Campbell v Campbell - [2015] NSWSC 784

Supreme Court

New South Wales

Medium Neutral Citation: Campbell v Campbell [2015] NSWSC 784
Hearing dates: 30 April, 4, 5, 6, 7 May, further submissions 12, 22 May, further written submissions 3, 9 June 2015
Date of orders: 19 June 2015
Decision date: 19 June 2015
Jurisdiction: Equity Division
Before: Sackar J
Decision:
See [345]-[350]

Catchwords:
CONTRACTS – testamentary agreement – existence of binding agreement – no written agreement – alleged agreement constituted by oral representations and conduct – inconsistent accounts of conversations – family context – intention to create legal relations – adequacy of consideration

CONTRACTS – mutual wills – whether parties entered agreement not to alter or revoke wills without notice to the other – need for clear and cogent evidence – consideration of circumstances – inferences to be drawn – intentions of the parties

EQUITY – laches, acquiescence or estoppel – inaction on part of plaintiff in asserting legal rights – state of knowledge – whether plaintiff should be precluded from recovery

PROPERTY – interests in property – no written instrument – doctrine of part performance – whether acts unequivocally referable to existence of contract
PROPERTY – indefeasibility – allegation interest in property held on trust – no allegation of fraud on part of registered proprietor – whether indefeasibility of title operated to defeat plaintiff’s claim
Legislation Cited: Conveyancing Act 1919 (NSW)
Real Property Act 1900 (NSW)
Contracts Review Act 1980 (NSW)
Cases Cited: Ashton v Pratt [2015] NSWCA 12
Baird v Smee [2000] NSWCA 253
Birmingham v Renfrew (1937) 57 CLR 666
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Camden v McKenzie [2008] 1 Qd R 39
Carovski v Carovski (unreported, Cohen J, 28 April 1997)
Clune v Collins Angus & Robertson Publishers Pty Ltd (1992) 25 IPR 246
Craig v Silverbrook [2013] NSWSC 1687
Crawley v Short [2009] NSWCA 410
Delaforce v Simpson-Cook (2010) 78 NSWLR 483
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Evans and Braddock [2015] NSWSC 249
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Grundel v Registrar General (1990) 5 BPR 11,217
Hubbard v Mason (unreported, Santow J, 9 December 1997)
Hussey v Bauer [2011] QCA 91
Khoury v Khouri (2006) 66 NSWLR 241
LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517
New South Wales v Hunt (2014) 86 NSWLR 226
Orr v Ford (1989) 167 CLR 316
Osborne v Estate of Frederick Osborne [2001] VSCA 228
Permanent Trustee v Bernera Holdings Pty Ltd [2004] NSWSC 56
Plaska v Coffey [2014] NSWSC 1930
Neale v Bank of Western Australia [2014] NSWSC 315
Re Cleaver (deceased) [1981] 1 WLR 939
Re Goodchild (deceased) [1997] 1 WLR 1216
Re Oldham [1925] Ch 75
Regent v Millett (1976) 133 CLR 679
Renfrew v Birmingham [1937] VLR 180
Sharp v Anderson (1994) 6 BPR 13,801
Sze Tu v Lowe [2014] NSWCA 462
Thompson v Palmer (1933) 49 CLR 507
Vroon BV v Foster’s Brewing Group Ltd [1994] VR 32
Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387
Watson v Foxman (1995) 49 NSWLR 315
White v Wills [2014] NSWSC 1160
Texts Cited: GL Ceroma, The Law of Succession (2010, 4th edition, Lawbook Co)
JG Ross Martyn, C Ford, A Learmonth, M Oldham (eds), Theobald on Wills (2010, 17th ed, Thomson Reuters)
Category: Principal judgment
Parties: Julie Elizabeth Campbell - plaintiff
Marjorie Elizabeth Campbell – first defendant
Robyn Ann Edith Dennett – second defendant
Susan Marguerite Campbell – third defendant
David Scott Campbell – fourth defendant
Representation:
Counsel:
C Birch SC, A Connolly – plaintiff
D Pritchard SC, R Yerzerski - defendants
Solicitors:
JSM Lawyers - plaintiff
Piggott Stinson - defendants

File Number(s): 2014/107698
Publication restriction: n/a

Judgment

The Proceedings

The plaintiff, Julie Elizabeth Campbell (Julie) (born 15 August 1955), is the second eldest child of the first defendant, Marjorie Elizabeth Campbell (Lady Campbell) (born 9 May 1927) and the late Sir James Keith Campbell (Sir Keith). Sir Keith and Lady Campbell married in September 1951.
The second, third and fourth defendants are Julie’s siblings. They are:

The second defendant, Robyn Ann Edith Dennett (Robyn) (born 14 September 1958);

The third defendant, Susan Marguerite Campbell (Susan) (born 22 February 1953); and

The fourth defendant, David Scott Campbell (David) (born 24 January 1961).

The plaintiff has commenced these proceedings in order to enforce an agreement she alleges she made with the defendants in May 1983 whereby in consideration of the plaintiff and the second to fourth defendants directing Hooker Corporation Limited (Hookers) to transfer 8 Hopetoun Avenue, Mosman to Lady Campbell, Lady Campbell agreed to leave that property to the plaintiff and the second, third and fourth defendants (her children) in equal shares (1983 Agreement). The plaintiff contends that the 1983 Agreement was made following the death of Sir Keith.
The plaintiff also seeks to restrain Lady Campbell from resiling from an obligation to leave her estate to her children under the terms of a mutual will Lady Campbell allegedly made by agreement with her husband in about 1982, prior to her making the 1983 Agreement with her children.
The defendants deny the existence of the 1983 Agreement and the agreement to make mutual wills.

Background Facts

Lady Campbell was born on 9 May 1927.
She and Sir Keith married in September 1951.
On 22 February 1953 Susan, the third defendant, was born.
On 15 August 1955 Julie, the plaintiff, was born.
On 14 September 1958 Robyn, the second defendant, was born.
On 24 January 1961 David, the fourth defendant, was born.
Sometime during 1961 Sir Keith commenced working for Hookers.
For some years prior to 30 June 1975, Sir Keith and Lady Campbell and their family lived at a house at 14 Wonga Street, Strathfield. The house was purchased in about 1960 and was solely in Sir Keith’s name.
Sometime during 1975 the Board of Hookers apparently adopted the view that it would be more appropriate if Sir Keith and his family moved to a property in Mosman.
On or about 3 April 1975 Sir Keith and his family inspected the property at 8 Hopetoun Avenue, Mosman (the Property).
On or about 3 April 1975 the Board of Hookers was informed that Mr Glover had purchased the Property on behalf of Hookers for a price of $409,500. Stamp duty and legal costs associated with the purchase were expected to be in the order of $12,000. At around this time Mr Hunter Mansell (Mr Mansell) of the law firm Mansell & Norton was instructed by Hookers to act on the purchase.
On 21 April 1975 Mr Glover, the then deputy chief general manager (Mr Glover) informed Mr Millar, the then chairman of Hookers, of the purchase.
On 21 April 1975 Mr Glover instructed Mr Mansell that it was proposed that Sir Keith and his family have a lease for a period of ten years and an annual rental of $2,500. Hookers was to be responsible for the payment of rates, land tax and insurance and Sir Keith for the payment of other “normal” outgoings associated with the Property. Mr Mansell was asked to prepare the lease with an “inure clause relating to Mrs Marjorie Elizabeth Campbell and the four children”.

The letter continued:

In consideration of the sum of $1,000 paid by Mr. Campbell’s four children, it is proposed to grant an option for them (as tenants in common) to purchase the property from the Corporation at any time within the next 15 years for the sum of $421,500 plus any further amounts expended by the Corporation on alterations and modernisation of the property which are of a structural nature. Would you please prepare an appropriate option agreement

On 8 May 1975 the board of Hookers formally resolved to ratify Mr Glover’s purchase of the Mosman property on behalf of it.
On 6 June 1975 Mr Mansell wrote to Mr Glover. He invited Mr Glover to inform him when he (Mr Glover) or Sir Keith might be ready to discuss the lease and option agreement.
On 17 June 1975 Mr Glover wrote to Mr Mansell. He indicated that it was not now proposed to execute a lease to the “Campbell family” in respect of the subject property and that the Campbell family intended simply to occupy the Property pursuant to a resolution of Hookers. Mr Glover did indicate that it would be necessary in due course to have an option agreement prepared in respect of the four “Campbell children” providing that they would have a right to acquire the Property at any time within the next 15 years in consideration of each of them paying the proposed $1,000.
On 30 June 1975 the vendors executed a transfer in favour of Hookers as purchaser of the Property.
On 8 August 1975 Mr Mansell wrote to Mr Glover attaching what was described as “two carbon copies of a fourth draft of an Option”. Mr Mansell went on to say that there were two “problem factors” as follows:

1. Two of the children are under age and would need to ratify and confirm the Deed upon attaining the age of 18 years. In addition, any one or more of them might not collectively agree with the others to exercise the Option therefore frustrating it.
2. Keith was disinclined to use a corporate structure as the Grantee as he was also disinclined to use a Trustee.

Mr Mansell pointed out that discussion needed to take place, if the option was to go ahead, with the “children” personally so that the attendant problems and risks were fully comprehended.

The “fourth draft” so described was a four page document purporting to set out a proposed agreement between Hookers and each of the four children. As at the date Mr Mansell sent this letter to Mr Glover, the option was to be exercised “prior to 5pm on a date being the earlier of the 30th day of June, 1983 or the date which is seven hundred & thirty (730) days after the death of James Keith Campbell or him ceasing to be an Executive of the Grantor and any of its related Companies….” (cl 2).
Clause 6 provided that if the Grantees were, at the date of execution of the option agreement, under the age of 18 years, they were within a month of turning 18 to elect to confirm by ratification their willingness to go ahead with the option arrangement. Were any of the children to fail to ratify the arrangement then that child would cease to have any rights or obligations under the option agreement, which would nevertheless enure “for the benefit of the others”.
In his affidavit (BG2 [7]-[8]) Mr Glover identifies the handwriting on the bottom left-hand corner of Mr Mansell’s letter (identified as “Annexure A”) as being Mr Glover’s. The handwriting on the next document (“Annexure B”, the unsigned option agreement) he identifies as being Sir Keith’s. Mr Glover’s annotation on Annexure A, intended as a note to Sir Keith, reads as follows:

KC
Hunter has advised me that option can only be exercised if all children are over 18 or by those children over 18 having regard for other children over 18 who may have failed to ratify agreement.

It is clear from this remark that Mr Glover was aware of the difficulties regarding the option agreement.
The family home in Strathfield was sold in September/October 1975. As a result, Sir Keith placed $68,000 from the proceeds of that sale with Hookers, interest free, which was secured by debenture certificates in the names of each of the four children.
On 13 January 1982 Sir Keith made a will. In that will he appointed Susan Campbell as sole executrix and trustee. He then left the entirety of his estate upon trust for Lady Campbell. However, if she did not survive him for a period of six months (or if she predeceased him), he left the entirety of his estate upon trust for his children as tenants in common in equal shares.
In late 1981 or early 1982 Lady Campbell made a will similar to that made by her husband.
On 16 April 1983 Sir Keith died suddenly. At that time Lady Campbell was 56. There is no indication of precisely how old he was, but I assume in his fifties as well. All four children at that time lived at home. Their ages respectively were as follows: Susan (30), Julie (28), Robyn (25) and David (22). None of the children were married.
On 17 May 1983 Mr Mansell prepared a memorandum. The memorandum was directed to Lady Campbell and each of her four children. Mr Mansell indicated that he had “researched” his file of April 1975, reviewed copies of minutes of Hookers and had discussions with the current Chairman and the Chief Executive Officer of Hookers. He indicated he had also had discussions with Lady Campbell and her children.
He referred to the “original spirit of intent” which appeared to him to involve Hookers purchasing the house on the basis that it would be sold to the Campbell family upon Hookers being reimbursed for all expenditure by Hookers in respect of the purchase and resale. He then said:

No formal Option Agreement exists according to my investigations and information, but Hooker Corporation Limited is perfectly willing and prepared to dispose of the property at Book Value to the Campbell Family

He went on to say:

The Chairman of the Corporation has asked for a Clearance from the other Family Members as to the Corporation selling to Lady Campbell in isolation from her children. This is a formality which I understand will readily be agreed by the Family Members signing a simple form which I will provide, addressed to the Corporation.

The Memorandum also went on the state:

Since the date of death of the late James Keith Campbell, and even though a “gentleman’s agreement” existed as to the sale and purchase of the property, the Corporation had no arrangement whereunder the present occupancy should continue pending purchase

On 17 May 1983 Lady Campbell and each of her four children signed a document in the following terms:

We, the undersigned, confirm to you our joint and several desire that your Company should sell the property, No. 8 Hopetoun Avenue, Mosman to Lady Marjorie Elizabeth Campbell on terms and conditions as discussed between your Company’s Chief Executive Officer, Mr. B. A. Glover, and the Company’s own Solicitor, Mr. C. H. Mansell.
We, the undersigned other than Lady Campbell, jointly and severally acknowledge and confirm that none of us desires to acquire from your Company any interest in the said property provided that it is purchased as aforesaid by our Mother, the said Lady Marjorie Elizabeth Campbell

On 18 May 1983 the four children signed requests addressed to Hookers that the sums due to them on the debenture certificates be applied to the purchase of the Property by Lady Campbell.
On 23 May 1983 there was a transfer of the Mosman property from Hookers to Lady Campbell for $420,351.07.
On 31 May 1983 Lady Campbell executed a will (drafted by Julie) by which she left her whole estate to the four children equally.
On 20 June 1983 Susan was granted probate of Sir Keith’s will.
In May or June (there is a dispute between various witnesses) Lady Campbell, Susan, Julie and Robyn conferred with Mr Kevin Burges, solicitor, a partner of Stephen Jacques Stone James. What occurred at that meeting is also in dispute.
On 27 July 1983 the Campbell Family Trust was established. It is uncontroversial that Mr Burges prepared the relevant documentation.
In 1984 Julie left the Property. In 1985 Robyn left.
On 4 November 1996 Lady Campbell executed a new last will and testament. The will was prepared in May of that year by Mr Burges. On or about the same day he also prepared a will for Robyn.
In 2003 Lady Campbell and Susan proposed that the Property be developed with the assistance of Robyn and her husband, Mr John Dennett (John). In essence, the nature of that redevelopment was subdivision of the Property and the construction of a new house (No. 8A) for Lady Campbell and Susan to live in (Susan having lived with and cared for Lady Campbell since Sir Keith’s death), and the renovation of the existing house (No. 8) for Robyn and John to live in. The redevelopment, and consequent subdivision, left a third lot (No. 8B) undeveloped.
In mid to late 2003 the redevelopment of the Property commenced.
On 5 September 2005 Lady Campbell made a new will in which she left one lot comprised in the Property to Robyn and two lots to Susan.
In early 2008 the construction of the houses on the Property was completed and Lady Campbell and Susan moved into the newly constructed house on the Property.
In May 2008 Robyn and John moved into the renovated house on the Property.
The costs of the subdivision and redevelopment were borne by Susan, Robyn and John. In recognition of this, Lady Campbell executed Deeds of Loan in favour of Susan, Robyn and John in March 2009, as described below.
On 12 March 2009 a Deed of Family Arrangement was entered into between Lady Campbell, Susan, and Robyn and John (Deed of Family Arrangement).
On 12 March 2009 Lady Campbell transferred 5% of the part of the land comprising folio identifier 23/3793 being 1/1134949 to Robyn.
On 12 March 2009 a Deed of Loan was executed between Robyn and John on the one hand and Lady Campbell on the other recording a loan from Robyn and John to Lady Campbell of $3.4 million.
On 12 March 2009 a Deed of Loan was executed between Lady Campbell and Susan Campbell recording a loan from Susan to Lady Campbell of $4.5 million.
On 12 March 2009 Lady Campbell granted mortgages to Susan, Robyn and John over part of the land recorded in folio identifier 23/3793, being 1/1134949, to secure the debts recorded in the Deeds of Loan.
Also on 12 March 2009, Lady Campbell granted Susan a mortgage over Lot B, folio Identifier B/394089 and part of folio Identifier 23/3793, to secure the debt recorded in the Deed of Loan.
On 28 November 2013 Julie handed Lady Campbell a letter asserting an interest in the Property.
On 31 December 2013 Julie lodged caveats in respect of the Property and Lady Campbell served a 21 day lapsing notice.
On 9 April 2014 the present proceedings were commenced.

The parties’ contentions

Julie puts alternative claims. First she alleges that, shortly after Sir Keith’s death, Lady Campbell entered into a binding agreement with her four children, whereby she promised to leave the Property to them upon her death.
In the alternative, Julie alleges that Sir Keith and Lady Campbell entered into an enforceable mutual wills agreement prior to Sir Keith’s death whereby each agreed that the survivor would leave his or her estate to the four children in equal shares.
In support of her primary case Julie claims that at the time of Sir Keith’s death on 16 April 1983 Julie and her three siblings held an enforceable option to purchase the Property for the price paid by Hookers (plus rates and expenses incurred by Hookers). The option agreement is contended by her to have been one in writing and executed by all parties, including Hookers.
The defendants dispute that there was ever an enforceable option agreement. No document constituting such an enforceable agreement has been found and hence there is no direct evidence of such an agreement.
Julie, however, contends that between Sir Keith’s death on 16 April 1983 and the transfer of the Property from Hookers to Lady Campbell on 23 May 1983, she and her siblings entered into an agreement with Lady Campbell whereby as consideration for Julie and her siblings directing Hookers to transfer the Property to Lady Campbell for the purchase price provided for in the option, Lady Campbell agreed to bequeath the whole of the Property on her death to her four children in equal shares. In her Amended Statement of Claim Julie pleads that this agreement was made in part orally and in part by conduct.
So far as the oral component is concerned it is alleged that it occurred at the conference between Lady Campbell, Susan, Julie and Robyn with Mr Burges around May 1983.
Julie contends that the relevant conduct involves, firstly, Lady Campbell executing a new will in 1983 in which she left her estate to the four children in equal shares and, secondly, the execution by Lady Campbell and each of her children of a direction to Hookers dated 17 May 1983 confirming their mutual desire that the Property be sold by Hookers to Lady Campbell.

All of the defendants dispute that any agreement was entered into between them in 1983. I note in passing that David was not present at the meeting at which the alleged agreement arose.
Julie contends that it was an implied term of the 1983 Agreement that Lady Campbell would not dispose of or encumber the Property in any manner inconsistent with her obligations under the agreement, and that the effect of that agreement was that Lady Campbell thereafter held a remainder interest in the Property on trust for the benefit of her four children.
Julie contends that permitting the development and subdivision of the Property in or about 2008 amounts to an anticipatory breach by Lady Campbell of the 1983 Agreement, or that by her conduct she has repudiated the 1983 Agreement. Julie further claims that Robyn has committed an anticipatory breach of the 1983 Agreement or repudiated that agreement and holds her 5% interest in Lot 1 as constructive trustee for the benefit of all four siblings.
Julie’s alternative case is that Lady Campbell is bound in equity to devise her estate to her children as tenants in common in equal shares in accordance with the mutual wills agreement allegedly made by Lady Campbell and Sir Keith.
In respect of that claim Julie pleads that Sir Keith and Lady Campbell made “mutual wills” and entered into a contract whereby each was to be bound by the terms of his or her mutual will.
Again, the defendants deny that any agreement exists or was made.
This agreement is said by Julie to have been made by Lady Campbell and is said to have included a term that the entire estate (after payment of debts and expenses) was to be bequeathed upon trust for Sir Keith absolutely, provided he survived her for a period of six months, and a further term that in the event that Lady Campbell survived Sir Keith the entire estate (after payment of debts and expenses), was to be bequeathed upon trust to her four children as tenants in common in equal shares.
Julie claims that Sir Keith’s will, to which the alleged mutual will is said to have corresponded, was in force at the time of Sir Keith’s death so that Lady Campbell became the beneficiary of the whole of the estate of Sir Keith (after payments of debts and expenses). Julie alleges that by reason of these matters Lady Campbell is bound to leave the whole of her estate in accordance with that agreement.

Legal Principles

Credit

In Watson v Foxman (1995) 49 NSWLR 315 and 319, McLelland CJ in Eq made the following remarks:

…human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

I made the following observations in Craig v Silverbrook [2013] NSWSC 1687 at [140]-[142]:

140 Whilst a trial judge is entitled to make observations relating to the demeanour of certain witnesses, it is a notoriously crude and inaccurate methodology. Its defects have been exposed on numerous occasions.
141 In that regard, I am of course mindful of the comments of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 (at [30]-[31]) when they remarked (citations omitted):
[30] It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly form the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Societe d’Avances Commerciales (Societe Anonyme Egyptienne) v Merchants Marine Insurance Co (The “Palitana”):
“... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.”

[31] Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility…

142 In the recent decision of McGraddie v McGraddie and another [2013] UKSC 58; [2013] 1 WLR 2477, the UK Supreme Court emphasised that, especially in cases where a trial judge is faced with a stark choice between irreconcilable accounts, the credibility of the parties’ testimony, and the trial judge’s assessment of the character of witnesses and the manner in which the witnesses give evidence, is of primary importance. Those observations are particularly relevant to the present case. Similar observations have been made in Australian authorities (Fox v Percy at [23]; Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 at [41] per McHugh J and see generally comments in Ritchie’s Uniform Civil Procedure NSW at SCA s 75A.20).

In Camden v McKenzie [2008] 1 Qd R 39 at [34] Keane JA (as he then was) made the observation that “the rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation.” This remark was cited with approval by Leeming JA (with whom Barrett JA and Tobias AJA agreed) in New South Wales v Hunt (2014) 86 NSWLR 226 at [56].
Hallen J recently set out the relevant principles in Evans and Braddock [2015] NSWSC 249 at [70]-[77]. After referring to Watson v Foxman, his Honour said:

71 In that case, his Honour was talking of a cause of action founded on s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act 1987 (NSW): see the discussion by McDougall J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813, at [10] - [18]. However, as McLelland CJ in Eq also pointed out, the views apply to all types of litigation.
72 I also remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]:
“When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2).”

73   The credibility of a witness and his, or her, veracity may also be tested by reference to the objective facts proved independently of the evidence given, in particular by reference to the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities: Armagas Ltd v Mundogas S.A. (The “Ocean Frost”) [1985] 1 Lloyd’s Rep 1, per Robert Goff LJ, at 57. Also see, In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547, per Black J, at [7].
74   A court, in cases involving events which occurred long before the litigation, usually prefers to rely upon contemporaneous, or near contemporaneous, documents, which will often provide valuable and, usually, more revealing, information than what may be flawed attempts at recollection of those facts by persons with an interest in the outcome of the litigation: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200, per Jagot J, at [1247]. Greater weight is usually accorded to such documents, as often they provide a safer repository of reliable fact, particularly when it is clear that they have been prepared by a person with no reason to misstate those facts in the documents and where there is no suggestion that the documents are other than genuine: Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160, per Kenneth Martin J, at [157].
75   In this regard, I have also found useful what Lord Pearce wrote, in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403, at 431:
“Credibility involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.”

76 The circumstances of this case, make what was written by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben’s of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep), at 122 - 123 (in a passage cited with approval by the High Court when it upheld his Honour’s decision: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599, at [15]) appropriate to remember:
“[Given the lapse of time] between the events and conversations raised in evidence and the hearing of the evidence before me, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In circumstances where the events took place so long ago, it must be an exceptional witness whose undocumented testimony can be unreservedly relied on. The witnesses in this case unfortunately did not come within that exceptional class. The discussions referred to in evidence were capable of bearing quite opposed meanings depending on subtle differences of nuance and emphasis, and a proper appreciation of the significance of those matters must necessarily be considerably diminished over such a long period of time.”

77 Finally, I should mention an article by the former the Chief Judge at Common Law, P McClellan entitled “Who Is Telling the Truth? Psychology, Common Sense and the Law” (2006) 80 ALJ 655, in which he wrote, at 665, quoting a passage from the “Guidelines Relating to Recovered Memories” (2000) of the Australian Psychological Society:
“Memory is a constructive and reconstructive process. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempted remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval.”

In Grundel v Registrar General (1990) 5 BPR 11,217 at 11,219, McClelland J observed:

Accordingly on its first basis, the plaintiff's claim is essentially one against the estate of a deceased person based on alleged conversations between the plaintiff and the deceased of which the only evidence is that of the plaintiff. Generally speaking, in cases of that kind, by reason of the danger of estates of deceased persons being subjected to false or exaggerated claims in respect of matters of which the deceased has no opportunity to give his own account, the Court will treat such evidence with considerable caution, if not suspicion, will scrutinise it with great care, and act on it only if convinced of its truth…

These observations were reiterated by Robb J in Plaska v Coffey [2014] NSWSC 1930 at [35], and similar remarks were made by Wilcox J in Clune v Collins Angus & Robertson Publishers Pty Ltd (1992) 25 IPR 246 at 253.
In Neale v Bank of Western Australia [2014] NSWSC 315, Hammerschlag J at [198] made the following observations:

198 Where a party seeks to rely upon spoken words as a foundation for a cause of action the conversation must be proved to the reasonable satisfaction of the Court. This means that the Court must feel an actual persuasion of its occurrence or its existence. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.

Intention to create legal relations

The test for whether parties manifested an intention to create legal relations was articulated as follows in Ashton v Pratt [2015] NSWCA 12 (Ashton v Pratt) by Bathurst CJ (with whom McColl and Meagher JJA agreed). His Honour’s remarks about agreements in the contest of family relationships are particularly relevant to this case:

69   In Ermogenous, the High Court held at [25] that whether the parties intended to create legal relations required an objective assessment of the state of affairs between them.
70   In that case, the High Court doubted at [26]-[27] the validity of the use of a presumption that “family arrangements” were not intended to give rise to legal obligations. Subsequently, the Full Court of the Federal Court in Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] FCAFC 81; (2012) 289 ALR 237 concluded at [12]-[13] that the High Court had rejected the use of presumptions as a basis of determining whether parties had entered into contractual relations.
71   By contrast, in Sion v NSW Trustee & Guardian [2013] NSWCA 337 (Sion), Emmett JA, with whom Basten and Barrett JJA agreed, stated at [40]-[41] that as a matter of known experience, when family members make a promise to each other it is unlikely they intend it to be legally binding and the vaguer the language of the arrangement and the greater its informality, the more difficult it will be to rebut the presumption.
72 Ms Ashton contended that the primary judge erred in applying the presumption. It is correct that his Honour accepted the presumption applied, but he stated that in any event he was satisfied that the parties did not intend to make a contract: primary judgment at [36]. For the reasons which follow, he was correct in reaching that conclusion.
73   Notwithstanding what was said by this Court in Sion, in my opinion the effect of the decision of the High Court in Ermogenous was that in considering the issue recourse should not be had to any presumption concerning the contractual or non-contractual effects of family arrangements. That does not mean that the relationship of the parties and the circumstances in which the arrangement was entered into are irrelevant to the question. To the contrary, these factors form part of the surrounding circumstances from which it will be determined whether or not a contract came into existence.

The parties correctly accepted that in determining the issue of whether there was an intention to create legal relations, what was required was an objective assessment of the state of affairs between the parties as distinct from the identification of any subjective reservation or intention: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 (Ermogenous) at [25].
In Ashton v Pratt Meagher JA, whose remarks at [224] were cited with approval by Bathurst CJ at [220], put the test in the following terms:

…whether Mr Pratt and Ms Ashton are to be taken to have intended by their conversation in November 2003 to create legal relations turns on whether in the circumstances, by what they said and did, they objectively conveyed such an intention in the sense that reasonable persons in their position would have understood that to have been intended: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 at [24] - [26]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22].

Formal language of offer and acceptance is not required in order for a contract to be formed: see, eg, Ashton v Pratt at [80] per Bathurst CJ, citing Vroon BV v Foster’s Brewing Group Ltd [1994] VR 32 at 79. At [225] of Ashton v Pratt Meagher JA considered that:

225 At no stage in the conversation was anything said by either party that conveyed to the other that what was being promised was to be legally enforceable. However, as Windeyer J observed in Placer Development Limited v Commonwealth [1969] HCA 29; 121 CLR 353 at 367, that is not determinative of the matter in question.

It is clear that the question of whether a testamentary promise is enforceable requires an application of ordinary contractual principles: see Santow J in Sharp v Anderson (1994) 6 BPR 13,801 (Sharp v Anderson) at 13,807. His Honour observed in that case that, the alleged contract being a contract relating to land, it needed to be supported by valuable consideration, be certain in its terms and comply with the Statute of Frauds (as applicable per ss 23C and 54A of the Conveyancing Act 1919 (NSW)). His Honour remarked that “[t]he courts have shown a natural scepticism about where statements of future testamentary beneficence made within a family are intended to have contractual significance.”

This latter statement must be viewed in light of the observations in Ashton v Pratt and Ermogenous moving away from a presumption that family agreements were not intended to have legal force.
In Sharp v Anderson Santow J identified the following factors as being relevant to the issue of whether a statement of testamentary intention as intended to give rise to enforceable contractual obligations (at 13,809):

The number of people to whom the statement was made;

Whether the statement was in writing;

Whether there was substantial consideration offered for the promise;

The number of times the statement was made;

The context, formal or informal, in which the promise was made;

The nature of the relationship between the parties; and

The certainty of the terms.

Testamentary promise not in writing

Sections 23C and 54C on the Conveyancing Act provide as follows:

23C Instruments required to be in writing
(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.

(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.
54A Contracts for sale etc of land to be in writing
(1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.
(2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.
(3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900.

The defendant’s position is that if the 1983 Agreement came into existence, and if it had the effect of making Lady Campbell trustee of the remaining interest in the land for the benefit of her children, it “created an interest in land” or constituted “a declaration of trust respecting land” within s 23C(1) and (2), or was a “disposition of land” within the meaning of s 54A(1). In Khoury v Khouri (2006) 66 NSWLR 241 (Khoury v Khouri) at [4] Handley JA remarked that:

A declaration of trust of land creates an equitable interest in the land in favour of the beneficiary and does not convey an existing interest to him. A contract for the creation of a new interest, legal or equitable, in land is nevertheless a contract for the disposition of that interest.

At [15] Hodgson JA considered:

If it could take effect at all, it was as an agreement to create a trust. The primary judge held that such an agreement was not affected by s 54A of the Conveyancing Act. In my opinion, he was in error. Although a declaration of trust in respect of land is a creation of an interest in that land rather than a transfer or assignment of such an interest, it is in my opinion plainly a disposition of an interest in land, within the meaning of s 54A. The grant of a lease is a creation of an interest in land rather than a transfer or assignment of such an interest; and I do not think it could be said that it is not a disposition of an interest in land. In my view, a declaration of trust is not relevantly different.

At [44]-[48] Bryson JA made the following observations:

44 The trial judge’s consideration (after 22,958 [316]; 599 [316]) is directed to the words “disposition of land or any interest in land” and not the whole expression “contract for the sale or other disposition of land or any interest in land”. The words “contract”, “sale” and “disposition” in their ordinary and natural meanings have very extensive references. “Disposition” in its ordinary and natural meaning is broad and general in its reference to means of disposing of property, more so in s 54A(1) where it is presented as more than an exemplification of the reference to sale, itself a word of amplitude of meaning. The reference to “land or any interest in land” attracts the definition of inclusion in s 7(1) which enhances what would otherwise be an expression of very ample meaning. An ample approach to the meaning of s 54A(1) is assisted by the words “any” and the words “of land or any interest in land”.
45 To categorise the agreement as found as not a sale of Peter’s one half share of the Johnston Rd property, or as not a contract for the sale of that one half share, is to depart in a marked and striking way from the ordinary and natural meaning of references to a contract and to a sale. There is a price, there is property, and there is the passing of a proprietary right in the property. In my opinion there is no less a departure from the ordinary and natural meaning of those terms if a further stage is introduced in which there is an implied promise to declare a trust; if anything, the introduction of such a promise enhances the applicability of the ordinary and natural meaning of “contract for sale” and “sale” to the transaction because the contract itself confers equitable title to the property. I make similar observations about the use of “disposition”; to agree for consideration that one holds one’s interest for the benefit of another person, so as to create a trust, falls centrally within the concept of a disposition.
46 In some submissions, reliance was placed on anomalies and circularities which were said to arise from the application of the definitions of “disposition” and “dispose” in s 7(1) to those words appearing in s 23C and s 54A. It was said that in the definition of “disposition” the words “other assurance of property by any instrument except a will” show that the reference in the definition is to a declaration of trust by an instrument: that the words “by any instrument” relate not only to “every other assurance of property” but to the previously appearing “declaration of trust” (and, it would I suppose follow, “disclaimer” and “release”). While there is room for doubt I am inclined to the view that this contention is correct, and that the reference in the definition of “disposition” to “declaration of trust” is a reference to a declaration of trust by an instrument. The definition is no more than a definition of inclusion and does not limit what “disposition” would otherwise mean. Context and subject matter require that this definition should not be applied to “declaration of trust” in s 23C(1)(b) because it would be an absurdity to make the provision in par (b) with relation only to declarations of trust which were by instruments, that is in writing. Similar considerations of absurdity and circularity show that the definition does not apply to the word “dispose” in s 23C(1)(a) or “disposition” appearing twice in s 23C(1)(c); and that the definition cannot produce the result, in s 54A(1) that the disposition referred to is only a disposition in writing
47 The trial judge stated to the effect that the creation of a trust does not dispose of land or an interest in land and that a declaration of trust creates an interest in land and is beyond the operation of s 54A for that reason. This must be understood with the assistance of the trial judge’s references to his judgment in ISPT Nominees. His Honour’s observations on the different terms of s 54A and s 23C, which led him to see, in the use of the words “declaration of trust” in s 23C and their absence from s 54A, reinforcement for the view that declarations of trust are not dealt with in s 54A, are lacking in cogency The history and also the terms of those sections show that it is not correct to see them as working closely together and dealing in a symmetrical and tightly drafted way, and exhaustively, with a single subject; the absence of the words “declaration of trust” from s 54A is far better explained by considering whether the words used in s 54A extend to declarations of trust among other things than by the supposition that whatever led the draughtsman to use those words in s 23C would have led him to use them again in s 54A if he intended s 54A to extend to the same concept. The consideration that no clear policy can be seen to be furthered by the exclusion of contracts to declare a trust from the operation of s 54A tells strongly against the view that s 54A does not extend to a declaration of trust. In my view it would be markedly anomalous if s 54A did not extend to a declaration of trust and no purpose for such an exception can be discerned; the desirability of requiring a memorandum or note in writing of an agreement for a sale or disposition by declaration of trust is just as strong as it is in any of the cases to which s 54A may be supposed to extend.
48 In ISPT Nominees, Barrett J (at 22,958 [317]–[322]; 599 [317]–[322]) shows the grounds for his Honour’s opinion that a contract for the declaration of a trust is not a contract for the disposition of land to which s 54A would apply. Justice Barrett’s treating this opinion as relevant and as a basis for decision in the present case is a product of his view that the contract as found is a contract by which Peter promised to declare a trust in Bechara’s favour. As appears earlier, I am of the opinion that there is no such promise, and that, upon the contract as found, a trust arose upon the making of the agreement and passage of the consideration, without any declaration of trust being necessary or taking place. If it is necessary to consider whether and how the agreement as found falls within s 23C, I am of the opinion that it falls within s 23C(1)(a) which operates to prevent an interest in land being created without writing, as well as to prevent an interest in land being disposed of except by writing. Whether or not a declaration of trust, or a transaction which the law construes as creating a trust is a disposition is something which it is not necessary to decide in order to discern that par (a) applies where a trust interest in land is created. In my opinion, the passages in the judgments of Gibbs CJ and Aickin J in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, to which Barrett J referred do not show or tend to show that a declaration of trust or other transaction which brought a trust into existence is not a disposition of an interest in land. Justice Mason observed to the effect that, when imposing a stamp duty, the legislation treated a declaration of trust as if it were a transfer of an interest in land, on which stamp duty is otherwise imposed. The interest in land which the creation of the trust conferred on the cestui que trust was not transferred or conveyed because it had no previous existence, but the legislature can subject that transaction to rates of duty appropriate to a conveyance if it chooses to do so, notwithstanding the property lawyer’s clear understanding that it is not a conveyance at all, as appears from the passage of the judgment of Brennan J, cited in ISPT Nominees (at 22,959 [320]; 600 [320]).

This requirement may be overcome through the doctrine of part performance, which requires “acts done under and by force of the contract that are unequivocally and in their own nature referable to some such agreement as that alleged”: see Khoury v Khouri at [16] per Handley JA; see also Regent v Millett (1976) 133 CLR 679 and 682-3; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 432.

Indefeasibility

Section 42 of the Real Property Act 1900 (NSW) provides as follows:

42 Estate of registered proprietor paramount
(1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except:
(a) the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land,
(a1) in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act,
(b) in the case of the omission or misdescription of any profit à prendre created in or existing upon any land,
(c) as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value, and
(d) a tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected:
Provided that:
(i) The term for which the tenancy was created does not exceed three years, and
(ii) in the case of such an agreement or option, the additional term for which it provides would not, when added to the original term, exceed three years.
(iii) (Repealed)

(2) In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio.
(3) This section prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in this section.

In Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [193] the High Court (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) at [193] considered (footnotes omitted):

193 In personam exception. An exception operating outside the language of s 42(1) can exist in relation to certain legal or equitable causes of action against the registered proprietor. So far as Say-Dee was relying on Barnes v Addy, it was certainly alleging a recognised equitable cause of action. In Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd (Tadgell JA (Winneke P concurring, Ashley A-JA dissenting) held that a claim under Barnes v Addy was not a personal equity which defeated the equivalent of s 42(1) in Victoria, namely the Transfer of Land Act 1958, s 42(1). Tadgell JA said (279):
“[H]ere it is not possible to escape the circumstance that, if there was a ‘knowing receipt’ by the appellant, it was a receipt by virtue of registration under the Transfer of Land Act.”

He continued (280):
“The argument for the respondent appears to assume that the acquisition by a mortgagee, in that capacity, of a proprietary interest following registration of a forged instrument of mortgage in respect of property that is subject to a trust amounts to a receipt by the mortgagee of trust property. If it were so, it might be possible to treat the holder of the registered proprietary interest as a constructive trustee arising from ‘knowing receipt’ of trust property. As it seems to me, however, there is neither room nor the need, in the Torrens system of title, to do so. If registration of the mortgagee’s interest is achieved dishonestly then the registration, and with it the interest, are liable to be set aside not because, on registration, the registered holder became a constructive trustee but because s 42(1) recognises that fraud renders the interest defeasible. If, on the other hand, the registration is not achieved by fraud the Act provides, subject to its terms, for an indefeasible interest. Those terms allow, it is true, a claim in personam founded in equity against the holder of a registered interest to be invoked to defeat the interest; and a claim in personam founded in equity may no doubt include a claim to enforce what is called a constructive trust … [T]o recognise a claim in personam against the holder of a mortgage registered under the Transfer of Land Act, dubbing the holder a constructive trustee by application of a doctrine akin to ‘knowing receipt’ when registration of the mortgage was honestly achieved, would introduce by the back door a means of undermining the doctrine of indefeasibility which the Torrens system establishes. It is to be distinctly understood that, until a forged instrument of mortgage is registered, the mortgagee receives nothing: before registration the instrument is a nullity. As Street J pointed out in Mayer v Coe (281) … the proprietary rights of a registered mortgagee of Torrens title land derive ‘from the fact of registration and not from an event antecedent thereto’. In truth, I think it is not possible, consistently with the received principle of indefeasibility as it has been understood since Frazer v Walker (282) and Breskvar v Wall (283), to treat the holder of a registered mortgage over property that is subject to a trust, registration having been honestly obtained, as having received trust property. The argument that the appellant is liable as a constructive trustee because it had ‘knowingly received’ trust property should in my opinion fail.”

At [195] the Court, affirming the decision of the Court of Appeal of the Supreme Court of Western Australia in LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517 at [289], drew a distinction between a case where the “primary wrongdoer” is the registered proprietor and where the registered proprietor merely has notice of third-party fraud. See also Sze Tu v Lowe [2014] NSWCA 462 at [224]-[227].

Laches, acquiescence and estoppel

The applicable principles regarding laches were identified by the New South Wales Court of Appeal in Crawley v Short [2009] NSWCA 410 by Young JA (Allsop P and Macfarlan JA agreeing) at [163] as being: 1) knowledge of the wrong; 2) delay; and 3) unconscionable prejudice caused to the opponent by the delay. At [164]-[165] and [180] Young JA continued:

164 The key element is whether, in all the circumstances, “it would be practically unjust to give a remedy” (per Lord Selborne LC in The Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 at 239-240). Normally, that means that the defendant must show both delay and detriment suffered by the delay, Fisher v Brooker [2009] 1 WLR 1764 at 1781 [64] per Lord Neuberger with whom Lord Hope, Lord Walker, Baroness Hale and Lord Mance agreed.
165 It is sometimes said that the essential nature of the defence is that the claim of the plaintiff is released in equity. This is often, but not always the case. Sometimes laches operates as an estoppel, see Fisher v Brooker and Ashburner’s Principles of Equity 2nd ed (Butterworth & Co, London, 1933) at 520. The result of a successful plea of laches is that the plaintiff’s equitable claim is dismissed.
…
180 Thus the degree of knowledge, the type of transaction and the prejudice to the defendant caused by the delay are all matters which need to be evaluated when assessing whether the defence of laches has been made out and it is an unrewarding task to search for some formula as to just what degree of knowledge must exist in any particular case.

The principles of acquiescence were explained by Deane J in Orr v Ford (1989) 167 CLR 316 at 337:

There has, over the years, been considerable criticism of the loose us of the word “acquiescence” as a broad conjunctive or disjunctive companion to “laches”: see, e.g., per Lord Cottenham L.C., Duke of Leeds v. Earl of Amherst; De Busscge v. Alt. Such criticism has obvious force in that, so used, the word has chameleon-like quality which adds little besides confusion to an already vague area of equity doctrine. Strictly used, acquiescence indicates the contemporaneous and informed (“knowing”) acceptance or standing by which is treated by equity as “assent” (i.e. consent) to what would otherwise be an infringement of rights…

In order for a defence of acquiescence to be established the plaintiff must have had full knowledge of the facts: Permanent Trustee v Bernera Holdings Pty Ltd [2004] NSWSC 56 at [55] per Young CJ in Eq.
In Thompson v Palmer (1933) 49 CLR 507 at 547, Dixon J said of estoppel that:

The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other’s detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment, or because he has exercised against the other party rights which would exist only if the assumption were correct…or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so, or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted.

Mutual wills

The term mutual wills is used to describe joint or separate wills made as a result of an agreement between the parties to create irrevocable interests in favour of ascertainable beneficiaries: see the discussion generally in GL Ceroma, The Law of Succession (2010, 4th edition, Lawbook Co), JG Ross Martyn, C Ford, A Learmonth, M Oldham (eds), Theobald on Wills (2010, 17th ed, Thomson Reuters).
The law has long since recognised the enforceability of such contracts.
In Aslan v Kopf [1995] NSWCA 26, it was observed by Gleeson CJ (Kirby P and Priestley JA agreeing) that “although a will is, by its nature, revocable, a testator may enter into a binding contract not to revoke a will, and breach of such a contract will give to the other contracting party a right of action for damages, and, depending upon the circumstances, a possible claim for equitable relief.”
In Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at 489, Handley AJA (Allsop P and Giles JA agreeing) remarked:

[31] Although a will is revocable until death or loss of testamentary capacity, equity enforces a contract not to revoke a will, or to leave property by will, not by restraining or nullifying an inconsistent will, but by fastening a trust on the estate to give effect to the contract: Birmingham v Renfrew (1937) 57 CLR 666 at 683.

There are often difficulties as to proving the agreement and as to the nature, scope and effect of the trust imposed on the estate of the second person to die.
Equity does not protect the beneficiary under mutual wills merely because the wills have been made in identical or almost identical terms. There must be evidence of an agreement to create interests under mutual wills which are intended to be irrevocable after the death of the first person to die: Re Cleaver (deceased) [1981] 1 WLR 939 (Re Cleaver).
As Nourse J (as his Lordship then was) said in Re Cleaver at 945:

It is therefore clear that there must be a definite agreement between the makers of the two wills; that that must be established by evidence; that the fact that there are mutual wills to the same effect is a relevant circumstance to be taken into account, although not enough of itself; and that the whole of the evidence must be looked at.

A mere desire held by both testators that both wills should remain unaltered is insufficient in the absence of an express agreement to prevent the surviving testator from changing his or her will. The agreement must be a contract at law: Re Goodchild (deceased) [1997] 1 WLR 1216 (Re Goodchild).
In Re Goodchild, Leggatt LJ (with whom Morritt and Phillips LJJ agreed) said:

Two wills may be in the same form as each other. Each testator may leave his or her estate to the other with a view to the survivor leaving both estates to their heir. But there is no presumption that a present plan will be immutable in future. A key feature of the concept of mutual wills is the irrevocability of the mutual intentions. Not only must they be binding when made, but the testators must have undertaken, and so must be bound, not to change their intentions after the death of the first testator. The test must always be, suppose that during the lifetime of the surviving testator the intended beneficiary did something which the survivor regarded as unpardonable, would he or she be free not to leave the combined estate to him? The answer must be that the survivor is so entitled unless the testators agreed otherwise when they executed their wills. Hence the need for a clear agreement.

As Nourse J also said in Re Cleaver at 947:

…the principal difficulty is always whether there was a legally binding obligation or merely what Lord Loughborough L.C. in Lord Walpole v. Lord Orford (1797) 3 Ves.Jun. 402, 419, described as an honourable engagement.

Nourse J was approved on that point specifically by the Court of Appeal in Re Goodchild at 1225.
The agreement may be contained in the will or it may be proved outside the will. The agreement may be oral or in writing (especially if it effects the disposition of land). But the evidence said to prove the agreement must be clear and cogent and the precise terms must be proved in order to ascertain the ambit of any restriction on disposition of the Property in question by the survivor: Re Oldham [1925] Ch 75 at 86.
The essence of such an arrangement is, of course, the agreement not to revoke (ever), on the part of the surviving testator.
This, in Hussey v Bauer [2011] QCA 91, Martin J (with whom Fraser and Chesterman JJA agreed) observed at [29] (footnotes omitted):

Mutual wills arise when two persons agree to make wills in particular terms and agree that those wills are irrevocable and that they will remain unaltered.

I consider that the need for that requirement is also made apparent from the judgments of Latham CJ and Dixon J in the seminal authority of Birmingham v Renfrew (1937) 57 CLR 666.
Before turning to those judgments it is helpful if reference is made to the precise findings of the trial judge, which the High Court accepted, in Renfrew v Birmingham [1937] VLR 180 at 184-5 per Gavan Duffy J.

The first question is whether there was any agreement binding on Mr. Russell. The financial and other circumstances are such that the very making of the two wills suggests an arrangement and, although there is little or no evidence other than that of interested parties, I am prepared to find there was such an arrangement.
The only evidence to which I need refer specifically is as follows:-- Alexander Renfrew tells how, on the 31st March 1932, he and his wife were with Mr. and Mrs. Russell in a motor car on their way to the solicitor’s office. Mrs. Russell said: “Before we go into Mr Corr’s, I am going to tell you what we are going to do. Jack has agreed with me that, if I leave him all the residue of my estate, he is going to make his will and he will leave it to you, Kate, Elsie and little Billy, and he is not to alter it.” Mr. Russell said: “That is right. I will do that and I will not alter it”. Mrs. Renfrew, describing the same interview, says: “Mrs. Russell said: ‘I want to tell you before we go into Mr. Corr’s office that Jack and I have agreed that, if I do not tie up my estate in the ordinary way, and if I leave him the residue, he will make his will leaving all his estate to the same four’, and she mentioned the four, Alex, Elsie, Kate and little Billy, ‘to whom I am leaving the residue of my estate in the event of Jack dying before me’. Jack said ‘Yes, that is right, and I will not alter it’.” I accept this evidence as a substantially correct account of what occurred.

In the context of those findings, Latham CJ observed (at 674):

The learned trial judge (Gavan Duffy J.) has found that an agreement was made between the husband and the wife according to which the wife, instead of leaving her property to the husband for life and then to certain relatives, should, after giving certain legacies, leave the residue to her husband, he in turn promising that he would leave his property to those relatives and he would not alter the will so leaving it.

Dixon J also observed at 682:

Witnesses deposed to a circumstantial account of discussions between the wife and one or other of the intended beneficiaries. They narrated how the wife definitely stated in his presence the terms of the arrangement made with the husband and how he assented to her statement. The evidence, if believed, could leave no doubt that the wife made her will upon the faith of assurances on the part of her husband that he would leave his will unrevoked should she die first and that he made his will as part of the arrangement under which she made hers.

Dixon J then observed at 682-3:

The contract bound him, I think, during her lifetime not to revoke his will without notice to her. If she died without altering her will, then he was bound after her death not to revoke his will at all. She on her part afforded the consideration for his promise by making her will. His obligation not to revoke his will during her life without notice to her is to be implied. For I think the express promise should be understood as meaning that if she died leaving her will unrevoked then he would not revoke his. But the agreement really assumes that neither party will alter his or her will without the knowledge of the other.

Dixon J, for obvious reasons, was satisfied that what the trial judge had found was that Mr Russell had made an express promise that he would not revoke his will during his lifetime, if his wife, on her death, had not revoked hers. Otherwise he was prepared to find an implication the husband would, whilst he and his wife were both alive, not revoke his will without first notifying her. It is obvious that the essence of such a contract, as I have already said, must be the express promise by the surviving testator not to revoke his or her will upon the death of the other testator.
It will be necessary to look at all of the circumstances. One very important factor in Birmingham v Renfrew was that the wife had come into a very substantial amount of property under the will of an uncle. The husband had no property. The trial judge, unsurprisingly, had found that the wife was quite prepared for her husband to have the entirety of the residue for his benefit and enjoyment in turn for his promising, as it were, to leave “his” property to her family, which had been, in effect, its source.
In Baird v Smee [2000] NSWCA 253, Giles JA (with whom Mason P agreed) outlined the relevant principles at [64]-[65]:

[64] A will is by its nature revocable, and may be revoked inter alia by the making of a later will. A testator may, however, enter into a binding contract not to revoke his will. On ordinary principles, breach of the contract by the revocation of the will may entitle the other contracting party to damages (see Synge v Synge (1894) 1 QB 466 at 471; In re Richardson's Estate (1934) 29 Tas LR 149 at 155; Bigg v Queensland Trustees Ltd (1990) 2 Qd R 11 at 13).
[65] The so-called doctrine of mutual wills goes beyond this. It is founded on finding a binding contract between two testators making corresponding wills to the effect that neither will revoke his will, or that neither will revoke his will without notice to the other testator. Where such a contract is found, and one testator dies leaving his will unrevoked so that the other testator take property under its dispositions, the surviving testator will be regarded in equity as under an obligation to give effect to the terms of the corresponding will, and the obligation will be enforced by the imposition of a constructive trust. The will of the surviving testator remains revocable, and may be revoked by making a new will. The new will is a valid testamentary disposition, but is overridden in that the testator's estate is nonetheless held subject to the constructive trust. The basis of the doctrine of mutual wills is authoritatively explained in Birmingham v Renfrew (1937) 57 CLR 666, especially in the judgment of Dixon J at 682-691.

The Witnesses

Not only by reason of the passage of time, but by reason of the lack of what might otherwise be crucial contemporaneous documentation, the reliability and hence the credit of the various witnesses who gave evidence before me in this case must necessarily play an important role in the determination of many of the key issues.
It is therefore necessary to consider each of the various witnesses in some little detail.

Julie Campbell

I found the plaintiff to be an entirely unsatisfactory witness. She gave evidence which I regard as frankly implausible and, worse, untruthful.
What makes matters worse in her case is that she is a solicitor of over 30 years standing. Her areas of practice have been property and company law.
She prepared three affidavits in the proceedings. She accepted, unsurprisingly, that in preparing her affidavits she, along with others, had to ensure that they were statements of her best recollection of events.
As a solicitor I would expect nothing less than honest and objective evidence. True it is that she is a party to proceedings but she was, in my view, far too emotionally involved with her sense of grievance, to the point that it had the effect, I consider, of clouding and distorting her judgement when she came to prepare and give her evidence.
As an example, a matter of some considerable significance in the trial was her evidence about the existence of the alleged option agreement.
In one of her affidavits (JC1) she refers to a conversation with her father in which he apparently indicated that there would be a seven year option to buy the Mosman residence: see [11].
She asserts that after her father’s sudden death she found a file in a desk drawer in the study at the Property. She asserted that the file contained a typed document which she read. She described it in her affidavit in simple terms and asserted words to the effect that Hookers and her father had agreed that her siblings and she had an option to purchase the Property from Hookers for the price Hookers paid for it. At the time she swore that affidavit (11 April 2014), she said that she did not know the whereabouts of the file, or even if it still existed. However, she went on to assert that she showed the document “to her mother, sisters and brother”: [27].
The plaintiff clearly appreciated the significance to her case of her assertion that she had, in fact, discovered the particular document. More to the point, she described it as a “typed document”, which she then said she read “in order to describe its terms as simple”. At no time in that or any subsequent affidavit did she hint that the document had been signed by all four of the children.
She agreed that when she made the assertion, namely that she saw a signed document, that that evidence was being given for the very first time in cross examination (T41/45-46). She had never so much as hinted in her affidavit evidence or anywhere else that she had executed the document.
At first, she said she was unable to say whether the executed version of the option agreement that she saw had been signed by her siblings (T42/49). However, a little later in her cross examination she asserted that she did recall that each of her siblings had signed the document (T43/25-33).
She could not recall when she had signed the option (T44/8-10), or in whose presence it was signed (T44/12). In addition, she could not recall where she signed the document (T44/18, T47/44-45).
She could give no other details in relation to the document, for example the purchase price in the executed option (T49/3-9). She could not give any detail as to the option period (T60/32-33).
Later in cross examination she asserted again, firmly, that the option had, in fact, been executed by all of the children (T137/47-138/38). Unsurprisingly, she had to agree that this, along with many other of her answers on the topic, had never appeared in any of her previous affidavits (T66/7-8).
Somewhat inconsistently, Julie had asserted that she had exercised the option in 1983 by speaking to a Mr Gavan, who it is accepted is now deceased and who was then a director of Hookers (T67/17-19). She asserted that her siblings had given her authority to exercise the option (T67/22-24).
The plaintiff was at a loss to say what had happened to the so-called executed version of the option. She had to accept that if she was telling the truth then it had been in her possession in 1983, and undoubtedly an important document (T46/5-36). She asserted that, having shown it to her family, she simply put it back in the desk and never saw it again (T46/58-47/3). She agreed that she did not take the document to the conference with Mr Burges in 1983 or even mention its existence to Mr Burges (T54/24-55; T56/0-8). It is obvious she never drew the existence of the document to the attention of Mr Mansell or his staff, which in and of itself is extraordinary for reasons to which I will return.
In her affidavit (JC1 at [33]) she asserts that she told Mr Burges in the presence of the others (excluding David) that there was a seven year option in existence. In cross examination, however, she accepted that the source of that information was a conversation she had had with her father and not the discovery by her of the so-called executed option agreement (T60/19-2; T61/6-9).
In the circumstances she and her family found themselves in, if she had, in fact, found such a document, I am certain she would have taken a copy with her to show or give to Mr Mansell and, for that matter, Mr Burges. At the time she was approximately 28 years old and well underway to becoming a qualified lawyer, and felt capable of drafting a will for her mother.
Her evidence in relation to the option is incredible and, in many respects, clearly inconsistent. I cannot accept that, having prepared three affidavits, one in which she specifically focusses upon the existence of the option, it could possibly have escaped her attention that the document she described was executed by herself and her siblings. She realised, of course, in the preparation of the case that her sister Susan had discovered the unsigned memorandum of Mr Mansell dated 17 May 1983. She was no doubt also well aware of the discovery of what has been described as the “fourth draft”; a draft and clearly unexecuted form of the option agreement. She was also aware that Mr Mansell had in his memorandum made explicit reference to the absence of an executed option as it were.
Given the manner in which she gave her evidence, the inconsistencies and, frankly, the incredible nature of it, I am of the view that her evidence as to her having seen a signed option agreement was deliberately false. She decided, in my view, to embellish the evidence she had otherwise given in a misguided attempt to enhance her case.

The defendants submit that neither of those acts are unequivocally and in their nature referable to the contract. I agree.
Lady Campbell may have made the 1983 will for her own reasons, and there is no evidence to suggest, either from her or from Julie, the draftsperson, that the will was connected with any agreement made in 1983 or otherwise. Indeed, Julie’s evidence (JC1[28]) is simply to the effect that after Sir Keith’s death Julie had a conversation with Lady Campbell suggesting that Lady Campbell make a will, and she then followed her mother’s instructions.
The execution of the “Clearance”, as I have already observed, in my view is really the undertaking of the request from Hookers described by Mr Mansell as “a formality”. I observed before that there is not the slightest reference in that document to any option. The direction, I am satisfied, was executed only by reason of the request made by Hookers, and not as a result or a reflection of any agreement independently made between Lady Campbell and her children. In my view, the allegation of part performance cannot be sustained, in which case sections 23C and 54A of the Conveyancing Act are insurmountable obstacles for the plaintiff.

Indefeasibility

Julie seeks relief in the form of a declaration that Robyn holds her 5% share of Lot 1 as a constructive trustee for herself and each of her siblings (FASOC – prayer 5).
The defendants submit that such a claim cannot be maintained in the face of s 42 of the Real Property Act. I agree.
There is no fraud alleged on the part of the plaintiff in relation to Robyn’s 5% share in the lot.
In the absence, in my view, of Julie alleging fraud on Robyn’s part in connection with her title to the 5% interest in Lot 1, I am of the view that there is nothing that gives rise to any in personam rights on Julie’s part such as to overcome the effect of s 42 Real Property Act. In that event, her claim in that respect must fail and I would not grant any relief.
The plaintiff, in my view, makes no meaningful response to this submission (see plaintiff’s final submissions at [58]).

Laches, acquiescence and estoppel

The defendants allege that Julie’s claims are barred in equity by reason of her delay in bringing them, which manifested itself principally in her acquiescence in the face of the redevelopment of the Property and/or alternatively by reason of estoppel arising from her implied representation to the defendants that she had no interest in the Property.
Given my findings, the significance of this issue diminishes. I shall, again, deal with it briefly.
I have referred to the relevant principles earlier in this judgment. I am satisfied that the redevelopment of the Property began in or about 2003 and that Julie was aware that it was occurring from about that time.
In Julie’s observations to counsel in 2011 she referred, in the sixth full paragraph on the first page, to her discovering “about eight years ago” the details of the proposed redevelopment. She records that she was “shocked and very upset to hear this” as it was contrary to her father’s plans.
The plaintiff accepts that she was told in 2004 by Lady Campbell that Robyn and John were going to build on the site of the existing house and Lady Campbell was going to build a new house on Lot 8. The plaintiff, however, says she was never told that Robyn and John had agreed to lend Lady Campbell $3.4m and that Susan had agreed to lend Lady Campbell $4.5m to improve the Property. The plaintiff says, other than disclosure of the bare fact of the planned building works, no one informed her of the nature or size of the transactions. That submission is disingenuous. She must have realised that the building of a new house alone on Lot 8 would not have been an inexpensive exercise.
The defendants submit, in my view correctly, that notwithstanding that apparent knowledge Julie failed to raise any claim that the dealings in connection with the Property were in violation of her rights, even though she realised, as a property lawyer, the importance of doing so.
As an undisputed fact, Lady Campbell, Susan, Robyn and John, for that matter, have made significant personal and financial investments in the redevelopment of the Property. They did so to the clear knowledge of Julie. She knew, she says, about the 1983 Agreement, and the proposed redevelopment since 2003, yet she made no attempt in reality to assert her claim to an interest before 2013.
In the circumstances, it seems to me wholly inequitable, whichever preclusionary doctrine or notion is employed, that Julie have any rights, by reason of her failure to make a claim.
In my view, in the first instance that there was no 1983 Agreement. However, for the reasons I have considered as alternatives, in my view Julie is not entitled to any relief even if such an agreement could be demonstrated to have existed.

The mutual wills agreement

I have set out the relevant principles earlier in the judgment.
As the defendants point out in [27] of the FASOC, the plaintiff asserts that Lady Campbell and her late husband entered into a contract each to make a will equivalent in its terms to the other’s will and not to revoke it. It is said that that contract was in part oral and in part written, the written portion being the execution of the mutual wills.
This part of the case was the subject of a number of amendments (one very late), which I allowed, and which were said to be largely founded upon statements made by Lady Campbell in her affidavit affirmed 24 September 2014 (MC3).
The statements relied upon involved Lady Campbell asserting that she had had a conversation with Sir Keith in around late 1981 or early 1982 to the effect that Sir Keith expressed the view that he thought he and Lady Campbell should make “mutual wills”. He indicated that he would have Mr Mansell prepare them. Lady Campbell indicated that the document should simply be brought home and she would sign it. Lady Campbell indicated in her affidavit that she understood the discussions to mean that they would each make a will by which they would each leave each other everything.
She also said that, sometime after that conversation, her husband handed her a will which had been prepared. She read it through and understood the terms of it and assumed that her husband had made an identical will. She took it to their neighbours who witnessed her signing it: MC1 [18], [19] and [20].
The defendants submit that even from Lady Campbell’s affidavit evidence, what was being proposed was not a mutual wills agreement in the technical sense. There is certainly nothing they say, in my view correctly, in the conversation recorded by her in that affidavit to suggest that part of the making of those wills involved the corresponding promise not to revoke them. The defendants submit that Lady Campbell could not have had that belief, because she otherwise asserts at [35] in the same affidavit that she felt herself free to change her will at any time, depending on her personal circumstances or those of any potential beneficiary.
In passing, I note that there is no hint in the 1982 will of Sir Keith, executed by him on 13 January 1982, of any promise not to revoke that will. It is also common ground that there is no deed or accompanying documentation to that effect.
The defendants point out that in a further affidavit of Lady Campbell of 4 December 2014 (MC3) a number of additional statements are made by her. For example, she indicated that she was not certain that Sir Keith had actually used the phrase “mutual wills”: at [12]. He may have used that term, but he might also have said that they should simply get wills done together: at [12]. Lady Campbell also indicated that she did not, at the time she affirmed her affidavit on 24 September 2014, understand the phrase “mutual wills” had any technical meaning, and that prior to the filing of the Amended Statement of Claim she was unaware that married couples could even make legally binding documents not to revoke their wills: MC3 at [16].
Importantly, she asserted that Sir Keith had never proposed that they agree not to revoke their wills in the future, nor did he suggest that the wills could not be changed once made: MC3 at [20]. Lady Campbell also asserted that Sir Keith and she did not promise each other that they would not revoke the wills, and whilst alive he never suggested that she was unable to do so: MC 3 at [20].
Lady Campbell also said that she would never have agreed to make a will in circumstances where she could never change it, and always believed she had the ability to do so: MC3 at [21] and [24].
Lady Campbell went on to say that when she signed her earlier will in 1981/1982 she did not believe there was any formal or informal obligation upon her not to revoke it or change it at a later point, nor was she aware, she says, of whether Sir Keith had signed the will he had discussed with her in 1981/1982 until he died: MC3 [26]. In any event, she did not know if her 1981/1982 will was in corresponding terms to Sir Keith’s, although she thought it was in similar terms: MC3 at [27].
The defendants, in my view, correctly submit that the doctrine of mutual wills depends on the existence of an actual binding agreement between the two persons. They submit there is no evidence here to support such an agreement. Again I agree.
There is certainly nothing in the evidence given by Lady Campbell, at least in chief, to suggest that there was such an agreement, nor that such an agreement was ever proposed. The defendants submit that even if there was an agreement between Lady Campbell and Sir Keith regarding their 1981/1982 wills, there is no evidence to suggest it was a term of that agreement that they would not revoke their wills in the future.
It is pointed out by the defendants that Julie in her affidavit (JC1 at [24]) deposes to a conversation she allegedly had with her father in late 1982 or early 1983. Notably, they submit that in that conversation Julie does not purport to give any account of her father suggesting that there was some promise between him and Lady Campbell that they not revoke any wills they might make or had made.
The defendants also submit that, as in the present case, where the conversation is between two lay persons, without the intervention of a lawyer or express words to corroborate it, it would be unlikely in the extreme that the parties were proposing to make mutual wills to satisfy the respective criteria of the mutual wills doctrine in equity.
The defendants also point out that although there is a 1982 will for Sir Keith, there is no evidence of the existence of a corresponding will for Lady Campbell. In fairness, however, she did admit that she believed she had made such a will. I think the evidence at its highest would only support the proposition that she believed that will was in identical (or at least similar) terms to that which was made by Sir Keith. But that is as high as it goes. At T206/36-T207/10 the following exchange occurred in the cross examination of Lady Campbell:

Q. Putting it a little differently, the position is though, that having gone down that path of making those wills together in the way I've been describing in these questions, you considered that it wasn't the case that he was simply free to then choose to do whatever he liked with his estate without telling you. Isn't that correct?
A. I still can't imagine it. I'm afraid I find that very hard to answer because it just would never have happened.
Q. While I appreciate that your trust in your husband was so strong that you can't contemplate it happening, the fact is that you would have been shocked if he had done it. That's I think something you've agreed with. Is that correct?
A. Absolutely I would have been, yes.
Q. Part of the reason that you would have expected that he wouldn't have
done that was because your belief was that he was honour-bound to leave the estate to you in accordance with the wills that you'd made together after you'd gone through the process. Do you agree?
A. Yes.
Q. And the position that you were both in after you had gone through that process is that you knew that neither of you were then free to simply go off and make a fresh will whenever you wished unless you told the other.
A. Absolutely.

In re-examination the following exchange occurred at T270/36:

Q. Sorry, madam. Did you understand when you were asked that question the distinction between honour bound and legally bound?
A. One is honour and the other is legal, by law.
Q. When someone is legally bound by law as you say, what do you understand that to mean?
A. That I could sue him if he had made another will, that he was bound by a legal constriction.
Q. When someone is bound legally what did you understand the difference between someone being bound legally as opposed to someone being bound in honour?
A. That he couldn't make another will if he was legally bound.

A number of things may be said about these exchanges. First, I do not regard Lady Campbell’s evidence as amounting to any concession so as to prove the existence of an agreement to make mutual wills and not revoke them. The cross examiner, of course, was content to leave the issue on the basis of something which was honour-bound, without definition. The re-examiner clarified the position, as did Lady Campbell, in relation to her understanding as to the distinction between honour-bound and legally-bound. It is true, as the defendants point out, that the cross examiner never put to Lady Campbell that she was not only honour-bound but that she was indeed legally-bound. The crucial flaw in that line of questioning was that it was never put to Lady Campbell (the relevance of which may be debateable) that she believed that the survivor of her and Sir Keith was not free on any basis to change his or her will after one had predeceased the other. That is a critical element of the mutual wills doctrine. All of the questions, it seems to me, on a fair reading, were predicated upon Sir Keith and Lady Campbell being alive. Lady Campbell could not conceive it possible that Sir Keith would change his will during her lifetime without consulting her, presumably because they had a very close and intimate relationship and she would have expected him to discuss matters with her, as indeed she would with him.
It is clear from other evidence that Lady Campbell was at pains to say that she believed herself to be free to make a new will after Sir Keith had died. I regard her as a truthful witness and she never once hinted that the agreement they made included an express promise not to revoke her will – ever. Indeed, she gave evidence that she thought it was necessary for her to change her will in the light of his death (T238/7-17). That conduct, occurring so soon after they had made their alleged mutual wills, is of course wholly inconsistent with Lady Campbell believing she was bound in honour or in law not to change her will following Sir Keith’s death.

A further amendment

At the very end of the trial (22 May 2015) counsel for the plaintiff sought a late amendment. I granted leave to the plaintiff to file a Second Further Amended Statement of Claim dated 26 May 2015 (2FASOC).
This was the third attempt by the plaintiff to address perceived deficiencies in the pleading on the mutual wills allegation.
The amendment was granted by consent and without admissions, and with an express notation that the defendants maintained the proposed amendment did not plead an arguable claim and that the particularised case was wholly inadequate.
It is clear that what is pleaded in terms is an agreement by which the relevant parties made promises not to change the terms of the will during the life of the other testator. This is to be contrasted with an agreement where the respective parties agree they will not to change their respective wills after the death of the other. It is the former which the plaintiff pleads here, but it is only the latter which equity will oblige the parties to adhere to.
Indeed, the pleading in [27] of 2FASOC makes it abundantly clear that it is an agreement not to vary their wills during their respective lifetimes.

[27] [Lady Campbell] and the late James Keith Campbell entered into a contract each to make a will equivalent in its terms to the other’s will (mutatis mutandis) and not to revoke it without notice to the other.

In my view the authorities make it clear that it is essential that the agreement must bind each person so as to oblige the survivor not to revoke or change his or her will after the death of the other.
I agree with the defendants’ submission that the pleading in its third iteration is still defective in that regard. But even accepting that is what is meant, for other reasons the case fails.

The state of the evidence

Quite independently of the pleading issue, the defendants submit that the evidence is likewise deficient in relation to the agreement between Lady Campbell and Sir Keith, other than perhaps suggesting they agreed not to change their wills without notice to each other during the period in which they were both alive.
The evidence at the trial did not, it seems to me, ever rise any higher than some moral, perhaps legal, obligation not to change each other’s will without asking the other during their respective lives. It never was put to Lady Campbell that the arrangement she and Sir Keith had was never to change the mutual wills after either of them died nor, unlike in Birmingham v Renfrew, does the evidence prompt me to find any express promise to that effect.

The implied promise not to revoke

The defendants again assert that the matters relied upon to support an allegation of this sort are wholly deficient.
The plaintiff contends that there was agreement between Lady Campbell and Sir Keith never to revoke their wills, and that this is to be found by necessary implication from the alleged agreement between them to make wills in “equivalent terms”. Further, that content or the circumstances generally support such an implication. The circumstances are, first, that there was allegedly a proposal and agreement that Lady Campbell and Sir Keith make identical wills. Second, that there was a decision on the terms of the wills and, third, that Sir Keith and Lady Campbell likely had wills drafted together at or about the same time.
Put simply, it is submitted correctly by the defendants that an agreement to make wills in the same terms (whatever those terms may be) cannot carry with it a necessary promise (implied) not ever to revoke the wills. Such an implication, in my view, would not be necessary to give effect to the agreement “to make wills in equivalent terms”, and it is by no means obvious or for that matter objectively reasonable: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283; Osborne v Estate of Frederick Osborne [2001] VSCA 228 at [29] per Buchanan J.
The assertion, for example, in the particulars that there were, for example, negotiations between Lady Campbell and Sir Keith from which an implication should arise, finds no support in the evidence. The fact that a husband and wife make wills at the same or similar times is no basis for inferring or implying, without more, the existence of a promise between them never to revoke those wills.
In the circumstances I consider that on the asserted implication never to revoke the mutual wills the plaintiff’s case fails.
The defendants submit, correctly in my view, that there is no evidence from which it could be held that Lady Campbell and Sir Keith intended to enter legal relations in respect of their 1982 wills, other than perhaps regarding themselves as mutually bound to these wills during their lives.
In any event, the mere expectation or mutual desire as to the intended ultimate beneficiaries is not sufficient to give rise to an enforceable obligation, even if one party intended the arrangement to be legally binding.

Looking at the matter objectively, I do not think the plaintiff has established that there was a legally binding mutual wills agreement between Lady Campbell and Sir Keith.
When each made their will in 1981/1982 all four children lived at home, none were married, and it is clear Sir Keith did not expect to die the following year. Husbands and wives, especially those who are sophisticated, would, I consider, be wary about entering arrangements which they agreed would never be varied, especially without legal advice as to the repercussions. Mutual wills, in my opinion, are the product of special situations and this is not one of them. There is no suggestion that the parties, in making their wills, at the time looked very far beyond their immediate circumstances. To have the hands of the respective spouses clasped together tightly for eternity is a romantic notion. But to infer such an arrangement requires, in my view, the discharge of a heavy burden.
I am satisfied that no such agreement was in existence here at any time. The plaintiff therefore fails on this part of her case as well.

Contracts review and unconscionability

The defendants submit that if all else fails and the Court were to find that Lady Campbell and Sir Keith made a mutual wills agreement in 1981/1982, they assert that the agreement can be avoided by Lady Campbell on the basis that it was unconscionable or “unjust in the circumstances relating to the contract at the time it was made”. They call in aid the Contracts Review Act 1980 (NSW) and general principles in relation to unconscionability.
The defendants further submit that the mutual wills doctrine operates only where there is a binding contract according to ordinary contractual principles. As such it is susceptible to the Contracts Review Act remedies. They have referred me to a decision of Cohen J in Carovski v Carovski (unreported, NSWSC, 28 April 1997) and an unreported decision of my own in White v Wills [2014] NSWSC 1160. In principle, I am satisfied that in the appropriate circumstances such a contract is theoretically susceptible to contracts review relief.
The defendants point to s 9 of the Contracts Review Act and to the various matters the court has regard to in determining whether there is relevantly an injustice requiring remedy.
The defendants submit that there was material inequality in bargaining power between Lady Campbell and Sir Keith, particularly having regard to their educational background. They point to the fact that Sir Keith was the Chief Executive Officer of a major public company whereas Lady Campbell had had little tertiary education and had not had any professional employment after the age of 24. Sir Keith, they submit, handled all the family’s affairs. They also point out the agreement was not the subject of negotiation and that Sir Keith did not recommend Lady Campbell obtain, nor did she obtain, any independent legal or professional advice. Further, she got no explanation of the document and was unaware of the term “mutual wills” and whether or not it had any technical meaning. Further, it is submitted that if Sir Keith intended to enter a binding agreement he did not explain that to his wife.
It is submitted that Lady Campbell had no prior will and therefore did not understand what was being proposed.
Lastly, it is said that the agreement was being made in a familial rather than a commercial context. In the circumstances, it is submitted that Lady Campbell acted with “love and affection” rather than with a view to entering into any legally binding obligation.
In the circumstances the defendant invites me to refuse to enforce that agreement and declare it void.
The plaintiff, on the other hand, submits that the will could not be described as unfair or unjust. The plaintiff says that the wills were mirroring wills and both Sir Keith and Lady Campbell were subject to the same obligations. The benefit to Lady Campbell, it is submitted, is obvious, in that upon Sir Keith’s death she was to inherit the whole estate. Indeed, it is submitted that it would be unconscionable for her to take the benefit of the contract without accepting its burden. The point of the mutual wills was to ensure that, from Lady Campbell’s point of view, she and Sir Keith would be independent of their children on the death of the other.
It is submitted that the gift over to the children was not unwelcome, as evidenced by the fact Lady Campbell willingly made a new will in 1983 that had the same effect, and a further will in 1996 which, save for the continued occupancy of Susan, was again to the same effect.
It is submitted that Lady Campbell was not denied the opportunity of obtaining legal advice. That, if I may say so, is a little disingenuous. It was never proposed by Sir Keith, but I do not think that is determinative of the issue.
I do not consider what occurred, in the context in which it did occur, assuming it was a legally binding arrangement, was such as to lead to one person taking unfair advantage of the other or some inequality in bargaining power. This was not a negotiation, fairly obviously. It was an agreement between husband and wife where a pact was made to ensure each was treated the same and likewise their children. Had there been an agreement, neither the Contracts Review Act nor general notions of unconscionability have any part to play in the matter.

Conclusion

Given the various alternatives proposed by both parties, it is convenient for me to briefly summarise my findings in relation to each matter. Firstly, as a prelude to consideration of the alleged 1983 Agreement, I am not satisfied that any executed option agreement as alleged by the plaintiff existed.
Secondly, I am not satisfied Julie’s account of the conversations and circumstances in which the 1983 Agreement was said to be formed was an accurate one. That being the case, I do not consider that any such agreement was made. However, had I been convinced of the truth of Julie’s account and determined that a promise or agreement had been reached at the meeting with Mr Burges, I would not have considered that the parties had manifested an intention to enter legal relations. I would also, regardless of whether an option agreement had been executed, have been unsatisfied that adequate consideration for such an agreement had been provided. I would have considered the absence of a written agreement could not be overcome, as was suggested by Julie, through the operation of the doctrine of part performance, and I would further have considered that the operation of s 42 of the Real Property Act would defeat Julie’s claim insofar as it pertains to Robyn’s 5% interest.
Thirdly, had I been satisfied that any binding agreement had been entered into concerning the disposition of the Property, I would have considered that the operation of laches, acquiescence or estoppel would have precluded the plaintiff from recovery given her state of knowledge and her failure to complain until 2013.
Fourthly, I am not satisfied that Sir Keith and Lady Campbell entered into a mutual wills agreement by which each was bound not to alter or revoke their respective wills after (or before, without notice) the death of the other testator. Had I been convinced that such an agreement existed, however, I would not have considered that Lady Campbell could have avoided its operation through an allegation of unconscionability or through the operation of the Contracts Review Act.
In all the circumstances, in my view the plaintiff has been unsuccessful in all relevant respects and I would refuse any relief she has sought.
I invite the parties to prepare short minutes to reflect my reasons and if it cannot be agreed, to have the matter of costs argued.

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Decision last updated: 19 June 2015

Medium Neutral Citation:	Campbell v Campbell [2015] NSWSC 784
Hearing dates:	30 April, 4, 5, 6, 7 May, further submissions 12, 22 May, further written submissions 3, 9 June 2015
Date of orders:	19 June 2015
Decision date:	19 June 2015
Jurisdiction:	Equity Division
Before:	Sackar J
Decision:	See [345]-[350]
Catchwords:	CONTRACTS – testamentary agreement – existence of binding agreement – no written agreement – alleged agreement constituted by oral representations and conduct – inconsistent accounts of conversations – family context – intention to create legal relations – adequacy of consideration CONTRACTS – mutual wills – whether parties entered agreement not to alter or revoke wills without notice to the other – need for clear and cogent evidence – consideration of circumstances – inferences to be drawn – intentions of the parties EQUITY – laches, acquiescence or estoppel – inaction on part of plaintiff in asserting legal rights – state of knowledge – whether plaintiff should be precluded from recovery PROPERTY – interests in property – no written instrument – doctrine of part performance – whether acts unequivocally referable to existence of contract PROPERTY – indefeasibility – allegation interest in property held on trust – no allegation of fraud on part of registered proprietor – whether indefeasibility of title operated to defeat plaintiff’s claim
Legislation Cited:	Conveyancing Act 1919 (NSW) Real Property Act 1900 (NSW) Contracts Review Act 1980 (NSW)
Cases Cited:	Ashton v Pratt [2015] NSWCA 12 Baird v Smee [2000] NSWCA 253 Birmingham v Renfrew (1937) 57 CLR 666 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Camden v McKenzie [2008] 1 Qd R 39 Carovski v Carovski (unreported, Cohen J, 28 April 1997) Clune v Collins Angus & Robertson Publishers Pty Ltd (1992) 25 IPR 246 Craig v Silverbrook [2013] NSWSC 1687 Crawley v Short [2009] NSWCA 410 Delaforce v Simpson-Cook (2010) 78 NSWLR 483 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Evans and Braddock [2015] NSWSC 249 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Grundel v Registrar General (1990) 5 BPR 11,217 Hubbard v Mason (unreported, Santow J, 9 December 1997) Hussey v Bauer [2011] QCA 91 Khoury v Khouri (2006) 66 NSWLR 241 LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517 New South Wales v Hunt (2014) 86 NSWLR 226 Orr v Ford (1989) 167 CLR 316 Osborne v Estate of Frederick Osborne [2001] VSCA 228 Permanent Trustee v Bernera Holdings Pty Ltd [2004] NSWSC 56 Plaska v Coffey [2014] NSWSC 1930 Neale v Bank of Western Australia [2014] NSWSC 315 Re Cleaver (deceased) [1981] 1 WLR 939 Re Goodchild (deceased) [1997] 1 WLR 1216 Re Oldham [1925] Ch 75 Regent v Millett (1976) 133 CLR 679 Renfrew v Birmingham [1937] VLR 180 Sharp v Anderson (1994) 6 BPR 13,801 Sze Tu v Lowe [2014] NSWCA 462 Thompson v Palmer (1933) 49 CLR 507 Vroon BV v Foster’s Brewing Group Ltd [1994] VR 32 Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 Watson v Foxman (1995) 49 NSWLR 315 White v Wills [2014] NSWSC 1160
Texts Cited:	GL Ceroma, The Law of Succession (2010, 4th edition, Lawbook Co) JG Ross Martyn, C Ford, A Learmonth, M Oldham (eds), Theobald on Wills (2010, 17th ed, Thomson Reuters)
Category:	Principal judgment
Parties:	Julie Elizabeth Campbell - plaintiff Marjorie Elizabeth Campbell – first defendant Robyn Ann Edith Dennett – second defendant Susan Marguerite Campbell – third defendant David Scott Campbell – fourth defendant
Representation:	Counsel: C Birch SC, A Connolly – plaintiff D Pritchard SC, R Yerzerski - defendants Solicitors: JSM Lawyers - plaintiff Piggott Stinson - defendants
File Number(s):	2014/107698
Publication restriction:	n/a