Hunter Water Corporation v Landmarque Holdings Pty Ltd

The plaintiff, Hunter Water Corporation (Hunter Water), is the registered proprietor of a parcel of land at Rothbury in the Hunter Valley (the Land). Hunter Water purchased the Land with funds provided by the first defendant, Landmarque Holdings Pty Ltd (Landmarque).

Hunter Water has brought these proceedings for declarations and related relief to identify the beneficial ownership of the Land and, in effect, to enable the Land to be sold so that Hunter Water can recoup its costs incurred in holding the Land.

For the reasons which follow, the Court is satisfied that Hunter Water holds the Land for Landmarque on resulting trust and is entitled to relief, albeit on terms contained in an undertaking to the Court as to the sale process for the Land. I acknowledge with gratitude the assistance which the Court has received from the clear and comprehensive written and oral submissions of Mr L T Livingston of Counsel, who appeared for Hunter Water, which as I will next explain was the only active party in the proceedings.

As it was properly bound to do, Hunter Water sought to identify and join as a defendant to these proceedings any party who may have an interest in the Land. That is why there are seven named defendants to the Summons. The Court is satisfied that each of those defendants was properly served. None of those defendants has formally appeared, whether by submitting appearance or otherwise. Nevertheless, each of them has disavowed an interest in the Land or these proceedings (subject only, perhaps, to what I have recorded in [14] – [15] as to the position of the seventh defendant).

Ms Susan Devereaux is a director of both Landmarque and the second defendant, Hunter Valley Estates Pty Ltd. By email dated 4 August 2021 to Hunter Water’s solicitor, Ms Deveraux wrote:

The Court accepts Mr Livingston’s submission that it is not bound by Ms Devereaux’s apparent concession that Landmarque does not have an interest in the Land. For the reasons which follow, the Court has concluded that Landmarque is the beneficial owner of the Land.

The third defendant is Hanham Management Pty Ltd. On 13 July 2021, Ms Vivienne Hanham wrote to Hunter Water’s solicitor:

The fourth defendant is Errol Investments Pty Ltd. It currently has a caveat registered over the Land. On 13 May 2021, a representative of the holding company of Errol Investments Pty Ltd wrote to the solicitor for Hunter Water:

Based on that response, the Court will order the fourth defendant to withdraw its caveat over the Land.

The seventh defendant is Mr Ian Meredith. His two sons are the fifth and sixth defendants. At the time Hunter Water purchased the Land, the Meredith family had an interest in Landmarque. Mr Livingston informed the Court that there was evidence which suggested that another company controlled by the Meredith family had advanced funds to Landmarque which were used by the latter to fund Hunter Water to purchase the Land.

The evidence included a series of emails between Mr Ian Meredith and the solicitor for Hunter Water. These include an email from Mr Meredith in which he stated:

In a later email, Mr Meredith said:

No submitting appearances were filed. By email on 15 July 2021 to Hunter Water’s solicitor, Mr Meredith said:

Finally, two business days before the present hearing, on 24 September 2021 at 5.05pm, Mr Meredith emailed my chambers. My chambers subsequently forwarded Mr Meredith’s email to the other parties. At the conclusion of his email, Mr Meredith said:

It is because Mr Meredith’s last sentence can be read as suggesting a nascent dispute in relation to who is entitled to the net proceeds of any sale of the Land that the orders which the Court will make will include a further opportunity for both Landmarque and Mr Meredith to be heard on that question if they wish.

Hunter Water’s application depends upon these basic principles of equity and trusts:

The evidence makes clear, and the Court finds, that Hunter Water purchased the Land at the request of Landmarque and with the entirety of the purchase price (including incidental costs) provided by Landmarque. The position is concisely summarised in this letter from Hunter Water’s legal officer to the development project manager of Landmarque on 27 June 1990:

There is nothing in the evidence in relation to the circumstances in which Hunter Water purchased the Land that would rebut the presumption that the Land is held by Hunter Water on resulting trust for Landmarque. This means that at all material times Landmarque was and remains the beneficial owner of the Land. While nothing turns on it, I note for completeness that when Hunter Water purchased the Land it was under old system title but has since been converted to Torrens title.

There is evidence that Hunter Water has incurred land tax and council rates on the Land since it was purchased in 1990 up to 22 June 2021 totalling $222,878.72. Those costs, and any other such costs incurred before the Land is sold, are costs in respect of which Hunter Water is entitled to be indemnified against the Land as costs incurred as resulting trustee. Other such costs will include legal fees and other liabilities incurred by Hunter Water in relation to the Land (including inquiries about the beneficial ownership of the Land and the costs of the present application on the indemnity basis), costs properly incurred incidental to the sale of the Land, and any other taxes or duties incurred by Hunter Water as the legal owner of the Land. On any sale of the Land, on the evidence before the Court, Landmarque is entitled as beneficial owner to payment of the balance of the sale proceeds after payment to Hunter Water of those various costs.

Before turning to the question of sale of the Land, I record one other matter. In February 2004, part of the Land was resumed by the Roads and Traffic Authority for use as a public road, in respect of which $53,000 is held by NSW Treasury in relation to the resumption (the Resumption Moneys). Under s 37 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), the entitlement to compensation is vested in the “owner” of the land, which is defined by s 4 to be “any person who has an interest in the land”. As the legal owner of the Land, Hunter Water is entitled to the Resumption Moneys, but subject to its obligations as resulting trustee to Landmarque. While a declaration could be made that Landmarque is, as the beneficial owner, entitled to the Resumption Moneys, the most straightforward course is to declare that Hunter Water is entitled to the Resumption Moneys, which may then be applied by it towards its right of indemnity and exoneration as resulting trustee of the Land.

Finally, how should the Land be sold to enable Hunter Water to enforce its equitable lien and satisfy its entitlement to an indemnity for its costs and expenses incurred as resulting trustee?

The proposed short minutes of order propounded by Hunter Water included:

During the course of argument, I indicated to Mr Livingston that the Court would not be prepared to make such an order for two reasons. First, and most importantly, the order would be uncertain in its terms, not least because it would not be clear on its face as to when the Land vested in Landmarque. Second, it would be an unnecessary departure from the way in which an equitable lien is usually enforced, being by a declaration of the existence of the lien with the appointment of a receiver to sell the land over which the lien exists: see, for example, Davies v Littlejohn (1923) 34 CLR 174 (albeit in that case referring to a vendor’s lien).

However, in the circumstances of this case, it did not seem to me to be in the interests of anyone, not least Landmarque as beneficial owner, for more costs to be incurred by appointing a receiver to sell the Land. The relevant circumstances are that, first, the plaintiff is a public utility and, second, there is evidence that even just the land tax and council rates that have been incurred by Hunter Water represent a very substantial proportion of the value of the Land. In the interests of minimising the further costs to be incurred, instead of the usual course of appointing a receiver, the Court will make declarations and orders to give effect to these reasons upon an undertaking to the Court by Hunter Water to the effect that it will sell the Land by an open, arm’s length process and disburse the proceeds in accordance with these reasons.

The orders of the Court are: