Morton v Morton No. Scgrg-96-1816 Judgment No. S31

MORTON v MORTON
[1999] SASC 31

Civil

PERRY J. The plaintiff claims an order for a declaration that the partnership between him and the defendants, known as Pandie Proprietors, was dissolved on or about 30 June 1996, and an order for the winding-up of the partnership. As well, the plaintiff seeks a declaration that the first defendant, Mr George Morton holds a station property in New South Wales, known as “Barraroo” on trust for him, together with an order that he transfer Barraroo to the plaintiff free of any encumbrance. The plaintiff further claims a declaration that either Mr George Morton or all three defendants hold the Barraroo plant, equipment, fixtures, fittings and livestock on trust for the plaintiff, and an order that they transfer those items to him as well.
At the trial, counsel intimated that the parties accepted that the partnership had been dissolved as of 30 June 1996, and that it was liable to be wound up as of that date. However, in an agreed document put before me at the start of the trial headed Statement of Issues and Contentions, the parties submitted for the determination of the court a question as to the accuracy of the attribution to the plaintiff of his share of certain profits and losses of the partnership, as recorded in the partners’ current accounts. I deal with that issue in due course.
However, the central issue which became the main focus of the trial is the plaintiff’s alleged entitlement to Barraroo.
The defendant Mr George Morton is the plaintiff’s father. The other two defendants, David John Morton and Debbie Lorraine Weston are respectively his brother and sister. I will refer to the defendant Weston as “Rainie” which is the name by which she is commonly called.
In order to understand the factual background to the action, it is necessary to have regard to the family history extending over some years. Before doing so, I will state my findings as to credit.

Findings as to credit

The plaintiff gave evidence and called one witness, his wife Jacqueline. All three defendants gave evidence, but did not call any other witnesses.
I prefer the evidence of the plaintiff where it conflicts with his father’s evidence. I had both the plaintiff and his father under observation for a considerable time while they were examined and cross-examined. I formed the distinct impression, not only that Mr George Morton’s recollection as to the critical issues was faulty, but that there were times when he was guilty of conscious or unconscious reconstruction to suit his own case.
As for the other witnesses, it is fair to say that their evidence related to matters which were either common ground, or relatively peripheral. To the extent that there are conflicts in their evidence, I have resolved them in favour of the findings of fact which I set out in the remainder of this judgment, which largely reflect the plaintiff’s case rather than that presented by the defendants. As to those findings, it can be assumed that, without necessarily referring to all relevant items of evidence, I have accepted the evidence supporting those findings and rejected evidence and arguments to the contrary.
I should say that I have disregarded evidence admitted de bono, of conversations between the plaintiff and his mother. Whatever may be the admissibility of such statements, I have been able to reach the findings of fact set out in this judgment without reference to them.

Background

For at least three generations, the Morton family has owned and lived on grazing properties which, in the main, appear to have been located in Queensland near its borders with New South Wales and South Australia.
Mr George Morton’s father, the plaintiff’s grandfather, owned a property known as Roseberth. Another property known as Pandie Pandie, said in evidence to occupy approximately 2,400 square miles, was at one time operated by a partnership between Mr George Morton and his brother Lyall. Eventually Mr George Morton took it over, and the homestead at Pandie Pandie became his family home.
The plaintiff, who is aged 42 years, has two older brothers, the defendant David and another brother Graham. He has three younger siblings, being two other brothers, Kym and Rodney, and his sister Rainie. Graham left Pandie Pandie many years ago, as did Kym and Rodney, and they do not play any part in the transactions now in question.
After attending school in Adelaide, the plaintiff returned to Pandie Pandie to work as a stockman, doing the work of a general station hand. For about a year, between 1978 and 1979, he left to work on other stations before he came back to Pandie Pandie in 1979.
In 1979, a partnership agreement dated 1 July 1979 was entered into between Mr George Morton, his wife Lorrie, the plaintiff and his brother David. The partnership business was defined in the agreement as that of pastoralists and graziers, and was to be carried on at Pandie Pandie station and “such other lands at such place or places as the partners shall agree upon”. The firm name was to be “Pandie Proprietors”.
The partnership agreement provided that the initial capital of the partnership as at 1 July 1979 consisted of the livestock as shown in the balance sheet, which I understand was cattle previously owned by Mr George Morton held on Pandie Pandie. Under the agreement, Mr George Morton was entitled to a 7/10ths share of the capital, one 1/10th share being allocated to his each of his wife, the plaintiff and the plaintiff’s brother David. Although the agreement stipulated how profits are to be divided, somewhat surprisingly, it does not indicate how operating losses are to be borne. That omission has given rise to a problem to which I turn later in this judgment.
In the agreement, Mr George Morton is described as the “Senior Partner”. As such, he alone had “the general conduct of the day to day working of the partnership business and of the attending to and supervising of the work of the property or properties used by the partnership”. His rights extended to the hiring and firing of station employees, and the buying and selling of livestock, plant and equipment. As Senior Partner, he had the right to expel any of the other partners from the partnership in certain circumstances which are set out in the agreement (clause 20). Under the agreement, Mr George Morton agreed to make available to the partnership Pandie Pandie station and the plant and machinery on it.
After he had signed the partnership agreement, the plaintiff continued to work at Pandie Pandie. Indeed, it seems clear from the evidence that the change in his status to that of a partner had very little impact on his life, as he continued to work for a wage at the direction of his father who was and remains in sole control of the business operations. It does not appear that there has ever been a partnership meeting as such, and all relevant decisions which impacted on the operation of the partnership have been made by Mr George Morton.
In 1980, the plaintiff met his wife-to-be Jacqueline. They married in April 1982.
Some months before the wedding there were discussions between the plaintiff and his father, apparently initiated by the plaintiff, as to what he was to do after his marriage. The plaintiff said that he was not prepared to bring his wife back to live in the homestead with his mother and his sister, as he did not think that it would work out.
Towards the end of 1981 he went to Brisbane, where Jacqueline resided, but returned to Pandie Pandie about six or seven weeks before the wedding.
It appears that he was not able to resolve with his father a satisfactory basis upon which he might stay on the land, and he returned to Brisbane. He then made arrangements to work for Brambles in their plant on the outskirts of Brisbane as a heavy vehicle operator, or small-crane driver. He and Jacqueline resolved that she would work for her father, a chiropractor. They took up a lease on a house in Brisbane, and bought a Gemini motor car for Jacqueline to use.
The facts to which I have so far referred are common ground, or at least, were not put under challenge during the course of the trial. However, a development occurred on the night of the plaintiff’s wedding as to which the evidence of the plaintiff and his father differed substantially.
On the plaintiff’s account of the matter, his father approached him at the reception and suggested that he come and see him the next day. The following day they met at the home of mutual friends, Mr and Mrs Hall. At the meeting, according to the plaintiff, his father suggested that he come home. He suggested that other properties might “come up”, indeed, that his agent Mr Lindsay Olive, an employee of Dalgety’s, was looking at one at that time. The plaintiff’s father inferred that if he came home, the plaintiff might have an opportunity to get a start on a property.
The plaintiff’s evidence continues:
“Q.... So did you talk further to your dad about it.
A.I just went back and said to him ‘If you reckon there is a chance that this is the way it is going to go, we will come back again’, and dad said to me ‘Look, take a couple of weeks off, have a honeymoon and come home’, which we did.”
In his evidence, Mr George Morton admitted that there was a conversation at the wedding, but says that it was initiated by the plaintiff. His evidence on this topic was, in part:
“Q.... Did something happen at the wedding.
A.Just at the end of the wedding when they were doing their last swan dance, or whatever they do, Jim Evans and I were standing over in the middle of the floor there and Craig come running over. He said ‘I’m not leaving. .... I want to come home’, and I said ‘We will think about it’. We sat down over at the table with a beer and Craig said ‘I want to come home. I want to come home.’ I said ‘I don’t know what I can do because I have got nothing for you, but I will be buying other places’, which I intended to do, so I said ‘There’s something. You can go and look after them’.
Q...... Was something said about where he would live if he returned.
A.I didn’t have nowhere for him to live. I told him that.”
Mr George Morton went on to say that at that time he was looking for other properties.
He admitted that there was a further discussion at the Halls the next day when, according to his evidence, he said, “You can come home but we’ve got no work to do. If I get another place, you can go down and look after it”.
The evidence makes it clear that both Mr George Morton and the plaintiff had a fair bit to drink at the wedding reception. The evidence of both of them as to the events that night is, for that reason alone, to a degree unreliable. In any event, as I have already explained, I prefer the evidence of the plaintiff where it conflicts with that of his father or his father’s witnesses. I have had regard to the evidence of Rainie, which does not deflect me from making the findings which I have made as to the events of the wedding night and the next day.
So it was then that the plaintiff and his wife Jacqueline made their way back to Pandie Pandie about a month after the wedding. Before doing so, the plaintiff told Brambles that he no longer wanted to take up the offer which they had made of employment with them, negotiated his way out of the lease of the house which he had taken up, and sold off some of the possessions which he and his wife had bought to set up home there.
For the reasons which I have given, I find that the plaintiff’s return to Pandie Pandie with his wife Jacqueline followed an invitation by his father to do so. While I am satisfied that Mr George Morton said that he would buy another property or properties and that in that event the plaintiff and his wife could reside on one of the new properties and manage it, I am not satisfied that he said clearly at that stage that he would make a gift of any such property to the plaintiff.
Not surprisingly, the evidence from both the plaintiff and his father as to just what was said so long ago is lacking in detail. Nonetheless, I am satisfied that Mr George Morton’s invitation to the plaintiff to come back was couched in terms which encouraged the plaintiff to think that it would be to his long-term benefit to do so. I am satisfied that he would not have thrown aside the arrangements which he had made to settle down in Brisbane unless some such inducement was made.
Furthermore, I accept the plaintiff’s evidence that he would not have left Brisbane, set up house at Barraroo and worked there over the years from 1982 until now, were it not for the promises made by his father that the property would be his. Initially, when he left Brisbane, his father had simply intimated that he was looking for other properties and would be prepared to consider setting the plaintiff up on one of them as manager. However, when Barraroo was acquired, Mr George Morton promised that it would become the plaintiff’s property if he stayed on it and worked it until it became viable.

Barraroo

It was in about May 1982 that the plaintiff and his wife returned to Pandie Pandie. True to his word, the plaintiff’s father suggested soon afterwards that they inspect another property which he had in mind as a possible purchase, namely, Barraroo station. Barraroo station is in New South Wales, about 176 kilometres east of Broken Hill and about 280 kilometres from the border. It is on the Darling River between Menindie and Wilcannia. The property comprises about 99,200 acres. In 1982, there was on it an old homestead built in about 1890, some sheds, including a shearing shed and shearers’ quarters, and four dams which were badly silted up.
Following Mr George Morton’s suggestion that they inspect the property, he, the plaintiff and Rainie flew down to look at it in Rainie’s plane, which she piloted.
On the inspection, the plaintiff’s father asked him whether he and his wife would be prepared to live on it. The plaintiff said that they would.
After that inspection, Mr George Morton went to Adelaide. On his return he informed his son that he had bought the property. His evidence before me was that he paid $650,000 for it, excluding stock, plant and equipment. Sheep were run on the property.
Although neither he nor the plaintiff had had experience in running sheep, he bought the sheep and the plant and equipment, with a view to the plaintiff gaining experience with sheep.
On about 2 August 1982, the plaintiff and his wife took up residence at Barraroo. They have lived there, and brought up their family on the property, ever since.
In the first year, they suffered a bad drought. They found the homestead livable, although there was some trouble with snakes inside. Fences were in a poor state and needed a lot of repairs. There was little in the way of plant which came with the property, and for the first year or two the plaintiff borrowed much equipment from neighbours.
A partnership bank account was established in the name of Barraroo. The plaintiff was entitled to draw on the account, and a separate trading account with Dalgety’s, to pay for outgoings to run the property. He was not, however, permitted by his father to draw on the accounts for personal expenses. These he met from a salary which he was paid, which later was converted to a fixed drawing against the partnership.
Under the regime which his father established, the plaintiff was not entitled to incur any substantial expense without approval from his father. In the result, there were some items which he paid for out of his own pocket, including a colourbond fence around a new homestead built on the property.
The plaintiff’s mother, Mr George Morton’s wife, Lorrie Marie Morton, died in August 1993. After her death, her 1/10th share of the partnership was treated as divided equally between the two sons who were partners, that is, the plaintiff and David Morton, and Rainie. From then on, Rainie was treated as a partner to the extent of 1/3rd of her late mother’s share.
In 1986 Mr George Morton suggested that a new homestead be built on the property. He left it to the plaintiff and his wife to obtain plans and quotes from builders, although both he and the plaintiff’s mother looked at the plans and suggested some changes before approving them. I accept the plaintiff’s evidence that with respect to the house his father said, “You design it because it’s your house. You have to live in it”.
The plaintiff and his wife now have four children. When the children were old enough to do so, they have helped their father around the property. Basically, he works it single-handed with their help and some help from Jacqueline. He hires casual labour to mark lambs and at shearing time.
When the plaintiff took possession of Barraroo it was carrying about 4,300 sheep. At the time of trial there were about 8,000 sheep and about 190 head of cattle.
The plaintiff’s eldest son is now 15. The two eldest boys go to high school at Broken Hill. During school terms, Jacqueline stays with the two eldest boys in a three-bed-roomed cottage at Broken Hill which the plaintiff and his wife have bought with moneys borrowed from the bank. Jacqueline and the two boys return to the homestead at weekends and during school holidays.
The plaintiff estimates that at current land values Barraroo would be worth about $9.50 per acre, or close to $1 million.
In 1986, Rainie married. In the following year or two, the plaintiff and his father inspected other station properties with a view to their purchase, including a property known as Netley and another known as Marrapina. Mr George Morton purchased Marrapina through a company of which he and the other partners are shareholders, namely, Marrapina Station Pty Ltd. Rainie and her husband settled on Marrapina which they worked together with another adjoining property known as The Selection, which her father also acquired some years later.
Rainie and her husband parted in 1995, and she has managed Marrapina and The Selection on her own since then.

Mr George Morton’s Promises

Consistently with the overall view which I take as to their credit, I accept in preference to the denials of Mr George Morton, the plaintiff’s evidence of various promises made by Mr George Morton to the plaintiff with respect to Barraroo.
In particular, I accept that about a week or so after the plaintiff and his wife moved into possession of Barraroo his father said to him, while they were both on the property, “You’ll have to learn sheep. You will have to work hard. You will have to make the place pay. The sooner it pays, the sooner it will be yours”.
I accept also that in 1987, when the plaintiff and his father were travelling together on their way home from an inspection of Netley station, the latter said, when asked by the plaintiff “what was happening with the partnership”, that he would start “handing things over bit by bit .... that would take four or five years ... You will eventually own Barraroo”.
On another occasion Mr George Morton said that the plaintiff’s brother David would “end up” on Pandie Pandie and that he would like to get something to help Rainie “get a start as well”. That was before the purchase of Marrapina which, as I have indicated, Rainie and her husband, and following their parting Rainie alone, have occupied and worked.
The plaintiff kept asking his father about the transfer to the plaintiff of Barraroo, and I am satisfied that for a time the latter’s response was that “You’ve got a big debt now. Marrapina has to be paid for before I can do anything else at the moment”.
It was in about 1989 that the plaintiff considered that Barraroo was more or less self-sufficient in the sense that the income derived from the working of the property exceeded the outgoing associated with the workings of it. I am satisfied that at about that stage when the plaintiff raised the matter with his father, the latter became irate. In describing the exchanges which took place with his father at about this time, the plaintiff’s evidence was:
“Q.... Did you ever speak to your father at all on the topic of whether Barraroo had become self sufficient.
A.Yes, I did speak to my father about Barraroo becoming self sufficient and it had flow, it had a lot of money up to that time.
Q...... What time was it you first spoke to him on this topic.
A.I think it was 1989 your Honour.
Q...... What happened, what was said between you.
A.My father sort of got a little bit irate and told me that the place hadn’t made any money at all, and I said that’s not right Dad because we have had some big years of wool cheques and some good sales of sheep. I said even Mr Lindsay Olive and Mr Sach (Mr George Morton’s accountant and the partnership accountant) has told me the place had done well for itself and has paid for itself over.
Q...... What did your Dad say to that.
A.He virtually shot me down in flames.
HIS HONOUR
Q.What did he say exactly, as best you can remember it, what sort of things.
A...... Lot of little short words in it.
Q.That’s all right.
A...... He told me I wouldn’t f’ing know what I was f’ing talking about. I don’t see the account so how would I know.
Q.Did you respond to that.
A...... No, I was a bit intimidated.”

I think it was from about then that the relationship between the plaintiff and his father entered into a phase which can only be described as one of progressive deterioration. This phase was punctuated by occasions when there were further heated exchanges between them.
For example, I accept the plaintiff’s evidence that in 1991, when his wife was ill after their fourth child was born, the plaintiff asked his father straight out what was going to happen with Barraroo, and his father responded, “You will get Barraroo. It is in my will”. When the plaintiff remonstrated with him, suggesting that this was not good enough and that wills could be changed, his father responded in typically robust language, “You can collect your chips and get the fucking hell out of it”.
That was the first serious occasion upon which Mr George Morton made it clear that his son was free to go if he was not prepared to accept the situation.
In fact, that episode was followed by a placatory telephone call from both Mr Sach the accountant and Mr Olive, in the course of which they reassured the plaintiff that he would be “a wealthy man in the end”, and that the partnership needed him.
Another episode occurred one or two years before the plaintiff’s mother died. The plaintiff complained to his mother that when he had applied to the Social Security department for a low income supplement, he was told, to his surprise, that he did not qualify as there was an amount of some $272,000 which had been allocated to him as his share of profits of the partnership in the preceding financial year. That situation is indicative of the relationship which resulted from the regime which Mr George Morton imposed on his three children, in that he gave very little if any information to the other partners as to his conduct of the partnership, which he seems largely to have kept to himself, in consultation with Mr Sach.
It is clear that, together with Mr Sach, Mr George Morton simply allocated profits at his own whim, having regard to what suited him, no doubt with an eye to the overall incidence of tax, but with scant regard to the personal needs of the plaintiff. I refrain from making findings as to the position of the other two defendants, as they were joint defendants with their father and their relationship with their father was not subjected to any close scrutiny at the trial.
I am satisfied that, as time went on, the plaintiff’s father became more and more irascible and changeable. There were times when he repeated his promise to settle Barraroo on the plaintiff. For example, I accept the plaintiff’s evidence that after the Birdsville races in 1995 there was a conversation between the plaintiff and his father outside a shed at Pandie Pandie. Mr George Morton said that he was getting old, had had “enough”, and wanted “to get out”. I am satisfied that he said that he was “going to start splitting things up” and that the plaintiff would get Barraroo, David Pandie Pandie and Rainie Marrapina. I am satisfied that he said that he had Lindsay Olive and the accountant “working on it”.
I am satisfied that the plaintiff’s father repeated much the same sentiments in about October 1995 when there was a further conversation while the plaintiff was at The Selection at crutching time.
But there were other occasions when the plaintiff’s father abused the plaintiff, and described him as a parasite, “looking for something for nothing”. In fact, I am satisfied that Mr George Morton eventually hardened his feelings towards the plaintiff, and adhered to that position during an increasingly acrimonious series of exchanges between them, both verbal and by letter, including a number of facsimile transmissions, many of which were tendered in evidence.
No useful purpose will be served by embarking on what would necessarily be a tedious process of analysis of that correspondence. During the course of it, various proposals and counter-proposals were put between the plaintiff and his father.
It is clear that during this period Mr George Morton took a number of steps designed to force the plaintiff out of occupation of Barraroo. At times he used Mr Sach and Mr Snewin to write letters to the plaintiff. Their correspondence contains details of various offers which can only be described as extraordinarily disadvantageous from the plaintiff’s point of view, and not surprisingly, they were rejected.
The plaintiff in turn engaged Austen Brown & Thompson, solicitors, of Broken Hill, who on several occasions entered into the negotiations and wrote on the plaintiff’s behalf to Mr Snewin.

Dissolution of the partnership

It is common ground that during the course of the dealings between the plaintiff and his father in the early part of 1996, the plaintiff’s father gave a notice which was effective in law to determine the partnership. He did so, not by the exercise of any power in the partnership agreement, but by a notice which was effective to dissolve the partnership, having regard to s32 of the Partnership Act 1891.
Section 32(c) provides that if the partnership is entered into for an undefined time, it may be dissolved by any partner “giving notice to the other or others of the partner’s intention to dissolve the partnership”, in which event, the partnership is dissolved from the date mentioned in the notice as the date of dissolution.
The notice which has been accepted by the parties as effective to dissolve the partnership is in the form of a facsimile transmission from Mr George Morton to the plaintiff dated 15 March 1996 which reads:
“Craig,
I completely own Pandie, Marrapina, Barraroo and The Selection, which was bought with my own money, (mostly borrowed) no one helped me with the payments or even offered to try and help or pay any interest.
You are now trying to be a parasite and get something from me for nothing.
All I have got out of you is abuse and I am not going to cop any more.
I gave away to you 10% of cattle on Pandie but you try to get more. I gave 10% in a company in Marrapina and now you think you own it.
The company owes me the money for Marrapina if any one wants it that is the position, pay me the full amount of money.
I will not hand around my accounts they are mine, my problems, but you seem to think you own the places, what have you ever offered to pay to get any shares, you draw heaps of money for your own private use and do no good with it.
You are dead set on trying to milk me for free, a parasite. I take all the risks of borrowing money, lose a lot of nights sleep with worry, one slip with my judgment no bank or agent would pay my debt, the whole lot should have to be sold, yet you want to be the parasite and grab when I come good.
The party is over.
You and I don’t see eye to eye any more, you have a copy of the agreement, by its terms we must dissolve our association as at the 30th June 1996.”
That notice was acknowledged by a letter from Austen Brown, Thompson, addressed to Mr George Morton, dated 10 April 1996, which is as follows:
“Dear Sir

Re: Partnership
We have been approached by your son Craig regarding your Notice of Termination of Partnership dated 15th March 1996. Your right, as a partner, to terminate the Partnership is acknowledged and we note termination is to be effective from 30th June 1996.
It is further noted however that no arrangements were proposed by you regarding the distribution of partnership assets.
With a view to finalising Partnership matters as quickly as possible, we have been instructed to put the following offer to you.
Craig is prepared to accept “Barraroo Station” together with plant, equipment and livestock currently on that station, all unencumbered, in full satisfaction of any claims he may have against the Partnership.
Your response within fourteen (14) days is requested. Unless that response is received within that time we will assume that our offer is rejected and we will then have no alternative but to commence legal proceedings against you without further notice.”

Notwithstanding the dissolution of the partnership, after 30 June 1996 the plaintiff has remained to this day in occupation of Barraroo.
A considerable volume of correspondence ensued after July 1997 involving Austen Brown, Thompson, Mr Snewin, Mr Sach, the plaintiff and his father. Much of it relates to the running of the property, as to which the plaintiff has been paid, or at least is entitled to, a salary, and some of it to do with steps to wind up the partnership.
The partnership has not been wound up as there are ongoing differences between the partners as to the final accounting. It is agreed between the parties that in this situation, s42 of the Partnership Act is of application.
The present proceedings were instituted by summons issued in this Court on 30 August 1996. As originally constituted, the action was between the plaintiff and his father and David Morton as defendants. Rainie was added as a defendant later.
The prayer for relief in the statement of claim attached to the summons was limited initially to seeking a declaration as to the dissolution of the partnership and an order for it to be wound up.
The claim which is now central to the case, namely, for a declaration that Mr George Morton holds Barraroo on trust for the plaintiff, was added later by way of amendment to the statement of claim.

Factual conclusions

At this stage it is convenient to summarise my findings as to the central factual issues:

*Towards the end of 1981, in the light of his impending marriage, the plaintiff saw no future for himself at Pandie Pandie station, or by remaining in partnership with his father on the land. He determined to come to Brisbane to live and work after the marriage.
*Towards that end, in December 1981, the plaintiff and his wife-to-be purchased a Gemini motor car in Brisbane, and between then and April 1982 took up a lease on a house property which was to be the matrimonial home, bought furniture and other articles for use in the house, and made arrangements for the plaintiff to take up a job, after the marriage, with Brambles as a machinery operator.
*At the reception following the plaintiff’s wedding in Brisbane on 10 April 1982, and on the day following, there were discussions between the plaintiff and his father during the course of which Mr George Morton invited the plaintiff to return to Pandie Pandie with his wife, at the same time indicating that he was interested in buying other properties, and that he had in mind that the plaintiff might occupy and manage one such property.
*Although no promise was made at that time that Mr George Morton would make over any such property to the plaintiff, the plaintiff was given to understand by his father that if he accepted the offer, he would be securing his future.
*Shortly after the plaintiff’s return to Pandie Pandie with his wife, which was soon after the wedding, the plaintiff and his father inspected and subsequently Mr George Morton purchased Barraroo for a price of approximately $650,000, excluding sheep and plant which were purchased separately.
*The plaintiff moved into occupation of Barraroo with his wife on 2 August 1982, following which and soon afterwards, Mr George Morton encouraged the plaintiff to exert himself in the management of it on the promise that the property would be his when it became viable. Further promises were made to a similar effect during the course of the ensuing years, as summarised in the earlier part of this judgment.
*The plaintiff would not have left Brisbane eventually to settle on Barraroo if his father had not encouraged him to do so, and would not have remained on the property and worked on it over the years since 1982, if his father had not promised to him that it would be his when it was a viable operation.
*When the plaintiff began to put pressure on his father to honour his word, the latter reneged on his promise and commenced an increasing crescendo of abuse of the plaintiff, culminating in efforts in late 1995 and early 1996 to dispossess him of the property or sell it to him.

It is true that, as Mr Wilkinson argued, the late emergence of the plaintiff’s claim in the form in which it finally came before the court, and the absence of specific references during some of the negotiations and in the proceedings as originally constituted, to any promise by the defendant Mr George Morton to transfer the property to the plaintiff, could be construed as operating against acceptance of the plaintiff’s case as it is now presented and his evidence given in support of it.
However, it seems to me that the plaintiff did not have anything in writing from his father, cannot be taken to be familiar with the equitable principles of constructive trusts, and cannot be taken necessarily to have received appropriate advice as to his entitlement in that respect until after the proceedings were instituted.
I am satisfied that I have now heard the full story insofar as it is relevant, and I have no hesitation in accepting the plaintiff’s account of the matter, which is encapsulated in the central findings of fact which I have just noted.
The question then arises as to whether in law the plaintiff is entitled to the relief which he seeks.

Questions of law

Insofar as the principal argument advanced by the plaintiff to establish his claim is based upon the equitable concept of a constructive trust, modern authority makes it clear that such a trust may arise, irrespective of the intentions of the parties concerned. See Muschinski v Dodds[1] per Deane J:
“Like express and implied trusts, the constructive trust developed as a remedial relationship superimposed upon common law rights by order of the Chancery Court. It differs from those other forms of trust, however, in that it arises regardless of intention.”
[1] (1986) 160 CLR 583 at 613.
The circumstances in which a constructive trust will be held to have arisen cannot, by the very nature of this kind of trust, be precisely defined. That this is so is illustrated by the oft quoted dictum of Cardozo CJ:
“When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain a beneficial interest, equity converts him into a trustee.”[2]
[2] Beatty v Guggenheim Exploration Co (1919) 122 NE 378 at 380.
Intention is not, of course, irrelevant, in that if property is acquired with the intention of conferring an interest in it upon another, the evidence of intention, coupled with other circumstances, may give rise to a constructive trust.
The variety of circumstances in which a constructive trust will be held to have arisen is well illustrated by the long line of cases in which the courts have considered the application of the principle in the context of matrimonial or other personal relationships where one party has contributed to the acquisition or improvement of a property in which the legal title to the property is vested in his or her spouse or partner.[3]
[3] See, for example, Baumgartner v Baumgartner (1987) 164 CLR 137 and Booth v Beresford (1993) 61 SASR 475.
But outside of cases involving such a relationship, there are a number of cases where the Court of Equity has intervened to grant relief to prevent the:
“... holder of the legal title to land from insisting upon her or his legal rights in relation to the land where the holder of the legal title has encouraged the other party to believe or expect that a right to the use of the land will be conferred on the other party.”[4]
[4] See Cope Constructive Trusts (The Law Book Company Ltd) 1992 at 643-644.
Of course, there is no reason why the principle should be confined to the generation of an expectation that the other party will have a right to the use of land, as opposed to succeeding to the legal title to it.
What is important is that the party claiming the equity must demonstrate that he or she has acted to his or her detriment, either by the payment of money or in some other way. In such cases there may arise what the courts have sometimes described as a proprietary estoppel. But I read the cases in which that description is used, simply as an illustration of circumstances in which a constructive trust will be held to have arisen. See, for example, In Re Basham (deceased).[5]
[5] (1986) 1 WLR 1498.
Another example is Riches v Hogben.[6] In that case, the plaintiff agreed to migrate to Australia from England with his family to live with and care for his widowed mother in return for her undertaking to buy a house in Australia and put it into the plaintiff’s name.
[6] (1986) 1 Qd R 315.
She bought a house and land but put it into her own name, subsequently turning the plaintiff and his family out of the house. In the course of his judgment, Macrossan J observed:[7]
“On the facts as found, there is ample authority to justify making an order in this case. Whether the basis for intervention is referred to as equitable estoppel, or proprietary estoppel or even constructive trust (see eg Ford and Lee, Principles of the Law of Trusts at 1036, 1037) there is a clear basis for relief. The considerable extent to which the plaintiff, to the knowledge of the defendant, acted to his detriment upon the faith of the arrangement, or, in the language of contract, the full consideration which moved from him as promisee, was intended by both parties to be a performance by him of what was to entitle him to a full interest in a house to be acquired by the defendant in Australia. A trust should accordingly be imposed upon the defendant in respect of her present legal interest in the house because it would now be inequitable or unconscionable to permit the defendant to repudiate the arrangement.
.........
It does not matter that at the time the arrangement was first entered into, the defendant did not own the house in question: cf Crabb v Arun[8] where the defendant’s representation related to its future conduct. There is no doubt that the parties’ contemplation centred upon some suitable house the acquisition of which lay in the future and that is why the working out of the equities in this case may appropriately relate to the house which was ultimately acquired. The house in Chester Place may convincingly be identified with the subject matter of the parties’ earlier planning. The remedy is to be moulded to the requirements of the case: Plimmer v Mayor of Wellington,[9] Crabb v Arun DC[10] and Wood v Browne.[11] The fact that in a particular case the equity may be satisfied in such diverse ways, even by ordering the payment of a sum of money, may indicate that the category of constructive trust is not always an appropriate name for it and proprietary equity or equity of expectation may be preferable. In the present case, the plaintiff’s entitlement will, however, operate in the same fashion as a constructive trust.”
[7] Ibid at 326.
[8] [1976] 1 Ch 179.
[9] (1884) 9 App Cas 699 at 713.
[10] Supra per Lord Denning at 188 and per Scarman J at 193 and 199.
[11] [1984] 2 Qd R 593. [See also Snell’s Principles of Equity, 27th Ed at 568.]
Reference may also be made to Glouftsis and Ors v Glouftsis and Anor.[12] In that case, the father of a Greek family purchased a house in part with the benefit of contributions made by his five sons, who gave him their wages substantially to be used by him for that purpose, following his representation that he would by will leave the family home to all of them. In breach of that representation, he secretly transferred the home to one son and that son’s wife. It was held on appeal[13] that the father held the home during his life, and at the time of the secret transfer of it, on a constructive trust for himself for life and in remainder to all five sons in equal shares.
[12] (1987) 44 SASR 298.
[13] Ibid per White, Legoe and Johnson JJ.
Having regard to the findings of facts to which I have come, I am in no doubt that in the circumstances of this case, at least by the time the operation of Barraroo became viable in the sense in which I have used that expression, Mr George Morton held the property subject to a constructive trust in favour of the plaintiff.

Apart from the promises by Mr George Morton which I have found were made, there is no doubt that the plaintiff acted to his detriment, in the expectation that they would be honoured, by remaining on Barraroo and working it, building it up to a viable operation, over the years between 1982 and 1996.
The constructive trust should now be enforced by appropriate orders in equity.
As for the stock and plant on Barraroo, it appears that these belong to the partnership. Although at one stage, the plaintiff was prepared to accept a transfer of Barraroo, including the stock and plant, in exchange for his interest in the partnership, his offer was rejected. In those circumstances, in addition to the transfer to him of Barraroo which I will order, he is entitled to his share of the partnership assets.
I do not overlook the evidence of the plaintiff that his father had on occasions said that he might want to retain an interest in the stock, or in some way “draw” a wage. At one stage in his evidence in chief, the plaintiff put it this way:
“He always said that his way of doing it, he always wanted to retain a small share on the stock side of it, or draw a wage. He just needed to have something for himself to live on.”
Mr George Morton initially owned all of the cattle (as opposed to sheep). It is clear from the evidence that the partnership, in his mind, related only to the stock running on the various properties. Initially, of course, there was only one property, Pandie Pandie, and the partnership agreement (clause 5(2)) acknowledges that Mr George Morton was to make available to the partnership “Pandie Pandie station and the plant, machinery and motor vehicles on or used by Pandie Pandie station (being) the property of George Villiers Morton”.
After the formation of the partnership, the stock on the properties worked by the partnership, which included Barraroo and Marrapina, was shown in the books of the partnership as a partnership asset. However, in a confused way, no doubt a reflection of the autocratic fashion in which Mr George Morton dealt with the operating of the partnership, he clung to the idea that the stock, at least the cattle, and possibly the sheep, still belonged to him.
I suspect that he may have had the intention at one stage, not only of divesting himself in favour of his children, of the station properties, that is, the realty, but also the stock. The mention by him on occasions, of wishing to “retain a small share in the stock side or draw a wage” could only be regarded as applying, if to anything at all, to profits derived from the stock. Perhaps he envisaged that he might substantially withdraw from the partnership, but retain a small interest in it. Given the fact that the running of the stock was the only business of the partnership, this could explain the suggestion that he might “retain a small share in the stock side or draw a wage”.
Although the plaintiff is now out of the partnership, the remaining partners, that is, the three defendants, have continued the partnership business. Whether or not Mr George Morton will remain a partner, or seek to withdraw substantially, reserving some small interest, is not a matter upon which I should speculate.
My reference to this aspect of the matter is, rather, prompted by the need to make it clear that I have considered the evidence to which I have just referred, but I do not construe it as operating to qualify in any way the promises which I have found Mr George Morton made to make over Barraroo to the plaintiff.

Issue as to allocation of profits and losses of the partnership

The dispute as to this matter highlights the unsatisfactory nature in which the accounting for the partnership from year to year seems to have been effected. As I have already observed, it seems to have been a matter worked out between Mr George Morton and Mr Sach the accountant, without any reference to the other partners, certainly not to the plaintiff.
My task in addressing a discrete aspect of the accounts is made more difficult than it might otherwise have been by reason of the absence of relevant evidence which might have been adduced at the trial, for example, by the calling of Mr Sach, and by the tender of all of the partnership profit and loss accounts and balance sheets.
Rather than call evidence as to those matters, the parties saw fit to attempt to agree the factual basis for this part of the argument in the Statement of Issues and Contentions to which I have earlier referred, which was tendered at the commencement of the hearing.
There appears in that document two tables setting out the percentages of distribution of profits and losses of the partnership between the years 1980 and 1996.
In the first table, percentages have been set out which reflect, as I understand it, the actual accounting performed by Mr Sach. In the second table are set out a different set of percentages, at least for the years between 1985 and 1991, which the plaintiff contends represents the basis upon which the profits and losses should have been distributed.
In the partnership agreement, as I have already indicated, clause 5 provided that the capital belonged to the partners in the proportions of an undivided 7/10ths share in Mr George Morton and one undivided 1/10th share in each of the subscribing partners, that is, Lorrie Morton, David Morton and the plaintiff Craig Morton.
In clause 15(1) of the partnership agreement there are slightly differing percentages set out for the division of net profits. They are as to Mr George Morton 3/5ths and as to the other three partners 2/15ths each.
The first of the two tables to which I have referred, consistently with the partnership agreement, provides as from 1980 to 1984 a distribution of 60% to Mr George Morton and 13.33% to each of the three other partners. The same percentages apply between 1987 and the death of Lorrie Morton, the adjustment resulting from the re-allocation of her share being accounted for as from 1994.
It has further been agreed between counsel that the two years 1985 and 1986 were years within which the partnership made a loss. As to those two years, Mr Sach apparently distributed the loss as to 25% to each of the four partners, that is, equally between them.
Mr Wilkinson contends that the equal distribution of the losses in those two years is correct and should not be interfered with on the footing that, given that the partnership agreement did not indicate upon what basis any losses were to be distributed between the partners, s24 of the Partnership Act applies. The relevant part of s24 of the Act is as follows:
“24.   The interests of partners in the partnership property and their rights and duties in relation to the partnership will be determined, subject to any agreement, express or implied, between the partners by the following rules:
(a)     all the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses whether capital or otherwise, sustained by the firm;
(b)     .....” (emphasis added)
On the other hand, the plaintiff contends that for the two loss years of 1985 and 1986, the percentages in which capital was to be owned should apply, that is, 70% to Mr George Morton and 10% to each of the three other partners.
In my opinion, Mr Wilkinson is correct. It seems to me that there is no basis upon which the operation of the Partnership Act, at least with respect to the sharing of losses, should not be held to apply.

Final orders

Before coming to the relief which, in the light of these reasons, should be pronounced, I mention that the title to Barraroo indicates that Mr George Morton holds the land pursuant to a perpetual lease, subject to the provisions of the Western Lands Act (NSW) 1901. It is not suggested that there are any encumbrances upon the land, but it appears likely that the consent of the Minister, who is not defined in the Act, must be given to any transfer of the lease.[14]
[14] See s18G(1).
In these circumstances, I think it proper that any decree in favour of the plaintiff directing the defendant Mr George Morton to transfer the land to him will be subject to him obtaining all necessary consents, including the consent of the Minister under the Western Lands Act.
Accordingly, I order and declare:
That the defendant George Villiers Morton holds his interest as lessee of the property situated in New South Wales comprised in the perpetual lease over lot numbered 3306 in deposited plan 765562, being the land upon which the property known as Barraroo is situated, subject to a constructive trust in favour of the plaintiff.

That the defendant George Villiers Morton do forthwith transfer his interest in the said land free of encumbrances at the expense of George Villiers Morton in all things to the plaintiff, subject to the obtaining of all necessary consents, including the consent of the Minister under the Western Lands Act (NSW) 1901, should the consent of the Minister be required for the purposes of effecting such transfer.

I order and declare that the distribution of losses within the partnership known as Pandie Proprietors for what are described in the tables set out in paragraph 9 of the Statement of Issues and Contentions of Parties as the 1985 and 1986 years, be as to each of them the plaintiff and the defendants George Villiers Morton, David John Morton and Lorrie Marie Morton, 25%.

It is not clear to me whether the partners still seek a declaration of dissolution of the partnership and an order for its winding up, which is currently proceeding informally. I will make further orders accordingly, if they are sought.
In any event, I further order that the parties may be at liberty to apply at any time for any order which might be thought necessary in order to carry into effect the substantive orders and declarations which I have made and pronounced.
I will hear the parties as to the terms of the final judgment and orders, and as to costs.

JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN THE JUDGMENT

(1986) 160 CLR 583 at 613.
Beatty v Guggenheim Exploration Co (1919) 122 NE 378 at 380.
See, for example, Baumgartner v Baumgartner (1987) 164 CLR 137 and Booth v Beresford (1993) 61 SASR 475.
See Cope Constructive Trusts (The Law Book Company Ltd) 1992 at 643-644.
(1986) 1 WLR 1498.
6. (1986) 1 Qd R 315.
Ibid at 326.
[1976] 1 Ch 179.
(1884) 9 App Cas 699 at 713.
10. Supra per Lord Denning at 188 and per Scarman J at 193 and 199.
11. [1984] 2 Qd R 593. [See also Snell’s Principles of Equity, 27th Ed at 568.]
12. (1987) 44 SASR 298.
13. Ibid per White, Legoe and Johnson JJ.
14. See s18G(1).

[1999] SASC 31

8 February 1999