aicken J in Napier's case were reaffirmed by Deane J in Calverley v Green (1984) 155 CLR 242 at 266.

1. In respect of each of the three disputed properties the Club was probably the practical source of the funds that led to the acquisition of the properties. But in each case the better view of the available evidence is that for its part the Club did not pay the vendor and direct the transfer of the property into the name of the Sub-Branch. In the case of the Speers Street property the Club donated money to the Sub-Branch, which then assumed ownership of the funds and applied them to the purchase. In the case of both the Edith Street and the Main Road property, any funds given, or raised from the Commonwealth Bank to acquire those properties were loaned or given to the Sub-Branch, so the Sub-Branch could itself acquire the properties. Moreover none of the subsequent conduct of the Club and the Sub-Branch in creating and writing off the debts between Club and Sub-Branch is consistent with the belief on the Club's part that it retained an interest by way of resulting trust in the three disputed properties.

(2) Possessory Title

1. The Club claims to have been in exclusive possession of each of the three carpark properties for over 40 years. The Club makes an application to the Court for possessory title under Real Property Act 1900, s 45D.

1. The Club says that in addition to being in open and exclusive possession of the properties for a period of over 40 years it has paid all outgoings that would have been paid by the true owner and has acted as the owner of the three properties. Moreover, the Club claims that its occupation of the premises has not been by way of lease or licence nor does it otherwise arise under the authority of the Sub-Branch. The defendants contend that the Club always knew that the properties were held in the name of the Sub-Branch and recognised the Sub-Branch's beneficial right to the three carpark properties.

Applicable Legal Principles - Possessory Title

1. The relevant principles in relation to Real Property Act 1900, s 45D may be shortly stated. Applications for possessory title can be made to the Court as well as to the Registrar General: Bartlett v Ryan [2000] NSWSC 807 at [11]. To extinguish the title, the title-holder's title to possession must be "open, not secret; peaceful not by force and adverse not by consent of the true owner": Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464. To extinguish the title holder's title to possession also must be for more than 12 years: Limitation Act 1969, s 27(2).

1. The Club has not made out a possessory title case. Since the first transfer of the three disputed properties into the name of the trustees for the Sub-Branch the Club has been using the three properties with the Sub-Branch's licence. There are many assertions of ownership of these properties on the part of the Sub-Branch over the years that must have been well known to the Club. The last of these was the May 1991 solicitor's letter written on behalf of the Club and the Sub-Branch to the State Branch.

(3) Express Trust

1. The Club contends that an express trust of the three properties for its benefit may be inferred from a number of facts: (1) the special relationship between the Club and the Sub-Branch, where one would be expected to support the other; (2) the common identity of the executives of both the Club and the Sub-Branch for many years; (3) that the Club's constitution provides that if it ceases to operate and is wound up any surplus must be returned to the Sub-Branch; (4) objectively the purchases of the three properties were known to both the Club and the Sub-Branch; and, (5) the purchase prices of the three properties were paid by the Club. The Club contends all of these are a basis to infer that the objective intention of Sub-Branch of the Club was that an acquisition the properties would be held by the Sub-Branch for the purpose of effecting the purpose for that purchase.

1. The defendants answer the Club's express trust contention at several levels. The defendant's contend that the matters the Club relies upon are not a basis to infer the express trust claimed. Moreover, the defendants say that the plaintiff's claim is caught by Conveyancing Act, s 23C and that it is not evidenced in writing.

1. The plaintiffs have a reply to the Club's Conveyancing Act, s 23C point. The Club says that many documents signed on behalf of the Sub-Branch acknowledged the terms of the trust. These documents are said to be an answer to the claimed failure to satisfy Conveyancing Act, s 23C. Moreover the Club says that it performed all its own obligations under the express trust and doctrines of part performance will not then permit the defendants to avoid the trust by deploying Conveyancing Act, s 23C: McBride v Sandland (1918) 25 CLR 69 at 78 and Ciavarella v Polimeni [2008] NSWSC 234 at [118]. Moreover, the Club says that the existence of the express trust has been well known to the trustees of the Sub-Branch and equity will not permit Conveyancing Act, s 23C to be deployed so as to constitute a fraud upon the statute: Muschinski v Dodds (1985) 160 CLR 583 at 613-14.

Applicable Legal Principles - Express Trust

1. The primary legal issue under this head of the Club's claimed relief is whether it has established an intention to create a trust. On this the applicable legal principles are not in contention. No formal or technical words are required to create a trust and the intention to create a trust may be inferred from the nature of the transaction and all of the circumstances attending the relationship between the parties: Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618 and Calverley v Green (1984) 155 CLR 242 at 262.

1. In my view, nothing in the Court's findings found a basis for the Club's claim that there was an express trust. Despite the special relationship pleaded, and the common identity of the executives of both the Club and the Sub-Branch, the intention was clear over the years in my view that the properties were to be retained legally and beneficially by the Sub-Branch. This is particularly evident from the transaction in which the debt owing by the Sub-Branch to the Club was written off apparently in exchange for a favourable lease to the Club: such an express trust was not asserted at the time.

(4) Constructive Trust

1. In the alternative to the Club's express trust case it contends that the Sub-Branch trustees hold the property on constructive trust for the Club. The defendants deny any constructive trust arises.

Applicable Legal Principles - Constructive Trust

1. The Club draws upon a number of different strands of constructive trust doctrine. The plaintiff's contentions rely upon each of these strands, at times without much differentiation among them. The law in respect of each of those strands may be concisely stated. It is the application of this law here about which the contention arises.

1. A constructive trust may be imposed as a personal obligation attaching to property, in order to enforce the equitable principle that a legal owner should not be permitted to use his common law rights as owner to abuse or subvert the intention which underlay his acquisition and possession of those rights: Muschinski v Dodds (1985) 160 CLR 583 at 613-14.

1. A constructive trust has been imposed in circumstances where the owner of property has allowed another to act upon the belief and expectation that that other has or will have an interest in the property: Giumelli v Giumelli (1999) 196 CLR 101 at [3].

1. A constructive trust has been imposed where a joint relationship or endeavour ends without blame and where the benefit of money or property contributed by one party on the basis and for the purposes of a relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that the other party would so enjoy it: Muschinski v Dodds (1985) 160 CLR 583 at 613-14 and Baumgartner v Baumgartner (1987) 164 CLR 137 at [32].

1. For the reasons already given the Club has not established in my view that it acted upon any belief or expectation that it would have a beneficial interest in any of the three disputed properties. Moreover, the Club acknowledged the Sub-Branch's legal ownership of the three properties when it bargained for a favourable lease whilst writing off the debt owed to it by the Sub-Branch, without asserting any such interest. In my view the Club neither had nor believed it had such an interest at that time.

(4) Estoppel

1. The Club relies upon the same facts to ground relief in equitable estoppel. The defendants deny the Club has made out the ingredients of such an estoppel.

Applicable Legal Principles - Estoppel

1. The Club's case is based upon doctrines of equitable promissory estoppel stated by the High Court in Walton's Stores (Interstate) Limited v Maher (1988) 164 CLR 387. The applicable law may be concisely stated. To establish an equitable estoppel a plaintiff must prove: (1) the plaintiff assumed or expected that a particular legal relationship would exist with the defendant and the defendant would not be free to withdraw from that relationship, (2) the defendant induced the plaintiff to adopt the assumption or expectation, (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation, (4) the defendant knew or intended him to do so, (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled, and (6) the defendant has failed to act to avoid that detriment: Walton's Stores (Interstate) Limited v Maher (1988) 164 CLR 387, at 428 - 429 per Brennan J.

1. The Club also relies on doctrines of proprietary estoppel cases which depend upon a defendant's alleged "encouragement" in the cases derived from Dillwyn v Llewelyn (1862) 4 DeGF & J 517; 45 ER 1285 or the "acquiescence" cases following from Ramsden v Dyson & Thornton (1866) LR1HL 129. But it seems to me that these doctrines add little to the plaintiff's case in addition to the plea in equitable estoppel, except in one respect.

1. The proprietary estoppel cases provide good examples of equity courts not only granting relief on the stated principles of proprietary estoppel, but also making adjustments and fashioning the relief in order to do equity between the parties: see for example ER Ives Investment Limited v High [1967] 2 QB 379 and Austotel Pty Ltd v Franklins Self Serve- Pty Limited (1989) 16 NSWLR 582 at 607- 608 per Priestley JA. The need to fashion relief is an important characteristic of this case.

1. The Club fails on its estoppel case for the same reasons as it fails on its constructive trust case.

Conclusions and Orders

1. In the result the Club has failed to not only establish its resulting trust case but has failed on all its relief for possessory title, express trust, constructive trust and estoppel.

1. In relation to that the Court will direct that the parties bring in either agreed, or competing, short minutes of order to give effect to these reasons within 14 days of today.

1. Parties may wish to advance arguments about costs and about whether costs should follow the event. One or other party may seek a special order as to costs. Both sides may file submissions as to costs within 14 days of today.

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Decision last updated: 30 August 2012