Flinn v Flinn
[1999] VSCA 109
•4 August 1999
SUPREME COURT OF VICTORIA
COURT OF APPEAL Not Restricted No. 4350 of 1996
MARY ANN CAROLINE FLINN (who is sued as
the Executrix of the Estate of William Charles
George Flinn deceased and in her personalcapacity)
Appellant
v
DANIEL FLINN
and Respondents BRONWYN ELLEN FLINN
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JUDGES: BROOKING, CHARLES and BATT, JJ.A. WHERE HELD: MELBOURNE DATE OF HEARING: 22-24 June and 19 July 1999 DATE OF JUDGMENT: 4 August 1999 MEDIA NEUTRAL CITATION: [1999] VSCA 109
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CONTRACT – Promise to leave property by will – On condition of payment of
reasonable sum to third person – Too uncertain.
ESTOPPEL – Proprietary estoppel – Plaintiffs working on farm after promises of gift by
will – Whether promises too uncertain – Detrimental reliance.EQUITY – Remedies – Constructive trust required to satisfy equity arising.
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APPEARANCES: Counsel Solicitors For the Appellant Mr R. Kendall and Neil A. Young & Co. Mr J.D. Mattin For the Respondents Mr R.M. Garratt Q.C. and John R. Buman & Co. Mr R.H. Miller
BROOKING, J. A.:
The background
William (“Bill”) Flinn was a successful beef farmer and, until 1976, also a logging contractor. He followed both occupations in partnership with his wife, Mary. Bill was born in 1914 and Mary in 1920. They had a son named Robert (“Robbie”), born in 1941. Mary had two children from her former marriage, Philip and Gary. I shall call Bill and Mary by those names, occasionally describing them – ignoring gender – as the testators. Bill died on Sunday, 23 January 1994. (The evidence shows confusion about the date.) His wife is still alive. This case is about a dairy farm which they owned and which was run for some years by Daniel (“Danny”) Flinn and his wife, Bronwyn. Daniel Flinn, born in 1953, was Bill’s nephew. I shall call Daniel and his wife by their given names, at times designating them as the plaintiffs. They say they should have the farm. The judge upheld their claim. Because his findings are attacked, it is necessary to combine a summary of the clearly established facts with a long summary of parts of the evidence.
Daniel’s mother died when he was very young. His father was an alcoholic and Bill and Mary brought him up and treated him as a son. He left school at the age of 14 and began working for a dairy farmer. From the age of 16 he worked for Bill, either on one of his two farms or in his logging business. Daniel married in 1975. His wife, a registered nurse, continued to work after the marriage, subject to the need to care for the two children of the marriage. She and Daniel lived in Bairnsdale. At the time of her marriage she was about 20 and her husband about 22.
In 1976 Bill sold his logging business and Daniel began working for another logging contractor. He was still driving a log truck in 1983, when Bill, who also lived in Bairnsdale, suggested to him and Bronwyn that they should run a dairy farm which he was minded to buy at Nicholson, about 20 kilometres from Bairnsdale. Bill specifically asked Bronwyn if she would give up her career in nursing to help run the farm, and she agreed to do so. Bill and Mary bought the farm – which was very run down – and in December 1983 Daniel and Bronwyn began improving it. They lived on that farm as share-farmers from February 1984 until 3 July 1988, receiving one-third of the milk cheque and one-half of the calf sales, with no contribution by them to the expenses. By this stage Bill was in his seventies. His wife had been suffering from Parkinson’s disease for years. Even back in 1975 she was considerably affected by it.
The farm at Nicholson was very run-down when the young couple went there. It had never had a boundary fence. There was no dairy. They had to start from scratch. They put in a mile and a half of water line and water troughs. Bill was a frequent visitor and did all the book work, paying the bills himself.
In about October 1987 Bill put the farm at Nicholson on the market. Because of the resulting uncertainty about his future, Daniel began working as a truck driver again, although he continued to work on the farm at weekends. One Sunday shortly before Easter 1988, Bill, Mary, Daniel and Bronwyn had a talk about the future in the farmhouse at Nicholson. Bill told Daniel that he could if he chose take the 120 dairy cows from the farm and find himself a farm that would take him on as a share- farmer with cows; alternatively, another farm could be bought – this time in an irrigation district, for the farm at Nicholson was dry – which would milk 200 cows and so provide a decent income for all four of them through another share-farming agreement. At this time Bill’s beef cattle farm at Bairnsdale had for some years been getting smaller and smaller as parts of it were sold off as residential land.
The farm at Tongala
In April 1988 Bill found an irrigated dairy farm in the Goulburn Valley, at Tongala – “Eulandool” – with 200 head of cattle and the potential to milk more. He and the plaintiffs went to have a look at it. On 16 April 1988 he inspected the farm a second time, this time accompanied not only by the plaintiffs but also by his wife, who, according to Bronwyn, “needed some convincing that this was the place that they wanted to buy” in view of its distance from her home in Bairnsdale. That night, after the inspection, according to Bronwyn, Bill said to Daniel in the motel at Tatura, in her presence and that of Mary, words to the effect that his farm at Bairnsdale was getting smaller and that he did not know when the stage would be reached when he would be unable to make an income by farming himself, and that he felt that the farm at Tongala would generate sufficient funds for him (Bill) later on when he needed them. He added, speaking to Daniel, “I’ll set you up in this future in farming here, and I’ll leave it to you in my will”. A little later in her evidence Bronwyn was emphatic that Bill’s statement was that he would leave the farm to Daniel, not that he would leave it to Daniel and her. On the other hand, Daniel’s evidence was that in the motel at Tatura Bill said, in the presence of Mary and Bronwyn, that the purpose of buying the farm was partly to enable Bill to leave it to Daniel and Bronwyn by his will and partly to provide him (Bill) with an income as he grew old. On the question whether what was said about a gift by will concerned a gift to Daniel alone or to him and his wife, the trial judge resolved the conflict of evidence by finding that what was mentioned was provision by will in favour of both plaintiffs. But it will be necessary to deal later and at greater length with his Honour’s findings about this.
On the day after the conversation in the motel at Tatura the purchase price of the farm at Tongala – $605,000, “walk in, walk out” – was agreed upon with the vendors, and, according to Bronwyn’s evidence, Bill said to the estate agent, William Wise, in the presence of Daniel and Bronwyn, that he was setting Danny up for a future in farming. The purchase was made by both Bill and Mary; according to Robbie, his parents were always in partnership. The contract of sale does not deal with the matter of co-ownership, but in due course they took a transfer of the land as tenants in common in equal shares. The plaintiffs were told by Bill, as was the fact, that the vendors were to finance the purchase to the tune of $305,000.
Early in May 1988 Bill and Mary visited the plaintiffs at Nicholson, Bill bringing with him the list of machinery on the Tongala property, which he had had valued, and copies of the milk statements for that farm. According to Bronwyn, Bill said to them that they would not be paid a one-third share as they were being paid at Nicholson, because they would earn too much money, and that if they were paid at that rate they could afford to pay for part of the farm as they went along, and that this would give rise to too much paper work. He then said that if the plaintiffs kept their income to a minimum and drew out enough money just to get by on, the rest of the money could be put back into the farm, and it would develop more quickly, so that by the time when he (Bill) needed to draw money from the income from the farm that income would be enough to keep his family and their family. Bill also said that the plaintiffs would receive half the proceeds of the sale of calves.
Daniel Flinn gave evidence of this particular conversation similar to that given by his wife. But while her evidence about this conversation makes no mention of any reference to a will, Daniel says that he and his wife were told by Bill that they would work for very little money and receive the farm at the end and that he (Bill) would leave them the farm in his will. According to her other evidence, however, on some other occasion or occasions at about this time Bill said that he would leave the farm to Danny by will.
According to the evidence of Daniel, in about April 1988, when he was about 35, Bill told him that it looked as if the farm at Nicholson had been sold and that he, Daniel, could if he wished go share-farming in his own right, taking with him the herd of cows. The alternative, Bill said, was that they could put the cows into an irrigation farm which would milk at least 200 cows, provide an income for Bill in his retirement and set Daniel and his wife up in the future for dairying. Not long after this Bill, Daniel and Bronwyn drove up to the Goulburn Valley and spoke to the estate agent, Wise, in Tatura. They inspected a number of properties, including Eulandool. A few days later both married couples went up to inspect Eulandool, and that night a conversation took place at the motel at which they were staying in Tatura. According to Daniel, in this conversation Bill said to him and Bronwyn, in the presence of Mary, that he would leave the farm to him and Bronwyn in his will. He said that the buying of the farm would provide him with an income as he got old and would provide for him, Daniel, for the future. Mary said she did not think that Bill could look after the farm on his own, but she was told by Bill that all the responsibilities would be taken by Daniel and Bronwyn, who would run the farm, and she said she thought that was a better idea. According to Daniel, the following day, in the turning circle at the farm, Bill said to Wise in the presence of Bronwyn and himself that he was setting Daniel up for a future in dairying.
Wise gave evidence that before the first inspection of Eulandool Bill telephoned him and discussed his advertisement for the property and went on to explain why he was interested. According to Wise, he said he had a nephew of his whom he had reared and who had been taken into the family as a son. He said – speaking of Danny and his wife Bronwyn – “I’m just buying it for the kids.” In reply Wise advised Bill to buy the property in the names of his wife and himself and then, “when the dog had proved itself”, either to will the property to them or to transfer it to them. Later the four Flinns inspected the property in company with him, after inspecting other farms. In the course of that inspection Bill said to Wise, “Look, we’re really interested. I’d like it for the young ones. I’m buying it for the young ones, to set them up, to make sure Danny’s got a good future in his life.” Wise has all four Flinns making the first inspection.
About a fortnight after the first inspection the four Flinns made a second one. On the property, in the turning circle, and in the absence of the plaintiffs, Bill said to him – I am continuing to recount the evidence of Wise – that he wanted the property to get into the plaintiffs’ names eventually and Wise replied “Well, when they’ve proven themselves, Bill, as I said before, you know, you want to do it right, transfer it across to them, or put it into their names or adjust your will to suit.” That night, in the motel at Tatura, Wise said, he had a conversation with the four Flinns in which Bill said to him, “We’re here to put the job together and what would you recommend?” He replied, “Bill, I would recommend that you buy it in the name of yourselves, the senior people.” Bill then asked, “Why?” and Wise said, “Well, we all know that – you know, there’s marriage breakups and so on, if you put it straight into the young ones’ names and Danny and Bronwyn had a problem, which we hope would never happen, it could be not a good situation to be in.” Bill asked Mary if she was happy if they did it “this way” and she said she was quite happy. This conversation must have indicated to Danny and Bronwyn that the farm would be bought, not by Bill alone, but by Bill and Mary.
Wise spoke of another unspecified occasion before the purchase in which he advised Bill not to pay cash for the farm but to take the vendor terms that were being offered, adding, “If Danny and Bronwyn pass the test of being able to look after the property, even if there is a debt on it, the farm’s got the water, got the acreage and the herd and if something happened to you, you and Mary, you could just pass it on and let Danny and Bronwyn go to Rural Finance and cover their debt if the vendor terms did run out.” Bill gave Wise to understand that he thought that was an excellent suggestion. According to Wise Bill called in to see him in about August or September 1993 and said he had come to discuss what he should do about Danny and Bronwyn and the farm. Wise asked, “Are things still going along well?” and Bill replied, “Very well.” He said to Bill, “If the dog is proved to be the good worker and you’re going to keep the dog you should now transfer the farm to Danny and Bronwyn that was bought for them, and/or you should adjust your will accordingly.” Bill said, “I’m going to do that.”
His Honour accepted Wise’s evidence.
Daniel’s evidence was that in the middle of May 1988 Bill and Mary visited them at Nicholson and a conversation took place in the kitchen. Bill brought with him documents relating to the plant and machinery at Eulandool – he had had it valued – and also the milk statements. They discussed these. Bill said that Daniel and Bronwyn would work there for very little money and receive the farm at the end. He said that if they stayed on the same agreement as at Nicholson, with the plaintiffs receiving a third of the milk cheque, they could virtually have bought the farm themselves and that there would be too much paper work in that and that it would be better to keep it simple and have them receive the farm when he died.
Asked when she learned in whose name the title to the Tongala farm stood, Bronwyn replied, “I don’t think it ever crossed my mind whose name it was in.” She added that most of the family, including Bill, believed that Mary would predecease him because of the state of her health and added, “Bill had said that he’d leave the farm to Danny in his will. … I think that we perhaps assumed that it was going to be Bill’s to give to us at that point …”. Bronwyn’s evidence, as one would expect, was that she knew nothing about tenancies in common.
Daniel said that the milk contract with Murray Goulburn Co-operative for the Tongala farm was signed by both married couples. This itself should have suggested to him that Mary was one of the owners of the farm. There are pieces of evidence about Mary’s view, as expressed in the hearing of the plaintiffs, on whether “we should buy the Tongala farm”. The evidence of Robbie that his parents did everything in partnership suggests that she always contemplated that any purchase would be by her husband and herself. The plaintiffs were aware that the milk money from Murray Goulburn Co-operative was paid into an account in the names of Bill and Mary, which again should have suggested to them that Bill and Mary were the owners of the farm. Daniel said he presumed that Mary owned half the farm at Tongala, since Bill and Mary bought everything together. I have already drawn attention to the significance in this regard of Wise’s account of the conversation in the motel at Tatura.
Robbie was an undischarged bankrupt from 1987 until 1990. His father had apparently come to his aid financially often enough. The father seems also to have lost a lot of money through investing in businesses associated with Robbie.
Mary McKinnon, a very old friend of Bill and Mary, who saw them frequently, gave evidence. She said that after the farm at Tongala was bought Bill often said, sometimes in the presence of Mary, that he was going to leave Danny the farm. According to her, Bill said that Danny was the only bloke that was honest and did a good day’s work and that he was worried that if the farm went to Robbie, Robbie would waste it. Mrs McKinnon’s evidence was accepted by the judge.
A run down farm improved
The estate agent, Wise, gave evidence that when the four Flinns inspected the farmhouse at Tongala Bill said to Bronwyn, “Would you accept the house?” and she replied, “Well, we’ll make it comfortable and – you know, we’re farmers, we’re triers and goers.” Bill’s concern was understandable. At the time of the purchase the farmhouse seems scarcely to have been fit for human habitation. Weeks of trips to the tip were needed to get rid of the accumulated rubbish. The roof leaked. White ants had been at work and so the floor had holes in it, some of which had been covered with tin. There was no proper plumbing and no proper hot water service. When the plaintiffs were irrigating, the irrigation water came up the sink and the bath and the bather had to put a foot on the bath plug to keep it in. One bedroom had no window. The plaintiffs did what they could to make the house more habitable, but for some time they had to share it with the cows. Not long after they moved in, the old friend of Bill and Mary, Mrs McKinnon, whom I mentioned a few moments ago, went with them on a visit to the farm at Tongala. According to this witness, Mary announced that she did not know how Bronwyn put up with the house the way it was. Mrs McKinnon described the house as awful, saying that the farm was in such a state that the only place where the cows could be was around the house and that they were on the verandah half the time. When the farm was bought the plaintiffs’ children were aged 10 and 12.
The farm itself was in a run down condition. After possession was taken it was found that Johne’s disease was already present, and this made the plaintiffs’ task a lot harder. The irrigation system was choked with weeds and much desilting of the irrigation channels was necessary. The plaintiffs improved the system by installing numerous pipes and doors and shutters. Other improvements made by them at Eulandool included rebuilding the dairy so as to enable 25 instead of 16 cows to be milked. This meant taking a complete dairy from the farm at Nicholson and incorporating it in the new farm, the result being that Eulandool had two of everything: two milk pumps, two milk vats, two hot water services and so on. The sheds were improved. About one-third of the pastures were oversown. There was no electric fencing at the time of the purchase. The plaintiffs electrified the whole farm, pulling out all the barbed wire fences and replacing them with a single electric wire. They improved the laneways and gateways. They put in two or three miles of water line, and water troughs in every paddock. Between July 1993 and the death of Bill the plaintiffs did a good deal of work at the farm in preparation for what is called “laser levelling”. They installed a 500 metre pipeline to enable bore water to be used to supplement their water allocation.
Bill did not take any part in the management of the farm. The plaintiffs worked every day of the year. Often they both worked twelve hours a day. They had no holidays worth mentioning between 1988 and 1994, when they were forced to leave the farm. Their day began at half past 5. Often, for days on end, Daniel would get up throughout the night because of the demands of the irrigation system. The irrigation season ran from 15 August to 15 May. It took Daniel between seven and ten days, depending on how far the improvements made by the plaintiffs themselves had progressed, to irrigate the whole farm, and he did this every twelve days. During that seven to ten day period the water flooded out over the pastures continuously, night and day, it being necessary throughout the day and night to shut bays off and open the next set of bays, sometimes at two hourly intervals.
Productivity was greatly increased by the plaintiffs.
Bronwyn kept the books of the farm and did the banking and paid the accounts. She was also responsible for the health of the herd and kept the cow records, and seems to have excelled in this work.
The plaintiffs acquired no assets of consequence during the six years for which they worked the farm, except by selling one car and buying another.
According to the contract of sale of the farm the purchasers were to give a mortgage to the vendors to secure the unpaid balance of $305,000, which was to be paid by annual instalments, starting in July 1991. Interest only was to be paid until July 1991. The plaintiffs had been told by Bill that both principal and interest would have to be paid out of the income from the farm. After the sale there was litigation between the vendors and purchasers arising out of the infestation of the farm with Johne’s disease, and as a result the purchasers refused to make payments of principal, although they did pay the interest as required by the mortgage. The interest was paid by Bronwyn out of the farm’s income. In 1993 the litigation was settled on terms which resulted in the purchasers’ receiving a payment in the region of $90,000 net of legal costs. As part of the settlement, the mortgage given to the vendors was discharged, the purchasers granting a new mortgage to the Rural Finance Corporation in June 1993. The loan made by that body was of $200,000, which sum, together with the amounts accumulated by Bill from the profits of the farm for the purpose of making payments of principal to the vendors, was used to clear off the mortgage debt of $305,000 owing to the vendors. The mortgage to the Rural Finance Corporation required a monthly payment of $2,020, and from June 1993, when that mortgage was given, this monthly payment was made by Bronwyn out of the income from the farm.
The July 1993 conversation
A highly important conversation took place in July 1993. According to Bronwyn what happened in or about that month was as follows: After the settlement in the litigation with the vendors of the farm, Bill telephoned Daniel, mentioned the settlement and said he thought it was about time a new farmhouse was built. As a result of this the plaintiffs obtained several quotations for the building of one. On 6 July 1993 they visited Bill and Mary in the farmhouse in Bairnsdale, taking with them from the farm at Tongala a small silo that Bill wanted for his own purposes. They discussed the possibility of a new house at Tongala and it emerged that, while the plaintiffs were contemplating that a house would be built for them at a cost of about $95,000, Bill and Mary had in mind the purchase of a “do- it-yourself” kit home for about $40,000, which Daniel presumably would somehow find time to erect. Bill said that incurring a cost of about $95,000 was out of the question and that the idea should be scrapped. A little later, when all four of them were in the kitchen, Bill telephoned his solicitor, Mr Tovey of Engel & Partners, and said that he and Mary wanted Tovey to come out to see them and bring their wills. Tovey arrived shortly afterwards, bringing copies of the two wills with him, and the five of them sat down together. Tovey began to read out the copy of Bill’s will and Bill said, “Just get to the bit about the farm”.
In fact the then current wills of Bill and Mary were “mirror” wills, each executed on 29 August 1990. Each will left the entire estate to the spouse, with a series of substitutional gifts if the spouse predeceased the testator. The first of these substitutional gifts was a gift to Daniel and Bronwyn of “a one-half share of my farm property at Tongala together with a one-half share of all the farm plant farm equipment and livestock thereon between them both equally or the survivor of them absolutely”. This was followed by pecuniary legacies of $40,000 each to the stepsons (or sons) Gary and Philip (“Bing”) and a residuary gift to grandchildren. No provision was made for Robbie, and this omission may well have been due to the fact of his being an undischarged bankrupt.
Bronwyn’s evidence was that Tovey went on to read out parts of the will and Bill then said that he was leaving half the farm to Danny and half to Robbie. It is clear enough from the evidence as a whole that this remark was made by way, not of expressing a view about the terms of the current will, but of declaring his present desire. According to Bronwyn, Tovey then said to Bill that he did not think this would be a workable situation because it would not give Danny the controlling share to make decisions about the farm, a comment with which Bill expressed agreement. Tovey then suggested to Bill that he leave the whole of the farm to Danny, saying that he had provided for Robbie well in the past. Bill said that he could not do that. Mary became upset, saying that Robbie’s troubles were not his own fault. Tovey then said to Bill that he could leave the farm to Danny and make provision to pay Robbie out over time. Bill said he liked that idea because it would put bread and butter on the table for Robbie, if things got tough again. He added that one of the reasons why he was changing his will was that Robbie was coming out of some of his problems and was going to be able to trade again. (Robbie had been concerned in a number of failed businesses and had, as I have mentioned, been made bankrupt in 1987.) Tovey then discussed with Bill the farm debt, and Tovey asked Daniel whether he would be prepared to take it on, to which Daniel replied, “Yes”. Tovey also discussed with Bill and Mary the gift made by the existing wills of $40,000 to each of Gary and Philip. Bill and Mary both said that they would reduce that amount. Bill asked Daniel if he wanted to be executor of the will and Daniel said that he did not. Giving evidence of what was said about the payment to be made to Robbie, Bronwyn said this:
“When they were talking about the amount that they were going to leave, they didn’t talk about an amount. Bill was talking about putting bread and butter on the table for Robbie. Bill said it would be a reasonable amount. It wasn’t going to be just a token issue, that he was going to give him. He said it would be a reasonable amount.”
According to Bronwyn, Tovey told Bill and Mary that he would arrange with his firm to come over and have these changes made to their wills and that they could either come into the office to sign them or have them brought out to their home to be signed.
According to Bronwyn, she believed that when Bill spoke about leaving the farm to Danny – the whole farm – it was on the assumption that Mary would predecease him. She understood that Bill was speaking on the assumption that Mary would die first and that on his own death Danny would get the whole farm under his will.
Bronwyn said that the plaintiffs were working for a low remuneration because of the expectation that Bill was going to leave the farm to Danny.
Daniel’s account of the conversation at Bill’s farmhouse in Bairnsdale in July 1993 is as follows: The four of them were in the kitchen. Bill said he had some changes to make in his will. He telephoned Peter Tovey and asked him to come over. Before Tovey arrived, Bill said that Robbie was just about due to trade again and was in a bit of trouble again and that he, Bill, would have to alter his will to suit that. Tovey arrived with Bill’s current will and Bill asked him to read it out. Tovey said that it was not the done thing to read the will out in front of Daniel and Bronwyn, but Bill said “Well, that’s the whole idea of it”. Tovey started to read out the will and Bill said, “Skip all the bloody rot. We’ll get down to the bit where the farm is.” Bill said “It’s already discussed” and said to Tovey, who made a note of what he said, that Daniel would receive half the farm and Robbie would receive the other half. Tovey said that that would be an unworkable position, because Daniel and his wife would not have a controlling interest in the farm. He further said that Bill had helped Robbie out a number of times and that he should give Daniel the whole farm. Bill said he was not able to do that and that Robbie was his son. Mary had become upset by this stage and said that it was just other people’s fault that Robbie was in the predicament he was in. Tovey suggested to Bill that Daniel and Bronwyn pay Robbie a sum of money and take on the farm debt. No particular sum of money was mentioned, just a reasonable sum. Bill said he thought that was a good idea, since it could put bread and butter on the table for Robbie if he got back into trouble again. Bill said that he would leave Daniel and Bronwyn the whole farm in his will and that they would pay Robbie a sum of money and that they would have to take on the farm debt. There was also discussion about the gifts to Mary’s two children, Bing (Philip) and Gary, who were each to receive $40,000 under the current will. Bill said, “The pot’s running a bit dry; the circumstances have changed; we’ll have to cut that back to twenty.” Mary expressed her agreement with that. When Tovey was leaving he said that if Mary was not well enough to come over and sign the will he would be quite willing to bring the documents back to the house. After Tovey left, Bill told Daniel and Bronwyn to use the farm bank account to keep the farm going after his death. Daniel’s evidence on the last point – which the judge accepted – was supported by that of Bronwyn.
According to Daniel, Bill said in July 1993, in Tovey’s presence, “When I die, you’ll get the farm”. Daniel said that he presumed that Mary owned half the farm, since Bill and Mary bought everything together. Daniel gave evidence that he believed that in 1988 the promise made was to leave the farm to him and his wife, not just to him. Daniel’s understanding of the July 1993 arrangement was, he said, that Bill would leave the farm to him and Bronwyn when he died, including the stock, but subject to the existing mortgage, and that he and Bronwyn would pay Robbie a sum of money. Bill had said, “When I die, I’ll leave you the farm.” Daniel’s evidence was that his discussion with Bill in April 1993 took place after Tovey had left. He said that after Tovey left he and Bill discussed the farm’s debts and that he said that he and Bronwyn would take over the Rural Finance loan and any other outstanding bills on the farm. He said that the outcome was that instead of Robbie’s getting half the farm he and Bronwyn would pay him a sum of money. He said that he assured Bill that Mary would be looked after. Like Bronwyn, Daniel gave evidence that Bill assumed that Mary would die first. She was on constant medication.
The evidence of Tovey was as follows: In July 1993 Bill telephoned him, saying that he and Mary wanted to discuss with him the contents of their current wills. He went at once to the farmhouse, taking with him copies of the two “mirror” wills of 29 August 1990. He was introduced to Daniel and Bronwyn. He expressed concern that Bill and Mary wanted to discuss the contents of their wills in the presence of some of the beneficiaries but was told that was perfectly all right and that they wanted to do so. He then read out such parts of one of the wills as appointed executors and contained dispositions. They then went back to the clause containing the gift to Danny and Bronwyn, and Bill suggested that he should leave the other half of the farm to Robbie. He (Tovey) then said that, as Danny and Bronwyn had been operating the farm for some time and Bill wished to make a gift to them, there might be some difficulty in their running the farm in partnership with Robbie. He suggested that since Bill had already provided a great deal of money to Robbie in his lifetime it might be more appropriate to leave the farm wholly to Danny and Bronwyn. Bill said that he did want to benefit Robbie but conceded that there might be difficulty in having a partnership. There was then some discussion of how Bill and Mary would benefit Robbie by their wills, but Tovey could not recall what was said. It was said that if the Rural Finance Corporation debt still existed by the date of the death of Bill and Mary, Danny and Bronwyn would assume that debt. Although the discussion was led by Bill, Mary took an active part in it. It was specifically said that the farm would be inherited in due course by Danny and Bronwyn. It was said that if there was any of the debt to Rural Finance Corporation left at the time the property passed to them they would be responsible for it. No instructions were given for the preparation of the new wills. Bill and Mary wanted to consider the contents of their new wills further before they were drawn. In cross- examination Tovey said that Bill made no final decision about what he might do in his intended new will. The judge accepted Tovey’s evidence.
The wills of 26 October 1993
Instructions were given for the new wills by both Bill and Mary to Tovey’s partner, Mr Engel on 21 September 1993. The next day Bill telephoned Engel and said that the Commonwealth bank account at Kyabram was to be included in the assets to go to Danny and Bronwyn, since this would enable them to continue to operate the farm immediately after the death of Bill and Mary. About a month later, on 26 October 1993, Bill and Mary executed “mirror” wills which Engel had prepared. The whole estate was left to the spouse, with substitutional gifts if the spouse died first. In that event, there was first a gift to Daniel and Bronwyn:
“I GIVE DEVISE AND BEQUEATH my dairy farm property at Tongala together with all the farm plant equipment livestock thereon and the balance outstanding in any farm bank account at the Commonwealth Bank in Kyabram or any other bank account used by the dairy farm business and any other livestock associated with the operation of the said dairy farm to my nephew DANNY FLINN and his wife BRONWYN FLINN equally absolutely SUBJECT HOWEVER to them paying to my said son BERNARD ROBERT FLINN the sum of ONE HUNDRED AND FIFTY THOUSAND DOLLARS ($150,000.00) AND I DIRECT that such sum shall be paid by my nephew and his wife by equal annual instalments of FIFTEEN THOUSAND DOLLARS ($15,000.00) each over a period of ten years from the date of the grant of Probate of my Will together with interest at the rate of six percentum per annum such interest to be calculated and paid quarterly from the date of the said grant of probate and my said nephew and his wife shall assume all liabilities owing over the said farm property outstanding as at the date of my death.”
This gift was followed by a legacy of $20,000 to each of Gary and Philip (reduced from the $40,000 given by the previous will), a legacy of $1,500 to each of 16 grandchildren and a gift of the residue to Robbie and his son Luke equally.
After Bill’s death
When Bill died on 23 January 1994 he was aged 79. He left his will of 26 October 1993 unrevoked. For years it had been expected by the family that his wife would die first, in view of her long-standing illness. The day after Bill’s funeral Daniel called in to see Mary. She said to him that Bill wanted him to have the farm but that he would have to wait, adding that after her father died her mother lived only for 18 months. Shortly after Bill’s funeral, so Daniel swore, in conversation with Robbie he mentioned the promise that had been made to leave the farm by will and Robbie replied, “We do things my way now. Me father’s not alive and what agreements you had, well, yes it doesn’t exist.” Elsewhere he swore that Robbie’s words were “Well, Bill’s not here now and things are different, that’s it. Whatever agreement you had with Bill no longer exists.” Late in February 1994 Bronwyn telephoned Tovey and asked him who was controlling the farm, and was told that Bill’s entire estate had been left to Mary. Both plaintiffs were, according to them, shocked by this news. They had worked so hard for so long and all they had accumulated was about $1,000 in the bank. Events moved swiftly after Bill’s death, and uniformly to the disadvantage of the plaintiffs. Very soon after her husband’s death – it was on 19 February 1994 – Mary granted a power of attorney to Robbie. (According to Daniel, Mary had often said to him, before Bill died, “If anything happens to Bill, they’ll put the power of attorney over me and take everything away.”) It is clear that, both before and after this litigation began, the firm of solicitors representing both Mary and the estate of Bill (not being Mr Engel’s firm) has been receiving its instructions from Robbie. On 7 October 1994 that firm wrote to the plaintiffs’ solicitors requiring the plaintiffs to vacate the farm within fourteen days. The plaintiffs in fact left on 23 October 1994. The judge found that within four weeks of her husband’s death Mary handed the control of her property and affairs to Robbie; that Mary probably had no idea of what the litigation was about; and that beyond doubt it was Robbie who was conducting the litigation. On 3 March 1995, when she was in a nursing home, Mary made a new will, in which she departed radically from the provisions of her will made on 26 October 1993. She had gone into a nursing home about a year earlier – before Robbie moved to Glenthompson, which he did shortly after Bill’s death. She had taken Bill’s entire estate under his will and her whole estate is now to go to Robbie, subject to legacies of $25,000 to each of her sons by her first marriage and subject to some further minor pecuniary and other legacies. Mary gave evidence at the trial of the action. It was common ground that her evidence should be disregarded. The judge described her as of unsound mind, noting that she thought her husband was still alive. In the course of her evidence Mary Flinn said that Danny and Bronwyn had not left the farm at Tongala and that they were still looking after it. She said that the court case was about “our disappointment” at the way in which the farm had been neglected. She believed that Bill was paying every month for her to stay in the nursing home.
At the end of February 1994 Robbie offered to sell the farm to the plaintiffs for a million dollars. The defendant asserts, as is evident from her solicitors’ letter of 16 February 1995, that, far from having been unfairly treated, the plaintiffs have been “handsomely financially reimbursed for their endeavours when employed as manager of the property”. She made a counterclaim in the litigation, which she ultimately abandoned.
History of the plaintiffs’ claims
On 24 March 1994 the plaintiffs’ then solicitors, Messrs Morrison & Sawers, wrote them a letter advising that it was possible that a claim could be made on their behalf on the basis that they had acted to their detriment in reliance on representations made to them by Bill during his lifetime which had engendered an expectation that one-half of the farm would be left to them by his will. The plaintiffs had no money and for some time they endeavoured to negotiate a share-farming agreement with Robbie as his mother’s attorney. These negotiations came to nothing. The plaintiffs succeeded in obtaining legal aid and as a result their present solicitors, John R. Buman & Co., issued proceedings on their behalf. Before doing that they lodged a caveat at the Titles Office, on 12 December 1994, claiming an equitable estate in fee simple in the farm, the grounds of claim being shown as “pursuant to an implied resulting or constructive trust”. In January 1995 the grounds of claim were amended by the addition of the words “between Daniel Flinn and Bronwyn Ellen Flinn of the first part and William Charles George Flinn of the second part”. This amendment resulted from a requisition requiring specification of “the parties to the instrument”. It will be noted that the caveat makes no reference to Mary. On 6 February 1996 the plaintiffs brought the action out of which this appeal arises, naming as defendant Mary, who was sued both as “executrix of the estate” of her late husband and in her personal capacity.
I shall very considerably oversimplify the pleadings to reduce the length of what must be in any event a very long judgment. By their statement of claim indorsed on the writ the plaintiffs alleged, in paragraph 8, an agreement made in 1988 between the four Flinns whereby the plaintiffs were to manage Eulandool for a nominal remuneration to cover their living expenses and William Flinn was to leave them the farm by will so that they would inherit it on his death. A cause of action was then alleged under the Fair Trading Act 1985 in consequence of representations made to the plaintiffs, but this claim was abandoned at the trial and need not be further mentioned. In paragraph 17 the plaintiffs alleged the making, in or about July 1993, of “the variation agreement” by the plaintiffs, the deceased and the defendant. This was pleaded as an agreement whereby the plaintiffs were to pay Robbie $150,000 by ten annual instalments of $15,000, together with interest and to assume liabilities in respect of Eulandool, including the Rural Finance Corporation debt, and the plaintiffs were to inherit from Bill Eulandool and all its plant, equipment and livestock. The statement of claim complained that the provisions of Bill’s last will were in breach of the 1988 agreement and the variation agreement in so far as the will left the entire estate to Mary and in so far as, by way of substitutional gift, it left the farm to the plaintiffs subject to their paying $150,000 to Robbie by instalments. The prayer for relief sought specific performance of the variation agreement, although the body of the statement of claim suggests that it was desired to obtain specific performance not only of the variation agreement but also of the 1988 agreement. The pleading contained an alternative claim for reasonable remuneration “in quantum meruit or by reason of the principles of unjust enrichment”. It was in addition alleged that at all material times Bill and Mary held Eulandool on trust for the plaintiffs by reason of the facts alleged in paragraph 8-12. Paragraphs 8, 9 and 10 alleged the 1988 agreement and the plaintiffs’ performance of it. Paragraph 11 alleged a number of statements made by Bill and Mary to the plaintiffs before the making of the 1988 agreement concerning the leaving of Eulandool to the plaintiffs on the death of Bill. Paragraph 12 may be ignored. In paragraph 28 it was alleged that the defendant was estopped from denying the existence of the 1988 agreement and the variation agreement.
Substantial changes were made to the statement of claim in an amended pleading served about nine days before the trial began. Paragraph 17 of this, alleging the variation agreement, differed from the original paragraph 17 by alleging an agreement that the plaintiffs would inherit “from” Bill, not the farm and all its plant, equipment and livestock, but his half share and the defendant’s half share in the farm and all its plant, equipment and livestock and that this was to occur on the defendant’s death. Paragraph 22A of the amended pleading was new. It alleged that wrongly and in breach of the variation agreement the defendant had executed or proposed to execute a will excluding the plaintiffs from any entitlement to the farm. Another new paragraph in the amended pleading, paragraph 5A, introduced an allegation concerning the will made by Mary on 26 October 1993 which had the result of extending to her will made on that date the existing allegations that the provision in Bill’s will of the same date leaving his entire estate to his wife and the substitutional gift in respect of the farm were in breach of the 1988 agreement and the variation agreement.
In the course of the trial further amendments were made to the statement of claim, on 27 October 1997. The reamended statement of claim contained two new paragraphs, paragraphs 17A and 17B, setting up for the first time what has been called the “mutual wills” claim. Paragraph 17A alleged that pursuant to the variation agreement Bill and Mary agreed to make mutual wills to give effect to the terms of the variation agreement that were mutually binding upon them. It would be possible to deal at some length with the difficulties about the plaintiffs’ pleadings in this case. To give but one example, paragraph 17A proceeds upon the basis that Bill and Mary had exchanged a promise or promises in making the variation agreement. It is by no means clear from paragraph 17 who the promisors and promisees are.
The particulars under paragraph 17A alleged that at the meeting of July 1993 at which the variation agreement was made Bill and Mary orally agreed to make mutual wills to give effect to the terms of the variation agreement. Paragraph 17B alleged that pursuant to the variation agreement Bill and Mary executed their mutual wills on 26 October 1993. The reamended statement of claim introduced, by paragraph 28A, a further plea of estoppel. The paragraph is rather curiously pleaded, but the intention apparently is to allege that the plaintiffs were led by representations made by Bill and Mary in 1988 to expect that Bill would leave Daniel by will an absolute interest in the farm if the plaintiffs performed the 1988 agreement and that the plaintiffs were induced by representations made by Bill and Mary in July 1993 to expect that they would by their wills leave the farm to the plaintiffs on certain conditions.
The trial of the action began on 15 October and ended on 11 November 1997, lasting thirteen sitting days. Seventeen witnesses were called and documents amounting to about 900 pages were put in evidence. In addition to numerous issues of fact, the questions raised included the suggested illusory character of the alleged variation agreement; the existence of a sufficient note or memorandum in writing; part performance; the suggested inability of Bill as part owner of the farm to perform the variation agreement; the existence of consideration for the variation agreement; laches; waiver by the plaintiffs of their right to relief; the imposition of conditions in granting specific performance; and the statute of limitations. There was in addition a counterclaim for $30,000 arising out of the drawing of a cheque by Bronwyn on the farm bank account very shortly after Bill’s death; this was abandoned near the end of the trial. In the circumstances the judge achieved a remarkable feat in giving judgment on 17 December 1997, when he published reasons running to 74 pages and dealing with a large number of questions of law and fact. The hearing of the appeal extended over four days. We have before us some eleven volumes of materials of various kinds.
The judge’s findings and decision
His Honour observed that the nature of the claims made it necessary to scrutinise closely the evidence of the plaintiffs. This he proceeded to do, referring at length to the attack made by the defendant on their credit. The judge said he was extremely impressed with Bronwyn as a witness, describing her as a very honest, hard-working and decent person. He described Daniel as a decent, hard-working, country man who did his best to tell the truth and should be accepted as a witness of truth. What the judge called the sustained and unfounded attacks on the plaintiffs were said by him to reflect adversely on those giving instructions on the other side, including in particular Robbie. His Honour accepted both plaintiffs as "credible, honest witnesses”. He went on to give detailed reasons for his conclusion that Robbie’s credibility had been severely damaged and that, in so far as his evidence conflicted with that of either of the plaintiffs, it was to be rejected. The judge also criticised the demeanour of Robbie’s wife, Maureen, describing it as demonstrating a lack of candour, and observing that he rejected her evidence in so far as it conflicted with that of the plaintiffs.
Although I shall not deal with them in detail, I make it clear that I have considered each of the elaborate criticisms of the judge’s findings of fact and determinations with regard to credibility put forward in support of the appeal.
The judge found that any agreements, promises and representations made by Bill were made with his wife’s knowledge, consent and authority. He dealt at some length with the defendant’s contention that some of the documents in the case, the allegations made in the plaintiffs’ pleadings from time to time and the conduct of the plaintiffs, both before and after Bill’s death, bore, and bore heavily, on whether their account of promises made to them should be accepted. One document relied on was the letter of advice dated 24 March 1994 and sent by Morrison & Sawers to the plaintiffs. His Honour accepted Bronwyn’s evidence that parts of this letter were inaccurate and her explanation of the plaintiffs’ failure to pursue a claim at that time. As regards the curious statement of the grounds of claim in the caveat as amended, the judge took this into account. As to the plaintiffs’ conduct in the months following Bill’s death, including the much discussed matter of the $30,000 withdrawn from the farm bank account, his Honour observed that “the plaintiffs were under economic pressure, they did not have any money to fight a court case, the legal advice given to them was inconclusive and they did not know what to do. It was all brought to a head when they were evicted on Robert’s instructions and they sought and obtained legal aid.” The judge also took into account, in evaluating the plaintiffs’ case, what he described as “the changes, uncertainties and inconsistencies” in their pleadings.
I turn now to his Honour’s principal findings of fact and determinations on questions of law. I have already said that it is not clear on the pleadings whether the plaintiffs were claiming any relief in respect of the 1988 agreement alleged in paragraph 8 of their statement of claim. The judge, while accepting the plaintiffs as truthful witnesses and finding that representations had been made to them in 1988 by Bill and Mary that provision would be made in their wills, was not persuaded that Bill and Mary had entered into any binding, concluded contract with the plaintiffs in 1988. There is no notice of cross-appeal and no notice of contention, nor have the plaintiffs argued before us that the judge was wrong in failing to find that a contract had been made in 1988. I therefore say no more about his Honour’s failure to be satisfied that the first contract alleged had been made. I return later to the judge’s findings about the promises made in 1988.
His Honour found for the plaintiffs on the issue of the making of the variation agreement which they alleged had been made in July 1993. He found that in that month Bill and Mary had put a proposition to the plaintiffs that if they continued to operate the farm as they had in the past, on the same terms as had been agreed upon in the past, then the testators would leave the farm and the dairy business to the plaintiffs upon the death of the survivor of them, subject to two conditions, namely, that the plaintiffs would pay a sum of money to Robbie, and that they would assume the liabilities over the farm. The judge was satisfied that this proposition had been accepted by the plaintiffs. He went on to reject the contention that the alleged contract was uncertain or illusory by reason of the failure to agree on the amount to be paid to Robbie, being of opinion that it was enough that the parties to the suggested contract had agreed that it would be left to the testators to decide how much should be paid to him. The judge found that Mary was under a contractual obligation to the plaintiffs to leave the farm to them and that she had broken this obligation by the execution of her will dated 3 March 1995. He rejected the defence of the statute of frauds, determining that the wills executed by the testators on 26 October 1993 constituted a sufficient note or memorandum to satisfy s.126 of the Instruments Act 1958. He went on to hold that in any event there had been sufficient acts of part performance by the plaintiffs. Then his Honour considered a number of other arguments advanced against the grant of specific performance of the variation agreement. The defendant said that the plaintiffs had not performed their obligations under the alleged variation agreement and were not ready and willing to perform it; that there was a want of mutuality; that the court was being asked to, and should not, compel the performance of personal services or the maintenance of a personal relationship; that there had been laches; and that the grant of specific performance would require the court to exercise ongoing supervision of the relationship between the parties. His Honour rejected each of these defences. He went on to reject the defendant’s contention that if specific performance was granted the court should require the plaintiffs to pay compensation to the defendant.
In case he was wrong on the question whether there was a contract that ought to be specifically performed, the judge proceeded to consider the other claims. He found for the plaintiffs on what he described as the proprietary estoppel claim, holding that in consequence of representations made by the testators and detriments suffered by the plaintiffs an equity had arisen which was to be satisfied by the defendant’s giving effect to the clause of her will made on 26 October 1993 concerning the farm. The judge also held that the plaintiffs succeeded on what he called the constructive trust claim, both in view of the common intention with which the Tongala farm had been acquired in 1988 and having regard to the mutual wills doctrine. Finally his Honour dealt with the claim on a quantum meruit, which was put forward in the alternative to all other claims, and determined, without himself ascertaining an amount, that the plaintiffs were entitled to a sum equal to 40%of the milk cheque in respect of the period from 8 February 1990 to 21 October 1994 without any deduction for expenses.
The orders made
At the conclusion of his reasons the judge announced the orders he proposed to make subject to any submissions by counsel. Evidently no submissions were made by either side, except in relation to the grant of a stay of execution and the extension of the time for appeal. With the addition of the stay and extension of time, the orders actually pronounced were the same as those which the judge had intimated he intended to make, subject to any submissions by counsel, although there are minor drafting alterations in the order as authenticated. Counsel apparently neither (as I have said) made submissions to the judge about the proposed orders he had announced nor sought from him time to consider whether submissions should be made. Despite this omission, on the appeal counsel for the appellant criticised the drafting by the judge of the declarations and the paragraph of the order which made those declarations subject to further order. According to the order as authenticated, the two main declarations are as follows:
“1.
Declaration that the agreement made in 1993 between the Plaintiffs Daniel and Bronwyn Flinn of the one part and William Charles George Flinn deceased and Mary Ann Flinn of the other part whereby the Plaintiffs agreed to operate and manage the dairy farm known as Eulandool at Tongala for a small remuneration and the deceased and Mrs Flinn agreed that the survivor should leave the dairy farm property together with all the farm plant equipment and livestock thereon and the balance outstanding in any farm bank account used by the dairy farm business and any other livestock associated with the operation of the said dairy farm by his or her will, be specifically performed.
2. Declaration that Mary Ann Flinn holds the dairy farm property at Tongala together with all the farm plant equipment livestock thereon and the balance outstanding in any farm bank account used for the dairy farm business and any other livestock associated with the operation of the said dairy farm upon trust for the Plaintiffs to give effect to the provisions of paragraph 4(I) of her will dated 26 October 1993, such trust to be subject to the Plaintiffs’ discharging their obligations pursuant to the agreement referred to in paragraph 1 hereof if required and permitted by Mrs Flinn.”
By a later paragraph of the order those declaratory orders were made subject to further order and by two further paragraphs the plaintiffs were given liberty to apply for such further relief as might appear necessary or proper and the parties were given general liberty to apply.
On the appeal, Mr Kendall, senior counsel for the appellant, sought to make something of the fact that the first declaration did not say to whom the assets were to be left, said nothing about the obligation of the plaintiffs to make payments to Robbie and to assume the liabilities of the farm and was not followed by the formulaic “and order and adjudge the same accordingly”. It was also said that it was unusual to make a declaration subject to further order. Some criticisms were also made of the drafting of the second declaration. Each of these matters should have been taken up with the judge when he invited discussion.
Mary as promisor
On the position of Mary, the judge had this to say:
“In the course of the proceeding the defendant, through her counsel, has sought to adduce evidence and to argue that she was not a party to any alleged agreement. This was on the basis that there was no direct evidence that she ever agreed to anything.
I am satisfied that she was a party to what was represented and/or agreed to by her husband. The evidence reveals that he made the decisions with respect to farming and their businesses, that she was present at discussions had concerning the alleged promises and agreements, that she did not disagree with what her husband said, that she did participate in the discussions and further, she executed mutual wills with her husband in identical terms. The inference is overwhelming that she agreed with everything promised and represented by the deceased. I am satisfied on the evidence that any agreements, promises and representations made by the deceased were made with her knowledge, consent and authority.”
His Honour went on to find “that the deceased spoke for and on behalf of himself and Mrs Flinn in all discussions with the plaintiffs concerning farming at Tongala”, that she was “a party to any promises, representations, agreements and statements made by the deceased” and that he was simply her spokesman.
There is no reason for disagreeing with these findings.
Findings of promises
I turn now to the question what findings the judge made about what was said by way of promise or representation to the plaintiffs in 1988. There are at least three questions here. They concern the identity of the donee – Daniel alone or both plaintiffs; the identity of the donor or donors – Bill alone or Bill and his wife; and the nature and extent of the promised provision. As regards the second question, it is clear from the judge’s reasons that he found that the plaintiffs were told in 1988 that provision would be made in the wills of both Bill and Mary. As regards the first question – the identity of the donee or donees – Daniel’s evidence was that in 1988 Bill had spoken of a gift by will to both him and his wife, while Bronwyn’s evidence was that Bill had spoken of a gift by will to Danny. The judge was well aware of this conflict of evidence. It seems to me that his Honour did resolve it and that he did so by finding that Bill had spoken of a gift to both the plaintiff and his wife. Having dealt with a number of preliminary matters, his Honour expressly set out to find the facts and proceeded to find that Bill had stated that if the plaintiffs agreed to manage the farm on the basis suggested he and his wife would make provision for “the plaintiffs” in their wills. Consistently with this finding of a statement that provision would be made for both plaintiffs, his Honour, in dealing with what I have called the third question – the nature and extent of the promised provision – asked himself how likely it was that a promise would have been made in 1988 “to give them [my emphasis] the whole farm at the beginning of the farming venture”. It is true that his Honour found that an expectation had been created in the minds of the plaintiffs that Daniel would benefit in some way under the will of the deceased and his wife. But, having regard to the judge’s reasons as a whole, this must, I think, be viewed as elliptical, the notion being that it was a desire to benefit Daniel that was the motivation, or primary motivation, and that that desire was to be fulfilled by a gift to Daniel and his wife. I do not overlook the fact that his Honour said, in dealing with what I have called the third question, that it was unlikely that Bill would promise to leave the whole farm “to Danny and maybe Bronwyn” and then execute a will some seven months later leaving only a one-third share of the farm to Danny. The phrase I have quoted might be thought to suggest an inability on the part of the judge to decide whose evidence to prefer, or a finding by him on the whole of the evidence that Bill did not make it sufficiently clear whether the gifts by will would be to Danny or to both plaintiffs. But the judge’s reasons as a whole, including further passages about to be mentioned, lead me to the view that he found that Bill spoke of a gift by will to both plaintiffs.
Subject to the possible effect of the costs of this litigation, to which I shall turn in a moment, the substance of the order which I would propose, in upholding the judge’s determination that an equity requiring the imposition of a trust has arisen, is as follows:
I would substitute for the declarations in the judge’s order (putting to one side for later consideration after argument paragraphs 4 to 6 of that order) something along these lines – A declaration that, as from the date of this Court’s order, the plaintiffs are
(a) beneficially and absolutely entitled, as joint tenants, to the farm freehold and to the livestock, plant and equipment used in connection with the farm;
(b) jointly and severally obliged properly to maintain and support Mary during the balance of her life, this obligation being secured by an equitable charge on the farm freehold;
(c) jointly and severally obliged to assume, in exoneration of the mortgagors, all obligations arising after the date of this Court’s order under the mortgage over the farm, including in particular the liability to make all payments of principal and interest that have not fallen due by the date of this Court’s order, this obligation being similarly secured;
(d) jointly and severally obliged to pay to Robbie or his legal personal representative the sum of $150,000 by ten annual instalments of $15,000, the first instalment to be paid one year after the date of this Court’s order and interest to be paid quarterly from that date at six per cent per annum (in the case of the first four quarters) on $150,000 and (in the case of each subsequent quarter) on the unpaid balance of the $150,000, this obligation being similarly secured.
I would make, as part of the substituted order, an order that the defendant, at her own expense and by her attorney, transfer the freehold to the plaintiffs as joint tenants subject to the mortgage, or some other order vesting the freehold in them.
This is of course, not a draft, but indicative only. I would allow counsel, in speaking to the minutes of the order, to deal within reason with questions of substance as well as form. I would hear counsel specifically on what provision, if any, should be made with regard to the farm bank account.
I find it unnecessary to consider any of the other claims made by the plaintiffs
in the action.
Before us Mr Kendall conceded that the evidence showed that, both at the time of trial and at the present time, Bill’s share in the farm at Tongala and in the personal property used in its operation was the only substantial asset in his estate and the farm at Tongala and the associated personal property constituted the only substantial asset in the estate of the survivor, Mary. The judge ordered that the costs of the action, with its trial lasting thirteen sitting days, be paid by the defendant. Mr Kendall says that there are no assets from which this order for costs can be satisfied if the plaintiffs succeed in their claim to the farm. Presumably Robbie has been financing both the defence of the action and the prosecution of the appeal. Although we should hear counsel on the question of the costs of the appeal if it is desired, it is difficult to see how the defendant could resist an order that gave the plaintiffs at least part of the costs of the appeal; my provisional view, subject always to anything counsel may say, is that the plaintiffs should be given the usual order for the costs of the appeal against the defendant, with no special order relating to the costs of issues. What order is ultimately made against the defendant in respect of the costs of the appeal will make no difference to the plaintiffs if the defendant has no assets available to meet even the existing order for the huge costs of the action.
Two questions then arise. The first is whether an order should be made against Robbie for payment of the costs of the appeal, on the basis that he has conducted and presumably financed all this litigation, at first instance and on appeal, acting throughout in pursuit of his own financial interests. (Mr Garratt has already intimated that the plaintiffs intend to ask us to make such an order and intend in addition to apply to the trial judge for an order that Robbie pay the plaintiffs’ costs of the action, invoking if necessary the liberty to apply reserved and giving notice of the application to Robbie.) The second question which arises is whether it is equitable to impose on the plaintiffs a condition that they pay $150,000 to Robbie when he is, it may be argued, the real unsuccessful party in highly expensive litigation where orders for costs obtained by the plaintiffs against the unsuccessful defendant, at first instance or on appeal, are worthless. Even if no order for costs, on appeal or below, is made against Robbie, it is arguable that it would not be equitable to require the plaintiffs to pay him $150,000 when he (so the foreshadowed argument runs) has brought about a situation in which the plaintiffs have been prosecuting an action and resisting an appeal for years, at enormous expense, opposed by a woman and an estate unable to pay the costs if the claim succeeds. If an order for costs was made against Robbie, in relation to the appeal or the action or both, the question would then arise whether this in itself afforded reason for departing from the order that would otherwise be made requiring payment of the $150,000 to Robbie, or made it appropriate to direct a set-off, or something resembling a set-off. These questions were briefly canvassed on the hearing of the appeal, when the Court pointed out that Robbie himself should be given the opportunity of being heard on them and observed that, there might be a conflict of interest between Mary and Robbie.
CHARLES, J.A.:
I have had the considerable benefit of reading in draft the reasons for judgment of Brooking, J.A. with which I agree. I also agree, subject to hearing counsel, with the disposition of this appeal outlined by his Honour in indicative terms only.
BATT, J.A.:
I have had the considerable benefit of reading in draft the reasons for judgment of Brooking, J.A. I agree with his Honour’s reasons and conclusions and with the order which his Honour outlines in indicative terms only.
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