Couch v Couch
[2002] VSC 502
•21 November 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT WARRNAMBOOL
COMMERCIAL AND EQUITY DIVISION
No. 1364 of 2001
In the Matter of part IV of the Administration and Probate Act 1958
And in the matter of the Estate of WILLIAM FRANCIS COUCH (deceased)
| GERARD FRANCIS COUCH | Plaintiffs |
| ANDREA COUCH | |
| v | |
| MARIE THERESE COUCH WILLIAM JOHN COUCH (as the Executor of the Estate of William Francis Couch, Deceased) | Defendants |
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JUDGE: | Ashley J | |
WHERE HELD: | Warrnambool | |
DATE OF HEARING: | 21 and 22 October 2002 | |
DATE OF JUDGMENT: | 21 November 2002 | |
CASE MAY BE CITED AS: | Couch v Couch | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 502 | |
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Administration and probate – family provision – whether testator failed to make adequate provision for the proper maintenance and support of adult son who had worked on family farm as a share-farmer for a long period – further provision by way of ensuring son’s eventual inheritance of family farm.
Equity – proprietary estoppel – remedy.
Equity – proprietary estoppel – whether promise made – absence of any certainty – no unconscionable conduct - slight detriment.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S. Newton | Jellie Laidlaw McDonald Wilson |
| For the Defendants | Mr P. Crofts | Tait Taylor Lawyers |
HIS HONOUR:
The Claims
Before the court are claims by Gerard Couch (“Gerard”) the 45 year old oldest son of the late William Francis Couch (“the deceased”), and by his wife Andrea. The claims are brought against Marie Therese Couch, widow of the deceased, and William John Couch (“William”). They are the executors of the will and trustees of the estate of the deceased, who died on 21 August 2000 leaving a will dated 26 May 2000.
The claims are three in number. First, the plaintiffs’ contend that property of the deceased known as “Home Farm” is subject to a trust in their favour; or in favour of Gerard. Alternatively, they say that the defendants are estopped from denying the existence of such an interest.
Second, the plaintiffs allege in their originating motion that it was a term of a share-farm agreement made between them and deceased in about 1987 that they would receive from the deceased ownership of six cows per annum. They claim that the dairy herd run on “Home Farm” is subject to a trust in their favour to the extent of 84 head of livestock.
Third, the plaintiffs allege that they are persons for whom the deceased had a responsibility to provide proper maintenance and support. They claim that the deceased failed so to provide. They seek an order under Part IV of the Administration and Probate Act 1958 (“The Act”).
The Family
The deceased was a dairy farmer. In 1954, aged about 20, he married the first defendant. They had seven children. The oldest, Helen, is aged 46. She is married but separated. She has four children.
Next there is the first plaintiff. He left school at 15. He worked on the family farm for four years, being paid pocket money only. He had also worked on the farm when at school. When he was about 17 his father purchased 38 acres of land known as “Dorneys” for he and his brother William. Gerard made a contribution to the purchase price. When he was 18 his father purchased a 200 acre dairy farm “Mathiesons” for William, a second brother Peter, and he. The boys worked the farm for a while. Eventually William acquired all of it. Aged 19, the first plaintiff and his father fell out. He left the family farm, where he had been working since leaving school, and went to work at the butter factory at Allansford. He made a claim in respect of his interest in Dorneys (and possibly Mathiesons). He received about $17,000 in a settlement. After work at the butter factory he drove a milk tanker. In 1982 he met his wife. In 1984 they married. They have five children aged between approximately five and 14 years. His wife works part-time as a nurse. In 1987 he and his father were reconciled at the instance of his mother. He and his wife entered into an oral share-farming agreement with the partnership constituted by his father and mother. Pursuant to that agreement he and his wife have share-farmed the family dairy farm ever since. The details of the agreement and related matters must later be analysed.
The next child is William. He is aged 43 years, and is married with two children. He has become a very successful dairy farmer. He owns 600 acres, leases 170 acres, and milks 400 cows.
Peter Couch is the third of the brothers. He is aged 42. He is married but now separated. There are two children of the marriage. He worked on “Mathiesons”, later for his sister Helen as a farmhand, and later still as a share-farmer on the family property. In about 1987 his wife left the property and he followed her. Later he moved to Coffs Harbour. He established a business there, which, as I understand it, he continues to operate.
Angela Sully is the second daughter. She is aged 41 and is married with two children. She left school later than her brothers and sisters. She trained as a teacher and moved into Warrnambool. Her father provided she and her sister Sharon with a house after that move. Presently she works as a teacher.
Sharon, the youngest of the three daughters, is aged 39. She left school when young, worked on the farm for a few years, then moved to Warrnambool. She had several jobs. She married and moved to Geelong. There was a child of the marriage, a son now aged about 12. After seven years the marriage broke down. Sharon was assisted by her parents. That assistance aside, deceased provided Sharon with accommodation, together with her sister Angela, when she first moved to Warrnambool; and she received half of the proceeds of sale of that house later on. She is now, it seems, in a de facto relationship, and she works in what was described as the “child care industry”. She and her partner live in a mortgaged property.
Paul Couch, the youngest son, is aged 37. He is married and has four children. After a successful career with the Geelong Football Club he has established his own business.
The first defendant, that is, the first plaintiff’s mother, is aged 68. She worked with her husband developing the family property. She lives in her own home at Warrnambool. In recent times she has experienced problems with her health. That has made her somewhat fearful.
The Estate
The principal asset of the estate is Home Farm. It is about 312 acres in size and is valued at $990,000. That valuation is said to include a property of 33 acres known as “Duffeys”.
There is other land, an outpaddock. In three titles, it totals 144 acres and is valued at $318,000.
The deceased had a 50% share in plant and equipment and stock in the farming partnership which he conducted with his wife. According to William’s affidavit sworn 16 October 2002 the value of that share was $136,732. The valuation assumed that the deceased and his wife owned all the dairy herd. That is consistent with the tax return filed by the partnership constituted by the estate and the widow for the part financial year 22 August 2000 – 30 June 2001[1]. The plaintiffs’ second claim challenges that assumption. According to William’s affidavit the estate otherwise consisted of sundry personal chattels valued at $3,500.
[1]Exhibit 1.
Disposition of deceased’s interest in plant, equipment and stock
In about December 2000 the defendant purchased her late husband’s interest in plant, equipment and stock. Apparently that was to be distinguished from the plant and equipment referred to in paragraph 2.5 of the will. The purchase assumed that she and the deceased owned all the stock. The purchase price was $69,732. According to William’s affidavit “as advised, this ultimately involved payment then a gift in favour of my mother with my mother agreeing to be responsible for the consequential tax”.
Overdraft paid out
According to William’s affidavit the deceased and his wife had a joint farming bank account which was $108,000 overdrawn after his father’s death. That overdraft has been paid out, apparently in the main following receipt of a dairy deregulation payment of some $84,000.
The will
Certain specific legacies aside, the late Mr Couch by his will provided that his trustees hold the residue of his estate upon trust as follows:
“6.1Until the date of death of the survivor of my wife and myself (hereinafter referred to as 'the time of distribution') my trustees shall hold my residuary trust fund as a common fund and shall apply the whole or such part or parts as my trustees shall think fit of the income and the capital of my residuary trust fund in such manner and at such time as my trustees in their absolute discretion shall think fit for or towards the maintenance support education or benefit as a class of such of them my wife my children and my grandchildren as for the time being shall be living and if my trustees shall think it desirable unequally between the members of such class or for or towards the maintenance support education or benefit of such one or more to the exclusion of the others or other of such members as my trustees in their absolute discretion shall determine.
Any income not applied as aforesaid so far as permitted by law shall be accumulated and added to the capital of my residuary trust fund.
6.2At the time of distribution as to both capital and income of my residuary trust fund (or the portion thereof then remaining in the hands of my trustees after any application of capital as aforesaid) UPON TRUST as follows:
6.2.1.As to all those pieces of land in the Parish of Nirranda being that part of Crown Allotment 76A containing 47 acres or thereabouts being the land described in Certificate of Title Volume 4408 Folio 460 and also that part of said Crown Allotment 76A containing 59 acres or thereabouts as is described in Certificate of Title Volume 8055 Folio 807 and also all that part of Crown Allotment 77 in the said Parish containing 38 acres or thereabouts as is described in Certificate of Title Volume 8002 Folio 170 for such of my sons WILLIAM JOHN COUCH and PETER JOSEPH COUCH and my daughters HELEN KEOGH, SHARON LEE COUCH and ANGELA THERESE SULLY shall be living at the date of distribution and if any of my said children shall have died prior to the time of distribution leaving children or a child living at that time my trustees shall hold the share in the said land which such deceased son or daughter of mine would have taken had he or she been living at the time of distribution UPON TRUST for such children or child of such deceased son or daughter who attain the age of 18 years and if more than one in equal shares as tenants in common and;
6.2.2.As to all the rest residue and remainder of my then residuary trust fund including all liabilities of my estate outstanding at that time UPON TRUST for my son GERARD FRANCIS COUCH SUBJECT TO the payment to my son PAUL EDWARD COUCH of the sum of money representing one third of the then net value of my residuary trust fund such payment to be made within 12 months of the date of distribution and no transfer of assets shall be made to GERARD FRANCIS COUCH without security being provided for by him for such payment. If my son GERARD FRANCIS COUCH dies before the time of distribution leaving children or a child living at the time of distribution who attain the age of 18 years such children or child shall stand in the place of my said son and shall take and if more than one equally between them as tenants in common that part of my residuary trust fund which my son GERARD FRANCIS COUCH would have taken if he had been living at the time of distribution."
The land referred to in cl. 6.2.1 is what I have referred to as the outpaddock.
The “rest residue and remainder” referred to in cl. 6.2.2 would, as matters presently stand, for the most part consist of Home Farm.
By cl. 9 of his will the deceased provided as follows:
“9. Estate Administration
In the administration of my estate I DECLARE it is my wish that my trustees should administer my estate in the first instance for the benefit of my wife so that her needs and requirements are given priority and that no real estate should be sold as far as possible and if sold the net proceeds of sale are to be set aside and retained for ultimate distribution to those beneficiaries who would have been entitled to the land had it not been sold and in the proportions and otherwise as stated in my will concerning the disposition of any land."
Certain features of the situation created by the will require comment. First, subject to what the executors are empowered to do by cl. 6.1, the distribution of the residuary estate is not contemplated as being equal between the children. Specifically, the will contemplates that Gerard will receive Home Farm subject to obligations to his brother Paul and in respect of the then liabilities of the estate; whilst the other children will share in (the value of) the outpaddock. I have already noted that Home Farm has been valued at $990,000 whilst the outpaddock has been valued at $318,000. Even allowing for the obligation imposed on Gerard with respect to Paul, and noting that Gerard is to bear liabilities of the estate outstanding at the time of his mother’s death, the import of the will is that, except if there be an exercise of power under cl. 6.1, Gerard will receive a greater share of the residuary estate than his siblings.
Second, the late Mr Couch expressed two wishes: that the trustees should administer his estate during his wife’s lifetime so as to give her priority; and that no real estate should be sold as far as possible. But if it be sold then it was his wish that the funds be kept identifiable and they – or what remained of them – be distributed to the residuary beneficiaries who would otherwise have been entitled to the land according to the terms of the will.
Third, the wishes expressed in cl. 9 and the apparent intent that Gerard should in due course inherit Home Farm could be set at nought by an exercise of power under cl. 6.1. Further than that, an exercise of power under cl. 6.1 could deprive Gerard of any interest in the estate.
Deceased’s expressions of intent
According to Gerard’s first affidavit, sworn 23 January 2002, his father was against change, and resisted his suggestions for farm improvements. But “(t)he deceased said to me on many occasions that he had no difficulty with me spending money on improvements as, one day, “Home Farm” would be mine.”[2] The deceased said “Put your money in, it’ll be yours anyway.”[3] Speaking of the stock, the deceased said, not long before he died, “I don’t know what you’ve worried about. They’ll be yours one day.”[4]
[2]para 16.
[3]para 17(c).
[4]para 17(c).
The first defendant, Gerard’s mother, denied by her affidavit sworn 17 June 2002 that her late husband had expressed such intentions.[5]
[5]paras 16 and 17(c).
Gerard, by his second affidavit, sworn 6 September 2002, amplified to an extent expressions of intent allegedly made by his later father.[6] In his viva voce evidence, he made passing reference to his late father’s expressions of intention. Speaking of a discussion between them concerning a new dairy, his father had said “You can build a dairy when I’m gone.”[7] So far as I can see he was not cross-examined to suggest that his father had not said to him what he had deposed in his affidavits; or what he added in viva voce examination in chief.
[6]paras 9, 10 and 14.
[7]T13.
The first defendant, in cross-examination, recanted from the denials in her affidavit[8]. I infer that her evidence was founded on what her late husband had told her. It was not suggested by defendants’ counsel in his closing address that I could not have regard to this evidence.
[8]T102.
I am quite satisfied, on all the evidence, that the deceased did state an intention, on a number of occasions, that one day Gerard would inherit Home Farm. I am satisfied that the expressed intent pertained to Gerard alone, although it is clear in a practical sense that disposition to Gerard would be to his wife’s benefit.
I am not satisfied that the deceased’s references to Home Farm were an intended reference to the deceased's interest in plant and livestock used in connection with the farm, notwithstanding the single remark attributed to the deceased at para 17(c) of Gerard’s first affidavit. It is to be remembered, inter alia, that, as it appears, the first defendant had a right under a partnership agreement made between them to purchase her late husband’s interest in the partnership plant and stock.
Deceased’s expressions of intent – made, for the most part, before the will dated 26 May 2000 – were certainly expressions of intent that one day Home Farm would be Gerards. But it is not incompatible with such an intent that Gerard should only taken Home Farm after his mother’s death – that is, assuming she survived her husband. The evidence does not lead to a conclusion that the deceased said or intended that Home Farm should be Gerard’s so soon as he, the deceased, died, and regardless whether his wife survived him.
Gerard’s work on Home Farm
Gerard has lived and worked on Home Farm since 1987. His work has been performed pursuant to an informal share-farming agreement by which he has received 3/8 of the milk cheque and 50% of bobby calf sales; and in return has been responsible for 3/8 of fodder costs and dairy power, 100% of dairy requisites, and the supply and maintenance of a farm utility and bike and their fuel requirements.
Additional to the above arrangement, Gerard gave evidence that he agreed to make and has made further contributions to farm running costs and to capital expenditure; and that he and his father agreed that he would be entitled to six (heifer) calves each year in lieu of milk which was taken from the vat to feed calves.
In my opinion it is crystal clear that ever since 1987 Home Farm has had a number of extremely unsatisfactory features from a management and operating point of view. I should mention the more important of them. For convenience, I do so in the present tense.
First, the dairy is far short of what is required. In consequence, milking takes far too long.
Second, the farm has an incomplete and only partly effective laneway system. That extends the time of the overall milking operation.
Third, the farm is not fenced into paddocks of optimum size. That inhibits suitable rotational use of the paddocks, which bears in turn upon production levels.
Fourth, there is no use of electric fencing, as might be employed to strip graze paddocks of otherwise unsuitable size.
Fifth, there is no suitable calf-rearing shed in reasonable proximity to the dairy.
It was the inevitable consequence of a farm with the features which I have described that Gerard has had to work extremely hard, and for many hours each day, to do the basic things. He has not had the time available to effect desirable improvements. He has had very little time to call his own.
Over the period since 1987 the performance of the herd in terms of milk volume has improved substantially. That reflects, in part, shift from a Jersey to a Friesian herd. But I am satisfied that it also reflects, in part, Gerard’s work – doing things such as controlling the incidence and persistence of udder infections, introducing grain feeding in the bail, and making silage. In consequence of the improved performance of the herd, the return from the farm - subject always to fluctuations in the milk price and prevailing prices for chopper cows and bobby calves - has increased, to the benefit of the late Mr Couch, his wife, and the plaintiffs.
I mentioned earlier Gerard’s evidence that he has made contributions to farm running costs and to capital expenditure beyond what the informal share-farming agreement required. The detail is for the most part set out in paragraphs 17(a)(b)(d)(f) and (g) of his first affidavit. I accept that he has made the additional contributions. In most instances, it appears, he claimed the full amount of any outlay as a tax deduction in the year in which the outlay occurred.
To accept Gerard’s evidence that he has made contributions to running costs and by way of capital expenditure beyond what the share-farming agreement required is not to suggest that his parents did not make substantial contributions of each type in the period between 1997 and 2000. It is clear that they did. Capital contributions are disclosed by Schedule A to the affidavit of Garry Smith sworn 4 October 2002. Gerard conceded in cross-examination various contributions by his parents to what I have called additional running costs.
Gerard gave evidence at several points that he made the additional contributions to which I have referred on the understanding that he would inherit the farm.[9] I consider it likely that his father's statements of intention did play a role in Gerard's preparedness to make the additional contributions; and, for that matter, in his preparedness to work as hard and as long each day as was necessary because of the unsatisfactory farm set-up to which I have referred. I consider it unlikely, however, that such statements were Gerard's only motivating factor. Most of the contributions had the potential to immediately increase Gerard's income or (as in the case of improvements to the home) the quality of life enjoyed by he and his family.
[9]See, for example, paras 17(d) and 23 of his first affidavit.
What, if anything, was said about heifer calves?
According to the Originating Motion it was a term of the share-farm agreement, said to have been made in about 1987, “that the plaintiffs would receive from the deceased ownership of six cows per annum”.
Gerard said this at paragraph 15 of his first affidavit: “There was always an arrangement with the deceased concerning heifer calves that I reared. The calves were reared from milk from the vat of which, in theory, I owned a 3/8th share. To compensate me for this, the deceased agreed that out of the calves I reared every year, I would be entitled to six heifers. Those have accumulated over the years to a herd of 84 cows”.
In cross-examination Gerard said that the entitlement to six heifers a year was not only in lieu of (the value of) milk taken from the vat, but also to recompense him for the AI work which he performed[10].
[10]T39. According to his evidence, Gerard qualified as an AI technician and inseminated the herd each year.
Gerard was cross-examined upon the partnership tax returns which he and his wife has submitted over the years. The returns were demonstrated to be very far from perfect as regards the cattle account. The account did not show with any exactitude an accretion of six cattle per year. On the other hand, the account did show an asserted ownership of stock in numbers that could not be explained otherwise than by Gerard's understanding that some arrangement existed between his late father and the plaintiffs concerning the accretion of stock by them.
I asked Gerard a number of questions about the asserted arrangement. The evidence went this way:
"Mr Couch, in your first affidavit you said this: 'There was always an arrangement with the deceased concerning heifer calves that I reared. The calves were reared for milking from the vat of which, in theory, I owned a three-eigthts share. To compensate me for this, the deceased agreed that out of the calves I reared every year I would be entitled to six heifers'. Okay?---Yes.
Now, you went back to the farm in 1987?---Yes.
And you had one or more than one conversation with your father about this matter?---It was only two, at the start, and that is all there was, right through.
There were two conversations with your father?---Yes.
At the start?---Yes.
I know it is going back a long time, but try and tell me, as best you can, what your father said to you in each conversation?---Yes. Well, I just said about the milk coming out of the vat, and it was my share, and he just commented that 'Oh well, for that, you can have six calves', and that is all the conversation sort of consisted of.
Okay. Now, am I right in thinking that the six heifers in any particular year's drop weren't identified, for instance, by tagging or branding?---No. They were all just kept in the herd, the same as the others.
So that if I was to go out and look at this years drop of heifer calves and say, let's say in 1997, or 1998, which are your six---?---Yes, I wouldn't be able to tell you.
When heifers get to be cows, they will die for a variety of reasons won't they?---Yes.
They might die calving, might get grass fever?---Yes.
Grass tetany, bloat, all those things happen unfortunately?---Yes.
And when cows get too old, or if they are not good milkers, they go as choppers?---Yes.
How could you ever say that some of your heifers had died or not died, gone as choppers or not gone as choppers?---Yes. No, I couldn't tell.
Did you and your father ever discuss how it could be that the – no, let me go back. When your Dad said that in compensation for the milk coming out of the vat you could have six heifers each year, was anything ever said between you as to how you should treat deaths or sales of cows as choppers, as relating to your six?---No. No, nothing was said about that."[11]
[11]T73-74.
And:
"I understand, from what you say, the six were never identified year by year, in any precise way; but presumably, when the six came into the herd you would get, on average, three heifer calves?---Yes.
So that at least as a matter of theory your heifers were somewhere in the mix of the whole herd having heifer calves, or a percentage of heifer calves?---Yes.
What discussion, if any, did you ever have with your Dad as to how that was to be handled?---Yes. No, there was no discussion. I just sort of treated the cows, you know, as my own and just, it didn't really worry me.
So really, what happened was that you have treated your numbers in the milking herd effectively, as increasing by six a year?---Yes.
In the current milking herd?---Yes.
Without ever being able to say, 'Well, they are my six from that year, and my six from that year'?---Yes. No, I never ever did that."[12]
[12]T76-77.
By paragraph 15 of her first affidavit the first defendant denied that there was any agreement as Gerard deposed to by paragraph 15 of his first affidavit. In oral evidence she said that at de-regulation time there were papers to sign. Her accountant had asked her whether Gerard had any stock. She had said she didn't know; that she did not think so.[13]
[13]T97.
William gave a little evidence about this matter. He said that the first time he heard that Gerard had stock of his own "was when the deregulation was done." "Gerard had put in his … stock that he had with his three-eigthts, and my father had told me that that was the first instance that he had realised that Gerard had stock."[14]
[14]T81.
I should mention the tax return filed for the partnership constituted by the estate and the widow for the period August 2000 – 30 June 2001. As I noted earlier, it asserted in substance that the dairy herd was entirely owned by that partnership.
In a report exhibited to the affidavit of Christopher Hibburt sworn 6 September 2002 there is a fragment of evidence relating to arrangements such as the plaintiffs allege was reached with respect to heifer calves. In his report, referring to 34:66 share arrangements, Mr Hibburt said: "The sharefarmer typically owns no stock. There may be an allowance for the sharefarmer to have a small share of the replacement heifer calves reared. These usually remain in the herd as a percentage rather than a specific group of animals." In cross-examination he accepted that such an arrangement is not standard practice[15].
[15]T65
I must decide whether there was an agreement in this case; and, if there was, then its terms. I doubt that Mr Hibburt's evidence, to which no objection was taken for the defendants, carries the plaintiffs any distance.
In my opinion, having regard to the other evidence which I have identified, it is likely that Gerard and his father did have some discussion about transfer of heifer calves in return for milk taken from the vat. I see no reason to disbelieve Gerard’s evidence to that point. But there is a real question whether the discussion culminated in any agreement. I am satisfied that what was shortly said left Gerard with the impression that there was an arrangement by which he was to receive heifer calves each year. The partnership tax returns filed by he and his wife, for all their relevant deficiencies, support that conclusion. But it seems likely that the late Mr Couch did not arrive at a similar understanding. Hence his remark to William at the time of deregulation; and, probably, the estate/widow tax return for part 2000-2001.
Whatever be the subjective understanding of the parties, viewed objectively a multiplicity of matters were unresolved between Gerard and his father. They are substantially revealed by Gerard’s evidence noted at paragraph [48] of these Reasons. Those matters do not include the question whether the arrangement was struck between the two partnerships or simply between Gerard and his father. Nor do they embrace the question whether transfer of ownership was recompense not simply for milk taken from the vat, but also for AI work performed by Gerard. Each of those questions adds another dimension of uncertainty.
I consider that the arrangement which Gerard described could not possibly stand as a term of the share-farm agreement. If Gerard and his father reached any understanding, which is doubtful, it was far too uncertain to constitute such a term. The inclination of the courts to give effect to a bargain despite its deficiencies has a limit.
A prospect of the exercise of cl. 6.1 power to Gerard’s disadvantage?
Counsel for the plaintiffs cross-examined the defendants and Mrs Sully in an attempt to show that, if relief was not now granted to his clients, there was real prospect of an exercise of cl. 6.1 given by the executors to Gerard’s disadvantage. I consider that Gerard should have relief regardless whether such a prospect in substance exists. That said, I have little doubt that the first defendant regards the prima facie distribution of the residuary estate to be inequitable; and that, notwithstanding her respect for her late husband’s wishes, she would be inclined to redress it if she remained free to do so. I have little doubt that Mrs Sully would encourage her in such a course. I consider that William, on the other hand, would be inclined to let the prima facie position stand. In the event, it is certainly possible, but not probable that, if the defendants remained free to do so, cl. 6.1 of the will would be exercised to Gerard’s disadvantage so far as inheritance of Home Farm is concerned. Much would depend upon whether William withstood the views of his mother and at least one of his sisters.
I should say a little in respect of the conclusions which I have just expressed. The first defendant’s first affidavit stressed, I think, the contribution made by the various children to the running of the family farm, and the practical equality of opportunities given them by the deceased in his lifetime. It downplayed, in my opinion, the worth of Gerard’s contribution to the running of the dairy farm after 1987. It denied, as I noted earlier, any statements of intent by the deceased that Gerard should one day have Home Farm. It denied any arrangement about heifer calves.
In oral evidence Mrs Couch said that she loved all her children and tried to treat them all the same[16]. In cross-examination, she said that was very important to her[17]. Asked whether it was her intention to use the cl. 6.1 power to ensure that all her children received an equal amount out of the estate she said no; and “not at this stage, I don’t intend to do that”[18]. She agreed that on her instructions her solicitors had written to the plaintiffs’ solicitors in October 2001 complaining about a downgrading in milk quality and suggesting a need to consider termination of the share-farming arrangement and sale of the property[19].
[16]T96.
[17]T97.
[18]T98. See also her evidence at T107 lines 6-10.
[19]T99.
Mrs Sully gave oral evidence of family discussions at which her mother was present. She said, inter alia:
“There were original discussions with the family about dividing it equally, one-seventh. But since these proceedings have taken place, that hasn’t been discussed”[20].
[20]T116.
She said that she “didn’t recall exactly” what her mother said in this connection. She didn’t think that her mother” ever agreed that she was going to divide it equally amongst us, to me.”[21] In re-examination she said in substance that the discussions took place after Gerard put in his claim[22]. That evidence seems not to fit in with her evidence in cross-examination[23].
[21]T117.
[22]T120.
[23]T116.
William gave evidence that it was his intention as executor to build up the farm and maintain ownership for as long as possible. He anticipated that the distribution of the residuary estate would be as in the first instance provided for by the will[24]. He said he and his mother “haven't really discussed” sale of the farm. “It hasn’t been an issue”[25]. He was unaware of the suggestion in the letter of October 2001 of a need to consider terminating the share-farming agreement and selling the farm. He had not discussed sale of the farm with his mother[26]. He said “… I think it would be wrong for Mum and I to discontinue Gerard as a share-farmer”.[27]
[24]T86.
[25]T85.
[26]T90.
[27]T91.
I allow for the fact that Mrs Marie Couch is offended by these proceedings; that they have caused her hurt and distress. That said, I consider that there was a thread to her evidence, consistent with the evidence given by Mrs Sully, that supports the conclusion which I earlier expressed as to her intentions with respect to an exercise of power under cl. 6.1. Whether or not William was party to any conversations of the kind described by Mrs Sully, his evidence, I consider, merits the conclusion which I expressed as to his relevant intention.
The relief sought by the plaintiffs; the contentions for the parties
The relief sought by the plaintiffs at trial was not identical with the relief sought by the originating motion. The plaintiffs sought, at the outset, transfer to them of Home Farm and 84 cows. But at trial, counsel for the plaintiffs pressed for transfer of Home Farm subject to his clients paying one-third of its value to the executors and subject also to them making suitable provision for Mrs Marie Couch out of income earned. He sought also transfer of stock. The relief sought at the outset, I think, provides some explanation of the tenor of the first defendant’s affidavits.
In support of the relief claimed at trial counsel for the plaintiffs argued that by reason of promises made by the deceased he held Home Farm in equity for the first plaintiff at the time of his death – though subject to provision being made for Paul and for the first defendant in her lifetime. The promises had not been made in a way that should fetter Gerard’s freedom to run Home Farm for so long as his mother lived. The farm, counsel further submitted, should be understood to mean not only the land and improvements, but also the deceased’s share in plant, equipment and stock.
Counsel analysed the needs of the first defendant. He submitted, having regard to other sources of income, and to the availability of assets which could be realised, that it would be appropriate for the plaintiffs to pay the first defendant $25,000 per annum indexed for the rest of her life.
Counsel submitted that, if I did not uphold the constructive trust claim, I should surely make an order in his clients’ favour under Part IV of the Act. It should, he argued, mirror the outcome which would be achieved if I found a constructive trust in favour of one or both of the plaintiffs.
As to the arrangement concerning heifer calves, counsel did not press an argument that there was a contractual term – that implying sufficient certainty – to found an order for specific performance. Relying upon the judgment of Brooking JA in Flinn v Flinn and anor[28] he submitted that the court was not precluded, however, from making an order in its equitable jurisdiction. Counsel submitted that an order could be made that his client was entitled to so many cattle, and that a mechanism could be prescribed for identifying them; or, in lieu of a mechanism, that there be provision for agreement between the parties with right of recourse to the Court if agreement could not be reached. On the footing that the milking herd had remained fairly static over the years he contended, in substance, that Gerard’s numbers should be treated as increasing by six milkers each year. That would take account of matters such as natural increase, death and sales of chopper cows.
[28][1999] 3 VR 712.
Counsel for the defendants submitted that the plaintiffs’ claim was a pre-emptive strike. The terms of the will were not likely to be overthrown. The admitted needs of the widow were not to be disregarded; nor was the problem that, if the plaintiffs were given title to the farm, and if for one reason or another that source of income was lost to the widow, the other children would have to carry an unequal burden in supporting her for the balance of her life. The security risk should not be placed on the widow and other children. The security of Home Farm eventually being inherited by Gerard lay essentially in his hands. The continued successful operation of the farm was the best way of ensuring that there was no need to sell it.
Counsel addressed the claim made under Part IV of the Act. He referred to the concept of “adequate provision for… proper maintenance and support”, citing the very well known passage in the judgment of Dixon CJ in The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales[29]; and to a recent case concerning an adult son in the context of the present Victorian legislation[30].
[29](1962) 107 CLR 9 at 19.
[30]Blair v Blair [2002] VSC 95, see particularly at paragraphs 4-7.
Counsel submitted that in considering the questions set up by s. 91(4)(a)-(d) of the Act it was particularly pertinent to consider the deceased’s obligation to the other beneficiaries of the will[31], particularly the widow. The deceased, by paragraph 9 of his will, had rightly recognized the widow’s claims as superior to those of Gerard.
[31]See sub-s. (4)(g).
Counsel submitted that, looking further to s. 91(4), the plaintiffs’ resources were adequate for their needs[32]. This was not a case where inequitable benefits had been given to Gerard in the deceased’s lifetime[33]. The children had been treated equally. Indeed, on one view Gerard had been maintained by deceased, in that he had been taken back to work on the farm, and had been given physical assistance by his father[34]. It was a difficult question whether, in fact, Gerard had contributed to building up the estate[35]. The evidence of the plaintiffs’ expert in that connection did not suggest any substantial contribution – at the most some $82,500 over an 11 year period, and that was before the plaintiffs obtained a tax advantage.
[32]See sub-s. (4)(h).
[33]See sub-s. (4)(h).
[34]See sub-s. (4)(m).
[35]See sub-s. (4)(k).
In all, counsel submitted, the plaintiffs had not made out a case for relief under Part IV of the Act.
Concerning the promissory claim, counsel submitted that the key question was what promise was made. Any promise, if such was made, was simply a promise that Gerard would inherit the farm; not that he would inherit it immediately upon the death of the deceased.
Concerning the alleged arrangement in respect of heifer calves, counsel submitted shortly that evidence of the arrangement was based on two discussions long ago. There was no particular attempt to nominate cattle. The plaintiffs’ accounting records had “considerable questionability”. The whole issue of the plaintiffs’ ownership of stock never arose until deregulation moneys became available.
Having submitted, in substance, that the plaintiffs’ claims should fail, counsel addressed what he described as the security claim, which he said “perhaps lies in the nub of this case”. He submitted that the plaintiffs’ position would be protected by my making an order “that the farm not be sold or encumbered, save for the purpose of raising funds necessary to do capital works, otherwise than by consent with the plaintiffs or by order of this Court”[36]. The will, he submitted, could be rewritten so to provide. This would not guarantee that the plaintiffs would remain the share-farmers, but there must be a share-farmer and the likelihood of Gerard remaining the share-farmer would be increased. Encumbering Home Farm, counsel noted, would not conflict with the wish expressed by deceased in cl. 9 of his will.
[36]T144.
The submission just noted would in fact alter the dispositions made by the will. It could not be made except if the plaintiffs, or Gerard alone, had demonstrated an entitlement to relief.
Resolution of the plaintiffs’ claims
In my opinion Gerard but not Andrea is entitled to relief. It centres upon Home Farm. The practical effect of my drawing a distinction between Gerard and Andrea, about which I shall say nothing more, is very probably nil.
Home Farm, for the purposes of the conclusion just expressed is to be taken to consist of the land and improvements only. I addressed that matter earlier, in the context of the deceased’s statements of intention. I treat the matter no differently in the context of the claim under Part IV of the Act.
Logically, the question whether deceased held Home Farm on trust for Gerard arises before the question whether Gerard has established a right to a remedy under Part IV of the Act. But in this case, I am satisfied that Gerard is entitled to relief under the Act; and I am also satisfied that if he established his promissory claim the relief granted would be no different. As a matter of convenience, I turn first to his claim under the Act, a claim which raises no new point of principle, but rather the application of settled principles.
Under s. 91 of the Act, the Court is empowered to order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.
The first question to be decided is whether the late Mr Couch had any such responsibility to Gerard; and, if he did, whether he failed to make adequate provision for Gerard’s proper maintenance and support. Section 91 specifies 11 matters to which the Court must have regard in determining the answer to each aspect of that question. By s. 91(4)(p) the Court must also have regard to any other matter it considers relevant.
The late Mr Couch by his will accepted that he had a responsibility to provide for Gerard. Rightly so. That is the case particularly because of the work that Gerard performed at Home Farm, to his parents’ advantage, for some 12 years leading up to his father’s death; work performed under difficult circumstances, involving financial contributions in excess of what the share-farming agreement required, and undertaken against a background of promises to him that one day the farm would be his. Consideration of the circumstances of the widow and of Gerard’s siblings does not lead to a conclusion other than that the testator had a responsibility to provide for Gerard.
The deceased, then, considered as a wise and just testator, did have, in accordance with prevailing community views and attitudes, a duty to make provision in his will for Gerard’s proper maintenance and support out of his estate. That may be described as a “moral duty”, a phrase long used in this State in the present connection. Counsel for the defendants, in his final address, accepted that Gerard’s moral claim might well be higher than that of the other beneficiaries; though then he excepted the widow.[37] At least subject to that qualification, the concession was in my opinion rightly made.
[37]T142.
Did the deceased make adequate provision for Gerard’s proper maintenance and support? The question is to be answered by consideration of facts and circumstances known to the testator at the time of his death[38] and what might then reasonably have been foreseen. Clear it is that serious consideration must be given to the intention of the testator as revealed by his will. Even so, I consider that the answer to the question which I have posed is “no”.
[38]The facts need not be subjectively known, it seems, but nothing turns on that in this case.
Considering all the circumstances to which I have referred in these Reasons, and applying them to the framework set up by s. 91, I consider that deceased made inadequate provision for Gerard’s proper maintenance and support in that, although by the will Gerard stands to eventually acquire Home Farm subject to obligations to Paul and in respect of liabilities, there remains the prospect that this could be lost by an exercise of power under cl. 6.1. Exercise of that power would, or at least might, advantage Mrs Couch senior and Gerard’s siblings too greatly and, critically, disadvantage Gerard too greatly. Under the distribution of the residuary estate contemplated by cl. 6.2 of the will, absent an exercise of power under cl. 6.1, adequate provision would be made, in my opinion, for Gerard’s proper maintenance and support. The relevant inadequacy arises, then, by reason of the uncertainty created by the existence of cl. 6.1. It is thus contingent upon an exercise of power which might not occur. But I do not understand that inadequacy of provision for proper maintenance and support might not thus be established.
What provision, then, should be made? In my opinion it should be such as will give Gerard certainty of inheritance of Home Farm, but without immediate transfer. I do not accept the submission for the plaintiffs that they, or Gerard, should have an immediate transfer of Home Farm. The deceased considered it important, and rightly so, that Mrs Couch senior have security of income throughout her life. Possibly, also, he considered it appropriate that during her lifetime she continue to have a role in superintending the fortunes of a farm that she had helped to build up. I was not impressed by the proposals advanced by counsel for the plaintiffs as to how Mrs Couch senior might be provided for if Home Farm was immediately transferred to them or to Gerard alone. Neither was I convinced by counsel’s submission that his clients should now be free to run Home Farm unfettered by reliance upon decisions by Mrs Couch senior and William.
Each of the executors gave evidence of appreciating the need to improve the farm infrastructure, and of willingness to facilitate this. It is likely to be in their own interests that such willingness be translated into action. It is crystal clear that improvements to the infrastructure of Home Farm are urgently required. I should assume that the executors will be true to their evidence if Home Farm remains trust property.
An important matter, if Gerard is to have certainty of inheriting Home Farm, is the institution of a borrowing regime which is equitable as between the various beneficiaries.
Short of selling or encumbering the outpaddock, the funds necessary to effect improvements to the infrastructure of Home Farm could only be raised by borrowings on the security of the latter. Improvements in the infrastructure of Home Farm would probably be reflected, though not exactly, in its having increased capital value. Such improvements would probably also result in increased farm income; or at least in maintenance of income where otherwise it might fall. Each of those developments would be to Gerard’s advantage if he was to remain as share-farmer until his mother’s death, and if he was to inherit Home Farm at that time.
It would be wrong to permit the sale or encumbering of the outpaddock to fund improvements to Home Farm if Gerard is to have the certainty of inheriting the latter after his mother’s death. Sale or encumbrance of the outpaddock would unfairly affect the anticipated, and just, entitlement of five of Gerard’s siblings.
The effect of cl. 6.2.1 and 6.2.2 of the will is that – putting to one side the complication of an exercise of power under cl. 6.1 – Gerard is to inherit all of deceased’s residuary trust fund, “including all liabilities” of the estate, and subject to payment to Paul of a sum “representing one third of the net value of [the deceased’s] residuary trust fund”. The children other than Paul and Gerard are to have the outpaddock.
Three points should be made. First, the phrase “my residuary trust fund” is defined by the opening portion of cl. 6 of the will. It is an inclusive description of deceased’s estate excepting property the subject of specific bequest and after provision for payment of debts, funeral expenses and certain other things. The phrase is used in the opening portion of cl. 6.2. It is used likewise in cl. 6.2.2: once in connection with Gerard’s entitlement; and once in connection with Paul’s entitlement.
Second, whilst Gerard by cl. 6.2.2 is to have the benefit of all deceased’s residuary estate except the outpaddock – in practical terms Home Farm plus any accumulated income – he is also to bear “all liabilities” of the estate outstanding at his mother’s death. Use of the verb “including” in the first line of cl. 6.2.2 is perhaps odd. But there is no doubting the sense of the clause. In consequence, if there were borrowings on Home Farm to enable improvements, to the extent that such borrowings remained unpaid at the time of the death of Mrs Couch senior, Gerard would assume an obligation of repayment. It would be likewise if the estate had other liabilities at the time. But there is no foreseeable reason why any other liabilities should come into existence.
Third, by cl. 6.2.2., Paul’s entitlement is a sum representing one third of the net value of the residuary estate at the time of his mother’s death. It was the assumption of the parties and defendants’ counsel[39] that this meant one third of the value of Home Farm. But it is evidently arguable, to say the least, that it means one third of the net value of the residuary estate in its entirety – that is, including the outpaddock and any accumulated income. Counsel for the plaintiffs made a submission concerning that construction of cl. 6.2.2 in his closing address.[40] He submitted that I should confine Paul’s entitlement to a sum representing one third of the value of Home Farm. To those submissions I shall return.
[39]As to the widow, see paragraphs 4.6.3 and 34 of her first affidavit. See also Gerard’s response at paragraph 20 of his second affidavit and William’s cross-examination at T86. As to defendants’ counsel see T148 lines 18-26; compare T147 lines 17-28.
[40]T157 line 25 – 159 line 14.
Whatever Paul’s precise entitlement under cl. 6.2.2, it is very likely that the sum would be the less if borrowings to fund improvements to Home Farm were outstanding at the time of his mother’s death. The greater the amount outstanding, the more likely it is that Paul’s entitlement would be the less; for any increase in the capital value of Home Farm would be less likely to outstrip outstanding borrowings. So also, the value of Gerard’s inheritance might be reduced if borrowings, especially in a substantial amount, remained outstanding at the time of his mother’s death. Having regard particularly to the consequences for Paul if borrowings, particularly substantial borrowings, were outstanding at the time of Mrs Marie Couch’s death, it is necessary that there be a bona fide attempt to repay any borrowings in her lifetime, as well as a need to pay borrowing costs and interest.
Who should pay the interest on any borrowings on the security of Home Farm, and who should be responsible for repayment of principal, in the event that Gerard is given certainty of inheriting Home Farm on his mother’s death? By that question, I intend to focus on the substance of the matter; for the estate, as registered proprietor, would be the borrower.
As to interest, which I will assume could be identified, I consider that the estate should pay 5/8ths and Gerard 3/8ths so long as he and his wife remain share-farmers in that proportion. If they remain share-farmers, but in some other proportion, then I consider that interest should be paid by the estate and by Gerard and his wife in the new proportions. It may fairly be said that Gerard and his wife would be the part beneficiaries of increased or maintained farm income resulting from capital expenditure so long as they remain the share-farmers. If, however, Gerard and his wife cease to be the share-farmers, I consider that the estate should be wholly responsible for paying interest. Gerard and his wife would in that event no longer have the benefit of increase in or maintenance of farm income.
As to capital repayments, the situation might well be more complicated. If borrowings were effected on the basis that regular payments be made over a long period, incorporating both capital and interest, it is likely that little capital would be repaid before the death of Mrs Couch senior. It could be different if the terms of borrowing incorporated an entitlement on the part of the borrower to make discrete repayments of capital. It could be different again if borrowings were effected on an interest only basis but with a right of repayment of capital before expiry of the term of the loan.
I do not imagine that I have exhausted the bases upon which a loan might be obtained. What is apparent, I think, is that if Gerard is to be given the certainty of inheriting Home Farm on his mother's death, then any loan should both enable differentiation of interest and capital payments, and provide for discrete repayments of capital.
If Gerard is to be given the certainty of inheriting Home Farm, then assuming that a loan is obtained which permits the identification of capital repayments and which provides for discrete repayments of capital, I consider that the estate and Gerard should assume a responsibility to repay capital in the proportions 5/8ths and 3/8ths; or, if there should be a change in the share-farming agreement, then in the new proportions agreed. Responsibility should continue for so long as Mrs Couch senior survives. If Gerard and his wife should cease to be the share-farmers, his responsibility for making capital repayments should continue, in the proportions set up by the share-farming agreement as last in operation.
The estate, as borrower, would of course be liable to pay principal and interest on any borrowings. What should happen if Gerard failed to contribute towards such payments to the extent that I consider to be proper? Absent such contribution, the estate would have paid out money that might otherwise have been distributed to the eight beneficiaries[41] pursuant to cl. 6.1 of the will. At the same time the value of Gerard’s interest in the residuary estate would have been enhanced. Paul also would have been benefited – that is, by the reduction in borrowings.
[41]That is, Mrs Marie Couch and the seven children – I include Gerard.
The amount of money otherwise available for cl. 6.1 distribution might, no doubt, be difficult to precisely assess. Interest, payments and other borrowings costs, for instance, would be tax deductible. Even so, I consider that if Gerard is to have certainty of inheriting Home Farm on his mother’s death, then six sevenths of any shortfall by him in payment of interest and capital on borrowings against the security Home Farm made for purposes of infrastructure improvement should be payable by him in equal shares to his siblings before he takes title to the property.
It is now possible to summarise my opinion. I consider that appropriate provision will be made for Gerard if:
(1)the defendants are precluded from selling Home Farm in the lifetime of Mrs Couch senior, save with Gerard’s consent;
(2)the defendants are precluded from encumbering Home Farm except to raise capital for infrastructure improvements thereon;
(3)provision is made for the outpaddock not to be sold or encumbered for the purpose of providing the estate with resources to effect improvements to Home Farm, or to pay interest or repay capital on any loan secured by Home Farm;
(4)provision is made that if in his mother’s lifetime Gerard does not contribute towards:
§ payments of interest made by the estate on any loan obtained pursuant to sub-paragraph (2) above in the proportion of his share[42] under the share-farming agreement for so long as he (or he and his wife) remain share-farmers on Home Farm; and
§ repayments made by the estate on the principal of any loan obtained pursuant to sub-paragraph (2) in that proportion
then six sevenths of any shortfall in contribution as at his mother’s death is to be calculated, and the amount is to be payable by Gerard to his siblings in equal shares before he takes title to Home Farm.
[42]That includes the joint entitlement of he and his wife.
There is an aspect of cl. 6.2.2 to which I should return. Contrary to a provisional opinion which I expressed at trial, I consider that the meaning of cl. 6.2.2 is that Paul is to be paid a sum amounting to one third of deceased’s entire net residuary estate at the time of the widow’s death. The several references in cl. 6.2.2 to “my (then) residuary trust fund” cannot be ignored. The meaning of that term is, as I have said, defined by the opening portion of cl. 6. The opening words of cl. 6.2 show that the sub-clause is intended to deal with the distribution of deceased’s residuary trust fund. Clause 6.2.1 deals with a discrete part thereof. The balance is dealt with by cl. 6.2.2. “Residuary trust fund” in cl. 6.2.2 should not be given a meaning which relates only to so much of the trust fund as is not dealt with by cl. 6.2.1.
I do not consider that I should accede to the submission of counsel for the plaintiffs that, upon such a construction, I should confine Paul’s entitlement to a sum representing one third of the value (or net value) of Home Farm. Strong though Gerard’s claim is to have certainty of inheritance of Home Farm in order that appropriate provision be made for him, I consider that the testator’s evident intent concerning Paul should not be disturbed. It appears to me that the late Mr Couch recognised that in his lifetime he had provided Paul with rather less than was the case with the other children[43]; and that the disposition effected by cl. 6.2.2 was his way of redressing the perceived imbalance.
[43]As to which see the widow’s first affidavit at paragraphs 17(c) and 34 and Gerard’s cross-examination at T25.
Before parting from the claim under Part IV of the Act I should add this: It was not contended that orders such as I consider appropriate were outside the power of the Court. Notwithstanding that some of the language of Part IV[44] suggests that any provision must be by way of a money sum, it has been held in the context of predecessor and similar legislation that orders of other kinds, affecting real property, may be made.[45] I treat the current legislation as being to the same effect.
[44]for example, ss. 91(4), 96(3), 97(1).
[45]See, for example, Re Radburn dec’d [1941] VLR 91 and King v White [1992] 2 VR 417.
I should refer briefly to what has been called the promissory claim.
In their originating motion the plaintiffs allege that, by reason of the promises of the deceased and their conduct in response, the defendants hold Home Farm on trust for them or for Gerard. They seek, in substance, present transfer of the property – whether to them both, or to Gerard alone.
There are a series of cases dealing with promises made to devise property by will which promises are abandoned in the lifetime of the promisor. The circumstances in which equity will provide relief in such a situation were described in Giumelli v Giumelli[46] and by Brooking JA in Flinn v Flinn and Anor[47]; see also Gillet v Holt[48], Rogers v Rogers[49] and my reasons in Pearson & anor v Williams and anor[50].
[46](1999) 196 CLR 101.
[47][1999] 3 VR 712.
[48][2001] Ch 210.
[49][2001] VSC 141.
[50][2001] VSC 509.
In Pearson I attempted to summarise the applicable principles.[51] I dealt also with a further and discrete submission.[52] Re-reading my Reasons in Pearson, I adhere to what I there said.
[51]at paras 66-75.
[52]at paras 77-81.
Let it be assumed that the principles which apply if the promisor yet lives may be applied as against his executors after his death. I would then conclude that an equity arose in Gerard’s favour. There were promises that Gerard would inherit Home Farm. The promises were sufficiently certain to found an equity, notwithstanding a lack of precision. Gerard acted in reliance upon those promises. What he did was not solely in response to the promises made; but the promises were an operative cause of his conduct, and I do not doubt that they were made with an intention that Gerard should rely upon them. Gerard’s actions were to his detriment. He committed himself to and did in fact work long hours nearly every day for many years to his parent’s financial advantage. He made financial contributions to the farm which exceeded his obligations under the share-farming agreement. He would be much disadvantaged if the executors, being empowered to deprive him of his promised inheritance, were to do so.
Upon the assumption which I have made the question would then arise: How should the equity be satisfied? That must be considered at the time when the order is formulated.
According to the submissions of counsel for the plaintiffs, “in equity, the testator… at the time of his death held the farm for Gerard – subject, of course, to the two conditions, which Gerard has never disagreed with”[53]. Those conditions concern Paul’s entitlement – though counsel for the plaintiffs argued that it should be confined; and provision of an income stream for Mrs Couch senior in her lifetime.
[53]T150.
I am not sure how it can be that Home Farm was held in trust for Gerard immediately before his father’s death subject to the conditions just mentioned. Perhaps counsel was saying no more than that, in satisfying Gerard’s equity today, he accepted that a transfer of Home Farm to his client should accommodate entitlements for Paul and his mother.
It seems to me, in the circumstances described, and remembering that the promises were not, in terms, that Gerard should inherit Home Farm immediately on his father’s death, that such equity as arose in his favour would be satisfied by ensuring that his inheritance was rendered secure; and that orders be made otherwise which ensured the orderly development of the farm in the interim. Hence the observation which I earlier made that, if the promissory claim succeeded, the relief granted would be no different to that which is appropriate in the claim under Part IV of the Act.
I turn finally to the question of the heifer calves. As I noted earlier, the plaintiffs claim by their originating motion that it was a term of the share-farming agreement that they would receive from the deceased ownership of six cows per year. On its face, that is the starting point of a claim in contract, despite the fact that it appears under the general heading of “Estoppel Claims”. I have already concluded that the evidence could not support the existence of such a term.
The originating motion goes on to allege that “In the premises, the herd is subject to a trust in favour of the plaintiffs to the extent of 84 head of livestock”[54]; and, “Further, and in the premises, the Deceased and the Defendants are estopped from denying the Plaintiff’s interest in the herd.[55] The prayer for relief seeks “pursuant to a constructive or resulting trust” “[a] declaration that the livestock herd is held by the defendants on trust for the plaintiffs as to the plaintiffs’ interest of 84 cows”[56]; and an order for transfer of the alleged trust property,[57] or alternatively damages for its conversion.[58]
[54]para 18.
[55]para 19.
[56]para D.
[57]para E.
[58]para F.
Counsel for the plaintiffs, as I earlier noted, did not press an argument that there was a contractual term in his final submissions. He rather contended that there was enough to justify intervention by the Court in its equitable jurisdiction.
I put aside, in reaching a conclusion upon the matter, anomalies in the pleading, to only some of which I have referred. Concentrating upon the evidence, it seems to me unsafe to conclude that any promise with even a veneer of precision was made by the deceased. It is next apparent, in my opinion, that Gerard and his father did not reach a common understanding as to the outcome of whatever discussion they had. The evidence further suggests that the deceased had no perception that Gerard was doing anything in reliance upon their discussions. Milk was taken from the vat to feed the heifer calves. But from deceased’s standpoint that was ambiguous. The calves had to be fed, and the vat was an inevitable source of milk. Again, accepting as I do that Gerard had a certain understanding of the outcome of his very incomplete discussions with his father, and that he used milk from the vat to feed the heifer calves in reliance upon that understanding, that was something that had to be done in any event and it involved a small quantity of milk in the overall scheme of things. Moreover, whilst use of the milk must have diminished the milk cheque a little, the impact was likely to have been reduced by tax relief. Again, the plaintiffs’ imperfect cattle account showed a small profit from time to time[59]. But any profits seem to have mainly derived from trading in cattle, and the amount of any tax payable in consequence of accretion of stock must have been very small.
[59]thus 1991/92 - $62; 1992/93 - $1643; 1993/94 - $1946; 1994/5 - $619; 1995/96 - $124; 1996/97 - $914; 1997/98 - $1576; 1998/99 - $3919; 1999/2000 - $0; 2000/2001 – loss $270.
In my opinion, the evidence which I have summarised does not support the plaintiffs’ case as presented in counsel’s final address. Any promise was altogether too vague to give rise to an equity, there was no unconscionable conduct on the part of deceased in the revealed circumstances, and the evidence of any detriment is slight indeed. In the last connection it may be added that the plaintiffs apparently received some part of the deregulation moneys paid in respect of the herd;[60] and that the consequence of my conclusion is that the number of stock in the partnership cattle account will have to be reduced to zero, or nearly so, without there being any income received. It would seem at least possible that this will have a favourable tax impact.
[60]Gerard said that he received about $30,000 and his mother about $84,000 – T75.
Orders
I ask counsel to prepare minutes of orders for my consideration which are consistent with paragraph [104] of these Reasons.
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CERTIFICATE
I certify that this and the 32 preceding pages are a true copy of the reasons for judgment of Ashley J of the Supreme Court of Victoria delivered on 21st November 2002.
DATED this 21st day of November 2002.
__________________________
Associate to Mr Justice Ashley
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