Kearney v Tamworth Poly Tanks Pty Ltd - [2025] NSWSC 729

Supreme Court

New South Wales

Medium Neutral Citation: Kearney v Tamworth Poly Tanks Pty Ltd [2025] NSWSC 729
Hearing dates: 5 - 6 February, 24 - 25 March 2025
Date of orders: 9 July 2025
Decision date: 09 July 2025
Jurisdiction: Common Law
Before: Schmidt AJ
Decision:
Judgment for Ms Kearney

Catchwords:
LEASES AND TENANCIES – possession of commercial property – where property leased by mother to son for many years – dispute over terms of undocumented lease and payment of rent – notices to quit served – declaratory relief in respect of lease sought – refused – order for possession made
LOANS – where money loaned by mother to son – dispute about interest and repayment of loans – payment of unpaid interest and repayment of loans ordered
PROCEEDS OF THE SALE OF LAND – son and his parents previously registered proprietors of a farming property – proceeds of sale split between parents – claim for share of proceeds pursued against mother – Pallant v Morgan equity – son not entitled to share of proceeds

Legislation Cited:
Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Evidence Act 1995 (NSW)
Family Law Act1975 (Cth)
Limitation Act1969 (NSW)
Real Property Act1900 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Bosanac v Commissioner of Taxation [2022] HCA 34
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Calverley v Green (1984) 155 CLR 242; [1984] HCA 81
Carey v Carey [2020] NSWSC 765
Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63
Chattock v Muller (1878) 8 Ch D 177
Clancy v Plaintiffs A, B, C and D; Bird v Plaintiffs A, B, C and D [2022] NSWCA 119
Commonwealth v Verwayen ("Voyager case") (1990) 170 CLR 394; [1990] HCA 39
Currie v Hamilton (1984) 1 NSWLR 687
Delaforce v Simpson-Cook [2010] NSWCA 84
Doueihi v Construction Technologies Australia Pty Ltd [2016] NSWCA 105
Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599; [1999] HCA 15
Ferrier v Nationwide News Pty Ltd (No 3) [2015] NSWSC 1806
Galati v Deans & Ors [2023] NSWCA
Galaxidis v Galaxidis [2004] NSWCA 111
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Murtagh v Murtagh [2013] NSWSC 926
Neilson v Letch (No 2) [2006] NSWCA 254
Ogilvie v Adams [1981] VR 1041
Pallant v Morgan [1953] CH 43
Ryan v Dries (2002) 10 BPR 19,497; [2002] NSWCA 3
Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278; [2006] HCA 6
Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7
Watson v Foxman (1995) 49 NSWLR 315
White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & Anor [2009] NSWCA 114
Woodhouse v Woodhouse [2022] NSWCA 240

Texts Cited:
Peter Young, Clyde Croft and Megan Louise Smith, On Equity (2009, Thomson Reuters)

Category: Principal judgment
Parties: Jill Kearney (Plaintiff/Cross-Defendant)
Tamworth Poly Tanks Pty Ltd (First Defendant)
SKM Agriculture Pty Ltd (Second Defendant)
Simon Peter Kearney (Third Defendant/Cross-Claimant)
Representation:
Counsel:
M Maconachie (Plaintiff/Cross-Defendant)
J Mack and L Hamilton (Defendant/Cross-Claimant)
Solicitors:
Benjafield & Associates Lawyers (Plaintiff/Cross-Defendant)
Harris Solicitors (First, Second and Third Defendants)

File Number(s): 2023/422452
Publication restriction: Nil

JUDGMENT

These proceedings result from the breakdown of a formerly close relationship between a mother and her son over an ongoing dispute about money, on which she claims she depends to live in her retirement. That resulted in the commencement of these proceedings in 2023 when Ms Kearney sought possession of a commercial property at Kingsford Smith Street Tamworth which she owns and has long leased to Mr Kearney and which Tamworth Poly Tanks Pty Ltd occupies, as well as at times other tenants.
The possession was resisted and in 2024 Mr Kearney and TPT filed a cross-claim by which they sought declaratory relief as to the lease and Mr Kearney pursued payment of a claimed share in the proceeds of the 2007 sale of a property, Eumbra, of which he and his parents had been registered proprietors. His parents had farmed Eumbra in partnership before their divorce in 2006 and when it was sold after their divorce, the assets were split between them in accordance with the agreement they had arrived at under the Family Law Act1975 (Cth), to which Mr Kearney was not a party. He did not then receive any share of the proceeds of the sale.
Despite this Mr Kearney’s father is not a party to the proceedings and no claim is pursued against him. But he was called to give evidence.
The cross-claim resulted in the amendment of the statement of claim. Ms Kearney then also pursuing the repayment of considerable sums she had loaned her son and companies associated with him over the years, together with unpaid interest. All that was claimed to be owed then being quantified to amount to $1,795,000.
Those claims were finally not entirely disputed, TPT admitting that it had not repaid its borrowings. As the result of an analysis of bank records in evidence, Ms Kearney also significantly reduced what she claimed she was still owed. That did not resolve the parties’ dispute.
Ms Kearney’s case was that she had to pursue these proceedings in order to regain possession of the property so that she could generate an income on which to live, Mr Kearney having left her without the means to support herself.
The defendants denied this, claiming that it was Ms Kearney who owed her son money, given all he had paid her and what she had wrongfully withheld from him in 2007. It having been as the result of her profligacy that she had insufficient funds to live on.
On Mr Kearney’s evidence it had not been until after his mother brought these proceedings that he came to consider that he had overpaid his mother and that in 2007 she had wrongly deprived him of his right to share in the proceeds of the sale of Eumbra.
A significant difficulty with the cases which the parties each advanced was that while over many years Ms Kearney and her son had arranged their affairs and those of associated companies with the assistance of legal, accounting and other advisers, they rarely documented any aspect of their dealings. No one called evidence from such advisers, or any expert.
There is no issue that the disputed property is leased to Mr Kearney who has sublet to TPT and others, but none of the leases have been documented. Ms Kearney did enter into one lease with another tenant, but on Mr Kearney’s case without his knowledge or consent, which she required, given the terms of his lease, with the result that he is entitled to the benefit of payments which it made to Ms Kearney.
Bank records and tax returns evidence rent payments which have been made by Mr Kearney and at times by others, on Mr Kearney’s case, at his direction. But because of the passage of time the records were incomplete.
Evidence was called from Mr Kearney’s wife, his father, a former bank employee, company employees and others who he had dealt with, to support the defence case, but they shed little light on the dealings between the mother and son. Part of those dealings are evidenced by written communications between the mother and son and light is shed on them by available records, which establish how they conducted themselves.
That, I consider, is the best evidence of what they agreed over the years.
There is no issue that Mr Kearney repeatedly failed to pay rent on time. But the amount of rent he has paid and is obliged to pay under the lease and whether all rent due has been paid, were all disputed. The defence case including that Ms Kearney had at times waived payment of the rent, which she denied.
The defendants also claimed that Mr Kearney had a continuing right to occupy the Kingsford Smith Street property until 2029 for the rent of only $40,000 per annum. That was the rent which he first agreed to pay his parents in 2006, when they both owned the property. On his case that rent continued as the result of agreements he later made with his mother, in 2019 Ms Kearney having agreed that this rent would continue until 2029.
These claimed agreements are also not evidenced in writing and are also disputed. Ms Kearney relying on rent of more than $40,000 per annum which has long been paid to her and that the rent she is currently being paid not reflecting anything that which she and Mr Kearney ever agreed, he having commenced payment at that rate only after she brought these proceedings.
There is also no issue that Ms Kearney loaned Mr Kearney and TPT considerable sums over the years, as well as providing him with other financial support; that Mr Kearney has paid her interest at times; that some sums were repaid; and that there has been an ongoing dispute about rent, other loans and interest due on them. There is also a dispute about whether Ms Kearney ever waived payments, as well as over whether Mr Kearney had wrongly accessed her funds and credit card, using them for his own purposes, without her knowledge or consent. This being possible because of a power of attorney she had given him.
There is also a dispute about the alleged forgery of Ms Kearney’s signature on a document used by Mr Kearney in respect of other of his borrowings.

The final dispute

The parties finally arrived at some measure of agreement. But Ms Kearney still pressed her order for possession while the defendants pressed the declaratory relief they sought in respect of the disputed lease. That Ms Kearney was owed anything was also still disputed, despite the parties’ analysis of the incomplete bank records.
That had been undertaken by Mr Kearney with the assistance of his solicitor, about which he was cross-examined. It then being considered and Ms Kearney’s position in respect of it explained in closing submissions by reference to MFI 13, which explained which aspects of the analysis were still in issue.
The result was that the money claim Ms Kearney pressed was reduced to some $653,000, which the defendants still disputed. They then contending that she had not advanced some $941,000. Mr Kearney also continued to press his claim for payment of $450,000, that representing one half of his share in the proceeds of Eumbra.

Conclusions

The state of the evidence presented significant challenges for the cases which all parties advanced, although TPT admitted that it had not repaid Ms Kearney’s loan. The result is that conclusions have to be arrived at from a consideration of whether the onus which falls on the respective parties have been met.
It was oral agreements made over the course of many years in conversations on which what is in issue turns. It being Mr Kearney who claimed to remember their details, which Ms Kearney denied.
There are significant gaps in the documentary record and Ms Kearney did not have a detailed memory of aspects of her dealings with her son. But bank records and emails do shed some objective light on what is in issue. I have concluded that what the best evidence what the parties actually agreed, was what they actually did over time, despite Mr Kearney’s self-serving evidence that even the bank records he analysed are not all accurate. That being the result of the way that he claimed he or his staff had incorrectly described payments which he had made to his mother on NAB bank transfers, at relevant times.
What I have concluded Mr Kearney’s cross-examination did establish was that his analysis was not a reliable basis on which to come to conclusions about what lay in issue between the parties. I have also concluded that his evidence cannot be preferred over that of his mother.
I also note that there was but limited examination of Ms Kearney’s assets and expenditure to support the defence case that it was her profligacy which had resulted in the depletion of her funds, rather than Mr Kearney’s actions. I am not persuaded that this was established by the evidence.
For reasons which follow, I have concluded that:

Even though by her pleadings Ms Kearney did not pursue payment of unpaid rent, she has established that she is entitled to an order for possession;

The defendants have not established that they are entitled to the orders they pursue;

TPT must be ordered to repay its borrowings and interest; and

Mr Kearney must be ordered to pay his mother $653,000.

In short that is because:

Mr Kearney has not established that he is entitled to have his mother pay him a one third share in the proceeds of the sale of Eumbra;

While he was still a schoolchild, his parents had made Mr Kearney a registered proprietor when they purchased Eumbra with the proceeds of the sale of their first farm and bank borrowings which were secured by a mortgage over Eumbra, they all then intending thereby to secure his inheritance, expecting that they would work together on Eumbra when he finished his education;

Mr Kearney did not contribute to the purchase price of Eumbra and while he was a party to the mortgage, he was not involved in its repayment;

It was his parents who successfully farmed Eumbra in partnership until they divorced, with Mr Kearney working there as an employee for only about a year after he completed his HSC for the second time at TAFE in Sydney, before he decided he would not pursue farming;

Mr Kearney’s parents supported his decision and later employed him to work in the family farm supply business in Tamworth, Northwest Direct Sales Pty Ltd, he having decided that he preferred to pursue a career there and they intending that he was to inherit it;

Mr Kearney later did not share in the proceeds when Eumbra was sold after his parents divorced, their conduct at that time reflecting an understanding between the three of them that he was not entitled to any share in the proceeds of its sale;

His parents provided Mr Kearney with financial support from their superannuation fund to purchase the commercial property on which NWDS conducted its business at Crown Street Tamworth, the rent it paid Mr Kearney covering his mortgage repayments;

Mr Kearney later sold the Crown Street property;

His parents acquired two Kingsford Smith Street properties, which Mr Kearney had identified to be suitable for NWDS’s long-term needs, constructing two sheds required for its business and his parents agreeing to lease him that property for the $40,000 rent he proposed, other favourable terms his parents accepted including that the lease did not provide for any rent increases;

After NWDS relocated to the Kingsford Smith Street property, at Mr Kearney’s instigation at a time when his parents intended to continue operating that business, they also agreed to sell him all of their shares in NWDS, he having become concerned to ensure his inheritance before their death, so that he would not be at risk of having to buy his sister out afterwards;

Mr Kearney also did not have the means to fund his acquisition of those shares, which was funded by bank borrowings which his parents guaranteed;

After Ms Kearney later became the sole proprietor of the Kingsford Smith Street properties, which she consolidated, Mr Kearney then paid her rent which increased over time, albeit he did not always pay it on time;

Over time Ms Kearney also loaned Mr Kearney and TPT considerable funds, on which she was to be paid interest;

The evidence does not establish that Ms Kearney waived payment of what she was owed, as Mr Kearney claimed;

Ms Kearney had retired after the divorce and was meeting her living expenses in retirement from the rent and interest she was paid;

A dispute developed about what and when Ms Kearney was being paid, which she found to be insufficient to fund her living expenses;

Ms Kearney eventually served valid notices to quit the Kingsford Smith Street property on Mr Kearney and TPT;

Ms Kearney brought these proceedings in the pursuit of its possession, when they refused to vacate despite the valid notices she had served on them;

Mr Kearney reduced the rent he had been paying Ms Kearney without her agreement and continued not to pay it monthly;

Ms Kearney is thus entitled to an order for possession of the Kingsford Smith Street property;

The defendants are not entitled to the declaratory relief they seek, the lease not containing the claimed terms, including as to rent; and

Ms Kearney’s final analysis of the documentary evidence of the money advanced to Mr Kearney and TPT and what she has been paid and was still owed should be accepted.

Issues

Various of the relevant facts were not in issue. The agreed facts included:

“1.   The third defendant, Simon, is the son of the plaintiff, Jill.
2.   Jill’s daughter, Melissa Baylis, is Simon’s sister.
3.   Jill’s former husband, Peter Kearney, is the father of Simon and Melissa.
4.   Jill and Peter were farmers, and for many years also ran a rural merchandise business through a company called Northwest Direct Sales Pty Ltd (NWDS).
5.   One of the properties that Jill and Peter farmed was called “Eumbra”.
6.   During the time that Jill and Peter farmed Eumbra the registered proprietors of that farm were Jill, Peter, and Simon.
7.   The land in XXX in Deposited Plan XXX (which is at 11 Kingsford Smith Street in Taminda, a suburb of Tamworth, New South Wales (Land)), was purchased by Jill and Peter, who became the registered proprietors of that land on 23 September 2005.
8.   The second defendant is not an occupier of the Land. It has played no active role in the proceedings other than to file a defence to each of the original and first amended statements of claim.
9.   The Land consisted of two vacant lots when Jill and Peter purchased it.
10.   Jill and Peter paid for two industrial sheds to be constructed on the Land.
11.   On 1 July 2006 Simon purchased all of the shares in NWDS from Jill and Peter and took over the management of the NWDS business.
12.   Jill and Peter separated in late 2006.
13.   Following the separation of Jill and Peter:
13.1.   Eumbra was sold for approximately $4,000,000.00;
13.2.   the net proceeds from the sale of Eumbra were divided evenly between Jill and Peter;
13.3.   Simon received no share of the proceeds of sale of Eumbra;
13.4.   Jill was transferred Peter’s share of the Land.
14.   The Land was consolidated into a single Lot after Jill became the sole registered proprietor.
15.   Jill is the sole registered proprietor of the Land. (FASOC [53])
16.   On 22 January 2007 Simon caused the first defendant, TPT, to be incorporated.
17.   When TPT was incorporated Jill and Peter each loaned TPT $75,000.00 (TPT Loan). (FASOC [24], [28]).
18.   On 30 April 2008 Jill advanced to TPT the sum of $75,000.00 (FASOC [28]).
19.   On 18 December 2007 Jill advanced the sum of $300,000.00 to Simon (Simon November affidavit [142]).
20.   On 1 February 2008 Simon repaid the sum of $300,000.00 (FASOC [38]).
21.   Simon was the sole director of TPT from 22 January 2007 until 29 August 2019, when Simon’s wife, Vikki Maree Kearney, replaced Simon as the sole director.
22.   TPT has, since 2019, operated from the Land.
23.   Jill’s guarantee for the liability to NAB was subsequently converted from the term deposit to a mortgage over the Land. (FASOC [30] – [32]).
24.   On 24 June 2008 Jill loaned $600,000.00 to Simon for Simon to purchase shares in AIRR Holdings Pty Ltd. (FASOC [42]).
25.   On 3 October 2008 Simon repaid an amount of $140,000.00 to Jill. (FASOC [46]).”

There was also no issue that:

Ms Kearney issued a number of notices to quit the Kingsford Smith Street property, which Mr Kearney and TPT did not comply with;

The parties’ arrangements in respect of that property, where NWDS used to conduct its business and TPT continues to conduct its business, have never been reduced to writing;

The Kingsford Smith Street property was concreted and a shed which connected the other two sheds already erected there by his parents, were built when NWDS relocated its business there from the Crown Street property;

Ms Kearney was paid rent for the Kingsford Smith Street property after she became the sole proprietor by transfer from various NAB accounts. But she has never received regular payments, or payments in amounts which accorded with the defence claim that the rent payable was monthly, for an annual sum even now of only $40,000, that is some $3,333 per month;

Ms Kearney’s tax returns, prepared by the accountants who also acted for Mr Kearney and his companies, reflect that over time she disclosed that she had been paid considerably more than $40,000 rent per annum;

The NAB bank records are incomplete, the parties being unable to produce all of them;

The records which are in evidence establish that the significant funds Ms Kearney advanced over the years were paid into the accounts of NWDS, TPT and Mr Kearney and that they have all made various payments to her;

After the divorce Ms Kearney moved to Sydney where she lived in rental accommodation, the Mosman property where Mr Kearney had lived while studying in Sydney also having been sold;

That for a number of 6-month periods she then lived in Italy where she studied; and

Later, Ms Kearney lived rent free at properties Mr Kearney owned, Longacres and Salona, before she left to live with her daughter in Victoria in 2023.

In cross-examination both Ms and Mr Kearney made relevant admissions, with the result that the issues lying between the parties were somewhat reduced.
What was finally in issue included:

Ms Kearney’s capacity;

Questions of credit;

The terms of the lease of the Kingsford Smith Street property;

Whether all the rent due on that property was paid;

Whether Ms Kearney ever waived the repayment of rent, loans or interest;

The total amount of the loans Ms Kearney made to Mr Kearney and TPT, what has been repaid and what interest remains unpaid;

Whether Ms Kearney loaned Mr Kearney $200,000 in 2010 or made him a gift of that sum when he was negotiating the purchase of Salona;

Whether Ms Kearney is entitled to the possession she seeks, or the defendants are entitled instead to the declaratory relief which they pursue in relation to the Kingsford Smith Street property;

Whether Mr Kearney is entitled to any share in the proceeds of the sale of Eumbra; and

A limitation question.

In cases which turn on events which began many years ago and concern undocumented transactions resulting from conversations which those involved do not clearly remember and which are evidenced by incomplete records, such issues must be resolved, if possible, by the Court placing “primary emphasis on the objective factual surrounding material and the inherent … probabilities, together with the documentation tendered in evidence”: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at [15]; [1999] HCA 15.
It is Mr Kearney who claims a clear recollection of conversations to support the existence of agreements which Ms Kearney denies. In the circumstances I will explain, such evidence has to be approached with considerable caution.

The parties’ cases

Ms Kearney’s case is that she has long been the victim of her son’s ongoing financial and other abuse, despite the very considerable support she has continued to give him over many years and that his evidence that he is paying her the agreed rent and has paid her all else that he owes her, has not been honestly given.
Mr Kearney called evidence from his wife, his father, a bank employee, employees of TPT and others who he had done business with over the years to resist her claims. Both credibility and reliability issues arise as a result. The defence also questioned Ms Kearney’s capacity.
Ms Kearney complains that the result of Mr Kearney’s abuse is that he has effectively used her money to advance his own interests and that his refusal to give her possession of the Kingsford Smith Street property so that she can rent it for a commercial rate, has left her without the means to support herself. To the point that she has had to borrow money under a Government scheme, she still not receiving the income she is entitled to from the rent and interest which he should be paying her and he also not having repaid all his borrowings. There is no issue that Ms Kearney has participated in the scheme.
Ms Kearney also claims that Mr Kearney forged her signature on a bank guarantee given in favour of another company of which he was a director and that he had also taken money from her bank account and used her credit card without her authority, for his purposes. Despite the position he had left her in, Mr Kearney refused to comply with notices to vacate the Kingsford Smith Street property she repeatedly served, so that she could obtain an income on which to live.
Ms Kearney pressed an order for possession of the property, disputing that the lease contained the terms which Mr Kearney claimed. But she finally pressed an order for much reduced damages, given the analysis of the contemporaneous records which evidenced payments about which Mr Kearney was cross-examined and made various concessions, which she partially agreed.
Ms Kearney defends the cross-claim on the basis that while Mr Kearney was made a registered proprietor of Eumbra, this was to encourage him to work on the property and to protect his inheritance. His parents later accepted that he would not do so, preferring to work in the family business, which they then also supported in various ways, always expecting that he would have to work for his inheritance. That he had no right to participate in the proceeds of the sale of Eumbra as a result was reflected by the way in which they gave effect to the family law agreement, when it was sold.
Ms Kearney’s case was that considerable parts of Mr Kearney’s evidence had not been honestly given and could not be accepted.
The defence case rested on an attack on Ms Kearney’s credibility, reliability and capacity.
It was that Mr Kearney does not owe his mother anything and that rather, she owes him for his unpaid share of the proceeds of Eumbra, he having paid her more than he owed her for rent, his borrowings and interest and not having been paid the share of the proceeds he was entitled to receive as a registered proprietor of Eumbra. Further, that she is not entitled to the possession which she seeks, given the terms of the lease that they had agreed and all that she has been paid.
The claim was finally pressed on the basis that, after his parents divorced, Ms Kearney became the sole proprietor of the Kingsford Smith Street property, at a time when the lease still provided for only $40,000 rent per annum and they agreed that it would remain at that amount. Mr Kearney later proposed funding significant improvements to it, in 2019 Ms Kearney agreed that he could continue to have possession of the property until 2029, provided that he continued to pay her the $40,000 per annum rent. This reflecting that he had originally agreed with his parents he could occupy the property in perpetuity, which had continued after his mother became the sole proprietor.
Declaratory relief was pressed in respect of the lease, as well as in respect of a claimed constructive trust in respect of one half of the proceeds of the sale of Eumbra. An order for equitable compensation of $450,000 in respect of those proceeds is also pursued and resisted.
In his evidence Mr Kearney accepted that $150,000 that Ms Kearney had loaned to TPT had not been repaid. But he claimed that he had provided her with a great deal of money over the years. Thus, he had come to believe as the result of his investigation of the available records, that all of the loans had been repaid by 2011.
Mr Kearney also claimed that some rental payments had been made to Ms Kearney by other businesses which operated out of the Kingsford Smith Street property under subleases which he had entered with them. In evidence was the lease which Ms Kearney had entered with one of them, of which Mr Kearney said he was not aware, and she had not been entitled to enter, claiming that he was entitled to the benefit of the payments that tenant had made to her.
Mr Kearney’s evidence also included that it was only in resisting her claims in these proceedings that he came to realise that his mother ought to have paid him a share of the proceeds of the sale of Eumbra, which his parents had farmed in partnership before their divorce and where he had worked as a family member and for a time for wages. His interest as a registered proprietor having entitled him to a share of the proceeds of the sale which he had never been paid.

Ms Kearney’s capacity

Before resolving what the parties otherwise put in issue, the question of Ms Kearney’s capacity should be dealt with. My conclusion rests on conclusions I have arrived at in relation to a number of matters over which issue was joined, which shed light on the capacity which I am satisfied that she does have.

Legal incapacity

It must be remembered that the question of legal incapacity is dealt with in the Civil Procedure Act 2005 (NSW) where a “person under legal incapacity” is defined to mean “any person who is under a legal incapacity in relation to the conduct of legal proceedings”, with exclusions and inclusions not here necessary to quote. In Rule 7.14 of the Uniform Civil Procedure Rules 2005 (NSW) reference is made to “a person incapable of managing his or her affairs”. Capacity is presumed until it is contradicted, but it is also understood that capacity can alter.
Ordinarily, a conclusion about incapacity must rest on medical evidence: Carey v Carey [2020] NSWSC 765 at [7]-[8]. In this case none was led.
Even when there is no such evidence, incapacity may be found where there is a strong indication that the litigant does not have the ability to understand and evaluate the significance and implications of prosecution of the action and resistance to the defendants’ case: Ferrier v Nationwide News Pty Ltd (No 3) [2015] NSWSC 1806 at [20]. That was not here established.

The attack on Ms Kearney’s capacity

The attack on Ms Kearney’s capacity was advanced by reference to what were described to have been incredible claim of wrongdoing advanced in her amended summons, at a time when her daughter was no longer acting as her tutor, which were argued not to be relevant to the claims advanced in relation to the unpaid loans.
The defence case was nevertheless that the entire claim had been constructed while her daughter was acting as tutor and that the filing of the summons had involved an improper resiling from understandings which Mr Kearney had long had with his mother, he understanding that he was to inherit his mother’s interest in the Kingsford Smith Street property on her death. I am satisfied that this was not established on the evidence.
Mr Kearney also professed not to understand why his close relationship with his mother had broken down, given his ongoing support of her over many years. Or why she went to live with his sister, from whom he and for a long time his parents, were estranged.
To attack Ms Kearney’s capacity, he relied on how the proceedings had been commenced by his sister, acting as their mother’s tutor, as well as his mother’s alleged profligacy. I am satisfied that the latter was not established by the evidence.
Mr Kearney explained in his affidavit his doubts about his mother’s capacity, on which he claimed her conduct shed light, especially in her pursuit of these proceedings. He also explained how her claims were contrary to his ongoing and considerable support, which he had examined and now believed had resulted in him paying her far more than he ever owed her. His payments including:

Giving her $25,000 in cash to live on after his parents’ separation, when he helped her to move to rented accommodation in Sydney, where she wished to live;

Paying many of her living expenses over ensuing years;

Providing her with significant other funds when she needed them to support her lavish lifestyle, one which she could not afford and which he believed explained the depletion of her assets; and

Providing her for years with a home rent free, first at Longacres and later at Salona, when she no longer wished to live in Sydney.

Mr Kearney suggested that there was a need to have his mother’s competence assessed, but he has pursued no such assessment. Given Ms Kearney’s evidence, including in cross-examination and what contemporaneous records established, why such an assessment was not pursued is apparent.
The defendants submitted in closing written submissions that in resolving what was in issue Mr Kearney’s examination of the financial information contained in the bank statements was the surest guide to what had been advanced and paid. I am satisfied that much of Ms Kearney’s evidence was supported by those records.

Ms Kearney’s case

In her affidavits Ms Kearney responded to Mr Kearney’s claimed concerns about her memory and capacity and also explained her decision to leave Salona to live with her daughter. That having been the result of her confronting Mr Kearney about a loan that had been guaranteed in her name, which had led to him becoming increasingly hostile and threatening to throw her out if she did not cease communicating with her daughter. The result was that she decided to discreetly leave Tamworth to live with her daughter.
The evidence establishes that there was such a guarantee and that there were disagreements between Mr Kearney and his mother over it at a time when he had her power of attorney.
In cross-examination it was put to Ms Kearney that she had had limited involvement in her partnership with her ex-husband and in NWDS, Mr Kearney’s evidence seeking to limit her business experience and know how. In his cross-examination Mr Kearney said that it was his father who had run NWDS and his mother rarely worked there.
Ms Kearney denied this limited account of her roles. Her evidence included that the division of work between her and her ex-husband on their first property at Manilla was not only that she had raised the children and was an avid gardener, she having worked on that farm and in the shearing shed as a piece picker and also providing workers’ meals.
Ms Kearney said she had also been employed in the Lands Department and had worked at NWDS, where she was partly responsible for keeping its books and records by hand day to day and attending to paying bills and banking and attending to clients. At Eumbra, where she also worked in the shearing shed, she had also kept the partnership books day to day by hand, her husband not having the capacity to read the books, with their accountants then doing the final work at the end of the taxation period. She thus knew the general coming and goings of their finances, Eumbra making money and they not depending on what NWDS generated.
No evidence was called from her former husband to dispute Ms Kearney’s evidence about these matters.
In her retirement Ms Kearney pursued university studies overseas. That she had also obtained a master’s degree at UTS and worked in Sydney teaching English, for which she was well paid, was also not challenged.
Ms Kearney explained why she went to live with her daughter, who she then gave a power of attorney, having in 2010 given Mr Kearney one. That does not establish lack of capacity.

Legal incapacity is not established

On all of the evidence I am satisfied that contrary to Mr Kearney’s case, Ms Kearney was for a long time a successful farmer and businesswoman, who after her divorce also successfully pursued further studies and employment.
I am not satisfied that the evidence accorded with her having problems of the kind Mr Kearney advanced, despite the proceedings having been commenced by her daughter who then acted as her tutor and in cross-examination she having said, when taken to a signature on a particular document about which there was no issue, that the signature was not hers.
Ms Kearney explained why her daughter had been appointed as her tutor in 2023, given the emotional turmoil she was then experiencing and why she no longer needed such assistance. She explained her own pursuit of her claims and defence of those advanced by the cross-claim. That including her subsequent amendment of her statement of claim.
No evidence was called from Ms Kearney’s daughter, who appears to have been long estranged from her family, having left the farm and then successfully pursuing studies, a career in accounting and life off the farm. She does not appear to have been involved in the dealings between her parents and Mr Kearney.
But she did assist her mother when she needed help with her difficult financial circumstances after Ms Kearney left Salona, in ways Ms Kearney explained. This included analysing the incomplete records which reflected her mother’s otherwise undocumented dealings with Mr Kearney over very many years.
That Ms Kearney needed such assistance and was distressed by the need to pursue this litigation in order to regain possession of the disputed property, so that she could obtain a reliable income stream on which to live, may readily be accepted.
The evidence established that she had earlier had to borrow to fund her living expenses. That she honestly believed that her son had engaged in the wrongdoing about which she gave evidence, was not disputed. That she found her situation and having to give evidence about their dealings distressing must be accepted.
The parties’ lawyers communicated about Ms Kearney’s need for a tutor, after the proceedings were brought. It was Ms Kearney who verified her further amended statement of claim. She also swore a number of affidavits to advance her case and meet that which Mr Kearney and TPT pursued, relying on the affidavits he, his father, his wife and others had sworn, to contradict relevant aspects of their evidence.
She also called evidence from Mr Robinson, a lawyer who had stayed with her over two weeks at Salona in 2022, at a time when she had spoken to him about seeking legal advice in relation to her situation. She was then upset with Mr Kearney. Mr Robinson was cross-examined, including about when he had met Ms Kearney to catchup over a drink. His evidence supported hers and did not suggest that she lacked capacity.
The parties’ claims and counterclaims concern events which began many years ago and involve complex, undocumented financial and other arrangements between Mr Kearney, his parents and various of their companies. They were the result of ongoing conversations, the details of which only Mr Kearney claimed to remember well. In cross-examination she frankly accepted that she could not remember many details, without access to records.
But bank and other records shed considerable light on these arrangements. They support various aspects of Ms Kearney’s claims, as do the agreed facts and the concession that TPT has not repaid its loan. The records establish payments which have been made by and to Ms Kearney at various times, including in amounts which do not support the defence case.
In opening written submissions for Ms Kearney, a summary of the claimed loans and what had been admitted or not traversed, as well as what remained in issue was provided:

#	DATE	BORROWER	AMOUNT	STATUS
1	Jan 2007	TPT	$75,000.00 plus interest at 12% p/a.	Outstanding. Loan admitted.
2	11 Dec 2007	Simon	$200,000.00 plus interest at 12% p/a.	Outstanding. Loan admitted.
3	18 Dec 2007	Simon	$300,000.00 plus interest at 12% p/a.	Repaid.
4	12 Mar 2008	Simon	$100,000.00	Outstanding. Not traversed. Deemed admitted.
5	30 Apr 2008	TPT	$75,000.00 plus interest at 12% p/a.	Outstanding. Loan admitted.
6	24 Jun 2008	Simon	$600,000.00	Outstanding. Loan admitted.
7	24 Jun 2008	Simon	$270,000.00	Outstanding. Not admitted.
8	1 Sep 2008	Simon	$150,000.00	Outstanding as to $10,000.00. Not admitted.
9	24 Dec 2008	Simon	$200,000.00	Outstanding. Not admitted.
10	10 Feb 2009	Simon	$75,000.00	Outstanding. Not admitted.
11	9 Sep 2010	Simon	$46,000.00	Outstanding. Not admitted.

A twelfth item was also added and item 11 was finally not pressed:

FASOC

Date

Nature

Amount

Submission

…

8.10.210

Unauthorised Withdrawal

$200,000

Denies Withdrawal

Not Proven

If repayable on demand, time barred.

If loan, repayable by NWDS

The sum originally claimed totalled $2,291,000. This table was not agreed, although in closing submissions advances of $1,350,000 were acknowledged by Mr Kearney, he then claiming that $941,000 had not been advanced, or was not recoverable. But he also claimed that he had repaid his mother $2,004,824.33.
This was not accepted and Mr Kearney’s evidence was successfully challenged in cross-examination. What Ms Kearney finally pursued was reduced to some $653,000. That was also disputed, the defence case resting in part on what was claimed to be a limitation problem, which I am satisfied was not established, as I will explain.
Ms Kearney had earlier been cross-examined about the matters she pursued. Understandably at times she could not recollect the details of transactions. She was asked about having kept any other records and produced a 2009 handwritten document when it was called for. It supported aspects of her evidence and the case she advanced.
Given all that was in issue, that Ms Kearney required assistance to advance her case and sought it from her daughter before commencing the proceedings when the records had to be examined, was unsurprising, given her occupation. Mr Kearney also required assistance, which he obtained from his solicitor.
With that assistance Mr Kearney had analysed what the bank records established, producing a schedule at the hearing which had not been served in accordance with the Court’s earlier orders. It finally resulted in Ms Kearney accepting that some claimed payments had been made. But others were not, aspects of his evidence having been contradictory and inconsistent with the records.
For example, despite claiming to have repaid all the borrowings, Mr Kearney also claimed that between 2014 and 2016 his mother told him not to worry about interest. His explanation was implausible:

“Q.   She would only have said that if interest was still payable, wouldn't she?
A.   Possibly, that could have been what, what she was thinking, I don't know.
Q.   You wouldn't have been paying her interest if you'd repaid the loan, would you?
A.   Well, I would have been paying her money, whether or not it was interest or not, I was paying her a lot of money at the time, so perhaps she knew that I'd paid her everything back and so she thought it was time for me to stop overpaying her. I don't know what she was thinking.
Q.   You're just making that up, aren't you?
A.   No, I'm not.”

Given what the contemporaneous documents established, I am unable to accept Mr Kearney’s evidence that he had overpaid his mother, or that she agreed that interest due did not have to be paid. I am also satisfied that his evidence does not support the views he advanced about his mother’s diminished capacity, which I am satisfied may not justly be accepted.
What Ms Kearney had to deal with in her evidence was complex and distressing. That she had difficulty following some of the questions she was asked was understandable, given how they were couched and all that she was taken to in the documents. As was that at times she was confused about what she was being asked. She did confirm that her understanding that she was entitled to be paid $6,000 per month rent reflected what her bank records established she was paid.
Ms Kearney also confirmed the credit cards she had and explained what they were used for, including by Mr Kearney and how she had proceeded in her retirement, living within her means, given money she had coming in and what she was spending. She also explained an occasion when Mr Kearney had spoken to her about serious trouble he was facing. There is no reason to doubt that evidence. She denied the first time she has totalled up what she was owed being in the context of the proceedings. The 2009 document which she produced supported her evidence. She also said that she had only wanted Mr Kearney to pay her rent before she commenced these proceedings. That accorded with her conduct. But she denied that he had made her payments she was not aware of.
As it transpired, Ms Kearney’s decision, finally, to press for money orders of only $653,000 having considered Mr Kearney’s analysis of the records was rational, neither party having called evidence from the accountants who had assisted them over the years, nor having engaged any expert to analyse what the available records established. That acceptance resulted from her consideration of what Mr Kearney’s analysis of the available financial records and his cross-examination had established.
The authorities are replete with how the challenges which claims such as Ms Kearney’s raise must be dealt with. Given the seriousness of some of what she alleges, the evidence she gave about such matters must certainly be assessed in accordance with s 140 of the Evidence Act 1995 (NSW). It requiring regard to be had to the gravity of the matters alleged: Clancy v Plaintiffs A, B, C and D; Bird v Plaintiffs A, B, C and D [2022] NSWCA 119 at [26]-[30].
It was not in issue that requires attention to be paid to what was decided in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; [1938] HCA 34. Dixon J there observing that “[i]n such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences”.
Also necessary to take into account is what is well understood about human memory, which is known to be fallible for a variety of reasons, with the degree of fallibility ordinarily increasing with the passage of time: Watson v Foxman (1995) 49 NSWLR 315 at 319. This has to be borne in mind when assessing the evidence which all of the witnesses gave and, I am satisfied, does not support the defence attack on Ms Kearney’s capacity.
Given the passage of time since many of the events which Ms Kearney had to deal with in her evidence; the complexity of the undocumented transactions the subject of her claims, which were entered over the course of many years; the limited and incomplete contemporaneous records available; and the case which Mr Kearney advanced about all these events, that Ms Kearney was confused by some of the questions she was asked in cross-examination and distressed by the case which was being advanced against her, is understandable.
I do not accept that her answers demonstrated any lack of capacity. She properly indicated when she found a question confusing. That she could not remember dates on which particular events occurred, is consistent with the passage of time, as is having indicated that she needed the papers in front of her, in order to answer certain questions. That she did not accept propositions put to her without them, is also understandable. As is her insistence that her circumstances were the result of Mr Kearney’s wrongdoing.
Ms Kearney also made concessions against her interests, for example agreeing that records showed significant sums transferred into her superannuation account in 2008 and 2009, although she was not sure what they were for. She also accepted that they could have been repayments of loans.
Ms Kearney also agreed with matters such as the agreed rent having originally been $40,000 for the Kingsford Smith Street property and that after she came to own all of the property, that rent was paid to her alone. On her evidence, rent of $6,000 per month was, however, being paid long before she commenced these proceedings. That accorded with bank records and contemporaneous correspondence from her solicitor, which can only have reflected instructions she gave at the time.
Also relevant is the dispute about how Ms Kearney came to live at Longacres and what she did there. Which was because, on her evidence, Mr Kearney’s conduct had left her without the means to support herself with the result that she could no longer afford to live in Sydney, as she preferred. On his, because of her profligacy.
That did not accord with Ms Kearney having made the $200,000 gift when Mr Kearney acquired Salona.
In her cross-examination Ms Kearney said that she went to live at Longacres after Mr Kearney had taken all of her money, having even used her credit card without her permission, with the result that on occasions she could not use it to pay for her own expenses. His cross-examination established that Mr Kearney had continued to use her card, which had been used at NWDS before her retirement, even after she retired. That this was done with her permission was not established.
Ms Kearney also described where she had to live at Longacres as rundown and rat infested and having to be restored, she not being able to live in the manager’s residence, because station hands were living there. She also described the work she performed there which included gardening, cooking and working with cattle at times.
Mr Kearney’s evidence was to quite different effect. Namely that the accommodation was suitable and that Ms Kearney only did some gardening there. Later she moved to Salona because she could not afford to live elsewhere and he also provided her with considerable funds over the years on which to live, more than he owed her.
The evidence of Mr Kearney’s wife was that there had been a family discussion about Ms Kearney visiting Longacres for a relatively short visit and then that evolving to her living there for 5 years, with Mr Kearney paying all her expenses, including her credit card bills and giving her cash. It never having been intended that she would have to repay him, this just being part of “the family mutual support structure”.
Mr Kearney’s wife’s understanding was that Ms Kearney had no interaction with the day to day running of Longacres, Mr Kearney being there most days and the extent of Ms Kearney’s involvement being limited to moving things in the garden and taking rubbish to the tip. She never having seen her engage in any work on the farm.
I am not persuaded that Mr Kearney’s evidence about the circumstances in which Ms Kearney left Sydney and what resulted, either at Longacres or Salona, can be preferred over that of Ms Kearney, despite the support which his wife’s evidence gave him. Nor that this helped establish her lack of capacity.
Emails which Ms Kearney and Mr Kearney have exchanged supporting as they do her claim that she had complained to him about he not having paid her what he owed her and he there explaining why he had continuing need for her financial support, still not having sold Longacres.
I also note that in his cross-examination Mr Kearney dealt with the claim that Ms Kearney’s signature on a guarantee had been forged and later used for the benefit of one of his companies. On the face of that document, to which she was taken, Ms Kearney’s evidence ought to be accepted. Not only was she out of the country when it was apparently executed, I am persuaded that it is not her signature, despite the evidence of the bank employee who witnessed the document being signed.
Given the onus which Ms Kearney had to meet, I am not satisfied that her opinion that it was Mr Kearney who executed the document can be accepted. But that is not a basis for concluding that the attack on her capacity can be accepted.
Mr Kearney also attributed Ms Kearney’s complaints about forgery to drunkenness. She was cross-examined about what her bank records disclosed about her expenditure on alcohol while she was living at Salona. She said that she then spent money on fine wine and whisky, which she enjoyed, but she had stopped drinking after she went to live with her daughter, accepting that she had been drinking too much.
Ms Kearney also said that she had been unsuccessful in making an application for a pension, for which she was not eligible because of the property which she owned. That had resulted in her obtaining a loan on that property to fund her living expenses, as well as her pursuit of these proceedings. That evidence was unchallenged.
Having considered all of the competing evidence, I am unable to accept Mr Kearney’s opinions about his mother’s capacity. That her alcohol consumption was at such a level that it had an adverse effect on her capacity when the proceedings were brought was simply not established. Nor that her evidence at trial was adversely affected by any lack of capacity.
In the result I am satisfied that Mr Kearney has not established either that Ms Kearney lacked capacity when she pursued these proceedings without the assistance of a tutor, or when giving her evidence. Or that, as he also contended, she otherwise no longer had the necessary capacity to advance the case she pursued against him, or to resist the case he advanced against her.
That aspect of the defence case must be rejected.

Credit issues

I am also satisfied that I cannot make adverse findings about Ms Kearney’s credibility, but that Mr Kearney’s evidence must be approached with considerable caution.
It is useful to explain this conclusion by reference to a number of other matters in issue, which have led me to conclude that what Ms Kearney and her son actually did, more reliably establishes the agreements they made than Mr Kearney’s self-serving evidence, despite concessions which he made.
I have also concluded that the closing written submission that Mr Kearney was more likely to have recalled the essential factors on which his family’s happiness and livelihood depended and that he had given clear and considered evidence about all parts of his case cannot be accepted. Nor can findings about the evidence on the way in which the amended statement of claim was pleaded be made, as was also urged by the defence.
Ms Kearney’s livelihood and happiness also depended on the agreements in issue. She made appropriate concessions in her oral evidence, even when contrary to her own interests and her evidence was supported by contemporaneous business records, emails, her handwritten 2009 note and even by concessions which Mr Kearney made in cross-examination. Including as to matters such as his use of her credit cards to pay for NWDS expenses, even after her retirement.
The reliability of the competing evidence must also be considered, of course, given the passage of time since the events in question and Mr Kearney’s frank acceptance that she not only had difficulty in remembering some events, found some cross-examination confusing and in one instance did not accept a signature was hers, even though there was no dispute about that transaction, as I have explained.
Still relevant aspects of Ms Kearney’s evidence were supported by other evidence. I have ultimately concluded that her evidence must be preferred over that of Mr Kearney’s, in the event of conflict.

Bank and other records

It was the defendants who put the reliability of the bank records in issue. On Mr Kearney’s evidence, despite the descriptions on the documents on which Ms Kearney relied to establish the nature of payments which had been made to her, having been provided by Mr Kearney or those who he employed. They having utilised an electronic bank transfer system to transfer funds into her accounts, it indicating the purpose of the payment made, information which had been supplied, ultimately, by Mr Kearney or his employees.
Mr Kearney’s evidence included that it was because of the way the NAB system operated and his failure, or that of his employees, to accurately alter a description automatically generated by the system, to reflect what a particular payment was actually made for, that the records were not reliable.
This evidence has to be approached with considerable caution. It was not supported by any objective evidence about how the NAB system operated and was advanced to support the defence case that Ms Kearney had long ago been paid in total, more than she was owed. Mr Kearney’s evidence was thus self-serving and incapable of establishing the true purpose of any particular payment for a purpose other than that disclosed.
There was no question as to the admissibility of the bank records. They are business records which include information provided at the time payments were made to Ms Kearney about the purpose of each payment.
I have concluded that I cannot accept that Mr Kearney’s evidence about the records casts adverse light on that which Ms Kearney gave about payments she received. It is difficult to see why she was not entitled to rely on advice she was given as to the purpose of payments which were made to her at the time she received the payments. They having flowed from undisputed obligations to pay her rent and interest on loans she had made and Mr Kearney not having made such payments regularly, when they fell due.
The conclusion that the records, or some of them, were inaccurate, as was Mr Kearney’s evidence, is thus difficult to draw. It was only he who had personal knowledge of what the purpose of each payment was. That he and others who made those payments under his direction repeatedly misdescribed this purpose, as he claimed, seems quite unlikely.
Mr Kearney’s analysis of the available bank records was explained in his fourth affidavit, sworn only in February, shortly before the hearing. It has to be understood in the context of his evidence that they did not establish all that he had paid while Ms Kearney was living at Longacres and Salona. It annexed an extensive spreadsheet which explained what he had concluded that the bank records did establish. He amended this schedule when called to give his oral evidence, to reduce what he claimed he had paid.
In the time available Mr Kearney could not be cross-examined about the entirety of his analysis. But he had to accept that his analysis was incorrect in various respects, when taken to the relevant documents.
For example, Mr Kearney’s cross-examination identified transactions which he had incorrectly treated as bank transfers between Ms Kearney’s accounts, as payments which had been made to her. As well as transactions where he had treated payments made to her as business expenses, which he accepted she had not incurred. He also conceded that even after her retirement, he had continued to use Ms Kearney’s credit card to meet considerable business expenses, which his analysis did not disclose.
The result was that it was accepted that some $49,692.85 had not been paid to Ms Kearney, as the defendants had claimed.
Mr Kearney’s concessions thus supported aspects of Ms Kearney’s earlier evidence, even though she had no opportunity to deal with what Mr Kearney’s belated analysis purportedly showed, her final affidavit having been sworn in December 2024.
Mr Kearney was also examined about a payment of $11,000 which he claimed he had used Ms Kearney’s credit card for, to pay for the services of a mediator, Mr McLaughlin, who was involved in clearing her credit cards. He later produced a document which purported to be an invoice. It did not contain an ABN number or any reference to GST and did not accord with Mr Kearney’s evidence about the services Mr McLaughlin had provided. The document, it must be accepted, is of dubious provenance.
Mr Kearney’s evidence included that while Ms Kearney had signed a document authorising Mr McLaughlin to represent her in 2022, he had earlier represented them both from about 2018 in mediation with the NAB and it was the bank which had required the authority to be produced. This appears to have concerned the guarantee that Ms Kearney had provided, but Mr Kearney’s evidence was unclear. He did say that the invoice produced had not been amongst his records, had been obtained by his solicitor and that he had not seen it in July 2022, when he used his mother’s credit card to pay Mr McLaughlin. He saw it for the first time when cross-examined about it.

I am satisfied that the evidence did not establish that Mr Kearney had his mother’s authority to use her credit card as he did.
Amongst other things, Mr Kearney also claimed for a time to have paid for Ms Kearney’s rent while she was living at Mosman, but the records showed her having paid rent. Understandably, he could not explain this. He also claimed that part of the payment he was making to his mother at one time was in respect of a tractor and spray rig, but in cross-examination his father conceded they had been sold with Eumbra.
Despite these difficulties the defendants relied on Mr Kearney’s analysis to contend that he had repaid all of his borrowings and the interest which he owed Ms Kearney by 2011. That was inconsistent with later contemporaneous documents, including bank records and emails he had sent, in which he promised to repay his borrowings. They supported Ms Kearney’s evidence.
As a result, I am satisfied that Mr Kearney’s evidence cannot be accepted as accurate, or preferred over that of his mother, without objective, independent support. Nor do I accept the submission finally pressed, that this was not the type of case where there was an overbearing son and a vulnerable mother, but one where they had enjoyed a trusting, loving relationship over many years. That does not accord with what all that the evidence establishes.

The Kingsford Smith Street property

In cross-examination Ms Kearney accepted that when she became the sole owner of the Kingsford Smith Street properties after the divorce, which she later consolidated, she had given Mr Kearney permission to construct a linking shed there, which she described as a roof over the two sheds which had earlier been built there. She also accepted that Mr Kearney had built another wall, as well as making other modifications in about 2019, when he moved TPT there.
Ms Kearney also agreed that she had then been happy for him to remain in the premises, despite what he had built, to which she did not object even though she considered that did not enhance its value. But she said that had changed over time because of his ongoing failure to pay the rent he owed her. She also came to suspect that he had used money he owed her to pay for the constructions he erected on the property. But she denied having discussed with him that the property would “do him for the next ten years”, after which he would be “out”.
That the constructions Mr Kearney erected on the property in 2019 enhanced its value was thus disputed. There was no objective evidence that they did.
Mr Kearney’s evidence was corroborated in various respects by the evidence his wife, father and other witnesses gave and he also made some appropriate concessions in cross-examination. Still, much of his evidence was implausible and important aspects of it were not supported by other evidence.
It was the evidence of Mr Kearney’s wife that since August 2019 she had been the sole director of TPT, while it was his evidence that he remained the director/ secretary in December 2019. On her evidence, before she became director her involvement or presence in Mr Kearney’s dealings with his parents was as a family member. Her evidence included that any amount over $40,000 per annum paid to Ms Kearney was a repayment to her of debts she was owed. That understanding can only have been the result of what Mr Kearney told her.
Mr Kearney’s evidence was that he had not only agreed with his parents that he could rent the disputed property for $40,000 per annum, but that it would never increase, despite his right to lease the property in perpetuity. There is no issue that the originally agreed rent was $40,000 per annum. But Mr Kearney’s father did not give evidence that it was also agreed that he could rent the property in perpetuity for that amount. Ms Kearney denied such an agreement.
Jones v Dunkel inferences must be drawn against the defendants in respect of this and other evidence which they did not call from Mr Kearney’s father, which it would naturally be expected that they would lead from him: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.
The result is that I have concluded that Mr Kearney’s evidence about the Kingsford Smith Street property must also be approached with caution.

Mr Kearney’s claimed payments

The evidence did not establish all of the parents’ financial circumstances. It also established little about those of Mr Kearney, TPT’s or NWDS’s, although it had been liquidated before the hearing. The circumstances were not explained.
But there was no issue that at times Mr Kearney was unable to make rent payments. His evidence about this was contradictory. He claimed he had made his mother sufficient payments to repay all that he owed her by 2011 and had made further payments to her thereafter, so that she could meet her living expenses, with the result that overall, he had paid her more than he owed her. But that did not accord with contemporaneous documentary evidence.
That it was only when Mr Kearney undertook his analysis of the bank records, not long before he gave his evidence, that he came to this realisation, as was his evidence, was also implausible.
The evidence established that Mr Kearney’s parents had been very successful and gave Mr Kearney significant financial support before and after their divorce. He downplayed Ms Kearney’s role in achieving that success, while also claiming that his parents had never paid him adequately for the work he had performed on the farm, or for NWDS. That was disputed by Ms Kearney, as was his claimed gift of $25,000 cash when she moved to Sydney after the divorce.
There is no issue that Mr Kearney assisted his mother when she relocated to live in Sydney and gave her some cash, which on her evidence she found in a drawer. On her evidence it was $2,500 and on his, $25,000.
Mr Kearney’s evidence was not believable, given his explanation of his then circumstances, the little he complained he was being paid for his work and what he was pursuing with his parents’ considerable financial assistance. There is no apparent source of such a large amount of cash.
I have concluded that Mr Kearney’s evidence about his claimed payments to his mother was but part of his attempts to bolster the defence case by failing to adhere to the requirements of his oath.

The support Mr Kearney received from his parents

As well as acting to ensure Mr Kearney’s inheritance, his parents had farmed Eumbra in partnership, as well as generating income from NWDS. They had also acquired three commercial properties in Tamworth and a house in Mosman. There was also a superannuation fund, but what all its assets were, is unclear. It did own the Crown Street property.
When they divorced, the Mosman house was disposed of and agreements were reached about Eumbra, the commercial properties and NWDS. The assets were split between Mr Kearney’s parents, on the evidence of his father, a split for which he was responsible. It was Ms Kearney’s evidence that she had not discussed this with Mr Kearney. But there is no issue that Mr Kearney knew that the proceeds of the sale of Eumbra were split between his parents. But his father gave no explanation for Mr Kearney not having shared in them.
That does not support Mr Kearney’s claimed entitlement to a share of the proceeds. The inference which has to be drawn being that his father’s evidence would not have assisted his claim.
Ms Kearney retired to live off the income which her share of the assets generated, but his parents still continued to support Mr Kearney, he then being employed at NWDS, which he was managing. They not only financed Mr Kearney’s acquisition of the Crown Street property, NWDS paying him rent which allowed him to pay off his borrowings, they also helped finance his acquisition of their shares in NWDS and agreed that he could rent the Kingsford Smith Street property on very favourable terms.
On her evidence when Ms Kearney later agreed with Mr Kearney that he could continue renting the Kingsford Smith Street property when she became the sole proprietor, she expected to be able to live comfortably on her income, without the need to budget.
That Ms Kearney did not have a proper basis for her expectation was not established, given the payments the records show she was receiving, including for rent, at more than the claimed $40,000 annual rent, as well as, at times, for interest.
Some of Ms Kearney’s records supported aspects of her evidence, given notations she had then written, including Mr Kearney’s initials against certain transactions. Still Mr Kearney did not accept that this supported her evidence about loans she had made to him. Suggesting for example that a $75,000 debit in 2009 could have been used to pay for a Mercedes. That was not established. I accept that these contemporaneous notations reflected payment she had made.
I have also concluded that Ms Kearney’s evidence that she had advanced this sum when Mr Kearney wanted to buy a tractor and spray rig which he needed for his business must be accepted. As should other relevant aspects of her evidence, despite Mr Kearney’s denials.
That in 2019 Ms Kearney also agreed that Mr Kearney’s rent could continue at $40,000 until 2029, as was his evidence, was quite improbable, given their then ongoing disagreement over money and the amount of rent which had been paid before that time.
Longacres had not been sold as they had expected; Ms Kearney had not received the regular payments she was entitled to; she had accused Mr Kearney of forging her signature on a guarantee, which he had not denied, but had suggested that she should re-sign; and she was having ongoing difficulties in funding her living expenses, which depended on the intermittent payments Mr Kearney was making.
That Ms Kearney then agreed to provide her son with the further support he claimed, was entirely unlikely.

The claimed 2019 agreement

The result is that I am satisfied that Ms Kearney’s evidence about what happened in 2019 must be preferred
The improvements Mr Kearney made to the property in 2019 were required so that TPT could conduct its business there, Mr Kearney then planning to move its operations. That they improved the value of the property was not established by objective evidence. Ms Kearney did not believe they did.
Mr Kearney also claimed they then agreed that rent would continue at only $40,000 until 2029. Ms Kearney denied this. Had it been agreed, she would obviously have been left dependent on an income stream of considerably diminishing value over that time, rent which Mr Kearny’s father considered had provided a good return in 2007. It could clearly not have provided such a return in 2019.
That this is what these parties agreed, given Ms Kearney’s business background and experience and the difficult financial position she was then in, not regularly being paid rent and interest, is entirely unlikely, notwithstanding how she had long supported her son.
Ms Kearney’s denial that she had entered such an agreement must be accepted. Its existence was not supported by objective evidence. The bank records showing, for example, that until these proceedings were brought, regular rent payments were made for greater monthly amounts.
Being unable to accept that Mr Kearney’s evidence is a reliable basis on which to conclude that he had long before 2011 repaid all that Ms Kearney loaned him, as well as all the interest and rent she was entitled to be paid, I cannot accept his evidence about what he claims they further agreed in 2019. Nor can I reject Ms Kearney’s evidence about that claim.

Are Ms Kearney’s claims time barred?

The limitation question arose in the context of a pleading in the amended statement of claim that an email Mr Kearney sent his mother in November 2013, promising that if she continued to guarantee his indebtedness to NAB, he and NWDS would continue to pay her commercial rent for the property, rather than moving to cheaper premises and that he would repay what he and his companies owed her, when Longacres was sold. That accorded with the rent then not remaining at the $40,000 which had been agreed in 2006, as was Ms Kearney’s evidence.
As a result, Ms Kearney agreed to continue securing Mr Kearney’s indebtedness, then in the amount of $227,500 and he did not repay his borrowings. That was relied on in the amended statement of claim as confirmation, for the purpose of s 154 of the Limitation Act1969 (NSW): at [66].
It is settled that limitation provisions do not limit the Court’s jurisdiction, they rather bar the remedy, thus creating a defence to an action which must be pleaded: Commonwealth v Verwayen ("Voyager case") (1990) 170 CLR 394 at 405; [1990] HCA 39. Despite this the defence did not plead any limitation defence.
The defendants contended that such a defence was not necessary in this case, his reliance having been pleaded and Ms Kearney also having advanced claims of her reliance on Mr Kearney’s emails, as well as promissory estoppel. Those pleadings had thus been considered to have been some way around the Limitation Act issues and so had been met with pleadings of laches, delay and acquiescence.
Given what was decided in Verwayen, it seems to me a limitation defence ought still to have been pleaded, if it was to be advanced. That would have resulted in the parties joining issue over what is involved in such a defence.
It being settled that when a loan is repayable on demand the limitation period commences to run on the making of the loan: Ogilvie v Adams [1981] VR 1041 at 1043 referred to in Woodhouse v Woodhouse [2022] NSWCA 240. But it is also settled that considerations of business efficacy may permit the implication of a term that a loan is not repayable without notice: Woodhouse v Woodhouse [2022] NSWCA 240 at [116]-[117].
Section 154 of the Limitation Act was pleaded. It is concerned with circumstances where, after a limitation period for a cause of action commences to run, but before it expires the person against whom the cause of action lies confirms the cause of action. In that event, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action by the person having the benefit of the confirmation, in this case Ms Kearney, against the person bound by the confirmation, in this case Mr Kearney: s 154(1).
That section does not, however, establish when a limitation period commences to run. That depends on the terms of the agreement in issue. In resolving whether Ms Kearney’s claims are time barred it is thus necessary to consider what the loan agreements required as to repayment.
The agreements were never documented. Neither Ms Kearney nor Mr Kearney gave evidence that they had agreed the loans were repayable on demand. But Mr Kearney called evidence from his father, who said that when both he and Ms Kearney invested in TPT they never lent on the basis of payment on demand “as this is not an arrangement that suited the business”. That accords with how both Ms Kearney and her son continued to conduct themselves, he repeatedly seeking and obtaining further financial support from his mother, who did not demand or require repayment by the giving of any notice.
While the parties did not address what the competing evidence established about the terms of the undocumented agreements in respect of repayment, I am satisfied that the evidence does not permit the conclusion that it was agreed that the disputed loans were repayable on demand.
Ms Kearney’s evidence that her son made payments to her as and when he pleased was supported by the bank records and the emails. Her ongoing support of his various business endeavours did not accord with the loans being payable on demand. It follows that in order for these undocumented loan agreements to have business efficacy, a term that they were repayable on the giving of notice would have to be implied.
It was not suggested that before she left Salona Ms Kearney gave such notice. I have concluded that earlier she did not waive or forgive payment of the loans, interest or rent, not being able to prefer Mr Kearney’s evidence about these matters over Ms Kearney’s denials.
How they conducted themselves accords with Ms Kearney’s forbearing from requiring the loans to be repaid for many years, even though in 2013 it was contemplated that Longacres would soon be sold. It was in fact not sold until 2021. Even when she commenced these proceedings in 2023, however, Ms Kearney did not require their repayment. She only pursued repayment after the cross-claim was served in 2024.
It is in all of those circumstances that I am satisfied that it has not been established that the claims Ms Kearney pursued by her amended statement of claim were time barred.

Is Ms Kearney entitled to an order for possession of the Kingsford Smith Street property or is Mr Kearney entitled to the declaration that he seeks?

It is convenient to deal with these competing claims together.
On the evidence I have earlier explained, I am satisfied that Ms Kearney is entitled to an order for possession and that the defendants are not entitled to the declaration that they seek, not having established that the lease contained the terms for which they contended.
Mr Kearney’s case was that the Court should find that before the breakdown of his parent’s marriage, he and they had entered mutually beneficial financial arrangements, they all working towards building the family’s wealth. The evidence does not support such a finding.
Before his parent’s divorce and the sale of Eumbra, Mr Kearney had twice attempted his HSC in Sydney; had worked for about a year for his parents as an employee on the property when aged about 19; had as a result decided not to pursue farming; and had returned to Sydney to work. After his father had suffered a heart attack he left Sydney, having decided that he wanted to pursue a career with NWDS, where his parents then employed him.
It may be accepted that it was Mr Kearney who identified the Kingsford Smith Street properties as suitable for NWDS’s needs, but it was his parents who bought them.
It was Mr Kearney’s parents who had earlier worked together to build their wealth, that allowing them to take a variety of steps to share it with Mr Kearney, intending thereby to secure his eventual inheritance, while he worked with them. Ms Kearney’s evidence that Mr Kearney was expected to work for that inheritance was not denied by his father and accorded with how the parties conducted themselves.
After Mr Kearney decided not to pursue farming, they worked to secure his inheritance at NWDS. That included assisting him to acquire the Crown Street property, his parents’ shares in NWDS at a time when they had not intended to retire and they also rented him the Kingsford Smith Street properties long-term, on advantageous terms.
After his mother acquired sole ownership of the Kingsford Smith Street properties, she and Mr Kearney did not enter a written lease or otherwise document the terms of their other agreements.
The result is that neither Mr Kearney nor TPT now have a right to possession of that property at law, he being a bare tenant at will and TPT his sublessee: ss 23C, 23D, 54A and 127 of the Conveyancing Act 1919 (NSW). Under s 127, an unwritten agreement which would formerly have brought into existence an informal tenancy from year to year, now brings into existence a lease that will be terminable by a month’s notice expiring at any time: Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63.
There is no issue that Ms Kearney has given such notice more than once.
As was Ms Kearney’s case, if the evidence established that all rent due had not been paid to her, Mr Kearney could not successfully resist her application for possession, because there would be no basis for the declaration which he pursues.

Ms Kearney moved to Salona after Longacres was sold. On her evidence she then having nowhere else to go, still being financially dependent on what her son gave her from time to time. Their relationship deteriorated to the point that she left, having decided she needed to seek legal advice. It was only after she commenced these proceedings that he began making rent payments of $3,400 per month, albeit even then not always monthly.
Mr Kearney’s wife corroborated aspects of his evidence, but she was not aware of all of his dealings with his mother. It is apparent from her evidence that what she understood about those of which she was aware, was the result of what Mr Kearney told her. She has not spoken to Ms Kearney since she left Salona and was not aware of all of the communications between her husband and his mother, including their written communications, which shed light on their ongoing arrangements and disagreements.
The defendants finally contended that what was advanced by way of MFI 13 did not merely identify what was no longer in issue. It rather sought to alter the case Ms Kearney advanced. I am unable to accept this, given how the case was opened and the evidence which was led. It rather reflecting concessions which Ms Kearney had made in cross-examination as well as aspects of Mr Kearney’s analysis which she had accepted, with the result that not all of the loans addressed in opening, earlier explained, were pressed.
Mr Kearney had admitted that the $150,000 TPT loan had been made and, according to its records, had not been repaid, with the result that it was not finally in issue. Mr Kearney also admitted that it had been agreed that he would pay interest on some loans, but not others. As I have explained, I cannot accept that it had been agreed that the TPT or other loans would be interest free or that interest due on any of the loans had been waived.
I am unable to prefer Mr Kearney’s evidence about such matters, advanced as it was by way of unsupported bald assertion. Given how Ms Kearney was dependent on what he was paying her by way of rent and interest, that they made such agreements was entirely implausible. That Ms Kearney’s case must be preferred, follows from all that I have explained about her evidence and his.
Ms Kearney had sworn a number of affidavits in which she explained loans she had made, in the main between 2007 and 2010, as well as payments she had received. On her evidence in 2007 Ms Kearney had also guaranteed one of Mr Kearney’s borrowings with a $227,500 deposit, as well as loaning him $500,000 for working capital, $300,000 of which was soon repaid, before she advanced him another $100,000 in 2008. There are written acknowledgments of some of these dealings.
In April 2008 she advanced funds to TPT, evidenced in its financial statements. In June she advanced Mr Kearney $600,000 to acquire a company and in September a further $150,000. In 2009 she advanced him $75,000 at a time when she understood he wanted to buy a tractor and spray rig. He repaid $140,000 in October, but she claimed he withdrew $200,000 from her account in October, without her knowledge or consent.
Ms Kearney made further advances to Mr Kearney in 2009 and 2010, including the disputed $200,000 which she provided in December 2010 so that he could purchase Salona. She believed he had used those funds for other purposes. The cheque was paid into an NWDS account.
Salona was the property Ms Kearney had long admired and hoped herself to purchase. It was described to have been a mansion, but on Ms Kearney’s evidence in cross-examination it was a large 5-bedroom house which required considerable upkeep when she moved in after she left Longacres, all of which she could not afford.
Mr Kearney claimed that this $200,000 was a gift. It was the affidavit evidence of his wife that the $200,000 had been given to her and Mr Kearney, but that “I understood this amount to be compensation to Simon and not a loan”. That did not accord with his evidence. In cross-examination he said he had received the $200,000 cheque in a Christmas card. Ms Kearney did not accept this.
Ms Kearney said that by 2011 she had loaned Mr Kearney most of her money and it was in 2013 that she first became concerned. That was when she discovered that the $227,500 term deposit had been used to secure Mr Kearney’s personal and business loans and a bank guarantee that she had not signed, at a time when he was dealing with the property, Cumbungi. This led her to write to Mr Kearney asking him what was going on, given advice she had received from the NAB and his response, which included his need for her to re-sign her guarantee, which NWDS needed to continue to operate effectively, without which he would have to relocate to cheaper premises.
Ms Kearney later took steps to have the lease documented by her solicitors, with increased rent she had proposed being reduced from $8,000 to $6,000 which she was then being paid. Mr Kearney denied knowledge of the proposed lease and it was certainly not executed. But I prefer Ms Kearney’s evidence about steps she pursued unsuccessfully, in an attempt to document their dealings, given what the contemporaneous documents established.
The evidence also established that Ms Kearney paid loans she made as Mr Kearney directed. He also explained that when she gave him cheques, at times he signed them over to others. Not all of the relevant bank records could be produced by the NAB. That does not require that Ms Kearney’s claims be rejected, supported as they were by her 2009 document. In all of the circumstances I have concluded that her evidence about the disputed loans which are not reflected in bank records must be accepted.
In one case the loan was evidenced by an unsigned copy of a letter produced by the NAB. That is a business record which did not depend on evidence being called from the employee who wrote it. On Ms Kearney’s case, Mr Kearney had made the disputed withdrawal from her account, without her knowledge, with the assistance of a bank employee. Ms Kearney and Mr Kearney gave conflicting affidavit evidence about this. Given what I have concluded about their respective evidence, hers should be preferred.
Despite these conclusions, I am satisfied that Mr Kearney was entitled to the benefit of rental payments made to his mother by other tenants, given their agreement that she would lease him the entire premises. That did not alter because of his failure to pay rent when it fell due. It follows that payments which Ms Kearney received direct from other tenants must thus be taken into account in the final calculation which the parties now have to undertake, even the tenant with whom Ms Kearney entered into a separate lease.
I do not accept that Mr Kearney is entitled to any payment in respect of what he constructed at the Kingsford Smith Street property. Reference was made to such a possibility in final oral submissions, but the amount of such a payment was not articulated or put to Ms Kearney. Her evidence was that what had been constructed in 2019 had not enhanced the value of the property, given what had been built for TPT’s particular business needs. In the result a basis for such an order was not established.

Is Mr Kearney entitled to a share of the proceeds of Eumbra?

It was the result of his parent’s concern to protect his inheritance that they made Mr Kearney a registered proprietor when they purchased Eumbra with the proceeds of the sale of their Manilla property and with bank borrowings secured by the mortgage. He was then a schoolchild, but they all understood that he intended to pursue his working life with them on that property, which his parents then farmed in partnership.
That when Mr Kearney became a registered proprietor, none of them intended that he would be gifted with a one third interest in the property, as was Ms Kearney’s evidence, is established by the way in which all three of them acted, including when Eumbra was sold.
Mr Kearney thus became a party to the mortgage, but he did not contribute to its repayment, even when he went to work for his parents on the property, when he was paid as their employee. Nor did he share in the proceeds when Eumbra was sold.
On his father’s evidence, it was he who decided how the assets were divided after the divorce. Still Mr Kearney did not accuse his father of any wrongdoing in not sharing the proceeds of Eumbra’s sale with him. Nor did he make his father a party to the proceedings. That was not explained. But it accords with Mr Kearney having no interest in the proceeds of the sale. As does him never advancing such a claim against either of his parents until his mother brought these proceedings.
That he had no such interest also accorded with Mr Kearney’s own evidence. It including that his parents had made their decision to make him a registered proprietor, it always being understood that when he finished school he would work on Eumbra and it being his mother’s strategic plan to make him a one third owner, so that he could not be disinherited. That concern having arisen out of the way his father had been disinherited from the family farm he had worked on, after his brother had successfully challenged his inheritance.
Mr Kearney also said that he worked unpaid on the farm as a child and that he was paid when he worked as an employee after he finished his TAFE studies, before he decided to return to Sydney. He made that decision because he had not been getting on with his father and found the work and conditions on the farm too challenging. It was after his father’s later heart attack that he returned and his parents agreed to employ him at NWDS in Tamworth, where he then lived. They then promising him before Eumbra was sold that he would one day inherit that company, that being the work he preferred to pursue.
Mr Kearney said that he began work at NWDS as a “shop boy” and also studied to become a qualified agronomist, eventually taking on a managerial role. He expressed dissatisfaction with what his parents had paid him for his work at both Eumbra and NWDS. It was in 2006 that his parents agreed to sell their shares in NWDS to him, he then being anxious to secure his inheritance and they then using Eumbra to guarantee his $550,000 loan. When it was later sold and the proceeds split in accordance with his parents’ family law agreement, his parents then provided NAB a $455,000 guarantee, secured over their Kingsford Smith Street properties.
Despite these steps, Mr Kearney claimed not to understand why he was not paid a share of the proceeds of the sale of Eumbra in 2007. I do not believe this. His evidence according as it does with an agreement with his parents that he would not share in the proceeds of the sale, despite being a registered proprietor. That both the sale and the distribution of the proceeds undoubtedly required his consent, which was given in the context of their decision that he would not pursue his life working on Eumbra, but with NWDS, which he would inherit, supports that conclusion.
Mr Kearney also said that at the time of the sale he had not raised his entitlement to a share of the proceeds, given the inheritance his mother had promised him, his expectation being that he would be able to operate NWDS out of the Kingsford Smith Street properties and not wanting to make her retirement more difficult.
It follows on his own evidence that Mr Kearney did not expect to receive any share of the proceeds when Eumbra was sold. That reflecting the other steps which he and his parents took, at his request, in order to secure his inheritance off farm before they died.
That it was not until after his mother brought these proceedings in 2023, that Mr Kearney came to consider that he might also have had a right to a share of the proceeds of the sale of Eumbra, also does not support his claimed right in 2007 to such a share. This accords with there being no suggestion that he has ever sought or been paid a share of those proceeds by his father.
Mr Kearney nevertheless relied on a claimed constructive trust and also pressed a claimed “Pallant v Morgan” equity against his mother, on the basis that she had retained 50% of his share of the sale proceeds of Eumbra. His parents having acquired it for $850,000 in 1989 and it having been sold for a capital gain of some $3 million in 2007.
Mr Kearney’s claim has to be understood in light of the prima facie position at law, that the beneficial ownership of real property is commensurate with its legal title: Currie v Hamilton (1984) 1 NSWLR 687 at 690.
Where more than one person has contributed purchase money in unequal shares and a property is purchased in all names there is, in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common, in the proportions in which they contributed the purchase money: Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [55]. Such a presumption can be dispelled by evidence.
It is the measure of the parties' contributions to the purchase or acquisition cost of the property, that usually determines their proportionate beneficial shares. The general rule in relation to subsequent contributions to the repayment of a mortgage loan being that they will not alter the extent of the proportionate beneficial interests determined by their contributions to the acquisition cost.
But later admissions and subsequent dealings between the parties are also admissible on the question of their intentions: Cummins at [65].
The relevant time for a finding of a resulting trust is the time of acquisition of the property or “so immediately after it as to constitute a part of the transaction”: Calverley v Green (1984) 155 CLR 242 at 262; [1984] HCA 81. A presumed resulting trust can be displaced by evidence showing that the parties had a common intention to share an equal interest in the property and/or that the party making the disproportionate contribution intended that the parties would have an equal interest in the property notwithstanding: Neilson v Letch (No 2) [2006] NSWCA 254, per Mason P at [26].
A common intention constructive trust is one where there is a common intention as to the ownership of property upon which the claimant has acted to his or her detriment. The inquiry being as to the actual intention of the parties and the law not imputing a presumed intention to the parties based upon what the Court considers fair and reasonable persons in the position of the parties would have intended, had they turned their minds to the issue: as explained in Galati v Deans & Ors [2023] NSWCA 13 at [54].
In this case the evidence establishes a common intention when Eumbra was acquired that Mr Kearney would be made a registered proprietor in order to secure his inheritance, which he would work for on the property, after he finished his schooling. But it does not establish that he ever acted to his detriment. To the contrary, his parents accepted that he did not wish to pursue farming and employed him at NWDS instead, then acting to secure his inheritance in other ways off farm. That explaining why Mr Kearney did not share or expect to share in the proceeds of the sale of Eumbra, even though he was a registered proprietor and also a party to the mortgage.
This also reflects that where parties intend to acquire property subject to a mortgage, the moneys raised on the mortgage are treated as a contribution by the parties who have borrowed the money from the mortgagee: Calverley v Green at 251, 257-258, and 267-268. But the procedure to be applied when determining the relative interests of each of the parties who purchase property using funds secured by a joint mortgage is that explained in Murtagh v Murtagh [2013] NSWSC 926 at [83] citing Ryan v Dries (2002) 10 BPR 19,497; [2002] NSWCA 3:

“(a)   establish the actual contribution of each party to the purchase price;
(b)   add incidental expenses;
(c)   apply the mortgage equally; and
(d)   then ascertain the percentage of the capital contribution of each party in relation to the total of (a), (b) and (c).”

Mr Kearney made no contribution to the purchase price, expenses or the repayment of the borrowings used to acquire Eumbra, or to the payment of the interest they attracted, other than by being made a party to the mortgage.
Agreements can also be made after acquisition about the equitable interests arising from varying contributions to the purchase price of a property: Calverley at 262-263. In this case the conduct of Mr Kearney and his parents accords with an agreement that he would have no immediate interest in the property, despite being a registered proprietor and party to the mortgage, his interest being intended to secure his inheritance, for which he would work with his parents on Eumbra.
In Bosanac v Commissioner of Taxation [2022] HCA 34 it was explained that a presumption of advancement can arise on transfers of property from a parent to a child, but that presumption can be rebutted by evidence of actual intention: at [14]-[15]. A question of intention being entirely one of fact: Bosanac at [32]. That having to be determined on the balance of probabilities, with no predetermined weight to be given either to the fact of a contribution having been made, or to the categorisation of the relationship between the parties. Their significance falling to be assessed “within the totality of the circumstances of the case”: at [66].
Further, it is the objective facts to be drawn from the parties’ conduct which must be considered: at [122].
It was Mr Kearney’s case that before the breakdown of his parents’ relationship they were pursuing “mutually beneficial financial arrangements”, all working towards building the families’ wealth. It having been his mother who had insisted that he be made a joint owner of Eumbra and he having returned to assist on the farm at age 19, as a loyal son of farming parents.
Despite how these family members supported each other over time, I cannot accept this description. It seems to have been Mr Kearney who was the recipient of his parents’ success and generosity, in relation to Eumbra, his employment, the Crown Street property, the lease of the Kingsford Smith Street properties and his acquisition of NWDS. His parents thereby achieving their aim of guaranteeing his inheritance, despite he not having shared in the proceeds when Eumbra was sold.
How Mr Kearney and his parents conducted themselves when Eumbra was acquired was consistent with an intention that he would earn his livelihood by working with them on the property until he inherited it, his inheritance being secured by making him a registered proprietor. But their conduct did not reflect any intention that Mr Kearney was to share in the profits of his parents’ partnership; was expected to contribute to expenses, including the repayment of the Eumbra mortgage and the interest it attracted; was entitled to be paid for his parents’ use of the property; or was to share in the proceeds of any sale.
Consistent with this, when his parents accepted that Mr Kearney would not pursue farming on Eumbra as his living, they took other steps to secure his inheritance off farm, with the result that he did not participate in the proceeds, when Eumbra was sold.
How Eumbra was sold without payment of a part of the proceeds to Mr Kearney, to which he was apparently entitled as one if its three registered proprietors, can only have been the result of conversations at the time and resulting instructions which were given to the solicitors who acted on the sale as a result. But the only evidence about this was that Ms Kearney was not involved in such conversations. The inference is that the evidence of Mr Kearney and his father would not have assisted his case.

What the objective facts do establish about their conduct includes that:

Mr Kearney’s parents long had a concern to secure Mr Kearney’s inheritance on which they acted in various ways;

They first made him a registered proprietor of Eumbra, expecting that he would work with them there;

After he attempted that work, they accepted his decision not to pursue farming;

They then employed him at NWDS in order that he could pursue the work he preferred, they then intending to secure his inheritance by it;

To achieve this, they first assisted his acquisition of their Crown Street property where NWDS conducted its business, with the result that it paid him rent which covered his mortgage repayments;

They then assisted him to purchase their shares in NWDS, as he wished, in order to secure his inheritance beyond challenge by his sister, which he was then concerned to do;

His parents later split the proceeds of the sale of Eumbra, with Mr Kearney not being paid any part, he not then considering that he was entitled to share in the proceeds;

His parents’ support also enabled Mr Kearney to operate NWDS’s business from the Kingsford Smith Street properties because of the lease they agreed to on favourable terms;

That support also enabled him to conduct TPT’s business at Crown Street before he sold it; and

Mr Kearney never advanced any claim in respect of an entitlement to share in the proceeds of the sale of Eumbra until after his mother brought possession proceedings in 2023 in respect of the Kingsford Smith Street property and then only against her.

I am not persuaded on those facts that Mr Kearney has established his case. Nor can his reliance on the Pallant v Morgan principle result in the orders which he pressed.
That Mr Kearney never advanced any claim in respect of an entitlement to a share of the proceeds of the sale of Eumbra until after his mother brought possession proceedings in 2023 in respect of the Kingsford Smith Street property and then only against her, tells against the grant of the equitable relief he pursued.
Reliance was placed on the explanation of the claimed equity in Young, Croft and Smith, On Equity (2009, Thomson Reuters) at [12.1070]. It explained that in Pallant v Morgan two people had made an agreement that one would bid on behalf of himself and the other at the auction of a property. The bid was successful, but the first person sought to retain the property for himself. Notwithstanding that their agreement was too uncertain for enforcement, it was held that retaining the disputed property would amount to a fraud, with the result that it was held on trust for both parties jointly.
In final written submissions Mr Kearney urged that it would be concluded that he was entitled to the relief he pressed, having with his parents operated the family farming and merchandising enterprise and that when the farming component ceased, his mother had taken the opportunity to keep his portion of the fruits of the entire venture, which were embodied in the sales proceeds of Eumbra. The result was that an equity had been generated, which the Court would enforce.
I am satisfied that the evidence I have explained does not permit the findings on which the claimed equity, so advanced, depends. Ms Kearney’s claimed wrongdoing not having been established.
Reference was made to the principle in White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & Anor [2009] NSWCA 114, which turned on issues about constructive trusts. Pertinently, it was observed in On Equity at [12.1070] that the equity would probably best be classified as a constructive trust. In White City it was observed at [82] that Pallant v Morgan and a case to a similar effect, Chattock v Muller (1878) 8 Ch D 177, “do not depend upon the existence of a specifically enforceable contract, nor indeed perhaps upon a contract at all, but upon it being fraudulent of the defendant to set up an absolute title”.
In this case fraud was not pleaded, understandably, given Mr Kearney’s acquiescence to the sale of Eumbra and the distribution of the proceeds between his parents, without any challenge for very many years. That reflecting their agreements both at the time of its acquisition and at the time of its sale, given all the steps that his parents took to ensure his inheritance, finally off farm as he desired. The intention to secure Mr Kearney’s inheritance having thereby been achieved, despite him not having shared in the proceeds of the sale of Eumbra.
That his mother wrongly or fraudulently shared in the proceeds of the sale of Eumbra with Mr Kearney’s father under the terms of their family law agreement, which it appears that his father devised and of which he was aware and did not dispute at the time of the sale, was simply not established.
In the result it must be concluded that the defendants did not establish a basis upon which Ms Kearney can justly now be ordered to pay Mr Kearney a share of the proceeds of the sale of Eumbra.

Costs

The usual orders as to costs under the Uniform Civil Procedure Rules is that costs follow the event. In this case that is an order that Mr Kearney pay Ms Kearney’s costs.
Unless the parties approach to be heard with short written submissions within 14 days, that will be the Court’s order.

Orders

It was Mr Kearney’s case that even if it be concluded that the agreed rent was not $40,000 per annum, that he should be given an opportunity to pay the arrears within 30 days, so that the lease can continue. That being supported by the evidence about his successful creation of a business operated out of the disputed premises for many years, on which his family depends, he having been affronted by the notice to quit which his mother, who he loves dearly, had given him.
I am not satisfied that this is what justice permits, given all that the evidence has established about Mr Kearney paying his mother only when he saw fit, thereby depriving her of the income that she needs to live on, with the result that she cannot obtain a pension and has had to borrow to fund her living expenses.
I have concluded that in the circumstances, she must have an order for possession so that she can rent out her property at commercial rates, her son long not having paid her the rent they earlier agreed and even after the proceedings were brought, not monthly as it was common ground that they had agreed.
The parties should thus now bring in orders reflecting the conclusions reached in this judgment within 14 days, together with short written submissions if they are not agreed, including as to costs.

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Decision last updated: 09 July 2025

Medium Neutral Citation:	Kearney v Tamworth Poly Tanks Pty Ltd [2025] NSWSC 729
Hearing dates:	5 - 6 February, 24 - 25 March 2025
Date of orders:	9 July 2025
Decision date:	09 July 2025
Jurisdiction:	Common Law
Before:	Schmidt AJ
Decision:	Judgment for Ms Kearney
Catchwords:	LEASES AND TENANCIES – possession of commercial property – where property leased by mother to son for many years – dispute over terms of undocumented lease and payment of rent – notices to quit served – declaratory relief in respect of lease sought – refused – order for possession made LOANS – where money loaned by mother to son – dispute about interest and repayment of loans – payment of unpaid interest and repayment of loans ordered PROCEEDS OF THE SALE OF LAND – son and his parents previously registered proprietors of a farming property – proceeds of sale split between parents – claim for share of proceeds pursued against mother – Pallant v Morgan equity – son not entitled to share of proceeds
Legislation Cited:	Civil Procedure Act 2005 (NSW) Conveyancing Act 1919 (NSW) Evidence Act 1995 (NSW) Family Law Act1975 (Cth) Limitation Act1969 (NSW) Real Property Act1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Bosanac v Commissioner of Taxation [2022] HCA 34 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Carey v Carey [2020] NSWSC 765 Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63 Chattock v Muller (1878) 8 Ch D 177 Clancy v Plaintiffs A, B, C and D; Bird v Plaintiffs A, B, C and D [2022] NSWCA 119 Commonwealth v Verwayen ("Voyager case") (1990) 170 CLR 394; [1990] HCA 39 Currie v Hamilton (1984) 1 NSWLR 687 Delaforce v Simpson-Cook [2010] NSWCA 84 Doueihi v Construction Technologies Australia Pty Ltd [2016] NSWCA 105 Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599; [1999] HCA 15 Ferrier v Nationwide News Pty Ltd (No 3) [2015] NSWSC 1806 Galati v Deans & Ors [2023] NSWCA Galaxidis v Galaxidis [2004] NSWCA 111 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Murtagh v Murtagh [2013] NSWSC 926 Neilson v Letch (No 2) [2006] NSWCA 254 Ogilvie v Adams [1981] VR 1041 Pallant v Morgan [1953] CH 43 Ryan v Dries (2002) 10 BPR 19,497; [2002] NSWCA 3 Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278; [2006] HCA 6 Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Watson v Foxman (1995) 49 NSWLR 315 White City Tennis Club Ltd v John Alexander's Clubs Pty Ltd & Anor [2009] NSWCA 114 Woodhouse v Woodhouse [2022] NSWCA 240
Texts Cited:	Peter Young, Clyde Croft and Megan Louise Smith, On Equity (2009, Thomson Reuters)
Category:	Principal judgment
Parties:	Jill Kearney (Plaintiff/Cross-Defendant) Tamworth Poly Tanks Pty Ltd (First Defendant) SKM Agriculture Pty Ltd (Second Defendant) Simon Peter Kearney (Third Defendant/Cross-Claimant)
Representation:	Counsel: M Maconachie (Plaintiff/Cross-Defendant) J Mack and L Hamilton (Defendant/Cross-Claimant) Solicitors: Benjafield & Associates Lawyers (Plaintiff/Cross-Defendant) Harris Solicitors (First, Second and Third Defendants)
File Number(s):	2023/422452
Publication restriction:	Nil