Browne v Browne - [2018] WASCA 72

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   BROWNE -v- BROWNE [2018] WASCA 72
CORAM:   MURPHY JA
HEARD:   23 APRIL 2018
DELIVERED          :   18 MAY 2018
FILE NO/S:   CACV 14 of 2018
BETWEEN:   EDWARD BROWNE
Appellant
AND
STEVEN EDWARD BROWNE
Respondent

ON APPEAL FROM:
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   SMITH AJ
Citation: BROWNE -v- BROWNE [No 2] [2017] WASC 375
File Number            :   CIV 2044 of 2017

Catchwords:

Practice and procedure - Application for a stay or injunctive orders to similar effect pending determination of appeal - Turns on own facts

Legislation:

Nil

Result:

Application dismissed subject to appropriate undertakings being given

Representation:

Counsel:

Appellant	:	Mr S Penglis
Respondent	:	Ms K A T Pedersen

Solicitors:

Appellant	:	Dwyer Durack
Respondent	:	Hotchkin Hanly Barristers & Solicitors

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

Beeck v Kohlen [2013] WASCA 134
Browne v Browne [No 2] [2017] WASC 375
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Mercanti v Mercanti [2015] WASCA 206
Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168

MURPHY JA:

Introduction

This is the appellant's application for, in effect, a stay of the primary court's orders or injunctive relief with broadly similar effect, pending the determination of the appeal.
The substantive appeal in this matter is against Acting Justice Smith's decision in Browne v Browne [No 2].[1] The primary proceedings concerned a claim by the respondent (as plaintiff) to the effect that the appellant held certain farming land known as Burracoorong on trust for the respondent. The appellant is the father of the respondent. The primary judge referred to the appellant as Mr Browne and the respondent as Steven. I will do likewise in these reasons.
[1] Browne v Browne [No 2] [2017] WASC 375.

The primary decision

Background

Steven is one of Mr Browne's four sons.[2]
[2] Primary decision [1].
Mr Browne came from a farming family. He purchased a farm called Yargalain. He also inherited a farm called Burracoorong from his father in 1966.[3]
[3] Primary decision [3].
In 1974, Mr and Mrs Browne formed a partnership with their two eldest sons, Steven and Paul. The partnership farmed the property owned by Mr Browne at nominal rent. The membership of the partnership changed over time to include all four sons.[4]
[4] Primary decision [4], [10].
In late 1975, Steven began working full‑time in the farming partnership. He farmed all of the partnership property including Burracoorong. By the late 1970s Steven had a central role in managing the farming partnership.[5]
[5] Primary decision [5].
Until 1988, all habitable accommodation was on Yaraglain.[6]
[6] Primary decision [7].
In 1988, Steven and his wife began building a family home on Burracoorong. It was not in dispute that Mr Browne told Steven and his wife to build their home on Burracoorong, and they subsequently did so.[7]
[7] Primary decision [7].
By the end of 1997, the partnership had borrowed funds to purchase a retirement home for Mr and Mrs Browne in Sorrento.[8]
[8] Primary decision [12].
In 1999, contemplating their retirement, Mr and Mrs Browne and their sons agreed to end the partnership. They agreed that the assets of the partnership would be split between the four sons, with Mr Browne remaining the owner of the land of the partnership. Among the arrangements put in place, the following was agreed:[9]
(a)The brothers' respective equities in the former partnership were Steven (36%), Paul (24%), Michael (16%) and Peter (24%).
(b)Each son was to farm independently on the lands allocated to them. Steven was allocated Burracoorong.
(c)Each son assumed an equal 25% of the debt assumed by the partnership for the purchase of Mr and Mrs Browne's retirement home in Sorrento.
(d)Peter and Steven were each to pay $16,000 per annum to Mr Browne; and Michael and Paul were each to pay $16,000 per annum to Mrs Browne until their death.
(e)Each son assumed liability for their share of the partnership debt. At that time, the partnership debt was $750,000, and the combined assets of the partnership were estimated at $3.1 million.
(f)Steven and Peter were to share use of the infrastructure on Yargalain that did not exist on Burracoorong.
(g)All four sons continued to use the partnership funding facility for their farming businesses, which was maintained by Mr Browne until early 2003.
[9] Primary decision [13] - [14].
In December 1999, it was agreed that the amount payable to Mr Browne should be increased from $16,000 to $18,000 per year.[10]
[10] Primary decision [14(d)].
From at least early 2000, Steven farmed the whole of Burracoorong independently of his brothers and father, and of the partnership.[11]
[11] Primary decision [15].
Steven made a number of substantial improvements to Burracoorong in the period 1999 ‑ 2017.[12]
[12] Primary decision [17].
In 2002, Peter and Steven (directly or through companies) purchased a property known as Moganmoganing as equal tenants in common.[13]
[13] Primary decision [21].
On 24 December 2002, Steven and his wife obtained a loan for $650,000, apparently from Rabobank. It was secured over Burracoorong, and Mr Browne guaranteed the loan. $400,000 of that amount was used to purchase Moganmoganing, and the remainder applied to Steven's share of the partnership loan.[14]
[14] Primary decision [22], [244].
In late 2009, there was a falling out between Steven and Mr Browne.[15]
[15] Primary decision [23].
On 23 March 2010, Steven and his wife obtained a further loan facility of $400,000 secured over Burracoorong.[16]
[16] Primary decision [24].
By March 2010, Mr Browne had allowed borrowings against Burracoorong for a total of $1,125,000, and had guaranteed the debt. This was later reduced to $1.025 million.[17]
[17] Primary decision [247].
In April 2013, in exchange for Mr Browne's consent to an increase in a loan facility, Steven agreed to increase annual payments to $34,000 per year.[18]
[18] Primary decision [25].
In August 2013, Steven's and Mr Browne's relationship had deteriorated to the point that Mr Browne refused to permit Steven access to the farming facilities on Yargalain.[19]
[19] Primary decision [28].
In August 2013, Mr Browne consulted solicitors who drafted a lease for Steven to sign for use of Burracoorong. The lease was for a 10‑year term and included, among other conditions, a base rent of $34,000 per annum, a reservation of Mr Browne of his right to sell Burracoorong to any prospective purchaser, and an obligation on Steven to yield up the premises and return all keys of the premises to Mr Browne upon expiry or termination of the lease.[20]
[20] Primary decision [27].
By 23 November 2013, Steven and his wife's borrowings secured by Burracoorong amounted to $1,025,000, and the loan facility was to expire on 2 January 2018.[21]
[21] Primary decision [33].
Around November 2013, Mr Browne indicated that he wished to withdraw his support for Steven's indebtedness to Rabobank, and required the bank to make arrangements to remove the mortgage over Burracoorong to secure Steven's indebtedness. Rabobank acted upon that request. Mr Browne subsequently had a change of heart. The bank nevertheless required Mr Browne to sign a deed of acknowledgement before it would withdraw the restrictions and reinstate Steven's access to the mortgage. On 25 November 2013, Mr Browne signed the deed of acknowledgement, but in the email sent to Rabobank, Mr Browne, by his solicitor, stated, in effect, that no further extensions were to be made over and above the $1.025 million, and that any additional funding required by Steven should be secured against Steven's half interest in Moganmoganing.[22]
[22] Primary decision [29] - [34].
In June 2017, Mr Browne refused to continue to guarantee Steven's borrowings secured on Burracoorong beyond the date of expiry of the current facility (2 January 2018).[23]
[23] Primary decision [38].
In August 2017, Mr Browne's solicitors wrote to Steven demanding the payment of increased rental payments of $34,000 per annum which Mr Browne said were owing from 2013. The letter also demanded increased rent of $61,000 per annum from 2017, and immediate payment of $64,000. [24] It reserved Mr Browne's right to evict Steven from Burracoorong if Steven did not pay $64,000 by 11 August 2017.
[24] Primary decision [40].
In August 2017, Mr Browne also executed a will in which Steven's entitlement to Burracoorong, via testamentary trust, was conditional upon and subject to a number of conditions, including payment of the increased rent and payment of $300,000 to each of Steven's sisters which would total $1.2 million.[25] The will was subject to alteration at any time and expressed an intention by Mr Browne to modify its terms to penalise his sons if they failed to respect Mr Browne's wishes or caused him any undue hardship or stress.[26]
[25] Primary decision [41].
[26] Primary decision [42].
In an application to Rabobank in February 1999, Steven estimated Burracoorong to be worth $3.025 million. At trial he estimated the unimproved value to be at least $4.4 million.[27] Mr Browne at trial claimed that Burracoorong was worth at least $6.825 million.[28]
[27] Primary decision [251].
[28] Primary decision [74].
There is no evidence that Steven had, at any time, put the security of Burracoorong at risk. He has accessed the equity in Burracoorong to enable him to farm successfully both Burracoorong and Moganmoganing.[29]
[29] Primary decision [252].
Burracoorong is the family home of Steven, and he has farmed it for over 40 years.[30]
[30] Primary decision [305].
On 14 February 2017, Steven received, but rejected, an offer from Peter to sell his half share in Moganmoganing for $1.4 million.[31]

Steven's claim

[31] Primary decision [281].

Steven asserted a proprietary estoppel. He claimed that, at various times between 1975 and 1999, Mr Browne promised him that he would gift Burracoorong to him before, or upon, Mr Browne's death, and Mr Browne thereby induced an assumption in Steven to that effect. Steven also claimed he was promised he could farm Burracoorong indefinitely at his own expense and that Mr Browne would support Steven's farming by allowing access to infrastructure on Yargalain and by facilitating Steven's borrowing by permitting the use of the partnership's existing funding facility.[32]
[32] Primary decision [55] - [56].
Steven claimed he relied on these promises in a number of ways, including by living and working on Burracoorong with his family, incurring debt and liability and making annual payments to his father. He claimed that if Mr Browne were permitted to resile from the matters giving rise to the promises this would cause detriment to him.[33]
[33] Primary decision [59] – [60].
Steven sought a declaration that Mr Browne held his legal interest in Burracoorong on trust for him.[34]

Mr Browne's counterclaim

[34] Primary decision [61].

Mr Browne denied Steven's claims and asserted certain claims by way of counterclaim.[35]

Primary decision and orders

[35] Primary decision [63] - [80], [202] - [210].

Smith AJ largely upheld Steven's claim. Her Honour formed an adverse view of the reliability of Mr Browne's evidence. She found Steven's evidence to be credible, although had some reservations about his account of events in the 1970s on account of the passage of time since then.[36]
[36] Primary decision [116] - [125].
On 22 December 2017, her Honour made, relevantly, orders to the following effect:
1.A declaration that Mr Browne holds his legal interest in Burracoorong on trust for Steven.
2.On the condition that Steven pays Mr Browne the sum referred to in par 3, Mr Browne is to forthwith deliver up a signed transfer of Burracoorong to Steven and do all things reasonably necessary on his part to effect that transfer.
3.Steven shall pay Mr Browne the sum of $64,000 forthwith.
4.Steven shall pay Mr Browne, or, in the event of Mr Browne's death, his wife, May Browne, no later than 31 January of each year, a sum of $34,000, representing 25% of the reasonable and quantifiable annual living expenses of Mr Browne and his wife for each financial year commencing 1 July 2017.
5.Burracoorong is charged with payment of the annual lump sum referred to in par 4.
6.The counterclaim is dismissed.

Events after final orders[37]

[37] These events are taken from the affidavit of Mr Dobson, Steven's solicitor, dated 13 March 2018.

On 5 January 2018, Steven, by his solicitors, sent a cheque for $64,000 and signed transfer to Mr Browne's solicitors for execution. On 19 January 2018, Mr Browne's solicitors advised that Mr Browne had not been able to locate the cheque or the transfer. On 24 January 2018, another cheque and signed transfer was sent by Steven's solicitors to Mr Browne's solicitors, together with a notice under s 31 of the Stamp Act 1926 (WA), and an Exemption from Stamp Duty.
On 31 January 2018, Mr Browne filed an appeal notice. On around 1 February 2018, Mr Browne's solicitors advised Steven's solicitors that Mr Browne had refused to sign the papers because he was convinced the cheque would bounce. However, Mr Browne did intend to bank the cheque. Mr Browne's solicitors also said they had no instructions to apply for a stay. On 6 February 2018, Mr Browne's solicitors advised that Mr Browne was in hospital and was not in a state to sign the papers. There were further email communications between the parties about undertakings.

The application for a stay and the course of the appeal

On 26 February 2018, Mr Browne filed the present application and an affidavit in support sworn by his solicitor, Ms Pickering.
Steven filed affidavits in opposition. The affidavits comprised an affidavit by his solicitor, Mr Dobson, sworn 13 March 2018, and affidavits by Steven sworn 13 March 2018 and 19 April 2018. In Steven's affidavit of 13 March 2018, he deposed, in effect, that:
1.He needs to borrow more money, and that his ability to borrow against Burracoorong would enable him to obtain better financial terms.
2.On the basis that Mr Browne transfers Burracoorong in compliance with the primary court's orders, then he undertakes, pending the determination of the appeal or until further order:
(a)not to sell or transfer or grant any interest in Burracoorong, subject to (b) below;
(b)not to borrow against Burracoorong and encumber it beyond $700,000; and
(c)to grant a registered charge in favour of Mr Browne over his half share in Moganmoganing, equal to any increase in borrowings against Burracoorong, up to the amount of $700,000.
In his affidavit of 19 April 2018, Steven, in effect, updated the evidence as to his financial position. Amongst other things, the affidavit indicated that in April 2018, Rabobank had agreed to lend Steven and his wife $250,000 for working capital, secured, relevantly, over his half share in Moganmoganing. The facility is said to expire on 28 February 2019.
In par 13 of that affidavit, Steven also annexed a loan application and associated documents in respect of a potential loan from Rabobank, in effect consolidating his debts and providing for a loan facility of up to $2.95 million. The application was made on the basis that Steven would obtain title to Burracoorong in accordance with the primary court's orders. The security for the proposed facility is stated to be Burracoorong and Steven's half interest in Moganmoganing. The documentation also acknowledged that there would be a release of Mr Browne's mortgage over Burracoorong and Mr Browne's guarantee.
On 7 March 2018, Mr Browne filed his appellant's case.
On 26 March 2018, Mr Browne filed undertakings as to damages.
On 5 April 2018, Mr Browne filed a further undertaking that until the determination of the appeal or further order:
1.he will not sell, transfer or grant any interest in Burracoorong; and
2.in the event that Rabobank gives notice of its intention to take action under the mortgage, he will cause Steven's solicitors to be given written notice within seven days of Mr Browne's receipt of such notice from Rabobank.
On 12 April 2018, Steven filed a respondent's answer.

The principles to be applied

There was no dispute about the relevant principles. See Eastland Technology Australia Pty Ltd v Whisson;[38] Tradesman Technologies Pty Ltd v Ameduri[39] and, in relation to Mr Browne's claim for injunctive relief, Mercanti v Mercanti.[40] In relation to an appeal in respect of a dispute over real property, consideration may also be given to whether the property in question has irreplaceable value, such that damages would not be adequate compensation in the event of a successful appeal: Beeck v Kohlen.[41]
[38] Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308.
[39] Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168.
[40] Mercanti v Mercanti [2015] WASCA 206.
[41] Beeck v Kohlen [2013] WASCA 134 [19].

The parties' arguments

Mr Browne contends, in effect, that:
1.He has a reasonably arguable case.
2.The appeal would be rendered nugatory without a stay. Burracoorong has been owned by Mr Browne since 1966 when he inherited it from his father and, therefore, he has a personal attachment to it and damages would be an inadequate remedy. In that context, and also relevant to the balance of convenience:
(a)there is a real prospect that Steven may not have sufficient money to pay such damages in any event;
(b)Steven has stated that he wishes to be able to borrow up to a further $700,000 on the security of Burracoorong.
3.The balance of convenience also favours Mr Browne because:
(a)in any event, there is no adequate evidence that Steven has a financial need of $700,000 at this time, and the amount of $1.025 million owing to Rabobank is a liability, but it is not shown as being presently due and payable. Also, Steven's affidavits tend to indicate that he does not need the additional money, and he could always apply, under a liberty to apply, if he did need the money;
(b)there may be stamp duty issues if Mr Browne were to transfer the property now and it had to be retransferred following a successful appeal;
(c)Steven has produced no evidence of any significant prejudice and, to the extent that he may suffer prejudice, it is adequately protected by Mr Browne's undertakings, which include the undertaking not to deal with Burracoorong;
(d)although Mr Browne has received the $64,000 pursuant to the primary court's orders, it is in his solicitor's trust account, and can be refunded to Steven if a stay were granted;
(e)there is no evidence that Steven's proposal has been put to Rabobank or approved by it; and
(f)the balance of convenience strongly favours the retention of the status quo, and in order to preserve the status quo, Mr Browne would also be prepared to renew the guarantee to Rabobank for the debt up to $1.025 million, on the same terms as it presently exists.[42]
[42] The debt is referred to in [18] and [22] above; see also ts 10.
As to the last‑mentioned point, Mr Browne's solicitors wrote to Steven's solicitors on 8 February 2018, and said:[43]
We confirm that in the event of an Application for a Stay, [Mr Browne] is prepared to extend the existing guarantee over the land in relation to Steven's loan to maintain the status quo prior to the decision of the Court of Appeal. [Mr Browne] will only extend the current guarantee however, and he will not sign the guarantee sent to him by Rabobank in May 2016. (emphasis added)
[43] Annexure PBD6 to Mr Dobson's affidavit, page 19.
Steven contends, in effect, that:
1.Prima facie he is entitled to the benefit of the judgment, and the onus is on Mr Browne to show why he should be deprived of that benefit.
2.Although Mr Browne lived on Burracoorong for a time in 1950s or 1960s in a shack, Mr Browne's family home has been on Yaraglain, and he now has his retirement home at Sorrento. Further, Mr Browne's case at trial was that he may sell Burracoorong.[44] On the other hand, Burracoorong has been farmed by Steven for over 40 years, and it is and has been his family home.
3.Further, Steven had offered to charge his interest in Moganmoganing in favour of Mr Browne to secure any additional borrowings up to the sum of $700,000.
4.The balance of convenience favours Steven in that:
(a)he needs to borrow, or at least needs to have the flexibility to borrow, up to $700,000 for his farming business, and the costs of borrowing would be more favourable to him if he could borrow on the strength of Burracoorong;[45]
(b)Mr Browne has not adduced evidence of any further guarantee which might be acceptable to Rabobank; and
(c)Mr Browne has accepted the $64,000 pursuant to the judge's orders (albeit that the money is in his solicitor's trust account) without, in effect, accepting the burden, namely the transfer of title.
[44] Primary decision[27(c)], [276], [309(b)].
[45] See, the affidavit of Steven Browne sworn 13 March 2018, pars 19 - 22.

Disposition

It was not in dispute, and I accept, that Mr Browne has an arguable case in the relevant sense.
I am not persuaded that the appeal will be rendered nugatory if a stay is not granted. In other words, I am not persuaded that a stay is required to preserve the subject matter or integrity of the litigation, or that there is a real prospect that relief will be inadequate if the appeal succeeds and the stay is refused. That is for five related and combined reasons, and is subject to the matter referred to in [56] below.
First, the suggestion that an entitlement to the beneficial ownership in Burracoorong is important to Mr Browne because the property has some sentimental value to Mr Browne, or that he has some similar attachment to the property, is doubtful. He has never made it his family home (although it was accepted by Steven that he lived there in a shack for a time in either the 1950s or 1960s), and on the judge's findings, Mr Browne is prepared to sell Burracoorong to serve his economic interests. I am not persuaded that its value to Mr Browne is anything more than economic, and that, from his point of view, the dispute is anything other than a dispute over an economic asset. From Steven's perspective, it is a dispute about his home, and his ongoing business. Secondly, on the basis of Steven's undertaking, the property would not be sold or transferred pending a determination of the appeal. Steven is prepared to undertake not to sell or grant an interest in Burracoorong pending the disposition of the appeal, subject to the prospect of him borrowing up to $700,000 for farming purposes and encumbering the property to that extent. Thirdly, that amount is a relatively small proportion of the value of the property attributed to it by Mr Browne - $6.825 million.[46] Fourthly, although I accept that there is limited objective evidence that Steven has a current need to borrow up to $700,000, I would infer that he would not undertake such additional indebtedness without good reason. I accept that he effectively wants the flexibility to borrow up to that amount if it becomes necessary for his farming business, pending the final determination of the appeal. Fifthly, I am satisfied that his offer to charge Moganmoganing would provide sufficient security to Mr Browne to cover any additional borrowing. The judge recorded that Peter offered to buy Steven's half interest in Moganmoganing for $1.4 million in what appeared to be an arms‑length proposal. Although Steven rejected it, it is a reasonable indication that there is substantial equity in Steven's share of Moganmoganing in the event that he were to borrow up to $700,000 prior to the determination of this appeal.
[46] Even if Steven's pre‑trial estimate of $4.1 million were adopted, the potential maximum borrowing remains less than 20%.
Further, even if the prospect that Steven will encumber Burracoorong up to $700,000 were to mean that the appeal would be rendered nugatory without a stay, the first, third, fourth and fifth matters referred to above remain relevant to the balance of convenience, and in my view tilt it in Steven's favour. The other factors in relation to the balance of convenience, which seem to me to be of potentially the most significance are:
1.It is not evident on the materials and submissions before me that stamp duty is, or is likely to be, a significant issue. It was a spectre floated by Mr Browne but without any detailed submissions addressing the substance of the point.
2.Although the point is overall a slight one, if an applicant seeks a stay of the burden of an order, it ordinarily ought not take and keep the benefit of the order, pending the resolution of its application. The sum of $64,000, although not a large amount in the context of the value of Burracoorong, is objectively, in itself, not an insignificant sum. In this case, I am not persuaded, on the evidence, that there is any good reason why Mr Browne could not have instructed his solicitors to return the money to Steven, pending the determination of his application.
3.I take into account Mr Browne's undertakings referred to earlier and accept that they are a factor pointing in favour of Mr Browne.
4.In this regard, I also accept that the quantum of any additional borrowing costs incurred by Steven without having access to Burracoorong may well be accommodated by Mr Browne's undertaking as to damages.
5.However, I think there is the prospect of some degree of prejudice, albeit difficult if not impossible to quantify, in being constrained from gearing a business (and, in particular, a seasonal business) in a manner and to a level that seems optimal to the proprietor of the business from time to time, pending the determination of this appeal.
6.Mr Browne's offer to renew the guarantee in favour of Rabobank seems to me to be of limited significance absent evidence that the proposed guarantee would be acceptable to Rabobank in the present circumstances.
7.From Rabobank's prospective, a declaration as to the beneficial ownership of Burracoorong cannot prejudice its rights as mortgagee, and the onus will be on Steven to make good his undertaking.
In all the circumstances, in my view the balance of convenience tends in favour of Steven. For these reasons, and subject to the next matter, the circumstances for the granting of a stay or an injunction to similar effect have not been established.
This conclusion is subject to Steven giving an appropriate undertaking along the lines he has indicated. Also, I understood it to be implicit in Steven's submissions, and in the evidence referred to in [42] above, that Steven will procure the release by Rabobank of Mr Browne's guarantee if the property is transferred to him. There would need, in my view, to be an explicit reference in the undertaking by Steven to that effect. Subject to those matters, the application for a stay should be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CL
ASSOCIATE TO THE HONOURABLE JUSTICE MURPHY
16 MAY 2018