Fay v Fay
[2025] VSC 455
•29 July 2025, revised 5 August 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 05939
| JANE ELIZABETH FAY (and others according to the attached Schedule) | Plaintiffs |
| v | |
| WILLIAM LUKE FAY in his capacity as Trustee and Administrator of the Estate of EP Fay, Deceased and in his Personal Capacity (and others according to the attached Schedule) | Defendants |
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JUDGE: | GRAY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30, 31 July and 1, 2, 5, 8, 9 August 2024, final submissions 19 August 2024 |
DATE OF JUDGMENT: | 29 July 2025, revised 5 August 2025 |
CASE MAY BE CITED AS: | Fay v Fay |
MEDIUM NEUTRAL CITATION: | [2025] VSC 455 |
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EQUITY — Fair-dealing rule — Where relevant trustees are not parties to the assignment of interests by the beneficiaries — Where assignee company is controlled and partly owned by the relevant trustees — Tito v Waddell (No 2) [1977] Ch 106 considered — Re James [1949] SASR 143, Yates v Halliday [2006] NSWSC 1346, Soulos v Pagones [2023] NSWCA 243 — Whether trustees took advantage of their position — Whether there was full disclosure or informed consent — Whether the transaction was fair and honest — Breach of fair-dealing rule established — Clay v Clay (2001) 202 CLR 410 applied.
EQUITY — Undue influence — Whether will of each of the plaintiffs was overborne by undue influence — Rebuttable presumption arises from parent and child and trustee and beneficiary relationship — Presumption not rebutted — Whether undue influence by some directors on notice to company or can be imputed to company – Undue influence established – Princess Theatre Pty Ltd & Ors v Ansvar Insurance Limited [2024] VSC 363 applied — Harris v Jenkins (1922) 31 CLR 341 distinguished.
EQUITY — Unconscionable conduct — Whether plaintiffs were under special disadvantage — Whether defendants unconscientiously took advantage of special disadvantage — Whether unconscionable conduct by some directors was on notice to company or could be imputed to company — Unconscionable conduct established.
CONTRACTS — Two plaintiffs were minors when executing deed of assignment — Whether plaintiffs repudiated contract within reasonable time of attaining majority — Reasonableness of delay is a factual inquiry — Unreasonable delay found for one plaintiff — Edwards v Carter [1893] AC 360 applied.
LIMITATION OF ACTIONS — Whether action in respect of breach of trust barred by s 21(2) of Limitation of Actions Act 1958 – Action in respect of breach of trust to which s 21(2) applied — Whether proviso in s 21(2) engaged — Whether plaintiffs’ revisionary or remainder interest was a future interest — Right of action accrued at death of life tenant — Claim of fair-dealing was brought within time — Re Pauling’s Settlement Trusts [1964] Ch 303, Armitage v Nurse [1998] Ch 241, Johns v Johns [2004] 3 NZLR 202, Halford v Halford (2022) 58 WAR 254 applied — Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94 considered.
EQUITY — Laches — Whether there was unreasonable delay resulting in sufficient prejudice to result in laches — Two plaintiffs attained knowledge of assignment deed 17 years before commencement of proceeding — Delay prejudiced defendants in ability to respond to claims — Other plaintiffs did not have sufficient knowledge of assignment deed until after death of life tenant — Laches established with respect to two plaintiffs — Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 applied.
EQUITY — Acquiescence — Plaintiffs did not acquiesce with respect to impugned transaction — Acquiescence not established — Orr v Ford (1989) 167 CLR 316, Byrnes v Kendle (2011) 243 CLR 253 applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | AMJ Meagher SC with M Roberts | Gadens Lawyers |
| For the first and second Defendants | DK Carlile with F Badali | Moray & Agnew Lawyers |
| For the third Defendant | PD Santamaria KC with A Purton | Madgwicks Lawyers |
TABLE OF CONTENTS
A. Introduction................................................................................................................................... 1
A.1 Overview of the dispute....................................................................................................... 1
A.2 Overview of key questions and answers............................................................................ 5
B. Context........................................................................................................................................... 12
B.1 Background facts.................................................................................................................. 13
B.2 The death of Eric Snr and what followed......................................................................... 17
B.3 The assignment deed is executed....................................................................................... 24
B.4 RLF and the partnership expand........................................................................................ 28
B.5 The partnership dissolves.................................................................................................... 31
B.6 Simon raises concerns.......................................................................................................... 32
B.7 A Federal Court proceeding is commenced and settled................................................. 35
B.8 Zilla’s will.............................................................................................................................. 36
B.9 The younger siblings raise their claims............................................................................. 36
C. The Witnesses.............................................................................................................................. 38
Josephine............................................................................................................................. 39
Simon.................................................................................................................................. 40
Mary..................................................................................................................................... 41
Jane.... .................................................................................................................................. 42
Desmond............................................................................................................................. 42
Bill..... .................................................................................................................................. 43
Rick... .................................................................................................................................. 45
Luke.. .................................................................................................................................. 45
Valuation experts............................................................................................................... 45
D. Consideration of preliminary factual issues......................................................................... 47
D.1 Eric Snr’s statements about leaving Ripon Lea to RLF or the elder sons.................... 47
D.2 Did the plaintiffs agree to the assignment in October 1984?......................................... 49
D.3 The plaintiffs’ accounts relating to the assignment deed............................................... 56
Jane.... .................................................................................................................................. 57
Mary.. .................................................................................................................................. 58
Desmond............................................................................................................................. 62
Josephine............................................................................................................................. 63
Simon.................................................................................................................................. 65
Payments under the deed?............................................................................................... 65
Access to copies of the deed?........................................................................................... 66
E. Consideration of the key questions identified by the parties............................................ 68
E.1 Did the trustees ‘procure execution’ of the assignment deed?...................................... 68
Overview............................................................................................................................. 68
Findings............................................................................................................................... 69
Conclusion.......................................................................................................................... 74
E.2 Did the trustees breach the fair-dealing rule?.................................................................. 75
E.2(a) Did the fair-dealing rule apply?........................................................................... 76
Overview of the parties’ positions..................................................................... 76
A limit based on the notion of ‘alter ego’?........................................................ 78
The fair-dealing rule applies more broadly...................................................... 79
Application to the facts........................................................................................ 82
E.2(b) Did the transaction meet the requirements of fair dealing?............................ 85
The four sub-issues identified by the parties................................................... 85
Overview of the parties’ submissions............................................................... 86
Independent advice?............................................................................................ 87
Did the trustees take advantage of their position?.......................................... 88
Was there full disclosure?................................................................................... 90
Was the transaction fair and honest?................................................................. 96
E.2(c) Have the defendants established a defence?.................................................... 102
Section 21 of the Limitation Act....................................................................... 102
Parties’ arguments.............................................................................................. 103
Scope of section 21(1)......................................................................................... 105
Section 21(2) and the scope of its proviso....................................................... 106
Application to the facts...................................................................................... 118
Fair dealing – laches or acquiescence?............................................................ 122
E.3 Was the execution of the deed procured by undue influence?.................................... 124
E.3(a) Was there a presumed or actual relationship of undue influence between the plaintiffs and Zilla, Bill and/or Rick?................................................................................ 128
E.3(b) Has any presumption of undue influence been rebutted?............................. 128
E.3(c) What was the effect of any undue influence on RLF / the assignment to RLF? 129
E.4 Was the execution of the assignment deed procured through unconscionable conduct? 131
E.4(a) Were any of the plaintiffs under a special disadvantage in relation to the assignment deed?...................................................................................................................... 132
E.4(b) Did Zilla, Bill and/or Rick unconscientiously take advantage of that special disadvantage?....................................................................................................... 133
E.4(c) What was the effect of any unconscionability on RLF / the assignment to RLF? 134
E.5 Have the defendants established a defence of laches or acquiescence?..................... 134
E.6 Did Simon and Josephine’s minority affect whether the assignment deed was binding on them?................................................................................................................................. 145
E.6(a) Was the assignment deed binding unless avoided? Or, not binding unless ratified?................................................................................................................................ 149
E.6(b) Did Simon and Josephine avoid being legally bound by the assignment deed? Or, did they become legally bound by the assignment deed through ratifying it? 149
E.6(c) Does the Limitations of Actions Act 1958 bar a remedy for Simon and Josephine?................................................................................................................................ 150
E.6(d) If Simon and Josephine avoided the assignment deed and/or did not ratify it, and it is found that the assignment deed is otherwise binding on the remaining plaintiffs, what legal consequences flow?.......................................................................... 151
E.7 If successful on having the assignment deed set aside, are the plaintiffs, or some of them (and if so, who), entitled to relief, and on what terms and conditions?........................... 151
E.7(a) To what extent should relief be conditional on Simon and Desmond repaying amounts paid to them under the settlement deed relating to the Federal Court proceeding in 2002?...................................................................................................................... 151
E.7(b) To what extent should relief be conditional on the plaintiffs repaying any amounts they received under the assignment deed?..................................................... 152
E.7(c) Are the plaintiffs otherwise entitled to relief?.................................................. 155
E.8 Are the plaintiffs (or any of them) entitled to equitable compensation relating to the use of the Carranballac land since Zilla’s death?.......................................................................... 156
F. Conclusion and orders.............................................................................................................. 157
HIS HONOUR:
Do the first and second defendants, as trustees of the deceased estate of Eric Parrington Fay (Eric Snr[1]), hold the residuary estate on trust for the plaintiffs, as originally provided by Eric Snr’s will? Or are the plaintiffs bound by a deed they signed in November 1984 (the assignment deed), which assigned their rights under Eric Snr’s will to the third defendant (RLF)?
[1]In these reasons, members of the Fay family are generally referred to by their first names.
A. Introduction
A.1 Overview of the dispute
The proceeding involves seven of the 11 children of Eric Snr and Zilla (sometimes called ‘Zillah’) Fay (Zilla).
The plaintiffs are the five youngest siblings (Jane, Mary, Desmond, Josephine and Simon), and the first and second defendants are the two eldest brothers (William, known as Bill; and Eric, known as Rick).
The third defendant, RLF, was incorporated in 1963 and at all times has been owned by members of the Fay family. Its current directors are Bill and Rick, and it is owned by the four eldest brothers, Bill, Rick, Mark and Luke, in virtually equal shareholdings. RLF was the registered proprietor of various parcels of land that, for many years until 1996, were farmed by a partnership of Eric Snr, Zilla, and the four eldest brothers (‘EP and Z Fay & Sons’ — the partnership). RLF and the partnership were managed by Zilla and others as a combined undertaking. The partnership was the trading arm of the undertaking.
The original family home, called ‘Ripon Lea’, stands in the south-eastern corner of a property on a title at 6376 Glenelg Highway, Carranballac, that includes over 300 acres of farming land to the west and north of the home. Across a side road to the east (the Beaufort-Carranballac Road) is another title associated with the same address of over 300 acres (together, the Carranballac land, or Ripon Lea).
Eric Snr inherited Ripon Lea and the Carranballac land from his father, and Eric Snr remained its registered proprietor until his death in 1983. The current registered proprietors are Zilla, Bill and Rick as the trustees of Eric Snr’s estate, although Zilla herself died in 2017.
As well as farming the land registered to RLF, until 1996 the partnership also farmed the Carranballac land. Since then it has been farmed by Bill and Luke.
The four eldest brothers worked for the partnership, receiving no wages until 1987. The two eldest sisters and five younger siblings were not involved in the partnership and its farming operations. The family’s living expenses were met from the income of the partnership.
Eric Snr died on 21 December 1983, leaving a will dated 16 September 1977 appointing Zilla, Bill and Rick as executors of the will and trustees of his estate. According to the inventory of his estate, Eric Snr’s assets were the Carranballac land and a personal estate of about $134,000, the majority of which was his interest in the partnership and a loan to RLF. The will directed that the whole of the estate be held on trust for Zilla during her lifetime, and that after her death the residue then remaining be divided among the plaintiffs.
In the months after Eric Snr’s death, various discussions involving Zilla, Bill, Rick and Murray Byrne, the family’s solicitor, led to the preparation of the assignment deed. The plaintiffs each signed the assignment deed on separate occasions in November 1984, and Zilla signed as witness for each of them. By the assignment deed, the plaintiffs agreed to sell, and RLF agreed to purchase, the plaintiffs’ reversionary interest (to vest after Zilla’s death) in the residuary estate of Eric Snr under his will, in exchange for $100,000 to be paid to the plaintiffs in equal shares within a 10-year period, $2,000 of which would be payable on each of them turning 19 years old. The plaintiffs were then aged from 15 to 22 years old. As well as being trustees of the estate of Eric Snr, Zilla, Bill and Rick were the directors of RLF. Bill signed the assignment deed as a director of RLF. Each of Zilla, Bill and Rick also signed noting they had been advised of the assignment in their capacities as trustees.
Zilla died on 29 September 2017. Since Zilla’s death, Bill and Rick have refused to transfer any of the remaining estate of Eric Snr to the plaintiffs, relying on the assignment deed.
The plaintiffs claim the defendants hold on trust for them the residue of Eric Snr’s estate that would have been due to them in the absence of the assignment deed, which they claim should be set aside due to (1) breach of fair-dealing rule, (2) undue influence, and/or (3) unconscionable conduct. The two youngest (Josephine and Simon) also claim that the assignment deed is ineffective due to their minority when they signed it, and the fact that they never ratified it.
The plaintiffs seek a declaration that the assignment deed is void, or alternatively, that it is voidable and to be set aside, a declaration that the titles to the Carranballac land are held on trust for them, orders facilitating the transfer of the titles to them, and transfer of Eric Snr’s remaining personal estate (including an amount representing his interest in the partnership, and other assets as specified in the inventory for his estate prepared for probate of his will in 1984), together with an accounting of the administration of his estate to date. They also seek equitable compensation and interest in respect of the use of the Carranballac land since Zilla’s death.
The plaintiffs commenced this proceeding in December 2019, about 27 months after Zilla’s death and about 35 years after they signed the assignment deed. This gave rise to a series of issues in the proceeding.
The defendants pleaded that the plaintiffs’ breach of fair-dealing claim was barred by s 21 of the Limitation of Actions Act 1958 (the Limitation Act).
With respect to the breach of fair-dealing claim, the defendants contended that, pursuant to s 21(2) of the Limitation Act, the plaintiffs’ causes of action accrued on 20 November 1984 when each of them executed the assignment deed, and therefore the breach of fair-dealing claims had been barred well before this proceeding was commenced in 2019. In response, the plaintiffs agreed that s 21(2) of the Limitation Act applied but claimed that, on a proper interpretation and application of that provision, the proviso in s 21(2) applied, with the result that the period within which they had to commence this proceeding commenced to run upon Zilla’s death when their interest vested in possession, and so the proceeding was brought within time under s 21(2). The plaintiffs submitted that it follows that, with respect to the fair-dealing rule, the defence of laches was therefore unavailable. The plaintiffs alternatively submitted that if s 21(1) applied to the case, no limitation period applied, and they acknowledged that in this event laches would be available to be argued.
The defendants also pleaded that the plaintiffs’ claims were all barred by laches, and/or by acquiescence. As well as contending that laches was not available as a defence to the breach of fair-dealing claim, the plaintiffs submitted that laches and acquiescence were not established in relation to any of their claims. With respect to the issue of Josephine and Simon’s minority, the plaintiffs further submitted that that was not a claim in equity, and therefore the doctrine of laches does not apply.
The defendants contended that it was too late for Josephine and Simon to repudiate the assignment deed on the ground that they were minors when they signed it, because they had not repudiated it within a reasonable time of turning 18. No limitation period was identified as barring Josephine’s and Simon’s claims in this regard. The plaintiffs submitted that the proper analysis was that the assignment deed was not binding on them because they had never ratified, and in the alternative they contended that Josephine and Simon (particularly Josephine) had not unreasonably delayed repudiating the assignment deed in any event.
A.2 Overview of key questions and answers
Based on the parties’ joint statement of issues[2] and their pleadings,[3] the key questions for determination in this proceeding are as set out below. A brief outline of my conclusion on each question appears below each question. My detailed reasoning appears in part E of these reasons below.
[2]By orders made on 12 May 2023 and 19 July 2024, the parties consented to orders that they would prepare a joint statement of issues. The joint statement of issues did not supplant the pleadings. For example, the plaintiffs noted that it omitted the plaintiffs’ pleaded claim for equitable compensation. The defendants ultimately did not press [22]–[24] of the joint statement of issues.
[3]Third further amended statement of claim (Third FASOC); Defence of the first and second defendants to the third further amended statement of claim, dated 6 August 2024, and filed 7 August 2024 (D1 and D2 defence). Defence of the third defendant to the third further amended statement of claim, dated and filed 8 August 2024 (D3 defence); Reply to defence of first and second defendants dated 22 July 2024, dated and filed 23 July 2024 (Reply to D1 and D2); and Reply to defence of third defendant dated 16 July 2024, dated and filed 18 July 2024 (Reply to D3).
First: did Zilla, Bill and/or Rick ‘procure the execution’ of the assignment deed?[4]
[4]Joint statement of issues [1], [6], and see also [13].
During closing addresses, the parties submitted that the question of who ‘procured’ the execution of the assignment deed was not relevant to the breach of fair-dealing claims. The parties were in agreement that the fair-dealing rule was directed to the features of the impugned transaction rather than the beneficiaries’ execution of the transaction document. I accept that the application of the fair-dealing rule is not necessarily assisted by answering the narrow question of whether the trustees procured the plaintiffs’ signatures on the document on a particular occasion. However, that question is not completely irrelevant, either. In my view, as well as the features of the transaction and the positions of the relevant persons and entities affected by it, the entirety of the circumstances in which the assignment deed came into existence is of potential relevance, and this includes the circumstances in which it came to be executed by the plaintiffs.
The inquiries required for the purposes of undue influence and unconscionability are different from the inquiry as to fair-dealing, and they are in turn somewhat different from one another. Undue influence focusses on whether each plaintiff exercised free will in entering into the assignment deed, and unconscionability focusses on the conduct of Zilla, Bill and Rick (and RLF) leading to the plaintiffs entering into the assignment. Both of these doctrines involve consideration of contextual matters such as any relevant disparity in bargaining positions between the trustees and plaintiffs. The circumstances of execution of the assignment deed are relevant to both.
Conscious of the differences in approach required under each claim, I was satisfied that all three trustees brought about the transaction represented by the assignment deed, and that Zilla (and to a lesser extent Bill) procured its execution by the plaintiffs.
Second: in the circumstances of its execution by the plaintiffs (or any of them) did Zilla, Bill and/or Rick breach the equitable rule of fair dealing that applies to trustees’ involvement in transactions concerning beneficiaries’ interests and trust property, with the result that the assignment deed should be set aside in relation to the plaintiffs (or any of them)?[5] This involved the following sub-questions:
[5]Joint statement of issues [4], [5].
(a) Did the ‘fair-dealing rule’ apply to the trustees’ procurement of the plaintiffs’ entry into the assignment deed here, even though they were not parties to the assignment and the assignee was RLF?[6]
[6]Joint statement of issues [2].
The plaintiffs bore the onus on this sub-issue. The defendants submitted that unless RLF was the alter ego of the trustees, the claim must fail. RLF had a distinct legal personality and could not be characterised as the ‘alter ego’ of the trustees. I did not find that RLF was the ‘alter ego’ of any of the trustees but I did not accept that this precluded the operation of the fair-dealing rule. The trustees were the directors of RLF and controlled it, as well as being substantial minority shareholders in RLF. I resolved this issue in favour of the plaintiffs. Having regard to the principles on which the fair-dealing rule is based, I concluded that it applied here.
(b) Did the circumstances of the transaction meet the requirements of fair-dealing?
The defendants bore the onus on this issue. Its determination involved consideration of the following factors:
(i) Did Zilla, Bill and/or Rick take advantage of their position as trustees and executors of Eric Snr’s estate?[7] I concluded that they did.
[7]Joint statement of issues [3(a)].
(ii) Did Zilla, Bill and/or Rick make full disclosure to each of the plaintiffs?[8] I concluded that they did not.
[8]Joint statement of issues [3(b)].
(iii) Was the transaction fair and honest?[9] I concluded that it was not fair.
[9]Joint statement of issues [3(c)].
(iv) Was independent advice for the plaintiffs required, and if so, was it obtained?[10] I concluded that this was not a specific requirement of the rule of fair dealing, but was a relevant matter. No such advice was provided here.
(c) Have the defendants established a defence?[11]
The available defences were that the claim was made after the deadline prescribed by the Limitation Act (if one applied), and acquiescence. Neither was made out. The parties agreed that laches (that is, delay causing prejudice) was not available as a defence to this claim. I concluded that the defendants did not establish a defence to the plaintiffs’ claim to set aside the assignment deed for breach of the fair-dealing rule.
[10]Joint statement of issues [3(d)].
[11]Joint statement of issues [25], [26].
For these reasons, I concluded that the trustees breached the rule of fair-dealing, with the result that the deed of assignment is to be set aside, as regards all the plaintiffs.
Third: was the execution of the deed by the plaintiffs (or any of them) procured through undue influence, with the result that the deed of assignment is to be set aside for all or any of the plaintiffs?[12] This involved the following sub-questions:
[12]Joint statement of issues [7]–[12].
(a) Was there a presumed or actual relationship of undue influence between the plaintiffs and Zilla, Bill and/or Rick?[13]
[13]Joint statement of issues [7(a)–(c)].
Yes, there was undue influence by Zilla (presumed and actual) over each of the plaintiffs. In addition, Bill exerted actual undue influence over Mary and Desmond.
(b) If there was undue influence, is the assignment deed capable of being set aside on this basis even though none of Zilla, Bill or Rick were parties to the assignment deed;[14] or in other words, was RLF affected by any undue influence through Zilla and Bill or Rick?[15]
[14]Joint statement of issues [8]; see also Third FASOC [23], [23A] (albeit not referring to Rick), [24].
[15]Joint statement of issues [9]; see also Third FASOC [23], [23A] (albeit not referring to Rick), [24].
Yes, the assignment deed may be set aside on the basis of the undue influence exercised by Zilla, and Bill, as RLF was on notice of their conduct.
(c) Has any presumption of undue influence been rebutted?[16]
No, the presumption of undue influence by Zilla was not rebutted.
[16]Joint statement of issues [10].
Fourth: was the execution of the assignment deed by the plaintiffs (or any of them) procured through unconscionable conduct, with the result that it is to be set aside (and if so, for which plaintiffs)?[17] This involved the following sub-questions:
[17]Joint statement of issues [13]–[16].
(a) Were any of the plaintiffs under a special disadvantage in relation to the assignment deed? If so, which plaintiffs?[18]
[18]Joint statement of issues [13] see also Third FASOC [27] (albeit not referring to Rick).
Yes, all the plaintiffs were under a special disadvantage vis-à-vis their trustees and senior close family members, Zilla, Bill and Rick.
(b) Did Zilla, Bill and/or Rick unconscientiously take advantage of that special disadvantage?[19]
[19]Joint statement of issues [14]; Third FASOC [28] (albeit not referring to Rick).
Yes, they all unconscientiously took advantage of that special disadvantage with respect to all the plaintiffs.
(c) Did RLF unconscientiously take advantage of that special disadvantage?[20]
Yes, through conduct and states of mind of Zilla, Bill and Rick.
[20]This issue was not included in the joint statement of issues but arises from the Third FASOC [27], [28].
Fifth: have the defendants established a defence to the claims of undue influence and unconscionability?[21]
The scope for an effective defence to the plaintiffs’ claims to set aside the assignment deed on grounds of undue influence and unconscionability was greater than for fair-dealing, because laches could be raised in response to undue influence and unconscionability.
I concluded that the defendants successfully established that Desmond and Simon were guilty of laches, and that this was an effective defence to the claims of undue influence and unconscionability made on behalf of each of them.
However, the defendants failed to prove when the remaining plaintiffs, Jane, Mary and Josephine, had sufficient knowledge of the assignment and its circumstances for the doctrine of laches to apply. I was not satisfied that Jane, Mary and Josephine had sufficient knowledge of this at any time before Zilla’s death in 2017. That meant the defendants failed to establish a defence of either laches or acquiescence to the claims of undue influence and unconscionability made on behalf of Jane, Mary and Josephine. The acceptance by Jane and Mary of $2,000 each in about 1985 did not constitute acquiescence in the absence of a sufficiently detailed understanding of the assignment.
[21]Joint statement of issues [25], [26].
Sixth: did Simon and Josephine’s minority at the time of execution affect whether the assignment deed was binding on them?[22] This involved the following sub-questions:
[22]Joint statement of issues [17]–[21]; Third FASOC [18], [20(a)], [21].
(a) Was the assignment deed binding unless repudiated/avoided? Or, not binding unless ratified?[23]
[23]Joint statement of issues [17(a)], [17(b)]; see also Third FASOC [18], [20(a)], [21].
The assignment deed was binding on Josphine or Simon unless they repudiated it within a reasonable period after attaining legal majority (turning 18 years of age).
(b) Did Simon and Josephine avoid being legally bound by the assignment deed? Or, did they become legally bound by the assignment deed through ratifying it?[24]
[24]Joint statement of issues [18], [19]; see also Third FASOC [18], [20(a)], [21].
They were required to repudiate/avoid it, and this did not occur until they attempted to do so by commencing this proceeding in 2019. Simon’s attempt was ineffective because it was unreasonably late. Josephine’s repudiation was effective. (If, contrary to my conclusion on sub-issue (a), ratification was relevant, there was no ratification or fresh agreement.)
(c) Does the Limitation Act bar a remedy for Simon and Josephine?[25]
[25]Joint statement of issues [20].
The defendants did not identify any provision of the Limitation Act that barred any such remedy for Josephine.
(d) If Simon and Josephine avoided the assignment deed[26] and/or did not ratify it, and it is found that the assignment deed is otherwise binding on the remaining plaintiffs, what legal consequences flow?[27]
This question is not strictly necessary to determine, because I have found that the assignment deed is to be set aside in its application to each of the other plaintiffs in any event. However, if it were to remain binding on the other plaintiffs, and not Josphine, it would be ineffective against Josephine but effective against the others.
[26]Joint statement of issues [21], says ‘did not avoid’, but in context that must be read as ‘did avoid’.
[27]Joint statement of issues [21].
Seventh: if successful in having the assignment deed set aside, are the plaintiffs, or some of them (and if so, who), entitled to relief, and on what terms or conditions?[28] This involved the following sub-questions:
[28]Joint statement of issues [27]–[28].
(a) To what extent, if any, should relief be conditional on Simon and Desmond repaying amounts paid to them under the settlement deed relating to the Federal Court proceeding in 2002?[29]
[29]Joint statement of issues [27].
None. Simon and Desmond received a settlement sum at the conclusion of their Federal Court proceeding in 2002, in which they compromised claims they made as shareholders in RLF and through a derivative action on behalf of RLF. Their compromise of their claims in the Federal Court proceeding does not require counter-restitution in order for them to succeed in their claim of breach of the fair-dealing rule in this proceeding. The settlement deed expressly reserved their rights to make claims relating to their inheritance under Eric Snr’s will.
(b) ‘It being accepted that relief should be conditional on the plaintiffs repaying any amounts they received under the assignment deed’:
(v) What amounts, if any, were paid to any of the plaintiffs under the assignment deed?[30]
[30]Joint statement of issues [28(a)].
Jane and Mary gave evidence that $2,000 was paid to them. Apart from this, on the available evidence, I was not satisfied that any other payments were made to the plaintiffs under the assignment deed that were reasonably identified as such.
(vi) What amounts must now be repaid by Simon and Desmond to RLF?[31]
My answer is ‘none’, because I am not satisfied that any amounts were paid to Simon and Desmond under the assignment deed, and they are not liable to repay any amounts under the settlement deed.
[31]Joint statement of issues [28(b)].
Eighth: Are the plaintiffs entitled to equitable compensation and interest for the use of the Carranballac land since Zilla’s death?
I will invite further submissions on this question, and as to proper orders more generally, in light of the implications of my decision to set aside the assignment deed and my reasons for judgment as a whole.
B. Context
The parties filed a brief agreed statement of facts that is binding and precludes any inconsistent findings.[32] The findings on background facts in this section of my reasons includes all the facts in that statement. It also includes additional findings on a number of other facts that appear to have been uncontroversial, most of which were introduced by the defendants.
[32]Evidence Act 2008 s 191.
The plaintiffs contended that many of these background facts were irrelevant. The plaintiffs contended that the facts necessary to determine their claims of unfair dealing, undue influence and unconscionable conduct were quite simple and limited in scope.
The defendants contended that a broader view was needed. They submitted that, in order to determine whether the assignment breached the fair-dealing principles, and also to determine whether it was the product of undue influence or unconscionable conduct, it was necessary to consider such matters as: the way the family farming business and household management expanded and evolved over many years, through various vicissitudes; the contributions of the elder sons to the farming enterprise; and the role of Zilla, the partnership and RLF in providing for the household at Ripon Lea and the family more broadly. I return to these in section E of these reasons, below.
Where there were factual controversies for me to resolve, I have noted them (without recording my findings on them) in this section. My findings on those controversies appear later in these reasons, in sections D and E below.
B.1 Background facts
Eric Snr and Zilla lived at Ripon Lea on the Carranballac land, near Skipton, in the Western District. They raised 11 children, born between July 1951 and June 1969. In birth order their children were Geraldine, William (Bill), Carmel, Eric (Rick), Mark, Luke, Jane, Mary, Desmond, Josephine and Simon. Geraldine and Carmel are not involved in this proceeding. Mark was not available to give evidence.
RLF was incorporated on 18 March 1963. Eric Snr, Zilla and Bill were the original directors of RLF. According to the register of shareholders,[33] on 1 March 1963 the majority initial shareholders in RLF were Rick and Zilla (2,050 shares each) with the remaining shares held by Bill, Mark and Luke (1,000 each). On 10 May 1968, 1,000 shares in RLF were issued to Desmond. On 12 October 1973, 1,000 shares in RLF were issued to Simon.
[33]Exhibit 65. Oddly, Eric Snr does not appear on the register, unless some confusion between him and Rick has occurred.
RLF was a landholding entity, not a trading entity. On 24 April 1963, RLF became the registered proprietor of a 512-acre parcel of land known as ‘Kerri’. On 26 September 1969 RLF became the registered proprietor of a 774-acre parcel of land known as ‘Tara Downs’. On 25 November 1975 RLF became the registered proprietor of a 379-acre parcel of land known as ‘Waldrons’.
On or around 24 June 1975, the partnership of ‘EP & Z Fay & Sons’ was formally established. I was invited to assume[34] that the partnership consisted of Eric Snr, Zilla, Bill, Rick and Mark, and that a partnership agreement was prepared by the Ballarat law firm of Byrne, Jones and Torney (BJT).[35] I treated these as uncontroversial facts. Murray Byrne of BJT was the family solicitor.
[34]The first and second defendants’ opening submissions [16] (D1 and D2 opening submissions); The third defendant’s opening submissions [13] (D3 opening submissions).
[35]D1 and D2 opening submissions [16]; D3 opening submissions [13].
In February 1977 a bushfire, known as the Streatham bushfire, burned across much of the Western District, impacting sections of Eric Snr’s land. During the Streatham bushfire, while fighting the fires and serving on the Carranballac fire truck, Bill suffered personal injuries.
On 16 September 1977, Eric Snr made his final will, in which he appointed Zilla, Bill and Rick as executors of his will and trustees of his estate. The will also provided that the whole of his estate would be held on trust for Zilla during her lifetime and that the residue remaining after her death would be equally divided among his five youngest children, the plaintiffs. Eric Snr’s estate included the Carranballac land.[36]
[36]Statement of agreed facts [5] (Statement of agreed facts). The deed of assignment referred to Certificates of Title Volume 4947 Folio 263 and Volume 3414 Folio 579, whereas the correct volume number for the latter title should have been Volume 3413. This title was correctly recorded on the inventory of assets in Eric Snr’s will.
By early 1981, Eric Snr was considerably impacted by deteriorating health, limiting his capacity for hands-on farming activities and meaning he relied on his sons more. His health continued to deteriorate in the following year.
Sometime around 1981 to 1982, approximately $200,000 compensation was paid out to Eric Snr by the Victorian State Electricity Commission for the impact of the Streatham bushfires after they accepted that faulty power lines were responsible. This contributed to the funds available for RLF to buy more land.
In or about the 1982–1983 financial year, Mr N (‘Denis’) Westbrook, the Fay family’s accountant, wrote to Eric Snr advising that the drought would result in reduced income for the family, and that if the drought persisted, it would almost certainly mean their income in the 1983–1984 financial year would be reduced.
On 1 March 1983, in a letter to the Commonwealth Department of Education concerning the family’s income, Eric Snr and Zilla wrote:[37]
July 1981 to June 1982 was a bountiful year. We were taxed accordingly. But since July 1982 we have experienced the worst drought that Victoria has ever recorded and that our grain crops which usually make up the bigger proportion of our income was a complete failure … On advice from our accountant we have had to apply to taxation office to greatly reduce our provisional tax as it has been estimated that our income would be $4450 each for year 1982–1983. And possibly lower for 1983–84.
As my wife and I are totally responsible for the upkeep & education of four dependent children — on our portion of next income we could find it most difficult to meet our commitments.
[37]Exhibit 28.
In April 1983 Rick and Mark returned to work for the partnership after doing alternative work in NSW and Queensland during the drought period.
RLF continued to acquire land. Later that year, on 1 September 1983, a contract of sale of real estate was made for RLF to purchase a 1,075-acre parcel of land known as ‘Russells’. Also, on 26 September 1983, RLF became the registered proprietor of a 1082-acre parcel of land known as ‘Nerrin’.
On 16 December 1983 a contract of sale of real estate was made for the purchase by the four elder sons of a 216-acre property known as ‘Partridges’. Sometime prior to purchasing the Partridges property, Bill had received around $105,000 in compensation for the injuries he sustained during the Streatham bushfire, which he used for the purchase.
Bill gave evidence at the trial that, at about this time, Eric Snr told him that he (Eric Snr) wished to change his will and bequeath the Carranballac land to RLF. Bill’s oral evidence was that:[38]
‘just before dad died he said he was going to leave Rippon Lea — one part of it to myself and one part of it to my brother Rick, … and I said to him, ‘Well. That might cause problems so we should put that into the Rippon Lea farming company and then everyone will get a share of it when that’s divided up with six boys’. So he said, ‘Yep. That’s okay’, and so [t]hen he obviously chatted to mum about it because he told me him and mum had decided to do that, and then when he went … away for about two weeks holiday. He went up towards Mildura, him and mum. Finished up in hospital, and so that decision to transfer it over never happened, but mum was fully aware that was going to happen, and her and Murray Byrne must’ve realised that the deed was the way to activate that … So I never had anything to do with thinking up how to get this deed going.’
[38]T432.3-26.
Bill’s evidence in his written affidavits did not note any conversation between himself and Eric Snr prior to his death about changing his will. One of Bill’s affidavits referred to hearing from Murray Byrne that Eric Snr had wanted to keep the land together. Bill’s affidavit referred to a number of documents he has read from the file of BJT, which he does not recall seeing at the time, and went on to say:
35. After my father’s death, Rick and I attended a small number of meetings with our mother and Mr Byrne. While Rick and I attended these meetings, we did not participate in the sense that the discussion took place between our mother and Mr Byrne.
36. I have a general recollection of these meetings and the matters discussed at them. I recall discussing our father’s will and the transfer of the farm to RLF. My recollection is that my mother wanted to get the farm into the name of RLF and that she discussed with Mr Byrne the need to keep the farming land together. While I have no specific recollection of what Mr Byrne said during any of these discussions, my memory is that Mr Byrne stated to our mother that he knew that our father wanted to ensure that the farm property was kept together and that he and Mr Byrne had discussed those matters before he died.
37. I have been shown documents which appear to be a file note taken by Mr Byrne of conferences that I attended with my mother and Rick on 10 February 1984 (P60) and with my mother on 18 May 1984 (P62). I have no specific recollection of these conferences, however, they are consistent with my general recollection that I attended a small number of meetings with Mr Byrne after my father’s death. I have no reason to doubt the accuracy of Mr Byrne’s notes.
38. Mr Byrne’s file notes record discussions about my younger siblings transferring their interest in our father’s estate to RLF in exchange for the payment of a sum of money. I have no doubt that these matters were discussed but they were not raised by me. As I say above, it is my impression that these matters were discussed by Mr Byrne and our mother, and that the conferences that I attended were really the continuation of prior discussions that had taken place without me being present.
Rick stated in one of his affidavits that in about 1982 Eric Snr expressed concerns to himself and Bill about money. In particular Rick recalls Eric Snr saying to him that he had to ‘get the farm into the company’ which Rick understood to mean that Eric Snr wanted to transfer Ripon Lea to RLF. When asked under cross-examination about the comments Eric Snr had made to him about transferring the properties to RLF, Rick’s oral evidence confirmed this interaction had happened but that he had not discussed it with Bill or Zilla.
Luke also gave some evidence concerning remarks made by Eric Snr about how he wished to leave the Carranballac land.
This topic — concerning what Eric Snr might have said to Bill, Rick and Luke about how he intended to leave the Carranballac land — was somewhat controversial. I return to it and make findings about it later in these reasons.
B.2 The death of Eric Snr and what followed
Eric Snr died on 21 December 1983. On the same day, in his place, Rick became a director of RLF. Bill was 30 years old, and Rick was 25. Zilla was 57.
At this time, Bill, Rick, Luke and Mark each held 2522 shares in RLF, while Simon and Desmond held 1000 each, and Zilla and Eric Snr’s estate each held six shares.[39] From this time to Zilla’s death in 2017, the directors of RLF were Zilla, Bill and Rick.[40] The family’s accountant, Denis Westbrook, was the company secretary.
[39]Statement of agreed facts [9].
[40]Ibid.
On 10 February 1984 Zilla, Bill and Rick met with Murray Byrne and discussed, among other things, an intention to address the question of ‘the purchase by the boys of the girls’ interest in the farm’.[41] One of Rick’s affidavits stated that he had a very clear memory of this meeting, and it was the only meeting he attended with Murray Byrne. He described it as follows:
I recall Mr Byrne reading through the details of our father’s will. I don't have a specific recollection of the content of the will, as it was being read by Mr Byrne. However, I do recall that the discussion that followed was a discussion between Mr Byrne and our mother and that neither of Bill or I participated in.
[41]Exhibit 41.
He had no reason to doubt the accuracy of Mr Byrne’s file note but did not recall the other matters in it being discussed. His affidavit went on to state:
At some point after the 10 February meeting, I was told that there was to be a deed of assignment. My recollection is that I was told words to the effect that there was a need to raise money for my younger siblings, that Ripon Lea would stay with our mother and that it would eventually come to RLF on her death because of her life interest. I can also recall being told words to the effect that Bill and I should leave the signing of the document to our mother and that Bill and I should not give any advice or assurances to the younger siblings because it could be construed as a conflict of interest. I do not recall who told me these things, although I can say it was not Bill (or any of my other siblings). To the best of my recollection, I was told these things by my mother. I did not question any of what I was told.
As I explain in more detail later in these reasons, Rick gave additional evidence at the trial that Zilla told him about the contents of the deed of assignment, including the amount to be paid by RLF.
On 13 April 1984 Zilla, Bill and Rick signed an affidavit supporting a probate application regarding Mr Fay’s will. The inventory of Eric Snr’s estate included in support of the application was:[42]
[42]Exhibit 55.
INVENTORY OF ASSETS
REAL ESTATE:
House and land situated at Carranballac
being described in Certificates of
Title Volume 3413 folio 579 and
Volume 4947 folio 263 $130,837.50PERSONAL ESTATE:
South British United Life Assurance
Policy no. 1243-986Sum assured plus bonuses $15,702.70
National Australia Bank, Skipton
Current account 130-0113 406.72
Riponlea Farming Co Pty Ltd
6 shares valued at 180.00
E.P. & Z. Fay & Sons
Deceased’s interest in partnership 93,173.51
Valiant sedan 200.00
Loan to Riponlea Fanning Co Pty Ltd 24,468.26
$264,968.69
Dated this 13th day of April One thousand nine hundred
and eighty-four
Zilla Fay William Fay Eric Fay
……………………………………………………
Executors
The Supreme Court granted probate of the will of Eric Snr on 18 May 1984.
That same day, Zilla and Bill had a further conference with Murray Byrne. Rick was not present. After the conference, Mr Byrne made a typed note (overlaid by hand annotations recorded in italics below) as follows:[43]
[43]Exhibit 56.
On the 18th May I had a conference with Mrs. Fay and William and after lengthy discussions with the family it was agreed that
Jane Fay, Secretary of “Riponlea” Caranballac [sic], 22 yrs
Mary Fay, Student “ “ “ 20 yrs
Desmond Fay, Surveying Student “ 19 yrs 18.8
Josephine Fay, Student “ 17 yrs 3.8.67
Simon Fay, Student “ 15 yrs on 12.6.
(we are aware, of course, that Simon and Josephine are not legally bound until they are eighteen to this agreement) the rest of the family that [sic] they will transfer all their interest in their father’s estate for the sum of $30,000.00 each to be paid over a period of ten years by the Riponlea Farming Company. No acknowledgement of payments are to be made by any parties until they have attained eighteen years. No interest is to be paid’. Assignments result of sale. Transfer by sale of R/P.
It was also agreed that Geraldine and Carmel should be given some as well. Straight gift
MURRAY BYRNE
Another handwritten annotation appeared below Mr Byrne’s name at the end of the note, on the same page, as follows:
Shares sold to six sons, N Westbrook
On the basis of this note, I find that, as at 18 May 1984, there was a firm proposal between Zilla, Bill and Murray Byrne to bring about an assignment to RLF from the plaintiffs of their reversionary/remainder interests in the residuary estate of Eric Snr, for $150,000 ($30,000 each) over ten years, with no interest being payable.
On the basis of the evidence of Rick noted above, I find that by about May 1984 or shortly after that (and before November 1984), Rick was informed by Zilla of the proposal, and understood and voiced no opposition to it, which indicates that he supported it. My conclusion that Rick supported the proposal is consistent with and corroborated by him later putting his signature to the assignment deed. I set out my findings in more detail on this point in section E.1, below.
On 4 June 1984, RLF acquired ‘Riponhurst’; a 226-acre parcel of land which had been purchased by a contract made shortly before Eric Snr died.
On 6 August 1984 Zilla, Bill and Rick became the registered proprietors of the two titles of Carranballac land (including Ripon Lea) in their capacities as trustees of Eric Snr’s estate.
On 17 September 1984, Murray Byrne made a note titled ‘Estate Eric Parrington Fay re Assignment of Family Interests’ stating that he had ‘further confirmation in respect to the suggested family assignment’. The note relevantly included the following:[44]
1. It has been agreed that the six shares in the family company owned by the estate should be transferred to the six sons who are shareholders in the family company and their names are William, Luke, Eric, Mark, Desmond and Simon.
2. We agree that Jane, Mary, Desmond, Josephine and Simon do a release and an assignment (?) of their interest in the estate for the sum of $26,000 payable over a period of 10 years.[45] The payment of $2,000 on their attaining the age of 19. No interest to be payable.
[44]Exhibit 66.
[45]I infer from the draft assignment deed later prepared by Mr Byrne that this was identified as the sum payable to each, making a total of $130,000.
It is unclear whether the above information was conveyed at a meeting or in some other way, and who on the family’s side communicated with Mr Byrne on this occasion. On the basis of this note, I find that the proposal referred to in paragraph 63 above was varied by the reduction of consideration to be paid by RLF from $150,000 to $130,000 ($26,000 for each plaintiff).
BJT then wrote to N Westbrook & Co Accountants on 24 September 1984, asking them to transfer the six RLF shares to the sons.[46] I infer that it was at about this time, in September 1984, that the annotation was made on Murray Byrne’s note of the conference on 18 May 1984 referring to the sale of shares to the six sons, noted in paragraph 62 above.
[46]Exhibit 67.
Internal memos and notes of BJT in evidence before me revealed the following further communications within the firm in September 1984.
(a) On 25 September 1984, a memo addressed to Murray Byrne from Alan Meredith (also of BJT), referred to an attached draft assignment deed and noted the assignment of the children’s interest in the estate for $130,000 (via payments in equal shares, which amounts to $26,000 each).[47] A draft assignment deed referring to payment of $130,000 to the vendors accompanied the memo.
[47]Exhibit 68.
(b) Two days after that, on 27 September 1984, a file note by Murray Byrne stated:[48]
After months of conferences with the family, the family agreed to the following assignment of interest and it is suggested that
1. when Simon becomes of age, i.e. 18, he further confirms his signature and consent.
2. that on Mrs. Fay’s death, she being the life tenant, then the property is formally transferred over to the Company and these documents will form part of the proof of consideration and sale of the remainderman’s interest in the estate. …
[48]Exhibit 69.
In about early October 1984, there was a 21st birthday party at Ripon Lea for Mary.
On 2 October 1984, Murray Byrne wrote a letter to Zilla which commenced:[49]
As a result of our recent conference with you we have given the future of your late husband’s estate considerable thought in light of the proposals which have been put forward by you and William over many months. We note that a decision has finally been reached between the family as to the future interests of all beneficiaries.
[49]Exhibit 70.
The letter went on to note that Mr Byrne was enclosing an original and two copies of a deed of assignment for perusal. It stated:
You will note that Riponlea Farming Company Pty Ltd will, of course be required to seal the document and I would suggest that possibly Mark or Luke, as they would appear to be the only Directors who are not either beneficiaries of the estate, should sign where indicated together with Denis Westbrook who, I understand, is the Secretary of the Company and arrange for the Company Seal to be endorsed on the document.
The reference to Mark or Luke being directors of RLF was incorrect. Only Zilla, Bill and Rick were directors of RLF. Also, the reference to Mark and Luke being ‘the only Directors who are not either beneficiaries of the estate’ suggests further confusion on the part of the author. It would have been more relevant to attempt to identify any directors of RLF who were not trustees of the estate. However, there were no such people. The trustees of the estate and the directors of RLF were the same people: Zilla, Bill and Rick.
The letter also stated that Simon’s interest under the assignment deed would not be enforceable until he reached 18 years and confirmed his consent, but that ‘there will, of course, be no other problems in carrying out the agreement arrived at by all the members of the family at this time’. The letter noted that RLF was ‘responsible to the various beneficiaries for payments as indicated in the document’. It also noted that the titles would not be transferred until all money had been paid ‘and then only upon [Zilla’s] death’.[50]
[50]Exhibit 70.
I infer that three copies of the draft assignment deed referring to $130,000 being payable to the vendors were enclosed with Mr Byrne’s letter to Zilla dated 2 October 1984. The evidence does not establish what happened to them.
On 10 October 1984, Zilla wrote a handwritten letter to Murray Byrne as follows:[51]
[51]Exhibit 72.
Dear Murray
Since our recent conference the family has again discussed the deed of assignment.
It has been agreed by Jane, Mary, Desmond, Josephine & Simon to accept $100,000.
I think this amount is fair to all the family.
Thanking you for your personal attention & help.
Yours sincerely
Zilla Fay
There is a significant controversy to be resolved concerning Zilla’s letter of 10 October 1984. The plaintiffs dispute that they had been consulted about, or agreed to, the proposal referred to in the letter at the time it was written. I return to this issue and make my findings resolving this controversy in section D of my reasons, below.
In response, Murray Byrne wrote back to Zilla on 31 October 1984 enclosing another two re-drafted assignment deeds.[52] These deeds now referred to the price of the proposed assignment being $100,000 rather than $130,000.
[52]Exhibit 73.
In short, from May to the end of October 1984, the consideration RLF proposed to pay for the assignment of the plaintiffs’ interests decreased in two steps from $150,000 (as first discussed between Zilla, Bill and Murray Bryne), to $130,000 (as conveyed by one or more unknown family members, most likely Zilla or Bill, to Murray Byrne in September), and finally to $100,000 (via Zilla’s letter dated 10 October 1984). I infer from this and the other evidence mentioned above that there were discussions over this period at least between Zilla and Bill — and more likely than not between Zilla and Rick also — about what RLF should pay for the proposed assignment.
B.3 The assignment deed is executed
On or about 20 November 1984, the deed of assignment was executed between the five youngest Fay children — Jane, Mary, Desmond, Josephine and Simon — and RLF.[53] Under the assignment deed the plaintiffs assigned, or purported to assign, their interests as remaindermen to RLF, in exchange for a payment to the plaintiffs of $100,000 without interest.[54] The $100,000 was to be paid within 10 years, with the first $2,000 to be paid to each plaintiff upon them turning 19 years old.[55]
[53]Exhibits 74 and 220.
[54]Ibid.
[55]Ibid.
The clearest version of the assignment deed in evidence before me was as follows:[56]
[56]Exhibit 220.
BYRNE, JONES & TORNEY SOLICITORS BALLARAT
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT is made on the 20th day of November One thousand nine hundred and eighty-four BETWEEN JANE FAY, MARY FAY, DESMOND FAY, JOSEPHINE FAY, and SIMON FAY all of Carranballac (hereinafter call [sic] the “Vendors”) of the first part and the RIPONLEA FARMING CO PTY LTD of 2 Drummond Street South Ballarat (hereinafter call [sic] “the Purchaser”) of the other part
WHEREAS ERIC PARRINGTON FAY late of Carranballac who died on the twenty-first day of December One thousand nine hundred and eighty-three and whose Will dated the sixteenth day of September One thousand nine hundred and seventy-seven was proved in the SupremebCourt [sic] of Victoria on the Eighteenth day of May One thousand nine hundred and eighty-four
WHEREAS by his Will the said ERIC PARRINGTON FAY deceased appointed his wife ZILLAH FAY and sons WILLIAM LUKE FAY and ERIC JAMES FAY the Executors of this Will and the Trustees of his estate and after the payment of all his just debts funeral and testamentary expenses and the Probate and Estate duties payable upon the whole of his estate he gave devised and be-queather [sic] the balance then remaining to be held on Trust for his said wife ZILLAH FAY during her life-time and after her death the residue then remaining to be divided equally amongst the Vendors.
WHEREAS the Vendors are absolutely entitled subject to any encumbrances referred to in the Schedule to this Assignment to the reversionary interest hereinafter expressed to be here-by conveyed and have agreed with the Purchaser for the sale thereof to it at the price of ONE HUNDRED THOUSAND DOLLARS ($100,000.00)
NOW THIS DEED WITNESSETH that it is hereby agreed and declared as follows:-
(a)This deed is made in pursuance of the said agreement for the sale in consideration of the sume [sic] of ONE THOUSAND DOLLARS [sic] ($100,000.00) being paid by the Purchaser to the Vendors in equal shares within ten years of the date of this Deedwith [sic] the payment of TWO THOUSAND DOLLARS ($2,000.00) to each of the Vendors being made on their attaining age of nineteen years and any balance out-standing during the duration of the ten years being free of any interest.
(b)The vendors [sic] as beneficial owners convey to the Purchaser all that to which under the Trust of the said Will men-tioned hereinbefore the Vendors are now entitled in reversion expectant on the death of their mother ZILLAH FAY of and in the investments and property specified in the schedule hereto and of and in the investments and property at any time hereinafter representing the same or any part thereof to hold the same unto the Purchaser absolutely subject to the life interest of the said ZILLAH FAY under the said Will.
IN WITNESS whereof the parties have hereunto set their names and seals the day and year first hereinbefore written.
SCHEDULE HEREINBEFORE REFFERED TO
Particulars of the investments and encumbrances not [sic] cons-tituting or representing the residuary real and personal estate of the said ERIC PARRINGTON FAY deceased and all now held be or standing in the joint names of ZILLAH FAY, WILLIAM LUKE FAY and ERIC JAMES FAY the present Trustees of the said Will and estate.
Real Estate:
Property “Riponlea” at Carranballac
described in Certificates of Title
Volume 3414 [sic] folio 579 and Volume
4947 folio 263 valued as at date
of death
Personal Estate:
Interest in EP & Z Fay and Sons
partnership
Cash held in Trust on behalf of estate
Liabilities:
Interest free loan to estate by
Zillah Fay.
$130,833.75
97,173.51
3,765.80$231,773.06
-- 9,992.70
$221,780.36
SIGNED SEALED AND DELIVERED by the ) Jane Fay
said JANE FAY in the presence of: ) Zilla Fay
SIGNED SEALED AND DELIVERED by the ) Mary Fay
said MARY FAY in the presence of: ) Zilla Fay
SIGNED SEALED AND DELIVERED by the ) Des Fay
said DESMOND FAY in the presence of: ) Zilla Fay
SIGNED SEALED AND DELIVERED by the ) Josephine Fay
said JOSEPHINE FAY in the presence )of: ) Zilla Fay
SIGNED SEALED AND DELIVERED by the ) Simon Fay
said SIMON FAY in the presence of: ) Zilla Fay
THE COMMON SEAL of the RIPONLEA
FARMING CO PTY LTD was hereunto [seal affixed]
affixed in the presence of:
……William Fay………………..Director……N (Denis) Westbrook ….…Secretary
We ZILLAH FAY, WILLIAM LUKE FAY and ERIC JAMES FAY as Executors of the estate of the late ERIC PARRINGTON FAY deceased acknow-ledge receipt of advice of the assignment contained within this Deed.
SIGNED SEALED AND DELIVERED by the ) Zilla Fay
said ZILLAH FAY in the presence of: ) Luke Fay
SIGNED SEALED AND DELIVERED by the )
said WILLIAM LUKE FAY in the ) William Faypresence of: ) Luke Fay
SIGNED SEALED AND DELIVERED by the ) Eric J Fay
said ERIC JAMES FAY in the presence )of: ) Luke Fay
There is considerable controversy about the circumstances in which each of the plaintiffs came to sign the assignment deed. I make my findings in that regard in sections D.3 and E.1 of my reasons, below.
On or about 20 November 1984 Murray Byrne sent a letter of that date to Phillip Westbrook (the son of Denis Westbrook) regarding the estate of the deceased, Eric Snr.[57] It noted that copies of the assignment deed were enclosed. It seems likely that all the Fay family had by now signed the deed, including Bill signing as director of RLF. Nothing was made of the possibility that Bill might not have been present when the company seal was affixed.
[57]Exhibit 76.
About a month later, on 19 December 1984, a note was addressed to Murray Byrne from N Westbrook & Co which responded to the 20 November 1984 letter and noted that the assignment deed had now been signed and was being returned.[58] I infer that this was a reference to the assignment deed being executed by RLF, by the affixing of RLF’s company seal, co-signed by Mr Westbrook as secretary.
[58]Exhibit 77.
The assignment deed was also signed by Zilla, Bill and Rick in their capacities as trustees of the estate, recording that they were receiving notice (or ‘advice’) of the assignment.[59]
[59]The parties agreed that nothing turned on this, because this was not a purported assignment under statute requiring notice to the trustees, but was an assignment in equity. The defendants’ note dated 14 August 2024 contrasted the case with an assignment under Property Law Act 1958 s 134, distinguishing Federal Commissioner of Taxation v Everett (1980) 143 CLR 440, 447; and relying on Thomas v National Australia Bank Limited [2000] 2 Qd R 448, [19]-[25] (Pincus JA) for the proposition that in equity an assignment requires no notice to the trustee. The plaintiffs did not dispute the defendants’ analysis: plaintiffs’ responsive note dated 19 August 2024, [7].
On 3 January 1985, BJT wrote to Zilla enclosing her stamped copy of the assignment deed ‘together with an additional five copies which you may like to hand to the other members of the family’.[60] The evidence does not reveal what happened to these additional five copies of the assignment deed.
[60]Exhibit 78.
It was highly relevant to determine when each plaintiff received their own copy of the assignment deed, or (at least) a detailed understanding of it, so as to be sufficiently informed to make a decision about whether to take steps to repudiate or challenge it. I return to this highly controversial factual issue in sections D.3 and E of my reasons, below.
B.4 RLF and the partnership expand
For the financial year ending 30 June 1985, financial statements were prepared for both RLF and the partnership, which were in evidence.[61] Notably, the RLF statement showed that the $120,000 mortgage account for ‘Russells’ from 1984 had been paid off. Included in RLF’s list of freehold assets were five properties, with the last two identified as ‘Russells’ and ‘Partridges’. The statement showed that RLF had owed the partnership $244,817 at the end of the 1984 financial year and showed that this had increased to $364,816.52 by the 1985 financial year. The partnership statement showed a Commonwealth Bank term deposit for $100,402.97, that working capital was $146,789.86, and that the partnership had received a loan from RLF for $315,616.52.
[61]Exhibits 80; 81.
On 8 July 1985 RTR Russell noted receipt of $41,525.47 from the partnership.[62]
[62]Exhibit 82.
On 18 October 1985 a contract of sale of real estate was made by RLF as purchaser, for $518,787.75 for a further property.[63]
[63]Exhibit 84.
The partnership and RLF were established customers of the Commonwealth Bank of Australia (CBA), and dealt with the CBA in Ballarat and a manager called Reg Barker.
On 12 November 1985 a senior manager of the CBA in Ballarat sent a letter to RLF confirming approval of an application regarding an advance overdraft limit of $98,000, and noting amongst the terms and conditions, ‘Existing security will be retained along with an unlimited guarantee from the Directors of the Company’.[64]
[64]Exhibit 88.
On behalf of the defendants, it was suggested that the approval of this CBA overdraft facility was connected in some way with the execution of the assignment deed the year before. It was suggested that the bank required the assignment deed in order to provide the overdraft.[65] This is controversial, or was at least not admitted by the plaintiffs, and I return to it later in these reasons.
[65]The first, second and third defendants’ closing submissions [71] (Defendants’ closing submissions).
For the financial year ending 30 June 1986, both RLF and the partnership again prepared financial statements, which were in evidence.[66] The RLF statement noted the new CBA loan for $98,000 and a new mortgage account for ‘Alexanders’ for $137,327.00. The ‘Russells’ mortgage account which was paid off in the previous financial year was no longer noted on the statement.
[66]Exhibits 95; 96.
Rick gave evidence that around the time of the 30 June 1987 accounts a wool rebate cheque of $205,000 was received by the partnership and given to Zilla.[67] It was contended on behalf of the defendants that this cheque was probably used by Zilla to make the payments due from RLF to the plaintiffs under the assignment deed. This was controversial, and I return to it in section E, later in these reasons.
[67]T607.26–32.
On 29 June 1987, a memo prepared within BJT noted that Simon was under the age of 18 when he signed the assignment deed and that his signature would be needed to confirm his agreement now he was an adult.[68] On the same date, BJT wrote a letter to Simon requesting that he make an appointment to reaffirm the agreement he had already signed and advising him strongly that he should make his own will owing to his interest in the estate.[69] Simon’s evidence was that he did not sign the assignment deed.
[68]Exhibit 105.
[69]Exhibit 106.
RLF’s statements for the financial year ending 30 June 1987 showed that the CBA loan for $98,000 had been fully paid,[70] while a loan for $137,327.00 for ‘Alexanders’ remained outstanding.[71] The loan from the partnership to RLF had further increased to $493,113.39.
[70]The $98,000 was noted as a mortgage account with the Commonwealth Trading Bank in RLF’s financial statements for the previous financial year ending 30 June 1986 (exhibit 95) but did not feature in RLF’s financial statement for the year ending 30 June 1987.
[71]Exhibit 107.
RLF’s landholdings continued to expand. On 10 June 1988 RLF became the registered proprietor of a further 1406-acre[72] parcel of land, known as ‘Ricks’.[73] The financial statement for RLF for the year ending 30 June 1988 showed that RLF’s property portfolio now included a seventh property referred to as ‘Villeurs’.[74] The statement also showed that RLF had secured a new CBA loan for $703,758.90. The loan from the partnership had increased further again to $619,266.49. On 6 August 1988 RLF became the registered proprietor of a 500-acre parcel of land known as ‘Ripponlea East’.[75] A few years later, on 18 October 1991, RLF also acquired registered proprietorship of a 645-acre property called ‘Loyola’.[76] By this time, RLF held more than 6,000 acres of farmland.
[72]Exhibits 142; 118.
[73]Exhibit 118.
[74]Exhibit 108.
[75]Exhibits 142; 118.
[76]Exhibits 142; 118.
On 14 December 1990 Bill was appointed as secretary of RLF, a position he still retains.[77]
[77]Exhibit 180.
The question of whether the amounts payable to the plaintiffs under the assignment deed were paid by the due date of November 1994, or at all, was highly controversial. Save for the $2,000 payments to each of Jane and Mary in 1985 that were admitted by them, the plaintiffs gave evidence that they had received no money under the terms of the assignment deed. Zilla made a set of diary entries, possibly in about 1988, that purportedly record various payments to the plaintiffs.[78] The evidence before me also included a handwritten list of unknown provenance dated ‘1984 – 1987’ and titled ‘payments made to remaindermen’ showing sundry amounts listed.[79] This was a controversial topic, and I return to it later in these reasons.
[78]Exhibit 221.
[79]Exhibit 109.
B.5 The partnership dissolves
For around a decade, following Eric Snr’s death in 1984, until the mid-1990s, Bill, Rick, Luke and Mark continued to operate the farming partnership together. Wages were paid to Bill, Rick, Luke and Mark after 1987.[80]
[80]T413.9–15; T631.3–10.
In about 1995 the four elder brothers decided to dissolve the partnership. On 13 September 1995, Peter Byrne of BJT wrote a file memo which noted that it had been made following a meeting with Mark and Rick Fay.[81] The memo noted that it had been agreed between Bill, Rick, Luke and Mark that the partnership would be split up and that the land owned by RLF would also be split up too, with each of them to receive a separate farm. The memo noted that the older brothers saw two problems: stamp duty costs and the RLF shares held by the two younger brothers, Desmond and Simon. The land and house occupied by Zilla was noted as being ‘in [Zilla’s] name absolutely’.[82] This was incorrect: from 6 August 1984 the registered proprietors of the two titles of Carranballac land (including Ripon Lee) were Zilla, Bill and Rick in their capacities as trustees of Eric Snr’s estate.
[81]Exhibit 113.
[82]Exhibit 113.
A handwritten note within BJT dated 14 August (the year was omitted, but I infer it was 1996)[83] recorded that Bill had been given 10 copies of the assignment deed to pass on to his sisters and brothers.[84] In one of his affidavits, Bill stated that he recalled receiving these copies of the deed,[85] and he gave these copies to Zilla,[86] and no-one else.[87] There is no evidence that Zilla distributed those copies to the plaintiffs or anyone else. The plaintiffs denied receiving copies of the assignment deed until later. I am satisfied on all the evidence that the plaintiffs did not receive copies of the assignment deed at this time.
[83]In his affidavit of 11 August 2021, Bill says that the file note was of a conversation he recalls between himself and Peter Byrne that took place on 14 August 1996. I am satisfied that this file note was in reference to a conversation that occurred in 1996 at around the time that the farming partnership was dissolved.
[84]T558.16–24; Exhibit 119.
[85]T558.16–24; Exhibit 20 [60].
[86]T558.16–24; Exhibit 20 [60]–[61].
[87]Exhibit 20 [61].
Following the dissolution of the partnership, it appears from various land title searches that were in evidence that the land held by RLF was retained for several years, but was eventually mostly divested. RLF retains some land.[88]
[88]Exhibits 240, 253.
From about 1996, Bill and Luke have farmed the Carranballac land.[89]
[89]D1 and D2 defence [10(b)].
B.6 Simon raises concerns
In 1996 Simon raised concerns with lawyers about whether he had been treated fairly in relation to the farming enterprise.[90] He retained the services of Ian Brown, from Ian Brown & Co Barristers and Solicitors.
[90]Exhibit 120.
On 23 August 1996, Mr Brown wrote to the Fay family solicitors, BJT, noting that his firm acted for Simon.[91] He requested copies of Mr Fay’s will and RLF’s financial statements from the last seven financial years. On 30 August 1996, with Simon’s written authorisation included, Ian Brown wrote to RLF’s then current accountant, Terry Rodoni of Bird Cameron Accountants. Mr Brown’s letter sought, among other things, RLF’s financial statements and minutes of company meetings relating to shares and dividend payments since June 1984.[92]
[91]Exhibit 120.
[92]Exhibit 121.
On 3 September 1996 Terry Rodoni wrote to Peter Byrne of BJT noting that he had included a copy of Ian Brown’s correspondence and would send the requested information directly to Ian Brown.[93]
[93]Exhibit 122.
Over a year later, on 21 January 1998, Ian Brown again wrote to Bird Cameron seeking information regarding RLF’s share transfers, its current shareholding and any information regarding Simon’s interest in the business.[94]
[94]Exhibit 123.
On 20 August 1999 Ian Brown wrote to Bird Cameron seeking information on behalf of Simon to advance a ‘s 237 application’[95] and relating to various matters including RLF and the partnership’s financial situations, any changes to RLF’s shareholdings, changes to Mr Fay’s interest in the partnership following his death, details of the partnership’s use of RLF’s assets and corresponding payments from the partnership to RLF, the location of RLF’s financial records prior to 1991 and any allegation that Simon executed any documents after he turned 18 years old confirming the terms in the assignment deed.[96] The letter referred to Simon’s execution of the assignment deed but did not expressly suggest that the contents and effect of the deed had not been explained to him at the time. The letter also noted that Simon had advised his lawyers that Bill had refused to provide information requested by Simon in a recent discussion.
[95]Section 237 of the Corporations Act 2001 (Cth) governs applications for leave to bring a derivative action, that is, leave to bring or intervene in proceedings on behalf of a company.
[96]Exhibit 130.
The position of Desmond and Simon on the question of acquiescence is more difficult. Were it not for cl 3.2 of the settlement deed, they would be at real risk of a finding that — by delaying their commencement of a proceeding like this one for some 17 years after settlement of the Federal Court proceeding — they are guilty of acquiescence in the assignment deed. The certainly had all the knowledge they required of the wrong by the end of the Federal Court proceeding. However, on balance, I am not satisfied that their delay between 2002 and 2019 should be characterised as giving rise to acquiescence. This is because they had effectively foreshadowed the potential that they would make a claim about Eric Snr’s will in cl 3.2 of the settlement deed. The defendants cannot reasonably have assumed that Simon and Desmond’s delay from 2002 betokened acceptance of the assignment deed.
None of the defences of acquiescence have been established.
However, I am satisfied that Desmond and Simon are guilty of laches that precludes them from securing relief based on their undue influence and unconscionability claims.
E.6 Did Simon and Josephine’s minority affect whether the assignment deed was binding on them?
The plaintiffs pleaded that the assignment deed is void against Josephine and Simon, as they had not attained the age of majority when they executed the assignment deed in 1984, and had not since ratified the assignment deed.[434] The plaintiffs relied on the 1749 case of Hearle v Greenbank[435] and on s 50 of the Supreme Court Act 1986 in support of their submission that the assignment deed was not binding on Josephine and Simon as a matter of law.[436]
[434]Third FASOC [20]–[21].
[435](1749) 26 ER 1200, 1208.
[436]Plaintiffs’ opening submissions [34]. On ratification, the defendants referred me to Vickery’s Motors Pty Ltd v Tarrant [1924] VLR 195 as an example of a fresh contract made after attainment of majority in place of ratification of a contract made by a minor.
The defendants pleaded that neither Simon nor Josephine repudiated the assignment deed before the lapse of a reasonable time after reaching the age of majority, and accordingly the deed is binding between each of them and the third defendant.[437] The defendants relied on Edwards v Carter [1893] AC 360, which I address in more detail below. They submitted that, on the authority of that case, Josephine and Simon were required to repudiate the assignment deed within a reasonable time of attaining their majority, and they had not done so. Further or in the alternative, if ratification was required before the defendants could rely on the assignment deed against Josephine and Simon, the first and second defendants submitted that their silence, and (further) their acceptance of benefits under the deed, constituted ratification.[438]
[437]See each of the defences [21].
[438]First and second defendants’ opening submissions [64]–[67].
The plaintiffs alternatively submitted that, if they were required to repudiate the assignment deed within a reasonable time of attaining their majority, Simon and Josephine repudiated the assignment deed by commencing the proceeding, which they did in reasonable time, provided this was to be assessed by reference to the time their interest vested in possession.[439]
[439]Plaintiffs’ opening submissions [35].
This appears to be an area that has not been closely or recently scrutinised in the caselaw. Although a relatively old case, it seems that Edwards v Carter is the most authoritative case on point, and it favours the defendants.
In Edwards v Carter, the House of Lords considered whether a person could repudiate a settlement deed he had signed as a minor. The background facts were as follows. By a marriage settlement the father of the intended husband (then a minor) covenanted with the trustees to pay them an annuity during the life of the intended wife or of any child or grandchild of the marriage, and the trustees were to pay the annuity to the husband during his life or until his bankruptcy, and after determination of his interest for the benefit of the wife and the issue of the marriage. The settlement contained an agreement by the husband to vest in the trustees upon certain trusts all property to which he should become entitled under the will of his father. The husband came of age about a month after he had executed the settlement. The father died nearly four years later, leaving property by will to his son. More than a year after his father’s death the husband repudiated the settlement. The House of Lords, affirming the decision of the Court of Appeal ([1892] 2 Ch. 278), held:[440]
that the settlement was as regards the husband voidable, not void; that if he chose to repudiate it he must do so within a reasonable time after he came of age; that he must be treated as knowing the contents of the deed whether he knew them or not; and that his repudiation not being made within a reasonable time, he was bound by the settlement.
[440][1893] AC 360 (headnote).
However, their Lordships noted that the key issue was not disputed before them:[441]
… it is not disputed that this contract executed and entered into by Martin Albert Silber was not absolutely void, but was voidable only, that is to say, that after he came of age it was as binding as if he had been of age at the time when he executed it, subject only to this, that the law enabled him to avoid his obligations provided he did so within a reasonable time.
[441]Ibid 364 (Lord Herschell LC).
The defendants submitted that, applying the analysis required by Edwards v Carter, Josephine and Simon were required to repudiate the assignment deed some reasonable time after they each turned 18, and doing so by commencing this proceeding by 2019, and after the death of Zilla, was far too late.
The relevance of the plaintiffs’ reliance on s 50 of the Supreme Court Act1986 is not clear to me. Section 50 is entitled ‘No proceeding to be brought on ratification of minor’s contract’. It provides:
(1) No proceeding can be brought to charge a person—
(a)on a promise made after full age to pay a debt contracted during minority; or
(b)on a ratification made after full age of a promise or contract made during minority.
(2)This section applies whether or not there was any new consideration for the promise or ratification.
This provision would have precluded any claim being brought against Josephine or Simon based on the assignment deed, or on any ratification by them of it after they attained 18 years of age. Perhaps it might be contended that an implication arises from this provision to the effect that, even though the defendants are making no claim against Josephine and Simon, they may not be permitted to rely on the assignment deed in answer to claims brought by Josephine and Simon either. If an argument of this was intended by the plaintiffs, it was not developed.
As I have reached conclusions that the assignment deed is to be set aside on grounds of breach of the fair-dealing rule as regards all of the plaintiffs, and on grounds of undue influence and unconscionability against Jane, Mary and Josephine, it is strictly unnecessary for me to reach a conclusion on this aspect of the plaintiffs’ claim.
However, it may be of utility to express my views, especially as regards Simon, whom I have found to be guilty of laches (along with Desmond), and therefore to have been unsuccessful in his undue influence and unconscionability claims.
There was considerable force in the defendants’ submissions that repudiation within a reasonable time was required, or else Simon and Josephine would lose any right to avoid the assignment deed on grounds that they were minors when they executed it. On the basis of the submissions and caselaw identified by the parties in this case, I am not satisfied that the question was one of ratification being required before the assignment deed became valid. The better view is that the assignment deed was not void, but voidable at the election of Josephine and Simon, provided they repudiated it within a reasonable time of attaining their majority.
In assessing whether repudiation occurred without unreasonable delay, contrary to the plaintiffs’ submissions, in my view the deemed accrual of their rights to complain of breach of the fair-dealing rule under s 21(2) of the Limitation Act is of no relevance. Section 21(2) did not apply to Josephine’s and Simon’s claim to rescind the assignment deed on grounds of their minority when they executed it.
The assessment of the reasonableness of their delay is a factual inquiry specific to each plaintiff, and dependent on matters such as the time they acquired sufficient knowledge of the transaction to make an informed decision whether to repudiate it.
Simon is in a much weaker position than Josephine on this issue.
Simon clearly had all material knowledge of the wrong constituted by the trustees’ procurement of his execution of the assignment deed by 2001, when the draft statement of claim for a proposed Supreme Court proceeding was prepared in his name, incorporating proposed allegations concerning the assignment deed and reproducing its text in detail. The subsequent Federal Court proceeding was settled in 2002, on the basis that he (and Desmond) remained free to bring claims concerning the estate of Eric Snr. From that point, his delay counts against him. His delay in commencing this proceeding for 18 years from that point was, in my view, clearly unreasonable. For essentially the same reasons as I have found him to be guilty of laches, I also find that he lost his ability to repudiate the assignment deed on the ground of his minority at the time he executed it by unreasonable delay.
I do not make any such finding concerning Josephine. For essentially the same reason that I have not found her guilty of laches, I am unsatisfied that her repudiation of the assignment deed by commencing this proceeding in 2019 was unreasonably late. That is because I am unable to make any finding that she acquired her knowledge of the essential elements of the case, including the key features of the assignment deed, at any time before she received a copy of the assignment deed in late 2017.
At some risk of repetition, I now address the sub-issues identified from the parties’ joint statement of issues, as distilled in section A.2 above.
E.6(a) Was the assignment deed binding unless avoided? Or, not binding unless ratified?
In my view, the assignment deed was binding unless repudiated/avoided. It was required to be repudiated without unreasonable delay after the affected plaintiff attained their majority. This is the view most consistent with Edwards v Carter.
E.6(b) Did Simon and Josephine avoid being legally bound by the assignment deed? Or, did they become legally bound by the assignment deed through ratifying it?
I am satisfied that, although Murray Byrne advised at the outset of the need for Simon to be asked to ratify the assignment deed after he turned 18, no-one took concrete steps to ensure that either Simon or Josephine ratified or affirmed the assignment deed after they turned 18, and they did not do so. Rick’s evidence was simply that this was ‘up to them’.[442] However, I am not persuaded that there was any onus on them to approach BJT.
[442]T620.11–19.
As already noted, I am satisfied that Simon knew all the essential elements of the transaction represented by the assignment deed by about 2001, when a draft statement of claim in the proposed Supreme Court proceeding was prepared on his behalf. At that time, he was sufficiently informed to make an appropriate decision about whether or not to repudiate the assignment deed. His delay in repudiating the deed until the commencement in this proceeding in 2019, after the death of Zilla, was unreasonable.
There is no evidence that Josephine had a copy of the assignment deed until the period of preparations for this proceeding, after Zilla’s death. Without the assignment deed, I am not satisfied that Josephine could have made a fully informed decision to repudiate it. I am satisfied that her delay in repudiating the deed was therefore reasonable.
I find that Josephine is entitled to repudiate the assignment deed on grounds that she was a minor when she executed it, and because her delay in repudiating it was reasonable.
E.6(c) Does the Limitation Act bar a remedy for Simon and Josephine?
The question of whether the Limitation Act bars a remedy for Josephine in repudiating the assignment deed on grounds of her minority when she executed it was raised in the joint statement of issues, but was not the subject of any submissions.
The onus lies on the defendants to demonstrate such a bar, however they did not identify what provision of the Limitation Act might apply, or develop any other submission on this issue. I am not satisfied that any statutory limitation has been breached by Josephine’s repudiation of the assignment deed.
For completeness, and because laches and acquiescence were pleaded in answer to the entirety of the plaintiffs’ claims, I will also address whether laches or acquiescence might have any role to play. The plaintiffs submitted that the recission of the assignment deed on grounds of minority when it was executed was not an equitable claim and therefore laches would not apply.[443] The defendants made no submission on this issue.
[443]Plaintiffs’ closing submissions [176].
I agree with the plaintiffs that laches as an equitable defence would not apply to Josephine’s or Simon’s claim to avoid the assignment deed on grounds of their minority when it was executed. Nevertheless, much of the factual analysis supporting my finding that Simon was guilty of laches in relation to his claims of undue influence and unconscionability also supports my conclusion that his delay in repudiating the assignment deed was unreasonable. Josephine was not guilty of laches in any event, as I have already found.
I am satisfied that neither Simon nor Josephine could be said to have acquiesced in their execution of the assignment deed as minors.
E.6(d) If Simon and Josephine avoided the assignment deed and/or did not ratify it, and it is found that the assignment deed is otherwise binding on the remaining plaintiffs, what legal consequences flow?
This question is unnecessary to answer, because I have found that the assignment deed will be set aside as regards all the plaintiffs. It would be unduly hypothetical to venture an answer on any alternative bases.
E.7 If successful on having the assignment deed set aside, are the plaintiffs, or some of them (and if so, who), entitled to relief, and on what terms and conditions?
All the plaintiffs are entitled to relief in the form of an order setting aside the assignment deed.
E.7(a) To what extent should relief be conditional on Simon and Desmond repaying amounts paid to them under the settlement deed relating to the Federal Court proceeding in 2002?
I am not satisfied that Simon and Desmond were paid any money under the settlement deed relating to the Federal Court proceeding that would amount to double-dipping with any distribution and compensation they will receive in this proceeding.
The settlement deed preserved Desmond and Simon’s ability to make claims relating to Eric Snr’s will and estate, indicating that no part of the consideration they received was for any compromise of their claims to have the assignment deed set aside or any consequential entitlements.
The notion that RLF was the assignee of the plaintiffs’ reversionary interests in the residual estate of Eric Snr at the time of the compromise of the Federal Court proceeding, and that this might have had some impact on the value of the shareholdings of Desmond and Simon at the time, was not explored. I am not satisfied that any such notion had a quantifiable impact on the settlement amount received by Desmond and Simon.
E.7(b) To what extent should relief be conditional on the plaintiffs repaying any amounts they received under the assignment deed?
The plaintiffs accepted that relief should be conditional on them repaying any amounts they received under the assignment deed. I am satisfied that this must be so.
However, the evidence before me was only sufficient to support findings that Jane and Mary must repay $2,000 each, adjusted for inflation since 1984 or 1985, when they received those payments.
Bill disputed this saying he was confident that Zilla would have paid all five of the plaintiffs. When asked about this, Bill disagreed that the plaintiffs weren’t paid under the deed, but he said that it was unlikely that the payment came from RLF as it ‘can’t trade, because it’s got no cheque book’ whereas the partnership was able to.[444] He explained later that the ‘whole family structure for the farm’ was based on an understanding that that RLF and the partnership were ‘one and the same’[445] and explained that he didn’t know why there were ‘two different names’ for the entities, but believed it must have been for accountancy reasons.[446]
[444]T511.23-T512.6.
[445]This phrase was used by counsel for the plaintiff; a phrasing which Bill agreed to entirely.
[446]T513.2-16.
When Bill was asked under cross-examination about the amounts the plaintiffs were paid pursuant to the deed, he said:
Well, in 1996, when the partnership was splitting up, I went up and, ah, I had these 10, um – 10, um, dockets to give to Mum from Peter Byrne and probably, ah, because we were wanting to split the partnership and we’re wanting to have a discussion with her about that. And I – I took up, ah, copies of the deed, 10 of them, Your Honour, and I gave them to Mum, and I said to her – probably one of the – I said, ‘Now, has all this been paid? Have you paid the plaintiffs?’. So they’ve got the money because Peter Byrne, who was our solicitor in Ballarat, was very keen to get that tidied up. And Mum said, ‘Yeah, I’ve got them all cheques and I’ve got this and I’ve invested this and I’ve done this and that’ and she said, ‘They may not have it in their own bank accounts yet, but they – I have got control of it’ and I said, ‘Well, that’s fine. Just as long as - - -?’ and she said, ‘I’ll hand it out when I think it’s necessary’. I said, ‘That’s fine’. So that – that was the closest I got for her to say, ‘Yes, we’ve squared our debt up on it’, Your Honour.
You say that happened in 1996, did it?---well, yeah, it’s written there somewhere in our, um, court documents, that 1996.
Rick gave similar evidence.[447] He said he had a conversation with Zilla to the effect that she wanted the wool rebate cheque of $205,000 (received in about 1987) and that the money came to Zilla.[448] Rick’s evidence was that Zilla had said she wanted the money from the wool rebate cheque in part to pay the other children the money under the assignment deed.[449] Neither Bill nor Rick claimed direct knowledge of any such payments actually being made.
[447]T607.3-13.
[448]T607-T610.13.
[449]T591.28-T592.10.
A hearsay notice filed on behalf of the first and second defendants also gave notice of representations by Zilla in written form on 12 September 2000, 26 October 2000, and 27 March 2001 purportedly referring to payments to Simon and Josephine. However, these were not tendered and I give these references in the notice no weight.
The evidence also included (exhibit 109) a handwritten list dated ‘1984-1987’ and titled ‘payments made to remaindermen’ showing various amounts and tendered as exhibit 109, and a set of entries in Zilla’s diary, probably made in 1988, relied upon in a hearsay notice and tendered as exhibit 221.[450]
[450]Exhibit 221, at court book p 1845.
Doing the best I can to decipher these two exhibits, they fall a long way short of establishing that each plaintiff was paid the money referred to in the assignment deed.[451] The high water mark of this material is the final two pages of exhibit 221. These pages immediately follow a series of entries summarising monthly payments to the elder sons, concluding with payments apparently made in July 1988.
[451]Exhibit 109’s most significant marking is the first line under the heading, which is simply a single line item referring to $90,000 without any explanation of how that item might have been constituted or when it might have been paid. I can give it no weight, if only for the reason that a single payment of $90,000 would have had no meaning under the assignment deed, which called for payments to each of the five plaintiffs totalling $20,000 each. The balance of exhibit 109 consists of one other quite significant figure ($6,600) and a number of far smaller figures, ranging from $1,300 down to $6. The total that these smaller figures is not particularly great — it is in the vicinity of $12,000. None of them gives a date or records a payee.
On the last two pages of the exhibit, under the heading ‘Dads’, are the following markings, which I infer were made by Zilla:[452]
[452]Exhibit 221, at court book p 1845.
Dads
Jane $2000 Simon
$3000
Mary $2000
July 87
Jo $3000 $1000Des $6000
These entries were the subject of an Evidence Act s 67 hearsay notice and I take them into account, as I must. They constitute representations by Zilla that, by about July 1988, payments had been made under the assignment deed to each of the plaintiffs in the sums stated. Those representations are corroborated to some extent, because Jane and Mary admitted the payments to them. Do they also establish that the other payments were made, to the other plaintiffs, as recorded by Zilla?
On balance, I do not think so. Compared with both Zilla’s diary entries and Bill and Rick’s assertions that Zilla would have made payments, I place more weight on the direct evidence of each of these plaintiffs denying receipt of any payments under the assignment deed. As I have already noted, the evidence of each of them on this topic was clear, and I regard it as honestly given and as reliable. If they had been told they were receiving a payment under the assignment deed in lieu of their rights under Eric Snr’s will, I am convinced that they would have retained a clear memory of that. I accept their evidence that they never received such a payment.
The finances of the family farming business and the household budget appear to have been managed by Zilla in a manner that makes it difficult to be sure whether any payments Zilla thought were fairly attributable to the assignment deed were actually so attributable. It appears that little if any distinction was made between the business of the partnership and RLF, and that Zilla had a key role in managing payments. I was not taken to any financial statements of RLF or the partnership recording any such payments, or even any liabilities to the plaintiffs. Even so, because of the way the business was conducted, it is possible that Zilla might have made unrecorded payments to the plaintiffs from partnership income, intending that they be treated as payments on behalf of RLF under the assignment deed.
It is possible that, when Zilla made her diary entries in about 1988, at that time she considered that, in meeting various expenses related to the upkeep or education of Josephine, Desmond and Simon, she was making payments on behalf of RLF under the assignment deed. If she believed this, I consider that to have been incorrect. In order to constitute a payment under the assignment deed, at the very least it was necessary for that payment to be clearly identified to the plaintiffs as such.
In making my findings on this issue on the basis of the plaintiffs’ direct testimony, I also note Bill’s evidence extracted above of his conversation with Zilla in 1996, which was to the effect that Zilla had not yet, at that time, made the requisite payments under the deed. This undermines the contents of the diary extract to some extent. I also note that none of the financial statements of RLF ever acknowledged any liability to the plaintiffs or recorded any payment to them. Nor was any cheque to the plaintiffs or other payment to them identified from any partnership financial statements or bank records. I do not rely on these matters, but they do tend to be consistent with my conclusion that the plaintiffs received no other payment identified as a payment under the assignment deed.
I am not satisfied that any other payments were made under the assignment deed to the plaintiffs, apart from the $2,000 payments acknowledged in the evidence of each of Jane and Mary. Further, I am positively satisfied that no other payments properly identified to the plaintiffs as payments under the assignment deed were made by or on behalf of RLF to the plaintiffs.
E.7(c) Are the plaintiffs otherwise entitled to relief?
There is no other potential impediment raised to the granting of the relief sought by the plaintiffs. They are entitled to relief.
E.8 Are the plaintiffs (or any of them) entitled to equitable compensation relating to the use of the Carranballac land since Zilla’s death?
The plaintiffs seek equitable compensation.[453] They submitted that they are entitled to equitable compensation in the form of the loss they have suffered as a consequence of Bill and Rick’s conduct in preventing them from enjoying the benefit of the Carranballac land since Zilla’s death. They submitted that their loss is the rent they would have received.[454]
[453]Third FASOC [10].
[454]Plaintiffs’ closing submissions [188]–[189].
The plaintiffs bear the onus of establishing the quantum of their claim for equitable compensation.[455] Here, they submitted that the lost rent should be calculated in accordance with the joint statement of Alan Hives and Graeme Linke dated 31 July 2024, which establishes the market rent of the Carranballac land to be:[456]
[455]Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193 [186].
[456]Plaintiffs’ closing submissions [190].
(a) for the three-year period starting 29 September 2017—$82,000 per annum;
(b) for the three-year period starting 29 September 2020—$127,000 per annum; and
(c) for the three-year period starting 29 September 2023—$114,000 per annum.
The Court can assess equitable compensation with respect to deprivation of a property on a broad-brush basis, taking into account relevant factors.[457] In Grant v Grant, the Court granted equitable compensation for an estate being deprived of the use of a property, taking into the nature of the property, rental income, expenses incurred, and the impact of the Covid-19 pandemic on earnings.[458]
[457]Grant v Grant [2022] NSWSC 714 [27].
[458]Ibid.
Further, while equitable compensation is often computed by reference to the loss suffered by the innocent party, compensation may also be achieved by requiring a fiduciary to disgorge the equivalent of the advantage that has been taken.[459] The evidence at trial was that Bill and Luke (but not Rick) have farmed the farming land component of the Carranballac land since about 1996.[460] Luke was not a fiduciary and is not a defendant. Further, it may be inequitable to compel the defaulting fiduciary to disgorge all of the profits if some of those profits are attributable to the use of his or her own skill, efforts, property or resources. This is a matter of judgement that depends on the facts of the case. The onus falls on the defaulting fiduciary to establish that, in all of the circumstances, it would be inequitable not to apportion the profits or to make some other allowance.[461]
[459]Talacko v Talacko [2009] VSC 533 [124]-[125], citing Hill v Rose [1990] VR 129, 143. (Tadgell J) and Ferrari Investment (Townsville) Pty Ltd (in liq) v Ferrari [2000] 2 Qd R 359, 370 [39].
[460]Defences, [10(2)].
[461]Talacko v Talacko [2009] VSC 533 [130].
Further, equitable compensation is aimed at restoring the innocent party to the position they would have been in had the breach of fiduciary duty not occurred.[462] Generally, this means equitable compensation is assessed as at the time of trial, with the full benefit of hindsight.[463] With respect to property values, the quantum of equitable compensation is assessed as at the date of judgment in the circumstances prevailing at the date of judgment.[464] Lost rents probably fall within the former category, and should be assessable up to trial. However, before reaching a final decision on that point, I will give the parties a further opportunity to be heard on the approach that should apply to this question and as to the quantification of equitable compensation more generally.
[462]Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193 [182].
[463]Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484, 499 [35]; Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193 [184]; Re Blockchain Tech [2024] VSC 690 [476].
[464]Talacko v Talacko [2009] VSC 533 [170]; McNally v Harris (No 3) [2008] NSWSC 861 [16].
F. Conclusion and orders
I have found that all three of the trustees of the estate of Eric Snr and the directors of RLF — Zilla, Bill, and Rick — brought about the preparation and execution of the assignment deed.
They did so in circumstances in which the fair-dealing rule applied to the assignment contemplated by the deed, even though that was an assignment to RLF. The transaction in question was the assignment of the plaintiffs’ equally shared reversionary / remainder interest in the residual estate of Eric Snr remaining after the death of Zilla to RLF, in return for promises by RLF to pay them the amounts specified in the assignment deed.
The defendants have not established that this transaction met the requirements of the fair-dealing rule. The assignment deed is therefore liable to be set aside, as regards all the plaintiffs, subject to any defences.
The defendants claimed that the plaintiffs’ claim to have the assignment deed set aside for breach of the fair-dealing rule was statute-barred, by reason of the application of Limitation Act s 21(2) (other than the proviso). However, I concluded that this defence failed. On the proper construction of s 21(2), its proviso applied to the circumstances of this case. So, read as a whole, s 21(2) prescribed a limitation period of six years after Zilla’s death, for the commencement of the plaintiffs’ claim that the assignment deed breached the fair‑dealing rule. The plaintiffs’ claim was made within that period.
As regards all the plaintiffs’ claims of breach of the fair-dealing rule, the operation of laches was excluded by implication arising from the operation of the Limitation Act s 21(2). This was conceded by the defendants in their submissions.
Because a limitation period was prescribed (and met), the equitable defence of laches was not available as an answer to the plaintiffs’ claim to have the assignment deed set aside for breach of the fair-dealing rule.
Acquiescence might have been available, but it was not made out on the facts.
The plaintiffs also claimed that the assignment deed was liable to be set aside on grounds of undue influence and unconscionability, subject to any defences.
Undue influence and unconscionability were both established, as regards all five of the plaintiffs. The assignment deed was the product of Zilla’s (and to a lesser extent, Bill’s) undue influence over all the plaintiffs, and was also a product of the unconscionable conduct of Zilla, Bill and Rick toward all the plaintiffs. RLF was on notice of the relevant conduct so as to enable the assignment deed to be set aside on these grounds, and in any event the conduct and states of mind of the trustees were to be imputed to RLF.
The defendants asserted defences of laches and acquiescence. I concluded that Desmond and Simon were guilty of laches: after attaining full knowledge of the assignment deed in the course of preparation for a proposed Supreme Court proceeding in about 2001, and after the settlement of an actual proceeding in the Federal Court the next year, they then delayed commencing this proceeding for about 17 years. This delay extended until after Zilla’s death, and the deaths of other material witnesses (including Murray Byrne). This prejudiced the defendants in their ability to respond to the claims made by the plaintiffs.
Laches was not established on the part of the other plaintiffs, because it was not established that they had sufficient knowledge of the assignment deed until after Zilla’s death.
Acquiescence was not established against any plaintiff.
By reason of their laches, Desmond and Simon are precluded from obtaining any relief for undue influence or unconscionability. The other plaintiffs are entitled to obtain relief on those grounds, if needs be.
Josephine and Simon were minors when they were made to execute the assignment deed. Simon failed to repudiate the assignment deed on this ground within a reasonable period of becoming fully aware of the details of the assignment deed, and is prevented from repudiating it on this basis. Josephine has repudiated the assignment deed on this basis within a reasonable period of becoming sufficiently aware of its details, and is entitled to avoid the deed on this ground, if she needs to.
In order to obtain equitable relief in the form of a declaration or order setting aside the assignment deed for breach of the fair-dealing rule, or for undue influence or unconscionability, and to obtain consequential equitable damages associated with the remaining trustees’ refusal to assign the residual estate to the plaintiffs, the plaintiffs must themselves do equity by repaying any payments they received under the assignment deed. In this regard, Jane and Mary must repay $2,000 each, plus interest at an appropriate rate.
The authorities suggest that I ‘may’ set aside the assignment deed ‘unless’ the trustees establish that it was a fair dealing. This formulation is perhaps ambiguous as to whether: (a) I must set aside the deed if the trustees do not establish a fair dealing; or (b) I retain a residual discretion whether or not to grant the relief sought by the plaintiffs even if the trustees fail to establish fair dealing. The parties did not address this point.
Assuming I might retain a residual discretion of that kind, in any event I would exercise it in favour of the plaintiffs. The only factors that might appear to militate against granting them relief are factors that arose in the course of my consideration of the defences asserted by the defendants and the requirement that the plaintiffs repay amounts they received under the assignment deed.
The key point would be prejudicial delay. But exercising discretion against the plaintiffs on the ground of prejudicial delay would defeat the principle (accepted by the parties in this case) that a prescribed limitation period excludes the operation of the doctrine of laches. In short, declining to grant relief on that basis would defeat legislative intention.
Aside from prejudicial delay, there are no other factors that would lead me to deny relief, provided the plaintiffs repay the amounts received under the deed. Having regard to all the other circumstances of the case, I am affirmatively satisfied that it is in the interests of justice the plaintiffs should have the orders they seek. I would therefore decide to exercise any residual discretion in the plaintiffs’ favour.
I will hear the parties on the question of any consequential equitable damages having regard to my conclusions on the assignment deed, as well as on the proper criteria for an assessment of such damages, and I will hear the parties more generally on the orders otherwise appropriate to carry these reasons for judgment into effect.
I will also hear the parties on the question of costs.
SCHEDULE OF PARTIES
| JANE ELIZABETH FAY | First plaintiff |
| MARY MAJELLA FAY | Second plaintiff |
| SIMON EDWARD FAY | Third plaintiff |
| JOSEPHINE FRANCES FAY | Fourth plaintiff |
| DESMOND PATRICK FAY | Fifth plaintiff |
| v | |
| WILLIAM LUKE FAY in his capacity as Trustee and Administrator of the Estate of EP Fay, Deceased and in his Personal Capacity | First defendant |
| ERIC JAMES FAY in his capacity as Trustee and Administrator of the Estate of EP Fay, Deceased and in his personal capacity | Second defendant |
| RIPON LEA FARMING COMPANY PROPRIETARY LIMITED (ACN 004 568 245) | Third defendant |
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