Merrett v Mackay

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2019 00014

BETWEEN:

DARREL CARL MERRETT	Plaintiff
v
CAROLINE JOYCE MACKAY (as executor of the Will and Estate of Caroline Beryl Merrett, deceased)	Defendant

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATES OF HEARING:	1, 2, 3, 17 June 2021
DATE OF JUDGMENT:	5 May 2022
CASE MAY BE CITED AS:	Merrett v Mackay
MEDIUM NEUTRAL CITATION:	[2022] VSC 220

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CONTRACT – Whether there was an oral contract of sale of land – Whether any oral contract of sale of land is enforceable notwithstanding its non-compliance with s 126 of the Instruments Act 1958 (Vic) or s 53(1)(a) of the Property Law Act 1958 (Vic) – Whether there are sufficient acts of part performance – Held that there was an oral contract for the sale of land – Held that payment of money for the purchase of the land is not sufficient act of part performance – Held that there was no sufficient act of part performance – Held that the oral contract of sale of land is not enforceable – Khoury v Khouri (2006) 66 NSWLR 241 – Vlahos Pty Ltd v Vlahos [2017] VSCA 166.

EQUITY – Proprietary estoppel – Whether representations that could found a proprietary estoppel were made – Held that no representation was made to the effect that plaintiff would receive property after working on the property – Held that a representation that the land would be transferred after payment of money is not sufficient – Held that a “secondary” representation of “something more” is required – Held that there is no relevant representation to found a proprietary estoppel - Actionstrength Ltd v International Glass Engineering IN.GL.EN SpA [2003] 2 AC 541 – Agius v Sage [1999] VSC 100 – Collin v Holden [1989] VR 510 – Powercell Pty Ltd v Cuzeno Pty Ltd (2004) 11 BPR 21,429.

TRUST – Whether there is a resulting trust, common endeavour or common intention constructive trust – Requirements for a common intention constructive trust – Referred to Shepherd v Doolan [2005] NSWSC 42 – If there is a resulting trust or constructive trust, what remedy ought to be granted – Whether there is unconscionable conduct on the part of the claimant – Whether there was laches or delay – Held that there is no resulting trust and no common endeavour constructive trust – Held that there was common intention between the relevant parties for beneficial ownership in the property to pass from one party to the other – Held that payment of money for the purchase of a property can be a relevant detriment for a common intention constructive trust – Held that there is a common intention constructive trust – Held that there was no unconscionable conduct – Held that the defence of laches fails – Held that a lesser remedy than a declaration of a constructive trust over the whole property ought to be granted – Giumelli v Giumelli (1999) 196 CLR 101 – Held that there is a constructive trust over a part of the property.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W F Gillies	SLM Law
For the Defendant	Mr D Kim	Clarke & Barwood Lawyers

HER HONOUR:

Introduction, background and parties

The Merrett family has been running beef and dairy farms in south-west Victoria since 1960, when Arthur Merrett and his wife Caroline Merrett (‘the parents’) purchased a 170 acre[1] property (‘Scotts Creek farm’) near Timboon as part of a soldier settlement scheme. The parents raised their six children there, being, in order of age, Graham, Caroline (‘the executor’),[2] Audrey, Darrel, Desmond (‘Des’) and Brian (‘siblings’). Arthur died in 1986, and Caroline died in 2015, from complications of Alzheimer’s disease.
[1]The Scotts Creek farm covers 68.82 hectares.
[2]I will refer to Caroline Mackay, the defendant in this proceeding, as “the executor”, so as to distinguish her from her mother.

All but one of the siblings, Darrel, the plaintiff in this proceeding, made their life largely off the family’s farms. Graham has his own farm in the area. The executor and Audrey left home when they were teenagers and started their own families. While Des worked with the parents for some time in the 1970s and 1980s, and worked on the Scotts Creek farm for about a year in the 1980s, he has had his own welding business for 30 years, and Brian has also gone his own way. On the other hand, while Darrel has worked in a number of jobs outside farming from time to time, he has largely worked on farms owned by the parents, in particular the Scotts Creek farm, since he left school at the age of 14 in 1971.

In the mid 1970s, the parents left the Scotts Creek farm in the hands of tenants (including Graham for a period of time) and purchased a farm in Princetown. They moved there with Darrel, Des and Brian, the latter two being still quite young. While there are conflicting accounts of precisely who did what, it seems that Darrel was fully engaged in running the farm operations at Princetown until the farm was sold in or about 1980 or 1981, primarily because he and the parents agreed that the location was too cold and windy, and the farm was unprofitable.

The parents then bought another farm in Carpendeit. However, Darrel did not move with them to Carpendeit, or if he did, he only stayed briefly. Instead, he returned to the Scotts Creek farm, and, apart from a 12-month break in 1985 or 1986, has farmed the land there since then, with either beef or dairy cattle, although for the past 10 years or so he has lived in his own home in nearby Simpson. The parents sold the Carpendeit farm in around 1982 and purchased a mixed business (‘shop’) in Colac, which was sold after Arthur’s death in 1986. Des, his wife Sharyn, and Brian also helped to run the shop.

This proceeding arises out of a dispute between Darrel and the executor regarding his entitlement to the Scotts Creek farm. Darrel says that when he was around 18 years old, he had a conversation with the parents about purchasing a farm they owned which would eventually become his if he worked on the farm and contributed to expenses. The conversation took place at around the time the parents purchased the Princetown farm, and, from then on, Darrel worked on the Princetown farm, paid the rates, mortgage repayments and other expenses, and made improvements to the farm.

After the parents purchased the Carpendeit farm, Darrel says that he agreed with the parents that the Scotts Creek farm would become his if he worked on the farm. They offered to sell the Scotts Creek farm to him at the shire valuation, but he could not afford to purchase the property at that time. He worked on the Scotts Creek farm with his own cattle from 1981, paying the mortgage repayments between 1981 and 1993, along with the rates and other expenses associated with operating the Scotts Creek farm.

It is unclear what income Darrel has derived from the operations of the Scotts Creek farm over the years. He owns most or all of the cattle on the farm, but it appears from documents in the court book that the income and expenses of the farm may have been accounted for as if the parents, and later Caroline alone, owned the farming business as well as the land.[3] He now owns three residential properties in Simpson, and he has also worked part time off the farm for considerable periods of time.
[3]The court book contains tax returns filed on behalf of Caroline for the 2006, 2007 and 2008 financial years, which show, among other things, income from and expenses associated with the farming operations at the Scotts Creek farm. None of Darrel’s tax returns were in evidence, so it is unclear whether the income recorded in Caroline’s tax return represented all of the income generated from the Scotts Creek farm. These tax returns show that income was generated from both milk production and the sale of livestock, and the expenses included the payment of rates for the Scotts Creek farm, along with other expenses associated with the operation of the Scotts Creek farm.

In 1985 or 1986, Darrel wanted a break from the farm, and swapped jobs with Des and Sharyn for approximately 12 months. There is some dispute about what state the Scotts Creek farm was in when Darrel left the property, and what was paid for and not paid for by Des and Sharyn when they moved onto the Scotts Creek farm. Those disputes are not particularly relevant to the issues currently before the Court, save that Des’ evidence suggests that the Scotts Creek farm was not always profitable.

Darrel learned that the shop did not generate a sufficient revenue to provide him with an income, so he took on a part‑time job driving trucks. The shop was sold after Arthur’s death, and Caroline moved to live for a time in a caravan on Des and Sharyn’s property, for a time in a caravan on the Scotts Creek farm, for a time at a house owned by her in Colac with her partner Colin, and finally, for the last year or two of her life, in an aged care facility in Cobden. It appears from the tax returns in evidence that Caroline lived off income from her investments (including a rental property) and possibly also from income generated by the Scotts Creek farm, as she was not eligible for the aged pension.

Darrel returned to the Scotts Creek farm after his father’s death in 1986, and has farmed the property ever since. From the early 1990s until 2012, when he had a serious accident, he also worked part time as a stock handler for a stock and station agent in Camperdown, Charles Stewart & Co.

The evidence is somewhat unclear as to what discussions Darrel had with his mother after Arthur’s death about his position at the Scotts Creek farm, but in 1996 Caroline spoke to a solicitor, Mr David Harris of Arthur E George & Sons (‘Arthur George’), a firm of solicitors based in Camperdown, about selling the Scotts Creek farm to Darrel, and the stamp duty consequences of any sale. In 2006, Caroline contacted Arthur George again to enquire about the contents of Arthur’s will, because she wanted to sell the Scotts Creek farm. Nothing of any note eventuated from these enquiries, at least as far as Arthur George was concerned.

In August 2006, Darrel obtained a loan from the ANZ Bank (described as a “Residential Investment Loan”) for $87,000, secured against two residential properties he owns in Simpson. While Caroline’s financial records did not disclose the precise destination of these funds, in the end there was no real dispute that she received those funds. Darrel contends that with this payment, he purchased the Scotts Creek farm.

However, the absence of any conclusive records regarding the transaction, Caroline’s declining health in the years prior to her death, and the executor’s staunch belief that the sum of $87,000 was a gross undervalue of the Scotts Creek farm (which, all other things being equal, it may well have been) means that there have been considerable difficulties facing Darrel in giving effect to the agreement he says he reached with Caroline back in 2006 regarding his purchase of the Scotts Creek farm (‘2006 transaction’).

Darrel says that he and Caroline agreed on a price of $87,000, because that was the amount he could raise by way of loan funding from the ANZ Bank, and that price was acceptable to Caroline. While he accepted that, at the time, the Scotts Creek farm was worth more than that,[4] he pointed out that by 2006, he had worked on the Scotts Creek farm for more than two decades, and had paid all of the expenses associated with the Scotts Creek farm, including rates and mortgage repayments, which Caroline would have taken into account when agreeing to a price.
[4]There was no expert valuation evidence put before the Court regarding the value of the Scotts Creek farm in 2006, or at any other relevant time. The value of the Scotts Creek farm in the Inventory of Assets and Liabilities dated 22 March 2018 was said to be $716,000, or approximately $4,200 per acre, which was based upon, according to the correspondence between the solicitors for the parties, the shire valuation at that time. During the executor’s discussions with Mr Harris in 2011, she referred to farmland in the area being valued at approximately $6,000 per acre or at least $3,000 per acre, given the condition of the buildings on the Scotts Creek farm. Mr Harris’ record of his conversation with Caroline in 1996 referred to a value of at least $2,000 per acre. Darrel gave evidence that as at 2006, the value of the Scotts Creek farm was between $2,000 and $3,000 per acre, and that the Scotts Creek farm would currently be worth between $6,500 and $7,000 per acre, or between $1.1 and $1.2 million. In contrast, a purchase price of $87,000 values the Scotts Creek farm at approximately $500 per acre.

The 2006 transaction was not recorded in writing, and what documentary evidence exists is limited to a few rather scrappy notes (‘notes’), the contents and authenticity of which will be discussed later in these reasons. Darrel says that originally, the plan was for Caroline to transfer the Scotts Creek farm to him immediately after the payment was made. However, about two weeks later, Darrel said that his mother told him that she wanted to leave the Scotts Creek farm to him in her will, because that was the last asset she held that she had owned with Arthur.

In 2011, there were a number of meetings and discussions between Caroline and Mr Harris and another solicitor at Arthur George, Mr Anthony Marasa, regarding, among other things, Caroline making a will, in which Graham, Darrel and the executor were also involved. The question of whether Caroline had in fact sold the Scotts Creek farm to Darrel was raised during the course of these meetings and discussions, which were comprehensively documented by the file held by Arthur George (‘solicitors’ file’). However, Caroline’s recollection of the transaction was somewhat variable, and Darrel had difficulties in locating documents in order to satisfy the solicitors, Graham and the executor of the existence and the bona fides of the 2006 transaction.

Over the course of 2012, Caroline’s health had deteriorated to the extent that there would have been serious questions about her capacity to either transfer the Scotts Creek farm to Darrel or alter the will she executed on 15 July 2011 (‘2011 will’) in order to leave the Scotts Creek farm to Darrel. As Graham, Darrel, and the executor (being the joint holders of Caroline’s financial power of attorney) could not reach agreement as to whether there was a valid sale of the Scotts Creek farm to Darrel, the issue remained unresolved in the years prior to and after Caroline’s death on 16 June 2015. On 3 August 2015 Darrel’s solicitors lodged a caveat over the title to the Scotts Creek farm claiming an interest in the freehold title of the Scotts Creek farm on the grounds of an “implied, resulting or constructive trust”.

On 29 May 2018, that is, nearly three years after Caroline’s death, the executor obtained a grant of probate of the 2011 will. The 2011 will provided, relevantly, as follows:

(a) Caroline appointed Graham, Darrel and the executor as the executors of her will and trustees of her estate;

(b) she left her partner Colin a right to reside at her home in Colac, subject to certain conditions;[5] and

(c) she left all of her remaining property to be divided equally between the siblings as tenants in common.

[5]Colin died shortly after Caroline, such that this property immediately fell into the residue of the estate.

The 2011 will made no express reference to the Scotts Creek farm, and, accordingly, its terms are consistent with there being an agreement with Darrel to transfer the Scotts Creek farm to him (in that it could have been transferred to him at any time during her lifetime, or at least while she retained capacity), but its terms are also consistent with there being no such agreement, particularly given that Darrel says that in 2006 Caroline promised to leave the Scotts Creek farm to him in her will, which she did not do. The consequence of the failure of Caroline to transfer the Scotts Creek farm to him during her lifetime, or to leave it to him in the 2011 will, along with the refusal of Graham and the executor to accept Darrel’s claim to be entitled to have the Scotts Creek farm transferred to him after Caroline lost capacity, means that the current proceeding will determine whether Darrel receives the Scotts Creek farm in its entirety, or whether the Scotts Creek farm is to be sold and the proceeds divided equally among the siblings.[6]
[6]Based upon the Inventory of Assets and Liabilities filed by the executor with the Court in March 2018, the Scotts Creek farm accounted for 47 per cent of the value of Caroline’s estate (that is, excluding administration and legal costs incurred by the estate since March 2018).

The proceeding and the pleadings

This proceeding was issued on 4 January 2019, after years of correspondence between the solicitors for the parties failed to reach a resolution regarding Darrel’s claim that he was entitled to have the Scotts Creek farm transferred to him.

There is an incomplete collection of correspondence between the solicitors in the court book. Originally, Darrel’s solicitors claimed that Darrel was entitled to the Scotts Creek farm on the basis of the 2006 transaction, stating in a letter dated 3 September 2018 that “[t]he agreement was reached taking into account that our client had contributed financially to the farm for a number of years by making the mortgage repayments and payment of the rates”, as well as mortgage repayments made with respect to the Princetown farm.

In his original statement of claim, Darrel made the following allegations (omitting uncontroversial matters):

(a) he worked on the Princetown farm and contributed to mortgage repayments between 1976 and 1981, and on the Scotts Creek farm with the parents from 1981, and has been responsible for the payment of rates and other outgoings since that time;

(b) on 3 August 2006, he paid Caroline $87,000 by way of bank cheque to purchase the Scotts Creek farm, which was acknowledged by Caroline;

(c) despite request Caroline failed to transfer the Scotts Creek farm to him; and

(d) he sought a declaration from the Court that the Scotts Creek farm is beneficially owned by him, along with orders that the Scotts Creek farm be transferred to him.

After some disputes regarding the adequacy of Darrel’s statement of claim, on 6 March 2020 Darrel filed an amended further amended statement of claim (‘final pleading’), in which he made the following allegations (again omitting uncontroversial matters):

(a) he left Timboon High School in 1971, and worked on the Scotts Creek farm for approximately 12 months for payment of 20 cents per day;

(b) he then left the Scotts Creek farm and worked at a petrol station in Geelong for approximately 12 months;

(c) he returned to the Scotts Creek farm in about 1974 or 1975 and worked there for approximately 12 months, when he went to work upon the Princetown farm;

(d) at around the time he went to live and work on the Princetown farm the parents said to him “if you work the farm you will get the farm one day”, or words to that effect;

(e) this representation or representations to similar effect were made by the parents on a number of occasions with respect to both the Princetown farm and the Carpendeit farm;

(f) relying upon these representations, Darrel worked on the farms for a wage less than he could have achieved had he gone back to school, or left the farm and joined the workforce; and

(g) Darrel made contributions to the Princetown farm and the Carpendeit farm for poor wages, and has suffered detriment, in that he was unable to obtain better remunerated employment in the workforce.

Darrel then went on to allege that he ran the Princetown farm, and received the milk cheque, from which he made mortgage payments of $4,500.00 every six months, and paid for the outgoings of the Princetown farm.

Darrel alleged that from 1981 to the current date, he has worked the Scotts Creek farm as a dairy farm, save for the period between 2003 and 2013, when the dairy herd was sold for beef. The milk cheque and/or the proceeds of sale of the cattle were used to pay the expenses and outgoings for the Scotts Creek farm, including mortgage repayments of $2,500 every six months between 1981 and 1993. Caroline also used these funds for her own benefit from time to time.

Darrel referred to the bank cheque he obtained for $87,000 in August 2006 which he paid to Caroline, and then went on to refer to the contents of the notes said to support his contention that this payment was made to purchase the Scotts Creek farm from Caroline.

The final pleading concluded as follows:

(a) the executor is estopped from denying that the Scotts Creek farm should be transferred to Darrel, on the basis of the representations made to him by the parents (which he relied upon), the 2006 transaction, and Caroline’s indication in 2006 that she would transfer the Scotts Creek farm to him;

(b) alternatively, Darrel and Caroline have at all times acted upon the “common intention or view” that the Scotts Creek farm would be transferred to Darrel upon Caroline’s death; and

(c) alternatively, the Scotts Creek farm is held by Caroline’s estate on a resulting trust or a constructive trust for him.

In the final pleading, Darrel seeks the following relief:

(a) a declaration that the Scotts Creek farm is beneficially owned by him, or that it is held on a resulting or a constructive trust for his benefit;

(b) orders that the Scotts Creek farm be transferred to him; and/or

(c) equitable compensation for the lesser remuneration he received while working on the Scotts Creek farm in the event that this Court finds there is no common assumption or constructive or resulting trust.

The executor’s defence to the allegations made by Darrel in the final pleading can be summarised as follows:

(a) if Darrel worked on the Scotts Creek farm for 20 cents per day (which she denied), he did so when he was a minor, and to help the parents, as all of the siblings did;

(b) she admits that Darrel did some farming work at the Princetown farm, but he also worked at a supermarket in Timboon;

(c) prior to selling the Princetown farm, the parents offered Darrel the opportunity to purchase the Princetown farm, just as Graham had been offered (and accepted) the opportunity to purchase another farm owned by the parents some years previously, but Darrel rejected the offer. A similar offer was made with respect to the Carpendeit farm, which was also rejected by Darrel;

(d) Darrel did not work on the Carpendeit farm, although Des, Brian and Des’ wife Sharyn did, with Des receiving approximately a third of the milk cheque for their work; and

(e) in relation to the representations alleged to have been made to Darrel by the parents, the executor:

(i) denied that the representations were made;

(ii) said alternatively, if they were made, they were only made with respect to the Princetown and Carpendeit farms; and

(iii) said if the representations were made, Darrel did not rely upon them in undertaking any work on the Scotts Creek farm.

In relation to the allegation that Darrel made contributions to the Princetown farm, the Carpendeit farm and the Scotts Creek farm for poor remuneration, and suffered detriment in that he was unable to obtain better remunerated employment elsewhere, the executor said, relevantly, that Darrel was allowed to have his own livestock on the Princetown farm and the Scotts Creek farm without being required to pay any rent or outgoings.

The executor also stated that, up until 1976, all of the siblings helped out with the chores on the Scotts Creek farm, and the Scotts Creek farm was tenanted when the family moved to the Princetown farm. Between 1979 and 1985, Darrel and his wife lived at the Scotts Creek farm with their own livestock, following which Des and Sharyn lived at and worked on there for 12 months, paying the mortgage repayments and other outgoings. The executor stated that, after this time:

(a) Darrel continued to occupy the Scotts Creek farm with his livestock and use the Scotts Creek farm for his own purposes;

(b) throughout his time at the Scotts Creek farm, he has not paid any rent to Caroline or the estate, and has not distributed to either Caroline or the estate any income he has received from his use of the Scotts Creek farm;

(c) Darrel has not looked after the Scotts Creek farm and it is derelict;

(d) she does not know whether Darrel paid any mortgage repayments for the Scotts Creek farm, as no records are available and the Scotts Creek farm has been mortgage free for some time; and

(e) she accepts that Darrel has paid some council rates for the Scotts Creek farm, but since 2016 the estate has been paying insurance premiums for the Scotts Creek farm.

As for the allegations that Caroline received some funds from the operation of the Scotts Creek farm, the executor said that Caroline did not receive the milk cheque for any of the cows owned by Darrel, but only for those owned by her, and, based upon her recent tax returns, Caroline’s income was used to pay for the expenses associated with the operations of the Scotts Creek farm.

As for Darrel’s allegations regarding the 2006 transaction, the executor:

(a) admitted that Darrel obtained a bank cheque for $87,000 payable to Caroline;

(b) stated that she is not certain whether Caroline wrote the various notations relied upon by Darrel;

(c) stated that, given that one of the notations referred to the sum of $87,000 as a “part payment” for the Scotts Creek farm, Darrel never provided full payment for the Scotts Creek farm; and

(d) referred to the 2011 will, noting that the 2011 will did not expressly refer to the Scotts Creek farm, and did not bequeath the entirety of the Scotts Creek farm to Darrel, but rather gave her remaining property to all of the siblings as tenants in common in equal shares.

As for Darrel’s claim for the Scotts Creek farm to be transferred to him, the executor asserted that Darrel had failed to plead any cause of action or the necessary material facts to establish a cause of action. Alternatively, if Darrel had procured Caroline’s consent, agreement or promise to transfer the Scotts Creek farm to him in the course of the 2006 transaction, then he did so unconscionably, given her age and vulnerability, given the fact that $87,000 was a “greatly undervalued price”, and given her failure to obtain independent legal advice prior to her entry into the 2006 transaction.

Further, the executor stated that if Darrel entered into a contract of sale for the Scotts Creek farm, any claim by Darrel is statute barred, as the alleged agreement fails to comply with s 126 of the Instruments Act 1958 (Vic) or s 53(1)(a) of the Property Law Act 1958 (Vic) (‘Statute of Frauds’), and he has failed to bring his claim within the period required by s 5 of the Limitation of Actions Act 1958 (Vic) (‘LAA’). In any event, if there was a contract of sale which is not statute barred, Darrel has only provided part payment of the purchase price, and accordingly, he has repudiated the contract, and his repudiation has been accepted by the executor.

Further, the executor says that if Darrel is able to establish an equitable claim to the Scotts Creek farm, he is barred from relief by the doctrine of laches (delay), on the basis that:

(a) since August 2006, Darrel has known that the Scotts Creek farm has not been transferred to him;

(b) Darrel is solely responsible for the inordinate and inexplicable delay in bringing his claim; and

(c) the delay has caused serious and unfair prejudice to the executor and the other siblings, in particular, by reason of their inability to obtain evidence from Caroline regarding the 2006 transaction prior to her death.

Finally, as for Darrel’s claim that he is entitled to the Scotts Creek farm as the beneficiary of a constructive trust, or his claim for equitable compensation, the executor says that the parents purchased the Scotts Creek farm before they purchased the Princetown farm or the Carpendeit farm, said that Darrel made no financial contribution to the purchase of any of these properties, and again relied upon the doctrine of laches.

The issues in the proceeding

Based on the parties’ pleadings, the key issues for the Court to determine are as follows:[7]
[7]These issues are largely based upon the issues identified in the executor’s written outline of opening submissions.

(a) did the parents make the representations to Darrel alleged by him in the final pleading (‘representations’), being that they said to him in respect of the Princetown and Carpendeit farms that “if you work the farm you will get the farm one day”?

(b) did the parents make any representation to Darrel to like effect with respect to the Scotts Creek farm?

(c) if the representations were made, are they capable of being representations recognised by the law?

(d) if the parents did make the representations alleged by Darrel to have been made, and they are recognised as such by the law, did Darrel rely on the representations by working on “the farms”?

(e) if Darrel relied on the representations, did he suffer detriment:

(iv) by working on the farms for a wage less than he could have obtained had he gone back to school or worked as a stock agent or left the farm and joined the workforce?

(v) by making contributions to the Princetown farm, the Carpendeit farm and the Scotts Creek farm?

(f) is the executor estopped from denying Darrel a right to the entire interest in the Scotts Creek farm based upon the representations?

(g) did Darrel and Caroline enter into an agreement for the sale of the Scotts Creek farm to Darrel in 2006?

(h) if Darrel and Caroline did enter into an agreement for the sale of the Scotts Creek farm:

(i)was the agreement void or invalid by the operation of the Statute of Frauds; or
(ii)is any claim by Darrel for specific performance of the contract of otherwise statute barred by reason of s 5 of the LAA?

(i) does the executor hold the Scotts Creek farm on a resulting trust for Darrel?

(j) does the executor hold the Scotts Creek farm on a constructive trust for Darrel?

(k) is Darrel entitled to equitable compensation from the estate for his alleged loss of income?

(l) does the doctrine of laches otherwise prevent Darrel from obtaining equitable relief?

One thread which runs through a number of the issues outlined above is the nature and legal effect of the 2006 transaction. While it appears from the evidence that there was at one time some doubt as to whether in fact Darrel paid Caroline the sum of $87,000 in 2006, by the time of trial his evidence in that regard was not contested. The executor did not submit that this payment was a gift, and no presumption of advancement applies. There was also no evidence that the payment was a loan from Darrel to Caroline, and the executor appears to accept that the payment was somehow connected with Darrel acquiring an interest in the Scotts Creek farm. However, she says that the 2006 transaction was ineffective to do so.

Accordingly, Darrel’s claim to be entitled to have the Scotts Creek farm transferred to him falls to be considered under the following headings:

(a) the representations claim;

(b) the contract claim;

(c) the proprietary estoppel claim;

(d) the resulting trust claim; and

(e) the constructive trust claim.

Each of these claims raises different legal and evidentiary issues. The legal principles relevant to each claim, and the analysis of the various defences raised by the executor in response to each claim, including any limitations issues, will be discussed in the relevant sections of these reasons.

Some comments on the evidence

While the parties filed outlines of evidence with respect to each of the witnesses they planned to call prior to trial, each of the parties’ witnesses gave oral evidence at trial. Accordingly, save for one aspect of the executor’s evidence, it is not necessary to refer further to the outlines of evidence.

Darrel gave evidence on his own behalf, and issued a subpoena to compel Mr Harris of Arthur George to give evidence. The executor also gave evidence, along with Audrey and Des. The executor originally intended to call Des’ wife, Sharyn, to give evidence, but the parties agreed that this was not necessary, as her evidence would cover substantially the same ground as Des’ evidence.

Neither of the remaining siblings, Graham and Brian, were called to give evidence. Neither party provided any explanation as to why they were not called, or sought to have me draw any adverse inference against the other party by reason of their failure to call them to give evidence. Brian’s evidence may only have been of tangential relevance, but he did live with the parents and Darrel at the Princetown farm, and the solicitors’ file records that Caroline may have been motivated to enter the 2006 transaction because she had incurred a liability for business debts incurred by Brian.

However, Graham was intimately involved in the meetings with the solicitors during the period in which Caroline made the 2011 will and the 2006 transaction was discussed, and apparently conducted his own investigations into the 2006 transaction. He was the joint holder (with Darrel and the executor) of Caroline’s financial power of attorney, the sole holder of Caroline’s medical power of attorney, and one of the executors and trustees nominated by Caroline in the 2011 will.[8] However, as it is difficult to make an assessment of whether either of the parties would have been hindered or assisted by any evidence given by Graham and/or Brian, I will say nothing further about that issue.
[8]No explanation has been provided as to why the executor appears now to be the sole executor and trustee of Caroline’s estate.

A related issue is the failure of either party to call any expert evidence in relation to the following issues:

(a) the valuation of the Scotts Creek farm at the relevant times; and

(b) the authenticity of the handwriting on the notes.

The parties disagreed as to which party bore responsibility for the failure to call any expert evidence on these issues. Darrel submitted that the onus was upon the executor to call expert evidence to support her contentions that the handwriting on the note was not Caroline’s handwriting, and that the 2006 transaction involved the sale of the Scotts Creek farm at an undervalue, given that these issues only arose by reason of the executor’s defence.

I agree. Darrel relied upon the notes to support his contention that he had entered into an oral agreement with Caroline to purchase the Scotts Creek farm for $87,000. While the contents of the notes are somewhat ambiguous, and it was not contended by Darrel that the notes comply with the Statute of Frauds, the notes are in evidence, were most likely found among Caroline’s papers in her home, and their contents speak for themselves. The logical extension of the executor’s contention that the handwriting on the notes is not Caroline’s handwriting (other than the handwriting on the first and second tax invoices, which Darrel agrees is his) is that I should reach a conclusion that where there is doubt, the notes were written by someone else, presumably Darrel.

That is a very serious allegation of what could amount to fraud or other criminal conduct. In those circumstances, it was incumbent upon the executor to adduce admissible evidence in support of that allegation.[9] There was no suggestion that obtaining such evidence was impractical because of lack of time, or the absence of any suitable examples of Caroline’s handwriting to enable an expert to undertake the necessary analysis. Accordingly, the lack of expert handwriting evidence leads me to discount to some extent the evidence to the effect that the handwriting on the notes was not Caroline’s handwriting.
[9]See s 142(2) of the Evidence Act 2008 (Vic) (‘Evidence Act’).

In the end, however, the “handwriting” issue is perhaps of less significance than the parties consider it to be. First, while I can see why some might have doubts as to whether much of the handwriting on the notes was Caroline’s handwriting, the notes were found amongst Caroline’s papers after her death, such that it can be inferred that she knew of the notes and their contents. Further, there is now little doubt that Caroline received $87,000 from Darrel in August 2006, and used the funds for her own purposes, even if the destination of the funds is not entirely clear. However, the real difficulty caused to Darrel’s case by the notes is that their contents are inconclusive, regardless of their authorship, and do not satisfy the requirements of the Statute of Frauds. Accordingly, even if it is accepted that the 2006 transaction put into effect an agreement for the sale of the Scotts Creek farm to him, it is unenforceable against Caroline or her successors in title should they rely upon the Statute of Frauds, in the absence of evidence of part performance, or in the absence of an enforceable equitable claim to the Scotts Creek farm.

As for the absence of any expert valuation evidence, again, the question of the value of the Scotts Creek farm arises only by reason of allegations made by the executor to the effect that, if it is accepted that the 2006 transaction was an agreement for the sale of the Scotts Creek farm to Darrel for $87,000, that agreement was voidable on the basis of Darrel’s unconscientious conduct in taking advantage of his mother’s age and vulnerability, with one of the critical elements of this defence being the executor’s contention that the price of $87,000 was a gross undervalue.

Again, it seems to me that the evidentiary onus rested upon the executor to make good this contention. In alleging the existence of an oral contract for the sale of land, it is not incumbent upon Darrel to establish that he had paid a fair price for the Scotts Creek farm, although evidence to that effect would be cogent evidence in rebuttal to the executor’s claim that the validity of the 2006 transaction was tainted by unconscionable conduct. Accordingly, the evidentiary onus in the current case is arguably a shifting one.

However, again, the absence of any expert valuation evidence in the current case is ultimately not a matter of great significance. First, it was never contended on behalf of Darrel that the market value of the Scotts Creek farm as at 2006 was $87,000. He himself agreed that at that time, the Scotts Creek farm would have been worth $2,000 to $3,000 per acre, that is, between $340,000 and $510,000. Further, at the risk of straying close to the boundaries of what might be matters of which one could take judicial notice, my experience is that farmers generally have a good understanding of the value of farming land in their local area, and this is borne out by the file notes recording Mr Harris’ conversations with Caroline and the executor.[10] One would also expect that Mr Harris, being the principal of a solicitors’ mortgage practice operating in the area, would also have a good appreciation of the value of farmland in the area. Finally, given that a rates notice in evidence for the 1985/1986 year shows that the shire valuation for the Scotts Creek farm was $157,100, I can readily infer that the value of the Scotts Creek farm 20 years later was considerably higher.
[10]See above n 4.

At the commencement of the trial, the executor objected to Darrel’s attempts to tender two documents, the first being a schedule said to have been prepared by the Corangamite Shire (‘schedule’) of the rates paid in respect of the Scotts Creek farm between 30 June 1999 and 19 May 2020, and the second being a file note on the solicitors’ file which had not been authored by Mr Harris (being the only representative of Arthur George called to give evidence). Darrel sought to rely upon these documents as being business records within the meaning of s 69 of the Evidence Act. I rejected the application with respect to the schedule, and accepted the application insofar as it concerned the file note not authored by Mr Harris, with such leave extending to file notes authored by another solicitor with Arthur George, Mr Marasa, and a law clerk named Yolanda.

However, the absence of the schedule was not of any great moment: in the end, Darrel’s evidence that he paid the rates for the Scotts Creek property from 1981 to the present day was not seriously disputed, and the rates notices and receipts in evidence for the 1985/1986 year and the 2019/2020 year indicate that the amount payable ranged from approximately $1,000 per annum to $3,000 per annum, such that it is possible to calculate an estimate of what was paid over that time. The rates paid in respect of the Scotts Creek farm are also recorded in the tax returns filed on Caroline’s behalf in 2006, 2007 and 2008, being $1,523.00 in 2006, $1,772.00 in 2007, and $1,695.00 in 2008. If it is assumed that the average annual rates payable in respect of the Scotts Creek farm were in the order of $1,500.00 to $2,000.00, then a reasonable estimate of the rates paid by Darrel over a 40 year period is in the range of $60,000.00 to $80,000.00.

During the course of the executor giving her evidence‑in‑chief, counsel for Darrel objected to a question aimed at adducing evidence of what transpired during a conversation between the executor and Caroline about Caroline’s dealings with Darrel regarding the Scotts Creek farm. Counsel for Darrel objected on the basis that the allegations had not been put to Darrel in the course of cross‑examination, and that to recall Darrel for cross‑examination on that issue, given that Darrel had closed his case, would disrupt the running of the trial. I allowed the objection. I also note that the evidence could have been objected to and excluded on the basis that the executor had failed to comply with the notice provisions in s 67 of the Evidence Act, which requires a party seeking to rely upon the exception to the hearsay rule provided by s 63 of the Evidence Act to notify the other party in advance should they seek to rely upon hearsay evidence of a representation made by someone who was no longer available to give evidence.

The evidence sought to be relied upon by the executor was summarised in her outline of evidence as follows:

In around July 2005 to 2006, she took her mother up the street with their new Mitsubishi car. They gave their old car to Murray Crawford, her son. She remembers her mother being really upset. She remembers asking her mother why she was upset. Her mother replied that Darrel was trying to claim the family farm. Her mother said that he had said to her that he had worked on it for all these years and he was entitled to it. She and her mother had a conversation about this and she said to her mother that she should go and get legal advice on what to do. [The executor] asked her mother if she would like [the executor] to come with her. Her mother told [the executor] that she would go by herself. When [the executor] next spoke to her mother, she asked her mother if she had received legal advice and her mother replied not yet and became distressed again. [The executor] followed up with her mother the topic once more and her mother said to [the executor] that she had not received legal advice. [The executor] did not ask her mother again after that.

This evidence would presumably have been relied upon for the purpose of supporting the executor’s unconscionability defence. Of course, that defence ultimately only becomes relevant if Darrel has established a prima facie entitlement to have the Scotts Creek farm transferred to him. However, the main difficulty with the forensic value of this evidence, if it had been given, is that the other evidence which might be relied upon to support an allegation of unconscionable conduct was equivocal. In particular, there was no evidence to suggest that, as at 2006, Caroline was in a position of particular vulnerability. From the tax returns in evidence, Caroline was 72 years old in August 2006. However, the evidence of the executor was to the effect that that her mother was an intelligent and financially astute woman, and only showed signs of mental decline in about 2011 or 2012, and this evidence was supported by other witnesses and the solicitors’ file. Further, on any view of the evidence, Caroline did not agree to transfer the Scotts Creek farm to Darrel based upon his contributions alone, she required him to make a payment for it, even if the payment was, in the view of some, inadequate.

In addition, the solicitors’ file shows that, in March or August 2006, Caroline contacted Arthur George to confirm that Arthur’s will provided that she was the owner of the Scotts Creek farm, because she wanted to sell the Scotts Creek farm. While she made no further contact with the solicitors prior to the 2006 transaction, the evidence shows that Caroline had access to solicitors and legal advice at the relevant time. These circumstances, along with the lack of evidence about any incapacity or particular vulnerability on the part of Caroline in 2006, do not support a finding that Darrel took unconscientious advantage of Caroline by reason of the 2006 transaction.

Finally, prior to turning to the evidence given by each of the witnesses, I should make some general observations regarding the credibility of the evidence given by the witnesses. First, while I cannot be satisfied that any of the witnesses gave deliberately false evidence, it is fair to say that some of the evidence given was coloured to some extent by the positions they have adopted in this dispute, and their views about the righteousness of the positions they have adopted.

Darrel on the one hand is no doubt genuinely aggrieved at the challenge to his entitlement to the Scotts Creek farm, given that he has worked on the farm for many decades, and has borne all of the risks and vicissitudes of farming for perhaps limited reward. No doubt he paid the sum of $87,000 to Caroline in good faith, having borrowed money to do so, and he looked after his mother and kept her company in her later years. On the other hand, the executor has not budged from her position that if the 2006 transaction did in fact take place, it was unfair for Darrel to be able to acquire the Scotts Creek farm at what she says is a significant discount, given that he has had the use of the farm to generate income for many decades for his own benefit. Both positions are understandable.

Further, the executor, Des and Audrey have what might appear to be reasonable suspicions about the authenticity of the handwriting on the notes, although they have failed to take the necessary step to validate those suspicions. The value of the evidence of Des can be somewhat discounted. Apart from the fact that his involvement in and knowledge of Caroline’s affairs was limited by their estrangement, his evidence was somewhat coloured by his animosity towards Darrel. While the executor rejects Darrel’s claims to the Scotts Creek farm, I have no reason to doubt the truth of her evidence to the extent she could give evidence about factual matters. I should say that no such observations could be made regarding Audrey’s evidence, but again, her involvement in the relevant events was limited.

As for Darrel’s evidence, I do not consider that Darrel told deliberate lies. However, some of his evidence, in particular, his evidence about the representations said to have been made by the parents in his youth was particularly vague and unpersuasive, particularly in the context of the uncontroversial evidence of what actually occurred. Further, given that his claim based upon the representations only really emerged with the delivery of the final pleading, I doubt that the vagueness of his evidence about the representations and the manner in which his evidence about the nature of those representations changed over the course of the trial can be entirely attributed to the memory loss and anxiety issues arising from an accident he suffered in 2012.

However, I have no reason not to accept Darrel’s evidence regarding the 2006 transaction. There is no dispute that he paid Caroline the sum of $87,000, and that payment is corroborated at least to some extent by the notes, and the solicitors’ file. His account of the 2006 transaction, and his claim to the Scotts Creek farm based upon the 2006 transaction was consistent over time. Darrel’s claim to be entitled to the Scotts Creek farm was first made at a time when it could have been easily disproved, that is, when Caroline was still alive, and, while there were some signs of cognitive decline on her part when the issue was first raised publicly in 2011, her solicitors and doctors considered she had sufficient capacity to execute a will at that time. Darrel’s evidence seeking to explain the notation on a letter to him from the ANZ Bank dated 3 August 2006 (‘ANZ letter’) to the effect that the sum of $87,000 was a “part payment” for the Scotts Creek farm was somewhat unconvincing, but his evidence to the effect that he had made full payment for the Scotts Creek farm was supported by the solicitors’ file.

There was another instance during the course of cross‑examination which gave rise to some concern in my mind as to whether Darrel was giving truthful evidence, when he was clearly flustered by questioning during cross‑examination regarding his knowledge of the contents of the 2011 will. He denied having any knowledge of the contents of the 2011 will. The forensic significance of this issue is that, if Darrel knew the contents of the 2011 will prior to Caroline’s death, then his lack of protest about the absence of any reference to the Scotts Creek farm being left to him in the 2011 will is inconsistent with Darrel’s evidence that Caroline promised to do just that. Further, any finding that Darrel knew about the contents of the 2011 will prior to Caroline’s death, but did nothing about it, is relevant to the executor’s defence of laches.

However, it is apparent from the solicitors’ file, including the file note of the conversation that Darrel was cross-examined about regarding his knowledge of the contents of the 2011 will, that at this time, Darrel, the executor and Graham were concerned about Caroline’s expressed wish that her partner Colin have a right to reside at her home in Colac, but Colin was refusing to pay the rates and other outgoings. Accordingly, they consulted Mr Harris as to whether they could evict Colin and sell the property. Viewed in this context, any equivocation by Darrel about whether he knew of the contents of the 2011 will, or Darrel’s query of Mr Harris as to whether Caroline could change her will, does not necessarily lead to a conclusion that Darrel knew that Caroline had not left the Scotts Creek farm to him in the 2011 will when he contacted Mr Harris in January 2013. All that can be safely concluded is that Darrel knew about the clause of the 2011 will granting a right to residence to Colin.

I will now turn to the evidence given by each of the witnesses at trial, along with the evidence given concerning the notes, and the evidence available from the solicitors’ file.

Darrel’s evidence

Darrel gave evidence that he left school in 1971, aged 14. He agreed that he struggled with reading and writing, and did not achieve good grades. After leaving school, Darrel helped his parents with the general running of the Scotts Creek farm, including carting hay and helping out in the cow yard, for 20 cents per day. He then worked at a service station in Geelong for about 12 months in 1972 and 1973, receiving $17.50 per week, which was the minimum wage at the time. He then returned to the Scotts Creek farm where he worked for a few years without receiving a wage.

Darrel gave evidence that when he was 18, he had a conversation with the parents, where they told him that they had purchased the Princetown farm, and that one day the Princetown farm would be his. The parents ran the Princetown farm for a couple of years, and he took over the running of the Princetown farm when he was 18.[11] The parents gave him 80 cows, and he purchased 40 of his own.
[11]Darrel’s evidence is somewhat confusing, as it seems that the family (excluding the older siblings) moved to the Princetown farm in 1975 or 1976, when Darrel would have been 17 or 18 years old. It is therefore not clear whether Darrel says he ran the operations of the Princetown farm from the time the family moved there, or from some time later.

Darrel ran the Princetown farm for approximately five years. In addition to paying the mortgage repayments ($4,500 every six months), rates and other outgoings for the Princetown farm, he also made improvements at the Princetown farm, such as fencing, building a piggery, enlarging a dam, and upgrading the pasture and laneways. He believed from his discussions with the parents that the mortgage payments he was making were “payments off the farm”. He denied working at a supermarket while he was living and working at the Princetown farm.

After the parents sold the Princetown farm, he moved to the Carpendeit farm for approximately one month, following which he returned to the Scotts Creek farm. He helped the parents at the Carpendeit farm at harvest time, as did Brian.

Prior to returning to the Scotts Creek farm, he had a discussion with Arthur, who told him that he was planning to sell the Scotts Creek farm. Darrel told him that he would like to return to the Scotts Creek farm on the same basis that he worked on the Princetown farm, that is, that he could buy the Scotts Creek farm, and that the mortgage repayments that he made would, in effect, be deducted from the purchase price. He had conversations to similar effect with Caroline.

Darrel gave evidence that he paid for all of the expenses and outgoings for the Scotts Creek farm from 1981, including mortgage repayments of $2,500 every six months, save for the year that he swapped jobs with Des. He also made improvements to the Scotts Creek farm, including modifications to the cow yard, installing a new vat in the dairy, installing a piggery, extending the machinery shed and carport, installing 11 new dams, and dividing the paddocks to increase the efficiency of the grazing rotation and improve the pasture. He received little or no help from the parents to run the Scotts Creek farm.

Darrel gave evidence regarding the “job swap” with Des. He said that he lent Des the funds to make the first mortgage repayment. When he worked at the shop, he also started working part time with Charles Stewart & Co. He worked part time at Charles Stewart & Co’s Camperdown premises for 24 years, taking delivery of and penning cattle until he had a serious accident in 2011 or 2012,[12] when he was trampled by cattle and suffered serious injuries. He believed that had he worked full time with Charles Stewart & Co there would have been an opportunity for him to become a stock and station agent and/or a real estate agent, earning between $70,000 and $100,000 per annum. He mentioned on more than one occasion that he was very interested in getting involved in real estate. However, under cross‑examination, he agreed that he always wanted to be a farmer.
[12]The information on the solicitors’ file suggests that this incident occurred in 2012.

Following his accident, he ceased work at Charles Stewart & Co, and returned to running dairy cattle at the Scotts Creek farm in order to generate extra income. He received weekly payments of compensation for a period of time, but these ceased once he was found to have the capacity to return to light duties. He also received compensation of approximately $40,000. As a result of the accident, he has some physical impairments, and suffers from panic and anxiety attacks, along with some short term memory loss.

During this period (that is, after 2012), his mother received the milk cheque for the dairy operations at the Scotts Creek farm, but she had no cattle of her own there. He now has about 120 cows at the Scotts Creek farm. He pays no rent, but he believes that the payments he made towards the mortgage over the Scotts Creek farm were treated as rent. He has not lived in the Scotts Creek farm since his late partner passed away there about ten years ago, and now lives in one of his houses in Simpson. He owns three residential properties in Simpson.

Darrel gave evidence that after Arthur’s death in 1986, there was a family meeting at Des’ home[13] during which it was said that Darrel could purchase the Scotts Creek farm for $130,000, but he could not afford to purchase the property at the time, as it was still mortgaged, despite the price of $130,000 being “cheap”. Under cross‑examination, he agreed that he knew that Caroline was not going to give the Scotts Creek farm to him, and that at all times he knew that he would have to pay something for it.
[13]From the other evidence, it appears that this meeting was at Graham’s home, and Des was not in attendance.

Darrel gave evidence that in 2006, Caroline offered to sell the Scotts Creek farm. He said she “put a price on it”, then he went to the bank, borrowed $87,000, obtained a bank cheque, and handed it to Caroline at the bank. He gave evidence that the Scotts Creek farm was supposed to be transferred to him immediately, but about two weeks after he paid her for the Scotts Creek farm, Caroline asked him if she could leave the Scotts Creek farm to him in her will instead, as this was the last asset she had which she had owned with Arthur. He agreed. When he asked her again whether she would transfer the Scotts Creek farm to him, she repeated that she would leave the property to him in her will.

Darrel gave evidence that he attended a meeting between Caroline and Arthur George to discuss Caroline making a will and powers of attorney. He recalled that one matter that was discussed was leaving Caroline’s partner, Colin, a right to live in her Colac home. A solicitor asked him how much he had paid for the Scotts Creek farm. After he responded, the executor got very upset, and Caroline said “don’t get all hoity‑toity”.

Darrel denied going into Caroline’s home after her death to remove any papers, or put any documents amongst her papers. He said that all of Caroline’s papers were removed from her home by Graham and the executor. He did not have access to Caroline’s cheque account. This account received all of the farm income, and paid for the farm expenses. He believed his mother used funds from this account for her living expenses, as he had sufficient income from his part‑time employment to pay for his own living expenses.

Darrel agreed that he did not tell Mr Harris about Caroline’s promise to leave the Scotts Creek farm to him in her will, but he did provide him with proof that he had paid Caroline the sum of $87,000. He had a number of discussions with Mr Harris, because he was concerned that the siblings did not believe he had purchased the Scotts Creek farm. He agreed that he told Mr Harris that he had nothing in writing to support his claim that he had purchased the Scotts Creek farm, because Caroline told him that he would only need to produce the tax invoices (see paragraph 106 of these reasons) if there was a court case. He believed that it would all be sorted out in Caroline’s will. He confirmed that he borrowed approximately $80,000 from Caroline in 2012 to buy an old church in Simpson, which he has not yet fully repaid to Caroline’s estate. He gave evidence that he has also not yet paid off the loan he obtained to pay Caroline the sum of $87,000 in 2006.

Darrel gave evidence that he did not recall asking Mr Harris about the contents of the 2011 will, or whether the 2011 will provided that the Scotts Creek farm would be left to him.

Darrel denied that the executor had a close relationship with Caroline, or spent a lot of time with Caroline, save for the last years of her life. Rather, of the siblings, he and Graham had the closest relationship with Caroline. He agreed that his mother was smart and hardworking, and careful with money.

The executor’s evidence

The executor gave evidence that she is retired, and lives with her sister Audrey.

The executor gave evidence that she lived with her family at the Scotts Creek farm from about 1960. All of the siblings helped with the chores, although she mostly did indoor chores. She does not recall Darrel doing any more work on the Scotts Creek farm than any of her other brothers, or being paid for his work on the farm. She does not believe that the parents actively encouraged Darrel to leave school, but she recalls that he was a poor student, with some learning difficulties. She could not recall Darrel working at the Scotts Creek farm, but does recall that he went to work at a petrol station in Geelong.

The executor gave evidence that the parents, along with Darrel, Des and Brian, went to live on the Princetown farm in 1972 or 1973. She did not visit often, but when she did, she saw each of her brothers doing chores. Darrel took care of the pigs, which belonged to him, and she believes he also worked at a supermarket in Timboon. She does not recall any discussion with the parents about Darrel purchasing or being given the Princetown farm if he worked on it, or later the Carpendeit farm.

The executor believes that while the family lived at the Princetown farm, the Scotts Creek farm was worked by Graham and his wife Carol, who she believed paid rent to the parents, and later tenant farmers. She gave evidence about visiting Des and Sharyn quite often when they lived at the Scotts Creek farm in 1985 or 1986, and she and her husband helped them to clean up the house and the farm, which were uncared for and required maintenance. She gave evidence that Caroline worked there as well.

The executor believes she had a very close relationship with Caroline. They spoke often, and in Caroline’s later years they often did things together, such as going shopping and visiting family members. Prior to Caroline entering an aged care facility in Cobden, the executor would contact Caroline once a fortnight, but that contact increased to once every two to three days after Caroline commenced living at the aged care facility.

The executor gave evidence that during the first meeting with Arthur George in 2011, Darrel raised the issue of the ownership of the Scotts Creek farm. She agreed that she was shocked when she heard that Darrel had paid $87,000 for the Scotts Creek farm, as her brother‑in‑law had recently bought a farm in the area for $6,000 per acre. Her mother then said “don’t be hoity‑toity”, and that she had come to do her will and “let’s get on with it”. However, under cross‑examination, the executor said that she did not recall Caroline telling her that she was being “hoity-toity”, or that she told Darrel that he had robbed his mother of the farm.

The executor agreed that she told Mr Harris that she believed that Darrel had “conned” Caroline, and that Mr Harris told her that the Scotts Creek farm was worth about $3,000 per acre. She has no recollection of Darrel wanting Caroline to amend the 2011 will.

The executor gave evidence that she believed that some of Caroline’s papers had been taken or moved prior to her collecting Caroline’s papers after her death, and that Darrel had been there before her, as he had a key, and his belongings were gone.

The executor gave evidence that she believed that if Darrel had paid Caroline $87,000 for the Scotts Creek farm, this price was a gross undervalue. However, at the time she had a discussion with Mr Harris to this effect, she did not know (and made no enquiries of Caroline prior to her death) that Darrel had made the mortgage repayments for the Scotts Creek farm.

The executor agreed that she could not dispute that Darrel had paid the rates for the Scotts Creek farm over a 40‑year period, and made improvements to the Scotts Creek farm, but she observed that the farm had become run down. She conceded that, when she formed the view that Darrel had purchased the Scotts Creek farm at an undervalue, she did not take into account the rates payments, mortgage repayments, and improvements Darrel had made with respect to the Scotts Creek farm. However, while she accepted that Caroline would have been fully aware of these matters, given that she was an intelligent person and kept the accounts for the Scotts Creek farm, she did not accept that Caroline would have been satisfied with the sum of $87,000 for the Scotts Creek farm, even taking these matters into account.

Audrey’s evidence

Audrey’s evidence was of relatively limited compass, given that she left home in or about 1970, when she was 15 years old, and her knowledge about the family’s farming ventures was quite limited.

Audrey recently retired from a catering position at St John of God Hospital in Geelong, and lives in her own home with the executor and Brian. She gave evidence that the parents referred to the Scotts Creek farm as the “home property”. She has no recollection of Darrel being paid for his work on the Scotts Creek farm. All of the siblings had their chores to do when they were living on the parents’ farms.

Audrey had no recollection of the parents telling her that Darrel was entitled to receive either the Princetown farm or the Carpendeit farm. She did not attend any family meeting after Arthur’s death. Darrel did speak to her at some time after Arthur’s death, when Caroline was living in a caravan on the Scotts Creek farm, and asked her whether she knew that he had purchased the Scotts Creek farm. She answered in the negative, and asked him whether he had any paperwork to prove that he had purchased the Scotts Creek farm, to which he responded in the negative. She told him that he needed to sort that out in case something happened to Caroline, but he never responded.

Des’ evidence

Des gave evidence he currently lives in Timboon, where he has his own welding business. He gave evidence that he lived with the parents and Darrel at the Scotts Creek farm and the Princetown farm. He does not recall Darrel being paid anything for the work he did at the Scotts Creek farm in or around 1971. He does not believe that the parents encouraged Darrel to leave school and work on the farm. He also left school at 14 to become an apprentice boilermaker. He recalls Darrel working at a petrol station in Geelong for about 12 months, during which time he did not work on the Scotts Creek farm.

Des gave evidence that he moved to the Princetown farm with the parents, Darrel and Brian. Darrel was supposed to run the Princetown farm on his own, but the parents did a lot of the work, because Darrel was too lazy. Darrel kept pigs on the Princetown farm, and kept the income generated by the pigs, and also received a percentage of the milk cheque. The parents also gave Darrel 80 cows, while the other siblings were each given 30 cows or the monetary equivalent.

Des gave evidence that he learned from family discussions around the kitchen table that the parents and Darrel did not want to stay at the Princetown farm because it was cold and windy, and they were not making much money from it. He thought that it was possible that Darrel had an agreement with Arthur for Darrel to purchase the Princetown farm, but Des was insistent that the Scotts Creek farm was to be divided between the siblings. He believes that the parents would only have sold Darrel the Scotts Creek farm for its market value, as Arthur had had a disagreement with his own brother about the inheritance of a farm, and said he would never put his children through something like that.

Des gave evidence that when the parents moved to the Carpendeit farm, only Brian went with them. Des was doing an apprenticeship at the time, but Arthur became ill and asked him to work on the Carpendeit farm. He did so, with his wife Sharyn, for about 12 months prior to the property being sold, and received a third of the milk cheque for his labour. He said that he believed that there were about 100-120 cows there, which belonged to the parents. Darrel never worked at the Carpendeit farm, and he was never told by either the parents or Darrel that Darrel was entitled to receive the Carpendeit farm.

After the Carpendeit farm was sold, Des moved to Colac to help the parents with the shop, along with Brian. He recalls that the shop was in financial trouble, but did not know why, as Caroline kept the accounts. During that time, Darrel approached him and asked him to take over the operation of the Scotts Creek farm, owing to his poor mental health. His time on the Scotts Creek farm was cut short by Arthur’s death, so he and Sharyn were only there for about 12 months. During this time, they ran the farm, including milking cows, doing animal husbandry, and repairing fences and the house, which he described as “an absolute pigsty”, on occasion with the assistance of the executor and her husband.

He and Sharyn ran the Scotts Creek farm with Darrel’s cattle, and collected the milk cheque, which was insufficient to cover the expenses associated with running the Scotts Creek farm. He worked as a welder in Portland when the cows were not milking to generate additional income. He paid the rates, mortgage repayments, and all other outgoings for the 12 month period, and left the Scotts Creek farm with an overdraft of $4,500. He denied that Darrel lent him the money to make the first mortgage repayment. A few days before his death, Arthur visited the Scotts Creek farm with Darrel, told him that he had done a great job, and asked him to stay at the Scotts Creek farm.

After Arthur’s death and the sale of the shop, from which he received some of the proceeds of sale, Caroline lived with him and Sharyn in Irrewarra, but he and his mother did not speak to each other for about 20 years prior to her death.[14] He does not like Darrel either. He does not recall Caroline telling him that Darrel had purchased the Scotts Creek farm from her, and said that he did not attend any family meeting at his home or Graham’s home after Arthur died.
[14]So, from about 1995.

The notes

As previously observed, the documentary evidence supporting Darrel’s claims that he had agreed to purchase the Scotts Creek farm from Caroline for the sum of $87,000 was scant, and, as will be seen, a little inconclusive. The executor disputed whether some of the handwriting on the notes was in fact Caroline’s handwriting, and those suspicions were supported by Audrey and Des in their evidence. While neither party called a handwriting expert to give evidence regarding the handwriting on the notes, one can see how these queries arose, given that there are apparent differences between the handwriting on some of the notes and other documents where there is no dispute that the handwriting is Caroline’s, such as her signature on the 2011 will.

The handwritten script on the notes is somewhat untidy. There are some spelling errors, and the language is ungrammatical. Understandably, that raised suspicions that the handwriting on the notes was Darrel’s handwriting, not Caroline’s handwriting. Further, Darrel gave evidence that he wrote out the first and second tax invoices. However, none of the witnesses called by the executor were prepared to allege that Darrel had attempted to forge Caroline’s handwriting on the notes, although intimations to that effect made their way into the executor’s final written submissions.

The notes are identified in the court book as having been discovered by Darrel, but it appears that most of the notes were originally provided to Darrel’s solicitors by the executor’s solicitors on or about 9 January 2017, with the covering letter saying that these documents had been found in Caroline’s possession. The notes include the following documents:

(a) the ANZ letter, which included a handwritten notation “money lent to me from Darrel as part payment for farm 3/8/06”;

(b) a copy of an ANZ Bank cheque dated 3 August 2006 and addressed to “C.B. Merrett” (Caroline) for $87,000 (‘bank cheque’). There is no dispute about the authenticity of the bank cheque;

(c) a sheet of A4 paper which appears to be a copy of two separate notes, each of which looks like they were written on scraps of paper and later stuck to the page. The first note said “5.8.06 when Darrel gave me money fo… I sent this amount in to George 87.000.00”, and the second note said “must keep as this the Date Darrel Payed me 5.8.06” (‘sundry notes’);

(d) a copy of a Bendigo Bank deposit slip signed by Caroline and dated 5 August 2006, showing the deposit of an ANZ Bank cheque for $87,000 into a Bendigo Bank account (‘deposit slip);[15]
[15]The deposit slip referred to a bank account which apparently was no longer held in Caroline’s name by the time the executor and Graham began investigating Darrel’s claim that he had purchased the Scotts Creek farm from Caroline. Remarkably, given the significance of this issue within the family, and the issues in this proceeding, the bank account concerned does not appear to have been identified, but there is no longer any dispute about whether the money was in fact paid to Caroline.

(e) a printed proforma “Tax Invoice/Statement”, such as might be obtained from a stationery supplier, with the number “46” (‘first tax invoice’). The handwritten parts of the note include the date of 10./8/2006, and the invoice is addressed to “Darrel C Merrett” from “C.B. Merrett.”. Under the heading “Description” is the following handwritten notation, largely in block letters:

SALE OF LOT 70
WILLIAMS RD SCOTTS CREEK
TO BE LEFT IN WILL TO
DARREL C MERRETT
OR CAN BE
TRANSVRET [sic]
TOTAL PRICE $87,000
PAID IN
FULL
TO C.B. MERRETT.

(f) another proforma “Tax Invoice/Statement”, this time numbered “48”, and dated 10/8/2006 (‘second tax invoice’). Against the printed word “To” is “C.B. Merrett” in cursive script, which is crossed out, and underneath replaced with “Darrel C MERRETT”, and next to the word “From” is the notation “C.B MERRETT SALE OF SCOTTS CREEK FARM 70 WILLIAMS RD”. The invoice also refers to “1” “FARM” with the price of “$87,000”, and there is a notation “PAID IN FULL”.

Further, while this document was not referred to in the original statement of claim or the final pleading, there is another handwritten document in the court book dated 16 June 2008 (‘2008 note’) The 2008 note stated, verbatim, as follows:

16-6.08
To whom this may conscern
Darrel To get Farm & contents. no Extra money.
$5.000 00 To be Put in Trust for colin Funeral
Colac. House to be for Colin To ues until Such time
he no longer wants or requires it but must be looked after
Pay Raits & water & after he no longer need it
it is to be sold & Devided between Graham
Caroline Audrey Des & Brian & Same to b done with
my House at 24 Jarraya St Simpson.
With Lov trust
Mum
Caroline Beryl Merrett

It is not clear from the evidence where the 2008 note was found, and in what circumstances, but the index to the court book shows that this document was discovered by the executor, so the 2008 note was presumably also found amongst Caroline’s papers.[16]
[16]It appears that a copy of the 2008 note was only provided to Darrel’s solicitors in October 2020, and the 2008 note is not referred to in the final pleading.

The executor gave evidence that when she was very young, Caroline worked in a solicitors’ office, and all agreed that she was a “good speller”. Further, the executor and Audrey knew from receiving greeting cards and other written communications from Caroline that she usually wrote in cursive script, consistent with the signature on the 2011 will. Des knew Caroline’s handwriting from documents at the shop and did not agree that she signed her name in block letters. Darrel gave evidence that Caroline’s writing style changed later in her life as she became more affected by symptoms of dementia.

Turning now to each of the notes, the executor did not believe the notation on the ANZ letter was in Caroline’s handwriting, as Caroline usually wrote in a cursive script. Audrey agreed, but Des gave evidence that he believed it was Caroline’s handwriting. Darrel gave evidence that he believed that Caroline had written the notation, and the reference to “part payment” was made because he made the other “part” of the payment by paying off the mortgage over the Scotts Creek farm.

As for the sundry notes, the executor believed that the sentence “I sent this amount in to George 87,000.00” was in Caroline’s handwriting, but the rest was not. Audrey and Des both agreed. Darrel said that he assumed that the sundry notes were written by Caroline.

As for the deposit slip, the executor believed that the signature was Caroline’s signature, but she was unsure about the rest of the handwriting on the deposit slip. Darrel, Audrey and Des agreed that Caroline signed the deposit slip. I note that the handwriting on the deposit slip (apart from the signature) is rather untidy, but I do not understand the executor to be making a positive allegation that the handwriting on the deposit slip other than Caroline’s signature is not Caroline’s handwriting.

As for the tax invoices, Des believed that the crossed out name at the top of the second tax invoice was his mother’s handwriting, but he did not believe that the rest of the handwriting was Caroline’s handwriting. Darrel said that he wrote out the first tax invoice at his mother’s request, and Caroline signed it, about four years after the 2006 transaction, as Caroline told him he might need it if the matter ever went to court. He said he wrote out the second tax invoice because he believed that it was necessary for a tax invoice to include more details about the Scotts Creek farm.

Finally, as for the 2008 note, neither the executor or Audrey believed that this note (which looked like instructions for making a will) was written by Caroline, given the spelling mistakes and the absence of her usual signature. However, under cross‑examination, the executor conceded that she could not be sure that Caroline did not write this document, and could not explain why this document was not in the original bundle of notes provided to Darrel’s solicitors in 2017. Des conceded that the 2008 note could have been written by Caroline. Darrel agreed that the signature on the 2008 note looks a little different than Caroline’s usual signature, but that the rest of the 2008 note looked like it was written in Caroline’s handwriting. None of the witnesses recalled Caroline ever using the expression ‘with love and trust’.

Accordingly, my findings with respect to the notes are as follows:

(a) I am not satisfied that the notation on the ANZ letter was not in Caroline’s handwriting;

(b) similarly, I am not satisfied that the handwriting on the sundry notes is not Caroline’s writing;

(c) there is no dispute that the handwriting on the deposit slip is Caroline’s handwriting, and this handwriting is not dissimilar to the handwriting on the 2008 note;

(d) Darrel agrees that both the first tax invoice and the second tax invoice were written out by him some years after the 2006 transaction. Contrary to Darrel’s evidence, Caroline did not sign either document, but the crossed out handwriting on the second tax invoice suggests (but not conclusively) that the second tax invoice was written in her presence; and

(e) given the 2008 note was not written in block letters, and must have been found amongst Caroline’s papers, and the handwriting seems similar to the handwriting on the deposit slip, I am satisfied that the 2008 note was written by Caroline. I accept that the 2008 note was not in Darrel’s possession prior to the filing of the final pleading. If it had been, I expect that it would have been referred to in the final pleading.

Applying these principles to the facts as found, I am satisfied that Darrel and Caroline intended, as at the time of the 2006 transaction, that the beneficial ownership of the Scotts Creek farm would pass to Darrel after Caroline’s death following his payment of the sum of $87,000. At first, the common intention, at least as manifested from the communications between Darrel and Caroline, was that the Scotts Creek farm would be transferred to him immediately. Later, they agreed, or at least Darrel did not object to Caroline’s proposal that the Scotts Creek farm be left to Darrel in her will. While I accept that the evidence of the requisite common intention is dependent upon an acceptance of Darrel’s evidence regarding his conversations with Caroline in 2006, and that Darrel’s uncorroborated evidence has to be treated with a little caution, I am fortified in my view by the following matters:

(a) the fact of payment is now undisputed;

(b) I have no reason to doubt the authenticity of the 2008 note, and the contents of the 2008 note are consistent with Darrel’s evidence concerning the effect of the 2006 transaction;

(c) the evidence from the solicitors’ file, in particular, the evidence concerning the discussion which took place during the course of the meeting on 16 May 2011. Indeed, there is some suggestion in the authorities to the effect that a constructive trust may arise where the holder of the legal title to property acknowledged the beneficial interest of another.[79] However, even if acknowledgment is not a sufficient basis for the imposition of a constructive trust, Caroline’s statements during the course of the meeting with Arthur George in May 2011 provide evidence which corroborates Darrel’s evidence regarding the conversations between them in 2006, notwithstanding the passage of time between August 2006 and May 2011. While five years is a considerable gap, it appears that the meeting in May 2011 was the first occasion in many decades where there was a focussed discussion within the family about Caroline’s financial affairs; and

(d) while the fact that Darrel borrowed money from Caroline in 2012 for the purpose of purchasing another property does not of itself support a positive finding that the payment of $87,000 in 2006 was for Darrel to obtain an interest in the Scotts Creek farm, it does tend to negative any suggestion that the payment was made for some other reason. If the payment was a loan (noting that this contention was not advanced by the executor) then surely, if Darrel needed funds, he could have simply requested that his loan be repaid, rather than borrow further funds from Caroline.

[79]Imam Ali Islamic Centre [2018] VSC 413, [481]-[482]. McMillan J acceded to a submission that an acknowledgement of an unregistered equitable interest by the registered proprietor of land may in some circumstances give rise to a constructive trust where the legal interest holder subsequently engages in unconscionable conduct intended to defeat or deny the unregistered interest. However, read in the context of the facts before her Honour, and the decision upon which she relied (Heggies Bulkhaul Ltd v Global Minerals AustraliaPty Ltd (2003) 59 NSWLR 312), the question of the fact of acknowledgment was relevant to the question of whether the holder of the unregistered interest could rely upon the fraud exception to indefeasibility under s 42 of the Transfer of Land Act 1958 (Vic) in circumstances where the registered proprietor had acquired the property with notice of the unregistered interest. I would therefore be cautious in applying a general principle that the acknowledgement of an unregistered interest by a registered proprietor of land must necessarily give rise to a constructive trust in the absence of proof of the other elements required for a common intention constructive trust.

Of course, it is necessary for Darrel to establish that he acted to his detriment as a consequence of the common intention arising from Caroline’s promise that she would leave the Scotts Creek farm to him in her will. When discussing whether the principles of proprietary estoppel could render an unenforceable contract of sale enforceable, I observed that the preponderance of authority would hold that Darrel’s payment of $87,000 in reliance upon a mere contractual promise did not amount to relevant detriment for the purposes of evading the consequences of the Statute of Frauds. However, while the authorities concerning the need for a “secondary representation” in cases where the principles of estoppel are deployed in response to a defence based upon the Statute of Frauds are somewhat difficult to reconcile with the principles governing when a common intention constructive trust might be found, there seems to me to be no reason in principle while Darrel’s payment of $87,000 could not constitute the relevant detriment, and I could locate no authority to the effect that payment of the “purchase price” pursuant to an unenforceable contract of sale could not constitute the relevant detriment. To the contrary, a common intention constructive trust has on occasion been found to be available to give effect to an unenforceable contract for the disposition of an interest in land.[80]
[80]Ogilvy v Ryan [1976] 2 NSWLR 504; Allen v Snyder [1977] 2 NSWLR 685.

Of course, the payment of $87,000 is also relevant to the determination of the common intention of the parties: in the words of White J in Doolan,[81] Darrel could not have reasonably been expected to pay Caroline $87,000 unless he was assured that he would acquire an interest in the Scotts Creek farm.
[81][2005] NSWSC 42.

I accept Darrel’s evidence that he relied upon Caroline’s assurances that he would receive the Scotts Creek farm. Contrary to the submissions advanced by the executor, I do not accept that Darrel made persistent efforts to have the Scotts Creek farm transferred to him in 2011 and 2012, contrary to the assertions he made concerning the terms of the 2006 transaction, being that he understood that the Scotts Creek farm was to be given to him in Caroline’s will. First, the solicitors’ file does not lead me to draw the conclusion that Darrel’s efforts were “persistent”: indeed, a bit more persistence may have been called for in the circumstances. The issue of the appropriate disposition of the Scotts Creek farm naturally arose in the context of Caroline’s discussions with Arthur George and other family members regarding her will. The solicitors’ file shows that Darrel responded to inquiries made by Mr Harris, and attempted to follow Mr Harris’ instructions as to what he should do. It was Mr Harris who expressed the need for some urgency in resolving the issue of what was to happen with the Scotts Creek farm, given Caroline’s declining health, rather than Darrel.

Given that the relevant common intention arose in the course of or as a consequence of the 2006 transaction, the detriment said to have been incurred by Darrel could not include the detriment said to have been suffered by Darrel in reliance upon the representations made by the parents in his youth. However, Darrel’s contributions to the Scotts Creek farm are relevant to the question of whether, and to what extent, equity would grant relief against Caroline’s departure from the common intention that the beneficial ownership of the Scotts Creek farm pass to Darrel upon her death.

Turning now to the question of whether it is unconscionable for the executor to now deny Darrel’s beneficial interest in the Scotts Creek farm, Darrel has made significant contributions to the Scotts Creek farm. He has maintained it and improved it. He has paid the rates, the mortgage repayments, and other outgoings. He paid $87,000, using borrowed funds, to Caroline on the faith of her promise to transfer the Scotts Creek farm to him, or to leave it to him in her will. She has failed to give effect to that promise, and there is no evidence of the executor having offered to compensate Darrel for the financial contributions he has made, not even the $87,000 paid by him during the course of the 2006 transaction. Therefore, subject to my further observations regarding what constitutes appropriate relief, denying Darrel’s interest in the Scotts Creek property would be unconscionable.

Accordingly, I am satisfied that Darrel has established the essential elements of a common intention constructive trust, based upon the terms of the 2006 transaction. I will consider the appropriate remedy to be granted later in these reasons.

Prior to turning to the executor’s defences, and the question of the appropriate remedy, as previously indicated, I acknowledge that the outcome of the current proceeding reveals a tension between the line of authority to the effect that the payment of money in purported performance of an oral contract of sale for land could not amount to detrimental reliance for the purpose of preventing a party from relying upon the Statute of Frauds to defend a claim for specific performance of the contract of sale without “something more”, and the characterisation of that same payment as sufficient detrimental reliance for the purpose of giving effect to a common intention constructive trust. However, in Ogilvie v Ryan,[82] a submission that an unenforceable oral agreement for the sale of land could not create an equitable interest in land was expressly rejected, as follows:

In my view, the true position is that, if the fact proved are such that, in Equity, a constructive trust would arise, a court of Equity will enforce that trust, notwithstanding that amongst the facts relied upon to establish it there is an agreement proved of which specific performance could not have been ordered because of the Statute of Frauds. A constructive trust may arise in circumstances where there is nothing that the law would call a contract, and a contract for the sale or other disposition of land may occur in circumstances which would not give rise to a constructive trust; but, in my opinion, the enforceability of a constructive trust of a beneficial interest in land is not inhibited by the presence of an oral contract otherwise unenforceable, because that would make the statute of the fraud which the constructive trust is designed to prevent.[83]

[82][1976] 2 NSWLR 504.

[83]Ibid, 525-526.

Indeed, in that decision, Holland J referred to the decision in Gissing v Gissing,[84] and the statement in that decision to the effect that “if an agreement can be proved it is the best evidence of intention”.[85]
[84][1971] AC 886.
[85]Ibid 902.

Perhaps the best way that the authorities can be reconciled is on the basis that, if relevant representations and consequent detrimental reliance were sufficient to render an unenforceable contract enforceable, the parties to the now enforceable contract would as a matter of course have available to them all of the remedies available to a party to a contract (including damages at law), while the relief available to a beneficiary of a constructive trust based upon a common intention is at the discretion of the Court, and is focussed upon avoiding the consequences of the unconscientious conduct of the legal owner of the property in denying the true beneficial ownership of the property in question, which might be less generous to a successful claimant than an order for specific performance, or damages for breach of contract.

Given my finding that Darrel is the beneficiary of a common intention constructive trust with respect to the Scotts Creek farm, I shall now turn to the relevant defences relied upon by the executor.

The executor’s unconscionable conduct defence

The executor contended that if the 2006 transaction did involve the “consent, agreement or promise” of Caroline to transfer the Scotts Creek farm to Darrel, then he did so unconscionably, given her age and vulnerability, her failure to obtain independent legal advice, and the fact that $87,000 was a gross undervalue of the Scotts Creek farm in 2006. In my view, this plea is drawn broadly enough to encompass an allegation that Darrel’s conduct has vitiated any enforceable agreement for the sale of the Scotts Creek farm, as well as a defence to any equitable claim by Darrel for a proprietary interest in the Scotts Creek farm. The latter could be on the basis of the maxim to the effect that those who seek the intervention of equity must come with “clean hands”, or on the basis that, even if Darrel had an expectation of an equitable interest in the Scotts Creek farm arising from any conduct of Caroline upon which Darrel relied to his detriment, or any common intention of Darrel and Caroline, it could not be unconscionable to deny that interest if Darrel in turn had acted unconscionably. Alternatively, any unconscionable conduct on the part of Darrel might be relevant to the character and value of any equitable relief available to him.

I have already referred to this issue briefly in paragraphs 56 to 59 of these reasons. To recapitulate, in order to establish her defence based upon Darrel’s alleged unconscionable conduct, the executor would need to establish that, as at 2006, Caroline was in a position of special disadvantage vis-à-vis Darrel, and that he took unconscientious advantage of Caroline’s particular vulnerability.[86] Special disadvantage is something that “seriously affects the ability of [a party] to make a judgment as to his [or her] own best interests”, and can include age and infirmity.[87] Even then, a finding of particular vulnerability may be rebutted if it was established that Caroline had received independent legal advice regarding the 2006 transaction and decided to proceed anyway, or if it was established that she had received a fair price for the Scotts Creek farm.
[86]Stubbings v Jams 2 Pty Ltd [2022] HCA 6, [39].
[87]Ibid [40].

However, as noted earlier, I am not satisfied that, as at 2006, Caroline was in a position of particular disadvantage and/or vulnerability. True it is that Caroline was a widow of advancing years, and some five years later she was beginning to exhibit signs of cognitive decline. There was also some (limited) evidence to the effect that the siblings were worried about whether her partner was taking money from her, and it can be on occasion inferred that an elderly woman might be vulnerable to undue pressure from adult children, particularly adult sons, about commercial matters.

However, having regard to the evidence and the particular circumstances of the parties in this proceeding, I could not be satisfied that Caroline was in a position of particular disadvantage or vulnerability. She was a woman of some financial substance, owning two residential properties in addition to the Scotts Creek farm, and held investments with at least two solicitors’ mortgage practices. She had run farming businesses and other business for some decades. She did the accounts for the Scotts Creek farm, and, during the relevant time, the shop, and had worked in a solicitor’s office as a young woman. The executor agreed that she was an intelligent and financially astute woman. Apart from advancing age, none of the usual indicia of special disadvantage were established by the evidence.

Significantly, for present purposes, from the limited evidence available, I can infer that, if anything, Caroline held the upper hand when it came to the power dynamic in her relationship with Darrel. While the evidence suggests that Darrel was permitted to run the operations of the Scotts Creek farm as he pleased, she was responsible for keeping the accounts, and controlled the bank accounts in which the milk cheque was banked and from which the farm expenses were paid, although it is not clear whether those arrangements had been in place as far back as 1981. When she decided in 2006 not to transfer the Scotts Creek farm to him immediately, and told him so, Darrel acquiesced.

Accordingly, there is no evidence to support a finding that Caroline was in a position of special disadvantage by reason of her inherent qualities or circumstances. In contrast, Darrel is not unintelligent, but he strikes me as fairly commercially unsophisticated.

Further, any suggestion that Caroline was vulnerable to any undue pressure from Darrel is contradicted by events. While she told Mr Harris in 1996 that Arthur had said prior to his death that Darrel should have the farm, the evidence suggests that Caroline always maintained the position that she would sell the farm to Darrel, not give it to him. Further, even if the executor’s evidence regarding the conversations she had with her mother in 2005 or 2006 has been admitted into evidence, the 2006 transaction ultimately involved a sale, not a gift, of the Scotts Creek farm to Darrel.

In addition, while Caroline did not seek legal advice about the 2006 transaction save for enquiring about the contents of Arthur’s will, it is evident that Caroline had ready access to legal advice, if she chose to seek legal advice. In addition to having a long standing relationship with Arthur George, she held investments with other solicitors’ mortgage practices. Further, it is apparent from the solicitors’ file that she did not have the certificates of title for the Scotts Creek farm, and required the assistance of Arthur George to obtain the titles, such that it seems to me that it would be unlikely that she would transfer the Scotts Creek farm to Darrel without the assistance of solicitors. She clearly had legal advice and assistance when it came to drawing the 2011 will, and sought and obtained advice from Mr Harris, a very experienced and competent solicitor, as to how to deal with the issue of the Scotts Creek farm at that time.

Finally, I accept that the 2006 transaction contemplated the transfer (either contemporaneously or via her will) of the Scotts Creek farm to Darrel at what was possibly a considerable undervalue, even though the precise value of the Scotts Creek farm at the relevant time was not the subject of expert evidence. However, the payment by Darrel of a price well short of market value was not, of itself, conclusive of any unconscionable conduct on Darrel’s part, although, as I will explain later in these reasons, the sum paid is relevant to fashioning any relief granted to Darrel.

However, it seems to me that in the context of the current case, what might have been a “fair” price for the Scotts Creek farm would not necessarily be equivalent to the market value of the Scotts Creek farm. I have accepted Darrel’s evidence that he paid the rates, the mortgage repayments, and the other outgoings associated with the Scotts Creek farm from the income generated from the Scotts Creek farm. While that income and those expenses may have passed through Caroline’s bank accounts, at least for some period of time, it was not seriously suggested by the executor that this income was generated through any other means than from Darrel’s livestock and Darrel’s labour. The executor has asserted that Darrel had the benefit of rent‑free occupancy of the Scotts Creek farm, and could not have expected to do better elsewhere, but Darrel has contended to the contrary. While it is not possible on the state of the evidence to determine precisely where the balance lies, Caroline would have been in as good a position as anyone to make that judgment. Making a gift of the Scotts Creek farm to Darrel under her will may well have reflected Caroline’s prudent assessment of the proper disposition of the Scotts Creek farm, subject to her solicitor being in a position to provide her with more informed advice as to what course of action she should take with respect to the Scotts Creek farm.

Limitations and laches

I have already dealt with the executor’s contention that any claim by Darrel for specific performance of the agreement for the sale of the Scotts Creek farm to Darrel was barred by reason of s 5 of the LAA. No other section of the LAA was pleaded in defence of Darrel’s claims, and as such, it is not necessary to consider whether any other provisions of the LAA may apply to Darrel’s claims.

The executor does, however, plead the defence of laches, contending that Darrel has been responsible for inordinate and inexplicable delay in issuing this proceeding, and that Darrel’s delay has caused the executor prejudice, particularly given that the executor has had to defend Darrel’s claim without the benefit of Caroline’s evidence.

In Orr v Ford,[88] Deane J described the doctrine of laches as follows (citations omitted):

the phrase refers to circumstances where inaction or standing by (with knowledge) by a plaintiff over a substantial period of time assumes an aggravated character in that it will, if the plaintiff is granted the relief which he seeks, give rise to serious and unfair prejudice to the defendant or third party ... The ultimate test effectively remains that enunciated by Lord Selborne LC ... speaking for the Privy Council, in Lindsay Petroleum Co v Hurd, namely, whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable 'to place him if the remedy were afterwards to be asserted’ ...[89]

[88](1989) 167 CLR 316.

[89]Ibid, 341.

I agree that, in an ideal world, it would have been preferable to have had Caroline’s understanding and explanation of what discussions took place between Darrel and the parents in his youth, her understanding of the contributions (both financial and in‑kind) that Darrel made to the Scotts Creek farm (and the Princetown farm) over the years, and the rationale behind and the precise terms of the 2006 transaction. However, it is difficult to conclude that all of the blame for the absence of Caroline’s evidence can be sheeted home to Darrel.

I have accepted Darrel’s evidence regarding the 2006 transaction, including his evidence that he acquiesced to Caroline’s proposal that she would leave the Scotts Creek farm to him in her will. It is unsurprising then that this issue did not come to the forefront until May 2011, when the issue was discussed in the meeting between Caroline and Arthur George in May 2011. Mr Harris, quite properly, gave advice to and took instructions from Caroline as to how to further progress the matter, and Darrel, at least to some extent, did what Mr Harris asked him to do. However, the enquiry as to what transpired during the 2006 transaction seems to have been derailed by other issues, including the issue of what was to happen with Caroline’s home in Colac, Caroline’s declining health, the issue about whether Caroline had lost money from her investments with Arthur George, Darrel’s inability to find written evidence of the 2006 transaction, and possibly Darrel’s accident in 2012.

Accordingly, I do not consider that Darrel could be held to be solely responsible for the delays up until 2013. After that time, while it is not possible to identify the precise time when Caroline lost all capacity, it is difficult to see how any additional prejudice arose after the time that Caroline lost the capacity to give cogent instructions or evidence about the 2006 transaction. The same could be said for the period between Caroline’s death in mid-2015 and the issue of this proceeding in early 2019. While I can speculate as to what might have occurred, no explanation has been provided as to why it took the executor nearly three years to obtain a grant of probate, and this proceeding was issued within a year of that date. Accordingly, the defence of laches fails.

The appropriate remedy

Having found that the facts of this case support a common intention on the part of Darrel and Caroline that Darrel was to have a beneficial interest in the Scotts Creek farm upon her death, and that the executor has not established the defences upon which she relied, the question remains, what remedy should Darrel have? Here, I am faced with some difficulties, because both parties have adopted what might be described as an all-or-nothing approach to this dispute. Darrel submits that nothing less than a transfer of the Scotts Creek farm would be an appropriate remedy to give effect to the expectation engendered in him by Caroline’s assurances and conduct, and to remedy the consequent detriment that he suffered. The executor, on the other hand, contends that Darrel has no entitlement to the Scotts Creek farm, in law or in equity, and the terms of the 2011 will ought be given immediate effect. Accordingly, I have been left with limited evidence, and no submissions, as to what might be an appropriate remedy which falls short of a constructive trust over the entirety of the Scotts Creek farm.

Darrel’s position finds support in the authorities, where it has been held that the Court is not confined to doing the “minimum equity” required to ameliorate the consequences of the legal owner’s unconscionable departure from their promises.[90] However, now is not the occasion for a lengthy discussion as to whether the “minimum equity” stipulation does or does not apply to cases where a common intention constructive trust has been found to exist. However, in my view the current case is not dissimilar to the facts facing the High Court in Giumelli v Giumelli[91] (‘Giumelli’), where the plurality held that the successful claimant could not establish an immediate right to relief equivalent to the right to recover damages for breach of contract, but rather, the plurality stated that “the Court must look at the circumstances in each case to decide in what way the equity can be satisfied”.[92] Their Honours then went on to state as follows.

Before a constructive trust is imposed, the Court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust.[93]

[90]Donis v Donis (2007) 19 VR 577; Delaforce v Simpson-Cook [2010] NSWCA 84; Sidhu v Van Dyke (2014) 251 CLR 505; McNab v Graham [2017] VSCA 352; Harris v Harris [2021] VSCA 138.

[91](1999) 196 CLR 101.

[92]Ibid 113 [10]. See also Delaforce v Simpson-Cook [2010] NSWCA 84 [3].

[93]Ibid (citations omitted).

Relevant factors to be taken into account in Giumelli[94] included the presence of an ongoing litigation within the family, improvements carried out on the property in question, and the impact of a declaration of a constructive trust upon third parties. The plurality accepted that what will be required to satisfy the equity found is not confined to reversing the relevant detriment, but the circumstances of the case may not necessarily require the enforcement of the relevant promise.[95]
[94]Ibid.
[95]Ibid 123-125.

Accordingly, I do not consider that I am relieved of the duty to consider a lesser remedy than the declaration of a constructive trust over the whole of the Scotts Creek farm in favour of Darrel simply because the parties have not made submissions as to the form or value of an appropriate remedy should Darrel’s claim for an equitable interest in the Scotts Creek farm succeed, as it has. The language of the plurality in Giumelli[96] is expressed in mandatory terms, such that I do not consider that the question of an appropriate remedy is confined by the manner in which the parties have put their case at trial. While I do find myself confined by the form of the prayer for relief in the final pleading, which limits the equitable relief claimed to a declaration of a constructive trust and the consequent transfer of the Scotts Creek farm to Darrel, it is open to me to determine, should the relevant circumstances warrant, that a constructive trust be declared with respect to only a share of the Scotts Creek farm.
[96]Ibid. See also Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566, 584, where another relevant factor identified was the possible injustice of the successful plaintiff getting an unfair priority over equally deserving creditors.

There has been some discussion in recent decisions of the role that the question of “proportionality” plays in determining what amounts to appropriate relief, that is, whether the remedy must be proportionate to the detriment incurred by the party seeking equitable relief. In Harris v Harris,[97] the Court of Appeal held that, where a claimant has established the right to relief based upon the principles of proprietary estoppel, the onus is on the party estopped to establish that relief which gave effect to the promise relied upon would be disproportionate to the detriment incurred. The Court held that, in making such an assessment, a “ledger” approach, that is, comparing the value of the promise with the value of the detriment suffered, is not necessarily appropriate, as it is tantamount to equating detriment with consideration.[98]
[97][2021] VSCA 138, [79].
[98]Ibid [81]-[82].

Notwithstanding the reference to “proportionality” in recent decisions, the prima facie position, being that a Court should give effect to the assumption induced by the conduct of a party who is estopped from denying an interest in land based upon the principles of proprietary estoppel unless it can be demonstrated that such relief is disproportionate to the detriment suffered does not, in my view, necessarily apply to a constructive trust arising in a different context, where the trust found (being a common intention constructive trust) is really a variety of an express trust, albeit one which fails to comply with the Statute of Frauds. In my view, the following statement of Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd[99] remains relevant:

... it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.[100]

[99](1937) 59 CLR 641. See also Ciavarella v Polimeni [2008] NSWSC 234 [173].

[100]Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, 674.

Further, the prima facie entitlement to the fulfilment of the relevant promise may be qualified if “the relief based upon that entitlement may exceed what could be justified by the requirements of conscientious conduct”.[101]
[101]Barnes v Alderton [2008] NSWSC 107 [69].

The circumstances compelling the High Court to afford a more limited remedy than a fulfilment of the relevant expectation in Giumelli[102] were more problematic than in the current case. Darrel is in effective possession of the Scotts Creek farm, and any improvements on the Scotts Creek farm by others were effected many decades ago, and are not capable of being valued. While a transfer of the Scotts Creek farm would clearly have a detrimental impact upon the remaining siblings, as beneficiaries of the 2011 will, they are volunteers. While there may be other litigation pending regarding Caroline’s estate, I am not aware of it.
[102]Giumelli (1999) 196 CLR 101.

In my view, the most compelling relevant circumstance telling against making good Darrel’s expectation is that, on Darrel’s own evidence, the payment of $87,000 in 2006 was clearly disproportionate to the value of the Scotts Creek farm at that time, even after taking into account Darrel’s past financial contributions to the Scotts Creek farm, which do not of course qualify as relevant detriment, but in my view may be taken into account in weighing the nature and value of the relief granted.

The best evidence available suggests that by August 2006, Darrel had made the following financial contributions to the Scotts Creek farm (there being no evidence about the value of any improvements), including the sum paid as part of the 2006 transaction:

Payment in August 2006   $87,000

Mortgage repayments 1981-1993   $57,500[103]

Rates 1981-2006   $36,000[104]

Total   $180,500

[103]The title search for the Scotts Creek farm in evidence shows that the mortgage held by the Rural Finance and Settlement Commission was discharged in 1993, and I have deducted $2,500 to reflect the evidence that Des paid one instalment of the mortgage repayments.

[104]I have deducted $1,500 to reflect Des’ evidence that he paid rates for one year.

If one adds the mortgage repayments paid for the Princetown farm ($45,000), the total financial contributions made by Darrel to the parents’ farms was valued at approximately $225,000, or, based upon the midpoint of the range of values attributed by Darrel to the Scotts Creek farm in 2006 ($425,000), approximately 53 per cent of the value of the Scotts Creek farm at the time. This estimate is very broad brush, given the deficiencies in the evidence, and does not take into account the changing value of money over time, but it is the best I can do in the circumstances.

I have not taken into account the work carried out by Darrel on the Scotts Creek farm when making the calculation above, because it is simply impossible to make some assessment of what the value of that work might have been. It is also very difficult to assess how the value of that work, and any improvements made by Des to the Scotts Creek farm should be offset against the benefits Darrel has derived from working on the Scotts Creek farm, in circumstances where he had the use of the Scotts Creek farm rent-free. Either the payments made by Darrel were made in lieu of rent, or should be considered to be relevant financial contributions: they cannot be both.

Taking all of the above matters into account, and making an allowance for the changing value of money over time, I consider that the appropriate order to make is a declaration to the effect that the executor holds the Scotts Creek farm on a constructive trust in favour of Darrel as to 65 per cent of the value of the Scotts Creek farm. I accept that this may appear to be an arbitrary figure, but that is all that is possible in the circumstances. How precisely that declaration should be given effect, and how the responsibilities of the executor as the trustee of the Scotts Creek farm might be discharged should be the subject of further discussion between the parties, and if necessary, further orders.

Finally, for completeness, I would add that, if I had found that Darrel had failed to establish any entitlement to the legal or beneficial ownership of the Scotts Creek farm, there may have been other remedies available to Darrel as a consequence of the payment to Caroline of $87,000 in 2006. The money might be repayable to Darrel upon restitutionary principles, or on the basis of unjust enrichment.[105] Alternatively, the funds might be found to be impressed with a Quistclose[106] trust in favour of Darrel. Of course, claims of that nature were not made in the final pleading, and might face a variety of defences. However, Darrel’s potential right to recover his payment (and possibly interest) in the event that it was found that the 2006 transaction failed to give Darrel any beneficial interest in the Scotts Creek farm should be acknowledged.
[105]Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Southage Pty Ltd v Vescovi [2014] VSC 141.
[106]Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567.

[2022] VSC 220

5 May 2022