In brief

The case of Duke Unley Pty Ltd (ACN 080 195 606) & Ors v The Corporation of the City of Unley [2020] SASC 224 concerned an application to the Supreme Court of South Australia (Court) in respect of a memorial for the creation of a permanent carpark (Memorial) presented to, and implemented by, The Corporation of the City of Unley (Council) in the early 1970s under the now repealed Local Government Act 1934 (SA) (1934 Act), which sought the following:

  1. A declaration that the Memorial gave rise to a statutory trust under section 380(b) of the 1934 Act, an express Quistclose trust, or a constructive or charitable trust.

  2. An injunction to prevent or prohibit the Council from developing the Subject Land for any purpose other than a carpark. 

The Court held that because the Subject Land was formed by the amalgamation in 2002 of the land over which the Memorial was given (Memorial Land) and land previously used as a post office, the Subject Land could not factually be subject to a trust or dedication as argued by the applicants. 

The Court considered whether the Memorial Land was affected by a trust or dedication which, under section 193(1)(b) and section 201(2) of the Local Government Act 1999 (SA) (1999 Act), prevented the Council from excluding the Memorial Land from the classification of "community land" and limited the circumstances in which the Council could dispose of the Memorial Land. 

The Court held that there must be a clear intention derived from the conduct of the parties to declare a trust, other than a constructive trust which will be imputed where a party is "bound in conscience to hold the property on trust" regardless of intention (at [44], [54], [61], [65], and [66]). The performance of a statutory obligation to levy and pay rates was insufficient to satisfy an intention to create a trust (at [84]), and the Court held the following in respect of the trusts and dedication argued by the applicants:

1. Statutory trust – The legislative scheme supported a finding that there was no trust because of the following: 

  • Section 224 of the 1934 Act allowed the Council to abandon the construction of the carpark and credit the special rates received against the next general rate payable (at [37]). 

  • "[P]ermanent works" under section 383 of the 1934 Act meant works that were intended to last "indefinitely" and not "in perpetuity" (at [38] and [81]).

  • The Council was not empowered to create a trust on its own land except where the Council was gifted or donated the land for a purpose stated by the donor, which did not occur in this case (at [39] and [54]).

2. Quistclose trust – The Court rejected the submission that the levying of the special rate satisfied the requirements for a Quistclose trust, which may arise in circumstances where a payment has been made to a person only for the purpose of the satisfaction of a debt to a third-party creditor (see [59] and Rambaldi (Trustees) v Commissioner of Taxation, in the matter of Alex (Bankrupt) [2017] FCAFC 217; (2017) 107 ATR 1). The Court observed, in obiter, that even if a Quistclose trust was established, once moneys advanced for the specific purpose were applied, the trust was extinguished (see [62]). 

3. Constructive trust or charitable trust: 

Although the High Court of Australia (High Court) has recognised the creation of a constructive trust in respect of a joint endeavour, the High Court has expressly rejected the application in Australia of a remedial charitable trust (see [71] and Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59; (1998) 195 CLR 566 compared with the United Kingdom position in Dore v Leicestershire County Council [2010] EWHC 1387 (Cth)). 

  • The courts have showed a willingness to find in favour of a constructive trust, where a person by way of joint endeavour has "contributed to the acquisition, maintenance or renovation of property", the endeavour has failed through no fault of the parties, and to not impose the trust would be unconscionable (see [65], [66], and Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 538). 

  • There was no joint endeavour between the Council and the applicants, who were not named on the Memorial, and to suggest that it would be unconscionable for the Council not to hold the property on trust for the applicants' benefit was untenable (at [67]).

4. Dedication of the Memorial Land as a "public place": 

  • The reasoning of the High Court in Randwick Municipal Council v Rutledge [1959] HCA 63; (1959) 102 CLR 54 in respect of the dedication of Crown land ought to also be applicable to a local government, and therefore a local government will not be taken to have dedicated land for a particular purpose and may subsequently use the land for another purpose, unless an intention to create a trust exists (at [74] to [77]). 

  • The Memorial Land was not a "public place" or a "thoroughfare" within the meaning of section 5 of the 1934 Act and the 1934 Act "did not confer power on the [C]ouncil to dedicate land it already owned". 

The Court held that an object of local government legislation includes the local government's funding of development to service its residents, whose needs may change overtime, and it would therefore be unsound to construe the legislation as requiring the creation of a trust which would prevent or restrict the Council's use of its land (at [53]). 

The applicants were not memorialists, but nevertheless had standing in the proceedings by virtue of their special interest "which [was] more than a mere intellectual or emotional concern" as they were adjoining landowners and there was potential for the removal of the carpark to impact negatively on their commercial interests (at [93] and [94]). 

The Court held that "the invocation and use of the statutory scheme of undertaking work sought by a memorial of ratepayers and funded by levying a separate rate [could not] impress the [M]emorial [L]and owned by the [C]ouncil with a trust" and that the Council was able to dispose of the carpark without complying with the requirements of section 194 of the 1999 Act because the Council's removal of the Memorial Land from the classification of "community land" was valid. 

Factual matrix and party positions 

The Memorial as was permitted under section 218 of the 1934 Act was put to the Council in 1971 seeking that the Council construct a permanent public carpark on the Memorial Land. 

In 1973, the Council undertook works to create a bituminised carpark at a cost of $10,352.44 and levied a rate of three cents in the dollar for a period of 10 years (Special Rate) to recover the cost from ratepayers within the area of the Memorial Land, including those who were not memorialists. 

The applicants alleged that the Subject Land was "community land" under section 193(1) of the 1999 Act, which relevantly provided the following: 

"(1) All local government land (except roads) that is owned by a council or under a council's care, control and management at the commencement of this section (the commencement date) is taken to have been classified as community land unless—

(a) the council resolves to exclude the land from classification as community land within three years after the commencement date; and

(b) the land is unaffected by provisions of a reservation, dedication, trust or other instrument that would prevent or restrict its alienation."

Were the Subject Land classified as "community land", the Council was prevented under section 201(2)(a)(ii) of the 1999 Act from disposing of the land, unless the classification was revoked under section 194 of the 1999 Act. 

The applicants submitted that the Council's attempt to revoke the classification of the Subject Land was contrary to section 193(1)(b) of the 1999 Act and therefore invalid because the land was affected by a trust or dedication. 

The Council denied the creation of a trust over the Subject Land, and submitted that it did not have power under the 1934 Act to declare a trust or dedication for carparking purposes over land it owned. 

No trust was declared to prevent the Council's disposal of the Memorial Land 

Although the Subject Land could not form part of the applicants' case for want of being subject to the Memorial, the Court considered the applicants' position solely in respect of the Memorial Land. 

The Court held that the Memorial did not request a carpark in perpetuity or the creation of a trust (at [80]), nor did the resolution of the Council to levy the Special Rate "declare a trust or state that the [M]emorial [L]and [had] been dedicated for the purpose of a carpark or any other purpose" (at [81]). 

The resolution of the Council to levy the Special Rate characterised the carpark as permanent works, which meant the carpark was intended to have indefinite existence rather than permanent existence (at [83]).

The Special Rate was levied by the Council according to the applicable statutory scheme under the 1934 Act, and in addition to the Council lacking power to declare a trust or dedicate land it owned, the satisfaction of an obligation to pay rates was held to be insufficient to satisfy an intention to declare a trust or dedicate land (at [39] and [84]).

The Court also held that there was "no room for equity's intervention by the imposition of [a Quistclose or constructive] trust", where the position was regulated by statute (at [62] and [67]).

However, the Court noted that had the Council received the Memorial Land as a gift or donation, the Court's decision may have been different (see [39], [50], [51], and section 380 of the 1934 Act). 

Conclusion

The Court held that no trust or dedication was established by the performance of obligations under the applicable local government legislation. As such, the Court confirmed the validity of the Council's removal of the Memorial Land from the classification of "community land" and its ability to use the land for a purpose other than a carpark, including disposing of the land.

The principles in relation to the declaration of trusts and dedication of land relied upon by the Court were enunciated by the High Court, and are therefore applicable in each Australian State and Territory. 

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.

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