Catalyst Townsville SPV No 1 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers appointed) [2025] QSC 255

SUPREME COURT OF QUEENSLAND CITATION: Catalyst Townsville SPV No 1 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers appointed); Catalyst Corinda SPV No 2 Pty Ltd v The Presbyterian Church of Queensland (receivers and managers appointed); The Presbyterian Church of Queensland (receivers and managers appointed) v Catalyst Carina SPV Pty Ltd & Anor [2025] QSC 255 PARTIES: In BS 5900 of 2021: CATALYST TOWNSVILLE SPV NO 1 PTY LTD (AS TRUSTEE FOR THE CATALYST TOWNSVILLE SPV NO 1 TRUST) ACN 621 858 839 (plaintiff) v THE PRESBYTERIAN CHURCH OF QUEENSLAND (RECEIVERS AND MANAGERS APPOINTED) (defendant) ATTORNEY-GENERAL OF QUEENSLAND (intervener) In BS 12562 of 2021: CATALYST CORINDA SPV NO 2 PTY LTD (AS TRUSTEE FOR THE CATALYST CORINDA SPV NO 2 TRUST) ACN 623 429 247 (plaintiff) v THE PRESBYTERIAN CHURCH OF QUEENSLAND (RECEIVERS AND MANAGERS APPOINTED) (defendant) ATTORNEY-GENERAL OF QUEENSLAND (intervener) In BS 14920 of 2021: THE PRESBYTERIAN CHURCH OF QUEENSLAND (RECEIVERS AND MANAGERS APPOINTED) (plaintiff) v CATALYST CARINA SPV PTY LTD (AS TRUSTEE FOR THE CATALYST CARINA SPV TRUST) ACN 629 754 632 (first defendant) -- 1 of 82 -- 2 CATALYST FINANCE SPV PTY LTD (AS TRUSTEE FOR THE CATALYST FINANCE SPV TRUST) ACN 629 766 936 (second defendant) ATTORNEY-GENERAL OF QUEENSLAND (intervener) FILE NO/S: BS 5900 of 2021 BS 12562 of 2021 BS 14920 of 2021 DIVISION: Trial Division PROCEEDING: Claim and Statement of Claim ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 3 October 2025 DELIVERED AT: Brisbane HEARING DATES: 6, 7, 8, 9, 10, 13, 14, 15, 16, 20, 21, 22, 23, and 24 November 2023, and 1 and 2 February 2024. Final documents tendered on 29 February 2024. JUDGE: Bradley J ORDERS: THE COURT DIRECTS THAT: 1. Within fourteen days, the plaintiff in BS 5900 of 2021, the plaintiff in BS 12562 of 2021, and the defendants in BS 14920 of 2021: (a) prepare a draft judgment or order in their respective proceeding: (i) to reflect the published reasons; (ii) to deal with interest on any judgment sum; and (iii) to include any order as to costs; and (b) provide a copy of the draft to the other parties in the proceeding, including the intervenor. 2. Within 14 days of receiving a draft judgment or order, each of the parties in each proceeding is to: (a) confer in person or by electronic means with the other parties about the draft judgment or order; and (b) advise the Court whether the party agrees: -- 2 of 82 -- 3 (i) that the terms of the draft reflect the published reasons; (ii) on the draft provisions dealing with interest on any judgment sum; and (iii) on any order as to costs. 3. Within 14 days of advising the Court in accordance with paragraph 2(b) above, any party that has advised the Court it does not agree about any of the matters in paragraph 2(b)(i) to (iii) above is to file and serve written submissions (limited to ten pages in length) as to the judgment or order the party contends should be made in their proceeding (or proceedings), and attach a copy of the draft judgment(s) or order(s) the party contends should be made. 4. If any party serves written submissions in accordance with paragraph 3 above, then within 14 days any other party to the same proceeding is to file and serve written submissions (limited to ten pages in length) as to the judgment or order the party contends should be made in the proceeding. CATCHWORDS: CHURCHES AND RELIGIOUS ASSOCIATIONS – CHURCH PROPERTY AND TRUSTS – TRUSTEES AND MANAGEMENT – where a corporation named “The Presbyterian Church of Queensland” is the common party in proceedings BS 5900 of 2021, BS 12562 of 2021 and BS 14920 of 2021 (the Corporation) – where the Corporation is distinct from the unincorporated religious association also known as “The Presbyterian Church of Queensland” (the Church), which is a church, and is not a party to any of the proceedings – where the Corporation owed substantial sums to the adversarial parties (the Catalyst parties) in these proceedings and was unable to pay them from readily available funds – where Court appointed receivers (the Receivers) conducted the case for the Corporation in each proceeding – where the Corporation transacted with one or more of the Catalyst parties in separate dealings concerned with the development of various retirement and aged care facilities across Queensland – where proceeding BS 5900 of 2021 concerns dealings as between the Corporation and Catalyst Townsville, associated with land in Townsville – where proceeding BS 12562 of 2021 concerns dealings as between the Corporation and Catalyst Corinda, associated with land in Corinda – where proceeding BS 14920 of 2021 concerns dealings as between the Corporation and Catalyst Carina, associated with land in Carina – where the Receivers contend the Corporation held the Carina and Townsville land as trustee of a specific charitable purpose trust – where the Attorney- -- 3 of 82 -- 4 General was given leave to intervene in the proceedings – where the Attorney-General contends the Corporation held the Carina and Townsville land on a different specific charitable purpose trust than alleged by the Receivers – where the Receivers contend, in the alternative, that the Corporation held the Carina and Townsville land on either the trust alleged by the Attorney-General or on trust for the charitable purposes of the Church – whether the Corporation held property as trustee for the purposes of the Church CHARITIES – CHARITABLE PURPOSES – ADVANCEMENT OF RELIGION – RELIEF OF AGED, IMPOTENT AND POOR – where the Corporation held property as trustee for the purposes of the Church – whether the purposes of the Church were charitable purposes – whether the general charitable purposes of the Church included the provision of relief and assistance to the aged and infirm CHARITIES – TRUSTEES OF CHARITIES – POWERS AND DUTIES – where the Corporation had no purposes of its own – where the Corporation, from time to time, held property as trustee for the general charitable purposes of the Church – where the Receivers contend the Catalyst parties cannot enforce any of their debt and damages claims because the Corporation lacked power to enter into the agreements with each of the Catalyst parties, or because the Corporation had breached its duties as a trustee when it entered into those agreements – where the Receivers contend that in its dealings with the Catalyst parties, the Corporation did not exercise the degree of caution expected of a trustee of property held for charitable purposes – whether the Corporation dealt with the trust property in accordance with the Church’s constitution – whether the Corporation exercised the caution, conservatism and restraint expected of it as trustee of a charitable purpose trust – whether each of the agreements made as between the Corporation and the Catalyst parties were imprudent, hazardous, and wholly unsuitable for a trustee of a charitable purpose trust such that the Corporation breached its duties as trustee EQUITY – GENERAL PRINCIPLES – UNCONSCIONABILITY, UNCONSCIONABLE DEALINGS AND OTHER FORMS OF EQUITABLE FRAUD – where the Receivers claimed equitable compensation and an account of profits from the Catalyst parties – where the Receivers contend the Catalyst parties acted unconscionably in persuading the Corporation to contract with them – where the Receivers contend the Catalyst parties acted unconscionably in pursuing their claims in these proceedings – whether the Catalyst parties unduly influenced or pressured the Corporation in relation to their transactions or -- 4 of 82 -- 5 agreements with the Corporation – whether the Catalyst parties’ pursuit of their claims in these proceedings was conduct sufficiently outside the societal norms of acceptable commercial behaviour so as to warrant condemnation as unconscionable Aged Care Act 1997 (Cth), ch 3A, s 52N-1 Associations Incorporation Act 1981 (Qld), s 144 Australian Charities and Not-for-profits Commission Act 2012 (Cth), s 205-5 Competition and Consumer Act 2010 (Cth), sch 2, s 22(1), (2) Australian Securities and Investments Commission Act 2001 (Cth), s 12CA, s 12CB, s 12CC Corporations Act 2001 (Cth), s 420 Human Rights Act 2019 (Qld), s 20, s 48(1) Presbyterian Church of Australia Act 1971 (Qld), s 3, s 5, sch pt II, sch pt III Presbyterian Church Property Act 1909 (Qld), s 2, s 3 Religious Educational and Charitable Institutions Act 1861 (Qld), s 1 Uniting Church in Australia Act 1977 (Qld), s 24 Amey & Ors v Fifer [1971] 1 NSWLR 685, cited Amos v Brunton (1897) 14 WN 69; 18 LR (NSW) Eq 184, cited Attorney-General (NSW) (Ex rel Elisha) v Holy Apostolic & Catholic Church of the East (Assyrian) Australian NSW Parish Association (1989) 37 NSWLR 293, cited Attorney-General (Qld) (Ex rel Nye) v Cathedral Church of Brisbane (1977) 136 CLR 353; [1977] HCA 15, considered Attorney General v Great Eastern Railway Co (1880) 5 App Cas 473; [1874-80] All ER Rep Ext 1459, cited Attorney-General v Pearson (1817) 3 Mer 353, cited Attorney-General (NSW) (Ex rel McLeod) v Grant (1976) 135 CLR 587; [1976] HCA 38, considered Attorney-General v The South Sea Company (1841) 4 Beav 453; [1841] 49 ER 414, considered Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18, considered Bailey v Uniting Church in Australia Property Trust (Qld) [1984] 1 Qd R 42, considered Bonanza Creek Gold Mining Co v The King [1916] 1 AC 566, cited Commissioner of Taxation of the Commonwealth of Australia v Bargwanna (2012) 244 CLR 655; [2012] HCA 11, cited Doctor Warren’s Case (1835) Grindrod’s Compendium, 371, cited Drummond v Attorney-General (1849) 2 HL Cas 837; [1849] 9 ER 1312, considered -- 5 of 82 -- 6 Elder’s Trustee & Executor Co Ltd v Higgins (1963) 113 CLR 426; [1963] HCA 48, cited Frackelton v Macqueen [1909] St R Qd 89, cited Free Church of Scotland (General Assembly) v Lord Overtoun [1904] AC 515, cited Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Dobrijevic (2017) 94 NSWLR 340; [2017] NSWCA 28, considered Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238, considered In re Clergy Orphan Corporation (No 2) [1894] 3 Ch 145, cited Incorporated Society v Price (1844) 1 Jo & Lat 498, cited Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25, cited Karger v Paul [1984] VR 161, cited Long v Bishop of Capetown (1863) 1 Moore NS 411; [1863] 15 ER 756, cited Macqueen v Frackelton (1909) 8 CLR 673; [1909] HCA 28, considered McSwaine v Lascelles [1895] AC 618, cited Melbourne Jewish Orphan and Children’s Aid Society Inc v ANZ Executors and Trustee Company Limited [2007] VSC 26, cited Milligan v Mitchell (1837) 3 My & Cr 72; [1837] 40 ER 852, cited Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6, considered Presbyterian Church (NSW) Property Trust v Ryde Municipal Council [1978] 2 NSWLR 387, considered President and Scholars of the College of St Mary Magdalen, Oxford v Attorney-General (1857) 6 HL Cas 189; [1859] 10 ER 1257, cited Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, cited Radmanovich v Nedeljkovic [2003] NSWSC 350, cited Re General Assembly of the Presbyterian Church of Queensland [1981] QSC 438, cited Re St Bride’s, Fleet Street, Church or Parish Estate (1877) 35 Ch D 147, cited Re James Stewarts’ Will Trusts [1962] QWN 24, cited Re Stable [1957] St R Qd 90, distinguished Re the Trusts Act of 1984 and the appointment of a new trustee in respect of the Assemblies of God in Australia (Ayr Assembly); Sirris v Malamoo [1985] QSCFC 61 (BC8521013), cited -- 6 of 82 -- 7 Re Travis; Mant v Attorney-General [1911] St R Qd 216, considered Salehi v Salehi [2023] VSC 535, cited Serbian Orthodox Ecclesiastic School Community “Saint Nikolas” Queensland v Vlaislavljevic [1970] Qd R 386, cited Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82, cited Thorne v Kennedy (2017) 263 CLR 85, cited Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565; [2007] NSWCA 117, cited Victoria Park Golf Course Inc (2001) 118 LGERA 107; [2001] QCA 528, cited Warringah Shire Council v Salvation Army (NSW) Property Trust (1943) 15 LGR (NSW) 91, considered Watson v Jones 80 US 679 (1871), cited COUNSEL: M R Hodge KC, with D C Clarry, E L Beechey, J D Byrnes, and D P Davison, for the plaintiff in BS 5900 of 2021, the plaintiff in BS 12562 of 2021, and the defendants in BS 14920 of 2021. A M Pomerenke KC and A C Stumer KC, with S J Webster and S L Walpole, for the defendant in BS 5900 of 2021, the defendant in BS 12562 of 2021, and the plaintiff in BS 14920 of 2021. A L Wheatley KC, with B J McEniery, for the intervener in BS 5900 of 2021, BS 12562 of 2021, and BS 14920 of 2021. SOLICITORS: Corrs Chambers Westgarth for the plaintiff in BS 5900 of 2021, for the plaintiff in BS 12562 of 2021, and for the defendants in BS 14920 of 2021. Allens for the defendant in BS 5900 of 2021, for the defendant in BS 12562 of 2021, and for the plaintiff in BS 14920 of 2021. Crown Law for the intervener in BS 5900 of 2021, BS 12562 of 2021, and BS 14920 of 2021. INDEX The participants in the proceedings ......................................................................................... 10 The brief facts about the transactions ...................................................................................... 11 Townsville ............................................................................................................................ 11 Corinda ................................................................................................................................. 11 Carina ................................................................................................................................... 12 Events after the Carina lease .................................................................................................... 12 The Catalyst parties’ claims ..................................................................................................... 13 The Receivers’ claims .............................................................................................................. 14 -- 7 of 82 -- 8 Summary of Findings ............................................................................................................... 15 The alleged charitable purpose trusts ................................................................................... 15 The Corporation’s dealings with the Catalyst parties .......................................................... 15 The Catalyst parties and alleged breaches of trust ............................................................... 16 Alleged unconscionable conduct in the transactions............................................................ 16 Alleged unconscionable conduct in the proceedings ........................................................... 17 AEFIPs amounts ................................................................................................................... 17 Rent and outgoings ............................................................................................................... 17 Outcome of the proceedings .................................................................................................... 18 The alleged charitable purpose trusts ....................................................................................... 18 Legal nature of the Church ................................................................................................... 18 Denominational Union 1900-1901 ................................................................................... 20 Interdenominational Union 1971-1977 ............................................................................ 20 The General Assembly ..................................................................................................... 21 Finance Board ................................................................................................................... 22 Property Board .................................................................................................................. 22 Legal nature of the Corporation ........................................................................................... 23 The RECI Act and letters patent ....................................................................................... 23 The Church and the Corporation .......................................................................................... 28 The Officeholders ............................................................................................................. 28 Property held for the purposes of a church ....................................................................... 30 The Corporation’s use of property allegedly held on a more specific charitable purpose trust ....................................................................................................................................... 31 Before the interdenominational union: 1920s to 1970s .................................................... 32 The interdenominational union: 1970s and 1980s ............................................................ 32 Creation of the PresCare Board and the PresCare organisation ....................................... 33 The Church’s exit from St Andrew’s Hospital ................................................................. 37 The Carina land ................................................................................................................ 38 The Townsville land ......................................................................................................... 39 The Corinda land .............................................................................................................. 39 Consideration of the contentions of the Attorney – the Aged Care Trust ............................ 39 Consideration of the contentions of the Receivers – the PresCare Constitution Trust ........ 40 Conclusion on the alleged charitable purpose trusts ............................................................ 42 The dealings with the Catalyst parties ..................................................................................... 43 The Townsville agreements ................................................................................................. 43 From first contact with Catalyst to the PresCare Board authorisation ............................. 44 The Corinda agreements....................................................................................................... 47 From expression of interest to heads of agreement .......................................................... 47 -- 8 of 82 -- 9 Negotiation of the transaction documents ........................................................................ 48 KPMG advice after completion ........................................................................................ 48 Events after KPMG advice ............................................................................................... 48 The adjustment amount claimed under cl 9.2 of the Corinda development agreement ... 48 The Corinda AEFIP payments .......................................................................................... 51 The Carina agreements ......................................................................................................... 51 CBA debt before negotiations for the Carina agreements ................................................ 51 Initial contact with Catalyst Carina .................................................................................. 52 Advice from KPMG ......................................................................................................... 53 Further breaches of the CBA Facilities ............................................................................ 55 Further contact with Catalyst Carina ................................................................................ 57 Further advice from KPMG.............................................................................................. 58 Further contact with Catalyst Carina and introduction of Catalyst Finance..................... 62 The Catalyst parties’ alleged breach of trust............................................................................ 65 The Receivers’ breach of trust claims .................................................................................. 65 Knowledge of a breach of trust......................................................................................... 66 Honesty and good faith ..................................................................................................... 67 Special restrictions of the sale of trust property including land ....................................... 67 Hazardous or speculative investment ............................................................................... 69 Imprudent, hazardous, and wholly unsuitable agreements with substantial risk.............. 69 Alleged unconscionable conduct in the transactions ............................................................... 72 The Receivers’ unconscionable conduct claims................................................................... 72 Catalyst’s position ................................................................................................................ 74 The Corporation’s position................................................................................................... 74 CEO Mr Skelton ............................................................................................................... 75 CFO Mr Lynch ................................................................................................................. 75 Financial Controller Mr Playford ..................................................................................... 75 COO Mr Bosel .................................................................................................................. 75 GM Property Development Ms Wilkinson....................................................................... 76 General Counsel Ms Hickey ............................................................................................. 76 KPMG............................................................................................................................... 76 McCullough Robertson..................................................................................................... 76 Board supervision ............................................................................................................. 76 The information .................................................................................................................... 77 The transactions.................................................................................................................... 78 Alleged exploitation ......................................................................................................... 79 Alleged unconscionable conduct in the proceedings ............................................................... 80 -- 9 of 82 -- 10 Conclusion on unconscionable conduct claims .................................................................... 80 Rent and outgoings .................................................................................................................. 81 Corinda triple net lease ..................................................................................................... 81 Townsville and Carina RACFs ......................................................................................... 81 Final disposition ....................................................................................................................... 82 The participants in the proceedings [1] A corporation with the name “The Presbyterian Church of Queensland” is the common party in each of these three proceedings.1 It is not a church, but a corporation aggregate comprised of three religious officeholders (collectively, the Officeholders). It is convenient to refer to this entity as the Corporation. This title distinguishes it from the unincorporated religious association also known as “The Presbyterian Church of Queensland”, which is a church, and is not a party to any of the proceedings. It is convenient to refer to this religious association as the Church. [2] In May 2021, the Court appointed Michael Owen and Philip Carter of PricewaterhouseCoopers (the Receivers) as receivers and managers of all the assets, property, and undertakings of the Corporation. Since then, the Receivers have had power to bring or defend any proceedings for the purpose of obtaining the objective for which they were appointed.2 In each proceeding, the Receivers conducted the case for the Corporation. In these reasons, for convenience, the claims, defences, contentions, and submissions made on behalf of the Corporation in the proceedings are referred to as the claims, defences, contentions and submissions of the Receivers, and counsel for the Corporation are referred to as counsel for the Receivers. [3] The Court appointed the Receivers on the basis that the Corporation owed substantial sums to the adversarial parties in these proceedings and was unable to pay them from readily available funds. It is convenient to refer to those adversaries collectively as the Catalyst parties. Each of the Catalyst parties was a special purpose company and the trustee of a specific trust. Each was related to the other Catalyst parties as a subsidiary of a common parent company.3 [4] The Court gave the Attorney-General (the Attorney) leave to intervene in the three proceedings to assist the Court on three matters raised by the Receivers. These were: (a) the existence and composition of any alleged charitable trust or trusts; (b) whether the transactions between the Corporation and the Catalyst parties are liable to be set aside as having been ultra vires or void, or alternatively, entered into by the Corporation in breach of trust; and (c) the remedies available to the Corporation. 1 It is the defendant in BS 5900 of 2021 and in BS 12562 of 2021. It is the plaintiff in BS 14920 of 2021. 2 Corporations Act 2001 (Cth), s 420(2)(k). 3 By the commencement of these proceedings, the common parent was M.H. Carnegie & Co Management Pty Ltd (Carnegie). -- 10 of 82 -- 11 [5] Otherwise, the Attorney did not seek to become a party. In particular, the Attorney did not seek to enforce any charitable purpose trust or grant her fiat to another person to do so, despite alleged breaches of trust, including by the Corporation as trustee, some allegedly induced by one of the Catalyst parties. The brief facts about the transactions [6] Most of the relevant facts about the transactions involving the Corporation and one or more of the Catalyst parties are not in dispute. They are set out in some detail at [208] to[353] below. In each proceeding the relevant dealings had a specific geographic focus. In BS 5900 of 2021 the dealings concerned land in Townsville; in BS 12562 of 2021, land in Corinda; and in BS 14920 of 2021, land in Carina. Townsville [7] In December 2017, a Catalyst party4 (Catalyst Townsville) paid the Corporation $1.5 million to buy vacant land at Douglas in Townsville (the Townsville land). The Corporation agreed to lease the land from Catalyst Townsville for a term of 40 years and to pay all expenses related to the land, including insurance, land taxes, rates, utilities, and maintenance. The parties called this a triple net lease. They agreed on the rent and a mechanism by which the Corporation could repurchase the land during the lease. Catalyst Townsville agreed to advance funds to the Corporation to pay for the construction of a retirement and aged care facility (RACF) on the Townsville land (the Townsville RACF). The two parties agreed on a schedule of Advance Equity Funding Instalment Payments (AEFIPs) over ten years, by which the Corporation would repay the loan. The Corporation engaged a builder5 (Woollam) to construct the Townsville RACF. [8] Between December 2017 and September 2019, Catalyst Townsville advanced about $31 million to the Corporation to pay Woollam for that work. The Corporation occupied the Townsville land and operated the Townsville RACF from about 20 March 2019 until 6 October 2021. Corinda [9] In April 2018, another Catalyst party6 (Catalyst Corinda) bought vacant land at Corinda in Brisbane (the Corinda land) from an unrelated company7 for $4.2 million. At the end of April 2018, the Corporation agreed to lease the Corinda land from Catalyst Corinda under a 40-year triple net lease. They agreed on the rent and a mechanism by which the Corporation could purchase the Corinda land during the lease. Catalyst Corinda agreed to advance between $28 and $35 million to the Corporation to pay for the construction of an RACF on the Corinda land (the Corinda RACF). The Corporation agreed to give Catalyst Corinda notice of the total amount it intended to borrow to construct the Corinda RACF closer to practical completion. Catalyst Corinda 4 The plaintiff in BS 5900 of 2021, Catalyst Townsville SPV No 1 Pty Ltd (as trustee for the Catalyst Townsville SPV No 1 Trust). 5 T. F. Woollam and Sons Pty Ltd. 6 The plaintiff in BS 12562 of 2021 Catalyst Corinda SPV No 2 Pty Ltd (as trustee for the Catalyst Corinda SPV No 2 Trust). 7 Although the Corporation had once owned this land, it had sold it almost 20 years before Catalyst Corinda acquired it. -- 11 of 82 -- 12 agreed to give the Corporation a schedule setting out the AEFIPs over ten years, by which the Corporation would repay the loan. Catalyst Corinda undertook that the schedule would use the same calculation methodology used for the loan to construct the Townsville RACF. [10] Between December 2018 and May 2020, Catalyst Corinda advanced the Corporation about $25 million for the Corporation to pay Woollam to build the Corinda RACF. Shortly before practical completion, Catalyst Corinda agreed to forebear, for a period of 12 months from practical completion, from seeking to recover any amount owing by the Corporation. On 3 April 2020, Woollam completed the Corinda RACF. The Corporation never occupied or operated it. Carina [11] In December 2018, another Catalyst party8 (Catalyst Finance) loaned $27 million to the Corporation to enable it to repay a loan the Corporation owed to the Commonwealth Bank (CBA). The Corporation gave Catalyst Finance security over land it owned at Carina. Between 2008 and 2009, the Corporation had built an RACF (the Carina RACF) on part of that land (the Carina land). In September 2019, Catalyst Finance loaned another $500,000 to the Corporation, secured in the same way. [12] In April 2020, the Corporation sold the Carina land to another Catalyst party9 (Catalyst Carina) for $33 million. The Corporation used most of the proceeds from the sale to repay the $27.5 million loan from Catalyst Finance. The Corporation agreed to lease the Carina land from Catalyst Carina under a 40-year triple net lease. They agreed on the rent and a mechanism by which the Corporation could purchase the Carina land during the lease. The Corporation occupied and operated the Carina RACF under the lease from about 21 April 2020 until 6 October 2021. Events after the Carina lease [13] Within a year of the sale of the Carina land, it was clear that the Corporation would not be able to operate the Townsville, Corinda, and Carina RACFs, and meet its obligations to the Catalyst parties under the three triple net leases and the two AEFIPs schedules. [14] In December 2020, the Corporation told the Catalyst parties that it held at least some of its assets as a trustee. In January 2021, the Corporation wrote to the Catalyst parties about legal advice it had received “regarding certain assets that [the Corporation] holds on trust and which are not available to [the Corporation] generally.” The Corporation set out a proposal that the Corporation would make “available to Catalyst the total net financial capacity from its denominational (available) assets.” The concepts of denominational property and congregational property are considered at [91] below. [15] On 9 April 2021, the Corporation and the Catalyst parties agreed to compromise the Catalyst parties’ then claims on terms in a written agreement (the HOA). The HOA was subject to a condition precedent,10 which was not satisfied or waived by the agreed date.11 The compromise did not become effective. 8 Catalyst Finance SPV Pty Ltd (as trustee for the Catalyst Finance SPV Trust). 9 Catalyst Carina SPV Pty Ltd (as trustee for the Catalyst Carina SPV Trust). 10 That the Commonwealth provide certain funding. 11 12 May 2021. This date had been extended by agreement from 23 April 2021. -- 12 of 82 -- 13 [16] However, the parties had agreed to be bound by some terms of the HOA regardless of satisfaction of the condition precedent. Those binding terms included terms to the effect that an amount of $12.39 million, payable by the Corporation to Catalyst Townsville in certain circumstances, and another amount (now determined to be $14.36 million), payable by the Corporation to Catalyst Corinda in certain circumstances, “will be deemed to be immediately due and payable” by the Corporation to the relevant Catalyst party on termination of the HOA. These amounts are collectively referred to as the AEFIP Payout Amounts. [17] On 12 May 2021, the HOA was terminated save for the terms referred to in [16] above, which remained operative. That day, the Court appointed the Receivers on the basis that the Corporation owed the AEFIP Payout Amounts to two of the Catalyst parties and was unable to pay them from readily available funds. [18] Under the Receivers’ control, the Corporation continued to pay rent and outgoings pursuant to the Townsville and Carina triple net leases until 30 June 2021. The Corporation did not pay rent after this date. On 26 July 2021, Catalyst Townsville and Catalyst Carina terminated those leases. Catalyst Corinda terminated its triple net lease the same day. [19] The Corporation continued to occupy and operate the Townsville and Carina RACFs until 6 October 2021. That day, the relevant Catalyst parties completed the sale of the Townsville, Corinda, and Carina land, including the RACFs, to an unrelated company12 for about $100 million. The Catalyst parties’ claims [20] Catalyst Townsville and Catalyst Corinda claimed the AEFIP Payout Amounts as debts owed by the Corporation. [21] Catalyst Townsville and Catalyst Carina claimed rent and outgoings payable under the Townsville and Carina triple net leases for the period from 1 to 25 July 2021.13 [22] They also claimed a further amount14 from the Corporation, contending that the Corporation had occupied the Townsville15 and Carina16 RACFs from 26 July to 6 October 2021 under an implied agreement with each of them that the Corporation would continue to pay rent and outgoings. Alternatively, they claimed this amount as restitutionary damages based on an alleged understanding that the Corporation was obliged to pay something for the continued occupation of the RACFs. [23] Catalyst Corinda also claimed five unpaid AEFIPs17 and rent and outgoings under the Corinda triple net lease for the period from 3 April 2020 to 25 July 202118. 12 St Vincent’s Care Services Ltd (St Vincent’s). In the period up to December 2021, the Receivers sold chattels associated with the operation of the RACFs on the Townsville and Carina land to St Vincent’s. 13 Townsville lease: $100,186.90 rent and $42,476.64 outgoings. Carina lease: $153,913.05 rent and $67,188.47 outgoings. 14 $1,002,788.68. 15 The claim for Townsville is $364,152.99 for occupation rent; and $50,036.14 for outgoings. 16 The claim for Carina is $513,729.07 for occupation rent; and $74,870.48 for outgoings. 17 5 x $567,000 = $2,835,000. 18 $1,185,318.50 rent and $139,740.80 outgoings. -- 13 of 82 -- 14 [24] As counsel for the Catalyst parties noted, there was little reference to the Catalyst parties’ claims during the trial. The focus of the opening submissions, the three weeks of evidence, the closing written submissions (which totalled 981 pages in length), and the final oral submissions was the defences, counterclaims, claims, and allegations of the Receivers directed to defeat the Catalyst parties’ claims. The Receivers’ claims [25] The Receivers contended that the Corporation held the Carina land and the Townsville land as trustee of a specific charitable purpose trust that the Receivers called the PresCare Constitution Trust (the PC Trust). In the alternative, the Receivers contended that the Corporation held the land on the trust alleged by the Attorney (see [26] below). In the further alternative, they contended the land was held on trust for the charitable purposes of the Church. [26] As intervener, the Attorney submitted that the Corporation held the relevant land as trustee of a different specific charitable purpose trust, which the Attorney called the Aged Care Trust (the AC Trust). In the alternative, the Attorney submitted that the property was held on the PC Trust. [27] The Receivers alleged that the Catalyst parties could not enforce any of their claims because the Corporation lacked power to enter into the agreements with each of the Catalyst parties, or because the Corporation had breached its duties as a trustee when it entered into those agreements. [28] The Receivers alleged each agreement with a Catalyst party was imprudent, hazardous, and wholly unsuitable for a trustee of a charitable purpose trust. They alleged that the Corporation did not exercise the caution, conservatism and restraint expected of it as trustee of a charitable purpose trust. They alleged that, in entering into those agreements, the Corporation exposed the trust property to substantial risk without any reasonably assured outweighing benefit. [29] The Receivers also contended that Catalyst Townsville and Catalyst Carina could not enforce their respective contractual rights over the Townsville land and the Carina land because the related transactions were not beneficial to the charitable purposes of the PC Trust or any of the alternatively alleged trusts. [30] As well, the Receivers alleged that Catalyst Townsville and Catalyst Carina purchased the land knowing of circumstances that would have indicated to an honest and reasonable person that the Corporation was a trustee of a charitable purpose trust and that the transactions were in breach of trust. The Receivers also alleged that the Catalyst parties induced the Corporation to breach its duties as trustee. [31] Separately, the Receivers alleged that the Catalyst parties acted unconscionably in their dealings with the Corporation, in persuading it to contract with them, and in the terms of the agreements. They also alleged that Catalyst Corinda pressured the Corporation to make the agreements about the Corinda land. [32] Finally, the Receivers contended that the Catalyst parties had acted unconscionably in pursuing their claims in these proceedings, given the internal rate of return the Catalyst parties enjoyed on the funds invested through the transactions. -- 14 of 82 -- 15 [33] On these bases, the Receivers claimed equitable compensation and an account of profits from the Catalyst parties. The Receivers also asked the Court to rescind the land sale, triple net lease, and finance agreement for the Townsville land and most of the agreements about the Corinda land. Summary of Findings [34] For the reasons that follow, the parties’ claims should be determined in this way. The alleged charitable purpose trusts [35] The Corporation did not hold the Carina land or Townsville land (or any other relevant property) as trustee of the alleged PC Trust or the alleged AC Trust. [36] From time to time, the Corporation held property, including the relevant estates or interests in the Corinda, Carina, and Townsville land, for the charitable purposes of the Church and in accordance with the Church’s constitution. The Receivers called this a general charitable trust for the purposes of the Church. [37] The Corporation only acted as a trustee. It had no purposes of its own, distinct from its role to hold property as trustee for the purposes of the Church. The Corporation’s dealings with the Catalyst parties [38] The Corporation sold the Townsville and Carina land to the relevant Catalyst parties, leased that land and the Corinda land, and applied other property to meet its obligations under the transactions with the Catalyst parties, for the charitable purposes of the Church and in accordance with the Church’s constitution. [39] The evidence did not show that, in doing so, the Corporation acted other than in good faith, responsibly and reasonably, and exercising the degree of caution expected of a trustee of property held for such charitable purposes. [40] The Corporation applied the moneys raised by the sale of the Townsville and Carina land for those charitable purposes, including discharging debts incurred for those charitable purposes. It did so in accordance with the Church’s constitution. [41] The Corporation’s transactions with the Catalyst parties were not imprudent, hazardous, or wholly unsuitable for the Corporation acting as trustee of property for the charitable purposes of the Church. [42] The evidence did not support the Receivers’ suggestion that the Corporation sold the Townsville or the Carina land at an undervalue. [43] In doing these things, the Corporation did not breach the duties it owed as trustee of the relevant property. The same conclusion would be reached, had the Corporation held the relevant property as trustee of the alleged AC Trust or the alleged PC Trust. -- 15 of 82 -- 16 [44] In the circumstances found at [38] to[43] above, the Corporation had power to complete the transactions with the Catalyst parties.19 The Catalyst parties and alleged breaches of trust [45] The Catalyst parties did not have subjective knowledge of circumstances that would indicate to an honest and reasonable person that the Corporation’s entry into the Townsville, Corinda or Carina transactions was a misapplication of trust property or a transfer of property in breach of trust. [46] In the circumstances set out in [38] to [44] above, the Catalyst parties did not induce or procure the Corporation to breach the duties it owed as trustee of the relevant land and other property. Alleged unconscionable conduct in the transactions [47] The relative strengths of the bargaining positions of the Corporation and the Catalyst parties were not such that the Corporation was at a situational disadvantage. The Corporation did not suffer from an asymmetry of information in any of the transactions with the Catalyst parties. [48] The PresCare executives acting for the Corporation were able to understand the documents relating to the transactions. Through them, the Corporation had access to and the benefit of internal and external professional advice on the transactions and the documents. Those acting for the Corporation and those advising them were aware they were proposing that the Corporation transact with each of the Catalyst parties in a manner that was commercial in nature, namely selling and leasing land, and borrowing funds to build new RACFs or to repay existing debts. They did not ask any of the Catalyst parties to transact with the Corporation on terms other than commercial terms and the Catalyst parties did not offer to do so. [49] The Catalyst parties did not take advantage of any disadvantage or lack of information on the part of those acting for and advising the Corporation in a way that calls for the Court to protect the Corporation. [50] The Catalyst parties did not victimise the Corporation or engage in conduct that resulted in the Corporation being required to comply with conditions that were not reasonably necessary for the protection of the Catalyst parties’ legitimate interests. There was no satisfactory evidence to the contrary. There was evidence, albeit limited, that another provider of equivalent facilities and services did so on similar terms. [51] The Catalyst parties did not exercise undue influence on or pressure the Corporation in relation to the transactions or agreements. They did not use unfair tactics. [52] In the circumstances found at [47] to [51] above, none of the Catalyst parties conducted itself in a way sufficiently outside the societal norms of acceptable commercial behaviour to warrant condemnation of its conduct as offensive to conscience. 19 Including the sale and lease back of the Townsville land, the borrowing to finance building the Townsville RACF, the lease of the Corinda land, the borrowing to finance building the Corinda RACF, and the charging and the sale and lease back of the Carina land. -- 16 of 82 -- 17 Alleged unconscionable conduct in the proceedings [53] Before those acting for the Corporation began to negotiate any transaction documents with any of the Catalyst parties, they knew the Catalyst parties’ purpose was to attract funds to make long-term investments in aged care facilities with agreed rates of return on the investors’ funds. It was obvious that, if the Corporation defaulted on a triple net lease or the AEFIPs, it would deny the Catalyst parties this outcome. [54] The Catalyst parties spent months negotiating the relevant transaction documents with those acting for the Corporation. Before the first legally binding agreement was made, between Catalyst Townsville and the Corporation, it was apparent to those acting for the Corporation that what became the AEFIPs could operate to the benefit of Catalyst Townsville if the Corporation defaulted or exercised the right to purchase the land early in the term of the triple net lease. These were the circumstances in which the Corporation and Catalyst Townsville agreed on the calculation of what became the AEFIP Payout Amounts and when they would become due and payable. [55] The Receivers did not show that the internal rates of return to any of the Catalyst parties over the period it held its investment in the Townsville, Corinda, or Carina land ameliorated the consequences of the loss of a lower longer-term rate of return to an extent that would make it unconscionable for the relevant Catalyst party to insist on it legal rights. [56] By the HOA, the Corporation agreed the circumstances in which the AEFIP Payout Amounts would become due and payable. Before then, the Corporation had offered to make all the denominational property available to satisfy the debts claimed by the Catalyst parties. [57] In the circumstances found at [53] to [56] above, the Catalyst parties’ pursuit of their claims in these proceedings was not conduct sufficiently outside the societal norms of acceptable commercial behaviour so as to warrant condemnation as unconscionable. AEFIPs amounts [58] The AEFIP Payout Amounts became due and payable under the HOA when it was terminated on 12 May 2021. [59] The amount due to Catalyst Corinda was not fixed until the AEFIP Schedule was provided on 4 June 2021. This also fixed the amount of the quarterly AEFIPs to repay the Catalyst Corinda loan that had accrued since completion of the Corinda RACF and confirmed the adjustment amount payable to Catalyst Corinda. Rent and outgoings [60] Although the Corporation did not occupy the Corinda RACF, under the triple net lease it became liable to pay rent and outgoings to Catalyst Corinda from the construction completion date of 3 April 2020. Catalyst Corinda terminated the lease on 25 July 2021. The rent payable for the period 3 April 2020 to 25 July 2021 is $1,185,318.50. The outgoings payable for that period are $139,740.80. [61] The Corporation did not impliedly agree with Catalyst Townsville or Catalyst Carina that the Corporation would pay rent and outgoings for the further period, during which -- 17 of 82 -- 18 the Corporation occupied and operated the Townsville RACF or the Carina RACF after 25 July 2021. Nor did the Corporation occupy or operate the RACFs on the understanding that it was obliged to pay something for the occupation of the property. The Corporation’s continued operation of each RACF from 26 July to 6 October 2021 benefited the relevant Catalyst party. This allowed it to sell the Townsville or the Carina land with the RACF as a going concern, without incurring the cost of operating the RACFs over that period. The Corporation does not owe the Catalyst parties the $1,002,788.68 claimed for “occupation rent” and outgoings for this period. Outcome of the proceedings [62] The Receivers have failed in their defences (in BS 5900 of 2021 and BS 12562 of 2021) and their claim (in BS 14920 of 2021) and the Catalyst parties have failed in their claims for occupation rent and outgoings, but otherwise succeeded in their claims (in BS 5900 of 2021 and BS 12562 of 2021) and their counterclaim (in BS 14920 of 2021). [63] The reasons for these findings are set out below. The alleged charitable purpose trusts [64] Counsel for the Attorney submitted that the Corporation constituted itself as trustee of the AC Trust in about 1929, when the Corporation received a gift of real property from William Robert Black. Counsel for the Receivers submitted that, in about 1998 or 1999, the Corporation constituted itself as trustee of the PC Trust. By each, it was contended that the Corporation held the Carina land (from 1999 or from 2006) and Townsville land (from January 2016) as trustee of the alleged trust. [65] No declaration of trust, no deed of gift, no testamentary bequest, and no other trust instrument was produced for either of these alleged specific charitable purpose trusts. [66] In the absence of evidence that either trust was created, the Attorney and the Receivers relied on the legal nature of the Church and the Corporation and their dealings with relevant property to propound their respective cases. The existence, terms, and nature of any trust on which the Corporation held the relevant property may be discerned from how the Corporation dealt with the property, said to have been the subject of each alleged trust.20 These matters are considered below. Legal nature of the Church [67] In November 1863, Christian adherents within the presbyterian tradition met in Brisbane and formed the Church.21 They were ministers and elders from local congregations 20 Radmanovich v Nedeljkovic [2003] NSWSC 350 at [151]-[153] (Barrett J); Re St Bride’s Fleet Street (1877) 35 Ch D 147 (Jessel MR). 21 The derivation of the various presbyterian churches with which the persons who formed the Church had formerly worshipped are of historical interest only. However, the Church was never an established church. The relevant conduct occurred after the grant of a representative legislature and responsible government in Queensland. It follows that the body of law relating to real property (and certain other property) held by an established church for its purposes and the exercise by the Crown of prerogative power independent of legislative authorisation has little relevance for the present disputes. -- 18 of 82 -- 19 deriving from the Church of Scotland,22 the Free Church of Scotland23 and the United Presbyterian Church of Scotland.24 The ministers and elders formed the Church on the basis of a written instrument (the 1863 Basis of Union)25 and certain rules and forms of procedure (the Code).26 [68] The 1863 Basis of Union identified the scriptures in the Old and New Testaments as the Supreme Standard, and the Westminster Confession of Faith27 (which it called the Church’s confession of faith), as the Subordinate Standard, of the Church. The Church’s fundamental tenets of faith in the Westminster Confession included its form of internal government by synod or assembly of ministers and elders.28 This distinguishes churches in the presbyterian tradition from churches in the episcopal tradition, where bishops have higher or final authority, and from those in the congregational tradition, where final authority lies with the whole body of the church or congregation.29 The ministers and elders constituted themselves as the Synod of the Church and appointed the first Moderator. The Church has upheld this form of government since its formation. [69] Since its formation, the Church has been a voluntary unincorporated association. It has no legal personality distinct from its members from time to time.30 The Church could not contract with a legal person, and any attempt to do so would be a nullity.31 It could not acquire or hold property. An individual or a body corporate could hold property on trust for the purposes of the Church because the advancement of religion32 is prima facie a charitable purpose, and the Church’s purposes likely included other charitable objects. 22 Established in 1560 during the Scottish Reformation. In 1840, a Synod of Australia in connexion with the established Church of Scotland was formed pursuant to a recommendation of the General Assembly of the Church of Scotland: Presbyterian Temporalities Act 1840 (NSW) 4 Vic No. 18. 23 Formed in 1843 by a schism from the Church of Scotland. 24 Formed in 1847 by the merger of the United Associate Synod of the Secession Church (United Secession Church) with the Presbytery of Relief (Relief Church). The United Secession Church had been formed in 1820 by the union of two groups (the New Licht Burghers and the New Licht Anti-Burghers) that had emerged following the first secession from the Church of Scotland in 1732-33. The Relief Church was founded in 1761 in the second secession from the Church of Scotland. 25 In some documents, this instrument is referred to as the “Articles of Union”. 26 The Code comprised the Rules and Forms of Procedure of the Victorian Presbyterian Church “as far as they were applicable to the Church in Queensland.” At the times material for these proceedings, the Code was titled “The Presbyterian Church of Queensland Standing Orders and Rules and Forms of Procedure”. 27 The Westminster Confession of Faith agreed upon by the assembly of Divines at Westminster, with the assistance of Commissioners from The Church of Scotland. This statement was approved by the General Assembly of the Church of Scotland in 1647. It was ratified by the Confession of Faith Ratification Act 1690 (Scotland) [1690 c 7]. 28 Westminster Confession, Ch XXXI, cl I, III, and Ch XXV, cl VI. 29 Attorney-General (NSW) (Ex rel Elisha) v Holy Apostolic & Catholic Church of the East (Assyrian) Australian NSW Parish Association (1989) 37 NSWLR 293 at 314–315 (Young J), adopting the categorisation of Miller J in Watson v Jones 80 US 679 (1871). This formulation was cited with apparent approval by Payne JA in Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Dobrijevic (Dobrijevic) (2017) 94 NSWLR 340, 360-361 [110]-[111] (Ward and Gleeson JJA agreeing). 30 Amos v Brunton (1897) 18 LR (NSW) Eq 184, 186-7; 14 WN (NSW) 69, 70 (Manning CJ in Eq); Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565, 576 [47]-[48] (Mason P; Ipp and McColl JJA agreeing). 31 Amey & Ors v Fifer & Ors [1971] 1 NSWLR 685, 685-686 (Sugerman P; Mason JA and Taylor AJA agreeing). 32 It has been assumed that the courts have no means of judging whether a religion is or is not for the public good, save for extreme cases. The courts proceed on the assumption that a trust for the advancement of religion is in the public interest, provided the religious beliefs, principles, observances or standards of conduct that are not illegal or contrary to law. -- 19 of 82 -- 20 [70] In 1868, the Church renamed the Synod as the General Assembly.33 The General Assembly has the power to set down rules and directions for the government of the Church. Since 1863, these have been set out in the Code which the General Assembly has amended from time to time. Denominational Union 1900-1901 [71] In 1900, the Church agreed to unite with other churches in the presbyterian tradition in the colonies of New South Wales, Victoria, and Tasmania and the Province of South Australia, by adopting a common Basis of Union and Articles of Agreement (together the 1900 Basis of Union). It shared the features of the 1863 Basis of Union noted at [67] and [68] above. [72] In July 1901, by a Deed of Union, the Church surrendered to the Presbyterian Church of Australia (the National Church) the power to determine finally in matters of doctrine, worship, and discipline. By this denominational union, the Church and presbyterian churches in New South Wales, Victoria, South Australia, Tasmania, and also Western Australia, became the members of the National Church. Like the Church, the National Church was an unincorporated association. [73] The denominational union was facilitated by legislation in Queensland34 and the other colonial Parliaments,35 which gave the 1900 Basis of Union full force and effect of law from 24 July 1901. As a constituent part of the National Church, the Church was governed under the 1900 Basis of Union, which set out how the National Church and the Church were organised and the way in which they could make decisions. [74] In the 1900 Basis of Union, the constitution of the National Church established a “federal ecclesiastical structure”,36 such that: “The local General Assemblies shall retain their present names, and their autonomy shall not be further interfered with than is needful to give effect to the [1900] Basis of Union”. Interdenominational Union 1971-1977 [75] In 1971, the Church agreed with the other members of the National Church to offer Church congregations and members the opportunity to become part of a larger church including adherents to other Christian churches outside the presbyterian tradition. The offer was facilitated by the Presbyterian Church of Australia Act 1971 (Qld) (the PCA Act) and similar legislation in other States. [76] The PCA Act authorised the general assembly of the National Church to negotiate with other branches of the Christian church with a view to entering into an 33 Re General Assembly of the Presbyterian Church of Queensland [1981] QSC 439 at [2] (Campbell J). 34 Presbyterian Church of Australia Act 1900 (Qld). 35 See, for example: Presbyterian Church of Australia Act 1900 (NSW), s 1. 36 See the Preamble to the Presbyterian Church of Australia Act 1971 (Qld). The “federal” description of the denominational union was that of Isaacs J in Macqueen v Frackelton (1909) 8 CLR 673 (Macqueen), 705. It was adopted by Gibbs J in Attorney-General (NSW) (Ex rel McLeod) v Grant (1976) 135 CLR 587, 592. Clause 11 of the 1900 Basis of Union was similarly summarised by Chubb J in Frackelton v Macqueen [1909] St R Qd 89, 125, which was quoted without challenge by Griffith CJ in Macqueen at 683. -- 20 of 82 -- 21 interdenominational union.37 In the event of an interdenominational union, the PCA Act required the general assembly of the National Church to provide just and equitable safeguards of the rights of certain communicants who did not support the interdenominational union and were able to continue as a congregation or as congregations within a national church under the 1900 Basis of Union (the Continuing National Church), and not as part of the church to be formed by the interdenominational union. [77] The PCA Act also gave statutory effect to amendments to the 1900 Basis of Union in a form set out in a schedule and reflected in the Code. It is convenient to refer to this as the 1971 Basis of Union. This included that each of the State-based synods (including the General Assembly of the Church) was authorised to “exercise executive, administrative, pastoral and disciplinary functions over the Church within their bounds”, subject to the 1971 Basis of Union.38 The General Assembly continued to be the final decision-maker “except in cases of doctrine and/or discipline that carry deposition or excommunication as possible judgments”, which were reserved to the general assembly of the Continuing National Church. 39 This did not affect the relevant matters noted at [67] to [74] above about the 1863 Basis of Union and the 1900 Basis of Union, which remained unchanged. [78] In 1977, the interdenominational union proceeded with the formation of the Uniting Church in Australia (the Uniting Church). Since then, the Church has comprised the congregations of the Continuing National Church in Queensland under the 1971 Basis of Union. This development affected property the Corporation then held on trust for the Church in the way considered at [139] to [146] below. The General Assembly [79] The General Assembly governs the Church. It meets annually, and otherwise if convened. [80] The General Assembly may appoint from time to time: “such committees as they think fit, prescribing membership, purpose and duties and giving other directions usually in the form of regulations.”40 [81] The General Assembly allocates responsibility for property and funds to its committees and boards by specific resolution or by including specific provision in the Code. These bodies then administer the allocated property or funds as authorised by the General Assembly. [82] The committees and boards established by the General Assembly supervise the various “departments” also established by the General Assembly. Those “departments” sit within the “Church office” composed of groups of staff with identified duties. [83] The General Assembly appoints a Commission of Assembly (the Commission) that supervises the committees and boards of the General Assembly between those meetings 37 PCA Act, Schedule, Part III, s 15. 38 PCA Act, Schedule, Part II, s 9(4). 39 PCA Act, Schedule, Part II, s 13. 40 PCA Act, Schedule, Part II, s 12. -- 21 of 82 -- 22 and transacts any “emergent and urgent business so that the work of the Church may not be retarded.” [84] Like the General Assembly, none of its committees, boards or the Commission is a legal entity. Nor is any department. [85] Among the boards that featured in the dealings between the Corporation and the Catalyst parties were the Finance Board and the Property Board. Finance Board [86] The General Assembly elects the members of the Finance and Administration Board41 (the Finance Board). The Finance Board has primary responsibility for the finances of the Church. It appoints the key management staff of the Church’s Finance and Administration Department and the auditor of the accounts and books of the General Assembly, its committees, and boards. [87] The Finance Board reports to the General Assembly on the balances of the various funds and accounts. It directs the investment of the Church’s funds, and it administers those funds and the enterprises and projects allocated to it by the General Assembly. Subject to a decision of the General Assembly, the Finance Board determines the rates of interest, the terms and conditions, and the security, on which the Corporation may borrow from time to time. [88] From time to time, the Corporation may borrow such sums of money, at such rates of interest, and upon such terms and conditions, and upon such security as the Finance Board or the General Assembly may determine. The approval of the Property Board must first be obtained, if the security is a mortgage of land. Property Board [89] The General Assembly elects the members of the Property Board. The Property Board has administrative oversight of all denominational property of the Church and works cooperatively with the Finance Board in relation to all financial matters relating to property. The Property Board advises on the acquisition of land for future development of the Church and consults with the other relevant Church bodies before granting approval. It may also authorise any Church agency to administer a particular property on its behalf from time to time. [90] The Property Board approves the vesting in the Corporation of any land gifted to or acquired by a Church body. It may approve a request that the Corporation hold land on trust for the Church. With the prior approval of the Property Board, all land gifted to or acquired by a congregation, charge, or board or committee of the General Assembly is to be vested in the Corporation. [91] The Code distinguishes “congregational property” from “denominational property”. (a) Property held by the Corporation (or other trustees) for the purposes of a particular congregation of the Church is congregational property. When the Corporation holds congregational property, it “can only be sold, mortgaged, purchased or dealt 41 Formerly the “Board of Finance”. -- 22 of 82 -- 23 with in any way whatsoever provided the action is carried out in terms of … the Code.” (b) Property held by the Corporation for the charitable purposes of the Church is denominational property. Denominational property is “given over” to the committees and boards of the General Assembly to which the General Assembly has allocated responsibility. The Code provides that, “[t]hese bodies do not own any property but simply administer such property as authorised by the Assembly.” Indeed: “the Assembly has the power to change the body that administratively runs and/or uses the particular resource by changing the necessary sections of the Code, either Rules, Regulations or Constitutions.” [92] Gregory Rodgers42 explained his understanding that denominational property was “owned by the State Church”, and congregational property was “owned by a congregation.” [93] The consent of the Property Board is required for the investment of Church funds by way of the purchase, sale, lease or mortgage of any freehold or leasehold property. [94] The approval of the Property Board is required before the Corporation may grant security over land for any borrowing. Legal nature of the Corporation The RECI Act and letters patent [95] By the Religious Educational and Charitable Institutions Act 1861 (Qld) (the RECI Act), the Parliament authorised the Governor, with the advice of the Executive Council (relevantly) to: “issue Letters Patent … and therein to declare that any person or persons and their successors for ever holding any religious … office … to which he or they shall have been duly called or appointed in accordance with the rights laws rules or usages of the community or institution to which such person or persons should belong … shall be a body corporate by such name and style as may in and by the said Letters Patent be given to such Corporation and such person or persons shall by that name have perpetual succession and a common seal.”43 [96] The officers of any unincorporated charitable body could request letters patent under the RECI Act provisions. 42 Former Moderator, PresCare Board chair and member, and Finance Board member. 43 RECI Act, s 1. -- 23 of 82 -- 24 [97] In 1876, the Corporation was incorporated by letters patent issued pursuant to the RECI Act.44 The letters patent recited the above provision from the RECI Act and then two factual matters: (a) First, that it had been represented to the Crown that three named persons45 “hold and exercise the offices of Moderator, Clerk, and Treasurer of the Presbyterian Church of Queensland” and had been appointed to those respective offices “in accordance with the rites, laws, rules, and usages of the said General Assembly of the Presbyterian Church of Queensland.” (b) Second, that it had also been represented to the Crown that the Officeholders “are desirous of being incorporated and designated by the style of THE PRESBYTERIAN CHURCH OF QUEENSLAND” under the RECI Act and “have complied with the provisions thereof, entitling [them] in that behalf.” [98] The declaration in the letters patent was that the Officeholders and their “successors for ever” shall be “a Body Corporate by the name and style of THE PRESBYTERIAN CHURCH OF QUEENSLAND.” [99] Since 1876, the Corporation has consisted of the individuals from time to time who were successors of the original three in holding the religious offices of Moderator, Clerk and Treasurer of the Church, to which offices they had been “duly called or appointed in accordance with the rites laws rules or usages” of the General Assembly. [100] By the RECI Act, the Parliament gave certain powers to persons declared to be a corporation. Relevantly, these include power: “to receive purchase acquire and possess to them and their successors … to and for the uses and purposes of the said Corporation and of the religious … institution or body or association of persons by which such person or persons and their successors shall be so called or appointed any messuages lands tenements and hereditaments of what nature kind or quality soever” and: “to receive purchase acquire and possess to and for the same uses and purposes any goods chattels gifts or benefactions whatsoever”.46 [101] In the context of the RECI Act, I accept the submissions of the Receivers and the Attorney that “uses” are trusts, and “purposes” are relevant religious, educational, or charitable purposes. I reject, as anachronistic, the Catalyst parties’ submission that “uses” bears the common contemporary meaning of ways property might be applied. [102] I also reject the Catalyst parties’ submission that the RECI Act authorised the Officeholders to obtain and deal with property for the “purposes” of the Corporation. 44 Although the RECI Act was repealed in stages from 1908 to 1981, letters patent under the RECI Act continue in full force and effect and continue to be subject to the RECI Act by operation of the Associations Incorporation Act 1981 (Qld), s 144. 45 Rev William Lambie Nelson, Rev Charles Ogg, and James Bryden. 46 RECI Act, s 1. -- 24 of 82 -- 25 [103] Properly construed, the unpunctuated RECI Act provisions give such a corporation power to receive, hold and deal with property as trustee of a trust (“to … the uses … of the said Corporation”) for the charitable purposes of the unincorporated association in which the persons who are the corporation hold their offices (“the religious or secular institution or body or association of persons by which such person or persons and their successors shall be so called or appointed”) in accordance with the association’s constitution.47 [104] Although this involves a somewhat distributive reading of the RECI Act provisions, it is the proper construction of the Act, for the following reasons: (a) A relevant unincorporated association (such as the Church) can have religious, educational, or charitable purposes. It is not a legal person and cannot hold property as a trustee. So, it can have “purposes” but not “uses”. (b) A RECI Act corporation (such as the Corporation) can hold property on trust for the charitable purposes of an unincorporated association (such as the Church). It can have “uses”.48 (c) The RECI Act did not require a RECI Act corporation (such as the Corporation) to have a constitution. A RECI Act corporation may have no constitution separate from the constitutional documents of the unincorporated association (such as, in the case of the Church, the Basis of Union and the Code) for whose purposes it was incorporated and whose appointed officers are the corporation. Nothing in the RECI Act indicates a legislative intention that a RECI Act corporation, once declared, could have a purpose of its own, distinct from the purposes of the unincorporated association for whose purposes it may hold property. A RECI Act corporation need not have “purposes”. (d) This interpretation is consistent with the express purpose of the RECI Act, namely “to provide facilities for the transmission and management of estates properties and effects granted or dedicated to religious educational or charitable uses”. It provides a coherent operation of the RECI Act consistent with that distinct purpose. (e) It gives meaning to every word in the provision.49 (f) It accords with the conclusion reached by McPherson J in Bailey, that such a corporation: “fulfils its intended role, which is that of a repository of the property of the association, holding or acquiring that property, as s. 1 provides, ‘for the uses or purposes of the Corporation and of the religious or secular institution or body or association of persons’ by which the office holders and their successors are appointed; or in other words, on trusts (which are, having regard to 47 Bailey v Uniting Church in Aust Property Trust (Qld) [1984] 1 Qd R 42 (Bailey) at 47 (McPherson J). 48 It cannot hold property on trust for an unincorporated body as such because the unincorporated body is not a legal entity or a charitable purpose. 49 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [71] (McHugh, Gummow, Kirby and Hayne JJ). -- 25 of 82 -- 26 the title to the Act, ordinarily charitable) that accord with the purposes and constitution of the unincorporated association.”50 (g) A RECI Act corporation has the rights and powers the Crown is authorised to confer by letters patent under the RECI Act. As a matter of statutory interpretation, a RECI Act corporation may do “whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorized” save for things expressly prohibited.51 Such ancillary rights and powers may be taken to be indirectly or impliedly authorised by the express grant. A RECI Act corporation could not undertake a trust beyond the object for which it was established.52 (h) The RECI Act predated the Companies Act 1862 (UK),53 which was the first enactment to provide for the incorporation of companies limited by guarantee and for the incorporation of “associations” not formed for the purpose of business or trading as companies limited by guarantee or by shares. That Act, and Queensland statutes adopting its provisions, allowed for the incorporation of a proprietary company limited by shares with charitable purposes54 or a company limited by guarantee with charitable objects. Each could hold property for its own charitable purposes identified in its constitution. [105] In addition to receiving and holding property as trustee for the charitable purposes of the unincorporated appointing entity, the RECI Act also gave such a corporation power: “to mortgage charge or alienate all or any of the said messuages lands tenements hereditaments goods chattels gifts or benefactions provided such a mortgage charge or alienation be not contrary to the gift grant or dedication of the original donor or of the constitution of such body or association of persons and that the moneys to be raised thereby shall be applied to the same uses and purposes”. [106] For the reasons noted at [104] above, the provision should be construed in the same manner as in [101] above, so the effect of it is that: (a) A RECI Act corporation holding property on an express trust must not mortgage, charge or alienate it in breach of the terms of the express trust (“contrary to the gift grant or dedication of the original donor”) and the moneys raised by the dealing must be applied to the same express trust (“the same uses”); (b) A RECI Act corporation holding property for the charitable purposes of an unincorporated entity, but not on an express trust, must not mortgage, charge or alienate it in a way contrary to the constitution of the unincorporated entity (“such body or association of persons”) that appointed the persons who are the corporation; and 50 [1984] 1 Qd R 42 at 47, citing WB Campbell J in Serbian Orthodox Ecclesiastic School Community “Saint Nikolas” Queensland v Vlaislavljevic [1970] Qd R 386 at 393. 51 Attorney General v Great Eastern Railway Co (1880) 5 App Cas 473 at 478 (Selborne LC). 52 Incorporated Society v Price (1844) 1 Jo & Lat 498. 53 25 & 26 Vict c 89. 54 Such as the corporations considered by Parker J in Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238 (Grain Technology (No 3)). -- 26 of 82 -- 27 (c) A RECI Act corporation must apply moneys raised by a mortgage, charge or alienation of property, held as trustee of a trust (whether for the charitable purposes of an unincorporated entity or for more specific purposes) for the same purposes. [107] A RECI Act corporation (like the Corporation) otherwise has the powers of a natural person, subject to any limitation in its constitution.55 The only constitutional documents of the Corporation are the letters patent and the relevant provisions in the Code. [108] As the Attorney submitted, the RECI Act did not authorise the Crown to create or declare a trust. It merely “facilitated the creation of trustee corporations.” The letters patent recorded the Officeholders’ desire to be incorporated as the Corporation under the RECI Act. In that form they could receive, purchase, or acquire property as trustee of a trust for the charitable purposes of the Church in accordance with the constitution of the Church. [109] Unlike Acts for the benefit of a particular church or unincorporated body, the RECI Act did not authorise the Crown to vest property in a corporation declared by letters patent. The legal holders of relevant property had to take some action to vest the property in the RECI Act corporation. Property could be transferred from an existing trustee who held it on trust for a relevant purpose, or it could be given to the RECI Act corporation by a donor or bequeathed by a testator to be held on trust for that purpose. [110] There is no evidence for the Attorney’s contention that a “Church Religious Trust” was “created upon founding of the Church” in 1863 with the sole purpose of “the advancement of religion in accordance with the tenets of Presbyterianism”. No settlor, no declaration of trust, no trust property, and no trustee of such a trust has been identified. Before the Corporation was incorporated, Parliament had created trusts to hold specific property on trust for particular congregations of the Church. [111] When the Parliament enacted the Presbyterian Church Property Act 1909 (Qld) (the 1909 Act), it empowered the General Assembly to declare that the 1909 Act applied to any: “real or leasehold property now or hereafter held by any person in trust for the Presbyterian Church of Queensland generally, … or for any other purpose in connection with that church”.56 [112] The effect of such a declaration would be to vest the real property estate or interest in the Corporation “absolutely”.57 With the consent of a congregation of the Church, the General Assembly could also vest in the Corporation, any property held on trust for the purposes of the congregation (or for a purpose in connection with the congregation). [113] The Catalyst parties submitted that the 1909 Act operated so that, when property was vested “absolutely” in the Corporation, both the legal and the beneficial interests were 55 Victoria Park Golf Course Inc [2001] QCA 528 at [9] (McPherson JA), citing Bonanza Creek Gold Mining Co v The King [1916] 1 AC 566, 583. See also: Re the Trusts Act of 1984 and the appointment of a new trustee in respect of the Assemblies of God in Australia (Ayr Assembly); Sirris v Malamoo [1985] QSCFC 61 (BC8521013) at pp 6-7 (McPherson J for the Full Court). 56 Presbyterian Church Property Act 1909 (Qld), Definition of “Church Property” in s 2. 57 Presbyterian Church Property Act 1909 (Qld), s 3. -- 27 of 82 -- 28 vested. I reject this submission. The 1909 Act does not evidence a legislative intention to extinguish an existing charitable trust or to allow the Corporation to deal with property, formerly held on trust, free from the legal and equitable restraints that applied to it as trust property. It operates to vest the absolute estate or complete legal interest in the Corporation, without a complete beneficial interest.58 The property remains trust property, whether held for the purposes of the Church or of a particular congregation. The decision in Re James Stewarts’ Will Trusts59 may be understood to treat the “absolutely” in the 1909 Act in the same way. The Church and the Corporation [114] As the Receivers and the Attorney submitted, the Church and the Corporation are inextricably connected. The Code deals with the link between the Church and the Corporation, in respect of property, in the following relevant ways. The Officeholders [115] In the Code, the Church recognises the Officeholders for the time being as forming the Corporation. The Officeholders are not a board or committee of the General Assembly. Nor do they otherwise constitute a decision-making body within the Church. As a group, they do not have governance powers under the Code.60 [116] The General Assembly, the Finance Board, and the Property Board may give directions to the Officeholders to sign and seal documents with the Common Seal of the Corporation. They must report every sealing to the Finance Board. [117] Together with the Deputy Clerk, the Officeholders are Officers of the General Assembly or “Assembly Officers”. As such, they have: “the right to participate with the privileges of an associated member (…) at all meetings of, and consultations with, Assembly appointed Committees and Boards of which they are not ex officio members.” [118] The Receivers submitted that the Officeholders owed fiduciary duties as members of a trustee corporation. This may be accepted, but says little about the content of their duties, and less about the scope for them to exercise power independently of the General Assembly or its boards and committees in accordance with the Code. [119] The right of the General Assembly to govern the Church and decide on its activities and priorities is necessary to the continuance of the Church as a presbyterian association. To afford the Officeholders, as the Corporation, a power to determine where and how trust property is to be applied for the charitable purposes of the Church, would be to give the Officeholders a power contrary to “the fundamental tenets or doctrine of the 1900 Basis of Union which formed the terms (or some part of them) subject to which the property had been held in trust since 1900”.61 The RECI Act does not express an intention to take away or modify a fundamental tenet or doctrine of a religious association as a condition 58 cf Re Stable [1957] St R Qd 90, 98, 112 (Jeffriess AJ). 59 [1962] QWN 24. 60 In this respect, the Corporation is quite different from the corporation the subject of Re Travis; Mant v Attorney-General [1911] St R Qd 216 FC, which was the synod or “governing body” of the Church of England for the Diocese of Brisbane. 61 Bailey at 50 (McPherson J). -- 28 of 82 -- 29 of using the facility offered by the Act.62 Absent an express intention, the Court should interpret the RECI Act to not infringe freedom of religion in such a way.63 [120] The Corporation was to apply the property, held on trust for the purposes of the Church, as the General Assembly directed, in accordance with the Code. The General Assembly, through its internal governance processes, could determine where and in what manner such property was to be applied. [121] This is consistent with the evidence led by the Receivers from General Assembly and Finance Board member Mr Knapp, that the Officeholders were: “the signatory body of the Corporation, who affix signatures and seals to documents as necessary and … act at the direction of the Congregations or General Assembly and its Boards and Committees.” [122] In this sense, the Corporation (and its three members) might be thought to be in an analogous position to the trust (and trustees) considered by Street J in Warringah Shire Council v Salvation Army (NSW) Property Trust.64 There, the legislature had vested in trustees “every asset in New South Wales which belonged to the Salvation Army in the year 1929” and had given the trustees “the widest powers of management and control … for the purpose of furthering the aims and objects of the Salvation Army”. [123] His Honour concluded that the purpose and design of the Act was to vest the title to the property in the trustees “for the purpose of convenience of management and administration, and for facilitating the use or disposal of any such property”, and that the object of the creation of the statutory corporation was “to render certain the title of all the Army’s property and assets in this State”. In whatever the trustees did with their statutory powers “the benefit must go to the Salvation Army”. As his Honour noted: “The Trustees in one sense are agents for the Army, although this is not an accurate way of describing their legal position. The fact that the title of the property was vested in them constituted them, in name and in fact, as trustees, but the whole of their powers were designed to be exercised for the single purpose of furthering the aims and objects of the Army, and under the control and power of direction possessed by the Army through the General. While the legal ownership was in the Trustees, the beneficial ownership in every sense of the term was in the Salvation Army, and the Legislature itself by the language which [it] has used … clearly recognized that it was the Salvation Army which was properly to be regarded as the body beneficially entitled under the trusts created by the Act in question.”65 [124] This is consistent with the submission put for the Receivers in the opening that the Church adopted “the mechanism provided by the RECI Act to solve the common church problem”: 62 cf Bailey at 44 (Sheahan J). 63 Human Rights Act 2019 (Qld), s 20, s 48(1). 64 (1943) 15 LGR (NSW) 91. 65 At 99. -- 29 of 82 -- 30 “How are we going to put church property in church ownership? We will do it by this corporation and this corporation will hold the church property on trust for the purposes of the church.” [125] Considered as trustees, the Officeholders were obliged to act “with the care of an ordinary prudent businessperson” and inform themselves of matters which are relevant to a decision, including advice from appropriate expert advisers.66 They were not under a duty to avoid incurring risks, which are an inevitable aspect of buying and selling land, constructing buildings, and providing facilities and services to the aged and infirm. It is desirable that trustees in doubt as to a course of action should seek judicial advice rather than proceed and then seek relief.67 [126] If, at any time, the Officeholders were concerned that a direction of the General Assembly68 about property may not be for the purposes of the Church or may not have been given in accordance with Church constitution and practice, then, as the Corporation, they could seek judicial advice, like any other trustee. Property held for the purposes of a church [127] The Court applies the ordinary law relating to trusts for charitable purposes to persons holding property on trust for the purposes of a church. However, in construing any instruments relating to such property, the Court looks at the instrument as part and parcel of the whole machinery by which the church is kept together and carried on.69 [128] As Griffith CJ explained, the mutual relations and obligations of church members are “regulated by the terms of an agreement or consensual compact to which they are parties.”70 In Bailey, McPherson J explained the “social compact” by which members joined as a church: “That agreement or compact embodies or includes, expressly or by implication, certain tenets of faith or common beliefs as well as the form of government adopted for the regulation of the affairs of the individuals who comprise that church. It is these features, as well as the name and history, that serve to identify a particular church and to distinguish it from other churches.”71 [129] This approach accords with Professor Scruton’s observation that: “Religion is a way of life, involving customs and ceremonies that validate what matters to us, and which reinforce the attachments by which we live. It is both a faith and a form of membership, in which the destiny of the individual is bound up with that of a community. And that is a way in which the ordinary, the everyday and the unsurprising are rescued from the flow of time and re-made as sacrosanct. A religion has its 66 Commissioner of Taxation v Bargwanna (2012) 244 CLR 655, 661-2 [10]-[11]. 67 (2012) 244 CLR 655, 663 [14]. 68 Or such a direction of the Commission or a board or committee of the General Assembly. 69 Doctor Warren’s Case (1835) Grindrod’s Compendium, 371, 373, 376; Long v Bishop of Cape Town (1863) 1 Moo PCC (NS) 411, 461. 70 Macqueen (1909) 8 CLR 673, 679. 71 Bailey at 45. The committees and boards are required to present an annual report to the General Assembly about the work under their care. -- 30 of 82 -- 31 accumulations of dogma, but dogmas make no real sense when detached from the community that adheres to them, being not neutral statements of fact, but collective bids for salvation.”72 [130] Judicial consideration of property held on trust for the purposes of a church confirms that the purposes are those prescribed by the fundamental tenets of faith of the relevant church. A church adhering to an altered system of worship or government was found not to be entitled to the benefit of property held on trust for the purposes of the original or unaltered faith.73 Mergers, schisms, and doctrinal disputes within the broad body of presbyterian believers have supplied many of the reported decisions on this area of the law.74 [131] In Re Travis; Mant v Attorney-General writing for the Full Court, Lukin J noted a corporation constituted under the RECI Act is: “by the Act only authorised and rendered capable of taking property ‘to and for the uses and purposes of the said corporation and of the religious or secular institution’ in regard to which the incorporation has taken place, and further … the property so received by them might be impressed with a specific trust in favour of any one of the uses and purposes, or to any part of the religious or secular institution as a testator or other benefactor might direct.”75 [132] The RECI Act does not authorise such a corporation to hold property on a specific trust beyond the relevant charitable purposes of the appointing entity. Whether a RECI Act corporation (like the Corporation) holds property on trust for the general charitable purposes of an unincorporated association (like the Church) or only for one or more of those charitable purposes is determined as at the time the relevant trust was created.76 [133] In the absence of any contrary intention, if a person gifted or bequeathed property for the purposes of the Church, or declared they held property for the purposes of the Church, the Court should presume that the property is held on trust for the religious purposes prescribed by the Church’s fundamental tenets of faith and its constitution. These are found now in the 1971 Basis of Union and the provisions in the Code. The presbyterian form of church government is a fundamental tenet of that faith. The Corporation’s use of property allegedly held on a more specific charitable purpose trust 72 Scruton, R, Our Church: A personal history of the Church of England, Atlantic Books, London 2012, p 6. 73 Milligan v Mitchell (1837) 3 My & Cr 72, 83. In Drummond v Attorney-General (1849) 2 HL Cas 837, it was held to be a breach of trust for the trustee of a trust established for the general purposes of a church to allow any church building, chapel or meeting house held on that trust to be used by another body essentially different from the church. 74 e.g. Attorney-General v Pearson (1817) 3 Mer 353, 400 (Lord Eldon); Free Church of Scotland (General Assembly) v Lord Overtoun [1904] AC 515, 645 (Lord Davey). 75 [1911] St R Qd 216 FC, 231 (Lukin J). This is also consistent with the conclusion of the Privy Council in McSwaine v Lascelles [1895] AC 618, 624 (Lord Hobhouse, Lord Morris, Lord Davey and Sir Richard Couch) that “every gift to the congregation tends to increase the resources of the Church, and is in furtherance of the objects, uses, or purposes for which the office-bearers of the Church were incorporated.” 76 Dobrijevic at 387 [232] (Payne JA; Ward and Gleeson JJA agreeing). -- 31 of 82 -- 32 [134] It is convenient to consider the Corporation’s dealings with some relevant property acquired before the interdenominational union, retained following that union, and with the subsequently acquired Carina land and Townsville land. Before the interdenominational union: 1920s to 1970s [135] The PresCare Constitution, adopted by the General Assembly includes a short introductory statement that the Church “has been involved in social mission in a variety of forms from 1929.” It describes the social mission work as including “hostels, children’s homes and aged persons establishments” which “were governed by a variety of Assembly committees.” The earliest identified committee was the General Assembly’s Committee on Homes and Hostels, which “oversaw the Church’s work for children and the aged” in the 1950s. [136] 1929 was the year of Mr Black’s gift of real property at Corinda. It appears Mr Black made other gifts of land in the Corinda area to the Corporation before 1929. Church records refer to house and land gifted in 1923, which became the “Blackheath Home for Boys”, and another in 1928, which became the “Presbyterian Home for Children” and later the “W R Black Home for Children”. [137] According to the Receivers, after 1929, the Corporation received gifts of property and money “for the purpose of the provision of aged care”, including a bequest for “the erection of an aged care home in Maryborough”. They submitted that “as part of this” by 1998 the Corporation came to hold six RACFs. These were Alexandra Gardens in Rockhampton, Yaralla Place and Groundwater Lodge in Maryborough, Roslyn Lodge at North Tamborine, Lake Sherrin (or Allawah) in Thornlands, and Kingsford Terrace in Corinda. None of the dealings with the Catalyst parties involved these RACFs. [138] As noted above, no trust deed, declaration of trust, deed of gift or testamentary instrument was tendered in respect of any of these properties. The interdenominational union: 1970s and 1980s [139] In 1971, by the PCA Act, Parliament provided for the General Assembly to set up a commission (the Statutory Property Commission), in the event of an interdenominational union.77 The Statutory Property Commission was given: “the power to determine what specific items, if any, of the general property … held in trust for the purposes of [the Church and the General Assembly] shall for the efficient functioning of the [Church] be retained by or for the purpose of the [Church], and what compensation if any for the loss of a just and equitable share of such property should be payable to the [Church].”78 [140] In making its determinations, the Statutory Property Commission was to provide for certain requirements of the Church, including “provision for and maintenance of … such other staff and buildings deemed necessary … for continuing the activities” of the Church” as part of the Continuing National Church.79 77 PCA Act, s 3(2)(b), (c) and (d), s 5, and Schedule, Part III, s 18(a). 78 PCA Act, s 5, and Schedule, Part III, s 18(d). 79 Ibid, Schedule, Part III, s 18(e)(ii). -- 32 of 82 -- 33 [141] In 1977, the interdenominational union occurred, and the Uniting Church was formed.80 [142] The PresCare Constitution states after formation of the Uniting Church “all of the social mission work of the Church was gathered under an Assembly committee known as the Committee for Social Mission and the operation was carried out by the Department of Social Mission” (DSM). In respect of the RACFs, this seems to have happened in about 1979. [143] On 7 August 1980, s 24(3) of the Uniting Church in Australia Act 1977 (Qld) (the 1977 Act) commenced. It provided that: “any property that, immediately before [7 August 1980], was vested in the [Church] or in any person upon trust for the [National Church comprising the State presbyterian churches including the Church] or any congregation, board or committee of management, session, presbytery committee, council, board or other institution, organisation or section thereof is hereby divested from the [Church] or person as aforesaid and is, to the extent that it was so vested, hereby vested (without conveyance) in the [Uniting Church in Australia Property Trust (Qld)] and shall be held by the trust in accordance with the provisions of this Act.” [144] Property formerly vested in the Corporation for the purposes of the Church would now be vested in the new corporate trustee (UCPTQ) and held for the purposes of the Uniting Church.81 [145] There were exceptions to the property divested from the Corporation and vested in UCPTQ.82 [146] A relevant exception was property to which the Church was entitled (or became entitled) by a determination of the Statutory Property Commission. That property would remain vested in the Corporation. The remainder of the real property Mr Black gifted to the Corporation in 1929 likely remained vested in the Corporation in this way, because the Corporation retained this land, which included the Corinda land, until 2016. The RACFs, which the General Assembly placed under the administration of its Committee for Social Mission in 1979 also likely remained vested in the Corporation in this way, because these remained in the Corporation’s ownership about 40 years later, when the relevant dealings with the Catalyst parties occurred. Creation of the PresCare Board and the PresCare organisation [147] The Receivers’ case for the PC Trust was that it was “created in the context of … the Church’s withdrawal from St Andrew’s War Memorial Hospital” (the Hospital). Counsel for the Receivers submitted that, in about 1998 or 1999, the Corporation constituted itself as trustee of the PC Trust, when the PresCare organisation “acquired” the then six RACFs from the DSM, using the funds from the Hospital. They contended 80 This seems to have occurred on 22 June 1977. 81 1977 Act, s 24(7)(a). See Bailey, at 56 (McPherson J). 82 These included certain congregational property, such as property for a Church congregation where at least one-third of the communicants who participated in the interdenominational union vote recorded votes indicating their desire to continue in membership of the Continuing National Church: PCA Act, s 5, Schedule, Part III, s 18(b). -- 33 of 82 -- 34 that the Corporation held the RACFs (from that time), the Carina land (from 1999 or from 2006), and Townsville land (from January 2016) as trustee of the PC Trust. [148] The Hospital was a RECI Act corporation, formed at the initiative of the General Assembly of the Church. Under the PCA Act, the Statutory Property Commission determined that the Church and the Uniting Church should each appoint one half of the board. [149] In 1998, the Church sought advice on how it might surrender its right to appoint half the Hospital Board in consideration for payment of a sum equal to half the net value of the Hospital assets. The Church’s objectives included to obtain “absolute control of funds equivalent to half the agreed value of the Hospital to use for its general purposes”. [150] In May 1998, the General Assembly received and approved a constitution for “an organization to be known as ‘PresCare’.” The constitution then became part of the Code. [151] The constitution expressed the objects of the PresCare organisation as: “3.1 To acquire and conduct the business of the six aged person complexes and other health and family related activities owned and operated by the Church through its Department of Social Mission. 3.2 To carry out all necessary functions directed towards the establishment and conduct of homes for the aged and/or disabled, respite day care centre or centres and the provision of community health services. 3.3 To provide aged and/or health care and community services to the public irrespective of religious beliefs in a manner which best serves the needs of the community. 3.4 To conduct a ministry of care and compassion administered in the name and spirit of Christ. 3.5 To provide education and training for persons involved in aged, health, religious or charitable activities. 3.6 To engage in any other activity of a charitable or religious nature which the Board considers necessary or desirable. 3.7 To enter into arrangements or joint ventures with other associations or bodies to benefit the charitable or religious objects of PresCare or which, in the opinion of the Board, will enhance or promote the future viability of the business of PresCare. 3.8 To act as Trustee of or to merge with any other association to benefit the charitable or religious objects of PresCare.83 83 Not being a legal person, PresCare could not act as a trustee. In 2011, the constitution was amended to require the PresCare Board, before carrying out any activity or action in relation to clauses 3.7 and 3.8, to decide whether the proposed action expands the scope of the PresCare business beyond existing activities and, if so, obtain the concurrence of the General Assembly or, if urgent and emergent, the Commission, before undertaking the activity. -- 34 of 82 -- 35 3.9 To initiate processes that will enable PresCare to conform to the standards for accreditation determined from time to time by the Aged Care Standards Agency. 3.10 To conduct research by all such means as the Board may think advisable into all or any matters that may relate to the above objects whether or not in collaboration with any other authority. 3.11 To engage in all such activities and to do make perform and execute all such further acts matters and things incidental or conducive to the attainment of the above objects.” [152] The constitution provides that the General Assembly appoints the eight members of the PresCare Board for a three-year term. All must be communicant members or ministers of the Church; one preferably with an accounting qualification; and one preferably with a legal qualification. [153] Subject to the General Assembly’s direction or decision, the PresCare Constitution, and the Code, the constitution provides that the PresCare Board is “responsible for the whole management of PresCare”, and has the following powers: (a) “To conduct appeals for funds and accept donations, gifts and bequests of money and any real or personal property”, provided any property “shall be held in the name of the Church;” (b) To make “other regulations for the internal management, organization, administration and procedures of PresCare, provided that such regulations are not inconsistent with this Constitution;” (c) “To provide the Manager of PresCare with policies and guidelines that will enable him/her to proceed with the day to day management of PresCare;” (d) “To invest in the Manager of PresCare the authority to employ, supervise and discipline staff as appropriate and in keeping with the policies and guidelines laid down”; and (e) “Subject to the rules and forms of procedure of the Church”: (i) “To purchase, take on lease, exchange, hire or otherwise acquire an interest in any real or personal property;” (ii) “To borrow or raise money whether on mortgage or other security or otherwise as the Board may think fit;” (iii) “To erect buildings and maintain, alter and improve existing buildings and … for these purposes, to employ persons on such terms as the Board may determine;” (iv) “To make investments in any one or more of the forms of investment and to operate banking accounts whether trading, savings or investment accounts with such bank or banks as the Board may determine;” and (v) “In furtherance of the objects of PresCare to sell, improve, develop, dispose of, or otherwise deal with all or any part of the property and rights of PresCare.” -- 35 of 82 -- 36 [154] The constitution provides that the PresCare Board must report annually to the General Assembly and quarterly to the Finance Board and the Commission. The Board must arrange for an annual audited profit and loss and balance sheet and provide it to the General Assembly “immediately it is available.” The General Assembly may resolve to appoint an auditor “to investigate the financial affairs of PresCare” with “full authority to inspect all accounts books and records of PresCare.” [155] The constitution provides that the General Assembly appoints the CEO “to manage PresCare” who must “be and remain a member of the Protestant Christian Church.” The General Assembly also appoints the Director of Chaplaincy for PresCare, in consultation with the PresCare Board and the Church’s Committee on Ministry Resourcing. [156] The constitution provides that the General Assembly appoints the chair of the Finance Board (or a representative) and the convenor of the Committee on Ministry Resourcing (or a representative) as “visitors of PresCare” with the right to: “visit PresCare at any time to examine the procedures of the [PresCare] Board and the manner in which PresCare is being conducted and to see that the Assembly’s laws, rules and regulations are being duly observed and executed. Each visitor shall have the right to examine ancillary factors relating to PresCare to enable them to undertake their function.” [157] The constitution provides that the “income and property of PresCare shall be applied solely towards the promotion of the objects of PresCare as set forth” in the constitution; and upon dissolution, the General Assembly is to resolve to transfer, hand over or pay “the assets of PresCare after payment of all expenses and liabilities” to: “one or more authority, organization, fund or institution, having similar objects or in part similar objects to that of PresCare and which prohibits the distribution of its or their income and property among its or their members and which is an organization to which gifts are allowable deductions under the provisions of the Income Tax Assessment Act as amended.” [158] This reflects a desire to obtain Commonwealth charitable and deductible gift recipient status of the PresCare organisation as a public benevolent institution. [159] The constitution also provides that the General Assembly (or the PresCare Board with effect from the approval of the General Assembly) may amend the constitution. [160] The constitution was prepared with the assistance of the Church’s solicitors. An earlier draft of the constitution included an express provision that certain property: “shall be vested in the Church [84] as Trustee to be held in accordance with the objects of the Department as set forth in this Constitution and shall be dealt with as the Board shall from time to time direct (subject at all times to the prior consent of the Assembly) which dealings may include the sale, leasing or mortgaging of such property or such other dealings as may from time to time be considered necessary or desirable.” 84 In this provision “Church” plainly means the Corporation. -- 36 of 82 -- 37 [161] The General Assembly did not include this provision in the constitution it adopted. The Church’s exit from St Andrew’s Hospital [162] In 1999, the Church and the Uniting Church agreed to amend the Constitution of the Hospital to enable the Uniting Church to have the sole power to appoint to the Hospital board. On 14 May 1999, the Court made a cy-pres order which authorised the Hospital to give effect to certain agreed arrangements, including the Uniting Church providing financial accommodation to enable the Hospital to pay $9.4 million to the PresCare organisation (as the body nominated by the Church), representing one half of the agreed value of the net assets of the Hospital. [163] Then Hospital board member Mr Knapp gave evidence that: “the decision to have the money paid to PresCare was made by the Church, and that the St Andrew’s Board was not concerned with how the Church dealt with the money once it was received provided that it was approved by the Court through a cy-pres application. I do not recall that the Board of St Andrew’s knew that PresCare would then be using those funds to buy assets from the Church, and I only learnt about that proposal through my involvement with the General Assembly.” [164] The General Assembly made all the decisions about the application of the funds paid by the Hospital. It did so before PresCare was constituted as an organisation and before there was a board to supervise the new organisation. By those decisions, the Church achieved its stated object of obtaining “absolute control of funds equivalent to half the agreed value of the Hospital to use for its general purposes”. [165] In August 1999, the Commission resolved to “constitute” PresCare to operate from 1 September 1999. The Commission appointed the PresCare Board in November 1999. [166] The General Assembly decided that PresCare was to apply the funds received from the Hospital toward the “acquisition of the interests of the Church’s Department for Social Mission.” The General Assembly resolutions record that funds received for the “transfer” of the aged care assets from the DSM to PresCare were to be used as the “St Andrew’s Mission Fund”. The guideline for the administration of the St Andrew’s Mission Fund provided that the Church was to steward the Fund “to benefit the Statewide Church”, and that the General Assembly (or Commission), when considering applications to apply the Fund for grants, loans, and ministry projects, was to take into account the benefits of any grant or loan “to the overall ministry” of the Church. [167] The land on which the six RACFs had been constructed continued to be held by the Corporation, as it had been before the General Assembly PresCare resolutions. In about 2017 or 2018, the Corporation sold Roslyn Lodge RACF, a former DSM property.85 [168] There are other indicators of continuity between the work of PresCare and the DSM and perhaps earlier Church departments. PresCare’s Australian Business Number (ABN) was acquired by DSM on about 1 November 1999, as an unincorporated association. On about 10 June 2000, DSM changed its trading name for the ABN to PresCare. On about 25 July 2000, DSM changed its entity name to PresCare for its ABN. On 1 July 2000, 85 This seems to have been reported to the CBA in the context of an “asset sale program”. -- 37 of 82 -- 38 while known as DSM, it was endorsed as a deductible gift recipient and obtained an exemption from income tax. From about 1 July 2005, PresCare was registered as a public benevolent institution (PBI). A PBI is a body that carries out activities to provide benevolent relief to people in need. It does not need to be a legal person. It may be an unincorporated association or body of persons that “in practice are treated as having a separate identity in the same way as a legal person.”86 A PBI may be registered as a charity with the Australian Charities and Not-for-profit Commission. PresCare is registered. Its charity registration states it was established on 31 December 1955. Nothing in these reasons turns on the matters in these records. The Carina land [169] In 1999, the Corporation purchased a parcel of vacant land at Carina (the Carina Block), applying $2 million from the St Andrew’s Mission Fund. The Corporation constructed a church building on part of the land (the Church Block) but did not subdivide the Carina Block to create a separate title at that time. [170] In 2006, the General Assembly made the PresCare Board the administering body for the Carina Block, except for the Church Block. The Church recorded that PresCare had “acquired” this part of the Carina Block (the PresCare Block) for $3.7 million. The Corporation did not subdivide the Carina Block to create a separate title for the PresCare Block at that time. [171] The whole of the Carina Block (including the Church Block), continued to be held by the Corporation. [172] Between 2008 and 2009, the Corporation constructed the Carina RACF on part of the PresCare Block. In April 2009, the Corporation began to operate the Carina RACF, with the PresCare Board having responsibility for that work. [173] In 2010, the Corporation subdivided the Carina Block into two titles: one was the Church Block; and the other was the PresCare Block. At some point, the Corporation granted CBA a mortgage over the PresCare Block. [174] In December 2018, the Corporation granted Catalyst Finance a mortgage over the PresCare Block, and Catalyst Finance advanced $27 million on that security, principally to discharge the Corporation’s debt to CBA. CBA released its mortgage over the PresCare Block. [175] In March 2020, the Corporation subdivided the PresCare Block into two titles. Lot 1 was the Carina land (on which it had built the RACF). The other (Lot 2) was the balance of the land, which had remained vacant. The Corporation was the registered proprietor of the Carina land and Lot 2. [176] In April 2020, the Corporation sold the Carina land to Catalyst Carina for $30 million, applying most of the proceeds to discharge the Corporation’s debt owed to Catalyst Finance. In October 2020, the Corporation sold Lot 2 to an unrelated company for $4.4 million. There was no evidence of how the Corporation applied the proceeds of this sale. 86 Australian Charities and Not-for-profits Commission Act 2012 (Cth), s 205-5(1)(d). -- 38 of 82 -- 39 [177] The Carina land was denominational property.87 The Townsville land [178] On 13 January 2016, the Corporation completed the purchase of the Townsville land from an unrelated company for $1.5 million. The source of the funds to complete the purchase is not known. The Corporation granted CBA a mortgage over the Townsville land, which was registered over the title on 28 July 2017. [179] In December 2017, the Corporation completed the sale of the Townsville land to Catalyst Townsville for $1.5 million. [180] The Commission’s decision to exempt the PresCare Board from reporting to the Property Board about the Townsville RACF development, is consistent with all other indications that the Townsville land was denominational land. The Corinda land [181] In September 2016, the Corporation sold the Corinda land, together with other land gifted by Mr Black in 1929. The whole parcel was sold for $26.4 million. The purchaser was Aura Australia Management Pty Ltd (Aura), a third party with no apparent connection to the Church, the Corporation, or the Catalyst parties. The execution of the sale contract was approved by the Finance Board. Consideration of the contentions of the Attorney – the Aged Care Trust [182] The Attorney submitted that the Corporation held property “on various charitable trusts”, including a “Religious Trust” and the “Aged Care Trust”. By way of explanation, the Attorney proposed that: “[T]he Church’s purposes have been enlarged over time as a consequence of the Church having accepted donations for charitable purposes that differ from the purposes of the Church’s Religious Trust.” [183] By these submissions, the Attorney assumed the Corporation held property as trustee of a “Religious Trust”, the purposes of which were insufficiently broad to encompass the relief of the aged. As the Attorney noted, in Presbyterian Church (NSW) Property Trust v Ryde Municipal Council, the court upheld a finding that the conduct of the Presbyterian Church of Australia in New South Wales, in operating a home for the relief of the aged, was conducive to the advancement of religion, even though religious affiliation was not a qualification for entry to the home.88 This part of the Attorney’s submissions is inconsistent with her submission that s 1 of the RECI Act operates so that “the uses and purposes” of the Church and the Corporation are “one and the same.” [184] If the Corporation can only hold property on trust for the Church’s religious purposes and if providing care to the aged is not within the Church’s religious purposes, then it is difficult to resolve how the Corporation could hold land as trustee of the Aged Care 87 I reject the unexplained contrary contention of the Church’s former Deputy Clerk, Lesleigh Hall, that property administered by the PresCare Board was not denominational property. 88 [1978] 2 NSWLR 387 at 390 (Moffat P), 394 (Glass JA) and 412 (Mahoney JA). -- 39 of 82 -- 40 Trust.89 If care for the aged is within the charitable purposes of the Church, then it is not necessary for the Corporation to become trustee of a separate Aged Care Trust. [185] The Attorney contended Mr Black’s gift of real property in 1929 marked the start of the Aged Care Trust. Counsel for the Attorney submitted that the Corporation held that land and the subsequently acquired RACFs as trustee of the Aged Care Trust. The Attorney submitted that, when the Corporation acquired the Carina land in 1999, and when it acquired the Townsville land in 2016, the Corporation held each as trustee of the Aged Care Trust. [186] In 1929, the Church’s social mission does not appear to have been confined to care for the aged. There is no evidence that Mr Black’s gift was anything other than a direct gift. [187] The Corporation’s continued ownership of the land gifted by Mr Black and the pre-1977 RACFs indicates the Statutory Property Commission decided under the PCA Act that those properties were necessary for continuing the activities of the Church. [188] If the Corporation had held the RACFs on the Aged Care Trust, it could not have altered the trust on which they were held, without a Court order. No cy-pres order was sought or made. Nor was any order sought for the Corporation to apply the $9.4 million (received from the Hospital) as a fund for the benefit of the purposes of the whole Church, rather than for the more specific charitable purposes of the alleged Aged Care Trust. [189] The Corporation dealt with the property, alleged to have been held on the Aged Care Trust, as if it held the property on trust for the general charitable purposes of the Church. This conduct does not support the Attorney’s case that the Corporation held the property on the alleged Aged Care Trust. Consideration of the contentions of the Receivers – the PresCare Constitution Trust [190] The Receivers pleaded that the Corporation “held and acquired property for the purposes of the Church”, which were “charitable purposes” and has “held and acquired property as trustee of a charitable trust (or charitable trusts).” The Receivers were “unable to identify the precise terms of the said trust or trusts, save that the charitable purposes were or encompassed providing aged care services to the community”. [191] By the trial, the Receivers’ case had advanced to the point of submitting that the assets of the Corporation related to aged care services, including the Townsville land and the Carina land, were held by the Corporation on a specific charitable purpose trust, which they called the PC Trust. [192] The main objects of PresCare were assistance to the aged and infirm. The relief of the disabilities of old age “of its very nature” is a charitable purpose, within the preamble of the Charitable Uses Act 1601. [193] It was common ground that the Church had been providing relief and assistance to the aged and infirm since at least 1929. I have rejected the Attorney’s contention that the property used in that Church ministry was held on a separate trust for a more specific 89 Or, as the Attorney alternatively submits, the PC Trust. -- 40 of 82 -- 41 charitable purpose. The charitable purposes in the PresCare constitution were also within the scope of the general charitable purposes of the Church. [194] Like the submissions advanced by the Attorney, the Receivers’ case for the alleged PC Trust proceeded on the basis that the Corporation held the RACFs on the AC Trustbefore the General Assembly passed the PresCare resolutions.90 The General Assembly resolutions about the application of the funds received from the Hospital are not consistent with that contention. [195] When the General Assembly approved the PresCare constitution, it did not purport to establish the PC Trust. The General Assembly’s approval of the PresCare constitution did not manifest an intention to create the PC Trust or to devote property with immediate effect to it.91 The Receivers did not identify any property in respect of which they alleged the Corporation was made a trustee at the time the General Assembly adopted the PresCare constitution. [196] The General Assembly did not direct the Officeholders to declare that the Corporation held specific property on trust in accordance with the objects of PresCare set out in the PresCare constitution, when it approved the constitution or afterwards. There was no formal external manifestation of an intention by any person (the Corporation, the General Assembly, a donor, or a settlor) to devote property to those specific charitable purposes with immediate effect.92 [197] The following opportunities for such a manifestation were presented: (a) In 1999 when the Corporation acquired the Carina Block using funds to benefit the Church. (b) In 2006 when the General Assembly made PresCare the administrating body for the PresCare Block. (c) In 2009 when the Corporation built the Carina RACF. (d) In 2010 when the Corporation subdivided the Carina Block and created the Church Block and the PresCare Block as separate titles. (e) In 2016 when the Corporation purchased the Townsville land. (f) In 2020 when the Corporation subdivided the PresCare Block and created the Carina land and Lot 2 as separate titles. [198] PresCare has never been a legal person. When the General Assembly allocated the RACFs to the PresCare board to supervise and PresCare to administer, the existing six RACF properties remained in the ownership of the Corporation, as they had done when responsibility had been allocated to the former Committee on Homes and Hostels and the Committee on Social Mission and any other predecessor committee or board. The 90 The Receivers submitted that “prior to their transfer to PresCare, the assets of DSM were held subject to the Aged Care Trust.” 91 Neither the General Assembly nor PresCare was able to be a trustee of such a trust. A decision of the General Assembly to that effect may have been sufficient to bind the Corporation (as the legal owner of the property) and make it the trustee of such a trust. It is unnecessary to consider this, given the absence of a relevant resolution or other evidence of intention. 92 Grain Technology (No 3) at [359] (Parker J). -- 41 of 82 -- 42 real property remained subject to the mortgage the Corporation had granted to CBA. The Committee on Social Mission, formerly responsible to the General Assembly for the six RACFs, did not have any influence or authority over the PresCare Board or PresCare executives in the performance of their duties in respect of the RACFs once the General Assembly decision was carried into effect. The General Assembly retained the authority to reallocate responsibility for the RACFs from the PresCare Board to another board or committee of the General Assembly. [199] In the circumstances, the General Assembly’s resolution that PresCare “acquire” the existing RACFs was an expansive or convenient description of the change of supervisory board among the General Assembly’s boards and committees, and a change of the relevant Church department managing the assets.93 [200] The cy-pres order authorised the Uniting Church Property Trust (Qld) to provide funds to the Hospital and the Hospital to pay the funds to the Corporation. Plainly the order was made on the assumption that the recipient would apply the funds for purposes consistent with the purposes of the Hospital. Leaving aside the possibility that the Court was misled or mistaken, the Court must have been satisfied that the purposes of the Church, for which the Corporation held property, encompassed the purposes for which the Uniting Church Property Trust (Qld) and the Hospital held the funds. [201] In applying funds, and in purchasing, mortgaging, and disposing of land from time to time, the Corporation acted as the General Assembly and its authorised boards and committees decided. These transactions were consistent with the Corporation holding the property, including hostels, children’s homes, and aged care assets, on trust for the general charitable purposes of the Church at all relevant times and applying them as directed by the General Assembly. [202] There was no evidence of any connection between the Corporation’s purchase of the Carina land or the Townsville land and any appeal, donation, gift, or bequest exclusively for a separate trust for the purposes in the PresCare constitution. Nor was there any evidence that the Corporation applied any property derived from such an appeal, donation, gift, or bequest in the transactions with the Catalyst parties. [203] The way the Corporation dealt with the property said to have been held on the PC Trust, leads to the conclusion that the Corporation held the property on trust for the general charitable purposes of the Church, and did not hold it on the alleged PC Trust. Conclusion on the alleged charitable purpose trusts [204] In the absence of evidence of an intention to create either the AC Trust or the PC Trust, neither the legal nature of the Church and the Corporation, nor the way in which the Corporation dealt with the relevant property supports a finding that the Corporation constituted itself as trustee of either alleged trust. [205] Despite entries in the records of the General Assembly, it would be unsafe to draw an inference that the General Assembly intended to cause the Corporation to transfer the beneficial interest in the relevant land and property from the general charitable purposes 93 Being “one or more authority, organization, fund or institution, having similar objects or in part similar objects to … PresCare”. -- 42 of 82 -- 43 of the Church to the more specific charitable purposes of the alleged AC Trust or PC Trust. The most that might be ventured is that the land and other property was appropriated to a more specific purpose of care for the aged for a time until the General Assembly, through its authorised boards and committees, decided to cause the Corporation to appropriate the land and property to another specific charitable purpose amongst the Church’s general charitable purposes or simply to those general purposes.94 [206] As Jacobs J explained in A-G v Lesser Chapter,95 the fact that the beneficial owner of property uses it for a specific charitable purpose does not mean the owner has dedicated or appropriated the property in perpetuity for that specific charitable purpose. “It is at liberty to discontinue or to alter the charitable uses or purposes because such a charitable use, unless a charitable trust has been declared, is a private, not a public use.” [207] For the reasons set out at above, I find that the Corporation held the land and other property administered by PresCare at all material times from 2016, including the Townsville and Carina land, for the general charitable purposes of the Church. The dealings with the Catalyst parties [208] It is convenient to deal in turn with the relevant agreements for each geographic location. The Townsville agreements [209] In 2014, the Commonwealth licensed the Corporation to operate a 100-bed RACF in the Townsville region.96 [210] On 25 February 2015, the PresCare Board approved the purchase of the Townsville land. It was vacant land. [211] On 25 March 2015, the Corporation signed a conditional contract to purchase the Townsville land from a third party97 for $1.5 million. [212] On 30 September 2015, for the development of a RACF at Townsville the Commission resolved to grant PresCare an exemption from administrative oversight of denominational property by the Property Board under the Code. [213] In October 2015, the Townsville City Council granted the Corporation development approval to build a 100-bed RACF on the Townsville land.98 [214] In late 2015, the Corporation retained Bentleys99 to model two scenarios for the operation of an RACF on the Townsville land over five years. Bentleys’ model showed a net loss for each year of operation in each scenario. The “Operator Only” scenario, in which the Corporation did not own the Townsville land and did not borrow to build an 94 Attorney-General (Qld) (Ex rel Nye) v Cathedral Church of Brisbane (1977) 136 CLR 353, 373 (Jacobs J). (A-G v Lesser Chapter). 95 At 371. 96 The licence was issued through the Department of Social Services. 97 Northern Medical Investments Pty Ltd. 98 This approval was varied for a 140-bed facility on 7 December 2016. 99 Bentleys was a firm of chartered accountants and business advisers and the auditor of PresCare at the time. -- 43 of 82 -- 44 RACF, and the owner required a return of 7.5% per annum on the land and construction costs, showed substantially higher net losses than the “Owner/Operator scenario”, in which the Corporation retained the land and borrowed the construction costs at bank rates. [215] On 13 January 2016, the Corporation completed the purchase of the Townsville land. The transaction was authorised by the relevant General Assembly boards in accordance with the Code. From first contact with Catalyst to the PresCare Board authorisation [216] The first contact between PresCare executives and the Catalyst parties was in March 2016. Having purchased the Townsville land, the Corporation was seeking funding to build an RACF on it. Mr Laboo100 provided PresCare CEO Greg Skelton with an overview of the “Catalyst funding model” – a new type of long-term funding for aged care facilities which relied on the investment of funds held by trustees of large superannuation funds. Mr Skelton was “extremely interested”. Mr Laboo met with Mr Skelton, PresCare COO Michael Bosel, and PresCare CFO Peter Lynch. They spoke in general terms about the Catalyst funding model. [217] During 2016, through PresCare staff, the Corporation actively sought funding to construct an RACF on the Townsville land. They approached CBA, the Bank of Queensland, and Westpac. By late 2016, all three had declined. [218] In October 2016, KPMG had reported to PresCare executives on its analysis of the opportunity to develop an RACF on the Townsville land. KPMG’s analysis was that the development “may only be attractive if one or more of the other developments proposed for the primary catchment do not proceed”.101 [219] The next contact between the Corporation and the Catalyst parties was in December 2016. Mr Laboo met with Mr Bosel. Afterwards, Mr Bosel sent Mr Laboo information about the Townsville RACF development, including an “updated” version of the KPMG model for the Owner/Operator scenario. Mr Bosel suggested Mr Laboo visit the Townsville land, which he did. [220] In January 2017, Mr Laboo and Mr Cunningham102 presented the essential elements of the Catalyst funding model for the Townsville RACF to Mr Lynch and Mr Bosel. In short, those essential elements were: (a) A Catalyst party would buy the Townsville land from PresCare;103 100 Mr Laboo was, at all relevant times, the director of Catalyst Health REIT Pty Ltd ACN 164 221 372 and the Catalyst parties. 101 This is a reference to other persons the Commonwealth had licensed to operate RACFs in the Townsville region. Later, Mr Laboo and Mr Cunningham would encounter similar concerns when they began raising funds for the Townsville transactions. On 17 April 2017, Mr Cunningham told Mr Lynch that “a number of banks” had expressed concern that there was not an adequate level of demand for beds in Townsville. 102 Mr Cunningham was, at all relevant times, the company secretary of Catalyst Health REIT Pty Ltd ACN 164 221 372 and the Catalyst parties. 103 At this time, Mr Laboo and Mr Cunningham were not aware that PresCare was not a separate legal entity or that the Corporation existed and held the title to the Townsville land. -- 44 of 82 -- 45 (b) PresCare would lease the Townsville land from the Catalyst party for up to 40 years;104 (c) The Catalyst party would provide PresCare with funding to construct the Townsville RACF;105 (d) PresCare would engage Woollam to build the Townsville RACF;106 (e) PresCare would not contribute any equity to the construction cost; (f) PresCare would retain the refundable accommodation deposits (RADs) paid by each resident for a room in the Townsville RACF, with “positive cash flow” in the form of a growing balance of about $22 million in RADs;107 (g) PresCare would make two “financial payments” to the Catalyst party under the lease, namely: (i) a rental payment of $10,000 per bed per annum; and (ii) a “value” or “equity” payment of $15,000 per bed per annum for the first 10 years of the lease;108 and (h) PresCare could “buy back” the improved land during the term of the lease. [221] On 31 January 2017, the PresCare Board approved entry into an arrangement with a Catalyst party: “that allows Catalyst to construct the Townsville facility, to PresCare specifications, with PresCare to operate the facility under a triple net lease that includes an option to purchase the facility at any point through the term based on annual assessment of the lease/coupon buy out value”. [222] the PresCare Board authorised Mr Skelton “to negotiate the final terms of the agreement with a Catalyst party, in conjunction with KPMG and McCullough Robertson.” [223] The Board had before it a paper prepared by Mr Lynch, Mr Skelton, and Ms Manouchehri, a KPMG employee on secondment to PresCare. The paper identified that three banks had declined to fund the Townsville RACF development. It described “Catalyst” as a “relatively new entity”, and the Catalyst funding model as “non- traditional”. It stated that if the transaction proceeded, “this may be the first transaction of this nature”. The paper also stated that a portion of the RADs would be used to cover the “value” or “equity” payments, also referred to as “coupons”. Negotiation of heads of agreement and transaction documents [224] The PresCare executive team, led by Mr Skelton, began negotiating “heads of agreement” with Mr Laboo and Mr Cunningham, which would contain the key commercial terms of the proposed transaction. They were assisted by KPMG and McCullough Robertson. 104 The proposed lease had an initial 20-year term with two 10-year options to extend. 105 Then estimated to be about $30 million. 106 At a cost of about $28.5 million for the Townsville RACF. 107 Although the RADs were refundable when a resident left the RACF (or died), each would likely to replaced by the RAD paid by the new resident who would occupy the same room after the departing (or departed) resident. 108 Initially, this payment was called a “Coupon Linked Value Payment”. Later it was called an AEFIP. -- 45 of 82 -- 46 [225] From the due diligence questionnaire submitted by Mr Laboo and Mr Cunningham and their initial draft heads of agreement, it is clear that Mr Laboo and Mr Cunningham did not know the name or nature of the entity with which the Catalyst party would contract. The initial draft had a placeholder for the “PresCare Entity” on the cover page and the signature block referred to execution for the “PresCare Entity” by its directors and or a secretary. [226] On 3 March 2017, in a revised draft heads of agreement sent to Mr Laboo and Mr Cunningham that day, McCullough Robertson identified the contracting entity as the Corporation “trading as PresCare”, with two of the Officeholders (referred to as trustees) to sign on its behalf. [227] The negotiations were conducted by exchanges of drafts and emailed comments. They were genuine. The PresCare executives challenged the Catalyst draft terms, particularly about the “buy-back”, and Mr Laboo and Mr Cunningham made concessions. [228] On 22 March 2017, the Corporation and Catalyst Townsville signed the heads of agreement. [229] The same day, the PresCare Board reported to the General Assembly, including on the “development of a 140-bed residential aged care facility in Townsville across the next two years”. The Board told the General Assembly in its annual report that: “PresCare has continued to work through financing options for the construction of the Townsville facility. Given recent ‘economic’ occurrences in the region, banks have expressed some concerns around age care developments in the Townsville region particularly in relation to supply and demand with the number of potential developments in the pipeline. A substantial amount of work has been undertaken with Woollam Constructions with regard to this project and an agreed Design and Construct costing has been capped at $28.5m. It is anticipated that, subject to finalising funding arrangements, construction will commence by the end of May 2017.” [230] Between 22 March 2017 and 4 October 2017, the Corporation and Catalyst Townsville negotiated the Townsville transaction documents. These would be a land sale contract, a development agreement, and a lease. In these negotiations, the Corporation was represented by Mr Skelton, Mr Lynch, General Counsel Ms Hickey, and external solicitors McCullough Robertson. In addition to assisting in the negotiations, McCullough Robertson provided legal advice to Ms Hickey and other PresCare executives about the terms of the draft documents. [231] Catalyst Townsville was represented by Mr Laboo and Mr Cunningham. At some point in the negotiations, Catalyst Townsville engaged HopgoodGanim to assist with the drafting of the Townsville transaction documents. [232] Like the heads of agreement, negotiations of the transaction documents were conducted by the exchanges of drafts and emailed comments. They took place over more than six -- 46 of 82 -- 47 months. Each side challenged the other’s proposed terms. Some terms were compromised. Some changes were resisted. [233] On 4 October 2017, two of the Officeholders, Mr Clark and Mr Barson, executed the Townsville land sale contract, the development agreement, and the lease on behalf of the Corporation. [234] The same day, the private equity firm M.H. Carnegie & Co Management Pty Ltd (Carnegie) established the “Carnegie Catalyst Healthcare Real Estate Trust” (CHRET). On 26 June 2017, a Catalyst entity had signed a “Terms Sheet” with Carnegie, under which Carnegie was to assist in raising funds from investors. On 27 July 2017, Carnegie had introduced Sunsuper to the Catalyst model and the Townsville proposal. [235] On 21 December 2017, CBA executed a release of the mortgage over the Townsville land, to enable the Corporation to complete the sale to Catalyst Townsville. [236] On 22 December 2017, the Corporation and Catalyst Townsville completed settlement of the Townsville land sale contract. Catalyst Townsville paid the $1.5 million purchase price to the Corporation. The same day, the Corporation gave Catalyst Townsville the first funding notice under the development agreement, requesting $2,793,214.96 to be paid by 5 January 2018. Sunsuper provided funding through the CHRET for this and the subsequent payments made under the development agreement. The Corinda agreements [237] In about March 2017, while Mr Laboo and Mr Cunningham were finalising the Townsville heads of agreement with Mr Skelton and other PresCare executives, Mr Skelton raised the possibility of a Catalyst party providing funding to develop an RACF at Corinda. [238] The Catalyst officers and PresCare executives met in late May 2017. Ms Hickey said words to the effect that the Corporation wanted the Corinda transaction to be in the same form as the Townsville transaction.109 From expression of interest to heads of agreement [239] On 26 May 2017, Mr Laboo and Mr Cunningham sent a draft “Expression of Interest” (EOI) to Mr Skelton, Mr Lynch, and PresCare’s project manager.110 It proposed a Catalyst party would purchase the Corinda land for $3.84 million. On 31 May 2017, Mr Laboo and Mr Cunningham sent the EOI to Aura by email, with an adjusted purchase price of $3.9 million. It was copied to Mr Skelton and subsequently forwarded by Mr Laboo to Mr Lynch. Following further discussions with PresCare executives, on 7 June 2017, Mr Laboo sent an updated EOI to Aura adjusting the offer price to $4.2 million, copying it to Mr Skelton. [240] Despite the similarity to the Townsville transaction, Catalyst Corinda and the Corporation would not execute the Corinda heads of agreement until about nine months later, on 19 February 2018. Catalyst Corinda signed the land purchase contract with Aura that same day, with a purchase price of $4.2 million (ex GST). 109 The heads of agreement for the Townsville transaction had been executed on 22 March 2017. 110 Aspect Project Managers Pty Ltd, through a Mr Bartlett. -- 47 of 82 -- 48 Negotiation of the transaction documents [241] Negotiation ensued of the final transaction documents in relation to the Corinda land, with the Townsville transaction documents serving as the basis. This was a much swifter process than the negotiations of the Townsville transaction documents. [242] The PresCare executives sought and received legal advice from McCullough Robertson on any risks in the proposed Corinda transaction documents “not previously known” in relation to the prior Townsville transaction. The PresCare executives did not ask KPMG to review or provide advice on the Corinda transaction prior to executing the Corinda transaction documents. I infer this was because KPMG had provided some advice on the Townsville transaction and the PresCare executives regarded this as a similar transaction. [243] On about 27 March 2018, Catalyst Corinda and the Corporation executed the Corinda development agreement. [244] On 16 April 2018, Catalyst Corinda completed the land purchase from Aura. [245] On 30 April 2018, the Corporation leased the Corinda land from Catalyst Corinda. KPMG advice after completion [246] On 10 May 2018, PresCare Financial Controller, Mr Kalon Playford, emailed a copy of the Corinda development agreement to KPMG for the purpose of KPMG advising on the indicative terms for a lease or sale and lease of the Carina land, the latter of which was to be on similar terms to those for the Corinda transaction.111 [247] In August 2018, the PresCare executives obtained from KPMG a “Commercial Terms Review” of the Corinda development agreement and the Corinda lease. That review identified aspects of the transaction which KPMG considered were not consistent with market terms, or which represented unreasonable commercial risks. Events after KPMG advice [248] On 31 October 2018, the Corporation and Woollam signed a design and construction contract for the Corinda RACF (the Building Contract). By then, Woollam had already commenced work. [249] Practical completion occurred on 3 April 2020. Shortly before practical completion, the Corporation informed Catalyst Corinda that it did not intend to open the RACF because it was in “financial distress”. Catalyst Corinda offered to forbear from charging the Corporation for any amount owing under the Corinda transactions documents for a period of 12 months from practical completion. The adjustment amount claimed under cl 9.2 of the Corinda development agreement [250] It is necessary to say something further about Catalyst Corinda’s claim for the adjustment amount under cl 9.2 of the Corinda development agreement. 111 See [285]. -- 48 of 82 -- 49 [251] The Corinda development agreement provided for the Corporation to elect for a total of the payments to be made to the builder under the Building Contract, the pre-construction costs, and the costs of acquiring the Corinda land (the Elected Corinda Cost). The Corporation was to notify Catalyst Corinda of its Elected Corinda Cost “on or before the date of execution of the Building Contract”. The estimate would fix the AEFIPs subject to adjustments noted at [253] below. The rent would not be affected. [252] Within 30 business days of receiving the Corporation’s Elected Corinda Cost, Catalyst Corinda was to deliver to the Corporation a schedule setting out the AEFIPs due for an Elected Corinda Cost from $28 to $35 million (the AEFIP Schedule). Catalyst Corinda undertook that “the calculation methodology used to formulate the AEFIP Schedule will be the same as that applied” for the Townsville transaction agreements. [253] Following practical completion, there would be adjustments. If the Elected Corinda Cost was lower than the Actual Corinda Cost,112 then the Corporation was to pay Catalyst Corinda the difference (up to a cap of $1 million). If the Elected Corinda Cost was higher than the Actual Corinda Cost, then Catalyst Corinda was to pay the Corporation the difference (up to the same cap). [254] On 31 October 2018, when the Corporation and Woollam executed the Building Contract, the Corporation had not decided on the level of finishes it wanted for the Corinda RACF. The Corporation and Catalyst Corinda agreed to defer the date the Corporation would give notice of the Elected Corinda Cost until closer to practical completion. [255] During construction, the Corporation decided it wanted a higher level of finishes. This increased the price under the Building Contract. Between December 2018 and May 2020, the Corporation issued 18 funding notices to Catalyst Corinda. Catalyst Corinda paid all the amounts payable by the Corporation to Woollam under the Building Contract. This included $1,568,798.00 for variations requested by the Corporation, including for the higher finishes. In addition to these construction costs, Catalyst Corinda also paid pre-construction costs and land acquisition costs. The Actual Corinda Cost was $29,426,916.26. [256] On 20 February 2020, close to practical completion, Catalyst Corinda gave the Corporation an update on the Actual Corinda Cost to that date ($27,138,612.22) and an estimate of the Actual Corinda Cost to the then anticipated date of practical completion (20 March 2020). The estimate was $29,724,566.49. [257] The Corporation did not give written notice to Catalyst Corinda of its estimate of the Total Development Cost of the Corinda RACF, by practical completion or at all. [258] Catalyst Corinda honoured its forbearance offer to the Corporation. [259] On 9 April 2021, about a year after practical completion, the Corporation and Catalyst Corinda were among the parties that executed the HOA. By the HOA, they agreed that the AEFIP Payment Amount under the Corinda development agreement would be 112 Being the total of the actual payments to be made to the builder under the Building Contract, the pre- construction costs, and the costs of acquiring the Corinda land. -- 49 of 82 -- 50 immediately due and payable on termination of the HOA. On 12 May 2021, the HOA was terminated. [260] On 4 June 2021, Catalyst Corinda gave the Corporation the AEFIP Schedule for the Corinda development agreement, based on an Elected Corinda Cost of $29 million.113 The AEFIP Payout Amount was $14.36 million. The accompanying letter from the solicitors for Catalyst Corinda to the solicitors for the Receivers advised that: “the AEFIP Payout Amount for the Corinda Development Agreement that is due and payable by PCQ on termination of the [HOA] is $14.36M”, and that the Corporation was: “liable to pay a true-up amount of $426,916.26 to Catalyst Corinda under clause 9.2 of the Corinda Development Agreement.” [261] Counsel for Catalyst Corinda submitted that the Corinda development agreement should be construed so that, if the Corporation failed to give the required written notice, the Corporation would be deemed to have given notice of the Elected Development Cost in the table that is closest to the Actual Corinda Cost. That would be $29 million.114 Counsel contended that the implication of such a term was necessary to give business efficacy to the agreement and to the parties’ agreement to allow the Corporation to defer giving the notice until closer to practical completion. [262] It is apparent that, when the parties agreed that the Corporation could defer giving notice until a date closer to the date of practical completion, they caused a deficiency in the expression of their consensual agreement. They omitted a term that they should have included, to deal with circumstances in which the building work reached practical completion without the Corporation giving the required notice. The deficiency was caused by the failure of the parties to direct their minds to this eventuality and to make explicit provision for it. [263] As the date of practical completion approached, the Actual Corinda Cost would be easier to estimate, as most of the costs would have been incurred, most of the decisions, events and circumstances that could affect those costs would have been made, occurred, or transpired. [264] It may be presumed that, had they turned their minds to it, the parties would have agreed that the Corporation would be deemed to have given notice that the Elected Corinda Cost was one of the figures in the table for Actual Corinda Cost that was nearest to, without exceeding, the estimated Actual Corinda Cost known to both parties before the agreed date (which was the date of practical completion). [265] In the circumstances, the Corinda development agreement should be construed in that way. [266] That estimate of Actual Corinda Cost was $29,724,566.49, made by Catalyst Corinda and communicated to the Corporation on 20 February 2020. So, the Elected Development Cost is deemed to be $29 million, and the AEFIP payout amount is $14.36 113 Catalyst Corinda used the same calculation methodology that had been used for the Townsville transaction documents. 114 Based on the Actual Corinda Cost of $29,426,916.26. -- 50 of 82 -- 51 million. The deemed Elected Corinda Cost was lower than the Actual Corinda Cost by $426,916.00. So that is the adjustment amount payable by the Corporation to Catalyst Corinda. [267] The Receivers did not engage with Catalyst Corinda’s claim for the Corinda AEFIP Payout Amount of $14.36 million, save to contend that the amount was not payable until Catalyst Corinda provided the AEFIP Schedule and demanded payment. The Receivers contended that Catalyst Corinda has not pleaded any demand. This issue had not been raised by the Receivers in their pleading. [268] I am satisfied that the Corporation’s agreement in the HOA, that the Corinda AEFIP Payout Amount would be immediately due and payable on termination of the HOA, obviated any need for Catalyst Corinda to make a further demand. If I am in error in this respect, I am satisfied that, in the circumstances, the 4 June 2021 letter, enclosing the AEFIP Schedule, was a sufficient demand. [269] In the circumstances, the Corporation should pay interest on the Corinda AEFIP Payout Amount and the related adjustment amount from 4 June 2021, being the date the Corporation was advised of the actual sums due and payable. The Corinda AEFIP payments [270] In the period between 3 April 2020 and 12 May 2021, five quarterly AEFIPs accrued. Each was $567,000.115 The total of the unpaid repayment instalments is $2,835,000. Most of this period was covered by Catalyst Corinda’s forbearance. The balance was while the HOA was on foot, with the potential to resolve all the Catalyst parties’ claims. [271] Once the HOA terminated, Catalyst Corinda was entitled to demand the outstanding AEFIPs. As noted above, the amount payable for each AEFIP was not quantified and communicated to the Corporation until 4 June 2021. It follows that the Corporation should pay the outstanding amount with interest from 4 June 2021. The Carina agreements [272] Negotiations concerning the Carina transaction documents commenced a few months after the Corinda HOA was executed. The negotiation occurred in the context of the Corporation attempting to refinance around $21 million in debt it owed to CBA under various facilities (the CBA Facilities).116 This debt was secured against the property managed by the PresCare executives under the supervision of the PresCare Board. To understand that context, it is necessary to consider some dealings with CBA about the CBA Facilities before negotiations commenced with the Catalyst parties about the Carina land. CBA debt before negotiations for the Carina agreements [273] Before 1998, the Corporation had granted CBA mortgages over the titles to all the existing RACFs owned by the Corporation. The Corporation granted CBA mortgages over the Carina Block and the Townsville land, after it acquired those lands. 115 One quarter of the annual $2,268,000 AEFIP amount, based on an Elected Corinda Cost of $29,000,000. 116 The relevant covenants and terms of the CBA Facilities are noted below. -- 51 of 82 -- 52 [274] On 18 December 2017, CBA issued a breach letter to the Corporation because the PresCare operations had failed to meet the minimum earnings before interest, taxes, depreciation and amortisation (EBITDA) and the interest cover ratio (ICR) covenant under the CBA Facilities for the June 2017 and September 2017 quarters. [275] On about 11 January 2018, Mr Harris, Mr Lynch, and Mr Skelton met with CBA officers, and the January PresCare Board minutes record that “a discussion was held around our ongoing banking relationship and both parties agreed that PresCare will seek new banking arrangements in September” 2018. [276] On about 22 January 2018, CBA issued a further breach letter to the Corporation, this time relating to an increase in inter-company loans to Credere Services Group Pty Ltd and its four subsidiaries (the Credere companies). The Credere companies were owned by the Corporation117 and managed by PresCare executives. They operated commercial businesses associated with aged care. [277] By late February 2018, the February PresCare Board minutes record that PresCare executives contacted Westpac and engaged consultants to assist in consideration of alternative financiers. Initial contact with Catalyst Carina [278] On 20 March 2018, Mr Skelton told Mr Laboo and Mr Cunningham118 that he was running a process to refinance the CBA Facilities. He referred to difficulties arising from the Royal Commission into Aged Care. Mr Skelton said one of the options being considered was a sale and lease back of the Carina RACF, with the rent for the facility to be paid from earnings from the Carina RACF and other RACFs operated by PresCare at sites not leased from a Catalyst party.119 Mr Skelton asked if the Catalyst parties would be interested in putting forward a proposal. Mr Cunningham and Mr Laboo said they would discuss this internally and revert to him. [279] On 22 March 2018, the PresCare Board discussed the potential sale and lease back of the Carina RACF. The March Board minutes record that PresCare executives told the Board that a sale would release $40 to $45 million to use on other projects and would increase revenue by about $28 million. [280] On 29 March 2018, Mr Cunningham emailed Mr Skelton a proposed “high level draft” of sale and lease back terms for the Carina RACF. The terms contemplated a $40 million purchase price,120 lease payments of $11,000 per bed, AEFIPs of $2.982 million per annum over a 10-year period, and a waiver of the establishment fee. The other terms were equivalent to terms in the Corinda heads of agreement.121 117 The Corporation held all the shares in the parent company. 118 Mr Lynch was also present. 119 At this time, the Corporation had leased the Townsville Land from Catalyst Townsville and was about five weeks from agreeing to lease the Corinda land from Catalyst Corinda. So, the other RACFs were those in Rockhampton, Maryborough and Thornlands owned by the Corporation and supervised by the PresCare officers. 120 I infer Mr Skelton had communicated this figure to Mr Cunningham, as it had no relationship to the likely value of the Carina land. Nothing turns on this inference. 121 It had been executed on 19 February 2018. -- 52 of 82 -- 53 [281] The same day, Mr Playford gave Mr Lynch his comments on the terms of the proposed “high level draft”, noting: “our options are limited, but we have thought about potentially arguing for a secured ‘advance’ of Townsville and Corinda RADS? Restructure behind the scenes”. [282] On 2 May 2018, at Mr Lynch’s request, Mr Cunningham provided indicative terms for an “all lease option” (that is, rent only with no AEFIPs) for the Carina RACF. The purchase price remained $40 million. A Catalyst party would pay stamp duty of $2 million. The annual lease payments would be $21,800 per bed. [283] Later that day, Mr Playford provided Mr Lynch and Mr Skelton with his comments on the “all lease option”. Mr Playford said, “So we sell at twice the price, and have to lease back at twice the price (so their figures make sense based on some market activity)”. He referred to a 2016 Knight Frank article, “Property Snapshot: The Real Village and Care Transactions Story”, on the Generation Healthcare/RSL transaction. [284] On 7 May 2018, Mr Playford emailed Mr Lynch a spreadsheet entitled “Catalyst Financing Model – Vela” (the Playford Carina Financing Model). Vela was the name of the Carina RACF. Advice from KPMG [285] On 10 May 2018, Mr Playford emailed Mr Zubrik of KPMG copies of the indicative terms for the Carina RACF (both the “all lease option” and the proposed “high level draft” sale and lease back option, for a $40 million purchase price) and a copy of the Corinda development agreement.122 Mr Playford posed queries about the proposals for advice by KPMG. [286] On 13 June 2018, KPMG gave a presentation to PresCare executives on the Carina RACF transaction. KPMG recognised that the “transaction price does not necessarily reflect a market value” and: “the proposed rent (on a without AEP basis) is double the average market rent for similar facilities. This is driven by the minimum capital return PresCare is seeking ($40 million) and the return on investment”. [287] KPMG made recommendations set out in a document provided to Mr Skelton and Mr Lynch the same day. It contained the following statements: “KPMG has concluded that the commercial terms proposed by Catalyst for the Vela transaction are sub-optimal and do not reflect a value for money outcome for PresCare. … [T]he … return generated by Catalyst is based on pricing for the Townsville transaction and is above market for the Vela asset. … [T]he proposed rent (on a without AEP basis) is double the average market rent for similar transactions. … 122 Which had been executed on 27 March 2018. -- 53 of 82 -- 54 [I]f time is not of the essence, PresCare should consider competitively tendering the sale and leaseback to improve the financial terms. … Given the impacts on longer term financial flexibility, PresCare may be better served by extending its existing finance facilities to allow it to develop a property strategy that aligns its strategic, operational and financial objectives and identifies the optimal financing solution. … [R]eplication of the single asset strategy (for Townsville and Corinda) may result in broader implications for PresCare. We recommend that PresCare consider developing a corporate property strategy to deliver its future growth ambitions.” [288] Later that day, Mr Playford requested a discussion with the KPMG debt team about CBA and Westpac. He also requested indicative pricing from KPMG on a closed tender process (with 4–6 participants) to be run in cooperation with KPMG and conclude in time to settle with CBA at the end of September 2018. [289] On 22 June 2018, KPMG provided the PresCare executives with a presentation in relation to its debt enquiry which stated: “PresCare are considering capital options to facilitate the repayment of existing debt owed to [CBA]. Furthermore, we understand that Catalyst Health REIT has secured $100 million in funding from Sunsuper, is seeking further investments in this sector and have an interest in acquiring the 154 bed aged care facility (“Vela”) which PresCare currently own and operate in Carina. Whilst this option may allow for the repayment of CBA, the decision to replicate the Townsville transaction (on the same terms) and enter a sale and leaseback arrangement for Carina with Catalyst Health REIT does not represent optimal value for money and a superior outcome could be achieved through either a: • Debt refinance process; or • Competitive sale and lease back process. KPMG are pleased to present our proposal to the Board of PresCare for consideration in relation to the pursuit of a debt or sale and leaseback solution.” [290] On 25 June 2018, KPMG provided the PresCare executives with a draft engagement letter for debt advisory services which stated: “PresCare have existing loan arrangements with CBA and have requested assistance to arrange a refinancing of the existing facilities with a new financier, preferably prior to 30 September 2018. PresCare wishes to assess debt funding options that may be available to refinance existing debt levels and seeks to engage KPMG’s Debt Advisory Services to assist it with these tasks. The financing approach should be cognisant of the following: -- 54 of 82 -- 55 • PresCare’s ambitions to increase aged care beds from approximately 452, to 1,000-1,200 beds in future years to further support the organisational vision to build a network of connecting services for their clients and customers. • Catalyst Health REIT (owner of PresCare’s recently developed land in Townsville) have an interest in acquiring the 154 bed aged care facility (“Vela”) which PresCare currently own and operate in Carina. Alternative sale and leaseback options have not been considered at this time. • A long-term property and capital strategy needs to be further developed to assist determine the best funding sources for the above. This Engagement Letter is prepared on the assumption of a successful refinance of the existing CBA facilities with a new financier in the time proposed. Phase 1 is expected to take approximately 4-5 weeks after receipt of (a) the financial model and (b) PresCare’s Strategic Plan. At that time, based on soft market soundings with relevant financiers, it will be determined if a debt refinancing will achieve a successful outcome. If an outcome is deemed unlikely, this Engagement will be replaced with an Engagement Letter from KPMG Property Consulting Pty Ltd and a competitive closed market process will be undertaken to achieve a successful ‘sale and leaseback’ transaction through Catalyst Health REIT, or a similar provider, with the commercial terms of that Engagement Letter consistent with the terms outlined herein.” [291] On 3 July 2018, the PresCare Board discussed matters including: “- We have a number of options in relation to banking – 1. Working with Design Farm and Westpac. 2. Catalyst sale and leaseback on terms applicable to Townsville. 3. Working with KPMG Debt Advisory and Real Estate. - Proposal from KPMG running two streams to achieve a result – one is the rebank stream and the other to run in parallel is a sale and leaseback option so we can look at one or the other or a combination of the two. Three, five & 10 year strategy to facilitate future growth.” [292] The Board resolved to accept and engage KPMG for three months to assist in the debt restructure. The Board approved payment of $30,000 per month and a $125,000 success fee. Further breaches of the CBA Facilities [293] On 23 April 2018, CBA had issued a further breach letter to the Corporation because PresCare operations had failed to meet the minimum ICR covenant under the CBA Facilities in the December 2018 quarter. CBA confirmed it would not be extending any debt facilities beyond the current loan term maturity date of 29 September 2018. -- 55 of 82 -- 56 [294] On 31 May 2018, CBA had issued a ‘Review Event’ letter to the Corporation for failing to maintain 10% of its RADs liability in cash or cash equivalents as required under the CBA Facilities. CBA requested that the Corporation remedy the breach within 30 days. [295] On 29 June 2018, PresCare executives wrote to CBA advising that they were unable to remedy the failure, but were taking action to find alternative funding sources with the intention of refinancing the CBA Facilities. [296] On 9 July 2018, CBA wrote to the PresCare executives reiterating that the Corporation’s financial obligations to CBA had to be repaid in full by 28 September 2018 and reserving its rights in relation to breach of the RADs liquidity ratio required under the CBA Facilities. [297] On 10 July 2018, Mr Playford received a draft valuation from JLL of the RACFs portfolio as at 30 June 2018. It valued the Carina RACF at $28 million and the adjoining vacant (unsubdivided) parcel of land at $7.5 million. [298] Between 15 and 16 July 2018, Mr Playford sent Mr Hall and Mr Zhang of KPMG three different versions of a spreadsheet entitled “Bank Finance Model V14 15072018 2100” (PresCare Bank Finance Model). [299] On 3 September 2018, KPMG sent the PresCare executives a proposed timeline for the refinancing process, attaching a summary of potential restructuring scenarios and a draft flyer for prospective financiers. The draft flyer included the statement that “Presbyterian Church of Queensland is the ultimate counterparty to any borrowing agreement, providing explicit support to the transaction.” This was plainly a reference to the Corporation as the only legal entity able to be a party to a borrowing agreement. [300] Also on 3 September 2018, Mr Skelton wrote to CBA (copying Mr Lynch and others), providing: (a) an update on the operational review of PresCare operations and the Credere companies, the asset sale program and the debt refinance process; (b) confirmation that the Board had approved the sale of the vacant land adjacent to the Carina RACF; (c) advice that, in addition to the sale of the adjoining vacant land, PresCare executives were working with Catalyst to develop options for a sale and lease back of the Carina RACF which “can be finalised within similar timeframes to the refinancing”; (d) advice that PresCare executives were exploring a refinancing of the CBA Facilities with KPMG, including seeking additional funding to meet the 10% minimum liquidity amount for RADs; (e) a timeline for the refinance (to complete financial close by 27 November 2018) and advice of initial discussions with five banks; and (f) a request for a two-month extension of the CBA Facilities on the basis that, amongst other things, “PresCare as a wholly owned unincorporated entity of -- 56 of 82 -- 57 Presbyterian Church of Queensland has continued ongoing support of the PCQ throughout this process”.123 [301] On 7 September 2018, Mr Zhang of KPMG sent Mr Skelton, Mr Lynch, and Mr Playford a draft of a presentation for an upcoming meeting between PresCare executives and CBA (the KPMG CBA Presentation). [302] On 10 September 2018, Mr Playford challenged, amongst other things, the statement that “PresCare is nearly $1m worse off each year from year 1”. He also sent KPMG a revised version of their workings spreadsheet comparing bank debt versus a sale and lease back for the Carina land and RACF. [303] Later that day, Mr Lynch forwarded Mr Skelton an email from KPMG attaching a revised version of the KPMG CBA Presentation in which the commentary about PresCare operations being nearly $1 million worse off each year had been removed and replaced with “PresCare is still assessing the benefits of a bank refinancing compared with a sale and leaseback transaction”. Further contact with Catalyst Carina [304] On 13 August 2018, Ms Hickey had sent an email to Mr Cunningham asking him to speak to Sunsuper about a revised transaction for a sale and lease back of the Carina RACF on the following terms: $30 million sale price, with a lease at a capitalisation rate of 8.0% on the basis of a 10 x 10 x 10 year lease term and a buyback right every 5 years. [305] On 27 August 2018, Mr Lynch and Ms Hickey had asked Mr Cunningham for revised terms. Later that day, Mr Cunningham sent a revised set of terms which he would submit to Sunsuper – for funding of $30 million, lease payments of $14,610 per bed (which equated to a 7.5% capitalisation rate), stamp duty to be paid by the Catalyst party, and no establishment fee. All other terms were the same as the previous transactions, save that a capitalisation rate of 7.5% was to be used for the buyback right, in place of 8.5% used in the Townsville and Corinda transaction documents. [306] On 17 September 2018, Mr Cunningham met with Mr Skelton, Mr Lynch and Ms Hickey. He was asked to prepare a letter for the Finance Board setting out the terms of the proposed Carina sale and lease back transaction. [307] On 18 September 2018, Mr Cunningham emailed a draft letter setting out Sunsuper’s approved terms. Ms Hickey confirmed the following day that Mr Skelton had reviewed and approved it. [308] On 19 September 2018, Mr Laboo emailed Ms Hickey the final letter of approval, advising that he had received approval from Sunsuper for a Catalyst party to acquire the Carina RACF for $30 million and setting out the terms of the offer, including a lease back at a 7.5% capitalisation rate. [309] On 20 September 2018, Finance Board members124 received an “Update on PresCare short term loans” signed by Mr Lynch and Mr Skelton. The paper sought: 123 This seems to be a reference to the Corporation, rather than the Church. 124 Including Mr Hall, Mr Harris, Mr Knapp, Mr Rodgers, and Rev Strong. -- 57 of 82 -- 58 (a) an extension of $3 million worth of existing short-term funding that the Finance Board had authorised the Corporation to provide to PresCare operations until 30 November 2018 (when it was anticipated the refinancing process would complete) – noting that the funding related to the minimum liquidity amount for repayment of RADs required by the CBA Facilities, which remained at 10%; and (b) Finance Board approval of additional short-term funding or assignment by the Corporation of its term deposits to $3 million to cover the liquidity shortfall, noting “This alternative would not require [the Corporation] to transfer cash to a PresCare account and [the Corporation] would also retain all interest earned during the period.” [310] That day, the Finance Board: (a) resolved to request from the PresCare Board “an appropriate level of information at the next Finance Board meeting concerning the submissions being forwarded to the banks supporting the refinancing of existing facilities, including five-year financial projections”; and (b) approved the requested extension and additional short-term funding or (if approved by CBA) assignment of term deposits up to $3 million for 60 days. Further advice from KPMG [311] On 21 September 2018, Mr Zhang of KPMG emailed Mr Lynch (copying Mr Skelton, Mr Playford, and others) advising that the final refinancing flyer had been issued to ANZ, Bendigo Bank, BOQ, NAB, and Westpac. [312] Also on 21 September 2018, Mr Skelton emailed CBA advising that the refinancing flyer had been sent to the banks and that BOQ had agreed to renew the Credere companies’ facilities on improved terms. Mr Skelton’s email attached a copy of the refinancing flyer. The 8-page refinancing flyer was a predecessor to the longer 59-page refinancing information memorandum later provided to Bendigo Bank and CBA referred to below at [331]. [313] The refinancing flyer stated, among other things: “An opportunity exists to provide a $41 million (including bridging loan) funding package to the Presbyterian Church of Queensland (trading as PresCare) by refinancing existing senior debt and working capital facilities … Since 1929, the Presbyterian Church of Queensland (the Church) has been providing aged care services in Queensland[.] In 1998, PresCare was established as a separate brand/ABN, but is legally the same entity, to provide residential aged care, affordable housing and community support services across Queensland”. [314] The refinancing flyer forecast normalised EBITDA for the PresCare-managed RACFs in FY19 and FY20 would be $1.1m and $2.7m respectively. In the “recap” section under the heading “financial capacity”, the flyer stated: -- 58 of 82 -- 59 “Presbyterian Church of Queensland is the ultimate counterparty to any borrowing agreement, providing explicit support to the transaction”. [315] On 22 September 2018, the PresCare Board received a copy of the refinancing flyer and the Catalyst party’s offer terms of 19 September 2018, summarised at [308] above. [316] On 25 September 2018, the PresCare Board discussed the refinancing options being explored. It was told that CBA had verbally advised Mr Skelton that they would offer a 12-month extension on the CBA Facilities because they believed the refinancing process would take longer than the requested two months. The board was also told that BOQ had renewed their facility for the Credere companies for 12 months. The Board resolved that a decision on the extension of the CBA Facilities would be made by flying minute. [317] Later that day, Mr Zhang of KPMG emailed Mr Skelton, Mr Playford and Mr Lynch with preliminary, informal responses from the banks. Mr Lynch forwarded the email to Ms Hickey stating, “Plan C (Catalyst) rapidly coming in to play based on the below…”. [318] On 26 September 2018, CBA emailed Mr Skelton (copying Mr Lynch) to confirm that CBA had formally approved a 12-month extension to the expiring CBA Facilities and provided the terms of that approval (relevantly including a $25,000 establishment fee per quarter, payable in advance). [319] The same day, Mr Lynch forwarded the CBA terms to KPMG, and asked (inter alia) whether to delay agreeing to the extension. KPMG responded: “… real question would be around the capacity of the commercial businesses to operate within true AP/AR terms going forward??? (C2H and Surecom would seem to be ok in for the next 12 months at least – others would be a challenge at this point).[125] We could potentially not charge some costs to the entities but they would have to be shown through PresCare results.” [320] Mr Lynch forwarded KPMG’s advice to Mr Harris and Mr Rodgers, copying Mr Skelton. Mr Harris responded, “Let us aim to be rid of CBA no later than mid December so we avoid the establishment fee for the second quarter”. Mr Lynch responded, advising that he had spoken to Conrad Hall of KPMG and he believed the PresCare Board should take the CBA offer “as it solves our immediate audit problem and buys more time in relation to getting a deal down with another bank”. Mr Skelton noted Mr Rodgers should be in the PresCare office the next morning, so Mr Skelton and Mr Harris could “go upstairs and chat with Ron [Clark] if he is around”.126 [321] On 27 September 2018, Mr Skelton and Mr Lynch exchanged emails to the following effect about the CBA terms for an extension of the CBA Facilities: 125 The commercial businesses, including C2H and Surecom, were Credere companies. “AP/AR terms” are accounts payable/accounts receivable terms. 126 This seems to be a reference to Ronald Clark, who was Clerk from 2006 to 2018, and so an Officeholder, and ex officio member of the PresCare Board, the Finance Board and the Property Board -- 59 of 82 -- 60 [322] Mr Skelton was concerned about “the inter company debtor stuff” for two of the Credere companies.127 He disagreed with Mr Harris’s view, because he didn’t think a deal with another bank was achievable. Mr Skelton asked what Mr Rodgers thought. [323] Mr Lynch responded: “… I guess the way that we could manage it would be by flowing funds from PresCare through to PCQ (repayment of PresCare loans) and then PCQ could flow this through to Credere… Greg [Rodgers] obviously wants out of the CBA asap but it would seem that the re-banking piece may be more difficult than we originally thought and the timelines in the flyer will prove to be too tight. In relation to Catalyst, we will need to present a full case to the Board which will mean that we won’t get that opportunity until the end of October. If we accept the CBA offer, I would hope that by end of October we will be able to run with Catalyst or be well advanced with a Bank.” [324] Mr Skelton responded that he was concerned about losing the Catalyst deal and his preference was to have no debt and have money in the bank (explaining that the next 12 months would get worse, citing the royal commission and Stewart Brown EBIT reports). He concluded that “In the end the Board has the right to make the decision not me, but my view is to take the Catalyst deal.” [325] Mr Lynch responded: “I think Catalyst are fine with where we are at – especially if we get Corinda moving … I believe that the Board has signed off on Corinda and I think that it has also been through to [Finance Board] back in February (…). The real question on Corinda is whether it would negatively influence any banks??”. [326] Mr Skelton responded: “Is the real issue an asset sale from Georges [Harris’] perspective. Everything about the cba deal is more expensive through fees and charges and covenants …”. [327] On 2 October 2018, Mr Lynch told Mr Skelton that BOQ and Bendigo Bank were the only banks that remained interested. Mr Skelton responded, “Please keep Catalyst close, I am really unsure KPMG has been that useful”. [328] Also on 2 October 2018, Mr Lynch and Mr Skelton signed a PresCare Board paper recommending that the Board resolve to accept the extension of the CBA Facilities. The paper was circulated to the PresCare Board along with a flying minute for the Board’s consideration giving effect to that recommendation. 127 Contented Chef (a catering business) and Walk on Wheels (a mobility business). -- 60 of 82 -- 61 [329] On 3 October 2018, KPMG advised Mr Playford and Mr Lynch that, of the five banks KPMG had approached, four did not wish to proceed further in the refinancing process and only Bendigo Bank had expressed interest. KPMG requested information for Bendigo Bank. The same day, Mr Playford emailed KPMG an updated PresCare Bank Finance Model. [330] On 4 October 2018, Mr Skelton, Mr Lynch, and Mr Playford received feedback from Westpac on the decision not to consider a refinancing application. Mr Skelton told Mr Lynch: “Think you need to convince George ASAP that Catalyst is the best move. We have no way of completing erp or getting maintenance done to correct levels”.128 [331] On 8 October 2018, KPMG emailed Mr Lynch, Mr Skelton, and Mr Playford a draft refinancing information memorandum for Bendigo Bank. It built on the refinancing flyer. Appendix A to the draft memorandum contained a summary of the Townsville transaction. Among other things, it stated: “… • The AEFIP is a ‘bespoke’ structured instrument that lowers the long- term occupancy cost required by PresCare by increasing the short-to- medium term occupancy cost to PresCare. After year 10, there is a potential benefit to PresCare compared to a rent-only structure (using an assumed 8.5% cap rate) • The AEFIP may also serve to reduce the cost of an asset buyback • The AEFIP serves to balance the need for Catalyst to meet its IRR hurdles, whilst providing PresCare with 100% upfront funding, retention of aged care places (and RADs/bonds), a discounted lease payments and an option to repurchase the RACF”. [332] On 15 October 2018, KPMG emailed Mr Skelton and Mr Lynch the feedback from the five banks approached as part of the refinancing process. In providing this feedback, KPMG noted: “4 of 5 banks were quick to decline the opportunity to participate, with only Bendigo indicating appetite to proceed further (they are on leave this week)”. “We will continue to work with you on progressing the [information memorandum] for Bendigo but caution there are significant risks in achieving a successful outcome. We also note that a [sale and lease back] for [Carina] may provide a short term fix to the financing predicament, but the (high) cap rate is likely to only delay the issue and could cause additional cash flow pressures in the future”. “[Sale and lease back] in Townsville is on particularly unfavourable terms to PresCare.” 128 “erp” was a reference to the “Enterprise Resource Planning” software system which PresCare executives were then implementing. -- 61 of 82 -- 62 “Continuing to pursue Corinda when finances are in the current state demonstrates an inability to recognise the issues facing PresCare.” “[PresCare should [i]mmediately discontinue any future [sale and lease back] plans (e.g. Corinda).” “Change of leadership required before Banks can consider supporting a refinance.” [333] On 21 October 2018, KPMG emailed Mr Skelton “some thoughts for you on the way forward, in terms of options available, as you requested”. The email included reference to safe harbour protections. Mr Skelton forwarded this email to Mr Lynch. The original email to Mr Skelton stated: “Sale and lease backs … are simply another form of debt provided by an alternative financier and is provided with substantial debt servicing costs – these future lease obligation levels for Townsville, [Carina] and Corinda is [sic] likely to place ever increasing pressure on PresCare financials initially, and would [require] ever increasing support of the Church. … [I]f you require some comparative modelling (bank debt vs [sale and lease back]), we suggest that Paul Morris’ team could assist [sic] prepare this for your (and the Board’s) information. … We continue to believe that negotiating a better outcome on Corinda with Catalyst in relation to a 12 month delay is important for you, to allow PresCare time to refocus the business and dispose of other assets to ensure it is in an improved financial position. … We believe that entering further [sale and lease back] at this time is likely to end up with a highly problematic financial position for PresCare requiring substantial bail-out financing from the Church and do not believe it is in the Church’s best interests to continue to add debt/debt- like instruments to the balance sheet”. [334] On 23 October 2018, Mr Lynch sent profit and loss, balance sheet, and cash flow forecasts for the RACFs and the Credere companies, to CBA, as well as the KPMG refinancing information memorandum. Further contact with Catalyst Carina and introduction of Catalyst Finance [335] On 27 September 2018, Ms Hickey had told Mr Cunningham that the PresCare Board would make a decision about the Carina RACF at the next board meeting in four weeks and that Catalyst was “in the mix” of financing options. [336] On 22 October 2018, the PresCare executive team met. The minutes of this meeting record, among other things: “In the interim we have done some negotiation with Catalyst and talking about a number of different options with them. This process is advancing quickly in the background but in essence we are looking at end September being the first reporting date, close out the new agreement with them. We are hopeful that 1. We will potentially be able to get ourselves into a -- 62 of 82 -- 63 position that in 12 months’ time CBA will want to continue with us and 2. That Bendigo will be interested in going forward with us in terms of debt. There are challenges with forecast numbers across all areas of the business.” [337] That day, the PresCare executive informed McCullough Robertson that there was to be a new transaction with a Catalyst party relating to the Carina RACF land. Later, McCullough Robertson gave legal advice of a limited nature about the proposed Carina transaction documents. [338] For the Carina RACF sale and lease back to proceed, the Corporation needed to subdivide the land on which the Carina RACF had been constructed and Lot 2 (which the Corporation was to retain). In October 2018, the subdivision and creation of new titles were months away from completion. The PresCare executives wanted to repay CBA earlier, and so asked the Catalyst parties to structure a transaction to permit that to occur. [339] On 26 October 2018, Mr Cunningham sent Ms Hickey a draft transaction framework for the Carina RACF to permit a substantial portion of the funding to be provided ahead of the creation of separate titles for the land. In summary: (a) A Catalyst party would provide interim funding of $27 million to allow the Corporation to refinance the debt owed to CBA. This amount would be repayable on completion of the purchase contract or before 31 March 2019. (b) The PresCare Board would procure the subdivision of the Carina land. (c) A Catalyst party would contract for the purchase of the Carina RACF land, with settlement to occur following completion of the subdivision. (d) The Corporation would grant the Catalyst party a call option in respect of the whole of the land held by the Corporation at Carina (including the Carina land), exercisable if the purchase contract was terminated for any reason other than a default by the Catalyst party. (e) The Corporation would execute: (i) a lease for the Carina land, to come into effect upon the subdivision; (ii) a lease for the whole of the land held by the Corporation at Carina (including the Carina land), to come into effect if the Catalyst party exercised the call option; and (f) The Catalyst party would have step-in rights under either relevant lease in the event of a default by the Corporation after the lease came into effect. [340] On 28 October 2018, Mr Skelton emailed Mr Harris a copy of a board paper on the Carina RACF sale and lease back and relevant financial modelling ahead of the upcoming PresCare Board meeting, saying that he would appreciate Mr Harris’ thoughts. Mr Harris responded on the same day, stating “I am now comfortable that this is PresCare’s best financing option. It seems to be financially viable”. [341] On 30 October 2018, the PresCare Board approved entry into the sale and lease back with the Catalyst party on lease only terms. The Board also resolved that alternate -- 63 of 82 -- 64 funding continue to be pursued with the aim of finalising the CBA relationship as soon as possible. Ahead of this meeting, board members had received a board pack containing: (a) confirmation that the extension of the CBA Facilities had been approved by the Finance Board; (b) a copy of the refinancing information memorandum; and (c) the Board paper on the potential sale and lease back of the Carina land with the Catalyst party, signed by Mr Lynch and Mr Skelton, referred to in [340] above. [342] On 15 November 2018, the Finance Board noted the PresCare Board’s approval to enter into a sale and lease back of the Carina land. [343] On 27 November 2018, the PresCare Board resolved unanimously to approve granting the mortgage in favour of a Catalyst party on an interim basis for $27 million pending the full settlement of a sale of the Carina land for $30 million. The Board also approved the sale of Lot 2 at Carina for $6.5 million, noting about $200,000 needed to be spent on sewerage works for the subdivision, which would likely take until about May 2019. [344] On 20 December 2018, the Finance Board approved the mortgaging of the Carina RACF, pending a sale and lease back, and the Property Board approved the Carina RACF sale and lease back. [345] On or about 20 December 2018, the Corporation and Catalyst Finance executed: (a) a loan facility agreement under which Catalyst Finance agreed to provide a loan of $27 million (later increased to $27.5 million by a deed dated 18 September 2019) to the Corporation (Carina Facility Agreement); (b) a mortgage granted by the Corporation in favour of Catalyst Finance over the PresCare Block (Carina Mortgage); and (c) a specific security deed, granting Catalyst Finance security over all of the Corporation’s present and future assets, undertakings, rights, and property where such property related to or was used in connection with the PresCare Block and the Carina RACF (Carina Security Deed). [346] The Corporation and Catalyst Carina executed: (a) a contract for the sale of the Carina land (to be created by subdivision) for a purchase price of $30 million, from the Corporation to Catalyst Carina (Carina Sale Contract);129 (b) a triple net lease of the Carina land from Catalyst Carina to the Corporation for 15 years with two options to renew for a further term of 5 years and 10 years, respectively (Carina Lease); 129 The Carina Sale Contract was conditional on: registration of a survey plan which by subdivision would create the Carina land; and the Corporation agreeing to sell, and Catalyst Carina agreeing to purchase, the Carina land. -- 64 of 82 -- 65 (c) a lease side deed granting the Corporation a right to repurchase the Carina land following the sixth anniversary of the lease period (Carina Lease Side Deed); and (d) a deed of forbearance in relation to the Carina Lease Side Deed by which Catalyst Carina agreed to forbear certain obligations under the Carina Lease Side Deed. [347] On 24 December 2018, the Corporation issued a funding notice to Catalyst Finance for the $27 million. Catalyst Finance applied most of the funds to pay out the CBA Facilities and paid the balance of the funds to the Corporation. [348] There is no evidence that Mr Laboo or Mr Cunningham or anyone from the Catalyst parties was told of any of the Corporation’s breaches of the CBA Facilities or CBA’s notices about those breaches. Nor were they told the view expressed by KPMG about the financial position of the PresCare\-managed RACFs, noted above. [349] The Corporation and Catalyst Finance varied the Carina Facility Agreement three times during 2019, principally to allow additional time for the Corporation to subdivide the land, and to provide for the advance of an additional $500,000 to the Corporation. [350] On 18 September 2019, the Corporation issued a further funding notice to Catalyst Finance under the Carina Facility Agreement for the additional $500,000. The Corporation received the funds on 30 September 2019. [351] On 19 March 2020, the Carina land subdivision was finalised, creating the Carina land and Lot 2. [352] The sale of the Carina land to Catalyst Carina settled on 9 April 2020 for $32,999,808 and the title was transferred on 21 April 2020. The Corporation used most of the settlement proceeds to repay the loan from Catalyst Finance. [353] The Corporation retained Lot 2. On 30 October 2020, the Corporation sold Lot 2 to property developers for $4.4 million. The Catalyst parties’ alleged breach of trust The Receivers’ breach of trust claims [354] The Church’s provision of “aged health care and/or community services to the public” was undertaken in a particular context. This included Commonwealth laws regulating the contributions residents could make to RACF operators.130 [355] On entry, a resident could choose to pay a RAD131 to secure a room and then pay a daily fee for services.132 An RACF operator who received a RAD could only apply it for certain permitted uses, including certain types of capital expenditure.133 The permitted uses included, relevantly, the development costs of building the RACF and the 130 Aged Care Act 1997 (Cth), Chapter 3A. 131 A refundable accommodation deposit. 132 The resident may be able to “draw down” on the RAD to meet the services fee. 133 Aged Care Act 1997 (Cth), s 52N-1 and the Fees and Payments Principles 2014 (No 2) (Cth). -- 65 of 82 -- 66 repayment of debt incurred for such capital expenditure.134 The service fees are income that the RACF operator may apply as it wishes. [356] A RACF operator could accept a resident on the basis the resident would not pay a RAD, but instead would pay a daily accommodation payment (DAP) to the operator. Some residents were eligible for a means tested accommodation supplement paid by the Commonwealth. Like the service fees, the DAPs are income that the RACF operator may apply as it wishes. [357] The Catalyst model was designed to incorporate a rent per bed, which the operator would pay from income, and an AEFIP, which the operator would pay from capital in the form of RADs. [358] An RACF operator would be obliged to refund the RAD when a resident left the RACF.135 The operator would expect to admit a new resident to take the vacated place; and might expect the new resident to pay a RAD that would replace the refunded RAD. Knowledge of a breach of trust [359] The Receivers submitted that the Catalyst parties purchased the land in Townsville and Carina in circumstances which would have indicated to an honest and reasonable person that the Corporation was a trustee of a charitable trust, and that those transactions were in breach of trust. [360] The Receivers urged the Court to find that Catalyst, by Mr Laboo, must have known that the Corporation was acting as a trustee because: its name included the word “Church”; the PresCare website described PresCare as a ministry of the Church; PresCare was a not-for-profit body and its “parent” church, the Continuing National Church, had charitable status. [361] Mr Laboo had experience as an executive in the for-profit provision of aged care services. He had presented the Catalyst model to church agencies and not-for-profit bodies on the basis that they were reliable long-term users of assets in which superannuation funds might be invested. It was apparent during his cross-examination that Mr Laboo is a citizen of the disenchanted world, leeched of mystery and richness organised religion might have supplied.136 His only interest in the internal processes of a counterparty was in how long it would take it to decide whether to proceed with each funding proposal. [362] For their part, the PresCare executives, Board and legal and financial advisers dealt with Mr Laboo and Mr Cunningham on a purely commercial basis. They gave no indication that the Corporation required any different consideration because of its charitable status. They were seeking funds to advance an ambition to expand the provision of aged care in newer larger RACFs. [363] In the negotiation of the first Townsville transaction document, the Corporation through its solicitors asserted that it was not acting as trustee of a trust. For the reasons above, those representing the Corporation were wrong about that fact. The Corporation had not 134 Ibid, s 52N-1(2)(e). 135 Including, when a resident dies, to the deceased’s estate. 136 “Entzauberung der Welt” in Max Weber’s Wissenschaft als Baruf, Duncker & Humbolt, Munich, 1919. -- 66 of 82 -- 67 signified on the registered title that it held its interest in the Townsville land or the Carina land as trustee. It did not signify on any sale or transfer document that it was selling as a trustee. In the development agreements for Townsville and Corinda and the Carina Lease Side Deed, the Corporation warranted to each of the Catalyst parties that, if it was a trustee, it had power to enter into the agreements, did so in the proper administration of the trust, and without any breach of trust. These were “boilerplate” warranties, appropriate as Catalyst Townsville was contracting as trustee of a trust. They were included without objection from any party. [364] Mr Cunningham thought that church buildings were assets held for the charitable purpose and that the Church would have other assets with charitable purposes. It does not follow that Mr Cunningham knew that the PresCare executives and any legal entity through which they operated or intended to operate RACFs were acting for the trustee of a charitable purpose trust. [365] The way those representing and acting for the Corporation dealt with Mr Laboo and Mr Cunningham, including the error made by their lawyers about the status of the Corporation, meant that an honest and reasonable person in the position of Mr Laboo, Mr Cunningham, and the Catalyst parties’ legal advisers would not have known that the Corporation was entering into the transactions as a trustee of a charitable trust. Such a person would not have known that the Corporation was entering into the transactions in breach of any trust. The Receivers adduced no evidence to support their contrary contention. Honesty and good faith [366] The Officeholders acted honestly and in good faith in binding the Corporation by each of the agreements with the Catalyst parties. None of those acting for or advising the Corporation in respect of these transactions was shown to have acted otherwise. The Receivers invited the Court to second-guess the decisions to make these bargains by reference to information and opinions that were not available to those acting for or advising the Corporation or to the Officeholders. [367] The Receivers did not show that the Officeholders, the members of the General Assembly or any of its boards or committees or any of their internal or external advisers acted in bad faith. There was no evidence of dishonesty. The Court may presume they acted in good faith.137 Special restrictions of the sale of trust property including land [368] The Receivers submitted that Catalyst Townsville and Catalyst Carina were obliged to return the land they purchased from the Corporation unless they could show that the transactions were beneficial to the charitable purpose trust and “justified” in the circumstances. 137 Elder’s Trustee & Executor Co Ltd v Higgins (1963) 113 CLR 426 at 448 (Dixon CJ, McTiernan and Windeyer JJ). -- 67 of 82 -- 68 [369] The Receivers relied on authorities about unauthorised dealings in land that had been permanently endowed to be used for specific charitable purposes.138 As noted, the Townsville and Carina land was not held by the Corporation in such a way. The Corporation’s dealings with the land were authorised in accordance with the Church’s constitution. The Corporation did not breach any relevant measure in its letters patent or the Code. There is no relevant authority and no good reason to apply the alleged “purchaser principle” to transactions that were authorised and involved property the Corporation was at liberty to buy, sell or lease. [370] The transactions with the Catalyst parties did not involve dealing with land or capital gifted to the Corporation to be held in perpetuity for a charitable purpose. The Receivers did not show that any other relevant property was held by the Corporation as a permanent endowment. It is not appropriate to analyse the relevant dealings of the Corporation through the prism of dealings with land gifted to a charitable object “for ever” or land held by trustees who did not have statutory powers of sale.139 [371] Decisions on such dealings reflect the importance of a trustee strictly observing the terms of a gift or bequest or other trust instrument. The approaches the Receivers called the “purchaser principle and the “South Seas Company principle” do not apply as they contended to land acquired by a trustee from funds not gifted, bequeathed, or raised for the purpose of acquiring the land. Nor do they apply to land acquired using funds borrowed by the trustee. Such approaches originated in times when estates and interests in land were infrequently traded, and buildings were expected to be used for hundreds of years. They do not have the same force when the trustee is not expected to be able to use the subject land or the buildings in perpetuity for the charitable purpose and trades the freehold for a 40-year lease – approximately the useful life of the buildings to be constructed on it. [372] The Corporation was able to acquire, use and dispose of the land and other property to pursue the Church’s charitable purposes in accordance with the Church’s constitutional processes. The Corporation was not in breach of trust for doing so. In all the dealings with the Catalyst parties, the Corporation applied land and property for the charitable purpose of providing care for the aged and infirm. [373] The use of property to serve a charitable purpose is not a breach of trust simply because property is converted from a freehold estate to a leasehold interest or is realised and the proceeds applied to serve the charitable purpose. It is absurd to impeach the application of trust property to care for the aged on the basis that it does not result in a “permanent or lasting” outcome. Many charitable works are more ephemeral. Some might endure, at most, for the life of the person whose situation cries out for aid. [374] The Corporation had purchased the Carina and Townsville land from third parties using funds it was empowered to apply and dispose of for the charitable purposes of the Church in accordance with decisions made under the Church’s constitution. It disposed of the freehold estate and used the funds for the same purpose, including to repay debts incurred for those purposes, in accordance with the Code. The Receivers submit that the law 138 Including: The Attorney-General v The South Sea Company (1841) 4 Beav 453; In Re Church of England Trusts Corporation (Wangaratta) [1924] VLR 201; The Melbourne Jewish Orphan and Children’s Aid Society v ANZ Executors and Trustee Company Limited [2007] VSC 26. 139 cf President and Scholars of the College of St Mary Magdalen, Oxford v Attorney-General (1857) 6 HL Cas 189 at 205, 10 ER 1267 at 1273 (Lord Cranworth LC). -- 68 of 82 -- 69 prevents such dealings in principle. Such an overreach was rejected more than 130 years ago.140 Hazardous or speculative investment [375] The Corporation did not transact with the Catalyst parties as an investor, making a trust investment. The Corporation sold, leased, borrowed, and built to pursue the charitable purposes of the Church by providing care for the aged. These were transactions to finance the construction of new RACFs for the Corporation to operate in fulfillment of one of the charitable purposes of the Church. [376] The Corporation was not exercising a power of investment, as known to law or equity and preserved by s 23 of the Trusts Act 1973 (Qld). Whatever duties trustees might owe when making trust investments, they were not operative duties in respect of the Corporation’s entry into the transactions with the Catalyst parties. Imprudent, hazardous, and wholly unsuitable agreements with substantial risk [377] The risk the Receivers rely on is the risk that the operation of the RACF, to be constructed on the Townsville Land, “would not generate sufficient cash operating surplus” to meet the Corporation’s financial obligations to Catalyst Townsville. To the extent this is anything beyond the ordinary risk of operating an RACF, there was no evidence of it in October 2017, when the General Assembly bodies authorised the transactions. If it is the ordinary risk, then there is no proper basis to impeach the Corporation’s reliance on the decisions of the General Assembly’s boards and committees made with the assistance of the experienced executives of PresCare and external professional advisers. [378] The relevant General Assembly boards and committees were drawn from the elders and members of the Church. They made decisions for the Church in pursuit of its charitable purposes. They cannot be held to a standard required of company directors. [379] To make their case that each agreement with a Catalyst party was imprudent, hazardous, and wholly unsuitable for a trustee of a charitable purpose trust, the Receivers relied on the opinion evidence of Laila Burnet, Chris Westworth, Grant Corderoy, and Darrell Price. Their evidence was also relevant to the Receivers’ contention that, in entering into each agreement, the Corporation exposed trust property to substantial risk without any reasonably assured outweighing benefit. [380] There may have been some “honest blundering and carelessness”141 by less experienced or qualified individuals, content to act on the recommendations of those more experienced or qualified. Some of the PresCare executives may have adopted ambitious plans. Others, including members of the PresCare Board, the Finance Board and the Property Board, may have assumed those with the plans had the wherewithal to achieve them. The Church governance processes operated. There was no single decisionmaker. 140 In re Clergy Orphan Corporation (No 2) [1894] 3 Ch 145 at 154-55 (Lord Hershell LC, Lindley and Davey LJJ). 141 Karger v Paul [1984] VR 161 at 161. -- 69 of 82 -- 70 [381] In each of her three reports to the Court, Ms Burnet stated that she valued the market rent in accordance with the Australian Property Institute definition.142 However, in her oral evidence she admitted she had not done so. On the contrary, Ms Burnet told the Court she had adopted as the “market rent” the amount that, in her opinion, the existing operator of each “comparable” RACF could afford to pay as rent, based on a percentage of the operator’s EBITDAR. She described the percentage of EBITDAR as “paramount” to her opinions on “market rent”. She intentionally failed to disclose this reasoning in her report, apparently because “it would be just as easy to pull all of that apart and prove it wrong or correct either way.” In Ms Burnet’s approach, if a better, more efficient operator took over the same RACF, then the “market rent” for the RACF would increase. If a poorer, less efficient operator took over, then the “market rent” would decrease. [382] Ms Burnet’s reports were partial in another sense. She omitted from her comparisons relevant information about Infin8Care RACFs, apparently because they tended to undermine the Receivers’ allegations. [383] Oddly, Ms Burnet was not given actual trading data for the RACFs. She was given forecasts in a version of Mr Playford’s financing model for the Carina RACF rather than the actual trading data. The figures in those forecasts were a little over half the actual figures placed before the PresCare Board when it approved the transactions for the Carina RACF. [384] Ms Burnet’s opinions were of no assistance in establishing whether the rent payable by the Corporation under any of the triple net leases was above or below the market rent. [385] Mr Westworth expressed an opinion that AEFIPs should be treated as rent, so that for each Catalyst transaction the four quarterly AEFIPs should be added to the annual rent and the sum compared with the market rent. In her own misguided way, Ms Burnet had assessed “market rent” on the basis that, in addition to paying rent, comparator RACFs would be making loan or capital payments for building and fit-out costs. These fundamental differences made it inappropriate to compare Mr Westworth’s rent plus AEFIP figure with Ms Burnet’s “market rent”. [386] The Receivers also relied on the report of Mr Westworth to submit that the Corporation could not use RADs to discharge its liability to make the AEFIPs. This had not been part of the Corporation’s pleaded case. Mr Westworth’s report appeared to be about the appropriate accounting treatment of AEFIPs. His view was that the AEFIPs were expenses. [387] Under cross-examination, Mr Westworth revealed that he did not know how aged care places were funded or how RADs could be used. He also did not know that RACF operators treated RADs as capital and not as income. He was unaware that the Corporation had obligations to pay Woollam as the builder of the Townsville and Corinda RACFs. He did not know that the Catalyst parties had advanced funds to the Corporation to discharge those obligations. [388] When pressed, he expressed the view that if the Corporation had borrowed the building costs from a bank, the proper accounting treatment of the loan repayments would be to regard them as rent. 142 Based on Spencer v The Commonwealth (1907) 5 CLR 418. -- 70 of 82 -- 71 [389] Mr Westworth’s uninformed and idiosyncratic opinions were not a proper basis for a finding about the use that the Corporation could have made of RADs paid by residents of its RACFs. [390] Ms Burnet gave some evidence of the transactions between Australian Unity and Infin8Care. This limited evidence showed another provider of equivalent services did so on terms involving two payments by the RACF operator (Infin8Care) to the property owner (Australian Unity). One payment was “rent” based on the amount Infin8Care thought it could afford to pay from the income earned from residents. This rent was capitalised to calculate the amount of the total building cost of the RACF that would be serviced by the rent. The other was a loan repayment made by Infin8Care for the balance of the building cost, which was paid as capital from the RADs held by Infin8Care. Ms Burnet’s evidence also tended to show that the Catalyst capitalisation rates were within the range for other RACFs traded over the relevant period, and that some RACF operators with premium facilities, like those built in the Corinda RACF, achieved EBITDAs between $20,000 and $30,000 per bed per year. [391] The Receivers relied on the report of Mr Corderoy to show that the PresCare RACFs were performing poorly at the time the PresCare executives were in negotiation with the Catalyst parties and that the estimates of EBITDAs for the Carina RACF and for the RACFs to be constructed at Townsville and Corinda were unrealistic. Mr Corderoy used data drawn from Stewart Brown surveys of RACF operators. [392] Mr Corderoy’s opinion on “industry averages” was not reliable. His figures were based on a data set corrupted by the inclusion of RACFs that apparently paid no rent and the exclusion of large providers, for-profit providers, and newly developed RACFs, such as the Infin8Care RACFs. The curious nature of Mr Corderoy’s data set made it unsuitable as a basis for an opinion on the industry average rent and so for a comparative assessment of the rent the Corporation agreed to pay under the Catalyst leases with the industry average. [393] These issues made Mr Corderoy’s opinions on industry average EBITDAs similarly unreliable. It was possible to check Mr Corderoy’s calculated EBITDA for the Carina RACF ($2,195 per bed per annum) with the actual EBITDA reported to the PresCare Board (between $14,722 and $19,722 per bed per annum) for a similar period. In short, Mr Corderoy’s opinions, based on the corrupted data set, were unreliable. [394] Mr Price compared his own analysis of the financial performance of the PresCare businesses between 2015 and 2018 to the “industry average” sourced from Mr Corderoy’s Stewart Brown surveys. It was not clear why Mr Price’s opinion of the actual performance should be preferred to the actual audited financial statement of PresCare. The problems with Mr Corderoy’s material are noted above. [395] As well, the Stewart Brown survey figures were not before the PresCare Board when it considered the Catalyst parties’ proposals or when the Corporation entered into the agreements with the Catalyst parties. An assessment of whether the transactions were imprudent, hazardous, wholly unsuitable, or involved substantial risk should be made based on the information available to those acting for and advising the Corporation at the time the relevant decisions were made. Those decisions were made on information and models drawn from PresCare’s then trading performance, with input from experienced executives and professional external advisers. -- 71 of 82 -- 72 [396] The decision of the Receivers to put the unsatisfactory or partial opinion evidence of Mr Westworth, Ms Burnet, Mr Corderoy and Mr Price before the Court indicates that they were unable to produce soundly based and impartial evidence that the rent payable to the Catalyst parties was above the market rent or that the trading performance of the PresCare RACFs should have led those acting for and advising the Corporation to conclude the transactions were imprudent, hazardous, wholly unsuitable, or involved substantial risk. In any event, the Receivers failed to prove their contentions. Alleged unconscionable conduct in the transactions The Receivers’ unconscionable conduct claims [397] In ASIC v Kobelt,143 Gaegler J explained unconscionable conduct according to the common law and then statutory unconscionability, by reference to s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act): “In Australia, the central concern of a court administering equity in identifying conduct as unconscionable has long been understood to be to relieve against a stronger party to a transaction exploiting some special disadvantage which has operated to impair the ability of a weaker party to form a judgment as to his or her interests. Section 12CA of the [ASIC Act] gives statutory expression to that equitable conception of unconscionable conduct. The section’s prohibition against engaging in conduct in relation to financial services that is “unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories” operates to impose an additional statutory sanction on conduct that is unconscionable in equity. Suggestions that its reference to conduct that is unconscionable within the meaning of the unwritten law imports some more expansive and less precise denotation are contradicted by extrinsic material explaining the precise choice of statutory language and have been properly refuted. Section 12CB of the ASIC Act does something more. The section’s prohibition against engaging in conduct in connection with the supply or possible supply of financial services ‘that is, in all the circumstances, unconscionable’ is expressed to be ‘not limited by the unwritten law of the States and Territories relating to unconscionable conduct’. Those words make clear that the statutory conception of unconscionable conduct is unconfined to conduct that is remediable on that basis by a court exercising jurisdiction in equity. Furthermore, determination by a court exercising jurisdiction in a matter arising under the section of whether conduct is, in all the circumstances, unconscionable is required by s 12CC to be informed by the numerous considerations specified in that section, each of which has the potential to bear positively or negatively on the characterisation of conduct as conduct that is or is not unconscionable, and each of which must be taken into account if and to the extent that it is applicable in all the circumstances. … 143 (2019) 267 CLR 1 (Kobelt). -- 72 of 82 -- 73 The correct perspective, in my opinion, is that unambiguously adopted by the Full Court of the Federal Court in relation to materially identical provisions in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [144] . The correct perspective is that s 12CB operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of a court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standard in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances. The Commonwealth Parliament’s appropriation in s 12CB of the terminology of courts administering equity in the expression of the normative standard which the section prescribes serves to signify the gravity of the conduct necessary to be found by a court in order to be satisfied of a breach of that standard. ‘Unconscionability’, as has been long and well understood, ‘is not a slight matter, and behaviour is only unconscionable where there is some real and substantial ground based on conscience for preventing a person from relying on what are, in terms of the general law, that person’s legal rights’. … … what Parliament’s appropriation of the terminology of equity in the expression of the normative standard in s 12CB does not do is to authorise a court exercising jurisdiction in a matter arising under that section to dilute the gravity of the equitable conception of unconscionable conduct so as to produce a form of equity-lite. The appropriation of the terminology of equity does not allow a court to adopt a process of reasoning which starts with the equitable conception of unconscionable conduct, involving exploitation of a special disadvantage, and then uses considerations identified in s 12CC to water down the court’s assessment of what amounts to a special disadvantage or to allow the court to arrive more easily at an assessment that conduct amounts to exploitation. [The] conduct proscribed by the section as unconscionable is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience. … The judgment required of a court exercising jurisdiction in a matter arising under s 12CB is a heavy one. For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society. Those values are not entirely confined to, or entirely removed from, the values which historically informed courts administering equity in the development of the unwritten law of unconscionable conduct. They include respect for the dignity and 144 [2013] ATPR 42-447 at 43,463 [23], 43,467 [41]. -- 73 of 82 -- 74 autonomy and equality of individuals. They include respect for the cultural diversity of communities.”145 (citation omitted) [398] The Receivers alleged that the Catalyst parties acted unconscionably in persuading the Corporation to transact with them, and that the Catalyst parties pressured the Corporation to transact about the Corinda land. [399] The Receivers failed to make good these allegations. Catalyst’s position [400] When negotiations with the PresCare executives began, Catalyst was just two individuals, Mr Laboo and Mr Cunningham. Mr Laboo had degrees in law and mathematics. Mr Cunningham in accountancy. They both had experience in finance. Mr Laboo had management experience in the retirement and aged care, and childcare sectors. They had not engaged any external professional advisers or consultants. [401] During the negotiations, the Catalyst parties were working out the detail and testing the feasibility of a new way of investing in RACFs. They had only an idea, their enthusiasm, and no real working capital. The Catalyst model was untested. They faced the challenge of persuading potential RACF operators to adopt the Catalyst model and persuading investors to fund the RACF operators willing to use it. Until and unless they did so, the Catalyst parties had no income. Mr Laboo and Mr Cunningham were working on the negotiations with only the hope that their idea would bear fruit, and the Catalyst parties (and the Catalyst model) would become valuable. [402] On 26 June 2017, Catalyst signed a “Terms Sheet” with Carnegie, under which Carnegie was to assist the Catalyst parties in raising funds from investors. On 27 July 2017, Carnegie introduced Sunsuper to the Catalyst model and Townsville proposal. On 4 October 2017, Carnegie established the “Carnegie Catalyst Healthcare Real Estate Trust”. From 22 December 2017, Sunsuper would provide funding through this trust for the Townsville transaction. It is likely from this time that the Catalyst parties had access to funds to remunerate Mr Laboo and Mr Cunningham for their work and to cover expenses incurred to that point in time. The Corporation’s position [403] Throughout the negotiations with the Catalyst parties, the Corporation was well- resourced. It had over 60 people working in the PresCare department as corporate support for its RACFs and broader aged care services businesses. These staff and their predecessors had been managing five or six RACFs for 10 to 15 years. The PresCare- operated RACFs were generating about $80 million in annual revenue and employed over 900 staff. [404] Since April 2009, PresCare staff had been administering the Carina RACF, known as Vela, which the Corporation had built on the vacant Carina land in 2008-2009. It had administered a retirement living facility at Corinda developed by the Corporation, which it had sold in 2016 for $26.4 million. 145 At 36-40 [81]-[83], [87]-[90], [92]-[93]. -- 74 of 82 -- 75 [405] Since 2014, through the PresCare executives, the Corporation had been exploring developing an RACF on the Townsville land. Since the end of 2015, they had the advice of Bentleys about two models for operating an RACF on the site. [406] Some gauge of the resources available to the Corporation may be gained from the senior PresCare staff and other advisers. Some of these are noted below. CEO Mr Skelton [407] Mr Skelton remained as the full-time PresCare CEO until 20 February 2020. Mr Skelton had 20 years’ experience in aged care. He was a qualified CPA with a degree in Business, an MBA in strategic management, and a member of the Australian Institute of Company Directors. Mr Skelton’s duties included managing the overall operations and identifying potential opportunities for those operations to improve, grow, and diversify. He had overseen a period of rapid growth of PresCare operations between 2013 and 2015. Before the first contact with the Catalyst parties, Mr Skelton was working on plans to build and operate new RACFs, including at Townsville and Corinda. He was on the Finance Board and was a Director/Governor of St Andrews Toowoomba Hospital. [408] The Receivers did not call Mr Skelton. I reject the Receivers’ submission that the Court should infer that, under Mr Skelton, PresCare was not “transaction literate”. CFO Mr Lynch [409] Mr Lynch was full-time PresCare CFO from early 2012 until December 2018. He had been a chartered accountant since 1985. He had experience as a director of finance and CFO in other organisations before he joined as a PresCare executive. He had been an auditor, and had worked in finance management roles in the not-for-profit sector, as well as in business management and tax services. As CFO, he was generally responsible for all aspects of the finances, including arranging external funding and managing the relationship with financiers, modelling the financial implications that proposed transactions were expected to have on finances, briefing the PresCare Board in relation to the financial position and the financial implications of proposed transactions, and briefing the Finance Board from time to time in relation to those matters. As well as the PresCare operations, Mr Lynch’s team did the finance and accounting work for the Church. So, he had an oversight of the financial affairs of the Church (and so the Corporation) as a whole. [410] The head office staff working under Mr Lynch included about ten qualified accountants and business advisers, who were financially qualified and literate. Financial Controller Mr Playford [411] Mr Playford was the PresCare Financial Controller from June 2017 to March 2020. He was experienced in financially modelling commercial transactions. He assisted Mr Lynch in analysing financial information and projections provided by the Catalyst parties about the Townsville and Corinda transactions. The Receivers did not call Mr Playford. COO Mr Bosel [412] Until mid-2017, Mr Bosel was PresCare COO. He had 18 years’ experience in the UK Aged Care industry, including on a number of UK advisory and industry boards, and in -- 75 of 82 -- 76 senior positions in major companies. He had worked in the Australian retirement industry since 2006. He also had consultancy roles for aged care related projects in Australia and Singapore. GM Property Development Ms Wilkinson [413] Ms Wilkinson was PresCare general manager of property development. Ms Wilkinson was responsible for managing operations related to potential new RACFs and upgrades to existing RACFs. General Counsel Ms Hickey [414] Ms Hickey was PresCare General Counsel from about May 2017 until May 2019. The Corporation had external lawyers who had been acting and advising and had provided legally qualified staff to work on secondment within the PresCare office. The Receivers did not call Ms Hickey. KPMG [415] In addition to Bentleys’ advice on developing an RACF on the Townsville land, the Corporation engaged KPMG to provide independent advice on the Townsville transaction, on the specific differences that emerged in the Corinda transaction, and on the Carina transaction. The Receivers did not call any of the KPMG partners or staff involved in advising the PresCare Board and PresCare executives.146 McCullough Robertson [416] Ms Hickey and other PresCare executives were advised by McCullough Robertson. The team at McCullough Robertson who advised Ms Hickey and the PresCare officers included a partner, Ms Conlon, a senior associate, Ms Chan, and a lawyer, Mr McPhee.147 Board supervision [417] The work of the PresCare organisation was also supervised by three General Assembly boards: the PresCare Board, the Finance Board and, to some extent, the Property Board. [418] Between 2013 and 2020 the common figure across all three boards was Mr Harris. He was Treasurer of the General Assembly, and so was chairman of the Finance Board and an ex officio member of the other boards for the whole of this period.148 Mr Harris was a chartered accountant and registered auditor. He had been head partner of the Gold Coast office of KPMG Peat Marwick (and its predecessor firms) from 1981 to 1996, when he retired at 65 years of age. He had continued to work as a financial planner from 1996 to 2012. 146 In particular, Mr Zubrik, Ms Manouchehri and Mr Ford were not called. 147 The Receivers did not call Ms Conlon or any of the McCullough Robertson staff. 148 As Treasurer, Mr Harris was one of the Officeholders who constituted the Corporation. -- 76 of 82 -- 77 [419] Mr Harris was called and gave evidence. He impressed as an astute and careful person. This likely reflected his long experience as an accountant and adviser. He was a frank and honest witness. As the relevant events occurred some years ago, appropriately Mr Harris deferred to contemporaneous written records of them. His deference to the collective decisions of the General Assembly and its boards was in keeping with the presbyterian form of government. In this respect, I do not regard his answers as an attempt “to diffuse attribution”. [420] According to Mr Harris, the PresCare Board understood the importance of “economies of scale” and took opportunities to increase the scale of the RACF operations. He also said the Board had a preference to “create greenfield sites”. [421] Unlike Mr Harris, the other Board members, including the Moderators and Clerks of the General Assembly, did not have backgrounds in finance or commerce. The information [422] Mr Skelton and Mr Lynch knew the Townsville transaction was the Catalyst parties’ first transaction and the first transaction using the Catalyst model. When Mr Laboo or Mr Cunningham referred to a 0.5% establishment fee as “usual”, it is unlikely Mr Skelton and Mr Lynch were misled into thinking the Catalyst parties had done like transactions before and charged that fee for them, as the Receivers alleged. Mr Skelton and Mr Lynch had been dealing with other potential financiers for the Townsville RACF. Sensibly, they would have understood it as a usual fee for arranging financing for such a large project involving a land purchase, long-term lease, and construction finance. [423] The Corporation was much better placed than the Catalyst parties to assess the risks involved in the operation of the RACFs. The transactions were developed, examined, and concluded using models originally developed for the Corporation by its auditors and advisers Bentleys, before any dealings with the Catalyst parties. After negotiations with Catalyst began, Mr Playford further developed and updated the models with reviews and input from KPMG. [424] When the Catalyst parties began seeking funds to invest in the Townsville RACF, Mr Cunningham of Catalyst told Mr Lynch that “a number of banks” Catalyst had approached had expressed concerns about the level of demand for beds in Townsville and, later, that the banks were asking for greater historical information about EBITDA per bed on the Corporation’s RACFs. As the Receivers describe it, in substance this was a concern about the assumption that the Townsville RACF would produce starting annual EBITDA per bed of $17,000. Catalyst raised these concerns with Mr Lynch because he represented an experienced RACF operator, which had supplied the original information in the model for the Townsville RACF. [425] In March 2017, during due diligence for the Townsville transaction, Mr Lynch had given Mr Cunningham the December 2016 and January 2017 PresCare management accounts for the former DSM RACFs that were still operating and the Carina RACF that had been added to the PresCare operations. Overall, the RACFs were expected to make a loss of $1.249 million for the 2016/2017 financial year. The newer Carina RACF was expected to achieve EBITDA of $17,000 per bed. The older facilities were not. Mr Cunningham told Mr Laboo that this “gives some comfort around” a $17,000 EBITDA per bed for the proposed Townsville RACF, given the age of the existing PresCare portfolio. -- 77 of 82 -- 78 [426] The agreements for all the transactions were executed before the Corporation, through the PresCare staff, began to operate the Townsville RACF, the first of the Catalyst- funded RACFs. The relevant decisions were made on the basis of forecasts and models of what might be expected to occur when the Corporation, through PresCare, began to operate the RACFs. [427] The Receivers did not allege that Mr Laboo or Mr Cunningham deliberately withheld any relevant information from the PresCare executives or their advisers to take advantage of the Corporation. Nor was that contention put to them in cross-examination. The transactions [428] The transactions with the Catalyst parties were new, but not difficult to understand. The Receivers’ characterisation of them as “sophisticated new inventions of cutting-edge fund managers” overstated the position. In Townsville and Carina, the Corporation was exchanging freehold titles for 40-year leasehold interests. In Corinda, it was taking a 40-year lease. [429] In each instance, the Corporation was borrowing to finance the construction of the RACFs on the land, which it could use for 40 years, in a way that allowed it to make two types of payment. One characterised as rent and the other as a capital payment. The parties shared an understanding that this division would allow the Corporation to use income to make rent payments over the term of the lease and to draw on RADs to make the capital payments over the agreed period of about ten years. [430] The Catalyst parties were seeking a long-term return on its investment (comprised of the land purchase and the construction loan) to meet the preference of superannuation fund managers, such as Sunsuper. The Corporation, through the PresCare Board, was seeking to build and operate newer, larger RACFs, and diversify away from the older, loss- making portfolio of RACFs it had taken over from the DSM. It also had a short-term goal: to refinance or repay an existing debt owed to the CBA. [431] The Corporation had the benefit of internal and external advice on the transactions and the documents. Those acting for the Corporation were able to understand the documents relating to the transactions. In this way, the Corporation was able to know, with a reasonable degree of certainty, the risks it would undertake in transacting with the Catalyst parties. [432] The Corporation, relying on the advice of the experienced PresCare executives, contracted with the Catalyst parties to fund those plans and to refinance the existing CBA debt. The Corporation was not tied or under any obligation to contract with a Catalyst party for any of the relevant transactions. The continuation of the relationship across two further sites was not the involuntary consequence of the Townsville transactions. These were choices made by the Corporation, with the benefit of advice. Those acting for the Corporation had explored traditional bank finance options as a means of funding ambitious plans to expand its aged care offering. They knew of the option to defer those plans (or revise them) until traditional funding sources became available. There was no -- 78 of 82 -- 79 element of exploitation or predation,149 when assessed against the normative standard of acceptable commercial behaviour. [433] Given the nature of the dealings and the relevant experience and resources available to the Corporation, through the PresCare executives, the PresCare Board, KPMG and McCullough Robertson, as between the Corporation and the Catalyst parties, the Corporation did not suffer from an “asymmetry of information” in any of the transactions, as the Receivers contended. The Catalyst parties did not take advantage of any disadvantage or lack of information on the part of the Corporation on any topic in a way that calls for the Court to protect the Corporation from the consequences of its decisions. [434] The relative strengths of the bargaining positions of the Corporation and the Catalyst parties were not such that the Corporation was at a “situational disadvantage”. Alleged exploitation [435] Having heard the oral evidence of Mr Laboo and Mr Cunningham, I am satisfied that they genuinely believed in the merits of the Catalyst model and behaved honestly in their dealings with the Corporation. They planned to use the model to attract investment in other RACFs with other not-for-profit operators. In their exchanges with the Corporation, through the PresCare executives, the Catalyst parties exhibited good faith and fair dealing. There was no trickery or sharp practice on the part of the Catalyst parties. There was no evidence that they victimised the Corporation. The Receivers failed to prove their allegations that the Catalyst parties engaged in conduct that resulted in the Corporation being required to comply with conditions that were not reasonably necessary for the protection of the Catalyst parties’ legitimate interests. [436] Although the Catalyst parties wanted faster decisions and commitments from the Corporation about each of the transactions, the Corporation took its time. None of the witnesses holding positions in the Church or PresCare at the relevant times said they were pressured by Mr Laboo or Mr Cunningham. [437] In November 2017, the negotiations between the PresCare executives and Catalyst Corinda, initiated by Mr Skelton eight months earlier, were continuing without an end in sight. Mr Laboo identified “pressure PresCare” as amongst potential options. Mr Laboo did not choose that option. He recommended “continue to pursue PresCare with urgency” for execution of a heads of agreement. It seems he had in mind a December 2017 deadline. The negotiations dragged on regardless. The Corinda heads of agreement would not be signed until 27 March 2018. The building contract would not be signed until 31 October 2018. The first draw-down on the construction loan would not be until January 2019. I reject the Receivers’ submission that this course of action by Catalyst was “an application of pressure” and their contention that it could be “properly characterised as against conscience.” Regrettably, this is typical of some of the Receivers’ overwrought submissions. 149 Kobelt (2019) 267 CLR 1, 17-18 [15] (Keifel CJ and Bell J), citing Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 427 [124] and Thorne v Kennedy (2017) 263 CLR 85 at 103 [38]. -- 79 of 82 -- 80 [438] There was no evidence the Catalyst parties exercised undue influence or pressure on the Corporation. There was no evidence they used unfair tactics in relation to the transactions. [439] There was no evidence of any element of exploitation by the Catalyst parties in the dealings between any of them and the Corporation. The Catalyst parties’ dealings with the Corporation did not have the effect of being exploitative and unfair. The indicia of unconscionability in s 22(1) and (2) of the Australian Consumer Law were not present. Alleged unconscionable conduct in the proceedings [440] The Receivers also alleged that the Catalyst parties have acted unconscionably in pursuing their claims in these proceedings, given the internal rate of return the Catalyst parties enjoyed on the funds invested through the transactions. [441] The Corporation knew the Catalyst parties’ purpose was to make long-term investments in real property, between 10 and 40 years, with agreed rates of return on the funds of the investors in the CHRET. As Mr Laboo explained, one of the fundamental premises of the Catalyst model was to hold the underlying property long term and derive long-term income from the capital invested. When the Corporation defaulted, it denied the Catalyst parties this outcome. [442] The Receivers did not show that the internal rates of return to the Catalyst parties over the short period of their investments ameliorated the adverse consequences of the loss of a lower long-term rate of return to an extent that would make it unconscionable for the Catalyst parties to insist on their legal rights. The Receivers’ submissions seem to treat the short-term capital gains on the sale of the RACFs as the same as the anticipated return on funds intended to be invested over one to four decades. The former were subject to property price variations and government policy decisions, and other less predictable factors. The Catalyst parties were not seeking investments with those risks. The Corporation’s defaults forced that outcome, but it left the Catalyst parties to seek out, examine, and procure replacement investments with the attendant costs and delay. [443] Before binding agreements were made, it was apparent to those acting for the Corporation that the AEFIP Payout Amounts could operate to the apparent benefit of the Catalyst parties if the Corporation defaulted early in the term of the leases. By the HOA, the Corporation agreed to pay the AEFIP Payout Amounts claimed by the Catalyst parties (and that this agreement would be legally binding) after the Corporation knew it could not continue to operate the RACFs and meet its contractual obligations to the Catalyst parties, if the conditions in the HOA were not satisfied. [444] There is no element of “double dipping” in seeking to recover moneys owed and unpaid. [445] In the circumstances, the Catalyst parties’ pursuit of their claims in these proceedings was not unconscionable. Conclusion on unconscionable conduct claims [446] Considering the evidence as a whole, the Receivers failed to prove that, in any respect, the Catalyst parties conducted themselves in a way sufficiently outside the societal norms -- 80 of 82 -- 81 of acceptable commercial behaviour as to warrant condemnation of their conduct as offensive to conscience. Rent and outgoings Corinda triple net lease [447] Although the Corporation did not occupy the Corinda RACF, under the triple net lease it became liable to pay rent and outgoings to Catalyst Corinda from the construction completion date of 3 April 2020. During the forbearance period, Catalyst Corinda made no demand for rent or outgoings and the Corporation paid none. [448] The Catalyst parties terminated the triple net leases on 26 July 2021. The rent payable for the period 3 April 2020 to 25 July 2021 is $1,185,318.50. The outgoings payable for that period are $139,740.80. Townsville and Carina RACFs [449] Catalyst Townsville and Catalyst Carina do not assert any express agreement that the Corporation would pay rent and outgoings for any further period during which the Corporation might occupy and operate the RACFs on the Townsville and Carina land. They assert an implied agreement to that effect or an understanding on those terms. [450] I do not accept the Catalyst parties’ submission that the Corporation, by continuing to occupy and operate the RACFs, and the relevant Catalyst parties, by not recovering possession of the RACFs from the Corporation, impliedly agreed that the Corporation would pay rent and outgoings to the relevant Catalyst parties or shared an understanding that the Corporation would pay for its continued occupation and use of the RACFs. [451] Residents occupied the Townsville and Carina RACFs. The lives of those residents would have been severely disrupted without an operator of their RACF. The Corporation, through the PresCare organisation, continued to occupy and operate the RACFs from 26 July to 6 October 2021. This conduct by the Corporation allowed the relevant Catalyst parties to sell the Townsville and Carina land with the RACFs as going concerns. It allowed the residents of the RACFs to continue to have the services essential for them to remain in the RACFs. The Corporation’s conduct saved the relevant Catalyst parties the costs of operating the RACFs themselves or paying others to do so. [452] This is a sufficient explanation for why the Catalyst parties did not seek to recover possession of the Townsville and Carina RACFs until completion of the sale to the incoming owner and operator. It is a more compelling explanation for the conduct of the parties than an implied agreement or understanding asserted by the Catalyst parties. [453] Catalyst Townsville and Catalyst Carina relied on the decision in Salehi v Salehi.150 As Chernov JA explained in Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd,151 the restitutionary claim also depended on the existence of an agreement between the parties to the effect that the occupant will be the tenant of the owner and pay for its 150 [2023] VSC 535 (Daly AsJ). 151 [2006] VSCA 6. -- 81 of 82 -- 82 occupation.152 Here, the circumstances negative the implication of an agreement to pay for the occupation. [454] It follows that the Corporation does not owe the relevant Catalyst parties the additional $1,002,788.68 they claimed for “occupation rent” and outgoings for this further period or restitutionary damages. Final disposition [455] For the above reasons, it appears that: (a) In BS 5900 of 2021, Catalyst Townsville should have judgment against the Corporation for the agreed AEFIP Payout Amount of $12,390,000.00, together with interest on that amount from 13 May 2021, and the amount of the unpaid rent of $100,186.90 and the unpaid outgoings of $42,476.64 (in each case for the period from 1 July 2021 to 25 July 2021) under the Townsville triple net lease, together with interest on those amounts from 26 July 2021; (b) In BS 12562 of 2021, Catalyst Corinda should have judgment against the Corporation for the AEFIP Payout Amount of $14,360,000.00, the difference between the Elected Corinda Cost and the Actual Corinda Cost of $426,916.26, the five AEFIPs totalling $2,835,000, together with interest on each of those amounts from 4 June 2021, and the unpaid rent of $1,185,318.50 and unpaid outgoings of $139,740.80 due under the Corinda triple net lease, together with interest from 26 July 2021; and (c) In BS 14920 of 2021, Catalyst Carina should have judgment against the Corporation for the amount of the unpaid rent of $153,913.05 and unpaid outgoings of $67,188.47 (in each case for the period from 1 July 2021 to 25 July 2021) due under the Carina triple net lease, together with interest on those amounts from 26 July 2021. [456] However, the Catalyst parties requested an opportunity to prepare draft orders for each proceeding following the publication of the reasons for judgment. It was envisaged that these draft orders would include the calculation of interest in respect of the sums owing by the Corporation to each Catalyst party in respect of the claims and counterclaim. The Catalyst parties also requested an opportunity to make submissions as to the costs of the proceedings, including the costs in respect of the intervention of the Attorney General. [457] In light of these requests, and the possibility that typographical errors or other slips may have found their way into these reasons, the Court should make directions providing for the preparation of draft orders, conferral between the parties’ legal representatives about the drafts, and short written submissions in respect of any points of difference. 152 At [22]. -- 82 of 82 --