SUPREME COURT OF QUEENSLAND
CITATION:
Hinrichsen v Hinrichsen [2025] QSC 108
PARTIES:
NEVILLE WILLIAM HINRICHSEN
(plaintiff and defendant by counterclaim)
v
DAVID BAILEY HINRICHSEN(defendant and first plaintiff by counterclaim)
HINRICHSEN PASTORAL PTY LTD ACN 079 049 773
(second plaintiff by counterclaim)
FILE NO/S:
565/20
DIVISION:
Trial Division
PROCEEDING:
Trial
ORIGINATING COURT:
Supreme Court at Rockhampton
DELIVERED ON:
21 May 2025
DELIVERED AT:
Rockhampton
HEARING DATE:
24, 25, 26, 27, 28 March 2025 and 4 April 2025
JUDGE:
Crow J
ORDER:
The Court will hear from the partis as to the precise form of relief and as to costs.
CATCHWORDS:
TRUSTS — COMMON INTENTION CONSTRUCTIVE TRUST — whether the plaintiff as registered owner of a rural property held a half interest as constructive trustee for his brother — whether express or implied common intention that property held on trust — consideration of relationship between common intention constructive trust and estoppel
EQUITY — TRUSTS AND TRUSTEES — CONSTRUCTIVE TRUSTS — JOINT ENDEAVOUR — where the plaintiff and first defendant engaged in joint venture in a family rural enterprise — where parties had on their separate properties trust owned cattle and plant and equipment — whether unconscionable for one party to retain the benefit of trust property and cattle sales
EQUITY — FIDUCIARY DUTIES — GENERALLY —whether receipt and holding of trust funds into a non-trust owned bank account preventing the payment of outstanding debts owed by a trust amounts to breach of fiduciary duty
Corporations Act 2001 (Cth), s180, s181, s 182, s 1305, s 1317E, s 1317H
Evidence Act 1977 (Qld), s 84
Land Act 1994 (Qld), s 301, s 302, s 325
Limitations of Actions Act 1974 (Qld), s 10, s 13, s 27, s 35
Property Law Act1974 (Qld), s 10, s 11
Trusts Act 1973 (Qld), s 96Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588
Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd [2015] VSCA 9
Australian Karting Association Limited v Karting (New South Wales) Incorporated [2022] NSWCA 188
Bank of New South Wales v Brown (1982) 151 CLR 174
Bijkerk Investments Pty Ltd v Bikic Pty Ltd [2020] NSWSC 1336
Bosanac v Commissioner of Taxation (2022) HCA 34
Brackenridge v Bendigo and Adelaide Bank Ltd [2021] SASCA 129
Breskvar v Wall (1971) 126 CLR 376
Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165
Clayton v Clayton [2023] NSWSC 399
Doolan v Doolan [2023] VSCA 136
Farrah Constructions v Say Dee Pty Ltd (2007) 230 CLR 89
Franklin's Pty Ltd v Metcash Trading [2009] 76 NSWLR 603
Frazer v Walker (1967) 1 AC 569
Galati v Deans & Ors [2023] NSWCA 13
Joudo v Joudo [2024] NSWCA 258
Kerr v Baranow [2011] 1 SCR 286
Koprivnjak v Koprivnjak [2023] NSWCA 2
Love D&V XOXO Pty Ltd (Receiver and Manager Appointed) v Vlahos [2025] NSWSC 230
McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579
McDonald v Schinko Australia Pty Ltd [1999] 2 Qd R 152
Nathan v Williams [2020] QCA 138
Nolan & Ors v Nolan [2015] QCA 199
Oughtred v Inland Remedy Commissioners (1960) AC 206
Presbyterian Church (NSW) Property Trust v Scotts Church Development Ltd (2007) 13 BPR 24, 969
United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2018] VSC 347COUNSEL:
D R Cooper KC for the plaintiff
D T Forbes with AR Hellewell for the defendant
SOLICITORS:
Edgar & Wood for the plaintiff
Connie Navarro Legal for the defendant
Introductions
Durrandella is a rural property of 25,700 hectares, situated approximately 50 km south of Alpha on the Alpha-Tambo Road. Christen Frederik Hinrichsen acquired the property in 1925.
On 5 November 1995, Christian Frederick Hinrichsen and his son Henry Neville Hinrichsen were registered as the co-lessees of Durrandella. Henry Neville Hinrichsen, commonly referred to by the parties as Mr Hinrichsen Senior, was born on 29 January 1914 and passed away on 13 September 2012. Mr Hinrichsen Snr was married to Jean Charlotte Hinrichsen, who is currently 87 years of age. Mr Hinrichsen Snr and Mrs Hinrichsen have five children: two sons, the plaintiff Neville William Hinrichsen and the defendant David Bailey Hinrichsen, and three daughters.
After Christian Frederick Hinrichsen passed away, Mr Hinrichsen Snr became the sole lessee of Durrandella on 27 July 1973. Neville was then aged 6 years of age having been born 26 November 1966. Neville is now 58 years of age. David was 3 years of age when his father became the sole lessee of Durrandella as David was born 6 July 1970. David is now 54 years of age.
Neville has lived the whole of his life on Durrandella, apart from five years between 1979 and 1984 when he received education at the Rockhampton Grammar School and the Emerald Agricultural College.
Prior to the year 2000, David had lived most of his life on Durrandella. David did leave Durrandella for several years for boarding school in Rockhampton and then TAFE and completed his mechanical apprenticeship in Emerald. David returned to Durrandella in 1991 and remained there for a further nine years until the year 2000. Apart from operating Durrandella for minimal wages, Neville and David conducted a regrowth control contracting business in partnership between 1994 and 1999, as well as a machinery hire business.
Francis John Houlihan is a chartered accountant who retired in August 2024 after 42 years of practice, specialising in rural practice. Mr Houlihan was a member of the Emerald accounting firm Harris, Houlihan, Holzwart, which was later incorporated to become HHH Partners Pty Ltd.
Prior to 1997, the cattle grazing business upon Durrandella was conducted by Mr Hinrichsen Snr and Mrs Jean Hinrichsen as a partnership.
Nineteen ninety-seven was an important year for the Hinrichsen family business. David alleges that it was in the first half of 1997 that the Durrandella Succession Agreement or arrangement came into existence. David alleges that the Durrandella succession agreement is an oral agreement entered into in the first half of 1997 that provided for the property to be left equally to Neville and David on the basis that they would continue to work the property full-time. David alleges on that basis that Neville and David would each receive a half share of Durrandella and that they would otherwise be excluded from obtaining any share of the estate of Mr Hinrichsen Snr when he passed away. The existence of the Durrandella Succession Agreement is the principal factual dispute in this case and will be addressed below. It is sufficient to note Neville does not deny that there were discussions and planning but he denies the existence of the Durrandella Succession Agreement.
On 27 June 1997, a Deed of Trust for the Hinrichsen Pastoral Trust was executed with Mr Houlihan as the settlor. The Trust deed provided for Mr Hinrichsen Snr, Mrs Hinrichsen, David, and Neville to become the appointors for the Trust, for Hinrichsen Pastoral Company Pty Ltd (‘the company’) to be appointed as Trustee and for Mr and Mrs Hinrichsen, Neville, and David to become the primary beneficiaries and fixed beneficiaries. The fund of the Trust included the original settlement sum of $10 and other money or property vested in the Trustee. The deed included a perpetuity date, which was 79 years from the date of signing of the deed, and the usual types of provisions in Trust deeds. Mr and Mrs Hinrichsen transferred all of their partnership assets, all station stock, plant, and equipment to the Trust.
On 25 October 1997, Mr Hinrichsen Snr executed a will (leaving Durrandella to his sons) and executed an option to Neville and David to jointly to purchase Durrandella for the sum of $1. From 27 June 1997, Neville and David continued to work full-time in the business conducted by the Trust.
Neville alleges, that sometime in 1999, it was agreed between Mr Hinrichsen Snr, David, and Neville that Durrandella could not support three families, and so it was agreed that Neville and his family would remain on Durrandella, and another property would be found for David to work.
David alleges there were several variations to the Durrandella Succession Agreement between 1998 and 20 November 2000, which will be discussed below. David alleges, and I accept that in July 2000, Neville and David inspected Yappar River and Ella Vale stations, which were properties located 224 km south-east of Karumba's live export port and over 1,000 km from Durrandella.
David alleges,[1] that the oral offer to purchase Yappar River and Ella Vale was made by both Neville and David. David’s evidence is that before the oral offer was made that he and Neville agreed that Neville would run Durrandella station, while David would run Yappar River and Ella Vale stations.
[1]T2-18, line 11.
David's evidence[2] is that before a contract was signed that there was a meeting at the office of Mr Houlihan. Mr Houlihan discussed that if any entity purchased the property and later on the property was transferred to David, the Hinrichsens would be paying two lots of stamp duty on those transfers. Mr Houlihan advised it was beneficial to the Hinrichsen family to have the Yappar River and Ella Vale properties purchased solely in David's name to avoid double stamp duty. David’s evidence[3] is that all present at the meeting took Mr Houlihan’s advice and it was on that basis that David signed the agreements to purchase the Yappar River and Ella Vale on 11 September 2000. Importantly, the contract was signed by Mr Hinrichsen Snr, Mrs Hinrichsen, Neville and David and bears the seal of the family company. The contract at pages 462 to 473 (Exhibit 1) provided for David to acquire the property for $850,000 and the family company to acquire all other assets (mainly 3,500 cattle) for $650,000. The contract settled in November 2000.
[2]T2-20.
[3]T2-20.
A Deed of Assignment of 7 November 2000 came into existence to alter the Durrandella Option Agreement of 25 October 1997 to allow Neville to purchase Durrandella on his own for $1. Neville exercised the option on 13 December 2004 and Mr Hinrichsen Snr signed the transfer of the lease to Neville.
Finally, on 17 December 2004, the transfer of Durrandella was lodged. On 17 January 2005, David became the sole registered lessee and sole registered permittee in respect of Durrandella.
On 3 January 2005, that is, soon after Durrandella was transferred to Neville, Mr Hinrichsen Snr redrafted his will, excluding his sons from his estate to the benefit of his daughters. On 13 September 2012, Mr Hinrichsen Snr passed away, and probate of his will was granted on 10 December 2012.
Neville asserts that with the registration of the transfers and of the lease and permit to occupy Durrandella, he is the sole beneficial owner of Durrandella and has been since 17 January 2005.
David alleges that as a result of the Durrandella succession agreement or arrangement, Neville and he are equal owners of three properties: Durrandella, Yappar River, and Ella Vale and equal owners of all of the plant and equipment and stock, and have equal liability for the debt upon the properties.
The most important document in the case, the Deed of Assignment of 7 November 2000, was signed at or about the time of the acquisition by David of Yappar River and Ella Vale. David argues that the coincidence in time between, the entering of the Deed of Assignment and the acquisition of Yappar River and Ella Vale by David strongly suggests that the Deed of Assignment was entered into reflecting the agreed terms of the varied Durrandella Succession Agreement, namely that in the long term, Neville would remain living on and running Durrandella, and David would remain living on and running Yappar River and Ella Vale but all properties where equally beneficially owned by Neville and David.
On 2 June 2020, Neville filed an originating application seeking a declaration that he was the “sole absolute” owner of Durrandella. As this was disputed by David. Orders were made on 29 July 2020, requiring Neville to file and serve a statement of claim seeking his declaration.
The last iteration of the pleadings, the amended statement of claim filed 29 August 2024, the amended defence and amended counterclaim filed 30 September 2024, the second amended reply to the further amended answer to the counterclaim filed 7 February 2025 and the amended reply to the amened defence filed 21 March 2025 raises many issues. Firstly, there is a substantial dispute of fact as to whether the Durrandella Succession Agreement or arrangement alleged by David did exist. The second issue involves several questions of law which arises only if it is determined that the Durrandella Succession Arrangement or agreement did exist. The third issue is the claim for debt and the fourth issue is the derivative action brought by the second plaintiff by counterclaim against Neville for breach of his duties as a director.
The Durrandella Succession Arrangement
The principal factual issue to be decided in the trial is whether the Durrandella Succession Arrangement exists as alleged by David or does not exist as alleged by Neville. I accept the submission made in paragraph 1 of Neville’s outline of argument (Exhibit 196) that “the resolution of this matter will be determined by whether the Court accepts the evidence of the plaintiff or defendant”.
The original Durrandella Succession Agreement is the subject of paragraph 14 of the amended counterclaim (without inclusion of the particulars) which alleges as follows:
“14.In or about 1997, Mr Hinrichsen Snr, Mrs Hinrichsen, the plaintiff and the defendant came to the following agreement, alternatively reached the following understanding, alternatively made the following arrangement, concerning the succession to and future management of Durrandella:
(a)The plaintiff and the defendant would continue to work in the cattle station operations of Durrandella full time and in return:
(i) the cattle station operations of Durrandella and the assets used therein would be managed by Mr Hinrichsen Snr, Mrs Hinrichsen, the plaintiff and the defendant jointly with income and profits to be shared between them using such legal structures as they may be advised;
(ii) Mr Hinrichsen Snr and Mrs Hinrichsen would ultimately withdraw from the management of the cattle station operations and from receiving profits generated by it whist retaining the right to reside in their homestead at Durrandella;
(iii) Durrandella would be transferred to the defendant and the plaintiff in equal shares before Mr Hinrichsen Snr died; and
(iv) The defendant and the plaintiff would ultimately have transferred to them in equal shares the stock and other assets associated with Durrandella.
The Durrandella Succession Arrangement was oral in the first half of 1997 but on or about late June 1997 part of it was placed in writing in the form of the Deed of Trust of the Hinrichsen Pastoral Trust and the Option pleaded in paragraph 16 below.
(b)in recognition of the matters stated in sub-paragraphs (iii) and (iv) above, the defendant and the plaintiff would otherwise be substantially excluded from Mr Hinrichsen Snr’s will in favour of their sisters; (collectively the “Durrandella Succession Arrangement”).”
David's claim, as set out above, is that the Durrandella succession agreement was oral for the first half of 1997, but in late June 1997, it was partly placed in writing in the form of the Deed of Trust of the Hinrichsen Pastoral Trust and the Durrandella Option Agreement of 25 October 1997. Accordingly, as alleged in paragraph 14(a)(iii), the agreement alleged was to the effect that Neville and David would continue to work Durrandella on a full-time basis, and Durrandella would be transferred to Neville and David in equal shares before Mr Hinrichsen Snr died.
The allegations of the agreement being partly in writing in the form of the Hinrichsen Pastoral Trust deed and the Option Agreement support the allegations of David as to the existence of the Durrandella Succession Arrangement. However, as important parts of the agreement were said to be oral, then the accuracy, reliability, and importantly, credibility of Neville and David is an important issue at trial.
I was impressed by the evidence of David. David was subject to an aggressive and lengthy cross-examination and answered questions logically and was largely consistent in his answers. As discussed below in detail, although Neville was subject to an even lengthier cross-examination, I consider his evidence to be in many parts illogical and inconsistent. David's evidence has the support of the evidence of Mr Frank Houlihan and also his sister, Ms Heather Sanders.
Where there is a conflict between the evidence of Neville and David, I prefer David's evidence as representing the truthful and reliable account of the events that occurred over many years. David made concessions in his cross-examination, such as not understanding what was meant by the term “perpetuity date”. As discussed below, Neville found himself in the contradictory position of arguing that there was no Durrandella succession agreement or arrangement, whilst conceding that most of the terms pleaded in paragraph 14 of the amended counterclaim were agreed.
In particular, at the time of the Durrandella succession agreement in 1997, Neville expressly agreed with the terms alleged in paragraph 14(a)(i), (ii), (iii), and (iv) and paragraph 14(b).[4] Indeed, in terms of paragraph 14 of the amended counterclaim, it was only a particular alleging Mrs Hinrichsen acted as an intermediary and the termination clause that were objected to by Neville.
[4]T4-4 to T4-5.
Mr Hinrichsen Snr’s 1996 will (Exhibit 17) left his estate to his wife, Mrs Hinrichsen. Although I accept that Neville may have not read the will, I consider it highly probable that he was aware of its contents. This rightly created in Neville's mind a lack of security for himself and his own young family and explains the background for the acceptance of the evidence of David as to the terms of the Durrandella Succession Arrangement. The timing is also important insofar as the Deed of Trust for the Hinrichsen Pastoral Trust came into existence on 26 June 1997, and soon thereafter on 25 October 1997, two important documents are executed on the same day: the Durrandella Option Agreement and Mr Hinrichsen Snr’s 1997 will.
By his will executed on 25 October 1997, Mr Hinrichsen Snr did alter his will in terms of paragraph 14(b) of the Durrandella Succession Arrangement, that is by leaving Durrandella to his sons and the balance of his property to his daughters. Mr Hinrichsen Snr had also provided for his wife a significant interest in the assets of the Hinrichsen Pastoral Trust, in addition to the right to reside upon Durrandella. It seems therefore, that the original oral succession agreement or arrangement had been fully put into place in writing via the Hinrichsen Pastoral Trust, the Durrandella option agreement, and Mr Hinrichsen Snr’s will of 25 October 1997. These actions support David’s evidence.
I accept the evidence of Ms Sanders, the sister of Neville and David, that she had a series of conversations with her late father about the future of Durrandella. I accept Ms Sanders' evidence that the first conversation was in the 1980s, that Mr Hinrichsen Snr told Ms Sanders that Durrandella was going to go to Neville and David.[5] I accept Ms Sanders' evidence that in about 1988, Mr Hinrichsen Snr again said to her that the property of Durrandella was to be left to Neville and David. In the February of 2012, that is, several months before Mr Hinrichsen Snr passed away, Mr Hinrichsen Snr and Ms Sanders had a conversation in which Ms Sanders alleges, and I accept, that Mr Hinrichsen Snr said that “There wasn’t an exit strategy put in place because there was nothing that they had received advice around, and that the family understanding and agreement was that the boys would receive everything equally.”[6]
[5]T3-5, line 45.
[6]T3-10 lines 43 to 44.
I accept the evidence of Ms Sanders. I consider it to be not of great relevance insofar as it establishes the term alleged in paragraph 14(a)(iii) of the Durrandella Succession Agreement, as this was both conceded by Neville and, in any event, was placed in writing in the Trust documents, the option document, and Mr Hinrichsen Snr’s 1997 will. The only particular relevance of Ms Sanders' evidence is that it constitutes evidence of Mr Hinrichsen Snr’s acceptance of a family agreement or arrangement in 2012, which was some dozen or so years after the deed of assignment of the option on 7 November 2000. This evidence does support David's case that the execution of the deed of assignment of the option agreement from Neville and David to Neville solely was not intended to deprive David of a beneficial interest in Durrandella. That is, the common intention was that Neville and David would equally own all the rural properties continued after the Deed of Assignment was signed on 7 November 2000.
I accept the evidence of Francis John Houlihan, a retired accountant of HHH Partners. Mr Houlihan's evidence was that he could recall conversations with Mr Hinrichsen Snr about succession planning for Durrandella, in which Mr Hinrichsen Snr said that he wanted the property to go to his two sons, David and Neville.[7] Mr Houlihan confirmed that the property was never going to be transferred into the Trust, but rather the land was always going to go to Mr Hinrichsen's two sons, and the intention was for the Trust to own only the plant, equipment, and cattle. That is the way in which the partnership and the Trust accounts were conducted.
[7]T3-30, lines 15 to 20.
Mr Houlihan also explained that if Durrandella was transferred into the Trust, that would make it impossible for either David or Neville to own the land at any point in the future, and that was the reason why all real estate was kept out of the Trust.[8] I accept Mr Houlihan's evidence[9] that it was Mr Houlihan who pointed out to Mr Hinrichsen Snr, that whilst Durrandella property was a good property, it could support one primary family and some very young families, but it was not big enough to support three adult families, and so it was necessary, if Mr Hinrichsen Snr wished to have a rural property for his sons, that the Hinrichsen family acquire more rural property.
[8]T3-31, lines 30 to 35.
[9]T3-33, lines 7 to 16.
I accept that that is the background to the acquisition of further rural properties by the Hinrichsen family. Mr Houlihan's evidence is that he discussed Mr Hinrichsen Snr’s plan to purchase more properties with Neville and David, and that Neville and David told Mr Houlihan that they had been looking for suitable properties for quite some time and could not find one, and “They’d finally found these two properties, which are operated as one, and that they intended to buy them in joint names.”[10] [my underlining]
[10]T3-33, lines 32 to 33.
I view the evidence of Mr Houlihan as important, as it affirms that the arrangement for the Croydon properties was that it was intended that Neville and David would purchase them jointly, and that the reason why they did not do so was Mr Houlihan's recommendation that there was a probability of additional stamp duty if that occurred, and it would be better to place the land directly into David's name.
I accept Mr Houlihan's evidence that Mr Hinrichsen Snr, Neville, and David attended in his office and they had discussions and reached an agreement concerning their affairs. Although Mr Houlihan recommended that the agreement be documented, that did not occur. After the discussions were had about how the properties would be managed, discussion was held as to what was to occur with respect to the ending of the relationship. Mr Houlihan's evidence was:[11]
“That when both of them were comfortable with the level of debt, and that’s in relation to - so the whole process was all the assets were then owned, either in individual names, in the trust or still in Mr Hinrichsen's name, would be all added up, the debt taken off, division of property 50/50, and if the debt level was too high, then an adjustment would have to be made between the two parties so that they ended up with a similar amount of net assets.”
[11]T3-34, lines 42 to 48.
I accept that Neville and David were part of this discussion with Mr Hinrichsen Snr, and that the agreement between the parties was as deposed by Mr Houlihan, which supports the existence of the Durrandella Succession Agreement as alleged in paragraph 14 of the amended counter claim and the later amendments.
One of the significant difficulties with Neville's evidence, which he appeared to be completely unaware of, is that it was often contradictory. A significant contradiction is that it is Neville's pleaded case that there was no Durrandella succession agreement or arrangement. Yet in his evidence, he has agreed to all terms of the succession agreement with the exception of the termination clause and the intermediary suggestion. Despite agreeing to all of the significant terms, Neville did contradict himself by stating “I do not agree to this family agreement that you keep referring to.”[12]
[12]T4-9, line 29.
Neville agreed[13] that there were discussions between Mr Hinrichsen Snr, Neville and David that Neville and David would become the next and equal owners of Durrandella after the Hinrichsen Pastoral Trust was drawn up “…at a later date”.
[13]T4-9, lines 30 to 35.
David had sworn evidence that it was Neville who brought up the issue of the future of Durrandella, as Neville, with his young family, required more security. That part of David's evidence was not the subject of any cross-examination. Neville's evidence commenced[14] with him alleging that it was his father, Mr Hinrichsen Snr, who raised the issue with Neville and David about the management and farming operation of Durrandella. Neville[15] said that in early 1996 he was looking for more security. I accept that it was Neville who brought up the issue about Neville and David managing, farming and succeeding to Durrandella, and not Mr Hinrichsen Snr.
[14]T3-100.
[15]T4-4.
Regardless of who raised the issue, Neville did agree that in discussions between his father, mother, himself and David, it was agreed that Neville and David would become equal partners and equal profit sharers with their parents in Durrandella. I accept Neville and David's evidence that the Hinrichsen family attended at a succession planning seminar in Alpha conducted by Mr Frank Houlihan in 1996 or 1997, then made arrangements to attend upon Mr Houlihan in his office at Emerald. I accept Neville's evidence that it was Mr Houlihan's idea “to set up so that everyone could become equal – um – directors and beneficiaries … and bring Mum and Dad's cattle grazing business into Hinrichsen Pastoral – becomes Hinrichsen Pastoral, for us all to be moving forward in that fashion.”[16]
[16]T3-101, lines 15 to 20.
Neville's evidence-in-chief was that after the setting up of the Hinrichsen Pastoral Trust, there was a discussion about introducing an option to give a future transfer of Durrandella[17]. Neville's evidence is that Charles Lumsden Solicitor explained each term of the option to purchase Durrandella in his Emerald office, and after the explanation, all parties immediately signed the option. Neville's evidence is that he did not know that his father executed his 1997 will on the same day, that is, 25 October 1997. I do not accept Neville's evidence in this regard.
[17]T3-103.
I do not accept Neville's evidence that he did not know of the contents of his father's will, given that he had expressed the view that he was concerned about his sisters challenging his father's will. This was also contradicted by paragraph 13(d) of Neville's amended reply to the amended defence, in which Neville positively asserted:
“…that he lived and worked on “Durrandella” and accepted the minimal wage paid by his parents because during his lifetime the late Mr Hinrichsen Snr had told him (the plaintiff) and he (the plaintiff) believed it to be true and acted upon the faith of the representations, and to his own detriment and that of his own family, that he was to have “Durrandella” as his own property.”
Neville’s allegation in paragraph 13(d) is not the subject of any of Neville's evidence and is also contradicted by of Neville's evidence. In view of Neville's admission that he wanted security for himself and his family, his unproven allegation in paragraph 13(d) that Mr Hinrichsen Snr had promised that Neville alone was to receive Durrandella as his own property, it seems to me to be highly improbable that Neville would not have had any discussion with his father, Mr Hinrichsen Snr, as to the contents of his will.
One of the troubling features of Neville’s evidence was his emphatic declaration that Exhibit 5, the option to purchase, was signed in the offices of Charles Lumsden Solicitor in Emerald immediately after Mr Lumsden had taken “us through the document”.[18] An outstanding feature of Exhibit 5, the option to purchase of 25 October 1997, and Exhibit 18, the will of Mr Hinrichsen Snr of 25 October 1997, is that Michael Vincent Horlock of Sky Alpha was the witness to each of the signatures on both exhibits with Ethel Horlock being the other witness who signed Mr Hinrichsen Snr’s will of 25 October 1997.
[18]T3-103, line 29.
After it was pointed out to him that Michael Horlock was the signature to the deed of option only then did Neville concede “Michael Horlock being at Durrandella just signing papers”,[19] and that the option was signed at the kitchen table at Durrandella.[20] Neville also confirmed that Mr Lumsden did not come to Durrandella for any professional business.[21]
[19]T4-9, line 44.
[20]T4-10, line 1.
[21]T5-8, line 11.
In view of the witnesses’ signatures of Mr and Mr Horlock upon the documents of 25 October 1997 and Neville’s evidence that the option was signed on the kitchen table at Durrandella, I reject Neville’s evidence at T3-103 that the option was signed in Charles Lumsden’s office in Emerald after Charles Lumsden had taken the Hinrichsen family through the document and explained every term, after which the family immediately signed the document.
Whilst it is possible that Neville had simply made an error in his recollection, as for example, Exhibit 11 the deed of assignment of 7 November 2000 was signed in Charles Lumsden’s office, I consider it more likely that Neville’s original evidence as to the execution of the option contract at T3-103 was deliberately false. This, together with the contradictions in Neville’s evidence does lead me to conclude, together with the high credibility of David’s evidence that in the areas where there is conflicting evidence, I prefer the evidence of David as being truthful and accurate over the evidence of Neville.
Neville’s evidence-in-chief was that towards the end of 1999, he and David did discuss Neville’s intention to stay on Durrandella. Rather than being asked what was said, Neville was asked what was David’s attitude towards Durrandella, to which Neville replied “David didn’t particularly think much of Durrandella at all, and he was more than happy to move off Durrandella to – to some - another block… He used to say it was a shit block”.[22]
[22]T3-107, line 11 and 18.
I accept Neville's evidence that there were discussions in 1999 about the future of Durrandella and the need to purchase another block of land. However, I do not accept Neville's evidence that David did not think much of Durrandella, that he was more than happy to move off Durrandella, or that he thought it was a “shit block”.
I accept the evidence of David, as supported by Frank Houlihan, that the discussion for the purchase of another block arose out of the financial necessity to purchase another block because Durrandella could not support three families.
I do not accept Neville's evidence that David was happy to move away from Durrandella, nor that David did not think much of Durrandella, nor that it was a “shit block” as it was David's home. David, who was a trade-qualified mechanic, had significant opportunities to earn income as a mechanic yet left his trade to return to assist in the running of Durrandella. I cannot accept that David would have undertaken this course in life unless he was fond of his family's property, Durrandella. David had set his future course in agreeing to the establishment of the Hinrichsen Pastoral Trust, of which he was an equal beneficiary, an equal appointor of the Trust and an equal shareholder and director. It seems to me that by the time of the coming into effect of the Hinrichsen Pastoral Trust on 25 October 1997, David had committed his future to Durrandella and the family rural business at Durrandella.
It is common ground between Neville and David that in 1999, the family had accepted that Durrandella was not sufficient to support the Hinrichsen family, and so enquiries were made to purchase other properties. The adjacent property ‘Tarago’ owned by Reginald Nixon was too expensive,[23] and so Neville and David went on a road tour with a rural real estate agent. Neville and David looked at properties north of Barcaldine around Aramac, Muttaburra, south of Longreach, south of Winton and then up to north-east of Croydon, where they located Yappar River and Ella Vale.
[23]Tarago was sold for $3.45 million; see TB 8055.
Neville’s evidence was that it was David's decision to buy Yappar River and Ella Vale. I do not accept that. I accept that it was the equal decision of Neville and David, as both brothers were on a tour to find a suitable property to expand the Hinrichsen family's grazing business, and that business was agreed to be run by the Hinrichsen Pastoral Trust. After finding the property, Neville and David made an oral offer made at $1.5 million, and that oral offer was accepted.
Neville's evidence, which I accept in this regard, was that Mr Hinrichsen Snr, Neville and David, attended upon Frank Houlihan in his office in Emerald to discuss the prospective purchase. Neville's evidence was that it was Mr Houlihan’s advice was “That was where David was moving to, as his property. So it mainly made sense to put it straight into David's name from the beginning.” [24]
[24]T3-108, lines 36 to 40.
In my view, the words "in David's name from the beginning" are very important, as it tends to confirm David's case that Yappar River and Ella Vale were purchased by the Hinrichsen family to the benefit of both Neville and David equally. Neville then added that is what “we did”,[25] again an indication it was a joint decision. Neville said that it was done that way “just to avoid double stamp duty”.[26]
[25]T3-108, line 40.
[26]T4-18, line 27.
By his evidence, Neville has confirmed the evidence of Frank Houlihan and David that it was the original intention for the properties to be purchased in the joint names of Neville and David and that Frank Houlihan raised the issue of the additional payment of stamp duty if that structure of transaction were used. David also confirms Mr Houlihan's common sense view that in the long term, with Neville devoting his time, effort and life to the running of Durrandella, and David running Yappar River and Ella Vale, in the eventual agreed 50/50 dissolution, it was a very high probability that Neville would keep Durrandella and David would keep Yappar River and Ella Vale.
In those circumstances, Mr Frank Houlihan's advice to place the property in the name of David only, even though the property was beneficially owned by both David and Neville, would save a significant stamp duty.
The conversation and the acceptance of Mr Houlihan's advice is also important because it was made at a time when Neville and David had equal rights under the option to purchase. Given that David and Neville had an equal right to Durrandella under the option to purchase, and David would have the legal title solely to Yappar River and Ella Vale, and if the beneficial interests in Durrandella and Yappar River and Ella Vale were not taken into account, then there was a great inequality in the Hinrichsen family finances in David's favour, which, it is plain, was never intended by any party.
In my view, it is plain that Neville understood that the placing of the Croydon properties in David's name was a step taken to reduce stamp duty, but not to deny Neville an equal beneficial interest in the Croydon properties, just as David had an equal interest in Durrandella. In my view, this was clearly known to, accepted and understood by Neville.
In my view, this conclusion is fortified by Neville's evidence,[27] where Neville said that as a result of David acquiring or about to acquire the Croydon properties, Mr Hinrichsen Snr, David and Neville had a discussion about what should happen to the option to Durrandella, and that all three parties agreed that “once the settlement for Yappar River was made, then the option was transferred from David and I to myself.”
[27]T3-110.
In my view, this is again in keeping with Mr Houlihan's advice, that is, to have the Croydon properties in David's name and Durrandella in Neville's name so as to avoid the additional stamp duties if that process were not undertaken. Mr Hinrichsen Snr, Neville and David had agreed, at least from 1997, that Neville and David would be equal partners, equal owners and equal beneficiaries of the rural properties and cattle grazing operations conducted by the entire Hinrichsen family. The placing of the Croydon properties in David's name and Durrandella in Neville's name, I find, did not alter the agreement which had been reached.
If there was any intention by any party to alter the agreement, then that ought to have been the subject of a further discussions and agreement. That, according to Neville, did not occur, as Neville said there was not a great deal of discussion about the option at all.[28]
[28]T3-111, line 19.
Neville's evidence of the conversation between himself and David in 2010, in my view, also supports the existence of the agreement between Neville and David that Durrandella and the Croydon properties were owned equally by David and Neville. Neville's evidence is that in 2010, David visited Durrandella, and that during the visit, he brought up the fact that the coal mines might have been interested in Durrandella, and that:[29]
“…[H]e wanted me to go with him to a solicitor to get cut back into Durrandella for if there was any windfall from the mines, that he would benefit from that… And I said, well, there’s --- there’s no future of that because the coal mines have been and gone and there was --- they --- was nothing was found.”
[29]T3-113, line 23.
In my view, the 2010 conversation shows that it was David's position that he was an equal beneficial owner of Durrandella in 2010, and therefore was entitled to be “cut back into Durrandella” if there was some windfall from a mining company taking an interest in Durrandella. In my view, Neville's answer was telling. Namely, that he did not say that David did not have a beneficial interest in Durrandella. He did not say he could not be “cut back into Durrandella”, rather simply said the coal mines have been and gone and nothing was found.
In my view, Neville's response is consistent with Neville's understanding as to the existence of an agreement and common intention between Neville and David as to the equal beneficial ownership of Durrandella.
According to Neville, in the same visit in 2010, David mentioned that Frank Houlihan had told David that Neville was running a head of cattle of his own on Durrandella, and that David “just followed up himself by saying I am not sure why he brought that up, but I did not feel it was any of my business.”
That conversation is most curious. It would appear that the existence of the conversation was sought to be used in Neville's case to defend a claim that Neville had acted improperly in running his own cattle upon Durrandella. However, the conversation is equally likely to reflect an understanding that the brothers had that they were both able to run small personal herds on their respective properties, that is, outside of the auspices of the Hinrichsen Pastoral Trust.
Neville alleges that it was in 2014 that he had discussions with Frank Houlihan about terminating the Trust.[30] Neville alleges that Mr Houlihan advised that it was complicated. It would appear that Neville challenged this advice by questioning why it was complicated by saying “How is that? It is only land, and – ah – stock and plant”. To which Neville alleges Mr Houlihan said “Oh that is right. But that’s what we had – uh – was arranged originally, but David wants to include the value of the properties in the split-up.”[31] [my underlining]
[30]T3-113, line 46.
[31]T3-114, line 13.
Neville’s evidence in this regard, is also a contradiction, as Neville himself has expressed that the terminating arrangements between Neville and David ought not to be complicated because it is only a matter of splitting up the land, stock and plant, and reference to land can only be a reference to Durrandella and the Croydon properties. Furthermore, Neville's evidence of Mr Houlihan's reply stating “that was arranged originally” is confirmation of the agreement as alleged by David, and Mr Houlihan's answer that David wants to include the other properties, is again confirmation of David's position that the rural properties were always part of the assets jointly owned by Neville and David.
Neville and David are at least agreed that their relationship has been strained since 2014, and they have not spoken to each since their father's funeral. Although Neville said that he did not agree that the Durrandella Succession Arrangement was ever made,[32] in my view, his evidence is very much to the contrary.
[32]T3-115.
Neville’s evidence was that at some time after mid-1997, there were discussions between Mr Hinrichsen Snr, Mrs Hinrichsen, Neville and David. Discussions included Mr Hinrichsen Snr advising Neville and David that they would be inheriting Durrandella from him, and that Neville and David's sisters would receive all of Mr Hinrichsen's other property.[33]
[33]T4-4 to T4-5.
Neville’s evidence was that the discussions included Neville and David sharing the management and profits in Durrandella, and that “some sort of structure would be put in place to allow you and your brother to share profits equally…” with Mr Hinrichsen Snr and Mrs Hinrichsen.[34] The structure was to allow Neville and David to have an “equal say” in the management of the business at Durrandella.
[34]T4-5, line 5.
It was discussed that Mr Hinrichsen Snr and Mrs Hinrichsen would withdraw from the management of the business, but there was no timeframe put on the agreement that Mr Hinrichsen Snr and Mrs Hinrichsen would withdraw from the management of the business. Neville agreed that it was in 1997 that his parents, his brother and himself had a meeting with Mr Houlihan “about how to implement the arrangement that you just agreed would’ve been in place to share the profits and the management rights at Durrandella”.[35] [my underlining]
[35]T4-5.
After taking advice from Mr Houlihan, and on Mr Houlihan's recommendation, the business was thereafter placed into the Hinrichsen Pastoral Trust, with the deed being executed and the company being registered as Trustee of the Trust. Despite agreeing to the contents of the family agreement, Neville did state “I do not agree to this family agreement that you keep referring to.”[36]
[36]T4-9, line 29.
As discussed above the witnesses to the signing of the Deed of Option of 25 October 1997 were the same witnesses to the signing of Mr Hinrichsen’s Snr’s will on 25 October 1997. That is, they were the neighbours Mr and Mrs Horlock, and I accept Neville's evidence, that Mr and Mrs Horlock came over to Durrandella on 25 October 1997, sat at the kitchen table and witnessed those documents.[37]
[37]T4-9 to T4-10.
Neville described the discussion amongst family members that Durrandella was not generating enough income for all the people that were living there and the need to buy a further property as the family's “final discussion”.[38] As the Trust had been operating since October 1997 and completely running the Hinrichsen family grazing business on Durrandella, Neville's evidence that the family had intended that the business on the property purchased would be operated within the same structure, is important evidence.
[38]T4-16, line 10.
Importantly, as Neville confirmed,[39] at the point where the Hinrichsen family agreed to purchase more property, it was not decided “exactly who or which entity would be buying the new property”. Neville's evidence is also important insofar as it reveals that Neville accepted and agreed that as between himself and his brother David, each would receive an equivalent distribution of Hinrichsen Pastoral assets.[40] This follows from Neville's evidence that it was his belief, that the “Yappar River was equivalent to Durrandella”.[41]
[39]T4-16, lines 36 to 37.
[40]T4-16.
[41]T4-16, line 44.
Although it appears to be Neville's firm belief that Yappar River was equivalent to Durrandella in value, that is clearly incorrect. Although Yappar River and Ella Vale are very significantly larger parcels of land, they are, by the admitted facts (Exhibits 33 and 34), worth less than half the value of Durrandella. Accordingly, whilst I accept that it is Neville's strong belief that Durrandella and the combined Croydon properties are of equivalent value, I conclude that that view is quite wrong and highly unreasonable.
It would appear that it is this unreasonable view which is the genesis of the hostility between Neville and David, which has led to the breakdown of the Hinrichsens as a functioning family unit. As Neville said,[42] the purchase of the Croydon properties was to provide land “suitable for Hinrichsen Pastoral to operate a business on…”[43]
[42]T4-17, line 34.
[43]T4-17, line 36.
Importantly, Neville's evidence was that the oral offers to buy the Croydon properties were made by Neville and David through the agent, and the oral offer was accepted.[44] That is important because it shows that the original intention was that the Croydon properties were to be owned by Neville and David, and I would infer equally, as that had been the agreed family arrangement at that point.
[44]T4-18, line 10.
Neville then agreed that after leaving Yappar River and Ella Vale with an oral and unenforceable contract, that the next step was to arrange finance and get the lawyers and accountants involved. Neville expressly agreed that it was Mr Houlihan who suggested David was to become the buyer of the land. According to Neville, Mr Houlihan said “Seeing as David was --- figured the block was being for David’s future, that David’s name should be put on it right from the start … Just to avoid double stamp duty”.[45]
[45]T4-18, lines 23 to 25.
Neville then confirmed that he understood that if the property had been put in both brothers’ names initially and later transferred to David, that would create an extra stamp duty liability. Neville's evidence[46] was that the discussion in Frank Houlihan's office was that “when you and David eventually went your separate ways … that it was more likely that he’d end up with that property and more likely that, in the long run, that you’d end up with Durrandella”.[47]
[46]T4-18.
[47]T4-18, lines 35 to 40.
Importantly,[48] Neville did not dispute that the agreement between family members was that Neville and David were to be treated equally, and that was said as part of the discussions that at some undefined point in time in the future that Neville and David would go their separate ways. As Neville said, everything was equal at this stage at which the Croydon transaction was entered into.
[48]T4-18, lines 54 to 19.
Neville's evidence was that it was the intention of David and himself that there be an equal split only of the assets of the Hinrichsen Pastoral Trust, not of the land.[49] This cannot sit logically with Neville's evidence that “Everything was equal at that stage” unless it is accepted that Durrandella had an equivalent value to the Croydon properties,[50] which may be seen through the Notice to Admit Facts (Exhibit 33) and reply (Exhibit 34) to be plainly incorrect.
[49]T4-19, lines 4 to 5.
[50]T4-19, lines 1-2.
Neville was cross-examined upon this issue,[51] where it was pointed out that with respect to the contract for the sale of the Croydon properties, David had acquired properties for $800,000 and was subject to a $835,000 debt, whereas Neville had acquired Durrandella free of debt.
[51]T4-23 to T4-25.
Neville's answer to the obvious inequality was that “David was never expected to pay that debt though”.[52] Neville has accepted that the $835,000 must be repaid by the Trust and not by David personally, and it was a “position” that was never placed in writing.[53]
[52]T4-25, line 44.
[53]T4-27, lines 45 to 46.
Neville's best evidence[54] was that the discussions leading to the final agreement occurred between about August 2000 and the formalisation of the contract several weeks later, on 11 September 2000.
[54]T4-28.
Neville confirmed that he was concerned about his father's will being challenged if Durrandella were left to him through his father's will. At T4-29, with reference to trial bundle page 562, it was confirmed that it was Neville whose handwritten instructions authorised the solicitor, Mr Lumsden, to proceed to settlement for the purchase of the Croydon properties. This again is an indicator that the Croydon properties were not intended to be solely beneficially owned by David, but rather jointly owned equally by Neville and David. The formal contract to purchase the Croydon properties was executed on 11 September 2000, and the Deed of Assignment of the Option was executed on 7 November 2000.
It is a clear inference, and I do infer, that the placing of the Croydon properties in David's sole name and the assignment of the option agreement on 7 November 2000 were all carried out pursuant to the agreement between Mr Hinrichsen Snr, Mrs Hinrichsen, Neville and David, and with the continued family common intention, and as expressly agreed, that Neville and David would share equally in the Hinrichsen family rural assets, which were Durrandella, the Croydon properties and the assets of the Trust.
I accept Neville's evidence that the final discussion occurred in the period between the inspection of the Croydon properties in August 2000 and the final execution of the Assignment of Option Contract on 7 November 2000. Those discussions resulted in an oral agreement set out in paragraphs 14 and 20 of the Amended Counter Claim, with the exception of the issue of timing which Neville repeatedly claimed that no time frames were agreed.
Neville later contradicted himself,[55] when he alleged that it was agreed that David and he would split their assets equally after a period of 10 years of operations of the Hinrichsen Pastoral Trust. Mr Houlihan’s evidence[56] was that he did recommend a sunset clause of 10 years. Neville confirmed[57] that there was nothing said to David to suggest to David that when he signed the assignment of the option, he would lose his rights to Durrandella. Neville's evidence was, “I don’t know what he thought he was signing if he was not giving up his right to Durrandella … I don’t know what was said to him… I don’t know how you could have understood it any other way.” Neville's admission that he did not know what was said to David about giving up his rights to Durrandella means that the only evidence on this issue is the evidence of David.
[55]T4-32, lines 40 to 47.
[56]T3-34, line 12.
[57]T4-33.
As discussed above, I accept the evidence of David. Neville explained[58] that the several-year delay between the assignment of the option and his exercise of the option was a delay caused by a concern that stamp duty would be payable upon the exercise of the option. Importantly,[59] Neville described the 1997 agreement in terms of being an agreement whereby Durrandella was to be transferred from Mr Hinrichsen Snr to Neville, and I infer David, whether an option existed to purchase this property or not.
[58]T4-38.
[59]T4-49, line 12.
That, in my view, is confirmation of the 1997 oral agreement, which is antecedent to the option. Neville again,[60] confirmed that there was a discussion in which “the Croydon properties should be put in David's name to avoid later stamp duty.” That plainly is a part of the 2000 discussion leading to the 2000 agreement, and the emphasis was on the Croydon properties not being solely beneficially owned by David, but rather that the properties being “put in David's name” is, in my view, a clear indicator that the agreement between Neville and David was that all the rural properties would be equally beneficially owned.
[60]T4-40, lines 20 to 23.
Neville's confirmation,[61] that he did not expect to inherit any other property from his father is, in my view, also confirmation of the term of the 1997 and 2000 agreements entered into between Mr Hinrichsen Snr, Mrs Hinrichsen, David and Neville. This is consistent with the term alleged in paragraph 14(b) of the amended counterclaim.
[61]T4-41, line 1.
Neville's admission,[62] that the Croydon properties were to be repaid from Hinrichsen Pastoral funds is also an important admission by Neville. It is important because, as discussed below, Neville's actions of ceasing to graze the Trust cattle upon Durrandella, taking significant sums of money from the Trust, and continuing to draw a salary from the Trust whilst not doing anything for the Trust, did not allow the Trust to be in a position to repay the debt on the Croydon properties.
[62]T4-41, lines 17 to 20.
Although I do consider it to be illogical, I do accept that it was Neville's genuinely held view that “David was going to end up ultimately with as good or better deal than I got…”.[63] It is to be recalled that whilst the Deed of Assignment was executed on 7 November 2000, the option was not exercised until December 2004.
[63]T4-42, lines 14 and 15.
Neville was cross-examined about Exhibit 13, the Letter of Charles Lumsden, solicitor, of 28 November 2000.[64] The three-page letter dealt with the settlement of the Croydon properties and included on page three:
“I note that David and Neville have requested me to prepare an agreement for them concerning their rights subject to a forced sale of “Yappar River” and “Ella Vale” (it is noted that, pursuant to requirements of the Department of Natural Resources, the properties cannot be sold separately). I request that Neville and David make an appointment with me to discuss this matter further.”
[64]T4-42 to T4-43.
It is apparent that neither brother took up the opportunity to make an appointment to draft the agreement between Neville and David as to their rights should there be a forced sale of the Croydon properties. The letter contemporaneously sets out the common view of both Neville and David that they needed a written agreement to be prepared concerning their underlying rights subject to a forced sale of Yappar River and Ella Vale. As all of the property, plant, equipment and stock were owned by the Trust, the rights of Neville and David could only relate to the leases of the properties themselves. I view this as clear evidence of the understanding and state of mind of Neville and David in November 2000, that is, that both brothers understood that they were the owners, and I infer equal owners, of the Croydon properties, despite the Croydon properties being “placed” in David's name.
Neville confirmed[65] that David was not free to run the Croydon properties as he wished, but rather was obliged to conduct the business on behalf of the Hinrichsen Pastoral Trust. Although Neville accepted that David was obliged to conduct the business on behalf of the Hinrichsen Pastoral Trust, Neville also gave evidence that David could simply sell the land if he wished to, and do what he wished with his part of the family business.[66]
[65]T4-46, lines 1 to 3.
[66]T4-46.
Neville's answer in this regard is illogical. Neville had accepted that the endeavour to expand the family business by purchasing the Croydon properties was a long-term proposition, with Neville variously giving evidence that there was no time limit, or a suggested time limit of some 10 years. In view of the significant value of the over 3,500 head on the Croydon properties, it did not make any commercial sense to suggest that David could sell the Croydon properties after a short time. This would have been entirely disruptive to the business of the Trust being conducted upon the leases and in knowledge of the debt to PIBA and latter Rabobank being secured upon Durrandella.
There are significant admissions in the annual review statements signed by Neville and provided to Rabobank. Neville confirmed that it was his practice to complete those forms honestly.[67] Exhibit 35 is the annual review position statement signed by Neville on 1 June 2016, which nominates the property Durrandella as a Trust asset. It also includes $651,000 in a Rabo savings account as being Trust property, which it was acknowledged to be, with the exception that Neville had taken the money from the Trust’s Rabo account and placed it in his own account.
[67]T4-47, line 16.
Curiously, that 2016 statement only includes the 908 cattle upon Durrandella and not the over 3,000 head of cattle on the Croydon properties. That may have been a consequence of the fact that from 2014 Neville and David were not speaking to each other and only communicating through lawyers. The inclusion of Durrandella as a Trust asset is suggestive of the property being considered not to be solely owned by Neville. Page 287 has the retail trading stock balances for the Trust on hand at 30 June 2016, showing that 870 Trust cattle were upon Durrandella, which means there were 38 cattle at Durrandella which were not Trust property. The retail Trust account, page 208 from the Croydon properties, shows that at 30 June 2016, 3952 cattle were depastured upon the Croydon properties.
Exhibit 36 was accepted[68] to be the position statement of Neville and not the Trust, signed by Neville on 4 October 2016 and has figures handwritten by Neville, showing Neville's ownership of $425,300 worth of shares and $120,000 worth of superannuation, which were not Trust assets. In terms of the debt to Rabobank, Neville declared that he had $1,268,300 worth of assets consisting of cattle, plant, machinery, motor vehicles, savings account, shares and superannuation.
[68]T4-55.
Importantly, Neville admitted in cross-examination that,[69] he did place a handwritten value upon Durrandella of $6 million, but did not include that in the total assets owned by him. That is consistent with Exhibit 35, the annual position of the Trust, in which Neville had placed Durrandella in the Trust's assets. That is not an unequivocal declaration that the Trust was the owner of Durrandella, but rather that it was an asset owned for Trust purposes and as it was not Neville's personal asset, there is a strong inference that it was the asset of both Neville and David in accordance with the oral family agreement. This conduct, as well as the Trust paying the lease upon Durrandella and the rates for Durrandella for many years, are actions by Neville which were only consistent with the view taken by Neville at the time that Durrandella was equally the property of himself and his brother David, and to be used for the purposes of the Trust.
[69]T4-55.
Similarly, in Exhibit 37, the position statement of 8 July 2000, the property at Durrandella has no value placed upon it, suggesting it was not Neville’s asset nor an asset of the partnership of Neville and Mrs Annette Hinrichsen.
Neville was cross-examined[70] about the contents of an affidavit he swore in support of his application, filed 19 November 2024, to have a receiver appointed to the Hinrichsen Pastoral Trust. As recorded at T4-64, Neville had sworn in support of his application that the Trust had made losses in the last three financial years of 2022, 2023, and 2024.
[70]T4-61 to T4-103.
After having been shown the 2022 profit figures of the Trust at $138,122, Neville accepted that his declaration of losses in the last three financial years was untrue. Perhaps a more egregious breach was that Neville had sold all of the Trust cattle off Durrandella and built up his own private herd in partnership with his wife, and yet that was not the subject of any disclosure, and that, on any view, could not have but contributed to financial loss being suffered by the Trust. I accept that in paragraph 27 of his affidavit filed in support of his application to have the Trust wound up, Neville has misrepresented the true financial position of the Trust, and that is a matter against his credit. Neville made a further complaint that the money that was being held in the Trust was being depleted. However, as Neville admitted in cross-examination,[71] he had in fact taken that money and was holding it for the Trust and did not make this known in his affidavit.
[71]T4-65 line 40.
Neville was cross-examined upon his reply to paragraph 34A of the counterclaim, where Neville alleged that he had not received a distribution of profits from the Trust since 2019. That was demonstrated on the tendered documents to be false. Exhibit 39 is pages 7216 and 7217, which contains Trustee resolution for 2022, which was signed by Neville on 27 June 2022, which showed the resolution of the distribution of half the profit to Neville.
Despite signing the Trustee resolution declaring half the profit to himself, Neville has not lodged any personal income tax returns for four years, nor has he lodged the tax return of the partnership NW & AL Hinrichsen since 2021. Neville’s view as to the accounts were explained by Neville.[72] That is, he had no doubt that the accountants HHH Partners “Have done the right thing with the information they have got. I doubt the information they have received”.[73]
[72]T4-67 to T4-77.
[73]T4-76 line 45 to T4-77 line 1.
Neville confirmed[74] that in the 2021 financial year there were no Trust cattle being held upon Durrandella and all of the trust herd was at Croydon. That is, in the 2021 year, Neville did nothing for the Trust, yet he took drawings of $48,000 in that financial year and used $82,566.65 of Trust monies to pay his own personal legal fees[75] and at 30 June 2021, was indebted to the Trust in the sum of $475,738.05.[76]
[74]T4-80.
[75]T4-80, line 30.
[76]T4-81, line 40.
Although acknowledging that he owes $475,738.05 to the Trust[77], Neville has never accepted that to be an enforceable loan.[78] Neville had sworn in paragraph 8 of his affidavit in support of the appointment of a receiver that since 2019 he had been excluded from any involvement in the affairs of the Trust. As had been demonstrated by cross-examination,[79] that was not at all the case. Neville also accepted[80] that the Trust was significantly advantaged by having cattle in Alpha and cattle available in Croydon as it reduced the risk to the Trust of having its operations being adversely affected by drought.
[77]T4-83, line 45.
[78]T4-84, line 17.
[79]T4-91 to T4-100.
[80]T4-93.
Exhibit 51 includes Rabobank bank statements as of 30 June 2018 showing that, as admitted by Neville[81], he had withdrawn $647,078.94 from the Trust account and placed it into his own cash management account, upon which he received interest from Rabobank at 1.8%. As established by Exhibit 52, this was at a time when the Trust was paying Rabobank 5.75% interest on the money it owed to Rabobank.
[81]T4-94, line 99.
Neville's claim that he had been excluded from the affairs of the Trust that was used to support his application to appoint a receiver[82] is falsified by many matters. One such matter is the fact that Neville has signed quarterly Business Activity Statements (BAS) for the Trust entity until the second quarter of 2025, when he refused to sign any more. The BAS’s showing Neville's involvement are in Exhibit 55.
[82]T5-14, lines 10 to 15.
Neville's claim that he was not provided with information or was excluded from the Trust is falsified by Exhibits 56, 57, 58, 59, 60, 61, 62, and 63, as well as the enormous amounts of information contained in the 11 trial volumes, all of which Neville had access to.
Accordingly, Neville's claim in paragraph 11 of his affidavit in support of the application of November 2024 that the reason he had refused to sign tax returns for the company for the last three financial years is that he was “not given sufficient information to determine their accuracy”,[83] is false.
[83]T5-28, lines 14 to 15.
In addition to signing all of the quarterly BAS until mid-second quarter 2025, Neville signed all of the annual directors' reviews between 2015 and June 2024.[84] Neville admits that the Trust's outstanding loan of $2.38 million to Rabobank is required to be repaid by 30 June 2025,[85] and that the bank has indicated it will not renew the facility beyond 30 June 2025.
[84]T5-30, line 15.
[85]T5-37, lines 20 to 25.
Neville accepted that a conservative valuation of the herd at 30 June 2024 on the Croydon properties of 3,965 head would be $3.2 million. Neville accepts there are no other assets other than the Croydon herd to satisfy the Rabobank debt on 30 June 2025. Neville acknowledges that this is a serious problem.[86]
[86]T5-40, lines 5 to 6.
Exhibit 65 shows that David had, on 15 November 2024, proposed a series of resolutions requiring the Trust to sell down its herd on the Croydon properties to pay the Rabobank debt, and that would appear to be the only viable and commercial solution to the payment of the Rabobank debt by the due date.
Neville's only reply to the proposal (in his solicitors letter of 22 November 2024)[87] is that he did not agree to the proposals. Neville does not have any proposal as to how the Rabobank debt of $2.38 million is to be satisfied by 30 June 2025, commenting that it is “all hinging on what happens in this case”.[88] Neville accepts that it would be totally outside the normal activities of David's authority within the Trust for him to sell the entire herd,[89] and that is the only method of satisfying the Rabobank debt, yet he has refused to authorise David to undertake that step. In my view, this is an egregious breach of director's duties, as the failure to satisfy the Rabobank debt on 30 June 2025 has potentially catastrophic commercial consequences for the Trust, allowing the bank to exercise its security upon all Trust assets, as well as Durrandella and the Croydon properties.
[87]T5-43.
[88]T5-43, line 6.
[89]T5-42, lines 42 to 45.
After the breakdown in communication between Neville and David in 2014, the bank records show that Neville has transferred hundreds of thousands of dollars in cash from the sales of Trust cattle into either the partnership account he holds with his wife or his own account.
Exhibit 68 is the Rabobank account of the partnership of NW and AL Hinrichsen for September 2015. It shows that on 7 September 2015, Neville transferred $230,000 from the Trust's Rabobank account into the partnership account, taking the partnership account from a debit of over $141,000, upon which the partnership paid interest at 5.91%, to a credit of almost $89,000, upon which Rabobank paid interest to the partnership at 0.05%.
Neville's handwriting in Exhibit 68 clearly shows he was aware that the $230,000 was not partnership money but Trust money.
Exhibit 69 is Neville's email of 13 September 2015, which did not mention that he had taken $230,000 of Trust money and placed it into his partnership account. Exhibit 69 also reveals a change in Neville's position concerning the financial arrangements of the Trust. As stated above, Neville had agreed that the entirety of the borrowings of David at $835,000 to purchase the Croydon properties would be paid entirely from the Trust income, and was to be a debt taken into account prior to any equal distribution of nett assets between David and Neville.
Exhibit 69 shows that Neville's intention in September 2015 had altered such that his position was that he was to pay half the Rabobank debt. As Neville said[90], his position changed again in that in 2025, he was not willing to pay half the Rabobank debt from his own assets, but rather to pay them from Hinrichsen Trust pastoral assets.
[90]T5-54, line 20.
Exhibit 70 evidences considerable sales of the Trust's cattle. Exhibits 71, and Neville’s evidence from T5-54 to T5-62, and with reference to Exhibit 70 and by reference to trial book pages 6256 to 6267, it was demonstrated that from the period from 7 September 2015 to 1 August 2016, Neville had taken significant assets of the Trust and placed them into his own partnership account that he had with his wife, Alison.
Those records show that on 8 October 2015 Neville sold $243,563.57 of Trust cattle and placed the proceeds directly into his own partnership account.
On 9 October Neville sold a further $143,786.92 of Trust cattle and placed the proceeds into his partnership account.
On 12 October 2015 He sold a further $116,037.67 from Trust cattle and placed them into his partnership account.
Accordingly it is recorded in Neville's own handwriting as at 26 October 2015, Neville had taken $733,388.16 of Trust assets and placed them in his own partnership account. He did not stop there. On 25 November 2015, he sold a further $49,759.46 worth of Trust cattle and placed them into his partnership account, such that by 26 November 2015, Neville had taken $783,147.62 from the Trust and placed it into his partnership account.
The effect was to severely deplete the Trust funds and cause the Trust to pay commercial interest rates, while benefiting his own partnership by placing it significantly into credit and obtaining interest from Rabobank upon those large credits.
Prior to the first repayment on 29 December 2015, the partnership account was in credit to the sum of $681,466.73. The partnership, therefore, having taken $783,146.62 from the Trust, could repay that sum in its entirety and reduce the debt to Rabobank and reduce the commercial interest being borne by the Trust. Neville chose not to do so.
Neville did make a transfer back from his partnership to the Trust of $80,000 on 29 December 2015, and a further $20,000 on 15 January 2016, a further $13,147.62 on 04 February 2016, and a further $55,000 on 25 February 2016, such that by 29 February 2016, the partnership had reduced its indebtedness to the Trust to $615,000.
The partnership repaid the Trust $30,000 in March of 2016, and a further $20,000 in May of 2016. The partnership transferred a further $10,000 to the Trust on 3 June 2016, but curiously, Neville transferred $30,000 from the Trust to the partnership on 13 June 2016.
There are other two curious transactions being pages 6263, the cattle sale of 31 May 2016 of $96,399.20, which Neville has indicated was sales of Trust cattle credited to the partnership account, and a similar entry on 13 June 2016, page 6264 for the sum of $42,641.47. The entries are curious because they are not immediately reflected in Neville's handwritten tally, but I accept they were sales of Trust cattle benefiting and credited to the partnership account.
On 5 July, Neville sold $74,356.30 of Trust cattle, crediting it to his partnership account. On 6 July, Neville sold $26,423.69 of Trust cattle, crediting the partnership account. On 13 July, Neville caused $20,000 to be transferred from the partnership account to his own account, and on 14 July, caused the partnership to transfer $10,000 back to the Trust. Neville caused the partnership to pay $10,000 back to the Trust on 15 July 2016. Neville then caused the partnership to pay himself $500,000 on 21 July 2016. According to Neville's handwritten tally on page 6265. The partnership was indebted to the Trust in the sum of $199,421.46.
I do not accept that as being true, as the transfer on 21 July was not from the partnership back to the Trust but to Neville personally, and so I find that on 22 July 2016, the partnership was indebted to the Trust for $699,421.46.
On 22 July 2016, Neville caused the partnership to pay himself $209,421.46. According to Neville's handwritten tally on page 6266, he had overpaid the Trust by $10,000. That was incorrect because, in fact, he caused the partnership to pay himself personally over those two dates $709,421.46. That was not payment to the Trust at all.
As Neville had by his own tally considered he had overpaid the Trust by $10,000, Neville repaid $10,000 into the partnership on 1 August 2016. According to Neville's handwritten tally, as of 31 August 2016, he had repaid the entirety of Hinrichsen Pastoral monies from the partnership to the Trust. I do not accept that is correct, as Neville had undertaken, by paying himself $699,421.46, a transfer of assets from the Trust to his own personal account, in clear breach of his duties as a Trustee and director of the company.
The sales of cattle, the transfers of money from the Trust to the partnership, was not the subject of any written communication nor any director's resolution. Neville explained his motivation for taking such a large sum of funds from Hinrichsen Pastoral[91], that if he left the funds in the Trust account as he ought to have, then David would have been able to draw those funds down, and as he sold all Trust cattle off Durrandella, it was “The only way I could secure anything was to try and secure those funds”.[92] This admission by Neville could not be a clearer admission of an egregious breach of duty as a director of the Trust company to the Trust.
[91]T5-58, lines 25 to 30.
[92]T5-58, lines 33 to 34.
Exhibit 71 is a series of emails between HHH Partners and Neville, raising the transfers of the monies from the Trust to the partnership, to which Neville responded with “the money in this account is 100% Hinrichsen Pastoral. This is not a drawing, just a holding account.” In his application to wind up the Trust filed in November 2024 in Brisbane, Neville complained at paragraph 15 that David had “removed a sum of $268,299 from the Hinrichsen Pastoral Trust account… He deposited those funds in an account in the sole name --- since that transfer, the second respondent has failed to pay any Trust income to the Trust account…”
As Neville admitted,[93] while he had alleged essentially that David had stolen $268,299 from the Trust for his own use, he failed to disclose that he had previously transferred over $700,000 to his own account. This, in my view, is seriously misleading and impacts poorly upon Neville's credit.
[93]T5-63.
Exhibit 72 is a letter of Neville’s former solicitors dated 17 September 2018 which records factually that Alpha and its surrounding areas had the worst drought for the last 50 years and that the drought was lasting 5 years and counting. The letter recorded that Durrandella is in a “terrible state, and our client has been supplementing on and off since 2013 and hand feeding three days a week for the last three months.” Neville commented[94] that 2018 was almost a wipe-out drought. I infer from this letter and the drought conditions in the period from 2013 to 2018 that Durrandella was in no place to receive any cattle from the Croydon properties. At least until 2018, neither Neville nor David had been in breach of any director’s duties for not transferring cattle from Croydon to Durrandella for the purposes of obtaining a better price. There is no clear evidence as to when the drought from 2013 broke, only that it is some time after late 2018.
[94]T5-72, line 25.
Importantly, as Neville has admitted, there was never a request to send any further cattle from Croydon to Durrandella and, it is plain that as Neville had control of Durrandella, it was impossible for David, even if he wished to forward cattle to Durrandella to achieve that purpose without Neville’s consent and without Neville having put into place arrangements to receive the cattle. That simply did not occur. Yet, Neville complains that David has breached his duty as a Trustee of the Trust by failing to send cattle from the Croydon properties to Durrandella. Neville admits, however, that he did not ask for any cattle to be sent.[95]
[95]T5-21, line 9.
Neville was asked[96] why he caused the Hinrichsen Pastoral Trust herd on Durrandella to deplete whilst he increased the cattle in the herd owned by the partnership of himself and his wife, and his response was that the Trust cattle could not be retained because sales were needed to pay the bills.[97] However, as it was shown,[98] at the time of the selling of the cattle, Neville had taken over $375,000 from the Trust bank account and placed it into his own bank account, so there was ample money available to pay the bills and he restock the Trust herd on Durrandella.
[96]T5-73.
[97]T5-74, line 1.
[98]T5-74 and with reference to trial book page 6282.
Neville, who accepted that it was prudent management of a cattle herd to keep enough heifer calves in drought times so that they would become cows and future breeders, could not logically explain why he had sold off the Durrandella Trust herd and increased his own herd, particularly when he had ample money to pay the Trust bills. The only proper inference is that Neville built up his own herd, the herd he owned in partnership with his wife, to obtain income for his own family, and deliberately did so to the detriment of the income of the Trust. This, in my view, constituted another clear breach of director's duties as a director of the Trust company, preferring his own interests to those of the Trust; that is, he chose his own interest in preference to those of the other beneficiaries of the Trust, namely his brother David.
When confronted with the over $375,000 of Trust money he had paid into his own Rabobank account, Neville's evidence was that he could not use that money to purchase any cattle for the Trust because the money was required to pay down the Rabobank debt.[99] He did, however, admit he did not know whether Rabobank would extend or not, so he did not know whether the money would be required by the bank or not. In my view, it does not make any logical sense for Neville to have sold what he acknowledged to be all of the significant income-earning assets, that is the Trust cattle on Durrandella, and converted them to cash in order to pay Rabobank, when in fact he did not pay Rabobank. Neville described his own perverse decision, made without consulting David, as an intelligent decision.[100]
[99]T5-74, line 20.
[100]T5-74, line 44.
Neville was cross-examined on the contents of pages six and seven of Exhibit 29, which is an email trail from Mr Wilkes, an accountant of HHH Partners, and Neville, in which Neville claimed on 1 June 2023 that the NW and AL Hinrichsen partnership business tax returns were up to date. Given that the email was sent on 1 June 2023, that, in my view, could only be understood as meaning that the partnership tax returns up to and including the financial year ending 30 June 2022 had been lodged. If they had been lodged, given the allegation raised in the counterclaim about the competition between the partnership and the Trust, then Neville was required to disclose that document. The documents were not disclosed.
When cross-examined on the issue[101] Neville said that he was not sure if the 2021 or 2022 partnership tax returns had been lodged. As neither the 2021 nor 2022 partnership tax returns had been disclosed, I infer that they have not been lodged. A consequence is that I accept that Neville's email of 1 June 2023 to Mr Wilkes, pages six and seven of Exhibit 29, was a misleading email. This is another matter that adversely affects my assessment of Neville's credit.
[101]T5-81.
No challenge is made to the mathematical accuracy of the final balance owing of $395,177. The accountants, Mr Houlihan and Mr Wilkes' statements, set out how the account statement was calculated and also Neville has signed the financial accounts stating, amongst other things, the amounts stated were true and accurate for the 2018, 2019 and 2020 financial years.
At paragraph 45 of his amended reply to the amended defence filed 30 September 2024, Neville has alleged that the relevant entries constituting the debt “were made by the trust accountant of his own volition for the purpose of reducing or avoiding the personal tax liabilities of the beneficiaries … the entries were not made on the instructions or with the agreement of the plaintiff.”
It seems to me these are quite serious allegations being made against the accountants Mr Houlihan and Mr Wilkes, which were not raised with Mr Wilkes in cross-examination. That also reflects poorly upon Neville’s credit. Nonetheless, the lack of challenge to the mathematical accuracy of the final balance owing at $395,177 was plain.
Neville has certified that as at 30 June 2020, he was indebted on account stated to the trust for $639,141. That reduced in the ensuing three financial years to the balance of $395,177 as at 30 June 2023.
Neville tendered the 2023 balance sheet showing his account stated debt at $395,177 (Exhibit 28). Exhibit 72 is a letter from Neville's solicitor of 17 September 2018, accepting that the monies received from the trust were accounted for as a loan, even though Neville has not signed the 2021, 2022 and 2023 financial statements.
Pursuant to s 84 of the Evidence Act 1977 (Qld) and s 1305(1) of the Corporations Act, an entry in a book of account, such as the financial statement, is prima facie evidence and therefore sufficient to prove that matter in civil proceedings unless other evidence convinces the court to the contrary on the balance of probabilities.[120] Questionable entries maybe factually challenged and those factual challenges require a court to consider the whole of the evidence.[121]
[120]Australian Karting Association Limited v Karting (New South Wales) Incorporated [2022] NSWCA 188 per Gleeson JA at [129].
[121]Ibid at [134] to [136].
The books of the account are therefore prima facie proof of the matter, and in particular, Exhibit 28 is proof of the debt arising from the account stated, showing that Neville owes the company $395,177.
Neville, by paragraph 45 of his counterclaim and paragraphs 57 to 81 of his outline of written argument disputes the debt but he does not do so by reference to any disputed fact. Neville raises legal arguments disputing the debt. Neville’s submissions point to clause 16.1 of the Constitution of the company, which provides “subject to the Corporations law and any other provisions of these articles – the business of the company shall be managed by the directors.”
It is then uncontroversially submitted that that stipulation requires the directors to act together as a board of directors and emphasises that no one director has power to act unilaterally. That, of course, on Neville's own case, is precisely what he did.
Neville's written submissions also rely upon clause 20.01 of the trust deed, which states that “every trustee, which is a corporation, may exercise or concur in exercising any discretion or power conferred on the trustee by this deed or by law by resolution of its Board of directors…”
It is Neville's argument that the word “may” in clause 20.01, although a verb expressing a possibility or being used in a permissive sense, is in fact, a modal verb which operates as a directive. I do not accept the submission on the interpretation of the word “may” in clause 20.01, as it seems to me, “may” ought to be used in its ordinary sense as a permissive.
The text of clause 20.01 refers to the actions of the trustee in exercising any discretion or power conferred by the trust deed or by law by reference to a concurrence. It seems to me that clause 20.01, properly interpreted, allows trustees to exercise or concur in exercising a discretion or power by a resolution of its board of directors, but does not demand that occur.
That is particularly so in the context of the use of the word “concur”, which envisages a corporate trustee exercising a discretion or power in the first place and at a latter stage a corporate trustee concurring with that decision to exercise the discretion or power.
Neville's written submissions then make four general points citing the reasons of Garde AJA Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd [2015] VSCA 9 at [228] and [229], where his Honour said:
“[228] I agree with the statement by Robson J of the duties of a director of a company that acts as a corporate trustee. In circumstances where a company is a corporate trustee, a director acting in the best interests of the company as a whole must act in good faith to ensure that the company administers the trust in accordance with the trust deed having regard to the rights and interests of the beneficiaries of the trust. The best interests of the company as a corporate trustee are to act properly in accordance with the trust deed in managing the business of the trust and in dealing with the assets and liabilities of the trust. A director of a corporate trustee must act in good faith to ensure that the company complies with its obligations as a trustee, and properly discharges the duties imposed on it by the trust deed and by trust law generally. It is not in the best interests of the company for it to act in breach of its duties of a trustee, for the company has assumed the responsibilities of that office and must see to it that they are fulfilled.
[229]The obligation of a director of a corporate trustee is the same whether the trust is a unit trust or a discretionary trust viz to act in good faith to ensure that the company acts properly in accordance with the trust deed in administering the business, assets and liabilities of the trust. Although in the case of a discretionary trust, a member does not have any present entitlement to the trust assets, the member does have standing to compel the proper administration by the corporate trustee of the trust. This is not disputed. The director should act in good faith to ensure that there is no cause for legitimate complaint by a beneficiary about the administration of a trust for which the company is responsible.”
[footnotes omitted]
In paragraph 68 of Neville’s written submissions, Neville submits, and I accept, that the standard required of a director of a trustee company is higher than that of a director simpliciter. I also accept that as a principle, it is the responsibility of the directors to ensure that in managing the trust business, the trustee exercises the same care that an ordinary prudent businessman would exercise in conducting the business as if it were his or her own.[122]
Neville's argument is that in taking the $647,078.94 from the Trust's Rabobank account in 2018, and placing it directly into his own personal account, it did not create a loan but rather created a bare trust.
Neville submits the debt is a false loan account in which it was suggested in the cross-examination of Mr Houlihan that Mr Houlihan created a false loan account “of his own volition”. Mr Houlihan rejected this, explaining[123] that “he took money from the trust” and “A loan is not a drawing. A loan is a loan. It is not a drawing, it is a loan…”[124]
[123]T3-42, line 29.
[124]T3-42, line 20.
Mr Houlihan then explained how HHH Partners had questioned the taking of the money from the trust. Mr Houlihan explained how his staff member, Ms Kerry, had questioned Neville about taking the money from the Rabobank account, which Neville stated in reply, “Kendall, the savings account is Rabo Cash Management Account in the name of Neville Hinrichsen. This money in this account is 100% Hinrichsen Pastoral. This is not a drawing, just a holding account.”
This passage seems to show some confusion in Neville's mind as to what is a loan, what is a drawing and what is a debt. The accounts prepared by Mr Houlihan and Mr Wilkes of HHH Partners are prepared properly, accurately and in conformance with normal trust accounting principles. It was not suggested otherwise. Indeed it is not necessary to call an accountant to prove the accuracy of the books of account.[125] David did call Mr Houlihan and Mr Wilkes and it was not put to them that any entry was inaccurate.
[125]Love D&V XOXO Pty Ltd (Receiver and Manager Appointed) v Vlahos [2025] NSWSC 230 per Nixon J at [119].
A trust net profit is calculated at the end of each financial year and distributed to beneficiaries in accordance with the trust deed and resolution of the trustee. If beneficiaries of the trust do take any sums of money from the trust prior to the declaration of the profit, then the taking of that sum is properly accounted for as drawings which is a loan and a debt. Plainly, when a beneficiary draws more from the trust than the beneficiary's distribution of profit, then the beneficiary is indebted to the trust.
When Neville unilaterally took more than $600,000 from the trust company's bank account and placed it into his own account, he was taking funds from the trust to be accounted for as a loan or a drawing. In either event, it constitutes a debt owing by Neville to the trust. Such a circumstance may also cause a bare trust to come into existence in respect of the taken monies, which enables the trustee to utilise equitable remedies in pursuit of the monies taken. That does not prevent a trustee suing upon the debt. Therefore, I reject Neville’s submissions in paragraph 74 of his written submission that the intentional taking of monies from the trust, being an intentional breach of trust by Neville, cannot give rise to a creditor-debtor relationship.
Fundamentally, as discussed above at [196], common law remedies are not supplanted by equitable remedies but sit side by side with them. It matters not, therefore, whether Neville understood the debtor’s declaration in which he signed the annual financial accounts, nor that he understood that the book entries created enforceable loans against him. I reject the submission made on behalf of Neville that a debtor-creditor relationship did not exist because Neville did not borrow trust funds and simply took them in breach of his duties to the trust. I consider such a submission is fundamentally misconceived.
Paragraphs 77 and 78 of Neville's written submission appear to argue that there is no account stated because it is necessary for an account stated that there be mutually offsetting claims between the trust and the plaintiff, and there must be consensual conduct between those two parties. I do not accept this submission. I do accept Neville’s submission in paragraph 80 that when Neville took the money he “took them in breach of his duties to the trust”.
I do accept that the term “account stated” is capable of two forms of meaning. These are explained by Brennan J in Bank of New South Wales v Brown (1982) 151 CLR 174 at pages 535-536. The first sense of the term “account stated” is a claim to a payment made by one party and admitted by the other party to be correct. That is little more than an admission of debt out of court, and in respect of that admission, it is cogent evidence of the existence of the debt, subject to the account stated, but the admission of debt is not binding and can be shown by the party claiming it that the debt does not exist to be made in error.
The second sense of “account stated” is what may be referred to as “a real account stated”, that is where there is an account between two parties with both credits and debits figures on both sides which are adjusted between the parties and a balance struck. The table in paragraph 45 of the counterclaim is a real account stated because it has debits and credits moving through the various bank accounts, arriving at the eventual balance of $395,177. I conclude that Neville is indebted to the second plaintiff by counterclaim for the account stated of $395,177.
Although not raised in Neville's written submissions, paragraph 45(b) of the answer to the counterclaim raises a limitation defence under section 10(1) of the Limitations Act 1974 (Qld). The time limitation defence fails for many reasons. The first is that proceedings were issued in this matter in 2020 and accordingly this may be pursued pursuant to s 10 for six years, i.e. to 2014. The second reason is that pursuant to s 35(3), all limitations of actions to recover a debt is deemed to have accrued on and not before the date of the last payment. This can be seen from paragraph 45 by the reducing balance, there were payments made right through 2018 to 2023, arriving at the account stated as on 30 June 2023 at $395,177. Accordingly, the time limitation defence fails.
Breach of Directors’ Duties
Paragraphs 49 to 58 of the counterclaim allege that Neville breached his duty as a director of the plaintiff by counterclaim by running a herd of cattle in partnership with his wife upon Durrandella for the 2014 through to 2024 financial years. Factually, Neville does not deny that he did this, but appears to argue that he is entitled to compete with the trust.
Paragraph 49 of the counterclaim alleges it is a further term or part of the Durrandella Succession Arrangement that the company would occupy Durrandella exclusively for the purpose of carrying out its operations upon Durrandella. Neville denies that this was a part of the Durrandella Succession Agreement, which he says does not exist.
I, however, accept David's evidence and the evidence of Mr Houlihan[126] that Durrandella would be exclusively used to operate the cattle side of the trust business. The term of the Durrandella Succession Agreement in paragraph 49 of the counterclaim, however, is not part of the cause of action alleged against Neville in paragraphs 53 and 54 of the counterclaim.
[126]T3-34.
Although by paragraph 53(a) of the counterclaim David alleges that Neville's actions in running cattle upon Durrandella was a breach of the Durrandella Succession Agreement pleaded in paragraph 49, David does not allege in paragraph 54 that any loss has flowed from that breach. The loss of $3,548,440 was alleged in paragraph 54 to have arisen from the breach of the duties by Neville. The duties of Neville that have been breached are set out in paragraph 53(b) of the counterclaim and not paragraph 53(a).
Section 180(1) of the Corporations Act 2001 (Cth) provides:
180 Care and diligence—civil obligation only
Care and diligence--directors and other officers
(1)A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:
(a)were a director or officer of a corporation in the corporation's circumstances; and
(b)occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.
Section 182(1) of the Corporations Act 2001 (Cth) provides:
182Use of position--civil obligations
Use of position--directors, other officers and employees
(1)A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a)gain an advantage for themselves or someone else; or
(b)cause detriment to the corporation.
Paragraph 50 of David's counterclaim pleads that Neville owes the statutory duties under sections 181(1) and 182(1) of the Corporations Act. Paragraph 68 of Neville’s written submissions (Exhibit 197) accurately asserts that the standard of care required of a director of a company is higher than that of a director of a simpliciter.[127]
[127]Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd [2015] VSCA 9 at [228] to [229].
In United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2018] VSC 347, Elliot J summarised the principles governing section 182 of the Corporations Act at [644]-[646] as follows:
“[644] Section 182 requires a director not to have a proscribed purpose: to gain an advantage or to cause a detriment. It is not necessary that an advantage has in fact been gained by the director or other person or that detriment has in fact been caused to the corporation. Further, in ascertaining whether a director had 1 or other of the proscribed purposes in mind when she or he made use of her or his position, it is relevant to consider the particular duties and responsibilities of the director and her or his appreciation of the circumstances at the relevant time.
[645]The test is whether the conduct would breach the standards of conduct that would be expected of a person in the director’s position by a reasonable person with knowledge of the duties, powers and authority of her or his position as director, and of the circumstances of the case, including the commercial context. A director’s appreciation of the relevant circumstances might be relevant to analysis of the propriety of the use the director made of her or his position in acting as she or he did.
[646]In this court, it has been held that impropriety requires “behaviour [that] breached the norm of conduct thought necessary for the proper conduct of commercial life so that people will have confidence that the running of the marketplace is in safe hands”.”
[footnotes omitted]
The critical allegation in this part of the counterclaim is paragraph 52, that since 2013, Neville has conducted cattle grazing operations upon Durrandella for the profit and benefit of himself or alternatively allowed parties other than the trust to conduct such operations for their benefit without accounting to the trust.
In paragraph 52 of his answer to counterclaim, Neville admits that he has done this, asserts that he had his father's permission to do so, and that David knew of this and did not object to Neville running his own cattle upon Durrandella. It is common ground that the cattle movements in Durrandella were recorded as a part of the National Livestock Identification System (NLIS) and so the parties have largely agreed the cattle movements to and from Durrandella from the 2014 financial year to the 2023 financial year.
Cattle movements are also the subject of evidence from Mr Houlihan and Mr Wilkes. An important tabulation showing movements is contained in paragraph 51D of the counterclaim, which is admitted by paragraph 51D of the answer to the counterclaim, with some very minor exceptions that are largely irrelevant in terms of the important total column. The only difference between David and Neville is that David has the 2023 total of 535 head being valued at $618,945, which is a typographical error as the correct figure is $618,495.
Neville has in paragraph 51 of his answer the same cattle numbers of 535 head, but places a higher value on them of $652,171. As David's figures have been verified by the accountants and are more conservative than Neville's figures, I consider that David's figures ought to be accepted as being accurate.
The effect of Neville's activities is more clearly observed from the particulars in paragraphs 52(a) and (b). What the figures show is that the trust had 1,559 cattle on Durrandella as at 30 June 2014 and 30 June 2015, before slowly reducing the herd through 2016, 2017, 2018 and 2019, at which point the herd had decreased to 438 cattle, i.e. was less than a third of the size.
The trust cattle were then all sold in the 2020 financial year, with the exception of nine head, which perhaps were not able to be mustered. There were no trust cattle on Durrandella in 2021. Whilst the trust cattle herd on Durrandella was being reduced from a significant herd of cattle, Neville, in partnership with his wife, increased their partnership herd from 221 cattle in the 2013 financial year, up to 976 cattle in the 2018 financial year (during the supposed period of the wipeout drought) and the closing stock number of 672 beasts on Durrandella in the 2020 financial year. Neville has not disclosed his closing stock levels since that point.
Not only did Neville run down the trust cattle upon Durrandella from a sizeable herd of 1,559 cattle on 30 June 2014, essentially to no cattle by 30 June 2020 and in that time having built up his own partnership herd, Neville also caused the trust to pay for his partnership expenses in doing so. As discussed above Neville caused the trust to pay all of the rates for Durrandella until 2019, all of the lease payments for Durrandella until 2017, considerable regrowth control, repairs and maintenance expenses as admitted in paragraph 33A(b) of Neville’s amended reply. In addition to this, the partnership accounts showed that the partnership of NW and AL Hinrichsen did not pay fuel expenses for 2014, 2015, and 2016 and I infer from this that the trust paid for all of the fuel expenses and activities upon Durrandella during those years.
Neville, as a director of the company, having his statutory duty under section 181(1) of the Corporations Act to act in good faith and in the best interests of the company, and for a proper purpose, and having the duty under section 182(1) of the Corporations Act 2001 not to gain an advantage for himself or someone else or cause detriment to the second plaintiff, has, in my view, deliberately done so by running down the trust herd on Durrandella supplanting them with the herd that Neville owned, in partnership with his wife. There could not be a clearer breach of the statutory duties under sections 181(1) and 182(1) of the Corporations Act 2001.
Sections 181(1) and 182(1) of the Corporations Act are, by the operation of section 1317E of the same Act, civil penalty provisions and by which enliven a power under section 1317H of the Corporations Act to order compensation to be made to the company for any damage suffered by the company as a result of the contraventions of sections 181(1) and 182(1).
Damages are pleaded as a loss of $3,548,440, being calculated by reference to lost revenue from potential sales of trust cattle in the total sum to the end of 2024 of $6,716,048, less the particulars of expenses of $3,167,608.
The calculations have been proven by the evidence and there was no suggestion that any of those figures were incorrect. I accept them as being proven and being correct. Furthermore, the interest calculation set out in paragraph 58 totalling $691,092 was not the subject of any cross-examination or criticism in Neville’s submissions. I accept that figure is correct.
As discussed above, the trust paid significant lease payments to Durrandella until the end of 2017 and significant rates expenses in respect of Durrandella to 2019 at a time when Neville had decreased the trust herd upon Durrandella from 1,559 head down to 438 head, at the same time increasing the herd in partnership with his wife from 221 head to 976 head in the 2018 financial year.
In my view, it is plain that no reasonable person in the position of director of the company would act as Neville did in running down the trust's income-producing herd to the benefit of himself and his wife. As discussed above, Neville did this whilst also drawing $48,000 per annum from the trust, which by 2020 was being solely funded by the work of David at the Croydon properties.
Paragraphs 82 to 108 of Neville's written outline contain submissions made on behalf of Neville as to why Neville ought not to pay the company approximately $4.2 million as a result of his breaches of directors' duties. The first submission in paragraph 83 is that the breach of director’s duties claim has its genesis in the amendment to the Durrandella Succession Agreement pleaded in paragraph 49 of the counterclaim. I do not accept that submission as the genesis of the claim is based upon ss 180(1) and 182(1) of the Corporations Act. The whole point of sections 180(1) and, in particular, section 182(1) is to prevent, avoid or render unlawful directors placing themselves in a position of conflict of interest such that they have to make a decision to prefer their own interests to that of the company of which they are a director.
Accordingly, I reject the genesis of the breach of duties claim as paragraph 49 of the counterclaim. Even if the further term of the succession agreement were not proven, as I consider it is, the company would still make good its claim for breach of directors’ duties on the admitted facts.
Paragraph 85 of Neville's submission refers to David's evidence[128] that a personal herd allowance of 5% was included in the damages calculation. David said that the 5% allowance was a figure that he “came up with”, and that was a figure for a personal herd allowance that does not interfere with the profits of Hinrichsen Pastoral.
[128]T2-115.
Sections 180(1) and 182(1) are absolute in their terms. They do not authorise small breaches of directors’ duties that are made in conflict of interest in duty. Whilst I consider the deduction in damages for 5% personal herd is wrong in principle, David has not sought any amendment to increase the loss to the company by redacting the 5% allowance for personal use.
Neville's argument in paragraph 85 (of Exhibit 197) seems to be that because David had run some personal cattle upon the Croydon properties, he was not in breach of any director's duties by running an extremely large herd of cattle upon Durrandella. That, in my view, is simply wrong and does not accord with the duties required of directors in sections 180 and 182 of the Corporations Act.
Neville also appears to run the same argument in paragraph 89, that as David is in breach of his director's duties, Neville could not be in breach of his director's duties. This is a non sequitur. Furthermore, as described above, I reject the submission that David is at any fault for not sending further cattle from Croydon to Durrandella in the years from 2013 to 2018 and beyond because of the near wipeout drought at Durrandella in 2018.
Neville's repeated submissions in paragraphs 90 to 97 were that it was David’s fault that the family arrangements failed. Firstly, I do not accept that it was David's fault that the family arrangements failed and secondly, even if it was, that does not relieve Neville from the consequences of his breaches of directors' duties pursuant to sections 180 and 182 of the Corporations Act.
In paragraph 98 of Neville's submissions, it appears to be argued that as the relationship between Neville and David had irreparably faltered, there was apparently an imminent termination of the trust such that it was acceptable or lawful for Neville to breach his directors' duties. There was no logical nor lawful basis to accept that the breakdown of the relationship somehow excuses Neville's breach of director's duties.
Paragraphs 100 to 108 of Neville's written submissions relate to what are termed discretionary defences which are pleaded in paragraph 59 of the answer to the counterclaim. Apart from the time limitation defence, the submissions appear to argue that the company's claim, the derivative action, ought not to be allowed as it was a claim not brought for a bona fide purpose, but for an ulterior purpose of having David exerting illegitimate pressure upon Neville to settle David's claim against him for an unfounded interest in Durrandella. I reject this submission, as I have found above that David has succeeded in his claim for an interest in Durrandella.
Furthermore, I consider that the company has brought its derivative action for a proper purpose, namely to recoup the considerable losses sustained by the trust as a result of Neville running his own large herd upon Durrandella in competition with and then to the exclusion of trust cattle.
There is the surprising allegation in paragraph 59(vii) of the answer that David has acted in bad faith because he has not caused the company to sue himself. Much of paragraph 59 deals with the fact admitted by David that he opened up a Westpac Banking Corporation account number 141-633 since 2014 and has paid the income of the trust into that account. The allegation is made that that is somewhat improper as the monies ought to have been paid into the Rabobank account.
The accusation is somewhat curious, as Neville has pleaded accurately in paragraph 59(3) of the answer that David in fact opened the bank account in the company name and put trust funds into the company’s Westpac account. As David pleaded in his reply to the counterclaim, he opened the new account because Neville had access to the Rabobank account and had taken all of the monies and assets from it and placed it into his own name.
In my view, it would have been a breach of David's duties as a director not to have taken some action to stop Neville from taking trust money and placing it into his own name and accordingly, the actions of David in opening a new Westpac account in the corporate trustee's name was, in the circumstances, entirely appropriate.
Neville's allegation in paragraph 59(vi) is that David has used the monies from the trust Westpac account 141-633 to pay personal expenses as particularised. As set out in paragraph 48 of David's reply to the counterclaim, David informed Neville that the company was opening a new bank account at Westpac and, as discussed above, David provided Neville with all the necessary information that Neville required to see what David was doing with the new trust bank account.
Further, Neville received and approved every quarterly Business Activity Statement and associated lodgement declarations for the corporate trustee from 2020 until the first quarter of 2024. Neville received and signed annual solvency declarations for the company from every financial year from 2022 to 2024.
As David pleads in paragraphs 48(c), (d), (e) and (f) of his reply to the answer, David in fact used the Westpac account to pay proper trust expenses. Insofar as there was a payment of any personal expenses out of that Westpac account, it was accounted for as drawings and debited to the defendant's loan account, and so it was properly dealt with on an accounting basis. Moreover, David acknowledges his indebtedness to the trust as set out in the accounts whereas Neville denies his and argues in paragraph 107 that the company’s claim ought to be denied on the basis of acquiescence, waiver and laches.
The problem with this submission is firstly, that the company is not suing on any equitable cause of action, but rather for a statutory cause of action pursuant to section 1317H of the Corporations Act, to which acquiescence, waiver and laches are not a defence. Secondly, I do not consider that, if it were a defence, David would be guilty of acquiescence, waiver and laches. It has to be recalled that the cause of action is held by the company and not David. The company has two directors, namely Neville and David, both of whom would appear to have “sat on their hands” and did not act to attempt to sue each other or attempt to bring the company to sue each other until Neville sued David.
I do accept Neville's submission in paragraph 108 that an external administrator, such as a receiver and manager, ought (at some stage) to be appointed to take control of the trust affairs, to bring about a state of circumstances to wind up the trust. In paragraph 105 of Neville's submission, Neville argues that the company's claim is statute-barred by section 10 of the Limitations of Actions Act 1974. Whilst this is referred to as a discretionary defence, it seems to me that it is not a discretionary defence, but, if plead, is a defence to be proved and applied as a matter of law.
The company’s actions against Neville is an action under section 1317H of the Corporations Act 2001 for compensation against Neville for damage suffered by the company by Neville, a person who has contravened a civil penalty provision in relation to the corporation and who has caused damage as a result of that corporation contravention.
In my view, it is an action to recover a sum recoverable by virtue of an enactment other than a penalty or forfeiture defined in section 10(1)(d) of the Limitations of Actions Act 1974, which cannot be brought after the expiration of six years from the date on which the cause of action arose.
The cause of action under section 1317H has two elements, namely contravening conduct and the damage resulting from the contravention. The company's counterclaim was filed on 7 September 2020 and accordingly, it seems to me that any cause of action for breach of directors' duties accrued prior to 7 September 2014 is therefore statute-barred.
I accept Neville's submission that losses sustained by the company for a breach of directors' duties in the 2014 year are not recoverable, as they are time-barred by section 10 of the Limitations of Actions Act 1974. In terms of the damages claimed, that has the effect of removing the loss in the 2014 year of $41,358 (revenue loss in paragraph 54 of $71,515 less expenses saved 2014 $30,157).
With respect to the 2015 financial year, I have allowed the full loss as claimed, as Neville has not shown which, if any, part of the 2015 loss of $14,738 ($21,854 minus $7,116) was in fact incurred in the period from is this 1 July 2014 to 7 September 2014. Furthermore, any such loss is likely to be de minimis and more than sufficiently allowed for in the inappropriate 5% personal herd allowance. I conclude therefore, that the company has proved it suffered damages and is entitled to compensation pursuant to section 1317H in the sum of $3,507,082 ($3,548,440 minus $41,358), together with interest in the sum of $688,820 ($691,092 minus $2,272), a total of $4,195,902.
Exhibit 198 Statement of Neville Hinrichsen
On 22 October 2024, orders were made requiring Neville to file and serve his witness statements by 10 January 2025. Attached to David’s supplementary closing submissions dated 8 April 2025 is a letter of Neville’s solicitors of 12 March 2025 showing that Neville’s solicitors provided David’s solicitors with a copy of Neville’s unsigned affidavit and exhibits. That same letter advised that Neville’s solicitors were in the process of arranging for the signing and filing with the court of Neville’s witness statements.
Neville’s witness statement was filed on 20 March 2025 but was not signed, nor was it served. Neville’s witness statement, document 64 on the file, was admitted as Exhibit 198. It was plain that it was Neville’s counsel’s intention to tender Neville’s statement, however, that did not occur until the sixth day of trial during submissions. It seemed that senior counsel for Neville had laboured under the misapprehension that Neville’s statement had been tendered when it had not.
Exhibit F for identification is the list of objections to Neville’s statements which was dealt with from T3-81 to T3-95. At the conclusion of the fifth day of the trial, the parties were directed to agree and settle the balance of the documentary evidence to be tendered, and as Neville’s statement had been cross-examined upon in the trial, it was anticipated that Neville’s statement would form a part of the agreed tendered bundle. That, however, did not occur by another oversight, and so during Neville’s counsel’s submissions on the sixth day of the trial, Neville was given leave to re-open his case to tender document 64 as Exhibit 198.
As David’s counsel said at T6-54, line 39, he had been working from the unsigned version which became Exhibit 198 In these circumstances I reject the submission made by David’s counsel that Neville’s statement ought to be accorded no weight because it was tendered late or because it was not signed or because it could not constitute sworn evidence as Neville did not identify the document nor state the contents were true and accurate.
As stated above, there was a lengthy and extensive cross-examination of Neville upon all significant issues raised at the trial. I do not accord much weight to Neville’s statement, not because it was not signed nor the fact that it was tendered late, nor the fact that Neville did not identify the statement nor swear its contents were true and correct. As Neville’s counsel accurately submitted in paragraph 1 of his outline of argument, Exhibit 179, “resolution of this matter will be determined by whether the court accepts the evidence of the plaintiff or the defendant”.
For reasons I have expressed above, I do accept the evidence of the defendant, David, over the evidence of the plaintiff, Neville, and it is for that reason that I do not accord weight to Neville’s witness statement.
Form of Orders
I will hear from the parties as to the form of orders which flow from these reasons. The defendant and plaintiffs by counterclaim are directed to file and serve submissions containing a draft form of order within three days hereof. If the plaintiff disagrees with the orders then the plaintiff is directed to file and serve submissions including its draft form of order within six days hereof.
Unless otherwise agreed by the parties, it seems to me that orders will include judgment in favour of the second plaintiff by counterclaim against the plaintiff, in the sum of $395,177 on the debt claim and judgment in favour of the second plaintiff by counterclaim against the plaintiff in the sum of $4,195,902.
I am conscious that although the plaintiff, Neville, is required to pay the company almost $4.6 million, he as an equal beneficiary is entitled to the benefit of half of that claim, a $2.3 million credit on the eventual resolution of the trust.
As stated above, David had sought Neville's authorisation by resolution to sell down sufficient numbers of the trust cattle at the Croydon properties to meet the Rabobank debt of $2.38 million, which is due on 30 June 2025. I will hear from the parties as to the best practical means of satisfying that debt, whether it be by the appointment of a liquidator to the company, a receiver and manager to the company, or statutory trustees for sale of some or all of the land, and/or via a direction pursuant to section 96 of the Trusts Act 1973 (Qld) allowing or requiring the company acting solely through David to sell a sufficient number of trust cattle, if practicable, prior to 30 June 2025 to pay out the Rabobank debt. Alternatively David may seek other directions which may include a direction that he take control of the Durrandella Pastoral Trust for the purpose of refinancing the Rabobank debt.
If the parties are unable to agree on orders, then statutory trustees for sale need to be appointed for the sale of Durrandella or Yappar River and Ella Vale. Past experience has shown that forced sales of large rural properties resulting from the breakdown of family relations is a difficult and time-consuming process. Issues arise involving the proper treatment of livestock on the pastoral holdings and how they can be properly and humanely dealt with or sold.
It may be that the appointment of liquidators, receivers and managers, and statutory trustees for sale of the rural parcels of land is to be delayed for a short period of time to enable practical arrangements to be put into place, taking all of these matters into account.
I am conscious that there is a serious breakdown of family relationship, and the parties have been in dispute for over a decade, and so if the form of orders cannot be agreed in six days, there will be a further hearing to settle final orders in seven days.
- AGLC
- Hinrichsen v Hinrichsen [2025] QSC 108
- Case
- [2025] QSC 108
- Decision Date
CaseChat Overview and Summary
The legal issues that the court needed to decide were multifaceted. Primarily, the court had to determine if there was a common intention constructive trust in place between the parties, particularly considering the relationship between such trusts and estoppel by representation. Additionally, the court needed to consider whether the plaintiff's actions in retaining the benefit of trust property and cattle sales were unconscionable, given that the parties had engaged in a joint venture in a family rural enterprise. Another significant issue was whether the receipt and holding of trust funds in a non-trust owned bank account, which prevented the payment of outstanding debts owed by the trust, constituted a breach of fiduciary duty.
The court's reasoning focused on the nature of the joint venture and the common intention between the parties. It was determined that the relationship between the parties did not give rise to an express or implied common intention that the property be held on trust. The court further held that there was no unconscionable conduct in the plaintiff's retention of the benefit of trust property and cattle sales. The court found that the plaintiff did not breach any fiduciary duties by holding trust funds in a non-trust owned bank account, as this did not result in the payment of outstanding debts owed by the trust being hindered. The court concluded that the plaintiff did not hold the property as a constructive trustee for his brother and ordered further submissions on the form of relief and costs.
Orders
Orders of the court
The Court will hear from the partis as to the precise form of relief and as to costs.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.