Mould v Canale

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PROPERTY LIST

S CI 2017 01605

BENJAMIN MOULD	Plaintiff
v
MARIO CANALE & ORS	Defendants

S CI 2016 03686

MARIO CANALE & ANOR	Plaintiffs
v
G W & R MOULD PTY LTD	Defendant

S CI 2016 03921

SALAHUDIN McMILLAN & ORS	Plaintiffs
v
G W & R MOULD PTY LTD	Defendant

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JUDGE:	MACAULAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	19, 20 and 22 June 2017
DATE OF JUDGMENT:	21 December 2017
CASE MAY BE CITED AS:	Mould v Canale & Ors
MEDIUM NEUTRAL CITATION:	[2017] VSC 793

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EQUITY – Proprietary estoppel – Constructive trust – Representation by directors and shareholders of corporate landowner that if their son worked an orchard farm he would inherit the land – Detrimental reliance – Control of land passed to other sibling and sold to third parties – Son gained control of landowner company and refused to complete contracts for sale – Donis v Donis (2007) 19 VR 577, McNab v Graham [2017] VSCA 352, Accurate Financial Consultants Pty Ltd & anor v Koko Black Pty Ltd & Ors [2008] VSCA 86 applied.

EQUITY – Priority of competing equitable interests in land ‒ Purchasers on notice of a claimed equitable interest arising from constructive trust when entering contracts for sale– Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 applied

EQUITY - Specific Performance – Contracts for sale of land – Hardship – Suttor v Gundowda (1950) 81 CLR 418 applied

ESTOPPEL – Issue estoppel – Claim for equitable interest in land arising from constructive trust ‒ Court previously ordered removal of caveat over land asserting same equitable interest – Claimant settled related proceedings involving similar claims to land – Piroshenko v Grojsman (2010) 27 VR 489, Hall v Nominal Defendant (1966) 117 CLR 423 applied

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APPEARANCES:	Counsel	Solicitors
Benjamin Mould and G W & R Mould Pty Ltd	D G Collins QC with J Ross	Slater + Gordon
Mario Canale & Anor and Salahudin McMillan & Ors	M Settle	RNG Lawyers

TABLE OF CONTENTS

Introduction and summary.............................................................................................................. 1

Background......................................................................................................................................... 5

Evidence called............................................................................................................................ 11

Did Ben have the equitable interest he asserts?........................................................................ 12

Principles of proprietary estoppel............................................................................................ 13
What promises were made?...................................................................................................... 15
1994 meeting....................................................................................................................... 17
1997 meeting....................................................................................................................... 19

Findings........................................................................................................................................ 24
The land or the business?................................................................................................. 26
The land or the shares?..................................................................................................... 27
Authority?........................................................................................................................... 28
Reasonable reliance........................................................................................................... 29
Intention of Geoffrey and Raie that Ben rely on the representations........................ 29
Detriment suffered............................................................................................................ 30

Conclusion.................................................................................................................................... 30

Does that interest have priority over the equitable interests of the purchasers?................ 31

Is Ben estopped from asserting his equitable interest?............................................................ 33

Caveat removal............................................................................................................................ 34
Settlement and dismissal of the GWRM proceeding............................................................. 35

Did the Canales agree not to enforce the Contract of Sale?..................................................... 37

Relevant contractual principles................................................................................................. 37
On the evidence was a contract made?.................................................................................... 37
Conclusion.................................................................................................................................... 41

Alternatively, should specific performance be refused on the grounds of hardship?....... 42

Principles...................................................................................................................................... 43
The McMillan parties.................................................................................................................. 45
The Canales.................................................................................................................................. 46
Submissions................................................................................................................................. 47
Conclusion.................................................................................................................................... 48

Conclusion and final orders........................................................................................................... 48

Annexure............................................................................................................................................ 50

HIS HONOUR:

Introduction and summary

Eight days before her death by cancer Raie Mould (Raie) changed her will so that instead of passing control of properties on which three generations of her family had conducted their orchard business to her son, Benjamin Mould (Ben), she passed control of them to her daughter, Susan Hicks (Sue). Within 15 months of Raie’s death Sue had caused the orchard properties to be sold. Two parcels of land were sold to neighbouring fruit growers, Mario and Oraziantonio Canale. Another parcel was sold to members of the McMillan family. Before settlement of those sales Ben took control of the properties (after paying out his sister, Sue, together with other siblings) and has since refused to settle the contracts claiming that he has a prior equitable interest in the land of which the purchasers each had notice at the time of sales. Heard together, these three proceedings concern the purchasers’ attempts to enforce the sales and Ben’s endeavour to resist them.

The registered owner (and vendor) of the orchard properties[1] is a company, G W & R Mould Pty Ltd (GWRM). By Contract of Sale dated 18 December 2015, GWRM, then under Sue’s control, sold two parcels of orchard land (comprising about 61 hectares) at 38-40 and 46 Hunter Road, Wandin in the State of Victoria (Hunter Road properties) to the Canales for the sum of $4.06 million. By Contract of Sale dated 10 February 2016, GWRM sold another parcel (comprising about 6 hectares) at 135 Beenak Road, Wandin (Beenak Road property) to Salahudin McMillan, Faye McMillan, Kirsten McMillan and Scott St Clair (McMillan parties) for $675,000.
[1]The orchard properties, more particularly described in these reasons, are shown in Annexure A.

Ben claims to have an equitable interest in all of the properties based upon the operation of proprietary estoppel. He claims that GWRM held (and still holds) its interest as registered proprietor of each parcel of land on trust for him due to representations made to him by his parents (also the directors of GWRM) that upon their deaths the properties would be his. On 26 March 2015—well before either contract was made—Ben lodged a caveat over the Hunter Road properties and part of the Beenak Road property claiming an interest in them by way of an implied, resulting or constructive trust. A copy of that caveat appeared in the vendors’ statements made pursuant to s 32 of the Sale of Land Act[2] accompanying the two Contracts of Sale.
[2]Sale of Land Act 1962 (Vic).

At the time Sue caused GWRM to sell the properties Ben was serving a 14 month sentence of imprisonment following conviction for cultivating marijuana. In mid-2016, after his release from prison, Ben entered an agreement with the executors of Raie’s estate (one of whom was Sue) under which he purchased all the shares in GWRM for $2,050,000, replaced Sue as sole director and took control of the company. Shortly before that agreement was made, on 10 June 2016, McMillan J ordered the removal of Ben’s caveat.[3] Notwithstanding that order, GWRM, by then under Ben’s control and thus acknowledging his alleged interest in the land, refused to complete the Contracts of Sale.
[3]GW & R Mould Pty Ltd v Mould and Anor; Wakefield v Mould and Anor [2016] VSC 330, (‘GWRM’).

The proceeding (2016/3686) in which Mario and Oraziantonio Canale are plaintiffs was instituted against GWRM for specific performance of the Contract of Sale of the Hunter Road properties (Canale proceeding). The proceeding (2016/3921) in which the McMillan parties are plaintiffs was instituted against GWRM for specific performance of the Contract of Sale of the Beenak Road property, along with damages for the costs of reinstatement following certain works done on the property by Ben in about August and September 2016 (McMillan proceeding). The proceeding (2017/1605) in which Ben is plaintiff was instituted against the Canales and the McMillan parties seeking declarations that GWRM holds the properties on constructive trust for Ben, that Ben’s interest in the properties has priority over the interests of the Canales and the McMillan parties, and for injunctions restraining the Canales and the McMillan parties from seeking to register transfers of the respective properties to themselves (Mould proceeding).

There is now no dispute that both the Canales and the McMillan parties are ready, willing and able to complete the contracts they entered into. But Ben and GWRM deny that the purchasers are entitled to specific performance of their contracts because:

(a) Ben has an equitable interest in the properties based upon principles of proprietary estoppel, of which the purchasers had notice at the time of their respective contracts, which takes priority over the equitable interests of the Canales and the McMillan parties as purchasers under the Contracts of Sale;

(b) Alternatively, if Ben did not have an equitable interest or his interest did not have priority, the hardship he would suffer by being deprived of land on which he has worked for the whole of his working life—and, in the case of the Hunter Road properties, land on which he presently conducts an allied fruit juice processing business—would amount to an injustice greater than that suffered by the purchasers if left simply with their remedy in damages.

Additionally, in the case of the Canales, Ben and GWRM allege that Mario Canale (for himself and his father, Oraziantonio) orally agreed that if Ben obtained control of the Hunter Road properties from Sue, repaid their deposit and reimbursed them for a building insurance premium they had paid, in return, they would not enforce the contract to purchase the properties. Ben and GWRM seek an injunction to restrain the Canales enforcing the contract. The Canales deny they made any such agreement.

In response, first, the Canales and the McMillan parties deny that Ben has the interest he asserts, arguing that at best he only had an equitable interest in the shares in GWRM; or in the business of GWRM; but not in the land itself. Further, they say that Ben is estopped from arguing in these proceedings that he has an equitable interest in the Hunter Road properties or the Beenak Road property because he made the same claim in another proceeding which he commenced in 2016 against GWRM, when it was controlled by Sue (the GWRM proceeding), and that proceeding was disposed of by orders of this Court when he settled it. Alternatively, they say that Ben is estopped from contending that he has an equitable interest in the relevant properties because that issue was decided against him when this Court ordered the removal of his caveat in which he claimed that interest.

Finally, absent Ben having any prior equitable interest, both the Canales and the McMillan parties maintain that as purchasers of land under contract they are prima facie entitled to the remedy of specific performance regardless of whether the land holds any special value for them. Nevertheless, they also argue that the land they respectively purchased does have special value to them, claiming that damages will be an inadequate remedy should this Court not enforce the transfers of the land in their favour.

Arising from these arguments, the questions I have to decide are as follows:

(a) Does Ben have an equitable interest in the Hunter Road properties and the Beenak Road property, based upon principles of proprietary estoppel, arising from representations made to him by his parents?

(b) If so, does that interest have priority over the equitable interests of the Canales and the McMillan parties as purchasers under the Contracts of Sale?

(c) If Ben had a prior equitable interest in the land, is he nonetheless estopped from asserting that interest either because of the decision of McMillan J to remove his caveat, or because he settled the GWRM proceeding?

(d) Did the Canales make an agreement not to proceed with the sale of the Hunter Road properties that this Court should enforce by way of an injunction?

(e) If Ben does not have an equitable interest in the land that competes with the interests of the purchasers, should the purchasers nonetheless be denied specific performance of the contracts due to the hardship Ben will suffer if the properties are conveyed?

In my view, for the reasons set out below, the questions should be answered as follows:

(a) Ben has an equitable interest in the Hunter Road properties and the Beenak Road property, based upon principles of proprietary estoppel;

(b) that interest has priority over the equitable interests of the Canales and the McMillan parties as purchasers under the Contracts of Sale;

(c) Ben is not estopped from asserting that interest either because of the decision of McMillan J to remove his caveat, or because of the settlement of the GWRM proceeding;

(d) the Canales did not make any legally enforceable agreement not to proceed with the sale of the Hunter Road properties; and

(e) although the fifth question was unnecessary to answer, had it been relevant I would not have denied specific performance of the contracts due to any hardship Ben would suffer if the properties were conveyed.

Before turning to each of the issues in turn, I will describe in further detail the relevant events from which the disputes arise.

Background

Geoffrey Mould (Geoffrey) and Raie married in 1954 and 10 years later acquired GWRM to conduct their family orchard business, becoming its directors and shareholders. GWRM bought the various parcels of land making up the Hunter Road properties in 1966 and 1984 respectively, and the land comprising the Beenak Road property in 1969. They developed and conducted the family orchard business from these properties, which were adjacent to one another in Wandin.

Geoffrey’s and Raie’s son Ben was born in 1971; he was the last of their four children. Sue was born 8 years earlier and there are two older siblings who do not play any significant role in this narrative. Ben left school in 1986 aged 15 to work in the family orchard business as an apprentice fruit grower.

It was in the following year, 1987, that he says that the first of four representations were made to him by one or the other of his parents—in this first case, his mother—to the effect that the farm would eventually be his, inducing him to stay working in the orchard business for long hours and low remuneration. A more detailed description of the content of this representation, and of the other representations on which Ben relies, will be given when addressing the first question listed at [10] above.

In 1990, then aged about 19, Ben completed his apprenticeship. He continued to work in the family orchard business. In that same year, Ben says that his parents, together, made a second representation to him to like effect as the first. The third representation he relies upon was made to him by his mother about a year later.

In 1992, Geoffrey and Raie acquired another company, Devon-on-Yarra Pty Ltd, through which they purchased Devon Downs. It was situated in Coldstream, some distance away from the three Wandin properties. Following the purchase of Devon Downs Ben moved into the house on that property, and began the task, along with staff, to clear and redevelop the 120 hectare property as orchards. The work included preparing the ground, planting trees, trellising, and installing irrigation. As will be seen, that property was later sold without Ben’s knowledge and is not the subject of these proceedings.

In April 1994 Geoffrey was sick with cancer. He attended a meeting with his solicitor, Frank Field, and his accountant, Michael Dundee. Mr Field gave evidence in these proceedings concerning what Geoffrey said at that meeting. Geoffrey told Mr Field what he wanted to happen with the shares in GWRM and the ownership and control of the various farming properties. At that time Ben was married and Geoffrey held a concern about what might occur to the properties should Ben and his wife divorce.

Geoffrey died on 15 July 1994 without any change being made to his will. Raie became the sole shareholder of both GWRM and Devon-on-Yarra Pty Ltd. Ben became a director of both companies along with his mother. Ben assumed sole responsibility for running the family business on the orchard properties. That also included the work and investment developing the orchards at Devon Downs. He took over his father’s role in dealing with growers and supermarkets. The Coldstream property was slowly coming into production. He stopped paying himself a salary after his father died, because the Coldstream property was costing a fortune to develop. Rather, he drew from the business only what he needed for day to day living expenses.

It was at another meeting with Mr Field and Mr Dundee on 12 February 1997 that Raie told Mr Field, in Ben’s presence, that she wished to honour the wishes expressed by Geoffrey before he died so that Ben could run all the farming properties together. Her instructions at that meeting are relied upon by Ben as the last of the four representations made by his parents. Following that meeting, Raie executed her penultimate Will, prepared by Mr Field, on 23 October 1997 (1997 Will).[4] By the terms of that Will upon her death she would have passed all the shares in GWRM (which owned the three Wandin properties) to Ben ‘for his own use and benefit absolutely’. After making provision for her other children out of the residue of her estate, Raie declared (at clause 5):

..that whilst it may appear BENJAMIN MARK MOULD has received a greater benefit than my remaining children it is my wish to honour a commitment made to my son by my late husband which was that the property known as DEVON-ON-YARRA[5] was to be given to BENJAMIN MARK MOULD absolutely so that all my farm properties could be run effectively which BENJAMIN MARK MOULD has been doing satisfactorily for several years.

[4]CB 1059.

[5]This seems to be a misnomer – ‘Devon-on-Yarra’ was the company name whereas the property was called Devon Downs.

Given that statement it might have been expected the 1997 Will would provide for the disposition of Raie’s shares in Devon-on-Yarra Pty Ltd, which owned Devon Downs. But it did not. That may be explained by Mr Field’s note of the 12 February 1997 meeting (see [68 ] below), confirmed by a statement appearing in the recital of the deed of settlement made on 5 August 2016 (see [31] below). Devon-on-Yarra Pty Ltd was trustee of a unit trust all the units of which were owned by GWRM. That meant, in substance, that GWRM was the sole beneficial owner of Devon Downs and, probably, that Devon-on-Yarra Pty Ltd was of nominal value only. So, whoever owned GWRM was also the effective beneficial owner of Devon Downs. Further, at that time Ben was a director of Devon-on-Yarra Pty Ltd along with Raie, so he and his mother had control of the land.

Ben’s case is that after each of the four representations were made to him by his parents he acted to his detriment in reliance upon those representations by continuing to work in the orchard business for long hours and at low remuneration.

Going forward 17 years, on 7 August 2014 Ben resigned as a director of GWRM and Devon-on-Yarra Pty Ltd (apparently on legal advice) to protect his assets after he became embroiled in a matrimonial dispute with his wife. Not long earlier he had been charged by police for cultivating cannabis in one of the cool rooms on the property at 46 Hunter Road. Raie, who at that stage was in poor health, appointed Ben’s sister Sue as sole director of GWRM on 24 October 2014. While in hospital, on 30 October 2014, Raie signed her last Will (2014 Will) passing all of the shares in both GWRM and Devon-on-Yarra Pty Ltd to Sue instead of Ben as her 1997 Will had provided (or at least declared should occur).[6] As already stated, Raie died eight days later on 8 November 2014.
[6]CB 1063.

Ben was imprisoned on 29 January 2015 after being convicted of cultivating 365 kilograms of cannabis, serving a sentence until 29 March 2016. On 1 March 2015, without Ben’s knowledge or consent, Sue caused Devon-on-Yarra Pty Ltd to sell Devon Downs. When Ben learned of what happened, while still in prison, he instructed solicitors to lodge a caveat over the orchard properties at Wandin: that is, both the Hunter Road properties and the Beenak Road property. A caveat was lodged on his behalf over those properties on 26 March 2015. Lodged on the title of each property, the caveat claimed an interest in the freehold estate on the ground of ‘an implied, resulting or constructive trust’.

While Ben remained in prison, on 18 December 2015 Sue caused GWRM to execute a contract to sell the Hunter Road properties to the Canales. A statement prepared in accordance with s 32 of the Sale of Land Act (s 32 statement),[7] required to be given to purchasers before executing a contract to purchase land, disclosed the caveat by which Ben’s asserted equitable interest was revealed. The s 32 statement was provided to the Canales before they signed the contract and there is no dispute that they were aware of Ben’s claimed interest before signing.
[7]Sale of Land Act 1962 (Vic).

Likewise, on 10 February 2016 Sue caused GWRM to execute a contract to sell the Beenak Rd property to the McMillan parties. Again, the s 32 statement provided in relation to that property contained a copy of the relevant caveat and there is no dispute that the McMillan parties were aware of Ben’s claimed interest before signing their contract.

Along with the question whether Ben acquired any equitable interest in the land, the date of the lodgement of the caveat relative to the dates that the Canales and the McMillan parties purchased the properties is, of course, relevant to the issue of the priority of their respective interests. That issue is addressed in connection with the second question listed at [10] above.

After being released from prison on 26 March 2016, Ben instructed his solicitors to commence a proceeding against GWRM (still controlled by Sue). The GWRM proceeding[8] was filed in the Supreme Court of Victoria on 16 May 2016. In it, Ben contended that Geoffrey and Raie had held their shares in GWRM (as owner of the orchard properties) on trust for him, alternatively that GWRM held ownership of the properties on trust for him. Ben’s claim asserted an equitable interest in the shares or the land itself as beneficiary of a constructive trust arising from his reliance on the representations made to him by his parents as described above.
[8]Referred to at [8] above.

On 10 June 2016 an application brought by GWRM was heard by McMillan J in the Practice Court of this Court for the removal of Ben’s caveat using the procedure under s 90(3) of the Transfer of Land Act.[9] Her Honour ordered the removal of the caveat over the Hunter Road properties and the Beenak Road property. Her Honour’s reasons for doing so[10] are discussed below in connection with the third question listed above at [10].
[9]Transfer of Land Act 1958 (Vic).
[10]GWRM [2016] VSC 330.

On the day the hearing took place, Ben had a telephone conversation with Mario Canale about the Hunter Road properties. Ben claims that in that conversation he secured an oral agreement from Mario, binding both Mario and Oraziantonio (son and father respectively) as purchasers under the Hunter Road Contract of Sale, that they would ‘walk away’ from the contract on certain conditions. The conversation was overheard by a solicitor acting for Ben, Bibi Amidzic, who also gave evidence of what was said. Mario gave evidence of his version of the conversation. I discuss this evidence in connection with the fourth issue listed at [10] above.

Through their respective solicitors, Ben and Sue then negotiated a resolution of the GWRM proceeding. The upshot of that settlement was reflected in a deed of settlement executed between the parties on 5 August 2016.[11] Its parties were Ben, Devon-on-Yarra Pty Ltd, GWRM, Sue Hicks and Sabina Wakefield as executors of Raie’s estate, Sue Hicks in her personal capacity and Wild Juice Pty Ltd, a company operating a fruit juice business allied with the orchard business. For payment of $2,050,003 Ben was to receive all Raie’s shares in GWRM, Devon-on-Yarra Pty Ltd and Wild Juice Pty Ltd, with the result that Ben would become the sole shareholder of each of them. Although not executed until 5 August 2016, the deed contemplated that Ben be appointed as sole director of GWRM from 27 June 2016 and, indeed, that is what occurred. As agreed by the parties, each of them consented to orders made by McMillan J on 17 November 2016 in these terms: ‘The proceeding be dismissed with no adjudication on the merits’.[12]
[11]CB 957.
[12]Exhibit B.

The McMillan parties and the Canales contend that the effect of the deed of settlement and the orders made by McMillan J on 17 November 2016 is to estop Ben from contending against them an equitable interest in the properties based upon the same constructive trust that was the subject of the GWRM proceeding. This argument is addressed in connection with the third question listed at [10] above.

Once Ben was appointed sole director of GWRM he instructed its (new) solicitors to advise the Canales and the McMillan parties that GWRM would not be completing the sale of either the Hunter Road properties or the Beenak Road property. The Canales were advised by letter of 29 August 2016 and the McMillan parties by letter of 8 September 2016.

For some reason not explained in the evidence, the Registrar of Titles did not remove the caveat from the titles to the Hunter Road properties or the Beenak Road property until 14 December 2016. However, the evidence makes it clear that the effective obstacle to the completion of the sales was Ben’s retaking of control of GWRM and his refusal to complete them.

Evidence was given by all of the parties about the special significance to them of the relevant parcel or parcels of land. For Ben, the three parcels of land constitute ‘the farm’ on which he had devoted the whole of his working life and for which he depended for his living. For the Canales, the Hunter Road properties (abutting their existing orchard properties) represent a rare and highly valuable opportunity to expand their business operation in the district. For the McMillan parties, the Beenak Road property (on which is a residence) embodies all of the features they had been searching for to house their two families and to enable them to enjoy a particular type of lifestyle. These matters are potentially relevant to the fifth question listed at [10] above.

Evidence called

Ben called three witnesses. Ben himself gave evidence. He called Mr Field, the solicitor with the firm Wisewould Mahoney who provided advice to his family in 1994 and 1997, including preparing Raie’s 1997 Will. At the time of giving evidence he had been in practice for 46 years. Ben also called Ms Amidzic, the solicitor with Slater + Gordon who has acted for Ben in these and other proceedings since March 2015.

Ben’s evidence traversed the range of issues in dispute in these proceedings, while Mr Field’s evidence concerned the issue of whether Ben’s parents, or either of them, made the representations said by Ben to have been made by them. Ms Amidzic’s evidence was confined to the question of whether an oral agreement was made to the effect that the Canales would agree not to demand settlement of the sale of the Hunter Road properties if Ben could recover control of the properties from his sister, and refund the deposit and other expenses paid by the Canales.

Kirsten McMillan and Mario gave evidence on behalf of the two sets of purchasers. Kirsten’s evidence concerned her plans for the Beenak Road property, being to build a house in which she and her partner could live and care for her ageing parents, and to operate a ‘self-sufficient’ hobby farm. Mario’s evidence concerned the significance of the Hunter Road properties to the development of the orchard business owned by him and his father, as well as his version of the conversation relied upon by Ben to contend that an agreement had been reached for the Canales not to enforce their Contract of Sale for the Hunter Road properties.

With this overview of the relevant factual context, I now turn to address each of the issues for decision.

Did Ben have the equitable interest he asserts?

The applicable legal principles were not in dispute. I set them out briefly below.

Arising from the arguments put at trial, it was apparent that there was no actual dispute that certain representations were made to Ben during his parents’ lifetimes about their intentions for Ben and the orchard business. No evidence was led to contradict Ben’s evidence or the evidence of Mr Field as to what was said on the four occasions. What was in dispute, however, was the true meaning and legal effect of those representations.

Little or no argument was directed against the proposition, assuming I find that Geoffrey and Raie made representations to Ben of the kind he alleges, that Ben relied upon those representations to his detriment.

The real issues in dispute on this question can be stated shortly:

(a) Were the representations made by GWRM (as the relevant owner of property), or only by Ben’s parents?

(b) Were the representations made about running the orchard business, rather than owning the land?

(c) Were the representations made about owning the shares in GWRM or owning the land?

Principles of proprietary estoppel

In Donis v Donis[13] Nettle JA (Maxwell ACJ and Ashley JA agreeing) expressed the underlying principle for proprietary estoppel in the following terms:

… As it is put in Meagher, Gummow and Lehane’s Equity, the fraud of the promisor and the action of the complainant are sufficient to produce equity’s intervention where it would otherwise decline interest. The underlying principle is that conduct of the promisor in engaging the complainant to change his or her position to their detriment on the footing that the promised property will be theirs, when acted upon by the complainant, creates an equity which binds the promisor to make good the expectation. …

[13](2007) 19 VR 577, [36].

Where the expectation that is encouraged is an interest in property, the estoppel is not restricted by the minimum equity to do justice. The remedy relates to the understanding of the parties and the expectation that has been encouraged. Prima facie the equitable obligation is fulfilled by making good the promise which must be made good in conscience.[14] Nevertheless, ‘the prima facie position will yield to individual circumstances’[15] so that--

…before granting the relief the court is required to consider all of the circumstances of the case, including the possible effects on third parties, and to avoid going beyond what is required for conscientious conduct would do injustice to others… The object of the exercise is to do equity and for that purpose ‘detriment’ is no narrow or technical concept… The requirement must be approached as part of a broad inquiry as to whether departure from a promise would be unconscionable in all the circumstances.[16]

[14]Ibid, [18]-[20].

[15]Ibid [20].

[16]Ibid.

In deciding the form and scope of the constructive trust, the Court looks to the circumstances of the case to decide how equity can be satisfied.[17] Where the subject of the representation is an interest in land this gives rise not just to a personal right to sue but an interest in the land itself.[18]
[17]Varma v Varma [2010] NSWSC 786, (‘Varma’).
[18]Hamilton v Geraghty (1901) 1 SR (NSW) Eq 81, 89 (Owen J); Silovi Pty Ltd v Barbaro & Others (1988) 13 NSWLR 466, 475C (Priestley JA, Hope and McHugh JJA agreeing); Young v Lalic (2006) 197 FLR 27, [83] (Brereton J); J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (LexisNexis Butterworths, 5^th ed, 2014), [17-130].

Kaye J considered the principles of proprietary estoppel in Harrison v Harrison.[19] Adapting the summary formulated by his Honour in that case, to establish proprietary estoppel, Ben must show that:
[19]Harrison v Harrison [2011] VSC 459, [362]-[370] (Kaye J), (‘Harrison’), not questioned on appeal: Harrison v Harrison [2013] VSCA 170.

(a) the owner made promises and undertakings to him that they would confer on him an interest in property;

(b) he acted in reliance on those promises;

(c) he acted reasonably in reliance on the promises and undertakings made to him by the owner;

(d) the owner knew or intended that Ben would rely on their promises and undertakings; and

(e) he acted to his detriment on the basis of the undertakings and promises made to him by the owner.[20]

[20]Ibid [371].

The authorities show that on two questions of relevance to the facts in this case, the approach in equity is somewhat more flexible than the approach at law. The first matter concerns the question of the certainty or specificity of the promise or representation relied upon. The second concerns agency or the authority of a representor to bind the owner of property by way of estoppel.

In equity, a promise may form the basis of a proprietary estoppel claim even though not sufficiently certain or specific to satisfy the requirements of an enforceable contract at law.[21] It was put by Dodds-Streeton JA in Accurate Financial Consultants as follows:

Where necessary to inhibit unconscionability, equity will construe a representation robustly in context, to determine its meaning as reasonably understood by the addressee. In my opinion, the standard of certainty, clarity and completeness required of the representation cannot sensibly be determined in isolation from other elements of proprietary estoppel in the circumstances of each particular case.[22]

[21]Ibid [374]–[376]; on appeal Harrison v Harrison [2013] VSCA 170, [141]–[152] citing Ramsden v Dyson (1865) LR 1 HL 129; Flinn v Flinn [1999] 3 VR 712 (Brooking JA); Accurate Financial Consultants Pty Ltd & anor v Koko Black Pty Ltd & Ors [2008] VSCA 86, (‘Accurate Financial Consultants’).

[22]Accurate Financial Consultants [2008] VSCA 86, [178].

As to agency, in equity a representation will bind an entity where the person making the representation has ostensible, apparent or implied authority,[23] as a person ‘dealing with the matter’,[24] or who ‘in the ordinary course of business…ordinarily acted for’ the entity,[25] or who was ‘entrusted’ by the entity with the ability to make representations.[26]
[23]Legione v Hately (1983) 152 CLR 406, 421 (Gibbs CJ and Murphy J), 437 (Mason And Deane JJ), (‘Legione’).
[24]Ibid [437].
[25]Ibid [421].
[26]Crabbe v Arun District Council [1976] Ch 179, 189 (Lord Denning MR), 193 (Scarman LJ).

In Northey v Bega Valley Shire Council,[27] after surveying authorities on this matter, Brereton J concluded by saying that the:

..cases show that, in this field, where there is a more flexible approach to the concept of agency, the true issue is whether the defendant is so implicated in the plaintiff’s assumption and reliance as to make it unconscionable for the defendant to deny it.[28]
[27]Northey v Bega Valley Shire Council [2010] NSWSC 527, (‘Northey’).
[28]Ibid, [28].

What promises were made?

I have already given, in overview, the sequence of occasions on which the four representations were made (see [15], [16] and [20] above). What follows is the detail of each of those representations.

On the first occasion, early in his apprenticeship in 1987, Ben had a discussion with Sue in which she told him she was going to get a share of the farms. Later, he confronted Raie about this conversation. His account was as follows:

… during my apprenticeship Sue said to me once that she was getting a share of the farms. I confronted mum over that, saying that ‘Sue said she’s getting half the farms.’ Mum says ‘What rubbish, what is she going to do with them?’ I said, ‘Well I’m not going into business with her.’ Mum says ‘Dad and I want you to run the farms. Sue’s going to get married one day, start her own family, she’ll leave the farms. What does she want them for?’[29]

[29]T71.30 – T72.7.

As a result of this conversation, Ben said his plan was to continue working on the farm on the basis that one day it would be his. He was able to manage the orchards on his own—that is, pruning, picking, tractor work, spraying and managing staff—whereas his father worked mainly in the packing sheds. He said he worked from daylight to dusk, seven days a week.[30]
[30]T72.8 – T72.25.

The second occasion was in 1990 after Ben finished his apprenticeship. He had moved to a small cottage on the property at 38-40 Hunter Road, which he renovated with his own money and labour. He gave evidence that when he was about twenty years old, he had an argument with his father about the type of tractor the business was to purchase. He ‘spat the dummy’ and told his father that he had had enough, and that he was going to leave the farm. That night, he explained, his parents visited him at the cottage where he lived on the farm:

… And they came in, sat down. Dad said that he was happy to get the tractor that I wanted to get. Mum said that “The farm will be all yours, we’re doing all this for you.” Dad said “At the end of the day, all this will be yours. We’ve built all this up, and we want you to carry it on.”
At that time, what were you being paid?---When I finished my apprenticeship I got about $600 a week.
And were you paid anything for overtime or?---No.
Public holidays, or any extra rates?---No.
And after that conversation which you’ve referred to, after the dispute about the tractor, what did you do?---I continued on. Got the tractor, the tractor that I wanted, and we continued on.

And why was it that you continued on in that way, working those hours and on that salary?---It was the promise, you know, that I was always going to get the farms.[31]

[31]T73.22 – T74.7.

The third occasion took place about a year after the second. By then Sue had married and was living away from the farm with her husband, Tim Hicks. She was still working in the packing house, being paid an hourly rate for the set hours she worked, whereas Ben continued to be paid a fixed amount of $600 per week for longer hours. When Ben raised this with his mother, Raie said as follows:

I raised it with mum once saying “Why does Sue get paid more than I do?” Mum’s response was “Sue’s married Tim, they’ve got to pay for the house. One day she’ll leave the farm and start a family. She needs the money. … You won’t need the money, you don’t need to buy a house, because the farms will be all yours.”[32]

[32]T74.20 – T74.26.

The fourth and final representation, made in 1997, took its context from the meeting that occurred in early 1994 when, along with his parents, Ben met with Mr Field and Mr Dundee.

1994 meeting

Ben recalls his father saying at that meeting that he wanted Ben to get the Coldstream property (that is, Devon Downs) after all of his years of hard work; he wanted Ben to have the farms and carry on the business; but he was concerned that if he gave Ben the Coldstream property he could lose it in a ‘divorce situation’.

Mr Field identified handwritten and typed file notes he had made of relevant meetings and conversations with Geoffrey, Raie, Ben and Mr Dundee: he had no recollection of the conversations independently of his notes.

From a perusal of Mr Field’s notes, it is apparent that Geoffrey and Raie had other assets apart from the farms (real property and a share portfolio) and were concerned, in the division of their assets upon their deaths, that there should be rough equality among their four children. As will appear, some of the challenges were that the assets were partly owned by their companies and they wished specific assets within those companies to go to different children. But transferring assets out of the companies so they could be passed in specie would have stamp duty and other cost implications. Another was that one of the children was a bankrupt.

Mr Field had a typed file note of a meeting on 18 April 1994 between him, Mr Dundee, Geoffrey, Raie, and Ben. Among other things, the file note listed the assets of Geoffrey and Raie, GWRM and Devon-on-Yarra Pty Ltd and their approximate values, and the names and ages of the four Mould children. The file note included the following notes:

- wants to leave the bulk of estate to his wife
- wants to leave Benjamin – ppy Devon-on-Yarra Pty Ltd – concerned that if his wife (not married as yet) leaves him she may get half; and

Wants Benjamin to run farms. Helen wants to leave the farms. Susan works on part-time basis. Anthony (currently bankrupt). He worked on farms for about 2 years only, went into various other business activities.
Mrs Mould to even things up in due course.
- Shares in company is to Benjamin so that he can run the two farms
-Plan of subdivision - titles with bank Westpac – Lilydale (Peter Wandmaker)
-Does not want Benjamin to have more than 50%. Suggest Mrs Mould have 51% interest
-Consider transferring some of the properties out of the company so we can separate the farm property.
-Subdivision Lot 3 is a viable proposition on its own. It is the orchard. It may be that Lot 1 and 2 be transferred out to equalise things.

Over the next couple of months Mr Field made notes of several other conversations and of his own thinking. Essentially they recorded further instructions and his consideration of how to give effect to them.

On 21 June 1994, Mr Field wrote to Geoffrey and Raie as follows:

I refer to previous attendances and telephone conversations concerning both your Wills. I confirm that at the present time both your Wills provide that each leaves the whole of the estate to the other and appoints the other as executor of the Will. In the event of the death of one party then the whole of the estate is left equally to your children and the executor is John Tatman of 2 Temple Street Ashburton.
I understand you are happy with the terms of the existing Wills but wish to cover the following matters when the survivors dies:
(a) the fact that your son Benjamin wishes to operate the orchard; and
(b) the fact that Anthony is bankrupt.
I am not certain whether you are happy with the substitute executor of the estate or whether this person is to be changed.
As previously advised I need to know which property could be left to Benjamin as a minimum with which he could run a viable farming operation. Once this has been established the remainder of the estate can be divided into proportions so that each child ultimately ends up with approximately the same value share in your estate.
I note that the major property assets are in the name of G W & R Mould Pty Ltd and that G W & R Mould Pty Ltd is the unit holder of Devon-on-Yarra. I consider that the only way in which Benjamin can be secure in making sure that he is left one of the properties, is if that property is transferred out of G W & R Mould Pty Ltd into both your names as joint proprietors and then that property is dealt with specifically under the terms of your Wills. The share to your son who is bankrupt could be left to a trust of which he would be one of the beneficiaries.
Stamp duties would apply to any Transfer of real estate and an exact estimate can be given once we have been advised as to which property is to be transferred. I have considered in some detail the alternatives available to you however as the major assets are the shares in the company it is not feasible to simply leave these shares equally unless the farm property is transferred out.
I apologise for the delay in putting this advice in writing however the options available to you have been considered in some detail with a view to avoiding any unnecessary expenses by way of stamp duties etc. unfortunately I do not see any way that this can be achieved and I would be happy to discuss any of these matters with you further or with Mr Dundee.

Given Geoffrey’s state of health and the fact that matters could be adjusted through Raie’s will, it appears that Mr Field was instructed not to do anything regarding Geoffrey’s will. Geoffrey died less than a month after Mr Field’s letter.

1997 meeting

Ben gave evidence that in 1997 he and his mother went to see Mr Field at his office to discuss his mother drawing a will. Ben said that he was concerned that the development of the Coldstream property was costing millions and he was ‘spending that on my own demand’. He had said to his mother that they needed to put something down to record what his father’s wishes were. Ben’s evidence was that during the discussion his mother told Mr Field:

…she’d like to honour Dad’s wishes that I was to get…the Coldstream property, Devon Downs, and that I was to get the shares - the farming properties, which were the shares in G W & R Mould.[33]

[33]T80.16 – T80.19.

His evidence gains support from contemporaneous notes and correspondence.

Mr Field’s file note of a 12 February 1997 meeting[34] attended by himself, Mr Dundee, Ben and Raie, records the discussion at some length (three typed pages), with a summary of what was proposed in these terms:

(a)Ben to be left all shares in G W & R Mould Pty Ltd. No property is to be transferred out.
(b)Mrs Mould to forgive all bar $300,000.00 of the loan owed to her by the company.
(c)Mrs Mould is to give Ben the 2 acres on the Cnr of Beenak & Hunter Roads Wandin.
(d)The remainder of the estate is to be divided between the other 3 children equally except that Anthony’s entitlement in the residue of the estate is dependent upon him repaying the loan of $28,000.00 which was made by the company to him.
(e)A comment in the Will is to be made as to why Ben is receiving the farm properties and as to the effect that the remainder interest in the estate also consists of Mr Mould’s interest in his late father’s estate of which Ben is not to share

[34]Attached to Exhibit D ‘Outline of oral evidence of Frank Field’.

It was apparent from the pages of the note preceding that summary that the intention was that the ‘estate was to be divided so that Ben Mould could continue to run the farms’. GWRM owned the three Wandin properties (the Hunter Road properties and the Beenak Road property) as well as Devon Downs via GWRM’s ownership of the units in the trust of which Devon-on-Yarra Pty Ltd was trustee. Devon Downs was recorded as being ‘used in conjunction with’ the Hunter Road orchard properties. But, there was evident concern that the value of the farming properties, together, exceeded the value that each of Ben’s siblings would receive under the proposed distribution of Raie’s estate. One of the justifications for that imbalance, recorded in the note, was that Ben was already taken to be the owner (although ‘not legally’) of Geoffrey’s half of Devon Downs because of what Geoffrey had said in 1994 (reflected in the parenthesised words in the first numbered item of the letter extracted in the next paragraph).

The letter from Mr Dundee to Raie written the next day (13 February 1997) is consistent with Mr Field’s note:

Just a short note to summarize my understanding of the result of discussions with Frank Field yesterday.
1)All shares in G.W. & R. Mould Pty Ltd will be left to Ben. Effectively this means both the Wandin and Lilydale farms will pass to Ben. (It was noted and agreed that Geoff had voiced his wish that when he died 50% of Devon should become Ben’s).
2)The Beenak Road property that is in Raie’s name will pass to Ben.
3)That any loan balance in the accounts of G. W. & R. Mould Pty Ltd in excess of $300,000 owing to Raie will pass to Ben.
4)That the first $200,000 of any loan balance owing to Raie will be divided equally between Helen and Sue.
5)It was noted that Tony was indebted to G.W. & R. Mould Pty Ltd in the amount of $29,421. Tony is to receive the balance of $100,000 owing to Raie referred to in 3 and 4 above less $29,421 (adjusted for any repayments made to the company by Tony).
6)The $300,000 referred to in 3, 4 and 5 above is to compensate Helen, Sue and Tony for the Warburton property which will pass to Ben with G.W. & R. Mould Pty. Ltd.
7) All other assets of Raie’s estate are to be equally divided between Helen, Sue and Tony.
8)Subject to your final decision, Frank Field and I have agreed to be executors of the Will.
Please let me know if your understanding of our discussions differs from the above.

Raie’s 1997 Will was then prepared and sent to her by letter of 5 August 1997 and signed on 23 October 1997. When writing to Raie on 5 August 1997 Mr Field reiterated what he understood his instructions to be, including:

The intention is that the farm properties (these consist of Lot 38 and 46 Hunter Road, Warburton Highway Wandin, 124 hectares in the name of Devon-on-Yarra Pty Ltd and the property in your name at the Cnr of Beenak and Hunter Roads Wandin) are to pass to Ben.

The ‘comment’ to be placed in the Will as to why Ben was receiving more than the other siblings, referred to by Mr Field in his 12 February file note, became the declaration set out at [20] above.

Ben said he understood that his mother signed a new will in accordance with what had been discussed in the meeting in February 1997, although he did not see the 1997 Will at that time. He gave evidence that, with that understanding and belief, he continued to work in the business:

And what hours were you working and what was your role?---Just, ah, it was a bit more than daylight till dark because, ah, obviously, I was in the - in the shed, um, and office as well. So it was just long hours seven days a week.
And on what basis? Were you being paid anything?---No, I wasn’t drawing a wage.
Then how were you, you know - - -?---Living?
- - - paying your expenses and living?---I was just - I was just drawing what I needed out of the - out of the business.[35]

[35]T81.

Under cross‑examination Ben agreed with a number of propositions put to him, namely that:

(a) his parents wanted him to carry on the farms, and the business of the farms was run by GWRM;

(b) the position discussed at the meeting in February 1997 was as noted by Mr Field, namely ‘Ben to be left all shares in the company GW+R Mould Pty Ltd. No property is to be transferred out’; that was the position carried into the 1997 Will; and he did not object to that course;

(c) he knew that his mother would leave him the shares in GWRM, and he did not say anything to his mother about transferring properties from GWRM to him;

(d) the letter from Mr Field to his parents dated 21 June 1994 (reproduced in full at paragraph [63] of these reasons), and in particular the statement that:

As previously advised, I need to know which property could be left to Benjamin as a minimum with which he could run a viable farming operation.

was inconsistent with the position that each of the properties were to go to him;

(e) there was never a transfer of the farming properties from the company to him;

(f) millions of dollars went into the Coldstream property from the orchard business for his ultimate benefit, as he expected that the Coldstream property would be transferred to him in time.

In cross examination, Mr Field agreed that the farms were in the name of GWRM and they were not Raie’s to give away. He explained that is why he proposed that the shares in GWRM be left to Ben as he was instructed that no property was to be transferred out of GWRM. That course was adopted in the 1997 Will. He also agreed that the only way Ben’s position could be secure was to transfer the properties out of the companies and for Raie to deal with them separately in her Will. That comment, of course, involves a legal opinion: in context, I take it to be an opinion that Ben’s position would have been secured with greater certainty had the properties themselves been passed to him under the Will. But if Mr Field meant that doing so was the only means by which the interest in the properties could be effectively transferred to Ben, then I do not accept that view as being accurate.

Mr Field also said in cross examination that the Geoffrey and Raie wanted Ben to able to operate the farms and to have the farms. These were his instructions. The focus of the discussion was about the structure and how the assets were actually held. The preferred mechanism to effect the intention was for Ben to get the shares in GWRM, a suggestion which he and Mr Dundee had made.

As already described, Ben stated that after each of the representations were made to him he had continued to work in the business, working long hours at either low remuneration or just drawing enough for living expenses. He said he did so because, as he put it, the farm was one day to be his.

In addition to the general orcharding work already described, in 1998 Ben commissioned a juicing plant to process what he described as ‘out of spec fruit’, being the fruit which was not accepted for sale by the supermarkets. He appointed a business manager and created the company Wild About Fruit Pty Ltd. He upgraded the plant (which was located on the property at 46 Hunter Road) which he operated for about ten years. He supplied products to Coles from 2006, and Woolworths from 2009, but by 2010 he stopped supplying supermarkets after certain lines were deleted and he could not afford the transport fees for the remainder. He then supplied a Victorian distributor and operated a couple of vans himself. He was running the farms and his mother was running the packing house. He and his mother would have lunch together every day and would make all decisions jointly. The orcharding business employed a lot of staff.

Findings

I am satisfied that each of the first three representations, of which Ben’s account was the only evidence given, were made as he stated. There is no reason to disbelieve Ben’s account. I find that he gave his evidence in a straightforward manner, doing the best he could to recall the events even though much of what he spoke about occurred a long time ago.

His account of what occurred at the meetings with Mr Field in 1994 and 1997 was substantially corroborated by the contemporaneous notes and correspondence to which I have referred. His credit was barely challenged in cross-examination. While his conviction for cultivating 365 kilograms of cannabis does not assist him, in the circumstances of this case it does not especially harm him. That event is largely irrelevant except that it supplies a possible explanation as to why Raie changed her Will in 2014 and for Sue’s ability to advertise and sell the various properties without Ben’s intervention.

There was one area in the evidence where Ben’s evidence came into conflict with the evidence of another. That was his account of the conversation with Mario out of which Ben claims an agreement was made. But, as I will explain later, my view of that issue does not so much turn upon any difference in the accounts of the conversation but, rather, the legal meaning and effect of the words used in it.

So, I accept that on three occasions between 1987 and about 1991 Ben’s mother, on two occasions, and his parents together, on the other, told him, in effect, that the farming properties on which the orchard business was being conducted would one day be his.

The evidence of the fourth representation was not confined only to Ben’s evidence but was supplemented by the notes and letters of Mr Field, the letter of Mr Dundee and the terms of the 1997 Will itself. Ben’s evidence was that his mother said he was to ‘get’ Devon Downs and ‘get’ the ‘farming properties, which were the shares in GW & R Mould’.[36] When, in his note of the 12 February 1997 meeting, Mr Field referred to the need to include a ‘comment’ in the Will, he wrote that it was to explain ‘why Ben is receiving the farm properties’.[37] Mr Dundee indicated ‘both the Wandin and Lilydale farms will pass to Ben’ just as ‘the Beenak Road property … will pass to Ben’. On 5 August 1997 Mr Field wrote of his understanding that ‘the farm properties … are to pass to Ben’. It is important to pay attention to the language, used by an accountant and a lawyer, of Ben getting and receiving the properties, and of the properties passing to him.
[36]See [65] above.
[37]See [67] above.

That Mr Field was seeking clarity in June 1994 of the minimum amount of property to be left to Ben in order for him to conduct a viable farming operation may suggest some uncertainty about what Geoffrey and Raie had actually promised. In context with the other evidence, however, I think it either reflected Mr Field’s own lack of understanding about his instructions or that there existed, at that time, a dilemma concerning how a balanced division of interests was to be achieved given Geoffrey’s and Raie’s intention to give all the farming properties to Ben. But I am satisfied that dilemma was resolved while adhering to the promised position that Devon Downs, the Beenak Road property and the Hunter Road properties would pass to Ben.

The land or the business?

At different times, statements made were in terms of Ben’s parents wanting or intending him to ‘run’ the farms. In context, his parents’ representations that they wanted him to ‘run’ the farms was the equivalent of them saying that they intended him to ‘own’ the farms. The equating of these two concepts can be demonstrated in several ways:

(a) in the first representation (see [53] above), the answer given to Raie to the reported suggestion that Sue was ‘getting half the farms’ was to dismiss it by saying ‘Dad and I want you to run the farms’;

(b) in the second representation (see [55] above), Geoffrey said to him ‘At the end of the day, all this will be yours. … we want you to carry it on’;

(c) in the third representation (see [56] above), Raie said ‘the farms will be all yours’; and, then,

(d) in Mr Field’s notes of the 12 February 1997 meeting, he referred to Raie’s intention being that Ben ‘could continue to run the farms’ (see [68] above) whilst Mr Dundee’s note the next day of the same meeting recorded his understanding that ‘the farms will pass to Ben’ (see [69] above), the same language used by Mr Field in his letter to Raie on 5 August 1997 (see [70] above) to confirm her instructions.

So, there can be no doubt that when his parents said that they intended him to ‘run’ the farms or ‘to carry on’ the business, they were stating their intention that Ben should own the farming properties on which the orchard business was conducted. I reject the submission put on behalf of the Canales and the McMillan parties that the representations made to Ben are to be construed as being limited to him having control of the operation of the orchard business. The stated promise was that the land was to be his, not merely control of the business. I am satisfied that is what was intended by Geoffrey and Raie, and that that is what was understood by Ben.

The land or the shares?

Equally, I reject the submission that the representations were confined only to Ben obtaining ownership of the shares in GWRM rather than any proprietary interest in the land itself. Perhaps this proposition is simply another way of putting the argument that I have just addressed.

Clearly, GWRM was the legal owner of the Beenak Road property and the Hunter Road properties and, through ownership of the units in Devon-on-Yarra Pty Ltd unit trust, the beneficial owner of Devon Downs. In my view, the evidence taken as a whole clearly establishes that it was the intention of Geoffrey and Raie—an intention that was conveyed to Ben—that Ben should own the orchard properties. However, it was acknowledged that there was good reason not to transfer the properties out of the companies in which they were held — that is, GWRM and Devon-on-Yarra Pty Ltd. Accordingly, I accept the argument that the transfer of the shares in GWRM to Ben was simply seen as the preferred ‘mechanism’ by which ownership of the land was to be passed to him.

Notwithstanding that the 1997 Will provided ‘only’ for the transfer of the shares in GWRM to Ben, I find that Mr Field’s understanding of the intended practical effect of the disposition of the shares, as set out in his 5 August 1997 letter, accurately reflected the instructions he had received from Raie earlier in the year. That was that the farm properties themselves were to ‘pass to Ben’. With that understanding of his instructions, and being conscious of the fiscal disadvantages of transferring the properties out of the company, it was Mr Field who recommended the transfer of the shares as the appropriate mechanism by which Raie’s intention was to be implemented. And that is what the 1997 Will provided for.

True it is that Ben’s parents did not, in terms, say that they, as directors of GWRM, promised that the company would hold the properties on trust for Ben, and that they would transfer the shares in the company to him to better perfect their promise. As orchardists, not lawyers, that is hardly surprising. But their intention was clear enough. Nor did they go to the trouble and expense of having the properties transferred out of the company into their own names so that they, as registered proprietors, could in their own right make a promise to Ben that the land would be his or, better still, directly transfer title to the properties to him by their Wills. But there was good reason not to do so and at the time it was not thought to be necessary for effecting their purpose.

As the authorities to which I have referred state (see [49] above), where necessary to inhibit unconscionability equity will construe a representation robustly, in its context. Here, the representation by the sole directors of GWRM (and of Devon-on-Yarra Pty Ltd)—the owner of the properties concerned—promised Ben ownership of the properties. That the promise was effectively implemented by the transfer of ownership of the entity which, in turn, owned the properties was a practical means of effecting that promise. In no way did that detract from, nor was it inconsistent with, an intention to convey the beneficial interest in the properties to Ben personally.

Authority?

That conclusion leads to the last of the three principal arguments raised by the defendants: namely, that Geoffrey and Raie, not themselves being the owners of the land, were not authorised to make representations on behalf of GWRM that could affect its interest in the properties.

In my view this argument has a particularly artificial ring to it. First, the company was at the relevant times owned by Geoffrey and Raie who were also its directors. It was conducting a family business, under the control of Geoffrey and Raie. Its business, like most businesses of that nature, was conducted informally rather than by formal resolutions. If anyone had actual authority (let alone ostensible authority) to make representations on the company’s behalf, it was plainly Geoffrey and Raie. In other words, in the ordinary course of business they ordinarily acted for GWRM. Adopting the test formulated by Brereton J in Northey,[38] I find that GWRM was so implicated (by Geoffrey’s and Raie’s statements) in Ben’s assumption and his reliance on the belief that the orchard properties were to be his, so as to make it unconscionable for GWRM to deny it.
[38]Northey [2010] NSWSC 527, [28].

A point was made by the defendants that GWRM should have been a party to the Mould proceeding, given that it was its interest that would be burdened by the constructive trust that Ben asserts. Perhaps as a point of procedure it might have been, being a party whose interests would be affected by the relief sought. But, at the time the Mould proceeding was filed, Ben was the sole shareholder and director of GWRM. He has pleaded, and it has not been denied, that GWRM acknowledges his equitable interest in the properties.[39] No doubt that is so; he represents the controlling mind of the company. No real purpose would have been served by GWRM’s joinder. It is not a necessary party to the proceeding as it has no interest in contesting the relief sought by Ben and, for the relief Ben seeks in it, he does not need GWRM to be bound by any order in his favour so long as he remains in control of the company.
[39]Statement of Claim, [43].

Reasonable reliance

I find that Ben relied upon Geoffrey’s and Raie’s statements of their intention to leave the orchard properties to him. That is, he was induced by those statements to believe that is what would occur. As I have sought to demonstrate, the subject of his parents’ statements to him was not confined to an interest in the shares or the business. He had no reason to doubt their authority on behalf of GWRM to make the promise to pass the properties to him. Their promises did not lack any credibility. They were made consistently over a long period of time. Accordingly, I find that Ben’s reliance on the representations was reasonable in all the circumstances.

Intention of Geoffrey and Raie that Ben rely on the representations

The evidence also satisfies me that Geoffrey and Raie well knew and in fact intended that Ben would rely on the representations they made to him. The first was made to keep Ben involved in the business, given that he was not prepared to go into business with Sue. The second was made in the context of placating Ben about his evident frustrations concerning decision making within the business, particularly those decisions (such as the choice of a tractor) which might impact on how the farming operation would be conducted in the medium to longer term. The third was designed to give Ben a rational reason for accepting lower remuneration than his sister. The fourth was made in response to Ben asking Raie to attend her solicitor in order to create a record of what she and Geoffrey had said to Ben about him getting the properties.

In each case, the understanding that Ben would get the properties for himself was the key message that Geoffrey and Raie intended to convey.

Detriment suffered

I find that because of the belief engendered by his parents’ representations, Ben accepted the long hours he was working, seven days per a week, and the relatively low wages that he was receiving without overtime payments or other usual employment benefits. For example, he did not insist upon the higher wages that Sue was receiving at the time of the third representation. Later on, after the fourth representation in 1997, he only drew living expenses rather than a wage. In substance, Ben’s whole working life from an early age until his mother’s death – on a time-scale far beyond and at a remuneration level much below that of a mere employee – was a devotion premised upon the understanding that he was building up his own asset: the orchard business upon land he was to own.

On that basis, by working under such burdensome (and disadvantageous) conditions I find Ben suffered detriment in reliance upon the representations made to him by Geoffrey and Raie.

Conclusion

In conclusion I make findings, relevantly to these proceedings, that:

(a) on behalf of GWRM, Geoffrey and Raie made promises and gave undertakings to Ben that on their deaths he would be granted absolute ownership of the Hunter Road properties and the Beenak Road property;

(b) Ben acted in reliance on those promises;

(c) Ben acted reasonably in reliance on those promises and undertakings;

(d) through the knowledge of Geoffrey and Raie, GWRM knew or intended that Ben would rely on the promises and undertakings; and

(e) Ben acted to his detriment on the basis of the undertakings and promises made to him on behalf of GWRM.

Prima facie, those findings are sufficient to give rise to a constructive trust and establish Ben’s equitable interest in the properties. As earlier stated, where the subject of the representation is an interest in land, the representation gives rise not just to a personal right to sue but also to an interest in the land itself. Yet, to decide the form and scope of any relief to be afforded in respect of the land I must also have regard to the whole of the circumstances. Those circumstances include the interests of relevant third parties and the impact upon them were I to find that the land is held pursuant to a constructive trust in Ben’s favour.

My analysis of the interests of the McMillan parties and the Canales—persons who, by virtue of having entered contracts to purchase the land, are competing equitable interest holders—is set out below. In summary, taking those interests into account, along with the considerations I will come to next, I nonetheless conclude that conscience requires that I should grant relief for Ben based upon there being a constructive trust in his favour over the fee simple estate in the land. In other words, even taking into account the impact that the loss of the expected interest in the relevant properties will have on the Canales and the McMillan parties, I maintain my view that Ben’s equity should prevail over theirs’.

Does that interest have priority over the equitable interests of the purchasers?

If there was any doubt as to when a constructive trust will be treated as coming into existence, it was settled (at least in Victoria) recently in the Victorian Court of Appeal decision of McNab v Graham[40] which, in turn, affirmed the earlier decision of Ward J in Varma.[41] In Varma, her Honour said of the principles concerning the question of the priority as between competing equitable interest holders:

As a matter of general principle, it seems to be the accepted position under Australian and English law that a constructive trust will be treated as coming into existence at the time of the conduct which gives rise to the trust. In such a case, the doctrine of priorities would apply and, where the equities are equal, the beneficiary of the constructive trust would be entitled to priority over the holder of a later equitable interest, a later legal interest (providing they are not a bone fide purchaser for value without notice) or an unsecured creditor of the constructive trustee. [42]

[40][2017] VSCA 352, (‘McNab’).

[41][2010] NSWSC 786, [507].

[42]Ibid, underlining added.

Explaining further what is meant by ‘the time of the conduct giving rise to the trust’, the Court of Appeal in McNab continued:

The relevant time is the time at which there is reliance on a promise giving rise to the estoppel, that is, the time of the reliance which would render departure from the fulfilment of the promise unconscionable.[43]

[43]McNab [2017] VSCA 352, [107]; see also Varma [2010] NSWSC 786, [507]; Parsons v McBain (2001) 109 FCR 120, [8]-[16] (Black CJ, Kiefel and Finkelstein JJ).

Whether that moment was to be fixed at the time Ben continued working on the farms under burdensome conditions after, say, the making of the first three representations, or only after the making of the fourth representation, does not particularly matter. All were a long time ahead of the Canales and the McMillan parties entering contracts to buy the land in 2015.

It follows that before any registration of the purchasers’ interests takes place the competition between the interests of Ben, on the one hand, and the McMillan parties and the Canales, on the other, is a competition between equitable interest holders: Ben as beneficiary of a constructive trust and the McMillan parties and the Canales as purchasers under contracts of sale. Ben’s interests are first in time. If the merits are equal, priority in the time of creation is considered to give the better equity.[44]
[44]Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265, 276 (Kitto J).

The fact that a purchaser acquires a later interest for value, or without notice of the prior equitable holder’s interest, does not of itself give the purchaser a superior equity over that of the prior interest holder.[45] But, of course, here the defendants did have notice of Ben’s interest. The s 32 statement for the Hunter Road properties contained a title search that referred to the caveat.[46] The Contract of Sale for the Hunter Road properties stated that “Settlement is due on 30 June 2016 or 14 days of the Vendor’s representative notifying the Purchaser’s representative in writing that the Caveat has been successfully withdrawn.”[47] The s 32 statement for the Beenak Road property included a copy of the caveat.[48] The Contract of Sale for the Beenak Road property contained a special condition that “[t]he sale of this property is subject to…withdrawal of the caveat by the 30/12/2016 or on or before settlement date.”[49]
[45]See cases cited in Heydon, Leeming and Turner, above n 17, [8-025].
[46]CB 647.
[47]CB 702.
[48]CB 731.
[49]CB 723.

In my view there is no factor or circumstance which would make the merits of the Canales’ and the McMillan parties’ equities (or either of them) better than Ben’s equity.

It therefore follows that Ben’s equity as beneficiary under a constructive trust should prevail. So, unless some other circumstance were to justify otherwise, this Court should enforce Ben’s equity by refusing specific performance of the Contracts of Sale (in the McMillan proceeding and the Canale proceeding), and by restraining entry on the Register of any transfer of legal title in the respective parcels of land to either the Canales or the McMillan parties (in the Mould proceeding). In my view, there is no ‘other circumstance’ that would justify otherwise.

Is Ben estopped from asserting his equitable interest?

It will be recalled that two separate grounds are advanced to argue that Ben is estopped from asserting his equitable interest as a means of preventing the Canales and the McMillan parties from obtaining specific performance. One relates to the order made by McMillan J removing Ben’s caveat, and to her Honour’s reasons for doing so. The other is Ben’s settlement of the GWRM proceeding and the subsequent order of this Court disposing of that proceeding. I shall deal with them each in turn.

Caveat removal

On or about 23 May 2016, GWRM issued a proceeding seeking the removal of Ben’s caveat over the Hunter Road properties and Beenak Road property. On 10 June 2016, McMillan J ordered the removal of the caveat.

In her reasons delivered on 14 June 2016,[50] her Honour decided that there was not a serious question to be tried for the existence of a caveatable interest. Without the benefit of the authorities cited to me or a full presentation of the relevant evidence, her Honour was not persuaded that the circumstances could establish anything more than a potential interest in the shares of GWRM as opposed to the land itself.[51] As for the question of the balance of convenience, her Honour held that by reason of the liabilities of GWRM: ‘the balance of convenience favoured the removal of the caveats and that the removal carries the lower risk of injustice.…’.[52]
[50]GWRM [2016] VSC 330.
[51]Ibid, [46], [48] – [51].
[52]Ibid [68].

The principle concerning issue estoppel is uncontroversial:

A judicial determination directly involving an issue of fact or of law disposes once and for all the issue, so that it cannot afterwards be raised between the same parties or their privies.[53]

[53]Blair v Curran (1939) 62 CLR 464, 531.

But, a truly interlocutory decision, made having regard to whether there is a serious question to be tried and the balance of convenience, and which does not finally decide rights, does not give rise to an issue estoppel in a later proceeding on the issue the subject of the decision.[54]
[54]Schlieske v Minister for Immigration and Ethnic Affairs (1987) 79 ALR 554, 574 (Beaumont J); Leppington Pastoral Company Pty Ltd v Commonwealth of Australia 76 FCR 318 (Jenkinson, Beaumont and Lehane JJ).

The decision of McMillan J ordering removal of the caveat was interlocutory. With respect, correctly, her Honour followed Piroshenko v Grojsman[55] in treating resistance to a removal-of-caveat application as analogous to an application for an interlocutory injunction. Consistently with that approach, her Honour considered whether there was a serious question to be tried and the balance of convenience. The decision was in form and substance an interlocutory decision. As such it was not a ‘final decision’[56] (as pleaded by the Canales and the McMillan parties) and McMillan J did not finally dispose of the rights of the parties.
[55](2010) 27 VR 489 (Warren CJ).
[56] Hall v Nominal Defendant (1966) 117 CLR 423.

I reject the argument that McMillan J’s decision to remove Ben’s caveat estops him in these proceedings from relying upon the interest he asserts under the constructive trust.

Settlement and dismissal of the GWRM proceeding

On 16 May 2016, Ben issued the GWRM proceeding. Neither the Canales or the McMillan parties were named as defendants to that proceeding. In his statement of claim in the GWRM proceeding, brought to substantiate his caveat over the properties and Raie’s estate, Ben alleged, in summary, as follows:

(a) the 2014 Will was not valid owing to Raie’s lack of testamentary capacity;

(b) the ownership of various properties by GWRM and Raie, the operation of the orcharding business by GWRM, and the sales of Devon Downs, the Beenak Road property and the Hunter Road properties by GWRM in 2015 and 2016;

(c) the representations made to Ben by Geoffrey and Raie, including detailed particulars of those representations;

(d) that those representations were made on behalf of GWRM and Devon-on-Yarra Pty Ltd;

(e) that Ben acted to his detriment in reliance upon those representations, in circumstances in which it would be unconscionable to deny him an interest in the properties;

(f) accordingly, that Geoffrey and Raie, and then Raie alone, held their interest in the shares of GWRM upon a constructive trust for Ben;

(g) alternatively, that GWRM held its interest in the Hunter Road properties, the Beenak Road property, and Devon Downs on a constructive trust for Ben; and

(h) that the sales of the Hunter Road properties and the Beenak Road property occurred without his consent.

In his prayer for relief in the GWRM proceeding, Ben claimed, among other things:

(a) orders restraining GWRM from completing the Contracts of Sale for the Hunter Road properties and the Beenak Road property;

(b) declarations that, among other things, Raie held the whole of her interest in the shares of GWRM on trust for Ben, and that GWRM held the whole of its interest in the Hunter Road properties and the Beenak Road property on trust for Ben; and

(c) orders that Raie’s shares in GWRM, and titles to the Hunter Road properties and the Beenak Road property be transferred to Ben.

It may therefore be seen that the subject matter of the GWRM proceeding certainly intersected with the claims and defences raised in these three proceedings.

As mentioned above, the parties to the GWRM proceeding entered into a deed of settlement on 5 August 2016 and the proceeding itself was dismissed by an order of this Court, made by consent, on 17 November 2016. There are at least two problems with the Canales and the McMillan parties seeking to draw any comfort from that settlement and order in these proceedings.

First, an issue estoppel can only be raised by a party to the proceeding from which the estoppel is alleged to arise.[57] Neither the Canales or the McMillan parties were parties to the GWRM proceeding. Secondly, paragraph 1 of the order made on 17 November 2016 provided ‘[t]he proceeding be dismissed with no adjudication on the merits.’[58] A consent order dismissing a proceeding without an adjudication on the merits does not give rise to an issue estoppel.[59]
[57]Blair v Curran (1939) 62 CLR 464, 531 (Dixon J) (quoted at [20] of the Defendants’ Outline of Argument at CB 4).
[58]Exhibit B.
[59] ACCC v Australian Safeway Stores Pty Ltd (No 2) (2001) 119 FCR 1, [1154] (Goldberg J).

I therefore reject any argument that the settlement or dismissal of the GWRM proceeding estops Ben from relying upon the interest he asserts under the constructive trust in these proceedings.

Did the Canales agree not to enforce the Contract of Sale?
Relevant contractual principles

In addition to agreement and consideration, a further element is necessary for a contract to be valid and enforceable: there must be an intention to create legal relations. A contemporary statement of the principle is found in Ermogenous v Greek Orthodox Community of SA Inc[60] in which it was said:

The search for the ‘intention to create contractual relations’ requires an objective assessment of the state of affairs between the parties…[61]
[60]Ermogenous v Greek Orthodox Community of SA Inc. (2002) 209 CLR 95.
[61]Ibid [25].

Factors to consider would include the subject matter of the agreement, the status of the parties, their relationship and all the surrounding circumstances.
On the evidence was a contract made?

Ben gave evidence that on 10 June 2016, he was in Ms Amidzic’s office at Slater + Gordon preparing for the caveat removal hearing. Ms Amidzic was present in the room when he telephoned Mario. Mario’s son initially answered the phone; Ben was told that Mario would call back in ten minutes, which he did. Ben then gave the following account:

And did you later receive a call?---Yes, he rang back and said that he’d been to market that morning and he was frozen. He came home to get warm and shower. I said to him, I said ‘You know there’s a shit fight going on with my sister, and I’m trying to get the farm back. And if I get them back, what do you want to walk away?’ Mario responded and said that ‘Well, I want my deposit, 200,000.’ I said ‘I’ll give you that.’ I said ‘You’ve paid some insurance, how much was that?’ And he said it was $3000. I said ‘I’ll give you an undertaking that I’ll pay you that as well.’ I said ‘Princey’s been doing some work on the property.’ I said ‘How much was that?’ He says ‘I’m not worried about that.’ I said ‘Well, if you work out what it is, I’m more than happy to pay that as well. I don’t want there to be any ill feeling.’ He said ‘Thanks very much.’ I said ‘The word round town is that you’ve paid some cash under the table.’ He said ‘Why would I do that when I wasn’t sure I was getting the farm?’ I said ‘Well, I don’t want to be throwing darts over the fence.’ He says ‘I don’t want that either.’ And that was the end of the conversation.
And what sort of phone were you on as you had that conversation?---The mobile, I was on my mobile.
And where were you sitting in relation to Bibi?---Right next to Bibi, because we were signing documents and that for court.

Under cross‑examination Ben:

(a) agreed that the sale of the Hunter Road properties to the Canales represented a rare opportunity for the Canales to obtain land adjacent to their property;

(b) confirmed that during the conversation he asked what Mario wanted for walking away from the Contract of Sale and disagreed that Mario told him specifically that he wanted the Hunter Road properties;

(c) said that he took Mario’s word at his honour;

(d) said that during this conversation he did not have his phone on speaker mode but that Ms Amidzic was sitting very close to him; and

(e) agreed that no-one mentioned to McMillan J during the hearing that took place later that day that there was an agreement between him and Mario.

Ms Amidzic also gave evidence about the conversation which she said took place in her presence. She did not recall whether Ben’s telephone was on speaker mode or whether the other speaker’s voice was simply audible enough for her to hear what was being said. Her account was as follows:

Right. As best you can, can you tell His Honour what you remember was said in the conversation?---Ben answered the phone and said to Mario, ‘you probably heard about the shit fight with Sue over the farms.’ Mario said, ‘Yes’, he knew about all that. Ben then asked him – said something like, ‘You know I’m going to fight like hell to get my farms back. What are you going to want if I get my farms back from Sue?’ Mario answered and said, ‘Just my deposit, that’s about it.’ They continued on. Ben said, ‘What else have you spent on the place?’ He said, ‘I’ll pay you that. What else have you spent on the place?’ Mario said he’d spent about $3,000 in building insurance. Ben said, ‘I’ll pay you that as well.’ He then – Ben asked him, ‘Have you had – have you have someone work up the land?’ Mario said, ‘Yes’, he’d had Princey do it. Ben asked him what he had spent on that. Mario said, ‘I’m not worried about that.’ They spoke about other things. Ben said, ‘I heard you’d paid cash for the place?’ Mario said, ‘Well, why would I do that when I knew there was a fight about the place.’ And Ben said something like, ‘Well, we don’t want to be throwing darts at one another over the fence.’ And Mario said, ‘No, no, no.’ And then there was some reference to Ben asking him whether he had seen some items around the shed and Mario said, ‘Well, I’ve hardly been on the place.’ I think that’s about the extent of it.
Right. Did you make any file notes during the conversation?---I made a brief file note shortly afterwards.

Under cross-examination, Ms Amidzic agreed that her file note did not refer to the detailed account of the conversation that she had given in her evidence-in-chief. She said that she did not think she had appreciated the significance of the conversation at the time, being that the effect of the conversation was that the Canales would not proceed with the Contract of Sale. For example, she did not believe that McMillan J was told about the conversation. Further, she did not believe that she disclosed the existence and substance of the conversation between Ben and Mario before 26 August 2016 (when a letter was written), except perhaps to counsel acting for Ben in the caveat removal proceeding. As to the conversation itself, Ms Amidzic agreed she did not tell Mario that she was listening to the conversation. But she was certain that there was a reference to ‘darts’ in the conversation because she had not heard of or used that expression before. She also said she did not recall any reference to throwing stones (as Mario had stated).

Mario said he was not aware that Ms Amidzic was listening to the conversation. He stated that he denied ‘ninety per cent’ of the contents of that phone call as described by Ben. The only part that was true, he said, was the bit about people throwing stones at each other. Mario confirmed that he returned Ben’s call and that Ben had done all the talking. He said that Ben said that he was fighting with his sister and had asked him ‘Do you want out of the contract?’, to which he had replied ‘No’. Mario recalled that at one point, towards the end of the conversation, Ben had asked whether, if he was to win his case against his sister, Mario would throw stones at him? Mario replied ‘Would you throw stones at me if you lose?’ He agreed that Ben had referred to a ‘shit fight’ with his sister. However, he said he did not respond to the question ‘If I get them back, what do you want to walk away?’ In particular, he said he did not say that he would want his deposit back. According to Mario, Ben had asked about that but he did not reply. He said he had been rather stunned with the conversation, but was adamant that he had not indicated in any way that he did not want to go through with what he was doing.

In substance, Mario largely agreed with Ben’s version of events as to what Ben said during the course of the conversation save that he referred to ‘stones’ rather than ‘darts’. However, he maintained that no deal was made. He asked rhetorically ‘How can I give up something when I have bought it with my father?’

Under cross‑examination Mario denied knowing about any dispute between Ben and Sue. He said he had no idea what a caveat was until about two weeks before giving evidence in these proceedings. By way of background, he said he had finished school at the age of twelve. But he agreed that he had had solicitors acting for him for the last eighteen months. When asked about the conversation with Ben, Mario said that he did not answer any of Ben’s questions, he just listened and responded at the end about throwing stones. He recalled telling Ben that he had had to pay more for the property because there was another bidder for it.

In closing submissions, Ben argued that his evidence was broadly consistent with the evidence of Ms Amidzic and should be accepted. By contrast he submitted that Mario’s evidence ought not be accepted as he had not presented as a truthful witness and his evidence had been contradictory.

Moreover, Ben argued that the elements of an enforceable agreement were satisfied: that is, first there was an offer and acceptance. That followed, he submitted, because his offer was to repay what Mario wanted for the Contract of Sale not to be proceeded with if Ben got the farms back. Mario identified what he wanted. Ben said he would pay and Mario thanked him. Secondly, he maintained that there was consideration: that is, that he had promised to pay Mario the amount identified in exchange for Mario’s agreement not to proceed with the Contract of Sale. Thirdly, he argued there was an intention to create legal relations. For that he pointed out that Mario is engaged in the business of strawberry farming and was acquiring the Hunter Road properties to expand his farm. Ben was seeking to retain the Hunter Road properties so that he could run his own farming business. The conversation was therefore between business people. It was a commercial arrangement giving rise to the presumption that the parties intended to create legal relations and be bound by their agreement.

Conclusion

I reject the submission that a contract was made in the circumstances described above. The conversation took place unannounced. Mario had been in the shower and had no idea what was to be discussed. Although neighbours a long time, he and Ben barely knew one another. The opportunity to purchase the Hunter Road properties was, for the Canales, of great commercial significance. Not knowing what the conversation was to be about, Mario clearly had not had the opportunity to discuss what Ben proposed with his father, his co-purchaser.

Accepting the fact that both Ben and the Canales were ‘business people’, perhaps accustomed to a degree of informality, that does not of itself make this particular conversation a ‘business conversation’ the likes of which a Court might think was intended by the parties to be binding between them. Indeed, I do not think that an unannounced telephone call, requesting potential conditions to ‘walk away’ and raising the desirability of avoiding neighbourly angst, was a likely setting for a final deal, in effect, to cancel a multi-million dollar property transaction that represented a ‘chance of a life-time’ acquisition. That is all the more so when both parties to the conversation knew that one of the critical interest-holders could have no idea what they were discussing.

Even accepting Ben’s account of the conversation, I do not accept that the parties to it intended to create binding legal relations. I think it is more likely that Ben was intending to sound Mario out about what might be possible in the future. The evidence does not provide any support for the view that either Ben or his solicitor believed, on that day, that Ben had secured a valuable deal with the Canales. Mario, for his part, may not have wished to appear uncharitable to his neighbour and most likely answered questions about ‘what would it take’ on a hypothetical basis, to be considered in more detail after discussion with his father and further reflection.

More fundamentally, I do not find that Mario was authorised to make a binding contract on behalf of his father. There is simply no evidence as to their usual manner of dealing and no evidence that Ben believed Mario had authority to make the contract on his father’s behalf.

For those reasons I reject the contention that an agreement was made by the Canales to discharge the Contract of Sale on terms of reimbursement of certain expenses.

Alternatively, should specific performance be refused on the grounds of hardship?

Having reached this point in the analysis there is less need to weigh the competing hardships to be experienced by the parties should the outcome be one thing or the other. That is, having determined that each of the current proceedings must be resolved on the basis that Ben held an equitable interest, by virtue of a constructive trust created prior to the Contracts of Sale, then the question of whether specific performance of the contracts should be granted substantially falls away. I would not order specific performance of a contract to enforce an equitable interest which ranks second in priority to an equitable interest created earlier, unless some factor or circumstance changed the equities in a way that demanded I do so. As I have already made clear, no such factors or circumstances exist in this case.

But I will briefly refer to the evidence and arguments about hardship for two reasons. The first reason (as just mentioned) is that I have taken into account the impact upon the Canales and the McMillan parties of upholding the constructive trust in reaching my decision on whether to grant the relief sought by Ben in the Mould proceeding. I have taken the evidence into account, as I stated above at [99], for the purpose of giving proper consideration to the whole of the relevant circumstances before reaching a final conclusion on the appropriate remedy to give.

The second reason is to briefly state my conclusions on the arguments for and against granting specific performance of the two Contracts of Sale had I not been satisfied that Ben had an equitable interest in the land arising from a constructive trust, in case those conclusions hereafter become relevant.

Principles

The legal principles concerning the availability of the remedy of specific performance to enforce a contract for the sale of land were conveniently summarised in the McMillan parties’ written outline of submissions:

The equitable relief of specific performance of contracts is a discretionary remedy; but, in the ordinary case of a sale of land, the court normally grants it as of course and withholds it only on proof of special facts. Hardship is a ground on which, in a proper case, a purchaser or vendor may be refused specific performance and be left to its right to damages for breach of contract at law. The hardship which moves the court to refuse specific performance is either a hardship existing at the date of the contract or a hardship due in some way to the plaintiff.
Dr I C F Spry in The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, (9^th ed 2014, Lawbook Co.) at p 63:
‘But land is property that has a fixed location and a special value, and ordinarily at least damages are not to be regarded as an adequate substitute for the right either to acquire or dispose of an interest in it. Even indeed if the purchaser intends to purchase the land in question merely in order to be able to sell it later at a profit, damages are not regarded as an adequate remedy for him. [Citing, relevantly, Adderley v Dixon [1824] EngR 376; (1824) 1 Sim & St 607; 57 ER 239 and Pianta v National Finance & Trustees Limited [1964] HCA 61; 180 CLR 146 at 151 per Barwick CJ].’

The general rule is that the substitution of damages for specific relief ordinar[il]y occurs only when the hardship caused to the defendant through specific enforcement would so far outweigh the hardship caused the plaintiff if specific enforcement were denied that it would be unjust in all circumstances to do more than to award damages.[62]

[62]Plaintiffs’ Outline of Argument, [35]-[37].

Specific performance will not lightly be refused when a purchaser has established the existence of a contract capable of specific performance. For a court to refuse the remedy, it would generally be necessary for the vendor to prove hardship to the vendor amounting to an injustice.[63] Examples of cases where a Court has refused to order specific performance on the grounds of hardship illustrate the proposition that the hardship must amount to ‘oppression far outweighing the inconvenience’ to a purchaser if left to their remedy in damages.[64] In Patel v Ali,[65] which was relied upon by all parties in their submissions, an order for specific performance was refused where the contract of sale had been on foot for more than four years and, in the intervening period, the non‑English speaking vendor had borne three children; had become severely physically disabled; had been abandoned by her bankrupt husband; and was heavily reliant upon nearby friends and family to care for herself and her young children.
[63]Suttor v Gundowda (1950) 81 CLR 418, 439 (Latham CJ, Williams J and Fullagar J).
[64]Zhu v Snell [2014] NSWSC 468, [204].
[65][1984] Ch 283.

Another illustration of the principles of hardship is seen in RD McKinnon Holdings Pty Ltd v Hind.[66] The Court there held that requiring an owner to vacate land to which she had a special attachment would amount to hardship, there being no evidence at all of any particular use proposed by the purchaser. Specific performance was refused, notwithstanding the absence of fault on the part of the purchaser. It was recognised as an exceptional case.
[66]RD McKinnon Holdings Pty Ltd v Hind [1984] 2 NSWLR 121.

The Court may consider hardship to be caused to third parties who are so connected with the vendor that, because of some moral duty, it would be highly unreasonable to prevent the vendor from discharging that duty.[67] Arguably, this principle could have some application, treating Ben as the third party connected with GWRM as vendor.
[67]Gall v Mitchell (1924) 35 CLR 222, 230-231 (Isaacs J).

On behalf of the Canales and the McMillan parties respectively, Mario and Kirsten each gave evidence of what the Hunter Road properties and the Beenak Road property meant to them, and of the hardship that would be occasioned to them should the contracts of sale not be enforced. Ben’s evidence of what the properties meant to him, and still mean to him, has already been canvassed at length.

The McMillan parties

In substance, Kirsten said that the Beenak Road property represented a perfect opportunity for her and her partner, and her parents, to experience rural living together on one property and to pursue some specific activities that interested them.

Kirsten described the family relationships between herself and her partner, and her mother and father. She gave evidence concerning the town planning application made in March or April of 2016 for their proposed use of the Beenak Road property, and how the local Council had asked for further details about their farming plan.[68] Kirsten said the McMillian parties had not provided any further details of their farming plan to the Council at that stage, apparently because they did not want to spend any more money on the planning process until transfer of title to the Beenak Road property had been secured. So no planning permit was finalised for their intended use.
[68]A letter from Yarra Ranges Council to the McMillan parties’ architect dated 9 June 2016 identified a number of issues and concerns with the McMillan parties’ plans for the Beenak Road property, in particular, the plan for two dwellings to be located on the property.

Under cross‑examination Kirsten said that the intended use of the Beenak Road property was as a dwelling for her mother and father and herself and her partner, as well as to operate a self‑sufficient hobby farm and animal rescue shelter. She said their current building plan is to construct one dwelling with four wings. She admitted that the McMillian parties preferred there to be two separate dwellings under one roof but accepted it would never be approved. She said she had engaged an architect who had told her that the Beenak Road property could not be developed with two separate dwellings. She said her instructions to the architect were that they wanted one house in which both couples could live separately.

When asked about her plans for ‘self-sufficiency’, Kirsten said that she wanted to grow her own vegetables, fruit and herbs, open up a bed & breakfast which she could manage while looking after her father, and possibly sell produce at local markets. She disagreed with the proposition that the Beenak Road property had not been purchased for the pursuit of an agricultural business, claiming that her plans were not ‘set in stone’.[69] She maintained that they could possibly have some horses, some llamas, and employ someone to look after the horses.
[69]T167.16

As for the animal rescue facility, Kirsten explained that she volunteers with an animal rescue group and wanted to be able to offer space to them. While there was no reference to horse agistment in the plans, she said she had also considered installing a hydrotherapy pool for horses. Kirsten said she had not attended any meetings with the Council, but that the architect had. She conceded he subsequently told her the plans for an animal rescue facility may be problematic. She agreed that she needed to provide the Council further information about the proposed agricultural activity and had not yet put anything in writing. The aim was, she said, to make sure they had the property before they moved forward any further.

In conclusion, Kirsten gave evidence that she wanted a self-sufficient hobby farm where she could care for her parents, and that she would prepare a new plan based upon the Council’s requirements. She disputed, as was put to her, that, in reality, she still required separate dwellings to be constructed on the property and that she had no genuine agricultural pursuit that required her to live at the Beenak Road property.

The Canales

Mario explained that he lives adjacent to the Hunter Road properties, at 433 Queens Road, Wandin.[70] He and his father are strawberry growers. His father is 83 and still very active in farming the property. He gave evidence as follows:

And do you say that ownership of that land is beneficial to your farming enterprise?---It will complete me as a farmer. Like, I can expand my farming business. I’m right next-door. I – I – but adjacent to the property. Dad’s house is across the road. Um, this is a chance of a lifetime for me to expand, and that’s why I bought it, tried to buy it and trying to buy it, yes.…
[70]The location of the Canale’s existing land is shown in Annexure A.

Submissions

Ben submits that the hardship to him if specific performance is ordered is acute. Even if an equitable estoppel is not established, he argues that his working life has been spent on his family’s farms for little or no pay under the assumption he would receive them based on the representations made to him by Geoffrey and Raie. He has no formal training and his experience is limited to operating the farming properties. His evidence is that he entered into the deed of settlement and settled the GWRM proceeding in 2016 to prevent the loss of the properties, which would have occurred had Sue remained in control of GWRM. Moreover, both Ben and GWRM would lose the ability to conduct the fruit juicing business if specific performance was granted in favour of the Canales and the McMillan parties. Ben submits that GWRM owes him a clear moral duty, if not a legal one, to transfer the properties to him.

On the other hand, Ben argues that if specific performance was refused, the Canales and the McMillan parties would not suffer any hardship that could not be compensated by an award of damages.

Turning first to the McMillan parties, Ben contends that while they do seemingly intend to use the property as a residence, they will not be permitted to do so unless they can demonstrate, first, why it is necessary to live on the land to be used for agricultural purposes, and, secondly, that they intend to live in one, rather than two, dwellings. Ben submits that on the evidence it cannot be concluded the McMillan parties will be able to do either of those things. In the result, Ben urges the Court to conclude that the land is in fact unsuitable for the McMillan parties.

Ben’s submissions in relation to the Canales is much more confined. He argues that Mario’s evidence was only that the Canales want to acquire the Hunter Street properties in order to make their neighbouring farm larger. There was no evidence, for example, that the Canales cannot continue to carry out their existing business or that the Hunter Road properties are in any way necessary to the Canales’ business.

Conclusion

On the authorities, a refusal of specific performance to a purchaser with a contract to purchase land capable of being specifically performed is an exceptional order. It is generally confined to circumstances where to allow the relief for the purchaser would amount to an injustice.

I am nowhere near satisfied that is the case here, given that, at this point, I am considering this question on the hypothesis that Ben has not acquired an equitable interest by reason of any detrimental reliance upon representations made to him that the land should be his. In other words, absent the ‘moral’ force of that situation, merely because he worked his life on that land and paid Sue a lot of money to be able to stymie the sales (for a while) to the Canales and the McMillan parties, does not give rise to the type of injustice that would warrant this Court taking the exceptional step of refusing specific performance to purchasers who are without fault.

But further, the land is of some special value to both sets of purchasers. The Beenak Road property represents to the McMillan parties a place that two families can live, with lifestyle features that are attractive to them. That their plans are somewhat unformed is, for this comparative analysis, of lesser moment. Perhaps some of their plans might even seem unlikely to be fully realised; but I do not consider that observation to so diminish the value of the property to them that the exceptional step of refusing specific performance is to be seriously considered.

In my view, the value of the Hunter Road properties to the Canales is even more obvious. Adjacent farming land giving them the rare opportunity to expand their commercial operation constitutes a very clear value. I do not consider that, against the loss of that opportunity, the loss of the properties to Ben would so clearly amount to an injustice that specific performance should be refused when the Canales are without fault.

Conclusion and final orders

On the conclusions I have reached, in the Mould proceeding I will make the declarations that Ben seeks, namely that GWRM holds the whole of its interest in the Hunter Road properties and the Beenak Road property on trust for him subject to the mortgages registered on the titles. I will grant an injunction restraining each of the McMillan parties and the Canales from seeking registration of a transfer of the Beenak Road property and the Hunter Road properties respectively.

In the McMillan proceeding and the Canale proceeding I will refuse the relief for specific performance of the Contracts of Sale as sought.

I will hear from the parties on the form of these and any consequential orders.[71]

[71]For example, it was conceded by GWRM that upon specific performance of the contracts being refused GWRM would be liable to pay damages to the McMillan parties and the Canales respectively in the sum of deposits paid under the contracts and interest thereon: Transcript 268.18-21

Annexure A

[2017] VSC 793

21 December 2017