Macaulay v Macaulay - [2024] NSWSC 1547

Supreme Court

New South Wales

Medium Neutral Citation: Macaulay v Macaulay [2024] NSWSC 1547
Hearing dates: 13-14, 16, 19-23 and 26-27 August 2024
Date of orders: 03 December 2024
Decision date: 03 December 2024
Jurisdiction: Equity
Before: Hmelnitsky J
Decision:
See [498]

Catchwords:
ESTOPPEL — Proprietary estoppel — Encouragement — Where the plaintiff was a farmer who worked in the family partnership on the family farms — Where the plaintiff and the defendants are siblings — Where the plaintiff claimed his father made oral representations to him over many years that certain farms would be his — Whether the representations were made — Whether the plaintiff acted to his detriment in reliance of the representations — What the appropriate relief is in the circumstances
PARTNERSHIPS AND JOINT VENTURES — Winding up — Distribution of assets on settlement of accounts — Whether there was an agreement to divide profits of the family partnership after death of one of the partners in proportions different to the continuing partners’ interests in the partnership
PARTNERSHIPS AND JOINT VENTURES — Partnership property — Identification — Whether family farm that was held between the partners as tenants-in-common in equal shares was partnership property

Legislation Cited:
Income Tax Rates Act 1986 (Cth) s 14
Partnership Act 1892 (NSW) ss 20, 21, 42, 43
Succession Act 2006 (NSW) s 59

Cases Cited:
Ambridge Investments Pty Ltd (in liquidation) v Baker [2010] VSC 59
Baker v Baker [2024] NSWSC 559
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59
Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165
Commissioner of State Revenue v Rojoda Pty Ltd (2020) 268 CLR 281; [2020] HCA 7
Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39
Coster v Coster [2024] NSWSC 1104
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26
Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84
Dillwyn v Llewelyn (1862) 4 De GF & J 517; 45 ER 1285
Donis v Donis (2007) 19 VR 577; [2007] VSCA 89
Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 ; [1980] HCA 6
Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109
Fragar v Fragar [2024] NSWSC 193
Gissing v Gissing [1971] AC 886
Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10
Green v Green (1989) 17 NSWLR 343
in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
In the matter of Hillsea Pty Ltd [2019] NSWSC 1152
Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P & CR 8
Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270
Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106
Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78
O’Brien v Komesaroff (1982) 150 CLR 310; [1982] HCA 33
Parker v Parker [2017] TASSC 37
Pettitt v Pettitt [1970] AC 777
Priestley v Priestley [2017] NSWCA 155
Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19
Sullivan v Sullivan [2006] NSWCA 312
Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7

Texts Cited:
B McFarlane, The Law of Proprietary Estoppel, (2nd ed, Oxford University Press, 2020)
J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths)
M Blackett-Ord and S Haren, Partnership Law (6th ed, 2020, Bloomsbury Professional)
R I Banks, Lindley and Banks on Partnership (Sweet & Maxwell, 20th ed, 2017)

Category: Principal judgment
Parties: Scott Alexander Macaulay (Plaintiff)
Craig Neil Macaulay (First Defendant)
Christina Jane Kronenberg (Second Defendant)
Tracey Maree Ford (Third Defendant)
Representation:
Counsel:

M Gunning (Plaintiff)
A J McInerney SC/N Kabilafkas (Second and Third Defendants)

Solicitors:
Gordon Garling Moffitt (Plaintiff)
Campbell Paton & Taylor (Second and Third Defendants)

File Number(s): 2021/00238598

Table of contents

The dispute in broad outline

Some matters of context

The farms
The Partnership
The parties
Neil and Janet
Scott
Christina
Craig
Tracey

The relevant wills
January 1988 Wills
February 2007 Wills
October 2007 Wills
August 2016 Will
August 2018 Will

The facts in more detail

Some preliminary observations about the evidence
Scott’s evidence about the representations
The making of the February 2007 Wills
April 2007 – property settlement; alleged assault
The October 2007 Wills
Scott takes work off the farm
Rabobank refinancing in 2010
Janet dies
Mr Twomey suggests that the October 2007 Will be revisited
The June 2015 meeting
The 30 September 2015 meeting
November 2015 – alleged assault
The February 2016 meeting and the 2016 Will
16 September 2016 – alleged assault
31 October 2016 – alleged assault
4 February 2017 – alleged assault
March 2017 – Macaulay family discussions
June 2017 – Neil sees Mr McGroder
30 July 2017 – the ute incident
Neil terminates the Partnership
The 2018 Will
Scott’s amendment application in relation to the 2018 Will

Estoppel

Did Neil make the representations?
How did Scott understand the representations?
Reliance
Detriment
Legal Principles – Detriment
The parties’ positions on detriment
Has Scott suffered detriment?
Parker v Parker

Was it unconscionable of Neil to resile from the representations?
What relief is appropriate?

The partnership dispute

The Fairfield debt
Was Miltons partnership property?
The 2016 Agreement about Janet’s interest in the Partnership
Taking of accounts

Other claims for relief

Constructive trust claims
Succession Act

ORDERS

JUDGMENT

The parties are the children of the late Neil Macaulay, who died in 2021, and the late Janet Macaulay, who died in 2012.
The plaintiff is Scott Macaulay. The defendants are his brother Craig Macaulay and his sisters Christina Kronenberg and Tracey Ford. I will adopt the naming convention used by the parties and, without intending any disrespect, I will generally refer to the members of the Macaulay family by their first names.

The dispute in broad outline

In 1989, Neil, Janet and Scott entered into a partnership known as the Parkvale Pastoral Co Partnership (the Partnership) for the purpose of carrying on the business of farming on Parkvale, a property of about 2,121 acres near Parkes. Neil and Janet had acquired Parkvale in 1988 and it was held in their joint names.
In time, two properties adjacent to Parkvale were also purchased. In 1994, the Partnership borrowed funds from the Commonwealth Bank of Australia (CBA) to purchase a 404 acre property directly to the south of Parkvale known as Miltons or Miltons Block but which was sometimes referred to in the evidence as Cordells. Legal title to this property was held by Neil, Janet and Scott as tenants-in-common in equal shares. In 1999, Scott borrowed funds from CBA which he used to purchase a 670 acre property directly to the east of Parkvale known as Fairfield. Scott is the sole registered proprietor of Fairfield. The parties agree that neither Parkvale nor Fairfield was partnership property. There is a dispute about whether Miltons was partnership property.
Scott farmed Parkvale, Miltons and Fairfield in the Partnership for most of his adult life up until 2017, when there was a serious rift in the family. This rift, which had been brewing for some time and which was largely stoked by disagreement as to what Neil’s will should provide for Scott and Craig, eventually resulted in Scott being banished from the farm, in the termination of the Partnership, and in Scott being ostracised from the family altogether. There were numerous allegations that Scott had physically assaulted Neil, including one which became the subject of criminal proceedings, where Scott was found not guilty at trial.
Neil gave notice of termination of the Partnership (by then consisting only of him and Scott) as of 1 September 2017 but there has never been a winding up or taking of partnership accounts. The parties remain in dispute as to the partners’ entitlements.
In addition to Parkvale and their interests in the Partnership, Neil and Janet acquired some non-farm assets during their lifetime. These included a modest house in Endeavour Place, Parkes, where they lived in their later years. They also accumulated some other savings and investments including superannuation.
By his final will made on 10 August 2018 (2018 Will), Neil left his estate as follows:

To Scott, his property at Endeavour Place in Parkes.

To Christina, Tracey and Craig, the balance of his estate including the whole of Parkvale and his interest in Miltons, in equal shares.

The executors of Neil’s estate are Christina, Tracey and Craig. Probate of the 2018 Will was granted on 31 January 2023.
By statement of claim filed on 20 August 2021, Scott seeks a variety of orders in relation to Parkvale and Neil’s interest in Miltons. His claim seeks no relief in relation to Fairfield because that property is in his name and, until the final hearing when the defendants briefly contended that it was partnership property before abandoning the point, it had never been suggested that Fairfield was partnership property.
The gist of Scott’s claim is that the 2018 Will represents a serious departure from representations made by Neil over many years as to Scott’s eventual ownership of Parkvale and Miltons. He says that he relied to his detriment on the representations and the assumption to which they gave rise and that it was unconscionable of Neil to depart from them by making the 2018 Will. His case is that rather than seeking more remunerative opportunities elsewhere, he devoted the bulk of his working life to the Partnership, the revenue of which was largely used to improve Parkvale and to pay down significant partnership debt.
This general case is articulated in a number of ways. In addition to his contention that the defendants are estopped from denying the representations or assumption, Scott contends that he and his parents were parties to a joint endeavour that came to an end without attributable blame. Scott further contends that he and Neil at some point had a common intention that Neil would hold his interests in Parkvale and Miltons for Scott’s benefit.
The primary relief which Scott seeks are declarations and orders that:

The defendants, in their capacity as executors, hold their interests in Parkvale and Miltons subject to a constructive trust for Scott’s benefit;

The defendants’ interests in Parkvale and Miltons are subject to a charge or lien in favour of Scott for his disproportionate contributions;

The defendants are estopped from denying the truth of and departing from the pleaded representations and assumption; and

The defendants are liable in equity to reverse the detriment occasioned to Scott.

So far as the Partnership is concerned, Scott seeks orders for a taking of accounts and consequential orders. The defendants agree that such orders are appropriate, however it is necessary to resolve several issues concerning the partners’ entitlements before doing so. The principal questions in this respect were (1) whether, following Janet’s death, Neil and Scott agreed to split Janet’s one-third partnership share equally such that they became equal partners, as Scott contends, or whether her share passed to Neil such that Scott remains a one-third partner, as the defendants contend, (2) whether Miltons was partnership property and (3) whether a debt owing from Scott to the Partnership, as shown in the financial reports of the Partnership for many years and which related to the refinance of funds originally borrowed by Scott to purchase Fairfield, was genuinely required to be repaid. This last issue was generally referred to by the parties as the “paper debt” or the “Fairfield debt” issue.
Scott alternatively seeks an order for provision under s 59 of the Succession Act 2006 (NSW).
At the time they filed their defences, the defendants were jointly represented. By the time of the hearing, however, Craig was unrepresented. The second and third defendants (Christina and Tracey) say that Neil never made any representations as to whether Scott would inherit Parkvale or any other property. They say that he never relied to his detriment on any such promises in any event.
Craig did not rely on a separately pleaded defence and so his position, at least so far as the pleadings were concerned, was aligned with his sisters’ position. However, his evidence and submissions were to the effect that his father did indeed make representations as to both his and Scott’s eventual ownership of Parkvale and Miltons, but that his recollection of these representations differed from Scott’s (and his sisters’) recollection.

Some matters of context

Before addressing the issues in detail, it is convenient to describe some general matters of context.

The farms

Parkvale is located just north of Parkes on Renshaw McGirr Way (or, as it is also known, the Wellington Road), which runs in a northerly direction but then forks slightly north-east at the junction of Olieview Road, which runs north from that point. The eastern boundary of Parkvale runs along Renshaw McGirr Way and Olieview Road. Miltons adjoins the southern boundary of Parkvale and also borders Renshaw McGirr Way. Fairfield is to the east of Parkvale on the other side of Olieview Road. It is therefore separated from Parkvale by the road.
There were many sketches, paddock-maps and photographs of the properties in evidence. For the purpose only of illustrating the general layout of the properties, I have slightly edited one of those sketches to the following:

Parkvale consists of a mixture of highly arable red loam and clay soils, as well as undulating red granite soils. There are some areas of light timber, a creek line, a homestead and many significant farming improvements around the area of the homestead.
Miltons and Fairfield consist of red and grey loam soils and small areas of light timber. Fairfield has some improvements, consisting of a house, sheds and some grain storage, however at the times relevant to this dispute the farming infrastructure was nowhere near as improved or well-maintained as on Parkvale. That is because the Partnership farmed all of the lands together using the far better and constantly maintained infrastructure on Parkvale.
Fairfield has a couple of dams but does not generally have good access to water. Parkvale, on the other hand, has good water access, including a bore located in the handle of the battle-axe-shaped northern paddock marked AE on the diagram at paragraph [20].

The Partnership

The parties to the Partnership entered into a written partnership agreement which had effect from 30 June 1989. An unsigned copy of their agreement was in evidence. The parties do not dispute that each of Neil, Janet and Scott had a one-third partnership share until Janet’s death in 2012.
The terms of the partnership agreement are fairly conventional. It is relevant to note clauses 10, 11 and 12, which governed the use of and improvements to land owned by partners.

“10. The lands of all partners or any other lands which may be acquired by any partner during the term of this agreement shall be made available for use by the partnership business and the partnership livestock may be depastured thereon during the term or any other operation or activity relating to the partnership business may be carried on thereon during the term and all rates insurances premiums on fixtures thereon (other than insurance premiums on the contents of any dwelling house or chattels in or about any dwelling house which contents or chattels shall not be the property of the partnership) and all other outgoings in respect of the lands shall be paid by the partnership together with a rental as shall be mutually determined by the partners to be paid by the partnership for its use of the lands of any individual partners or lands owned jointly by any of the partners and the partnership is hereby granted a licence by each partner in respect of land now held by him or her or any land as may hereafter be acquired to use the same for the purposes of the partnership as aforesaid until the termination of the partnership in accordance with the provisions hereof provided always that on any partner ceasing to be a partner whether by giving notice of withdrawal or for any other reason whatsoever that partner shall be entitled to have vacant possession of all lands contributed by him or her to the partnership free from any right of occupation or use thereof by the partnership.
11. In the event of it being necessary or desirable in the opinion of the partners to effect any structural improvements on any of the lands of the partners either presently owned or to be owned in the future for the purpose of increasing the productivity thereof or any other permanent improvements the same may with the consent of the other partners be paid out of the partnership funds but in that case in the event of the partnership being determined after expenditure on those improvements then the said partner or partners owning the lands shall pay into the partnership for subsequent distribution between the partners in accordance with this agreement the actual cost of the improvements.
12. Notwithstanding anything herein contained nothing in this agreement shall be deemed to create any partnership in the lands brought under the provisions of the agreement by any partner.”

There was limited evidence as to how the Partnership kept its accounts in the period prior to 1 September 2017. For many years, the partners engaged Mr Geoffrey Twomey of Twomeys (as it is now known) in Young and Cootamundra as their accountant. On the basis of Mr Twomey’s evidence and those accounts that were before the Court, I infer that the partners kept their books and managed their financial and tax affairs in an orderly way at least up until the breakdown of relations associated with the present dispute.
The Partnership conducted a mixture of farming activities, principally cropping and livestock (sheep). It was generally successful. Although there were ups and downs, it was a profitable enterprise overall. The period of drought between 2006 and 2009 was especially difficult. In 2007, for example, although the Partnership recorded farm income of over $400,000, consisting of gross profit from sheep trading and revenue from sales of grain crops and wool, it ultimately made an overall loss of $3,560.48.
The fortunes of the Partnership improved from the 2010 financial year onward, with income returning to pre-drought levels.
The 2006 and 2008 accounts show that the Partnership had liabilities to CBA totalling about $366,000 and $330,000 respectively, consisting of both current liabilities and non-current liabilities. The 2010 accounts are less clear, but the Partnership seems to have at least had current liabilities to CBA of about $340,000. In 2011, however, the Partnership refinanced with Rabobank and the existing debt to CBA was folded in with other personal debts of Neil, Janet and Scott. A liability of $1,200,000 to Rabobank was therefore recorded in the 2011 accounts. I will say more about this refinancing in due course.
By the 2018 financial year, the amount owing under the Rabobank facility had been reduced to less than $200,000.

The parties

All of the Macaulay children were active participants in the proceedings.

Neil and Janet

There was little evidence of Neil and Janet’s life prior to the purchase of Parkvale. Between 1961 and 1970 they had four children, being the parties to these proceedings.
In the 1960s the family lived in Cootamundra where Neil owned and operated a butcher shop. Neil also worked in a farming partnership with his father, Alexander Macaulay, and his brother, Brendan Macaulay, which traded under the name AB & N Pastoral Company (the ABN Partnership). In 1969 Neil and Janet purchased “Glenroy”, a small farming property on Gundagai Road near Cootamundra where the family subsequently moved. Neil eventually stopped working as a butcher and leased out his shop in town in order to devote himself fully to farming. Over the years both Neil and Janet and the ABN Partnership acquired other farming properties.

In about 1982 or 1983, there was a falling out among Alexander, Brendan and Neil. It was unclear what exactly this dispute was about, but it appears to have concerned financial matters. This led to a bitter dissolution of the ABN Partnership.
Alexander died in 1985. There was some evidence that Neil thought that the way his father’s estate was divided was unfair to him and his other brother Max Macaulay.
In about 1987 or 1988 Neil and Janet sold their other properties. They used the proceeds, together with Neil’s inheritance from Alexander’s estate, to purchase Parkvale. The evidence suggests that Parkvale was purchased outright by Neil and Janet.
As mentioned above, Neil, Janet and Scott established the Partnership in 1989 in order to farm Parkvale. A written agreement was prepared by Callan & Luff, Solicitors and Tax Agents. Their invoice dated 15 February 1990 suggests that this agreement was duly executed, however only an unexecuted copy was in evidence.
During the 1990s the Partnership experienced commercial success. By leveraging its mix of cropping and livestock farming, it became quite profitable. The family won a string of crop competitions at local and state Royal Agricultural Society shows during this period. In 1994, the partners acquired Miltons as tenants-in-common in equal shares. In 1999, Scott acquired Fairfield. The Partnership conducted its farming business on all three properties but the main homestead and the vast bulk of the farming infrastructure was located on Parkvale.
In 2001 Neil and Janet purchased a house on Allenby Road in Orange. Tracey and Phillip lived in the house from then until 2013 and paid $150 a week in rent. Neil sold the Allenby Road property in 2018.
In 2005 Neil and Janet decided to buy a house in town. Janet had become involved in a number of community associations and other activities in Parkes. It was becoming tiresome to travel in from the farm. Neil and Janet also had regular social engagements in Parkes. The couple purchased a house in Endeavour Place, Parkes and moved there from the homestead on Parkvale.
Janet began to exhibit signs of cognitive decline in late 2008 or early 2009. Her condition deteriorated and she eventually moved into Niola Nursing Home in Parkes in either late 2011 or early 2012. Janet died on 18 August 2012.
The Partnership continued to operate with Neil and Scott as the remaining partners. I will separately deal with the evidence as to how the parties dealt with Janet’s partnership share.
Save for the issue about how Janet’s interest in the Partnership was dealt with by Neil as her executor, there is no issue about Janet’s estate. The schedule of property annexed to the grant of probate of her October 2007 Will showed the following assets.

Description

Value of share

Miltons

$181,500

Partnership

$26,666.66

Endeavour Place, Parkes

$200,000

Allenby Road, Orange

$129,000

Parkvale

$1,172,314

Neil died on 9 January 2021. The schedule of property attached to the grant of probate for Neil’s estate identified the following assets.

Description

Value of share

Endeavour Place, Parkes

$470,000

Parkvale

$6,100,000

Miltons

$1,000,000

Furniture and Personal Effects

To be ascertained

Refund of Accommodation Payment to Niola Nursing Home

$327,661.48

CBA Farm Management Deposit Account

$195,497.76

CBA Cheque Account

$71,739.96

CBA Farm Management Deposit Fixed Term Account

$114,846.81

Rabobank Account

$35,000

Superannuation

$658,973

Investment

$61,928.88

Amount owing to deceased by Parkvale Farm Pty Limited atf Parkvale Trust

$424,855

Farming Plant and Machinery

$130,600

Partnership Debt

To be ascertained

Scott

Scott was born in 1963.
Like his siblings, Scott grew up in Cootamundra and then on the family farm Glenroy. Scott finished school in 1978 after achieving his year 10 school certificate and commenced farming with Neil, his grandfather Alexander and his uncle Brendan under the ABN Partnership.
Scott’s evidence was that he always wanted to be a career farmer. In 1979 he studied farm technology, wool classing and automotive engineering at Wagga TAFE for 12 months on a full-time basis. In 1981 he obtained a wool classing/sheep classing certification and a mechanical/welding certification from TAFE. He also achieved a chemical usage/poison certification around 1990.
Scott worked for the ABN Partnership until around 1985. From 1985 to 1987, Scott moved to Sydney where he worked for CSIRO in animal production relating to sheep and cattle. For a period of time in 1987, he resided with Christina and her husband, and then moved into rented accommodation.
In January 1988 Scott travelled to Alberta, Canada to participate in a farm exchange organised through the Internal Agricultural Exchange Association. During this exchange, Neil asked Scott to come and work with him and Janet on Parkvale.
In November 1988 Scott returned to Australia and went to live and work with his parents at Parkvale. It was around this time that the three of them established the Partnership. Scott was a partner and worked the farmlands to produce profit for the Partnership, until it was terminated in 2017. I have already referred to the purchase of Miltons and Fairfield.
In 1990 Scott married his first wife Ann-Maree. Together they had three children, all of whom are now adults. At the beginning of their marriage, they lived in the shearer’s cottage on Parkvale but soon after moved out.
Scott and Ann-Maree purchased a house on Victoria Street in Parkes some time in the mid 1990s. They lived at Victoria Street until Scott purchased Fairfield in 1999. They then lived in the homestead on Fairfield until 2003 or 2004, when they moved back into Victoria Street as their eldest child was starting high school.
In 2006 a severe drought hit the region. It had a devastating effect on farms and rural families across NSW and the Macaulays were not spared. The drought led to a downturn in the fortunes of the Partnership and Scott was forced to find other work at the mines whilst maintaining his farming responsibilities. It was during this time that Scott and Ann-Maree separated and ultimately divorced.
I will deal with the evidence about Scott and Ann-Maree’s property settlement as well as Scott’s work off the farm later in these reasons. For now, it is relevant to note that Scott moved onto Parkvale in 2006 or 2007 following his separation with Ann-Maree. By this point, his parents had moved to Endeavour Place. It was unclear as to how long Scott remained living at Parkvale after 2012. I infer from the evidence that in 2015, his new partner Cathie purchased a home at Hillcrest Avenue, Parkes and that Scott moved there at some point. He and Cathie were married on 8 March 2017. The Hillcrest Avenue property remains Scott’s permanent address.
Cathie had three children prior to meeting Scott. They are all now adults. Other than the real estate that Scott and Cathie each own (to which I have already referred), their savings consist mostly of superannuation.

Christina

Christina was born in 1961.
Christina assisted her family with farming activities from the time they moved to Glenroy in 1969.
Christina completed the HSC at Cootamundra High School in 1978. In 1980 she moved to Sydney and commenced hospital-based nursing training in Blacktown Hospital which she completed in 1983. In 1985, Christina became a qualified midwife. She completed other nursing training and qualifications throughout the 1980s. Christina worked as a community nurse in the Western Sydney Area Health Service from 1987 to 2001.
Christina currently resides in Parkes with her husband of 39 years, Arno Kronenberg. Together they have four children, all of whom are now adults.
Christina currently works two days each week as a community nurse in Trundle and two days each week as a child and family health nurse at Parkes Hospital.

Craig

Craig was born in 1966.
He attended Cootamundra High School and St Gregory’s College Campbelltown until the end of year 10 in 1982. He then completed a TAFE course in Albury and Cootamundra as a mechanic from 1983 to 1984. During this period Craig worked on Glenroy.
From 1984 to 1988 Craig undertook and completed a boilermaker’s apprenticeship. From 1988 to 1994 Craig lived between Cootamundra, Brisbane and Parkvale, intermittently working as a boilermaker, for an engineering company, and on the farm.
In 1994 Craig moved into the cottage adjacent the homestead on Parkvale. In 1996 he married his current wife Julie Macaulay. In 1998 the couple moved into a house in Parkes where they remain to this day. From 1999 to 2005 Craig worked for Australian Topmaking services performing metal fabrication and maintenance work. From 2005 to 2017 he worked full-time at the North Parkes mine.
Craig and Julie have three adult children.

Tracey

Tracey was born in 1970.
Tracey enjoyed growing up on Glenroy and took advantage of country life. Tracey boarded at Loreto Normanhurst from years 8 to 12 and completed the HSC there in 1988.
Tracey lives on a property in Manildra with her husband Phillip Ford. They have three adult children. From 2001 to 2013, they lived in the Allenby Road house in Orange, which they rented at below-market rates from Neil and Janet. Tracey gave evidence that the purchase of their current home in Manildra was facilitated in 2013 by a $100,000 interest-free loan from the Partnership, approved by both Neil and Scott. I note that this loan does not appear in the financial statements for the Partnership that were in evidence. However, there was evidence that it was partially repaid in cash as to $50,000 and that Phillip worked for the Partnership for a time as a means of further repaying the loan.

The relevant wills

There was significant dispute as to the circumstances in which Neil and Janet made their various wills. I will return to that issue in the context of my more detailed consideration of the facts. For the moment, it may assist the reader to understand the overall arc of the dispute by noting what each will contained.

January 1988 Wills

Neil and Janet made mutual wills in January 1988. Nothing really turns on these wills. Broadly, each was entirely in favour of the other but, should the other predecease them, Scott and Christina were appointed executors and each testator left their entire estate equally to such of their surviving children who attained 18 years.

February 2007 Wills

On 12 February 2007, Neil and Janet made mutual wills (the February 2007 Wills) prepared and witnessed by their longtime solicitor, Mr Bill Thompson of Commins Hendricks in Coolamon, that were partly typed and partly handwritten. Only Neil’s February 2007 Will was in evidence but I infer that Janet made a will in similar form at about the same time. The sense of urgency implied by the form of these February 2007 Wills was largely due to the fact that Scott was at that point in the throes of separating from his first wife, Ann-Maree, and a property settlement with her was in prospect.
Pursuant to the February 2007 Wills, Neil and Janet again left their entire estate to the other in the first instance. However, if the other should predecease them, these wills provided as follows:

The four children were appointed executors.

Furniture, jewellery and personal effects were left to Christina and Tracey.

Craig was to be provided:

Fairfield “debt free” as from the next 1 February following the testator’s death;

Stock (ie, sheep) to the value of $50,000.

Scott was to be provided:

Parkvale;

The testator’s two-thirds share of Miltons (on the hypothesis that each testator will have inherited their deceased spouse’s one-third share);

The testator’s interest in the farming business subject to:

payment of Partnership debt of approximately $300,000;

payment of Fairfield debt of $260,000 and the transfer of Fairfield to Craig;

“My son” (presumably Scott) being entitled to the income from the farming business until the next 1 February following the testator’s death;

Payment of $250,000 to each of the testator’s other three children should Scott sell, divorce or enter into a property settlement under the Family Law Act 1975 (Cth) or the De-facto Relationships Act 1984 (NSW) (this clause being expressed to apply until 1 February 2017);

Scott was to be responsible for funeral expenses.

The rest and residue of the testator’s estate, subject to debts, was bequeathed equally to Christina and Tracey.

Any daughter living in a house had the option to “take that house as her share”.

Should Scott and Craig wish to “sell or lease” (which in Scott’s case I take to be a reference to Parkvale and Miltons and in Craig’s case to Fairfield), then they were required to give the other six month’s written notice of settlement or the lease would start on the 1 February (which I take to mean the 1 February following expiration of the six month notice period) subject to:

Rent or purchase price being market value.

If the above cannot be agreed, then rent or purchase price being determined by a registered valuer.

The “opt” (which I take to mean the option to sell or lease) to be agreed (which I take to mean agreed by the recipient of the option) by notice in writing.

The overall scheme of the February 2007 Wills so far as the farmlands were concerned was therefore that Scott would inherit both Parkvale and Miltons, subject to the whole of the partnership debt, on condition that he first transfer to Craig free and clear title to Fairfield.

October 2007 Wills

Neil and Janet contemplated that the somewhat hurried handwritten February 2007 Wills would be typed out and re-executed in due course. This occurred on 15 October 2007. On that day, each of Neil and Janet returned to Mr Thompson’s office at Coolamon and executed mutual wills (the October 2007 Wills) that largely reflected the February 2007 Wills, save for an error that assumed significance for the family in later years.
The relevant changes appeared in clause 4 of the October 2007 Wills, which dealt with the entitlements of the beneficiaries. Because so much turns on the content of this clause, I will set it out in full:

“4. SHOULD my [wife/husband] fail to survive me THEN I LEAVE the whole of my Estate as follows:
4.1 I LEAVE my furniture, jewellery and personal effects equally to my daughters SUBJECT to such items being distributed in accordance with any list that I may leave.
4.2 I LEAVE UNTO my son Craig the following –
4.2.1 The property ‘Fairfield’ of approximately 600 acres debt free. Craig is to take possession of the property as from the 1^st February after the date of my death on the basis that until that date Scott is entitled to farm the farmlands and be entitled to all income after the payment of all expenses.
4.2.2 Stock to the value of $50,000.00.

4.3 I LEAVE UNTO my son Scott the following –
4.3.1 The property ‘Parkvale’.
4.3.2 The two thirds my spouse and I own of ‘Fairfield’.
4.3.3 Interest in any farming business, capital, loan and beneficiary account, plant and livestock, FMD’s but subject to –
(a) Payment of the partnership debt which is approximately $300,000.00 as at the date of my Will.
(b) Scott transferring at his expense the property known as ‘Fairfield’ to Craig.
(c) the payment of the ‘Fairfield’ debt of approximately $426,000.00 as at the date of my Will.
(d) My son will be entitled to the income from the farming business until the 1^st February after the date of my death and then the stock to the value of $50,000.00 is to be delivered to Craig.
(e) Should my son Scott sell, divorce or enter into a property settlement under the Family Law Act or De Facto Relationship Act then he is to pay the sum of $250,000.00 to each of my other three children. This clause applies until the 1^st February, 2017.
(f) My son Scott shall be responsible for funeral and estate expenses.

4.4 I LEAVE the balance of my estate including shares, superannuation, houses subject to any debts owing in relation to the houses equally to my daughters.
4.5 Should any daughter be living in one of the houses then that daughter shall have the option to take the house as part of her share subject to the payment of the debt.
4.6 SHOULD either brother wish to sell or lease then they must give their other brother at least six months written notice and settlement or the commencement of the lease will start on the 1^st February after the expiration of that six months notice subject to the following conditions:
(a) Rent or purchase price will be market value.
(b) If market value cannot be agreed upon then the price will be determined by an independent registered valuer.
(c) The option must be accepted by notice in writing.”

It is important to notice clause 4.3.2. Neither Neil nor Janet was a registered proprietor of Fairfield and, except for a brief moment at the final hearing, there was never any suggestion that it was partnership property. It is obvious that the reference to Fairfield in this clause should have been to Miltons which, ex hypothesi, the surviving spouse would own as to two-thirds upon the other’s death. This is after all what the February 2007 Wills had provided. The balance of clause 4 treats Fairfield, correctly, as being owned by Scott.
Subject to this error, the overall scheme of the October 2007 Wills so far as the farm was concerned was the same as that set out in the February 2007 Wills.

August 2016 Will

By August 2016, Janet had died and Neil was in his eighties. An air of rancour and mistrust had settled upon the Macaulay family. There is a significant body of evidence as to the detail of the disagreements that existed among the Macaulay children, including as between Craig and Scott about what each believed they should inherit.
On 26 August 2016, Neil made a new will (the 2016 Will) by which he left the whole of his estate to all four children in equal shares. This 2016 Will was prepared by a new solicitor, Mr Graham Billing of Graham Billing & Co in Orange.
This was a significant departure from the scheme of the 2007 wills. From Scott’s point of view, it also represented a serious departure from what, according to his evidence, his father had always told him would happen on his death.
A prominent aspect of the second and third defendants’ evidence was that the 2016 Will represented a division of Neil’s estate for which Scott, for a time at least, positively advocated and to which he actually agreed. For reasons I will explain, I do not accept that evidence. Neither Neil nor any other member of the Macaulay family could sincerely have believed that Scott wanted or agreed to a four-way split of Neil’s estate, including the farms, in August 2016.
As will be seen, Craig believed that this will was an “interim will” designed to stay in place only until Scott turned 55. As I will explain later in these reasons, there is also evidence to suggest that Neil considered this will to be an interim measure.

August 2018 Will

Neil’s final will was executed in the presence of Mr Billing on 10 August 2018 at Orange. It is this will that has been admitted to probate.
As I have already mentioned at [8] above, under the 2018 Will, Scott is to receive the Endeavour Place property but the whole of the rest of Neil’s estate, including the entirety of Parkvale and his interest in Miltons, is to go to Christina, Tracey and Craig in equal shares.
Also as mentioned above, and as may be expected, Scott contends that this 2018 Will represented a further serious departure from what he had been promised and from the assumption upon which he claims to have relied to his detriment for many years.

The facts in more detail

Before addressing the facts in detail, it is appropriate to say a few things about the evidence generally.

Some preliminary observations about the evidence

First, the parties led a significant amount of affidavit evidence. The text alone of the affidavits came to over 500 pages. The volume of testamentary evidence exceeded the volume of centrally relevant documents by a considerable margin. The defendants in particular approached the evidence as though the proceedings involved a roving commission of inquiry into all aspects of their relationships with Scott over a 15-year period. Much of this evidence was of only marginal relevance to the actual issues in dispute. It included, for example, evidence about Scott using a partnership credit card in October 2005 to buy two pairs of jeans, the good deals on tires Phillip Ford could get from Curtis Bros in Glebe when he and Tracey were dating, and the circumstances in which Ann-Maree received her car in the property settlement with Scott (including whether it was a black or a silver Commodore).
I have not found it necessary to resolve all of the factual disputes between the parties that are the subject of so much back and forth in their sworn affidavits. The parties wisely confined the issues at trial to the real issues in dispute, being:

In respect of Scott’s claims over Parkvale and Miltons:

Whether Neil made the representations (or whether he induced the assumption) for which Scott contends.

Whether Scott relied to his detriment on the representations or the assumption such that it was unconscionable for Neil to depart from them.

The basis on which the Partnership should now be wound up. This issue involved three principal questions identified at paragraph [14] above. There was originally also a fourth question, namely whether accounts should be taken on a wilful default basis on the footing that Scott had physically assaulted his father, but the defendants did not press this point in final submissions.

As will be seen, the resolution of all of these issues involves a detailed consideration of what happened in the long series of meetings with various financial and legal advisers between late 2014 until the middle of 2017, all of which involved discussions about Neil’s testamentary intentions. Neil attended most but not all of these meetings. The evidence about these meetings (in particular, how Neil’s testamentary intentions evolved over the final years of his life) was also relevant to Scott’s alternative claim for provision under s 59 of the Succession Act.
Secondly, some witnesses gave evidence as to conversations and events that occurred a long time ago. In particular, several of the representations on which Scott’s case depends were, on his evidence, made over a long period of time and were not written down. In Coster v Coster [2024] NSWSC 1104 at [50]-[53], I referred among other matters to the decision of Black J in In the matter of Hillsea Pty Ltd [2019] NSWSC 1152 at [16]-[22], where his Honour helpfully collected and explained the authorities on how the Court should approach the evidence of statements made long before the evidence is given, of a witness whose account is uncorroborated, and where the witness would be a beneficiary of the evidence.
As in Coster v Coster, I approach my assessment of the evidence as to such matters in the light of what was said by Black J in In the matter of Hillsea Pty Ltd. As in that case, I particularly have regard to what was said in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] by Gleeson CJ, Gummow and Kirby JJ:

“Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical.”

My description of the facts set out below represents my findings on material issues of fact. I will not generally set out the evidence on which my findings are based, save for those matters where it is necessary to do so in order to explain my findings about significant discrepancies or disagreements in the evidence.
I will deal with Scott’s evidence about his father’s representations in a slightly different way. I will first set out Scott’s evidence as to what Neil said. I will then turn to the other facts in issue and, having made findings as to those matters, I will return to the question of whether or not to accept Scott’s evidence in the light of all the other facts and having regard to the defendants’ various submissions as to the reliability of Scott’s evidence and the inherent likelihood, or unlikelihood, that the representations were made.

Scott’s evidence about the representations

Scott’s evidence as to the setting in which the relevant representations were made was as follows.
For a period of over 25 years, Scott says that he worked with Neil (and with Janet while she was alive) in the operations and management of the Partnership. The central operations of the Partnership, including the homestead, machinery and infrastructure, were located at Parkvale. During this period of over 25 years (but apart from the period from 2006 or 2007 to 2012 where Scott worked evenly between the mines and the farm), Scott worked with Neil almost every day, performing cropping and livestock activities and engaging in all of the planning decisions for the farms. This work involved regular meetings between Neil and Scott (and at times, with agronomists and stock and station agents as well) at the Parkvale homestead to discuss decisions regarding such things as real property purchases, grain and wool sales, blook lines of livestock, purchases and sale of seed and grain, purchases of fertiliser, long-term soil agronomy and purchases of machinery and infrastructure. Over this 25-year period, Scott and Neil also attended meetings with insurers and financial managers to discuss the management of the partnership business.
Scott said that it was in this setting that Neil would say to him on a regular basis over this 25-year period that the farms would eventually belong to him.
Scott says that the nature of Neil’s oral representations up until 2007 was that he would inherit, receive or retain all of the farms, being Parkvale, Miltons and Fairfield. From 2007, however, he says that these representations changed from him ending up with all three farming properties, to him just receiving Parkvale and Miltons. Particular examples of Neil’s representations which Scott gave are set out below.
In 1994 when Miltons was purchased, Scott says that Neil said to him words to the effect:

“[Miltons] is a long-term investment that will ultimately belong to you in the future.”

In 1999, on the purchase of Fairfield, Scott recalls his father saying to him words to the effect:

“This is yours – at the end of the day you are going to get it anyway – so why should I put my name on it.”

He also recalls another conversation with Neil in the early 2000s in which they discussed changing blood lines of sheep. He says that his father said words to the effect:

“Changing the blood lines will maintain and continue the livestock on the farms (being Parkvale, Miltons and Fairfield), and improve our ability to control and manage the farm debt. Changing bloodlines will also ensure the ongoing viability of the farms, which will ultimately go to you in the future.”

Scott referred to several representations made by Neil at meetings in Forbes with Mr Christopher Haggerty and Mr Nick Turner during the 2010/2011 refinancing with Rabobank, to the effect of:

“Scott is the next generation to run the farms and service the Partnership’s debt.”

Scott also said that his father made a representation to him in 2013 after Janet died, in reference to Janet’s share in Miltons:

“Well, this is going to be yours one day anyway.”

From about 2005 to 2017, Scott said that Neil would say in meetings with Mr Ian Wright and Ms Karen Wright of AUSURE Insurance in Orange:

“The farm and the business will be…Scott’s in the future.”

From about 2008 to 2017, Scott said that Neil would say in meetings with Mr Peter Yelland (the Partnership’s agronomist) that:

“Parkvale will belong to [Scott].”

In further annual reviews in respect of the Rabobank facility from 2010 to 2017 most likely held in Forbes, Neil would say to Mr Haggarty and Scott:

“Scott is the next generation to continue running Parkvale and service the Partnership’s debt. He will ultimately have these properties to continue operating the Partnership.”

Scott’s evidence was that from 2010 to 2017, in meetings with Mr Geoffrey Rice (the Partnership’s stock and station agent), Neil would say:

“Parkvale Pastoral Co and the farm (Miltons and Parkvale) will continue with Scott into the future. Parkvale will ultimately belong to Scott.”

The making of the February 2007 Wills

On 12 February 2007, Neil, Janet, Scott, Craig and Christina travelled to Coolamon, near Cootamundra, to meet with Mr Thompson.
The subject of the meeting was succession planning for Neil and Janet. Most likely because of his earlier experience with the acrimonious family dispute involving his own father and brother, Neil wanted his children to participate in his succession planning. He wanted his children to know his testamentary intentions. The immediate impetus for the meeting was that Scott had separated from Ann-Maree and was seeking to resolve a property dispute with her under the Family Law Act.
The fact that Janet also attended the meeting and made a will in the same terms as Neil, and that she did likewise in October of the same year, demonstrates that she also wanted the children to know her testamentary intentions. It would have been no comfort to Neil, who particularly cared about this issue, if the children knew the content of Neil’s will but did not know the content of Janet’s. There is a fairly strong inference to be drawn that Neil and Janet wanted the content of their February 2007 Wills as well as their later October 2007 Wills to be clearly understood and, ideally, agreed to by their children.
I have already described the overall scheme of the February 2007 Wills. However, it is important to note that there was an alternative testamentary scheme discussed amongst the family in the 12 February meeting so far as the farming properties were concerned. That other testamentary scheme, which was described as “Option 1” (“Option 2” being the scheme ultimately adopted) involved the properties being divided as follows:

Scott would inherit Parkvale plus two-thirds of the plant and livestock and assume two-thirds of the partnership debt on condition that he transfer clear title to Fairfield and his one-third interest in Miltons to Craig.

Craig would inherit (or receive from Scott) Fairfield plus Miltons, as well as one-third of the plant and livestock on condition that he assume one-third of the partnership debt.

Option 1 therefore involved Craig receiving around 1,065 acres of land, being around one-third of the combined farmlands, but becoming a one-third partner in the Partnership and assuming a corresponding amount of debt. The partnership debt at the time seems to have been about $300,000. The total value of plant and livestock at the time (at least for the purposes of the discussion in February 2007) seems to have been about $450,000.
The prospect of “inheriting” one-third of the farming properties, or about 1,065 acres, is a notion that assumed enormous significance for Craig. It is a notion that animated all of his interactions with his father and with Scott about Neil’s estate throughout 2014, 2015 and 2016, despite the fact that neither his father nor his mother adopted Option 1, either in their February 2007 Wills or their October 2007 Wills.
In fact, the reason why Neil and Janet adopted Option 2 was that it better suited Craig at the time. That is because he had at that stage recently purchased a house and a block of land and had a mortgage. Should his parents have died at that point, Option 1 would have saddled him with additional debt. Option 2, on the other hand, involved no debt. It also involved Scott paying him $250,000, at least potentially, pursuant to clause 4.3.3(e) (set out at [75] above) of the typed versions of the February 2007 Wills.
On 19 February 2007, Mr Thompson wrote to Neil and Janet, copying in Mr Twomey, enclosing typed versions of the February 2007 Wills which Neil and Janet had executed at their Coolamon meeting. He described the wills as “interim wills”, and suggested that once Neil, Janet and Mr Twomey were all agreed that the typed version of the wills was accurate:

“a copy of …the Wills be distributed to the kids and if need be a meeting be organized in person or by way of telephone hook up with any of the kids that aren’t available to run through the advantages and disadvantages of the Will so that everyone has a clearer understanding as to what is happening and if anyone has got any concerns they have the right to express those concerns”.

Mr Thompson’s understanding of what Neil and Janet wanted so far as their testamentary intentions were concerned reflects the fact, to which I have already referred, that Neil and Janet wanted their children to know and agree to what was in their wills. They wanted to be transparent about the family succession plan.
Mr Thompson also wrote:

“The Wills have been prepared on the basis of the [principle] that fairness rather than equality is the goal of Neil and Jan. Scott has received the bulk of the farmlands on the basis that Scott has been farming except for a short period of time overseas and at the CSIRO. However there has been a clause included that [states] that should Scott or his estate sell prior to the 1^st February, 2017 then the other children would receive a greater share.”

The letter also contained a document setting out the financial implications of Option 1 and Option 2.
Craig said that even though his father chose Option 2, he in fact intended to choose Option 1. He recalled that Janet said to him in the car-ride back to Parkes:

“Will you be happy with ‘Fairfield’ and ‘Miltons Block[?]’”

In the course of his cross-examination, Craig was adamant that his parents wanted to adopt Option 1 at the meeting, not Option 2. He said that there was a whiteboard on which the options were written and that this was “burn[ed] in [his] mind”.
I am unable to accept that Craig’s recollection of these aspects of the February 2007 meeting is accurate. His recollection of his parents’ testamentary wishes is contradicted by the February 2007 Wills executed that same day and by the correspondence from Mr Thompson. I have no doubt that the February 2007 Wills correctly reflect the testamentary wishes of both Neil and Janet at the time they were made.

April 2007 – property settlement; alleged assault

On about 16 April 2007, Scott and Ann-Maree reached a property settlement.
A theme running through the evidence was that the 2007 wills had somehow been orchestrated so as to give the appearance that Scott’s financial position was worse than it really was, in order to improve his prospects of obtaining a favourable property settlement with Ann-Maree.
I am not able to identify any evidence that seriously supports this notion. The true position was far more mundane: the prospect of a property settlement with Ann-Maree was a reason why Neil and Janet felt it important to identify clearly what Scott could expect to receive on his parents’ death, as well as the property he would be required to transfer to Craig. As I will explain, Scott’s position was somewhat worse under the 2007 wills compared to what he had originally been promised, but that is a matter about which Scott has never complained and which, in any event, likely benefits the defendants.
At around this time, Christina visited Parkvale and claims to have witnessed Scott assaulting Neil. According to Christina, she witnessed Scott launch himself at Neil and punch him “around the chest and head” in an unprovoked attack. She says that Janet came out and broke them up. Scott was briefly cross-examined about this incident but denied that it occurred. He said that he did not assault his father on this or any other occasion. Christina was not asked about this issue in cross-examination.
It was unclear whether I am asked to find that the various alleged assaults, including this alleged assault, actually occurred. Despite the prominence which the alleged assaults assumed in the defendants’ evidence, there was a distinct retreat in final submissions from the contention that I should find that each assault occurred. They instead submitted in final written submissions that “when viewed as a whole, it ought be accepted that Scott had assaulted his father and behaved aggressively towards him over a period of time…”. In final oral submissions made very shortly after that written submission, the second and third defendants retreated even further. They submitted that the only fact I really needed to find in relation to the assaults (to the extent that it was even relevant) was that Neil had a state of mind that he had been assaulted and therefore the defendants were justified in believing that the assaults had occurred, because Neil had told them so. I am not entirely sure what I was finally asked to find in relation to the assaults. I am however not prepared to make a global or overall assessment of the evidence about the assaults along the rather unclear lines identified by the defendants. An allegation of assault is a serious matter. The appropriate course, in the circumstances, is for me to make findings about each incident according to the evidence proffered in relation to it.
So far as this incident is concerned, I can accept that Christina recalls matters as she has set out in her affidavit, but I am not prepared to place decisive weight on her recollection in circumstances where Scott was asked about the incident and gave a cogent denial, and where there was no other evidence as to the incident. There was no suggestion, for example, that Christina had ever mentioned this alleged assault to Scott or to her other siblings. I am therefore not persuaded that the incident occurred as Christina recalls it.

The October 2007 Wills

The typed copies of the February 2007 Wills attached to Mr Thompson’s letter of 19 February contained the error to which I have already referred. Despite what was contained in the handwritten will, clause 4.3.2 of the typed version mistakenly referred to Fairfield instead of Miltons. However, nobody appears to have noticed because on 15 October 2007, Neil and Janet returned to Coolamon to execute new wills which contained that same error. They also executed powers of attorney and appointed enduring guardians, being each other and their children.
It appears that Mr Thompson’s suggestion of circulating the February 2007 Wills for consideration by the children was taken up, because both Christina and Tracey recall seeing them. However, neither Scott nor Craig could recall seeing them at the time.
The family again travelled to Coolamon to meet with Mr Thompson in October 2007. It is unclear whether Tracey travelled with them, but nothing turns on this. She appears to have signed an acceptance of her appointment as attorney on 9 April 2007, although this is difficult to reconcile with the date next to her signature on the appointment of enduring guardian being 15 October 2007 (the same date next to Christina, Craig and Scott’s signatures on both appointments). In any event, I infer that at least Christina, Craig and Scott were in attendance on 15 October and that, as previously, there was discussion among them as to the content of Neil and Janet’s wills. I also infer that, as previously, Neil and Janet wanted their testamentary wishes to be known and understood by their children. I infer that this was important for them and that they understood it to be important for their children, particularly Scott and Craig, who Neil and Janet at that stage expected to inherit the farms.

Scott takes work off the farm

In late 2006 or early 2007, Scott took a job with Pybar Contractors at the North Parkes Mines. He remained employed there until 2012. He says this was due to the drought and the ensuing downturn in the Partnership’s finances, which meant that he was earning only minimal income as a partner.
Scott’s sisters refute the suggestion that economic circumstances forced Scott to take on outside work. Whilst they both accept that there was a severe drought that affected the farming operations, they contend that Neil and Janet encouraged Scott to get another job as a way of assisting him with personal issues caused by his failing marriage.
I do not accept that that is an appropriate way to characterise what occurred. The Partnership did suffer a significant drop in income during the period that preceded Scott working in the mines. The total income for the farm in the 2006 financial year was $601,454.10. In the 2007 financial year this dropped to $407,948.53. In the same years, the Partnership went from making a pre-tax profit of $106,019.74 to making a loss of $3,560.48. Scott’s total drawings from the Partnership decreased accordingly. In the 2006 financial year, he drew $64,738.72; in the next year his drawings dropped to $36,413.83 and in the year after they dropped further to $15,100.56.
By far the most likely explanation for Scott taking work off the farm is that economic circumstances forced him to do so. Scott had been a farmer all his working life. Following his separation, his personal financial circumstances were strained, as were the circumstances affecting the Partnership generally. It may well be that Neil and Janet also believed it would be good for Scott to work elsewhere in those circumstances. Whatever the motivation, I do not regard the fact that Scott took work off the farm as signalling a general retreat from farming.
At the mines, Scott worked an “even” roster, meaning that the number of days he spent working on the mines was equal to the number of days he had off. He worked 12-hour days, either as day shifts or night shifts.
Scott says that on his days off from the mine he devoted himself entirely to his work on the farm. In cross-examination Scott did admit that he did have some days off work altogether from time to time but maintained that he generally worked evenly between the mines and the farm during the period in which he was employed at the mines.
All parties accept that Scott did continue to work on the farm during his days off from the mines. However, Scott’s siblings suggested that his role during this period was subordinate to Neil’s and that Scott was only one of a number of people who assisted in the running of the farms at that time. In particular, Tracey says that she and her husband Phillip took an active role in assisting Neil with farming. Craig maintains that he “would assist with the farm regularly and often” and that Scott’s work on the farm dropped significantly whilst he was at the mines. Christina says that her son Paul Kronenberg also assisted.
Scott accepts that some of the family did help out from time to time during this period, but he denies that his participation in the farming activities dropped significantly.
Whilst I accept that other members of the family did help on the farm during this period, I find it most likely that Scott did, in fact, maintain a very heavy farming workload despite his work at the mines. He lived on Parkvale throughout this period, unlike the other deponents who claim to have knowledge of his level of work there. For the entire period that Scott was working on the mines, Phillip and Tracey were living in Orange and Phillip was working on his own family’s farm. Craig was working full-time at North Parkes Mines and living in town, off the farm. For most of this period from 2007 to 2012, Paul was still school-aged, and likely had other commitments to balance with farmwork. His parents (Christina and Arno) also lived in town in this period.
Ann-Maree gave evidence of Scott’s high level of commitment and hard work with which he approached farming. She said, and I accept, that his commitment to the farm, including through financially difficult periods, produced a lot of stress and was a cause of the breakdown in their relationship. Mr Richard Green, a neighbour, also gave evidence of Scott’s skill and dedication to farming.
I find that the Partnership’s continued success during the period in which Scott was employed at the mines was to a significant degree due to the fact that Scott continued to work long hours on the farm. I find that this period was one in which Scott worked exceptionally hard to ensure the Partnership’s ongoing viability. The business of the Partnership did not suffer during Scott’s period of offsite work. Instead, by the 2010 financial year, the Partnership’s income had recovered to its pre-drought levels and was making a healthy profit.

Rabobank refinancing in 2010

In late 2010 or early 2011, Scott, Neil and Janet came to the joint decision to refinance the various facilities they had with CBA. Some of these facilities were for personal loans and others were for partnership borrowings. Neil and Janet had a loan facility with a balance of $420,000, which had been taken out to purchase the Endeavour Place property. Scott had a loan with CBA for funds used in purchasing Fairfield. The Partnership also owed money to CBA. The 2010 statements show this liability differently but at least in 2006 and 2008, the accounts showed two separate liabilities owing to CBA, one for an “overdraft” facility and another entitled “bank finance”.
Rabobank offered an all-in-one debt facility which provided an interest only loan with no compulsion to continually pay down the debt. Mr Haggarty, the banker at Rabobank who assisted with the refinance, gave evidence in the proceedings. He said that Neil and Scott told him that they were not happy with the service they were receiving at CBA. He remembers that it was their intention to pay down their debt as much as possible to increase their equity in order to buy a new neighbouring property. Scott says they were attracted by the opportunity to consolidate the debt into one account.
Whatever their motivation, on 27 January 2011, Neil, Janet and Scott signed an acceptance and acknowledgment with Rabobank to facilitate the refinancing. An aspect of the arrangement was that Parkvale and Fairfield were mortgaged to Rabobank to secure the facility.
As part of the Rabobank refinancing arrangements, the Partnership took over the personal debts of Neil, Janet and Scott, namely the debts used to purchase Endeavour Place and Fairfield. In the partnership accounts these debts were incorporated into the Rabobank facility. Simultaneously, corresponding loans from the Partnership to Scott, representing the value of his old CBA loan, and to Neil and Janet, representing the value of their old CBA loan, were recognised as assets of the Partnership. Accordingly, the partnership accounts for 2011 records non-current receivable loans named “Loan: Scott Macaulay re: Fairfield” in the amount of $453,288.11 (being the Fairfield debt) and “Loan: NJ & JT Macaulay (Refinance Loan)” in the amount of $420,000 (representing the Endeavour Place debt). The Fairfield debt remained on the financial statements of the Partnership in subsequent years. The Endeavour Place debt was apparently repaid by journal entry in 2014/2015, being “set off” against Neil and Janet’s partners’ funds which, at the relevant time, had a significant credit balance. For this reason, the Endeavour Place debt no longer appeared in the financial accounts from the 2015 financial year onwards.

Janet dies

Janet died on 18 August 2012.
On 14 August 2013, probate in relation to Janet’s 15 October 2007 Will was granted to Neil as executor of her estate. Janet left her whole estate to Neil. The inventory of property attached to the grant of probate has been summarised at [43] above. There seem to have been no immediate steps to administer Janet’s estate. For the three years following her death, it appears that all parties treated Neil as executor of her estate as continuing to own her interest in the Partnership.

Mr Twomey suggests that the October 2007 Will be revisited

Mr Twomey was Neil’s (and the Partnership’s) long-term accountant. He had acted for Neil, in one capacity or another, over several decades. Neil had engaged the firm at which Mr Twomey later worked from as far back as the early 1960s.
On 22 December 2014, Mr Twomey wrote to Mr Billing, the solicitor who had recently begun to act for Neil, in relation to Neil’s October 2007 Will. The letter summarised a discussion that Mr Twomey had had with Neil and Scott on 16 December 2014. As with almost everything else, the parties were in dispute as to why Mr Twomey was looking at the October 2007 Will in the first place. It is however quite clear that, as Scott pointed out, the impetus for the discussion with Mr Twomey was Neil’s health. He was by this stage 79 years old and had been unwell. It is hardly surprising that Neil would ask his long-term trusted adviser to review his October 2007 Will. It would be equally unsurprising if Mr Twomey had instigated the review for the very same reasons.
Mr Twomey’s letter of 22 December 2014 raised a number of fairly straightforward issues concerning the October 2007 Will. For example, he pointed out that clause 4.2.2, which provided for Craig to receive stock to the value of $50,000, should probably be revisited to provide that Craig would be given a percentage of stock instead. He pointed out that the reference to Fairfield in clause 4.3.2 was a mistake and should instead be to Miltons. Mr Twomey also noted that the acreage to be held by the two brothers (assuming the transfer of Fairfield to Craig, as was envisioned by the October 2007 Will) would be approximately 80% by Scott and 20% by Craig. It is, no doubt, for this reason that he suggested that clause 4.2.2 should refer to 20% of stock, as opposed to a dollar value.
I am satisfied that Neil’s testamentary wishes as at December 2014 had not materially changed since 2007. It is apparent from the terms of the 22 December letter that Neil still wished for his sons to end up owning the farms in the same manner as had been envisioned in 2007. In reaching this conclusion, I have had particular regard to the fact that Mr Twomey gave evidence in the proceedings and was cross-examined. He was a thoughtful witness who expressed himself with care. There were many documents prepared by him in evidence, including file notes and correspondence. In all of that material, it is apparent that he paid careful attention to Neil’s instructions and gave serious consideration to his interests, both in his individual capacity and as a partner in the Partnership. His attempts to resolve the present dispute, which attempts are evident from the correspondence, were level-headed and fair-minded. The general antipathy shown towards him by the defendants, particularly by Craig who perceived him to be acting in Scott’s interest, was unfounded. I have no doubt that his 22 December 2014 letter faithfully reflects what Mr Twomey was instructed as to Neil’s testamentary wishes at that point.
The course of discussion and correspondence among the family members about Neil’s existing October 2007 Will and what he should do about updating it quickly devolved into a quagmire of claims and counter-claims, especially as between Craig and Scott, all aired in an atmosphere of hostility and mistrust. As had been the case in 2007, Neil remained keen for the question of inheritance to be openly discussed and to be something about which everyone should agree. This meant that there were many meetings between family members and their advisers at which the issues were discussed.

The June 2015 meeting

On 11 June 2015, there was a meeting in Orange attended by Neil, Scott, Christina, Craig and Tracey, together with Mr Twomey and Mr Billing. The meeting was arranged by Mr Twomey, apparently at the request of Scott. Prior to the meeting, Mr Twomey sent an email explaining that the purpose of the meeting would be “to consider the options going forward after 1 July 2015” and attaching a note setting out some issues concerning the distribution of partnership income after 1 July 2015. He referred to “discussions” (which was likely a reference to discussions with Neil and Scott as well as with Mr Nathan Robinson, who was the accountant at Twomeys who was primarily responsible for preparing the partnership accounts) about reconstituting the Partnership. It is relevant to note the following parts of the note:

“NOTES RE MEETING WITH NATHAN TO DISCUSS MACAULAYS CHANGES AT 1 JULY 2015
Now that we do not have the opportunity to distribute the partnership income 3 ways after 1 July 2015 we need to reassess how the farming operations should continue after this date.
Our discussions centred on a reconstitution [of] the partner[ship] Parkvale Pastoral Co. [P]resently the partners are:
Neil Macaulay 1/3
Estate on Jan Macaulay 1/3
Scott Macaulay 1/3
The [s]hare of the partnership of the late Jan Macaulay transfers to Neil her spouse. If no alterations are made to the partnership, income will split 2/3 Neil and 1/3 Scott. This will resolve in unequal profit distribution for both taxation and personal reasons.
With this in mind we are proposing that consideration be given to the partnership being restructured from 1 July 2015. We will have Scott 50% Neil’s Family Trust 50%.
The structure of the trust we are recommending is for Neil to be the trustee and the beneficiaries are himself plus his children and their issue. Also as beneficiaries we should include trusts or companies which are controlled by any [beneficiaries].
The partnership should run for a period of time and we recommend that it does so for 1 year. Then the Parkvale Pastoral Co can be [taken over] by the family trust and operate as a family trust in the farming business...”

Mr Twomey was correct to raise his concerns about the Partnership. Janet had died on 18 August 2012 and it seems partnership income had, for the following three years, been shared equally among Neil, Scott and Janet’s estate. However, if Janet’s partnership interest had not been dealt with by the 2016 financial year, the whole of the share of partnership income held by Janet’s estate would begin to attract tax at the highest marginal rate: see s 14 of the Income Tax Rates Act 1986 (Cth).
On 10 June 2015, Mr Twomey sent further correspondence to Scott, Mr Billing and Mr Robinson with a proposed agenda for the meeting. Mr Twomey suggested that Scott should circulate the agenda to his siblings but Scott could not recall if he had done so. The four agenda items were as follows:

“1. Discuss Neil’s new will and show errors in old will. Go through suggested changes as per Twomeys correspondence. Get input from Graham Billing re his meeting with Neil and the girls.
2. Look into the structure of ‘Parkvale Pastoral Co’ going forward from 1 July 2015. Do we continue with a partnership[?] What will Neil do with the share from Jan[?]
3. Consider the use of a Family Trust for the farming operations.
4. Consider intergenerational land transfers to siblings who wish to carry on primary production.”

It seems that all of these issues were discussed at the meeting.
Scott’s recollection of this meeting was a little blurry, in the sense that when he prepared his first affidavit he was mistaken as to the year in which it occurred. However, I am satisfied that the substance of what he recalls that Neil said (as set out below) is correct:

“100. During the meeting I recall that we discussed clause 4.3.2 of the Will. Dad said to everyone at the meeting words to the effect of:
‘What Scott has (referring to Fairfield) is to go to Craig, and what I have (referring to Parkvale and his two-thirds interest in Miltons) is to go to Scott. This clause has the wrong property. Miltons goes to Scott, not Fairfield because Scott owns Fairfield.’

101. Dad also said words to the effect:
‘The house in Orange is to go to Tracey (who was living in it at the time). My share in the super is to be split between Tracey and Christina. The Parkes house (being the residence that Dad purchased in 2005) is to go to Christina.’”

He then recalls that Craig said in response to Neil:

“That is not what I wanted. I want a third of the total area of the farms”.

Craig’s position was that, on Neil’s death, he should inherit or otherwise come to hold a third of the total farmlands, being an area of 1,065 acres, together with a third of the assets of the Partnership, but without any partnership liabilities. This was significantly more than what Neil had provided him in his October 2007 Will. Craig’s evidence was that he said the following at the 11 June 2015 meeting:

“Dad and I have had discussions and he told me he wants to have a third of the farmland and of the Parkvale Pastoral Company assets…”

However, even Craig did not suggest that this was a proposition with which anyone at the meeting agreed. Scott’s diary entries following this meeting show that he did not consider there to have been any agreement as to what Neil’s will should provide. For example, his diary entry on 15 June 2015 records:

“Discussions with DAD & Craig Re Will (no agreement)…”

I accept that Craig said the words he claims to have said at this meeting, as set out above. But I do not accept that Neil agreed with that proposition, either at the meeting or shortly thereafter. So far as Neil’s testamentary wishes were concerned, they remained as expressed in the October 2007 Will, save that he was clearly amenable to further discussion about the division of the farmland in the hope of reaching some agreement with his children.
It is also relevant to note Scott’s response to what Craig said. As the defendants pointed out, Scott did not couch his response in terms of a deviation from some longstanding promise that Neil would leave him the whole of the farms. Rather, Scott considered that Craig’s position was “unfair” in that it represented much more than what had been provided to Craig under the October 2007 Will. This distinction has some significance for the defendants’ case.
Finally, I note that Neil had been quite unwell in the period leading up to the meeting. He attended but was subdued and contributed little to the discussion.
The question of what to do about the partnership interest held by Janet’s estate was the subject of a further meeting with Mr Twomey during that week. On 22 June 2015 he sent a further email to Mr Billing about that topic which I will set out in the context of dealing with that aspect of the matter.
In July and August 2015, Neil, Craig, Christina and Tracey met with Mr Billing to discuss Neil’s testamentary wishes. Craig gave evidence to the effect that Neil indicated in those meetings that his wishes had changed. However, as I will explain, to the extent Neil expressed any such change to Scott it seems only to have been along the lines of what was communicated at the 30 September 2015 meeting, which I will describe next.

The 30 September 2015 meeting

Neil and Scott met with Mr Twomey again on 30 September. Mr Twomey’s notes of this meeting deal, in part, with the question of the Partnership. I will set out that part of his notes in its proper context later in these reasons. In relation to Neil’s will, his notes include the following:

“Neil’s Will and Land Transfers
It was decided that we should look at the situation of land transferred under Neil’s Will.
Presently the Will is very confusing and we have had discussions with all parties and Graham Billing (a Solicitor from Orange) in this regard.
After discussing all matters with Scott and Neil today, it has been decided that we do a few essential things:
1. A new Will needs to be prepared, and in that Will, Neil should ensure that Craig receives approximately 800 acres of land for his benefit upon his passing.

It seems inherently unlikely that Neil would have made the “paper debt” representation after late 2010 or early 2011. In circumstances where Scott nonetheless signed off on financial statements in which the debt was recorded after this point, I am not persuaded that the representation was actually made.
Even if I had accepted that Neil did make such a representation, I would have found that Scott had not relied to his detriment on that representation. I am not able to identify what Scott did in reliance on the representation that was to his detriment and that would now render it unconscionable for the Partnership to assert the liability. It is true that he has a liability to the Partnership, but that does not amount to detrimental reliance. It just means he was mistaken about the existence of the liability. The argument that, by reason of the promise, he lost the opportunity to correct the accounts fails for the same reason.
I am therefore unable to accept the submission that Scott’s liability to the Partnership for the Fairfield debt was only a “paper debt” or that the estate is in any way estopped from enforcing it. The last period for which there were finalised and signed partnership financial statements was for the year ending 30 June 2017. At that point, the accounts showed a liability of $453,288. In my view, this amount was payable.
The defendants addressed no submissions to the question of whether Scott was required to pay interest on this loan. There is no evidence that it was repayable with interest. I find that it was not. This is consistent with the way other loans to the partners were treated in the accounts, such as the loan to Neil and Janet in respect of the Endeavour Place property.

Was Miltons partnership property?

As I pointed out in Fragar v Fragar [2024] NSWSC 193 at [124], the starting point for determining whether an asset is partnership property is the proposition that “the acts and intention of the parties ... determine finally and ultimately the question whether property owned by a partner becomes partnership property”: O’Brien v Komesaroff (1982) 150 CLR 310 at 322; [1982] HCA 33.
It is also necessary to have regard to ss 20 and 21 of the Partnership Act, which are as follows:

20 Partnership property of firms other than incorporated limited partnerships
(1) All property, and rights and interests in property, originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership, and in accordance with the partnership agreement.
(2) Provided that the legal estate or interest in any land which belongs to the partnership shall devolve according to the nature and tenure thereof, and the general rules of law thereto applicable, but in trust so far as is necessary for the persons beneficially interested in the land under this section.
(3) Where co-owners of an estate or interest in any land, not being itself partnership property, are partners as to profits made by the use of that land or estate, and purchase other lands and estate out of the profits to be used in like manner, the land or estate so purchased belongs to them, in the absence of an agreement to the contrary, not as partners, but as co-owners for the same respective estates and interests as are held by them in the land or estate first-mentioned at the date of the purchase.
(4) This section does not apply to or in respect of an incorporated limited partnership.

…
21 Property bought with partnership money
Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.

The reference here to “contrary intention” is significant in the present case. It is common ground that the Partnership was governed by the terms of a partnership agreement, which was in evidence. I have already set out clauses 10 and 12 of that agreement at [25] above. Clause 10 provides for the Partnership to use the land owned by partners in the business of the Partnership, on the conditions there set out. At the time the partnership agreement was executed, that clause would have been understood to apply to Parkvale, which was owned by Neil and Janet.
The reference to lands “brought under the provisions of the agreement” in clause 12 would have been apt to include Parkvale. But clause 12 is a powerful indication that the parties also did not intend other land held by partners to become partnership property. Rather, the intention was that land owned by partners could be used in the business of the Partnership, subject to the conditions in clause 10, but that it would not thereby become partnership property.
The defendants’ refer, understandably, to the fact that Miltons was purchased using a loan taken out by all three partners and that the loan repayments appear always to have been borne as a partnership expense. That would very often be a powerful reason to conclude that land was intended by the partners to be partnership property, as I found in Fragar v Fragar at [134] (see also Lindley and Banks on Partnership (Sweet & Maxwell, 20th ed, 2017) at [18-03]–[18-04]).
The defendants also pointed to the fact that Miltons was recognised as an asset of the Partnership in its financial accounts. Mr Twomey confirmed that, at least for the 2012 financial accounts, Miltons was recorded under “Land and buildings” on the balance sheet to the amount of $291,000. This value and recording convention was consistent for the 2010 to 2017 accounts, and for the draft 2018 accounts, on the evidence before me.
Clause 12 of the partnership agreement suggests that the partners’ individual ownership interests in Miltons were not intended to become property of the Partnership. The Partnership was arguably always intended to be limited to the earning and sharing of profits from farming, not from ownership of the land on which those activities took place.
However, it is necessary to weigh the evidence as a whole. When regard is had to how the partners acquired Miltons and the way they recorded their interests in it in their partnership financial statements, which must have been presented to banks in connection with partnership financing, I find that they did intend Miltons to be treated as partnership property, despite the terms of clause 12 of the partnership agreement.

The 2016 Agreement about Janet’s interest in the Partnership

It is finally necessary to deal with the question of what happened to Janet’s one-third interest in the Partnership after her death.
Again, it is convenient first to recall the salient facts. Up until Janet’s death in 2012, each of the partners had an equal one-third interest in the Partnership. Janet’s interest in the Partnership was personalty, capable of being dealt with under her will. Under her October 2007 Will, the whole of Janet’s estate was left to Neil absolutely and probate of that will was granted to Neil on 14 August 2013. Neither party made any submissions about the terms of the partnership agreement dealing with the death of a partner.
For the three years ending on 30 June following her death, the parties treated Janet’s partnership interest as still held by Neil as executor of Janet’s estate.
Mr Twomey, at least, seems to have believed that that is what had occurred for the 2013, 2014 and 2015 financial years. The present dispute stems from the steps taken by the parties to sort out what to do for the year ending 30 June 2016 and subsequent years.
The starting point is an email dated 20 May 2015 from Mr Twomey to Mr Billing. This is the email in which Mr Twomey proposed the 11 June 2015 meeting in Orange. In that email he referred to having had discussions with “the Macaulays” about “the need to address ‘Parkvale Pastoral Co’ which is the partnership which operates the farm”. Mr Twomey said that the purpose of the meeting would be “to consider the options going forward after 1 July 2015.”
Mr Twomey attached a note, which I take to be of or in relation to the discussion to which his email referred. The sections of Mr Twomey’s note that are relevant for this part have already been set out at [152] above.
It is apparent that Mr Twomey put the question of what to do about Janet’s partnership interest on the agenda for the June meeting because he realised it needed to be resolved for the upcoming financial year.
Mr Twomey’s email of 10 June 2015, to which I referred at [154] above, included at item 2:

“Look into the structure of ‘Parkvale Pastoral Co’ going forward from 1 July 2015. Do we continue with a partnership[?] What will Neil do with the share from Jan[?]”

It is also relevant to note that no one kept notes of the 11 June meeting. Mr Twomey did not, but said that he believed that Mr Billing was taking notes. However, if Mr Billing did keep notes, none were produced. In any event, the evidence suggests that this matter was indeed discussed at the 11 June meeting, as each of the defendants say that Neil agreed to a 50:50 split at this meeting (though each contend it was to profits only).
Mr Twomey took the topic up with Neil and Scott again at a meeting on 30 September 2015. This is the meeting to which I referred at paragraph [165] above. His note of that meeting includes the following:

“This is a recording in relation to my visit to Neil and Scott Macaulay in Parkes on 30 September 2015.
Transfer of Partnership
It has been decided that from 1 July 2015, the partnership of Parkvale Pastoral Co will now only have 2 partners with equal equity.
1/3 equity that was held by the Estate of Jan Macaulay will now transfer to Neil and Scott equally.
They will now both have 50% equity and this will not require any change to ABN or TFN or banking arrangements as they are jointly and separately liable for any debt of the partnership.
We will need to do the relative transfer of livestock and plant and equipment elections when the 2016 income tax return for the partnership is lodged…”

Mr Twomey’s evidence about this meeting was as follows:

“24. The first matter we discussed was the adjustment of the share of equity in the Partnership between Scott and Neil. As I record in my typed notes, Scott and Neil decided that from 1 July 2015, as the two remaining partners of Parkvale Pastoral Co, they would each have an equal equity in the Partnership.
25. I said to Scott and Neil, words to the effect of:
‘We will need to do the relative transfer of livestock and plant and equipment elections when the 2016 tax return for the Partnership is lodged’.

I explained that this was necessary to ensure that the ATO [does] not assess the transfer at market value. This would have had a serious impact on the income tax for the 2016 year to both partners.
26. Scott and Neil agreed to do this, as I have noted in my typed notes of this meeting on 30 September 2015.”

Scott’s recollection of this meeting was contained in his primary affidavit. He recalled that he and his father agreed that the equity of the Partnership “should be changed….to ½ each for Dad and I”.
On 30 April 2016, Neil and Scott signed a notice to the Commissioner of Taxation in relation to a change in ownership of “all the trading stock of the Partnership as at 1 July 2015” and notifying the Commissioner of their agreement that the provisions s 70-100(4) of the Income Tax Assessment Act 1997 (Cth) will apply in respect of the change. The notice specified that the persons owning trading stock before the change were Neil, Scott, and the estate of the late Janet Macaulay, as to 33.33% each. It specified that the persons owning trading stock after the change were Neil and Scott, as to 50% each.
On the same day, Neil and Scott also signed a notice to the Commissioner of Taxation advising him that there had been a change in the ownership of “all the property of the Partnership on which depreciation has been claimed as at 1 July 2015” and notifying him of their election for rollover relief under s 40-340(3) of the Income Tax Assessment Act 1997. The notice specified that the persons owning property before the change were Neil, Scott, and the estate of the late Janet Macaulay, as to 33.33% each. It specified that the persons owning property after the change were Neil and Scott, as to 50% each.
In an extract from financial statements for the Partnership for the year ending 30 June 2016, the partnership profit was split 50:50 as between Neil and Scott. It is not clear if these were the final accounts for 2016 but I infer that this equal split is the basis on which the financial statements for that year were finalised, because Neil’s individual tax return for that year discloses an identical amount of income from the Partnership. This equal distribution is also reflected in the 2016 values as set out in the 2017 financial statements.
Neil and Scott also split the partnership profit equally for the year ending 30 June 2017.
In draft 2018 accounts, also prepared by Twomeys, the profit is split 50:50. Those accounts also show a movement in the Proprietors’ Funds account in that they show that Janet’s positive balance of partners’ funds had been transferred to Neil.
This last-mentioned fact seems to have spurred the dispute about what, precisely, Neil and Scott agreed concerning the Partnership after Janet’s death. The defendants contend that the agreement was nothing more than an agreement to split profit 50:50 and that this was only for certain years. They contend that, consistently with the fact that Janet’s capital account remained unaffected for some time and was ultimately transferred to Neil, there was no agreement between Neil and Scott about becoming 50:50 partners generally.
The defendants’ arguments about this issue tend to conflate two distinct concepts. It is important to draw a distinction between a partner’s interest in the partnership, on the one hand, and the balance of a partner’s capital, on the other. The former is a description of the extent of the partner’s rights and obligations as against the other partners and in relation to partnership property. The latter is an accounting entry that approximates the partner’s capital, being the sum the partner would be entitled to receive, or would be obliged to contribute, on a notional winding up of the partnership, worked out on the basis of the partner’s percentage partnership interest (among other things) as at the date of the accounts. The latter may be nil or even negative, notwithstanding that the partner has an ongoing interest in the partnership.
As to the first issue, in Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 at 450; [1980] HCA 6, Barwick CJ, Stephen, Mason and Wilson JJ explained that the right to receive partnership profits is not separate and severable from a partner’s interest in the partnership itself:

“The fundamental consideration, as we see it, is that the partner's fractional interest is an entire chose in action; it is capable of division by assignment into further fractions, but it is not capable of division by assignment so that the right to participate in partnership profits which is inherent in the interest is hived off from the rest of that interest. Consequently, a partner's entitlement to participate in profits is not separate and severable from the interest of the partner.”

The right to receive profits is, as their Honours pointed out at 449, “inherent in the partner’s interest in the partnership”, although they noted that this right might be excluded by the partnership agreement. An agreement to split profits equally is, generally speaking, also an agreement to share equally in the partnership.
In the present case, the fact that the parties agreed to split the profits of the Partnership equally for the years ending 30 June 2016 and 30 June 2017 is a powerful reason to conclude that they understood themselves to be equal partners from 1 July 2015. The position would be different if the partners had found some other means of sharing the profits, such as suggested by Mr Ryan, or if they had somehow reached an agreement that the division of profits was not to reflect their partnership interests for the 2016 and 2017 financial years (which the evidence does not support).
The notices signed by each of Neil and Scott on 30 April 2016 demonstrate that they had come to an agreement about the whole of their respective partnership interests, and not an agreement limited to the splitting of profit. That is because the notices related to the partners’ altered interests (ie, altered partnership interests) in partnership property. Had they done no more than agreed to share profits in proportions that differed from their partnership interests, even assuming that to be possible, then there would have been no occasion to notify the Commissioner of any change in the interests they held in trading stock or depreciable assets.
The defendants pointed out that there is no evidence of any agreement as to how to deal with the CGT consequences of their agreement, such as in relation to (for example) Miltons, which was partnership property. That however is not a reason to conclude that the partners did not reach agreement as to their respective partnership interests. It tells me no more than that the potential CGT consequences of the change in partnership interests may have been overlooked.
As to what occurred with Janet’s share of the partnership capital, there is some confusion in the documents. The 2015 to 2017 accounts do not show any movement in the capital accounts to reflect the fact that Neil had inherited Janet’s share of the capital of the Partnership. However, in a letter dated 13 November 2018, Mr Twomey explained that there had in fact been a movement in the capital accounts in the 2017 financial year and that this occurred by way of a ledger entry, a copy of which was provided. The ledger entry shows that the balance of Janet’s capital (or “Proprietors’ Funds”) account, being the sum of $249,223.19, was transferred to Neil’s capital (or “Proprietors’ Funds”) account on 30 June 2017.
The defendants relied on a report prepared by an expert accountant, Mr Weston Ryan, on these issues. The letter of instruction from Mr Billing to Mr Ryan dated 2 August 2022 was relevantly as follows:

“1. Please assume that a meeting at Yates Baker McLean Chartered Accountants in Orange on 11 June 2015 it was agreed that as and from the financial year ending 30 June 2016 the profits of Parkvale Pastoral Co partnership would be distributed 50/50 between Neil Macaulay and Scott Macaulay. Please assume also that there was no agreement to change the equity shares (or capital accounts) of the partners in Parkvale Pastoral Co and that the share [of the] late Janet Macaulay in the partnership passed to Neil Macaulay pursuant to her Will.
Q. Would such an agreement and this, change to the equity accounts of the partners have required tax election documents.
2 Q. Was the agreement to change the profit distribution of the partners in Parkvale Pastoral Co from 2/3 to Neil Macaulay and 1/3 to Scott Macaulay to 50/50 reflected in the Financial Statements of Parkvale Pastoral Co for the years ended 30 June 2015, 2016 and 2017.
3 Q. Was there any change in the equity (or capital accounts) of Neil Macaulay and Scott Macaulay in Parkvale Pastoral Co to 50/50 recorded in the Financial Statements for the financial years ended 30 June 2015, 2016 and 2017.”

In his report dated 4 August 2022, Mr Ryan expressed the following opinions in response to Mr Billing’s three questions.

An agreement to alter the distribution of profit “would not alter the underlying capital accounts of the partners other than in relation to the distribution of profits.” He pointed out that there were ways of distributing profit to a partner in a proportion different than their percentage partnership interest. He said that this was possible by a partner assigning a right to receive a partnership distribution or by the payment of a “salary”, which is not treated as a deduction for the purpose of calculating the partnership net income or loss under s 90 of the Income Tax Assessment Act 1936 (Cth).

He agreed that the financial statements for the 2016 and 2017 years divided the partnership profit 50:50.

There was “no change in the equity or capital accounts of Neil Macaulay and Scott Macaulay in the financial statements…for the years ended 30 June 2015, 2016 and 2017” that reflected the partners ”each holding a 50% interest”.

These opinions were hardly surprising given the way the questions to him were framed. The proposition inherent in Mr Billing’s first question was that a partner’s percentage interest in the firm must generally align with his or her “capital” account. However, that is not so. In Partnership Law (6th ed, 2020, Bloomsbury Professional) the learned authors Mark Blackett-Ord and Sarah Haren said at 9.3:

“A partner’s capital is his contribution to the partnership capital. It will remain as a book-keeping entry, and will be irrelevant to the annual profit share unless (unusually today) profit share is computed by reference to it or interest upon the capital account has been agreed between the partners. He may not withdraw his capital without his partners’ consent. Its amount remains of little significance until the net assets or liabilities of the firm are distributed or shared on dissolution, when it becomes very important indeed.”

I therefore do not see the continuing presence of an entry for Janet’s partners’ funds in the 2016 and 2017 accounts as revealing much about the present question at all.
As I have already noted, the accounting entries for Janet’s partners’ funds for 2016 reflect that the continuing partners (Neil and Scott) recognised a liability to her estate as at the end of the 2015 year, namely up to the point at which Neil and Scott became equal partners. Mr Ryan seemed to think that the continuing recognition of Janet’s partners’ funds showed that Neil and Scott must not have agreed to anything other than a profit split for the 2016 and 2017 years. However, I cannot accept that conclusion. It elides the distinction between an outgoing partner’s entitlement to capital, which is what these entries seem to represent, and the continuing partners’ interests in the Partnership, including their entitlements to the net assets of the Partnership on a winding up. I also note that, in expressing his opinions, Mr Ryan was expressly instructed that the agreement between Neil and Scott was only as to profit, which of course is the very question in issue. It is also significant to note that Mr Billing did not inform Mr Ryan about the existence of the 30 April 2016 notices. When confronted with the existence of those notices in the witness box, Mr Ryan accepted that it would have changed the financial statements that he prepared in draft form for the financial years 2018 through to 2021 in a more favourable way to Scott in respect of his capital balances.
I therefore conclude that the Partnership was carried on between 1 July 2015 until its termination on 1 September 2017 on the basis that Neil and Scott were equal partners.

Taking of accounts

I agree with the parties in that a taking of accounts is necessary.
For the reasons I have given above, the taking of accounts should be done on the basis that:

The Fairfield debt was not a “paper debt”.

Miltons was partnership property.

Neil was entitled to receive whatever amount of capital was due to Janet as at 30 June 2017, when it was transferred to him.

Neil and Scott operated as equal partners in the Partnership from 1 July 2015 until 1 September 2017.

Other claims for relief

Constructive trust claims

Scott has advanced claims further or in the alternative for orders designating Parkvale and the portion of Miltons that Scott does not already own subject to a common intention constructive trust and a joint endeavour constructive trust.
Given that I have found that Scott has made out a claim for proprietary estoppel, it is not necessary to address these claims.

Succession Act

Scott also advances a claim for further provision out of Neil’s estate pursuant to s 59 of the Succession Act. It is not necessary to address this claim for the following reasons.
First, as I have already found that Scott is entitled to most of Parkvale and all of Miltons by way of his proprietary estoppel claim, I do not see any circumstance in which Scott would be entitled to further provision.
Secondly, even if I am wrong about Scott’s entitlements to Parkvale and Miltons, I still do not think it appropriate to deal with the Succession Act claim given the opacity around Scott’s financial circumstances. It is imperative in applications for further provision under the Succession Act that the Court has access to updated, accurate information about the applicant’s financial circumstances: see Baker v Baker [2024] NSWSC 559 per Hammerschlag CJ in Eq at [21]-[24]. Because it remains necessary to wind up the Partnership, it is not presently possible to determine Scott’s financial circumstances with any degree of precision. This is by no fault of any of the parties. An accurate figure can only be produced once there has been a taking of partnership accounts.

ORDERS

The declarations and orders of the Court will therefore be as follows:

Declare that the defendants, as executors of the estate of the late Neil Macaulay, hold their legal interests in the following properties on trust for the plaintiff subject to the conditions set out in order (2):

“Parkvale”, located at Parkes, NSW, comprising Lots 122, 138, 145, 153, 155 and 188 in Deposited Plan 750132, Lot 61 in Deposited Plan 750160, Auto-Consol 8404-189, Auto-Consol 10847-200, Auto-Consol 10706-102, Auto-Consol 10706-103, and Lots 1 and 2 in Deposited Plan 1130686, save for the paddocks marked U, AE and Q on the paddock map annexed to these orders; and

“Miltons”, located Parkes, NSW, comprising Lots 72, 73 and 74 in Deposited Plan 750160 and Lots 1-5 in Deposited Plan 1097809.

Declare that the plaintiff’s interests under the trusts identified in order (1) are subject to the following conditions:

That the plaintiff shall convey free and clear title to “Fairfield” to the first defendant;

That the plaintiff shall renounce the devise of the property at 2 Endeavour Place, Parkes under the will of the late Neil Macaulay dated 10 August 2018.

Declare that the plaintiff and the late Neil Macaulay carried on the Parkvale Pastoral Co Partnership (the Partnership) as equal partners on and from 1 July 2015 until the termination of the Partnership.

Declare that the interest of the estate of the late Janet Macaulay in the capital of the Partnership as at 30 June 2017, being the sum of $249,223.19, was assigned to the late Neil Macaulay on 30 June 2017.

Declare that the plaintiff’s liability to the Partnership in relation to the refinancing of the Fairfield debt, being the amount of $453,288 recorded in the financial statements of the Partnership for the year ending 30 June 2017 under the heading “Loan: Scott Macaulay re: Fairfield”, was duly payable.

The statement of claim is otherwise dismissed.

The parties are to file short submissions and any additional evidence on the question of costs as follows:

Plaintiff on or before 4:00PM on 4 February 2025.

Defendants on or before 4:00PM on 14 February 2025.

Plaintiff in reply on or before 4:00PM on 21 February 2025.

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Decision last updated: 02 May 2025

Medium Neutral Citation:	Macaulay v Macaulay [2024] NSWSC 1547
Hearing dates:	13-14, 16, 19-23 and 26-27 August 2024
Date of orders:	03 December 2024
Decision date:	03 December 2024
Jurisdiction:	Equity
Before:	Hmelnitsky J
Decision:	See [498]
Catchwords:	ESTOPPEL — Proprietary estoppel — Encouragement — Where the plaintiff was a farmer who worked in the family partnership on the family farms — Where the plaintiff and the defendants are siblings — Where the plaintiff claimed his father made oral representations to him over many years that certain farms would be his — Whether the representations were made — Whether the plaintiff acted to his detriment in reliance of the representations — What the appropriate relief is in the circumstances PARTNERSHIPS AND JOINT VENTURES — Winding up — Distribution of assets on settlement of accounts — Whether there was an agreement to divide profits of the family partnership after death of one of the partners in proportions different to the continuing partners’ interests in the partnership PARTNERSHIPS AND JOINT VENTURES — Partnership property — Identification — Whether family farm that was held between the partners as tenants-in-common in equal shares was partnership property
Legislation Cited:	Income Tax Rates Act 1986 (Cth) s 14 Partnership Act 1892 (NSW) ss 20, 21, 42, 43 Succession Act 2006 (NSW) s 59
Cases Cited:	Ambridge Investments Pty Ltd (in liquidation) v Baker [2010] VSC 59 Baker v Baker [2024] NSWSC 559 Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165 Commissioner of State Revenue v Rojoda Pty Ltd (2020) 268 CLR 281; [2020] HCA 7 Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 Coster v Coster [2024] NSWSC 1104 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 Dillwyn v Llewelyn (1862) 4 De GF & J 517; 45 ER 1285 Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 ; [1980] HCA 6 Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109 Fragar v Fragar [2024] NSWSC 193 Gissing v Gissing [1971] AC 886 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Green v Green (1989) 17 NSWLR 343 in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 In the matter of Hillsea Pty Ltd [2019] NSWSC 1152 Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P & CR 8 Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 O’Brien v Komesaroff (1982) 150 CLR 310; [1982] HCA 33 Parker v Parker [2017] TASSC 37 Pettitt v Pettitt [1970] AC 777 Priestley v Priestley [2017] NSWCA 155 Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Sullivan v Sullivan [2006] NSWCA 312 Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7
Texts Cited:	B McFarlane, The Law of Proprietary Estoppel, (2nd ed, Oxford University Press, 2020) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths) M Blackett-Ord and S Haren, Partnership Law (6th ed, 2020, Bloomsbury Professional) R I Banks, Lindley and Banks on Partnership (Sweet & Maxwell, 20th ed, 2017)
Category:	Principal judgment
Parties:	Scott Alexander Macaulay (Plaintiff) Craig Neil Macaulay (First Defendant) Christina Jane Kronenberg (Second Defendant) Tracey Maree Ford (Third Defendant)
Representation:	Counsel: M Gunning (Plaintiff) A J McInerney SC/N Kabilafkas (Second and Third Defendants) Solicitors: Gordon Garling Moffitt (Plaintiff) Campbell Paton & Taylor (Second and Third Defendants)
File Number(s):	2021/00238598

Description	Value of share
Miltons	$181,500
Partnership	$26,666.66
Endeavour Place, Parkes	$200,000
Allenby Road, Orange	$129,000
Parkvale	$1,172,314