New South Wales Supreme Court CITATION : Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council (No 2) [2005] NSWSC 1048 HEARING DATE(S) : 27/9/05 JUDGMENT DATE : 19 October 2005 JURISDICTION : Equity Division JUDGMENT OF : Young CJ in Eq DECISION : Plaintiff's claim is dismissed; Plaintiff to deliver up any of first defendant's certificates of title in its possession; Plaintiff to pay first defendant's costs of claim and cross-claim. CATCHWORDS : CRIMINAL LAW [411]- Bribery- Joint venture between Local Aboriginal Land Council and developer to develop land- Officer of Land Council received personal benefits from developer for purpose of furthering developer's interests with Council- Whether benefits constituted bribes. PROCEDURE [579]- Costs- Case effectively specific performance suit- Normally only parties to contract should be parties to proceedings- Second defendant added for reasons not directly relevant to case- Second defendant's costs to lie as they fall. LEGISLATION CITED : Independent Commission Against Corruption Act 1988 Hovenden & Sons v Millhoff (1900) 83 LT 41; [1900-3] All ER Rep 848 R v Allen (1992) 27 NSWLR 398 CASES CITED : R v Glynn (1994) 33 NSWLR 139 Tasker v Small (1837) 3 My & Cr 63; 40 ER 848 Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156 Redglove Projects Pty Limited (P) PARTIES : Ngunnawal Local Aboriginal Land Council (D1) New South Wales Aboriginal Land Council (D2) FILE NUMBER(S) : SC 1984/04 T S Hale SC (P) COUNSEL : D A Smallbone (D1) J K Kirk (D2) Morgan Lewis Attorneys (P) SOLICITORS : Patrick Woods & Company (D1) Chalk & Fitzgerald (D2) LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Wednesday 19 October 2005 1984/04 – REDGLOVE PROJECTS PTY LTD v NGUNNAWAL LOCAL ABORIGINAL LAND COUNCIL (NO 2) JUDGMENT 1 HIS HONOUR: On 6 September 2005, I gave reasons in this matter. I dismissed the plaintiff's claim and forecasted various orders to restore the status quo ante. 2 In para 116 of the judgment, I referred to the fact that I did not need to make findings on certain matters in order to decide the case, and in particular referred to the fact that I had said in para 113 that I did not need to decide whether a series of payments made by Mr Burke to Mrs House together with a "Consultancy Agreement" between Redglove and Mrs House constituted bribes, nor whether Mr Burke bribed other members of Ngunnawal to support the joint venture. I then said that I would make full findings on these other issues if both parties so requested. 3 When the draft short minutes were brought in, Mr Smallbone of counsel for Ngunnawal, made such a request. Mr Hale SC for the plaintiff, made it clear that he did not make that request. He pointed out that I had said in para 116 that I would make full findings if both parties so requested, and only one had so requested. 4 However, I am of the view that any party has the right to have the Judge make findings of fact on all matters which are relevant. Mr Smallbone fears that the plaintiff will appeal and that it may possibly succeed and he wants to make sure that he has an alternative ground for supporting the verdict. On the other hand, Mr Hale has indicated that whilst at this stage an appeal is unlikely, he cannot rule out that possibility. Accordingly, in my view I need to give additional reasons. 5 The motive for not giving reasons is that I thought that both Mr Burke and Mrs House probably thought that they were doing the right thing and that their conduct could not be criticised. However, measured on the standard applied in this Court, that unfortunately is not the case. 6 The chair of the Ngunnawal Local Aboriginal Land Council was one Matilda Anne House. Originally she was not to be called, but the first defendant's counsel indicated that he would make her available for cross-examination. On 20 July, however, she was called and her affidavit of 16 June 2005 was read. She had no tertiary education or any significant experience in business. 7 She said that Mr Burke, the principal of Redglove, was introduced to her by a Mr Gerry Moore. He was introduced as a person who could help the officers of the first defendant. Apart from an introduction, there was nothing that occurred at this time. However, about a year later Mr Burke told Matilda House that if the Ngunnawal land was developed "you will all own your own homes" and "you will all be millionaires". 8 Mrs House said that although it seemed too good to be true she did think that working with Mr Burke would generate money to provide better housing and treating some of the health problems of her community. 9 She says "From quite early in these renewed discussions with Martin Burke he started to offer me a job consulting with his property development business working with Aboriginal communities. It took quite a while to get a formal consulting agreement in place, but I was paid money by him from time to time. I considered it to be payment for work I was doing, and to do later, for his company and I didn't see anything wrong with it. The other members of NLALC were aware that I was receiving payments from Burke. I did not see a conflict with my office as Chairperson with NLALC because the work I expected to do for Burke's company was not with NLALC, rather it was working with his company and the Local Aboriginal Land Councils of other areas." 10 The Memorandum of Understanding was entered into between the parties on 22 November 2000. The first defendant had no legal advice before entering into that Memorandum. 11 On 28 August 2001, the Joint Venture Agreement was entered into between the plaintiff and the first defendant. This had been approved by a meeting of the first defendant Council on the same day, but no legal advice had been received. Clause 6 of this agreement provided that the first defendant would transfer 16-20 Lowe Street, Queanbeyan to the proposed joint venture company for $260,000 and would transfer 245 Cooma Street, Queanbeyan for $190,000. In each case the payment was to be deferred and would be paid from the profits of the development. 12 There was then further discussion as to whether a better form of agreement could be worked out, and finally on 13 June 2002, the DMDA referred to in my earlier judgment, was signed. As was pointed out in my earlier reasons, the DMDA not only dealt with the two parcels of land referred to in earlier versions of the joint venture agreement, but all the other land of the first defendant was effectively frozen by it. The DMDA attributed $260,000 to the Lowe Street land, $190,000 to Cooma Street, Queanbeyan, now known as the Mirrabee land and a third parcel of land at Bungendore at $160,000. 13 As mentioned in the earlier judgment, these figures were a considerable under-value. As at 2003, a year later, there was evidence that Lowe Street had a value not of $260,000 but somewhere between $800,000 and $940,000 and that the Bungendore land was not worth $160,000 but nearer $780,000. As I have already found, at the time of negotiating the values for inclusion in the DMDA, Mr Burke was fully aware of the under-value, but Matilda House was not. I then said in para 58 of the previous judgment: "As Mr Murr SC put to Mr Burke in cross-examination, the negotiation was like taking candy from a baby. Mr Burke disagreed but I think that is a not too inaccurate way of describing the parties' relative bargaining positions." 14 In para 59 of the previous judgment, I indicated that the DMDA was not a good bargain from the first defendant's point of view even aside from the substantial under-valuation of the land for the reasons I then gave. 15 In addition to all this, there was some suggestion in the evidence that Mr Burke had white-anted the will of the members of the first defendant by being extremely generous with gifts of liquor and cigarettes to members of the community who customarily met outside the local Woolworths supermarket on most days. 16 I do not put much store on this material because there is no proper evidence to connect the beneficiaries of this largesse with the persons who actually agreed in general meeting to the DMDA or any previous version of it. 17 However, the material has some relevance in that it reinforces the view that the plaintiff made a deliberate attempt to undermine Matilda House's loyalty to the Land Council by giving her a very generous contract to represent the plaintiff, particularly with other Aboriginal communities. 18 Mrs House originally said that she did not consider that there was any conflict of interest because her work was mainly with other Aboriginal land communities influencing them in favour of the plaintiff. However, when cross-examined by Mr Griffiths SC for the second defendant at T199, she said that at the time she did not think there was any conflict of interest, but now she thinks there probably was. 19 I believe that this latter view was correctly taken. However, I should note that Matilda House did, in the course of her cross-examination, make it quite clear that at least some of the money that she received was not used by her personally but was used for the benefit of her community. Even accepting this, the problem is that when a person is paying another person considerable sums of money, it is a natural human reaction to feel particularly grateful to him or her and so one's inhibitions against entering into foolish deals with him or her are minimised. 20 If I had found there was a binding contract, it would seem to me that every principle that one reads about in the legal literature on unfair bargains would have meant that this Court would have given no equitable relief to the plaintiff. The cases in this area mainly deal with people who took advantage of 21 year old heiresses in the 18th century or drunken old men in the 20th century, but the general principles of equity apply where a person ingratiates their way into an Aboriginal community and strikes a very advantageous bargain where the Aboriginal community does not obtain sufficient independent advice. 21 It is clear that the first defendant did not obtain appropriate advice. The various versions of the joint venture agreement were entered into without any independent legal advice, though there was some legal input by lawyers who were associated with the plaintiff and upon whom the first defendant may have had some reliance. However, there was no truly independent legal advice; there was no real explanation of the terms of the agreement; the price was at an extreme under-value and all the factors point to the contract being so unfair that it would not be the subject of specific performance. 22 Indeed, it may even be that the DMDA was so unfair that the Court would set it aside if asked to do so. 23 It may be that Mr Burke considered himself to be a knight in shining armour to the Aboriginal community and it may be that he did not approach this project in any way other than feeling it would be a good deal for both himself and the Aboriginal community. The fact remains that objectively speaking it was a most unfair contract, he would receive great benefits at little risk and this Court would not have been willing to enforce his bargain. 24 In para 113 of my main judgment, I indicated that I did not need to decide on whether Mr Burke had offered, and Mrs House accepted, bribes. 25 The concept of bribery is as the Queensland Full Court said in Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156 at 181, surprisingly elastic. The Court quotes Professor Noonan in his book Bribery (MacMillan, New York) p 697, that the word bribe "is used today not only in its primary sense of an exchange with an office holder but in the sense of any inducement given to alter conduct that would naturally be otherwise." Perhaps in that sense the payments could be considered as bribes. However, in the classic sense of the term, especially remembering that in the classic sense of the term bribery and corruption are crimes, I could not be satisfied that what passed between the plaintiff and Mrs House were bribes. 26 The classic definition of bribe is given by Romer LJ in Hovenden & Sons v Millhoff (1900) 83 LT 41 at 43; [1900-3] All ER Rep 848 at 851. His Lordship was speaking as a member of the Court of Appeal, the other two Judges giving separate judgments to the same effect. His Lordship remarked that some members of the mercantile community would not "like the ugly word 'bribe', or would excuse the giving of a bribe if that word were used, but they differ from the courts in their view as to what constitutes a bribe. It may, therefore, be well to point out what is a bribe in the eyes of the law. Without attempting an exhaustive definition, I may say that the following is one statement of what constitutes a bribe. If a gift be made to a confidential agent with a view to inducing the agent to act in favour of the donor in relation to transactions between the donor and the agent's principal and that gift is secret as between the donor and the agent – that is to say, without the knowledge and consent of the principal – then the gift is a bribe in the view of the law. If a bribe be once established to the Court's satisfaction then certain rules apply. … First, the Court will not inquire into the donor's motive in giving the bribe, nor allow evidence to be gone into as to the motive. Secondly, the Court will presume in favour of the principal and as against the briber and the agent bribed, that the agent was influenced by the bribe; and this presumption is irrebuttable." 27 Also as to bribery see R v Allen (1992) 27 NSWLR 398 at 402 and R v Glynn (1994) 33 NSWLR 139 at 143-5 where bribery is defined as offering an undue reward to a person in public office in order to influence that person's behaviour in that office. 28 In the instant case, if payments were made to Mrs House over and above the worth of the work she did for the plaintiff, there was no secret about it. Accordingly, we do not have in this case a bribe in the technical sense of the word. Nonetheless, what occurred would be sufficient in equity not to enforce the contract and perhaps to set it aside. 29 There was a suggestion in the second defendant's preliminary outline of submissions that the evidence might suggest that the actions of the plaintiff and its directors might constitute corrupt conduct for the purposes of the Independent Commission Against Corruption Act 1988. This, however, did not feature as an issue in the case and I do not think I should say anything about it save that on a criminal standard there would not be sufficient in my view to establish the matter on the evidence before me. 30 It remains for me to deal with the draft short minutes that have been handed up. 31 The principal debate is as to how the second defendant's costs should be paid or borne. 32 The matter is complicated because the second defendant was not a party to the suit as originally constituted. On 25 March 2004, the second defendant filed a notice of motion that it be given leave to be joined as a party. This was initially resisted. 33 On the first day of the hearing counsel for the plaintiff indicated that he sought no order against the second defendant and asked it be dismissed from the suit. The second defendant objected and for reasons I gave at the time, it remained in. 34 The main effort expended by counsel for the second defendant was to cross-examine Matilda House. Indeed, he did this with such vigour that Mrs House complained that she was being oppressed by counsel who ostensibly appeared for an Aboriginal body. 35 Although the present proceedings were odd in a way in that specific performance could only be granted after there was some preliminary order, it was essentially a specific performance suit. The general rule in specific performance proceedings is as in Tasker v Small (1837) 3 My & Cr 63; 40 ER 848, that the only persons who should be involved in such proceedings are the vendor and the purchaser. This in itself is a reason for not giving the second defendant its costs. However, the principal reason is that the second defendant was involved in these proceedings, basically because it wished to protect the administration of its Act. In my view, the second defendant's costs, apart from the costs ordered to be paid by Windeyer J should lie as they fall with each party paying their own. 36 The orders, accordingly, are as follows: (1) The plaintiff's claim is dismissed; (2) The plaintiff to deliver up to the first defendant any certificate of title or other evidence of title to any land of the first defendant in its possession or control; (3) The plaintiff is to pay the first defendant's costs of the claim and cross-claim to date; (4) No order as to the second defendant's costs save that the order previously made in respect of such costs by Windeyer J is to stand; (5) Note that no further order is required under the cross-claim; (6) Order that the exhibits be returned upon the usual undertaking that should an appeal be filed they are to be returned to the Court; (7) The injunction granted by Nicholas J on 1 April 2004 is dissolved; (8) The first defendant is at liberty to file a notice of motion returnable before the Registrar for an inquiry into any damages suffered by it as a result of the said injunction and for an order that the plaintiff pay such damages when certified provided that such motion is filed no later than 6 December 2005; (9) The parties to have liberty to apply generally and with respect to future costs. **************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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