Juers v Groserdam Nominees & Ors No. DCCIV-94-971 Judgment No. D3550
[1997] SADC 3550
•31 January 1997
Court
DISTRICT COURT OF SOUTH AUSTRALIA
Judgment of His Honour Judge Lowrie
Hearing
01/07/96 to 04/07/96, 02/12/96 to 05/12/96.
Catchwords
Plaintiff sought declaratory relief that firstnamed defendant family company holds certain farming land purchased in 1977 in trust for himself and his brother, the secondnamed defendant. Finding, plaintiff's evidence unsatisfactory and failed to establish that the legal position of the ownership of such farming land was other than as reflected in financial accounting since 1977 as pleaded by the defendants and, consequently, that the land in question was held by the defendant company in trust for the secondnamed defendant's family trust. Plaintiff's statement of claim dismissed. Declarations made in accord with defence.
Representation
Plaintiff GLEN DANIEL JUERS:
Counsel: MR R C HALLIDAY WITH MR R R SCHROEDER - Solicitors: KNOX &; HARGRAVE
Defendants GROSERDAM NOMINEES PTY LTD AND ROGER LOUIS JUERS:
Counsel: MR M E HOILE - Solicitors: VON DOUSSAS
Defendant EILEEN MAY JUERS:
Counsel: MR J S RODER - Solicitors: HERVE &; CO
DCCIV-94-971
Judgment No. D3550
31 January 1997
(Civil)
JUERS v GROSERDAM NOMINEES & ORS
Civil
Judge Lowrie
The plaintiff, Glen Daniel Juers, commenced this action against a family company, Groserdam Nominees Pty Ltd (hereinafter called "Groserdam:), being the firstnamed defendant, his brother, Roger Louis Juers, and mother, Eileen May Juers, seeking declarations that Groserdam holds certain farming lands upon a constructive, resulting or implied trust for the benefit of nominated family members including himself and/or their respective trusts, and ancillary relief.
The defendant, Roger Louis Juers, has appeared and denied the relief as sought by his brother and sought a declaration that the farming lands in dispute are held by Groserdam as trustee for his own family trust, being the R L Juers Family Trust.
Mrs Juers appeared and admitted certain of the plaintiff's allegations, but, has pleaded that she was not in a position to plead to many of the matters as set out in the statement of claim.
FAMILY BACKGROUND
Glen and Roger are children of the late Arthur Gustav Juers who died on 24 January, 1969, then aged 64 years. Arthur was married to Eileen and there were five children of this marriage Glen, his brothers Bronte and Roger, and two daughters, Kay and Helen. The Juers have farmed land in and around Charleston since the 1860s. The land has in recent generations been used for dairying, beef cattle, sheep and the growing of potatoes.
Glen, Roger and Mrs Juers still carry on the farming business in partnership. Glen attends mainly to the growing of potatoes and Roger is involved in the dairying side of the partnership.
Bronte was initially involved in the family farm partnership, but decided to conduct his separate farming operation. Mrs Juers said Bronte was provided with some financial assistance to commence his own farming pursuits. Bronte left the family partnership in the lifetime of her late husband. At the time of Arthur's death, he left his interest in the farming lands equally between his wife and sons, Glen and Roger. Consequently, at the present time many titles are vested in the names of Mrs Juers, Glen and Roger.
During the lifetime of Arthur, he and his wife had gifted a property to Glen. Glen is the eldest child and Roger the youngest. There is about a 10 year difference in the ages of the brothers. The property gifted to Glen has been referred to during the hearing as "Woodside". This property was transferred to Glen in 1965 for a stated consideration of oe12,000, and, then as was a common practice, Mr and Mrs Juers each 18 months forgave portion of that debt, until the final sum was forgiven in about the year 1975.
In 1977 the property known as "Buckleys" was purchased. The purchaser in the contract note was described as "Roger Louis Juers and/or nominee or nominees, Farmer Charleston". Prior to settlement, Roger nominated as the purchaser Groserdam which at all times has been the trustee company of Roger's discretionary family trust, and, thus at settlement Groserdam became the registered proprietor.
Glen, Roger and Mrs Juers sold a farming block referred to as "The Scrub" and used these moneys as a deposit for the purchase of Buckleys. The remainder of the purchase price was raised by way of mortgage finance.
Glen, Roger and Mrs Juers are also the registered proprietors of other broad acres which have been referred to as "The Homestead", "The Nook" and "Mum's Place".
Glen is seeking a declaration that Buckleys is held by Groserdam on trust other than the R L Juers Family Trust.
THE FARMING LAND
To appreciate the nature of the relief sought it is necessary to identify the various parcels of farming land. All of the farming lands have been used for the benefit of the farming partnership.
The properties mentioned during the hearing were:
The Scrub
This land comprises two sections, an area of approximately 112 acres. This scrub was in the name of Arthur Juers until his death and then passed under his Will to his wife, Glen and Roger and was sold in 1977. The sale moneys were applied towards the purchase of Buckleys.
The Homestead
This land comprises allotments ofapproximately 149 acres. This was the original farming block with many improvements including the dairy sheds and workshop. This property is registered in the names of Mrs Juers, Glen and Roger in equal shares as tenants in common.
The Nook
An area of approximately 285 acres in the names of Mrs Juers, Glen and Roger in equal shares as tenants in common.
Mum's House
A small allotment of land of a few acres with a residence adjoining Buckleys and in the name of Mrs Juers.
Woodside
A farm comprising a number of sections of approximately 83 acres in the sole name of the plaintiff. Glen erected a house on this property and resides there with his family.
Buckleys
A farming block comprising a number of sections and being approximately 120 acres purchased in 1977 with the aid of the moneys from the sale of the Scrub and registered in the sole name of Groserdam.
HEARING : FAMILY BACKGROUND
The parties have tendered numerous books of documents, by consent, including financial and taxation returns for the partnership, Groserdam, and all relevant documents in regard to the sale of the Scrub and the purchase of Buckleys. The family have until recently used the services of one accounting firm for the preparation of all financial accounts for both the partnership as well as the individual returns. On the face of that documentation the following is the position:
ù On 9 March, 1977, Raymond Clive Schubert of Lobethal entered into a contract with "Roger Louis Juers and/or nominee or nominees farmer of Charleston for the sale of Buckleys for a purchase of $175,000". The contract was signed by Roger on 9 March, 1977. There was a condition that the contract was subject to the approval by 13 April, 1977 of a loan of not less than $100,000, but it appears that this was waived. Roger subsequently appointed Groserdam Nominees Pty Ltd as the purchaser.
ù Eileen, Roger and Glen entered into a contract note with Mr and Mrs Bruce Allan Noske which was signed by them on 5 April, 1977 for the sale of the Scrub at or for a price of $80,000 and settlement was fixed for 1 July, 1977. The parties received approximately $77,000 being the net proceeds from the sale of this land which was then applied for the purchase of Buckleys.
ù Settlement on Buckleys occurred. Initially the vendor provided finance but subsequently finance was forthcoming from the Australian New Zealand Banking Group as well as the Commonwealth Development Bank of Australia.
ù All financial returns for the partnership, A Juers & Co, were tendered from the year 1974 until recent years. This has been the operating vehicle for all farming operations until the present time and shows the current accounts or capital accounts of the three partners, mother, Glen and Roger. The current accounts of Glen and Roger in the year 1966 were similar with Glen, $56,620, and Roger $53,150. The capital accounts were an accumulation of undrawn profits.
On the death of Arthur, substantial Federal and State succession duties were incurred. The family thereafter were conscious of this fact and had, over the years, received advice as to the transfer of farming lands into trust, as well as varying the form of their trading entity for taxation benefits. As a result of that advice in the 1976-77 period a number of companies were incorporated and trusts created.
The family trading partnership of Mrs Juers, Glen and Roger which traded under the name of "A Juers & Co" was taken over by what was described as the "A Juers Unit Trust" and the trustee of this trust was a company, "Schoenthal Nominees Pty Ltd". The units in this trading trust were issued equally to the family trust of Glen and Roger. A family discretionary trust was established for Glen and his family and the trustee of that trust was the company, "Ettrick Nominees Pty Ltd". Glen and his wife were the shareholders and directors of that company. A trust was settled for Roger's benefit called the "Roger Juers Family Trust" or the "R L Juers Family Trust" and the trustee of that discretionary family trust was the company, "Groserdam Nominees Pty Ltd". Roger and his wife were the shareholders and directors of Groserdam.
Although there had been valuations of certain farming lands, no steps were taken to vest any of the farming lands in the trusts. It may well be the incidence of stamp duty was one factor which caused difficulties.
Thereafter, as to be expected, the family received substantial accounting fees for what was necessary for the management of the trading unit trust and its operating company, both family trusts as well as their respective trust companies. By 1979 the only company which held any assets was the company, Groserdam, as the registered proprietor of Buckleys.
The family was anxious to then reduce its accounting and statutory fees and received advice that Groserdam could be the trustee of the trading unit trust as well as both discretionary family trusts. Groserdam was the only company in the structure that held any assets, namely Buckleys, hence its need to be retained. However, the shareholding was held by Roger and his wife, Maureen. To enable Groserdam to extend its area of operation as it was necessary for there to be equality between Glen and Roger Maureen transferred her share in Groserdam to Glen. Consequently, Groserdam became the operating company as well as the corporate trustee of both Glen and Roger's family trusts.
The purchase of Buckleys was reflected in the accounting. The property was shown as an asset in the R L Juers Family Trust. The moneys which came from the sale of the Scrub were shown as a debt owed by the R L Juers Family Trust to Mrs Juers, Glen and Roger. Similarly the deposit of $5,000 was an advance by the trading partnership. All payments of interest on the mortgage moneys was shown as a partnership expense, and, all capital repayments of such loans were debited against Roger's own loan account in the trading account. Consequently, over the years this has resulted in a gradual but apparent disparity between the capital accounts of Glen and Roger in the books of the operating unit trust.
EVIDENCE
The plaintiff gave evidence in support of his version of the history of events of this partnership and called his mother who is now aged 81, as well Mr Ronald Schubert the real estate agent who negotiated the purchase by the family of Buckleys, and, Mr Anthony John Hughes, a chartered accountant who has recently perused all of the relevant company documents and accounts and tendered certain advice to Mr Glen Juers on his views of inferences to be drawn from such accounting.
Roger gave evidence and as well called Mr Michael Boyle who was the accountant for the family from 1977 until 1984, and, Mr Simon Vine, also a chartered accountant who has continued with such work until the present time.
PLAINTIFF'S EVIDENCE
Mr Glen Juers confirmed the family background. He outlined how his father had told him in the 1950s that, as happened to his father, he would not get wages but would see to it that he received land. He left school at 14 to work on the farm and, as was the family practice, received his keep and some pocket money, but no regular wage.
Glen said he has worked on the family farm until the present time. He married at 25. He said his father advised him that he wanted to fulfil his promise and said "I'll give you Woodside" and they went down to see Mr Ron Cook, who at that time was his father's accountant. Mr Cook explained that the best way to implement his father's suggestion was for the land to be sold to Glen and then every 18 months there would be a "forgiveness" of that debt. He said he thought the property was sold to him for oe12,000 and over the years that debt was forgiven. This property was transferred to Glen by his parents in 1965. Glen was then aged 26. Glen explained he and his wife built a house on the Woodside property where he still resides.
He said Roger left school at 15 to work on the farm property.
He was aware of the difficulties that succession duty had caused on his father's death and believed discussions occurred in the early 1970s about the nature of trusts to avoid such duties. He remembered in this period that his mother, Roger and himself went to Adelaide to see a solicitor when the nature of trusts was explained and of transferring the land into a trust as then it "doesn't belong to anybody, nobody owns it, so if any one of us was to die we wouldn't have to pay probate". He said he was aware of the costs involved in transferring land to a trust but after this had been achieved there were tax savings.
Mr Glen Juers said these discussions continued over the years. He recalled talking about trusts with his initial advisers the accountancy firm of Cavender & Adams, and, then their successor, Mr Mike Boyle. He said he remembered Schoenthal Nominees Pty Ltd was incorporated and that was "for the three of us, mum, Roger and myself". He said Ettrick Nominees Pty Ltd was also incorporated and he was proposing to put "my land over to me, because I own land". That was a reference to "Woodside". He was then asked a question about the company, Groserdam, and was asked particularly.
"Q. What was Groserdam for. Any idea what that was for.
A. That's for the two of us.
Q. When you say for the two of us, just take your time and explain what you mean by it was for the two of you.
.....
Q. What was Grosserdam for.
A. For Roger and myself, because mum didn't want to be a part of it, otherwise it would have gone to Schoenthal."
He was then asked the following:
"Q. What was Grosserdam, as far as you were concerned, to do.
A.To form a trust.
Q. What was the trust to do.
A. To be the owner of that land.
Q.The owner of which land.
A. Buckleys."
Mr Glen Juers said that the Scrub block was some 3 miles from the Homestead and was hilly, steep and gravelly and Buckleys was a preferable farming block as it was almost adjoining the Homestead. He said he first approached Roger about Buckleys, but Roger was not interested as "knowing Schubert he'd want far too much and much more than what it's worth". Eventually he said he contacted Mr Schubert and the initial price was far too high. Family discussions occurred between himself and Roger and they received much help from the agent and they decided on a price. An offer was made by both himself and Roger. They had decided that the Scrub block should be sold to assist the purchase.
A contract note was produced to him which was signed by Roger. Mr Glen Juers said he had never seen that document, nor, did he know why Roger had signed it. He had seen that document for the first time just prior to the trial. He was asked:
"Q. Did you ever raise the question with Ron Schubert about 'where's the contract, what's happening. Have you got Buckley's.'
A. If it was done it was done in Mike Boyle's time because he was handling that with Roger."
Mr Juers said he did not believe in 1977 when the debate was proceeding that there was any discussion as to who would be the owner.
Mr Glen Juers said he believed that all moneys to meet the mortgage on Buckleys were paid by the partnership, A Juers & Co. He was asked:
"Q. Prior to the signing of the mortgage, was there to be any difference between who paid the interests and who repaid the principal.
A. No, A. Juers & Co."
Mr Juers said he thought the accountant, Mr Boyle, became involved in their family affairs at about the time of the purchase of Buckleys. He said he believed he had discussions with Mr Boyle about the purchase of Buckleys as well as with his brother Roger. He said:
"Q. Do you have a recollection as to why it was that Buckleys was registered in the name of Groserdam.
A.Well it was from a discussion with Mike Boyle.
Q. What was the reason.
A.Well as I pointed out before, both of us to - like both the owner of it and that was the way it was done. He did say I know, he did say, he said 'It won't matter whose name it goes into, because it won't make any difference to you'. The reason was because Roger didn't have a trust and he said he could use that as his trust, and it wouldn't make any difference to Buckleys because you're both paying for it and you both still own it. He said that won't make any difference, so Groserdam was actually used for Roger's trust then, because it won't make any difference to Buckleys because he said 'You're both paying for it and you both own it'."
He was asked further:
"Q At that stage, that is to say, at the time of the completion of the purchase of Groserdam, who did you believe were the shareholders in Groserdam.
A.The two of us.
Q. You have an understanding as to what proportions of the shares.
A. 50%."
Mr Juers said he believed there was a conversation with Mr Boyle about the house on Buckleys being transferred to Roger as some security for him, but, it became "too costly, trying to get surveyors in and then also creating another title" for the house.
He said he was aware that after Buckleys was purchased they applied for rural assistance with the assistance of the agent, Mr Schubert, because of the cheaper interest rates of those moneys.
He said Mr Boyle did their accounting work from 1977 up until he thought 1984. He outlined how Mr Boyle would prepare the financial returns for all parties, including his mother, all relevant minutes and they would go through them and sign wherever was required. He said he remembered an occasion in 1979 when Mr Boyle said that he had been doing things the wrong way and advised him to sell some of the trusts. He said he thought this was because it would be a saving to them if everything was placed in the one trust. He recalled that he said it would be preferable for the company Schoenthal to be involved as he had never liked the name Groserdam. He recalled that Mr Boyle told him that Groserdam had a mortgage and it would be difficult to do anything else.
Mr Juers was confused about the initial shareholding in Groserdam. He said he thought his initial shareholding in Groserdam was "50%. .. I had my name on that". When he found out he had to have "his name on it" he said he was surprised.
Mr Juers said that he believed after the purchase of Buckleys the partnership paid for a number of improvements including bores, fencing and by 1985 Roger had moved into the house on Buckleys.
He said he thought there was a debate between his brother and himself in about 1983 when the question of separate ownership of farm land was mentioned for the first time. He recalled a dispute about a tractor and eventually there was a conference with Mr Boyle. He said he had little idea what that conference was about, but Mr Boyle advised him that Roger wanted "out" and talked about a division of the properties including the Homestead and Buckleys. He said it all came as a shock to him as Roger made it plain that he did not want to continue working with himself and his sons and preferred to make his own farming arrangements. He said it was not mentioned at this meeting any suggestion that Roger owned Buckleys. He said these discussions continued but nothing was ever resolved as every time they met "something different was suggested".
He was aware in this time that valuations of the properties, the Homestead, Buckleys and the Nook had been prepared no doubt to assist their discussions.
He said Mr Boyle ceased to be their accountant and Mr Simon Vine replaced him and continued in the same manner with the preparation of all relevant financial accounts.
Mr Juers said over the years he always signed whatever was placed before him by the accountants. He said he only ever started getting copies of these documents "when Simon Vine started doing the books". However, he did look at the accounts and nothing seem irregular.
In cross-examination, Mr Glen Juers kept reiterating that at all times he believed he had an interest in the company, Groserdam, and it was not until a conference between the brothers in a solicitor's office in Mount Barker in about 1984 when Mr Boyle was present, that he was advised that Buckleys was Roger's property.
He admitted that he was now aware principal amounts paid for Buckleys had been debited to Roger's account. Mr Juers was confused about the events of 1979 when Maureen Juers transferred her one share in Groserdam to him as he said he understood that he was a shareholder in this company, and, indeed until the present time he really did not understand or appreciate the reasons why that share was transferred to him.
Mr Glen Juers called his mother, who is now 81 and she outlined the background details of their farm and the nature of her husband's involvement in the farm. It was apparent during Mrs Juers' evidence that where she had good recall of some events, in other areas her memory was deficient which is no doubt to be expected not only because of her age, but because of the events between 1977-79.
However, she did recall that in 1965 the property at Woodside was transferred to Glen and said:
".. Glen was only getting a very small wage and because we had to pay his father for our property, he was of the same impression that Glen would have to do the same, and so he was only getting a very small wage and we gradually, each year, - there was a law then that gift duty came in and you could only give them so much and that worked out around about as much as he would be entitled to had he been getting a full wage. "
Consequently, over that period Woodside was gifted to Glen.
She recalled that when Glen married, Roger was about 15 or 16 as he was about 10 years younger than Glen and that he gradually became interested in the farm as well as their son, Bronte, but Bronte eventually went to the South East to farm.
Mrs Juers did recall that when her husband died they had to pay much duty and were obliged to borrow from a bank to pay this duty. She recalled that after her husband died there was talk about the use of trusts so as to avoid death duties. She felt this advice came from Mr Boyle. She said:
"Yes, I never, ever understood the trust business at all, because once the boys took over, I mean I didn't have anything to do with the business part of it, apart from their books and things like that."
Mrs Juers recalled when the property Buckleys was purchased, as far as she was concerned the two boys were the owners of Buckleys. She was asked specifically:
"Q. As far as you were concerned who was to own Buckleys.
A.The two boys naturally, A. Juers & Co.
Q. What about yourself.
A.I just come in the A. Juers & Co., I would be with what was just between the boys.
Q. Did you at the time of the purchase of Buckleys believe that you were to have a share in Buckleys or not.
A. Yes, naturally it was A. Juers & Co. and I was in there wasn't I?"
However, she said she did not discuss the ownership of this transaction at all with Mr Boyle. Mrs Juers' view was that the beneficial owner of Buckleys was A Juers & Co and said there was never any discussion about putting Buckleys into Roger's name.
She was asked whether she was now aware that Roger was in effect alleging that Buckleys was owned by him and she simply said, "news to me", and, reiterated that it was always in her view owned by A Juers & Co.
Mrs Juers said that when Roger left school and went on the farm she thought "he got full wages because Glen was getting full wages". However, Roger's early bank book was produced and it appeared that each year he received a small sum which Mrs Juers confirmed was his Christmas present. She was asked specifically about the purchasing of Buckleys and whether it was a purchase for Roger as Glen had been given Woodside and she answered "never no". One detected a slight emphasis in the manner she answered several questions in favour of her eldest son.
It was apparent that Mrs Juers never really had an appreciation of the various trusts and companies that were established in 1977.
The plaintiff also called Mr Ronald Brian Schubert, the agent who negotiated the purchase by the family of Buckleys in 1977. Mr Schubert, an experienced agent and no doubt respected by all, was well known to all parties. He was uncertain as to which brother first contacted him in regard to the purchase of Buckleys, but, in any event thereafter spoke with both brothers concerning the property.
He recalled that there were protracted negotiations as the initial price of the land was high and there was a large disparity between the Juers' offer and the price as sought by the vendor. He said he probably saw the brothers on at least ten or a dozen times during the negotiations. However, he said Roger was eventually the one who was running with the proposal, but, there were times when Glen was present.
Eventually he prepared the contract note which provided that the purchaser was Roger Louis Juers. He was also aware that the brothers were selling the Scrub block and those proceeds were being applied to the purchase of Buckleys. He said although Roger was the person doing most of the negotiating, Glen was certainly involved sufficiently to be aware of all details of the purchase.
He was aware that Roger was negotiating with the Bank of Adelaide for an advance of $100,000 and "Roger was knocking on doors to raise this sum". He prepared a letter to the Minister of Lands for Roger to sign. This letter, which was signed by Roger, was an application for rural assistance. That letter specifically mentioned when outlining the background:
".. hence the purchase of the additional property is in the name of Roger Louis Juers and/or nominee of which his family trust will become the nominee."
There is no doubt that this reflected his instructions.
The plaintiff also called a Mr Anthony John Hughes, an experienced chartered accountant who, after perusing relevant documents, prepared for the plaintiff's solicitors a detailed historical narrative of the past events and ventured an opinion of those background matters.
Mr Hughes in his report commented how the deposit for Buckleys was paid out of the partnership funds and confirmed that the principal repayments for the borrowings were shown as a liability to Roger. He noted that the interest factor on those borrowings had been treated as an expense of the trading unit trust. He said it was apparent that all farming expenses were paid by the trading entity, A Juers & Co, and it received all income.
He was aware that valuations had been prepared of some of the blocks. Mr Hughes said that as far as he was concerned on the face of the final accounts the property, Buckleys, had been treated in a proper accounting way. He pointed out that he believed the loan accounts had originally arisen in the partnership and then the unit trust by reason of undrawn profits and drawings were deducted from such accounts. Eventually there was a significant disparity between Glen and Roger's accounts which reflected the principal repayments for the purchase of Buckleys as being debited to Roger's loan account.
Mr Hughes agreed that all of the documentation before him was consistent with the proposition that Buckleys was purchased by Groserdam Nominees Pty Ltd acting as trustee for Roger's family trust and all relevant amounts have been accounted for in the financial records.
Mr Hughes commented that Buckleys had been treated for trading purposes the same as all other properties and, for that matter, the property owned by Glen at Woodside. No mention was made in any of the accounts as to the value or ownership of the farming lands other than Buckleys, but, this was not an unusual position.
It was Mr Hughes' view that Glen was entitled to an interest in Buckleys and he did gain some support from Mrs Juers. He did not believe there was anything that he had read where Buckleys was to equal the benefit received by Glen of Woodside. Mr Hughes did not confer with either Mr Boyle or Mr Vine as to their instructions or the basis for the actual preparation of these accounts.
DEFENDANTS' EVIDENCE
The defendants called both accountants who have been involved in the preparation of all family financial returns from 1977 to the present time.
Mr Boyle said in the late 1970s he was living in the Woodside area and was requested by the family to take over the accounting work for this family from the prior firm. He believed it was in 1977 when he first became involved as he recalled that when he became involved there were a number of trustee companies then in place involved in the running of this family venture and that they had been established prior to his arrival.He said thereafter he met and conferred with both the brothers, Glen and Roger, on many occasions. He believed he was first approached by Glen and was appointed to attend to their financial and taxation affairs. He said both brothers had much interaction with him in regard to those affairs. He said "I would say that Glen had a - he was the older brother and had a slightly higher profile if you like in the exercise".
Mr Boyle said that Buckleys had been acquired prior to his involvement. He said from discussion and information he was aware that there had been considerable succession duty paid by the family on the death of the late Mr Juers and one purpose of the trusts was to assist against the future incidence of that duty.
Mr Boyle said that from about 1978 to 1984 he was involved in the preparation of all the financial accounts and taxation returns for both families. He said his practice was to call at the Homestead block where he would generally meet Roger and Glen, collect all of the materials, go through cheque butts to ascertain amounts that had been expended, or, needed explanation and from instructions from the brothers, he would then prepare all of the financial statements and tax returns.
Mr Boyle confirmed that the first final accounts he had prepared were for the financial year 1978. That included the financial returns for the trading trust, A Juers & Co. Mr Boyle said that the individual family trusts had been set up in the prior year so the prior statements did not reflect this change. Consequently, he prepared the accounts on the basis of the new unit trust structure and that each family trust had an equal unit holding in the trading unit trust.
Mr Boyle commented that the capital accounts of both brothers as shown in the unit trust were effectively undrawn profits that had been built up over the years.
He was asked:
"Q. But do you recall any occasion when the question of the accounting treatment of the property known as Buckleys, which was purchased by Grosserdam Nominees Pty Ltd, came up as an issue and had to be considered.
A. I can't recall any issue relating to it. As I recall, from an accounting point of view, I don't think there was a great issue with regard to it. I have said in the statement that I have given some time ago, that my feeling would be that in the first year or two, that amongst other issues, would have been discussed with them both, just so that we all understood the same understanding about the accounts, but I can't give you an absolute recollection of a particular time."
Mr Boyle confirmed the accounts as prepared showed that Buckleys was owned by Groserdam for Roger's family trust. Mr Boyle confirmed that the payments of principal for moneys owing by the Buckleys land were charged or debited to Roger's account and interest on the loans was an expense of the unit trust.
Mr Boyle prepared the financial returns for the trading unit trust and company returns for Schoenthal, Ettrick and Groserdam and as well individual family members' tax returns. Mr Boyle said when he completed all of these returns he would attend both Roger and Glen and at times their wives and they would as a family go through all the documents and the same would then be signed with copies of all left for each brother.
He was asked:
"Q. .. do you think Glen would have had copies of the Grosserdam accounts.
A. Things were fairly open and so I would have thought so, but once again, I can't give you that as an absolute statement of fact."
There were draft documents in the handwriting of Mr Boyle which were placed before him and he commented that these were his notes concerning the possibility of separating the operations of the brothers as well as the ownership. He thought both brothers had instructed him and his notes he felt were some of the scenarios and possibilities that might flow from a division of assets. Although much was made of these notes I think it represents nothing more than his notes and views of a general discussion between the brothers concerning a possible division of their interests.
I do not think it provides any assistance at all with the question of the legal issue of the ownership of Buckleys.
Mr Boyle confirmed that with the debiting to Roger's loan account of principal mortgage repayments of the Buckleys mortgage a gradual disparity occurred in the loan accounts of Roger and Glen.
Mr Boyle did comment that there were discussions between the brothers about splitting their activities in the early 1980s. Mr Boyle said:
"I think the biggest problem was that it was difficult to find a dissection of the properties which was going to allow each brother to continue in operation and also which wouldn't put too much of a burden on the other in terms of finances. That's my very crude recollection of it ."
I believe that this is an accurate comment.
Mr Boyle also remembered that in 1984, steps had been taken to have some of the properties valued, so reflecting the ongoing discussion between the brothers.
He was then asked:
"Q. During the time that you were acting as the accountant for the family, can you recall any ascertion by Glen to the effect that he had a half interest in Buckleys.
A.No. It's something I would remember because it would have fairly significant consequences."
He agreed that suggestion went against all of the documentation and the manner in which he had treated that property in the financial returns.
Mr Boyle said he certainly remembered in 1979 the discussions concerning the continuation of the use of the companies Groserdam, Ettrick and Schoenthal. He said the brothers were unhappy about the costs in maintaining these trusts and companies and their annual fees and they looked at ways in which such fees could be reduced. He said the obvious way would be to liquidate the companies which were not in active use. Groserdam was the only company that as trustee held any property, and, to avoid any complication it was obvious that company should be retained. As a result of these discussions the companies, Schoenthal and Ettrick, were liquidated, and, Roger and Glen both became equal shareholders in Groserdam with the share transfer to Glen by Roger's wife, Maureen.
In cross-examination, Mr Boyle was pressed about the absence of advice to Glen concerning Buckleys' title. He pointed out that was the first year in which he had to come to grips with the family situation and their accounts and particularly of this purchase of Buckleys. He said:
". so there would have been I believe, quite a reasonable discussion about those issues, and making sure I had them all tagged in the right way."
He said he did not necessarily assume that the prior accountants had given advice and would never make such an assumption when taking over a new accounting job.
He then said:
"My job is always to get back to basics, people make mistakes and I like to make sure they were right. I feel quite sure that I would have gone through the general position with regard to the farming operations, the transfer from the partnership to the trusts, the setting up of the two family trusts and the Buckleys acquisition. I can't tell you the particular conversation but I feel quite confident that I would have had that conversation. I wouldn't have relied upon someone giving previous advice."
He was then asked:
"Q. You are confident that you would have told both Glen and Roger of the interest and principal factor, and how you're dealing with that.
A. I feel quite confident I would have, I can't give you a time but I feel quite confident I would have dealt with that."
Mr Boyle, in cross-examination, was pressed about specific advice to Glen concerning Buckleys and he pointed out that it was 18 years ago and "testing me a bit". He was then asked:
"Q. Is it therefore the case that you simply can't say whether or not Glen understood who was the beneficial owner of the Buckleys property.
A. I believe he understood it quite definitely, I am quite sure - my belief is that he understood it because there were a number of discussions that took place but I cannot give you instances, where the issue of Buckleys would have come up as being a major problem if he didn't have an understanding. It's by default effectively; one assumes that if there is a long period of time in which there are general discussions about things and no-one has raised their hand as an exception, then one assume that the person understands."
Mr Boyle did confirm that all of the farming land and its ownership was not reflected in any of the accounts other than the purchase of Buckleys.
Mr Boyle commented that the reduction of the principal repayment of the loan was debited to Roger's loan account whereas all other costs were divided equally and that was the only thing on the face of the final accounts, the gradual inequality in the capital accounts that gave rise to any question for the reason of the disparity in the capital accounts.
However, the final accounts for Roger's family trust have always reflected Buckleys as an asset of that trust and that has been the case from the time Mr Boyle commenced his involvement. He was asked:
"Q. You believe Glen would have had a copy of that in his final documents.(by 'that' it meant Roger's own family trust)
A. I believe so. If it had been a partnership, if you like in loose terms, a partnership of two brothers that were somewhat at odds with one another and really there for convenience only and there was a lot of personal information, that would have brought a different matter to it and so then I would say there is every likelihood that they wouldn't have had copies of one another's. But I believe, in the circumstances that prevailed at that time, there would be no reason why there wouldn't have been."
Mr Vine is a chartered accountant with considerable experience. He said he became involved with the Juers family when he was handed the work by Mr Boyle in 1984, and, has thereafter attended to the preparation of final accounts and tax returns of the family.
He commented that when he took over he simply observed and followed the manner in which the brothers had traded in prior years. He said it was his practice, like that of Mr Boyle, to attend the family and obtain all of the company records and other personal information, collate that and then there may well have been further information required and he eventually prepared the relevant financial and tax returns.
Mr Vine commented that he was aware that a property in the name of Mrs Juers and the two boys had been sold and these moneys were applied to the purchase of Buckleys, and, consequently this gave rise to a loan owing to the R L Juers Family Trust of some $82,000. It appeared that the other sums borrowed for the purchase had been repaid.
Mr Vine commented that when he attended the family he conferred with both brothers and when he returned he would attend the brothers and their wives.
He confirmed the accounts showed Groserdam as holding Buckleys and the same was shown as an asset in Roger's trust. He was then asked:
"Q. Did you give them copies, both brothers, of all the documents.
A.Yes .. In the early years the whole thing was put in together so there would be the trading trust, the two family trusts in the same book, two copies of the same book would go."
He believed this occurred in 1984, 1985 to about 1990. He said at that time there was the one family farming operation and there were no secrets between the brothers, and, consequently, that is why all the financial returns for the trusts were placed in the one book of both brothers and each brother had a copy of each other's family trust.
Mr Vine said he was quite positive that this occurred in the early years, but from 1990 he believed their affairs became separate.
Mr Vine also said at one stage he was asked to update valuations of the properties including Buckleys. He noted that they had been valued on a prior occasion when discussions ensued between the brothers. He was asked particularly if there was a suggestion that Buckleys when it was valued was treated as if it was owned by Roger and Glen in equal shares and he said:
"You could draw that conclusion although that conclusion was never drawn; it seemed to be leading that way".
Again, as applied to the notes of Mr Boyle, Mr Vine's notes can be seen as preliminary discussion and nothing more. No firm findings can be made from all of these negotiations or notes made by Mr Vine.
Roger gave evidence and confirmed that he had left school in 1963 aged 15 and went to work on his father's property. He had been able to find his 1959 bank book which showed very little in the way of deposits except towards the end of the year oe10. Roger explained, like his brother, he worked for his father and at the end of each year his father would say "here's ten pounds" and he would place it in his bank. He said he believed he was treated in the same manner as his brother, Glen, working on the farm under directions of his father, and, received board and keep together with some other small financial benefits.
Roger said he was aware that the property of Woodside had been transferred to his brother and said he was aware that his parents were going to give Glen this property and that was all he knew of the gift. He said his elder brother, Bronte, had left the farming partnership when Roger was about 14.
Roger said he was aware that accountants suggested he be involved in the partnership and this was when he was about 18.
Roger said he was well aware of the acquisition of Buckleys in 1977. He had been married for about 9 years and his wife was then expecting their fourth child. He said in about 1977 he had discussions with his mother and eventually decided to move into the bigger house on the Homestead property.
Mr Roger Juers said he believed the first time Buckleys was mentioned was when Mr Clive Schubert came down to the shed on the Homestead property and advised both Glen and himself that he was selling his property. He said at that time they were not interested as they had recently purchased land and felt they could not commit themselves. However, they then discussed selling the Scrub which he regarded as non-viable and use that money in the purchase of Buckleys. He said discussions took place between Glen, his mother and himself about this proposal and they had many discussions with Mr Schubert and eventually the contract note was signed by him as the purchaser.
Mr Juers said he then contacted the Bank of Adelaide. Initially they advised him that they would assist but then shortly before settlement declined, resulting in much effort to secure alternate finance.
MrRoger Juers denied the suggestion by his brother that he had purchased this land for himself and his brother. He said his brother was fully aware of all the negotiations that he had with Mr Schubert and, indeed, was present on many occasions. However, he kept him informed of all developments.
Mr Roger Juers remembered a discussion between Mr Boyle, his brother and himself in particular how the bank loan was to be repaid. Mr Juers said he was the one who went off and did all the work to raise the purchase moneys because he was buying the property. He said he contacted Bennett & Fisher but they refused assistance. In the meantime Mr Schubert had assisted him in writing to the Minister of Lands for further assistance and those letters reflected the position.
Mr Roger Juers confirmed that he had discussions with Mr Schubert about obtaining rural assistance hence the letter of 6 April, 1977. He said he believed Glen was aware of each step which occurred in the purchase of this property until its subsequent settlement. He said his mother said that he would be able to have a place of his own, "the same for you as I've done for Glen".
Mr Juers confirmed that he also had discussions with both the ANZ and Commonwealth Development Bank. He said as the Bank of Adelaide refused assistance at a late stage, and there was a great sense of urgency to obtain finance, he approached the ANZ bank which approved funding for the purchase. He confirmed that the company, Groserdam Nominees Pty Ltd, was the purchaser. He said his brother was present when he believed he and his wife, Maureen, signed the mortgage. He said the document was signed near Ron Schubert's car because he had called at the house and his wife came to the workshop and they completed that mortgage. He said it was never anticipated that Glen would sign that mortgage. He said he was confused about whether the actual mortgage they signed at the workshop was the one for the ANZ bank or the Commonwealth bank, but certainly he remembered signing a mortgage in those circumstances.
Mr Juers confirmed Mr Boyle's yearly practice was to contact Glen and himself and they would go to Glen's place and sit down when all the relevant details were provided and, subsequently, Mr Boyle would return and they would all meet together with wives and sign all relevant documents.
Mr Juers said he was fully aware that from 1977 interest on that money was treated as a trading debt and the principal payments were debited to his loan account.
Mr Juers said he remembered a conversation involving Mr Boyle when Glen was present and there was a clear discussion about him personally repaying the principal loan by way of debiting his loan account and thus it was his responsibility.
Over the years he was aware of the disparity, which occurred because of this debit, between his and his brother's loan accounts. He said in fact he had mentioned this to Mr Boyle and was told he was paying for his property and he accepted that position.
Mr Juers confirmed that the trusts had been formed initially so that land could be placed in them to avoid succession duties. He said eventually they were expensive to run and Mr Boyle had advised the restructure to save this expense. However, Groserdam would be retained as it involved the purchase of Buckleys and thus it was not necessary to transfer that property to some other entity. He said that these discussions particularly involved his brother, Glen, and the reason for retaining Groserdam and not the other companies was the fact that it held "the mortgage on that property". He said he was assured by Mr Boyle that Groserdam could in fact act as trustee for those other companies. He said at that time he was aware that his wife, Maureen, and himself were the directors and shareholders in Groserdam and because of the need for Groserdam to involve itself as trustee of the other trusts, it was proper for Maureen to transfer her share to Glen. Again, he said this was discussed in Glen's presence. However, he was happy with this situation as it would save ongoing accountancy costs and fees of the various companies.
He said in these yearly meetings with Mr Boyle both Glen and himself would question Mr Boyle on the accounts.
Roger denied that when Buckleys was purchased he was an agent for himself and his brother or, indeed, mother. He was aware that in the Buckleys transaction when the Scrub was sold those moneys were shown as owing by Groserdam.
Mr Roger Juers said he believed it was in Mr Vine's period of accounting when he had discussions about a division of their affairs and as Glen was involved with Groserdam he refused to involve himself in any transfer and he believed this was the catalyst that caused his brother to institute these proceedings.
Mr Juers was adamant that his brother knew that when Groserdam was incorporated he did not have any interest in that company and that this had been explained to him, particularly when the family went to Adelaide in 1977. Further in 1979 when various other trusts were terminated he was aware that Groserdam held the mortgage of the land which he in effect owned and Mr Boyle had discussed this with him.
Mr Juers confirmed that valuations were prepared of the land over the years particularly Buckleys, but never Woodside. He said he was aware of this and argued with Glen about the absence of a valuation for Woodside. He denied the suggestion that Buckleys was included because all the partners regarded it as being an asset owned by Groserdam for all of the family members.
He denied that at any time he tried to hide or cover up the fact that Groserdam had been the registered proprietor of this land for his own trust.
Mr Juers said he remembered when Glen insisted or requested that Buckleys be valued that he specifically told him "I'm paying for the property twice".
FINDINGS
The difficulty in this matter as reflected from the above summary is endeavouring to recall the relevant conversations and events which have occurred over 20 years. The evidence of independent persons is of great importance. Initially there was a close family relationship, but gradually as the difficulties have erupted between the brothers over the years in the reasoning process it is easy for inferences to be drawn and such inferences treated as facts.
I do not believe that either brother is other than endeavouring to recall what they regard now as an accurate recall of relevant events.
The accountancy evidence is very important. Both Mr Boyle and Mr Vine gave their evidence in an impressive and independent manner. They are both very competent accountants and, at all times, attended to the preparation of final accounts and taxation returns for this family partnership, the unit trust and the family individual returns in a very proper manner.
The new unit trust trading structure had been established prior to Mr Boyle's involvement in 1977. He received his instructions from both Glen and Roger, indeed, at that time he thought Glen being the older brother "had the higher profile". From the outset of his instructions, the property Buckleys was treated in those final accounts as being an asset of Roger's family trust and, at that stage, Groserdam was the trustee of Roger's family trust and the shareholders and directors of Groserdam, in that initial period, were Roger and his wife.
I accept Mr Boyle's evidence that each year he would confer with the brothers and then finally prepare all of the relevant final accounts for both the trading trust as well as their individual trusts and individual taxation returns, and, each brother had a full set of all of these accounts. This practice continued over the years thereafter and probably until the time the relationship was strained. It is readily apparent in reading such accounts that Buckleys was at all times shown as an asset in Roger's family trust.
As it appears from those accounts the principal repayments to the lending authorities were debited to Roger's loan account and the disparity between the brother's capital accounts is evident which is solely due to principal payments of Buckleys being debited to Roger's loan account.
Glen mentioned on several occasions that Roger and Mr Boyle conferred concerning the purchase of Buckleys, but he is mistaken as Mr Boyle's involvement with the family commenced after the purchase of Buckleys.
I believe on Mr Boyle's evidence, a finding has to be that in the early years he discussed these accounts in detail with both brothers, bearing in mind his recent appointment and particularly the manner of how he should deal with Buckleys in the accounts. This issue would have been discussed with both brothers and in those discussions I have little doubt that he stated that Groserdam held Buckleys for Roger Juers' Family Trust. Mr Boyle said he believed that in that period this discussion would have occurred as "he was still coming to grips with their operation", particularly as they changed in that year the basis of their operation from one of a family partnership to one of a trading unit trust. Consequently, he believed there would have been discussion for the reason why Buckleys was shown as an asset in Roger's family trust, and, in his words, "quite a reasonable discussion about those issues". He was also confident that he would have discussed with the brothers the method and how the trading unit trust bore the interest factor, and, the principal factor applied to Roger. He said he was quite confident that that issue was discussed and it is his view that Glen understood that "quite definitely".
I accept Glen's understanding of the purchase. It also has support from Mr Schubert who believed Glen was aware of details of the purchase.
Mr Vine, who accepted the responsibility for this accountancy work after 1984, said he reviewed this situation before embarking on his accounting.
Mr Vine mentioned that all the documents he prepared were all bound and a copy of all accounts provided to each brother. The trading trust and the two family trusts were bound together in the one volume and copies of the accounts were given to each brother. Mr Vine said this was his practice certainly until 1985. He said the activities were treated as the one operation and there were no secrets between each brother. Consequently, they were fully aware of each other's affairs until difficulties in about 1990.
Thus from 1977 to 1990 each brother had a copy of all financial accounting including the financial accounting of all family trusts and Roger's family trust had at all times been shown as the beneficial owner of Buckleys and, as well, apparent from such accounts was the gradual disparity in the capital accounts. Hardly a factor that would be overlooked.
Roger deferred to his older brother in the initial period of their partnership. This is borne out by the evidence of Mr Boyle.
However, my reservations in this matter are solely with the evidence of Glen. His evidence was unsatisfactory. His evidence of the establishment of the companies and trusts which is clearly now his state of mind is confusing. His evidence was that the company, Schoenthal, was related to this trading, which is correct. He said that Ettrick was for his land, again the correct position, but then maintained that Groserdam was "for the two of us". Clearly, it was established solely for the benefit of Roger. Glen must have in that period been aware of this fact and, as well, that he was not a shareholder until 1979 when Groserdam became the sole operating company for all family operations.
It was the family who decided to reduce their corporate structure because of the expense of the same and on the advice of Mr Boyle used Groserdam for all purposes. Glen contended the 1979 general use of Groserdam was because Mr Boyle "has been doing things the wrong way". This was not the position. There can be no criticism of the actions of Mr Boyle. The perhaps unnecessary corporate structure had been established prior to his involvement. It is this type of evidence that renders Glen's evidence of the historical narrative unreliable.
Glen must have been aware of the efforts of Roger to obtain finance for the purchase of Buckleys and the manner of the signing of the contract and then doing all acts at settlement without any involvement. Nor can I accept Glen's suggestion that Mr Boyle was involved in the negotiations for the purchase of Buckleys and gave him advice on his interest in such property. The finding has to be that Groserdam was the registered proprietor of Buckleys at a time when Glen must have appreciated that he had no interest in Groserdam, and, its sole purpose was then as the trustee of Roger's family trust.
The evidence of Glen is not supported by the various financial documents prepared since 1977, nor, any of the evidence of any person involved with the financial affairs of the family.
The letters prepared by Mr Schubert and signed by Roger to the Minister of Lands support Roger's evidence that Buckleys was to be owned by Roger's company, Groserdam, for the benefit of his family trust. This is the earliest clear statement of the beneficial owner of Buckleys.
As I have mentioned, Buckleys has been treated in family financial records since 1977 as an asset of Roger's family trust. Glen has had a copy of such accounts for some 13 years and raised no objection. Glen must also have been aware of the gradual disparity in their respective loan accounts over the years caused by the principal repayments of the Buckleys loan being debited to Roger's loan account and, again, he raised no query.
Mr Boyle maintained that he would have discussed the manner of the treatment of Buckleys in the books of accounts with both Glen and Roger and Glen must have acquiesced. Buckleys was dealt with in the accounts in the correct legal manner bearing in mind the contract note and nomination of Groserdam as the purchaser.
Perhaps, not of great import, but the Buckleys purchase moneys were raised by way of a mortgage over that land and collateral security of other land owned by Glen, Roger and their mother as tenants in common. Glen's own property, Woodside, was not used as collateral security.
Consequently, I have to find that the evidence of Glen is unsatisfactory and cannot be relied upon where it conflicts with the evidence of his brother, Mr Boyle or Mr Vine. As well meaning as he is, unfortunately, his reconstruction of the events over this long period is faulty and cannot be relied upon.
I do not gain any assistance from the evidence of Mrs Juers. Mrs Juers had little understanding of the manner in which the accounts had been prepared or the legal basis of the trading entity. She said Buckleys was owned by "the two boys naturally - A Juers & Co". A Juers & Co was a partnership which comprised herself.
It is hard to fault the evidence of Roger. He was aware that Groserdam initially was the trustee of his own family trust. He described how he carried out the negotiations for Buckleys and kept his brother informed of all developments.
Mr Schubert's evidence confirmed the evidence of Roger as well as the evidence of Mr Boyle. Mr Vine simply carried on the same accounting practices of Mr Boyle, but again I believe would have discussed the same with the brothers.
The land has always appeared in Roger's trust as its asset. Roger was aware that Glen had always received a copy of the R L Juers Family Trust returns showing that asset, and, was aware and accepted he was obliged to meet the principal mortgage repayments.
There is no conduct at all on the part of Roger which could possibly be seen as other than a full disclosure of his trust owning that asset. The transfer by Roger's wife to Glen of her share in Groserdam in 1979 was to simplify their company structure and shows their willingness to save the family unnecessary accountancy expense.
Roger's evidence was given in a forthright honest manner and, importantly, is supported by the evidence of Mr Schubert of his view of the position at the time of purchase as reflected in the letter to the Minister of Lands. Further, I believe both Mr Boyle and Mr Vine also support his evidence.
Consequently, there is no basis for making any of the declaratory orders as sought by the plaintiff, and, accordingly, the claim stands dismissed.
It would follow from my findings that I make an order in the terms of paragraph 54.1 of the defence, namely, that the company, Groserdam Nominees Pty Ltd, holds the property, Buckleys, as trustee for the Roger Louis Juers Family Trust.
I publish my reasons and will hear the parties on the further orders sought.
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