Boon v Burt

[2020] WASC 64

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   BOON -v- BURT [2020] WASC 64

CORAM:   CURTHOYS J

HEARD:   10 JUNE 2019

DELIVERED          :   5 MARCH 2020

FILE NO/S:   CIV 1036 of 2017

BETWEEN:   PENELOPE ANN BOON

First Plaintiff

JENNIFER MARGARET PHILLIPS

Second Plaintiff

PENELOPE ANN BOON as administrator of the estate of WINSOME MABEL BURT

JENNIFER MARGARET PHILLIPS as administrator of the estate of WINSOME MABEL BURT

Third Plaintiffs

AND

REBECCA ANTIONETTE BURT as executrix of the estate of PAULL REGINALD GEORGE BURT

First Defendant

BURT ENTERPRISES PTY LTD

Second Defendant

DOORAWARRAH PASTORAL CO PTY LTD

Third Defendant

THE BRICK HOUSE COMPANY PTY LIMITED

Fourth Defendant

Catchwords:

Deed - Construction - Uncertainty - Estoppel

Legislation:

Nil

Result:

Judgment for plaintiffs
First defendant's counterclaim dismissed

Representation:

Counsel:

First Plaintiff	:	M D Cuerden SC & M Curwood
Second Plaintiff	:	M D Cuerden SC & M Curwood
Third Plaintiffs	:	M D Cuerden SC & M Curwood
First Defendant	:	P MacMillan
Second Defendant	:
Third Defendant	:
Fourth Defendant	:

Solicitors:

First Plaintiff	:	Arns & Associates
Second Plaintiff	:	Arns & Associates
Third Plaintiffs	:	Arns & Associates
First Defendant	:	Pacer Legal
Second Defendant	:
Third Defendant	:
Fourth Defendant	:

Case(s) referred to in decision(s):

Alpha Wealth Financial Resources v Frankland River Olive Co [2008] WASCA 119

Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98

Boreland v Docker [2007] NSWCA 94

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153

Bytan Pty Ltd v BB Australia Pty Ltd [2012] VSCA 233

Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169

Fairbairn v Varvaressos (2010) 78 NSWLR 577 (2010); [2010] NSWCA 234

First Trade Consulting v GRD Kirfield

[2006] WASCA 175

Fitzgerald v Masters (1956) 95 CLR 420

Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603

Greer v Kettle [1938] AC 156

Hawkins v Clayton (1988) 164 CLR 539

In re Victoria Permanent Benefit Building Investment and Freehold Land Society (1870) LR 9 Eq 597

Legione v Hateley 152 CLR 406

Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633

McCourt v Cranston [2012] WASCA 60

Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) 329 ALR 1 [2015] FCA 825

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104

Re Ellenborough [1903] 1 Ch 697

Riseda Nominees Pty Ltd v St Vincent's Hospital (Melbourne) Ltd [1998] 2 VR 70

Rodda v Ian Rodda Pty Ltd (2015) SASC 95

Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65

Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2019] NSWCA 11

Sibonna Nominees Pty Ltd v Vouzas [2013] VSCA 369

Sullivan v Sullivan [2006] NSWCA 312

Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429

CURTHOYS J:

Introduction

1. Winsome Mabel Burt (Mrs Burt) died on 11 August 2012.  She was survived by her three children:  Penelope, Jennifer and Paull.

2. As is common in cases involving families I will refer to the children by their given names to avoid confusion. 

3. Penelope and Jennifer are plaintiffs both in their own right and as administrators of the estate of Mrs Burt.  Letters of Administration, with the will annexed, were granted to Penelope, Jennifer and Paull on 15 July 2013 (Exhibit 18 p 614). 

4. Paull died on 5 October 2013.  He is survived by his wife Rebecca who is his executrix and the first defendant.

5. Mrs Burt made her will on 4 July 2003 (the Will) (Exhibit 18 p 614).  In substance, the Will provided for Mrs Burt's estate to be held on trust for Penelope, Jennifer and Paull as tenants in common in equal shares. 

6. The three principal assets which Mrs Burt owned, or which were under her effective control at the time, were her residential property at 2 The Coombe, Mosman Park (The Coombe), three companies - Burt Enterprises Pty Ltd (Burt Enterprises), The Brickhouse Company Pty Ltd (Brickhouse Co) and Doorawarrah Pastoral Co (Doorawarrah Co) - which owned and controlled two pastoral leases:  Brickhouse Station and Doorawarrah Station.  For ease of reference I have referred to the pastoral leases as stations.

7. On 28 July 2004 the Guardianship & Administration Board appointed Rodney Lewis as the plenary administrator of Mrs Burt's estate (Exhibit 18 p 113).

8. Due to Mrs Burt's failing faculties she had effectively delegated the management of the stations to her children prior to the plenary administrator being appointed (Exhibit 1 p 3 ‑ 4). 

9. Relationships between the children in relation to the joint management of Brickhouse Station and Doorawarrah Station had deteriorated (eg.  Exhibit 18 p 28, p 31, p 45, p 53, p 71, p 126, Exhibit 1 p 16).

10. Prior to Mrs Burt's death it became clear to the children that because of the difficult relationship between Penelope and Jennifer, on the one hand, and Paull, on the other, relating to the management of Brickhouse Station and Doorawarrah Station it was better to separate the control of those stations.  It was decided that rather than the children ultimately receiving Mrs Burt's assets as tenants in common, in equal shares, upon her death, it would be better to divide the assets such that Paull controlled and owned Brickhouse Co, and thereby, Brickhouse Station, to the exclusion of Penelope and Jennifer, and that Penelope and Jennifer controlled Burt Enterprises and Doorawarrah Co, and thereby, Doorawarrah Station to the exclusion of Paull. 

11. Although the ultimate ownership of the stations legally vested in the companies in a practical sense the children were concerned with the ownership, control and management of the land that comprised the stations.

12. Prior to Mrs Burt's death, except for the shareholdings detailed below, their possible interest in shares held by Mrs Burt on trust for them, and Paull's possible interest in a desk and a portrait at The Coombe, the children only had an expectancy in Mrs Burt's assets.  Nevertheless, there was no reason why they could not deal with those expectancies pending those assets vesting in them (Re Ellenborough [1903] 1 Ch 697 at 700, Fairbairn v Varvaressos (2010) 78 NSWLR 577 (2010); [2010] NSWCA 234).

13. As early as February 2000 Paull had indicated his wish to take Brickhouse Station (Exhibit 18 p 76, see also Exhibit 1 p 17) as his 'share' of Mrs Burt's assets.  In order to effect this it would be necessary to agree to transfer the shareholdings of the companies that controlled and owned Brickhouse Station and Doorawarrah Station.

14. The children entered into negotiations to divide the ownership and control of the companies, and thereby the stations and other assets.  No issue was raised as to whether control also covered ownership.  For the sake of clarity, it is clear from the evidence that control did cover ownership.

15. The court notes that Derwent 'Pip' Phillips, Jennifer's husband, represented Penelope and Jennifer in many of the negotiations with Paull (Exhibit 1 p 8). 

16. Various proposals to divide the ownership and control of the companies, and thereby the stations, and the other assets were made in 2000 (eg. Exhibit 18 p 90 ‑ 92) and 2001 (Exhibit 18 p 103).

17. Suggested values for the respective properties in August 2001 were Brickhouse Station $2,700,000, Doorawarrah Station $800,000 and 2 The Coombe $1,700,000. 

18. Assuming the values stated above for the purposes of illustration, the value of the total asset pool was $5,200,000 - so one-third each was about $1,733,000.  If Paull received Brickhouse he would receive about $1,000,000 more than his share.  There was a debt on Doorawarrah of about $760,000.  If Paull accepted liability for that debt his share would be about $1,900,000.  At all times Brickhouse Station was more valuable than Doorawarrah Station and for Paull to obtain ownership and control of Brickhouse Station based on an equal division of the assets he would need to contribute an additional amount. 

19. In May 2002 Paull again indicated his willingness to forgo any claim on The Coombe and Doorawarrah Station if he was able to secure Brickhouse Station (Exhibit 18 p 111).

20. In order to resolve any potential disputes between the children arising from the disposal of Mrs Burt's estate the children and the Administrator entered into a deed of family arrangement on 3 May 2007 (the Deed) (Exhibit 18 p 220).

21. This case primarily concerns the validity and interpretation of that Deed of Family Arrangement (The Deed).  Sadly, that Deed was not drafted in such a manner as to avoid the case that is now before this court.  An issue of estoppel also arises.

22. The Deed was intended to give effect to an agreement entered into between the children in August/September 2005.  From that time onward the children acted on the basis that Paull had exclusive control of Brickhouse Station and the Penelope and Jennifer had exclusive control of Doorawarrah Station and The Coombe. 

23. As from October 2005 Penelope and Jenifer did not consult Paull or Rebecca in relation to any decision made in relation to the management of Doorawarrah Station (Exhibit 2 p 2).  For example, in August 2008 Doorawarrah took out an overdraft with the National Australia Bank.  Paull was not consulted in relation to the overdraft (Exhibit 1 p 11 ‑ 12, Exhibit 5 p 12, 14).

24. As from October 2005 neither Penelope nor Jenifer had any part in the management of Brickhouse Station (Exhibit 2 p 2).

25. In particular, although Jennifer and Penelope informed Paull of their decision to sell Doorawarrah Station, they entered into contracts for the sale of Doorawarrah Station and the Coombe without reference to Paull (Exhibit 2 p 3).  They did not discuss the terms on which they were prepared to sell Doorawarrah Station.  Equally Paull and Rebecca did not discuss the terms on which they were prepared to sell Brickhouse Station with Penelope or Jennifer (Exhibit 4 p 1).

26. On 30 September 2009 Jennifer and Penelope sold Doorawarrah Station at auction for $3 million (Exhibit 18 p 425).  The net sale proceeds, $2,708,164 (Exhibit 18 p 425) are still held in an account controlled by Doorawarrah Co.   

27. Brickhouse Station was also put up for auction 30 September 2009 but was passed in (Exhibit 18 p 372). 

28. In March 2014 Penelope and Jennifer sold the Coombe Property for $4.6 million (Exhibit 18 p 685).  The sale settled in October 2014 and Jennifer and Penelope divided the net sale proceeds (of approximately $4.49 million) equally between them without reference to Paull. 

29. Similarly, Paull entered into negotiations for the sale of Brickhouse without reference to Penelope and Jennifer (Exhibit 2 p 4, Exhibit 4 p 2 ‑ 3). 

30. Neither Penelope not Jennifer had any discussions with Paull or Rebecca concerning the sale of Brickhouse Station (Exhibit 2 p 2, 6, Exhibit 3 p 14, Exhibit 7 p 19). 

31. Over the following years there were various sale proposals for Brickhouse Station.  Paull entered into those negotiations without reference to Penelope or Jennifer.  He rejected various offers without reference to Penelope or Jennifer.  A combination of poor seasons and Paull's management of Brickhouse Station caused Brickhouse Co to spiral deeper and deeper into debt.  Ultimately Brickhouse Station had to be sold. For various reasons no sale of Brickhouse Station took place until after Paull's death.

32. Other than a very brief exchange of emails initiated on behalf of Rebecca in 2015 Penelope and Jennifer had no involvement in the negotiations for the sale of Brickhouse Station.  Rebecca accepted that the ultimate decision to sell Brickhouse Station was hers (T292, 13.6.19).

33. By a contract made on or about 1 July 2015, which settled in October 2015, Rebecca sold Brickhouse Station for $3.75 million.  The net proceeds of sale were around $91,000 (Exhibit 18 p 1000).  Rebecca used these towards meeting entitlements due to her by Brickhouse.  Save insofar it was necessary to sign documents the sale was made by Rebecca without reference to Penelope or Jennifer. 

34. Penelope's evidence is that she found out that Brickhouse Station had been sold by Rebecca to Andrew Forrest as a result of reading an article in a newspaper (Exhibit 1 p 16). 

35. In order to resolve this matter it is not necessary to make any findings as to whether or not Paull should, or should not, have accepted the offers for Brickhouse Station.  Its sole significance is that Paul acted without reference to Penelope or Jennifer in making decisions about Brickhouse Station.

36. Following the settlement of the sale of Brickhouse Station, Paull's estate and Rebecca claimed various entitlements from Brickhouse Co of $326,139.  If all those entitlements are accounted for, the deficiency in the accounts of Brickhouse Co is $234,178 (Exhibit 18 p 1000).

37. By letter dated 9 December 2015, some three weeks after the settlement of the sale of Brickhouse Station, Rebecca claimed that the Deed was invalid and that the assets of Mrs Burt's estate should be distributed in accordance with the terms of Mrs Burt's will (Exhibit 18 p 1006). 

38. Rebecca's claim that the Deed was invalid was made some 10 years after the children had entered into and proceeded on the division of Mrs Burt's assets as agreed in the 2005 Agreement.  The 2005 Agreement was given effect to by the Deed.  Rebecca's claim that the Deed was invalid was made more than eight years after the Deed was entered into.

39. This court finds that the Deed is valid and that the plaintiffs are entitled to the relief they seek. 

What remains outstanding under the Deed?

1. The plaintiffs seek orders which, in effect, carry the still outstanding matters under the Deed into effect.  

2. The things that are left to be done under the Deed are:

   (a)for Rebecca to transfer the 10,000 shares in Paull's name in Burt Enterprises to Jennifer and Penelope or at their direction;

   (b)for Rebecca to execute and deliver releases and indemnities to Penelope and Jennifer in their capacities as administrators of Mrs Burt's estate;

   (c)for Jennifer and Penelope (in their capacities as administrators of Mrs Burt's estate) to transfer:

   (i)Mrs Burt's two shares in Burt Enterprises to themselves in their personal capacities or at their direction; and

   (ii)the shares 20,074 in Mrs Burt's name in Doorawarrah Co to themselves in their personal capacities or at their direction; and

   (d)for Penelope and Jennifer to cause Doorawarrah Co to transfer all the shares in its name in Brickhouse Co to Rebecca or at her direction.

The basis for the evidentiary findings

1. The evidentiary findings in this matter are almost entirely based on the documents and the actions of the parties.  To a large extent the oral evidence of the witnesses only confirmed what the documents contained and the actions disclosed. 

2. To the extent that there was any inconsistency between the witnesses for the plaintiffs and the defendants I prefer the evidence of the plaintiffs' witnesses.  Their evidence is consistent with the documents and the actions of the parties.  My impression is that they endeavoured to give their evidence honestly and to the best of their recollection. 

3. On the other hand, Rebecca has clearly had a very traumatic time.  Paull's death and the loss of Brickhouse Station have affected adversely affected her recollection of events.  She had a tendency to avoid directly answering questions on their merits (eg.  T238, 243 ‑ 44, 12.6.19).  She stated that she had a poor memory (eg.  p 247, 249 12.6.19).  She was absent on occasions and did not participate discussions  (T p 265 12.6.19)

The company structure and shareholdings and the ownership of Doorawarrah Station and Brickhouse Station

1. Three companies were involved in the ownership of Doorawarrah Station and Brickhouse Station: Burt Enterprises, Doorawarrah Co and Brickhouse Co.  These three companies are the second, third and fourth defendants respectively.

2. There were 30,002 issued shares in Burt Enterprises:

   (a)Mrs Burt held one Class A share (a life governor's share), which converted to an ordinary share upon her death;

   (b)Mrs Burt also held one ordinary share;

   (c)Penelope held 10,000 ordinary shares;

   (d)Jennifer held 10,000 ordinary shares; and

   (e)Paull held 10,000 ordinary shares.

   (Exhibit 18 p 1071)

3. There were 34,685 issued shares in Doorawarrah Co:

   (a)Burt Enterprises held 14,611 ordinary shares; and

   (b)Mrs Burt held 20,074 ordinary shares.

   (Exhibit 18 p 769)

4. There is a dispute between the parties as to whether 15,450 shares in Doorawarrah Co registered in Mrs Burt's name were held by her personally or on trust.  To the extent that this is relevant it is dealt with below.

5. Doorawarrah Co held all the issued shares in Brickhouse Co (Exhibit 18 p 778).

6. Doorawarrah Co was until 8 August 2009 the lessee of Doorawarrah Station.

7. Brickhouse Co was until on, or about, 15 October 2015 the lessee of Brickhouse Station.

8. Paull (appointed 4 September 2001) and John Pikora (appointed 17 December 2002) were directors of Burt Enterprises in 2005 (Exhibit 18 p 1073). 

9. Paull (appointed 4 September 2001) and John Pikora (appointed 17 December 2002) were directors of Doorawarrah Co in 2005 (Exhibit 18 p 768). 

10. Paull (appointed 14 November 1986) and John Pikora (appointed 17 December 2002) were directors of Brickhouse Co in 2005.  Pip Phillips (appointed 12 August 2005) was also a director.

11. John Pikora was an accountant who was effectively in Paul's camp. 

12. Due to the company shareholdings, in order to effect the division of the assets such that Paull received control of Brickhouse Station and Penelope and Jennifer received control of Doorawarrah Station it would be necessary to transfer the shareholdings between Paull and Penelope and Jennifer.  Paull needed to hold all the shares in Brickhouse Co, which held Brickhouse Station, to the exclusion of Penelope and Jennifer, and Penelope and Jennifer needed to hold all the shares in Burt Enterprises and Doorawarrah Co, which held Doorawarrah Station, to the exclusion of Paull.

13. The share transfers could give rise to capital gains tax implications. 

The ownership of The Coombe

1. Mrs Burt was the registered proprietor of The Coombe Mosman Park being the whole of the land comprised in Certificate of Title Volume 1249 Folio 787.  It is common ground that 2 The Coombe was owned by Mrs Burt in her own right.

The 2005 Agreement and the steps taken to implement it

1. On 29 August 2005 a meeting of the directors of the 'Burt Group of Companies' was held.  The Burt Group of companies comprised Burt Enterprises, Brickhouse Co and Doonawarrah Co.  Those present were Pip Phillips, representing Penelope and Jennifer, Paull, Rod Lewis (Mrs Burt's administrator) and John Pikora. 

2. The minutes record:

   Girls Preferred Options:  PP advised that the girls have advised of two options:-

   1.Sell both properties, however wish to consider:-

   a.do not want PB disadvantaged;

   b.do not want PB removed from BH;

   c.WMB always wanted BH for PB; and

   d.WMB always planned to have all assets distributed evenly between the three siblings.

   2.By a Deed of Arrangement have:-

   a.PB take over the responsibility for BH and all related assets etc;

   b.Girls take over the responsibility for DW and all related assets etc;

   c.Girls take over the responsibility for 2 The Coombe and all contents;

   d.PB take over the total debt of BH and DW;

   e.Girls contribute 70% and PB 30% of WM Burt welfare costs;

   f.If WM Burt costs blow out and/or a sibling cannot provide the  funds required, then that respective siblings assets as in 2a, 2b and 2c above will need to be sold;

   g.Any assets and/or livestock currently on BH and DW but rightfully belonging to the other entity need to be replaced immediately;

   h.Any untoward action by any of the siblings will terminate the agreement and both pastoral properties sold.

   Resolved:

   Everyone agreed to accept option 2 on Prima Facie, however, PB and PP to formally acknowledge by Friday 9 September 2005.

   DW to be taken off the market immediately - PB to contact Elders and arrange.

   PB to terminate the aircraft hire immediately.

   Other Considerations:

   Deed of Arrangement should make provision for succession in the event that any of the siblings die prematurely - suggestion that assets be left for the siblings' children and not their spouses.

   Debt/Asset ratio to be determined and maintained.

   Taxation and Corporate strategy will need to be jointly reviewed ie.  JP, Peter Lark and PP and PB where possible.

1. On 7 September 2005 Paull wrote to John Pikora:

   In reference to the above matter that was discussed at the recent directors meeting held for the Burt group of companies, I would like to support the Option 2 on Prima Facia as detailed below except for item 2h of the minutes (shown in h below) which I have attempted to rewrite.  I have added some comments which I hope may clarify some future issues.

   a)PB (Paull Burt) to take over responsibility for BH (The Brick House Co P/L) and all related assets etc.

   b)Girls (Jennifer Phillips and Penelope Boon) to take over the responsibility for DW (Doorawarrah Pastoral Co P/L) and all related assets etc.

   c)Girls to take over responsibility of WMB (Mrs Burt) residence at 2 The Coombe.

   d)PB to take over the debt that DW has to Elders of $760,261.20.

   e)Girls to contribute 70% and PB 30% of Mrs Mrs Burt Burt's welfare costs.

   f)If WM Burt costs blow out and/or a sibling cannot provide the funds required, then that siblings assets as in a, b and c above will need to be sold.

   g)Any assets and/or livestock currently on BH and DW but rightfully belonging to the other entity need to be replaced immediately.

   h)Any untoward action by any one of the siblings which cannot be resolved in an amicable way within one week of that action of being reported to all parties, or to the satisfaction of WMB's administrator, shall result in the termination of the agreement.

   An item which I recall but has not been placed in the minutes, is of the furniture at BH, DW and The Coombe.  I would agree to the Girls to having all the furniture at The Coombe that is the property of WMB, but would like it to be noted that I would like consideration for the item known as the Forrest Desk, presently in the entrance hall.  I would like to mention  that the Antique Clock in the family room is a gift to myself given by WMB from Uncle Gray Johnson's collection, and that the painting of George Henry Burt, hung in the entrance hall is an inheritance from my late Grandfather of the same name.  This item can be verified by my two Aunts.  There are a couple of small occasional chairs that are the property of BH.  Personal effects of WMB other than the household furniture as described shall be distributed as per WMB's last will and testament.

   (the 2005 Agreement)

2. Paull applied to Elders Rural Bank for finance to take over the debt that Doorawarrah Co had to Elders Bank (Item (d)).  On 3 October 2005 Elders Rural Bank approved finance to assist Brickhouse Co in 'paying out existing loan in the name of Doorawarrah [Co].' The facility limit was $800,000 (Exhibit 18 p 145, p 163).

3. On 25 November 2005 Pip Phillips resigned as a director of Brickhouse Co (Exhibit 18 p 776).  This was to give effect in part to Item (a) above.

4. On 25 November 2005 John Pikora resigned as a director of Burt Enterprises (Exhibit 18 p 1073).  Penelope was appointed as a director.  Pip Phillips had been appointed a director on 12 August 2005 (Exhibit 18 p 1073).  This was to give effect in part to Item (b) above. 

5. On 25 November 2005 Paull and John Pikora resigned as directors of Doorawarrah Co.  Penelope was appointed as a director.  Pip Phillips had been appointed a director on 12 August 2005 (Exhibit 18 p 768).  This was to give effect in part to Item (b) above.

6. The effect of the change of directorships was that Penelope and Jennifer controlled Doorawarrah Co and Paull controlled Brickhouse Co (Items (a) and (b) above). 

7. On 13 December 2005 Elders Rural Bank wrote to the directors of Doorawarrah Co stating:

   RE:  The Brickhouse Company Pty Ltd A.C.N 008 668 914

   We refer to the following document:

   (a)The Guarantee and Indemnity dated 25th September 2001 by Doorawarrah Pastoral Coy Pty Ltd I 008 666 340 ('each a guarantor') in favour of Elders Rural Bank Limited.

   Elders Rural Bank Limited agrees and acknowledges that as from the date of this letter, Doorawarrah Pastoral Coy Pty Ltd I 008 666 340 is released and discharged from its obligation to Elders Rural Bank Limited wider this document to which it is a party.

   Nothing in this letter affects the rights of Elders Rural Bank Limited or the obligations of any person except as expressly set out in this letter.

8. On 13 December 2005 Paull sent an e-mail to Pip Phillips which relevantly stated:

   Elders bank has transferred the Loan a/c from DW to BH as agreed.  Documents have been sent to Lands dept for their stamp of approval - formality I have been told.  Ron Sherriff is visiting me on Thursday to tie up any loose ends.  The funds from old Elders Bank DW a/c should be available shortly. 

9. On 15 December 2005 Paull sent an email to Pip Phillips:

   Had meeting with Ron Sherriff.  He has informed me that he has had talks with National Bank and that all is OK regarding Titles etc.

   I have taken over the DW Loan a/c and all documents have been signed etc.

10. On 16 January 2006 Peter Lark sent a letter to the children enclosing a draft deed of family arrangement: The letter stated inter alia:

    Given this, I note the following by way of summary and clarification of the process that is currently envisaged.

    •The first transaction is the demerger.  The demerger allows the present shareholders of Burt Enterprises to directly hold the shares in The Brickhouse Company.

    •The second transaction is an exchange of shares to permit all of the shares in The Brickhouse Company to be held by Paull Burt, and all of the shares in Burt Enterprises to be held by the other members of the Burt family.

    •The demerger is a transaction which will be authorised by the shareholders and directors of the companies.  The share transfers are similarly transactions among shareholders.  That is, these have nothing to do with Mrs Burt's Will.

    •If the demerger is successful, my expectation is that the shares in The Brickhouse Company Limited which will be acquired by the present shareholders in Burt Enterprises will be pre-CGT.

11. In about August 2006 Penelope and Jennifer sought to reduce their share of Mrs Burt's expenses and to increase Paull's share.  Paull responded in an email to Rod Lewis on 15 August 2006:

    I have given some thought to the request that you passed onto me on behalf of the girls, re a 50/50 split to my Mothers expenses.

    What was put forward by Pip and the girls as he was their spokesperson re a Deed of Family Arrangement on the 29th August 2005 has been agreed to by all parties concerned.  Emails depicting this have even circulated from Pip's office:-

    20/10/05 from Pip to John Pikora and Self

    'John,

    Thanks for your email in regards to family agreement.  As you know, we are going to Carnarvon tomorrow to have an inspection and sort out hurdles to be jumped.  In principle, they are all in agreement.  There are a number of small issues that I personally have and they (the girls) have, which will be discussed and the board advised next week ………………'

    and again on 26/10/05

    'The agreement discussed and minuted is basically agreed upon by everyone, a couple of small issues to be bought to a head between Paull and the girls (after the meeting).  Consideration for those on the board and any changes deemed necessary should be discussed.  I do feel, at last, this is an opportunity to start with a new broom both with the companies and family relationship..........'

    It is now nearly 12 months since this was formally agreed to and here I am now requested to consider a major change to the terms of the agreement.  This is also after a June 30th deadline which I assumed we were all aiming for.

    I have to say that I am not surprised, but equally not amused by this request.  I would like to point out that I have complied with every request promptly and to the letter up until now.  I have even helped financially (with the girls consent) when DW was out of funds and Pip was away overseas and have yet to receive the monies back.  Penelope still has the use of a BH vehicle, DW still has the use of a BH truck and two-way radios, and I have personally helped out DW with the use of the BH aircraft and my time mustering, for their recent shearing.  Furthermore, I have relinquished $25000.00 of which I was owed for 2 years of DW directorship.

    I also agreed to; not to sell Doorawarrah (at their request), to allow Pip onto the board of Directors, allowed the change of Banking arrangements and for BH to take upon itself, the debt of Doorawarrah (which really all should not have been done until the agreement was signed) (and now questioning my wisdom), halted any livestock movements (except goats), returned the aircraft, transferred all assets belonging to DW that were on BH and vice versa (except those mentioned beforehand).

    I am well aware that if push came to shove, that BH is still under the control of DW and this disturbs me greatly in the sense that if no agreement is reached, then they (DW) can do what they seem fit.  John and I have spent considerable time setting up a program (as requested) to move BH forward, hoping to have implemented it soon after June 30th 2006.  It seems that this may be a one way street with the light at the end of the tunnel starting to blink.

    I acknowledge that Jenny and Penny spend time with Mum and I appreciate it, but am I to be penalised because I live further away??

    IF I were to agree to a 50/50 split of Mums expenses, I would insist to have one of the following terms in return:-

    a.A 50/50 split of the BH debt ($380,000.00 each) or

    b.DW to pay BH the $500,000.00 plus that BH forgave (even half would suffice) or

    c.To pay PB the $25,000.00 for DW directors fees plus half costs of travelling to and from Perth, and half of the goods and chattels of 2 The Coombe or

    d.All the above.

    I MAY consider a 1/3 split on these conditions:-

    a.That a written agreement be signed by the girls that no further major changes be made and

    b.That I receive 1/3 of the Chattels/Goods of 2 The Coombe and

    c.That the expenses caused by this change to Peter Lark's DOFA document be borne by the girls.

    I would like a decision on this ASAP please.

12. Penelope and Jennifer's proposed revised arrangement was not pursued.

The Deed of Family Arrangement

1. On 3 May 2007 the three children and Reg Lewis, as Administrator of Mrs Burt's estate, entered into the Deed of Family Arrangement.

2. The Deed of Family Arrangement (Exhibit 18 p 220) relevantly provided:

   A.Mrs Burt, Jennifer, Penelope and Paull are the owners of all of the Shares in Burt Enterprises.

   B.Mrs Burt and Burt Enterprises are the owners of all of the shares in Doorawarrah.

   C.Doorawarrah is the owner of all of the shares in Brickhouse.

   D.Doorawarrah owns the Doorawarrah Property.

   E.Brickhouse owns the Brickhouse Property.

   F.The Children are all of the children of Mrs Burt.

   G.Having regard to the most recent Wills Mrs Burt has prepared and the appointment of the Administrator to her affairs, the Children have foreshadowed a dispute in relation to the estate of Mrs Burt and in particular the Doorawarrah Property and the Brickhouse Property upon Mrs Burt's death.

   H.Rather than entering into a formal dispute, the Children have agreed on the allocation of certain assets of Mrs Burt once Mrs Burt has deceased, and the terms of their agreement are set out in this Document.

   I.This Document includes the provision of contractual powers to the Administrator to confirm his role as plenary administrator for Mrs Burt.

   J.Subject always to the obligations of the Administrator to Mrs Burt, the Administrator has agreed with the arrangements which have been reached between the Children.

   2.1Mrs Burt's estate

   …

   (c)The status of Mrs Burt's Will is unclear given her lack of capacity.

   (d)The Children have foreshadowed a dispute in relation to the future estate of Mrs Burt have regard to the most recent Wills she has prepared and the appointment of Administrator as plenary administrator to her affairs.

   ….

   (g)In consideration of agreeing to meet the Mrs Burt Costs, the Children have requested that the Administrator deal with the Shares and the Group in the manner set out in this Document.

   (h)The Children covenant and agree that their respective rights and obligations in the future estate of Mrs Burt will be determined in accordance with the terms of this Document.

   2.2Obligation in relation to Mrs Burt's Costs

   …

   (c)The Children agree among themselves that their respective liabilities to meet Mrs Burt's Costs will be met as follows:

   (1)      As to 35% by Jennifer;

   (2)      As to 30% by Paull; and

   (3)      As to 35% by Penelope.

   2.4Overriding power in the Administrator

   (a)Should the Administrator at any time become dissatisfied with the timeliness or manner in which any of the obligations under this Document are being carried out by any of the parties or determine that the terms of this Document restrict or prevent the Administrator from carrying out the statutory function as Administrator, then all other parties agree that the Administrator or any successor to that office may:

   (1)vary this Document In any way the Administrator or that successor sees fit;

   (2)vary the constitution of any Burt Enterprises, Brickhouse or Doorawarrah as Administrator see fit; and/or

   (3)terminate this Document,

   and in any case, no other party shall have any right to:

   (4)challenge any action or failure to act by the Administrator; or

   (5)seek any compensation or damages from the Administrator.

   (b)Termination of this Document under this clause does not prejudice or affect any accrued rights or obligations of any party.

   (c)If this Document is terminated under this clause, the arrangements in relation to allocations of the Shares, the Companies and the Other Assets among the Children as set out in clauses 19 and 3 continue to apply as if they were constituted in a separate deed among the Children

   3.Other Assets and the Coombe Property

   (a)The parties agree that upon Mrs Burt's death:

   (1)other than the Forrest Desk presently in the entrance hall, the Antique Clock in the family room and the painting of George Henry Burt hung in the entrance, the Coombe Property is to be allocated equally among Jennifer and Penelope;

   (2)the Forrest Desk presently the entrance hall, the Antique Clock in the family room and the painting of George Henry Burt hung in the entrance referred to in clause 3(a)(1) are allocated to Paull; and

   (3)the Other Assets are to be allocated equally among Jennifer, Paull and Penelope, provided that if they are unable to agree on any particular asset it is to be sold and the proceeds net of any costs and Taxation are to be allocated equally among Jennifer, Paul and Penelope.

   (b)Paull:

   (1)undertakes not to challenge the allocation under clause 3(a)(1);

   (2)releases and discharges Jennifer and Penelope from any claim he has or may have against Jennifer and Penelope in respect of any right to the Other Assets whether arising under a Will, statute, equity or otherwise; and

   (3)indemnifies Jennifer and Penelope absolutely on a full indemnity basis against any claim, action, damage, loss, liability, cost, expense or payment incurred or arising in relation to any claim by Paull or anyone acting for him or through his estate in relation to the allocation under clause 3(a)(1).

   4.Costs and liabilities

   …

   (b)Any Taxation assessed on any transfer of assets under this Document shall be borne by the Children equally.

   5.All parties other than the Administrator undertake to enter into any further documentation and do all necessary things to give effect to the terms of this Document upon the death of Mrs Burt including appropriate releases and indemnities to her executor

   Part C Burt Enterprises

   6.Appointment of Directors

   6.1The Board

   The Board of the Company shall consist of the appointees under clause 6.2 and any further persons the Board by majority may appoint.

   6.2Appointment of Directors

   (a)Subject to clauses 6.4 and 6.5, any of the Children (or the persons succeeding to ownership of their respective Shares in Burt Enterprises acting collectively) may at any time by notice in writing require the Board to:

   (1)appoint a representative selected by that Child as a Director of Burt Enterprises; or        ·

   (2)remove any of Director so appointed.

   (b)A Director appointed under this clause has the same power as a Director appointed by any other means.

   6.3Initial Directors

   The initial appointees under clause 6.2 are:

   (a)Derwent Coleridge Philips of 38 Lucy Victoria Avenue, Australind, Western Australia being the initial appointee of Jennifer; and

   (b)Paull being the initial appointee of Paull; and

   (c)Penelope being the initial appointee of Penelope.

   Part D Doorawarrah

   9.Appointment of Directors

   The Board

   The Board of the Company shall consist of the appointees under clause 9.2 and any further persons the Board by majority may appoint.

   9.2Appointment of Directors

   (a)Subjec.t to clause 9.4, any of Jennifer and Penelope may at any time by notice in writing require the Board to:

   (1)appoint a representative selected by that Child as a Director of Doorawarrah; or

   (2)remove any of Director so appointed.

   (b)A Director appointed under this clause has the same power as a Director appointed by any other means.

   9.3Initial Directors

   The initial appointees under clause 9.2 are:

   (a)Derwent Coleridge Philips of 38 Lucy Victoria Avenue, Australind, Western Australia being the initial appointee of Jennifer; and

   (b)Penelope being the initial appointee of Penelope.

   Part E Brickhouse

   12.Appointment of Directors

   12.1The Board

   The Board of the Company shall consist of the appointees under clause 12.2 and any further persons the Board by majority may appoint.

   12.2Appointment of Directors

   (a)Subject to clause 12.4, Paull may at any time by notice in writing require the Board to;

   (1)appoint two representative selected by that Child as a Director of Brickhouse; or

   (2)remove any Director so appointed.

   (b)A Director appointed under this clause has the same power as a Director appointed by any other means.

   12.3Initial Directors

   The initial appointees under clause 12.2 are Paull, and John Pikora of 292 Rokeby Road, Subiaco, Western Australia

   14.4Dividend and forgiveness

   In consideration of the various promises and undertakings under this Document:

   (a)if it has not already done so, Brickhouse must within 30 Business Days of the execution of this Document:

   (1)pay a dividend to Doorawarrah to the maximum reasonable level permitted by law franking that dividend to the maximum extent possible; and

   (2)repay the Elders Loan on behalf of Doorawarrah.

   (b)Immediately after carrying out the obligations under clause 14.4(a), Brickhouse must enter into a deed in a form reasonably determined by Peter Lark & Co:

   (1)releasing Doorawarrah from all future obligations that might otherwise arise from Brickhouse repaying the Elders Loan; and

   (2)releasing Doorawarrah from all obligations to repay the Doorawarrah Debt.

   Part G:  Restructure

   19.Restructure

   19.1Appointment

   (a)The parties agree to instruct Peter Lark & Co to consider and advise on restructuring of the Group in two stages to facilitate a position where:

   (1)Paull and/or entities controlled by Paull will be the sole Shareholder in Brickhouse; and

   (2)Jennifer and/or Penelope and/or entities controlled by Jennifer and Penelope will be the sole Shareholders in Burt Enterprises.

   19.2Stage One

   (a)The parties acknowledge that it is likely that the restructuring under Stage One will include:

   (1)choosing to consolidate some or all of the Companies for purposes of the Act;

   (2)the payment of dividends from Brickhouse and Doorawarrah;

   (3)the cancellation of the Class 'A' Share in Burt Enterprises;

   (4)paying up the balance of the issue price of the partly paid ordinary shares in Burt Enterprises;

   (5)the transfer of Mrs Burt's shares in Doorawarrah to Burt Enterprises under the CGT scrip for scrip rollover provisions contained in Subdivision 124‑M of the Act;

   (6)transferring the shares in Brickhouse from Doorawarrah to the Shareholders in Burt Enterprises under the demerger relief provisions contained in Division 125 of the Act,

   and that an application for a binding private taxation ruling is to be sought prior to any restructuring.

   (b)The Shareholders and the Group authorise Peter Lark & Co to prepare and lodge an application for a binding private taxation ruling and undertake to promptly provide Peter Lark & Co with appropriate written authority as required under the Act.

   (c)If the binding private ruling is positive, and subject to the receipt of satisfactory advice that the Duty will not be significant, the Shareholders and the Group must do all necessary things to enter into the necessary transactions contemplated by the application for the ruling at a time to be agreed among the Shareholders provided that it is within 2 years from the granting of probate for Mrs Burt's estate.

   19.3Stage Two

   (a)The parties acknowledge that it is likely that the restructuring under Stage Two will comprise:

   (1)an exchange of shares between Paull, Jennifer and Penelope; and

   (2)a transfer of shares held by the Administrator, Mrs Burt or Mrs Burt's estate,

   (3)to ensure that:

   (4)Paull and/or entities controlled by Paull will be the sole Shareholder in Brickhouse; and

   (5)Jennifer and/or Penelope and/or entities controlled by Jennifer and Penelope will be the sole Shareholders in Burt Enterprises,

   (6)and covenant to do all necessary things to achieve this within the spirit of this Document promptly after both of:

   (7)the completion of Stage One; and

   (8)the death of Mrs Burt.

   (b)The parties other than the Administrator must obtain the prior written consent of the Administrator before commencing Stage Two.

   19.4Indemnity

   …

   (c)agree to accept and not challenge the conduct the Administrator in any way or sue the Administrator for any reason including but not limited to challenge or legal action through the Courts or under the Guardianship Administration Act; and

   …

   19.6Fall back

   To the extent that the restructuring anticipated under this clause is not possible to achieve without Taxation, the Children agree to proceed with separation of the assets as allocated under this Document and to share the resulting Taxation equally consistent with the principle set out in clause 4(b).

   …

   22.10Further assurances

   Each party must do all things necessary to give full effect to this Document and the transactions contemplated by this Document.

   Schedule:  Shareholdings

   The shareholding in the Group companies is as follows:

   (a)Burt Enterprises Pty Ltd

   •Mrs Burt - 1 Class 'A' Share (life Governor's Share);

   •Mrs Burt - 1 partly paid ordinary Share;

   •Jennifer Phillips - 10,000 partly paid ordinary Shares;

   •Penelope Boon -10,000 partly paid ordinary Shares;

   •Paull Burt -10,000 partly paid ordinary Shares.

   (b)The Doorawarrah Pastoral Company Limited

   •Mrs Burt approximately 58% of the issued ordinary Shares;

   •Burt Enterprises approximately 42% of the issued ordinary Shares.

   (c)The Brickhouse Company Pty Limited

   •The Doorawarrah Pastoral Company Limited own all of the issued ordinary Shares.

1. It is an odd document in that many of the provisions of the Deed had had already been complied with. 

The two stage restructuring

1. Before turning to the pleadings it is significant to identify the net result of the two-stage restructuring contemplated by cl 19 of The Deed. 

2. The original shareholding at the time of the Deed of Family Arrangement was: 

   (a)Burt Enterprises:

   Mrs Burt - 1 Class 'A' Share (life Governor's Share);

   Mrs Burt - 1 partly paid ordinary Share;

   Jennifer - 10,000 partly paid ordinary Shares;

   Penelope -10,000 partly paid ordinary Shares;

   Paull -10,000 partly paid ordinary Shares.

   (b)Doorawarrah Co:

   Mrs Burt approximately 58% of the issued ordinary Shares;

   Burt Enterprises approximately 42% of the issued ordinary Shares.

   (c)Brickhouse Co:

   Doorawarrah Co 100% of the issued ordinary Shares.

3. The shareholdings after Stage 1 would be

   (a)Burt Enterprises:

   Mrs Burt - 1 partly paid ordinary Share;

   Jennifer - 10,000 partly paid ordinary Shares;

   Penelope -10,000 partly paid ordinary Shares;

   Paull -10,000 partly paid ordinary Shares.

   (b)Doorawarrah Co:

   Burt Enterprises owns all of the issued shares in Doorawarrah Co (19.2 (a)(5)).

   (c)Brickhouse Co:

   Burt Enterprises shareholders own all of the issued shares in Brickhouse Co (19.2 (a)(6))

4. The shareholding after Stage 2 would be

   (a)Burt Enterprises:

   Jennifer and/or Penelope and/or entities controlled by Jennifer and Penelope own all of the issued shares in Burt Enterprises (19.3(a)(5))

   (b)Doorawarrah Co:

   Burt Enterprises own all of the issued shares in Doorawarrah Co.

   (c)The Brickhouse Company Pty Limited

   Paul and/or entities controlled by Paull own all shares in Brickhouse Co (19.3(a)(4))

5. The net effect at the end of Stage 2 would be that Burt Enterprises, controlled by Jennifer and Penelope, would be the sole shareholder in Doorawarrah Co, which owned Doorawarrah Station (19.1(a)(2)).

6. The net effect at the end of Stage 2 is that Paull, would be the sole shareholder in Brickhouse Co, which owned Brickhouse Station (19.1(a)(1)).

The pleadings in relation to the terms of the Deed of Family Arrangement

1. Paragraphs 13, 14 and 15 of the Statement of Claim pleaded:

   13.On the proper construction of the Deed, and in the absence of the restructuring contemplated by sub-clauses 19.1 to 19.3 thereof (which did not occur), in consideration of Penelope and Jennifer each agreeing to do the things pleaded in the following paragraph, Paull agreed to do the things pleaded in paragraph 15 herein so that upon the death of the late Mrs Burt:

   (a)Paull and/or his nominee would be the owner of:

   (i)all of the shares in Brickhouse Co; and

   (ii)the Forrest Desk, the Antique Clock and the painting of George Henry Burt referred to in paragraph 5(d) herein; and

   (b)Penelope and Jennifer and/or their nominee/s would be the owners of:

   (i)the Coombe Property;

   (ii)all of the shares in Burt Enterprises; and

   (iii)all of the shares in Doorawarrah Co.

   14.The things which, by the Deed, Penelope and Jennifer each agreed to do as pleaded in the preceding paragraph were as follows:

   (a)to allow Paull sole responsibility for the management and control of Brickhouse;

   (b)to assume responsibility for the management and control of Doorawarrah and of the Coombe Property to the exclusion of Paull;

   (c)to reimburse Mr Lewis 35% (that is, a total of 70%) of the costs incurred by Mr Lewis in his capacity as the late Mrs Burt's plenary administrator in discharging his obligations to Mrs Burt; and

   (d)upon the death of the late Mrs Burt, to do everything necessary to cause Doorawarrah Co to transfer all of Doorawarrah Co's shares in Brickhouse Co to Paull or to an entity or entities controlled by him and to assign to Paull any interest they would have in the Forrest Desk, the Antique Clock and the painting of George Henry Burt referred to in paragraph 5(d) herein.

   15.By the Deed, Paull agreed, upon the death of the late Mrs Burt, to do everything necessary to assign to Penelope and Jennifer or at their direction:

   (a)his 10,000 ordinary shares in Burt Enterprises; and

   (b)any interest he would have in the following assets upon the death of the late Mrs Burt:

   (i)the Coombe Property;

   (ii)the 2 ordinary shares in Burt Enterprises; and

   (iii)the 20,074 shares in Doorawarrah Co.

2. Paragraph 17 of the Defence denies each and every allegation in paragraphs 13, 14, and 15 of the Statement of Claim.

3. Paragraph 16 of the Statement of Claim pleads:

   The following were further material express terms of the Deed:

   (a)Paull indemnified Jennifer and Penelope absolutely on a full indemnity basis against any claim, action, damage, loss, liability, cost, expense or payment incurred or arising in relation to any claim by Paull or anyone acting for him or through his estate in relation to the allocation of the Coombe property to Jennifer and Penelope (clause 3(b)(3));

   (b)all parties other than Mr Lewis undertook to enter into any further documentation and do all necessary things to give effect to the terms of the Deed upon the death of the late Mrs Burt including appropriate releases and indemnities to her executrix (clause 5);

   (c)each party must do all things necessary to give full effect to the Deed and the transactions contemplated by it (clause 22.10); and

   (d)Paull indemnified Jennifer and Penelope absolutely on a full indemnity basis against any claim, action, damage, loss, liability, cost, expense or payment incurred or arising in relation to any failure to comply with the provisions of the Deed by Paull or anyone acting for him or through his estate (clause 22.12(b)).

4. Paragraph 18 of the Defence does not admit paragraph 16 of the Statement of Claim.

5. Paragraph 11 of the Defence, relevantly, pleaded:

   It is an express term of the Deed, inter alia, that:

   (a)Brickhouse Co was:

   (i)within 30 business days of the execution of the Deed to (if it had not already done so) pay a dividend to Doorawarrah Co and to repay the loan owing by Doorawarrah Co to Elders, (Clause 14.4(a));

   (ii)to release Doorawarrah Co from all future obligations that might arise from such repayment, and release Doorawarrah Co from all obligations to repay the debt owed by Doorawarrah Co to Brickhouse Co (Clause 14.4 (b));

   (b)the Coombe Property was to be allocated equally to the First and Second Plaintiffs and Paull was to receive the antique clock and the portrait of George Henry Burt (Clause 3(a));

   (c)the parties acknowledged that the restructuring under Stage One of the Deed was likely to include at a time not necessarily after Mrs Burt's death:

   (i)choosing to consolidate some or all of the Companies for the purposes of the Income Tax Assessment Act (the Tax Act);

   (ii)payment of dividends from Brickhouse Co to Doorawarrah Co;

   (iii)the cancellation of the Class A share in Burt Enterprises owned by Mrs Burt;

   (iv)paying the balance of the issue price of the partly paid ordinary shares in Burt Enterprises;

   (v)the transfer of Mrs Burt's shares in Doorawarrah Co to Burt Enterprises under the CGT script for script rollover provisions contained in Subdivision 124-M of the Tax Act;

   (vi)transferring the shares in Brickhouse Co from Doorawarrah Co to the Shareholders in Burt Enterprises under the demerger relief provisions contained in Division 125 of the Tax Act (Clause 19.2(a));

   (d)the restructure under Stage One was conditional:

   (i)on the parties agreeing to instruct Peter Lark & Co to consider and advise on the restructuring of the Group in two stages;

   (ii)the Shareholders and the Group authorising Peter Lark & Co to prepare and lodge an application for a binding taxation ruling and promptly providing Peter Lark & Co with appropriate written authority as required under the Tax Act;

   (iii)on a positive binding private ruling being obtained and subject to receipt of satisfactory advice that the duty would not be significant the Shareholders and the Group doing all things necessary to enter into the transactions contemplated by the ruling application at a time to be agreed among the Shareholders provided it is within 2 years of a grant of probate of Mrs Burt's estate (Clause 19.1(a) and 19.2(b) and (c));

   (e)the parties acknowledged that it was likely that the restructuring under Stage Two would comprise:

   (i)an exchange of shares between Paull, Jennifer and Penelope;

   (ii)a transfer of shares held by the Administrator, Mrs Burt or Mrs Burt's estate;

   to ensure that:

   A.Paull and/or entities controlled by Paull be the sole shareholder in Brickhouse Co;

   B.Jennifer and/or Penelope and/or entities controlled by Jennifer and Penelope be the sole shareholders in Burt Enterprises;

   C.covenant to do all necessary things to achieve this within the spirit of this document promptly after both of the completion of Stage One and the death of Mrs Burt (Clause 19.3(a));

   (f)the restructure under Stage Two was conditional on the parties other than the Administrator obtaining the prior written consent of the Administrator before commencing Stage Two (Clause 19.3(b)).

6. By paragraph 19 of the Defence Rebecca relevantly pleaded:

   (c)alternatively:

   (i)the terms of the agreement pleaded in paragraph 11(c) hereof as to the restructuring under Stage One are a mere acknowledgement by the parties that the restructuring under Stage One are likely to include certain matters and are not enforceable;

   (ii)the term or the terms of the Deed pleaded in paragraphs 11(d) and (e) hereof as to the restructuring under Stage Two are a mere acknowledgement by the parties that it is likely that the restructuring will include certain matters and are not enforceable;

   (iii)the parties to the Deed did not instruct Peter Lark & Co to consider and advise on the restructuring of the Group in two stages nor did the Shareholders in the Group authorise Peter Lark & Co to prepare and lodge an application for a binding private taxation ruling by reason of which the terms of the Deed as to Stage One are in any event not enforceable;

   (iv)the parties did not and now cannot obtain the prior written consent of the Administrator to the commencement of Stage Two by reason of which the terms of the Deed as to the implementation of Stage Two are in any event not enforceable.;

   (v)the parties at the time of executing the Deed were unaware that Mrs Burt held 15,450 shares in Doorawarrah on trust and there was accordingly no common intention as alleged;

   (vi)the First Defendant denies that the Deed gives rise to the obligations pleaded in paragraph 15 of the SOC and denies that the parties had an actionable common intention as to the restructure and as to the assignment by Paull of an interest in the Doorawarrah Co shares as to which the First Defendant repeats paragraph 19(c)(i) and (ii).

   (d)Alternatively by reason of the facts pleaded in paragraphs 2(a) and 11(b) hereof the Deed is not supported by consideration and is not specifically enforceable;

The applicable principles of construction

1. The plaintiffs correctly summarised the applicable principles of construction relating to the Deed of Family Arrangement as follows:

   48.There is no issue as to the relevant principles applicable to the construction of the Deed.[1]  It is to be construed objectively by reference to what a reasonable person in the position of the parties would have understood it to mean, having regard to the language used, the objective circumstances and the relevant commercial purpose or objects.  The court approaches the task of interpretation on the assumption that the parties intended to produce a commercial result and to avoid a construction which make commercial nonsense or works commercial inconvenience.  The Deed must be construed as a whole, including its recitals.[2]

   49.The process of construction is (plainly) not limited to giving literal effect to the words used, and requires the court to 'draw out' what is implicit in the language of the contract itself.[3]  The line between construction and implication may be unclear.[4]

   50.No narrow or pedantic approach is warranted, particular in the case of commercial arrangements.[5]  Interpretation rests on the premise that the contract was made in good faith with the object of mutual benefit by due performance, and the court should be astute to give effect to discernible commercial purpose.  The fact that a document happens to contain infelicities and mistakes is not a sufficient reason for a court to interpret its provisions in a narrow or unreal way.[6]  Questions of meaning are to be answered in a practical and realistic way, not in a way which adopts an overly fine or theoretical approach that is alien to commercial agreements.[7]

   51.Further, a court may, as an exercise in construction rather than rectification, supply, omit or correct words used in an instrument (not limited to the correction of obvious or minor errors) where it is clearly necessary in order to avoid absurdity or inconsistency.[8]

   [1] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [51].

   [2] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 [379] ‑ [390].

   [3] Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 [28] ‑ [31]; Boreland v Docker [2007] NSWCA 94 [110] ‑ [111]; McCourt v Cranston [2012] WASCA 60 [58] ‑ [59]; and see Hawkins v Clayton (1988) 164 CLR 539, 570.

   [4] Bytan Pty Ltd v BB Australia Pty Ltd [2012] VSCA 233 [45] (footnote 31); Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] WASC 194 [214]; and see Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 [22].

   [5] Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, 437.

   [6] Seddon & Ellinghaus, Cheshire & Fifoot's Law of Contract (11^th ed, 2017) [10.30] and the cases there cited.

   [7] Seddon & Ellinghaus, Cheshire & Fifoot's Law of Contract (11^th ed, 2017) [10.32] and the cases there cited.

   [8] Fitzgerald v Masters (1956) 95 CLR 420, 426 ‑ 427; Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633 [116] ‑ [120]; Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2019] NSWCA 11 [6] ‑ [10].

2. Rebecca did not take issue with the principles as set out by the plaintiffs.

The objective circumstances and the relevant commercial purpose or objects.

1. The objective circumstances are that:

   (a)under the terms of Mrs Burt's will Penelope, Jennifer and Paull would be tenants in common in equal shares in the bulk of Mrs Burt's estate, including 2 the Coombe, and ultimately in the control of Doorawarrah Co and thereby Doorawarrah Station and Brickhouse Co and thereby Brickhouse Station;

   (b)Doorawarrah Station and Brickhouse Station were not owned directly by Mrs Burt or the children but through Burt Enterprises, and Doorawarrah Co;

   (c)Brickhouse Station was more valuable than Doorawarrah Station.

2. The relevant commercial purpose of the Deed of Family Arrangement was to achieve the following:

   (a)Penelope and Jennifer, on the one hand, and Paull, on the other, wished to separate the control and, ultimately the ownership, of Doorawarrah Co, and thereby Doorawarrh Station, and Brickhouse Co, and thereby Brickhouse Station, which would necessitate an exchange of shareholdings;

   (b)the children wished to separate control of Doorawarrah Station and Brickhouse Station prior to Mrs Burt's death;

   (c)in order to preserve an equal division between the children if Paul received Brickhouse Co, and thus Brickhouse Station, Paull would need to transfer assets and/or pay an amount to Penelope and Jennifer or discharge a liability so as to equalise the ultimate net value of assets received by each child;

   (d)there was a foreshadowed dispute between the children as to Mrs Burt's estate which the children wished to avoid. 

The beneficial ownership of the 15,450 shares in Doorawarrah Co

1. As noted above Mrs Burt held 20,074 ordinary shares in Doorawarrah Co.  This shareholding represented about 52% of the total shares.  (Exhibit 18 p 246)

2. Paragraph 5(c) of the Statement of Claim pleaded that Mrs Burt was the owner of the Doorawarrah Co shares. 

3. Paragraph 2(b) of the Defence pleaded:

   Mrs Burt immediately prior to her death was the registered owner of 20,074 shares Doorawarrah Co of which:

   (i)4,624 shares were held beneficially by her;

   (ii)15,450 shares were held by her as trustee of a trust created by the will of the late Reginald George Edward Burt dated 7 May 1953 and a Deed dated 10 October 1977 made between Horace Carson Stewart and Reginald Colin Gardiner as executors of that will and Mrs Burt, Jennifer Margaret Phillips, Penelope Ann Burt, Paull Reginald Burt (Paull), Henry Graham Johnson, Richard Grey Johnson and Anthony Egerton Johnson.

4. Paragraph 5A of the Statement of Claim pleaded:

   Alternatively to paragraph 5(c) herein, at all material times and immediately prior to her death, the late Mrs Burt held 15,450 of her 20,074 shares in Doorawarrah Co on trust under the terms of which, following her death, those 15,450 shares were held by her personal representative on trust for Penelope, Jennifer and Paull as tenants in common in equal shares absolutely.

5. Rebecca does not admit paragraph 5A.  However, having regard to the terms of the Deed of 10 October 1977, as set out below, if Mrs Burt held the shares as a trustee she held them as alleged in paragraph 5A. 

6. Paragraph 19(e) of the Defence pleads:

   the 15,450 shares in Doorawarrah Co pleaded in paragraph 2 hereof were not owned beneficially by Mrs Burt at the date of her death and do not form part of her estate and are not subject to the Deed.

7. Paragraph 1 of the Reply pleads:

   As to paragraph 2(b) of the defence, the plaintiffs say that immediately prior to her death Mrs Burt purported to hold 15,450 of her shares in Doorawarrah Co as trustee for herself during her lifetime and from and after her death for Penelope, Jennifer and Paull as tenants in common in equal shares absolutely, but say that:

   (a)as the sole beneficiary of that purported trust during her lifetime, the legal and equitable interests in those shares merged and Mrs Burt was at all relevant times the sole beneficial owner of all 20,074 shares in Doorawarrah Co during her lifetime, and all of those shares formed part of her estate upon her death;

   (b)further and alternatively, the first defendant is estopped by recital B of the Deed from denying that Mrs Burt was at all relevant times the beneficial owner of all of her 20,074 shares in Doorawarrah Co;

   (c)alternatively, if (which is denied) Mrs Burt held 15,450 of those shares on trust as alleged or at all, following her death those shares were held by her personal representative on trust for Penelope, Jennifer and Paull as tenants in common in equal shares absolutely.

8. Paragraph 5(b) of the Reply pleaded:

   the agreement embodied in the Deed with respect to the transfer of those assets was an agreement between Penelope, Jennifer and Paull to deal with their expectancies in Mrs Burt's estate other than in accordance with the terms of Mrs Burt's will and, if and to the extent the 15,450 shares in Doorawarrah Co referred to in paragraph 1 herein did not form part of Mrs Burt's estate, to deal with their expectancies in those shares under the trust referred to in sub-paragraph 1(c) herein other than in accordance with their respective expected beneficial interests therein.

9. In essence, the defence pleads that Mrs Burt held 15,450 shares in Doorawarrah Co as trustee and the terms of the Deed of Family Arrangement did not cover shares that Mrs Burt held as trustee.

1. Mrs Burt's father, Reginald Burt, was the original owner of Brickhouse Station and Doorawarrah Station by virtue of his shareholdings in Brickhouse Co and Doorawarrah Co.

2. Reginald Burt's will was admitted to probate on 13 March 1957 (Exhibit 18 p 1).  Reginald Burt left his residual estate as to one fifth to his stepson, Henry Johnson during his lifetime, and thereafter to his children who attained the age of 21 absolutely and as to four fifths to Mrs Burt during her lifetime, and thereafter to his children who attained the age of 21 absolutely (cl 8).  He expressed his wish that his trustee retain all of his shares in Brickhouse Co and Doorawarrah Co with a view to their ultimate transfer to the persons beneficially entitled to his residuary estate (cl 10). 

3. By deed dated 10 October 1977 it was agreed to partition and divide Reginald Burt's residuary estate (Exhibit 18 p 7).  Clause 1 of the Deed provided:

   Mrs Burt and the Burt children and Mr Johnson and the Johnson children do hereby request and direct the Trustees to partition and distribute in specie the assets comprised in the residue of the deceased's estate in the following manner:-

   (a)As to 1/5^th thereof, to transfer and convey the same to Mr Johnson to be held by him upon trust for himself during his lifetime and from and after his death as to both corpus and income for the Johnson children as tenants in common in equal shares absolutely, with power to Mr Johnson to sell all or any of such assets; and

   (b)As to the remaining 4/5ths thereof to transfer and convey the same to Mrs Burt to be held by her upon trust for herself during her lifetime and from and after her death as to both corpus and income for such of her children as shall survive her and shall have attained or shall live to attain the age of 21 years and if more than one as tenants in common in equal shares absolutely, with power to Mrs Burt to sell all or any of such assets.

4. As the plaintiffs submitted:

   36.Although not expressly pleaded, if those shares were held on trust as alleged, they were held on trust for Mrs Burt and, after her death, for Jennifer, Penelope and Paull as tenants in common in equal shares.

5. The plaintiffs submitted:

   37.There are three answers to [the contention that the 15,450 Doorawarrah shares were held by Mrs Burt on trust].  First, insofar as the purported effect of clause 1(b) of the deed dated 10 October 1977 was that Mrs Burt held the 15,450 shares on trust for herself, a person cannot hold property on trust for herself alone; the legal and equitable interests merge, and the person is simply the owner of the relevant property.  The power of sale in clause 1(b) of the deed of 10 October 1977 was inconsistent with a mere life interest in favour of Mrs Burt, and clause 1(b) conveyed an absolute interest in favour of Mrs Burt.  Accordingly, as a matter of law and equity, Mrs Burt was the beneficial owner of all 20,074 shares in Doorawarrah, ie all shares in Doorawarrah other than the 14,611 shares owned by Burt Enterprises.

   38.Secondly, Rebecca is estopped by recital B of the Deed from asserting the existence of a trust over any of Mrs Burt's 20,074 shares in Dorrawarrah.  Each of the suggested beneficiaries of the asserted trust over the 15,450 shares (ie Jennifer, Penelope and Paull) were parties to the Deed. 

   39.Thirdly, even if Mrs Burt held 15,450 of her Doorawarrah shares on some form of trust for Jennifer, Penelope and Paull, they were able to agree to deal with their respective beneficial interests or expectancies in those shares amongst themselves (as they did their shareholdings in Burt Enterprises).  That is, whether Jennifer, Penelope and Paull had beneficial interests or expectancies in 15,450 of Mrs Burt's Doorawarrah shares, the Deed was effective to deal with those interests or expectancies.

Did Mrs Burt hold the 1540 shares as trustee?

1. In answer to the plaintiffs' contention that Mrs Burt held the shares absolutely Rebecca submitted:

   42.Pursuant to the rules in Edwards v Edwards (1852) 15 Beav 357 at 362; 51 ER 576 and O'Mahoney v Burdett (1874) LR 7 HL 388 at 396 where there is a postponed gift to A absolutely, with a life estate with a gift over to B in the event of A's death, the gift to B occurs only if, for example, the life tenant A dies before B. There is no merger.

   43.A power of sale does not necessarily indicate an absolute gift and not a life interest.  Where the gift over is sufficiently certain, it indicates an intention to create a life interest.  Re Burton (Deceased); Public Trustee v Burton [1965] NZLR 712 at 713.

2. Rebecca further submitted:

   83.The Doorawarrah Shares were held by Mrs Burt as trustee of the Trust for her children pursuant to Clause 1(b) of the Deed dated 10 October 1977 and referred to in [7(b)] above.

   84.The Deed provided Mrs Burt, as trustee, with the power to sell the Shares.  She did not sell the Shares.

   84.Since the appointment of an Administrator to Mrs Burt, there has been no trustee of the Trust.

   85.The effect of the above is that the Shares, as at the date of Mrs Burt's death, continued to be held on trust for Mrs Burt's children.

   86Mrs Burt was not the sole beneficiary of the Trust: such of her children as survived her were also beneficiaries.  There was no merger of the legal and equitable interest.

   87.The power of sale held by Mrs Burt as trustee of the Trust did not have the same effect as such power might in a testamentary trust.  The terms of the Trust do not give rise to a gift of the Shares to Mrs Burt, absolute or otherwise.  The power of sale did not render ineffective the trust in favour of her children.

3. Ultimately, whether the 15,450 shares in Doorawarrah were held by Mrs Burt in her own right, or on trust for the children, is unnecessary to determine because the terms of the Deed of Family Arrangement covered those shares in whatever capacity they were held by Mrs Burt by reason of estoppel by deed. 

Estoppel by deed

1. Recital B of the Deed of Family Arrangement provided:

   Mrs Burt and Burt Enterprises are the owners of all of the shares in Doorawarrah.

2. Rebecca submitted:

   46.A party to a deed may be bound, (by common law estoppel by deed), by facts set out in the recital to the deed.  There is an exception where the deed is fraudulent or illegal.

   47.There is a further exception, in equity, where the traditional principle is that a mistake of fact may be proved to prevent estoppel by recital …

3. There is no suggestion that the Deed is fraudulent or illegal.

4. The plaintiffs submitted:

   17.Although the Deed contemplated that if the share restructure contemplated by clauses 19.1 to 19.3 took place then Mrs Burt's shareholdings in Burt Enterprises and Doorawarrah may have been dealt with (but not transferred to Jennifer, Penelope or Paull) before her death, in the absence of that contemplated restructure (which did not in fact take place) Jennifer, Penelope and Paull agreed to deal with their expectancies in those shares (see clause 19.6).  This would necessarily occur only upon Mrs Burt's death.  Jennifer, Penelope and Paull were (obviously) entitled to deal with their own shareholdings in Burt Enterprises (and any beneficial interest or expectancy they may have had in Mrs Burt's shareholdings in Doorawarrah by reason of any trust) before Mrs Burt's death.  The (objective) intent was that in the absence of the contemplated restructure, upon Mrs Burt's death ownership or control of the shareholdings in Burt Enterprises, Doorawarrah and Brickhouse would not be fragmented across the three children, but would be transferred to accord with the agreed position, ie so that Jennifer and Penelope would own or control all of the shares in Burt Enterprises (and, the plaintiffs say, Doorawarrah), and Paull would own or control all of the shares in Brickhouse (see clause 19.6 of the Deed – par 45 below).

5. Rebecca submitted:

   89.The Deed does not reflect that the Doorawarrah Shares were held on trust by Mrs Burt.

   90.That, on the Plaintiffs' case, was, presumably, the result of draftsman's mistake.  To allow an estoppel by deed would be to hold that the First Defendant is estopped from denying that Mrs Burt was the owner of the Doorawarrah Shares.  She was not the owner of the Shares.

   91.If so, equity will intervene to avert an estoppel by deed.

6. In Greer v Kettle [1938] AC 156, 571 their Lordships stated:

   A solemn and unambiguous statement in a deed must be taken as binding between the parties so that it does not admit any contradictory proof.

7. In opposition to this principle Rebecca cited a passage from Sibonna Nominees Pty Ltd v Vouzas [2013] VSCA 369 [55]:

   … equity will intervene, if the case is sufficient, to prevent the common law rule of estoppel by deed from operating.

8. Rebecca also relied on the decision In re Victoria Permanent Benefit Building Investment and Freehold Land Society (1870) LR 9 Eq 597 (In re Victoria).  In that case a recital in the deed stated that the surveyor of the building society was a member of the society.  The Court found that he had not read the deed before signing it (602 ‑ 603).  The Court held that the mortgage deed did not represent the real transaction and that the surveyor could not be made a contributory for the shares.  However, the Court did find that the surveyor was liable for an advance from the building society for the purchase of the shares.

9. There is no suggestion that Paull has not read the Deed as in In re Victoria.  Effectively, the Deed gives effect to the agreement reached between the children in 2005. 

10. If Mrs Burt did hold the shares as a trustee for the children, there is no suggestion that Paull had not read the Deed of 10 October 1977 to which he is a party.  Again the facts are very different to those in In re Victoria.  In re Victoria does not provide a useful precedent in resolving this matter. 

11. The decision in In Re Victoria does not assist Rebecca.  The children, who are the three people who have that interest in remainder of the shares, have all executed the Deed.  There was no evidence from Rebecca to suggest that Paull had executed the Deed without reading it and, or that he was under a mistake, not realising that the recital was there.  The Deed was negotiated over a period of two and a half years.  The Deed, with the recital, was on foot for the best part of 18 months prior to its execution.

12. The purpose of the Deed was to resolve the dispute between the children as to the management and ownership of 2 The Coombe and Doorawarrah, on the one hand, and Brickhouse on the other.  The children had 'foreshadowed a dispute in relation to Mrs Burt's estate and in particular the Doorawarrah Property and the Brickhouse Property upon Mrs Burt's death' (Recital G) Rather than entering into a formal dispute the Children had agreed on the allocation of certain assets of Mrs Burt's estate (Recital H).

13. Whether all of the shares in Doorawarrah were owned by Mrs Burt personally or as trustee is 'a dispute in relation to the estate of Mrs Burt'.

14. Recital B which states that 'Mrs Burt and Burt Enterprises are the owners of all the shares in Doorawarrah' avoids any issue as to whether Mrs Burt held that shares personally or as a trustee because the terms of Recital B are a statement that she does own them in her own right. 

15. Even if Mrs Burt held the shares as a trustee, all of those who were entitled to the shares either as beneficiaries or on an expectancy, ie.  the children, are parties to the Deed. 

16. The Deed dealt with shares that were held by the children personally, ie.  the shares in Burt Enterprises.  This indicates that the Deed was not intended to deal only with Mrs Burt's estate.  It confirms that the Deed was intended to be a comprehensive settlement of potential disputes between the children.

17. Counsel for Rebecca submitted that Rebecca is not precluded from asserting that the shares were held on trust for Paull, and therefore not bound by the Deed, because there is no reference to Mrs Burt's shares in Doorawarrah Co being held on trust in that Deed.  (T316, 14/6/19).  The reason that there is no reference in the Deed to the shares in Mrs Burt's name being held in trust is because by Recital B the children had agreed to proceed on the basis that Mrs Burt was the absolute owner of the shares.  Therefore there was no reason to state that Mrs Burt held the shares as trustee. 

18. If it were held that Mrs Burt held the shares as a trustee and Recital B should not be given effect to it would give rise to a fragmentation of the interests and have the potential to defeat the purpose of the Deed in resolving the issues between the children as to the ownership of Brickhouse Co and Doorawarrah Co because, in effect, about 40% of the shares in Doorawarrah Co would not be the subject of the Deed.  Far from resolving the issues between the children by separating the interests of Penelope and Jennifer and Paull and the management of Doorawarrah Station and Brickhouse Station Paull, would retain an interest in Doorawarrah Co.  That is inconsistent with the objectives of the Deed. 

19. The facts said by Rebecca to constitute sufficient reason are

    The circumstances surrounding the matter and the circumstances surrounding the inclusion of the provision in the deed that Mrs Burt owned all of the shares the fact that there was no trustee at that point and the fact that the [shares held on trust] were not dealt with in the deed at all (T 317, 16.6.19)

20. Far from there being 'a sufficient reason' in equity for estoppel by deed not to operate there is every reason for estoppel by deed to operate and to uphold Recital B. 

21. If Mrs Burt held the 15,450 shares in Doorawarrah Co personally they are undoubtedly covered by the Deed of Family Arrangement, in that they were an asset of her estate.  If Mrs Burt held the shares on trust then she held them as a trustee for the children.  Alternatively, the children had an expectancy in the shares.  The children were entitled to deal with their interest in the trust as beneficiaries or to deal with the expectancies to which they were entitled upon Mrs Burt's death by the Deed. 

22. Properly construed the Deed does provide for the disposition of the shares in Doorawarrah Co held by Mrs Burt whether held by her personally or on trust.

23. Rebecca submitted that as a matter of construction Clause 3(b)(2) of the Deed does not cover the shares held on trust.  This submission fails to take into account Recital B which provides that Mrs Burt is the owner of the shares in Doorawarrah Co.

The disposition of the Doorawarrah Co shares

1. There was an issue raised as to the fact that the Deed failed to deal specifically with the disposal of the Doorawarrah Co shares.  Having regard to the Deed as a whole and the objectives of the Deed the only tenable conclusion is that the Dorawarrah Co shares would be controlled by Penelope and Jennifer.  That is the only way ownership, control and management of Doorawarrah Station could be transferred to them. 

Various items - The Desk/Clock/painting

1. Paragraph 5(c) of the Statement of Claim pleads that Mrs Burt was the owner of various items of property including a desk known as the Forrest Desk, an Antique Clock and a painting of George Henry Burt.

2. By paragraph 2(a) of the Defence Rebecca pleads that the antique clock and painting of George Henry Burt were not owned by Mrs Burt.

3. Clause 1.1 of the Deed of Family Arrangement states

   Other Assets means the assets comprising Mrs Burt's estate other than any Share and the Coombe Property

4. Clause 3 of the Deed of Family Arrangement provides:

   3.Other Assets and the Coombe Property

   (a)The parties agree that upon Mrs Burt's death:

   (1)other than the Forrest Desk presently in the entrance hall, the Antique Clock in the family room and the painting of George Henry Burt hung in the entrance, the Coombe Property is to be allocated equally among Jennifer and Penelope;

   (2)the Forrest Desk presently the entrance hall, the Antique Clock in the family room and the painting of George Henry Burt hung in the entrance referred to in clause 3(a)(1) are allocated to Paull; and

   (3)the Other Assets are to be allocated equally among Jennifer, Paull and Penelope, provided that if they are unable to agree on any particular asset it is to be sold and the proceeds net of any costs and Taxation are to be allocated equally among Jennifer, Paul and Penelope.

   (b)Paull:

   (1)undertakes not to challenge the allocation under clause 3(a)(1);

   (2)releases and discharges Jennifer and Penelope from any claim he has or may have against Jennifer and Penelope in respect of any right to the Other Assets whether arising under a Will, statute, equity or otherwise; and

   (3)indemnifies Jennifer and Penelope absolutely on a full indemnity basis against any claim, action, damage, loss, liability, cost, expense or payment incurred or arising in relation to any claim by Paull or anyone acting for him or through his estate in relation to the allocation under clause 3(a)(1).

5. Rebecca submitted that whether these were owned by Mrs Burt or not is a matter of fact.  She submitted that if Mrs Burt did not own these chattels, their retention by Paull is irrelevant (submissions 82).

6. The plaintiffs submitted:

   But ultimately, none of this matters.  Paull either already owned these items but his entitlement to them was put beyond doubt by the Deed, or he was to (and did) receive title to them by the Deed.

7. In Paull's letter of 7 September 2005 he claimed ownership of the antique clock and the portrait (Exhibit 18 p 143).

8. It is not necessary to make a finding as to the ownership of these items.

9. Whether Paull or Mrs Burt owned the antique clock and the portrait is relevant in the sense that Paull was prepared to make those items the subject of the Deed of Family Arrangement and thus avoid any dispute as to ownership.

10. The fact that they were dealt with in the Deed of Family Arrangement reflects the desire of the children to resolve any issues between them.  This is consistent with avoiding any disputes as to Mrs Burt's estate and the division of the assets between the children. 

The language used in the Deed of Family Arrangement

1. The language used in the Deed of Family Arrangement makes it clear that the object was to divide ownership and control of Brickhouse Station from Doorawarrah Station and the Coombe whilst preserving broad equality between the children in terms of assets and to avoid disputes.  The language used in the following clauses support this conclusion: Recital G, Recital H, Clause 3, Clause 9, Clause 12, Clause 14.4, Clause 19 (and in particular the ultimate destination of the shareholdings as a result of the restructure), Clause 22.10.

2. The plaintiffs submitted:

   44.The Deed [of Family Arrangement] … contemplated the possibility of a two-stage process to achieve the restructure of the three companies without any or any significant tax.  Central to that process was the obtaining of a binding private tax ruling and the necessary transactions to take place within two years from the granting of probate for [Mrs Burt's] estate (ie by 15 July 2015).  It appears to be common ground that that process did not (and cannot now) take place. 

3. I am not convinced that the obtaining of a binding tax ruling was central.  I say this because whether the ruling required the payment of tax, or not, the parties had agreed that any tax payable would be shared equally.  Properly characterised it was no more than an information gathering process, albeit that any ruling would be binding.

4. Rebecca identified the following as one of the principal issues arising on the pleadings:

   39.… whether:

   (a)the terms of the Deed as to the restructure are a deferral of agreement and not enforceable;

   (b)if so, whether the restructuring aspects are severable: whether the balance of the Deed is enforceable, or whether the entire Deed fails.

1. In Alpha Wealth Financial Resources v Frankland River Olive Co [2008] WASCA 119 [164] Buss JA, as he then was, stated:

   I respectfully agree with Finn J's statement in GEC Marconi Systems [426] that, subject to one qualification, the elements of the doctrine of estoppel by convention are as summarised by the Court of Appeal of New Zealand in National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1 NZLR 548:

   The authorities show that for an estoppel by convention to arise the following points must be established by the party claiming the benefit of the estoppel (the proponent):

   (1) The parties have proceeded on the basis of an underlying assumption of fact, law, or both, of sufficient certainty to be enforceable (the assumption).

   (2) Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction.

   (3) Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them.

   (4) The proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding.

   (5) The proponent would suffer detriment if the other party were allowed to resile or depart from the assumption.

   (6) In all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption (550).

   The qualification is that, to the extent the proponent relies upon an assumption of law or an assumption of mixed fact and law, the assumption of law must relate to private legal rights.  Relevantly, for present purposes, a common assumption as to 'private legal rights' includes a common assumption as to the effect of contracts or agreements.

2. Although there is a difference on the authorities as to whether it is necessary to establish unconscionability it is unnecessary to resolve that for the purposes of this decision since I have found that Rebecca's conduct is unconscionable.

The underlying assumption

1. Penelope and Jennifer rely on the same assumption in relation to conventional estoppel as that pleaded in relation to their claim for equitable estoppel.  The same considerations apply. 

2. The acceptance of the assumption

3. As detailed above the parties have accepted the assumption that the assets would be divided as set out above.  Each party was aware of the conduct of the other.

4. Assumption intended to effect the legal relations

5. The parties have acted on the basis that the assumption was intended to effect legal relations.  The parties effectively divided the management and control of the assets as set out above.  Even though no steps had been taken to implement the restructure the parties acted on the basis that the assets would be divided.  After 15 July 2015 Paull, and subsequently Rebecca, continued to manage Brickhouse Station and ultimately to sell it without reference to Penelope and Jenifer, even though the period for seeking a binding private ruling has passed and restructuring had passed.  There is no evidence that any party took any steps to instruct Lark, as per cl 19, but they still proceeded to act on the basis that control of Doorawarrah Station and The Coombe had passed to Penelope and Jennifer and that control of Brickhouse Station had passed to Paull without reference to the requirements of cl 19.

6. Acting in reliance

7. As detailed above the parties have acted in reliance of the assumption as set out above in relation to equitable estoppel.

8. Detriment

9. As detailed above the Penelope and Jennifer would suffer detriment if the assumption were to given effect to.

10. Unconscionability

11. As detailed above it wold be unconscionable for the Rebecca to depart from the assumption. 

Rebecca's unenforceabilty argument

1. Rebecca correctly submitted that estoppel only becomes relevant to the Plaintiffs' case if the Deed is unenforceable.  Rebecca further submitted that if the Deed is unenforceable no estoppel can arise because the terms of the estoppel are similarly unenforceable.

2. Rebecca submitted

   the Plaintiffs rely on estoppel in the alternative and only in circumstances where the Deed is found not to be enforceable.  An estoppel cannot, sensibly, give rise in equity to liability where what the First Defendant is said to be estopped from denying is itself, by the Court's finding, uncertain or incomplete.

   Significantly, if the restructuring provisions of the Deed are found to be contractually unenforceable, this will be on the basis that Stage Two of the Restructure is subject to conditions that have not been fulfilled.  Also the restructure provisions are little more than a statement of intention.  Clause 19.2(a) provides inter alia, that 'The parties acknowledge that it is likely that the restructuring under Stage One will include …' If the estoppel succeeds, does it succeed to an extent any greater than the First Defendant being estopped from denying that proposition?

   Put another way, an estoppel is as to the parties proceeding on the basis of an underlying assumption of fact or law or both of sufficient certainty to be enforceable.  The underlying assumption or assumptions as to the restructuring provisions of the Deed are not sufficiently certain and do not give rise to the relevant estoppel.

3. It is clear that in order to found an estoppel a representation must be clear (Legione v Hateley 152 CLR 406 at 435-7). Rebecca argues that once the court finds that a contract is unenforceable because its lacks clarity that contract cannot provide a basis for a finding of estoppel.

4. In Sullivan v Sullivan [2006] NSWCA 312 Hodgson JA stated:

   [84]It has been said that in some respects at least more certainty is required for an estoppel than for a contractual variation (Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Manufacturing Co Ltd[1971] 2 QB 23 at 60; Legione v Hateley (1983) 152 CLR 406 at 436–7); but it is also the case that a promise or representation may support an estoppel even though it is not sufficiently certain to operate as a contract (Australian Crime Commission v Gray[2003] NSWCA 318 at [184] ‑ [200], Galaxidis v Galaxidis[2004] NSWCA 111 at [82] ‑ [94]).

   [85]Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised.  Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood …

5. The underlying assumption of the Deed is that certain assets will be transferred between the parties in order to give effect to the common assumption of the parties.  There is no dispute between the parties as to the common assumption as demonstrated by the 2005 Agreement and the conduct of the parties.  What is in potentially in dispute, if there is a lack of clarity, is the mechanism by which the assets will be transferred.  Had there been no contract then there is little doubt that once the Court found the common assumption and the other elements of estoppel that the Court would have ordered relief in equity.  There is a difference between a finding as to the underlying assumption and the mechanism by which that underlying assumption is to be given effect.  Even if the Court had found that the mechanism was uncertain it would still be the case that the underlying assumption was sufficiently certain to fashion relief in equity so as to give effect to the that underlying assumption.

6. An assumption relating to a binding (though in fact invalid) contract can found an estoppel by convention: (Riseda Nominees Pty Ltd v St Vincent's Hospital (Melbourne) Ltd [1998] 2 VR 70 at 77, See also Buss JA in Alpha Wealth Financial Resources v Frankland River Olive Co [2008] WASCA 119 [164]. The fact that such an assumption can found an estoppel by convention is strongly suggestive that a proprietary estoppel can also be founded on the basis of an unenforceable contract assumed to be valid.

7. Even if contrary to my holding the Deed is unenforceable, estoppel still operates to implement the underlying assumption between the children.

The measure of relief

1. As Justice Le Miere stated in Curie v Curie:

   [178]In Giumelli v Giumelli at [6] and [40] - [48] Gleeson CJ, McHugh, Gummow and Callinan JJ held that, because the fundamental purpose of equitable estoppel is to protect the plaintiff from the detriment which would flow from the defendant's change of position if the defendant were to be permitted to resile from his or her promise, the relief granted may require the taking of active steps by the defendant including the performance of the promise and the performance of the expectation generated by the promise. In Sidhu v Van Dyke at [82] French CJ, Kiefel, Bell and Keane JJ said that that holding is supported by the leading decisions to which this category of equitable estoppel is usually traced. The authorities their Honours referred to included Dillwyn v Llewelyn (1862) 145 ER 1285, Ramsden v Dyson (1866) LR 1 HL 129 and Riches v Hogben (1985) 2 Qd R 292 which are cases of proprietary estoppel.

   [179]In Sidhu v Van Dyke at [84] French CJ, Kiefel, Bell and Keane JJ said:

   If the respondent had been induced to make a relatively small, readily quantifiable monetary outlay on the faith of the appellant's assurances, then it might not be unconscionable for the appellant to resile from his promises to the respondent on condition that he reimburse her for her outlay.  But this case is one to which the observations of Nettle JA in Donis v Donis are apposite:

   '[H]ere, the detriment suffered is of a kind and extent that involves life-changing decisions with irreversible consequences of a profoundly personal nature … beyond the measure of money and such that the equity raised by the promisor's conduct can only be accounted for by substantial fulfilment of the assumption upon which the respondent's actions were based.'

   [180]The observations of Nettle JA in Donis v Donis are apposite in this case.  In Sidhu v Van Dyke at [85] French CJ, Kiefel, Bell and Keane JJ said that while it is true to say that the court as a court of conscience, goes no further than is necessary to prevent unconscionable conduct, where the unconscionable conduct consists of resiling from a promise or assurance which has induced conduct to the other party's detriment, the relief which is necessary in this sense is usually that which reflects the value of the promise. Their Honours went on to hold that in the circumstances of that case there was no reason to conclude that good conscience did not require that the appellant be held to his promises [86].

2. This is not a case where a relatively small, readily quantifiable amount of money is involved.  It concerns very significant alterations to the management of two stations, the control and ownership of companies and the sale of both stations and the Coombe.  It also involves very significant changes in the relationships between Penelope and Jennifer and Paull as a result of the change in the relationships between them a result of their ceasing their joint running of the stations. 

3. In this case good conscience requires that Rebecca, as Paull's executor, be held to his promises or assurances by transferring the shares held in his name to Penelope and Jennifer and otherwise carrying out the remaining provisions of the Deed as detailed above.

The relief sought by the plaintiffs

1. The plaintiffs seek the following relief

   A.A declaration that the parties are bound by the Deed.

   B.Specific performance of the Deed.

   D.A declaration that the first and second plaintiffs are beneficially entitled as tenants in common in equal shares to:

   (a)the net proceeds of sale of the Coombe Property;

   (b)all of the shares in Burt Enterprises;

   (c)the 20,074 shares in Doorawarrah Co owned by the late Mrs Burt.

   E.A declaration that the first defendant holds any interest in shares in Burt Enterprises and Doorawarrah Co on trust for the first and second plaintiffs.

   F.An order that the first defendant do forthwith deliver up to the first and second plaintiffs an executed transfer in registrable form of all shares under her control in Burt Enterprises.

   G.A declaration that the third plaintiffs are entitled to transfer all shares in Burt Enterprises and Doorawarrah Co to the first and second plaintiffs herein.

   H.An order that the first defendant do forthwith execute and deliver releases and indemnities to the third plaintiffs.

   I.Further and alternatively, damages.

   J.Interest on all damages.

   K.Costs including costs on a full indemnity basis.

   L.Such further or other relief as this Honourable Court might think fit.

2. By cl 22.7 of the Deed, the parties acknowledged that monetary damages would not be adequate compensation for breach and that specific performance is appropriate.  In any event, as the plaintiffs submitted, that accords with the reality of the situation.

3. Penelope and Jennifer remain ready, willing and able to transfer the shares and otherwise do what is required to give effect to the Deed (Exhibit 1 p 17, Exhibit 3 p 15).

4. The plaintiffs argue that they are entitled to indemnity costs from Paull's estate based on cl 22.12(b) of the Deed. 

5. Having found for the plaintiffs the first defendant's counterclaim should be dismissed with since it arises only if the plaintiffs were unsuccessful.

Appropriate orders

1. I will hear from the parties as to the appropriate orders to give effect to these reasons. 

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MDM
Associate to the Honourable Justice Curthoys

4 MARCH 2020

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION: BOON -v- BURT [2020] WASC 64 (S)

CORAM:   CURTHOYS J

HEARD:   ON THE PAPERS

DELIVERED          :   25 MARCH 2020

FILE NO/S:   CIV 1036 of 2017

BETWEEN:   PENELOPE ANN BOON

First Plaintiff

JENNIFER MARGARET PHILLIPS

Second Plaintiff

PENELOPE ANN BOON as administrator of the estate of WINSOME MABEL BURT

JENNIFER MARGARET PHILLIPS as administrator of the estate of WINSOME MABEL BURT

Third Plaintiffs

AND

REBECCA ANTIONETTE BURT as executrix of the estate of PAULL REGINALD GEORGE BURT

First Defendant

BURT ENTERPRISES PTY LTD

Second Defendant

DOORAWARRAH PASTORAL CO PTY LTD

Third Defendant

THE BRICK HOUSE COMPANY PTY LIMITED

Fourth Defendant

Catchwords:

Nil

Legislation:

Nil

Category:    B

Representation:

Counsel:

First Plaintiff	:	M D Cuerden SC & M Curwood
Second Plaintiff	:	M D Cuerden SC & M Curwood
Third Plaintiffs	:	M D Cuerden SC & M Curwood & M Curwood & MD Cuerden SC
First Defendant	:	P MacMillan
Second Defendant	:
Third Defendant	:
Fourth Defendant	:

Solicitors:

First Plaintiff	:	Arns & Associates
Second Plaintiff	:	Arns & Associates
Third Plaintiffs	:	Arns & Associates
First Defendant	:	Pacer Legal
Second Defendant	:
Third Defendant	:
Fourth Defendant	:

Case(s) referred to in decision(s):

ANZ Banking Group (New Zealand) Ltd v Gibson [1986] 1 NZLR 556

Bank of Western Australia Limited v Ponga (unreported) (Master Sanderson) Supreme Court of WA Library No.  980697

Bank of Western Australia Ltd v Marsh [2000] WASC 208

Gamba Holdings UK Limited v Minories Finance Limited [1993] Ch 171

Rumball v Mortimore [2000] WASC 126

CURTHOYS J:

1. This decision concerns the appropriate costs order arising from the principal decision. The plaintiffs seek indemnity costs on the basis of a contractual provision.

2. The principal decision primarily concerned whether a deed dated 3 May 2007 (the Deed) was enforceable. The Court found that it was enforceable.

3. The Deed (cl 3(b)(3) and cl 22.12(b)), relevantly provided:

   3.Other Assets and the Coombe Property

   …

   (b)Paull: ...

   (3)indemnifies Jennifer and Penelope absolutely on a full indemnity basis against any claim, action, damage, loss, liability, cost, expense or payment incurred or arising in relation to any claim by Paull or anyone acting for him or through his estate in relation to the allocation under clause 3(a)(1 );

   …

   22.12Indemnity

   (b)Paull indemnifies Jennifer and Penelope absolutely on a full indemnity basis against any claim, action, damage, loss, liability, cost, expense or payment incurred or arising in relation to any failure to comply and with the provisions of this Document by Paull or anyone acting for him or through his estate ...

The applicable principles

1. As the parties submitted in a contractual action, where the contract includes plain and unambiguous terms allowing for costs to be paid on a certain basis with respect to litigation relating to the contract, a court will ordinarily exercise its discretion in a manner consistent with the contract.  Rumball v Mortimore [2000] WASC 126 [15]; Bank of Western Australia Ltd v Marsh [2000] WASC 208 [5] ‑ [7]; Bank of Western Australia Limited v Ponga (unreported) (Master Sanderson) Supreme Court of WA Library No.  980697; Gamba Holdings UK Limited v Minories Finance Limited [1993] Ch 171 at 194.

2. In Marsh, at [5], the Master stated in determining any dispute as to an indemnity costs order, a court will take the following into account:

   1.An order for the payment of costs of proceedings by one party to another party is always a discretionary order: see s.37 of the Supreme Court Act.

   2.Where there is a contractual right to the costs, the discretion should ordinarily be exercised to reflect that contractual right.

   3.Any contractual provision which allows a mortgagee to claim for all costs associated with enforcing a mortgage are recoverable subject always to review by the court on taxation.

Disposition

1. The first defendant submitted that the decisions referred to above relate to mortgage documents and that the Deed, in this case, is anything but a boilerplate document. 

2. The principles stated in Marsh relate to contractual obligations broadly and are not limited to mortgages (see for example ANZ Banking Group (New Zealand) Ltd v Gibson [1986] 1 NZLR 556). The fact that the decisions related to mortgages is not a relevant point of distinction

3. The first defendant further submitted that there was a legitimate dispute as to the enforceability of the deed.  She further submitted the indemnity costs terms in cl 3(b)(3) and cl 22.12(b) relate to '...  any claim ...  in relation to the allocation under clause 3(a)(1 )' and to 'any failure to comply and with the provisions of this Document'. 

4. I am not persuaded that there was a legitimate dispute as to the enforceability of the Deed.  It took eight years after the Deed was executed to raise this issue.  Paull Burt never contested the enforceability of the Deed.

5. The terms relate to an assertion of a right or a failure to comply with the provisions of the Deed; not to a dispute relating to the enforceability of the deed itself.

6. I do not accept that a dispute relating to the enforceability of the Deed is not within cl 3(b)(3) and cl 22.12(b).  The words 'any claim' and 'any failure to comply' are words of wide import.  The first defendant failed to comply with the provisions of the Deed by failing to transfer the shares.  The fact that she may have relied on an allegation that the Deed was enforceable does not change the fact that she sought to avoid complying with provisions of the Deed. 

7. The first defendant further submitted that the plaintiffs relied on an estoppel as a fall-back position should the court find that the deed was unenforceable.  A significant part of the action was devoted to this issue. 

1. The plaintiffs succeeded on the enforceability issue.  I accept that part of the action was devoted to the estoppel issue but the factual matrix that underlay the enforceability question was essentially also relevant to the estoppel issue.

2. The first defendant submitted that had the plaintiffs failed as to the enforceability of the deed, but succeeded on an estoppel, the indemnity term in the deed would not have been of application.  The term should not now give rise to an indemnity costs order as to costs incurred with respect to the estoppel issues.

3. The fact is that the plaintiffs did succeed on the enforceability issue.  The fact that the factual issues were inter-related 

4. In all the circumstances of this matter, an indemnity costs order is appropriate. 

Order

1. It is ordered that:

   The first defendant pay all costs incurred by the plaintiffs, including reserved costs, except insofar as any of those costs are of an unreasonable amount or have been unreasonably incurred, so that subject to those exceptions the plaintiffs are completely indemnified by the first defendant for their costs, such costs to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MDM
Associate to the Honourable Justice Curthoys

25 MARCH 2020