Gazzola & Anor v Gazzola

[1990] HCATrans 55

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A36 of 1989

B e t w e e n -

GINO GAZZOLA and VERONICA GAZZOLA

Appellants

and

GINESTA GAZZOLA, ROMANO SEBASTIANO

GAZZOLA and NIVES GAZZOLA

Respondents

BRENNAN J
DEANE J

DAWSON J

Gazzola(2)

TOOHEY J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 4 APRIL 1990, AT 10. 18 AM

Copyright in the High Court of Australia

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MR R.W. EVANS: If the Court pleases, I appear with my

learned friend, MR G.D. EDMONDS-WILSON, for the

appellants. (instructed by Baker O'Loughlin)

MR B.T. LANDER, QC:  May it please the Court, I appear

with my learned friend, MR S.J. LIPMAN, for the

respondents. (instructed by Thomson Simmons &

Co)

BRENNAN J:	Yes, Mr Evans.
MR EVANS:	If the Court pleases, swords have already been

drawn with the exchange of written submissions.

However, it would seem that the result of that

is that some of the ships have passed in the

night. There are very few concessions which

the appellants can identify to limit the issues

or shorten the argument. So it is proposed that

the appellants will follow the form and content

of their written submissions.

BRENNAN J:  You can proceed on the footing that the written

submissions have been Eead and are available

for perusal, subsequent ..... different stages

of these proceedings so that might shorten what

you wish to say.

MR EVANS:  Thank you, Your Honour. The issues arise out

of a family relationship and it is our case

that equities ·were created by the nature of the

relationship and the conduct of the parties in

the context of that relationship. However, the

appellants' conduct was described by the lower

courts as unconscionable.

(Continued on page 3)

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MR EVANS (continuing):  I would like to take the Court to

the appeal books, in particular the judgment of

the Full Court of the South Australian Supreme Court

at page 1558. His Honour Justice Prior delivered

the reasons for the Full Court. At the top of that

page, really only the second to the fifth lines,

there is a cryptic conclusion:

Once Gino's actions -

Gino, of course, being the first appellant -

attracted the label of unconscionable conduct,

they spelt the end of equity's aid to the

enforcement thereof -

and he was referring to remedies which otherwise

would have been established by way of constructive trusts. And on page 1556, between lines 7 and 13,

in reviewing the findings of the primary judge,

His Honour says there:

A critical finding by the trial judge followed.

"I find that Gino by causing the letter of

July 31 to be sent, subsequently confirming

it by the letter of August 8 and acting in

accordance with the terms of those letters,
has acted fundamentally in breach of one half

of the common intention and thereby rendered it unconscionable for him to insist upon the

other.

Now, the letter which is referred to there is

set out in the reasons of the primary judge at

page 1484. Your Honours, no doubt, will recall

reading that letter - quite a long letter - from

the appellants' then solicitors. We submit that

the effect of that letter is to indicate that after

about 20 years of working within the family

arrangement, the appellant decide~ for good reasons,

that he wished to withdraw from that relationship

and, if necessary, venture on his own although,

as Your Honours will see from the evidence, it was

proposed that his brother, Ray, joint venture with

him but that was put to an end by the purchase of

the Port Wakefield property - that was the last

acquired property.

So, the effect of both the primary judge's

reasons, which were essentially upheld in all respects

by the Full Court, was to label the appellant's

conduct in terms of the letter and his actions as a

result of the letter as unconscionable which denied

him any equities by way of constructive trusts or

otherwise. It is our contention that the Court

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should impose a constructive trust in favour of the

appellant: firstly, by reason of a connnon intention; or,
alternatively, regardless of any connnon intention.

In so far as the nature of the trusts which should be imposed outside of a connnon intention, we submit that

there are four directions which can be taken to come

to that result.

The first is to identify the collapse of the

relationship along the lines in which this Court spoke

in MUSCHINSKI V DODDS; secondly, to identify a pooling

of resources which includes money and labour along the lines of this Court's reasons in BAUMGARTNER V

BAUMGARTNER; thirdly, the prevent unjust enrichment

which was adverted to in both MUSCHINSKI and

BAUMGARTNER and, indeed, in some other decisions of

this Court in other context and, lastly, by way of

estoppel.

Before developing these submissions, it may be

useful if I directed the Court to one of the

schedules attached to the written submissions, being

schedule A, which gives a diagramatic overview of

the acquisition of the various properties. Now, it

is our case that the relationship connnenced in 1966.

That is the relationship in which the appellant

with respondents contributed to a connnon pool for the

acquisition of properties, of course all being farming

properties. So, if Your Honours have a look at the

top line, those properties - Bolivar Road, which is

a short distance north of Adelaide and Sewers, which
was nearby, and Moyles, which adjoined Bolivar Road -

it was contiguous to Bolivar Road - were acquired

in 1951, 1954 and 1959 respectively.

(Continued on page 5)

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MR EVANS (continuing): Bolivar Road was owned to the

extent of one moiety by the father Elia with

Ginesta, if I can refer to the first respondent

in thatwa.yi. -swith Ginesta' s brothers, people

known as Berno owning the other moiety. That

was the same as Sewers, however Moyles which was

purchased later was owned by husband and wife as

tenants in connnon.

Now, the next line refers to the subsequently acquired properties;: Goreys which was further north

from Bolivar Road, also Long Plains and The Dairy

which, again, were further north still. The Dairy
was fairly close to Goreys and Long Plains was

different country, some kilometres north. Lower

Light was acquired by way of exchange and Badmans

was a property not far from Goreys.

Now, Goreys was purchased, as the panel shows,

in 1966 for about $20,000 and that was acquired from

the family's resources at the time and not from the

realization of the proceeds from any other family

property.and the shares shown there relate to husband

and wife each owning a half "".' again that was purchased

as tenants in connnon - and under the father's will

the sons Ray and Gino took a quarter interest each

and Ginesta retained the other half and still does.

TOOHEY J:	Mr Evans, do Bolivar Road, Sewers and Moyles play
any part in this litigation except as part of the
history?
MR EVANS:	Sewers will not, if Your Honour pleases. I do not think
there will be any doubt as to that. I am sure my
learned friend concedes that Sewers is on its own
because it was obtained prior to any relationship
was formed and was exchanged for another parcel of
land known as Lower Light. I am confident that that
can be eliminated.
TOOHEY J:	Why cannot Bolivar Road on the same footing?
MR EVANS:	Now, Bolivar Road will probably have to be considered, although it is not part of our case, it is more a
part of the respondents' case, but to explain the
facts the property was sold "'."

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TOOHEY J:	No, I did not want to divert you from your argument but I thought you said earlier on
that 1966 was really the starting point of the relationship.
MR EVANS:	Yes.
TOOHEY J:	By that stage, the three properties at the top
of the schedule, of course, had been acquired and
one had, in fact, been sold.
MR EVANS:	Yes.  The significance of Bolivar Road is, and
it is identified there with arrows, that that
was rolled into Long Plains and The Dairy. It was sold in 1973 for $143,500. The proceeds from
that sale; that was Elia's share, one-half share,
were received by him and they were used indirectly
to acquire the whole of Long Plains and a large
proportion of the moneys involved in the
acquisition of The Dairy.
Now, the first respondent claims that she had a beneficial interest in Bolivar Road and that,
therefore, sh~ was entitled to half the share of
the proceeds that her husband received and it may
be that when it comes to fashion the orders that on the principles of MUSCHINSKI, BAUMGARTNER and a decision of the New South Wales' Court of Appeal,
HIBBERSON V GEORGE, that the extraneous capital -
in this case, it would be notional capital that
she has contributed - should first be paid out
to her before any trusts are imposed in favour of the appellant.

The same with Moyles; as I mentioned, that

was owned as tenants in common; that was sold in
1968 for $33,000 and the net proceeds of that sale which was something less than that were applied to

the purchase of Badmans in 1969. So, although

the top row of properties were previously acquired,

the proceeds or part of the proceeds were reinvested	they were subsequently sold and it can be said that
in properties that were part of the family pool of
properties since 1966 but Goreys stands on its own in that apart from a small amount that was paid by way of deposit at settlement, much of the moneys
there were borrowed and the borrowings were repaid
from the contributions made by the appellant and
also the respondents, both in monetary terms and
by reason of their labour.

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MR EVANS (continuing):  Now there was an order made on the hearing of the

application for special leave, reiusing a ground set

out in the draft notice of appeal alleging that

Goreys formed part of the common intention. Now,

obviously the appellant is bound by that, but we say,

although that ground of appeal was removed in the

context of a common intention - on a constructive

trust by reason of common intention - it remains

in the pool of properties when one considers the terms

of a constructive trust regardless of common intention.

The particular ground is ref erred to and set out

at page 9 of the respondents' submissions, at the top

of that page - perhaps I should read from the bottom of
the previous page, paragraph 17:

When special leave to appeal from the decision of the Full Court of the Supreme Court of

South Australia was considered by this Court,

this Court declined to give the appellants

special leave to appeal on the ground then

appearing in the draft notice of appeal 2(i).

That ground read "Their Honours should have held

that the property know:ias Goreys was impressed

with the same trusts as Badmans, Long Plains and

The Dairy ...

and the important rider to that -

by reason of the common intention."

And, His Honour the Chief Justice made that order on

the basis that the primary judge had made a fundamental

finding of fact that at the time Goreys was purchased

there was no manifested common intention and for that

reason it was excluded. But we say, on the principles

of the imposition of constructive trust, regardlessof

common intention, the gravamen is when the contributions

were made and when the relationship in which the

contributions were made commenced. And clearly, on any

view of the evidence, that was in 1966, at the time of

the purchase of Goreys.

In comparing the two lines of constructive trust

it may be appropriate to make this submission at this

stage; that if the Court is with us that there is a
constructive trust by reason of the common intention,
the remedy, we submit, is in terms of the fulfillment
of the common intention. If the Court is against us
but is prepared to find that they are constructive

trusts, regardless of any common intention, the terms

of the trust will be related to the value of the

contributiora:made by the appellant, and between both

those parameters it would seem that the equitable remedy
of proprietary estoppel may establish the fulfillment

of expectations as its remedy, or at the other end of

the scale it may merely establish an adequate remedy to

meet any detriment suffered by the appellant which,

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arguably, would be limited to an interest in

the properties I have referred to, to the extent

of his contributions, and again there is a principle
that extraneous capital invested before the

relationship was formed should be repaid to the

contributor before the trusts are imposed on the
legal owner's property, being the first respondent.

Apart from refusing special leave on that particular ground that I have mentioned, there was

also some discussion as to whether estoppel, which

was sought as a further ground, had been properly

argued before the primary judge and before the Full Court. If I could refer Your Honours to the second

page of the written submissions, and I refer to the

discussion of the primary judge at page 1527 of the

appeal books, just below line 10, His Honour there

says:

(Continued on page 9)

-

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MR EVANS (continuing):

Gino also relied on a plea of equitable estoppel (Statement of Claim, paragraph 23).

But in my view, this is the same argument as

paragraph l lA -

which the primary judge regarded as endeavouring

to set up the claim for a constructive trust by

reason of a common intention -

and fails for the reasons already discussed.

Accordingly, the claim fails on all heads.

And the reason is already discussed where the conclusion that the primary judge came to that the appellant, himself, had been guilty of

unconscionable conduct and therefore it was

unnecessary to investigate whether the first
respondent had been guilty of unconscionable conduct

as legal owner and as to whether any equities were

established.

We submit that the fundamental flaw in the reasons of both the primary judge and the Full Court

was that the context of their unconscionable conduct

was in relation to a common intention and without

conceding that that conduct was, in any way,

unconscionable we say that it was erroneously

transposed to evaluate the appellants' conduct in

another context altogether, that is, regardless of

any common intention, and the one cannot be used to

eliminate equities in the other.

I will take Your Honours now to the findings of the primary judge and his conclusions. That is

page 1522, between lines 5 and 20:

The parents and the boys were, in fact,

"pooling their resources, efforts and money in

order to purchase and develop farming or

grazing lands". There was, as I have found in

relation to these later properties, the
intention on the part of the parents to leave

these lands to the sons and the belief created
in the minds of the sons that that would happen.

(Continued on page 10)

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MR EVANS (continuing):

It was matched by the common intention that

the boys would work the land and out of that working
of the land there would be a proper living for
the parents whose hard work was the foundation of

the land holding.

In my view, on the facts of this case, it

is simply impossible to conceive one side of

the equation without the other. The defendants'

approach was to deny the existence of both sides

of the equation. That is a possible point of

view, although I have come to the conclusion

that it is the wrong view. Gino argues for

one side of the equation but, in effect, rejects

the other. That is an impossible point of view.

Now on page 1525, from about line 6 to line. 12:

I find that Gino by causing the letter of July 31

to be sent, subsequently confirming it by the
letter of August 8 and acting in accordance with

the terms of those letters, has acted fundamentally

in breach of one half of the common intention

and thereby rendered it unconscionable for him

to insist upon the other.

There are other references.

DAWSON J: I am not sure that I understand it. What are the

two halves?

MR EVANS:  His Honour, the primary judge, took this approach that

there was a two-sides equation. In other words, there were opposing obligations in the one common intention.

DAWSON J: Yes, what were they? What was on one side and what

the other?

MR EVANS:  Yes. On the parents.' side, to leave the properties

to the sons and that was subsequently varied by making

a provision for the only daughter. There are two

sons and an only daughter.

(Continued on page 11)

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MR EVANS (continuing): That was a monetary prov1s1on that

the properties would be left to the sons and

from their inheritence the sons would have to

borrow moneys against the security of the properties

to pay the daughter an equal value in terms of

money.

They were the obligations on one side, being the parents' obligations. And His Honour extracted

an opposing obligation on the part of the sons

that they were to work the properties for the

whole of the parents' lifetime, the last surviving

parent and on his or her death would be entitled

to inherit his or her interests.

Implicit in that is that if they did not

honour those obligations until the death of the

last parent which may have been a period of 50

years altogether, they were to forfeit their

interests, the whole of their interests.

TOOHEY J: It was not just the working of the land, though,

was it? It was the working of the land in such

a way as to provide some livelihood for the parents,

having regard to their age, I suppose.

MR EVANS:  That is so and not to leave them in the lurch,

obviously. And that was the obligation that

the primary judge imputed from the evidence into

the common intention.

TOOHEY J: Is it over simplifying the matter, Mr Evans,

to say that the unconscionable conduct was found

to be in the withdrawal by your client from the

partnership or were there more - other factors

to be taken into account?

MR EVANS:  To answer that question, Your Honour, we say

that it was not the withdrawal of Gino's contributions,

that was regarded - - -

TOOHEY J: No, I was not asking you in terms of the appellants'

argument but in terms of His Honour's finding,

where the unconscionable conduct lay.

(Continued on page 12)

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MR EVANS: Well, the way I interpret his findings and,

again, I am looking at page 1525 of outline 10, yet

it was his action in insisting on his side of

the bargain without - that is, the benefit under

his side of the bargain - without being prepared to meet the obligations so it was unconscionable

for him to claim that the properties were held

on trust by way of a reversion of a remainder

interest and withdrawing his labour from the

family pool.

TOOHEY J:	Yes, but how is it, in His Honour's view, that
the appellant withdrew his labour? Was it simply because he ceased to work on the property or because he withdrew from the partnership or what?

MR EVANS: It think it was both, if Your Honour pleases.

There was a partnership at the time which

His Honour has said in his reasons was a

convenient means of regulating the contributions

to the pool. He gave notice according to the

articles of the partnership, being article 17,

that he intended to retire in three months' time;
that was the requisite notice under the articles

and retired according to the terms of the articles
and thereafter, although he had tried to involve

Ray in joint venturing other properties, because
Ray eschewed that invitation, he ended up working

on his own or with his wife, Veronica.

We submit that not only the reasons of the primary judge but the comments of the Full Court

identify the unconscionable conduct as not

withdrawing from a relationship which had been

going for 20 years but - - -

GAUDRON·J:	Mr Evans, can I interrupt you there?
MR EVANS:	Yes.

GAUDRON J: Do you accept - well, you must for the purposes

of this appeal accept that there were mutual

obligations in relation to that common intention.

Leave aside the characterization for one moment of the withdrawal as unconscionable. If the

common intention can no longer be carried into

effect, how can you, in any meaningful way, talk

about the imposition of trusts to give effect to

the common intention as is the way you put the

trust at the beginning of your argument? I mean,

the unconscionability may have other consequences

in respect of other aspects of your argument.

MR EVANS: Yes. Well, we say that there are two ways in

which constructive trusts might arise on those

facts and if I could take the Court to - - -

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GAUDRON J:  But the question really is: how can you say

that a trust arises which	is the implementation
of the common intention?	It is really much like
a problem of frustration.

MR EVANS: Quite. Before I come to the question of frustration

if I could answer Your Honour's question this way:

that if all the obligations of the common intention

had been fulfilled, then it would be unconscionable

for Ginesta, the first respondent, to resile from her obligations under the common intention. That

would be the unconscionability qua, a common

intention.

We submit as at page 3 of the written

submissions and what is set out there, that

the nature of the sons' obligations were unenforceable

personal assurances and in support of that contention

we refer to the judgment of His Honour the President

in MUSCHINSKI V DODDS, (1985) 160 CLR 583 at 605.

BRENNAN J:  Could I just ask a question before you come to that

because I am having difficulty with the notion of

common intention in this respect: is it sufficient

to establish a common intention which might, in

turn, be the foundation for the imposition of a

constructive trust when the common intention
consists simply of the expectations borne of

a family relationship having regard particularly

to the lifestyle of that family?

(Continued on page 14)

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BRENNAN J (continuing): We are all familiar with the notion

of hard. working immigrant parents. who work in
the family works and at the end of the day the

parents die and the children inherit it. Does

that give rise, because it is the family lifestyle

and expectations, to constructive trusts if

somebody does not adhere to the family expectation?

MR EVANS:	We submit that they do, Your Honour, and we say
that the circumstances here, in the case af ba~
are not far removed from the cases I have referred to which are, of course, were de facto spouse
cases. But we submit_ that where you have a close
knit family working agricultural properties
side by side and living under the same roof, that the expectations that are created by the parents in the minds of the sons do give rise to legal obligations and - - -

DEANE J: But do we not have to go back and understand the

factual basis in that, as I follow it, here all

members of the family got legal rights which were

of great value as it turned out. That is so, is

it not? I mean, your client is not somebody who has

worked for the family and then been told he has

nothing and if I am wrong, I have misunderstood

it. As I followed it he and the other members of

the family have all obtained very substantial legal

rights and what is involved is your client's

expectation that he would get more on the death of

the parents. Is that the position?

MR EVANS:	That is the submission of the respondents and we say that is without foundation.
DEANE.J:	What, your client did not become a legal owner of

any of the land?

MR EVANS:	Only by inheritance, that is through the father's estate and by purchase - his interests other than
what he inherited were purchased for value. (Continued on page 15)

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DEANE J: But so were everybody else's interests.

MR EVANS: Perhaps if I could take Your Honour to schedule G

at page 20 -

DEANE J:	But is there somewhere a chart which shows us, for example, how much your client has put in and how much he has got out already?
MR EVANS:	Yes, I can take Your Honour to that too. But, could

I first of all take the Court to schedule G which is

a convenient summary of the duration and extent of the

appellant.'. s contributions which may put that question

into relief. I will not go the references; I will just

refer to the subject-matter. There is a finding that

he worked on the family properties whilst he was still

at school. He left school in 1966 and worked-

that was his first job after leaving school - at a case

factory and contributed his earnings to the family

pool - it is. at page 29 if Your Honour pleases -

and that was at the time Goreys was acquired.

After Goreys was acquired - he was actually living

at Goreys. He was the only family member resident at

Goreys, doing up the house and making it habitable

and improving the property. He also worked at

Bolivar Road but he did not receive any pay until 1974.

So that is the first submission we would make,

that this is an unusual family relationship, arrangement,

in that he worked from 1966 to 1974 without ever being

paid anything, and that was working full time up

until 1973 when Badmans was purchased and at his

parents'- I am sorry, I have given Your Honours the

wrong date - 1969, when Badmans was purchased, and at

his parents suggestion he went to work in a factory

and he remained working at the factory from 1969 to

1976 and he contributed virtually all of his earnings

into the family pool and not only did he do that but

he worked before and after work on the properties

at weekends and during his holidays. Paragraphs 3, 4

and S refer to that situation.

His Honour, the primary judge, found that the appellant

contributed a great deal of time and effort to the working

of the properties. There is a finding that he banked

about 75 per cent of his earnings which was used for

the common advantage of the family pool and in 1970

he paid over half his net income from the full time

employment in mortgage repayments on Goreys. And

when the family direction, the philosophy of the

farming enterprise, moved away from dairying and

glasshouses to cropping and grazing, he played a major

part in that and in those years the partnership

profits were greatly swelled by his efforts. He was also

involved in the - - -

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BRENNAN J: Were these the financial contributions which were

the subject of the deed of gift?

MR EVANS:  No,. the deed of gift as His Honour the primary judge

said in his reasons was irrelevant in the sense that -

perhaps if I could take the Court back to schedule A.

BRENNAN J: No, do not let me delay you. You continue, and then perhaps

s~tines ..: --- · - ·

MR EVANS:	What happened was that when his father died on the last day of 1978, he inherited certain interests of
his father's along with the other son and, indeed,
the daughter benefited markedly under the will and the daughter at no time contributed anything to the
working of the family properties. Prior to the death of his father he had purchased a quarter interest
in two properties being The Dairy and Long Plains and his share of the purchase price was debited to
the partnership accounts.  So he acquired -again going
back to schedule A - his interest to the extent of a
quarter in Long Plains and The Dairy by purchase.

He inherLted half of his late father's interest

in 1979 and that, therefore, built his interest in

those two properties up to three-eighths; the extra
eighth is to be added. He also inherited half his

father's interest in Goreys so he became the legal

owner to the extent of one quarter. But the point -

(Continued on page 17)

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DEANE J:	That is putting it one way! The facts of it was
that the money for the purcha.,e came overwhelmingly
from the father and your clieut, in terms of cold
cash, put in almost nothing towards the purchase of
either property. Is that not so?
MR EVANS:	It is not quite correct, with respect Your Honour,

and perhaps if I could ask Your Honours to look at

schedule Bon page 22, that sets out both Long Plains

and The Dairy, and Long Plains was purchased for
$105,000-odd. There was a deposit of $10,000 which

Gino contributed $2,000, not much behind his parents and the balan:i:e was_met from the net proceeds of the

sale of Bolivar Road, being attributed there to

the father in the sum of $94,000-odd.	The Dairy was
much to the same effect.	The balance of the proceeds of
the settlement from Bolivar Road were applied.	It is
shown that the father contributed $51,000-odd.	Gino

contributed $1100, as did Ray, and there was also a

deposit of $6,000 paid which Gino contributed $2576

and also he contributed $3000 in reduction of the

mortgaze repayments.

D~~E J :.T:  But why is not the only real conclusion from

all this that your client and the other members of the

family were entitled to the legal interests that the

family worked out and it was a common intention that

when each of the parents died they would benefit under

the respective wills?

MR EVANS:	Well that obviously would have been satisfactory to
the appellant, but in the circumstances the first

respondent - - -

DEANE J:  Well, it might be satisfactory, but why is that not

really the only inference that is available to be drawn

when you have a careful working out of legal interests
while people are alive and the only talk is of common

intention after the father dies and then after the

mother dies, with no suggestion that father or mother

was to be deprived of her or his ownership during their

respective lives?

MR EVANS: With respect we say that was the common intention

essentially, if Your Honour pleases - - -

BRENNAN J: Well in that case I follow it. I did not think that

was the way it was being put.

MR EVANS:  Yes. That was the common intention and His Honour found

that, having regard to first of all Goreys and also Badmans

being purchased in 1966 and 1969 respectively when

neither of the sons are sui juris and there is a lot of

evidence on this and specilie.findings-, that it: was impossible

to attribute them with any legal interest because of

their age and His Honour regarded that as an important

indicator that there was a common intention. Indeed, the

primary judge found that there was a common intention and

C2Tl7/l/CM	17	4/4/90
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that finding was not disturbed on appeal. What - - -

BRENNAN J: Where do we find the finding of common intention?

In what terms has it been made?

MR EVANS: Page 1514, if the Court pleases, about line 17,

His Honour says:

I find that the allegation in paragraph llA

of the Claim is made out as far as Badmans is

concerned. In my view, both boys were led to

believe that the Badmans property would pass to

them and they acted on that belief to their

detriment.

And then further on in relation to Long Plains and
The Dairy, on the following page, about line 3:

I need spend less time on Long Plains and The Dairy. In my opinion, the case is overwhelmingly made out that the boys were led to believe that the parents would leave their

interests in those properties to the boys.

And the argument was put, at first instance, by the then defendants, that it was nothing more than the

ordinary type of arrangement that one sees in many

farming families, and that was rejected by the trial

judge,·and on those two pages he makes specific findings

as to the existence of a common intention in relation -

to the disposition of both Long Plains and The Dairy

and also Badmans. ·

(Continued on page 19)

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GAUDRON J: If I could just interrupt you there, you seem

to put it, although it is not there in terms,

that the common intention would be that the interests

of the parents could not be alienated by them

during their lifetime; so that is the unexpressed

premise on which you operate, is it not?

MR EVANS:  Yes.

GAUDRON J: And that, as I understand it, is somewhat different

from the way Justice Deane put it to you.

MR EVANS: Certainly that is a premise, if Your Honour

pleases, but there was a finding by the primary

judge that it would not be unreasonable if those

properties were sold and the moneys were reinvested

in similar properties. Indeed, subsequent properties
were acquired. It was not that rigid but it

was in the nature of the family, through the

joint efforts of its members, building up a pool of

farming properties and they included Badmans,

Long Plains and The Dairy, and His Honour found

quite decisively, although there is one passage

subsequently where he equivocates and I will

come to that - but on those two pages, with respect,

there is little doubt that a finding of common

intention was made. But he went on to disqualify

the appellant from any benefits under the common

intention by reason of his so-called unconscionable

conduct.

DEANE J:  But does that not conceal the question? I mean,

what His Honour has found in effect is that it

was everybody's intention that your client would

get his legal interests immediately and that

it was the common intention that for the rest,

if the family stayed together and he provided

with the others for the parents, he would inherit

under their respective wills?

MR EVANS:  Yes.

DEANE J:	Now, is that not the question in the case whether in that context and in the circumstances of this
case when he withdrew from what His Honour saw
as his half of the obligation there is a constructive
trust not to carry out any common intention because the common intention was that there would not be anything until his parents died but to adjust
things? I am just putting to you my problem.
That would seem to me to lead this Court into the area of, "Well, let's look at everything.
Let's look at what he put in, let's look at the
value of the legal entitlement of what he and
others got out and if the result can be said
to be unconscionable according to equitable principles

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let's work out what the situation should be."

Can we do that?

MR EVANS:  Thank you, Your Honour. I propose to come to

that very shortly and that is, of course, the

case for the appellant that if there was not

a fulfilled common intention and therefore the

appellant is not justified by reason of a

constructive trust based on a common intention

then there are other equities based on his level

of contribution.

DEANE J: Except the real problem is this, is it not, if

you client were cast out without a penny, your

case subject to what is said against you would

seem to me to be an overwhelmingly strong one?

But when the arrangement is everybody gets legal

interests during the parents' lives and then

if they have done these things for the parents

they will get something more under the parents'

will, you have moved into a much more difficult

territory?

MR EVANS:  I accept that, of course, if Your Honour pleases,

but we say that that was not the finding of the primary judge and that is, indeed, inconsistent

with the finding of the primary judge. The primary

judge, in those two passage I have referred to,

formed the clear view that the common intention

was for both parents to leave their properties

to the sons subject to making a provision in

a monetary legacy for the daughter. And it has

to be remembered that the daughter, who was slightly

younger than the second son, made no contributions

at all at any time. She left school and got

a job inAdelaideand, although she lived on

the properties, she did not contribute in any

way at all and she received a substantial legacy

under her father's will, almost to the same value

as the sons.

(Continued on page 21)

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DEANE J: Well, that is the problem, is it not? I mean, is

your argument that the parents could leave nothing

to their daughter.- - -

MR EVANS:	No, it is not our submission.
DEANE J:	- - - or nothing of these properties?
MR EVANS:	I suppose it comes to this, that, on His Honour's

findings - and we accept them to the extent that

they are establishing a corrnnon intention - we say

that there was no basis for forfeiture of the

appellant's· interest -because, firstly, the

obligations of the appellant are already being

met because 20 years later, from the time Goreys

was purchased the portfolio of properties had been

so well established that the mother, in terms of
her legal interests, had a combined asset value of
in excess of a million dollars in 1986 values, and

that having contributed, as I read from the schedule,

over such a long period, that the appellant had
discharged his obligations by putting her in a

position where she was of independent means and

obviously financially secure for the rest of her

life.

Side by side with that, and I would like to take the Court to the further schedule - - -

DEANE J: Mr Evans, I will stop interrupting you, I do not

want to say too much - - -

MR EVANS:  It is a complicated set of facts, Your Honour, and

I -

DEANE J: - - - but can I just say this to you. Please do

not let me put you off your argument the way you

want to present it by dealing with my queries, I
was simply trying to indicate to you an area where

I am having concern. Do not put your argument in

terms of answering what I have raised.

MR EVANS:  I welcome the confrontation, if Your Honour pleases.

If I could take the Court to schedule J, at page 49, which refers to events and circumstances leading

to the dissolution of the partnership which, of

course, occurred in the middle of 1984.

(Continued on page 22)

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MR EVANS (continuing): After the death of Elia in 1978

the family began to drift apart. The trial

judge held that there was a total absence of

any organized consultation between the partners,

and a tradition in the family of an absence

of cotmnunication.

In 1980 Ginesta informed her children that

she intended to partition her legal interests

in the properties and work alone. She did not

pursue that but legal right to do that was not

challenged by the sons. In 1980 she revoked her

1972 will, which was at that time similar to

her late husband's and made a new will	·
leaving the properties to Gino, Ray and the

daughter Nives in equal shares. That was held

to be inconsistent with the cotmnon intention.

Paragraph 5: if there had not been any

further properties purchased since 1974 - that

was when the Long Plains and The Dairy properties

were acquired - aridthere were no outstanding

borrowings.and we submit that the cotmnon intention
then had effectively crystalliZed. · and the only

continuum was the working arrangements for the

existing properties.and the primary judge held

that it was not necessarily inconsistent for the

sons to purchase other properties outside those

in the cotmnon intention and, in fact, other

properties were purchased, a property - known as
section 193, which was near Long Plains, in 1977

and a property further north known as Inkermans

in 1981. They were acquired as tenants in common

by the two sons.and the appellant had invited his

mother to join in the purchases of those properties

as part of the family arrangement and cotmnon

intention but she declined to do so. Then there

·was a further partnership formed by the two sons for

working section 193 and Inkermans.

Gino went to live at Long Plains after it

was purchased in 1974 and later got married and he

looked after the properties at the northern end -

the top end - and the other family members remained

on living together at The Dairy and looked after the

southern properties.

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MR EVANS (continuing): Then disagreements occurred as to

individual partnership interests, as recorded in

the accounts, purchases of plant and machinery and

moving of stock from one property to another.

However, it was in July 1984 that the two sons had a

personal dispute and that was because, at that stage
Gino, the appellant, wanted to purchase the

Port Wakefield property, which is something over a

thousand acres, north of the existing properties and

there was discussion with the other son, Ray, as to
the value of the property. Ray was prepared to join

Gino, but not at the price that Gino was prepared to

pay for it. So there was a falling out, and Gino

then was determined to acquire, if he could, on his
own, but to raise the funds required it was necessary

for him to mortgage his interest in Inkermans, which

was held at tenancy in common with Ray.

Ray refused - or it was tantamount to a refusal.

He said, "I am prepared to allow you to encumber that

property, providing that our bank manager will

guarantee me a similar loan for any further property

that I want to buy". And he was, on the findings of

the primary judge, at that stage looking for a

property himself. That might have been another

motive why he did not join in with Gino. Now it was

principally that impasse,and this again is on the

Gino went to see a solicitor and,having consulted the	findings of the primary judge referred to there, that
solicitor and taken legal advice,we have the letter
that I have referred to which, on the findings of the
primary judge, precipitated the dissolution of the
partnership, and there is a further finding under
paragraph 12 that the primary judge regarded the partners as having an. incapacity for objectivity, a
lack of skill in compromise and negotiation, et cetera.

So what we had there was a long-standing family

relationship which was all channelled in one direction.

All the energies were devoted to acquiring farm properties to be worked in conjunction and by the
members of the family to the overall advantage and

mutual benefit of the family as a whole. (Continued on page 24)

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MR EVANS (continuirig):  Had the parents, being reluctant to

commit themselves to the purchase of further

properties - initially it was the father - the

evidence is and, again, that is found by the primary

either Goreys or Badmans, that he was driven by his	judge, that Elia was not really keen to purchase
wife - the first respondent - and then through the process of evolution, after the purchase of
Long Plains and The Dairy we see that the.mother is
reluctant to commit herself to joining in the purchase
of other properties butthe sons are keen and, indeed,
two properties, as I mentioned, were acquired jointly by the sons.

If the Port Wakefield property had been

acquired by the two sons one would expect that there would not have been the letter, there would not have been the dissolution of the partnership and the

family relationship would have continued until

some other truncating event occurred. Now, that is

the background to the situation that the appellant

found himself in at the time he saw the solicitor

to obtain legal advice as to his position.	We
say that at that time, by reason of both his

contributions and his brother's contributions since

1966, the common intention had crystallized in a

sense that there were not any outstanding obligations
because the mother was then in a position of owning

property of substantial value - over a million

dollars - of either farming it .·herself and then she

worked daily in the dairy and ran The Dairy with

the help of the younger son Ray, or she could have

share farmed it or leased it and lived very well

off the income. At that time she was not prepared

to involve herself in the acquisition of further

properties although the sons were anxious to.

Now, on the principles espoused by the

President in MUSCHINSKI V DODDS, we submit that there is room for a finding, or a conclusion, that the

obligations of the sons were in the nature of

personal assurances and, therefore, could not be enforced against them as a matter of law .. They may	give rise to equities and I rely on the dictum of
His Honour in MUSCHINSKI at pages 605, 606 and 608.

(Continued on page 25)

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BRENNAN J: This is a minority judgment, is it not?

MR EVANS:  It is, Your Honour, but we say that these facts are

more amenable to that approach than the facts that

presented themselves in MUSCHINSKI were.

BRENNAN J: Yes, I must confess I am still at a loss to

understand this corrnnon intention upon which all of

this was founded.	What are the elements? What is
the description of a	corrnnon intention which is

necessary to give rise to a constructive trust of this kind?

MR EVANS: Well, the expectations that were created - and this

flows into proprietary estoppel but also it is

relevant on the authorities to a corrnnon intention -

that the sons would inherit their parents' properties.

BRENNAN J:  So that at a certain point of time when the

intention is formed that the sons will inherit on the

death of their parents, the sons then acquire an

equitable interest in those properties?

MR EVANS:  A legal interest; their parents'respective legal

interests and equitable interests and absolute interest.

BRENNAN J:	When that common intention is formed, the sons thereupon acquire an equitable interest in the properties?
MR EVANS:	Yes. Well, we submit that the equitable interest

arises before the death of the parents because,by
reason of the common intention, they,have a vested

interest in the remainder which passes to them - - -

BRENNAN J: Yes, that· is my proposition to you. In other words,

the common intention is one which vests in them a

beneficial interest, prior to the death of the parents

so that it would be impossible for the parents

without breaching the constructive trust to alienate	that land at any time from the time of the formation
of the common intention onwards, whether inter vivos
or by will, except in accordance with the common
intention.

MR EVANS:  Yes, and except in accordance with the consents of

the beneficiaries.

BRENNAN J: Yes. Well now then the next question arises: is

the common intention one which is to be expressed

in terms of an agreement to leave the property to the

sons on condition that the sons do certain things,

or is it that they have that beneficial interest there

and then and the condition upon which they have been

given that beneficial interest is a personal

C2T23/l/LW	25	4/4/90
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undertaking of the sons that they will thereafter

continue to look after it because it is only on the
second of those hypotheses that this judgment

has anything to say?

MR EVANS: Certainly. Well it is the second of those

hypotheses and if I could refer the Court to page 4

of the written submissions and the passage there
at the top of the page. The clear inference from

the evidence is that the sons were to take an

irmnediate beneficial interest in return for their

assurances of present and future contributions of

money and labour.

GAUDRON J: And what about the daughter's share? That is not

comprehended - or the daughter's provision.	It
certainly is not comprehended in that.

MR EVANS:  No, but His Honour, the primary judge, specifically

found that that was the original intention and it

was varied by a family discussion that took place at

the time the wills were drafted in 1972 and the

beneficiaries consented to that variation in the

cormnon intention. Again, that is at page 1513 and

1514.

BRENNAN J:  Do you have a finding which says that the corrrrnon

intention was one which imposed upon the sons nothing

but a personal obligation - - -

MR EVANS:  No.

BRENNAN J: - - - and was not-such that the fulfilment of the

obligation was not a condition of the equitable

interest?

MR EVANS:  The finding was to the opposite effect, that it was

a legal obligation, and we submit that the contrary

finding was a correct one, that it was only a personal

assurance, and we say that this Court should so hold

in the sense that the primary facts as found by the

learned trial judge support a gloss, either as a

legal obligation or a personal assurance that one

can move in either direction and it is open to this

C.ourt to substitute its own view of the legal

significance of the obligations, namely, that they

are merely personal assurances and not binding

obligations.

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MR EVANS (continuing): And we support that by firstly, that

the transfer of. Badmans. was at a time when the

sons were not sui juris.

GAUDRON J:  Mr Evans, is not the problem with this that simply

no parent would so put themselves at a position of

disadvantage in relation to their children. You

have got no finding to this effect and, indeed, it really

defies connnonsense· in terms of parent/children

relationships.

MR EVANS: Well, I accept Your Honour's point of view and we

put this - - -

GAUDRON J: Particularly if you are a mother, yes.

MR EVANS:	Yes, definitely in that capacity, if Your Honour
pleases.  We put that as the high water-mark of
our submission and as you will follow on page 5 - and I will turn to page 5 -the alternatives - I
am reading from the middle of that page - is that assu:ning
they were  legal obligations,they had been
discharged and I will not reiterate what I have said, but for the reasons that I have submitted to
Your Honours. The alternative to that is that they
were legal obligations but they had been discharged
over the 20-year period leaving the first respondent as a woman of substance .. And in the third situation,
the third alternative, we say that if the conditions had not been totally fulfilled, but substantially
fulfilled, that equity could relieve against a forfeiture on the principles enunciated in
STERN V McARTHUR, (1988) 165 CLR 489, pages 526 to 527 and also at 529. That case, of course, involved
an instalments contract; the facts are somewhat
different; that was called up but decision provided
for relief against forfeiture and if I could read from the bottom of page 526, from the joint judgment of
Justices Deane and Dawson:

The general underlying notion is that which

has long been identified as underlying much

of equity's traditional jurisdiction to grant

relief against unconscientious conduct, namely,

that a person should not be permitted to use or

insist upon his legal rights to take advantage

of another's special vulnerability or

misadventure for the unjust enrichment of

himself.-

DAWSON J: But that is the principle which underlies the right

to relief against forfeiture. In that case it	was
held that the terms contract was analagous to a
mortgage.

MR EVANS: Yes.

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DAWSON J: But it is a long way from this case.

MR EVANS:	The facts are, but in our submission that this
is tantamount to forfeiture if the last vestage of the obligations are not fulfilled after 20 years of fulfilment and if they are not be imposed so strictly that they have to be fulfilled until the death of the last surviving parent and, if on the
day before the death of that parent, there is a
withdrawal from the family arrangement, there is
forfeiture.

GAUDRON J: And this is all still predicated on an immediate

beneficial interest, is it, which is forfeited some

time down the track by reason - - - ?

MR EVANS:	Yes, by a condition subsequent. Now, it is for those
reasons that the appellant contends that there should
be a constructive trust imposed in his favour by
reason of the common intention, whether there was fulfilment or partial fulfilment.

BRENNAN J:. Is there anything other than those words to. which you

have directed our attention on pages 1514 and 1515

which you would rely on to establish a common intention

that there should be an immediate interest vested

in the beneficiaries of this constructive trust?

(Continued on page 29)

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MR EVANS: Yes, Your Honour. Perhaps if I could read another

passage on page 1515 from line 15; where the

primary ·judge says:

It would, in my view, be unthinkable that

the parents would deliberately introduce .
the boys as purchasers of a quarter interest,

respectively - 1

and he is there talking about Long Plains and The

Dairy -

unless they were intending to leave their

interest, either directly or indirectly

by way of the survivor, to the boys. It

would be tantamount to making a trap for them.

The boys would work these properties knowing

that they had one half interest in their

names, spending money, not individually but

by way of their being partners, in improving

the pastures, building up the soil, keeping
the fencing .and out-houses up to scratch and

perhaps improving them, only to find that they

might be forced into a sale if these two

properties were left elsewhere.

That, with respect, is the learned trial judge's

attitude to Your Honour the President's hypothesis.

GAUDRON J:  But it stops short of an immediate beneficial

interest; of a finding that the common intention

was an immediate beneficial interest, does it not

and, indeed, the finding about unconscionable

conduct in a sense is not formed in terms that

you would expect for the expression of a condition

subsequent defeating an immediate beneficial

interest?

MR EVANS:	We submit, Your Honour, that those findings do
give rise to an immediate beneficial interest
and that - - -
GAUDRON J:	But it is not so said, is it?

MR EVANS: It is not so said but it -

GAUDRON J:  And, in fact, all the passages you have taken

us to are directed to the terms of a will and

normally one's expectation in a will is nothing

like an immediate beneficial interest.

MR EVANS:	No, we can only submit that in this particular
family arrangement on these facts, going back to the appellant working the properties from 1966, that there was much more to it than a promise
made by parents to leave property under a will
to their children.

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GAUDRON J:  And it would mean that from 1966 until 1978,

before the - well, I will call him the testator,

died he, himself, would not have been able to

alienate the properties notwithstanding that he

was apparently the major or dominant person in

the working of those properties.

MR EVANS:  We say that that is the position; that is, of
course - - -

GAUDRON J: But, it is hard to imagine that anybody - - -

MR EVANS: Well, subject to the consent of the beneficiaries,

the terms of the trust could have,been varied by

the consent of the beneficiaries and, indeed, they

were in respect of the daughter taking interest.

GAUDRON J: If you say you have got a finding to that effect

which - I mean, I cannot see it in the judgment

because that is a finding to the effect that as

from 1966 the parents had absolutely subordinated

their will to the dictates of the whole family.

MR EVANS:	Could I refer Your Honour to another passage and
there are many of them in the reasons, at 1518,
towards the bottom of that page, the last couple
of lines:

And her stand is that she -

this is the respondent -

in 1978, could have done exactly the same
and is free to do so now and has been free to

do so at any time during the intervening

period.

(Continued on page 31)

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MR EV.ANS (continuing):  And that is referring to the passage

above that revoking her Will and not leaving the

lands to the sons.

GAUDRON J:  If you go on to the next paragraph I can understand

that making sense in terms of some other form of

constructive trust or perhaps even a resulting trust,

but for myself I cannot see that it takes you that

extra distance to an immediate beneficial interest,

.n 1966 and at the times when the Long Plain or Lower Light and The Dairy were purchased r when they were purchased indeed in separate names. I

mean, your intention might as well have resulted

in the properties being purchased simply in the name

of the two boys after the sale of the first property.

MR EVANS:  Yes. Well of course the 1966 property does not

come into the comm.on intention trust, so it is the

1969 property and the 1974 properties. Well, we

can only submit, if the Court pleases, that on the explicit findings of the primary judge we say that

that is the most likely inference and the inference

that is most properly open. That brings us then to - - -

BRENNAN J:  But does that not run into the difficulty

of the view that was expressed about the consequences
of the conduct of your client and does that not say

something about what the common intention was?

Now granted the proposition for which you have been

contending, then the question of conduct of your

client can be looked at in a certain context, but

does not the view that His Honour formed as to the

consequences of the conduct of your client itself

say something about the finding that he made about

the common intention, as to whether of not an

equitable interest was immediately created?

MR EVANS:  It is a question ·of whether- there was defeasance by a

condition subsequent or not, I suppose ; whether that

is the proper interpretation from his tindings.

BRENNAN J: Either that there was no immediate creation of an

equitable interest or that . whatever equitable
by conduct which failed to live up to the expectations	interest was created was subject to defeasance
of the parents.

MR EVANS:  Yes. That is of course how we interpret it and that

is our contention that was a._vested .eql::Ji.itable

interest which was subject to defeasance.

GAUDRON J: But what vested equitable interest? I mean

MR EVANS:  The remainder of the properties in the legal title

of the parents.

GAUDRON J:  It has got to be - yes,thank you. The immediate

beneficial interest as to the whole of their

C2T26/1/CM	31	4/4/90
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legal interest.

MR EVANS:  Subject to making the agreed provision to the

daughter by providing the means to form a

legacy equal to the value of the estates.

BRENNAN J: But the condition subsequent is a condition

subsequent on His Honour's findings, which was

not satisfied by something which fell short of

a continuance of family participation in the

working of the properties.

MR EVANS: That is on His Honour's findings?

BRENNAN J: Yes. Well now it is possible_ for a common

intention, I suppose,to be formed in those terms.

It is only if the common intention was different from that that you can succeed. If the common

intention was in those forms it may be that your

client is not to blame in any relevant sense, except

for non-fulfillment of the condition subsequent.

Well now,does this case then all turn of a question of fact?

MR EVANS: With respect not, Your Honour,and I am coming to

that alternative factual situation,and this is at

page 6 now of the written submissions,to consider

the factual situation regardless of common

intention and it is the appellants' case that there

are two possibilities: either there was a corrrrnon

intention that was fulfilled and that gave rise to

a constructive trust, because the respondent resiled

from the terms of it.

(Continued on page 33)

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MR EVANS:  Now, if it was not that factual situation, it was

this: that there was a premature collapse of
the relationship, and it was because of the premature

collapse that the appellant was not able to fulfill

the-conditions, or the obligations, and that factual

situation was considered in MUSCHINSKI V DODDS.

There, of course, there was a difficulty with planning

approval for the house, but moreover the underlying

personal relationship of Mrs Muschinski and Mr Dodds

collapsed. We submit that that is the same situation

here; that the obligations were not carried out,

they were frustrated because of the collapse of the

relationship.

I will not take Your Honours back to the

schedule showing the events leading up to the collapse

of the relationship, but we say that that was always

a risk in a family relationship such as this, particularly

one that had been in existence for about 20 years at

the time of the collapse, and that no blame for the
collapse of the relationship should be attributed to

the appellant.and,. in that event, on the authorities

of MUSCHINSKI and BAUMGARTNER and HIBBERSON V GEORGE

and others, a constructive trust should be imposed

to the extent that it would be unconscionable for the

respondent to assert an absolute interest in the

properties in which she is legally entitled.

GAUDRON J:  Now, that precisely is where it seems to me you

are getting to some very difficult country. As far as the mother's contributions to the acquisition of

the children's interests are concerned, do you view it
through the eyes of the doctrine of advancement, or

do you view it some other way, the former, of course

not being the subject of any factual finding? But

do you not,coming at things through the doctrine of

advancement, if you like, or concepts similar thereto,

come to the idea that this really was the working out
of the interests of the family and that each to the

extent that any contributions were in excess of the

legal interest actually taken, that there was an

extent1 intention that the others should benefit to that (Continued on page 34)

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MR EVANS:  Your Honour, we say as to that that the legal title

to both Goreys and Bad.mans was entirely fortuitous

and it was dictated by circumstances, namely, that the two sons were not of sufficient age - they had

not obtained their majority - and His Honour, the
primary judge, made that specific finding, that the
reason why the titles were not registered partly in
the name of the appellant and his brother was because

of the fundamental legal impediment - they were not

sui juris.

So, what we say in this situation is that where one member of a relationship fortuitously at the

time the relationship is terminated finds herself as

the legal owner but not related to her contributions,

in otherwords, there is a windfall to her, that she

holds her legal title to the extent that it is

unconscionable to assert it and retain it by way of

a constructive trust in favour of the other

contributors as beneficiaries and that is as	I
understand the principles in MUSCHINSKI and
BAUMGARTNER.

GAUDRON J: Well, that is just an ordinary resulting trust,

is it not?

MR EVANS:  No, Your Honour, and there are authorities to this

effect: CALVERLEYwas one and, I think, also

ALLEN V SNYDER, but -

GAUDRON J: Well, you want something more than a resulting

trust - - -

MR EVANS: Well, the difficulty of a resulting trust is that

it only attaches to contributions made at the time

of the acquisition of the property and, therefore,

it is an ineffective remedy. Certainly,

MUSCHINSKI and BAUMGARTNER and HIBBERSON did not

proceed on principles of resulting trust. It is the

evolving concept of a constructive trust to prevent,

as it has been referred to, "the unjust enrichment"

of the person who fortuitously holds the title

at the time the relationship comes to an end.

Obviously, the appellant makes no claim in respect of Long Plains and The Dairy because he

is legally entitled to a quarter which represents,

accurately, the level of his contributions but what

he claims is a constructive trust relating to

Goreys and Badmans becaus~ ab initio, he was a

contributor to Goreys purchased in 1966 and that

was acquired by the family, not from any discrete

fund - it had been created before the relationship

started -but from the ground up.

GAUDRON J: This depends, really, not so much on the premature

collapse of a common intention as on the absence of

any common intention, does it not?

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MR EVANS:  Yes. With respect, that is all we have to

establish that in the absence of a connnon intention

GAUDRON J: Well, maybe you have to establish an absence in

this sense: if there is a connnon intention that

collapsed that is to be seen in the working out of

the legal estates - or a step towards it is the

working out of the legal estates - you might think that

part of the common intention was tha4 regardless of

contributions as between each member of the family

if the common intention was not ultimately realized,

the intention was that each should take those

legal interests regardless of the contribution to

any particular property.

MR EVANS: That would require that finding of fact. Now, in - - -

GAUDRON J: Yes, well, you seem to be missing a lot of

findings of facts in these - - -

MR EVANS: Yes, well in MUSCHINSKI V DODDS therewas a very

similar situation where there was a connnon intention

to develop a property between the de facto spouses.

The relationship broke down in much the same way as

this did and the principles upon which that case was

decided was that, although there was a common
intention and it was notcarried out to its entirety

because of the premature collapse of the substratum
being the relationship and the parties did not
advert to the possibility of there being a premature

collapse.

(Continued on page 36)

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MR EVANS (continuing):  We say that those facts apply equally

here and those facts should be found, that the

parties did not consider that Gino or Ray would

withdraw from the common intention. That was

the last thing that was imagined and, in those

circumstances, equity will impose a constructive

trust if one party has unreasonably benefited

from another party's contributions.

In other words, looking at it from another

way, one would have to ask, "Accepting all the

evidence that Gino contributed equally with his

parents, apart from some minor adjustments to

capital", which I will come to, "in the acquisition

development, et cetera, of Goreys and Badmans,
did he intend to make a gift of his contributions

to his parents?". That would seem to be the

inevitable result if a constructive trust is

not imposed in his favour.

He has, essentially, as the matters stand,

made a gift of substantial contributions of money

and labour over 20 years to allow his mother

to be entitled absolutely to one-half of both

of those properties rather than one-quarter.

BRENNAN J: That may not be a surprising thing.

MR EVANS:  That would leave him in the situation if his

mother, and as indeed she has, wished to resile

from the common intention and leave him without

anything for his efforts.

DEANE J:	Can we look at schedule A and schedule B because
one really needs to be precise here? Goreys
was purchased in 1966 which was the year Gino
left school, which means - does it appear at what age he left school?

(Continued on page 37)

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MR EVANS:	There is some evidence as to that.	I think he

was about 17; that is near enough at this - - -

DEANE J:	He had just stopped being a schoolboy.
MR EVANS:	Yes.
DEANE J:	And, if you look at schedule B, we see the purchase
price - 'that the father is credited on this with the deposit. The amount on settlement presumably
came from the sale of Bolivar - no, where did
that come from?
MR EVANS:	The amount on settlement? That came from the
box below that, from the father, the:mother and
the E & G Gazzola partnership.  Now, thab ,was :an.
overdraft loan ,and ·chat was repaid, that $4000, apparently from Gino's contributions because he
started to work for the family immediately after
Goreys was purchased so that would be divided amongst the four, or at least, amongst the three
because Ray was not then working.  He was three
years younger than Gino.
DEANE J:	So, in monetary terms, if :you look at that,Gino
would have put in what, about three thousand out
of 20 thousand?
MR EVANS:	That is so and what we would say to compensate the
others for that is that they have their capital
repaid, if necessary, with interest, before any
distribution.
DEANE J:	But that, you assume.  I mean, MUSCHINSKI V DODDS,
when you get building on land and so on is one
thing; the prima facie approach to a constructive
trust here would be a proportionate share,
according to contribution, would it not; that
being, as it were, the ordinary operation of- a
resulting trust in equity?
MR EVANS:	That does not, of course, take into account, if
Your Honour pleases, the enhanced value of the
property by reason of its development or, indeed,
the effect of inflation. It is not in present
day values and the principles - - -
DEANE J:	But that is precisely what does take account of enhanced value of property and inflation; that is,
the person who puts in a quarter gets a quarter of
the property.  He does not put in a quarter and
get a disproportionate share of the enhanced value of the property by reason of inflation.

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MR EVANS:	Could I put it this way, if Your Honour pleases,
that from the time of the purchase Gino is working
to the same extent, in terms of his contribution,
as his two parents.  Now, the extraneous capital
which was introduced was.. tothe..effect of $1998 paid
by the father, a slightly lesser amount by the mother,
I am sorry, I slightly greater amount by the mother
and then on overdraft and then to repay the mortage the partnership provided $3000-odd and there is an
unknown .$2000 which one might assume would come from
partnership sources and, of course, the appellant,
at this stage, was working for no wages and he was
contributing to the partnership income.
DEANE/'J:	Mr Evans, I said I would not interrupt you earlier and

I have broken that promise, but what is concerning
me again is, if your client had got nothing I

would have little problem with this case, but looking

at Goreys, in the context of the legal interests your

client has got in other properties, I have a little

difficulty in following the path whereby one says,

"That result is unconscionable, he has got to get

more than a quarter than the quarter he has already

got under his father's will" and it is that area that

if you are moving into this type of constructive

trust, you really cannot get this Court intervening

unless the position is made quite clear, really.

MR EVANS:	Well could I endeavour to answer Your Honour's question
this'way that it is our submission that you do not look to the appellant but you look to the titled owner, here the mother,and ask,_ the question whether she has gained her entitlement as a windfall due to
some other person's contributions rather than entirely from her own contributions and what we say
is_ that with Goreys, that was a property that should
have gone to the four members of the family in equal
shares,. Because of the historical manner in which it
was purchased the title remained in the mother and
father's name only and she has effectively gained a
absolute interest in one half - asserts an absolute quarter interest in the whole property from the contributions of the two sons, yet she maintains an interest in one half.
BRENNAN J:	That would be the history of the dairy industry of

this country, would it not?

MR EVANS:	Well, we say that without fear or favour the sons and
the parents worked alongside each other and with
the same  purpose and effort, but what has happened
is that the mother has ended up with a one half
interest that she claims is hers absolutely in Goreys
and Badmans and the sons have ended up with no
interest in Goreys or Badmans and their quarter share
in Long Plains and The Dairy was paid for. That was

C2T31/1/,JL	38	4/4/90
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acquired. by payment as .the moneys. were debited

to their partnership accounts. Certainly, they

received a benefit under their father's will which

discharged those debts effectively but so did the

daughter, she received a substantial payment in

1979 of $46 ,000 •.

BRENNAN J: Could I ask, what is the equitable principle which

the assertion of title by Ginesta fails to acknowledge?

MR EVANS: It fails to acknowledge that the title - - -

BRENNAN J:  I am not asking you about the facts, I am asking

you about the relevant - - -

MR EVANS: Principles, yes, it fails to acknowledge that others

have contributed to the acquisition of that asset,

who have no interest in it and she has therefore

derived a windfall and the only conclusion that

would flow from that is that the two sons intended

to gift all their contributions to their mother.

DEANE J: But that is not so. I mean the family arrangement

covered everything and at the stage it came to an

end the arrangement was that the legal interests
would be your clients had a quarter interest in the

two properties you are talking about and a larger

than quarter interest in the other two.

(Continued on page 40)

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MR EVANS:  We say, Your Honour, that that was not the family

arrangement as found by the primary judge.

DEANE J: No, it is was the legal arrangement though.

MR EVANS: It was the legal arrangement.

DEANE J: Yes.	I appreciate what you say about beneficial.
MR EVANS:	Yes, that was the legal arrangement.

DEANE J:  But then if you do not get a ~onstructi ve trust

by reason of intention your task is to show that

that situation is unconscionable. What I am

querying is whether you can go to the individual

properties or one must look at the overall situation?

MR EVANS:  Yes. I am happy to look at the task in both ways.

DEANE J:	I mean the widow might well say it is unfair after all these years and all I have done that I have only
got a quarter of the Dairy.
MR EVANS:	Well those properties were acquired, as I mentioned,

through the partnership. In our respectful

submission, they should be left out of the consideration.

It is a matter of looking at individual assets and

we say in relation to Long Plains and The Dairy

Ginesta has not lost anything and she has not gained

anything. It was an ad valorem purchase. But in

the case of the other two properties, Goreys and

Badmans, the appellant and his brother have

contributed to the acquisition of those properties

and they have nothing. If there had been another

three or four properties in the same category

it would attach to those also.

GAUDRON J:  But they have got a quarter.

MR EVANS: That is through their father's will.

GAUDRON J: Yes, but why would you think that there was any

unconscionability when they have a quarter as a

result of the will taking effect, as I dare say it

had been discussed between the family and the mother

has got a half which is, on any view, does not really

reflect the contribution as between the mother and

the sons as towards Goreys?

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MR EVANS: Well, I can only endeavour to answer that, if

Your Honour pleases, by going back to the principles of MUSCHINSKI and perhaps more particularly,

BAUMGARTNER.

GAUDRON J:	But you say that, but what you are really seeking to leave out of account in this is that certain
arrangements took effect, both as to the legal estate
and as to the will of the father, which is why I put to you before, that if you want to make out this constructive trust, you have almost got to say there
was no common intention and you are either in
resulting trust or that extension of resulting
trust being contribution that results in a constructive
trust, being the sort of - as in BAUMGARTNER, where it
was still based on contribution.
MR.:EVANS:	Yes, Your Honour, we say that there was no connnon
intention in relation to the unexpected situation
where Gino retired from the family arrangement, and I can only argue that by way of analogy with the
facts in MUSCHINSKI and BAUMGARTNER, that the
collapse of the relationship was something the parties had never addressed their minds to, indeed, did not
contemplate.
GAUDRON J:	It all looks to be very much as though that_

preci~ely is· ~t the arrangement was about. These are

the things that will happen if it is carried through

to its end and if it is not carried through to its

end these are the interests~that will come about, either

by way of purchase, or by inheritance. I mean, I know

there is no factual finding one way or the other, but

it certainly smacks of a deal of foresight as to

precisely what would happen if it did not get carried

to its completion.

MR EVANS:  Could I put _one or two hypothetical situations?

If Gino had been badly injured driving a tractor or

been in a motor vehicle accident and was incapacitated

and. - - -

GAUDRON J: That is right.
MR EVANS~	- - - he was therefore precluded from contributing

his labour; that is a situation, an event that was

not foreseen, it was not anticipated and not

catered- for.

(Continued on page 42)

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MR EVANS (continuing): And we say it is in tilat unexpected situation as was held in MUSCHINSKI and BAUMGARTNER that

the parties did not contemplate the collapse
of the relationship and here we say the family

did not contemplate the collapse of their

relationship and there are findings to that effect.

DEANE J: Is that a good example? I mean that is precisely

the situation where one would have thought the
parents would have been free to sell the property

and give him necessary medical attention in the

terms of ordinary operation of a family.

MR EVANS:  If that situation had happened 30 years after

he had started to work that might have been a

fairly poor reward for his effort. That is what

we are obliged to submit here, that one looks
at Ginesta's windfall, rather than what Gino has

acquired through his father's 'Will or winning the

lottery or any other source. That is an extraneous

consideration ,and that the equitable principles

in the cases identify the legal owners position rather

than the claimants and the inquiry is if the legal

owner is fortuitously left in that situation after

the collapse of a relationship, it is incumbent

on the Court to examine whether she has, if you like,

earnt that status or not, and where the assets have

been acquired by joint efforts of co-contributors, as I understand the principles,-and it is therefore our submission that one looks at the value of the

contributions. And we say, on these facts, because

it was a labour intensive relationship, one should

not be too influenced by any disparity with unequal

capital contributions except that where capital

had been acquired before the relationship was

established, that must be paid out before any
equities are defined and we would therefore say. that the

money that came to Badmans from the sale of Moyles,

being about $33,000,, and half that being the first

respondent.'.s, that should be paid out to her by way

of capital _ntroduced before the relationship was

formed and so also should one half of the proceeds

of Bolivar Road which amounts to about $72,000.

(Continued on page 43)

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MR EVANS (continuing): That should be paid out to her and

it should be indexed so that it represents present-

day values and because the four members of the

family have jointly contributed to the acquisition

of Goreys and Badmans, each party is entitled to

a one-quarter interest or, more particularly,

Ginesta is entitled to a one-quarter interest.

She has fortuitiously been left with a one-half

interest. Subject :to being recompensed for her

initial capital introduction, she should hold

the balance in a ~onstructive trust for the

two sons in equal share so they would share

one-eighth 1each of the total interest or - - -

GAUDRON J:  And how does one work into that the provision

for the daughter?

MR EVANS: Well, the daughter may very well inherit the

mother's interest if the mother wishes to

compensate the daughter. The other thing is

and, perhaps the most simple answer to that is

that she is not a member of the family arrangement.

GAUDRON J:	I know she is not but does it not - - -
MR EVANS:	She has never worked.
GAUDRON J:	You either have to say there was no family arrangement to substantiate that or if you 1want
to work - or common intention - in the background
of the common family intention, you cannot just ignore the daughter.
MR EVANS:	On the authority of BAUMGARTNER, it is the
co-contributors who are considered.  The daughter
is not a co-contributor, with respect, so she
does not deserve to be considered.
GAUDRON J:	Yes.

BRENNAN J: Well, does that not rather lead to the conclusion

that if there was any arrangement at all which

gave rise to any legal rights or equitable nights,

the equitable rights which the sons took or what

might be left by the parents after they had applied

the property for ordinary family purposes throughout

their lives and had made some provision for the

daughter and, after all that was done, then but

only then would you quantify the value and extent

of their interests?

MR EVANS:	Yes, I have to accept that, with respect, as a
reasonable hypothesis on the evidence but if I
could turn the coin over, it may mean that Gino, after contributing for 20 years and then withdrawing, will be in a worse position than
Nives who has never contributed.

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BRENNAN J: Not necessarily. It depends on whether you

put into that -

MR EVANS: Well, he is at the whim of his mother.

BRENNAN J: - - - common intention, if that is the phrase,

a power to disinherit. If you do not, then

other considerations may arise.

MR EVANS:	Well, in our submission, that would be a very Draconian construction to place on the common intention; that, if he contributed for 40 years
and then withdrew, he would forfeit any interest
that he might have under the common intention
and were, on the other side -
BRENNAN J:	The other way of looking at it is to say that if

he substantially does what he is supposed to do he

will get his interest when the mother dies but,

until the mother dies, there is no way in which he

has a vested interest and that if he has discontinued

his efforts in part but not substantially, then it

may be that he will be required to contribute in

some way in order to equalize the interest between

himself and his briother ..

MR EVANS:	That is certainly an interpretation but it was not
the finding of the primary judge or the concurrent
finding of the Full Court with respect.
BRENNAN J:	No, that is quite true.
DEANE J:	But it would be fairly close to the primary judge's
finding to say that he would get his legal interest
straight away and if things stayed the same when
the first parent died, he would get an accretion to that legal interest and, if things stayed the same when the second parent died, he would get the
final accretion to· that legal interest.

(Continued on page 45)

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MR EVANS:  Yes.

DEANE J: Well, it brings us straight back to the query:

should equity impose a constructive trust upon

that legal arrangement?

MR EVANS: Well,to answer that, Your Honour, we say that the

family was of a kind that would not have contemplated

that anything would tear them asunder. They did not

contemplate that there may have been a Cain and

Abel relationship between the sons and just as that was not foreseen in MUSCHINSKI and BAUMGARTNER

we say that that does not disqualify the appellant

from having a trust imposed to recognise the extent
of his contributions or,from the other side, to

relieve his mother of her windfall.

DEANE J:	The point that Justice Gaundron was making to you
though was that you might say that in that gradation
one has the inbuilt provision for such contingencies.

MR EVANS: Well that, of course, is open on the evidence and

perhaps on the inherent probabilities but it was not

the finding made by the primary judge or the Full

Court.

DEANE J:	Do we know, Mr Evans, what the working out of ordinary
partnership principles would result_ what the legal position would be in this case in teLmS of accounts
and so on?  How did that work out?
MR EVANS:	There was some evidence but by no means reliable

evidence as to that.

DEANE J:	It has not been worked out as a basis?
MR EVANS:	It has not and we are certainly conscious of the

requirement to compensate Ginesta for her capital

contributions and it would seem, with respect, that

if she is given full value for the proceeds of the

one or two lesser amounts, then she is, if that is in	sales of both Bolivar Road and Moyles, and perhaps
present day values, in effect, being credited with all her contributions over and above those of Gino
and Ray.

GAUDRON J: Well,then, the difficulty I have with that is that

one just cannot predicate that if these things were

going to be worked out in this way,that the

father's will would have been in the terms it was.

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GAUDR0N J (continuing): That is the problem under which your client took and that is the whole problem

about the unconscionability of this areas as

far as I am concerned.

MR EVANS:  We would be prepared, with respect, to accept

that but what we say is in that situation and

because of the lack of foreseeability, it is

Ginesta who has received with windfall.

GAUDR0N J: No, no. The argument can be made that because

of that tne will was left in a certain way and

she has been disadvantaged and perhaps quite

considerably. Onany view other than that this

was a staged arrangement which would happen if

certain things happened it is the mother whose

contribution, on your argument, is being devalued

in a sense.

MR EVANS:  We say, in answer to that, Your Honour, that

both the mother and father were aware of each

other's wills. It was never intended that she

would take under her late husband's will or that

he would take under her will -

GAUDR0N J:  No, but that intention might have been quite

different if it had for one moment been thought

that the boys could claim constructive trusts in respect of the legal interests held by the mother.

MR EVANS:  And accepting that, if Your Honour pleases,

we would content that that supports our argument

that there was not any consideration as to what

might happen in circumstances such as this and

I can refer to a finding of the primary judge

at 1481, line 5, where he says:

There is no suggestion in the evidence of

the partners ever sitting down together
to plan the future of their partnership.

And I had referred to another reference to the

evidence in the schedule on the same point to

the same effect, that is schedule J, paragraph 12

on page 50, and also at page 1487 of the appeal

books at line 5 where the primary judge found:

(Continued on page 47)

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MR EVANS (continuing):

This is not to say that there may not have

been some minor irritations in the partnership

and indeed, given the total absence of any

organised regular consultation between the

partners, that is almost inevitable.

The findings were to the effect that the partnership

propelled itself almost by remote control. It was in

the nature of the relationship that this event would

not have been foreseen or even contemplated.

GAUDRON J: You have taken what I said quite out of context.

I am - - -

MR EVANS:	I am sorry, Your Honour.
GAUDRON J:	- - - thinking as between the mother and the

father and the decision relating to the wills, not as
to how the partnership was worked. That is to say,

I cannot see, in the light of the evidence, how you

can measure unconscionability without taking into

account the way the father's will operated.

MR EVANS: Well, we can only answer that by saying that it

operated as much in favour of Nives, who was a

non-contributor,as it did in relation to the two

sons. That is all we can say.

GAUDRON J:  Yes, but that is not the point. The question is

the unconscionability that you assert is between the

mother and the sons. The will did not do anything

for the mother.

MR EVANS: Well, again,we say that on the principles of those

cases I have referred to, one has to look at whether
Ginesta, in having a fortuitous legal interest, obtained that through another's contributions, and

that is as much as I can submit to Your Honours on

this particular point.

GAUDRON J.t Yes.
MR EVANS:	Now the other matters that - - -

BRENNAN J: Can I just take you back to your answer to

Justice Gaudron? When a legal owner of property does

acquire that property as the result of another's
contributions, it may be that those contributions are

by way of gift, or by way of loan, or by way of

acquisition of a proprietary interest.	Do those three
ways exhaust the possibilities?

C2T38/l/FK	47	4/4/90
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MR EVANS:	I think on these facts,. with respect, they would
seem to.

BRENNAN J: Well then · you deny that it was by way of gif~

of course.

MR EVANS:	That is our fundamental contention that that is what
makes the acquisition ridiculous, in our submission,
it could not have been intended by way of gift.
BRENNAN J:	It was·not intended by way of loan?

MR EVANS: It was not intended by loan.

BRENNAN J:  So therefore it must have been intended by

way of acquisition of a proprietary interest.

MR EVANS: In relation to the mother's acquisition?

BRENNAN J: No, those who contributed.

MR EVANS:	Yes.
BRENNAN J:	So that the proposition is that the boys'

contribution was a contribution for the purpose

of acquiring a proprietary interest or,put

another way, with a conunon understanding that by
doing that they were earning their stake in the

property.

MR EVANS: Well, perhaps I could answer that and again I

do not want to avoid the question, but in another

way altogether, that there does not, in our

respectful submission, have to be any intention

at al~ that where there is a de facto pooling of

resources, including money and labour, the courts
of equity will externally impose a trust in the

absence of any intention.

BRENNAN J: Now what is the authority for that proposition?

MR EVANS: Well, MUSCHINSKI V DODDS and BAUMGARTNER, of this

Court.

BRENNAN J: But in MUSCHINSKI V DODDS there was an intention that

both would take the benefit of the contributions

that they-were making by way of a proprietary interest.

MR EVANS:	But the principle therewas espoused to take effect
regardless of any conunon intention.and that was adopted
in BAUMGARTNER where there was not any connnon intention.
I.t was expressly decided in BAUMGARTNER that there was
no connnon intention.and that the principle operated
regardless of any connnon intention.

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BRENNAN J:  So that the equity arises simply from the windfall?

MR EVANS: Yes, and that flows on to the concept of unjust

enrichment which has - - -

BRENNAN J: Yes, I see the way you put it.

MR EVANS: ~ - - found favour in Canada and the United States

on principles of restitution and it is being referred

to quite often in cases ffom this Court in all types

of factual circumstances and, indeed, His Honour

Justice Deane, in MUSCHINSKI, postulated that

unjust enrichment might become a separate subset of

equitable rules and could be developed on a case- by-

case basis although the doctrine was not applied in .

MUSCHINSKI.

And, His Honour Justice Toohey, in BAUMGARTNER,

questioned whether there was any difference in

principle between the notion of unjust enrichment

and an unconscionable retention of property by

reason of co-contributors making the contributions

to another's benefit.

BRENNAN J: Yes.

MR EVANS:  The section on unjust enrichment appears at page 13

of the written submissions. If I could refer the

Court to both those cases: first of all,

MUSCHINSKI, at page 617, His Honour, at about the

fifth line on that page, says:

In the United States of America, a general doctine of unjust enrichment has long been recognized as providing an acceptable basis

in principle for the imposition of a

constructive trust.

He refers to Scott, volume V, paragraph 461.

(Continued on page 50)

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MR EVANS (continuing):

It may well be that the development of the

law of this country on a case by case basis

will eventually lead to the identification

of some overall concept of unjust enrichment

as an established principle constituting the

basis of decision of past and future cases.

And then referring to the Canadian decisions of

the Supreme Court in PETTKUS V BECKER and the

New Zealand case of HAYWARD V GIORDANI. And then

in BAUMGARTNER at page 153 in the judgment of

His Honour Justice Toohey, the last paragraph on

that page:

The notion of unjust enrichment,

qualified in this way, is as much at ease

with the authorities and is as capable of

ready and certain application as is the

notion of unconscionable conduct.

And he refers to the paper of Professor Waters,

the Canadian. professor, where he says:

"to continue sharpening the edges of the

criteria which must be satisfied before

the claimant can obtain constructive trust

relief". But that exercise is necessary,

whichever approach is adopted.

And he goes on to say:

The existence of a de facto relationship

between the parties constitutes no barrier

in either case. The object of a constructive
trust is to redress a position which

otherwise leavesuntouched a situation of

unconscionable conduct or unjust enrichment.

(Continued on page 51)

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MR EVANS (continuing):

In a situation such as the present one,

where two people have lived together for

a time and made contributions towards the

purchase of land or the building of a home

on it, an approach based on unconscionable

conduct or one based on unjust enrichment

will inevitably bring about the same result.

Neither approach necessarily calls for a

precise accounting of the contributions

of the parties.

And implicit in that, in our submission, is that

one has to have regard to the title of the legal

owner and ascertain whether that has been derived

as a windfall or not. And we say that that should

be looked at discretely in relation to the

acquisition of each property. And that it would

be an error in principle to embark on an exercise

something -in the nature ofequitable set-off or

equitable accounting to merge the other properties

in respect of .which a claim is not made.

In so far as the appellant has benefited

under his father's will, that is something outside

the principles in MUSCHINSKI and BAUMGARTNER.

And that all that should be off set is the capital that the legal owner has contributed which was

derived before the relationship was formed. And

that an appropriate order here would be to require

the two sons to repay to their mother the capital

that she contributed from external sources indexed
to the present day and upon that they should
then be entitled beneficially to one-half of

the first respondent's interests in both Goreys

and Badmans.

GAUDRON J:: How do we account for the fact that half has

already passed under a will.with this extraneous

capital? (Continued on page 52)

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MR EVANS:	Because it was the father's capital -
GAUDRON J:	Do

we do the same with the father's share and reapportion all of that?

MR EVANS:  Yes. We have given, in that formula, credit to

the mother for the total interest that she had

in Bolivar Road and Moyles.

GAUDRON J: But, do we not have to do the same with the

father's share?

MR EVANS:	The father's share was left to the sons under the
will; that has been accommodated, in our submission~
and the daughter has received a legacy equivalent to one-third of the value of the real property that
passed to the sons under their father's will and
that is - - -
GAUDRON J:	I am not concerned about the facts; I am concerned about the mathematics of what you are doing.
MR EVANS:	Yes. Well, we say that the principle is that one ignores the father's situation; that one focuses on the legal owners' windfall and ignores anything that
is not directly related to that windfall.

GAUDRON J: Well, I just have some difficulty with the notion

of extraneous capital and a quarter shareholding

by reference to a one-half share in the property

and, in particular, have some difficulty with the -

I ~have no confidence that the mathematics will be the same if you do it one way rather than another way.

MR EVANS: It is a difficult case because the facts are very

convoluted artd complex and where there were single

asset trusts in MUSCHINSKI and BAUMGARTNER, obviously

the calculations as well as the principles and the

application of the principles to the facts was far

mare straightforward but it would be a great shame	if the appellant is denied a remedy that he is
otherwise entitled to because of the compticated nature of the facts and the difficulty in the
mathematical calculations.

TOOHEY J:	Mr Eva~s, how did the primary judge approach the
notion of unconscionability on the part of
Mrs Gazzola?  I mean, I appreciate that he spoke
of a common intention on both sides and that when
one aspect of that common intention failed to take
place then the common intention was said to be at an
end but in terms of focusing on unconscionability by
reference to the assets that Mrs Gazzola presently has
or had at the relevant time, what did His Honour say about that aspect?

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MR EVANS:	He did not have to consider that, if Your Honour pleases, because the finding of tmconscionability
on the part of Gino pre-empted any discussion or
inquiry as to whether Ginesta had acted
unconscionably.
TOOHEY J:	But why do you? I understand in terms of His Honour's

reasons why it did by reference to connnon intention

but I do not quite understand the role, if any, it
had to play in relation to unjust enrichment or

unconscionability in the retention of assets by

Mrs Gazzola.

MR EVANS: Well, that is, indeed, our fundamental complain and

if I could take Your Honours to the first page of

the written submissions?

TOOHEY J:  But just before you do, I am not sure that you have

answered my question, except that I understand you to

say that His Honour said nothing about unconscionability

in the sense that I have just put to you.

MR EVANS:  What he said about it, if Your Honour pleases, was

that the uncohscionability. in the appellant in

forcing the bargain as a one-sided bargain flowed

across to any equities that he may have had in a

situation regardless of common intention. He used the

same conduct as - he would characterize it as

unconscionable, to de'feat equities in two discrete

areas. And that is our complaint, that if, indeed,

Gino acted unconscionably in · being selective about

the enforcement of the common intention, that behaviour

could not be unconscionable when one is looking at

a quite different situation that does not in any way
relate to a common intention. In other words, Gino

would have been better off if there had been no

finding of any common intention.

(Continued on page 54)

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TOOHEY J: Did His Honour say anywhere that it would have

been unconscionable for Mrs Gazzola to retain the

interests which ~he had, except as part of the

notion of conrrnon intention?

MR EVANS:  He did not have to say so in so many words; it is

implicit in his findings that he formed that view,

in our submission, and if I could go back to - - -

TOOHEY J:  But when you say that do you mean that His Honour

appears to have proceeded on the basis that it

was not unconscionable for Mrs Gazzola to retain

the assets because of the unconscionability of

conduct of the appellant?

MR EVANS:  That is so and that was the rationalization of the

case and I can - perhaps I should just go to that

evidence and, again, it was reiterated by the

Full Court where the primary judge's findings were

quoted. That was at page 1556, lines 7 to 12:

"I find that Gino by causing the letter

of July 31 to be sent .... and acting in

accordance with the terms of those

letters, has acted fundamentally in

breach of one half of the cormnon

intention and thereby rendered it

unconscionalbe for him to insist upon

the other.

TOOHEY J: Yes, I was trying to get away from the notion of

cormnon intention in the questions that I was asking

you.

(Continued on page 55)

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MR EVANS: Yes, but he had transposed that conduct from the

circumstances and contexts of a common intention to

any other circumstances in which Gino may have had
an equitable remedy._ At page 1558, at the top, in the

reasons of the Full Court:

Once Gino's actions attracted the label of

unconscionable conduct, they spelt the end

of equity's aid to the enforcement thereof.

Now, that applied across the board, if I could put

it that way. So it precluded the imposition of a

constructive trust, not only in the context of the

common intention, but in the context of the
alternative situation, regardless of a common

intention.

TOOHEY J:  You mean that because the appellant had been

unconscionable the respondent could not be

unconscionable or it was irrelevant to consider

whether the respondent was unconscionable or otherwise.

MR EVANS:  That is so, if Your Honour pleases. It pre-empted

any finding of·unconscionability on the part of the
legal owner, which of course was the normal inquiry.

Further down 1558 - - -

DAWSON J:  Why should you look at it that way? Why should you

not say it just '_'pre-empted relief", and that renders

irrelevant questions of unconsc·ionability on the

other side, what is wrong with that?

MR EVANS:  Yes. I am very happy to adopt that, if Your Honour

pleases, and indeed the Full Court said as much at

the middle of 1558:

The relief sought was therefore properly

refused, both with respect to declarations of constructive trusts and with respct to Gino's claim to an interest in the properties to the

. extent of his contributions.

' f:'~~i<~,-'

i['Altcfi: there is nothing in that sentence to tie it in

,.with the resulting trust the extent of which

contributions was regardless of intention in a

constructive trust situation, and as His Honour

Justice Dawson has put so succinctly, it pre-empted

anything.

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BRENNAN J:	Mr Evans, can you give us any indication given
the continuance of the disturbance that your argument
has encountered thus far, how much longer your
argument is likely to take?
MR EVANS:	I think I can limit it,with the opportunity of
reflection over lunch time, if the Court pleases.
BRENNAN J:	To what?

MR EVANS:  Five or 10 minutes perhaps. I want to deal~ very

briefly, with proprietary estoppel and WALTONS case,

because that decision had not been delivered when

the primary judge reserved judgment.

BRENNAN J: Yes,and Mr Lander,have you any information that

you can give us as to the time that your argument

will take?

MR LANDER:  I should not expect to be more than an hour,

Your Honour.

BRENNAN J:  I see. The Court will adjourn now until 2.15.

AT 12.48 PM LUNCHEON ADJOURNMENT

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Gazzola(2)

lJPCN RESUMING Kr. 2 .18 PM:

BRENNAN J: Yes, Mr Evans.

MR EVANS:  If the Court pleases, I move to the topic of

proprietary estoppel and I rely on the principle

stated in WALTONS V MAHER, 164 CLR 387 at page 404,

the joint judgment of the Chief Justice and

Justice Wilson, in the middle of that page:

One may therefore discern in the cases

a common thread which links them together,
namely, the principle that equity will come
to the relief of a plaintiff who has acted

to his detriment on the basis of a basic

assumption in relation to which the other

party to the transaction has "played such

a part in the adoption of the assumption

that it would be unfair or unjust if he

were left free to ignore it". Equity comes

to the relief of such a plaintiff on the

footing that it would be unconscionable

conduct on the part of the other party to

ignore the assumption.

And we submit that the same facts support a

constructive trust which is the appropriate

remedy under that principle. WALTONS' case, as

I mentioned, was not decided until after judgment was reserved and His Honour the primary judge did

not have the benefit of any argument in relation to the principle in WALTONS. As far as the particular

remedy is concerned, it would seem that in this

instance equity is at its most flexible and it ~ay

range from giving the appellant the fulfillment of

his expectations, or alternately a restitutionary

remedy to compensate him for the extent of his

contributions to both Goreys and Badmans.

(Continued on page 58)

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MR EVANS (continuing):  In that regard, if I could take

the Court to the schedules forming part of the

written submissions, starting at page 44 which

is part of schedule A - perhaps to go to the bottom of the previous page 43 under the heading "Alternative 4 11 , therein are set out the so-called

extraneous contributions of capital that the

respondent made, first of all giving her a notional

one-half share in the proceeds of the Bolivar

Road settlement which amounts to $71,750, then

also giving her the benefit of a sum of $11,000

that she paid in 1979 to meet what was apparently

looming as a dispute between the children as

to the payment of succession duties in respect

of her late husband's estate.

And at the top of page 44, the contribution

of $3000 which she made to assist in the purchase
of section 193 which is the property I earlier

mentioned, registered in the joint names of the

sons. And then there was a small contribution

in 1981 to the subsequently acquired property

of Inkermans of $500. Those individual amounts

total $86,250 and if you add to that her contributions

by way of capital to Goreys and Badmans which

is found at page 38 - from the table at the top

of that page - there is an amount of $21,913.

Those were the capital contributions which were introduced before capital was raised by

the four family members working the properties.

That provides a total of the order of $109,000

and if that is indexed at 10 per cent to the

date of the valuations of the properties which

were made in 1986 it produces a total of $250,000. Taking the agreed valuations in 1986, the

combined value of Goreys and Badmans was, in

round figures, 1.6 million. If you take Genista's

share which was $800,000 and then deduct from

that one-half of that, that is $400,000, the

sum of $250,000 being the index repayments of

capital, that leaves a surplus of $150,000 which

we contend is her excess or unjust enrichment

in respect of both - - -

(Continued on page 59)

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BRENNAN J: It is enrichment but why is it unjust?

MR EVANS:  For the reasons, if Your Honour pleases, that

both sons contributed to the acquisition of those

two properties and were not recognized by her to

have any legal or equitable interest other than that

that they took under their father's will. So that comes

down to a monetary figure of $75,000 each to the

appellant and Ray and that assumes that the values,

as they were agreed in 1986, are roughly the same
as they are today. In our submission, the order

should speak as of the date of the hearing.

Although there is no direct evidence, inquiries

have revealed that the properties are substantially

more valuable today than they were in 1986, and

perhaps double. We, therefore, contend that the

appropriate order would be that, in respect of

Goreys and Badmans and, in particular, Ginesta's share

being one half of each, that she is repaid her

indexed extraneous capital amounting to $250,000

and thereafter she holds the properties on trust

to the extent of one-half of her interest in equal

shares for the two sons.

BRENNAN J:	Is 10 per cent based upon any view that has been expressed in the courts below or any rules of court?
MR EVANS:	Perhaps if I could refer Your Honour to the case

of HIBBERSON V GEORGE, a judgment of the New South

Wales Court of Appeal and; in particular, the judgment

of Mr Justice McHugh as he was then.

That. is HIBBERSON V GEORGE, (1989) 12 Fam. LR 725,

and I refer to the final page of the judgment at

page 744 under the heading "Orders", about the

sixth or seventh line down in that paragraph. He

says:

Such further sums should carry interest at

10 per cent since the date of payment by the

respondent. The sum of $10,000 should carry

interest at 10 per cent from 21 May 1985. (Continued on page 60)

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MR EVANS (continuing): That was the percentage rate that he

fixed upon to index the repayments of capital,
bearing in mind the judgment was delivered in that
case in February of last year and, notoriously,

interest rates over the last five or 10 years have

been higher than they have traditionally been.

Here, of course, the interest calculations go back

considerably further; back, indeed, to 1966 when

rates were probably much less than 10 per cent and it would seem that that is a reasonable allowance,

with respect, an arbitary one, but a reasonable

allowan<a:e in coming to a just and equitable result.

In MUSCHINSKI and BAUMGARTNER no interest at all

was applied to the repayment of capital but it would seem

again to do equity it is not unreasonable to index

the capital repayments. It is for those reasons

that we urge Your Honours to allow the appeal and to

substitute an order providing for constructive

trusts, either on the first premise or the second

premise in favour of the appellant.

BRENNAN J:  Mr Evans, could I just ask you before you sit

down, schedule Band the amounts which are there

shown as having been contributed by Gino: are

any, and which of those amounts, the subject

either of loan agreements or items in the partnership

accounts?

MR EVANS:  Yes. Now, oddly enough, Your Honour, the answer

is both. There was a double accounting procedure

as the primary judge adverts to in his reasons.

A firm of accountants, Farmers Bagots, Stock and

Station Agents, managed to rearrange the account

so that there was, indeed, a loan agreement providing

for the repayment-of the moneys it advanced via the father to the two sons and also debited the sons' capital accounts in the partnership books.

But, His Honour the primary judge mentioned in his

reasons that the net effect of that was immaterial

because the sons, of course, took the residue of

their father's estate and, therefore, the debts were

will. automatically forgiven by operation of law under the

BRENNAN J: Well, which of these amounts were moneys lent by

the father to the son that were the subject of

extinction upon the - - -

(Continued on page 61)

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MR EVANS:	Yes, I will come to that Your Honour. I just refer
to page 1452, where the primary judge addresses the anomaly that was brought about by the accountants.
That is one reference. but there is a more pertinent
reference which I will have looked up, if the Court pleases. But to answer Your Honour the President's question, we say that those figures that I have
referred to., do equity because they reflect all of
the extraneous contributions that Ginesta has made, or notionally made. In other words, it credits her with one-half of the net proceeds of the Bolivar
Road sale although she made no claim in equity and did not establish any equitable interest in that property. It also addresses a payment of $11,000
that was made gratuitously in relation to the
succession duty of her late husband's estate and
then two gratuitous payments that were made in
relation to the subsequently acquired properties
in the names of the two sons.

The page that I was intending to refer to of

the primary judge's reason is found at 1463 of the

appeal books, starting about the third line:

The defendants arguedthat the capital accounts

should never have been debited with these

amounts. There are certainly arguments that

way. The land holdings had never been counted as assets of the partnership and rentals had
never been charged. These land transaction, loans

or gifts or whatever status was given to them,

had nothing to do with the partne:r;ship. However,

the fact of the matter is that it would have

made absolutely no difference if the Farmers tax

department had never introduced their figures.

As it was, the credits in the partnership in the

name of Mr. Gazzola were treated as debts due

to him by the partners and passed to the boys

by way of the provision in the will whereby he

left his interest in the partnership to them.

But had the entries not been made in the partnership accounts, the amounts due as per the

loan agreements would have been assets in

Mr. Gazzola's estate and passed to the boys

as residue.

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MR EVANS (continuing): That really accounts for Your Honour's

question. Because of the effect of the will it

mattered not whether there was a loan agreement, or

whether the advances were by way of loan, or whether

they were debited to the sons' accounts in the

partnership.

BRENNAN J:  The amounts that we see in schedule B do include

the amounts which were lent to the sons either by Mr Gazzola or through the partnership and applied

by the sons towards the purchase of the properties.

Is that the correct understanding, or not?

MR EVANS:  That only relates, of course, to Long Plains and

The Dairy, and I am referring to Goreys and Badmans,

if Your Honour pleases.

BRENNAN J: Well, is what I said correct in relation to

Long Plains and The Dairy?

MR EVANS:  It is correct in respect to Long Plains and The Dairy

in the sense that we say that the two sons acquired for

value their interests in those two properties because

their partnership accounts were debited at the time

and the moneys came back to them following their

father's death by his estate, but not the

$140,000-odd because we have given Ginesta

credit for half that, although she had not established

an equitable interest, at page 43, at the foot of

that page, we have notionally attributed $71,750 from
the proceeds of Bolivar Road settlement to her as

capital that has to be repaid to her. So effectively

at the time the $140,000 was credited to the father in
the partnership account, in other words, Elia's

partnership capital account was in credit and Ginesta's

and the sons were in debit by reason of the purchases

of Long Plains and The Dairy as a joint contributor

to the extent .of one -quarter of the total consideration.

What happened via the will was that the moneys came back to the sons as a legacy, as part of the

residue.

DEANE J:	Is not the simple answer to what His Honour asked you
that the moneys referred to in the bottom half of the
flow chart represent the loan accounts. The moneys in
the top half represent actual payments by your clients
and Ray among others?

MR EVANS:  Yes, that is correct, if Your Honour pleases. I am

looking now at the flow chart of funding of property,

page 22. Yes, I am obliged to Your Honour, that is the

effect of the transaction, but what we wish to be recorded

as to that is that we are, in effect, ameliorating against that

apparent advantage by paying the mother back half the

proceeds as a notional beneficial interest in that property

which was never established legally. ·

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GAUDR0N J:	I am lost on something.	Does anything in these

schedules reflect the fact that the two boys forgave
debts of $4000 which they had, in some way or

anoth~r, contributed to Goreys and Badmans?

MR EVANS:	I do not believe that they do.
GAUDR0N J:	Should they?

MR EVANS: With respect, not. It was an internal measure

that was taken as a means to avoid gift duty. I

do not think it has any bearing in the final wash-out

of the accounts with respect.

GAUDR0N J: Well, it may have something to do with unjustness

and unconscionability and intention, I suppose.

MR EVANS: Yes. Well, I can only suggest that it is

de minimis in the whole transaction. My learned

friend might have something to say on that but,

with respect, I do not believe that it looms

large in the calculations that I am putting

before Your Honours.

BRENNAN J: Except that if there was a release in order

to avoid gift duty, that is, a release of that

which was either a gift or a loan. Now, if

the understanding of the parties was that these

moneys were either a gift or a loan by the boys

to the parents, then the application of those

moneys in the acquisition of the properties
by the parents was not an acquisition that was
made on behalf of the sons. It was a gift or

a loan of the moneys to the parents.

MR EVANS:	Yes. Well, this was again canvassed by the primary judge at page 1452 from about lines 5 to
20 and he adverted to the situation that Farmers
Bagots, accountants, may have formed the view that the introduction of those moneys by the sons could be regarded by those in authority as
constituting a gift and subject to duty and
it was a precautionary measure by way of gift
duty planning to prepare the loan agreements and for giving the loan.

(Continued on page 64)

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BRENNAN J: Is it said that these were shams?

MR EVANS:  I cannot say that, if Your Honour pleases. I

can only refer to the evidence and the finding of the learned primary judge, that the passage there reads:

I do not think any of the family had any

thought about the problems of gift duty -

This is at line 12 -

at the time when the contributions were made.

I am therefore clear in my mind on this

point at least - that they do not throw any

light upon the intentions of the parties

at the time that the advances were made.

He is not suggesting that they were shams, but his finding is that they had no effect on the overall

intentions as to how the advances should be

characterized. They were treated by the accountants

as having the potential to attract gift duty.

BRENNAN J:  Your proposition is that the moneys were neither

gifts nor loans?

MR EVANS:  That is my proposition, if Your Honour oleases. As I

have submitted to Your Honours it is a very complex
web of transactions which manifest themselves in

complicated figures, but I invite the Court to

apply the principle that Qquality is equity in

so far as recognizing that the physical and indeed

monetary contributions after the purchase of

Goreys and Badmans were equal. If the Court pleases.

BRENNAN J:  Thank you, Mr Evans. Mr Lander.

MR LANDER:  The first proposition that has been put by the

appellants before Your Honours today is this, that

entitled to the beneficial interest. of the trust were that the sons became immediately a constructive trust arose in 1966 and the terms (Continued on page 65)

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MR LANDER (continuing): It is further argued before

Your Honours that there were no corresponding

duties upon the sons but only what are called personal assurances. In our submission, that

cannot be right for a number of reasons: the first is Ray, who was the second of the sons,

was, in 1966, only 14 years of age. By reason

of that fact alone it is highly improbable that
the parents would have put themselves in a position
where the beneficial interest passed out of their
hands in 1966 with no guarantees that either

of the boys would do anything more than complete

personal assurances.

Moreover it would have been the case - if

the appellants' case is right - that if the mother

• •	and father wished to sell the property they would
have needed to seek the consent of the 14-year -
old boy which is most unlikely.
It is wrong for another reason and that is because the trial judge rejected it and he
spent some time in relation to the proposition
that a constructive trust arose that early at
page 1498. It was put at trial that this trust
arose between 1966 and 1969 and His Honour dealt
with that at page 1498, line 9. In answering
the submission that my learned friend put to
His Honour, that the trust included Goreys and
Lower Light, His Honour described it as self-evidently
ridiculous to so describe it.

He went on to discuss the further submission

and at line 20 His Honour described it again

as self-evidently wrong that a trust had arisen

at this time.

(Continued on page 66)

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J:1R LANDER (continuing):  Then he went on to say, and we rely

on this reason as well, if Your Honours please,

at line 25:

To suggest that all should be left to the boys

and nothing or virtually nothing to Nives is

offensive to reason, contrary to the express
provisions of Mr Gazolla's existing will and
contrary to what Mr Gazzola said to Nives.

And His Honour there was describing in the last part a conversation that was had between Mr Gazzola and

Nives whereby Mr Gazzola had promised to leave

Bolivar Road to Nives. And His Honour flatly rejected

the proposition that any trust had arisen at that time.

So,in our submission, it cannot now be said before this Court,because it is offensive to reason

as His Honour said, but al so against the a:n:urrrot firrlirgs

of the courts below, that a trust did arise at that

time. As to the terms of the trust, that is, that it

is suggested that the terms were that there would be

an immediate beneficial interest passing to the boys,

that is contrary to the plaintiff's own pleading.

And can I direct the Court to page 1492 and, in

particular, paragraph 10 of the pleading that

His Honour there sets out. In paragraph 10

Your Honours will see that what is pleaded is

not only that there is a common intention between

the parties but,moreover, that there is a contract

between the parties, that the boys will do that

which is pleaded in l0(a), (b) and (c). So it

was put as high as contractual terms at trial, obliging the boys to do what is included, and
what is included is that each of the mother, father

and the boys :

would pool their resources efforts and money in

order to purchase and develop farming or

grazing land;

(b) Upon the death of Elia or Ginesta, or at

the latest the survivor thereof the land held

by the deceased would be left by will to Gino

and Romano in equal shares;

and, lastly, each of them:

would work the properties as farming or grazing

land and derive the benefits and profits

therefrom. -

C2T57/l/LW	66	4/4/90
Gazzola(2)

So it was put at trial that that was a contractual

obligation-upon the boys with the corresponding

contractual obligations upon the parents in

paragraph lO(b).

It is submitted that it is only now put to this

Court that one of the terms of the said to be

connnon intention is that there were no obligations

upon the boys is because the appellants are faced

with the finding of the conduct of the appellant at

the time that he did what he did in July 1984 and,

to excuse that conduct, they say he had no obligation

to continue working for his parents, so that they

have now reframed their case, discarding the

original pleading, discarding the original contract

which, of course, His Honour found not to exist, but

instead of substituting any other obligation,

removing all obligations upon the boys, therefore,

saving themselves from the unfavourable finding of

the trial judge in respect of the appellant's conduct

in July 1984.

Now,in our submission, for all those reasons, it

is inherently improbable that any such trust arose

in 1966 or, as His Honour goes on to say, in 1969,

or at any time,possibly, before 1972 and that what

is put as a primary submission to this Court is

contrary to the evidence, contrary to the findings
and contrary to the allegations made by the appellants

in the court below.

The second proposition that was put to this Court

is that a constructive trust would arise without any

connnon intention and we accept that that can happen

after the decision in BAUMGARTNER. It is said to

arise in the circumstances of this case somehow by
reason of the contributions made by the boys.

In the court below it was not put as a constructive

trust. It was put to the Full Court and the trial

judge that the trust arose by reason of contributions
in the sense of a resulting trust, and that was

rejected by the trial judge at page 1526. (Continued on page 68)

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Gazzola(2)

:tvJ.R LANDER (continuing):  The trial judge there, relying upon

CALVERLEY V GREEN, said at line 22:

I am satisfied that Gino did make contributions

to the actual purchase price in respect of
various of the properties (in addition to

contributions to payments in discharge of

mortgage moneys which do not count for the

purpose, CALVERLEY V GREEN). But the

evidence shows that it was not intended that

these payments should give rise to a resulting
trust to the extent of the contributions or
otherwise.

So, what was put in the court below, and the pleadings show this, if the Court please, that the

argument in relation to a trust arising out of

contributions was that a resulting trust arose.

There was no suggestion that a constructive trust

of the kind that Your Honour Justice Deane mentioned

in argument might arise out of contributions. As to

the contributions that were made by the appellant: firstly, regard has to be had to the pleadings in

respect of that. Indeed, in the particulars at

page 27 of volume 1 of the appeal book, the

said to be financial contributions are set out.	At
page 27, line 11, it is set out	the amounts

paid in respect of Badmans. Those amounts form part

of the acknowledgement of debt and the forgiveness

of the loan which is mentioned at page 1451 which

Your Honour Justice Brennan asked of my learned friend just before I stood up. All of those were part of the moneys forgiven.

In respect of the contributions to The Dairy, the last-mentioned contribution of $13,000 was

never made in money because it was an amount raised

as against the appellant in the books of the
partnership and by way of an acknowledgement of

debt which, after the death of the father, had the

effect of being forgiven. Indeed, I am reminded,

obtained credit for and in respect of the first	the other two amounts in respect of The Dairy, he
payment on page 28, in respect of The Dairy, the
same applies.

In respect of the amount relating to Gorey~

those amounts also form part of the amount forgiven

and mentioned at page 1451. It is true to say that

not all of the amount that was brought forward by

the appellants was forgiven in 1972 but I think it

is $4000 of the order of a contribution of $4800

was forgiven at that time. Then, as to the last of the contribution - Long Plains - the same can

be said of that as is said in relation to The Dairy,

that is, that the sum of $24,238.35 was never, in

C2T58/l/DR	68	4/4/90
Gazzola(2)

fact, paid because the two sons, as the beneficiaries

of the partnership assets of the father, obtained

those assets on his death. So, they were never

called upon to pay the sum of $24,000 and that is -

and I will come back to this - in

contradistinction to the position of Mrs Gazzola.

A similar amount was raised against her as being owing to the partnership in the partnership

books. As she was not a beneficiary of the estate,

on her husband's death she was called upon to pay

that money and the moneys went to her son. So, she

not only did not get the $70,000 - and I will come

back to this - that my learned friend mentioned in

respect of the sale of Bolivar Road she, in fact,
paid something in the order of $37,000. So, in

respect of the purchase of those two properties,

Long Plains and The Dairy, Mrs Gazzola's real

contribution in terms of money by not receiving one

amount and being called upon to pay the other amount

is something in the order of $110,000 of the total

purchase of the order of $160,000.

They are the contributions that were said to

be made in terms of money. There is one other thing

that ought to be mentioned in respect of those

contributions relating to Goreys. As my learned

friend said, when this Court gave special leave to

appeal, complaint in relation to the imposition of
the trust or the failure to impose a trust in

relation to Goreys was excluded from the matters

upon which leave was given.

(Continued on page 70)

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MR LANDER (continuing): That deals, firstly, with the monetary

contributions. It is also out to this Court that

there were contributions by.way of services and

what has been put to Your Honours a number of

times, today is that the contribution in services

was that: the appellant gave 20 years service to his

mother, and a lesser time to his father, in relation

to these properties. That is not correct. After

he left school in the middle of 1966, he did work on

the properties until February 1969 - about two and a

half years. He then ceased to work on the properties

full time and between February 1969 and March 1976 he
worked in Adelaide; he worked in Adelaide for wages

which he kept; he stayed at work because he desired

to obtain his long service leave, so he stayed at

work until March 1976 so that he may obtain his long

se~vice leave and he did obtain it.

During that time he did save his money, as has

been put to the Court,but the saving of those moneys

that he was earning in Adelaide allowed him to make

the contributions in respect of D~iry and Long

Plains because he was earning wages.

What else is important is that after the purchase

of Long Plains and The Dairy in 1974, the parents on

1 January 1974 allowed there to be formed a new

partnership and without any injection of capital by

either Ray or the appellant, they were included and

allowed to take one-quarter share of the profit.

So, ever after 1 January 1974, up until the time that

the appellant dissolved the partnership, he obtained

a quarter of the profits - I am sorry that is not

correct - ever after 1 January 1974 and up until the

time his father died, he obtained a quarter of the

profits.

What is significant about that is this, that he

not only was allowed to keep his wages which he earned

between 1 January 197 4 and March of 1966 ,, he also,

whilst the other three were putting in full time

effort in respect of the place, took one-quarter share

of the profits, whereas his contribution during that

two and a half, or nearly two and a half years, was

something less than full time and was, in fact,

limited to weekend work and, perhaps, some work late

at nights.

DEANE J: That sounds a bit strange; how did he take them?

MR LANDER:	I am sorry,Your Honour.
DEANE J:	How did he take a quarter share of the profits? I

mean they surely, in this set up, did not sit up

every six months and divide the profits into quarters?

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Gazzola(2)

MR LANDER:  No, the books were credited from time to time and

the capital accounts adjusted and the loans of his

moneys were adjusted, of course, by reason of

whatever profit was struck.

DEANE J: This is book entries you are talking about?

MR LANDER: Well, yes, to a certain extent: It is not quite

book entries because - I will come to this in a

minute - but in 1977 he had acquired enough to

purchase another property, independent of his

parents, so that came out of his partnership share

which allowed him to cash himself up, as it were,

to buy 193.

DEANE J: Wha~ there is evidence that he was actually getting

substantial sums of money from the profits, is there?

MR LANDER:  The word "substantial" might not be absolutely

accurate. He was getting as much as the other three

partners during that period.

BRENNAN J: What happened after the father died, what proportion

did he get then?

MR LANDER: After the father died a new partnership was formed

on 1 January 1979 and the proportions were a third,
a third, a third, although the appellant argued at

trial that it ought to have been a half to him and

a quarter to each of his mother and his brother and

he argued that on the basis that his wife was admitted

to the partnership in 1979 for the purpose of saving

on tax and he argued at the trial she should have got

a quarter share but, in fact, although His Honour does

not find, the evidence clearly supports the proposition

that she was only introduced for the purpose of splitting

his income be.tween himself and his wife.

BRENNAN J: But in fact he received a third then?

MR LANDER:  And the point we make up until the death of the

father is that Mrs Gazzola, Ray and Gino, the

appellant, all worked full time after March 1976,

so did the father up until June 1978, the

evidence would say.

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MR LANDER (continuing):  He then became unwell with a

terminal illness and did not work much on the
property between June of 1978 and his death on

31 December 1978, but, that interruption of six

months when the father was diagnosed as having

a terminal illness is the only interruptionby

any of the parties between 1976 when the

appellant ceased work and 1984 when the

partnership finished. By that, I mean to say,

Mrs Gazzola always worked full_time in the

business and I will come to it in a minute, but

one can see that her contributions, in money

terms up until 1984,were probably more -in

money terms -than the two boysr because the

division of labour was this: she ran The Dairy.

She ran the business which ran The Dairy. The

two boys, as His Honour finds,did the cropping.

Up until 1984 the business in The Dairy, in which

one was engaged, either exceeded in money terms

the business in the cropping or, if it did not

exceed, was not less than a half, if I could put

it that way, so that one persons contribution per

dollar earnt was greater in The Dairy than it was

in the cropping.

In the year of the dissolution, as our

written submissions show, the business of cropping

increased a number of times, such that it went from something like in the order of an income of $30,000 to an income of $120,000. That was the year he

dissolved the partnership. We will come back to that.

So in respect of the partnership that was formed on

1 January 1974, the two legal owners, Mr and Mrs Gazzola,

allowed the partnership to work all of the lands rent

free, so that whereas, in respect of Long Plains

and The Dairy, the partnership shares also reflected

the legal holdingsr in respect of Badmans, Goreys

and Lower Light, tne two legal owners allowed the

four partners to work all of those properties

without incurring any rent.

In 1977 the family went to an auction with the intention of buying a property for Nives. It

was a property section 190.l.S. When they arrived

at the auction it was observed there was another

property,section 193,that was also for sale.	The
appellant who always carried on -as His Honour

observes, who always managed the business of the
partnership, bid for 193, that is the property that

they were not interested in before they went to the

auction, and it was knocked down to him. He did it

without reference to any of the other partners or

without reference to his parents or Ray. After

it was knocked down to him that property was put in

the names of himself and his brother, and that was

a property of something in the order of 218 acres.

C2T60/l/CM	72	4/4/90
Gazzola(2)

The parents did not object to that but the

end result was that the moneys that had been

obtained out of the partnership income and

credited to the boys for the period up until

1977, was used for the purchase of section 193.

parents obtaining no legal or beneficial title.	So the boys there took 218 acres, but the observed, Mrs Gazzola paid $3000 for the boys to
use for the purpose of purchase, whichme has
never sought to be repaid and which has never·
been offered to be repaid .,, and she sought· no either legal
or equitable title in respect of that property.
Mr Gazzola died, as I say, on 31 December 1978
and by reason of the terms of his will the two
boys took half each of his partnership assets,
together with the land. The effect, as I have
already mentioned, of taking half each of the
partnership assets, caused Mrs Gazzola to have to
pay the amount that had been debited to her at
the time of the purchase of Long Plains and
The Dairy, that sum to her sons effectively, and
she paid it. But the sons, of course, by reason
of the inheritance of the partnership assets of
their father were absolved from the payment of
a similar debt which had been raised in the books
at the same time.

After the death of Mr Gazzola, there was

what the judge called "some unseamly bickering"

which was bickering that was caused by the terms

of the will.

(Continued on page 74)

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MR LANDER (continuing): Succession duty still applied

in South Australia at that time. It was in

the interests of the boys that the properties

be valued as low as possible so the succession

duty was correspondingly low. However, to cause a valuation to be as low as that affected Nives,

whose interest it was to have the properties

valued as high as possible so that she would

get the equivalent one-third in money of what the boys

were taking in land.

The judge found that by reason of what he called

this unseemly bickering Mrs Gazzola paid $11,000

of the succession duty. She paid it on account of

the two boys. She has never sought repayment

of that and it has not been offered and she sought

nothing in return for it.

As I have already mentioned, after the

death of Mr Gazzola the partnership continued on
with the partners sharing one-third, a third,

a third, each of the partners putting in as much

effort as they had before; Mrs Gazzola still

working what we called at the trial the southern
lands and, in particular, the dairy aspect of
the business and the two boys working the northern

lands which were more suitable for cropping and

that continued until July of 1984.

Now, I have already observed that in 1984

the partnership had, in respect of its cropping,

a year they had never had before. They approached

30 June 1984 with the prospects that they would

have a marked increase in the incidence of taxation

following upon the profits they made. In about

May or June of 1984 the appellant sought the agreement of his brother to buy an expensive piece of machinery valued at more than $100,000.

The brother would not agree and no more came of

that. It was put by the appellant at trial that

that showed that the partnership had lost its

consensus. Now, His Honour rejected that. What

then happened was that the appellant wished to

buy some land at Port Wakefield of some many

hundreds of acres. It was even further north

of what had been called the northern lands. He

approached his brother to join him in the purchase.

The brother thought it was worth about $95,000.

The appellant thought it was worth $125,000.	The
brother, Ray, refused to join in the purchase.

Neither of the sons approached their mother for
her agreement or inquired of her whether she wished

to join in on the purchase.

After the property was purchased, I think it

would be on 19 July 1984, the appellant sought from

his brother the brother's agreement to the mortgaging
of land they jointly owned - the brother and himself

so that the appellant could buy the land.

C2T61/l/SH	74	4/4/90
Gazzolla(2)

MR LANDER (continuing):  Ray refused except in certain

circumstances and the circumstances he offered

to allow the land to be mortgaged was that if

the bank would give him a like facility if he

bought some land he would agree to it being mortgaged

to the bank. The bank, for obvious reasons,

were not prepared to agree to something like

that that might occur in the future so they refused.

That left the appellant with having signed for the purchase of the land and not having the

money to purchase it. And the evidence is absolutely

clear that after that time there were very grave

disagreements between the parties leading to
physical assaults between the women in the family,

the appellant's wife and the respondent's, between

•'	Mrs Gazzola and her son and a number of fights
took place.

But by 31 July 1984 the parties had reached

a position where they simply could not work together,

so Gino says - so the appellant says and he withdrew

his labour. It is clear, as His Honour finds - I

should say that the physical fights occurred

after the letter. But His Honour set the letter

written by Mr Trzeciak, solicitor, out at page 1483

and the reason why the appellant sought the

dissolution is set out at page 1484, at line 4:

Our client instructs us that he has experienced

recent problems in achieving concensus of

opinion of all parties under the partnership

agreement. The most significant difference

of opinion has occurred in relation to certain
land that our client presently wishes to

puprchase but that apparently you and your

mother Gisenta Gazzola (who is also a partner

under the terms of the agreement) do not

consent to. Our client without your consent

cannot obtain sufficient security to obtain

a mortgage to purchase the property on his

own behalf. (Continued on page 76)

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Gazzola(2)

MR LANDER (continuing):

Our client has decided that he has no alternative

but to dissolve the existing partnership. He

wishes to realise his interest under the terms

of the agreement and with the assets acquired

therein commence to venture on his own behalf.

In those circumstances he will then be able to make decisions for himself without the need to consult with other parties.

Now, His honour found that that was the reason - and

the evidence, in our submission, overwhelmingly

supports it - tnat was the reason for the dissolution

of the partnership in 1984. The letter went on to say,

again at page 1484, at line 25, that the assets of

the partnership needed to be realised and, apparently

wrongly treating the lands as assets of the partnership,

the solicitor wrote on behalf of his client that the

real property existing be divided and apportioned

so that each of the partners retains a portion of the

lands that is just and equitable in all the

circumstances and than, Your Honours will see at

page 1485, if that was not agreeable to Ray and

Mrs Gazzola that the lands:

be sold and the proceeds divided in
accordance with the legal interest held by

the individual parties.

So, there it was that the appellant was there claiming

that if the lands could not be partitioned, in fact,

they ought to be sold and divided according to the

legal interest, and His Honour - I should say, the

appellant at trial sought to resile from the letter
on the basis he put in his evidence, that it was not

the single most important reason for the dissolution

of the partnership. But His Honour found against that

and His Honour's findings are at page 1486, and at

line 12 he described the appellant's behaviour in

this way:

Gino must take the overwhelming

preponderance of the blame for having taken

this precipate ill considered action.

At page 1487,	in answer to a submission by the
appellant, at	line 4, His Honour found that the
appellant did	not have reasonable grounds for doing
what he did.	And, at line 8, where he says:

Veronica, in fact, made more of these

difficulties

this is irritations in the partnership -

C2T63/l/FK	76	4/4/90
Gazzola(2)

I am satisfied that there was nothing of any great substance,

nothing which could not have been

put right by reasonable approaches. It

was said that by reason of the failure of

Mr Gazzola and Ray to agree or to co-operate the partnership was at a stand-still. This

is absolute nonsense.

So, all other reasons were rejected by His Honour and he finished on this topic, at page 1488, this

is in the chronological recital at line 8 - - -

DEANE J:	Does not all this amount to that there was a
breakdown of personal relationships. In the context where reference is made to "without attributable
blame", that is not talking about getting involved in
the sort of divorce court wrangle about who is at
fault for a breakdown of a relationship. That is directed at "without attributable blame" for the collapse of the joint enterprise. This really
has nothing to do with things, has it?

MR LANDER: Well, it does, if Your Honour pleases, because

this brought down the cormnercial arrangement between

the parties, not because a - sorry to interrupt

Your Honour - - -

DEANE J:	But His Honour is really talking about personal
relationships, as you have been, about people having
fights, and so on.
MR LANDER:	Yes, that all followed upon the dissolution of the

partnership, but the point we make to this Court is that

we are not talking of the de facto relationship such

as in BAUMGARTNER or MUSCHINSKI, but we are talking
about the attributable blame that was mentioned in

ATTWOOD V MAUDE, which Your Honour relied upon for what

Your Honour said in MUSCHINSKI.

DEANE J: Well, if I relied on something that said you get

involved as to who is at fault in a family breakdown

I did so quite inadvertantly.

MR LANDER:  No, Your Honour did not. Your Honour there using

ATTWOOD V MAUDE which was a	case involving the
dissolution of a partnership	where a premium had
been paid by one partner.

(Continued on page 78)

C2T63/2/FK	77	4/4/90
Gazzola(2)

MR LANDER (continuing): It was not the personalities that

brought down the partnership or brought about this
behaviour by the appellant. It was the fact that

he could do financially better by not continuing with the arrangement that had continued and that has to be the inference,in our submission,arising

out of the increase in the profits, the fact that -

DEANE J: Well that has consequences. I have trouble seeing

that it brings up questions of who is to blame

and, indeed, the law would be going on an absolutely

false track if we set the courts to exacerbating

family disputes in any trust case by trying to say

who is to blame.

MR LANDER:  Not in the circumstance, in our submission, in a

case such as this where there are the connnercial

arrangements that there are. We would accept that,

if Your Honour pleases, in the MUSCHINSKI type and

the BAUMGARTNER type fact situation but not in this.

But, in our submission, this evidence is not only

relevant in respect to attributable blame but it is
also relevant to determine whether that which

Mrs Gazzola did subsequently and whether her conduct was unconscionable because her conduct must be viewed

in the light of the facts applying.

BRENNAN J:	What was the blame attaching to Gino?
MR LANDER:	The blame?

BRENNAN J: Yes.

MR LANDER: The· blameworthiness, if Your Honour pleases, was

the reasons for his leaving the connnercial arrangement.

BRENNAN J: His motive.

MR LANDER: Including his motive.

BRENNAN J: And only his motive or - - -

MR LANDER:  No, the fact of him doing it and the motivation that

lead to it, that is, that it was in his financial

interest to do so.

BRENNAN J:	What was blameworthy about the fact of his doing it?
MR LANDER:	Well because it brought to an end the substratum

that existed between the parties. It brought that relationship to an end. That relationship was the

working of the properties for the purpose they say the

purpose was.

C2T64/l/LW	78	4/4/90
Gazzola(2)

TOOHEY J:  Do you mean that the partnership could function

most effectively if the properties were all retained

and worked somehow together and that by dissolving

the partnership the success of the operation would be

diminished?

MR LANDER:  Yes, firstly that, if Your Honour pleases, the success

of the operation would be diminished but also that

at the time when it was done Mrs Gazzola is getting

older and she is coming to the time when she may

require the services of someone else in the partnership

who can provide the type of labour that she will not

be able to provide as she gets older.

BRENNAN J: Is this postulated on the footing that there is some

sort of constructive trust on foot at this time? irrelevant. If there is a constructive trust then the

blameworthiness, I take it, TiruSt be related to the terms

of that trust?

MR LANDER:  Yes, indeed. The appellant has put the constructive

trust, as I understand the argument, on two bases:

one, that it arises out of the common intention that

I have dealt with; the second, it arises by reason

of the contributions, both in labour and in money.

As to the second, as I understood the argument,

it was suggested that the constructive trust was

raised still back in 1966 and continued through that

time, not that it is imposed by reason of

unconscionable conduct in 1986 when the trial takes place.

(Continued on page 80)

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Gazzola(2)

MR LANDER (continuing):  I may be wrong about whether that

second point is the argument by the appellant

but it was never put any other wa½ that this

constructive trust arose other than in 1966.

BRENNAN J: Well, if it did, where is the blameworthiness

in dissolving the partnership?

MR LANDER:  Because the partnership is a vehicle which

allows the properties to be worked for the purposes

suggested by the appellant; that is, they would

be worked so that there would be financial gain

for each of the parties so that further properties

could be acquired. If one resolves that - if

one refuses any longer to put one's input in

or to put the quarter share or the third share
as it turned out to be by this time, then that

is the blameworthiness, we would say.

The trial judge also said, at page 1488,

at line 7:

With a single blow he brought down what

had been built up by the work of his parents

and to a not inconsiderable extent by the

labours of Ray and himself.

And then, at page 1521, in discussing what he

found to be some part of the aspects of the common

intention, he says, at line 13:

the common intention had evolved to the

point -

that is, 1974 -

that Ray had terminated his outside employment

and that Gino would do so at an agreed time
and that Gino and Ray would devote such

of their time as was necessary to the working

of the family properties but more particularly

to those operations which fell outside the

ambit of the glass-houses and the Dairy;
and that, in particular, they would continue
to do so after the parents were unable to
do so, or when by age or other circumstances
it became unreasonable to expect them to

do so.

(Continued on page 81)

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Gazzola(2)

MR LANDER (continuing):  So we woul( associate that factual

finding with what we say :s a blameworthiness in

1984.

Now, can I go back to the questions of

contributions. In our submission, the evidence

clearly shows that in services, the contributions

were not 20 years as has been put but the

contributions were between March of 1976 and

July of 1984 and they were the only full-time

contributions made by the appellant as a man.

There were the earlier two and a half years between the middle of 1966 and February 1969

when, as a boy, he did work on the properties.

At the time of triaL for the contributions

that he has made which we have referred to at

page 27 of the first appeal book and for the

contribution in services-and we say he always

got his just result out of his contribution
for services - out of the partnership he took

a quarter or a third share but, by trial, with what he had received from his father, the land

he owned was worth three quarters of a million

dollars for a contribution in a real sense of

about $20,000 in money plus those services.

He also was entitled, apart from those moneys,

the three quarters of a million dollars, to

half an interest in the Inkermans property with

his brother, half an interest in section 193

with his brother and the interest in two

partnerships, the partnership with which he

was involved with his mother and his brother
and the partnership with which he was involved with his brother and his wife because some time after the purchase of section 193 in 1977, he

and his brother and his wife taking a half each;

he and his wife one half and his brother one
half, had gone into partnership as well and

they farmed section 193 and Inkermans.

So, he not only took, after his father died, one-third of one partnership, he also

took one half of another partnership.

Now, it is clear as we point out in our

written submissions that by the time of trial

it would have to be that the appellant was then

worth in excess of a million dollars for the

contributions he had made. Now, in our submission,

he cannot by reason of what he then owned point

to any detriment within the meaning of estoppel

or any deprivation within the meaning of "unjust

enrichment" and, in our submission, it is clear

that by being allowed to work the properties

he had done very well in the eight years that

he worked them.

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MR LANDER (continuing):  On the other side of the ledger, his

mother's position must be explored. After 1974 she
acquired no more land. So, after the partnership

came into existence in January 1974 any land that was acquiredwas acquired for the two boys and she

took no interest. Prior to the purchase of

Long Plains and The Dairy in 1974, she was either

193; she paid, as I have mentioned, the succession duty; she contributed to the purchase of

the legal owner of one-half of all of the lands or section

entitled to be the beneficial interest in Bolivar

Inkermans and in 1974 she allowed herself not to

take the proceeds of Bolivar Road.

Your Honour Justice Toohey mentioned earlier this morning whether the sale of Bolivar Road was

important. It is, in our submission. It was sold

in 1973 for $143,000. She was entitled, as

His Honour found, at least morally if not legally,

to one-half of those proceeds.	The legal title
in the property was with her husband.	She did not

take that at that time, probably for reasons of

gift duty. It was explored with the bank manager

at the time the moneys in Bolivar Road were paid

as to whether or not it could be put in the joint

names and their advice was given to them for it
not to be.

So, she forwent that amount of money in 1974 which was used by her husband and by her sons for

the purchase of Long Plains and The Dairy and I

have already said she not only forwent those

moneys, she also undertook a liability at the same

time to repay something like $40,000 or thereabouts

in the future in respect of those same properties.

In effect, she paid for three-quarters of Long Plains

and The Dairy but took only a quarter share. It was

not only that she was affected by those arrangements

but it is also the case that Nives was also affected
by those arrangements.

At the time that Bolivar Road was sold Nives, as the will showed, was entitled to one-third, in

money terms, of the value of the land. Whilst

Bolivar Road was in the hands of Mr Gazzola she

was entitled to the equivalent of one-third of the value of Bolivar Road. After it was sold and what was done with Bolivar Road, that is to turn it in

as it were, or roll it over as my learned friend
said, into Long Plains and The Dairy, of course
the father and the mother then only owned one-half

of those moneys and as a result Nives's entitlement

went down from one-third of a whole and became

one-third of a half after 1974. So, both the women

in the family were affected, in money terms, by

that.

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MR LANDER (continuing): After 1974 until 1978 she took

one-quarter of the proceeds of the partnership and

after 1978 one-third. There is no evidence that

she was in anyways enriched by the services or

the contributions that were provided. There is none,
in our submission, of that. In fact, the evidence is to

the contrar~ that by reason of the paymenw she made

for and on behalf of her children that the enrichment
went to the children rather than to herself and, in

our submission, there can be no suggestion firstly, that she was, in money terms, enriched or secondly,

that she was enriched in any ways at the expense of

the appellant.and, in our submission, no reason that

the circumstances that prevailed after 1972 - in the

circumstances that prevailed after 1972 - that what

she obtained she obtained unjustly.

Now, it was put to this Court that the Court

ought not to have regard to Gino's improvement in financial circumstances after 1974. In our

submission, that is not so. One cannot measure the

question of enrichment without looking at both

sides of the equations and, in our submission, if

there is an enrichment one must examine whether there

has been an adverse effect on Gino; whether in

fact, there has been any effect on Gino.

DAWSON J:	Mr Lander, what you are really submitting is,
on the · evidence, there was no common intention;
there was no tmconscionable conduct;· there was no unjust
enrichment.
MR LANDER:	That is so, Your Honour, all three.

DAWSON J: That is just a question of fact.

MR LANDER:  In the circumstances of this case, yes, if Your Honour

pleases.

DEANE J: Have you figures comparable to the figures you gave

in respect of the appellant, as at the same time,

for the widow?

MR LANDER:  For Mrs Gazzola?

DEANE J: Yes, you said three-quarters of a million worth of

land plus half interest in two properties, what

would be the comparable position?

MR LANDER:  Yes, if Your Honour pleases, I have not got that

figure but I answer Your Honour in respect of it

this way, of course that was the same land she had

before.

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MR LANDER (continuing): It simply would have increased by

way of inflation. Could we provide that figure

to you, if Your Honour pleases.

DEANE J:	Well if you have not got it readily available, do not worry.
Of course, if your submissions are right, as I
follow it, the ground on which the court was
persuaded to grant leave here was essentially that unconscionable conduct by the appellant
would deprive him of his equity under an existing
constructive trust. That question would never
arise if you be right.

MR LANDER: It does not arise, if Your Honour pleases, if

my submissions are correct.

DEANE J:  Do you propose to attempt to justify that proposition

that if the appellant did have an interest under
a trust, the fact that he engaged in something that
was called "blameworthy" would deprive him of that

interest?

MR LANDER:  No, Your Honour. No, in fact we would be content

to rely on the trial judges reasons rather than
the Full Court's reasons. In respect of the
reasons of the Full Court there is, with respect
to the Full Court, some looseness of language in

respect of that and in respect of dealing with

unconscionable conduct, and that can be seen at

the bottom of page 1556, in line 27:

Each case has its own result whatever legal

or equitable principles are connnon to them. However, the crucial reason for concurring with the trial judge's denial of a

constructive trust in this case is the finding

of unconscionable conduct against Gino.

The absence of fault and, in particular,

unconscionable conduct on the part of a

claimant, was a critical matter for both

Justice Mason (as he then was) and Justice Deane.

(Continued on page 85)

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MR LANDER (continuing):  The second sentence would not

seem to follow the first, in our submission. The first sentence puts one proposition, the

second sentence puts another proposition. We

would rely on the second sentence but not the

first. And the other matter, we would say,

about Their Honours' reasoning at that point,

is that they appear, whilst they are using the expression "unconscionable conduct on the part

of the appellant" to be really talking of whether

there is attributable blame and I say that because

of what they say is at page 1558, the next page

on, at line 14:

To impose it now would be to condone Gino's

unconscionable conduct and afford relief

• • to one to whom blame is attributed.

It might be said out of that that what in fact

Their Honours were dealing with was a question of attributable blame in the setting of the

constructive trust rather than the unconscionability

of the conduct of the appellant but, again,

to answer Your Honour Justice Deane we do not try
to justify the first of those sentences I referred to

at page 1557. We do rely on the second sentence

which we say is a proper investigation having

regard to the facts.

BRENNAN J:  But your basic proposition is that no trust

was found by the trial judge, not that a trust

was found but found to be destroyed by subsequent

blameworthy conduct?

MR LANDER:  Indeed, if Your Honour pleases. No trust was

found because of all the reasons Justice Dawson

put to me. We had not been guilty of any of

those matters and it was not a question of a

trust being found and extinguished by reason

of the appellants' behaviour.

BRENNAN J:

The special leave point really only arises

on the hypothesis that a trust is found and to

get to that point it is a question of examining

the facts upon which the trial judge's judgment

was founded?

MR LANDER:  Yes, if Your Honour pleases. We say this appeal

comes down to the matter of fact in all respects

as to whether or not the trial judge was right
in the findings and whether simply as a matter

of fact what was done by the first respondent,

Mrs Gazzola, was unconscionable in the

circumstances or whether she has been unjustly

enriched in the circumstances. And we say that

we can demonstrate by pointing to the circumstances

C2T70/l/ND	85	4/4/90
Gazzola(2)

that she was neither guilty of the first nor

did she receive the benefit of the second.

In respect of the matter relating to common

intention, His Honour made a final finding on

that at page 1523. It will be seen that in respect

of the argument in relation to common intention

we put at trial - and it is reported by His Honour

at line 10 of page 1523 that it was argued the

common intentions were too vague to have any

expression. And His Honour dealt with that

and, finally, at line 22, decided it was:

not necessary to decide the question. Either

the common intentions or the expectations

created are so vague as to be unenforceable

or, if this is not the case, Gino has repudiated

one part of the arrangement and is thereby

precluded from enforcing the other.

TOOHEY J: But, Mr Lander, did the trial judge have any

doubts about the existence of a common intention

so far as Long Plains and The Dairy were concerned?

MR LANDER:  He is dealing there, if Your Honour pleases,

with all of the properties.

TOOHEY J:  Yes, I appreciate that but he had earlier, as

it were, made a finding in respect of two of

the properties, Long Plains and The Dairy, had

he not, that there was a common intention?

(Continued on page 87)

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MR LANDER:  Yes, he does.

TOOHEY J: That is at page 1522, line 5.

MR LANDER:  But what he says is the common intention

involved the appellant's input into it and without the appellant doing the work, the common intention ceased to exist.

TOOHEY J:	Did he ever say that in those terms?
MR LANDER:	Not in as many words.

TOOHEY J:  No. He spoke of repudiation but rather it was

not so much repudiation or it was not that events

occurred that brought the common intention to an

end, as it wer~, ~ the failure of a conditibn but rather

His Honour seems to have spoken in terms of

repudiation.

MR LANDER:  Yes, he does, if Your Honour pleases but, in our

submission, a reading of his reasons rather suggests

that not so much a repudiation but the common

intention disappearing on the basis that one of the

parties will not perform what he termed was one side

of the equation.

TOOHEY J: Well, I rather thought His Honour was putting it

differently. If you look at page 1525, at line 6

and the lines that follow, there seems to be a

finding that by sending the letter, the appellant

acted in breach of the common intention. Not

so much that events had occurred which had brought

the common intention to an end but there had

been a repudiation of this common intention.

MR LANDER:  Yes. His Honour there is dealing with the

claim in contract, as I understand it.

TOOHEY J: Is he?

MR LANDER:  Yes. He refers there, at line 6 with the allegation

in paragraph 24 of the statement of claim and

if Your Honour goes back to page 1524, that

was a claim in contract which His Honour did

find was not available to the appellant.

BRENNAN J:  Was it not cast either in contract or

in common intention?

MR LANDER:	I am sorry, if Your Honour please?
BRENNAN J:	I thought the pleading attributed to the words

"family agreement" the meaning of either

contract or common intention.

MR LANDER:  Yes, that is so but paragraph 24, in our submission

would deal with contract. Certainly, paragraph 10,

C2T71/l/SH	87	4/4/90
Gazzola(2)

which is at page 1492, sets out that the agreement

is an agreement or, alternatively, a common intention

but if Your Honour goes then to page 1494, the
claim is for damages in contract, or appears to

be.

DEANE J:	But would you contest that it was a common intention
that the parties would have their respective legal interests and that the parents would leave the interests or their respective interests in the land
to the sons at the time of their respective deaths
if the arrangement had carried through?

MR LANDER:  I could not contest that on the findings.

DEANE J: Well, now, does that not then lead us to this

situation: the joint enterprise having collapsed

before the final stage was reached, would it

be unjust enrichment or unconscionable conduct

for your client to retain her legal interest

in all the circumstances?

MR LANDER: It may. It may amount to unconscionable conduct

depending upon the facts or it may amount to unjust enrichment, depending upon the facts.

DEANE J: Well, that is what I said, in all the circumstances.

MR LANDER:	Yes.
DEANE J: I did not put a proposition.	It was a question.

MR LANDER:  I beg your pardon. I misunderstood your question.

Yes, it could amount to that in both circumstances.

DAWSON J:	In fact, that is the question in this case.
MR LANDER:	That is the question in this case and that is what I have been endeavouring to answer by
showing that her - - -
DAWSON J: Because it is not everv common intention that

gives rise to a constructive trust.

MR LANDER:  No, indeed. What I have been endeavouring

to show in the submissions I have made this

afternoon is that, in fact, she has not been

guilty of unconscionable conduct,nor has

she been enriched.

DEANE J:  Yes, I follow. I was just trying to put it in

the right context.

(Continued on page 89)

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MR LANDER:  The appellant put to this Court that you ought

not to - in determining whether Mrs Gazzola's

conduct is unconscionable - take into account his
conduct, but that cannot be right, in our submission,

in determining whether what she did was conscionable

or otherwise. It can only be determined having regard
to what otherwise was done and what may have caused

her to do what she did, and in the appellants'

submission her conduct would have to be examined in

a vacuum which, in our submission, is not the

appropriate way to determine whether conduct would

amount to unconscionable conduct any more that it

would not be appropriate as it has been put to the

Court to examine her enrichment without at the same

time examining his deprivation. It just simply cannot

be done. Both sides of the equation, in respect of

both propositions must be examined.

It was also put to the Court that there was a

premature collapse of the arrangement. That is not

the case on the evidence for the submissions I have

already made. There was not a premature collapse.

There was, in fact, a collapse caused by what the

appellant did, but that takes the matter nowhere

unless, again, still Mrs Gazzola has been guilty of

unconscionable conduct. Without taking the Court

to the references in respect of His Honour's findings

in relation to that, I simply mention pages 1523 and

1525.

The other matter that ought to be mentioned in respect of the proposed orders is that the appellant

seeks this Court to have regard to the contributions

he has made. Those contributions, on the whole of

the evidence on His Honour's findings, were made to

the parents. The appellant does not bring into

account the other side of the ledger, "W'ell I have

already received from my father, in respect of half

of that" and that has been left out of account in

all of the schedules that have been put to the Court.

Now, in our submission, that is no test of the

contributions at all, because theremust be taken into

account the moneys and the land that was received

from his father.

(Continued on page 90)

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MR LANDER (continuing):  As to the unconscionability of

Mrs Gazzola, His Honour did discuss her conduct

and, in particular, found it was not unconscionable,

at page 1525, and in particular at that page

His Honour, perhaps loosely describing it as a
"fundamental breach" at line 13, says:

Only two matters are raised which could have any significance -

in relation to unconscionable conduct. They are the

changing of the will in 1980 and the second was - the first is discussed on page 1525, that is, the payment to Nives of one-third which he finds is not

unconscionable, and the second is the changing of the

will which, again, for the reasons he expresses and

which we would urge from this Court, are also right,

he found that the changing of the will could not

amount to unconscionable conduct.

TOOHEY J:  But is that the context in which His Honour examines

those two matters, Mr Lander? I rather took him to

be looking at those matters in relation to the

argument that there had been some breach on the part of

Mrs Gazzola of this common intention, rather than

whether or not there had been unconscionable conduct

such as to give rise to a cause of action of itself.

MR LANDER:  I have taken His Honour to be discussing

unconscionable conduct there in the context of a

constructive trust, whether it would give rise to

a constructive trust, either with or without a common

intention; but, probably, more likely, he is

discussing it with respect to a common intention.

TOOHEY J: Well, he speaks of it on page 1525, line 12, in

relation to whether or not there had been a fundamental

breach by the defendants or, more particularly, by

Mrs Gazzola of the common intention.

(Continued on page 91)

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Gazzola(2)

TOOHEY J: And then he goes on to say "Well, only two matters have been raised" and he seeks to dispose of those. But I do not see there any reference, certainly no

express reference to unconscionability on the part

of Mrs Gazzola.

MR LANDER:  No, as I say, His Honour rather loosely uses the

term "fundamental breach" which we would submit

is - what he is examining there is whether or not

what is done at that time would amount to

unconscionability.

TOOHEY J:	I must say I had not read it that way.
MR LANDER:	The whole of the judgment shows that His Honour

did not find anything that was done by Mrs Gazzola

to be unconscionable.

TOOHEY J: That may well be in the sense that there is an

absence of any such finding.

MR LANDER:  Yes. The matter of proprietary estoppel was

argued this afternoon. In our submission, the

principles are not in dispute arising out of the

authority put to the Court but for the reasons I

advanced in relation to unjust enrichment no

detriment can be shown for the reasons already

argued in relation to the other matters.	The
other thing that can be said in respect of

proprietary estoppel is that His Honour's findings

are not clear that there were any expectations that

would have given rise to satisfying an argument in

proprietary estoppel. Lastly, the - - -

BRENNAN J: 

Was there an expectation that the interests in

the land would pass to the sons on the death of
the parents?

MR LANDER:  Yes. I should qualify that. Your Honour is right,

with respect, in the event that the circumstances

continued.That expectation was available.	No
earlier expectation than that.

GAUDRON J: Does that not throw up something that is a little

awkward about this case? You could not talk about

detriment in that situation if the parent is

alive.

(Continued on page 92)

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Gazzola(Z)

MR LANDER: Exactly.

GAUDRON J:	And the same when you talk about the change to the will. That can have no legal significance
at all. I mean, it can just as readily be changed
back. This whole QOtion seems to be quite at odds
with - - -
MR LANDER:	A little premature, Your Honour.

GAUDRON J: Yes, thank you.

MR LANDER:  Yes, and of course, what Your Honour raises with

me is also appropriate in respect of the orders

that are sought. The only expectation the

appellant could ever have was some beneficial

interest that would come to him on his mother's

death. Unless you can show an unjust enrichment,

which was never argued below, but unless you can

show an unjust enrichment he ought not to be

entitled to the trust that are now being suggested

in the orders that are put with the schedules to

the submissions. He might be entitled to the

value of an enrichment, but that is not how those

schedules are put forward. They are put forward

as showing some form of trust so that a money

payment is made to him now. That is, his interests

are not only catered for, but they are advanced

until today, rather than the expectation he had,

that is that they would come about on the mother's

death. Moreover, those schedules also do not take

into account the daughter. She is ignored for the
purpose of these proceedings and the one-third

interest that everyone says she ought to have got

in money value at least,under the old will, is

simply now ignored and she loses that. Further,

it is all put to this Court on the basis that you

ought to pay-Mrs Gazzola back her initial

contribution and then work on the basis that the

boys contributed the rest. The difficulty with

that proposition is that you pay Mrs Gazzola back

at a rate of ten per cent, which is said in

argument to be generous, but the two sons then get

all of the advantages of inflation. They get all

of the advantage of this land creeping into the

Adelaide metropolitan area, so that Mrs Gazzola simply gets her money back, which she contributed

well before any of this came about, to the

property and the boys then get the value of the

property now.	Now, in our submission, that is
no way to deal with this matter at all.	In our

submission, firstly, there is no constructive trust.

There is no unjust enrichment and lastly, in our

submission, the proposed orders simply do not bear

upon what the issues in the case were.

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MR LANDER: Now,. for those submission we say the appeal

ought to be dismissed. ·

BRENNAN J:  Thank you, Mr Lander. Mr Evans . Mr Evans, in

the course of your reply, it might be of assistance

if you were to address the question of whether,

if the Court should be against you on the.facts and

in particular, in relation to the existence of facts

which could give rise to a constructive trust on

the basis of unjust enrichment, the appropriate
order would not be to rescind special leave~- the
hypothesis on which special leave having been given

being _that which was,. discussed in the course of ·

Mr Lander's submissions.

MR EVANS:  Yes. If Your Honours please, if I could put it this

way, that the special leave point which is clear

from the transcript relates to the question in

law as to what amounts to attributable blame in

a relationship which has collapsed. That was the

special leave point. It was certainly not granted

on facts; that was canvassed and excluded those
Honour the Chief Justice, and that was the reason

why special leave was rescinded in relation to the claim in respect of Goreys under a common intention

trust, because that was a question of fact, whether

Goreys at the time it was purchased was forming part

of the trust properties and Goreys, contrary to the submissions of my learned friend, was only excluded in the context of the common intention trust. It

is at large, in the context of the wider trust - the

over-arching trust that is imposed by the Court, without

regard to the intention of the parties, by reason of

an unjust enrichment or an unconscionable retention

by the legal owner in the circumstances of a collapsed

relationship.

In our submission, the point that was the subject-

matter of the hearing for special leave is the same

point that falls for determination on this appeal.

It is a legal matter.

DEANE J:· E5tcept what if at the end of argument one were firmly

of the view that regardless of any question of

attributable blame and its effect, the ·facts

of this case would not found an intentbut found a
finding of a common intention to create a constructive

trust, nor would they support the base - the imposition

of such a trust on grounds of unjust enrichment or
unconscionable conduct. surely.~ the appropriate course,

in that event, would be to revoke leave rather than to go through an analysis of all the facts to come to the

conclusion that of the questionwhich leave was granted to

agitate did not arise?

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MR EVANS:	So, if Your Honours came to that,clear	view that

the facts on any interpretation could not support

a basis for the application of the principles of

law, I could not oppose that conclusion but, of

course, that is contrary to the whole thrust of our

submissions.

DEANE J:	Yourwhole submissions, I appreciate that. But, in other other words, if we were left of the firm conclusion
that under this arrangement the staged process of
legal ownership which was agreed did not give rise to
equitable intervention, the other question would never
really arise, would it?
MR EVANS:	Yes. I think I am driven to that submission. I
do not wish to put anything else to the Court in reply other than to mention in response to the inquiry as to the value of the mother's estate
at the time that Gino's was worth three-quarters of
a million~ t-fy instructions are that it was worth
about 1.2 million, something just short of that.

DEANE J: Thank you.

MR EVANS: If the Court pleases.

BRENNAN J: The Court will reserve its decision in this

matter considering for that purpose both the
question of special leave and contingently on
the answer to that question the decision on

appeal.

AT 4.08 PM THE MATTER WAS ADJOURNED SINE DIE

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