Lidgett v Lidgett

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST

S ECI 2023 01185

BETWEEN:

SIMON JOHN LIDGETT	Plaintiff
v
JILLIAN ROSEMARY LIDGETT & ANOR (according to the attached Schedule)	Defendants

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28 and 29 November 2023
DATE OF JUDGMENT:	12 December 2023
CASE MAY BE CITED AS:	Lidgett v Lidgett
MEDIUM NEUTRAL CITATION:	[2023] VSC 743

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PRACTICE AND PROCEDURE — Receivers and managers — Application for appointment of a receiver and manager of assets of a farming business operated by a partnership between the plaintiff and the first defendant pursuant to s 37(1) of the Supreme Court Act 1986 (Vic) and rule 39.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) — Choy v St Kilda Baths Pty Ltd [1999] VSCA 212 and Martyniuk v King [2000] VSC 319 referred to — Whether circumstances justify the appointment of a receiver — Farm business assets are not at risk of dissipation or waste such as to necessitate the appointment of a receiver — Appointment of receiver is inappropriate and unnecessary — Receiver not capable of resolving underlying factual disputes between the partners — Application refused.

PRACTICE AND PROCEDURE — Interlocutory injunction — Application for injunctive relief to prevent the sale of farm business assets of a partnership — Yimiao Australia v Cyber Intelligence [2023] VSCA 21 referred to — Whether a grant of the injunction would authorise an unlawful act — Partnership Act 1958 (Vic), ss 42-3, 46 — Balance of convenience favours the granting of an interlocutory injunction restraining the first defendant from selling or disposing of any assets of the partnership — Application granted, subject to conditions.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D B Clough of counsel	Cinque Oakley Bryant Lawyers
For the First Defendant	Mr R E T Wodak of counsel	Heinz Law

TABLE OF CONTENTS

Introduction................................................................................................................................... 1
Factual background and the parties’ claims in this proceeding............................................ 2
The current applications............................................................................................................ 16
The evidence................................................................................................................................ 21
Relevant legal principles............................................................................................................ 54
Applications to appoint receivers................................................................................... 54
Injunction applications..................................................................................................... 56

The parties’ submissions............................................................................................................ 60
Discussion.................................................................................................................................... 82
Proposed orders.......................................................................................................................... 99

HER HONOUR:

Introduction

These reasons concern two applications made by the parties in a proceeding with respect to a bitter dispute within a fifth generation Victorian farming family. In the first application, the first defendant, Mrs Jill Lidgett,[1] applies for the appointment of SMB Advisory as the receiver and manager of the assets and undertaking of the SJ Lidgett & JR Lidgett Partnership (‘partnership’), a farming business operated by Jill and the plaintiff, her son Simon. The farming business operates from the property which is the subject of Simon’s primary claim in this proceeding (‘Highton farm’).
[1]For ease of reading, and to distinguish between family members, first names are used for the parties in these reasons. No disrespect is intended.

Simon opposes Jill’s application, and has applied in turn for interlocutory relief, including, among other things, an interlocutory injunction to restrain Jill from selling or otherwise disposing of certain assets of the partnership (‘farm business assets’) until the determination of this proceeding, or further order.

The partnership was dissolved by Jill giving notice on 10 February 2023. Simon does not dispute that the dissolution of the partnership was valid. However, he says that given the nature of the farming business operated by the partnership, and given his claim in this proceeding that Jill holds her share of the farm business assets on trust for him, then the status quo should be preserved in order to enable Simon to manage the farm business assets until the hearing and determination of this proceeding.[2] Further, he says that, even if interlocutory injunctive relief is not granted, and the farm business assets must be sold, he is in a better position than any receiver to liquidate the farm business assets in an orderly and cost effective manner.
[2]Following the hearing of the current applications, but foreshadowed at the commencement of the hearing, I fixed the trial of the proceeding to commence on 4 June 2024, on an estimate of two to three weeks. Some careful and robust case management will be required to ensure that all necessary interlocutory steps can be completed so that the trial commences on that date.

For the reasons which follow, I will refuse Jill’s application to appoint a receiver to the partnership. Further, I will grant the interlocutory injunctive relief sought by Simon, subject to some reasonably strict conditions. In addition to providing the usual undertaking as to damages, Simon will be required to:

(a) comply with the interim regime established by the orders made by consent on 10 October 2023 (’10 October orders’), with some modifications;

(b) agree to and facilitate the appointment of a new accountant for the partnership;

(c) agree to the appointment of a joint expert to value the farm business assets prior to trial;

(d) allow access to any livestock agent appointed by Jill to inspect the livestock upon reasonable notice being provided;

(e) provide evidence of insurance coverage for the farm business assets, in particular for the livestock, and appropriate public liability insurance;

(f) agree not to sell any farm business assets (including livestock) without the consent of Jill, such consent not to be unreasonably withheld,[3] or to use the property which is the subject of this proceeding for any purpose other than as a family residence and to manage and maintain the farm business assets; and

(g) use all necessary endeavours and take all necessary steps to ensure that the trial of the proceeding be ready to commence on the scheduled date of 4 June 2024.

[3]For example, some livestock sales may be required to fund expenses required to preserve the welfare of the livestock, or to dispose of ageing livestock at the appropriate time.

My reasons follow.

Factual background and the parties’ claims in this proceeding

This section of the reasons will be, in the interests of expedition, a relatively truncated summary of the background to this proceeding, noting that the key events span a period of over 40 years.

The Highton farm has been held by the Lidgett family for many generations. The Highton farm comprises approximately 700 acres of farmland near Ballan, valued in September 2022 at $9.4 million. Until transfers of the titles upon which the Highton farm were located were made on 22 December 2022 and 9 February 2023, Jill was the registered proprietor of the Highton farm, having inherited the Highton farm from her late husband (Simon’s father Peter) after he suddenly died in 1981, when Simon was 11 years of age.

From 1996 at the latest, the partnership operated the farming business, after Jill left the house on the Highton farm (‘homestead’) to enable Simon and his wife Anita to live at the homestead. The farming business involves the breeding and sale of cattle and sheep, although part of the Highton farm has on occasion been used for cropping, primarily grain and fodder for the livestock. Since at least 1996, Simon has managed the day to day operations of the farming business, with Jill playing largely a passive role in the farming business. Neither Simon nor Jill drew a wage from the partnership, although both draw funds for living expenses from time to time. The partnership did not pay rent to Jill for its use of the Highton farm.

A list of the farm business assets compiled by Simon on or around 7 March 2023 is in evidence. The farm business assets include plant and equipment with a total estimated value of $26,541, plus livestock estimated by Simon to be valued at $230,400 at that time.[4] Jill disputes this valuation, saying that she believes that the livestock are worth considerably more than that. The livestock on hand as at 4 March 2023 was a herd of 127 cattle, 103 calves, three bulls, and 297 sheep, including one ram.
[4]Some months later, Simon revised his estimate down to $143,000.

The dispute between the parties over the sale of the Highton farm and the partnership seems to have developed gradually over recent years, with the parties having instructed solicitors to act on their behalf no later than June 2022, after discussions within the family about succession planning failed to reach any agreed conclusion. In August 2022, the parties agreed to participate in a mediation, which was conducted over two days in October and November 2022. The mediation was attended by Simon, Anita, Jill and Anna Lidgett, one of Jill’s three daughters (Simon being her only son). Following the further adjournment of the mediation in November 2022, Jill, with the assistance of her current solicitors, initiated the creation of a family trust, the Lidgett Property Trust (‘family trust’), of which Jill and each of her four children are among the beneficiaries, with Anna being appointed as trustee of the family trust. Jill then transferred the Highton farm to the family trust in two stages, on 22 December 2022 and 9 February 2023. On the following day, 10 February 2023, Jill gave notice of the dissolution of the partnership. This proceeding was commenced by Simon against Jill and Anna on 24 March 2023.

A summary of the claims made by Simon in this proceeding were summarised in a recent decision of Moore J in another proceeding,[5] as follows:
[5]In the proceeding before Moore J (‘judicial advice proceeding’) Anna applied for judicial advice in her capacity as trustee of the family trust that it would be appropriate and justified for the family trust to defend the claims against her in this proceeding in her capacity as trustee of the family trust (claims are also made against her personally), and to pay the costs of defending Simon’s claims in this proceeding out of the assets of the family trust. His Honour declined to provide the advice sought by Anna, making the following orders:
(a)Anna Lidgett, in her capacity as trustee of the Lidgett Property Trust, is directed that it would be appropriate to and she would be justified in playing no active role in and abiding by the judgement of the Court in proceeding S ECI 2023 01185.
(b)Subject to further order of the Court, Anna Lidgett, in her capacity as trustee of the Lidgett Property Trust, is directed that it would not be appropriate and she would not be justified in paying the costs of defending proceeding S ECI 2023 01185 out of the assets of the Lidgett Property Trust.
See [2023] VSC 673.

The claims in Simon’s proceeding are set out in an amended statement of claim filed on 7 September 2023 (the ASOC). By way of background, Simon alleges that Jillian inherited the Highton property from her husband (and Simon’s father) in June 1982 and that she was not able to conduct a farming operation on her own. If he had not remained working on the Highton property from 1985, Simon alleges that Jillian would have had to either sell or lease the Highton property, or enter into a share farming arrangement on inferior terms.
A central allegation made by Simon is that, from about 1986, Jillian promised to him that, if he remained working on the Highton property for a reasonable time, or alternatively until her death, she would devise the Highton property to him by her will and bequeath to him all her interests in various farm business assets situated on it (the promise). Simon pleads that, on the basis of the promise, he expected to obtain ownership of the Highton property upon Jillian’s death and that, by her conduct between 1986 and 2020, Jillian represented to him that he would inherit the property if he remained working on it for a reasonable time or until her death.
Simon alleges that he relied upon the promise and the foregoing expectation to his detriment such that, on and prior to 9 February 2023 when Anna in her capacity as trustee of the Trust became the registered proprietor of the properties which comprise the Highton property, Jillian held the Highton property on a constructive trust for herself during her lifetime, and then for his benefit (the constructive trust).
Simon also relies upon the promise in pleading that he and Jillian entered into a contract pursuant to which Jillian would ensure that, by her will, she would fulfil the promise and that, in consideration for that promise, Simon would remain working on the Highton property for no wage (the contract).
Simon pleads that, in about August 2022, he and Jillian entered into an agreement to participate in a mediation (the agreement to mediate), which included terms that the parties would participate in the mediation in good faith and maintain the status quo with respect to their dispute until the termination of the mediation. He alleges that he attended a mediation on 6 October 2022 with Jillian and Anna, which was then adjourned and reconvened on 15 November 2022, and again adjourned (the mediation). Simon pleads that, on 10 February 2022, Jillian informed him that she did not wish to reconvene the mediation.
Against the backdrop of these allegations, Simon alleges that, on 9 February 2023:
(a)Jillian was bound by the contract and by the agreement to mediate not to transfer ownership of any of the three titles comprising the Highton property to any person other than him;
(b)Jillian had never previously evinced to him any intention to transfer ownership of any of the three titles comprising the Highton Property to any person other than him;
(c)‘the parties’ were in the process of negotiating in good faith in relation to the claims the subject of Simon’s proceeding;
(d)Jillian transferred registered ownership of each of the three titles comprising the Highton property to Anna in the latter’s capacity as trustee of the Trust;
(e)Jillian knew, or ought to have known, that if Simon were aware of her intention to transfer ownership of any of the three titles comprising the Highton property to any person other than him, that he would have registered caveats on those titles; and
(f)Jillian deceived Simon by not informing him of her intention to make the transfers and thereby deliberately avoided alerting Simon to the failure of the mediation and the prudence of registering caveats on the three titles comprising the Highton property.

Simon alleges that the transfers of the registered ownership of the titles comprising the Highton property from Jillian to Anna (in her capacity as trustee of the Trust) were:
(a)       in breach of the contract;
(b)       in breach of the obligation of good faith in the agreement to mediate;
(c)       deceptive, dishonest, opportunistic and unconscionable; and
(d)      in breach of the abovementioned constructive trust,
and therefore occurred pursuant to a fraudulent design and done by means of fraud within the meaning of ss 42(1) and 43 of the Transfer of Land Act 1958 (the alleged fraud). Simon also alleges that, by this conduct, Jillian engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL), and acted unconscionably within the meaning of the unwritten law and within the meaning of ss 21 and 22 of the ACL.
Simon advances an accessorial liability claim against Anna. He pleads that, in her personal capacity and as trustee of the Trust, Anna holds the Highton property on constructive trust for him because, by receiving registered ownership of the properties comprising the Highton property, she:
(a)       knowingly assisted in the alleged fraud;
(b)knowingly received registered ownership of the titles in the Highton property as the proceeds of the alleged fraud;

(c)       stood to benefit from the transfers;
(d)      stood to benefit from the alleged fraud;
(e)       intended to obtain these benefits;
(f)acted deceptively, dishonestly, opportunistically and unconscionably; and
(g)received registered ownership of the Highton property by means of fraud within the meaning of ss 42(1) and 43 of the Transfer of Land Act.

Simon also alleges that Anna:
(a)engaged in misleading or deceptive conduct in contravention of s 18 of the ACL by failing to disclose to him during the mediation her intention to engage in the transfers;
(b)acted unconscionably within the meaning of the unwritten law and s 20 of the ACL by engaging in the transfers of title comprising the Highton property; and
(c)was involved in Jillian’s alleged contraventions of ss 18, 20 and 21 of the ACL.

Simon also pleads:
(a)A claim of conspiracy by unlawful means based on the allegation that Jillian and Anna (in her personal capacity and in her capacity as trustee of the Trust) acted in concert in transferring to Anna the registered ownership of the titles comprising the Highton property, as a result of which Simon alleges he has suffered loss and damage.
(b)A claim for equitable compensation. Simon alleges that he has suffered loss and damage as a result of Jillian’s transfer to Anna of registered ownership of the titles comprising the Highton property, conduct said to be contrary to the promise and expectation, and in breach of the constructive trust.

In his prayer for relief, Simon relevantly seeks the following relief:
…
AADeclaration that [Jillian] was contractually bound to devise the Highton property and bequeath the farm business assets to [Simon] upon her death.

…
BAOrder under ss 237(1)(a)(i) and 243(a)(ii) of the Australian Consumer Law that the transfers to [Anna] of the registered ownership of the property known as “Highton”, 30 Lidgett’s Lane, Greendale, Victoria, described in Volume 8672 Folio 391, Volume 4061 Folio 081 and Volume 2454 Folio 634 are void ab initio.
CDeclaration that [Anna] in her personal capacity and in her capacity as trustee of the Lidgett Property Trust, holds the property known as Highton … on constructive trust for [Simon].
DOrder that [Anna], in her personal capacity and in her capacity as trustee of the Lidgett Property Trust, do all such things and sign all such documents as may be required to transfer to [Simon] the property known as “Highton” …

E Alternatively, equitable compensation.
F Alternatively, damages.[6]

[6]Ibid [11]-[21].

The above summary makes little reference to Simon’s claims with respect to the farm business assets, but the promise said to have been made by Jill in or about 1986 included a promise that she would bequeath to Simon all her interests in livestock, farm implements, machinery, wool, skins and crops situated on the Highton farm from time to time. Paragraph B of Simon’s prayer for relief seeks an order that Jill do all things necessary to transfer the ownership of the farm business assets to him.

Simon has filed a further amended statement of claim since the publication of the reasons in the judicial advice proceeding following the partial success of a strike out application brought by Jill,[7] but for present purposes, there has been no material alteration in the manner in which Simon advances his claims in this proceeding.
[7]This application was determined by me in orders made on 18 October 2023, with reasons provided in ‘Other Matters’.

In her defence and counterclaim filed on 9 August 2023, Jill stated that the partnership was in possession of the Highton farm, not Simon. She said that the partnership has been dissolved, and ought to be wound up. She said that to the extent that Simon has made any use of the farm business assets since 10 February 2023, that use is unauthorised and improper.

Jill denied that she was incapable of operating the farm business after Peter’s death by reason of her health or for any other reason. She said that she continued the farm business until 1996 with the assistance of a casual employee, family members and friends, and that Simon was apprenticed to her until 1993, and took on greater responsibilities after that. She denied that if she had not entered into the partnership she would have been required to sell or lease the Highton farm, or enter into a sharecropping arrangement. She said that if she had been required to do so, then that would have been more financially beneficial to her than participating in the partnership has been.

Jill denied making the promise pleaded by Simon and said:

(a)while Jill had a will prepared for her in 1983, she did not sign a will in that year;
(b)she was the sole owner of the Highton Property from 1981 and the registered proprietor of the Highton Property from 1982;
(c)from 1981 until entry into the Partnership she owned the assets used in the course of farming the Highton Property, including livestock;
(d)since entry into the Partnership the assets used in the course of farming the Highton Property, including livestock, have been owned by the Partnership;
(e)until about November 2022 she expected that she would continue as the registered proprietor of the Highton Property until her death and intended that on her death her four children would each receive an equal inheritance (measured in economic terms);
(f)until about November 2022 she hoped and intended that as part of the equal division of her estate Simon could inherit the Highton Property, but she only intended that this occur on the basis that Simon and each of her daughters benefited equally from her estate (measured in economic terms). She:
(i)envisaged that to achieve an equal economic outcome in circumstances where Simon inherited the Highton Property would require:
(A)that Simon make payments to her daughters so as to compensate them, as the Highton Property was by far her largest asset; and
(B)that her daughters inherit her assets other than the Highton Property;

(ii)did not know whether it would prove possible for Simon to make the payments to her daughters which would be necessary to ensure an equal division of her estate, so did not know whether it would be possible for Simon to become the owner of the Highton Property;

(g)it has always been her intention that Simon would not obtain any additional interest in the Highton Property by reason of having farmed it in partnership with her;
(h)her communications with Simon in respect of her intentions as to her estate have been consistent with the matters set out in (f) to (h) above.

Jill denied that Simon had an expectation of a current entitlement to obtaining ownership of the Highton farm and the farm business assets, saying that she does not know what expectations Simon had and when he developed them.

Jill admitted that she gifted the proceeds of sale of a property she inherited to her three daughters, because her daughters had needed to borrow money to purchase their homes, while Simon and his family had lived at the homestead rent free since 1996.

Jill did not admit the allegation that the farming business had a low level of profitability, and says that she did not know what level of profitability the farm business had prior to 2009. She did not admit that Simon had lost opportunities of the kind pleaded by him. She said that Simon has taken drawings from the partnership, and other payments, including Job Keeper payments and consultancy income earned by his partnership with Anita.

Jill denied the allegations made by Simon regarding the funding of the purchase of her home in Bacchus Marsh (‘Bacchus Marsh property’) consistent with her claims in a related proceeding concerning the ownership of the Bacchus Marsh property (‘related proceeding’). She admitted that Simon and Anita purchased a block of land adjoining the Highton farm in 2009. She does not admit that Simon expended funds on improvements to the Highton farm, but said that the improvements to the homestead were funded by the partnership.

Jill admits that she benefited from Simon’s work for the partnership, but said that Simon and his family also benefited from the partnership. She denied that until about November 2020 she had said nothing to disabuse Simon of the expectations that he had concerning the ownership of the Highton farm, and says that ‘…her relationship with Simon has been characterised, over many years, by disputation, principally in relation to what was to become of the Highton property…’.

In relation to what occurred in the lead up to and the aftermath of the mediation in October/November 2022, Jill pleaded, in summary, as follows:

(a) she admitted that as at 9 February 2023 she had not informed Simon that she had transferred the Highton farm to the family trust, or of her intention to do so;

(b) she admitted attending the mediations, but said that the mediations were conducted on the basis that what was said was confidential and subject to privilege; and

(c) she referred to the correspondence between the parties in the lead up to the mediations, observed that Simon was legally represented at the time, and said that she does not know why Simon failed to lodge a caveat over the Highton farm to protect his asserted interest in the Highton farm.

Jill said further that even if Simon’s claims with respect to the Highton farm and the farm business assets are made out, the Court should refuse to provide him with any relief by reason of his lack of clean hands, given that Simon has:

(a) failed to cause the preparation of true accounts of the Partnership;
(b)failed to keep his assets, and Anita’s assets, separate from Partnership assets;
(c)used the assets of the Partnership for his own benefit, and for Anita’s benefit;
(d)continued using Partnership assets and has purported to continue conducting the Partnership business notwithstanding its dissolution;
(e)conducted the Partnership through personal bank accounts to which Jill does not have access;
(f)obtained more substantial benefits from use of the Highton Property than he is entitled to, given that since 1996 he has occupied and farmed the Highton Property in his capacity as one of two equal partners in the Partnership and in no other capacity;
(g)used the Highton Property for his own benefit, and that of Anita, notwithstanding that it was occupied by the Partnership for the benefit of the Partnership;
(h)conducted business at the Highton Property for his benefit, and that of Anita, and without accounting to the Partnership from income earned by so doing.

Jill also relies upon the defence of laches, or delay.

Jill’s counterclaim concerns the dissolution of the partnership, and repeats many of the allegations made in her defence (and made in the course of the hearing of the current applications) regarding Simon’s management of the partnership. In her prayer for relief, Jill claims the following relief with respect to the partnership:

A.An order pursuant to section 37(1) of the Supreme Court Act 1986 (Vic) that a receiver be appointed to the assets and undertaking of the Partnership for the purpose of finalising the affairs of the Partnership (including by causing the preparation of final accounts of the Partnership), and that to achieve this purpose the receiver be empowered to do all the things set out in section 420 of the Corporations Act 2001 (Cth), but on the basis that references to ‘the corporation’ in that section be read as ‘the Partnership’.
B.An order pursuant to section 46 of the Partnership Act 1958 (Vic) that the defendant by counterclaim pay to the counterclaimant such share of the profits made since the dissolution as is attributable to the use of the counterclaimant’s share of the Partnership’s assets.
C.In the alternative to B., an order pursuant to section 46 of the Partnership Act 1958 (Vic) that the defendant by counterclaim pay to the counterclaimant interest at the rate of seven per centum per annum on the amount of the counterclaimant’s share of the Partnership’s assets.
D.An order that following the preparation of final accounts of the Partnership the partners make such payments to each other as are required so that the distributions to the partners from the Partnership are equal.

E. An order that the Partnership be wound up.

On 23 November 2023 Simon filed a further amended statement of claim following the determination of the defendants’ strike out application. During the course of the hearing of the application, Jill foreshadowed making specific claims against Simon with respect to Simon’s management of the partnership in her amended counterclaim.

On 11 December 2023, while judgment in the current applications was reserved, Jill filed a further defence and counterclaim. The amendments to the defence and counterclaim were extensive. Time does not permit me to traverse the new allegations in any detail, but the new allegations substantially accord with the evidence relied upon and submissions made during the course of the hearing of the current applications, save that a new allegation was introduced to the effect that Simon breached his obligations towards Jill and/or the partnership by working as a farm manager on a neighbouring property, ‘Glen Pedder’.

In paragraph 9A(c) of the further defence and counterclaim, Jill said that if any contract was made between her and Simon in the terms alleged by Simon (which she denied), then Simon failed to perform the contract, by reason of the following matters:

•his work as farm manager for ‘Glen Pedder’ since 1998, in respect of which he earns substantial consulting/contracting fees;
•the breeding, fattening and grazing of livestock at the Highton Property by Simon for his own benefit and not for the benefit of the Partnership;
•the selling of livestock which have been bred, fattened and/or grazed at the Highton Property by Simon for his own benefit and not for the benefit of the Partnership;
•Simon permitting and facilitating the breeding, fattening and grazing of livestock at the Highton Property for the benefit of his family members and not for the benefit of the Partnership;
•Simon permitting and facilitating the selling of livestock by which have been bred, fattened and/or grazed at the Highton Property for the benefit of his family members and not for the benefit of the Partnership;
•The growing of grain at the Highton Property for the benefit of Simon, further and alternatively Simon and Anita, and not for the benefit of the Partnership and the sale of that grain for the benefit of persons other than the Partnership;
•Conducting, alternatively permitting Anita to conduct, a business of growing sunflowers at the Highton Property and permitting visitors to attend the property to pick and purchase sunflowers and associated items;
•Conducting farming activities at the Highton Property such that they consistently failed to deliver a reasonable commercial return to the Partnership, such that the income to the Partnership was on average significantly lesser than the rental a commercial farming tenant would pay to rent the property;
•Causing accounts for the Partnership to be prepared other than to divide the benefits of farming activity at the Highton Property equally between Simon and Jill, but instead so that Simon and his family enjoyed a significant majority of the benefits accruing from the farming activity;
•Causing accounts for the Partnership to be prepared which did not accurately record the division of the benefits of farming activity at the Highton Property, which were largely received by Simon and his family, but instead inaccurately recorded Simon and Jill as benefiting equally;
•Causing accounts for the Partnership to be prepared which were incomplete and inaccurate;
•Failing to produce complete, accurate records of the Partnership to Jill on request;
•Failing to produce complete, accurate records of the farming activities at the Highton Property to Jill on request.

The nature of the conduct engaged in by Simon is such that it has not resulted in the production of documents which comprehensively and accurately record the farming activity at the Highton Property and the economic benefits enjoyed from that activity.[8]

[8]Particulars were provided of the asserted inaccuracies in the partnership accounts which largely accord with the allegations made during the course of the current applications.

Jill also relied upon the above matters (or other matters in similar terms) for the purpose of, among other things:

(a) contending that she was entitled to terminate any contract she was held to have entered with Simon;

(b) contending that it would not be unconscionable for her to resile from any promise she made to Simon with respect to the Highton farm;

(c) contending that she was induced to participate in the mediation without sufficient information;

(d) supporting Jill’s contention that Simon has failed to come to court with clean hands; and

(e) claiming that Simon has breached his fiduciary duties towards Jill.

Jill’s prayer for relief in her further defence and counterclaim seeks the following additional relief:

(a) equitable compensation;

(b) an order pursuant to s 43 of the Partnership Act 1958 (Vic) (‘Partnership Act’) that the business and affairs of the partnership be wound up; and

(c) as an alternative to equitable compensation, an order consequential on the winding up of the business and affairs of the partnership, that:

•the property of the Partnership be applied in payments of the debts and liabilities of the Partnership; and
•the surplus assets of the Partnership be applied in payment of whatever amount is found to be due to the partners after deducting such amounts as are due from them to the Partnership as partners.

Finally, Anna has foreshadowed bringing an application for summary judgment against Simon with respect to the claims against her, both in a personal capacity, and in her capacity as trustee of the family trust. However, I was informed at the hearing of the applications that the second defendant is considering her position in that regard following the outcome of the judicial advice proceeding, and will reach a concluded view on the matter soon.

As indicated earlier in these reasons, in the related proceeding, Jill claims that Simon, as the registered proprietor of the Bacchus Marsh property, holds two-thirds of the Bacchus Marsh property on trust for her.[9] The Bacchus Marsh property was purchased by Simon in 1995 for $112,500, and, following the carrying out of some renovations, Jill has lived there ever since. There is no evidence before me of the value of the Bacchus Marsh property, but given the passage of time, the renovations,[10] and given that Bacchus Marsh is now in effect part of Greater Melbourne, I can draw the inference that the Bacchus Marsh property is now worth many multiples of the original purchase price. The Bacchus Marsh property secures a line of credit said by Simon to be used to bolster the cash flow of the farming business as needed. Simon says that the amount outstanding under the line of credit is $76,993,[11] and, accordingly, he and Anita (as his co-borrower) are creditors of the partnership for that amount.
[9]On 30 November 2023, while judgment in the current applications was reserved, Irving AsJ dismissed an application for summary judgment brought by Simon in the related proceeding. The parties and their advisors will be asked to consider whether the related proceeding should be heard together with this proceeding, given the overlap between the parties and the subject matter in the two proceedings, and given that I doubt that the length of the trial will be greatly extended should the two proceedings be heard together.
[10]In his reasons provided when dismissing the summary judgment application in the related proceeding, (see [2023] VSC 705) Irving AsJ reproduced parts of Jill’s pleading in the related proceeding, which included the following particulars:
The Defendant made or arranged the following renovations and improvements to the [Bacchus Marsh] Property in 1995/96: renovations to bedrooms, building of an en-suite bathroom, installation of bathroom cabinetry in the main bathroom, installation of pantry, cupboards and flooring in the kitchen, installation of larger windows and French doors in the lounge room, internal repainting of most of the house, installation of a garden shed and chook-house, installation of shelves and doors in the garage, paving the front garden and the rear garden, installation of a reticulated water system, installation of heating and gas to the house, installation of two hot water services and installation of a rainwater tank.
I do not understand the extent of the renovations to be in dispute, and I expect that the renovations would have added considerable value to the Bacchus Marsh property once completed.
[11]As at 30 June 2023.

Relevantly for the purposes of the current applications, since about June 2022, Jill’s solicitors have been pressing Simon and the partnership’s accountants (‘MOR’) for financial and other information concerning the farm business and the partnership accounts. The drawn out nature of this process, and what is said to be the piecemeal approach by which partnership documents have been provided to Jill and her lawyers, is relied upon by Jill in support of her contentions in the current applications.

It appears that Simon and his solicitors have now provided (albeit belatedly, and in several tranches) all, or almost all of the partnership documents requested by Jill and her solicitors. Further, Jill and her solicitors have also obtained documents via subpoenas issued by the Court directed at, among others, Anita and MOR. Objections to the subpoenas directed at Anita and MOR made on behalf of Simon on 18 August 2023 were dismissed by Efthim AsJ on 4 September 2023, save that the parties agreed a process by which Simon’s claims for legal professional privilege over a significant number of documents produced by MOR (‘disputed documents’) could be determined. I will hear Simon’s application to withhold the disputed documents from being inspected by Jill (‘privilege application’) on 15 December 2023.

The current applications

In her summons filed on 3 July 2023, Jill applies for the following orders:

Receiver and manager
1.SMB Advisory of 551 Little Lonsdale Street Melbourne VIC 3000 be appointed as receiver and manager of the assets and undertaking of the S J Lidgett & J R Lidgett Partnership (the Partnership) pursuant to section 37(1) of the Supreme Court Act 1986 (Vic} and Rule 39.02 of the Rules.[12]

[12]Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’).
2.The receiver shall have all of the powers conferred by section 420(2) of the Corporations Act 2001 (Cth), but on the basis that references to 'the corporation' in that section be read as references to the Partnership, including without limitation the following powers:
a)to enter into possession and take control of the property of the Partnership;

b) to sell the assets of the Partnership;
c)to pay into Court the proceeds of sale of the Partnership assets, after payment of any costs of sale and the payment of the receiver's remuneration and disbursements; and
d)to prepare accounts for the Partnership, including final accounts.

3.The parties may provide submissions to the receiver in respect of the manner in which he ought to exercise his powers. The receiver is obliged to consider any submissions he receives but is not obliged to act in accordance with them, or to provide reasons for his decisions.
4.The receiver shall be remunerated in accordance with the scale prescribed from time to time by the practice note in respect of the remuneration of liquidators, provisional liquidators and receivers, with such remuneration to be payable by the partners of the Partnership in equal shares.

5. The receiver has liberty to apply for directions at any time.
Accounts and inquiries
6.Pursuant to Rule 52.01 of the Rules, the Court order the making of an inquiry into the affairs of the Partnership, namely:
a.whether any partner has permitted a person other than the Partnership to conduct any business on property occupied by the Partnership and/or using any Partnership assets and, if so, whether they have done so on arms-length terms or, if not, with the informed consent of all partners;
b.whether the accounts of the Partnership accurately record the contributions of the partners to the Partnership and the income received by the partners from the Partnership.

7.Pursuant to Rule 52.01 of the Rules, the Court order a taking of the accounts of the Partnership so as to determine:
a. the assets of the Partnership;
b. the liabilities of the Partnership; and
c.whether the dealings of the Partnership have been accurately recorded in its accounts.

8.The costs of the making of inquiries and the taking of accounts are to be paid, in the first instance, by the Partnership and equally by the partners.

Paragraph 2 of Jill’s summons seeks that the Court should appoint a receiver with ‘all of the powers conferred by s 420(2) of the Corporations Act 2001 (Cth)’. For completeness , s 420(2) of the Corporations Act 2001 (Cth) provides that the receiver of the property of a corporation has the following relevant powers:

(a)to enter into possession and take control of property of the corporation in accordance with the terms of that order or instrument; and

(b) to lease, let on hire or dispose of property of the corporation; and
(c)to grant options over property of the corporation on such conditions as the receiver thinks fit; and

(d)      to borrow money on the security of property of the corporation; and
(e)       to insure property of the corporation; and
(f)       to repair, renew or enlarge property of the corporation; and
(g)       to convert property of the corporation into money; and
(h)      to carry on any business of the corporation; and
(j)to take on lease or on hire, or to acquire, any property necessary or convenient in connection with the carrying on of a business of the corporation; and
(k)to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation; and
(m)to draw, accept, make and indorse a bill of exchange or promissory note; and

(n) to use a seal of the corporation; and
(o) to engage or discharge employees on behalf of the corporation; and
(p)to appoint a solicitor, accountant or other professionally qualified person to assist the receiver; and
(q)to appoint an agent to do any business that the receiver is unable to do, or that it is unreasonable to expect the receiver to do, in person; and
…

Shortly before the hearing of the current applications, Jill sought leave to file an amended summons seeking orders in the alternative to the appointment of a receiver, being:

(a) an interlocutory injunction preventing Simon from binding or purporting to bind the partnership save to complete transactions begun prior to 10 February 2023, or prior to the 10 October orders, or to wind up the affairs of the partnership;

(b) an interlocutory injunction requiring Simon to sell the farm business assets within four weeks; and

(c) an interlocutory injunction restraining Simon from withdrawing money from the partnership bank account, or to spend or use any of the money of the partnership, without Jill’s consent.

However, the amended summons was not pressed at the hearing of the current applications.

In his summons filed on 21 July 2023, Simon applied for the following relief:

1.Interlocutory injunction preventing the First Defendant from selling or otherwise disposing of any assets of the SJ Lidgett & J R Lidgett partnership ABN 21 144 783 051 (Partnership) until the determination of the proceeding or other order of the Court.
2.Interlocutory injunction preventing the First Defendant from interfering in the Plaintiff's conduct of the business of the Partnership until the determination of the proceeding or other order of the Court.
3.Interlocutory injunction compelling the First Defendant to take all necessary steps to remove requirements for her consent to transactions by the Plaintiff with any of the Partnership's bank accounts until the determination of the proceeding or other order of the Court.

The current applications were originally returnable before me on 9 October 2023. However, the parties required more time to file and serve their evidence, and to digest the documents produced upon subpoenas issued by the Court at Jill’s request. Accordingly, the current applications were adjourned to 28 November 2023, and only the defendants’ strike out application proceeded on 9 October 2023. In the interim, the parties agreed to the 10 October orders, which provided as follows:

Subject to the following orders and until the hearing and determination of the injunction application, or further order, the plaintiff conduct the business of the Partnership in the ordinary course but subject to the following orders.
Until the hearing and determination of the injunction application or further order:
(a)the first defendant not interfere in the plaintiff’s conduct of the business of the Partnership;
(b)the first defendant not sell or otherwise dispose of any assets of the Partnership;
(c)the first defendant take all necessary steps to remove the requirements for her consent to transactions by the plaintiff on the Partnership’s bank account with Westpac, details BSB 033-602 Account Number 154 323 (‘Partnership account’);

(d)      the first defendant not transact on the Partnership account;
(e)the plaintiff take all necessary steps to ensure that the first defendant has electronic banking access to the Partnership account;
(f)the plaintiff ensure that all income of the Partnership is banked into the Partnership account;
(g)the plaintiff ensure that all expenses of the Partnership are paid from the Partnership account;
(h)the plaintiff cause the Partnership to transact on a basis which does not involve it incurring indebtedness to any person;
(i)the plaintiff not cause the Partnership to borrow funds from any person or lend funds to any person without the first defendant’s prior written approval;
(j)the plaintiff not cause the Partnership to repay any existing indebtedness of the Partnership;
(k)the plaintiff not cause the Partnership to pay wages to any person or drawings to any partner without the first defendant’s prior written approval;
(l)the plaintiff not cause the Partnership to incur any expense to a lawyer or accountant without the first defendant’s prior written approval, save for the preparation of the Partnership’s final accounts for the 2022-2023 financial year and the preparation and filing of Business Activity Statements as and when they are due; and
(m)the plaintiff provide a fortnightly report to the first defendant, in writing, by which he reports on:
(i)        any purchases of NILS tags;
(ii)       the application of any NILS tags to any animals;
(iii)      the purchase of any animals or other assets;
(iv)     the sale of any animals or other assets;
(v)      any known births or deaths of animals;
(vi)     income received; and
(vii)     expenses incurred.

The plaintiff cause the $54,844.33 paid into Macquarie Bank account BSB 182182 Account Number 008043499 on 17 July 2023 to be paid into the Partnership Account.
Until the hearing and determination of the injunction application, no partner take any step to prepare, file or lodge any taxation document for the Partnership without the prior written approval of the other, save for Business Activity Statements as and when they are due.

The evidence

Jill relied upon the following evidence in support of her application for the appointment of a receiver and in opposition to Simon’s application for an interlocutory injunction:

(a) an affidavit sworn by her on 3 May 2023 (‘Jill’s first affidavit’);

(b) an affidavit sworn by her on 28 July 2023 (‘Jill’s second affidavit’);

(c) an affidavit sworn by her solicitor, Mr Simon French, on 12 May 2023 (‘first French affidavit’);

(d) an affidavit sworn by Mr French on 8 August 2023 (‘second French affidavit’);

(e) an affidavit sworn by Mr French on 5 October 2023 (‘third French affidavit’);

(f) an affidavit sworn by Mr French on 3 November 2023 (‘fourth French affidavit’);

(g) an affidavit sworn by Mr French on 22 November 2023 (‘fifth French affidavit’); and

(h) an affidavit sworn by Mr French on 27 November 2023 (‘sixth French affidavit’).

Simon relied upon affidavits sworn by him on 21 July 2023 (‘Simon’s first affidavit’), 28 September 2023 (‘Simon’s second affidavit’), and 21 November 2023 (‘Simon’s third affidavit’).

The affidavit evidence, especially the evidence relied upon by Jill, was extensive and wide ranging, and the exhibits voluminous, forming the vast bulk of an application book which ran to nearly 3,000 pages, although many of the documents were duplicates. Again, in the interests of expedition, I do not propose to refer to the evidence in great detail save for the summaries below, except where necessary for providing the reasons for my disposition of the applications. Given that much of the affidavit evidence was responsive to the evidence relied upon by the other party, I shall summarise the affidavits in chronological order.

In Jill’s first affidavit, Jill deposed, in summary, as follows:

(a) as to the origin of the partnership, and its formalisation by registration on 10 March 2000;

(b) that neither she nor Simon took wages from the partnership, but each took living expenses from partnership income;

(c) she deposed as follows:

Anita has for some years undertaken the bookkeeping for the Partnership. Simon and Anita are responsible for liaising with the Partnership’s accountant. For many years Simon made clear to me through word and action that he does not welcome my involvement in the affairs of the Partnership, and particularly does not welcome my involvement in the management of the farm. As a result, I have almost no understanding of the Partnership’s practical or financial affairs.
The Partnership’s accountant is Paul Hansen of MOR Accountants (Paul). I have had very limited dealings with Paul. Simon and Anita have been responsible for almost all dealings with Paul in respect of the Partnership.
I am informed by my solicitor Simon French and believe that he has made substantial efforts to obtain information about the Partnership’s affairs but has met considerable resistance in obtaining this information.
The difficulties faced in obtaining information concerning the Partnership, and in particular difficulties in obtaining current and accurate information as to the assets and liabilities of the Partnership, have exacerbated my concerns as to the accuracy of such information as is available.

(d) as to the dispute between her and Simon regarding the Highton farm;

(e) the reasons why she decided she wanted to dissolve the partnership, including:

(a) Simon’s exclusion of me from the Partnership affairs;
(b) The very disappointing profitability of the farm over many years;
(c)My dissatisfaction with the accounts of the Partnership as prepared by Paul pursuant to instructions provided by Simon and Anita. The fact that I had recent [sic]
(d)The fact that I had recently learned that Simon and Anita were conducting a separate business on the Land without my approval and without accounting to the Partnership for the income they earned from so doing;
(e)My limited access to the Land whilst Simon and his family lived there and while Simon farmed the Land on behalf of the Partnership;
(f)My disappointment in Simon's conduct in seeking ownership of the Land to the exclusion of his sisters and without accepting on an obligation to fairly compensate them; and
(g)Simon’s bullying behaviour towards me over the years in respect of his assertions of an interest in the Land.

(f) her concerns about Simon’s management of the farm business, including the use of part of the Highton farm for a sunflower farm run by Anita (‘Greendale Sunflower Farm’), the accuracy of the partnership accounts, and the inadequate recognition of the value of her contribution to the partnership;

(g) her desire to sell the farm business assets as soon as possible;

(h) her doubts about Simon’s estimate of the value of the livestock, and the validity of Simon’s claim that he and Anita are creditors of the partnership;

(i) her loss of faith in Simon as a partner; and

(j) Jill’s first affidavit concluded as follows:

For the reasons outlined above, I believe that a receiver ought to be appointed to the Partnership to:
(a)Sell the assets of the Partnership, with priority given to the sale of the Partnership's livestock which ought to occur as soon as possible;

(b) Vacate the Land;
(c)Determine who the Partnership's trade and finance creditors are and in what amount and then pay them;
(d)Appoint an accountant to prepare accounts (including revising former accounts if required) concerning the Partnership having regard to issues raised by Partners and issues identified by the Receiver;

(e)       Determine what amounts, if any, are owed to Partners;
(f)       Repay debts owed to Partners; and
(g)       Distribute capital to partners.

The following documents were exhibited to Jill’s first affidavit:

(a) the trust deed for the family trust;

(b) the partnership termination notice dated 10 February 2023;

(c) other correspondence between the solicitors for the partnership regarding the dissolution of the partnership, and the ongoing occupation of the Highton farm by the partnership;

(d) a screenshot of a website promoting the Greendale Sunflower Farm;

(e) a bundle of financial documents provided to her on 13 March 2023, including the partnership annual general ledger, the partnership tax return for FY2021,[13] partnership financial statements of FY2022, a profit and loss statement for the Greendale Sunflower Farm, and a bundle of bank statements;
[13]The financial year ended 30 June 2021.

(f) a valuation of the Highton farm dated 20 September 2022;

(g) the originating motion in the trustee proceeding;

(h) a letter from Mr French to Westpac requiring that she be added as a signatory to the partnership bank account; and

(i) a summary of the partnership assets and livestock holdings prepared by Simon.

In the first French affidavit, Mr French deposed as to his attempts to obtain documents regarding the partnership’s affairs since he was first instructed by Jill in June 2022. The first French affidavit exhibited correspondence between him and Simon’s solicitors, along with some of the documents received by him from Simon, Simon’s solicitors, and MOR.

In Simon’s first affidavit, Simon deposed, in response to Jill’s first affidavit and the first French affidavit, and in support of his application for interlocutory injunctive relief, in summary, as follows:

(a) the Lidgett family has been conducting a farming business on the Highton farm for over five generations, since the late 19th century;

(b) from the time of his father’s death in 1981 he conducted most of the farming operations, while Jill continued to maintain the books of the farm business;

(c) he completed his farming apprenticeship in 1993, and in 1994, he and Jill created the partnership and Jill retired;

(d) Anita commenced keeping the books for the partnership after they married in 1996. Since that time, and until the parties were in dispute, Jill never asked to see any financial records of the partnership;

(e) Jill has always been free to withdraw funds from the partnership’s bank accounts, and has regularly done so, generally without consulting him;

(f) he denied Jill’s allegation that he has taken personal advantage from the operations of the partnership at the expense of the partnership, and said that he believes the partnership accounts are accurate;

(g) he said that he disagrees with Jill’s insistence that the assets of the partnership be sold immediately, because selling the farm business assets (and in particular, the livestock) would effectively nullify his claim to the farm business assets. He deposed as follows:

The most valuable assets of the Partnership are the livestock. As at 18 July 2023, there are 180 cattle and calves, 2 bulls, 245 sheep and 1 ram.
The livestock include bloodlines that I have spent my entire career developing, building on the breeding done by my family on my father’s side for four generations prior to me, as I have described in paragraph 5 above. The bloodlines comprised in the livestock are my life’s work and the continuation of the legacy of the prior four generations of Lidgetts. If the livestock were sold then the emotional detriment I would suffer, and the loss to future generations of my family, would be irrevocable and could not be compensated with money. The sale of the livestock would also destroy my livelihood and the career I have developed on the Highton Property over my entire working life of about 30 years.

(h) Jill’s notification to Westpac after the dissolution of the partnership to the effect that she be a co-signatory for the partnership bank account was done without consultation with him, and he and Anita have had to lend funds to the partnership to make payments to creditors and to preserve the welfare of the livestock;

(i) he denied Jill’s allegation that he has engaged in bullying behaviour;

(j) he provided some details about the operation of the Greendale Sunflower Farm, which he said was established by Anita. Simon said that the sunflower season lasts approximately four weeks, and that planting and harvesting the sunflower crop benefited the partnership by improving the soil on the Highton farm and generating fodder for the partnership’s livestock. Simon said that the Greendale Sunflower Farm generated modest profits, which were used to recarpet the homestead;

(k) that Jill attended annual meetings with the partnership accountants with him and Anita. He does not dispute Jill’s entitlement to access the books and records of the partnership, and so far as he is aware, all of the documents that her solicitors have requested have been provided to them;

(l) he deposed as follows:

Regarding paragraph 33 of Jill’s Affidavit, I believe the value of the livestock owned by the Partnership at the start of this year was about $230,400. I believe that cattle prices have fallen by about half since I made that estimate , and that their current market value is about $143,000. These estimates of market value are based on Ballarat Saleyards stock reports and my long experience as a cattle and sheep breeder and trader. I believe higher prices would be achieved if the livestock were marketed in the ordinary course of the Partnership’s business, considering several factors such as the timing of sales after cows have calved and sheep have lambed.

(m) in relation to Jill’s application to appoint a receiver, he deposed as follows:

I believe the appointment of a receiver to the Partnership would serve no proper or useful purpose and, in any event, would be premature prior to the determination of these Proceedings. Furthermore, the fees that a receiver is likely to charge would be disproportionate to the net value and profitability of the Partnership. Nonetheless, I believe the Partnership is solvent and will continue to be able to pay its debts as they fall due if I am allowed to continue its farming business in the ordinary course, at least until the determination of these Proceedings.

(n) in relation to his application for injunctive relief, he deposed as follows:

In paragraph 45 of Jill’s Affidavit, Jill sets out the reasons why she believes a receiver should be appointed to the Partnership. Those reasons demonstrate that Jill intends to bring the Partnership’s farming business to an end, sell the livestock “as soon as possible”, and wind-up the Partnership.
In paragraph 44 of Jill’s Affidavit, Jill acknowledges that I might have a claim for damages against Jill if the Partnership assets are sold and therefore are not available to me. I reiterate that in these Proceedings I claim that Jill holds her interest in the Farm Business Assets on constructive trust for me, including most importantly the livestock.
As I have explained in paragraphs 5 and 17 above, the livestock have such personal value to me and my lineage that I could not be fully compensated in monetary terms for the wrongful disposal of the livestock. I also have no wish to pursue my mother into bankruptcy should her personal assets be insufficient.
Paragraph 45 of Jill’s Affidavit demonstrates her intention to wind-up the Partnership as soon as possible and along with it the farming business on the Highton Property, which the Lidgett family on my father’s side has operated over five generations, including my entire career of over 30 years. In these Proceedings, in addition to my claims over the Farm Business Assets, I also claim a proprietary interest in the Highton Property. If I succeed in these Proceedings, I intend to continue the farming business on the Highton Property. If Jill succeeds in selling the farming assets prior to the determination of these Proceedings, it will destroy an important part of the subject matter of my claims, along with my livelihood and the legacy farm that I wish to pass on to my children.
…
If the injunctions I seek were granted, I would undertake to conduct the business of the Partnership in its ordinary course, keep Jill informed of its operations and ensure that she has ongoing access to the records of the Partnership. I am aware of my fiduciary obligations as a partner, and I would continue to abide by those obligations.
I would also give the usual undertaking as to damages.

Exhibited to Simon’s first affidavit were the following documents:

(a) photographs of medallions won by his great-grandfather for his livestock between 1898 and 1925 and a photograph of his prize shorthorn bull;

(b) an article from the Live Stock Annual of Australia describing the Highton farm and his great-grandfather’s breeding operations on the Highton farm;

(c) a copy of the obituary published following his father’s sudden death in 1981;

(d) copies of certificates from the 1990s said to evidence the quality of meat and wool obtained from livestock bred on the Highton farm;

(e) the profit and loss statement for the partnership for FY2023, and the partnership balance sheet as at 30 June 2023, prepared by MOR. The profit and loss statement showed that the partnership had a net profit of $37,460 in FY2022, and $123,250 in FY2023, most of which was derived from sales of cattle;

(f) the Livestock Trading Statement and Capital Account Drawings Statement for the year ending 30 June 2023 prepared by MOR. The Capital Account Drawings summary showed that between 2017 and 2022, Jill’s drawings from the partnership ranged between $16,000 and $30,000, and were generally somewhat in excess of Simon’s drawings, although they dropped substantially in FY2023;

(g) copies of the annual general ledger for the partnership from 1 July 2016 showing the payment of Jill’s and Simon and Anita’s personal expenses from the partnership funds, the income tax paid by the partnership on behalf of Jill, Simon and Anita, and Simon’s capital contributions to the partnership;

(h) documents said to evidence the quality of the bloodlines of the cattle bred on the Highton farm;

(i) a ledger showing transactions related to the Greendale Sunflower Farm business for FY2022, which showed that revenue from the sale of sunflowers was $6,140.04 in FY2021 and $7,784.69 in FY2022;

(j) photographs titled ‘Jill amongst the sunflowers – 27 February 2021’; and

(k) an asset schedule for plant and equipment, which showed the value of the partnership’s plant and equipment to be $26,518.75 as at 30 June 2023.

In Jill’s second affidavit, she deposed, in summary as follows:

(a) she has discovered that the partnership has earned income from consulting fees paid by Athol and Julie Lidgett, relatives who own a neighbouring cattle farm;

(b) she disputed Simon’s version of events as to what occurred after Peter’s death. After discussions with all of her children, she decided to remain on the Highton farm, and conducted the farming operations with the assistance of an employee, family and friends;

(c) Simon was apprenticed to her until 1993, and from about 1994 she and Simon farmed the Highton farm together. While she had back pain necessitating surgery in 1996, her back pain did not prevent her from conducting the farming business;

(d) until 1996 she was responsible for keeping the books for the farming business;

(e) Simon and Anita have never paid rent for the homestead, and the partnership has never paid rent to her;

(f) she has never promised Simon and Anita exclusive possession of the Highton farm;

(g) Simon had always told her that the partnership is not profitable, and encouraged her to draw as little as possible from it. She has paid for food and personal items from income she has earned from outside the partnership;

(h) since February 2022 Simon has used an account with the Macquarie Bank in his and Anita’s names for the purposes of the partnership, without her permission; and

(i) Simon and Anita did not seek her permission before borrowing funds from the partnership, and she never discussed with Simon and Anita about them lending funds to the partnership.

In relation to the dissolution of the partnership, Jill deposed that Simon’s assertion that she has insisted that the farm business assets be sold immediately is untrue. She has attempted to negotiate an outcome whereby Simon would buy her interest in the farm business assets. As those negotiations have not borne fruit, the farm business assets should be sold. She never promised to give Simon the farm business assets, and there is a ready market for livestock and farming equipment.

In relation to the historical information referred to in Simon’s first affidavit, Jill deposed that during the time she lived and worked on the Highton farm, the farm was stocked with Angus cattle, not shorthorn cattle, which was the breed for which previous generations of Lidgetts won prizes.

Jill denied that her conduct was preventing the partnership from operating using its own funds. She said:

…I stand ready, willing and able to approve payment of any proper Partnership expense incurred:
(i) in finalising the Partnership's affairs;
(ii)owing by the Partnership in respect of its activities prior to its dissolution;
(iii)incurred in respect of the finalisation of transactions commenced prior to its dissolution,

upon being satisfied that it is a proper expense of the Partnership and that the Partnership has funds available to pay it.

In relation to Simon’s application for injunctive relief, Jill deposed as follows:

…I do not want to continue in Partnership with Simon and certainly do not want to continue in a Partnership with Simon whereby he is entitled to conduct it unilaterally.
(a)It has always been my intention that my four children benefit equally from my estate. I hoped that it would prove possible for me to implement some arrangement whereby Simon would receive the Highton Property in my estate, on the basis that his sisters were properly compensated (by a combination of my other assets and payments from Simon) so that they each benefited equally.
(b)Simon has for some years badgered me in relation to what was to occur in relation to the Highton Property. He has repeatedly sought to have me put the Highton Property into a trust which he would ultimately come to control. Simon's attempts to have me do as he wished with the Highton Property has been a point of contention between us for many years. It was my intention that Simon would receive the Highton Property in my estate if my daughters were properly compensated. I was not willing to transfer the Highton Property into a trust to benefit Simon.
(c)My relationship with Simon has broken down, primarily due to the dispute as to what ought to occur in respect of the Highton Property. I decided that I wished to deal with the Highton Property in my lifetime and hence I transferred it into a trust with my four children and myself listed as specified beneficiaries.
(d)Simon accuses me in this proceeding of acting fraudulently and unconscionably. I strongly reject these allegations, which are false and which have greatly upset and offended me.
(e)Further, I have learned information as to the manner in which Simon has conducted the Partnership which has caused me to lose faith in his integrity. Simon has caused the preparation of Partnership accounts which are inaccurate and is presently conducting Partnership affairs without reference to me and through a bank account to which I have no access.
(f)I now realise that I have been foolish in signing accounts and tax returns without adequately understanding them, in reliance on Simon, Anita and the various external accountants used by the Partnership over the years (and who I formerly used). I now believe that these tax returns and accounts are inaccurate and have been prepared so as to suit Simon and Anita rather than to reflect the true dealings.
(f)I do not consent to the Partnership continuing to use Paul Hansen as its external accountant given that I have lost faith in him.
(g)I do not intend to sign any tax document for the Partnership, or consent to the filing of any tax document by the Partnership, until I have a proper opportunity to consider all of the Partnership records and satisfy myself that the documents are accurate.
(h)The Partnership has been dissolved. Given that, I believe the ordinary course of business is for its assets to be sold and for its affairs to be wound up. I do not consent to continue the Partnership with Simon as if it had not been dissolved.
(i)I refer to paragraph 20 of Simon's affidavit and maintain that Simon has engaged in a bullying manner towards me. He has for some years sought to have me agree that he ought to be entitled to inherit the Highton Property without being obliged to properly compensate his sisters and has become angry when I have not agreed to do as he wished.
(j)I refer to paragraph 55 of Simon's affidavit. I believe his reference to Macquarie Bank is mistaken and the reference ought to be to Westpac Bank. I confirm that I require that all payments by the Partnership be approved by each of Simon and I. I am now aware that Simon is circumventing this requirement, and unilaterally conducting the Partnership, by using a bank account in the name of himself and Anita to conduct Partnership business.

In relation to the Greendale Sunflower Farm, she learned from relatives that the business of growing and selling sunflowers was being conducted at the Highton farm. Anita did not tell her that she was running the sunflower farm for her own benefit. She deposed as follows:

I visited the Highton Property on 27 February 2021. My daughter Anna was also there.
(i)I visited it during the afternoon, I do not recall the exact time. There were many people at the farm, with more arriving and many cars parked on the side of the road.
(ii)I observed people paying cash for sunflowers and secateurs. I saw a box on the table at the entrance which contained cash.
(iii)I estimate that when I visited there were around 50 customers at the farm. People were walking around with dogs and children, taking photos.

I believed that the business was being conducted on behalf of the Partnership, as:
(i)I owned the Highton Property, while the Partnership occupied the Highton Property and farmed it;
(ii)neither Simon nor Anita asked my permission to use the Highton Property for any purpose other than it being farmed by the Partnership, nor told me that they intended to conduct (or were conducting) a business for their own benefit on the Highton Property.

I believe that most of the income earned in respect of the Greendale Sunflowers business is earned in cash. I believe this because:
(i) I was informed of this by relatives, who I believe.
(ii)The Greendale Sunflowers business was promoted as a cash-only business. …
(iii)Anita said so in an email to Paul Hansen. …

Jill deposed as to what she has learned from the partnership records provided to her, including:

(a) that the partnership accounts are false, in that they have allocated income to her that she did not in fact receive;

(b) that the partnership accounts show that income has been allocated to Simon, Anita and their children to suit their personal affairs rather than dividing the income of the partnership equally between her and Simon; and

(c) that Simon’s assertion that the partnership accounts were altered in 2021 to show that she was being paid rent for the Highton farm to enable her to make a contribution to her superannuation fund was incorrect, as she closed her superannuation account in 2016.

Jill noted that she no longer owns the Highton farm, and that its future is a matter for Anna. On 20 June 2023, Anna served a notice upon the partnership to vacate the Highton farm (‘Notice to Vacate’), which expires on 1 August 2023, following which the partnership will be trespassing on the Highton farm. She does not believe that the farm business generates sufficient income to pay a commercial rental for the Highton farm, which Simon says is $46,900 per annum, and Jill says is $103,312 per annum.

Jill’s second affidavit concluded as follows:

I am concerned that the Partnership has been conducted on a basis which does not distribute the benefits of the Partnership equally between Simon and myself.
(i)I believe the Partnership accounts are inaccurate, and that Simon and Anita have caused them, over many years, to be prepared in a way which does not allocate to me half of the income of the Partnership but which diverts Partnership income to other persons (for example, to Simon and Anita’s children). My concerns arise in part from emails between Simon, Anita and Mr Hansen. Copies of various of those emails are to be exhibited to an affidavit Mr French is to swear on this application.
(ii)I believe that I have not received all of the Partnership income attributed to me in the accounts. I have no confidence that Simon will in future keep accurate Partnership accounts which result in me receiving half of the benefits accrued from conducting the Partnership.
(iii)I am concerned at the loans Simon and Anita claim to have made to the Partnership and caused the Partnership to repay to them. I have no visibility into the making of, or repayment of, these loans.

…
I am concerned that if Simon is permitted to carry on the Partnership indefinitely without reference to me, I may be exposed to significant financial risk without any ability to control or avoid that risk.
I am further concerned that Simon may be unable to meet any amount he is required to pay on his undertaking as to damages. I am not aware of any substantial unencumbered assets owned by Simon and which would be available to me.
I am willing to give the usual undertaking as to damages if required upon the appointment of a receiver to the Partnership. I am also willing, as I have set out above, for my portion of the net proceeds of sale of the Partnership assets to be held in trust pending the hearing and determination of this proceeding.

Exhibited to Jill’s second affidavit were the following documents in addition to the documents already in evidence and previously described in these reasons:

(a) further extracts from the Greendale Sunflower Farm website;

(b) email exchanges between Anita and Paul Hansen of MOR in September 2021 regarding the Greendale Sunflower Farm and the preparation of partnership accounts and individual tax returns for the 2021 financial year;

(c) the exit statement of Jill’s superannuation fund;

(d) the Notice to Vacate;

(e) a valuation report for the Highton farm prepared for Jill’s solicitors in September 2022; and

(f) correspondence between the parties’ solicitors in April 2023 regarding, among other things, the parties’ negotiations regarding the winding up of the partnership.

The second French affidavit runs to some 53 pages, and exhibits a bundle of documents which runs to some 1369 pages, so I will not summarise the contents of the second French affidavit in any detail in these reasons. The following extract from the second French affidavit summarises the matters canvassed in the second French affidavit:
I will now summarise, very briefly, some of the important matters dealt with in this affidavit. A great deal of the information provided by Simon in respect of the SJ & JR Partnership has proved false or unreliable, he has refused or failed to provide important documents and he has delayed in providing important documents and access to the partnership's accounting records. For example:
(a)In March 2023 Simon provided a document purporting to set out the partnership's indebtedness to he and his wife Anita Lidgett (Anita). The document showed that as at late February 2023 he and Anita were owed $78,900 by the partnership . On 20 July he provided documents which disclosed that this information was false and that in fact he and Anita had been indebted to the partnership throughout 2023.
(b)I have sought to reconcile information provided by Simon, and in partnership accounts, as to livestock numbers with information obtained from the National Livestock Identification System (NLIS) database. The information cannot be reconciled. The number of livestock recorded as being present on the Property is far larger than the number of livestock recorded in the partnership's records. The number of livestock sold by the partnership as disclosed in the records produced by Simon cannot be reconciled to the movements in livestock recorded on the NLIS database. In particular, as at 1 August 2023:
(i)the NLIS recorded 695 sheep tags at the Property whereas Simon claims that the partnership owns 245 sheep;
(ii)the NLIS recorded 570 cattle tags at the Property whereas Simon claims that the partnership owns 182 cattle.
(c) The partnership records produced by Simon record:
(i)no natural increase (births) of calves at the Property in 2022 (despite 91 in 2021 and 165 in 2023);
(ii)no natural increase (births) of lambs in 2022 (despite 119 in 2021 );
(iii) a natural increase of 1 lamb in 2023.
These numbers are implausible for a farm conducted as a breeding operation.
(d)There is a real risk that Simon and Anita are trading, for their own benefit, livestock reared on the Property without accounting to the partnership for so doing.
(e)The partnership accounts exclude moneys earned from the conduct of a sunflower business at the Property, notwithstanding that the Property has been occupied and farmed by the SJ & JR Partnership. Further, the records of the sunflower business do not record the cash income earned in conducting that business.
(f)The value of the Partnership’s livestock substantially exceeds the value as estimated by Simon.
(g)There have been very serious delays in the provision of partnership records despite repeated requests. Access to the partnership’s QuickBooks account was not provided until July 2023 without any proper explanation for the delay. Simon, through his lawyers, have made false and misleading statements as to the extent to which partnership records have been provided. The external accountant has repeatedly sought Simon's approval before providing partnership records to Jill.
(h)The QuickBooks records were provided after numerous deletions were made. Jill cannot properly assess why these changes were made or what effect they have.
In relation to purported liabilities of the partnership:
(a)The partnership accounts have been prepared on the basis that personal indebtedness of Simon and Anita to Westpac Bank and Macquarie Bank is recorded as debts of the SJ&JR Partnership. The records produced do not enable Jill to ascertain whether these debts ought to be recorded as partnership debts, and whether the partnership ought to have made payments in respect of these debts.
(b)It appears from the partnership records that the partnership has made loan payments in respect of a home loan in Simon's name. This loan may relate to the Bacchus Marsh Property but I cannot determine this question on the basis of the documents provided.
(c)As identified above, Simon has provided inconsistent documents in relation to the creditor/debtor relationship between he and Anita (on the one hand) and the partnership (on the other hand). He has not provided access to the source documents which would be required to determine the true position in respect of these dealings. From the available records it appears that he and Anita have been indebted to the partnership for significant periods. Jill did not agree that Simon and Anita were entitled to borrow funds from the partnership.
(d)Simon and Anita have caused the partnership to pay them 'reimbursements' at times they were indebted to the partnership.
Simon has excluded Jill from the conduct of the SJ & JR Partnership, and now appears to be carrying on the partnership unilaterally.:
(a)Simon has conducted the partnership in a manner oppressive and unfair to Jill, and beyond his authority.
(b)it is apparent from communications produced between Simon, Anita and the Partnership’s accountant that the financial affairs of the partnership have not been conducted on the basis that Jill is entitled to half of the economic benefits available through farming activities conducted at the Property, and that many decisions affecting Jill's interests have been made without her involvement.
(c)Simon has conducted partnership business through bank accounts to which Jill does not have access, and has caused partnership funds to be held in his personal accounts, so that it was necessary for seek assistance from Anita (a non-partner) if she required access to partnership funds.
(d)Simon presently appears to be unilaterally carrying on the business of the SJ&JR Partnership, notwithstanding that the partnership was dissolved on 10 February 2023. Following its dissolution Simon repeatedly informed Jill in writing that he acknowledged the dissolution, and made statements which appeared to confirm his agreement that the partnership was to be wound up. He did not advise Jill that he was continuing to conduct the partnership business until this emerged from his 21 July affidavit.
For many years the SJ&JR Partnership occupied the Property, which was owned by Jill and which she permitted the partnership to use without charge. Jill no longer owns the Property and there is no agreement between the partnership and the registered proprietor as to its occupation. The partnership continues to occupy the Property. The registered proprietor served notice on the partnership revoking its licence to occupy the Property and that notice has now expired so that the partners are liable for trespass if the partnership has not vacated the Property.
There are animal welfare concerns in relation to the partnership’s livestock.
(a)Simon has twice, by letter, expressed serious concerns as to the welfare of the partnership's livestock.
(b)An agricultural consultant has recently reviewed livestock at the Property. He had concerns about the condition of the sheep and cattle. He observed that the sheep had not been drenched or crutched and Simon told him that this was because he could not afford to do it. The failure to drench and crutch the sheep is contrary to appropriate livestock management.

Jill makes the overarching submission that Simon is not to be trusted, and his evidence in these applications should not be believed. The necessary consequence of that submission is that I should accept all of Jill’s evidence and Mr French’s evidence without question, and disregard any explanation or rebuttals that Simon has advanced with respect to the issues identified by them in their evidence and submissions.

I cannot accede to that submission. Most, if not all of the matters relevant to the misconduct issue are matters for trial (and, for that matter, cannot and will not be resolved by the appointment of a receiver), which is the appropriate occasion for the credibility of the parties and their witnesses to be tested. I do not consider that I should make findings about the credibility or otherwise of the parties effectively ‘on the papers’.[46]
[46]Noting that neither Simon or Jill have been physically present in Court during the hearing of the applications before me, let alone subject to any cross-examination.

In any event, to the extent that there could be said to be glaring inconsistencies between Simon’s evidence and contemporaneous documents, there are inconsistencies on both sides. For example, Jill’s evidence in Jill’s first affidavit to the effect that she had not given her consent for the Highton farm to be used to conduct the business of the Greendale Sunflower Farm seems somewhat disingenuous once one views the photographs of Jill amongst the sunflowers in 2021 exhibited to Simon’s first affidavit.

Simon said that the sunflowers were visible to anyone attending the Highton farm, and that the Greendale Sunflower Farm was the subject of discussions within the family, and Jill was a party to some of those discussions. Simon and Anita may ultimately have to account for the profits of the Greendale Sunflower Farm to the partnership. But the question of whether permitting Anita to run the Greendale Sunflower Farm was a serious breach of Simon’s fiduciary duty to Jill will ultimately turn upon whether a judge accepts Jill’s evidence that she had no knowledge of, and did not consent to the Highton farm being used in this way. Similarly, the question of whether the Greendale Sunflower Farm generated an income well in excess of what is shown in the accounts in evidence is clearly a matter for trial.

The allegation that Simon has sold partnership livestock ‘off the books’ is a serious allegation, and is an allegation, if made out, which would amount to relevant misconduct. I accept that there are some odd discrepancies between the partnership records and the partnership accounts (such as the discrepancies between the income shown by the NVD records and the partnership accounts), and matters which may require further investigation and/or explanation, such as the years where there was no natural increase in the livestock herd. The same could be said about the allegation that Simon has caused the accounts of the partnership to be manipulated for his benefit, although I suspect the party with the most cause for complaint would be the Australian Taxation Office (‘ATO’). However, once again, these allegations are matters for trial.

Other allegations made by Jill against Simon which are said to amount to disloyalty or even misconduct seem to me to be somewhat misconceived or overblown. It seems that considerable effort and expense has been gone to identify all possible grounds for complaint against Simon, even if they concern relatively trivial matters, no doubt at least in part because of the total breakdown of relationships within the family. By way of example, reference was made in the second French affidavit to a certificate showing Simon’s registration as a wool classer, which was said by Mr French to make no reference to the partnership. But one does not need any particular expertise in the primary production industry to know that wool classing is a qualification acquired by an individual with relevant expertise, not a non-corporeal entity such as a partnership. The proposition that Simon’s registration as a wool classer could amount to a breach of duty to the partnership seems to me to be absurd.

Similarly, the allegation that by allowing Anita and his children to raise livestock gifted to them on the Highton farm, Simon breached his fiduciary duty to the partnership seems to me to be motivated by other than a genuine concern for the health of the farm business. If it had not been for this dispute, would Jill have begrudged part of the Highton farm being used for her grandchildren’s hobby sized livestock herd?

Accordingly, some of the allegations relevant to the misconduct issue seem somewhat overblown, and others which concern more serious matters can only be resolved at a trial. Unless I was to also make orders that the receiver appointed also be appointed as a special referee to determine all of the disputes between the parties regarding the partnership accounts and the conduct of the partnership business, Jill’s contention that a receiver could address and resolve her concerns about the accuracy of the partnership accounts and the misconduct issue reflects a misunderstanding of what a receiver can and cannot do. A receiver can prepare a final account, but only after key factual disputes have been resolved at a trial. If Simon has breached his fiduciary duty to Jill by misappropriating partnership funds or other assets, or by preferring his own interests ahead of Jill, a receiver may be able to form an opinion on those matters, but a receiver cannot usurp the role of the Court by finally determining the rights of the parties, unless the parties agree or the Court orders otherwise. Accordingly, the appointment of a receiver will not, in the absence of any agreement or court order to the contrary, have the utility that Jill and her advisors hope that the appointment of a receiver might have. Finally, a receiver is not required to locate or call in the assets of the partnership, they are all in place on the Highton farm.

Turning now to the deadlock issue, it is common ground that the relationship of trust and confidence between Jill and Simon has completely broken down, and that the parties cannot agree upon how the affairs of the partnership should be finalised. Where the parties disagree is whether the current state of affairs necessitates the appointment of a receiver.

I do not consider that the appointment of a receiver is necessary to address the deadlock issue. Indeed, the appointment of a receiver runs the real risk of imposing a further financial burden upon an already marginally profitable business. Given that Simon has proffered an undertaking to take steps to realise the farm business assets in an orderly fashion in the event that his application for an interlocutory injunction is unsuccessful, and I accept that he has the necessary expertise to do so, it is not necessary for a receiver to be appointed to realise the farm business assets. There is no cause for concern that the farm business assets would be sold for an undervalue: it would be in Simon’s interests for the farm business assets to be sold for their maximum achievable value, and any accounting can take place after any claims made by Jill (and Simon and Anita) in this proceeding have been heard and determined.

As for the disarray issue, I consider that Jill’s contentions in that regard are somewhat overstated. The question of whether the partnership accounts are accurate is disputed, and as such, is a matter for trial. While I accept that it is undesirable that taxation returns have not been submitted, there is no evidence of any communications with the ATO that indicate that this matter needs to be attended to as a matter of urgency: this would not be the first time that a business could not comply strictly with its reporting obligations by reason of disputation between partners or shareholders.

As for the assertion that the partnership is a trespasser on the Highton farm, that may well be correct, but there is no evidence of any formal action being taken to eject the partnership from the Highton farm apart from the service of the Notice to Vacate. Given the nature of Simon’s claims in this proceeding, one suspects that any application by Anna under Order 53 of the Rules would have limited prospects of success, at least before the hearing and determination of Anna’s summary judgment application, which may or may not proceed. In any event, the question of whether the Highton farm is necessary for the purpose of the partnership only arises if Simon’s application for an injunction is successful. If it is, but he is subsequently forced to vacate the Highton farm, I expect that it would be very inconvenient, but not impossible for Simon to lease alternative farming land, if required.

Accordingly, the proposition that the partnership’s affairs are in disarray is somewhat overstated, and the fact that the partnership’s affairs may be in somewhat of a state of disarray does not necessarily warrant the appointment of a receiver.

There is another further reason why the appointment of a receiver is not necessary or appropriate. While there is no evidence before me as to the likely cost of a receiver, professional services are expensive. I can infer that the cost of a receiver would be in the tens of thousands of dollars at least, especially if the receiver was to conduct an extensive audit of the partnership accounts and records. It seems to me that a party seeking to appoint a receiver to a modestly profitable business should be in a position to put before the Court at least some evidence of the estimated costs involved, and no such evidence has been provided, save to say that the receiver would be remunerated in accordance with the relevant scale. While Jill asserts that the value of the livestock is considerably more than that contended for by Simon, evidence relied upon to support that assertion does not make good that proposition. Simon’s estimate of the value of the livestock is $143,000, while Mr Bourke says it is $189,000. Jill now seems to accept that the Highton farm is not overstocked. In circumstances where the value of the farm business assets, on the best case scenario for Jill,[47] is unlikely to exceed $200,000, the appointment of a receiver would be a disproportionate remedy.
[47]That is, if Simon’s claim to be a creditor of the partnership is ultimately rejected.

Accordingly, the application for the appointment of a receiver will be refused. It has not been shown that the appointment of a receiver is necessary to protect the partnership assets. The appointment of a receiver, in the absence of any order appointing the receiver as a special referee, will not be able to adjudicate upon Jill’s claims with respect to the misconduct issue, or Simon’s claim that the partnership is significantly indebted to him and Anita. The consequences of the deadlock issue and the disarray issue for the security of the partnership assets have been somewhat overstated, and are capable of being ameliorated. And there is a real risk that, particularly if Simon’s claim that he is a creditor of the partnership is ultimately accepted, the modest assets of the partnership could be largely consumed by the costs of a receiver.

Turning now to the injunction application, ultimately, the issue is which course of action will cause the least injustice.

Turning first to the strength of Simon’s claims in this proceeding, Jill says Simon’s claims in this proceeding are very weak. None of the particulars in the further amended statement of claim relied upon by Simon to support his claim to a proprietary interest in the Highton farm evidence any promise made by Jill with respect to the farm business assets. Further, Jill’s transfer of the farm business assets to the partnership is inconsistent with such a promise being made, and she is no longer in a position to leave the farm business assets to Simon. And Jill’s submissions with respect to the trustworthiness of Simon and the credibility of his evidence in the current applications could be taken to be also made in support of a submission to the effect that the credibility of his substantive claims in this proceeding should also be diminished.

In relation to the last point, I have already observed that the state of the evidence in the current applications, untested as it is, does not permit me to draw any particular conclusions about the credibility of the evidence that Simon will give at trial, or, for that matter, the likely credibility of Jill’s evidence. I will proceed on the basis that Simon has a viable claim to the farm business assets, while Jill has valid defences. As for the viability of Simon’s claims to the farm business assets, while I accept that the words said by Simon to have been spoken by Jill did not refer expressly to the farm business assets, the draft will relied upon by Simon did, and it seems to me at least plausible that if Jill is ultimately found to have made the promise to Simon in the terms alleged by him, then that promise extended beyond the Highton farm to include the farm business assets. For example, by way of analogy, if the farming property which was the subject of a similar promise was an orchard, it seems to me that it would be highly unlikely that such a promise would be held not to extend to the fruit producing trees on the farm property.

Further, I agree with Simon’s submission to the effect that Jill’s transfer of the farm business assets to the partnership will not impede a court from granting relief with respect to her share of the farm business assets. After all, in cases where a court grants relief in a proprietary estoppel, equity looks backwards, not forwards,[48] and the Court has sufficient flexibility to craft relief consistent with the requirements of conscience. Indeed, one could argue that the transfer of the farm business assets to the partnership is consistent with Simon’s claim: that Jill was prepared to, in effect, transfer half of the farm business assets to him during her lifetime arguably makes it more likely that she intended to transfer the balance to him upon her death.
[48]See Milling v Hardie [2014] NSWCA 163 [55]; Thorner v Major [2009] 3 All ER 945, 975.

Accordingly, the outcome of any analysis of the merits of the parties’ claims and defences in this proceeding could best be characterised as neutral. In any event, I note the observations in the authorities to the effect that the grant of an injunction may be justified even when the claim of the party claiming interlocutory relief is weak, if the balance of convenience overwhelmingly favours the grant of an injunction.[49]
[49]Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464, 472.

Before turning to the balance of convenience (including the question of whether damages would be an adequate remedy for Simon’s claims in this proceeding), I will deal with Jill’s submission to the effect that the Court is not empowered to grant the injunction sought by Simon, because this Court cannot, via the grant of injunctive relief or otherwise, authorise what would otherwise be an unlawful act.

I have no difficulties with that submission, as far as it goes, although I note that the powers of the Court do extend to restraining a party from exercising what would otherwise be their lawful rights. However, I do not agree with Jill’s submission to the effect that granting the injunction sought by Simon would, in effect, authorise a breach of the Partnership Act, or be in conflict with the regime put in place by the Partnership Act upon dissolution of a partnership.

The relevant sections of the Partnership Act are extracted at paragraphs 93 to 96 of these reasons. Jill relies upon s 42 of the Partnership Act to contend that, by granting the injunction, this Court would be authorising Simon to continue the partnership business contrary to s 42 of the Partnership Act.

This submission misapprehends both the consequences of granting the injunction, and the effect of s 42 of the Partnership Act. The terms of the injunction do not have the effect of compelling Jill to continue business in partnership with Simon. Simon merely seeks to restrain Jill from selling the farm business assets. Really, the effect of the injunction is to restrain Jill from exercising her rights under s 43 of the Partnership Act to wind up the business and affairs of the partnership. As observed by counsel for Simon in his submissions, the relevant provisions of the Partnership Act make a clear distinction between the dissolution of a partnership and the winding up of the business and affairs of the partnership.

If the dissolution of a partnership had the effect of winding up a partnership, there would be no need for there to be an express reference to the right of a partner to apply to the Court to wind up a partnership, as is made in s 43 of the Partnership Act.[50] And, I agree that s 46 of the Partnership Act expressly contemplates the continuation of the business of a partnership after one of the partners ceases to be a partner.
[50]Such an application is now formally made by Jill in the further defence and counterclaim filed on 11 December 2023.

Rather, the effect of s 42 of the Partnership Act is to provide that Jill is no longer bound by any transaction entered into by Simon after its dissolution, although s 46 provides that she would be entitled to any profits until the preparation of final accounts. In the context of how the partnership actually operates, any liabilities incurred by the partnership since 10 February 2023 will be sheeted home to Simon alone. For example, if in fact the Macquarie Bank loan in the names of Simon and Anita is a loan of the partnership, Simon alone, not the partnership, would be liable for any increase in the loan since 10 February 2023, save where the borrowings could be shown to have been made for the purposes contemplated by s 42 of the Partnership Act. Further, while I have not considered the issue in any great detail, any liability of Jill for the debts and obligations of the partnership under s 13 of the Partnership Act would have ceased after 10 February 2023, insofar as those debts and obligations were incurred after 10 February 2023. An example of such an obligation would be any liability to the family trust for Simon’s continuing occupation of the Highton farm after he was served with the Notice to Vacate.

Accordingly, by granting an injunction, the Court would not be forcing Jill to carry on the business of the partnership with Simon contrary to s 42 of the Partnership Act or otherwise. In effect, granting the injunction would mean that Simon would continue to be the caretaker of the farm business assets until the hearing and determination of Simon’s claim to the farm business assets at trial.

The matters discussed above are also relevant to the determination of where the balance of convenience lies.

Turning now to the matters relevant to the balance of convenience, the following matters weigh in favour of the grant of the injunction:

(a) I accept that damages will not be an adequate remedy if the livestock is required to be sold and Simon’s claims to the farm business assets are ultimately made out at trial;

(b) granting the injunction will in effect preserve the status quo pending trial, which is now scheduled to commence in less than six month’s time;

(c) there is no evidence that Jill is in immediate need of the funds that would be realised by the sale of the farm business assets; and

(d) if an injunction is not granted, the partnership will incur the costs involved in preparing the livestock for sale, which may prove to have not been necessary should Simon’s claim to the farm business assets succeed at trial.

The following matters weigh against granting an injunction;

(a) ordinarily the courts are loathe to grant an injunction which would compel a party to carry on a business;

(b) it is at least arguable that damages would be an adequate remedy to meet Simon’s claim to the farm business assets, although I think the better view is that damages would not be an adequate remedy;

(c) the proposition that the partnership is a trespasser on the Highton farm is arguable, and if action is taken to enforce the Notice to Vacate, the farm business assets may have to be sold in any event;

(d) by permitting Simon to, in effect, manage the business of the partnership against Jill’s wishes, Jill continues to be exposed to the risks and potential liabilities associated with operating the partnership business;

(e) if Simon is permitted to hold and use the farm business assets under the regime provided for by the 10 October orders, or some similar regime, the court will be required to supervise Simon’s compliance with those orders; and

(f) if Jill’s claim in the related proceeding to the effect that Simon holds two thirds of the Bacchus Marsh property on trust for her is successful, then the value of Simon’s undertaking as to damages may be quite limited.

In my view, the balance of convenience favours granting the injunction. The matters relied upon by Jill to contend that the injunction should not be granted are either not as significant as contended for by Jill, or can be ameliorated by the conditions I intend to impose upon the grant of the injunction.

Turning first to the matters weighing in favour of the grant of the injunction, I accept that while it is at least arguable that damages would be an adequate remedy to meet any claim by Simon to the farm business assets, given that there is a ready market for plant and equipment and livestock, and given that the farm business assets are capable of being valued with some precision.

However, I accept that there is something special about a breeding operation, where livestock are bred for sale, rather than production, and I accept Simon’s evidence that the livestock herd has a value to Simon greater than what can be measured in money. I also accept that if Simon is successful in his claim to the Highton farm and the farm business assets, but only after the farm business assets have been sold, then the damages recoverable by Simon may be insufficient to restore the farming business to what it was before. To explain further, it is clear from the evidence that the plant and equipment on the Highton farm must be quite out of date, and would realise little when sold, but if Simon’s claims are successful, then that plant and equipment would have been replaced.

During the course of the hearing of the applications, counsel for Jill submitted that there was not a complete overlap between the farm business assets and the assets of the partnership, as the farm business assets do not include the cash at bank and the goodwill of the partnership. I agree. While the partnership accounts do not record goodwill as an asset of the partnership, it seems to me that if there is any goodwill which could be assigned a value, that value can only be attributable to the reputation of the partnership’s breeding practices and bloodlines, the fruits of which would be destroyed should the livestock be sold.

Accordingly, the above matters lead me to conclude that, on balance, damages would not be an adequate remedy, and also support the desirability of preserving the status quo pending the trial of the proceeding, noting that the trial is now scheduled to commence in less than six months time.

Further, I accept that there is no evidence that Jill has any immediate need for the funds that will be raised by the sale of the farm business assets. That she has no such need is supported by her offer that her share of the proceeds of sale of the partnership assets be held in trust pending the hearing and determination of the proceeding.

Finally, while I accept that Simon has not quantified the costs associated with preparing the livestock for sale, he has given detailed evidence (which has not been contradicted by Jill) of the steps that are required to do so. I accept, therefore, that the costs associated with preparing the livestock for sale would not be trivial.

Turning now to the arguments why the injunction should not be granted, I accept that ordinarily the Court should be reluctant to force a party to carry on a business they do not wish to carry on, particularly if it requires that party to continue an association they no longer wish to continue. However, the purpose of the injunction is not to compel Jill to carry on a business: it is to enable Simon to keep the farm business assets in his custody pending the resolution of the dispute between the parties about their ownership. Jill would not be required to do anything: she would simply be restrained from, in effect, taking action to wind up the business of the partnership.

Jill is concerned about being exposed to the inherent risks associated with the conduct of a primary production business, and to the risk that Simon will incur liabilities on her behalf. However, in my view, those risks are not real, by reason of the dissolution of the partnership and the consequences of the dissolution, as set out in ss 13 and 42 of the Partnership Act, as discussed earlier in these reasons. To the extent that those risks are real, they can be ameliorated by the conditions that I will impose upon the grant of the injunction.

I propose to impose a regime substantially similar to that imposed by the 10 October orders, plus some additional conditions. I accept that could involve the Court being required to supervise compliance with that regime and those conditions. However, in any event, this proceeding will require some degree of case management to ensure that the trial commences on the scheduled date, and also, the period of supervision will be limited. The Court’s indefinite supervision will not be required.

As for the submission to the effect that granting an injunction would be futile, because the partnership does not have security of tenure on the Highton farm, while I agree that the partnership’s tenure at the Highton farm is legally precarious, I accept that from a practical perspective, Anna will have some difficulties in immediately evicting Simon from the Highton farm. As noted earlier in these reasons, Anna is likely to face some hurdles in successfully making an application under Order 53, at least prior to the hearing and determination of her summary judgment application, and she has not taken any other action to evict Simon and the partnership from the Highton farm. And, in any event, while I accept that it would be costly and inconvenient for Simon to relocate the farm business assets to another property, I also accept that it would not be impossible.

As for the value of Simon’s undertaking as to damages, I accept that if Jill’s claim to the lion’s share of the Bacchus Marsh property is successful, then his assets will be considerably diminished. However, he will still have a one-third share of the Bacchus Marsh property, and while there is no evidence of its current value (or the value of a property Simon and Anita own in Woolongong), given the likely escalation in the value of the Bacchus Marsh property, Simon’s net asset position may well exceed the value of Jill’s share of the partnership assets, even on a worst case scenario for Simon.

In any event, the conditions I will impose upon the grant of the injunction will ameliorate the potential disadvantages to Jill of granting the injunction. These conditions include a requirement that Simon provide confirmation[51] that the insurance policy documents included in the evidence cover the farm business assets, include public liability insurance for the Highton farm and the farm business, and that the fact that the insurance policy is in the names of Simon and Anita would not jeopardise any claim with respect to the farm business assets and the Highton farm. Given that the partnership accounts show that the partnership incurs considerable expenses with respect to insurance, I expect that the insurance records in evidence do relate to the insurance of the farm business assets and the Highton farm, contrary to Jill’s submissions.
[51]A letter from the insurance broker who arranged the insurance cover may be sufficient evidence for present purposes.

The other conditions that I will impose upon the grant of an injunction are as follows:

(a) that Simon take all reasonable steps and use all reasonable endeavours to ensure that the trial of the proceeding scheduled to commence on 4 June 2023 commences on or around that date;

(b) that Simon facilitate the valuation of the farm business assets prior to trial; and

(c) Simon co-operate with Jill to appoint a new accountant to the partnership.

The first condition is self explanatory. The second condition is imposed in aid of a direction I will subsequently make to appoint a joint expert to value the farm business assets prior to trial. The third condition is imposed, at least in part, to ameliorate Jill’s concerns about the independence of MOR.

I have no reason to doubt the professionalism of MOR and Mr Hansen. Further, I am in no position to make any findings with respect to Jill’s allegations that the partnership accounts are inaccurate, or have been manipulated to benefit Simon and his family at Jill’s expense. However, I accept that MOR cannot be perceived as fully independent or impartial in circumstances where Simon has objected to the production of documents evidencing communications between him and MOR on the basis that they are subject to a claim by him for legal professional privilege.

The very foundation of a claim for legal professional privilege is the confidentiality of the relevant communication. Indeed, non-confidential communications cannot be the subject of a claim for legal professional privilege. It cannot be the case that MOR is truly impartial, or can be perceived to be truly impartial, if its principals are party to confidential communications with one partner of a partnership in circumstances where the partners are in dispute, for the purpose of that partner advancing his position in that dispute. The partnership accountant should be impartial, and transparent. However, Jill’s concern that MOR is not impartial is reasonably based.

Proposed orders

Subject to further consultation with the parties as to the appropriate form of order, I propose to make the following orders:

1. Until the hearing and determination of the proceeding or further order:

(a) the first defendant be restrained from selling or otherwise disposing of any of the farm business assets (as defined in the further amended statement of claim dated 23 November 2023);

(b) the plaintiff not sell any of the livestock of the partnership without the first defendant’s written consent, such consent not to be unreasonably withheld;

(c) the first defendant not transact on the partnership account without the plaintiff’s written consent, such consent not to be unreasonably withheld;

(d) the plaintiff take all necessary steps to ensure that the first defendant has electronic banking access to the partnership account;

(e) the plaintiff ensure that all income of the partnership is banked into the partnership account;

(f) the plaintiff ensure that all expenses of the partnership are paid from the partnership account;

(g) the plaintiff not cause the partnership to borrow funds from any person or lend funds to any person without the first defendant’s prior written consent, such consent not to be unreasonably withheld;

(h) the plaintiff not cause the partnership to repay any existing indebtedness of the partnership;

(i) the plaintiff not cause the partnership to pay wages to any person or drawings to any partner without the first defendant’s prior written consent, such consent not to be unreasonably withheld;

(j) the plaintiff and the first defendant are directed to confer and agree upon the appointment of a new accountant for the partnership, and to facilitate the transfer of the books and records of the partnership to the new accountant;

(k) the plaintiff co-operate with a valuer to be jointly appointed by the plaintiff and the first defendant in due course to value the partnership assets;

(l) the plaintiff permit access to the Highton farm to any livestock agent appointed by Jill to inspect the livestock upon the provision of reasonable notice; and

(m) the plaintiff provide a fortnightly report to the first defendant, in writing, by which he reports on:

(i) any purchases of NLIS tags;

(ii) the application of any NLIS tags to any animals;

(iii) the purchase of any animals or other assets;

(iv) the sale of any animals or other assets;

(v) any known births or deaths of animals;

(vi) income received; and

(vii) expenses incurred.

2. Until the hearing and determination of the proceeding, no partner take any step to prepare, file or lodge any taxation document for the partnership without the prior written consent of the other, save for Business Activity Statements as and when they are due.

3. The plaintiff’s summons filed on 21 July 2023 be otherwise dismissed.

4. The applications in the first defendant’s summons filed on 3 July 2023 be dismissed.

5. The parties’ costs be reserved for determination in due course.

6. Notification of any application by any party with respect to the costs of the current applications be provided to the other party and the Court by 4:00pm on 19 December 2023.

7. There be liberty to apply on 7 business days notice to the other parties and the Court with respect to paragraphs 1 and 2 of this Order.

SCHEDULE OF PARTIES

S ECI 2023 01185
BETWEEN:
SIMON JOHN LIDGETT	Plaintiff
- v -
JILLIAN ROSEMARY LIDGETT	First Defendant
ANNA ELIZABETH LIDGETT (in her own capacity and in her capacity as Trustee of the Lidgett Property Trust)	Second Defendant

[2023] VSC 743

12 December 2023