Eckert v Roberts - [2017] SASCFC 176

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
ECKERT v ROBERTS
[2017] SASCFC 176
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Nicholson)
22 December 2017
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION - SURROUNDING CIRCUMSTANCES
EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - CONSTRUCTIVE TRUSTS
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT - WHERE FINDINGS BASED ON CREDIBILITY OF WITNESSES - GENERALLY
The respondent is the registered proprietor in fee simple of farming land located at Langhorne Creek. The respondent became the registered proprietor in August 2010 upon purchasing the land from Rabobank in its capacity as mortgagee in possession. The appellant was at that time the mortgagor. Following the respondent’s purchase of the land, the appellant remained in possession of the land and continued to farm it. The parties executed a lease in August 2010. In March 2015, the respondent served a notice of re-entry and re-possession upon the appellant.
At trial, the respondent contended that the appellant’s occupation of the land was pursuant to a lease executed by the parties, and that the appellant had breached the lease by falling into arrears in rental payments. The appellant denied that the lease was the basis of his occupation of the land and sought a declaration that the respondent held the land on trust. He contended that there was an agreement between the parties whereby the respondent agreed to purchase the land for the appellant upon the appellant agreeing to indemnify him for all costs related to the management of the farm and servicing of the loan obtained by the respondent to purchase the land. The appellant further contended that it was part of the agreement between the parties that the appellant would have the opportunity to repurchase the land in the future at fair-market value.
The Judge held that the respondent did not hold the land on trust for the appellant and found in favour of the respondent’s claim for possession. The Judge found that the appellant had no rights in relation to the land other than the right conferred by the lease to occupy the land for the initial 12 month term of the lease (the Arrangement Finding). The Judge further found that the parties intended the appellant’s occupation of the land to take place pursuant to the terms of the lease (the Lease Finding).
On appeal, the appellant relies on a number of grounds, primarily challenging the Judge’s Arrangement Finding and Lease Finding. The appellant contends that the Judge erred with respect to each finding on the basis that the evidence establishes findings of fact or inferences from findings of fact that are inconsistent with the Judge’s findings or that render those findings glaringly improbable.
Held per Nicholson J, (Kourakis CJ and Stanley J agreeing), dismissing the appeal:
1.       The appellant’s challenges to the Judge’s Lease Finding are not made out. The Lease Finding cannot be said to be inconsistent with the asserted incontrovertible facts or glaringly improbable in light of those facts. It was open to the Judge to draw the conclusion that he did.
2.       None of the appeal grounds advanced by the appellant provide a basis upon which the Judge’s Arrangement Finding should be set aside and replaced with the alternative finding as to the arrangement contended for by the appellant. The appellant has not shown it to have been inconsistent with uncontested testimony or incontrovertible facts, glaringly improbable or contrary to compelling inferences.
3.       Even in the event that the Judge’s Lease Finding were set aside, the Arrangement Finding nevertheless should not be disturbed.
4.       Taken at their highest, the appellant’s contentions are not sufficiently persuasive as to provide reason to reject the natural advantage the Judge had in assessing the evidence of the appellant and respondent so as to reject the Judge’s findings.
5.       Each of the other grounds of appeal advanced by the appellant must fail.
Jones v Dunkel [1959] HCA 8, (1959) 101 CLR 298; Fox v Percy [2003] HCA 22, (2003) 214 CLR 118, considered.

ECKERT v ROBERTS
[2017] SASCFC 176
Full Court: Kourakis CJ, Stanley and Nicholson JJ
KOURAKIS CJ.

I would dismiss the appeal for the reasons given by Nicholson J.
STANLEY J.
I would dismiss the appeal. I agree with the reasons of Nicholson J.
NICHOLSON J.
Introduction
The respondent (the plaintiff at trial), Paul Roberts, is the registered proprietor in fee simple of approximately 185.19 hectares of farming land located at Langhorne Creek. The farming land consists of one contiguous parcel of land recorded in six Certificates of Title.[1] It has been farmed by the appellant (the defendant at trial), Christopher Eckert, since 1979.[2] Until August 2010, five of the titles had been registered in the name of Mr Eckert and the sixth was registered in the name of his father, Charles Eckert. However, after Mr Eckert fell into financial difficulty, his mortgagee, Rabobank, sold the farming land in its capacity as mortgagee in possession to Mr Roberts on 31 August 2010.[3]
[1]    Register Book Vol 6065, Folios 205, 207, 208, 209 and 210 and Register Book Vol 6088, Folio 676.
[2]    Throughout these reasons I will refer to the parties variously as the appellant or Mr Eckert and the respondent or Mr Roberts.
[3]    Mr Eckert’s father had provided a third party guarantee and mortgage over his title as part security for Mr Eckert’s borrowings.
Hereafter, I will adopt the Judge’s terminology and refer to the farming land from time to time as “Eckert Farm” and “the Farm”.
Following Mr Roberts’ purchase of Eckert Farm in August 2010, Mr Eckert remained in possession and continued to farm it in the manner he had done so since 1979.
It was Mr Roberts’ claim at trial that Mr Eckert had continued to occupy the Farm initially pursuant to a lease executed by the parties in late August 2010 but that since March 2015, following termination of the lease by Mr Roberts, Mr Eckert had remained as a trespasser. Mr Eckert had breached the lease; had failed to comply with the requirements of a notice to remedy the breach; and had failed to deliver up possession of Eckert Farm following service of a notice of re-entry and repossession. Further, and in any event, Mr Roberts maintains that because, by 2015, the original term of the lease had long since expired, Mr Eckert was only in possession holding over pursuant to the terms of the lease on a month to month tenancy. As such, Mr Roberts had been entitled to terminate without cause upon the provision of appropriate notice and had done so.
At trial, Mr Roberts sought an order for possession of the land. Mr Roberts also sought various remedies for the alleged conversion by Mr Eckert on and after 2 March 2015 of grapes grown on Eckert Farm, alleged to be the property of Mr Roberts.
Mr Eckert maintained that, whilst a written lease document had been executed by the parties, the terms of that document did not at any time form the basis upon which he remained in possession of the land. Rather, once Rabobank had come into possession of the land with a right to sell, Mr Roberts agreed to purchase it as part of an arrangement designed to protect Mr Eckert against losing the Farm. As part of this alleged arrangement, Mr Eckert was to indemnify Mr Roberts for all costs in relation to the running of the Farm and the servicing of the loan necessary to purchase it. In addition, Mr Eckert was to have the opportunity to acquire Eckert Farm from Mr Roberts in the future.
Mr Eckert counterclaimed at trial seeking a declaration to the effect that Mr Roberts, at all material times, had held Eckert Farm on some form of trust. In this respect, the Judge described the nature of the trust, as ultimately contended for at trial by Mr Eckert, in the following terms.[4]
That trust, he contends, continues whilst Mr Eckert indemnifies Mr Roberts for all expenses incurred in respect of the farm of which Mr Eckert has notice, and only vests upon Mr Roberts giving notice of his intention to sell the farm, or, upon Mr Eckert giving notice of his intention to purchase the farm. If the former occurs, Mr Roberts may sell the farm after he first offers it for sale to Mr Eckert at a fair-market value and Mr Eckert either, refuses to purchase it, or, is unable to do so. Alternately, if Mr Eckert gives notice of an intention to buy the farm, Mr Roberts must sell the farm to him at a fair-market value.
[4] Roberts v Eckert [2016] SASC 197 (Trial Reasons) at [7].
One of the difficulties that confronted the Judge and this Court on appeal is that the nature of the trust obligation and its terms as asserted and relied on by Mr Eckert changed throughout the proceedings. I will return to this. However, insofar as Mr Eckert contended for a trust in the nature of that described by the Judge, an immediate conceptual difficulty arises. The notion that Mr Roberts, as legal owner, would be obliged to transfer the legal title at “fair market value” would seem to imply that, at all material times, Mr Roberts was also the equitable owner of the property. This does not lie easily with an obligation arising from some form of trust impressed on the property. Rather, the description provided by the Judge is more apt for a contractual option to purchase or right of first refusal.
The Judge allowed Mr Roberts’ claim for possession and dismissed Mr Eckert’s counterclaim. His Honour also found Mr Eckert liable for damages for trespass and conversion and made consequential orders. Mr Eckert, in his notice of appeal, complains about the Judge’s orders dismissing the counterclaim, finding Mr Roberts entitled to possession of the Farm and finding Mr Eckert liable for damages for trespass and for conversion.
For the reasons that follow, I would dismiss the appeal.
Uncontested background
The following lengthy extract from the Judge’s Trial Reasons[5] records matters characterised by the Judge as “not disputed” and as having been “established on the balance of probabilities”. Save for the qualification in footnote 6 below, I do not understand any of these matters to be challenged on appeal.
[5]    Trial Reasons at [11]-[51].
Paul Roberts is 37 years old. He has been a farmer since 2003-2004. He has his own 150 acre block on Nine Mile Road, Milang (Nine Mile farm) which he bought in 1999 with the assistance of his mother. He bought the Nine Mile farm from his parents upon his parents’ marriage ending. That property is used for cropping and sheep. There is no residence on the property, but Mr Roberts has installed a shed that has power.
Mr Roberts does not work the Nine Mile farm exclusively. Since 2004, with the exception of two periods where he spent time in the United Kingdom, he has also worked for Steven and Dianne Maidment. Since his return from the United Kingdom in late 2008 he has worked fulltime for Mr Maidment.
Before turning to farming, Mr Roberts worked in a hardware store in Strathalbyn. It was whilst he worked in that store in 2004 that he met Mr Eckert who was a customer. He had also come across Mr Eckert as a consequence of doing some grape harvesting work for Mr Eckert with his brother, Brenton Roberts, who was a grape harvester contractor.
Christopher Eckert is 56 years old and has been married for 28 years to Elizabeth. Mr and Mrs Eckert have two children, a daughter, Rebecca, and a son, Russell.
Mr Roberts met Mr Eckert’s daughter, Rebecca, in 2008 when she was working at the travel agency that assisted him in arranging his travel to the United Kingdom. They soon commenced a relationship that led to them buying a house in Mount Barker together in 2009 and ultimately marrying on 18 February 2012. Unfortunately the marriage did not last and Mr Roberts and Rebecca Eckert separated in April 2014. They are not on good terms and are currently embroiled in property division proceedings in the Federal Circuit Court.
As mentioned, Mr Eckert lives on Eckert farm and has done so since 1984. The residence on the farm is located on Certificate of Title Volume 6065 Folio 210. A vineyard of approximately 29.3 hectares is located on Certificate of Title Volume 6065 Folio 210 and Certificate of Title Volume 6065 Folio 207. The balance of the land, that subject of Certificate of Title Volume 6065 Folio 209, Certificate of Title Volume 6065 Folio 208, Certificate of Title Volume 6065 Folio 205 and Certificate of Title Volume 6088 Folio 676, is used for cropping and sheep. The land has a number of improvements including the residence to which I have referred, a machinery shed, barn, wool shed, irrigation shed and dam.
In 2001 Mr Eckert first sought financial assistance from Rabobank. In August 2006 arrangements with Rabobank were revisited. At that time Mr Eckert was granted a loan limit/credit facility of $1,615,000. The security provided for the credit facility included all six titles comprising Eckert farm. Mr Eckert was the registered proprietor of five of six of those titles. Mr Eckert’s father, Henry John Eckert, was the registered proprietor of the sixth title. Henry John Eckert provided a guarantee to Rabobank limited to the sixth title as part of the security arrangements accepted by the bank upon granting his son the credit facility to which I have referred.
Repayments on the credit facility were to be made twice yearly, on 31 December and 30 June.
By 2008 Mr Eckert had fallen significantly into arrears with Rabobank. On 18 March 2008 Rabobank served a notice of breach and intention to exercise a power of sale on Mr Eckert in addition to serving a notice of demand for $424,808.96 on Henry John Eckert in his capacity as guarantor. The default was not remedied. The bank issued a further notice on 4 April 2008. Ultimately Rabobank instituted proceedings in this Court against Mr Eckert and his father, seeking orders for the delivery up of possession of the land subject of the six titles comprising Eckert farm in addition to other land that had been provided as security for the credit facility.
Henry John Eckert died on 21 June 2008.
An order for possession was made on 20 August 2008 against Mr Eckert in respect of the five titles of Eckert farm of which he was the registered proprietor. That order required that Mr Eckert deliver up possession of the land within 28 days of service of the order.
By order dated 24 October 2008 this Court ordered the executors of Henry John Eckert’s estate, Christopher Eckert and his brother Richard Eckert, within 28 days of service of the order, to deliver up to Rabobank possession of the land subject of the one title of Eckert farm of which Henry John Eckert was the registered proprietor and which he had as guarantor provided as security for the credit facility extended to his son.
Despite the orders for possession, Mr Eckert remained in occupation and continued to farm the land. He did not finally resolve all issues concerning his indebtedness to Rabobank until 2013.
All attempts on the part of Rabobank to find a purchaser for Eckert farm in the period between the obtaining of orders for possession in 2008 and the purchase of Eckert farm by Mr Roberts in August 2010, proved unsuccessful.
On 19 July 2010 Mr Roberts and Rabobank executed a contract for the sale and purchase of Eckert farm. The purchase price was $595,000. The purchase was conditioned upon finance being obtained. A deposit of $20,000 was paid to Elders Real Estate on 26 July 2010 by a personal cheque, drawn on Mr Roberts’ National Australia Bank Everyday Account. Finance provided to Mr Roberts by the National Australia Bank (NAB) was approved on 6 August 2010. The loan documents were executed on 18 August 2010 and the loan was drawn down on 31 August 2010, being the date upon which settlement occurred.
The bank prepared three cheques for settlement – one in the sum of $574,959.98 in favour of Rabobank, a second in the sum of $31,138.00 in favour of the Chris Rodgers Trust Account and a third in favour of Finlaysons Trust Account in the sum of $2,938.19.
Chris Rodgers is the registered conveyancer who acted for Mr Roberts. Finlaysons were the solicitors acting for Rabobank. The settlement statement prepared by Mr Rodgers revealed that on transfer stamp duty of $26,555.00 was payable in addition to a fee for the registration of transfer of $3,901.00. The conveyancer’s fee was $660.00 inclusive of GST. Adjustments to account for rates, the emergency services levy and the phylloxera levy paid for a period post settlement were also payable.
In order to fund the purchase of Eckert farm, Mr Roberts borrowed $630,000 from NAB. The loan was an interest only loan with repayments to be made at six monthly intervals. Bank documents reveal that NAB understood[6] the purchase to be as an investment and that:
[6]    According to the grounds of appeal it would appear that this description of the NAB’s intention either was not or, if it was at trial, now is not, common ground.
Mr Roberts will lease the property back to the vendors for $5,750 per month which will meet interest costs. Roberts intension it to realign of boundaries and sell of 5 individual, 10 to 20 acre blocks for approx $140k each (as advised by Raine & Horne) to reduce and eventually clear the debt (sic).
Around the same time Mr Roberts and Mr Eckert executed a Memorandum of Lease (the lease).
The lease was tendered and received as Exhibit P30. It was not registered under the RPA. The lease commenced on 31 August 2010 and expired on 30 August 2011. Mr Roberts could not recall the date upon which he signed the lease, but recalled that it was prior to the settlement of the property. He signed the lease in front of a solicitor who worked in the offices of Alan Oxenham, a solicitor in Strathalbyn. Mr Eckert signed the lease, witnessed by Mr Maidment, in Mr Roberts’ presence in Mr Roberts’ shed on Nine Mile farm.
Clause 1.17 of the lease provided that the purpose for which the land may be used by the lessee, Mr Eckert, was for broadacre farming and viticulture.
Under clause 4.1 the lessee was required to pay an annual rental of $63,000.00 plus GST. The rental was payable in monthly instalments of $5,250.00 plus GST, that is, $5,775.00 per month in advance.
Clause 4.2 of the lease provided for the rental to be adjusted on the first day of the renewal period if the right of renewal, to which reference is made below, was exercised. Clause 4.3 of the lease provided the mechanism for the determination of the market rental of the land.
Clause 10 of the lease provided for default and consequential remedies. It defined “events of default” and “default” as the failure by the lessee to pay the rental specified in the lease and the failure by the lessee to pay any other sum payable by the lessee under the lease, or to observe or perform any other covenant, condition or agreement on its part, or to be observed or performed pursuant to the lease for a period of 14 days after written notice specifying such failure and requesting that it be remedied has been given to the lessee by the lessor, unless the lessor agrees in writing to an extension of time prior to its expiration.
Clause 10.2 provided that whenever any event of default referred to in clause 10.1 occurred and was subsisting the lessor could re-enter the premises or any part of it and repossess the same.
Clause 11.1 of the lease provided for the giving of notices under the lease and provided that any notice or demand that is required or permitted to be given or served by either the lessor or the lessee shall be deemed properly given if served personally upon the party to whom the notice is addressed at the address given in the lease of that party. It also required that all notices shall be given in writing, and, if posted shall be deemed to have been given on the fifth day after mailing inclusive of the day of mailing.
Clause 1.16 of the lease provided for its renewal for one further year in accordance with part 3 of the lease by the lessee giving written notice to the lessor not earlier than four months and not later than three months before the end of the term or the extended period of the term. The term ended on 30 August 2011.
Mr Eckert has never paid rent on a monthly basis, despite the terms of the lease. Rather he would pay amounts twice yearly in time for Mr Roberts to meet his mortgage obligations with NAB.
At the conclusion of the term within the meaning of the lease Mr Eckert did not seek the renewal of the lease under clause 1.16. In such circumstances clause 3.2 was enlivened. It provided:
3.2     Holding Over
In the event of the Lessee continuing in occupation of the premises after the expiration of the term or any renewal thereof without any demand for possession having been made by the Lessor the premises shall be held by the Lessee under a tenancy determinable at any time upon one (1) calendar month’s notice being given by either party to the other at the same rent and subject to the same terms and conditions as are herein contained so far as they can be applied to a monthly tenancy.
The table produced below contains the details of payments Mr Roberts received from Mr Eckert. [It is not necessary to reproduce the table.]
As mentioned, in 2014 Mr Roberts’ marriage broke down.
After the breakdown of his marriage to Rebecca Eckert, Mr Roberts, through his solicitors, engaged in settlement negotiations with Rebecca. Initially during this period his relationship with Mr and Mrs Eckert remained on good terms but it too soon broke down.
On 7 November 2014 Mr Roberts issued an invoice to Mr Eckert in the sum of $11,550.00 for rent due for the months of October and November 2014 “as per agreed Lease”. Prior to this Mr Roberts had never invoiced Mr Eckert for rent. The invoice stated, “TERMS 14 DAYS FROM INVOICE DATE”. Mr Eckert did not pay this invoice.
On 6 January 2015 Mr Roberts issued a second invoice to Mr Eckert. This invoice was in the sum of $23,100.00 and was for rent due for October 2014 - January 2015. Again the invoice stated, “TERMS 14 DAYS FROM INVOICE DATE”. Again Mr Eckert did not pay.
On 17 January 2015 Mr Roberts issued a third invoice to Mr Eckert. This invoice was in the sum of $28,875.00 and was for rent due for the period October 2014 - February 2015. Once again the invoice stated, “TERMS 14 DAYS FROM INVOICE DATE” and once again Mr Eckert did not pay.
On 28 January 2015 Mr Roberts, by his solicitor Mr Oxenham, forwarded to Mr Eckert by ordinary pre-paid post, and purportedly in accordance with clause 11.1 of the lease, a letter enclosing a written notice dated 28 January 2015 that was entitled “Notice to Remedy Breach.” It gave notice to Mr Eckert that Mr Roberts required him to pay the sum of $23,100.00, being the rent payable for the period 1 October 2014 to 31 January 2015. It made demand for the payment of the outstanding rental on or before 5.00 pm on the day that was 14 days from the date of the service of the notice. The notice also advised that if payment was not made within the time stipulated, that Mr Roberts may exercise his power of re-entry and termination of the lease and such other power or powers as may be available to him at law.
The purported breach was not remedied.
On 2 March 2015 Mr Roberts went to Eckert farm in possession of a Notice of Re-Entry and Re-Taking of Possession. He personally served this notice on Mr Eckert. A copy of the Notice was also sent by registered post to Mr Eckert by Mr Roberts’ solicitors undercover of a letter dated 4 March 2015.
On 3 March 2015 $38,000 was deposited into Mr Roberts’ NAB everyday account by Mr Eckert.
On 28 May 2015 Mr Roberts instituted these proceedings.
Mr Eckert has remained and remains on Eckert farm.
[footnotes omitted]

As earlier indicated, the Judge dismissed Mr Eckert’s counterclaim and found in favour of Mr Roberts on his claim for possession.[7] Mr Eckert, on appeal, challenges the dismissal of the counterclaim. However, in the event that the Judge was correct in this respect there can be no challenge to the findings that the lease was validly terminated such that Mr Eckert must give up possession.
History of the appellant’s pleaded case
[7] Trial Reasons at [277]-[278].
Defence and counterclaim
In the appellant’s initial defence and counterclaim, filed 3 September 2015, the basis pleaded to support a trust can be summarised as follows.[8] In or about May 2010, Mr Eckert had a conversation with Mr Roberts “suggesting that [Mr Roberts] buy the land for a sum of $600,000 from Rabobank”; that Mr Eckert would obtain a mortgage[9] loan from the National Australia Bank (NAB) in order to facilitate the purchase; and that Mr Eckert would pay all mortgage payments due under the intended mortgage and all outgoings in connection with the land such as rates and taxes. Further, “it was the intention” that:
[Mr Roberts] would subdivide part of the land and would receive a title which he would transfer to his own property to enable him to further subdivide his own property in consideration of the agreement. [Mr Eckert] would pay the costs associated with the subdivision and re-allocation of the title.
[8] Defence and counterclaim filed 3 September 2015 at [10]-[11].
[9] In the third defence and counterclaim subsequently filed this was amended to allege that Mr Roberts would obtain the mortgage.
It was further pleaded[10] that: in August 2010, Mr Roberts borrowed mortgage funds from the NAB and purchased the land from Rabobank; that Mr Roberts allowed Mr Eckert to continue to occupy and farm the land; and that Mr Eckert reimbursed Mr Roberts $28,375 for stamp duty and registration fees and paid all mortgage payments and outgoings in respect of the land “from May 2010 to date and continues to do so”.
[10] Defence and counterclaim filed 3 September 2015 at [12].
It was further pleaded[11] that prior to Mr Roberts purchasing the land, the parties were advised by the NAB that it required a written memorandum of lease in order to approve the loan. It is alleged that at the time of signing the lease, Mr Eckert did not read it and only obtained a copy in October 2014 when the dispute with Mr Roberts began.
[11] Defence and counterclaim filed 3 September 2015 at [14]-[16].
The relief sought by Mr Eckert included an injunction restraining Mr Roberts from taking any further steps to take possession of the land and “a declaration that [Mr Roberts] holds the land as trustee for the benefit of [Mr Eckert]”.
Second defence and counterclaim filed 12 May 2016 (11 days before the commencement of trial)
In this pleading Mr Eckert particularised the nature of the arrangement said to have been arrived at in or about May 2010 in significantly greater detail. Set out below is all of paragraph [11] of the second defence as amended (which was incorporated in the counterclaim). The underlining indicates new material and the strike outs identify material deleted from the original pleading.
In the course of that and several subsequent conversations as particularised hereunder ~~At that time~~ the defendant agreed with the plaintiff (‘the Agreement’) as follows:
11.1that the plaintiff would approach the land agent acting for Rabobank and offer to purchase the land;
11.2that the defendant would obtain a mortgage loan from the National Australia Bank (“NAB”) in order to purchase the land;
11.3that the defendant would pay all mortgage payments due by the defendant to NAB, under the intended mortgage and would pay all outgoings in connection with the land such as rates and water charges;
11.4that once the subject land was purchased the plaintiff could use such land together with his own land to apply for and obtain consent to subdivide his own land contained in Certificate of Title Register Book Volume 5943 Folio 787;
11.5that part of the subject land (being Allotments 5 & 7 Langhorne Creek Road and sections 3579 and 3340 and being the northernmost part of the subject land) would be subdivided so as to create inter [sic] a new allotment with a separate title to be sold as a residence, with the proceeds of such sale to reduce the indebtedness to the National Australia Bank under the said mortgage. it was the intention of the plaintiff and the defendant that the plaintiff would subdivide part of the land and would receive a title which he would transfer to his own property to enable him to further subdivide his own property in consideration of the Agreement. The defendant would pay the costs associated with the subdivision and reallocation of title;
Particulars of Conversations giving rise to the Agreement.

Time and Place

Persons Present

Result of Discussions

Approximately May 2010 at house on subject land

Plaintiff, Defendant, Elizabeth Eckert, Rebecca Eckert[12]

Defendant raising with plaintiff the possibility that plaintiff and Rebecca Eckert buy the subject land for a reasonable sum with the defendant to farm the land until it could be repurchased by him, with the plaintiff to meet all costs associated with any such proposal. Matter left on the basis that plaintiff and Rebecca Eckert would think about it

About a week or two later at house on subject land

Plaintiff, Defendant, Elizabeth Eckert, Rebecca Eckert

Plaintiff and Rebecca Eckert advising defendant that plaintiff had been to the National Bank at Strathalbyn, that he had inquired about a loan to finance the purchase, that the Bank was prepared to lend the money but for the fact that he did not have enough income to fully service the loan, and that he would purchase the land. The plaintiff then suggested that he purchase the land but that the defendant and Elizabeth Eckert would help service the loan for which they would be entitled only to occupy the land during their lifetime. The proposal was not accepted

During daylight hours at some unknown day in about June 2010 at the farm of Mr Stephen Maidment

Plaintiff and defendant

Plaintiff and defendant agreed to explore further possible arrangement with plaintiff to buy the land in his own name to enable the defendant to continue to farm and repurchase land in due course; defendant to carry all costs; plaintiff to use land to apply for subdivision of his own land; plaintiff to approach the land agent and offer to buy the land; defendant to confer with the bank manager at the Strathalbyn Branch of the National Australia Bank and discuss finance concerning the purchase

During daylight hours at some unknown day in about June 2010 Strathalbyn Branch of the National Australia Bank, Strathalbyn

Plaintiff, defendant, Mr David Stanton[13]

A discussion as to the proposal occurred and an application for finance was commenced to be drawn for the plaintiff to complete; understanding reached between all parties that part of the subject land would be subdivided and sold off to reduce the debt principal; that an application would be made by the plaintiff in conjunction with the subject land to subdivide land he already owned so as to reduce his separate debt to the bank; that the defendant was to continue to farm the land in order to service the loan; the defendant was to enter into a lease to assure the bank that he would continue to farm the land.

[12] Elizabeth Eckert is the defendant’s wife and Rebecca Eckert is the defendant’s daughter who married the plaintiff.
[13] David Stanton was the officer of the Strathalbyn branch of the National Australia Bank with whom Mr Roberts and Mr Eckert dealt in order to procure the mortgage funds.

The other aspects of the initial defence and counterclaim identified earlier remained unchanged. In the prayers for relief, Mr Eckert continued to seek the relief as earlier identified together with a new claim for declaratory relief based on estoppel.
Third defence and counterclaim filed 31 May 2016 pursuant to leave given on 26 May 2016
During the trial another version of the defence and counterclaim was filed for the purpose of making numerical and typographical corrections. No amendments of substance were effected apart from the change earlier noted in footnote 9 that the mortgage with the NAB was to be taken out by Mr Roberts not Mr Eckert.
Fourth defence and counterclaim filed 9 June 2016 pursuant to leave granted by the Judge on 2 June 2016
The parties proceeded to trial on the basis of the second defence and counterclaim. However, at the conclusion of the parties’ final submissions at trial, Mr Eckert sought and was granted permission to file a further amended defence and counterclaim which was said to conform more accurately to the evidence that, ultimately, had been given at trial by Mr Eckert and with his counsel’s closing submissions. The material changes, as compared with the second and third defence and counterclaim, were those made to the prayers for relief. They are now in the following terms; again, the underlining and strikes outs form part of the amended pleading and are indicative of the changes.
The defendant seeks the following orders:-
1.A declaration that ~~the plaintiff holds the land as trustee for the benefit of the defendant;~~ the plaintiff holds the said land on a constructive trust for the defendant;
1)    subject to the defendant continuing to keep the plaintiff indemnified from all expenses incurred in respect of the said land of which he has notice.
2)    to continue until such trust shall vest upon either the plaintiff giving formal notice of his desire to sell or the defendant giving notice of his desire to purchase the said land at fair market value.
3)    upon vesting of the trust the plaintiff shall sell to the defendant and the defendant shall purchase the said land at fair market value; such value to be either as agreed or as may be determined by this Court on further application by the parties.
4)    upon the constructive trust vesting and the defendant refusing or being unable to purchase the said land at fair market value the plaintiff shall be at liberty to sell the said land on the open market or otherwise deal with the said land as he thinks fit;
2.That the plaintiff be restrained from taking any further steps to take possession of the land;
2AA declaration that the plaintiff is estopped from bringing any claim under the lease as pleaded in paragraph 5 of the Statement of Claim and the plaintiff is bound by the terms of the Agreement as pleaded in paragraphs 11 and 12 of this Defence and Counterclaim
3.Costs;
4.Such further or other orders as the Court thinks fit.
Notice of appeal – orders sought
In his notice of appeal, Mr Eckert has sought orders with respect to the trust allegation in broadly the same terms as those provided for in the fourth defence and counterclaim (that is, save for some numbering and non-material textual changes).
Orders sought during the appeal
However, during the appeal, it became apparent that counsel (who was not counsel at the trial below) sought to argue for a different complexion to be placed on the parties’ interactions in terms of the nature of the trust obligation said to have been assumed by Mr Roberts as a result of the conversations in or about May 2010 and the parties’ subsequent conduct, including the purchase of the Farm by Mr Roberts and the payment by Mr Eckert of all monies due under the mortgage and all farm outgoings. Counsel on appeal reformulated the orders now being sought by Mr Eckert as follows (with changes from the notice of appeal as indicated).
1.that the judgment and orders made by the learned trial Judge on the 20^th December 2016 be quashed.
2.that the claims by the respondent for possession of the land, the conversion of the wine grape crop and trespass and an order for an account and enquiry be dismissed.
3.that in lieu thereof it be declared that the respondent holds the said land on a constructive trust for the appellant:
3.1     subject to the appellant continuing to keep the respondent indemnified from all expenses incurred in respect of the said land of which he has notice.
3.2     to continue until such trust shall vest upon the happening of one or other of the following events:-
3.2.1the appellant giving formal notice to the respondent that he requires the respondent to transfer legal and beneficial interest in the said land to him;
3.2.2the respondent giving formal notice to the appellant of his intention to sell the said land;
3.3     upon the vesting of the trust in the circumstances described in paragraph 3.2.1 the respondent will transfer the legal and beneficial interest in the said land to the appellant upon the appellant extinguishing the respondent’s liability to NAB in respect of the respondent’s purchase of the said land;
3.4     upon the vesting of the trust in the circumstances described in paragraph 3.2.2 the respondent will give the appellant a first right of refusal to acquire the legal and beneficial interest in the said land in return to the appellant extinguishing the respondent’s liability to NAB in respect of the respondent’s purchase of the said land;
4.In the alternative to paragraph 3 it be declared that the respondent holds the said land on a constructive trust for the appellant:-
4.1     subject to the appellant continuing to keep the respondent indemnified from all expenses incurred in respect of the said land of which he has notice
4.2     to continue until such trust shall vest upon the happening of one or other of the following events:-
4.2.1the appellant giving formal notice to the respondent that he requires the respondent to transfer legal and beneficial interest in the said land to him;
4.2.2the respondent giving formal notice to the appellant of his intention to sell the said land;
4.3     upon the vesting of the trust in the circumstances described in paragraph 4.2.1 the respondent will transfer the legal and beneficial interest in the said land at fair market value, such value to be agreed or as may be determined by the Court on further application by the parties;
4.4     upon the vesting of the trust in the circumstances described in paragraph 4.2.2 the respondent will give the appellant a first right of refusal to acquire the legal and beneficial interest in the said land at fair market value such value to be agreed or as may be determined by the Court on further application by the parties.
5.Upon the constructive trust vesting and the appellant refusing or being unable to ~~purchase the said land at fair market value~~ extinguish the respondent’s liability to NAB in respect of the respondent’s purchase of the land or alternatively purchase the said land at fair market value the respondent shall be at liberty to sell the said land on the upon [sic] market or otherwise deal with the said land as he thinks fit;
6.A declaration that the respondent is estopped from relying on the terms of the Lease as the basis upon which the appellant has occupied the said land since 30 August 2010 and continuing;
7.In the alternative to paragraph (3) and (5) thereof, that the respondent is estopped from terminating the said Lease until he gives notice of his intention to do so equivalent to the period of time over which payments had historically been made, namely six months.
8.That the appellant have the costs of his Appeal and the trial before the learned trial Judge.
The evidence of and concerning the material conversations between Mr Roberts and Mr Eckert prior to Mr Roberts purchasing the Eckert Farm
Evidence in chief of Mr Roberts
Mr Roberts said that it was his idea and not Mr Eckert’s idea, that Mr Roberts purchase the Farm from Rabobank. He had raised the possibility for two reasons. First, that because of his relationship with Rebecca Eckert (they were to be married) the Eckerts were potential family and he saw this as a means by which they could remain on the Farm. Second, Mr Roberts saw investment potential, particularly as to various means of subdividing Eckert Farm so as to be able to sell some of it as separate hobby farm allotments.[14]
[14] The evidence concerning the respective understandings by each of Mr Roberts and Mr Eckert as to the potential for subdivision was confused and unclear. A fundamental problem was that the Council at the time would not permit subdivisions in order to create additional allotments in the relevant area. As it happened, two applications by Mr Roberts for subdivision were made to the Council and rejected and no subdivisional potential has ever been realised with respect to Eckert Farm.
According to Mr Roberts, he initially made an enquiry with both Elders, agent for Rabobank, and the NAB about the prospects of purchasing and borrowing the necessary purchase monies, respectively. He also made an enquiry with Raine and Horne as to the potential for subdividing some of Eckert Farm into a number of small hobby farms. Mr Roberts had these various discussions at the same time as he discussed with Mr Eckert the possibility of his purchasing the Farm.
Mr Roberts said that he had a number of discussions with Mr Eckert on the topic but he was able to recall one particular one which he said occurred in his shed on his Nine Mile property in or about May or June of 2010. Mr Eckert’s account also focussed on this particular discussion, as central to understanding the parties’ arrangement, although his account differed in some of the details and as to the critical issue concerning his entitlement to acquire the Farm from Mr Roberts at a later time. This conversation was referred to during the appeal as the “nitty gritty” conversation. Mr Roberts gave this account.
AI recollect talking to him about how we could save the property. What could be done.
. . . .
AOkay. I said to Mr Eckert I wished to save his property. I didn’t, like I said before, I did not want him to go through the same issues that Mr Rohrlack (sic)[15] did, and I believed the investment there was a good option. So I said to him I would attempt to buy the property for him so he could continue to live there.
[15] Mr Roberts had previously given evidence about a farmer in the area, Mr Rohrlach, who had also fallen into substantial debt to his financier, as a result of which his farm was sold under a mortgagee sale such that Mr Rohrlach was unable to remain on and continue to farm the property.
QAnd what else specifically of the conversation do you recollect.
AI recollect saying that he would be responsible for all lease, all costs incurred with interest rates, taxes, etc, and that he would be responsible for that and for any other money that he made on the property that would belong to him, and he would continue to stay there and to farm it. Then I would have to split up titles to reduce the debt. I also recall the other option that I did recommend, that I would sell my Nine Mile property.
QFor what purpose.
ATo purchase the Eckert’s [sic] property and Mr Eckert said no, don’t do that, …
Soon after giving this account, the following exchange occurred.
QYou used the term ‘save the property’. What did you mean by that.
AI knew if I didn't buy it a third party would buy it, Mr Eckert would lose the land that he had farmed since 1979 and as I was part of the family I wanted to avoid that happening. So I wished him to stay there and continue to farm it.
QWho would own the property.
AI would own the property.
QAnd on what basis would Mr Eckert farm the land. Was that discussed.
ANot at that point it was not discussed. He would farm it as he saw fit but it wasn't discussed on what terms - is that what you're asking what financial terms?
QYes, I'm asking you about whether the basis on which Mr Eckert under your scenario would stay on the farm whether that was discussed in that conversation.
ANo, he would stay there, he would farm it and yeah, he would be responsible for all costs that I incurred with the purchase of the property.
QWhat was his reaction to that suggestion. What did he say.
AHe had no issues with that.
QWas there any discussion on the topic of Mr Eckert purchasing the farm at some point.
AYes, Mr Eckert still had the belief that he wished to purchase the farm back in his own right.
QWhat did he say to you on that topic.
AThat he would hopefully attempt to buy the farm back from me within 12 months.
. . . .
QDid he elaborate in any way on that.
AOnce he had finished dealing with Rabobank he would then be in a position to gain money to finance the purchase of the block from me.

Mr Roberts was then asked whether, at that time (that is, at the time of the conversation in the shed) he had a view as to how realistic was Mr Eckert’s suggestion that he might be able to buy the farm back in another 12 months.
AI did not know of Mr Eckert’s position at that time, no. I expected it would be doubtful but I did not know of the position that Mr Eckert was in financially. I didn’t have a figure on it.
QDid Mr Eckert explain to you what mechanism he had in mind for being able to buy the farm back from you in a year or so.
AYes, he would just refinance. Not refinance but just get a loan and go buy the property back from me. I could never understand this. It never made any sense to me. I always thought, and I’ve never dealt with anyone before I met Chris Eckert, was once you lost a property to a mortgagee sale you’d find it extremely difficult to have the ability to borrow more money in the future. I knew from Chris Eckert himself, he told me he was not bankrupt at the time so he would have the ability to borrow more money but I just never understood that that would be a possibility with the credit history that he had at the time.
At the time of the discussions with Mr Eckert, Mr Roberts had not done any financial analysis and was not in a position to know if his plan was commercially realistic. However, it was “worth investigating” and he wanted to “do the right thing”. The question of price, if Mr Eckert was to buy the Farm back, was never discussed.
Mr Roberts also gave evidence about his discussions with Mr Stanton, the lending officer at the NAB with whom Mr Roberts dealt, including an occasion when Mr Eckert was present and when both provided the bank with financial information sufficient to satisfy the NAB as to the financial viability of the purchase at least from its perspective. However, according to Mr Roberts, it became evident to Mr Stanton that the aspect of the arrangement whereby Mr Eckert was to be responsible for all mortgage interest payments was fundamental to Mr Roberts being able to service the interest only loan that was being proposed. At this point, Mr Stanton suggested or perhaps required that a formal lease be entered into. Mr Roberts gave this evidence.
AHe said ‘You need to prepare a lease to assist you with gaining approval for the loan’.
QDid he explain what having a lease in place would do.
AYes. There was two reasons for the lease. One was to boost my income, my income from my farm as well as working as a labourer at Maidments. It was insufficient to service that loan as I was servicing a home loan at Mount Barker at the time, and I needed extra income and documents to support that to borrow the money from the bank to purchase the land, and secondly, it was also a security device for both myself and Mr Eckert in case our relationship broke down. At the time, I could not foresee that, everything was perfectly fine between us, but, yeah, that was recommended to be done.
QPrior to Mr Stanton giving you that advice, had it occurred to you that you either needed or it would be a good thing for you to enter into a lease with Mr Eckert.
ANo, it had not.
QAfter receiving that advice from Mr Stanton, did you speak to Mr Eckert on that topic.
AYes. Yes, I would have talked to Mr Eckert about that. He was aware that a lease was required.
QWhat did he say to you about his willingness to enter into such a lease.
AHe had no issues whatsoever, not that he expressed to me.
Mr Roberts’ evidence in cross-examination
Counsel for Mr Eckert in cross-examination dealt with what has been described as the “nitty-gritty” conversation with a light touch. Counsel commenced his cross-examination with an extended exploration of the parties’ post-purchase behaviour including, in particular, the nature and extent of payments made by Mr Eckert. He also explored Mr Roberts’ understanding of potential subdivision scenarios at the time of his discussions with Mr Eckert and, briefly, Mr Roberts’ knowledge of Mr Eckert’s financial difficulties.
Counsel then took up the topic of the arrangement arrived at. Mr Roberts agreed that there was more than one conversation and that Mr Eckert was “very desperate”. Mr Roberts “didn’t want the Eckerts to go through that same thing the Rohrlachs did”. Throughout the cross-examination, on the issue of the arrangement reached, Mr Roberts gave evidence consistent with his evidence in chief. Ultimately, on this topic, Mr Eckert’s counsel appeared to put his client’s case but in a manner that, in effect, replicated Mr Roberts’ earlier evidence.
QDuring your discussions with Mr Eckert on this occasion that you're at your farm, the possibility was raised, was it not, that if you were to become the owner of the land, he would then buy you out at a subsequent time.
AYes.
QAnd that he knew, or if he didn't know, he told you that he was having difficulties with Rabobank.
AHe didn't have difficulties; he just said he would have everything sorted out well and truly within 12 months.
QYour understanding on what he told you on that occasion was that after 12 months, he would be in a position to buy the land.
AYes, that's correct.
QThe other thing discussed, I take it, at that time was him undertaking to meet any expense that you incurred in respect of the land.
AThat's correct.
QThat, of course, was important to you, was it not.
AYes, whenever you buy an asset, you need that asset to make some money.
Mr Roberts was cross-examined as to his level of confidence in the ability of Mr Eckert to keep farming the land and confirmed “Yes, I knew he would keep farming it”. He was pressed with the notion that as the farm was making money, Mr Eckert might well be able to pay for the loan that Mr Roberts was contemplating entering into. Mr Roberts tended to agree but explained his fall back position.
[S]o I thought, well, there’s some money there. But I always knew my fall-back position was if Mr Eckert was unable to generate enough income from the property, that I would subdivide off the house and, yes, Mr Eckert would not be able to live there, but that was always the understanding if things got tight and push come to shove, that would be my fall-back position.
On my reading of the cross-examination of Mr Roberts, his account of the “arrangement” reached with Mr Eckert, prior to Mr Roberts going to the NAB, arranging finance and purchasing Eckert Farm, was not challenged in any material respect. Similarly, the cross-examination of Mr Roberts with respect to his and Mr Eckert’s dealings with Mr Stanton at the NAB was materially consistent with Mr Roberts’ evidence in chief. It was made clear by Mr Stanton that a lease would be required. A figure of approximately $63,000 per annum was fixed upon on the basis, according to Mr Roberts, that this would cover the expected annual interest rate on the loan he was to take out together with something for rates and taxes.
Mr Roberts said that he had arranged with the bank for interest to be paid on six monthly rests essentially because, given that the Farm did not produce regular income, monthly rests would not be appropriate.
Late in the cross-examination, counsel revisited the discussion or discussions between Mr Roberts and Mr Eckert. Mr Roberts agreed that a right to “repurchase”[16] was discussed and that Mr Eckert was “very keen to do that”. He had no objection to this at the time provided that he was not to be out of pocket. Mr Roberts said he seriously doubted that it would happen. Nevertheless, he had no problem with a buyback within 12 months. However, there was no discussion as to price or how any purchase was to be effected.
[16] From time to time both men used the term “repurchase”. Of course, only a purchase was ever envisaged. Mr Roberts did not purchase the Farm from Mr Eckert but from Rabobank, a purchase in which Mr Eckert had no part to play. In legal or practical terms, he could neither cause it to happen nor prevent it from happening.
The evidence in chief of Mr Eckert
At the conclusion of the plaintiff’s case, the defendant provided a short opening. Counsel submitted that the essential difference between the parties was whether their arrangement had been governed by the lease or whether the lease should be treated as “not being in full force and effect, for whatever reasons” and that “the events” should be treated as giving rise to either a resulting trust or a constructive trust. Counsel then put the following:
The essential issue that your Honour has to consider, we would suggest, is what was actually agreed, what the understanding was, as evidenced by what the principal parties say, namely the plaintiff or the defendant, because they were the two participants in the agreement, and what subsequent events show as revealing their intention as to the agreement. In this case, we would make great store of the fact that the terms of the lease were never followed, no payments were made in accordance with the lease, payments were made that were not covered by the terms of the lease.
. . . .
It's not necessary for me at this stage to elaborate on all the matters that, even on the evidence to hand, would say [sic] that we would say means that in effect your Honour can conclude that there was no effective lease as between the parties. But that's essentially our case and has been the case since the defence and counterclaim was filed.
The essential issue your Honour has to decide, we would suggest, is what was the understanding of the parties between themselves as to what was to happen to the land. We would say that the essential claim is that the plaintiff was to purchase the land and was to enter into a financial agreement with the bank and was to be able to use the land for several purposes which involved financial benefit to him potentially, significant financial benefit to him potentially in respect of sub-division of both the subject land and also, of course, the land on Nine Mile Road.
So the essential case for the defence must be what is the agreement reached?
[emphasis supplied]
Apart from identifying Mr Eckert’s case as being that there was an oral arrangement entered into that had been carried out and that it was never governed by the lease which was only effected to meet banking requirements and had not been complied with, counsel did not elaborate on the nature of any resulting or constructive trust that Mr Eckert maintained emerged.
Mr Eckert gave evidence concerning a conversation between Mr Eckert and Mr Roberts in or about May or June 2010 which may have occurred at Mr Roberts’ farm. The topic was that of Mr Roberts purchasing the Farm, with Mr Eckert “taking the loan over once [I had] got sorted with my Rabo issues” and Mr Roberts being able “to take title from the Eckerts’ farm across to his own to subdivide his own property as a benefit for doing so”.
The arrangement agreed upon, according to Mr Eckert, had these elements.
(i)Mr Roberts would borrow from the bank and buy the Farm from Rabobank in his name.
(ii)Mr Eckert would remain on the Farm and continue to farm the property and from the proceeds pay sufficient to Mr Roberts to enable his loan commitments and other costs to be met.
(iii)Mr Eckert could take over the loan when financially able to do so, that is, would pay out Mr Roberts’ debt and Mr Roberts would transfer title.
(iv)Mr Roberts would receive the benefit of one of the titles which he could then add to his own farm so as to facilitate its subdivision.
I interpolate that this description of the arrangement is different from the fourth defence and counterclaim filed at the conclusion of closing submissions which, in the particulars to paragraph 11, refers to Mr Eckert being able to “repurchase” the land in due course and in the prayers for relief seeks “upon vesting of the trust [that Mr Roberts] shall sell to [Mr Eckert] and [Mr Eckert] shall purchase the said land at fair market value”.
However, the orders sought in the prayers for relief on appeal, as reformulated by counsel during the appeal, are predicated on alternative findings of the trust arrangement. Prayer for relief 3.3 seeks a declaration that upon vesting[17] of the trust, Mr Roberts is to transfer the land to Mr Eckert upon Mr Eckert extinguishing Mr Roberts’ liability to the NAB in respect of the purchase; to all intents and purposes a taking over of the loan. Whereas, prayer for relief 4.3 seeks, in the alternative, that upon vesting of the trust, Eckert Farm is to be transferred at fair market value.
[17] The use of the term “vesting” adds further confusion with respect to the conceptual basis relied on for the appellant’s case. Typically it is only an express trust that will have a vesting date.
I also interpolate at this point that the pleaded arrangement said to have been arrived at was quite open ended in that it would involve a transfer to Mr Eckert upon him discharging Mr Roberts’ NAB mortgage at any time in the future or upon Mr Eckert having a right to purchase at fair market value at any time in the future. Neither the right to acquire the Farm at any time in the future nor the pleaded alternative bases for any such acquisition was put to Mr Roberts in cross-examination. Furthermore, Mr Eckert did not refer in his evidence to having any right to purchase at fair market value.
Mr Eckert was also examined in chief about the entry into the lease. He said that it came up in conversation with Mr Stanton that “the bank would require a lease to assure [sic] that the loan was repaid” but that apart from this nothing else was discussed about the lease. Thereafter, Mr Eckert had no further meeting with Mr Stanton. Later in the examination in chief, Mr Eckert was taken to the lease document at which time he acknowledged his signature by way of execution thereof. Mr Eckert gave this evidence.
We - both me and Paul Roberts knew that a lease had to be done for the bank to allow the loan to go through, and Mr Roberts said he would get a lease drawn up at a lawyer's place and he rang me and told me that the lease was prepared and would I come across to Mr Maidment's place of work to sign it, because it was getting late in the afternoon and Paul Roberts needed it signed to drop it into the bank that day.
Mr Eckert met with Mr Roberts and signed the lease. Mr Eckert was also of the understanding that the rent of $63,000 disclosed in the lease was the amount that was required to meet the interest expense for the bank loan for the first year.
Mr Eckert’s evidence in cross-examination
Mr Eckert was relatively consistent throughout the cross-examination that the verbal arrangement he reached with Mr Roberts was to the effect that Mr Roberts would purchase Eckert Farm and, when Mr Eckert was able to, he would take over the loan and “repurchase” the property and Mr Roberts would “take a title for his payment”. According to Mr Eckert, this right or opportunity to take back the property would be at any time in the future when Mr Eckert was financially able to do so. He acknowledged that he would have to have finished with Rabobank and be in a position to get funding. He also maintained that another element of the arrangement was that Mr Roberts was to obtain the benefit (in some but not clearly explained way) of a title subdivided off Eckert Farm by way of payment. According to Mr Eckert, the arrangement containing the elements just set out was struck with Mr Roberts in the initial conversation.
During the cross-examination, the following exchange between Mr Eckert and counsel occurred.
QSo the only elements of the agreement that you can remember is that at some point in the future when you're ready to do so you could require Mr Roberts to transfer the legal title to you if you took over the mortgage liability at that time.
AYes.
QAnd that was the extent of the agreement that you reached was it.
ANo, he would take the title and transfer to his land.
QWhat title.
AThe one that he took to his own land, was trying to do the subdivision of his own land.
QDid you say your agreement contemplated what would happen if that wasn't feasible.
ANo.
QSo you say that you and he didn't talk about what would happen if an idea of transferring titles didn't work for one reason or another.
ANo, not in the early stages.
QAt any time.
ANo, because we just assumed we could make it happen.
Earlier in the cross-examination, Mr Eckert had agreed that in June 2010, that is, as at about the time of the nitty gritty conversation, he owed to one or more banks, including Rabobank, approximately $2.6 million and that he had no capacity to repay it. Nevertheless, as at the time of the nitty gritty conversation when, according to Mr Eckert, the arrangement was arrived at, Mr Eckert hoped to be in a position to “repurchase” Eckert Farm within 12 months or so and expected to be able to do so.
Mr Eckert also accepted during cross-examination that in 2014, at a time when post separation property settlement negotiations were taking place between Mr Roberts and Rebecca Eckert, Mr Roberts offered to sell Eckert Farm to Mr Eckert for $850,000. This offer was refused. However, Mr Eckert acknowledged, as his understanding, that if by then he were to acquire the property, not only would he have to take over the loan or pay out that which was still owing under the loan, he also would have to pay some money in addition because Mr Roberts had failed with respect to his expected title transfer. It would seem that Mr Eckert accepted that the arrangement in the form he maintained had been arrived at in 2010 was no longer appropriate or binding once it became apparent that none of the subdivisional plans originally envisaged by Mr Roberts would be approved by the Council. The following exchange occurred with counsel.
QYou had no belief at the time that Mr Roberts made this offer to you in the middle of 2014 to sell the Eckert's farm back to you for about $850,000, you had no belief at that time that Mr Robert's [sic] was holding the farm for you.
AYes. We'd always worked on that theory.
QIf he was holding the farm for you, why would you need to pay him for a farm that you were the owner of anyway.
AI see what you mean, yes, sorry, I didn't understand what you were getting at. We knew that - our opinion was that always we'd have to pay out the loan, the full loan on the land and that's why - and because the title wasn't transferred, we knew we'd have to pay extra because you didn't get any appreciative benefit from the title transfer.
. . . .
QYou knew that you would have to come up with around $250,000 to pay out Mr Roberts for the difference between the market value of the farm at that stage and the mortgage amount that he owed.
AYes.
QYou knew that because you didn't believe that Mr Roberts was holding the land on trust for you.
ANo, I wouldn't say that. I'd say we knew we had to re- compensate Paul for the fact that he couldn't get a title transferred.
There is nothing in Mr Eckert’s evidence that lends support to a finding that part of the arrangement reached at the nitty gritty meeting was that Mr Eckert could elect in the future to purchase the Farm from Mr Roberts at fair market value. Neither “fair market value” nor any equivalent expression is mentioned in Mr Eckert’s evidence. I infer that the pleaded references to, and the defence case put in the alternative of, a right to acquire the Farm at fair market value, is a later adoption as a means to accommodate the fact that a fundamental element of the arrangement as pressed by Mr Eckert – the “consideration” that was to move to Mr Roberts – had totally failed.

Mr Eckert’s evidence as to the arrangement was to the effect that Mr Roberts would purchase the Farm as a “white knight”[18] to prevent Rabobank from selling to someone else, Mr Eckert would continue to farm it and cover Mr Roberts’ costs and, when financially able to, Mr Eckert would take back the Farm after paying out Mr Roberts’ loan. Mr Roberts was to retain a subdivided portion of the Farm to compensate him.
[18] The term was used by counsel for Mr Eckert in the sense of a person who comes to the aid of another. It is often used to refer to a person or company who makes an acceptable counter-offer for a company facing a hostile takeover bid.
According to Mr Eckert, there was no agreement reached as to what was to happen if the planned subdivision did not eventuate (as happened); there was no consideration given to this. Thus it was that in 2014, when the parties fell out following Mr Roberts and Rebecca Eckert’s separation, Mr Eckert formed a view that he would or should have to pay to Mr Roberts something extra to compensate Mr Roberts for the failed subdivisional opportunity.
The arrangement initially arrived at, as described by Mr Eckert, is in the language of contract and, as matters developed, a contract where the consideration that was to move to Mr Roberts wholly failed. The case has never been presented as one in contract and there would have been, to my mind, substantial, if not insuperable difficulty in doing so.
Evidence of David Stanton from the NAB
Mr Stanton was called in the defence (Mr Eckert’s) case. He gave evidence of his recollection of a meeting with Mr Roberts and Mr Eckert. This was the only meeting he had jointly with the two men about the loan proposal that he could recall. There were later meetings with Mr Roberts for the purpose of document execution and annual reviews. Mr Stanton provided his recollection as to his understanding of the proposal that was under discussion.
QWhat did you understand about the proposal that was going to be made.
AThe proposal was to purchase the property and then to repay the debt by subdividing off smaller blocks to recoup the money that had been paid back to the bank.
QWas there any discussion at that joint meeting as to what particular subdivisions would be, or was it just a general expression or process.
ANo, it was cut off into, I think that's 20 acre blocks or 10 acre blocks and selling them for 200,000 each or something.
QAt that meeting was there any other discussion about land actually owned already by Mr Roberts.
AYes.
QWhat was that discussion.
AIt was that that property would also need to be held in security by the bank.
QDid you have any discussions concerning the servicing of the loan and how that was to happen.
AYes, one of the documents that was provided was a cashflow budget which Paul [Roberts] had, I assume, put together, and in my discussion I was getting the understanding of how the assumptions were all put together, and I remember at the time there was a lease payment in there, and then Mr Eckert started to explain how that was determined, I didn't want to hear that because I said to Paul 'Look, at the end of the day you are responsible for this loan, you need to be comfortable that those lease payments can be met. So, I wasn't making judgment on those lease payments.
. . . .
QWell, you're aware of what subsequently happened in respect to the mortgage of a loan being granted.
ACorrect.
QAnd there was a repayment provision in respect of that mortgage payment, mortgage loan.
AInitially the facility was granted interest only to provide time for the subdivision to occur, if I remember correctly the facility was renewed interest only again to allow more time, and eventually the subdivision didn't appear to be going to happen and we decided to put the facilities on principal interest repayment program, just start paying back the principal.
. . . .
QWere you advised by Mr Roberts as to progress in respect of sub-division of land at all in respect of the farm.
AYes, I was. I was advised that the council wouldn't allow it to proceed because it was in a flood-zone area and they didn't want titles re-arranged.
QWas that a matter of any concern to the bank.
AIt was because we were relying in our initial discussions that that would occur, allowing the smaller blocks to be sold and repaying the debt.
In cross-examination on behalf of Mr Roberts, Mr Stanton had his memory refreshed by a relatively contemporaneously made file note in which he had recorded that Mr Roberts’ intention was to realign boundaries and to sell off five individual 18-20 acre blocks for approximately $140,000 each to reduce and eventually clear the debt. Mr Stanton said that he was of the belief that, during the joint meeting, Mr Eckert was in agreement with this because it was a way of reducing the debt and paying out the debt. Mr Stanton said that his file note in this respect had been prepared on the day after the joint meeting, based on his handwritten notes made during that meeting and his memory at the time.
Defendant’s final address
Contrary to his opening remarks,[19] counsel for Mr Eckert in his final address submitted that, ultimately, what Mr Eckert and Mr Roberts said to each other was not of great significance. Rather, the important thing is what they had actually done and how they had behaved towards each other after the purchase by Mr Roberts of Eckert Farm. Counsel did not submit that the lease should be regarded as a sham but only that its overall purpose was to give Mr Roberts security. Further, the parties’ conduct gave rise to “an equity which subsumes the legal right that the lease gave”.
[19] See the first quoted paragraph above at [37].
The understanding between or arrangement reached by the parties was that Mr Eckert would indemnify Mr Roberts with respect to all costs in relation to the purchase and that Mr Roberts would have the opportunity to use the land to pursue development proposals after which he would “depending on negotiations with Rabobank, then offer to sell the land to the plaintiff [sic: the defendant] at fair market value”. However, what Mr Roberts has done and contrary to the understanding of the parties is to proceed to enforce the lease.
Counsel made this, with respect unhelpful, submission.
We don’t say that [Mr Roberts] in this case holds the property on trust for [Mr Eckert] but do say it’s subject to the right of [Mr Eckert] to be offered to purchase the land for a fair market value as at the date that [Mr Roberts] effectively wishes to sell it.
Counsel indicated that his client sought a declaration that he had the right to purchase the Farm at fair market value from Mr Roberts upon its sale.
The Judge’s reasons
After a short introduction and the recitation of the uncontested background (as set out earlier) the Judge turned to summarise both the nature of Mr Eckert’s case and the law said to be relevant to it. As a summary of relevant authorities, I am satisfied that the latter is both accurate and of assistance. His Honour said this.[20]
[20] Trial Reasons at [55]-[67].
Mr Eckert seeks the intervention of equity to impose a constructive trust binding Mr Roberts as the registered titleholder of Eckert farm. His contention is that here there is a constructive trust in existence analogous to that found in Pallant v Morgan.[21] Pallant v Morgan was a case where prior to the acquisition of title in land by one party, the parties agreed that one would purchase the property for the benefit of both, with the consequence that the second party stayed out of the market. Subsequently the first party and titleholder declined to subdivide the property and convey a portion to the second party. The analogy was conceded to be imperfect. The essential submission however was that there was a pre-existing agreement governing the purchase of Eckert farm which Mr Roberts now seeks to abandon with the consequence that Mr Eckert will sustain detriment as a result of his reliance upon the agreement. Such trusts are often referred to as common intention constructive trusts. This species of trust is different from a Muschinski v Dodds[22] constructive trust but will often arise in similar circumstances.[23]
[21] [1953] 1 Ch 43.
[22] (1985) 160 CLR 583.
[23] Sivritas v Sivritas (2008) 23 VR 349 at [134] (Kyrou J).
In Muschinski v Dodds, Deane J said: [24]
[24] (1985) 160 CLR 583 at 613; see also Baumgartner v Baumgartner (1987) 164 CLR 137 at 148 (Mason CJ, Wilson and Deane JJ).
… In its basic form it [the constructive trust] was imposed, as a personal obligation attaching to property, to enforce the equitable principle that a legal owner should not be permitted to use his common law rights as owner to abuse or subvert the intention which underlay his acquisition and possession of those rights.
To similar effect in Gissing v Gissing, Lord Diplock said:[25]
[25] [1971] AC 886 at 905; See also, Banner Homes Plc v Luff Developments Ltd [2000] Ch 372; Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 615-6 (Mason CJ and Dawson J), 638 (Wilson and Toohey JJ), 654-5 (Brennan J); Bannister v Bannister [1948] 2 All ER 133 at 136 (Scott LJ); Beatty v Guggenheim Exploration Co (1919) 122 NE 378 at 380 (Cardozo J with whom Hiscock CJ, Chase, Collin and JJ agreed); Rochefoucauld v Boustead [1897] 1 Ch 196.
A resulting, implied or constructive trust – and it is unnecessary for present purposes to distinguish between these three classes of trust – is created by a transaction between the trustee and the cestui que trust in connection with the acquisition by the trustee of a legal estate in land, whenever the trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired. And he will be held so to have conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land.
(citations omitted).
Put slightly differently, equity will intervene to ensure that the parties’ true intentions are not thwarted to the benefit of one where detriment is caused to the other by dint of his or her reliance upon those true intentions.[26] Relevant to this case, those true intentions are to be derived from the existence of an agreement, arrangement or understanding, which evidences the intention to create a trust prior to the vesting of the legal estate and which trust was intended to colour possession of the legal estate from the outset.[27] Thus, here the question is whether the circumstances in which Mr Roberts obtained title to Eckert farm bespeak an agreement, arrangement or understanding between Mr Roberts and Mr Eckert the effect of which would be subverted or undermined to Mr Eckert’s detriment if Mr Roberts were permitted to assert the common law rights attaching to his status as lessor and registered titleholder.
[26] McCormick v Grogan (1869) LR 4 HL 82; Rochefoucauld v Boustead [1897] 1 Ch 196. Such constructive trust is an institutional constructive trust; Parsons v McBain (2001) 109 FCR 120 at 125-6 (Black CJ, Kiefel and Finkelstein JJ).
[27] Paragon Finance Plc v D B Thakerar & Co [1999] 1 All ER 400 at 408-9 (Millet LJ).
As to the nature of the agreement, arrangement or understanding, in Gissing v Gissing Lord Diplock observed:[28]
[28] [1971] AC 886 at 906.
As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct. It is in this sense that in the branch of English law relating to constructive, implied or resulting trusts effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw from their words or conduct and not to any subjective intention or absence of intention which was not made manifest at the time of the transaction itself. It is for the court to determine what those inferences are.
In this case any inference drawn as to the existence of an agreement, arrangement or understanding, must be referrable to the acquisition by Mr Roberts of Eckert farm. That does not mean that things said or done after title to Eckert farm was obtained by Mr Roberts are irrelevant. Evidentially such things may be indicative of the existence of the agreement, arrangement or understanding or otherwise.[29]
[29] Lloyd’s Bank Plc v Rossett [1991] 1 AC 107 at 132 (Lord Bridge of Harwich, with whom the other Law Lords agreed).
In Giumelli v Giumelli, Gleeson CJ, McHugh, Gummow and Callinan JJ observed that the role of the court in declaring a constructive trust is to construe or interpret the circumstances and not to construct them: [30]
[30] (1999) 196 CLR 101 at [2].
In submissions to this Court, the term "constructive trust" was used to identify the nature of the equitable remedy granted by the Full Court. Care is required in the use of the term "constructive" in this context. Professor Scott has pointed out:
"It is sometimes said that when there are sufficient grounds for imposing a constructive trust, the court 'constructs a trust'. The expression is, of course, absurd. The word 'constructive' is derived from the verb 'construe', not from the verb 'construct'. ... The court construes the circumstances in the sense that it explains or interprets them; it does not construct them."
The relief granted by the Full Court involved a trust that was "constructive" in that way. The Full Court so interpreted the circumstances as obliging the appellants, in good conscience, not to retain their beneficial interest in the whole of the Dwellingup property and as requiring them to answer the respondent's equity by bringing about a subdivision of the promised lot and conveying the title to it. The equity of the respondent was seen by the Full Court as sufficiently strong as not only to prevent the appellants from insisting upon their strict legal rights but also, in respect of the promised lot, to convey it to the respondent.
I bear in mind the cautionary words of Professor Ong who in the fourth edition of his work, Trusts Law in Australia, said in relation to the species of constructive trust asserted in this case:[31]
[31] D S K Ong, Trusts Law in Australia, 4th ed, Federation Press, 2012 at 594-5.
It is of the first importance to recognise that in this species of constructive trust the common intention, common understanding, arrangement or agreement between the owner of the legal title and the claimant of the beneficial title is not enforced as an agreement between them, but it is enforced as the avoidance of the detriment which the beneficial claimant would otherwise suffer as a result of his reliance on the legal owner’s inducement to him, an inducement of which the agreement between the parties is merely probative. If the claimant has not been induced to act on the basis of the oral agreement, then the oral agreement, as a mere oral agreement, cannot be enforced for lack of written evidence.[32]
[32] In this State, s 26(1) of the Law of Property Act 1936 (SA) prohibits the enforcement of an oral agreement said to establish a beneficial interest in land.
(emphasis in original; citations omitted).
Thus as Professor Ong and the judgment of Lord Diplock in Gissing v Gissing quoted above make plain, it is not enough to establish the existence of an agreement, arrangement or understanding. Detriment must also be established. In this regard in Austin v Keele the Privy Council in an appeal from New South Wales said:[33]
[33] (1987) 10 NSWLR 283 at 291. See also, Grant v Edwards [1986] Ch 638 at 651 (Mustill LJ); Green v Green (1989) 17 NSWLR 343 at 355 (Gleeson CJ); Public Trustee v Smith [2008] NSWSC 397 at [99] (White J).
Even if, however, it is accepted that these indicia can be prayed in aid as additional evidence of the common intention alleged, they carry the case no further. A trust does not come into being merely from a gratuitous intention to transfer or create a beneficial interest. There has first of all to be the additional ingredient of an intention or at least an expectation that the cestui que trust will act in a particular way, normally, though not necessarily exclusively, by making some contribution towards the cost of acquisition of the property in which the interest is intended to subsist. Moreover, Lord Diplock's formulation of the principle in Gissing v Gissing involves the further essential element that the trustee has so conducted himself that it will be inequitable to allow him to deny to the cestui que trust the beneficial interest which it is proved that he was intended to have. There has to be some conduct detrimental to the cestui que trust, even if only in the sense of an irrevocable change of legal position, which is referable to the common intention proved and undertaken on the footing of the grant of the beneficial interest claimed. Classically this takes the form of some contribution towards the purchase of the property, a feature which is entirely absent in the instant case. In fact there was not, from first to last, any evidence that Austin ever contributed a cent towards the cost of the properties.
Detriment is not a matter of unfairness.[34] The relevant detriment is “that which would flow from the change of position if the assumption were deserted that led to it”.[35] The detriment may lie in an opportunity or right forsaken in reliance upon the agreement, arrangement or understanding, which justifies holding the legal titleholder to the agreement, arrangement or understanding, or, in some positive act or contribution toward the obtaining by the legal titleholder of the title done on the strength of the agreement, arrangement or understanding. Thus, equity will only intervene after entry into the agreement, arrangement or understanding where:[36]
… the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice.
Hence in Muschinski v Dodds, Deane J said:[37]
Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do.
Here there are parallels with the principles that underpin proprietary estoppel.[38] Both proprietary estoppel and the device of the constructive trust seek to prevent the titleholder from insisting on his or her strict legal rights when it would be unconscionable to do so. In the proprietary estoppel context, the High Court in Sidhu v Van Dyke[39] indicated that the relevant question as to detriment may be stated in terms of asking what different course the claimant may have adopted had the agreement, arrangement or understanding not been made?[40] The answer will shed light on whether the legal titleholder is acting unconscionably in seeking to exercise his or her legal rights in relation to the property contrary to the agreement, arrangement or understanding. If it is established that the claimant would have been in no different position, it cannot be said that the relevant detriment will arise if equity does not prevent the titleholder from acting contrary to the agreement, arrangement or understanding.[41] It cannot be said that the titleholder is acting unconscionably. In this sense unconscionability becomes the guiding principle.[42] As to what amounts to unconscionable conduct in equity, in Commonwealth v Verwayen, Deane J, referring to Story’s Commentaries on Equity Jurisprudence and Thompson v Palmer,[43] considered the question of unconscionability to involve that which one party in conscience ought not to do as between the parties.[44] This requires the making of a judgment by the court after undertaking the ordinary process of legal reasoning.
I turn to consider the evidence relevant to the question of the existence of an agreement, arrangement or understanding and the detriment that will flow should Mr Roberts not be kept to the terms of any agreement, arrangement or understanding. My recount of the evidence should be read against the background of the facts found at paragraphs [10] to [51] above.
[34] Muschinski v Dodds (1985) 160 CLR 583 at 608 (Brennan J), 615-616 (Deane J).
[35] Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674-5 (Dixon J); see also, Sidhu v Van Dyke (2014) 251 CLR 505 at 511 (French CJ, Kiefel, Bell and Keane JJ); Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 419 (Brennan J), at 404 (Mason CJ and Wilson J).
[36] Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674-5 (Dixon J).
[37] (1985) 160 CLR 583 at 620.
[38] See D S K Ong, Trusts Law in Australia, 4th ed, Federation Press, 2012 at 593-4 and the authorities referred to therein.
[39] (2014) 251 CLR 505.
[40] Sidhu v Van Dyke (2014) 251 CLR 505 at [77] (French CJ, Kiefel, Bell and Keane JJ), [93] (Gageler J).
[41] Sidhu v Van Dyke (2014) 251 CLR 505 at [92] (Gageler J).
[42] Parij v Parij (1997) 72 SASR 153 at 161 (Debelle J), cited with approval in Carruthers v Manning [2001] NSWSC 1130 at [109] (Einstein J).
[43] (1933) 49 CLR 507.
[44] (1990) 170 CLR 394 at 441.

In my view, it was open to the Judge to make the findings that his Honour made. They are not to be seen as inconsistent with incontrovertible facts established by the evidence or uncontested testimony in the evidence nor can they be said to be contrary to compelling inferences from the evidence or glaringly improbable.[109]
[109] See Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [23], [25]-[29] being the passages earlier set out in these reasons.
The sole basis for the appellant’s claim to some form of constructive trust or other equitable right with respect to Eckert Farm is based on alternative findings with respect to the arrangement arrived at as a result of the nitty gritty conversation, the joint meeting with Mr Stanton and the execution of the lease document. As such, my findings to this point are sufficient to dispose of the appeal. I would dismiss the appeal. Nevertheless it is appropriate that I say something further, albeit briefly, about the remaining appeal grounds 6 to 12.
Appeal grounds 6 and 7
By appeal ground 6, the appellant contends that the Judge erred in finding that with the exception of the lease, the arrangement between the parties was not intended to effect legal relations (the Legal Relations Finding) such that a constructive trust did not arise. In appeal ground 7, the appellant sets out a number of contentions as to why he maintains that the Legal Relations Finding is incorrect.
The Judge’s finding complained of is in these terms.[110]
In the wake of Mr Eckert’s candid assessment of the circumstances as not giving rise to any legal consequence and being in the nature of an agreement within family, an assessment which is not contradicted by the evidence more generally, it is difficult to construe the circumstances differently. Clearly the lease was intended to effect a legal relationship between Mr Roberts and Mr Eckert, but beyond that this was an arrangement formulated with his future son-in-law that meant he could not be evicted upon the sale by Rabobank of the farm to an unknown third party. Whilst the circumstances permit me to find that there was an arrangement or agreement as I have described, with the exception of the lease, I conclude it was not one otherwise intended to affect legal relations between Mr Eckert and Mr Roberts. In my view, Mr Eckert hoped, perhaps expected, that Mr Roberts as a member of his family would provide him with the opportunity one day to buy back Eckert farm, but the circumstances do not betray an agreement or arrangement of a type described by Brennan J in Walton Stores (Interstate) Ltd v Maher that he would do so. Mr Eckert’s hope or expectation does not provide a foundation upon which a constructive trust may be erected.
[110] Trial Reasons at [226].
In appeal ground 7.1, the appellant contends that the Legal Relations Finding is wrong because it is dependent upon the Lease Finding which itself is wrong for the reasons set out in appeal grounds 1 to 3. On my reasoning to this point, this ground does not advance the appellant’s case.
By appeal ground 7.2, the appellant contends that the Legal Relations Finding is wrong because it is dependent upon the Arrangement Finding which is wrong for the reasons set out in appeal grounds 4 to 5. On the basis of my reasoning to this point, this appeal ground does not advance the appellant’s case.
In appeal ground 7.3, the appellant sets out again the finding which he maintains the Judge should have made contrary to the Judge’s Arrangement Finding. This alternative version has been rejected by me for the reasons given to this point. As such, appeal ground 7.3 does not advance the appellant’s case.
By appeal ground 7.4, the appellant, in effect, draws a conclusion from appeal grounds 7.1 to 7.3 and contends that the Judge “ought therefore” to have held for a constructive trust. Appeal ground 7.4 does not advance the appellant’s case over and above that which has been dealt with to this point.
By appeal ground 7.5, the appellant seeks to raise a new point. The appellant contends that the Judge ought to have held that:
The respondent holds Eckert Farm on trust for the appellant by reason of the fact that pursuant to the agreement or arrangement described in appeal ground [7.3] the appellant has contributed to the purchase price paid by the respondent for Eckert Farm by making payments in reduction of the principal of the loan taken out by the respondent to fund the purchase.
Appeal ground 7.5 appears to conflate two issues. First, according to its terms, it is premised upon the success of appeal ground 7.3. Appeal ground 7.3, being the alternative factual finding relied upon by the appellant in lieu of the Judge’s Arrangement Finding, has failed for reasons given to this point and, accordingly, appeal ground 7.5 should fail for this reason. Secondly, the appellant for the first time seeks to rely on the fact that there have been reductions in loan principal contributed to by the appellant. To the extent that the appellant seeks to assert some form of constructive trust based on a contribution to purchase price such should be rejected. It was not pursued at trial and was expressly disavowed by counsel on appeal. During the appeal the following exchange with counsel occurred.
NICHOLSON J:   Is your point here that to the extent that Mr Eckert started to pay down the principal that is supportive of the case that he had an interest in the property in the way you articulate it? As opposed to simply a right to occupy at the pleasure of Mr Roberts?
MR HARRIS:     The easy case is in relation to the creation of a trust in this circumstance would be if we contributed to the purchase price, and there are plenty of cases in relation to that, but there is no doubt that what we did is pay down principal, pay down Mr Eckert's principal liability to the bank.
NICHOLSON J:   But that type of constructive trust is not your case and it never has been, that was my next question I'm coming to, and that is, as I understand the constructive trust law or relation, the equitable right that you're pursing [sic] is based on an arrangement or an understanding -
MR HARRIS:     Yes.
NICHOLSON J:   - reached back in 2010.
MR HARRIS:     Yes.
NICHOLSON J:   From which it is unconscionable to Mr Roberts to walk away.
MR HARRIS:     Yes.
NICHOLSON J:   It's not a constructive trust based on an ongoing relationship between the parties whereby your client contributed to the purchase price over time or worked on the property for no wages, that sort of more standard constructive trust arrangement.
MR HARRIS:     No.
If that is the issue being pressed in appeal ground 7.5 it must be taken to have been abandoned and the appellant should be held to that position. The appellant’s case was never presented nor defended at trial on this basis and was not argued in this way on appeal. It is too late to do so now. However, to the extent that the reference to the appellant having contributed to the reduction of loan principal is relied on in the context of the appellant’s argument that such demonstrates a matter inconsistent with the Arrangement Finding such as to provide good reason for this Court to set aside the Judge’s acceptance of Mr Roberts’ evidence with respect to the nitty gritty conversation, that argument has been dealt with earlier in my reasons.
In any event and as earlier explained, during the period of Mr Eckert’s occupation prior to the termination of the lease Mr Roberts managed to reduce principal on the loan by the sum of $42,000. As explained earlier, merely because Mr Eckert’s payment of rent during the lease holding over period may have assisted Mr Roberts to effect this reduction does not satisfy the requirement that Mr Eckert’s payments be characterised as directed at the reduction in principal. Further, the amount of the reduction is relatively insignificant in the overall scheme of things and would not, on its own, lead to a remedy by way of a constructive trust over the property or in the form sought by the appellant. Such a remedy would be quite disproportionate.
Out of an abundance of caution, the Judge dealt with the question of a resulting trust notwithstanding that there is no prayer for relief to that effect and that counsel at trial did not seek to press this issue. The Judge’s reasoning as to why he would not, in any event, be willing to find that a resulting trust was brought into existence[111] is sound. There has been no challenge to this reasoning in the notice of appeal.
[111] Trial Reasons at [234]-[243].
In appeal ground 7.6, the appellant maintains that the Judge ought to have held that the respondent was estopped from relying on the terms of the lease as the basis upon which the appellant has occupied Eckert Farm since 30 August 2010. This ground was not developed in submissions. No detailed argument has been put in support of this broad proposition. Further, the ground lacks utility. Even if made out, it still would beg the question as to what was the basis upon which Mr Eckert occupied Eckert Farm in the context of the Arrangement Finding made by the Judge.
The fact that the parties, by their subsequent behaviour, orchestrated an environment such that Mr Roberts should be estopped from relying upon the strict terms of the lease (which proposition I do not accept) can be of no assistance in determining whether or not the Judge was correct to make the Arrangement Finding. There is a distinction to be drawn between the conduct of the parties as comprising some form of inconsistency or glaring improbability with respect to the Arrangement Finding and the conduct of the parties giving rise to an estoppel in the event that Mr Roberts sought to rely on the strict terms of the lease in an unconscionable manner. He has not done the latter. All he has done is seek to terminate Mr Eckert’s right of occupation in circumstances where the lease expired by effluxion of time back in 2011.
Appeal grounds 8 and 9
By appeal ground 8, the appellant complains that the Judge erred in finding that the appellant would suffer no detriment if the respondent were not held to the arrangement or understanding (the Detriment Finding). In appeal ground 9, the appellant sets out four contentions as to why the Detriment Finding was wrongly made.
The Judge’s conclusion with respect to the question of detrimental reliance was in these terms.[112]
If I am wrong in my construction of the circumstances and if it were to be concluded that an agreement or arrangement did arise the content of which was that Mr Roberts would provide the Eckerts with the opportunity to purchase the farm from him once they were in a position to do so in return for a title, I would nonetheless conclude for the same reasons that not holding Mr Roberts to that agreement would result in no relevant detriment. Nothing would have been done differently. Nothing was foregone, nothing contributed. To provide relief would be to enforce the agreement, not to avoid any relevant detriment.
His Honour, prior to forming that conclusion, had observed that, before Mr Roberts had purchased the Farm, whilst Mr Eckert was able to support himself by working the Farm, he was in no position financially to buy it from Rabobank himself – “in Mr Roberts buying the farm, Mr Eckert did not refrain from doing anything”. The Judge also rejected any suggestion in Mr Eckert’s evidence that he had passed up other white knight opportunities in order to enter into the lease with Mr Roberts.[113]
My understanding of this evidence was that no more than preliminary inquiries were undertaken of these people. Mr Eckert never said that but for Mr Roberts agreeing to assist him he would have taken some other course of action that would likely result in him being able to purchase, or having the option of purchasing, Eckert farm once he had settled his liability to Rabobank or been in a financial position more generally to do so.
[112] Trial Reasons at [233].
[113] Trial Reasons at [230].
The Judge further observed that farming the property had allowed Mr Eckert to generate an income which was sufficient to support him and his wife and to make the payments twice a year that allowed Mr Roberts to meet the mortgage commitments. The Judge was satisfied, on the evidence, that no improvements had been made to the Farm and that any contribution Mr Eckert made had been limited to his rental payments.
The findings made by the Judge were open on the evidence and his conclusion that Mr Eckert suffered no material detriment that could have been avoided had he passed up the opportunity to lease the property from Mr Roberts was also open on the evidence. As I have earlier indicated, Mr Roberts did not need Mr Eckert’s permission to buy the property. At the time the lease was entered into, Mr Eckert very much wanted to stay on the property (was desperate to do so) and was confident as to the future bearing in mind his relationship with Mr Roberts and Mr Roberts relationship with Mr Eckert’s daughter. Given that there were no realistic alternative opportunities that would have provided greater security to Mr Eckert for the future, he had no practical alternative but to stay on the property as Mr Roberts’ tenant.
In appeal ground 9.1, the appellant asserts that he suffered detriment by effecting a reduction in the principal sum borrowed by the respondent. This matter has already been dealt with on the facts. In any event, whilst it might have been an advantage to Mr Roberts, such does not necessarily mean it was a detriment to Mr Eckert. All Mr Eckert did was to pay the monies demanded by Mr Roberts in order to remain in possession of the Farm on a holding over basis under the lease.
By appeal ground 9.2, the appellant contends that he suffered a relevant detriment by not taking up the opportunity of dealing with another white knight. This also has been dealt with on the facts and rejected. The assertion does not have a proper foundation in the evidence.
By appeal ground 9.3, it is contended that the appellant suffered a detriment by giving up the opportunity to continue to occupy Eckert Farm with the consent of Rabobank and on the same basis as was in place between August 2008 and August 2010. Again, this has been dealt with earlier. This was never a realistic option. In any event, given the continued interest burden it is not apparent on the evidence as to the extent to which Mr Eckert would have been better off financially if at all. Further, Rabobank was always going to pursue Mr Eckert for the outstanding debt and ultimately brought proceedings in the Supreme Court in March 2012 for the balance of approximately $2.1 million owing after the sale of the land to Mr Roberts. Rabobank continued to pursue Mr Eckert until the parties reached a settlement some years later. There was never a possibility of Mr Eckert continuing to live on Eckert Farm at no cost to Mr Eckert.
By appeal ground 9.4, the appellant argues that he suffered a relevant detriment by maintaining the vines on Eckert Farm and improving the value of the land by reason of his personal labours. Direct evidence in support of this proposition is limited, although it is to be accepted that Mr Eckert occupied and farmed the land over the period in question. However, this was his obligation under the lease and was an activity pursued by him for his own benefit. It enabled him to pay the rent and it enabled him to survive financially on the balance earned from the Farm over and above the outgoings.
The matters in appeal ground 9.1 to 9.4 do not amount either individually or in combination to relevant detriment in the circumstances of this case. However, and in any event, the Judge’s Detriment Finding is only relevant in the event that the Judge’s Arrangement Finding and Lease Finding were found to be wrong.
Appeal grounds 10 and 11
By appeal ground 10, it is contended that the Judge erred in holding that the respondent was not estopped from seeking an order that the appellant deliver up vacant possession and by appeal ground 11 it is contended that this finding is wrong for three reasons. First, because it is dependent upon the Lease Finding which is wrong (appeal ground 11.1). Second, it is wrong because the respondent is or should be estopped from relying on the terms of the lease as the basis upon which the appellant has occupied Eckert Farm since 30 August 2010 (appeal ground 11.2 which is really a reference back to appeal ground 7.6). Third, it is contended that the respondent should be estopped from altering the rent payment to monthly unless he first gave notice of the intention to do so equivalent to the period of time during which payments had historically been made on the basis of every six months (appeal ground 11.3).
Appeal grounds 11.1 and 11.2 must fail for reasons already given. Appeal ground 11.3 also must fail on the basis that even on the appellant’s case, he occupied Eckert Farm after 2011 only on a month to month tenancy or as a tenant at will, unless the Judge’s Arrangement Finding were to be set aside and replaced with the alternative finding propounded by the appellant. Unless the Arrangement Finding were to be set aside and replaced, the Judge was correct to find that on any analysis Mr Roberts was entitled to insist upon payment of monthly rent and, ultimately, to terminate Mr Eckert’s right to possession either at will or, at best for Mr Eckert, on the provision of one months notice.
Further, as the respondent contends, the issue of estoppel would simply give rise to the issue of whether Mr Eckert might be entitled to relief against forfeiture of any interest under the lease. No such relief was applied for and Mr Eckert does not seek reinstatement of the lease. He has always maintained that his occupation was not pursuant to the lease. Whilst the Judge’s Arrangement Finding stands, there can be no right in Mr Eckert to resist giving up possession of the property to Mr Roberts.
Appeal ground 12
By appeal ground 12, the appellant contends that the Judge erred in holding that from one month from the date of the service of the claim the appellant was guilty of trespass and conversion of the grapes harvested from Eckert Farm. This ground was not developed during submissions. In the event that the Judge’s Arrangement Finding, Lease Finding and findings relating to Mr Roberts’ entitlement to possession of Eckert Farm were to be upheld, there can be no defence to the claim for trespass and conversion.
Conclusion
At the commencement of the appeal, counsel for the appellant, by way of response to a written submission by the respondents, sought to read an affidavit sworn by Kevin Donald McKinley on 6 June 2017. The matter was left on the basis that a decision as to its admissibility on appeal would be made after hearing the parties’ submissions on the substantive issues. The burden of the affidavit was to confirm that the NAB’s initial 12 month facility was extended from time to time so that it was in place for more than the period of the lease. So much was common ground at the trial and the affidavit does not of itself advance the appellant’s case. It is unnecessary to receive the affidavit on the appeal.
None of the grounds of appeal has been made out. I would not disturb the Judge’s findings and would dismiss the appeal.
As I understand the position, Mr Eckert had remained in possession of the Farm paying rent as requested at least as at the time the appeal was heard. Further, various orders of an interlocutory nature were made by the Judge by agreement between the parties pending the outcome of the appeal. In these circumstances, I would invite the respondent to submit minutes of order on appeal consistent with the Judge’s orders made to this point and the dismissal of the appeal. I would also hear the parties on the question of costs.

Time and Place	Persons Present	Result of Discussions
Approximately May 2010 at house on subject land	Plaintiff, Defendant, Elizabeth Eckert, Rebecca Eckert[12]	Defendant raising with plaintiff the possibility that plaintiff and Rebecca Eckert buy the subject land for a reasonable sum with the defendant to farm the land until it could be repurchased by him, with the plaintiff to meet all costs associated with any such proposal. Matter left on the basis that plaintiff and Rebecca Eckert would think about it
About a week or two later at house on subject land	Plaintiff, Defendant, Elizabeth Eckert, Rebecca Eckert	Plaintiff and Rebecca Eckert advising defendant that plaintiff had been to the National Bank at Strathalbyn, that he had inquired about a loan to finance the purchase, that the Bank was prepared to lend the money but for the fact that he did not have enough income to fully service the loan, and that he would purchase the land. The plaintiff then suggested that he purchase the land but that the defendant and Elizabeth Eckert would help service the loan for which they would be entitled only to occupy the land during their lifetime. The proposal was not accepted
During daylight hours at some unknown day in about June 2010 at the farm of Mr Stephen Maidment	Plaintiff and defendant	Plaintiff and defendant agreed to explore further possible arrangement with plaintiff to buy the land in his own name to enable the defendant to continue to farm and repurchase land in due course; defendant to carry all costs; plaintiff to use land to apply for subdivision of his own land; plaintiff to approach the land agent and offer to buy the land; defendant to confer with the bank manager at the Strathalbyn Branch of the National Australia Bank and discuss finance concerning the purchase
During daylight hours at some unknown day in about June 2010 Strathalbyn Branch of the National Australia Bank, Strathalbyn	Plaintiff, defendant, Mr David Stanton[13]	A discussion as to the proposal occurred and an application for finance was commenced to be drawn for the plaintiff to complete; understanding reached between all parties that part of the subject land would be subdivided and sold off to reduce the debt principal; that an application would be made by the plaintiff in conjunction with the subject land to subdivide land he already owned so as to reduce his separate debt to the bank; that the defendant was to continue to farm the land in order to service the loan; the defendant was to enter into a lease to assure the bank that he would continue to farm the land.