Hampton & Farley & Ors

[2013] FamCA 213

FAMILY COURT OF AUSTRALIA

HAMPTON & FARLEY AND ORS [2013] FamCA 213

FAMILY LAW ─ PROPERTY SETTLEMENT ─ De facto relationship ─ Where the relief sought by the de facto wife resulted in the corporation (owned by the de facto husband and the his son), a partnership between the de facto husband and his son, and the son in his own right intervening in the proceedings, and seeking orders in the exercise of the Court’s accrued jurisdiction ─ Where determination of the property of the parties to the de facto relationship clearly involved the exercise of the Court’s accrued jurisdiction ─ Where the Court concluded that an order altering the interests in property of the parties to the de facto relationship would be just and equitable ─ Where the Court’s conclusion as to a just and equitable alteration of interests in the property of the parties to the de facto relationship in favour of the de facto wife could be satisfied without recourse to any of the property which, on the Court’s findings of fact, were found to be impressed with a trust in favour of the de facto husband’s son ─ Where to view the day-to-day contributions of the parties to the de facto relationship during their cohabitation as other than equal would be unfair to the de facto wife ─ Where the Court concluded that the de facto wife’s contribution based entitlement should be adjusted by approximately 15 per cent by virtue of the disparity of financial resources of the parties which the evidence revealed ─ Splitting order made in favour of the de  facto wife ─ Interim spousal maintenance order made in favour of the de facto wife

FAMILY LAW ─ TRUSTS ─ Where on behalf of the de facto husband, the son and the corporation, it was submitted that the de facto husband’s legal interests in the partnership and the corporation were held, or should be declared to be held, by him on trust for the son ─ Where Senior Counsel for the son submitted that both the de facto husband and wife should be estopped from denying that the son had been encouraged to believe that the de facto husband’s interest in the farm or farms would “one day” be his, and had relied upon that promise in circumstances where the evidence established that it would be unconscionable to allow the de facto husband or wife to depart from that assumption ─ Discussion of the principles of equitable and proprietary estoppel with respect to the Court making a declaration of trust ─ Where the Court was not persuaded that the de facto wife should be regarded as estopped from departing from the assumption which the Court found the de facto husband had created or encouraged in the mind of the son, but that it did not preclude the son from successfully asserting that the de facto husband should be estopped in equity from departing from that assumption ─ Where the Court was satisfied that there was a representation by the de facto husband to the son which gave rise to an expectation on the part of the son upon which he relied, and was intended by the de facto husband to rely ─ Where although the conversations relied upon by the de facto husband and the son referred to “the farm”, the Court concluded that the declarations in the son’s favour should extend to all of the farming properties owned by the partnership, and the corporation, other than as trustee for the superannuation fund ─ Where the Court concluded that a trust should be declared with respect to the de facto husband’s legal interest in the farms

Family Law Act 1975 (Cth)

Adam P. Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Coghlan and Coghlan (2005) FLC 93-220
Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84
Fencott v Muller (1983) 152 CLR 570
Kardos v Sarbutt (2006) 34 Fam LR 550
Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635
Pierce and Pierce (1999) FLC 92-844
Smith v Smith (1986) 161 CLR 217
Stanford v Stanford [2012] HCA 52
Thorner v Major and others [2009] UKHL 18; [2009] 3 All ER 945; [2009]; [2009] 1 WLR 776
Waddell v Waddell (2012) 292 ALR 788; [2012] NSWCA 214
Waltons Stores (Interstate) Limited v Maher (1998) 164 CLR 387
Warby and Warby (2002) FLC 93-091

APPLICANT: Ms Hampton

FIRST RESPONDENT: Mr Farley Snr

SECOND RESPONDENT: Mr Farley Jnr

THIRD RESPONDENT: Farley and Son Pty Ltd

FILE NUMBER: MLC 116 of 2011

DATE DELIVERED: 5 April 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Dubbo and Sydney

JUDGMENT OF: Coleman J

HEARING DATES: 11,12 and 13 September 2012
17, 18, 19 and 20 December 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Nicholson

SOLICITOR FOR THE APPLICANT: Peter Webb

COUNSEL FOR THE FIRST RESPONDENT: Mr Kenny

SOLICITOR FOR THE FIRST 

RESPONDENT:

Campbell Paton & Taylor

COUNSEL FOR THE SECOND & THIRD RESPONDENTS: Mr Laughton SC

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: MacLarens Lawyers

Orders

1. That Mr Farley Snr and Mr Farley Jnr do all acts and things and execute all deeds, documents, instruments and writings and cause all necessary resolutions to be passed declaring that Mr Farley Snr, Mr Farley Jnr and Farley and Son Pty Ltd, in its own right, hold the fee simple to the real property vested in the names of the said Mr Farley Snr, Mr Farley Jnr and/or Farley and Son Pty Ltd upon trust:

   (a)       For Mr Farley Snr as life tenant;

   (b)       For Mr Farley Jnr in remainder.

2. Note that order 1 hereof does not apply to the legal title to real property which is held as Trustee for Farley and Son Pty Ltd Superannuation fund.

3. Grant leave to Senior Counsel and Counsel for Mr Farley Snr, Mr Farley Jnr and Farley and Son Pty Ltd to file minutes of order to give further effect to order 1 hereof, provided that such minutes of order are filed within 21 days of these orders. 

4. That in accordance with s 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the superannuation interest of Mr Farley Snr in the Farley and Son Pty Ltd Superannuation Fund (“the Fund”), Ms Hampton or her personal legal representative be entitled to be paid an amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 using the base amount of $500,000 (“the superannuation split”) and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made out but for these Orders.

5. That the Trustee of the Fund comply with the obligations imposed upon trustees of eligible superannuation plans under the Family Law Act 1975 (Cth) and Family Law (Superannuation) Regulations 2001.

6. That Orders 4 and 5 hereof bind the Trustee of the Fund and these Orders take effect from the operative time being the fourth business day after the date of service of these Orders on the Trustee.

7. That pursuant to Rule 14F of the Family Law (Superannuation) Regulations 2001 any payments from the Fund made after the trustee has rolled over or transferred the transferable benefit to a Fund of Ms Hampton’s choosing are not splittable payments.

8. That upon payment and the superannuation split being completed any interest Ms Hampton may have in the company, the Fund and the partnership known as Farley and Son (“the partnership”) vest absolutely in Mr Farley Snr, provided that Mr Farley Snr, Mr Farley Jnr and Farley and Son Pty Ltd jointly and severally indemnify and keep indemnified the applicant in respect of all liabilities of whatsoever nature past, present and future relating to either the company and/or the partnership.

9. That, pending compliance with these orders, Mr Farley Snr be restrained from encumbering, charging, or otherwise dealing with or receiving his entitlement in the Farley and Son Pty Ltd superannuation fund, or reducing the balance of his interest in such fund below the sum of $500,000.

10. That unless otherwise specified in these orders and save for the purposes of enforcing any moneys due under these or any subsequent orders:

    (a)All parties be solely entitled to the exclusion of the other to all superannuation entitlements and other property including choses-in-action in the possession of such party as at the date of these orders;

    (b)Assurance policies remain the sole property of the owner named thereon;

    (c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

11. That Mr Farley Snr continue to pay or cause to be paid to Ms Hampton by way of interim spouse maintenance the sum of $800 per week and that such payment be made by direct bank transfer into such account as nominated by Ms Hampton and that such payments continue until all obligations of Mr Farley Snr and Mr Farley Jnr pursuant to these orders have been fully complied with, whereupon this order shall be discharged.

12. That in the event any monies payable to Ms Hampton by Mr Farley Snr remain outstanding beyond the due date of payment then Mr Farley Snr, in addition to the amounts outstanding also pay to the applicant interest calculated at the applicable rate under the Family Law Act and Rules from the due date of payment until the actual date of payment.

13. That if either party refuses or neglects within 28 days to execute any and all documents and do all other acts and things necessary to give effect to these orders:

    (a)The Registrar of the Family Court of Australia at Sydney is hereby appointed pursuant to s 106A(1) of the Family Law Act 1975 (Cth) to execute all deeds and documents in the name of either party, and do all acts and things necessary to give validity and operation of theses Orders;

    (b)The defaulting party is ordered to pay all reasonable solicitor/client costs incurred by the other party for the purposes of enforcing this order, to be taxed if not agreed.

14. That Ms Hampton relinquish any entitlement she may have, howsoever arising, in or to the property of Mr Farley Snr, Mr Farley Jnr, the partnership known as Farley and Son, and Farley and Son Pty Ltd, and sign all documentation necessary to cause any such entitlement to be released, transferred or assigned to, or in such manner as the person or entity entitled to the benefit of this order directs in writing.

15. That Mr Farley Snr, Mr Farley Jnr, the partnership known as Farley and Son and Farley and Son Pty Ltd do jointly and severally indemnify Ms Hampton with respect to any liability which Ms Hampton may have to or in respect of the said Mr Farley Snr, Mr Farley Jnr, the partnership known as Farley and Son and Farley and Son Pty Ltd.

16. That all other applications and cross-applications are hereby otherwise dismissed.

17. That costs be reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hampton & Farley and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT DUBBO AND SYDNEY

FILE NUMBER: MLC 116 of 2011

Ms Hampton

Applicant

And

Mr Farley Snr

Respondent

And

Mr Farley Jnr

Second Respondent

And

Farley and Son Pty Ltd

Third Respondent

REASONS FOR JUDGMENT

introduction

1. The proceedings before the Court arise from an application for settlement of property pursuant to the provisions of Part VIIIAB of the Family Law Act 1975 (Cth) (“the Act”) by Ms Hampton, the former de facto wife of Mr Farley Snr, (hereinafter referred to as “the wife” and “the husband” respectively).

2. The relief sought by the wife resulted in Farley and Son Pty Ltd, (hereinafter referred to as “the corporation”) which is owned by the husband and the husband’s son, Mr Farley Jnr, (hereinafter referred to as “the son”), Farley and Son, a partnership between the husband and his son (hereinafter referred to as “the partnership”) and the son in his own right intervening in the proceedings, and seeking orders in the exercise of the Court’s accrued jurisdiction.

3. At the conclusion of the trial, as is apparent from the concluding submissions of their respective Counsel and Senior Counsel, the positions of the parties were essentially as set out below.

4. The wife sought that the husband and/or the partnership or the corporation pay to her the sum of $463,000 by a series of instalments, at least inferentially concluding on 25 January 2014.

5. The wife further sought a “splitting order” pursuant to the provisions of Part VIIIB of the Act with respect to the interest of the husband in the Farley and Son Pty Ltd Superannuation Fund (“the superannuation fund”), the amount payable pursuant to such order being calculated in accordance with the relevant superannuation rules, using a base amount of $537,000.

6. The wife sought a series of consequential orders to give effect to the splitting order sought by her. Also sought were a series of indemnity orders in the wife’s favour, those orders being sought against each of the husband, the partnership, the corporation, and the son.

7. The wife sought a series of orders to give effect to the primary relief sought by her in the event of those orders not being complied with. In essence, the enforcement provisions of the orders sought by the wife involved the sale of real estate held by the husband and the son in co-ownership. The wife sought the continuation of a current interim spousal maintenance order of $800 per week until the husband fully complied with the provisions of the orders sought by her.

8. The husband opposed the wife’s application. In his final submissions, Counsel for the husband asserted that the orders sought by the husband in his further amended application of 8 February 2012 should be made by the Court. The relief there sought was, in essence, that the husband pay the wife the sum of $150,000 in full satisfaction of any rights which he may have with respect to the property of the husband, the partnership, the corporation, and/or the superannuation fund.

9. In his final submissions, Counsel for the husband also asserted that the wife’s entitlement should be satisfied by way of splitting order with respect to the husband’s interest in the superannuation fund. To the extent that the wife was held to have any entitlement in excess of that which could be satisfied out of the husband’s interest in the superannuation fund, it is less than entirely clear how it was sought that the husband would satisfy such shortfall. Whatever the precise intention of the orders sought on behalf of the husband, it is clear that the husband sought that satisfaction of the wife’s entitlement ought not involve the realisation of any property of the corporation or any real estate.

10. As articulated in the written submissions of their learned Senior Counsel at the conclusion of the trial, the position of the corporation and the son was that the Court would make no orders in favour of the wife, or that, to the extent that, contrary to the positions urged upon the Court on their behalf, any orders were made in favour of the wife, they would not affect the real estate or, if any such orders potentially had that effect, the son and/or the corporation have the opportunity to satisfy such entitlement in order to obviate the sale of real estate.

11. The son sought orders in the following orders:

    13.1A declaration that there exists from the period between February 1996 and 30 June 1996 an agreement that [the husband] would, in consideration of [the son] working in the agricultural businesses almost exclusively, and allowing [the husband] to work in other enterprises not associated with the agricultural businesses, transfer all his right, title and interest in the agricultural business to [the son].

    13.2A declaration that [the husand] holds on constructive trust for [the son] all of his right title and interest in the agricultural businesses.

    14.      Alternatively, a declaration that [the husband] is estopped from:

    14.1denying the existence of the agreement and/or

    14.2denying the existence of the constructive trust which arises from the Agreement.

    15.      A declaration that [the wife] is estopped from:

    15.1denying the existence of the agreement and/or

    15.2denying the existence of the constructive trust referred which arises from the Agreement.

    16.      An order that insofar as [the wife] seeks orders for property settlement which involves, or adversely affects the interest of [the son] which is the subject of:

    16.1the agreement and/or

    16.2the constructive trust referred to,

    and that her Application be dismissed.

12. The husband sought orders in identical terms to those sought by the son.

13. As is readily apparent, pivotal to the determination of the property settlement proceedings between the husband and the wife is the determination of what constitutes the property of the husband and wife. The case of the husband, the son, the partnership and the corporation is that the husband does not beneficially own any of the real, or most of the personal property the legal title to which is vested in his name. There is no suggestion on behalf of the wife that the son does not beneficially own all the real and personal property the legal title to which is vested in his name. Determining the property of the parties to the de facto relationship clearly involves the exercise of the Court’s accrued jurisdiction. It is common ground that the jurisdiction exists and should be exercised. The controversy relates to how it should be exercised (see Adam P. Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, Fencott v Muller (1983) 152 CLR 570, Smith v Smith (1986) 161 CLR 217, and Warby and Warby (2002) FLC 93-091).

14. Subsequent to the conclusion of the trial in December 2012, the Court has received very extensive, and helpful, written submissions on behalf of the parties, the last of such submissions being received on 19 March 2013.

15. The balance sheet appearing in the written submissions of Counsel for the wife (at page 74), consistently with, the wife’s case that the legal interests of the husband, the son, the corporation and the partnership, reflected the beneficial ownership of those entities and the assets reposing in them. The bulk of the net worth of the partnership and the corporation is the real estate upon which farming and grazing activities are conducted by those entities.

16. On behalf of the husband, the son and the corporation, it was submitted that the husband’s legal interests in the partnership and the corporation were held, or should be declared to be held, by him on trust for the son. If the Court did not so conclude, the son relied upon a quantum meruit claim. Upholding the son’s claim on any basis would greatly diminish the property of the husband against which the wife could claim.

17. To the extent that it was submitted on behalf of the husband, the son and the corporation that the legal interests of the husband in those entities was held upon trust for the son, or should be declared by the Court to be so held in any manner, it was submitted on behalf of the wife that the Court would not so conclude. Any alternate claim by the son in reliance upon quantum meruit was also submitted to be without merit.

18. It was common ground between all Counsel that the husband’s interest in the superannuation fund was the “property” of the husband, as, albeit of much less significance was the interest in that fund of the wife. Beyond seeking relief to preserve his beneficial entitlements and entitlements asserted in their assets, the son did not directly seek orders with respect to the partnership or the corporation. Nor did he seek to disturb the property of the superannuation fund, and wisely was that so.

19. Given that there is ultimately little, if any, dispute as to the value of relevant assets, it is readily apparent that determining the beneficial interests of the husband and the son in the corporation and the partnership will have a material impact upon the determination of the entitlement of the wife, particularly as, sensibly in the Court’s view, her claim was maintained in reliance upon the provisions of the Act, no relief ultimately being sought by the wife against any third party in the exercise of the Court’s accrued jurisdiction.

1. The net assets of the parties to the de facto relationship were submitted on behalf of the wife to be worth $2,440,555. The most significant component of that total was the sum of $1,246,899 representing the husband’s asserted value of the legal interest in the partnership. Albeit disputing that the husband was beneficially entitled to that legal interest, neither Counsel for the husband, nor Senior Counsel for the corporation or the son disputed the value of the legal interest at $1,246,899.

2. Obviously, if, as the father and the son assert, the husband holds that legal interest upon trust for the son, the “property” of the parties to the de facto relationship is reduced by slightly more than half on that basis.

3. The husband’s 50 per cent legal interest in the corporation was submitted on behalf of the wife to be worth $348,829. Again, although disputing that the husband was beneficially entitled to such legal interest, neither his learned Counsel nor Senior Counsel for the son or the corporation disputed the value of the legal interest. Albeit not to the same extent of the impact of the Court’s findings with respect to the husband’s legal interest in the partnership, the Court’s determination as to the beneficial ownership of the husband’s 50 per cent interest in the corporation will have a material impact upon the quantum of the “property” of the parties to the de facto relationship.

4. The husband’s interest in the superannuation fund is agreed to be worth $549,726. So is the wife’s interest of $17,245. All parties invite the Court to treat such interest as “property” and it is clearly appropriate to do so, particularly as it is not in contest that the wife is presently able to access such entitlement as she is awarded by way of splitting order (see Coghlan and Coghlan (2005) FLC 93-220).

5. Apart from conceded add-backs of legal fees totalling approximately $168,000, no other “property” assumes great significance. Whilst some other lesser sums are controversial, in the Court’s view they do not, and should not, assume significance. In essence, if the wife’s case is accepted, the net pool of property approximates $2.44 million whilst if the husband’s contentions are accepted, the pool approximates $686,056.

6. If, the husband holds, or is declared to hold his legal interest in the partnership on trust for the son, the net asset pool approximates $1.2million at most. If the husband’s interest in the corporation is similarly held, the net asset pool approximates $852,000 if the figures contained in the balance sheet relied upon by Counsel for the wife are otherwise accepted.

7. It is both logical, and necessary, in the circumstances, to first determine the beneficial ownership of the husband’s interest in the partnership and the corporation. For reasons which will become apparent, somewhat different considerations apply to each of those interests. However, before embarking upon that not uncomplicated exercise, some background, dates and events, which are either uncontroversial, or, to the extent that they are controversial do not ultimately assume great significance can be recorded.

background

1. The wife was born in 1949 and is currently aged 63 years. There is no evidence that the wife’s health is other than reasonable.

2. The husband was born in 1952 and is thus 60 years of age. There is no evidence that the husband’s health is other than reasonable.

3. The son was born in 1976 and is accordingly 37 years of age. The son is in good health.

4. The husband and wife commenced a relationship in 1995. At that time the wife was living in rented accommodation in town F. The husband was living with his then wife, Mrs Farley, and the son on the farming property owned by them and known as V. Mrs Farley is the son’s biological mother.

5. In February 1996 the husband and Mrs Farley separated.

6. On 1 July 1996 the husband and the son formed a partnership known as Farley and Son. That is the partnership referred to at the commencement of these Reasons for Judgment.

7. On 8 December 1998, following a 3-day trial concluding on 7 December 1998, the Court ordered that the net property of the marriage of the husband and Mrs Farley be divided in shares of 55 per cent to Mrs Farley and 45 per cent to the husband.

8. The Court found the net property of the parties to the 1998 proceedings to be worth $945,614. The husband’s entitlement was accordingly $425,000.

9. Pursuant to the Court’s 1998 orders, the husband retained his interest in the partnership with the son which was then found to be worth $90,053, personalty of the husband found to be worth $103,873, an income equalisation deposit of $60,000, a net tax credit of $1200 and an insurance policy worth $5,668.

10. The balance of the husband’s entitlement of $425,500 was to be obtained from either the realisation of the property of the parties or, at the husband’s election, his paying Mrs Farley a sum sufficient to meet her overall entitlement.

11. There was no appeal against the orders of the Court of 8 December 1998.

12. The applicant alleged that she and the husband commenced cohabitation in about December 1998. The husband asserted that cohabitation commenced in mid 1999.

13. There is no compelling evidence in support of each party’s version of when cohabitation commenced. Ultimately, when the parties commenced cohabitation does not assume significance. That is because, whenever the parties commenced cohabitation, it is not in doubt that the wife had very modest assets whilst the husband’s property, was worth $425,000 net.

14. On 27 January 1999 the husband transferred to the son as tenant in common his one half interest in the V property.

15. On 27 February 1999 the husband borrowed $300,000 from the Primary Industry Bank of Australia (“PIBA”) which was secured by mortgage over the V property, the mortgagors being the husband and the son. Apart from creating a security in favour of PIBA, the mortgage contained the usual personal covenants on behalf of the husband and the son.

16. The monies borrowed from PIBA were in part applied by the husband towards the payment by him of the sum of $501,000 necessary to satisfy Mrs Farley’s entitlement pursuant to the 1998 orders of the Court. Upon payment of those monies to her, and as contemplated by the Court’s orders, Mrs Farley transferred to the husband her one half interest in V.

17. The father and the son thus became registered as tenants in common in equal shares of V. From that time at the latest, until the present, the son conducted the greater preparation of the partnership’s farming and grazing operations.

18. In the 1998 proceedings between the husband and Mrs Farley, it had been agreed that Mr & Mrs Farley Pty Ltd, a corporation then owned by the husband and Mrs Farley, was worth $38,404. The corporation was primarily utilised, legitimately, as the entity through which the husband conducted his commission livestock purchasing activities.

19. In July 1999 Mr & Mrs Farley Pty Ltd, changed its name to Farley and Son Pty Ltd. Mrs Farley resigned as a director of Mr & Mrs Farley Pty Ltd. The son was appointed as a director of the corporation. Mrs Farley transferred her shares in the corporation to the son. The husband and the son thus held equal shares in and were co-directors of Farley and Son Pty Ltd. The corporation continued, and continues to receive income generated by the husband’s commission livestock purchasing activities, and proceeds of livestock trading.

20. What became of Mr & Mrs Farley Pty Ltd is less than entirely clear, and is ultimately of little moment in any event.

21. In October 2000 the partnership of the father and son purchased two parcels of rural property which became and continue to be known as “G” for $510,000. Title to the property was acquired by the partners as tenants in common in equal shares.

22. To facilitate the purchase of the G property further funds were borrowed from PIBA. Those borrowings, together with what remained of the $300,000 borrowed in February 1999 produced a balance owing of $540,000. The 10 per cent deposit for the purchase of G, the sum of $51,000, was paid by the partnership.

23. The partnership also then leased two other rural properties “X Block” and “Y Block”.

24. In October 2000 the husband and wife moved to G and continued to reside there for the balance of their cohabitation.

25. In the financial year ending 30 June 2001 the wife was paid $35,000 gross by the partnership by way of wages for work which she was undertaking on its behalf. The wife’s work, and payment for it, continued in subsequent years, until the parties’ separation in May 2009. On occasions, the wife lent the husband, or entities in which he had interests, monies saved from her wages. Those monies were repaid to the wife.

26. In November 2002 the son purchased the Y Block for $137,312. It was thereafter operated by the partnership in conjunction with other holdings for farming and grazing purposes.

27. In April 2003 the father and son sold the V property for $735,000. The partnership retained and transferred to the G property 325 mega litres of the 915 mega litre water allocation attaching to V.

28. On completion of the sale of V all PIBA debt, over both the V and G properties was discharged. Some funds were applied for a subsequent purchase, that being the property “X Block”. Some funds were placed in farm management deposits, and not taxed at that point.

29. In June 2003 the father and son purchased X Block as tenants in common in equal shares for $267,995, which was paid from the sale proceeds of V through the partnership. After the sale of V, the son, and his wife T, commenced to occupy the smaller house on the G property. The partnership thereafter conducted farming and grazing activities on G and X Block.

30. On 4 May 2004 the husband, the wife, the son and the son’s wife T attended an estate planning meeting in town F. Consequent upon the meeting, a report was provided by the financial planners on 7 May 2004. It is helpful at this point, and necessary in relation to determining the threshold issue of beneficial ownership of property, to refer in some detail to the contents of the financial planner’s report, a copy of which is Exhibit MF15 to the affidavit of the son sworn 4 September 2012.

31. Not surprisingly, in the light of the breakup of the relationship between the husband and wife, each of them and the son, asserts a version of events which favours his, her, or their financial interests. That is not said critically of anyone: it is the reality of life and human nature.

32. The financial planning report however, prepared as it was five years prior to the separation of the husband and wife, and at a time when the evidence does not suggest there to have been any basis for scepticism about the continuation of the relationship between the husband and wife, provides a more reliable reflection of the intentions of the parties than does evidence of those matters seven years later, and at a time when each party has a vested interest in suggesting a particular version of events.

33. Under the heading “current circumstances” the financial planning report recorded:

    ·[The husband] is currently aged 52. [The husband] is a successful farmer and stock buyer with his own business which he runs jointly with his son [Mr Farley Jnr] aged 28.

    ·[The husband’s] partner is [Ms Hampton] and both have been previously married. [The husband’s] ex wife received a settlement in 1997. [The wife] has 2 children from her precious [sic] relationship. A son financially independent and a daughter with 5 children. [The husband’s] son from his first marriage is [Mr Farley Jnr], who is married with one son and another child on the way.

    ·We are preparing this plan for both [the husband] and [the son] as many of their assets are held jointly.

34. Under the heading “your objectives”, the financial planning report recorded:

    ·We understand that if either [the husband] or [the son] were to die their land holdings & business assets are to remain in the [Farley] bloodline ie: for the benefit of the children and grandchildren.

    ·Both [the husband] and [the son] would like [the wife] and [the son’s wife] looked after by leaving assets other than farm and business to them.

    ·Specifically, [the husband] would like [the wife] to have the options remaining in their home as she wishes. He would also like to provide approximately $500,000 from his estate to her to fund her living costs. [The husband] is currently considering how to accumulate this amount either in Superannuation cash or life insurance (see note further on Superannuation & insurance).

    ·[The son] wishes to leave [his wife] $900,000 to cover her living costs. This will most likely be funded by insurance. We need to ensure this is done correctly.

    ·You are currently considering your wishes in the unlikely event that yourselves and your children were to pass away at the same time.

35. The “broad wishes” of the participants in the financial planning meeting was suggested to achieve four objectives, they being:

    1.        To preserve the assets that you have accumulated.

    2.        Ensure that your beneficiaries are adequately provided for in the event of your death.

    3.        To consider avenues available for protection of the capital from claims either by creditors or other family members.

    4.        To take advantage of available tax planning opportunities

    In essence you wish to ensure that in the event of your death there will be an orderly (and tax efficient) transfer of assets to your beneficiaries.

36. The financial planning report proceeded to suggest a number of steps to implement the “objectives” earlier identified by it. The first was “creation of new wills for yourselves”.

37. On 24 February 2005, the husband executed a will in terms consistent with the financial planning agreement. That will provided:

    3.        I give and bequeath to [THE WIFE], if she survives me, the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) which sum is to be paid from the [FARLEY AND SON] PTY LTD SUPERANNUNATION FUND and is the subject of a binding nomination incorporated into the said Superannuation Fund. IN THE EVENT that the said Superannuation Fund does not have sufficient funds to meet this bequest then the balance required to satisfy shall be paid from my estate.

    4.        If [THE WIFE] survives me I grant her the right to use and occupy the homestead building and curtilage on the property known as “[G]” … together with any domestic water rights attaching to the said homestead:

    (a) for her lifetime OR

    (b) until she remarries or enters into a de facto relationship OR

    (c) until she ceases to permanently reside therein OR

    (d) until the sale of [“G”] ...

    5.        AS TO THE REST AND RESIDUE of my estate:

    (a)to devolve upon the [THE HUSBAND’S] TESTAMENTARY TRUST, the original Trustee of which is my son [MR FARLEY JNR].

    (b)IN THE EVENT that the said Trust shall fail for any reason to be paid to [THE WIFE] OR

    (c)IN THE EVENT that [THE WIFE] does not survive me to be paid to the grandchildren of [THE WIFE] who shall be living at her death and attain the age of TWENTY-ONE (21) years.

38. The husband and the son each took out life insurance policies as recommended by the financial planners in their reports (see par 11, on page 7 Exhibit MF15).

39. Under the heading “direct property” the financial planning report recorded:

    You currently own property in a partnership [Farley and Son]. As discussed we recommend a partnership agreement be prepared setting out what is to happen in the event of death of any of the partners. This can be discussed in greater detail in our meeting with the solicitor. This property is held as tenants in common, which mean it can be dealt with in your Wills. You have indicated that you wish this property to be left in trust for [the son’s] children. There is also land held in a Company where [the son] and [the husband] are Directors and Shareholders. We need to address the transfer of shares in this Company in your Wills.

40. The report also referred to the superannuation benefits then held by the father and the son in the superannuation fund. Those balances were then $162,869.41 and $14,934.96 respectively.

41. Appendix “A” to the Financial Planning Report recorded assets of the partnership worth $2,108,000 which, after allowing for stock agency fees of $40,000 produced a net balance of assets of the partnership of $2,068,000.

42. There is no evidence before the Court that the Financial Planning Report inaccurately reflected anything said at the time of the interviews(s) on which it was based. Nor was any attempt made to call the author of the report to give evidence or to be cross-examined. The report is able to be accepted as an accurate reflection of what the parties then conveyed to the financial planner.

43. During 2004, improvements were effected to the G property.

44. In February 2009, the corporation purchased the property “W” for $1,050,000. Part of W was purchased by the corporation as trustee for the superannuation fund at a cost of $550,000. The acquisition was funded by the superannuation fund. The partnership leased the superannuation fund’s portion of W from the superannuation fund and conducted farming and grazing activities on that land. In its own right, the corporation acquired the balance of W, together with water licenses at a cost of $500,000.

45. The purchase by the corporation in its own right was funded as to a loan of $300,000 from PIBA, a loan from the son of $55,000, a loan from the partnership of $25,000, and a loan from the husband of $40,000. The balance of purchase monies, approximately $80,000, was contributed from funds held by the corporation.

46. In May 2009 the husband and wife separated. The wife ceased to reside on G, and occupied rented premises in town K.

47. The husband continued to remain living at G and still resides there.

48. At separation, the husband paid the wife $15,000. Beyond agreeing that such sum was paid, and agreed, the parties agree about little in relation to the circumstances surrounding such payment. That ultimately causes no difficulty in determining the proceedings before the Court.

49. Since separation, the wife has had no employment of any significance and either occupied rental premises or lived with family members.

50. On 20 June 2011 consent orders were made whereby the husband was required to pay $40,000 to assist the wife pursue the current litigation together with a $4,000 lump sum spousal maintenance payment.

51. On 21 October 2011 orders were made following a defended interim hearing requiring the husband to pay the wife $800 per week by way of interim spousal maintenance together with a further $25,000 for the purpose of funding the wife’s legal fees.

The beneficial ownership of the husband’s interest in the assets of the partnership and shareholding in the assets of the corporation

1. The case of the husband, the son and the corporation as articulated by his learned Counsel, essentially asserted that:

   4.1      By an agreement made between [the husband] and [the son] between February 1996 and 30 June 1996, [the husband] agreed that in consideration of [the son] performing most of the physical exertion on the farming business operated either by them or by, what was then [Farley and Son] Pty Ltd, [the husband] would give his interested in the farming business to [the son], and that as a consequence of the Agreement:

   4.1.1   By an agreement made between [the husband] and [the son]

   4.1.2   [The husband] is estopped from denying the existence of the trust.

   4.2      [The wife] either entered the de facto relationship knowing of the existence of the Agreement and accepted that position or became aware during the relationship of the arrangement between [the husband] and [the son] and accepted that position.

   4.3Accordingly, she is estopped from denying the existence of the agreement and the trust.

2. Under the heading “outline of the case”, and by reference to the evidence in chief of the son, Senior Counsel for the son articulated the evidentiary foundation of the son’s claim to be:

   17.[The son] was born [in] 1976 and is the only child of [the husband] and [Mrs Farley].

   18.In 1989 [Mr] and [Mrs Farley] purchased [V], a rural property for $360,000.00 on which [Mr] and [Mrs Farley] conducted a partnership farming the property.

   19.In 1992, [Mr] and [Mrs Farley] incorporated [Mr & Mrs Farley] Pty Ltd, the shareholders of which were [the husband] and [Mrs Farley]. It conducted the business of purchasing livestock on commission, using [the husband] as the principal employee.

   20.As often happens on farms [the son], as a child, worked on [V] in the business operated by the partnership of his parents.

   21.From 1993 or thereabouts, [the son] performed a significant amount of the work on [V] and for a short time prior to February 1996, he was running the farming business on [V] with very little assistance from [the husband], who was working away from [V] for between five and seven days each week, buying and selling livestock on commission.

   22.In late 1995 or early 1996 [the husband] and [Mrs Farley] separated, at which time [V] was valued at about $500,000.00.

   23.Between February 1996 and 30 June 1996, conversations took place between [the husband] and [the son], the driver being the separation of [the husband] and [Mrs Farley] and her pending claim for property settlement.

   24.In the conversation, [the husband] said to [the son] words to the effect:

   “You have to decide whether you want to be a farmer or not. If you are not going to stay here and take on the farm, I will sell it.”

   [The son] told [the father] that he wanted to be a farmer and to farm [V].

   25.[The husband] said that they would form a partnership and that [the son] would take over his mother’s share of the farm so that he could work the whole farm and run it on a day to day basis. [The husband] then said:

   “You run it and one day it will be yours. I will keep working my job. We can borrow money to pay your mother out. You can take a minimal wage to live on and we build the farm up.”

   [The son] agreed.

   26.At the time the conversations took place, [the husband] had commenced a relationship with [the wife]. They were not living together at the time but were “dating” and [the wife] was often in the company of [the husband].

   27.[The wife] was present when [the husband and [the son] discussed the arrangement for [the son] to acquire [the son’s] interest in [W] and [the husband’s] promise that if [the son] worked the farm it would ultimately be his. [The wife] said words to the effect:

   “That would only be fair.”

   28.In about mid-1996 [the husband] and [the son] formed an equal partnership, the [Farley and Son] Partnership, which commenced to operate from 1 July 1997. At that stage, [the husband] had not settled the property dispute with [Mrs Farley] and [the son] was only 20. He had no ability to borrow money from a Bank to acquire his mother’s interest in [V].

   29.When they formed the partnership, the partnership bank account was opened with the National Australia Bank, and [the husband] and [the son] each deposited $20,000.00 into the account. [The son’s] contribution came from money that he had been able to save over the years. The money that [the husband] put into the account came from his wages and commission which he had saved.

   30.[The son] had previously been performing casual work as a contractor, carting hay, loading chaff and the like.

   31.The initial funds that went into the partnership were used to buy a truck and bins so that [the son] could continue to work as a contractor and to go to Queensland to work on the harvest there. (Footnotes omitted)

1. The financial records for the years subsequent thereto, and the evidence of the son and the husband in relation to the son’s farm duties were submitted on behalf of the son to establish the entitlement urged on his behalf on any of the bases relied upon by him. It is not a gross over implication to say that, ultimately, the son’s case is that, in reliance upon the promises made to him by the husband at various times, both prior to the commencement of cohabitation between the husband and wife, and on occasions subsequent thereto, the son performed unremunerated, or under remunerated work on the farming properties owned by the parties through the entities identified earlier in these reasons.

2. Prior to the commencement of cohabitation between the husband and wife and until their separation, and subsequent to such separation, the son asserted, and the Court finds, that he had been primarily, if not overwhelmingly, responsible for the conduct of all aspects of the farming and grazing activities conducted on the rural properties, whilst the husband had primarily devoted his time to the off-farm activities associated with commission live stock purchasing.

3. It was submitted that, but for the various representations made by the husband, the son would not have undertaken the work he did on the basis upon which he did. The evidence adduced on behalf of the son in support of his ultimate alternate claim, for relief by way of quantum meruit, was submitted to provide a quantitative reflection of the extent to which the son had, in purported reliance upon the asserted promises of the husband, been financially disadvantaged.

4. In support of her contention that the legal interests of the husband reflect his equitable interests, the wife asserted that the evidence relied upon by the husband and the son could not establish an express trust. Nor, it was contended on behalf of the wife, could that evidence establish circumstances rendering the imposition of a trust upon the legal interests of the husband in favour of the son justified in accordance with equitable principles.

5. Apart from the representations of the husband and the son over more than a decade, it was submitted that, whatever the son’s expectations may have been, the benefits received by him, and legal interests which he acquired, precluded him from successfully asserting either an entitlement to the imposition of trusts on the property held by the husband or any other recompense, whether in the nature of quantum meruit or otherwise.

6. Before considering the evidence in relation to the disputed issues of fact which are ultimately decisive of the threshold issues raised pursuant to the Court’s accrued jurisdiction, it is appropriate to refer to the not insignificant body of case law referred to be Senior Counsel for the son and Counsel for the wife.

Relevant Legal Principles

1. The alternate relief sought by the son, and not resisted by the husband seeks declarations of trust, substantially in reliance upon the principles of promissory or proprietary estoppel.

2. As the submissions of Senior Counsel for the son and Counsel for the wife confirm, pivotal to this issue is the doctrine of equitable estoppel.

3. Counsel for the wife referred the Court to the judgment of Brennan J in Waltons Stores (Interstate) Limited v Maher (1998) 164 CLR 387 at 428-429 in which his Honour said:

   In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.

4. Counsel for the wife submitted, correctly in the Court’s view, that in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 615 per Priestley JA, the New South Wales Court of Appeal adopted what Brennan J said in Waltons Stores. Relevantly, in Austotel at 610 Priestley JA said:

   For equitable estoppel to operate there must be the creation or
   encouragement by the defendant in the plaintiff of an assumption that a
   contract will come into existence or a promise be performed or an interest
   granted to the plaintiff by the defendant, and reliance on that by the
   plaintiff, in circumstances where departure from the assumption by the
   defendant would be unconscionable.

5. Senior Counsel for the son submitted:

   409....in Commonwealth v The Verwayen Mason CJ said “...cases of equitable estoppel have been concerned to grant relief where detriment would be suffered if the assumed state of affairs upon which reliance had been placed was held not to exist. But...the relief which equity grants is by no means necessary to be measured by the extent of that detriment. So, while detriment in the broader sense is required in order to found an estoppel...the law provides a remedy which would often be closer in scope to detriment suffered in the narrow ascent...” paragraph 47 “...Reliance upon an assumption for an extended period may give rise to an estoppel justifying a Court in requiring that the assumption be made good. The same result may follow from substantial and irreversible detriment suffered in reliance upon the assumption or from detriment which cannot be satisfactorily compensated or remedied...”

   410.Even if the Court finds that [the son’s] contribution is insufficient to now found the imposition of a constructive trust, by reason of the quantification of his contribution not reaching the level of value of [the husband’s] share in the farms, Verwayen is authority for the proposition that the Court may still declare a trust on the basis that the detriment to [the son], has occurred over long periods of time, that is in excess of 16 years. (Footnote omitted)

6. It is readily apparent that the issue in relation to equitable estoppel potentially has multiple relevance.

7. Senior Counsel for the son submitted that both the husband and the wife should be estopped from denying that the son had been encouraged to believe that the husband’s interest in the farm or farms would “one day” be his, and had relied upon that promise in circumstances where the evidence established that it would be unconscionable to allow the husband or the wife to depart from that assumption.

8. For reasons which are articulated in greater detail elsewhere in this judgment, the Court is not persuaded that the wife should be regarded as having initially been estopped from departing from the assumption which the Court finds the husband created or encouraged in the mind of the son. So concluding however does not preclude the son from successfully asserting that the husband should be estopped in equity from departing from that assumption. Albeit the wife could be regarded as having been estopped after 7 May 2004, by that time, the “dye had been cast”.

9. Counsel for the wife helpfully summarised what he contended were the principles emerging from the authorities to which both he and Senior Counsel for the son referred the Court. It was submitted in that regard:

   51.What emerges from Brennan J’s reasons are:

   51.1There is a representation about legal rights by the defendant to the plaintiff (representation);

   51.2The representation induces the plaintiff to have an expectation (expectation);

   51.3The plaintiff relies on the representation and changes his position (reliance);

   51.4The defendant intended the plaintiff to rely on the representation (intention);

   51.5If the defendant resiles from making good the representation, the plaintiff will suffer detriment (detriment). (Original emphasis)

10. For reasons which are articulated in greater detail elsewhere in this judgment, the Court is satisfied that there was a representation by the husband to the son which gave rise to an expectation on the part of the son upon which he relied, and was intended by the husband to rely. The Court is also satisfied that, although the husband has no intention of resiling from making good the representation, to make orders which had that effect would constitute detriment for the son.

11. In the following paragraph of his submissions, by reference to Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (4^th ed, 2002) at [17-050] page 550, learned Counsel for the wife submitted that there were six “common factors on cases of equitable estoppel”.

12. Five of those factors do not significantly differ from the five which were submitted to emerge from Brennan J’s reasons in Waltons Stores which have been referred to above. One, “the plaintiff’s interest or expectation must be one the defendant can lawfully satisfy”, does.  In this case, there is no doubt that the husband can “lawfully satisfy” the son’s “interest or expectation” in that he holds the legal title to the property to which the son’s interest or expectation relates. Although that so doing may limit the wife’s entitlement to an order, the entitlement of the son in reliance upon the doctrine of equitable estoppel which arose prior to the commencement of cohabitation between the husband and the wife, and at least from May 2004, was acquiesced in by the wife during such cohabitation, cannot yield to the claims of the wife against the husband in the circumstances of this case.

13. As will be seen, the Court’s conclusion as to a just and equitable alteration of interests in the property of the husband and the wife in favour of the wife can be satisfied without recourse to any of the property which, on the Court’s findings of fact, are impressed with a trust in favour of the son.

14. Counsel for the wife referred the Court to the decision of the New South Wales Court of Appeal in Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84. In support of his contention that the reliance of the son upon the promises of the husband in this case must be “reasonable”. By reference to Mr N’s evidence of the benefits which the son has received, it was submitted that the son could not satisfy the requirement of reasonableness.

15. Counsel for the wife relied upon the judgment of Handley AJA, with whom Allsop P and Giles JA agreed in Delaforce in which his Honour said:

    32.A contract not to revoke a will is subject to contingencies.…

    ...

    34....If the promisor marries, and his marriage ends in divorce, the Family Court could order a transfer of the subject property to the wife and defeat any contract by the husband to leave it to someone else in his will.

    35.A proprietary estoppel by encouragement based on similar promises must be subject to the same contingencies.

    ...

    89.If and when the enforceability of such a promise does arise in the lifetime of a promisor faced, in compelling circumstances, with the need to resort to the capital value of the property, the doctrine of frustration of contracts may bethought relevant….

16. Learned Counsel for the wife also relied upon the judgment of Campbell JA in Waddell v Waddell (2012) 292 ALR 788; [2012] NSWCA 214 in which his Honour said:

    53.It is no novelty that a representation upon which an estoppel case is founded is subject to limitations or conditions that arise by implication from the circumstances in which the representation is made. For example, Thorner v Major (2009) 1 WLR 776 ; [2009] 3 All ER 945 ; [2009] UKHL 18 concerned a farmer who had represented that his younger relative would be left his farm. They both knew that the identity of the fields that made up the farm had fluctuated over the years. Lord Scott of Foscote at [20] was of the view that the farmer would not have been acting in a way that was contrary to his equitable obligations if it was necessary for all or part of the farm to be sold in his lifetime to meet his own medical expenses or to fund his needs in old age. Lord Walker of Gestingthorpe at [62] and Lord Neuberger of Abbotsbury at [95] regarded the subject matter of the representation as concerning whatever the farm consisted of at the time of the farmer’s death.

17. In reliance upon those authorities it was submitted by Counsel for the wife that:

    60.It follows that had the 1^st respondent [husband] had entered into a contract to transfer his assets to the 2^nd respondent [son] at some point in the future and in the meantime the applicant [wife] obtained a property settlement out of those assets, then based on what Handley AJA said in Delaforce v Simpson-Cooke, it is arguable that the contract is frustrated and the parties to it are discharged from further performance. The rights the 2^nd respondent [son] gains by an equitable estoppel cannot be seen to be larger than what he could obtain by contract, otherwise equitable estoppel would replace the law of contract. (Footnote omitted)

18. As will be seen, it is ultimately unnecessary for the Court to conclude a view in relation to learned Counsel for the wife’s proposition arising from the decisions in Delaforce and Waddell. As these reasons articulate in more detail elsewhere, the evidence does not establish that the benefits which the son has received render his reliance upon the husband’s promises unreasonable.

19. Having regard to the Court’s conclusions with respect to the property of the husband and the wife, and the wife’s entitlement to an alteration of interest in such property, as revealed elsewhere in these reasons, preservation of the equitable interests declared in favour of the son does not have the potential to defeat or otherwise impair or impede the wife’s capacity to recover such entitlement.

20. The principles governing claims based on quantum meruit are not in doubt. In Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 the High Court said:

    83In Pavey & Matthews, a majority of this Court held that the right to recover on a quantum meruit does not depend on the existence of an implied contract but on a claim to restitution or one based on unjust enrichment. The concept of unjust enrichment was described by Deane J in Pavey & Matthews as constituting:

    “a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case.”

    …

    85.The second point to be noted is that unjust enrichment was identified as a legal concept unifying “a variety of distinct categories of case”. It was not identified as a principle which can be taken as a sufficient premise for direct application in particular cases. Rather, as Deane J emphasised in Pavey & Matthews, it is necessary to proceed by “the ordinary processes of legal reasoning” and by reference to existing categories of cases in which an obligation to pay compensation has been imposed. “To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate”. On the contrary, what the recognition of the unifying concept does is to assist “in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case” (emphasis added).

    …

    88.Adapting what was said by Doyle CJ in Angelopoulos to the facts of this case, the nine factors identified by Builders as supporting its claim were: (a) the plaintiff (here, Builders) did not do the work gratuitously; (b) Builders did not act “entirely at [its] own initiative” but at the implied request of the Lumbers; (c) payment for doing the work was not subject to fulfilment of a subsequent condition; (d) the work was not done “on a basis from which [Builders] chose to depart”; (e) the Lumbers benefited from what Builders did; (f) the benefit was conferred at the expense of Builders; (g) the Lumbers “approved of or agreed to” Builders carrying out the work it did; (h) the circumstances were such that the Lumbers “must have known as … reasonable [persons] that [Builders] expected to be remunerated for [its] services”; and (i) there is no particular circumstance (such as change of position) by virtue of which it would be unjust to require the Lumbers to remunerate Builders.

    …

    90.And if Builders did work or paid money at the Lumbers’ request, it would also follow that it would be neither necessary nor appropriate to consider any of the other eight factors identified in Angelopoulos in deciding whether Builders could recover a fair price for the work it had done and the amount it had paid for and at the request of the Lumbers. To the extent that Angelopoulos is understood as requiring separate or additional consideration of those other factors, where a plaintiff seeks to recover a fair price for work done at the defendant’s request, or the amount the plaintiff has paid for the defendant at the defendant’s request, Angelopoulos is wrong and should not be followed. (Footnotes omitted)

The evidence in relation to the competing assertions as to the beneficial ownership of the husband’s interest in the assets of the partnership and shareholding in the assets of the corporation

1. The father and son relied upon conversations which they asserted took place between them in 1996, at a time when the husband and his then wife Mrs Farley had separated, or were likely to do so. In its 1998 judgment, the Court found that the husband and Mrs Farley separated in February 1996. There is no rational basis for declining to find that conversations between the husband and the son had taken place in the terms asserted by them.

2. It was asserted that the father said to the son in 1996, “you have to decide whether you want to be a farmer or not. If you are not going to stay here and take on the farm, I will sell it”, to which the son responded that he wished to be a farmer and to farm the V property, on which the family was then living. Again, there is no rational basis for not making a finding in the terms asserted by the husband and the son.

3. At that time, the husband was significantly engaged in commission livestock purchasing at locations which were some distance from the farm. His ability to run a farm of the kind V appears to have been was accordingly quite limited. The son was then 20 years of age, and was passionate about, and already engaged in farming. It was further asserted by the father and son that the pair had agreed that they would form a partnership and that the son would take over his mother’s share of the farm, then work the whole farm and run it on a day-to-day basis. Whether the father and son ever had discussions in the terms asserted by them, that is substantially what in fact occurred, as the material facts recounted earlier in these Reasons reveal. Although not equivocally so, the evidence of what the husband and the son did after 1996 is corroborative of their version of the understanding they both had after 1996. No subsequent acquisition or dealing was inconsistent with that understanding.

1. It was alleged that the father said to the son at about this time, “you run it (the farm) and “one day” (emphasis added) it will be yours. I will keep working in my job. We can borrow money to pay your mother out. You can take a minimal wage to live on and we will build the farm up”, to which the son agreed. The Court accepts that conversations substantially in the terms asserted by the husband and the son occurred in about 1996. The parties’ subsequent conduct was consistent with their having done so.

2. Not surprisingly, the conversations between the husband and the son were not conducted with the principles of the law of trusts foremost in their minds. The husband was understandably vague as to when, and in what circumstances, the farm would be the son’s. The Court is satisfied however that, as and from 1996, the conduct of operations on the various parcels of farming land owned or subsequently acquired occurred in a manner consistent with their assertion that in 1996 they had agreed that, “one day”, the farm would be the son’s. As the submissions of Counsel for the wife appear to acknowledge, there was nothing unusual or sinister about that. The issue is whether more than a decade later, when circumstances had materially changed, subsequent events can imbue that understandably loose agreement with the legal character of a specific trust, or, if not, render the imposition of a trust in substantially those terms appropriate by the application of equitable principles.

3. Whether the wife was ever, in 1996 or in the years immediately thereafter privy to such conversations is controversial. The husband and the son contend that the wife was aware of the agreement between them, and had suggested “that would only be fair”. Whilst the finding that the applicant was privy to the conversations relied upon by the husband and the son, and responded in the terms asserted by them might assist the husband and the son’s cases, either finding that the wife did not hear such conversations, or express assent in the terms asserted by the husband and the son, is she did, or acquiesce in those arrangements, or was unable to make a finding about such matters would not be fatal to the husband and the son’s claim. Conversely, as the extensive submissions of Counsel for the wife in relation to this issue correctly assert, even if the Court found that the wife was privy to the alleged conversations that would not be conclusive of the issue in this case.

4. In cross-examination, the wife reiterated that she “was not present” on the occasions when the conversations asserted by the husband and the son were said to have occurred. In the course of her denials, the wife asserted a number of conversations with the husband which, if accepted, would not militate against accepting that the conversations substantially in the terms asserted by the husband and the son in fact took place.

5. The wife’s ultimate response in relation to suggestions to her in                cross-examination that she had been privy to the conversations between the husband and the son in relation to the ultimate ownership of “the farm” was “I don’t recall any conversations that [the husband] and [the son] had in front of me. There was probably no need to, but I was not present at any of those conversations”. Taken in the context of the whole of her evidence, it is likely that, whatever she heard, or did not hear, the wife assumed that the farm would “one day” be the son’s.

6. Although, and at times in colourful terms, Senior Counsel for the son and Counsel for the wife submitted that the evidence of the opposing party ought not be accepted, the Court does not consider such findings to be either readily available, or ultimately necessary in any event. To the extent that such matters were ultimately “hotly controversial”, other than between Counsel, the Court prefers the evidence of the husband and the son, particularly in relation to the duties performed by each of them on farm and off the farm to that of the wife. The wife’s evidence featured a degree of exaggeration which was largely absent from the evidence of the husband and, to an even greater extent, the evidence of the son. The latter revealed an impressive even-handedness.

7. With respect to the wife, whose genuineness the Court has no reason to doubt, her tendency to advocate her case from the witness box gave rise to a significant but unintended inconsistency. In the course of explaining the nature and extent of her contributions to the husband’s commission livestock selling activities, which occupied four days in each working week at locations some distance from where the parties were living, the wife necessarily limited the ability of the husband to contribute substantially to the farming and grazing activities on the farm or farms which the partnership and the corporation owned. Notwithstanding that reality, the wife initially appeared to be seeking to persuade the Court that the contributions of herself and the husband to farming and grazing activities rivalled those of the son. Ultimately, as the submissions of Counsel for the husband and Senior Counsel for the corporation and the son emphasised, the wife conceded the predominant role of the son in the conduct of farming and grazing activities.

8. The Court is comfortably satisfied, both in terms of the credibility of the husband and the son, that conversations, essentially in the terms asserted by them, occurred from time to time in 1996 and in the years following. The Court is not able to make an affirmative finding that the wife was ever privy to, or needed to be privy to such conversations, at least until May 2004. The circumstantial evidence, as detailed in the material facts recorded earlier in these Reasons provides support for accepting that the husband and the son had the conversations in the terms alleged by them. Those conversations gave rise to an expectation by the son that the farm, or farms, would “one day” be his if he worked hard, as he undoubtedly has done at all material times.

9. As the submissions of Counsel for the wife tacitly recognise, the issue is not so much whether the husband and the son had conversations in 1996 and subsequently, and thereafter had “an understanding”, but what that understanding really was. Significantly, as Counsel for the wife submitted, the conversations referred to “the farm”. As is not in doubt, what constituted “the farm” changed subsequently. Moreover, there was live stock, plant and equipment, none of which necessarily falls within the definition of a “farm”.

10. The issues which assume significance, and complexity, are thus what, if equitable rights were created in 1996, were the nature and extent of those equitable rights in favour of the son, and, whether if an express trust was not created, in the light of the benefits which the son undoubtedly subsequently received, those equitable rights have been satisfied without the imposition of any trust or equitable encroachment upon the legal interests of the husband in favour of the son.

11. It is unsurprising that the husband and the son would now make the assertions they make. The pursuit of the truth is assisted by looking at how the husband and the son have historically represented their financial dealings to their accountants, the Australian Taxation Office, their bankers, creditors, this Court in earlier proceedings, and the world at large. As will be seen, so doing provides qualified assistance for the claims of the husband or the son in relation to the beneficial ownership of assets held in the husband’s name.

12. In the course of the 1998 proceedings in this Court, the husband filed verified documents. Included in the material filed in those proceedings was a statement sworn on 29 July 1998 by the husband that: “[Mrs Farley] and I have always held out to [the son] that the property would one day be his and his work and dedication will be rewarded. We have often said to [the son] words to the effect ‘one day this will all be yours and your hard work will have all been worthwhile’”.

13. On 30 November 1998, the husband swore a further affidavit in the 1998 proceedings deposing that “in or about early July 1998 at the property [V], [town F], I said ‘I will loan you (the son) what I have available for a purchase of [V] or if that is not possible some other property”. The husband further deposed that he would “do all in my power to preserve his (the son’s) livelihood and future and in so doing to assist [the son] to purchase farming and grazing land in his own name”.

14. As is not in doubt, at no time in the 1998 proceedings did the husband assert that any property held by him was impressed with a trust, or other equitable obligation in favour of the son. The son gave evidence in the proceedings, but did not at any time assert such an interest or obligation.

15. Unless it is assumed, and there is no evidence to support such an assumption, that the husband had no interest in limiting his liability to his first wife, Mrs Farley, in the 1998 proceedings, the failure to assert that his legal interest did not reflect his equitable interest in the property with which those proceedings were concerned suggests that the husband did not regard his legal interest as being so burdened. Whilst that has implications for the assertions on behalf of the husband and the son that the husband has no beneficial interest whatsoever in the “farming assets” or farms, it is not inconsistent with the husband and the son understanding that the husband’s interest in the farm or farms would “one day” pass to the son. At the very least, the 1998 representations, having not been made in an attempt to reduce the property of the husband’s marriage to Mrs Farley, can be relied upon to rebut any suggestion that the obligations asserted by the husband in the present litigation are a recent invention.

16. As is not in doubt, subsequent to the conversations asserted by the husband and the son, the son committed enormous effort in terms of hours, skill and diligence to the activities on the farm and later acquired farms, and was, as the wife frankly conceded, the major worker on the farm. It remains to consider, quite apart from the fact that the son was in effect a half owner of the farm or farms and other farming assets, and, as is not in doubt, derived significant benefits, both by way of capital and income from them, whether his efforts can be found to have been significantly unrewarded or recompensed.

17. In August 2000, when the “D” property was purchased, the husband and the son asserted that conversations occurred in which the husband alleged that prior to the purchase of the farm the son had said to him words to the effect “the farm is run down and we can probably get it for a good price. I’m young, I’ve got plenty of energy and I am prepared to work hard to improve the farm”. The husband assertedly responded “if that’s what you want to do I will support you. If you are prepared to work on it, it will be all yours and you have proven to me so far that you are keen and that you have the ability”.

18. The Court accepts that a conversation in substantially those terms occurred. At the time, the financial accounts record, the husband had a significant and regular income from livestock trading which was paid into the corporation. Whilst the Court accepts that the conversations asserted by the husband and the son occurred in the terms asserted by them, the Court is not satisfied on the balance of probabilities that the applicant was ever privy to, or needed to be privy to those conversations. The absence of such finding does not militate against accepting the substance of the assertions of the husband and the son.

19. The husband asserted that prior to the purchase of the property the son also said to him “Dad, there will be no point in me working so hard and putting all my heart and sole into the farm if [the wife] is going to get a share of it from you if you and she separate”. The husband asserted that he responded to the son that “all the farm assets are going to stay in the [Farley] family. They are going to you and your children. She understood that”. Whilst the Court accepts that the conversation occurred, the Court is not satisfied on the balance of probabilities that the wife knew or “understood” the intentions of the husband and the son. Again, so concluding does not militate against accepting the substance of the assertions of the husband and the son.

20. The husband and the son asserted that they had a conversation in 2003 in which the husband said “I’ll put money into my super and my FMD so that when I retire I can support myself from them and you will have the farm”. The wife was asserted to have been present, a contention which she denied. Monies were in fact from time to time deposited into farm management deposits from that time on. Whilst there are some inconsistencies and considerable, if understandable, uncertainty in the language used by the husband and the son during these conversations, there is a consistent theme, that being that, at some future unspecified time “the farm” would be the son’s. The Court finds that a conversation occurred, largely in the terms asserted by the husband and son. The Court is not satisfied on the balance of probabilities that the wife was present during such conversation, or subsequently became aware of the terms of it. Again, the absence of such finding does not militate against accepting the substance of the assertions of the husband and the son.

21. The husband and the son asserted similar conversations that the “the farm assets are going to stay in the [Farley] family” at the time of the acquisition of X Block and Y Block in 2003. The Court is satisfied that conversations, largely in the terms asserted by the husband and the son in fact occurred, whether the wife was present at the time, or learned of them subsequently, about which the Court makes no finding in relation to the period prior to May 2004.

22. A recurrent and logical submission on behalf of the wife was that at no time, in any formal or informal way have the husband and son recorded or reflected what they assert to be the beneficial ownership of the farm or any other jointly held assets. Whilst that may have adverse implications for the case of the husband and the son in terms of any asserted express trusts, it does not necessarily follow that the husband’s legal interests are not subject to any equitable entitlements of the son.

23. The evidence of the husband and the son in relation to the payment of wages to the wife is significant in terms of the intentions of the husband and the son. As is not in doubt, the wife was paid wages by the corporation for most of the time she and the husband were cohabiting. The husband contends that such payments were made on legal advice to insulate the husband against any claim which the wife might make in the event of their cohabitation terminating. The significance of the arrangement, for present purposes, flows from the fact that the husband perceived, or was advised of a need to insulate himself against any possible claim by the wife.

24. The husband’s case before this Court is that he has had, and at the time the wife first commenced to receive a wage, had, no beneficial interest in any of the “farming assets”, to borrow the term used by Senior Counsel for the son and the corporation. Having no such beneficial interest, the husband would have had, and no doubt been told by his then solicitor that he had little or nothing to worry about in terms of any claim against any property by the wife.

25. The husband’s own evidence in relation to the reason for the payment of wages to the wife, quite apart from the reality that the wife was doing the work for which she was paid is difficult to reconcile with the husband then, or subsequently, believing that he had no beneficial interest in any of the property the legal title to which was vested in his name. Whilst, as with other circumstantial evidence, that evidence creates a substantial impediment to accepting that an express trust in the terms asserted by the husband was ever created, or intended to be created with respect to real property vested in the husband’s name, it does not have such adverse implications for the alternate relief sought by the son.

26. Reference has earlier been made to the financial planner’s report of 7 May 2004 and to a number of provisions contained within it. It is unnecessary and unhelpful to reiterate those matters.

27. In cross-examination the wife asserted that:

    Well, [the husband] was doing his estate planning, and were just starting to restore the homestead. We had done a little bit of it, and [the husband] said that we could do the estate planning. He actually put in that system there where I would receive $500,000 plus I had the homestead to live as long as I wanted, and he said that was to make me confident that the house was going to be mine before I did any more work.

28. The wife also asserted that the intention of the husband had been to make “arrangements” which reflected “what he would like to happen in the case of his death”.

29. In the course of her evidence, the wife reiterated that the husband expressed the wish “that the properties would remain in the family”, of which the wife was then, and properly, considered herself to be a member. In the course of her evidence in cross-examination the following exchange occurred:

    Yes. And that included leaving assets to you, other than the farming assets?

    He wanted to know that if I worked on the house, that I would have somewhere to live, and he left me – he said that he would like to leave me enough money to provide for me, but he did not say anything about the land or the farm assets while he was alive. And he was concerned to leave you an amount of about $500,000, was he not?

    Plus the house.

    Plus a right to occupy the house, yes?

    That’s right.

    And it was right to occupy; he wasn’t leaving you the house, because it was on a block of land?

    He actually said I had the house for as long as I wanted.

    As long as you were alive, I suggest?

    Yes, or as long as I wanted.

    Yes. So if you wanted to move out before you died, and then you could stay in the house?

    I think it was a phrase that he put in, in case I remarried or something like that, and it would be embarrassing for [the son] and his family to have other people living there.

    Yes. So to your observation, to get a proper succession plan it was important to [the husband], wasn’t it?

    It was very important to [the husband].

    There was then at the meeting discussion about how [the son’s wife] was to be looked after in the event of [the son’s] death?

    Yes.

    And that included discussion about what would happen to [the husband’s] share of the farms in the event of his death?

    Yes.

    And it included the matter of insurance against accident and death of both [the son] and [the husband]?

    Well, I only knew it was [the husband’s] estate planning.

    Well, [the son] was always going to be part of [the husband’s] estate, wasn’t he - - -?

    He was, yes.

    as far as you were concerned?

    Yes.

    And therefore the death of [the son] became important in the succession plans of [the husband] in the event that [the son] predeceased [the husband], didn’t it?

    Well, I don’t know whether [the husband] really took that into account. I think he was more worried about him dying or being killed in a car accident.

30. To the extent that the wife contends that the financial planner’s report of 7 May 2004 fails to reflect the discussions which preceded it at the financial planner’s, the terms of the document assume greater significance than the recollections of the parties eight and half years later, by which time their circumstances and motivations had significantly changed. The estate planning report was admitted into evidence without objection. Its author was not required for cross-examination. The Court accepts that the estate planning report accurately recorded what was discussed and agreed by the parties at the meeting with the financial planner who wrote such report. Albeit greater for the case of the husband and the son, the document provides some support for each party’s case.

1. The difficulties surrounding the making of declarations and consequential orders reflecting the Court’s conclusions with respect to the husband’s life interest in the farms owned by himself and the son, or the corporation in which he and the son hold the issued share capital, although in the case of the latter perhaps somewhat more complex, does not ultimately give rise to insurmountable difficulties in determining the value of the property of the husband, as will become apparent.

2. The G property and X Block are both owned by the husband and the son. As at 30 June 2012, the total assets of the partnership were valued in the books at $1,081,885. G and X Block represented $806,173 of that sum. The partnership had assets over and above that sum worth $275,712. Consistent with the Court’s conclusion as to the beneficial ownership of those assets, the husband’s legal interest in those assets is not impressed with a trust in favour of the son.

3. The issue is complicated by the partners’ loan account balances as at 30 June 2012. The husband’s loan account was in credit at that date in the sum of $699,186 and the son’s account was in credit in the sum of $536,618. It is readily apparent that if G and X Block were not available to the partnership, the loan accounts of the partners could not be satisfied in full, or even to a modest extent.

4. If, by reference to the evidence of Mr R, the values of the husband’s life interest in a one half interest of G and a one half interest of X Block were respectively $461,500 and $187,500, a total of $649,000, that sum is less than the credit balance of the husband’s loan account in the partnership. This potentially provides the least unsatisfactory valuation which could properly be attached to the husband’s interest in those properties and the partnership. Such an approach would however ignore the loan account balances which have been represented by the husband and the son in their published accounts. It also wrongly assumes that the properties could never cease to be available to the partnership. Insolvency, compulsory acquisition, destruction by mining activities, and other calamitous circumstances could see the farms cease to be owned by the husband or the son. Impressing the fee simple of land with life and remainder interests does not guarantee its continued ownership by the husband and the son.

5. To the extent that it might be suggested that one half of the assets of the partnership other than G and X Block could be seen as the husband’s, such an approach would be unfair, if not erroneous, insofar as, after satisfying the capital accounts of the partners, the totality of the assets of the partnership would be exhausted. In the event of dissolution of the partnership, there would be nothing to divide in equal shares between the partners.

6. As the balance sheet of the partnership confirms, there are no external creditors. The husband and the son beneficially own the whole of the assets of the partnership. Whatever the impact of the Court concluding that the husband’s one half legal interest in G and X Block is limited to a life estate may have on the balance sheet, given that, on any view of the balance sheet, the partnership has a surplus of assets over liabilities, and no external debts, valuing the husband’s interest in the partnership at $699,186, the value of his loan account, seems the least unfair approach the Court can take, for the husband and the wife.

7. The net assets of the corporation are worth in total $404,868. Included in those assets are Y Block and the W property, the book values of which were $141,996 and $432,475 respectively. The market valuations of the properties are significantly greater than the book values referred to in the balance sheet. The only valuations in evidence refer to the fee simple of each of those properties. The value of a life estate in favour of the husband with respect to them is not known to the Court.

8. As at 30 June 2012 the husband was owed $63,667 by the corporation. Conversely, as at that date the husband owed the corporation $16,166. After reconciliation of the husband’s loan accounts, he would thus be entitled to receive $47,501.

9. As at 30 June 2012 the net assets of the corporation were valued at $404,868. On a return of capital of shareholders, the husband would accordingly have been entitled to receive $202,434. However, that figure does not reflect the value of the husband’s interest in the corporation given the Court’s conclusions with respect to the beneficial ownership of Y Block and W.

10. Whilst, for reasons the Court has earlier suggested, valuing the husband’s interest in the partnership is problematic, doing so in relation to the corporation is even more problematic. The Court perceives there to be no reliable evidence of the value of the husband’s life estate in one half interest in Y Block and W. It is apparent that Mr R’s opinion of the value of a life estate in favour of the husband with respect to G and X Block is, as a matter of arithmetic, 70 per cent of the figure he ascribed to the husband’s legal estate in each of those properties. It may be, although there is no evidence in this regard, that Mr R would apply a similar percentage to the value determined by him, or Mr S to the value of the husband’s legal estate in Y Block and W. No party has urged such an approach upon the Court. The Court has not raised with the parties the prospect of a finding in those or similar terms. Although it might be convenient to have regard to what such calculations would reveal, the Court perceives that it cannot permissibly do so. It would be artificial, and erroneous, to attempt to do so in any event, for reasons suggested earlier in relation to the partnership.

11. Whilst the husband and the son control the corporation, and are the only shareholders in it, there is a secured external liability to a bank $173,811, and external non-current liabilities of $28,713. The assets of the corporation are more than sufficient to enable those external liabilities to be satisfied. Were the Court able to reliably fix the valuation of a life estate in favour of the husband with respect to his one half interest in Y Block and W, that would, in the circumstances, possibly provide the most reliable evidence of the value of the husband’s interest in the corporation.

12. As with the partnership, even if the Court could comfortably determine the valuation of the husband’s life interest in Y Block and W, the figures emerging would not be readily realisable. The life interests are, however, of real value to the husband, whatever their theoretical value might be. In the absence of any less unsatisfactory figure, the Court concludes that the husband’s interest in the corporation should be the value of his loan account, $47,501.

13. The husband’s interest in the superannuation fund was reflected in the balance sheet of the superannuation fund at $642,562 as at 30 June 2012. The total net assets available to pay members benefits as at 30 June 2012 were recorded as $777,777. The son’s withdrawal benefit as at 30 June 2012 was $135,215.

14. There is no evidence before this Court that any asset of the superannuation fund should be regarded as other than the asset of the fund. Nor is there any evidence before this Court that the husband’s interest in the fund should be regarded as other than the figure which the accounts reveal as his withdrawal benefit. Counsels for both parties have valued the husband’s interest in the superannuation fund at $549,726. Given that agreement, that is the figure which should be taken into account for the purpose of the balance sheet.

Property of the parties to the marriage

1. Counsel for the wife submitted that there should be included in the assets of the husband a tax refund of $8,663, NAB account with a balance of $49,972, an ATO credit of $41,500 and legal fees of $101,000. Counsel for the wife invited the Court to include cash at bank of the wife of $4976, a Holden Commodore motor vehicle at $1,000, furniture at $3,000, an add back of paid legal fees of $67,740.

2. It is common ground that the wife’s superannuation entitlement is $17,245. Counsel for the husband opposed the inclusion of the three large sums asserted by Counsel for the wife with respect to the NAB account, the ATO refund and paid legal fees whilst asserting that on the wife’ side there should be taken into account $9143 worth of savings of the wife at separation, paid legal fees of $67,743, and $17,000 withdrawn from superannuation after separation. The Court does not propose including any of these lesser sums in the pool to which regard will be had for the purpose of determining a just and equitable division of the property of the parties.

3. There are a number of reasons why the Court proposes so doing. Counsel for the husband articulated them in his written submissions. The impact of so doing having regard to the sums involved would be minimal. On the husband’s side there would be added back $201,135. On the wife’s side there would be $102,862. There is no evidence that the funds and or payments sought to be included with respect to the husband were not acquired in the post separation period from efforts made by him. The parties have been separated for almost four years, having cohabitated for 10 years in circumstances where the totality of the property of the parties currently in existence was referrable to the husband’s large and overwhelming capital contribution at commencement of cohabitation. To include these lesser sums would not materially alter the outcome of the proceedings. That is particularly so given that, in the post separation period the husband has undoubtedly, even after paying substantial interim spousal maintenance, been in receipt of greater income and other funds than has the wife. The evidence does not reveal that the husband has, in the post separation period, failed to meet his reasonable obligations to support the wife. Were it otherwise, the Court may have reached a different conclusion with respect to the “add backs” advanced on behalf of the wife.

4. It is reasonably apparent that the three large sums sought to be included on the husband’s side of the ledger were referrable to his efforts in the post separation period. It is clear that the payment of legal fees by the wife of $67,743 was largely, if not entirely referrable to funds received by her from the husband in the post separation period. Those payments were referred to earlier in the material facts recounted at the commencement of these Reasons.

5. On behalf of the wife, it was submitted that the husband and the son had failed to make a full and frank disclosure of their true financial positions. The Court does not accept that the evidence establishes that to be the case. There is a material distinction between making a full and frank disclosure, as the husband and son undoubtedly were obliged to, and disclosing everything which Mr N, a chartered accountant retained to advise the wife, sought to have disclosed or discovered.

6. It is not without significance that, beyond asserting the material which Mr N was submitted to have not been supplied with, and referring to a number of authorities in relation to a principle which is not in doubt, Counsel for the wife did not suggest in what ways, or to what extent the financial position of the husband and the son had not been fully and frankly disclosed.

7. Having regard to the extent of the evidence adduced at trial, and the cross-examination of each of the husband and the son, or absence of it in relation to alleged non-disclosures or mis-disclosures, the Court is comfortably satisfied that the husband and the son have fully and accurately disclosed all the financial details material to the determination of the proceedings before the Court. It needs to be remembered that the husband and the son conduct diverse rural enterprises, sensibly relying upon accountants to translate their day-to-day trading activities into published accounts. Having regard to the apparent thoroughness of Mr N’s endeavours, and the extent of his involvement, the absence of suggestions of the kind to which the Court has referred provides further support for concluding that the husband has fully and accurately complied with his obligations of financial disclosure.

8. No aspect of the accounts published on behalf of the partnership, the corporation or the superannuation fund has been shown to have been deficient or unreliable. As was the case when he gave evidence in 1998, and as is unsurprising given the nature of his professional activities, the husband was cautious about financial matters when giving evidence under cross-examination. During that time the husband volunteered nothing. For that the Court is not critical. It has not been established that the husband failed to reveal anything which he reasonably should, or even for the Court’s suspicions to be aroused in that regard. There is no reason to reject the substance of the husband’s evidence with respect to his financial disclosures.

9. There is no real suggestion, or none which has an objective foundation, that the evidence of the wife in relation to her financial circumstances ought not to be accepted.

10. The net property of the parties to the de facto relationship for the purpose of the dispute between them is accordingly:

1.	Husband’s loan account in partnership	$699,186
2.	Husband’s loan account (net) in corporation	$47,501
3.	Husband’s superannuation interest	$549,726
4.	Wife’s superannuation interest	$17,245
Total net assets		$1,313,658

1. Whatever the High Court may have intended to convey in Stanford, it seems reasonably clear that, before determining the nature and extent of any order altering interests in property, it is necessary to determine whether in fact such an order altering interests in property should be made. Senior Counsel for the son reminded the Court of the passage of the judgment of the High Court in Stanford in which it was said:

   42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

2. In this case, and largely for the reasons the High Court suggested in the passage quoted above, an order altering interests in property would be just and equitable. The husband acknowledges that to be the case, as the relief sought by him confirms. As will be seen when contributions are analysed, it would not be just and equitable for the wife to depart from her decade long cohabitation with the husband without receiving any more than she already has, or has had. For reasons which the Court has earlier indicated, the payments which the wife has received from the husband in the post separation period, over and above the monies paid by him by way of spousal maintenance, have not been included in the inventory of the property of the parties to the relationship. For the wife to depart with those funds and her superannuation entitlement would not be just or equitable.

3. Whilst an alteration of interests in property is just and equitable, it is difficult to see on what basis any alteration of the husband’s interest in the partnership or the corporation, particularly in the light of the Court’s conclusion with respect to the extent of the husband’s interest in those entities, would be just or equitable. As is not in doubt, the assets of each of those entities were either owned by them at the time that the cohabitation of the husband and the wife commenced, or are referrable to the utilisation of those assets subsequent to separation.

4. The promises made by the husband upon which the son relied which give rise to the imposition of equitable entitlements in favour of the son over the husband’s legal interest in the real property held by those entities pre-dated the commencement of cohabitation between the husband and the wife. The clear intention of the husband and wife, as recorded in the Estate Planning Report of 7 May 2004 was to preserve that real property in the Farley family.

5. In order to determine the alteration of interests in property which is just and equitable, it is necessary to evaluate the parties contributions pursuant to s 90SM(4) of the Act and then such provisions of s 90SF(3) of the Act as are relevant.

6. As is not in doubt, at the commencement of the cohabitation, the husband had property worth not less than $495,605, and the wife had property of only nominal value. In determining the significance of the husband’s vastly greater, and very substantial initial capital contribution, it is to be remembered that, by virtue of the Court’s conclusions with respect to the beneficial ownership of property legally owned by him, the husband cannot rely upon the impact of his initial capital contribution of the $495,605 which he thus contributed to the same extent as he could have had the Court not so concluded.

7. To do so would allow the husband to diminish the property he had at the commencement of cohabitation for the purpose of quantifying the asset pool for the purpose of his dispute with the wife, yet ignore that reality when assessing his contributions. Although precision in relation to the exercise which the Court must undertake is not possible, the fundamental realities remain that the totality of the assets to which the Court has regard for the purpose of the property settlement proceedings between the husband and wife is referrable to property which the husband had at the commencement of cohabitation.

8. Much of the evidence at trial involved cross-examination of the wife in relation to the work done by her, particularly on farms during the parties’ cohabitation. At the end of the cross-examination of the wife, there potentially loomed as a fundamental issue just how much work the wife did on the farms. The evidence of the husband and the son precluded that potential from being realised.

9. The Court finds that virtually every farming chore which the wife asserts that she did was at some time or other undertaken or performed by her. The Court is comfortably satisfied in that regard given that, other than by diligent study, and a great capacity for remembering what was studied, or invention, it is hard to see how the wife could have given the detail she gave of a large variety of farming tasks if she had not undertaken those tasks. The Court is satisfied that the wife was able to give evidence about those matters because she had done them. The Court is not persuaded however that the wife undertook those tasks with the frequency which, at least impliedly, her evidence suggested. Whilst the husband and the son did not resile from their position that the wife did not regularly perform most of the farming tasks asserted by her, each readily conceded that the wife had done virtually all of the tasks which she claimed she had at some time or other.

10. There is ultimately little uncertainty in the Court’s mind as to the essence of what occurred during the decade when the parties cohabited. The husband generally attended livestock sales four days per week at various locations throughout New South Wales. He was regularly accompanied on his journeys to livestock sales by the wife. This was of assistance to him both in terms of driving and company, although the husband does not now consider either of those benefits to have been of the magnitude which the wife suggests, and they probably were at the time. It ought not be thought that the evidence reveals that the wife derived no enjoyment or benefit in travelling with the husband in the course of his commission livestock purchasing activities. It was a mutually agreeable and advantageous arrangement. To suggest that either party contributed more, or was more greatly benefited by the arrangement than was the other party would not in the Court’s view be realistic having regard to the evidence.

1. As the wife conceded, the great bulk of the work on the farms was undertaken by the son. Given the distances involved in the livestock selling activities of the husband, the nature of the activities on the farms, and their ages, it is hardly surprising that, as between the son, the husband and the wife, the son performed far more of the farming duties than did the husband or the wife. The Court prefers the evidence of the husband and the son in relation to the nature and extent of the cooperative efforts of the wife and the husband on the farm to the evidence of the wife in that regard. It is unnecessary to refer in detail to what the son did on the farms and off them, so extensive and time consuming were the duties he performed. Whilst the son’s contributions to the farms might in other circumstances enure to the benefit of the husband in the Court’s evaluation of contributions, they should in this case, given that they have been relied upon, successfully, by the son in establishing his claim for equitable relief. The Court’s conclusions in that regard leave no scope for the husband to seek to enhance his contribution entitlement as against the wife in reliance upon contributions by or on his behalf by the son. The son’s contributions were asserted to have been, and accepted as having been, by or on his own behalf.

2. Objectively, to view the day-to-day contributions of the husband and wife during their cohabitation as other than equal would be unfair to the wife. The husband and wife each gave of their best in the various areas of endeavour relied upon by each of them. To conclude otherwise would necessarily place a higher value on working and earning income, than on providing home making and assistance of the kind the wife regularly did both on the farm and in the course of the husband’s commission livestock selling activities.

3. As not uncommonly occurs in cases of this kind, the critical question is how, on an overall basis, the contributions of the parties to the date of separation should be viewed against the background that:

   (a)The totality of initial capital contributions were made by the husband.

   (b)On any view of it, and having regard to the matters referred to earlier arising from the Court’s determination of the son’s claim against him, the husband’s initial capital contribution was very substantial.

   (c)The totality of the assets currently in existence are directly referrable to the property of the husband at the commencement of cohabitation and/or income generated by that property.

   (d)The day-to-day contributions of the parties from physical exertion or effort during their cohabitation can be seen as equal.

   (e)The husband contributed substantially more by way of income during the cohabitation than did the wife.

4. In the Court’s view, having regard to the critical factors listed above, and to the decision of the Full Court in Pierce and Pierce (1999) FLC 92-844 and the decision of the NSW Court of Appeal in Kardos v Sarbutt (2006) 34 Fam LR 550, to conclude that contributions favour the husband by 75 per cent to the wife’s 25 per cent would in the Court’s view be an appropriate, albeit necessarily somewhat arbitrary reflection of what emerges from the evidence.

5. The Court has determined the net property of the parties to approximate $1,300,000. Determining the contributions of the parties in the percentages suggested above results in the husband’s contributions exceeding those of the wife by $650,000. As the Court has earlier recorded, determining the asset pool at $1,300,000 net, or any other sum for that matter, is less than entirely satisfactory, for the reasons which have been earlier suggested. The Court is comfortably satisfied however that so doing does not disadvantage the wife. The husband’s property may not realistically be worth as much as the Court has concluded that is worth.

6. As is not in doubt, the sources of income of the parties during their cohabitation were referable to assets and or enterprises which the husband had owned and/or established prior to the commencement of cohabitation. The current property of the husband, or its source was, with the exception of the increase in the husband’s superannuation interest, referable to the property he had at the commencement of cohabitation. The nature, quantum, and use made of the property and resources which the husband had at the commencement of cohabitation, dwarf the contributions made by the parties by personal efforts or exertion during cohabitation. Even so, the wife’s 25 per cent entitlement by virtue of those efforts translates in monetary terms as $325,000.

The post separation period

1. The post separation period ought not, in the Court’s view, alter the entitlements of the parties as at the date of their separation.

2. To the extent that the husband had, as he undoubtedly did, more available to him by way of property, income and capital in the post separation period than did the wife, it was largely referrable to the assets which he brought to the cohabitation and/or the accretion of such assets or their value subsequent to the commencement of cohabitation. Moreover, as is not in doubt, the benefits received by the husband were referrable to the work which he continued to do, as a commission livestock buyer and farmer and grazier.

3. The evidence does not establish that the husband has failed or neglected to meet his legal obligations to the wife in the post separation period. To the extent that the husband has provided capital to the wife in that period, such capital has not been reflected in the balance sheet for the purpose of determining the dispute between the husband and the wife. The husband has paid substantial interim spousal maintenance as determined by a court.

4. To regard either party’s contribution based entitlement as being enhanced by reference to the post separation period would not in the Court’s view be justified.

Section 90SF(3)

1. Albeit by reference to a substantially larger asset pool, Counsel for the wife sought a 5 per cent adjustment by reference to the parties’ needs and financial resources. That adjustment was predicated on the wife’s contributions being assessed at 40 per cent of that much larger net asset pool.

2. Counsel for the husband fairly conceded that the wife would be “entitled to an adjustment in her favour”. In the Court’s view, the wife is entitled to a substantial adjustment by virtue of the disparity of financial resources of the parties. It is relevant in this context to recall that, albeit not sought by him, the Court has concluded that the husband has a life interest in valuable income producing assets.

3. Sensibly, neither Counsel for the wife nor Counsel for the husband referred in any detail to more the provisions of s 90SF(3) of the Act, save to the extent revealed earlier in these reasons. Although not exhaustive of a just and equitable determination pursuant to s 90SM(3), regard to the provisions of s 90SF(3) are instructive in determining of a just and equitable resolution.

4. The Court has earlier, in relation to its assessment of contributions, considered matters falling within the ambit of s 90SM(4). So far as s 90SF(3) is concerned, the Court has earlier referred to the ages and states of health of the parties, and to their income property and financial resources, as well as their physical and mental capacity for appropriate gainful employment.

5. The evidence does not suggest that the wife has any significant capacity for earning, whilst the husband has the capacity to earn as a commission livestock buyer, livestock dealer, farmer and grazier. The accounts for the enterprises through which the husband operates, or with which he is associated, suggest that the husband’s capacity is and will continue to be significant. This factor calls for an adjustment, the issue is how much it should be.

6. Section 90SF(3)(c), (d), (e), (f) are not relevant. There is nothing to suggest that either party will not have a standard of living which “in all the circumstances is reasonable” once the Court’s orders are made. Section 90SF(3)(j) is not relevant, nor is s 90SF(k). The evidence does not establish either that the husband’s capacity to earn has been enhanced by the duration of the de facto relationship or that the earning capacity of the wife has been diminished over that period.

7. The Court concludes that the wife’s contribution based entitlement should be adjusted by approximately 15 per cent by virtue of the disparity of financial resources, both in terms of income and property, which the evidence reveals. Given the respective positions of the parties at the commencement of their cohabitation, and absence of any evidence that the duration of the cohabitation adversely affected the earning capacity of the wife, it would be unfair to the husband to simplistically have regard to the disparity of income and assets as between the parties, and adjust by reference to that disparity without regard to their financial positions at the commencement of cohabitation, and the Court’s findings with respect to the impact of those initial contributions during the parties’ cohabitation.

8. The Court is obliged to consider, particularly for the purpose of determining a just and equitable division of the property of the parties, the impact of any order which it proposes making. As is not in doubt, in this case the wife will receive, whether by way of cash payment from the husband, or by virtue of a splitting order with respect to the husband’s superannuation entitlement, cash in the sum of $500,000, or the ability to receive that amount in cash. The monies receivable by the wife are thus risk free. The property retained by the husband, although underpinned by valuable real and personal property, is subject to the climate and market risks which attend all agricultural production. Conversely, other than by borrowings to an extent which the evidence reveals will not jeopardise the asset base of the husband and the son’s rural enterprises, the wife’s entitlement can be substantially satisfied by utilising the cash reserves of the superannuation fund.

9. Although the High Court decision in Stanford related to a marriage, and facts which were materially different to those of the present case, the wording of s 90SM(3), which clearly applies to the current dispute, is identical with the wording of s 79(2), which applied in Stanford.

10. Having regard to the Court’s findings, to make an order altering interests in the property of the parties to the marriage would be unconscionable as it would result in the wife, who has been found to be entitled to receive approximately $520,000, receiving nothing more than her superannuation entitlement. Albeit disputing the quantum of such alteration, the husband and his learned Counsel invited the Court to make an alteration of interest in the husband’s property. In the Court’s view, to make the order proposed would be just and equitable.

Proposed orders

1. So far as the dispute between the husband and the son is concerned, the Court has earlier indicated its conclusion with respect to the real estate of the partnership and the corporation, save for the real estate held by the corporation as trustee for the superannuation fund.

2. The Court will make a declaration in the terms earlier indicated with respect to the farming property held by the partnership and the corporation. It may be that, in terms not hitherto suggested, the husband and the son wish to have more specific or different orders with respect to those properties. Provided that the wife’s ability to recover her entitlement is satisfied, so doing would not be to the wife’s detriment.

3. Given the nature of the husband’s interest in the partnership and the corporation, as the Court has found it, enforcement of the wife’s entitlement, were that to prove necessary, may however be problematic for the wife if the husband and son were at liberty to alter the terms of the declaration which the Court proposes to make.

4. On balance, and without suggesting that it is a perfect solution, the preferable approach would appear to be to make a splitting order in the wife’s favour applying the base sum of $500,000. That would create an interest in favour of the wife in the superannuation fund. As is not in doubt, once awarded, the wife is entitled to realise that entitlement from the fund.

5. Given the intermingling of property between the husband and the son’s entities, it ought not be difficult for the superannuation fund to raise the necessary $287,000 to satisfy the wife’s entitlement. Whilst it appears not to be in contest that the interim spousal maintenance order in favour of the wife should continue until the wife receives the whole of her $500,000 entitlement, the evidence comfortably satisfies the Court that, unless and until the wife receives such sum, she will continue to be unable to support herself without the benefit of the interim spousal maintenance order, and the Court will so order.

I certify that the preceding two hundred and fifty-six (256) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman delivered on 5 April 2013.

Associate:

Date: 05.04.2013