E Co v Q

[2018] NSWSC 442

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	E Co v Q [2018] NSWSC 442
Hearing dates:	14 August - 6 September 2017; 3, 10 and 11 October 2017
Date of orders:	13 April 2018
Decision date:	13 April 2018
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	(1) To the extent necessary, give leave pursuant to r 35.2(3) for both parties to use the affidavits referred to at [296]-[297] of these reasons notwithstanding that the deponent was not made available for cross-examination. (2)   Direct the parties to prepare short minutes of order to reflect these reasons and to forward those and any brief written submissions in relation to those orders to my associate by 4pm 24 April 2018. (3)   Reserve the question of costs.
Catchwords:	ESTOPPEL – Proprietary estoppel – Encouragement – Acquiescence or standing by – Expectation that first defendant would make his properties available until his death for use in the family business and leave the properties to the plaintiffs on his death – Whether reliance established – Whether detriment established – Relief – Where acceleration of the expectation is appropriate in order to do equity and effect a clean break
Legislation Cited:	Agricultural Tenancies Act 1990 (NSW), ss 6, 7, 8, 9, 14 Children (Criminal Proceedings) Act 1987 (NSW), s 15A(1)(a) Civil Procedure Act 2005 (NSW), s 21 Contracts Review Act 1980 (NSW) Conveyancing Act 1919 (NSW), ss 54A, 127(1) Corporations Act 2001 (Cth), ss 232, 233 Court Suppression and Non-publication Orders Act 2010 (NSW), ss 7, 8(1)(a)-(d)(e) Crimes Act 1900 (NSW), ss 61M, 66A, 578A(2) Evidence Act 1995 (NSW), ss 55(2)(a), 78, 102, 103, 128 Income Tax Assessment Act 1997 (Cth), ss 104-55 Powers of Attorney Act 2003 (NSW), Pt 2 Uniform Civil Procedure Rules 2005 (NSW), r 35.2(3)
Cases Cited:	“X” v Sydney Children’s Hospitals Specialty Network [2011] NSWSC 1272 ACCC v Yazaki Corporation (No 2) [2015] FCA 1304; 332 ALR 396 Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (Cth) [1983] 1 NSWLR 1 Ascot Investments Pty Limited v Harper (1981) 148 CLR 337; [1981] HCA 1 Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 Austin v Hornby [2011] NSWSC 1059 Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Australian Building and Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 Australian Olympic Committee Inc v The Big Fights Inc [1999] FCA 1042; 46 IPR 53 Bennett v Horgan (Supreme Court (NSW), 3 June 1994, unrep) Birmingham v Renfrew (1937) 57 CLR 666; [1937] HCA 52 Bismark Range (Lucknow) Gold Exploration NL v Wentworth (Lucknow) Goldfields NL (1935) 35 SR (NSW) 400 Blomley v Ryan (1956) 99 CLR 362; [1946] HCA 81 Blue Haven Enterprises Ltd v Tully [2006] UKPC 17 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Brand v Chris Building Co Pty Ltd [1957] VR 625 Browne v Dunn (1893) 6 R 67 Bulstrode v Trimble [1970] VR 840 Cameron v Murdoch [1983] WAR 321 Carter v Brine [2015] SASC 204 Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752; [2008] UKHL 55 Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Commissioner for Railways v Small (1938) 38 SR (NSW) 564 Commonwealth of Australia v Verwayen (1990) 170 CLR 394; [1990] HCA 39 Connex Group Australia Pty Ltd v Butt [2004] NSWSC 379 County Securities Pty Limited v Challenger Group Holdings Pty Limited [2008] NSWCA 193 Crabb v Arun District Council [1976] Ch 179 Crossman v Taylor (No 3) [2011] FCA 734 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 333 ALR 384; [2015] HCA 26 Cubillo v Commonwealth (2000) 103 FCR 1; [2000] FCA 1084 Curwen v Vanbreck Pty Ltd (2009) 26 VR 335; [2009] VSCA 284 Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731; [2005] NSWCA 110 Dean v Aylward [2017] NSWSC 972 Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 Deposit & Investment Co td v Peat Marwick Mitchell [1996] 39 NSWLR 267 Dewhirst v Edwards [1983] 1 NSWLR 34 DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 Dillwyn v Llewelyn (1862) 4 De G F & J 517; 45 ER 1285 Donaldson v Freeson (1933) 33 SR (NSW) 460 Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 E K Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 Eade v Vogiazopoulos (No 2) [1999] 3 VR 889 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 Equititrust Ltd v Franks [2009] NSWCA 128 Evans v Evans [2011] NSWCA 92 Fermiscan v James [2009] NSWSC 474 Fisher v Brooker [2009] 1 WLR 1764; [2009] UKHL 41 Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109 Galaxidis v Galaxidis [2004] NSWCA 111 Gillett v Holt [2001] Ch 210 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Goody v Baring [1956] 1 WLR 448 Grant v Edwards [1986] Ch 638 Gray v Gray [2004] NSWCA 408; (2004) BPR 22,755 Green v Green (1989) 17 NSWLR 343; 13 Fam LR 336 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58 Halifax Building Society v Thomas [1996] Ch 217 Hamilton v Geraghty (1901) 1 SR (NSW) Eq 81 Hamilton-Smith v George [2006] FCA 1551 Hammond v Hammond [2010] NSWSC 331 Harman v Secretary of State for the Home Department [1983] 1 AC 280 Harrison v Harrison [2011] VSC 459 J Aron Corporation v Newmont Yandal Operations [2004] NSWSC 996 John Alexander’s Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1; [2010] HCA 19 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Jorden v Money (1854) 5 HLC 185 Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56 King v Adams [2016] NSWSC 1798 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 La Trobe Capital & Mortgage Corp Ltd v Hay Property Consultants Pty Ltd (2011) 190 FCR 299; [2011] FCAFC 4 Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11 Lester v Woodgate [2010] EWCA Civ 199 Low v Bouverie [1891] 3 Ch 82 Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 Mathiesen v Clintons (A Firm) [2013] EWHC 3056 McNab v Graham [2017] VSCA 352 Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106 Milling v Hardie [2014] NSWCA 163 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 Moffat v Sheppard; Alexander v Sheppard (1909) 9 CLR 265; [1909] HCA 22 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Muschinski v Dodds, (1985) 160 CLR 583; [1985] HCA 78 National Westminster Bank plc v Somer International (UK) Ltd [2002] 3 WLR 64 New Galaxy Investments Pty Ltd v Thomson [2017] NSWCA 153 New South Wales Trotting Club Ltd v Glebe Municipal Council (1937) 37 SR (NSW) 288 Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723; [1935] HCA 33 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Nguyen v Phan (No 2) [2015] VSC 634 Nolan v Nolan [2015] QCA 199 NSW Rifle Association Inc v Commonwealth [2012] NSWSC 818; 293 ALR 158 Osborne Metal Industries v Bullock (No 1) [2011] NSWSC 636 Pascoe v Turner [1979] 1 WLR 431,438 Plimmer v The Mayor, Councillors and Citizens of the City of Wellington (1884) LR 9 App Cas 699 Portland Downs Pastoral Company Pty Ltd v Great Northern Developments Pty Ltd [2012] QCA 18 Priestley v Priestley [2016] NSWSC 1096 Priestley v Priestley [2017] NSWCA 155 Ramsden v Dyson (1866) LR 1 HL 129 Raymond v Cook (1997) 29 ACSR 252 Re Basham, decd [1986] 1 WLR 1498 Re Dovico; Ex parte Mayne Weatherall [2012] NSWSC 822 Re Polyresins Pty Ltd (1998) 16 ACLC 1,674 Re Richardson & Wrench Holdings Pty Ltd [2013] NSWSC 1990; 97 ACSR 351 Re Spargos Mining NL (1990) 3 WAR 166; 3 ACSR 1 Rodda v Ian Rodda Pty Ltd (No 2) [2015] SASC 128 Rodda v Ian Rodda Pty Ltd [2015] SASC 95 Rodger v De Gelder (2011) 80 NSWLR 594; [2011] NSWCA 97 Samm Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132; 345 ALR 633 Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121; [2000] HCA 18 Schmierer v Taouk [2004] NSWSC 345; 207 ALR 301 Scottish Newcastle plc v Lancashire Mortgage Corporation Ltd [2007] EWCA Civ 684 Shepherd v Doolan [2005] NSWSC 42 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 9 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Sivritas v Sivritas [2008] VSC 374 Steria Ltd v Hutchison [2007] ICR 445; [2006] EWCA Civ 1551 Stone v Stone [2014] NSWSC 1655 Sullivan v Sullivan [2006] NSWCA 312 Svenson v Payne (1945) 71 CLR 531; [1945] HCA 43 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1981] 2 WLR 576 The Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447; [1983] HCA 14 The Nominal Defendant v Clements (1960) 104 CLR 476; [1960] HCA 39 Thorner v Major [2009] 1 WLR 776 Thornton v State of NSW [2015] NSWDC 251 Traderight (NSW) Pty Ltd v Bank of Queensland Limited (No 12) [2012] NSWSC 1363 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49 Varma v Varma [2010] NSWSC 786 Vukic v Grbin [2006] NSWSC 41 Waaka v Francois [2017] NSWSC 744 Waddell v Waddell [2012] NSWCA 214 Walton v Walton (Court of Appeal of England and Wales, unreported, 14 April 1994) Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Watson v Foxman (1995) 49 NSWLR 315 Watson v James [1999] NSWSC 600 Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68 Weatherall v Satellite Receiving Systems (Australia) Pty Ltd [1999] FCA 218 Westdeutsche Bank v Islington LBC [1996] AC 669 Willmott v Barber (1880) 15 Ch D 96 Yaroomba Beach Development Company Pty Ltd v Coeur De Lion Investments Pty Ltd (1989) 18 NSWLR 398
Texts Cited:	A Silink, “Causation in Equitable Estoppel” (2016) 43 Australian Bar Review 320 AJ Black, “Modern Indicia of fiduciary relationships in a commercial setting and the interaction of equity and contract” (15 November 2017, Supreme Court (NSW) Corporate and Commercial Law Conference) B McFarlane, The Law of Proprietary Estoppel (2014, Oxford University Press) E Sykes, “The Doctrine of Constructive Trusts” (1941) 15 Australian Law Journal 171 JD Heydon and MJ Leeming, Cases and Materials on Equity and Trusts (8th ed, 2011, LexisNexis) JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis) K Handley, “Recent Cases” (2017) 91 Australian Law Journal 812 K Handley, Estoppel by Conduct and Election (2nd ed, 2016, Sweet & Maxwell) P Feltham et al, Spencer Bower: Reliance-Based Estoppel (5th ed, 2017, Bloomsbury) P Young, C Croft, ML Smith, On Equity (2009, Thomson Reuters) R Goff and G Jones, The Law of Restitution (2nd ed, 1978, Sweet & Maxwell) Snell’s Equity (32nd edition, 2010)
Category:	Principal judgment
Parties:	“E Co” (First Plaintiff) “EM Co” (Second Plaintiff) “A” (Third Plaintiff) “B” (Fourth Plaintiff) “C” (Fifth Plaintiff) “First Defendant” (First Defendant) “Second Defendant” (Second Defendant)
Representation:	Counsel: AJ McInerney SC with N Kabilafkas (Plaintiffs) J Priestley SC with B Lloyd (Defendants)   Solicitors: MJF Legal Pty Ltd (Plaintiffs) Second Defendant (Defendants)
File Number(s):	2014/00198212
Publication restriction:	Restriction on publication of anything that may identify the persons identified in the judgment as “X”, “Y” and “Z”

INDEX

JUDGMENT – WARD CJ in Eq		[1]
Prohibition on publication/disclosure		[5]
Overview of the dispute		[9]
Summary		[45]
Chronology		[82]
The first defendant’s own family history	[86]
Property acquisitions by the first defendant from about 1978 to 2002	[88]
Discussions characterised by the plaintiffs as “succession planning”	[102]
7 April 2002 – monetary gift from the sons’ uncle	[108]
2002 discussions	[109]
9 May 2002 and 4 June 2002 meetings with accountants	[112]
July 2002 – B’s resignation from his then employment	[115]
11 July 2002 meeting	[119]
B’s notes	[122]
Notes at CB Tab 91	[126]
Notes at CB Tab 118	[129]
Purchase of Property No 9	[138]
Meeting on 30 August 2002 at Local Accounting Firm with Accountant No 1	[146]
2 September 2002	[147]
3 September 2002 meeting with Accountant No 2	[149]
5 September 2002	[151]
9 September 2002 letter	[152]
11-12 September 2002 incorporation of E Co	[154]
18 September 2002 meeting	[158]
25 September 2002 meeting	[180]
Time records and notes of meeting	[180]
Structure Diagrams – dispute about time of creation	[184]
Discussions at 25 September 2002 meeting	[189]
Draft letter dated 3 October 2002 – the “unsigned Aitken letter”	[204]
Settlement of purchase of Property No 9	[211]
Conduct of the Family Business from October 2002	[213]
Incorporation of D Co	[215]
Meeting on 10 December 2002	[217]
2003	[224]
Incorporation of EM Co	[227]
2 May 2003 meeting	[228]
Sale of House No 2	[234]
E Co – Operations from 1 July 2003	[235]
13 August 2003 meeting re E Co	[239]
Purchase of Property No 10	[241]
“Roll-over” of primary production activities	[244]
Confirmation of authority of A as manager of farming properties	[245]
17 March 2004 - Agreement for Lease	[246]
Purchase of Properties No 11 and 12 in 2005	[258]
Rent rebate under Agreement for Lease	[260]
Advances by the first defendant to E Co	[263]
“Off-farm investments”	[267]
August 2009	[274]
October 2009 confrontation	[275]
Meeting with Accountant No 2 on 22 October 2009	[280]
Subsequent conduct of the Family Business	[288]
JIRT investigation	[289]
3 March 2010 meeting with Accountant No 2 – the second confrontation	[290]
Advice sought from Mr David Beattie, solicitor	[291]
Marketing proposals	[299]
August 2010 acquisition of the “P Hotel”	[303]
Rabobank facility obtained by the first defendant	[306]
Disclosure by Z of sexual abuse by the first defendant	[308]
May 2011	[309]
Arrest	[310]
Purchase of second hotel – C Hotel	[311]
2011 request for resumption of rent payments under Agreement for Lease	[318]
New will - 15 December 2011	[323]
Final AVO	[326]
Acquisition by C of an interest in a property management business	[327]
Request by first defendant for Deed in relation to hotel facility	[328]
Events in March-May 2012	[333]
Sentencing	[337]
Sale of Property No 12	[342]
Insurance for farms	[344]
Dismissal of application for leave to appeal against sentence	[346]
Refinance of loan facilities in relation to the hotels/ the first defendant’s decision to sell all the farms	[347]
Service of Notice of Termination of Lease	[352]
Discussions as to refinance of the hotels	[354]
Legal advice sought from Mr Beattie in August 2013	[365]
Westpac Deed	[371]
Disinheritance of sons	[374]
Marketing process as at August 2013	[377]
The first defendant’s position as at 1 September 2013	[378]
Sale of Property No 8 and steps in relation to sale of other properties	[382]
Extension of time for termination of lease	[387]
“W” Deed re W Unit Trust	[390]
Legal advice sought from Mr Fitzgerald, solicitor, in March 2014	[395]
The first defendant’s position as at March 2014	[397]
Lodgement of caveats and further extension of notice of termination of lease	[398]
Discussions between Accountant No 1 and Accountant No 2 in April 2014	[401]
Accountant No 2’s 7 May 2014 emails	[402]
Commencement of the present proceedings	[405]
The pleadings		[406]
Second further amended statement of claim	[406]
The Issues in Dispute		[417]
Factual issues in dispute	[417]
Criticism by the first defendant of the plaintiffs’ pleaded case	[432]
Objections as to affidavit evidence	[467]
Evidence at trial		[487]
The plaintiffs’ case	[491]
The sons’ affidavit evidence	[491]
Mr Beattie’s evidence	[498]
Mr Andrew Eager	[516]
Farm Worker No 1	[517]
First defendant’s case	[519]
First defendant’s affidavit evidence	[519]
The accountants’ evidence	[535]
Accountant No 1	[537]
Accountant No 2	[546]
Farm Worker No 2	[549]
Dispute about Beattie’s evidence	[551]
Conclusion as to Mr Beattie’s evidence	[566]
Solicitor No 2	[570]
Findings as to credit		[573]
The sons	[574]
B’s evidence	[575]
A’s evidence	[581]
C’s evidence	[585]
Plaintiffs’ submissions as to the sons’ credit	[592]
Conclusions as to the sons’ credit	[596]
First defendant	[610]
Conclusion as to first defendant’s credit	[635]
Accountant No 2/Accountant No 1	[641]
General observations	[641]
Accountant No 2	[658]
Accountant No 1	[665]
Farm Worker No 2	[675]
Factual findings - the minor and major fault lines and as to the factual issues posed by the plaintiffs		[685]
Minor fault line	[685]
Conclusion as to minor fault line	[689]
Major fault line	[694]
Notes at CB Tab 91/CB Tab 118	[696]
Conclusions as to the status of the documents at CB Tabs 91 and 118	[711]
CB Tab 117 – 18 September 2002 meeting	[713]
Conclusion as to the notes at CB Tab 117	[722]
CB Tab 119 – 25 September 2002 meeting	[723]
Conclusion as to major fault line	[739]
Dispute as to “transfer” of land agreement or representation	[741]
Conclusion as to the “transfer” of land agreement or representation	[773]
Dispute as to “holding/inheritance” expectation	[791]
Conclusion as to “holding/inheritance” expectation	[801]
Determination		[813]
(i)   Claims in contract/express trust/unconscionable conduct	[814]
The pleading	[814]
Plaintiffs’ submissions	[821]
Determination	[838]
(ii)   Common intention constructive trust/joint endeavour constructive trust	[846]
The pleading	[846]
Plaintiffs’ submissions as to the common intention constructive trust claim	[847]
Determination as to the common intention constructive trust claim	[850]
Plaintiffs’ submissions as to the joint endeavour constructive trust claim	[852]
Determination as to the joint endeavour constructive trust claim	[857]
(iii)   Oppression	[862]
The pleading	[862]
Plaintiffs’ submissions	[865]
Determination	[869]
(iv)   Further relief relating to contracts	[878]
Relief in respect of Agreement for Lease	[879]
Claim for repayment of advances	[897]
Relief in respect of Westpac Deed	[898]
Set-off re W Unit Trust Deed amounts	[899]
(v)   Proprietary estoppel claims	[900]
Summary of issues	[900]
Proprietary estoppel – Introduction	[904]
Proprietary estoppel by encouragement	[910]
Estoppel by acquiescence or standing by	[916]
First issue: clarity of the promise, representation or assurance	[948]
Principles	[948]
Certainty requirements in other estoppels	[949]
Certainty requirements in proprietary estoppel	[951]
Determination – The three sons	[965]
Determination – A in relation to Property No 4	[983]
Determination – E Co	[986]
Second issue: Assumption	[987]
Principles	[987]
The knowledge requirement – estoppel by acquiescence	[990]
Assumptions relating to testamentary dispositions	[992]
Determination – The three sons	[1002]
Determination – A in relation to Property No 4	[1032]
Determination – E Co	[1034]
Third issue: Reliance	[1035]
Principles	[1035]
Consideration – recent authorities on the test for reliance	[1039]
Conclusions	[1073]
Counterfactual reasoning	[1077]
Legal context of the submissions	[1078]
Plaintiffs’ submissions concerning the counterfactuals	[1082]
First defendant’s submissions concerning the counterfactuals	[1083]
Plaintiffs’ submissions on reliance – As to A	[1100]
Plaintiffs’ submissions on reliance – As to B	[1109]
Plaintiffs’ submissions on reliance – As to C	[1110]
Plaintiffs’ submissions on reliance – As to E Co	[1111]
Determination as to reliance – The three sons	[1127]
Determination as to reliance – A in relation to Property No 4	[1128]
Determination as to reliance – E Co	[1129]
Fourth issue: Detriment	[1130]
Principles	[1130]
First defendant’s submissions as to detriment	[1137]
Plaintiffs’ submissions as to A’s detriment	[1154]
Plaintiffs’ submissions as to B’s detriment	[1160]
Plaintiffs’ submissions as to C’s detriment	[1162]
Plaintiffs’ submissions as to E Co’s detriment	[1164]
Determination as to detriment – The three sons	[1165]
Determination as to detriment – A in relation to Property No 4	[1170]
Determination as to detriment – E Co	[1172]
Fifth issue: measure of relief	[1173]
Principles	[1173]
Is there a remedial distinction between encouragement and acquiescence cases?	[1174]
The prima facie position	[1179]
The concept of proportionality – what is its relevance to the present proceedings?	[1186]
Proprietary estoppels and testamentary gifts – the plaintiffs’ supplementary submissions on relief	[1193]
Consideration – satisfying the plaintiffs’ equity	[1203]
Determination as to relief	[1215]
Cross Claim		[1226]
Set-off		[1238]
Costs		[1239]
Orders		[1241]

Judgment

1. HER HONOUR: On any view of the matter, underlying this dispute is a most unfortunate breakdown in the family relationship between a father (the first defendant) and his three sons (the third, fourth and fifth plaintiffs, to whom I will refer as “A”, “B” and “C”, respectively). The first and second plaintiffs (to which I will refer as “E Co” and “EM Co”, respectively) are companies in which the first defendant and his three sons each hold shares; the sons being the directors of both companies.

2. The genesis of that breakdown (and the reason for my description of it as most unfortunate, though I accept that this hardly captures the depth of emotion involved – the sons describing this as a tragedy and the first defendant accepting that his actions had a “doubtless devastating” effect on the fabric of the family), was the disclosure in September 2009 by the twin daughters of B (to whom I will refer as “X” and “Y”), who were then about nine years old, of sexual abuse by the first defendant. B and his wife commendably took the disclosure seriously, as did B’s brothers, which led to a confrontation in October 2009 between father and sons in which the first defendant admitted to inappropriate conduct involving his two granddaughters (though he considered, and still considers, the sons’ reaction to this disclosure to be unreasonable; and maintained in the witness box that he is a loving and doting grandfather).

3. Ultimately, the first defendant was charged with, and (having pleaded guilty to the relevant charges) convicted of, crimes relating to the sexual abuse of X and Y. In the course of the present proceedings, and with the benefit of a certificate under s 128 of the Evidence Act 1995 (NSW), the first defendant admitted to the sexual abuse also of A’s daughter (to whom I will refer as “Z”), in respect of which he has never been charged and which he had not previously expressly acknowledged. The abuse of all three children occurred when they were aged between five and ten years old. I raise this at the outset because it explains the extensive anonymisation of names and places in these reasons. I also note that there was considerable argument both before and during the course of the hearing as to the relevance to the issues here in dispute of evidence of the first defendant’s sexual offending (beyond certain admitted facts, including that he had pleaded guilty to the relevant charges and that he was imprisoned by way of punishment for the offences).

4. The first defendant submits that the conduct of the proceedings by the plaintiffs indicates that the sons have been motivated in this litigation by feelings of ill-will towards him and that they are seeking to punish him for his sexual offending. This was denied when put to B in cross-examination (T 170.13) and C denied a similar proposition, namely that the motivation for the litigation was that his feelings concerning the offending made him think the transfer of land should happen (T 602). The sons, for their part, maintain that an important factual issue in the proceedings (referred to as the “minor fault-line” running through the proceedings) is the motivation for the first defendant’s conduct in, among other things, changing his will in 2013 to disinherit them. They maintain (but the first defendant denies – T 986) that the first defendant is seeking to punish them and to force an apology from them for his incarceration for the crimes to which he had pleaded guilty. I deal with those submissions in due course.

Prohibition on publication/disclosure

5. Section 15A(1)(a) of the Children (Criminal Proceedings) Act 1987 (NSW) prohibits the publication or broadcast of the name of a person in a way that connects that person with criminal proceedings if the proceedings relate to the person and the person was a child when the offence was committed. Each of X and Y (but not Z) falls within the scope of sub-s (1)(a). The prohibition applies only to the publication or broadcast of the person’s name to the public or a section of the public by publication in a newspaper or periodical publication, by radio or television broadcast or other electronic broadcast, by the Internet, or by any other means of dissemination (sub-s (2)). The prohibition applies even after the proceedings concerned are disposed of and even if the person is no longer a child at the time of the publication or broadcast (sub-s (4)). For the purposes of s 15A, a reference to the name of a person includes a reference to any information, picture or other material that identifies the person or is likely to lead to the identification of the person (subs (5)).

6. Section 578A(2) of the Crimes Act 1900 (NSW) prohibits the publication of any matter which identifies the complainant in prescribed sexual offence proceedings or any matter which is likely to lead to the identification of the complainant. Publication includes (but is not exhaustively defined as) broadcast by radio or television and dissemination by any other electronic means such as the Internet (see sub-s (1)). Again, the prohibition applies even though the prescribed sexual offence proceedings have been finally disposed of (sub-s (3)). There are a number of exceptions (sub-s (4)), none of which is applicable in the present case. The offences of which the first defendant was convicted (offences under ss 61M and 66A of the Crimes Act) are prescribed sexual offences for the purpose of s 578A. Hence, the prohibition applies in relation to each of X and Y but again not Z.

7. During the course of the hearing of these proceedings, I made orders pursuant to ss 7 and 8(1)(a)-(d) and (e) of the Court Suppression and Non-publicationOrders Act 2010 (NSW) prohibiting the publication in Australia of the names of, or other material that would be likely to identify, each of X, Y and Z (such as the names of members of their families). I did so on the grounds set out in s 8(1)(a) of the said Act in relation to X and Y and on the grounds set out in s 8(1)(a) and (e) of the said Act in relation to Z. As to the orders made in relation to Z, I accepted the plaintiffs’ submission that any public interest in the publication of her identity is outweighed by the potential harm to her and her parents and would carry with it the potential prejudice to the administration of justice of the kind identified by Adamson J in “X” v Sydney Children’s Hospitals Specialty Network [2011] NSWSC 1272 at [8]. Prohibition of publication or disclosure of anything that might tend to identify Z is in any event necessary so that the identities of X and Y are protected from publication.

8. I have raised this issue at the outset of these reasons not only to explain the extensive use of pseudonyms throughout this judgment (which extends to the names of the particular properties the subject of, or otherwise referred to in, these reasons, and the names of various companies and trusts to which reference is made in these reasons) but also to emphasise the need for care in any publication of parts of these reasons that might, despite my best endeavours, tend to reveal the identity of X, Y or Z. At the time of publication of these reasons I will provide to the parties and their legal representatives a schedule of the pseudonyms adopted. Publication of that schedule will be restricted.

Overview of the dispute

9. By way of a broad overview of the dispute, the plaintiffs allege that, from shortly after the first defendant commenced (in about 1976) the establishment of what expanded over the years into a valuable cattle farming business over multiple rural properties, the first defendant allowed, encouraged or created the expectation in his three sons (A, B and C) that he would continue to purchase farms for his and their benefit; that he wanted his sons to work together with him on the farms in a family farming business for the benefit of them and the next generation; and that his sons would inherit his estate (including the farms and the cattle farming business) under his will (see [8] of the second further amended statement of claim filed in court on 4 September 2017).

10. The plaintiffs allege that this expectation continued through to 2002 when the expectation came to encompass an “ownership structure” between the first defendant and his sons for the future management and conduct of the then proposed family business (which they say was to include both the family farming business and non-rural and non-agricultural businesses referred to in the proceedings as “off-farm investments”). The plaintiffs allege that the expectation was, first, that (with one exception – the property to which I will refer as “Property No 8”) the farms on which the family business was to be operated would be jointly owned by the first defendant and the sons (through the new family business structure) and the first defendant’s estate (which would presumably include the first defendant’s share in that business structure) would be left to the sons under the first defendant’s will (or, if any of the said properties were sold during the first defendant’s lifetime, the proceeds would be shared and/or spent wholly or partially on property and assets operated by the proposed family business) (see [66] of the second further amended statement of claim).

11. The plaintiffs further allege that their expectation in relation to acquisition of joint ownership of the farms through the said family business structure was subsequently varied, such that the farms then owned by the first defendant (other than Property No 8), and any other farms purchased by the first defendant, would be “held” by the first defendant during the first defendant’s lifetime “for” his sons and for the use of the proposed family business and that, upon the first defendant’s death, the sons would inherit the said farms (with a similar expectation as before as to the proceeds of any sale of those farms during the first defendant’s lifetime) (see [74] of the second further amended statement of claim).

12. The plaintiffs plead, further or in the alternative, that there was a binding agreement between the first defendant and his sons (the content of which was revised just as the pleaded expectation was revised) to similar effect as the expectations pleaded at [66] and [74] respectively (see [67]; [75] of the second further amended statement of claim).

13. The sons say that, in reliance on the expectation allowed, encouraged or created by the first defendant (as it existed by around 25 September 2002), each made life-changing decisions – to work in the family business and not to pursue other career options then open to them (giving rise to the estoppel claims pleaded at [202]ff of the second further amended statement of claim). The plaintiffs further allege that E Co contributed time, money and effort in the improvement of the farms on which the farming business was conducted, in circumstances where it would be unconscionable for the first defendant now to retain the benefit of the improvements made to the farms (see [212]-[215] of the second further amended statement of claim). A separate proprietary estoppel claim is made by A in relation to the homestead in which he lives (which is on the property to which I will refer as “Property No 4”), by reference to expenditure made by him on renovations to the homestead and the expenditure of time, money and effort that he has contributed to the improvement of the property. In passing, I note that Property No 4 is the most extensive in acreage of all the properties; and the homestead does not appear to be on a separate title to that of the rest of that property.

14. The plaintiffs’ complaint is that the first defendant has now disinherited his sons and has sought to take possession of the farms on which the family farming business has been operated (through E Co) since 2003. Although the plaintiffs’ claims are framed in a myriad of ways – including in contract, proprietary estoppel and trust – and encompass various claims for equitable relief, by the end of the hearing the principal focus of the plaintiffs’ claims, as I apprehend it, and the basis on which I have concluded they have established claims to relief, was the doctrine of proprietary estoppel.

15. The first defendant denies the alleged agreements and denies having allowed, encouraged or created the alleged expectations. Indeed the first defendant maintains that there is scope to view this case as one in which (contrary to the plaintiffs’ case) it is he who has been taken advantage of – by his sons – in the sense that it is his expectation (namely, that the sons would work together on the farms) that is unfulfilled; whereas the sons have advanced their position to his clear detriment in that, on the plaintiffs’ case, he will be left with nothing. I interpose here to note that although there was some evidence of the first defendant’s financial position (in the form of tax returns and financial statements), there was no evidence adduced by the first defendant as to his asset position from which I could conclude that if the plaintiffs are successful in obtaining the relief they seek he will now be left with nothing.

16. The chronology of events will need to be set out in some detail. However, by way of summary, for the purposes of this introductory overview of the dispute, I note the following.

17. The first defendant, now aged 76, is one of a number of children of a man who established a very successful business from which he amassed considerable wealth. The first defendant’s father established a family trust (of which the first defendant was one of the beneficiaries) out of which his wealth was distributed amongst his children. It is not disputed that, over the years, the first defendant received substantial distributions from that family trust (to which I will refer, to avoid confusion between the various discretionary family trusts later established by the first defendant and each of his sons, as the “Sydney Family Trust” – since funds were distributed from that trust out of Sydney and the sons’ evidence, broadly accepted by the first defendant in cross-examination, is that reference was made by the first defendant over the years to him moving money out of Sydney).

18. The first defendant admits that he used some of the income he received from the Sydney Family Trust over the years to purchase substantial rural land holdings in New South Wales on which he carried on the business of cattle farming. During their adult years, up until about 2010, the first defendant provided his sons with monthly payments out of the distributions received he from the Sydney Family Trust. (He was at pains to make clear in the witness box that these were moneys to which he, not the sons, was entitled out of the Sydney Family Trust.) There is no doubt that the first defendant has been very generous in terms of financial support for his sons, giving one or more of them expensive cars over the years, buying homes in Sydney for each of B and C, and making his assets available from time to time as security for various business ventures in which one or more of his sons were involved (though the sons characterise the last as part of the agreement or expectation engendered by their father that is the subject of this dispute).

19. There is also no doubt that the first defendant wished (at least up until the present proceedings, and arguably even now when regard is had to his latest will) his sons to share equally in his largesse. I refer in this regard to references in the evidence to the “squaring up” of the ledger between the sons, by which the first defendant meant “evening” up the gifts he had made to the sons over the years (see [63] of the first defendant’s first affidavit sworn 2 November 2015), bearing in mind in particular that he had not bought A a house, unlike the position with respect to his other two sons; and I refer also to the first defendant’s insistence that A and C have an opportunity to share in one of the hotel ventures later entered into by B with the first defendant’s financial backing.

20. The sons do not dispute the first defendant’s generosity to them over the years. Nevertheless, they say (when addressing the first defendant’s argument that they have suffered no financial detriment in reliance on the alleged representations) that there is no reason to think that the first defendant’s generosity would not have continued even had they not joined in the new family business in 2002/2003 – i.e., they say there is no reason to think that the first defendant would not still have assisted them to purchase their own land or businesses, the difference being that in that event such holdings or businesses would likely not have been vulnerable to the whims of the first defendant’s continued support (as, on the first defendant’s case, the plaintiffs say they now are).

21. The three sons were raised on the first of the farming properties acquired by the first defendant in about 1978 (to which I will refer as “Property No 1”). The sons say that the first defendant impressed upon them from their earliest years the importance of family that had been inculcated into him by his own father. They say that their father wanted them all to obtain an education or a trade and then to return to work together as part of a family business for the benefit of all of them and their respective children. The sons also say that, in the period leading up to 2002, the first defendant gave them assurances from time to time that the farms would be left to them under his will. None of that appears seriously to be in dispute. That said, the various estoppel claims made in these proceedings are not based on any assurances, representations or conduct by the first defendant at a time earlier than September 2002. The relevance, as I understand it, on the plaintiffs’ case of the early family history (any such relevance being disputed by the first defendant), and of the expectations that the sons say were created in them by the first defendant prior to 2002 as to the family farming business being for the benefit of them and the succeeding generation, is that it sets the context in which the plaintiffs say what took place in 2002 should be understood (and as to what the first defendant’s conduct at that time reasonably conveyed to them).

22. The eldest son, A, acquired skills as a mechanic and then returned to work with his father on Property No 1 in 1989. He has worked as a farmer (and has lived rent-free on various properties owned by his father) ever since. In particular, from 1993 A has lived with his family at the homestead on Property No 4, which property forms part of an aggregation of four farming properties (referred to and numbered consecutively in these reasons as “Property No 3” through to “Property No 6”) to which I will refer as the “3/6 Aggregation”. A regards the homestead on that property as his home and says that his father has encouraged him so to regard it. With his father’s encouragement and/or at his father’s direction, A has expended a substantial amount of money (the precise amount of which has not been quantified but accepted by the first defendant as being in the order of $327,000) on renovations to the homestead on Property No 4.

23. The property on which for many years the first defendant lived is a property to which I will refer as “the Main Property”, which the first defendant acquired in 1999. A saw his father most days when they were each living on the respective properties (i.e., the Main Property and Property No 4).

24. The second son, B, has a business degree as well as an undergraduate certificate in food industry management. Prior to July 2002, B worked in various roles for companies in the retail area. The youngest son, C, worked as a farm-hand and then in retail, mainly in the liquor area, until October 2002. He obtained a certificate in business from a business college during that time.

25. In 2002, by which time the first defendant had substantially increased his land holdings both in the area in which the Main Property and Property No 4 are located and further afield, and each of the sons had received a substantial gift of money from one of their uncles, there were a number of meetings between the first defendant, one or more of his sons and the first defendant’s accountant (and, at one meeting, a legal adviser). What was said, let alone what, if anything, was agreed, in those meetings was much in dispute in the proceedings. The sons characterise the discussions as going to the form which the family business would thenceforth take, on the basis initially that the farms would be transferred by their father to a new entity for the purpose of a new family business structure and then that the farms would be held by their father and inherited by them on his death. In particular, the plaintiffs allege that, during these meetings, the three sons and their father entered into an agreement, or their father created in them the expectation, that the first defendant would grant to the sons an ownership interest in the farms if they worked with him to continue and expand the family business (the Family Business), which family business was also to encompass from time to time diversified “off-farm” investments. The first defendant has little recollection of any of these meetings but is adamant that he did not agree at these meetings or at any other time that he would “hand over” the farms to his sons or to any new entity. He says that the initial set up of the company (E Co) was to run the rural enterprise and “all this other stuff” came later when EM Co was incorporated and that his sons “dreamt [this] up” not he (see T 760). On his case, the 2002 discussions were no more than general discussions in which nothing relevantly was agreed and no expectation, as alleged, was created or encouraged by him.

9. On 11 September 2002, documents were signed for the incorporation of E Co. The plaintiffs say (but the first defendant does not accept) that E Co was the proposed corporate trustee for the purposes of the operation of the Family Business. There is, however, contemporaneous evidence (in the form of a structure diagram prepared by the first defendant’s accountant and provided to the family members in one of the relevant meetings) that shows that as at September 2002 it was at least contemplated that the unit trust of which E Co was the trustee would be the owner of “assets” as part of the structure by which E Co was to be the owner of the then proposed family business (and the plaintiffs, in essence, say the relevant “assets” included the first defendant’s land).

10. The two critical meetings (on the plaintiffs’ case) took place on 18 and 25 September 2002. At the first, on 18 September 2002, the plaintiffs say a trust was established which was to hold the farming assets, including the farms, of the Family Business. The plaintiffs say that the individual respective family trusts (also set up at this time) were to receive income from the trustee company, E Co. This is the core of the agreement pleaded in the second further amended statement of claim at [67] and will be referred to in these reasons as “the Family Business Agreement”.

11. At the second, on 25 September 2002, the plaintiffs say that advice was received from the first defendant’s solicitor that the structure for the Family Business should be varied, for capital gains tax and “asset protection” reasons, and that it was agreed that (instead of the farms being transferred into a trust) the first defendant would “hold” the farms “for” his sons and would leave the farms to his sons under his will. This is the core of the revised agreement pleaded in the second further amended statement of claim at [75] and will be referred to in these reasons as “the Revised Family Business Agreement”.

12. The plaintiffs say that thereafter (and indeed at least up to 2009 if not extending to 2013) the Family Business was conducted on the basis of the Revised Family Business Agreement. It is not disputed that, with effect from 1 July 2003, most of the first defendant’s livestock (apart from 200 head of cattle) was transferred to E Co and thereafter E Co conducted what had previously been the first defendant’s farming operations on the first defendant’s farms. An agreement for the lease by E Co of the farms, including Property No 8, commencing from 1 July 2003 and with no stated term, was minuted in March 2004 and was later varied in 2011 to exclude Property No 8 from the leased properties. I refer to this as the Agreement for Lease. Rent was struck for the lease arrangement at an amount that was apparently considered to be a commercial rent and the first defendant assumed responsibility for pasture development and other expenditure. At least in part this seems to have been to satisfy any tax issue that might later be raised as to it not being a commercial arrangement – see the first defendant’s evidence at T 831 where he seems to have accepted that satisfying the tax office was partially the reason for the lease terms as to responsibility for pasture development but added that this was not the main reason; that being, he said, that he did not want to be left with “run-down” properties.

13. The plaintiffs have adduced evidence that each of the three sons had a role to play in the farming business: A as a full-time farmer and mechanic; B, who as noted above had a background in retail, as the businessman in charge of the accounts and also to assist with the farms and off-farm investments; and C, who again as noted above had a background in liquor shops, to look for off-farm investments, including hotels, and to assist as and when necessary on the farms. A continues to manage E Co’s business on the farms and to supervise its employees. B, who says that he worked full-time in E Co’s business between October 2002 and late 2010, has since then worked mainly in two hotel businesses in Sydney. C, likewise, now mainly works in Sydney but says that he worked in E Co’s business on the farms from time to time as needed and otherwise looked for off-farm investments. It is fair to say that the first defendant in general denigrates the contribution made by each son to the family business operated by E Co since 2003. In his affidavit evidence in these proceedings he attributed his decision to terminate the Agreement for Lease at least in part to dissatisfaction as to the management of the farms. However, no such reason was put forward at the time the notice of termination was issued, and the plaintiffs point to various matters to say this explanation is not credible.

14. Following the family confrontation in October 2009, after the disclosure of sexual abuse by the first defendant, the plaintiffs say that it was decided that the family would continue the Family Business (albeit with personal contact between the first defendant and his sons being curtailed and any personal contact between the first defendant and X or Y being prevented).

15. The first defendant was charged in 2011 on a number of counts relating to the sexual abuse of X and Y. He pleaded guilty to nine of those charges and was sentenced on 20 July 2012 to a term of imprisonment (eight years in aggregate with a minimum non-parole period of four years). On 13 July 2012, by which stage the first defendant’s bail had been revoked and he was in prison, the first defendant appointed his solicitor, the second defendant in the present proceedings, as his attorney under a general power of attorney. Leave to appeal against sentence was granted but the appeal was dismissed by the Court of Criminal Appeal on 12 June 2013. The first defendant was released from prison in 2016 after serving four years in gaol. I was informed that his parole conditions (which are in force until some time in 2020) currently restrict him from visiting the farms (a matter of relevance when considering the impact on the first defendant of any relief that might be granted in these proceedings by way of acceleration of the sons’ claims as to an interest in the properties).

16. The sons say that, for the period from October 2009 up to June 2013, for all practical purposes it was business “as usual” in relation to the farming operations. However, in June 2013, at a time when an arrangement for refinancing in relation to the Sydney hotels was imminent, the sons learnt from the second defendant that the first defendant intended to sell the farms on which the Family Business was being conducted (and which were still leased to E Co).

17. On 27 June 2013, a notice of termination of lease was served on E Co. On 22 August 2013, as his sons only later discovered, the first defendant made a new will, drafted by the second defendant, which in effect operates to disinherit his sons. In four earlier wills, the bulk of the first defendant’s estate was to be left to his sons. In the 22 August 2013 will, the residue of the first defendant’s estate will be held in a discretionary trust, the trustee company of which will be controlled by the first defendant’s sister. Although it was suggested for the first defendant that his sons have misconceived the effect of the 2013 will (because they may potentially receive a distribution out of that discretionary trust), the first defendant made clear in the course of cross-examination that as at 22 August 2013 his wish was that his sons should receive absolutely nothing out of the farms. Hence, it seems inherently unlikely that the first defendant’s sister, who will control the trustee company and who I understand was in Court supporting her brother during at least part of the hearing, will in the future act contrary to the first defendant’s expressed wishes. Be that as it may, there is a clear distinction between being named as a residuary beneficiary under a will and being an eligible beneficiary under a discretionary testamentary trust.

18. The plaintiffs allege that, by so acting, the first defendant is in breach of the agreements he has made with his sons and the corporate vehicles established by them together to operate the Family Business and has resiled from the expectations that he induced in his sons (both by active encouragement and by silence and acquiescence over a substantial period of time). They allege that the first defendant has caused them loss and damage and has left them with the detriment flowing from their reliance upon the first defendant’s word (in essence that detriment being that, having built up the business of E Co, they have been left exposed to the foundation of that business now being removed and have lost the opportunity in the intervening period to establish themselves independently of the first defendant).

19. The first defendant denies the existence of both the Family Business Agreement and the Revised Family Business Agreement, contending that the only agreement that was reached between the parties was the one recorded in the minute of meeting of 17 March 2004 for the lease by E Co of the relevant farms (which lease he says is terminable on one month’s notice or at most on reasonable notice). The first defendant describes that agreement as an agreement to permit his sons, through E Co, to conduct a valuable business on his land. The first defendant maintains that, while there was a change in about 2003 as to who operated a farming business upon the land (in that it was thereafter operated by E Co and not by him), there was not any change in the expectations of the sons.

20. The first defendant maintains that there was no act or omission by him in 2002, or at any other time, that gave rise to the expectations or agreements alleged. The plaintiffs’ pleading is roundly criticised in this regard as failing to state clearly the alleged agreement(s) made or expectation(s) allegedly created or encouraged by him. The first defendant also contends that much of the affidavit material relied upon by the plaintiffs is characterised by “a marked lack of context and a lack of clear and reliable recollection”, it being described as “too often being assertion and submission rather than evidence”, noting that some of the conversations to which one or more of the sons depose occurred many years ago when they were children. The first defendant argues that the conduct of the parties, including the conduct of the farming business by E Co, since 2002/2003 can far more believably be seen as being on a continuum of conduct and lifestyle commencing from 1983, if not before, and ending no earlier than 21 October 2009 (and arguably not before the lodging of caveats over the farming properties by E Co in March 2014), rather than being pursuant to “some seismic shift in relations concluded emphatically at a meeting on 25 September 2002”.

21. The first defendant submits that, in the circumstances that existed in 2002, the sons sought to branch out into their own business endeavours with their father’s assistance and that they intended to, and ultimately did, make investments with the support of the first defendant, by way of the first defendant providing certain guarantees secured by the first defendant’s land. His position, in essence, is that his sons were at no time any more than expectant heirs and that he is free to disinherit them and to do as he wishes with his properties. In large part, the first defendant’s response to the claims made against him is that “the plaintiffs seek to construct an unrealistic and unlikely revisionist view of the lives shared by him and his sons”.

22. In that regard, the first defendant submits that the area of land in question in the present case (being some 28,000 acres) is significant, noting that some of the evidence shows that B at one time considered the value of the land to be up to $30 million (referring to a schedule – at CB Tab 748A – that was prepared around October 2009 after the confrontation between father and sons; see the email sent by B on 23 October 2009, just after the confrontation, to the first defendant’s accountant, Accountant No 2, at CB Tab 748). In effect, it is submitted that it is implausible that the first defendant would have agreed to give away such valuable assets for nothing or would have represented that he would do so.

23. The first defendant points to three examples of conduct that he says is counter-indicative of the plaintiffs’ allegations: first, the payment of “rent” (described in his amended defence (amended defence to further amended statement of claim filed in court on 6 September 2017) as an “annual fee” under a “Management Agreement”) to the first defendant by E Co; second, the purchase of property by the first defendant in his sole name after 2002; and, third, the sale after 2002 of property owned by the first defendant and the first defendant dealing with the sale proceeds “as he saw fit”. The first defendant says that all the conduct after the September 2002 meetings is consistent with there being no such agreement (or expectation) as the plaintiffs now allege in relation to the farming land.

24. The first defendant submits that even if it could be established (though he does not accept that such a finding should be made) that his sons reasonably held an expectation that his will would remain unchanged, in all the circumstances the sons have neither relied on any such expectation nor suffered any relevant detriment. It is submitted that “on the contrary they have had bestowed upon them many advantages which see them in sound financial positions” and they have had the benefit of the first defendant’s farms as financial backing for their business endeavours.

25. Insofar as the plaintiffs allege that the land was to be used as asset backing for “off-farm investments”, the first defendant points out that the off-farm investments have to date benefited only the sons. The first defendant also submits (though the plaintiffs say such a submission is not open to him having regard to the fact that it was not put to the sons in cross-examination) that the plaintiffs’ own evidence shows that the sons never “collectively” intended to “work the farm(s)” on the basis that it would become their property (pointing in particular to evidence of each of B and C to the effect that neither intended to be a hands-on farmer on a day to day basis).

26. The first defendant has cross-claimed in the proceedings, seeking: an order for E Co to vacate the land and claiming amounts allegedly owing under the Agreement for Lease entered into with E Co as well as the repayment of moneys advanced by the first defendant to E Co over the years; for A, B and C specifically to perform what I refer to as the “Westpac Deed”; and for payment by A, B and C of moneys due under another deed to which I refer as the “W Deed”. The plaintiffs accept liability for some of the amounts sought in the cross-claim (in particular, the amount due under the W Deed and an amount, though not the whole amount claimed, in relation to rent) but seek to set-off those amounts against any judgment obtained by them against the first defendant. I should add here that the first defendant (having regard to his evidence in cross-examination in which he accepted that he had agreed to grant rent relief during drought conditions from 2008 to 2011) no longer presses the claim for rental arrears prior to 2011.

27. No relief is sought by the second plaintiff. Nor is any relief sought against the second defendant. In the joint defence filed for the defendants, the second defendant expressly does not plead to the allegations made in the plaintiffs’ statement of claim. Other than as acting as the first defendant’s solicitor on the record in the proceedings, and instructing Counsel throughout the hearing, the second defendant has taken no role in the proceedings. He gave no evidence in the proceedings – a matter that was the subject of comment by the plaintiffs in the context of a Ferrcom inference (that being a reference to Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389) that I was asked to draw on the issue as to the extent of the joint conferencing that occurred in 2015 in the course of the first defendant’s preparation for these proceedings between the first defendant’s accountant, Accountant No 2; his former accountant, Accountant No 1; and the second defendant (see [642]ff below).

Summary

45. For the reasons I set out in due course, I am not persuaded that the claims in contract or based on an express trust (arising out of the alleged contract) have been made good. Nor am I persuaded that the oppression claim was made good. I do not consider it necessary to determine the various unconscionable conduct/undue influence claims in respect of the Revised Family Business Agreement having regard to my finding as to the contract claims. As to the unconscionable conduct/undue influence claims in respect of the Agreement for Lease and the Westpac Deed, the difficulty I have in relation to those claims is that since at least 2010 the plaintiffs have had the benefit of independent legal advice in relation to matters touching upon or relating to the family business venture (the Agreement for Lease being varied in 2011 and the Westpac Deed not being entered into until 2013). Another difficulty, in relation to the claims advanced in respect of the Westpac Deed, is that, despite the time pressure, the time frame put forward within which they were to arrange substitute security was seemingly of their suggestion.

46. As to the common intention and joint endeavour constructive trust claims, I do not consider that the common intention constructive trust claim has been established but I do consider that the joint endeavour constructive trust claim has been made good. As to the former, I am not persuaded that there was, relevantly, a common intention of the kind pleaded because I accept the first defendant’s evidence (albeit only proffered some time after termination of the lease) that his intentions in relation to the family farming business (and in particular as to the sons inheriting the farms) were subject to the uncommunicated “success” condition. As to the latter, I accept that there was a joint endeavour between the family members and that it failed without attributable blame on the part of the plaintiffs, though I do not accept that it failed by reason of the “contumelious and criminal conduct” of the first defendant towards his granddaughters (as pleaded at [209]); rather, I consider that it has failed due to the first defendant’s decision in June 2013 (for whatever reason) unilaterally to terminate the basis on which the family farming business was to operate on his farms. In any event, while I consider that the joint endeavour constructive trust claim has force, any relief on that basis would effectively be subsumed in the relief to be granted on the jointly made proprietary estoppel claim.

47. I have concluded that the sons’ jointly made primary proprietary estoppel claims (established separately in relation to each of them) in respect of the farms have been made good. Fundamental to my conclusion in this regard (as outlined in my findings as to the “holding/inheritance” expectation, below at [801]ff) is the acceptance by the first defendant in cross-examination of a succession of propositions put to him as to what he had agreed with his sons; what his intentions were; and, critically, as to his awareness of their expectations in relation to the family business and the farms in particular, as at the relevant time – namely from 25 September 2002.

48. Those propositions include that: he had agreed with his sons that his grazing business would be transferred to the new company (E Co) (T 807); he had agreed with his sons that he would make the farms available as security for off-farm investments (T 807); he had agreed with his sons that he would move money out of Sydney into the farms to assist the new business (T 807); his intention was that his sons would obtain the benefit of the farming business conducted on the farms and would obtain the benefit from making off-farm investments, for which the farms would be used as security (T 808); and he knew that his three sons in going into the new business with him had made life-changing decisions on the basis that they would be involved in the farming business with him for the long term, meaning that they would be involved in the business in the farms with him until he died (T 808), qualified by the (uncommunicated) proposition that this was only if they made a success of the business. The first defendant accepts that he never told his sons that the new business structure to be entered into with them depended on whether they made a success of the farming business or was subject to any condition – because to do so would have defeated the whole purpose of the exercise (see T 801.23; T 987.8-987.10).

45. Also fundamental to my factual findings is the first defendant’s acceptance, as to what was to happen to the farms, that as at 25 September 2002 it was his intention to leave his estate to his sons in equal shares (T 801.3), though he later clarified that by this he meant not the farms as such but the proceeds of sale of the farms to be divided up between them (which he appeared to accept was much the same thing) (T 802.21-802.23). The first defendant agreed that, between 25 September 2002 and when he was imprisoned on 6 July 2012, each of his sons in the course of his life had given up his time to work in the family business with the first defendant and his sons had done so “in the expectation that the farms would be there as on [his] passing” (T 809.45). He agreed that, as at 25 September 2002 his belief was that each of his three sons knew they were going to inherit from him (T 804.26) and that at no time before his imprisonment on 6 July 2012 had he ever informed his sons that they were ever at risk that he would take steps to remove the business from being conducted on the farms or that he would take steps to terminate the arrangement or that they were at risk that they would be disinherited by him (T 809.49). He accepted that he did not inform them of his view that the new family business structure was experimental and that if, in his mind, they did not make a success of it he could terminate the arrangement (T 810.11), knowing that they were giving up their time and effort and putting that into the family business (T 810.18).

46. As set out below, I have found that each of the sons had the expectation, when entering into the new family business arrangement in the period after the meetings on 18 and 25 September 2002, that the first defendant would make his farms available to them during his lifetime for the use of the farming business that was to be transferred to the new business entity (E Co) (and in that sense that the first defendant would “hold” – or perhaps more accurately hold onto or retain ownership of – the farms for his sons during his lifetime to be used for the purposes of that family business); and that the farms would be left to them on his death. Further, I am satisfied that the first defendant knew (as he accepted in the witness box he did) that each of his sons was entering into the new family business arrangement in that expectation and that, in doing so, each of his sons was making a life-changing decision. The first defendant also accepted that he understood it was his sons’ expectation, at the time that E Co entered into the lease agreement, that E Co would be there, conducting business on the farms, until the first defendant passed away (see T 837.8), albeit qualified again by him saying “or until they fell over, whichever come first” (see T 837.8); and that he encouraged the expectation in his sons that E Co would be there (i.e., conducting the farming business on the farms) until he passed away (T 837.39).

47. True it is that the sons have not been able to identify with precision words said by the first defendant that engendered such an expectation in them. That is not necessarily surprising given the time that has elapsed since the September 2002 meetings. Their recollection of the actual discussion that took place at the meetings in question is quite limited and their understanding (as at the time of these proceedings) of the outcome of the meetings appears largely to be based on what they have read in documents created at around that time (particularly B’s notes taken at or around the time of the meetings, which gives rise to concerns as to reconstruction and difficulties insofar as it involves the interpretation placed on the content of those notes). However, there are contemporaneous documents aside from B’s notes that reveal that, as at 2002, the family members were indeed engaged in discussions as to a family business structure going forward in which the sons, and their father, would work together in a family farming business. That structure at the very least involved the transfer of the first defendant’s farming business (and most of his livestock) to the new corporate entity (E Co) and the putting in place, in future of a lease arrangement (though the terms of such lease were not then agreed) for the use of his farms in the operation of E Co’s business.

48. I have concluded that the first defendant created or encouraged the sons’ expectation by his conduct in adopting the business structure that was followed after the 25 September 2002 meeting and not communicating any success condition in relation to that joint endeavour. The sons’ expectation (that from 25 September 2002 the farming business and the farms would be operated by a new company in which they and their father would have shares – E Co – for their benefit and that of their families, as well as for the benefit of the first defendant, during the first defendant’s life and that on, on his death, the farms would be left to them) was one of which the first defendant accepts he was aware at the relevant time.

49. In circumstances where each of the sons deposed to having such an understanding or expectation following the September meetings and I considered each to be a credible witness, and the first defendant admits that he was aware of that understanding or expectation on their part, I accept the plaintiffs’ submission that it is implausible that the first defendant did nothing to create or encourage such an expectation – and he certainly did nothing to disabuse his sons of that understanding or expectation (which gives rise to the alternative claim based on proprietary estoppel by acquiescence or standing by).

50. In his oral evidence, the first defendant was adamant that his intention was not to offer his sons any inducement (in his words, any “carrot”) for them to make a success of the family farming business. However, while he qualified his evidence more than once to make clear that his intention that the sons inherit the farms was on the proviso that they make a success of the business venture, and I accept that that was his genuinely held belief at least as at the time of the hearing, there is no dispute that that proviso was never communicated to the sons. In my opinion this points strongly to the unconscionability of the first defendant now seeking to depart from the expectation under which the plaintiffs entered into the new family business venture.

51. What I am not persuaded of, on the balance of probabilities, is that the engendered (or acquiesced-in) expectation as at around 25 September 2002 had two of the pleaded features – first, the exclusion of Property No 8 from the farms the subject of the expectation, and, second, what was to happen if any one or more of the farms was sold during the first defendant’s lifetime. Neither, however, is fatal to the plaintiffs’ claim.

52. As to the first, there is nothing that points to a discussion in the September 2002 meetings as to Property No 8 being treated separately from the other properties. It was initially included as one of the leased properties. The sons’ understanding as to its exclusion from the properties to be left to them under their father’s will appears to be referrable to statements they recall their father making when the property was acquired (in about April 2002) as to it being his “retirement block” and later statements as to this property being left to the grandchildren. That the property was intended to be the first defendant’s “retirement block” is consistent with what in fact happened – at least in the sense that the first defendant moved to Property No 8 in about 2012 and it was excluded from the Agreement for Lease in 2011. At one point in cross-examination the first defendant appeared to agree that he had made it plain to his sons on the purchase of the property that it was to be his retirement block (see T 726/727). Moreover, the first defendant accepted in cross-examination that he understood from the sons’ perspective that Property No 8 was always regarded as his property – see T 991. As to the intention that the property be left to the grandchildren, the first defendant says he never said that (T 726) but it is consistent with various iterations of the first defendant’s will over the years since the acquisition of that property. However, I am not persuaded that those statements were made in the context of the discussions that took place in relation to the new business structure to be adopted following the September 2002 meetings. In any event, since the sons are not seeking any relief in relation to Property No 8, nothing turns on this. It certainly does not lead me to conclude that the sons did not otherwise each hold the expectation that I have found they did hold, and of which the first defendant was aware (see [50]; [52] above).

53. As to the second, however, again there does not seem to be anything to point to a discussion having occurred during the September 2002 meetings as to what was to happen to the proceeds of sale if any one or more of the farms were to be sold during the first defendant’s lifetime. There was, I am satisfied, reference to capital gains tax during the September 2002 meetings and both Accountant No 1 and the first defendant accepted that it was likely that any discussion of capital gains tax would have related to land. Logically, there is a reasonable basis for concluding that the discussion related to a potential transfer of the first defendant’s land (since all the farming land was then owned, as remains the case, by the first defendant). However, there are indicators to the contrary (such as the reference in B’s notes to a corporate tax rate).

54. I am unable to conclude on the balance of probabilities that there was an agreement (in principle or otherwise) at the first of the September 2002 meetings for the transfer of the first defendant’s land to the corporate entity there being discussed. Similarly, while it would seem implicit in the notion that the farms would be “held” for the sons during the first defendant’s lifetime for the operation of the farming business that any sale in that period would only be after consultation with the sons, that does not lead me to conclude on the balance of probabilities that the first defendant created or encouraged an expectation in his sons at the September 2002 meetings that the proceeds of any such sale would be shared equally between the four family members or reinvested in the family business. I am prepared to accept that that was the sons’ expectation as to how the family business venture was to operate but the first defendant’s evidence in cross-examination as to what he understood the sons’ intentions to be at the relevant time does not seem to go that far. However, again, nothing turns on this because, for the expectation of the first defendant “holding” the farms until death and then leaving them to the sons on his death to be made good, the proceeds of the sale in 2012 of the property to which I will refer as “Property No 12” (that being the only property other than Property No 8 that has in fact been sold) should in my opinion at least be accounted for by the first defendant as if shared between the four family members. (On one view it might be said that the whole of those proceeds should go to the sons in equal amounts, since that would have been the outcome had the property not been sold but left to them on the first defendant’s death – but that is not what is here sought by the plaintiffs and, if their interest in the farms is to be accelerated, a quarterly distribution of the proceeds seems to me to be fair.)

55. I am satisfied that each of the sons acted in reliance on the said expectation in performing work for the purposes of the new family business structure (through E Co in particular) and in not choosing to take steps to further his own career or interests elsewhere. Posing the counterfactual as to what each of the sons would have done had he been told, as at September 2002, that he would be joining in a family business structure in circumstances where his father reserved the right, in effect, to “pull the rug out” from under E Co’s business operations by terminating the Agreement for Lease and evicting E Co from the farms at any time; and to disinherit him, I am satisfied that each of the sons would have chosen to pursue his own business (or in A’s case, farming or property) interests rather than join the new business venture on those terms.

56. I am satisfied that the first defendant’s conduct, in creating and encouraging in his sons, and/or in not disabusing his sons of, the relevant expectation of which he admits he was aware, was a contributing cause that influenced the conduct of each of the sons in joining in the family business from late 2002 and (to the extent that this is a different and/or higher test for reliance) that, but for the expectation created or encouraged or acquiesced in – and not disabused – by the first defendant, each of the sons would have acted differently. Reliance is, in my view, well and truly established.

57. I also accept that each of the sons has established detriment. True it is that each has been, to a greater or lesser degree, in a position to develop business interests of his own (the hotels in which each has an interest and for which the first defendant provided security, for example); but each has also unquestionably made life-changing decisions, such that I consider it would be unconscionable for the first defendant now to be permitted to act otherwise than in accordance with the expectation he created or encouraged in his sons (without ever disabusing them of that expectation).

58. As to E Co, its proprietary estoppel claim is established by the matters to which I have already referred in the context of the jointly made claims by the sons (see [50]; [52] above) in terms of the capital improvements it made to the first defendant’s farms in the expectation that it would be able to continue its farming operations on those properties during the first defendant’s lifetime and until his death. However, any relief in that regard is in effect subsumed by the relief to be provided to the individual plaintiffs.

59. As to the cross-claim by the first defendant for repayment of moneys advanced to E Co over the years or for payment for the cattle transferred to it at book value in 2013, the onus of proving that the moneys advanced were a loan (and if so, on what terms), or that the amount referable to the cattle is a debt presently owing, lies on the first defendant (see Gray v Gray [2004] NSWCA 408; (2004) BPR 22,755 at [16] per Young CJ in Eq, as his Honour then was, Sheller and Bryson JJA agreeing; and Schmierer v Taouk [2004] NSWSC 345; 207 ALR 301 at [59] per White J, as his Honour then was). The fact that the moneys advanced were recorded as a loan in the accounts of E Co is not determinative in this regard, particularly given that the practice of the first defendant’s accountant (Accountant No 2) appears to have been to record all moneys advanced by the first defendant (whether to the company or to his sons and whether or not the first defendant expected repayment) as being a loan (and Accountant No 2 did not give any evidence to explain how he came to record these amounts in the accounts). That was certainly not the first defendant’s intention in relation to moneys advanced to his sons and, from the evidence given by him in cross-examination, it was not his intention (subject to how the business performed) in relation to moneys advanced to E Co or shown in the accounts as payable by E Co for the cattle transferred to it in 2003.

60. The first defendant’s evidence was that, in respect of the moneys provided to E Co, it depended on what the money was for as to whether it was his expectation that it would be repaid (T 822.50). He accepted that he had never asked for any interest (T 823) and he could not recall saying to his sons that the moneys provided to E Co were by way of a loan (T 823.19) (though he says it was “known” by reference to amounts being recorded “in the books” and he said – though it was not clear to me to what repayments he was there referring – that some had been paid back).

61. Similarly, the first defendant did not recall whether the question of repayment for the transfer of the cattle to E Co “ever came up” with his sons (see T 834). The first defendant’s position at first was that his expectation as to repayment was that, if his sons failed, repayment would probably not be required, but if they made a success of the business, then repayment would be required (T 834.28). Nevertheless, he accepted that he had never told his sons that that was what he had in mind (T 834). Two days later, however, he gave evidence to the opposite effect (at T 1017-1018):

Q.   At the time that the trading stock, the cattle, all but 200 head were transferred to [E Co] you did not have any expectation that you’d ever be paid for those cattle did you?

A.   Depending on what success they made of the business.  At the end of the day if it was successful, I was quite prepared to ride [sic; semble “write”] it off.

Q.     You didn’t ever say that to anyone at that time did you?

A.     No.

Q.     What you did understand at that time was that your sons were proceeding with the new family business in the expectation that the farms and the cattle grazing business and the fish farm would all come to them once you passed, correct?

A.     Yes, if the business was successful.

Q.     I’m not asking you about that.  I’m asking you about what you understood your sons’ expectation was.

A.     Okay, that’s what they understood, probably understood.

Q.     You recognise, don’t you, that your sons’ understanding back at the time that you transferred the cattle at book value to [E Co] was that they would not have to pay any monies to you in respect of that transfer before your death, correct?

A.     That’s correct.

66. I am not persuaded on the balance of probabilities that the advances to E Co were made by way of loan repayable in the first defendant’s lifetime; nor that there was an agreement that the amount shown in the relevant accounts for the transfer of the cattle would be paid by E Co during the first defendant’s lifetime. The first defendant accepted that he entered into these arrangements to provide for his sons, their future and their families’ future (see T 834.9) (albeit with the same uncommunicated qualification “providing they made a success of it”), as well as for himself (T 834.24). He admits that he encouraged and expected that E Co would be “there” until he passed away (T 837; see also to similar effect at T 867-869). He accepted that (as at the financial year 2006) he understood his sons’ expectation was that he was holding the farms for them and that they would inherit the farms under his will “if they made a success of this venture” (see T 874.48; see also T 928).

67. I am satisfied that the expectation on the part of the sons (and through them E Co), encouraged and understood by the first defendant, was that the sums advanced to E Co by the first defendant for the purposes of the family business farming operations (and the transfer to E Co of the cattle at book value) would not be repayable during their father’s lifetime (and that those sums were not, as is in effect the first defendant’s case, repayable on demand (or at his whim)).

68. My conclusion in this regard is fortified by the fact that the moneys advanced to E Co for the purposes of the farming operations were being advanced to a company in which the first defendant had a shareholding and which, it is open to infer, the first defendant anticipated would be run in a tax-effective manner (as his own farming operations had been) in order to generate tax losses. The first defendant’s own evidence in cross-examination was that whether they were to be repayable would depend on the same (uncommunicated) success condition to which the sons’ inheritance was to be subject. The first defendant accepted (T 916) that he did not expect a benefit from E Co or EM Co (see also T 915).

1215. The plaintiffs have referred to the prospective life expectancy tables published by the Australian Bureau of Statistics (of which it is submitted that judicial notice can be taken) and say that, on the Australian Life Tables 2013-2015 published by the Australian Bureau of Statistics, a man of the first defendant’s age in NSW has an average life expectancy of 12.0 years.

1216. In respect of the net present value of the amounts that might accrue in the future to the first defendant in relation to the lease in the future, the plaintiffs make a number of assumptions. First they suggest the adoption of an inflation rate of 2.7% based on the 10 year Australian Government bond rate for September 2017 (which the plaintiffs submit is the appropriate discount rate because it represents the market’s best estimate of interest rates over the next ten years and is favourable to the first defendant being based on the negligible risk factor of default by the Commonwealth). Second, they assume that the lease fee does not increase but that the amounts payable for insurance, rates and taxes (to be deducted from the lease fee) do increase at the present CPI for insurance and financial services. Next they discount the net result back to 1 January 2018 (the assumed notional judgment date) and estimate the net result to accrue to the first defendant in the middle of the calendar year. Their net present value calculation for the period from 2018 to 2029 produces a net negative amount to the first defendant from 2024 onwards. Thus the plaintiffs argue that, even with modest inflation, the benefits to the first defendant in the earlier years (up to 2024) are cancelled by the losses in later years.

1217. I do not accept that the compensation for the loss of the income stream from the lease should proceed on the assumption that the lease fee would not increase over the balance of the first defendant’s life expectancy, nor on the basis that the first defendant’s intention would be to obtain no more than a notional amount from the lease. The compensation must reflect the fact that the family business structure will effectively come to an end. Thus the calculations, though useful as an indicative exercise, should not be adopted.

1218. In my opinion, the appropriate compensation to be ordered on the acceleration of the sons’ interest in the farms would be based on the net present value of the market rent for the farms over the period of the first defendant’s now life expectancy based on the statistical tables (on the assumption that the first defendant, as the notional lessor of the farms in that scenario, would bear the responsibility for insurance, rates and taxes). For that purpose, a regime should be put in place for an independent valuer to be appointed to opine as to the market rent for comparable properties over the relevant period.

1219. As to the proceeds of sale of Property No 12, as noted earlier, I am not persuaded that there was any discussion at the September 2002 meetings as to what was to happen if any one or more of the farming properties were to be sold during the first defendant’s lifetime. I consider that, implicit in the expectation that the first defendant would hold onto or retain the properties during his lifetime and that the properties would pass to the sons on his death, would be the practical result that any sale of the properties during the first defendant’s lifetime would occur only after consultation and agreement with the sons. What would then happen to the sale proceeds (whether they would be shared between the four family members, equally or otherwise, or made available for re-investment in the family business) would then be a matter for agreement at the relevant time. I do not accept that the evidence establishes on the balance of probabilities that the first defendant created or encouraged an expectation at the September 2002 meetings that any sale proceeds would be shared equally between the four family members or reinvested in the family business. However, nothing turns on this because, to make good the expectation that the properties would be held until his death and then inherited by the sons, it is in my view necessary (in the case of Property No 12 which has in fact been sold) that the first defendant account in some way for the proceeds of sale of that property. As adverted to earlier, there might well have been an argument that the whole of the proceeds ought to be made available to the sons. However, that is not what was sought and the sons did not at the time object to the sale (not realising at that time that their father might later change his will). In those circumstances, in order to make good the expectation, I consider that it is appropriate that there be a set-off, against the sum to be paid to the first defendant by way of compensation for the loss of the future income stream from the lease of the rural properties, of three-quarters of the sale proceeds of Property No 12, i.e., the sum of $600,000, with interest from the date of settlement of that sale.

1220. As adverted to above, the plaintiffs submit that, in the absence of evidence of the first defendant’s current asset position (and thus his ability to satisfy any order for costs), an order for compensation in favour of the first defendant that is payable before costs are assessed and the account in respect of Property No 12 is finalised exposes them to the risk that they will pay money to the first defendant where, on a final accounting, the amount owed to them by the first defendant would be greater than the amount paid over by them. Thus they seek an order that the first defendant’s liability to the plaintiffs (in respect of the proceeds of sale of Property No 12, and any order for costs made in favour of the plaintiffs against the first defendant) be set-off against any debt found in favour of the first defendant. (That said, the submission as to the lack of evidence of the first defendant’s current assets leaving the plaintiffs not able to assess his inability to meet a costs order seems somewhat inconsistent with the proposition that, in the absence of information as to his asset position, it should not be accepted that the first defendant would be left with nothing if the expectation of the sons in relation to the farms is accelerated.)

1221. In relation to the first defendant’s existing shareholdings in E Co and EM Co, I am of the view that it was implicit in what was understood by the first defendant to be his sons’ expectations in entering into the new family business that they would have the benefit of that family business going forward after his death. On that basis it would be appropriate to order that the first defendant’s shares in E Co and EM Co be acquired by the sons at a value that represents their present worth (determined by an independent valuation of the shares). It would be appropriate that the shares be valued on the assumption that E Co is in a position to continue its farming operations, but is liable to reimburse the first defendant both for the book value of the cattle transferred to it in 2003 and for the advances recorded in E Co’s accounts (without interest). Moreover, I am of the view that such an order is necessary to effect a clean break. However, as indicated earlier in the summary section of these reasons (at [78]-[80] above), I will hear submissions on this aspect of the relief.

Cross-claim

1226. Many of the matters raised in the cross-claim have been dealt with in the course of the consideration of the plaintiffs’ claims. In particular, the claims for relief in relation to the termination of the Agreement for Lease are now moot, given that I am of the view that the properties should be transferred to the sons.

1227. As to the claim for unpaid rent, as already noted, in light of the concession made by the first defendant in cross-examination (at T 843.16-37) the first defendant’s claim against E Co for unpaid rent is limited to the period from 2014 to the present, with an allowance made for the cost of insurance in that period. Adopting an approximate figure for insurance of $50,000 per annum, the first defendant says this results in an amount of $200,000 that is due from E Co.

1228. The plaintiffs, on the other hand, say that the costs of the “farmpack” insurance paid by the plaintiffs since the first defendant’s imprisonment have been: $52,050 in respect of the period ending 23 November 2014; $48,681 for the period ending 23 November 2015; $49,519 for the period ending 23 November 2016; and $50,698 for the period ending 23 November 2017. They say that, estimating rates and taxes with an increase from the 2014 amount of 2% a year, together with interest calculated on a notional (and, as it turns out, wildly optimistic) judgment date of 1 January 2018, the amount owing to the first defendant in respect of the lease fee for the financial years ending June 2014 through to June 2017 would be calculated at $57,378.

1229. The first defendant took issue with the plaintiffs’ method of calculation (T 1418.49), characterising it as based upon “totally unsupportable assumptions and figures as to what the rent will be in the future”.

1230. Accordingly, the final orders will need to resolve the method of calculation of the relevant amount owing by way of rent for the period up to judgment having regard to the amounts paid by the plaintiffs in respect of rates taxes and insurance in the period from 2014 to date in respect of the properties.

1231. The other money claim against E Co is the money due under the first defendant’s loan account. The first defendant says that this has been treated as a proper debt in the books of the company; and that, although the email evidence showed that the first defendant was considering forgiving the debt, the fact that consideration has been given to forgiving a debt shows that it must be owing. (I would agree with the last proposition subject to the qualification that what it shows is that as at the time consideration was being given to forgive the debt the first defendant (or the second defendant as his attorney) considered it to be owing but that subjective belief does not establish that it was in fact a loan in the first place.)

1232. The first defendant notes that, at T 875, he was cross-examined about both the E Co account in his favour and moneys recorded as due to him from his sons and, in that cross-examination, he agreed that the record of moneys due from the sons was wrong and did not reflect a true debt position. However, he says that this does not impugn the legal enforceability of the debt due from E Co (noting that he makes no claim by his cross-claim to recover the amounts shown in this accounts as loans to his sons).

1233. The first defendant says there is no dispute as to its amount, namely $2.12 million. Therefore the first defendant says there should be a judgment in his favour against E Co in the amount of $2.32 million being the total of the rent claim and the debt claim.

1234. It is not disputed that the first defendant bears the onus of establishing that the amounts were advanced by way of loan and the recording of the amounts as a loan in the books of the company is no more than prima facie evidence of such a debt (see Gray v Gray at [16]; Schmierer v Taouk at [59]). The fact that the moneys advanced were recorded as a loan in the accounts of E Co is not determinative in this regard, particularly given that the practice of the first defendant’s accountant (Accountant No 2) appears to have been to record all moneys advanced by the first defendant (whether to the company or to his sons and whether or not the first defendant expected repayment) as being a loan (and Accountant No 2 did not give any evidence to explain how he came to record these amounts in the accounts). That was not the first defendant’s intention in relation to moneys advanced to his sons and, from the evidence given by him in cross-examination, it was not his intention (subject to how the business performed) in relation to moneys advanced to E Co or shown in the accounts as payable by E Co for the cattle transferred to it in 2003. There was no evidence as to any agreement being struck for the payment of moneys in respect of the cattle or for the advances over the years. I am not persuaded on the balance of probabilities by the first defendant’s evidence (set out above at [66]-[65]) that the advances to E Co were made by way of loan repayable during his lifetime.

1235. Further, I am satisfied that the expectation on the part of the sons, encouraged and understood by the first defendant, was that the sums advanced to E Co by the first defendant for the purposes of the family business farming operations (and the transfer to E Co of the cattle at book value) would not be payable during their father’s lifetime (again, I refer back to the evidence set out above at [66]). That would have been relevant had the first defendant’s claim for repayment been considered in isolation. However, if there is now to be (as I think there must be) a clean break between the sons and the first defendant in relation to the operation of the family farming business, and the clean break encompasses the buy-out by the sons of the first defendant’s shares in the relevant family companies (E Co and EM Co), it would not in my view be unconscionable for the first defendant to require the repayment of those moneys, assuming a reasonable payment regime which will not jeopardise E Co’s ongoing business and operations.

1236. As to the amounts claimed by the first defendant from his sons, liability for the amounts owing by the sons under the W Deed (totalling $156,250) is admitted. Those amounts were due on 30 April 2014. The plaintiffs calculate, applying interest yields, the amount owing at 1 January 2018 at $172,417. That did not appear to be challenged by the first defendant. The plaintiffs thus calculate the total amount owing to the first defendant (as at 1 January 2018) as being: $57,378 owing by E Co in respect of the unpaid lease fee in the period 1 July 2013 to 30 June 2017; plus $172,417 owing by the sons under the W Deed. (From that they argue should be deducted the net loss of $2,293 in respect of the future rent period under the lease – leading to a net amount of $227,502 but, as noted above, I do not accept that the manner in which they have calculated the figure for compensation for loss of future rent to be the appropriate measure.) Those calculations will need to be re-done having regard to whatever was the actual amount paid for rates, taxes and insurance for the properties in the relevant period.

1237. As to the Westpac Deed, the need for relief in that regard now relates only to the release of the personal guarantee given by the first defendant. The plaintiffs should, as a condition of the relief to be granted in their favour on the proprietary estoppel claim, be required to obtain a release of that guarantee from the bank and, if such a release cannot be procured from the bank for any reason, the plaintiffs should be ordered jointly and severally to indemnify the first defendant for any liability arising under that guarantee (secured by way of charge over the farming properties to be transferred to the sons).

Set-off

1238. Finally, I consider that in all the circumstances of this unfortunate family dispute there should be a set-off, as against the amount payable to the sons in respect of three-quarters of the proceeds of the sale of Property No 12 (plus interest from the date of settlement) of: the amounts payable by the sons to the first defendant under the W Deed (together with interest on the W Deed amounts from the date they were due), the amounts payable by E Co to the first defendant for unpaid rent to 30 June 2017; and the amounts payable by E Co in reimbursement of the moneys advanced to it by the first defendant over the years (including the book value of the cattle).

Costs

1239. It would in the ordinary course be appropriate for the plaintiffs to have their costs of the proceedings in light of the outcome. If there is any dispute as to that or any alternative order is sought, that can be dealt with on the basis of written submissions and I will make directions in that event.

1240. Finally, as to the proposed set-off in relation to costs, I am inclined to the view that it is best to avoid as far as possible scope for ongoing disputes and that such a set-off as sought by the plaintiffs would be the most likely to achieve this. Therefore I propose to order that, to the extent that there is a surplus payable to the first defendant (plus the amount payable to him for compensation in respect of loss of future rent) this should be set-off against any costs orders made in favour of the plaintiffs.

Orders

1241. For the above reasons I consider it appropriate to order that the first defendant transfer to the third, fourth and fifth plaintiffs (as tenants in common in equal shares) within, say, 28 days the properties listed in the second further amended statement of claim and all farming equipment and machinery on those properties that is currently owned by the first defendant; that the first defendant account to the third, fourth and fifth plaintiffs for three-quarters of the proceeds of sale of the property referred to as Property No 12 in these reasons (with interest on that sum from the date of settlement); for judgment to be entered for the first defendant against the third, fourth and fifth plaintiffs for the sum admitted to be owing under the W Deed and interest thereon from the date it should have been paid; that judgment be entered for the first defendant against the first plaintiff for the agreed arrears of rent from 2014 to June 2017 (less the amount paid for insurance, rates and taxes in respect of the leased properties by E Co in that period); and to order that there be a set-off in relation to the monetary sums ordered to be paid.

1242. I also consider that an order should be made that, as a condition of the relief to be given in respect of the plaintiffs’ jointly made proprietary estoppel claims, the third, fourth and fifth defendants should pay to the first defendant a sum representing the net present value of the market rent for the properties from the date of judgment for the period of the first defendant’s life expectancy on the Australian Life Expectancy Tables (as valued by an independent valuer); and that the properties should be charged in favour of the first defendant for the said amount. Further, as a condition of the said relief, the third, fourth and fifth defendants should be ordered to procure the release of the personal guarantees provided by the first defendant for the loan facilities for the P and C Hotels referred to in these reasons and should (subject to hearing submissions on this aspect of the relief) be ordered to acquire the first defendant’s shares in E Co and EM Co (as valued by an independent valuer on the basis referred to earlier in these reasons).

1243. If orders are made for the acquisition of the first defendant’s shares in E Co and EM Co, then there should also be orders made for the payment to the first defendant of the amounts recorded in the books of the first defendant and E Co as advances made to E Co over the years and for there to be payment to the first defendant of the book value for the cattle transferred by him to E Co in 2003. Those orders need to make provision for a payment regime and for security to be provided for the payment of those amounts (over the properties) if payment of the said amounts is not made at the time of transfer of the properties to the third, fourth and fifth plaintiffs.

1244. For the present, I propose only to make orders in relation to procedural matters and to make directions for the parties to prepare short minutes of order (and submissions if those cannot be agreed) in order to reflect these reasons. It may be necessary for there to be a brief oral hearing on those matters if agreement cannot be reached between the parties.

1241. I therefore order as follows:

1. To the extent necessary, give leave pursuant to r 35.2(3) for both parties to use the affidavits referred to at [296]-[297] of these reasons notwithstanding that the deponent was not made available for cross-examination.

2. Direct the parties to prepare short minutes of order to reflect these reasons and to forward those and any brief written submissions in relation to those orders to my associate by 4pm on 24 April 2018.

3. Reserve the question of costs.

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Amendments

17 April 2019 - Amendment to title of judgment

26 April 2019 - [75] 'a remedial' to 'an institutional'

Decision last updated: 26 April 2019