Orr v Ford

[1988] HCATrans 146

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No Bl9 of 1988

B e t w e e n -

JOHN STUART ORR

Appellant

and

BRIAN HUBIRD FORD and PHILIP

STRUGNELL as Executors of the

Will of the late FRANCIS WILLIAM

STONE

Respondents

MASON CJ
WILSON J
DEANE J

TOOHEY J

Orr(3)

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 2 AUGUST 1988, AT 10.18 AM

Copyright in the High Court of Australia

C2T 1/1/JM 1 2/8/88

MR G.L. DAVIES, QC:  May it please the Court, I appear

with my learned friend, MR R. BAIN for the

appellant. (instructed by Cannan & Peterson)

MASON CJ:  Yes, Mr Davies. Yes, Mr Chesterman?

MR R.N. CHESTERMAN, QC:  May it please the Court, I appear

with my learned friend, MR D. RYAN for the

respondents. (instructued by T.J. Gibson & Co)

MASON CJ:  Yes. Mr Davies.

MR DAVIES:  May it please the Court, may I hand up some

copies of our outline?

MASON CJ: Thank you. Yes.

MR DAVIES:  Your Honours, the appeal concerns the construction of some provisions of the LAND ACT. Were it not

for the construction which the trial judge and the

Full Court arrived at of those provisions, they

would have granted the declaration which the

plaintiff appellant sought and seeks that a

holding, a selection under the LAND ACT, was held

in trust as to one half for him. In our respectful

submission the conclusion which the trial judge

and the Full Court reached as to the construction of

those provisions is wrong.

Could I take Your Honours immediately to the

first of the relevant provisions, which is section 91

of the LAND ACT?

(Continued on page 3)

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MR DAVIES (continuing):  Your Honours, it provides, relevantly:

Subiect to this Act -

and may I pause there to say that we will be making

a submission that that means, amongst other things,

"subject to sections 296 and 297". Then:

(b) any .....

(ii) person who in respect of the land .... held - I will leave "applied for" out of account for

the moment. And then the following line:

is a trustee -

and then again in the following line:

for any other person,

shall not be competent to ..... hold any
selection.

It will be our submission, Your Honours, that

that subsection must be read with and subject

to sections 296(1) and (2) - I will not go to

them yet, Your Honours - and 297 ( 1) and ( 2).

If I may, at the outset, say what we say the effect

of those sections taken together is, we say the

combined effect of those provisions is that a

person who holds the selection as a trustee is

liable to have his holding forfeited - that question

being a question, ultimately, for the discretion

of the minister.

Your Honours, in dealing with section 91

in the way I have, I have omitted the provision

which provides that:

any -
person who in respect of the land ..... is
a	trustee .....

shall not be competent to apply for ..... any
selection.

I mention that at this stage, Your Honours, because

it could not be suggested that an application

by a trustee for a selection invalidated his trust

and we submit with respect that "competence" really

has the same meaning with respect to applying
for and holding. That is, in the one case, application,

the trustee is not allowed to hold and in the

other case, holding, that his holding may be divested.

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MR DAVIES (continuing):  That sort of provision, Your Honours,

which refers to competence, may be contrasted with

other provisions in the Act which specificially make

transactions unlawful; for example - and I will just

give you one example, although there are others -

section 274, which in subsection (1) provides that:

It shall not be lawful -

to make certain subleases. Now, it is even debatable,

in our submission - although we do not need to go to

this - it is even debatable whether that provision

makes the sublease invalid. Section 274 itself has

in subsection (4) a provision which says:

The lessee of any holding who sublets the whole or any part of his holding contrary in any respect to subsections (1)

or (2), of this section, shall be deemed
to commit thereby a breach of the

conditions of his lease -

and there are consequences which flow from that.	So
it may be that, even in that case where the actual

grant of a sublease is specifically, it seems,

proscribed, that the only consequence is that there is

a breach of the conditions of the lease and, as

we will see a little later, that also is another

cause for liability for forfeiture.

Your Honours, before leaving section 91 and going

to sections 296 and 297, could I then take you back

to a provision which is in almost identical terms	to
section 91 with respect to preferential pastoral holdings, that is section 54(1)(a) which provides
that:

(Continued on page 5)

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MR DAVIES (continuing):

Subject to this Act a person who is -

(a) in respect of the land ..... held ..... a

trustee ..... for any other person.

And then down the bottom of the page:

shall not be competent to apply for or hold

a preferential pastoral holding.

Now, I mention that, Your Honours, as well as

section 91 because section 296 deals with both,

that is, the incompetence "to apply for and hold

a preferential pastoral holding" and incompetence

to - hold rather than apply for - an incompetence

to hold a selection. Can I then take Your Honours

to section 296. Section 296(1) provides that:

The right or title of any person to any

holding -

and I will leave out the rest down to "by fraud",

so it reads:

The right or title of any person to any holding

..... by fraud upon this Act shall be liable

to be forfeited.

Then what subsections (2), (3) and (4) do, in our

respectful submission, is, in effect, define

what "fraud upon the Act"is for the purpose

of subsection (1).	The term "fraud upon the Act",
of course, is not a term of art	and it needs

definition and, in fact, it is, in effect, defined

by subsections (2), (3) and (4) because they

say that in each of the cases set out in (2), (3)

and (4) that there is deemed to be a "fraud upon

the Act."

Subsection (2), which is the relevant one

here says that:

Any person who ...... holds as a trustee .... .

for any person any -

and Your Honours will see it is both "preferential
pastoral holding or selection" -either "preferential

pastoral holding or selection" -

shall be deemed to have acquired or to hold

the holding ..... by fraud upon this Act,

and shall be liable in respect of such holding

..... to the forfeitures prescribed.

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MR DAVIES (continuing):  And they are prescribed in the

following section 297 to which I will come in a

moment.

Subsection (3) then says that:

Every person who has -

(a) acquired .... .

any holding ..... shall, unless within three
months from the date of such acquisition or
agreement -

(i) a transfer ...... has been produced to the Minister for his consideration; or

(ii) ..... notice in writing -

has been given to the minister of the acquisition

that he is deemed -

to have acquired the holding ..... by fraud

upon this Act.

And then subsection (4) says that if a person acquires
title as lessee of a holding of over a certain

area which has more than a certain rental that

he is:

deemed to have acquired the holding ..... by

fraud upon this Act.

So those three subsections state - and nowhere

else is it stated - what is a fraud upon the Act

for the purpose of section 296(1).

DEANE J:	Mr Davies, is there anything in these sections
that refers to the beneficial interest of the cestui que trust?

MR DAVIES:	No, Your Honour.
DEANE J:	So they are all directed to the holding by the
trustee?
MR DAVIES:	Yes.
MR DAVIES:	And am I right that it has been held that the

trustees' holding does not disappear if the effect

of the sections is only that it is liable to a

forfeiture proceedure?

MR DAVIES:  Yes, and that appears clear enough when one looks

at section 296 and, indeed, at section 297 but

yes, that is so.

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DEANE J: While I am interrupting, can I take you back to

your first paragraph. You say it was held that

there was a trust, what sort of trust? Was it

an express or a constructive trust?

MR DAVIES:	Express, Your Honour.
DEANE J:	What would have been the position on the approach
below if it had been a constructive trust, for example, one imposed by the court?

(Continued on page 8)

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MR DAVIES: It would have been very difficult to - - -

DEANE J:	I suppose it would be that the Court could not impose it.
MR DAVIES:	Yes, I suppose it has to be that, Your Honour.

But, in fact, to impose any such trust is contrary
to the policy, I suppose, that must be saying
because there is nothing express but the implication

of the Act.

So, in our respectfuly submission,

sections 91 and 296(1) and (2) are concerned with

the entitlement of the trustee to apply for, or

hold, a selection and that "not competent" simply

means that the holding is liable to forfeiture -

just as, of course, he is not competent to app

because his application will be refused. And we

made the submission a little earlier that section 91

is subject to sections 296 and 297, specifically

made so by the opening words of that subsection

and subject in the sense that they prescribe and

qualify the incompetence which is stated to exist

in section 91 and similarly, of course, section 54.

Now, once that is accepted, in our respectful

submission, section 296 cannot have the effect

of invalidating the trust because, of course, the

mere fact that a trustee's interest is liable to

forfeiture would not render the trust void or

unenforceable if that is the only consequence and

we submit, with respect, it is. Your Honours,

the Full Court's reasoning to reach this conclusion

is fairly short. There seem to be really two bases

and we have mentioned them both in our outline.

First of all they spoke of the policy of the Act.

(Continued on page 9)

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WILSON J:  Before you perhaps go to the judgments, Mr Davies,

before you leave the review of the Act, you say

there is no illegality involved in a section 91

or a section 54 matter?

MR DAVIES:	Yes.
WILSON J:	The same is not true of section 274, is it?

Subletting would be illegal, even though the

consequences you have pointed out, there is a

deemed commission of the breach of the conditions

which would give rise to liability to forfeiture?

MR DAVIES:	Yes.
WILSON J:	It has that different complexion of illegality.
MR DAVIES:	Yes, it certainly goes much closer to making illegal

the sublease than this because it specifically - - -

WILSON J:	- - - says it is not lawful.
MR DAVIES:	Yes.
WILSON J:	So you may gain something by contrast?
MR DAVIES:	Yes, indeed. Yes, we do. We say - we did intend

to contrast those provisions. I was really only

saying by the way, Your Honour, that perhaps even in

that case because of the general scheme of the Act

it may be that the legislature really only intended

the consequence of a breach of section 274, that it

should be a breach of the conditions of the lease.

Certainly, it in turn seems to proscribe the sublease.

WILSON J:	Yes, thank you.
MASON CJ:	Mr Davies, could I ask you a question about the expression, "save as prescribed", in
section296(2).  Does that cover anything other than
matters referred to in - - -
MR DAVIES:	I am sorry, which expression, Your Honour?
MASON CJ:	"Save as prescribed", in section 296(2).
MR DAVIES:	Yes.
MASON CJ:	Does that cover anything other than what we find in subsection (2)(a), subsection (3) and subsection (4)?

MR DAVIES:  No, Your Honour, I do not think so. Your Honours,

I was about to take Your Honours then to what the

Full Court said about it.

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Orr(3)
WILSON J: Perhaps another question, Mr Davies: we have

been provided with the amending Acts of '84,

'85, '86 and '87. All the sections you have

referred to so far have not been amended?

MR DAVIES:	No, they have not.
WILSON J:	Or, not relevantly?
MR DAVIES:	Not relevantly.

WILSON J:  Do not let me divert you, or detain you. I

just wondered whether we need to go to those

statutes as well.

MASON CJ: But if there have been amendments at all of

these sections I think counsel should put us

in possession of the amendments. At some later

stage when we come to consider the exact form

of the provisions we need to know how they

stand at the relevant time.

MR DAVIES:  Yes. Itllink it was accepted below by both

parties that there was nothing which affects the

arguments which have been advanced to this Court,

but our learned friend - - -

~..A.SON CJ: That may not be good enough for our purposes.

MR DAVIES:	No.
MASON CJ:	We need to know precisely what the provisions
said at the relevant time.

MR DAVIES:  Yes. We will undertake to do that, Your Honour.

DEANE J:	The Full Court dealt with them on the basis of
their present form and said that it was agreed that any differences between their present form and earlier form could be disregarded.

MR DAVIES:	Yes. Your Honours, perhaps before I take Your Honours to the judgment, I should have
also taken you to section 297 to see what
really happens with respect to forfeiture,
because it is not automatic forefeiture, as appears perhaps from 296. It is simply liability and in
the end 297 makes it clear that it is really in
the minister's discretion. What 297(1) says that:

Where the Minister at any time has reason

to believe that the lease of a holding

is liable to be forfeited .• .__. .he may

refer the matter to the Court for hearing

and determination.

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Then he:

shall give the lessee ..... notice of

his intention to make the reference -

But then in (2):

If upon the final decision of the matter -

that is by the Court -

any such liability is established the Minister

may in his discretion -

(a) recommend ..... that the lease be forfeited; or

(b) waive the liability to forfeiture

Your Honours, after setting out the various

arguments of counsel, the Full Court, at page 243,

stated what they understood to be the primary question.

This is the judgment of Mr Justice Thomas, in whose

judgment the others agreed.

The primary question then is whether the

creation and continuance of such a

trust is expressly or impliedly prohibited

by statute and whether rights alleged to

arise thereunder are enforceable.

And then there is a quotation from the Chief Justice in YANGO. After the part that is quoted, they say:

Section 91 of the statute under

consideration does not expressly prohibit the

trust, so the question is whether it is

prohibited by necessary implication. The

question whether such a holding ..... subsists

until forfeiture is, as has been indicated

earlier, a separate question. (Continued on page 12.)

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MR DAVIES (continuing):  And then he goes on to say:

In my view the LAND ACT as a whole, and ss.91 and 296 in particular, provides

an indication of legislative policy to avoid

selections being taken up by dummy holders

or absentee controllers. Other objects such

as the encouragement of personal residence,

encouragement of improvement to the land

..... and the avoidance of too large holdings .....

may be discerned with respect to particular

types of selection or holding, but it is

not necessary to pursue these policies in

the present case. The policy that I have

mentioned may be seen as a legislatively

perceived public purpose that is an integral

part of the scheme of the Act. The insistence

of the Act that in the case of all selections
the Crown (through the Minister) will deal
directly with the holder and not an agent

or trustee of a principal or beneficiary

is inescapable.

The point we make about that, Your Honours, is

that even if one assumes that that is the policy

of the Act and of those provisions as His Honour

does, and there is nothing in the Act which indicates

that that is its policy, that can be achieved

just as well by the argument which we submit:

that is that there is a discretion in that case

to forfeit the holding, as by the argument which

found acceptance by the Full Court, that it results

in automatic avoidance of the trust.

His Honour then went on:

In addition to the above considerations

I confess to difficulty in understanding

how a trustee may be ordered by the court

to carry out a trust that he (or anyone else)

must always be incompetent to carry out as

trustee. The incompetence is not of a kind

that can be cured by a change of trustee

or avoided by indirect means. There is equal

difficulty in seeing how a court could properly

make a declaration of right in such a situation.

I would add that I accept the submissions of Mr Chesterman which have been set out

earlier in this discussion. In my view the

trust which the plaintiff seeks to enforce
is impliedly prohibited and no court should
lend its aid to its enforcement.

In our respectful submission, His Honour is really

taking as incompetence a meaning which, in our

respectful submission, is impermissible.

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His Honour is talking about ''incompetence to carry

out the role of trustee" but, in our respectful
submission, it is not competence to carry out

the trust but competence to hold a selection with

which section 91 is concerned. It is competence

to hold a selection if you are a trustee.

that incompetence, is liable to the

In our respectful submission it means, and perhaps because of

forfeitures which we have referred to.

Your Honours, they are our submissions.

The only other point we really want to make about

that is the one which we make in paragraph 9 of

our outline, and that is we really submit that

this is analogous to the principle which we set

out in paragraph 9 from the judgment of Lord Tenterden

in DOE D. ROCHESTER (Bp) V BRIDGES which has been

cited in many cases since, that:

where an Act creates an obligation, and

enforces the obligation in a specified

manner, we take it to be a general rule

that performance cannot be enforced in any

other manner.

We really say that it is much the same here, that

this Act created a condition, and we say a condition

which does not have any received consequences,

and states a consequence of that condition and

that, in those circumstances, the principle really
is, as a matter of statutory construction, that

that ought to be the only consequence of that

condition.

They are our submission, may it please the

Court.

(Continued on page 14)

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DEANE J:  Mr Davies, is section 296(4) the only one that
deals with the position of an executor?

MR DAVIES: Section 296(4), Your Honour?

DEANE J: Yes. Or does subsection (4) deal with the position

of an executor or administrator?

MR DAVIES:  I am not aware of any provision which specifically

does, Your Honour.

DEANE J: What is it that would - - -

MR DAVIES:	There is a provision which does except executors or administrators from that.
DEANE J:	I thought I had seen it somewhere.  I am just looking
for it.
MR DAVIES:	Yes, there is, Your Honour - that is section 235,

Your Honour:

Notwithstanding anything in this Act the

disqualifications and restrictions imposed

by this Act against by any person holding

a holding or any interest -

and so on -

shall not apply to the holding by any person

..... defined in subsection (2).

DEANE J:  Thank you. I was just looking for the section

and I could not find it again. Thank you.

MASON CJ:  Could I just ask you this question, Mr Davies?

Does that mean that 235 is an instance of a

prescription that falls within 296(2)?

MR DAVIES:	I am not sure I am answering Your Honour's question - we would submit the consequence of section 235
is that such a lease is not subject to the forfeiture
in section 296 because it is not such a trust as
sections 91 and 296 deal with.

MASON CJ:  Yes. Yes, Mr Chesterman.

MR CHESTERMAN:	May I pass up copies of our synopsis.
MASON CJ:	Thank you.

(Continued on page 15)

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MASON CJ:	Yes.
MR CHESTERMAN:	Before I conrrnence the submissions may I

say something about the provisions of the Act.

We have produced a schedule which sets out an

analysis of the types of holdings provided for by

the Act and the provisions of the Act dealing with

trust as they affect those sorts of holdings. May

I pass a couple of these to the Court.

MASON CJ:	Thank you.
MR CHESTERMAN:	Your Honours, the scheme of the paper is

this: the types of holding are set out in the

column on the left. The first four types of holding

are "selections" and are defined and created by Part IV of the Act. The next set of holdinge is '~astoral

tenures" and then there are" auction perpetual leases"

and then two particular sorts of holdings.

Section 91 applies to'selections". Section 54
applies to"preferential pastoral holdings". In

its present form the Act contains no provision

affecting trusts of holdings apart from "selections"

and "preferential pastoral holdings".

Sections 91 and 54(1) apply respectively to

"selections" and a particular type of pastoral tenure,

the "preferential pastoral holding". Section 235(4)

applies to trusts of "selections" and "preferential

pastoral holdings" as does section 296(2). In

view of our friend's argument it might not be

necessary to refer much to section 296(3), but

it applies to all holdings, every sort of holding

under the Act.

Your Honours, may I say one thing more about

the terms of the legislation. Section 296(2) was

amended in 1985 by section 55 of Act 1io 6 of

1985.      As it now stands, and as it stood at the

trial and the appeal to the Full Court in this
matter, section 296(2) applied only to the trusts

of "selections" or "preferential pastoral holdings".

In the form of the legislation, as it appears in

the judgments, which are wrong in that regard,
there was also reference to trusts of the sorts
of holding in the third category, that is,"auction

perpetual leases" but that reference was deleted

in 1985. So we submit, with respect, that

Your Honours should have regard to the form of

section 296 as it appears in section 55 of the

amending Act of 1985.

Section 296(2A) was amended in 1987, but we

do not think that those amendments are material.

The amendment occurred after the trial and judgment

but before the appeal to the Full Court - I speak

of the 1987 amendments. What happened then was

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that subsection (2A) was altered by - including

a reference to the trustee of certain holdings where the beneficiaries of the trustee were in the named categories.

Your Honours, having said that may I go to

our submissions. Perhaps I need not dwell on what

is said in paragraph 1 of the submissions. That

would seem not to be contentious. Our friend, I

think, would not contend to the contrary what

we submit. Their argument, as I understand it,

is that there is nothing in the LAND ACT which

gives rise to a policy offended by the trusts

in this case, nor, as I said, is anything unlawful

in the trust which was found in this case.

(Continued on page 17)

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MR CHESTERMAN (continuing):  We submit, as we say in

paragraph 2, that a trust of land with

section 91 and section 296 applies is illegal and

unenforceable, and may we take the Court to a

judgment of this Court, THE KING V HOPKINS,

20 CLR 464, at 470. Your Honours, this was a

case which concerned a trust of land that offended

section 59 of the LAND ACT (1910) which was a forerunner

of section 91 of the present Act. The particular

point at issue in the appeal was whether there was
evidence sufficient to make a finding of a trust,

but in dealing with that question

Chief Justice Griffith made some remarks at page 470

which we submit are relevant. His Honour said

at page 470, in the second last paragraph on that page:

The learned judges of the Supreme Court

were equally divided in opinion upon the

point -

that was whether there was or was not sufficient

evidence to make a finding of a trust -

Cooper CJ and Lukin J think that there was

no such evidence, Real and Chubb JJ thinking

that there was.

Then His Honour goes on with the point on which we

rely:

Before referring to the evidence relied upon

by the Land Appeal Court and by the appellant

to establish the alleged trust, I remark

that the question must be determined

irrespective of the consideration that such

a trust would be illegal and unenforceable.

A provision forbidding the creation of a

trust under the penalty of forfeiture of

the estate would otherwise be contradictory

and futile.

His Honour's reference there to the provision

forbidding the creation of a trust under the penalty

of forfeiture of the estate is a reference to

section 59 which, in our submission, is

indistinguishable from section 91. The essence of

section 59 is set out in the judgment at page 468,

about a third of the way down that page His Honour

said:

Section 59 provides that "no person who

is in respect of the land applied for or

held or any part thereof or interest

therein, a trustee, agent or servant of or

for any other person shall be competent

to apply for or hold any selection."

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And then section 130 of the Act provided - it is

set out at the bottom of page 468:

Lands acquired by any evasion of or fraud upon this Act shall be liable

to be forfeited -

and then subsection (2):

Upon the breach of any of the conditions to which a lease or licence of a holding is subject, or in any case where any

land is held in violation of this Act

..... the lease or licence shall be

liable to be forfeited.

(Continued on page 19)

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MASON CJ:	Was there a power to waive forfeiture?
MR CHESTERMAN:	Your Honour, I cannot answer that expressly,

I am sorry.

TOOHEY J: Mr Chesterman, do you rely upon section 91 standing

independently of section 296 and 297?

MR CHESTERMAN:  Yes, Your Honour. We submit that section 91

has a different effect to section 296. We submit

that what section 91 does is to prohibit the trust.

What section 296 does is to allow the legal estate,

the lease, to be forfeited. We submit the two

questions are separate. Section 91, by providing

that there can never be a trustee of a selection

provides in effect that there can never be - well, expressly, really, that there can never be a trust

of a selection. Section 296 makes the legal state

of the trustee liable to forfeiture.

TOOHEY J:  And yet it is curious, in a way, that section 296

then picks up section 91 and, with the section
that follows, namely 297, provides the machinery

for forfeiture.

MR CHESTERMAN: Forfeiture of the lease, Your Honour;

TOOHEY J:	Of the lease, yes.
MR CHESTERMAN:	We submit that the Act contains a clear

indication that the trust is never to be recognized

and is never to be regarded as lawful or valid.

Your Honour, we, with respect, would not accept

that section 296 picks up section 91. We submit

that the two sections do stand quite separately

and distinct.

TOOHEY J: Picks it up in the sense that it repeats the

language of section 91 for the purpose of

section 296?

MR CHESTERMAN:

Your Honour. Section 91 provides that no person I do not think it does, with respect,

shall be competent to hold selection as trustee

for any other person. Section 296 is really

quite self-contained. It provides that:

The right or title of any person to any holding or interest in any holding acquired or held by him in evasion of or by fraud

upon this Act shall be liable to be forfeited.

That does not appear in section 91.

TOOHEY J:  No, certainly that does not. I was thinking

more of section 296(2) which, although not in

identical terms, repeats the sort of situation

with which section 91 is concerned, namely, the

person who holds as trustee.

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MR CHESTERMAN:	Yes, but we would submit, Your Honour,

with respect, that section 91 deprives anyone

of the legal capacity to be a trustee of a selection

and therefore it prohibits the trust because there

cannot very well be a trust if no one can ever

be competent to be the trustee of the property.

We would have submitted, with respect, that one

cuts down the possibility of a trust if one forbids

the world at large from ever being a trustee

of a particular property.

Section 296, as we submit, sets out that

holding	land by fraud upon the Act makes
the land liable to forfeiture.	Then it sets out what

is fraud upon the Act and one of the things that

amounts to fraud upon the Act is holding a selection

as trustee for somebody else. We would submit

that if our friends were right in their submissions

as to section 296, section 91 is deprived of

any meaning, any force or effect, because 296,

as we say, is self-contained. Subsection (1)

sets up the general position that the holding

of land by fraud upon the Act makes the land

liable to forfeiture. Then is set out what amounts

to holding the land by fraud upon the Act.

(Continued on page 21)

C2Tl3/2/ND	20
Orr(3)

MR CHESTERMAN (continuing): Section 91 is not needed, if

our friends are right, because section 296 sets
out the consequence of holding land by fraud

upon the Act and what is holding land by fraud

upon the Act. There is no need to go back to

section 91 to find a further prescription or prov1s1on

as to trusts.

DEANE J:  But section 91 does not make him incompetent to

apply for or hold the selection as a trustee,

it makes him incompetent to apply for or hold

the selection.

MR CHESTERMAN:	But as trustee, Your Honour.
DEANE J:	No, it says if he is a trustee he is incompetent

to apply for and hold the selection, which means,

on your argument- it would really mean, would it

not, that your client .has no rights?

MR CHESTERMAN:  No, what gives rise to the incompetence 1s

the holding as trustee.

DEANE J:  But the consequence of the holding as trustee is

that your client cannot applx for and hold any

selection. It does not say 'as trustee". The

very thing it does not say is "and the trustee

can take the beneficiary's interest and make

whoopee".

MR CHESTERMAN:	Your Honour, what it does say, with respect, is that any person who, in respect of the land
held, is a trustee, shall not be competent to
hold the land.
TOOHEY J:	But what of the situation of the person who is
a trustee in respect, as is said here, of a moiety
Because aection 91 looks not only at the position
of a person who is a trustee in respect of the
entirety of the interest but who is a trustee
in respect of any interest in the land.
MR CHESTERMAN:	Yes, Your Honour.
TOOHEY J:	So that if a person applies to hold a selection,
he being a trustee in respect of perhaps some small interest in the land, then does section 91 operate to render him incompetent as regards the entirety of the interest which he seeks to acquire?
MR CHESTERMAN:	I think not because of the words in the

section:

or any part thereof or interest therein.

TOOHEY J:  But that is the disqualifying factor, is it not,

or a disqualifying factor?

C2Tl4/l/SDL	21	2/8/88
Orr(3)

MR CHESTERMAN:  Your Honour may be right, yes. Perhaps

Your Honour is right, we had not thought about that.

But however one looks at section 91, in our submission

it is clear that the legislature was expressing	'
disapproval of selections held on trust and was seeking to prevent selections being held on trust.

DEANE J: But that avoids the question, does it not? Is

not the real question: is the legislature expressing

its disapproval by measures directed to the trustee

or is it going further and expressing its approval

by providing that a beneficiary, however innocent,

will lose his interest in favour of the trustee?

Take the case where you have a trustee for infant children of money, who is insolvent, and

who puts the trust money into a selection. It

is a rather surprising result that the children

lose all their interest in the property purchase

with the trust funds and the trustee holds it for
his own benefit and, if insolvency is taken further,

for the benefit of other creditors.

(Continued on page 23)

C2Tl4/2/SDL	22	2/8/88
Orr(3)

MR CHESTERMAN:  Well, that consequence does follow, Your Honour,

with respect, because of the express provisions

of section 235(4), because that expressly allows

trusts of selections and preferential pastoral

holdings for children and grandchildren if - - -

DEANE J:	I was not referring to his children.	I said a
trust for infant children.

MR CHESTERMAN:  But the answer, all the same, to Your Honour's

question, with respect, is that it is made quite

clear by section 235(4) that a trust such as

Your Honour poses would be unlawful and of no force

or effect and that the beneficiaries would have

no interest.

Might I ask the Court then to look at section 235(4)

because we submit it does assist our argument.

It provides that:

Notwithstanding the provisions of subsection (1)

of section 54 and subsection (1) of section 91
of this Act, a person, with the permission

in writing of the Minister first had and

obtained, may acquire by transfer and hold

a preferential pastoral holding or a selection

or any interest therein as trustee for children,

grand-children, or like descendants of his

if, at the date of the creation of the trust,

the beneficiary thereunder or, where there

are more than one beneficiary, all of them

are under the age of eighteen years.

And then if I might omit the next part.	The last
part:

A trust permitted under this subsection shall

be created by way of transfer of the holding

or interest in question to the trustee upon

the permitted trusts and a purported creation

of such a trust in any other way shall be

of no effect in law.

So, we submit that subsection (4) clearly contains

legislative intent that there shall not be trusts

of selections or preferential pastoral holdings
save those that comply with the terms of subsection (4)
or subsection (2) which allows trusts under wills

or on testaces or on the operation of the bankruptcy

laws.

It may in some cases work hardship -one may

say unfairness-but we submit there is a clear

indication of legislative policy that there shall

not be trusts of these classes of holdings, se)ections

or preferential pastoral holdings. And we submit

C2Tl5/l/AC	23	2/8/88
Orr(3)

that that was the view of His Honour

the Chief Justice Griffith in RV HOPKINS and

nothing has changed the legislation since to render

his views inappropriate.

Your Honours, we submit here, as we submitted in the Full Court, that the appellant's action

was to enforce the trust. He sought a declaration

and, no doubt, consequential orders such as
injunctions and, perhaps, an order for specific

performance but if the court made such orders as

were sought the consequence would be that the
respondents, the executors, would have to hold
the land as trustee when section 91 provides that
they cannot do that because they are not competent
to hold the land if they are trustees of it. Yet,
the appellant seeks an order that the respondents
hold the land in trust for the appellant and in

doing that they would be doing that which they

are not competent to do because they would be

holding selection as trustee for someone else.

We submit that the court would not make such an order which places the respondents in contravention

of the section and, similarly, we submit that if

such an order as is sought were made the result

would be that the respondents would hold the land
by, what is said expressly to be, a fraud upon the Act. Now, whatever is meant by the phrase "a fraud upon the Act" clearly the legislature was expressing disapproval of people holding selections

as trustee for another.

(Continued on page 25)

C2Tl5/2/AC	24	2/8/88
Orr(3)

MR CHESTERMAN (continuing):  The phrase used is really

quite a strong one. "Fraud upon the Act" is a

strong word. "Fraud" has connotations, of course,

of dishonesty. Whethe~ in this particular case, necessarily there is dishonesty does not perhaps matter, but the order sought by the appellant

would have the consequence that the respondents

were holding the land in fraud, or by fraud, upon

the Act. We submit the Court would not make such

an order that would have that consequence. It

would put the respondents in contravention of the

section.

We submit that the appellant's argument

establishes the grounds why it cannot be accepted.

The reason why the lease is subject to forfeiture

is that the holding of the selection on trust is

contrary, or subversive, to the policy of the

Act. The reason why the minister can act to

forfeit the lease is that the Act sets is face

against trusts of selections. To prove that the

trust would make the lease liable to forfeiture

is to prove that the trust is contrary to policy

of the Act, in our submission, with respect.

The reason why the minister can act against

a trust of a selection other than a trust as

defined by section 235, or of section 29~2A) is

that trusts within those two provisions,	235 and
296(2A) are permitted by the Act.	They are
lawful - - -

TOOHEY J:  Mr Chesterman, you have said more than once that

the Act operates against the trust, but it operates against the holding, does it not?

MR CHESTERMAN:  It operates against the lease because it

is held on trust, Your Honour.

TOOHEY J: But if it brings down anything, it brings down

the lease in its entirety. It just does not

bring down the trust interests.

MR CHESTERMAN:  Your Honour, I accept that. But the reason

it brings down the entirety is that there is a

trust. What offends the Act is the existence of

the trust.

TOOHEY J:  But if the minister chooses, for whatever reason,

not to bring into operation the forfeiture

provisions, does the argument still hold good?

MR CHESTERMAN:  Yes, Your Honour, because in that case the

legal estate continues and subsists, but the trust,

we submit, is still invalid. It must be invalid,

with respect, because the existence of the holding

C2Tl6/l/JM	25	2/8/88
Orr(3)

on trust is enough to make the holding a fraud
upon the Act. It always remains a fraud upon

the Act whether or not the minister acts to forfeit the legal estate. The existence of the trust always has the result that the holding

is a holding by fraud on the Act.

GAUDRON J:  Mr Chesterman, when you say the trust is invalid,

do you mean to suggest thereby that no trust ever

came into being?

MR CHESTERMAN:  No, Your Honour. We submit there.was

a trust, but it is an illegal trust and one

the Court would not enforce. It is the sort of -

GAUDRON J:  Yes. So you wish to acknowledge that there is

a trust but that it is unenforceable rather

than suggesting validity of the trust as such.

MR CHESTERMAN:  Yes, perhaps "unlawfulness" is a better

description to use of it, Your Honour. It is a

trust that contravenes the policy of the Act.

It is a trust that is illegal and therefore one

the Court would not enforce.

It is the distinction made by Chief Justice Griffith,

that there is a trust. In that case there was an

inquiry to see whether the evidence established the

trust, the consequence of the trust being proved

by fact was to show that it was illegal and

unenforceable.

MASON CJ:  How does section 235(5) work in:telation to this, because

on the face of it it seems to convert the beneficial

interest of the cestui que trust into a proportionate

legal interest as lessee?

MR CHESTERMAN:  Yes. I think for the purpose of ascertaining

whether or not a particular holder has more than

the allowed aggregate, you take into account what

is held for him beneficially and what he holds in

his own name as legal owner, but you ignore trust,

or land held for him beneficially if it is a trust under

-section 235 ( 2) or ( 4) • You do not take into account land

lawfully held on trust in with -

(Continued on page 27)

C2Tl6/2/JM	26	2/8/88
Orr(3)

MASON CJ: 

But it is all in the context of prescribed

areas, whether as lessee of a prescribed area
or holding an interest in a lease in connection

with a prescribed area.

MR CHESTERMAN: 

Yes, Your Honour, that is as I understand

it. Your Honours, may we take the Court to what

the primary judge said about this matter at

page 233 of the record.	He put the matter as we
are putting it now, we submit, correctly.	At 233

starting about line 5 - this is the submission we

make, with respect. His Honour said:

In my opinion the illegality and unenforceability of the trust follows as

Griffith CJ indicated from the fact that

the trust is liable to forfeiture. The

reason why it is made liable to forfeiture

is that the holding of a selection as a

trustee is deemed to be a fraud upon the Act.

This constitute to my mind a legislative

declaration that it is contrary to public

policy for a selection to be held in trust.

DEANE J:	- Y.ou ,;rould disagree -:vi'h that, would you not? · I mean,
you could not accept that the trust is liable to forfeiture?
MR CHESTERMAN:	Yes, I suppose that is true, yes.
DEANE J:	It is a trust property and obviously that is

what His Honour meant.

MR CHESTERMAN:  Yes. But with that amendment notionally,

we submit, that what His Honour said there is

really quite right. His Honour said there what

I was trying to submit earlier, that our friend is

submitting that - the lease being liable to

forfeiture, established themselves that what the

trust they seek to enforce is unenforceahle hec~use

it is that which makes the lease liable to

forfeiture because the Act sets its face against

such things, the lease is liable to forfeiture.

Therefore, we submit, the trust must be

contrary to policy of the Act.

Your Honours, there is a similar decision of the judge at first instance in the Supreme Court
of Victoria. It is an old case, EVANS V REG, (1880)

6 VLR (Equity) 150 at 158. It is a similar sort

of case, although not exactly the same because

the legislation did differ a little. It is

enough, I think, for my purposes, if I tell

Your Honours that Mr Evans was found, on an inquiry,

to be the holder of land under the Victorian LAND ACT

as a trustee. Mr Justice Molesworth said at

page 158 in the paragraph that takes up the middle

of the page and 6 lines into that passa~e -

His Honour said:

C2Tl7/l/MB	27
Orr(3)

The Act, section 21, prohibits any person becoming a licensee who is an agent, servant,

or trustee for another, and says that all land

shall be applied for bona fide for the use

and benefit of the applicant in his own proper

person. This is law, independent of the

special power of the Governor to proclaim

forfeiture. The 22nd section says that if

any person shall become a licensee, or continue

to hold a license of Crown land, in violation of,
or non-compliance with, any of the provisions

of the Act, the same ~hall be a fraud under the

Act, and such license shall be forfeited and

void. This, too, is law, independent of the

following special power; and, I think,

precludes a person so denounced, from

maintaining a suit in a court of equity to
enforce the specific performance of a quasi

contract to him a lease.

We submit the decision of His Honour that the

licensee, being a trustee in contravention of the

Act, could not succeed in an action in equity to enforce the trust is apposite to the present case.
Your Honours, we have mentioned in our synopsis

MAURICE V LYONS. I do not know that I need go to that

case. It concerned a trust in contravention of
the defence forces - or the WAR SERVICE HOMES ACT
which prohibited the transfer of land, save with

the consent of the director of war service homes.

(Continued on page 29)

C2Tl7/2/MB	28
Orr(3)
MR CHESTERMAN (continuing):	The only point in the passage

we refer to is that His Honour Mr Justice Helsham

said that a trust which has as its object something

prohibited by statute is an unlawful trust which

would not be enforced, but I do not think that

point really is in contention.

TOOHEY J:  If you are right about section 91, Mr Chesterman,

then the selection in its entirety, using selection

in the technical sense,	was incompetent and is
incompetent - - -

MR CHESTERMAN:	Yes, Your Honour.
TOOHEY J:	- - - and you may say that is a matter that you

do not need to be concerned about in these

proceedings, but in fact that would be a consequence

of the argument.

MR CHESTERMAN:  I think that is so, Your Honour, and the

selection, although it subsists at the moment,

is liable to forfeiture.

TOOHEY J:  Yes. I was trying to get away from the notion of

liable to forfeiture to see what section 91 carries

by way of consequences and the way you have put the

argument is that the application for and the holding

of the selection are, and at all times have been,

incompetent.

MR CHESTERMAN:  Yes, Your Honour, that the deceased,Dr Stone,

was always incompetent to apply for and hold it.

WILSON J:	If the minister having exercised his discretion not to forfeit,what then?
MR CHESTERMAN:	The legal estate remains, Your Honour.

Despite the incompetence -

WILSON J:  He remains entitled to all the benefits of

the Act.

MR CHESTERMAN:  Yes.

TOOHEY J:  That is what I have difficulty with because

I rather thought you had indicated earlier that

section 91 stands on its own feet, as it were.

I think in answer to a question from me you pointed

out that section 91 is not in precise terms carried

through to section 296. So independent of machinery

for forfeiture, may there not be some consequences

flowing from incompetency?

MR CHESTERMAN:  There is nothing in the Act that I know of.

TOOHEY J:  No, but it may be open to the minister to seek

a declaration, for instance, that Dr Stone was

incompetent to hold the selection.

C2Tl8/l/HS	29	2/8/88
Orr(3)

MR CHESTERMAN:  I would think that is so, Your Honour,

with respect, yes.

TOOHEY J:  So that the fact that forfeiture proceedings have

not been set in train by the minister does not

necessarily tell us anything about the implications

of section 91, as you put the argument.

MR CHESTERMAN:  Yes, Your Honour. Yes, I think that is so.

We would submit that when section 91 commences

with the phrase -

DEANE J:  Can I just take you back for one moment.

EVANS V THE QUEEN, if one is comparing that to this

case, is it correct to say that it is analogous?

Would it not be analogous if Dr Stone was bringing

proceedings to obtain a lease as trustee?

MR CHESTERMAN:  Yes, Your Honour, I think that is so.

DEANE J: In that sense it does not really address the question

here, and that is whether the lease having been granted the Act penalizes the beneficiary by extinguishing his

interests, in addition to providing for forfeiture

as against the trustee.

MR CHESTERMAN:  But we would submit the point remains, with

respect, Your Honour, Mr Evans failed because what he

wanted to do was to enforce a trust rendered unlawful

by the Act. What the appellant here seeks to do is

to enforce a trust which is unlawful.

DEANE J:	I follow that. It is
MR CHESTERMAN:	I take Your Honour's point that in EVANS' case

it - - -

DEANE J:  If these were proceedings by Dr Stone to force

the grant to him of a lease as trustee, I do not think there would be much difficulty in saying he must fail.

MR CHESTERMAN:  I see what Your Honour says, yes.

Your Honours, I was going to submit that the

introductory phrase in section 91, "subject to this Act",

is really a reference to section 235 rather than

section 296. The construction which our friend's

argument puts upon the Act is to create an

inconsistency between section 91 and section 296.

Under section 296 the minister has a discretion

whether or not to forfeit the lease. Under section 91,

though, it would seem that his discretion could only

ever be exercized one way, because the selector holding

as trustee is, and always must be incompetent to be a

selector. Therefore, one would think the minister

would have to exercize his discretion to forfeit.

That inconsistency our friends seek to overcome by

C2Tl8/2/HS	30	2/8/88
Orr(3)

saying that the introductory phrase "subject to this

Act" makes section 91 subservient, as it were, or
subject to section 296, thereby reducing or overcoming
the inconsistency, but we submit that the two
sections have separate and distinct operations and

there is no inconsistency between them.

(Continued on page 32)

C2Tl8/3/HS	31	2/8/88
Orr(3)

MR CHESTERMAN (continuing): Section 91, we submit, as I

have said, strikes at the trust by providing that

there cannot be a competent trustee ever.

Section 296 allows the minister to attack the

legal estate.

DEANE J:	Mr Chesterman, could I take you back to section 235(4)
and to those last words on which you properly
place reliance. How long was a provision to
that effect - or how long has there been a provision
to that effect?
MR CHESTERMAN:	I will see if I can answer Your Honour's

question.

DEANE J:	Simply so I can direct your mind to what I am
asking about:  what is the significance of
the words "in law" in a context which requires the actual transfer, which is, of course, the legal
as distinct from the equitable document, to refer to the trust?

MR CHESTERMAN: If I come to the first question first, as

to the timing of it. Your Honours, I think it

has been there since 1962 when the principal Act
was first enacted and it seems to follow

section 135A of the 1910 Act, but I cannot tell

Your Honour precisely what terms that section

was in.	But it seems to have been there for some
time.	I cannot be more precise than that, I am

sorry, Your Honour.

As to the second part of Your Honour's question,

we would submit that the meaning of that phrase

"shall be of no effect in law" is to say that

the trust is unlawful.

DEANE J:	The implication of what I was asking you was whether
there is any significance in the fact that it
does not say "in law or in equity" in the particular
context of that paragraph?
MR CHESTERMAN:	We would submit not. It is clear, we would

submit, from the thrust of subsection (4) that

it allows a trust, if there are particular beneficiaries

and if it is made in a particular way, a trust

done any other way shall not have any effect,

is how we would submit - - -

(Continued on page 33)

C2Tl9/l/SDL	32	2/8/88
Orr(3)

DEANE J:  That is not so, is it, because it says "such

a trust"?

MR CHESTERMAN:  Yes, I see, but that is referring to - - -

DEANE J: It does not destroy the force of your argument

main descendants.

that the purported creation of such a trust must, favour of the

MR CHESTERMAN:  Yes, I would submit that is so, Your Honour,

with respect. My friends have been good enough

to give me a copy of section 145A as it was in

the 1910 Act and it did not contain what is now

subsection (4) so that would seem to have been

enacted first in 1962.

Your Honour, those are our submissions on

that part of the appeal. We have a notice of

contention and we do, with some trepidation,

wish to argue that two grounds on which we failed

before the trial judge and the Full Court should

have been decided differently and that if this

Court were of the view that the appeal should

succeed on the ground argued, nevertheless the

action should have been dismissed on these other

grounds.

May I go first to the defence which failed

but which was raised of laches or delay. Might

I give the Court some relevant dates as briefly

as I can.	Dr Stone, of whose executors the respondents
are, died on 14 October 1982.	He was then in
his early 90s.	He had suffered from Alzheimer's

disease and he was insane - had lost his mind - by June 1982 and he died in the October of that

year. The agreement on which the appellant founded

his case was said to be an old agreement made

in December 1967. The agreement was to become

a half owner in a selection known as Cockatoo

north of the Darling Downs in Queensland.

Cockatoo is one of three grazing properties

that Dr Stone owned, using "owned" perhaps as

a neutral term, in relation to Cockatoo, at least.

Dr Stone ran Cockatoo as his own without reference
to the appellant. Fran the time of its acquisition
in 1967, that is, he ran it as he saw fit without
reference to the appellant~ He did not account
to the appellant for any income from the property,

the appellant did not seek to have any input

into the operation of the property or the running

of the property, he made no contributions to

it, he claimed no tax deductions in respect of

it.

C2T20/l/ND	33
Orr(3)

In December 1977 Dr Stone wrote two letters

which I will go to in a moment to Mr Orr, the

appellant and his family in which,we submit,he
asserted quite unequivocally that he, Stone,

owned the property, Cockatoo, absolutely. Denied,

in other words, we submit, that the appellant

had ,any .i.nterest in the property. Nevertheless,

the appellant did nothing to assert any title

or claim to any part of Cockatoo until August 1982

by which time, as I have said, Dr Stone had lost

his mind. The claim then made by the appellant

was not to a half of Cockatoo but to a proportion

being equal to the relationship that 30,000

bore to the purchase price of the property because

the appellant put up $30,000.	The purchase price
was, in fact, 156,000.

So what the claim then made was was for

a proportion of Cockatoo, not for half. Nothing

more was done until December 1985 when this action,

the action that brings it here, was commenced.

The writ was issued in December 1985. Between

August 1982 and December 1985 the appellant's wife had commenced an action, or at least had

required the respondents here to prove the will

in solemn form, alleging that Dr Stone was not

of testamentary capacity when he made the will.

(Continued on page 35)

C2T20/2/ND	34	MR CHESTERMAN, QC 2/8/88
Orr(3)

MR CHESTERMAN (continued): That action was decided

adversely to the appellant's wife; following upon to the propery in August of 1982, as I have said,
judgment in that case this action was commenced.

Dr Stone was in no position to contest it, he being

insane. There was though living a woman,

Mrs Nickerson, who had been Dr Stone's housekeeper,

secretary and confidant for a number of years and

had been in that position in December 1967 when

the alleged agreement was made and had been ever

since. She was alive in August 1982 but she died

in November 1983 before the present writ was issued.

So that when this claim was first brought to the

court to enforce the agreement and the trust, the
only witnesses who could give evidence adverse

to the plaintiff's claim were dead and no claim

at all was made until after the principal witness,

Dr Stone, was in no position to contest it.

DEANE J:  Was Mrs Nickerson a beneficiary?

MR CHESTERMAN:  Yes, she was. She took half of the grazing

properties with another employee of Dr Stone but

the bulk of the estate went to family - distant

family. But, it is true to say she was a major

beneficiary.

Your Honours, the trial judge dealt with the

issue of delay and laches on this basis.

His Honour said that the appellants motives in

delaying were understandable but that he moved

with due diligence after he discovered that Dr Stone

had granted a sublease of Cockatoo to some people

called Nimmo, who was the other employee who was

a beneficiar½ with Mrs Nickerso~ of the properties.

Now, we submit that his discretion was carried

on this ground - on this basis, that it was, if

relevant at all, not very relevant that the appellants

motives for delaying were good, or seemed good

to him, and we submit that it was wrong, in fact,

to say that the appellant acted promptly once he

knew of what Dr Stone had done with the properties

but that, anyway, even if he had acted promptly

that would not be to the point because by that

time the delay had worked its prejudice because

by that time Dr Stone was incapable of resisting

the claim.

(Continued on page 36)

C2T21/l/AC	35	2/8/88
Orr(3)

MR CHESTERMAN (continuing):  We submit that the evidence

established clear prejudice to the respondents,

which they were not able to overcome, and that there

was gross delay by the appellant and whether or

not his motives were understandable and reasonable

that could not outweigh the prejudice to the

respondents. We submit the discretion was carried.

The Full Court, we submit, erred in not correcting

the trial judge's error. May I take the Court

to the relevant passages. The trial judge dealt

with the matter at pages 227, 228 and 229. At

page 227,about line 12, letter (d), His Honour

said:

On 23rd June, 1978 Stone sublet the estate

to the Nimmos for five years and the

plaintiff became aware of this agreement in

June, 1982. He did not seek an account from

Stone with respect to the rental upon becoming

aware of the sublease. I do not think that

any inference can be drawn from this which would

support a defence of laches and acquiescence.

By June, 1982 Stone was in no position to

discuss the reasons for his actions. ·

In giving that as an excuse for delay, we submit,

His Honour was in error. The point is that by

waiting until June 1982 to do anything, the appellant

had waited too long because by that time Dr Stone

could not refute any claim made on him for Cockatoo.

Then if I may take the Court to page 228 about

line 29, the third last line, His:Honour said:

Orr did delay in asserting any claim between December, 1977 when Stone stated

that the properties were his and that he

could do what he liked with them but I

consider in the circumstances this did

not amount to conduct on his part which Then if I may take the Court to line 14, His Honour	disentitles him to seek relief.
said:

The plaintiff acted without undue delay

to assert his rights once he discovered that

sub-leases had been granted to the Nimmos

and that Stone was in no position to manage

his own affairs. He did not fail to use due

diligence after he had such notice or knowledge

as to make it inequitable to lie by.

Your Honours, may we submit this: all that the appellant

did after June of 1982, when he discovered that

Dr Stone had suceumbed to Alzheimer's disease was that
he had his solicitors write a letter - which I will

go to in a moment, which appears at page 205 of the record.

He did nothing else at all until the writ was issued :in this

action three and a half years later.

C2T22/l/11B	36	2/8/88
Orr(3)

MR CHESTERMAN (continuing):  We would submit it is really

quite wrong to describe that as "using due diligence".

The other point we would make is that once he
had discovered that Dr Stone - or once it

was the case that in June 1982 Dr Stone was 1n

no position to contravert the claim, it was too

late. Diligence after that was irrelevant; it

was delay prior to that that was relevant but

was overlooked by His Honour.

TOOHEY J: Mr Chesterman, what is the particular significance

in this context of the sublease?

MR CHESTERMAN:  I do not think it has any, Your Honour,

with respect. We would submit His Honour was

wrong in dwelling upon it. What His Honour said

was this, that having discovered that Dr Stone

had subleased the property to Nimmo and he was
aware that Dr Stone had acted as though the appellant

had no interest in the property and that alerted

him to the fact that, perhaps, his interest was

under threat and th.at it prorrpted him to have his solicitors

write the letter.

TOOHEY J:  Yes, I understand that. On the other hand,

Dr Stone, it might be said, had at all times acted

as if the property were his in the sense that

there was no accounting to the plaintiff for any

income derived from the property or any request

to the plaintiff to recoup any of the expenditure.

But, notwithstanding all of that, the trust was

held to have existed.

MR CHESTERMAN:  Your Honour, that is a point that we wish

to make that, really, the subleasing of the property

was just the sort of thing that one could have

expected given the fact that Dr Stone dealt with

the property· as though it was his own for many

years.

TOOHEY J:  So it is not your argument that the knowledge

of the sublease should of itself have triggered

off some action on the part of the present appellant?

MR CHESTERMAN:  No. On the contrary. We submit

His Honour was wrong thinking that was important.

We submit that it is not important and it is just

the sort of thing that one could have expected.
It was just another example of Dr Stone using

the property as his own without reference to Mr Orr.

TOOHEY J:  Is there any point in time, any particular event,

that, in your	submission, should have caused
the appellant	to have brought proceedings earlier
than he did?

MR CHESTERMAN:	Yes, Your Honour, December 1977, when he received the two letters fran Dr Stone which I will go to now, if I may. They
are at pages 200 and 204.  At page 200 is the first.

C2T23/l/SDL	37	2/8/88
Orr(3)
MR CHESTERMAN (continuing):	It is a letter of 3.	December 1977,

page 200 of the record.

WILSON J:	Bunny is the appellant?
MR CHESTERMAN:	No, Bunny is the appellant's wife, Your Honour,

Mrs Orr. Mrs Orr is, err was the niece of Dr Stone.

Mrs. Nickerson (Nicky) -

that is the housekeeper -

was asked by me to tell Penny -

Penny is Mrs Flood, who was the appellant's daughter -

and you and John -

John is the appellant -

that you are not welcome here.

It is the next passage that we rely upon particularly:

These properties are owned by me and what I do

is my own business and I don't have to consult

anyone.

I am in good health and hope to carry on for

quite a long time.

Frank.

That was Dr Stone.

WILSON J: Is there any evidence as to what led to that

letter?

MR CHESTERMAN:  No, Your Honour. The appellant said it came

out of the blue.	At page 203 there is a letter from
the appellant to Dr Stone in which he remonstrates
with the deceased about his letter.	I do not wish

to go to that, but I do go to the next letter, 204,
which is Dr Stone's reply to the remonstration.

It is a letter of 28 December 1977 and Dr Stone said:

Dear John -

This letter is to the appellant -

Repeatedly on your visits here you have

interfered with the men.

I have a good man here now and don't want to lose him. Apart from that you told the men

that you would be coming up to take over.

I'm the one to make that decision.

C2T24/l/JM 38 2/8/88

Orr(3) ( Continued on page 38A)

And the rest, perhaps, is not relevant, although

the last line might be:

It will not be convenient for you to come up.

Now, that is December '77. We submit that it is

the clearest possible indication from Dr Stone that

he regarded the properties as his own; that the

appellant was not welcome on them and that he,

Dr Stone, would deal with the properties as he thought fit.

The properties are owned by me and what I do is my own business and I don't have

to consult anyone.

I am reading from the letter of 3 December 1977.

Now, notwithstanding those letters, Mr Orr,

the appellant, did nothing until August 1982.

It was in June of that year, as I have said, that

he discovered that Cockatoo had been subleased to

Nimmo and that Dr Stone was suffering from

Alzheimer's disease. The letter that he wrote,

or had written, in August 1982 is at page 20.5

of the record.

(Continued on page 39)

C2T24/3/JM	38A	2/8/88
Orr(3)
MR CHESTERMAN	(continuing):	The letter was written to

the public trustee who had become the manager of

Dr Stone's estate pursuant to an order of Master Lee

of the Supreme Court of Queensland. The point about

the letter is that it does not allege any agreement

such as was adumbrated at the trial. What it did

was to claim a resulting trust by reason of a

contribution to the purchase price. At the bottom

of page 205 the letter writer said, three lines

from the bottom:

They -

that is Mr Orr and Dr Stone -

discussed possible partnership

arrangements without reaching finality

and Dr Stone paid the balance of the

purchase moneys ($60000) in December 1967.

Mr Orr paid the sum of $30000 to

Dr Stone in January 1968 as a contribution

to the purchase price.

Then reading the last sentence in the penultimate

paragraph:

Having contributed the sum of $30000

to the purchase price as mentioned above

Mr Orr claims a beneficial interest in

the property to the extent of that

contribution.

That is all that was done by the appellant until the

issue of the writ in these proceedings in December of

1985.       I am afraid I have to go to some other .....

as briefly as I may. I should tell the Court that

Dr Stone's last will is document 69 in the index.

It is not reproduced in the record book, but it

was dated 5 July 1978 and that is the will which is

admitted to probate after a trial for proof and solemn
form.

The first claim made by the appellant to a share

of Cockatoo was in August of 1982.	That appears at
page 65 of the record, opposite line 30:

So, December 1985 is the first time you

asserted a claim to be an equal half

owner in Cockatoo?---Yes.

(Continued on page 40)

C2T25/l/HS	39	2/8/88
Orr(3)

MR CHESTERMAN (continuing): Just now I cannot find the passage

in which it is established that the first claim

of any sort was made in August of 1982 but I think

that it is not in contention that there is a finding

of the trial judge to that effect.

May I take the Court to some other evidence

at page 65 concerning Mrs Nickerson - she was the

housekeeper, secretary, confidant. At line 46:

Dr. Stone had a companion and housekeeper

and secretary for many years, did he not,

a woman called Mrs. Nickerson?--Yes.

At 55:

She certainly was his secretary and confidante

in 1967 and 1968?--Yes.

And she remained so until his death in 1982.

That is so, isn't it?--Yes.

It might reasonably be expected that she would

know a great deal about Dr. Stone's business

and financial affairs in the years 1967 and

onwards. That is so, isn't it?--Yes.

Mrs Nickerson is now dead, isn't she?--Yes.

She died in November of 1983, about a year

after Dr. Stone?--Yes.

You never made this claim in her lifetime,

did you?--I did.

When he said that he is referring to a claim to

the proportion which is that claim in the letter

from his solicitors at page 205.

WILSON J:  Who is Dr Ford?

MR CHESTERMAN:  He is not in fact a doctor. He is one of

the respondents, Your Honour. He is a local dentist,

one of the executors of the will.

WILSON J:	I see.
MR CHESTERMAN:	Your Honours, it appears at page 82, lines - - -
DEANE J:	Does all that mean that the people who would suffer
if the claim succeeded are the Nimmos, or Mr Nimmo and the Estate of Mrs Nickerson?
MR CHESTERMAN:	Yes, that is so.

DEANE J: Which means, really that, if there is a defence of laches,

one should be honing in on their interests, should

one not?

C2T26/l/AC	40	2/8/88
Orr(3)

MR CHESTERMAN:  I am not sure about that, Your Honour, but

we would hav~ submitterl that the prejudice that	has to be shown is the prejudice to resist the	claim. The executors were resisting the claim on
behalf of the beneficiaries. I do not know if I
have answered Your Honour's question but I am not
sure I understood what Your Honour is putting to
me, I am sorry.

DEANE J:  Well, only to this extent. I would have thought

it would be relevant to a defence of laches if

it could be shown, for example, that a particular

beneficiary who would have got a_general legacy got
nothing except a specific gift of property in respect

of which the claim had been delayed.

MR CHESTERMAN:  No, there is nothing of that nature in

the case, Your Honour. What we simply say is that
the means of resisting the claim by the executors

on behalf of the beneficiaries has been prejudiced

by reason of the delay.

DEANE J:  I follow that. I was only suggesting that it was

necessary to pay particular regard to the beneficiaries

who would be defeated or disappointed if the claim

were to succeed.

MR CHESTERMAN:  Yes. Well, I cannot do that, Your Honour,

except to say, as I think I have, that what happened

was that the three grazing properties and the
improvements and stock on them left by Dr Stone

went equally to Mrs Nickerson and Mr Nimmo and,

as Your Honour says, Mrs Nickerson's estate takes

her half.

DEANE J:  There is no evidence that, for example, the Nimmos,

or Mr Nimmo, stayed on as manager and worked the

property on the basis that half of it would one day

be his?

MR CHESTERMAN:  No, there is not, Your Honour.

TOOHEY J:  Mr Chesterman, what are the events that occurred

after December 1977? Perhaps I should put it another
way~ December 1977 being, you say, the first time

when Dr Stone asserted an absolute right to the

property, what events occurred thereafter that

might have borne upon the capacity of the present

respondents to resist the claim when made.

(Continued on page 42)

C2T27/l/MB	41
Orr(3)

MR CHESTERMAN: Principally that Dr Stone succumbed to

Alzheimer's disease and his testimony was lost

to the executors. The means of resisting the

claim, the means of denying the agreement asserted

by the appellant was lost.

TOOHEY J: It would have been difficult for Dr Stone to

have denied the agreement having regard to the

letter he wrote to the appellant and the letter

he wrote to the solicitor, would it not?

MR CHESTERMAN:  That might not be so, with respect. There

may well have been an explanation as to that,

we do not know because we were not graced by

his explanation.

TOOHEY J: That is one area of evidence that you say was

no longer available, what else?

MR CHESTERMAN: That is the real one, Your Honour. One

point is that Dr Stone sent $30,000, the very

sum that had been contributed by the appellant,

to the appellant's wife in 1968. He could have

said what that was for. That may well have been

some arrangement by which - I should perhaps

put it in context. The arrangement between the

appellant and Dr Stone was that the appellant

should go to Queensland and help Dr Stone with

the properties,· gave him companionship,· give· him

a sen::se of f am1 ly, ana ruu the properties. That

could not eventuate because of some personal

tragedies that befell the appellant and he told

Dr Stone he could not come up. And six months

later Dr Stone sent $30,000 to the appellant's

wife, who at that time was in need of money because

of some probate duties, a problem with her parents'

estate.

It may well be that there were some discussions between

the members of the family that $30,000 was a

recompense, a repayment of the advance.

TOOHEY J: Yes, I understand that.
MR CHESTERMAN:	I mean, the whole thing is clouded in mystery.

The only testimony is that of the appellant and
the means of challenging his story was lost to
the executors by reason of the delay and I will
come when I deal with the next part of her argument
to some passages in Mr Orr's testimony where

he himself gave evidence and said there never

was a final agreement between him and Dr Stone.

So it really, with respect, is not as clear cut

as Your Honour says. Those letters really, we

submit, may well have been the subject of

explanation. They may well have not borne the

meaning they appear on to on their face. There may well have been something behind the writing

C2T28/l/ND	42
Orr(3)

of them and there is just no means given to the
respondent to controvert the sworn testimony

of the appellant that there was this agreement

made that he should be a half owner of Cockatoo

though he contributed only a fifth of the price -

less than a fifth of the price.

TOOHEY J:  Do you point to any other witness whose evidence

was lost?

MR CHESTERMAN:  Mrs Nickerson, Your Honour. She was

Dr Stone's secretary and companion. She was

his only companion for 20 years or more and she

was in that position when Dr Stone made this

alleged agreement in December 1967. She was

not just his housekeeper but his secretary, his

confidante. It is likely that he discussed with

her what was going on with the appellant and

what the arrangement was.	She could have given
evidence of it but - - -

TOOHEY J:  I take it there is nothing pointing to what

her evidence might have been?

MR CHESTERMAN:  No, because in her lifetime the only assertion

by the appellant was to a contribution to a proportion

of the property because of the contribution he

made to the purchase price. In her lifetime

this claim was never made that there was an agreement

that he should get half. That was not made until

she was in her grave and Dr Stone likewise.

Your Honours, I was going to take the Court

to some evidence that shows that a year or so

before Dr Stone wrote those letters of December 1977

Mr Orr, the appellant, saw signs of Dr Stone's

memory failing. That is in 1967. Even then

he did nothing to protect his position, his half

interest Cockatoo. That appears, Your Honours,

at page 82, at line about 30:

What protection do you say you had

for your interest in Cockatoo in 1976 when

you saw Dr Stone's memory failing?---No

real protection, I suppose, other than the -

what had transpired over the years, what

he had said to people and the letters, but

other than that, no.

At page 81, too, I should refer the Court to

the passage at line 31 - perhaps I should start

at line 25:

(Continued on page 44)

C2T28/2/ND	43
Orr(3)
MR CHESTERMAN (continuing):

The only record of your ownership of Cockatoo

was the word of mouth agreement you had made
with Dr Stone nine years before?---A written

record are you saying?

There was no written record, was there?---

No, there was not.

In 1976 you observed signs that Mr Stone

was becoming quite forgetful?---Yes.

And you had no written record of your half

interest in Cockatoo?---No, I hadn't, but

it was well known within the family.

But the witnesses to it were both dead at

that stage - your mother and father -

that should be "mother and father-in-law" -

had passed away?---Yes, but the Bonwicks

were aware of it.

They were not present at the meeting?---No.

The only witnesses to the agreement with

Dr Stone were you, your parents-in-law and

Dr Stone?---To the discussions we had .....

Yes?---Yes.

And by 1976 two of the witnesses were dead and the third was failing - his memory was

failing?---Yes.

Why didn't you do anything then about making

a record of your interest seeking to preserve

or protect your interest, if you had one?---

It never even occurred to me.	As far as I was
concerned I felt, had always felt, that at
some stage or other the properties would
be going to the family, and that is all I can say, that I am not quite clear what I
should do - I suppose if I was a lawyer or
something like that I would probably take -
I mean, I don't know, but I am not, and it was a family arrangement and it was just a matter of an old man getting very old and
losing his memory.

And then, at the bottom of page 83, opposite line about 44 - the passage I want to refer to is at

line 50. I had asked him why did he not assert

a claim in Cockatoo and he said:

C2T29/l/SDL	44	2/8/88
Orr(3)

I give the same reasons, that------

What reasons?---Well, how could I go and reason with Dr Stone if I had wished to. I felt

that was quite impossible and as far as I

was concerned the properties would eventually

come to the family, and I let matters take

their course.

We submit that that passage is significant because of this: that there, Mr Orr, the appellant, is saying that he deliberately decided to make no claim, to do nothing to protect his half-interest

in Cockatoo because he felt that the properties

would, on Dr Stone's death, be left to his wife

and daughter. He deliberately chose, we submit,

from that passage, to do nothing. His delay has

made it impossible for his claim to be resisted

and we submit, with respect, that it is only fair
that the appellant should bear the consequences

of his decision not to prosecute his claim at

a time when it could have been contro7erted.

Your Honours, we submit that the error made by the trial judge is that he failed to have regard

to the prejudice caused to the respondents by
reason of the appellant's delay and he wrongly

took into account the fact that the appellant

acted prompty or diligently after June 1982.

We submit that on the facts he did not act diligently
anyway because all he did was to write the letter

of August 1982, he did nothing then for another

three and a half years. But, anyway, diligence

at that time was irrelevant. We submit His Honour

did not properly exercise his discretion and the

Full Court erred in not correcting His Honour's

error - that is at pages 246 to 247. Having reviewed

His Honour's treatment of this aspect of the case,

Mr Justice Thomas said that His Honour was called

upon to exercise a discretion and no error had

been shown in His Honour's exercise of that discretion.

We submit that is wrong and the Full Court should

have acted.

Your Honours, we do refer to one passage

in Mr Justice Thomas' judgment at page 247, line 8.

His Honour too, we submit, falls into the error

of thinking that the appellant's motive for doing

nothing is a relevant consideration. We submit

it is not. If it is at all relevant, it has scarcely

any weight and cannot counterbalance the prejudice

caused to the respondents. The passage we refer

to is where His Honour said, at line 5:

given th~ long friendly history between the two men,
and the age of Dr Stone (88) it is tmderstandable that

Mr Orr considered it better not to reason with him and

to let matters take their course within the family.

C2T29/2/SDL	45	2/8/88
Orr(3)

MR CHESTERMAN (continuing):  Thac is a reference to

Mr Orr deciding to do nothing because he assumed

that in due course under Dr Stone's will his

wife and daughter would benefit.	But really the
appellant took a gamble, as it were.	He made a
choice.	He could either have asserted his rights

and, I suppose, run the risk of alienating

Dr Stone even more and perhaps jeopardizing his

wife and daughter's_ legacies, or he could have, as it were, let his half interest in Cockatoo

go in return for not upsetting Dr Stone further

and allowing his wife and daughter to benefit

under the will. But if he made that choice,

if he consciously decided to do nothing, to assert

his rights, then that is clear evidence of delay

or acquiescence, we would submit, or laches. And
the proper consequence is that if the respondents

are prejudiced, as they are, the consequence should

be that the claim fails.

Your Honours, that takes us to the second

ground which we seek to argue, that the action
should have been dismissed even if the Court
should find that the trust can be enforced. This

is the ground that really the finding of fact made

by the trial judge that there was a trust, there

was an express trust, cannot be sustained on

the evidence. It is necessary, I am afraid,

to take Your Honours to some of the passages.

The first point we make is that the agreement

on which the appellant based his case was first

asserted in these proceedings. That was in action

commenced in December 1985. That appears, Your Honours,

at page 65, line 25:

The first time you put forward a claim to

be a half owner was in this present action,

the writ in which was issued in December of

1985. That is so, isn't it?--Yes.

So, December 1985 is the first time you

asserted a claim to be an equal half owner

in Cockatoo?--Yes.

Significantly, we submit, the letter from

Messrs Arthur Robinson & Co, the appellant's

solicitor, in August of 1985 expressly said there

was no agreement. The letter claimed, on Mr Orr's

behalf, a proportion of Cockatoo equal to the

contribution to the purchase price. It expressly

said there was no agreement, and we submit that

is most significant. That is at 205. It is a

letter I have referred to already in a different

context. It is the last passage on page 205:

C2T30/l/JM	46	2/8/88
Orr(3)

They discussed possible partnership

arrangements without reaching finality and Dr. Stone paid the balance of the purchase

moneys in December 1967. The part I emphasize is:

They discussed possible partnership

arrangements without reaching finality.

No claim is made to half of the property. In

cross-examination in this trial the appellant

agreed that no agreement had been made. The

first passage is at page 54, line 35. In the

passage in cross-examination, it was put to

Mr Orr:

Well, you had a partnership you tell us. You must have agreed upon some terms and

conditions. What were they?--No, we

didn't agree on any specific terms and

conditions. I took it on trust, other
than the - I was to have a half share

in Cockatoo.

At 58, lines 15 to 25:

What were the terms and conditions of the

partnership which you agreed with Dr Stone?

What did you agree that you would do and

that he would do and that the partnership

would do?--There was nothing firm at all,

Mr. Chesterman.

Nothing firm at all?--No, other than that

I would join him. There was no detailed

discussion on how much money would be put

in and so forth and so on to run it.

(Continued on page 48)

C2T30/2/JM	47	2/8/88
Orr(3)

MR CHESTERMAN (continuing): At page 68, line 5:

You were careful	enough to produce this
written agenda,	or notes for the meeting
with Dr Stone.	Why didn't you prepare
a record of the	agreement -

this is a reference to the agreement he said was made

in December 1967 in Melbourne -

that you had actually made, if you had

made such an agreement?--We never

reached an agreement -

and then he went on to qualify it.

When I say reached an agreement, a formal agreement, might I say.

We submit his answer is most significant, "We never reached an agreement", and he was asked:

What do you mean a formal agreement?

--Because he wasn't - I never got to first

base with this sort of thing. He is very

difficult to pin down on financial matters.

You know, he would push it around and he wanted a full shareholding. This looks very formal, but I had discussed the question of

my investment with my brother -

and so on. At page 69, line 39:

What about the agreement?--What - when you -

but it was a verbal agreement and there was

no point in my writing this down. You know,

as far as that sort of formal arrangement

was concerned, the only thing I think he

had agreed to was to pay me a salary and

Gatton hadn't come in and they were not to

be a partner.

That is a reference, Your Honours, to the fact that

at one stage there seems to have been some discussion
about whether what was then, I think, the agricultural

college at Gatton in Queensland should have been

invited to be a third owner of the property with them.

Nothing came of that but we stress the answer, "the

only thing I think he had agreed to was to pay me	a
salary".	Then at page 73, the passage that starts

about line 12:

You see, what I suggest to you is that

you did not in fact have an agreement with

Dr Stone that you and he should be half

owners and that you knew that at the time?

--I can't see how you say that in the light

C2T31/l/HS	48	2/8/88
Orr(3)

of what Dr Stone wrote to me and - it

was a nebulous sort of agreement, it was

a fairly airy-fairy sort of arrangement.

There was nothing fixed or formalised,

but nevertheless that was the arrangement

and that was Dr Stone's understanding and

my understanding right through the years.

Your Honours, in earlier proceedings the appellant

gave evidence and said that he had made no agreement

with Dr Stone. Those earlier proceedings were the

proof of the will in solemn form which had also been

tried by Mr Justice Ryan, I think the year before, or

perhaps even earlier, this trial.	At page 60,
line 24, the appellant gave evidence:

Can you recall you saying in answer,

"A third of Cockatoo at that stage because

it was thought to bring in a third partner

which was to be Gatton, the Gatton

Agricultural College." Can you recall

saying that?--Yes.	Well,	I could have
said that, yes.

Do you deny having said it?---No.

Do you agree that you did say it? ..... yes.

I will read it again so there is no

confusion -

his answer was that he thought he was buying - that

is the context of it -

"A third of Cockatoo at that stage, because

it was thought to bring in a third partner -

which was to be the college.

C2T31/2/HS	49	2/8/88
Orr(3)
MR CHESTERMAN (continuing):

Can you recall saying to me in cross-examination -

you were talking about the acquisition of

Cockatoo - do you recall me saying to you,
"What was the price?", referring to the price

of Cockatoo, and you saying, "At that stage

I thought the price was about $80,000. That

was the indication I had had from letters from Dr. Stone and I thought I was buying

roughly a third." Can you recall saying that?

--Well, I though that, yes.

And he agreed in the next passage that he had said

that. Your Honours, we submit that is most

significant; that, although in this trial, the

appellant swore that he had an agreement - an

express oral agreement with Dr Stone that he was
to be a half owner of Cockatoo, in the earlier

proceedings, a year or so earlier, he had sworn

that he thought the price of the property he was

buying was $80,000 when it was $156,000 and he

had put in about a third of the purchase price.	thought he was buying about a third because he the finding that the two men had made an express
oral agreement that they were to be a half owner
in a property, the purchase price of which was
$156,000. And then at page 61, line 50, the same
point is made:

You thought you were buying roughly a third

because you put up $30,000 and you thought the price was about $80,000 or a BIT MORE,

is that right?--Yes, I did.

Your Honours, I repeat the submission - perhaps

I should not - but that answer cannot be allowed to stand with a finding that there was an express

agreement that he should be a half owner. He cannot

have thought he was buying a third because he put

up a third of the price if they had made an express

oral agreement that he was to be a half owner and

the price was more than $80,000.

Then at page 62, line 45, again he was taxed with

evidence he had given in the earlier trial:

Then Mr Muir said to you, "The negotiations

never concluded in any agreement, did they?"

And you said, "No, they didn't."

That again was a reference to the negotiations

he had had with Dr Stone in December 1967, and

he admitted that he gave that answer to Mr Muir

in the earlier trial but the negotiations he had

had with Dr Stone never concluded in any agreement.

C2T32/l/AC	50	2/8/88
Orr(3)

And he tried to qualify it by saying:

Well, obviously I made that answer, but what

I would have been replying to was - did they

ever conclude in a formal agreement? There

was no formalised document or whatever you

like.

Your Honours, the next point we make is that the

appellant in his evidence portrayed an ignorance

as to whether he was to take a half interest or
a third interest in Cockatoo and that ignorance,

we submit, is completely inconsistent with his

evidence that he was to be a half owner because

of an express oral agreement with Dr Stone. The

first passage is at page 75, line 28 to line 30.

It is really just that sentence at the end of the

answer at line 28:

I really didn't know whether I was getting a half or whether we were going to have a

third party involved.

But his evidence was fairly simple; that they had

made an agreement, the terms of which were that

they were to be half and half owners of Cockatoo.

Equally, the appellant was ignorant as to whether

there was to be one partnership or two in connection

with the property. At some stages in the evidence

he said that there was to be one partnership which

was to own the property and to run the property.

Also in the evidence he said there were to be two

partnerships; one to own the property and a separate

one to run the property - to run the cattle on
the property and the second one was not to be
effective until the appellant went to Queensland
to take part in the running of the partnership.

That, Your Honours is at page 56, first at line 26

and then line 50.

(Continued on page 52)

C2T32/2/AC	51	2/8/88
Orr(3)

MR CHESTERMAN (continuing):  At line 26:

Are you saying there was a partnership to be

in two stages but the second stage never

reached finality, the second stage being the
running of a herd of bulls on Cockatoo?--Yes.

And then at line 50 there had been some disagreement about what had been said, and the question is

put again:

I go back because there is no doubt he did

agree. I will start again. Are you telling

us you had an agreement in two stages with
Dr Stone?--No, I am not.

We submit that shows an ignorance in the appellant as to what the terms of the agreement were which

he would not have betrayed had the agreement he

asserted actually been made. So, we submit, those

answers are inconsistent completely with the finding

and with the evidence that there was an agreement,

in express terms,that they were to be _full

partners in the property and the running of the

property.

There is a further inconsistency in his evidence.

In a number of passages which I will go r.o in a moment, the appellant swore that he was to pay the

full price for his half share of the property, that

is, he was not to be made a gift of any part of Cockatoo, he was to pay his way. He was to put

up half the price and be a full half owner. He

said that on about six occasions. But then later

he changed that and said that he was, in fact,

to get a gift of the property, the gift being the
difference between $30,000 which he put up and half

of a $156,000 which was the purchase price. The

passage, may it please Your Honours, are firstly

at page 30 line 60, the last line on page 30:

he wanted a full share in the land and

the home operation.

Page 31 line 6:

I agreed to go into a full half partnership

with him.

At line 34:

You have said you recall Dr Stone said he wanted a full share of everything, in

effect?--Yes.

Page 32 line 9:

We would have~ fu11 sharP partnership.

C2T33/l/MB	5?
Orr(3)

Those answers are in-chief. In cross-examination, page 54 line 36 - it is a passage I have referred

to earlier in a different context - he said he

was to have a half share in Cockatoo. At 58 line 50:

Let us be quite clear about this. Did

Dr Stone in December 1967 suggest that he

would make a gift to you of part of the

ownership of Cockatoo?--No, he didn't.

At 59 line 15:

He was not talking about making you a gift of

Cockatoo?--Not at that time.

Not at any time. The arrangement was this,

was it not, that you would pay for a full

half share in Cockatoo and he would pay

for a full half share in Cockatoo?--Yes.

Then to the contrary at 55, lines 36 to 46, he said that it was meant to be a gift. At line 36:

If you were to be a full, equal partner in the

partnership with an interest in Cockatoo,

why didn't you contribute half the purchase

price?--Because I was never asked for it.

But you were to be a full equal partner?--He took me as a full partner on the payment of

that $30,000.

Was he making a gift to you of the balance?
Did he say that?--I would say-----

Did he say that?--He just said, "Don't worry about it." If I raise that matter - I took

it as a gift.

(Continued on page 53)

C2T33/2/MB	53
Orr(3)
MR CHESTERMAN (continuing):	So really the appellant cannot

r,;:,ve it both ways, .,re subnit, with resnect, but the

inconsistencies and the vagariei in his evidence

make it impossible, we submit, with respect,
to accept him and to accept his evidence as

establishing the agreement which was the basis

of his claim. The last point, we submit, in

this aspect of the matter was that the evidence

established that the appellant was to become a partner only on a condition, the condition

being that he went to Queensland to work the

property, Cockatoo, with Dr Stone. That is at

page 59A, line 30:

As far as I was concerned and as far as

Dr Stone was concerned, the property, we

would share the property, and the enterprise

eventually when I got there, and I think

that is fairly clear in correspondence and

letters ..... because that was the arrangement.

But he never went there, that is clear,

Your Honours. So we submit the condition failed.

And also, we submit that when Dr Stone was told

refunded an identical sum of money to the appellant 1 s	that the condition would not be fulfilled he
wife, that is at page 79, lines 14 to 20. We
start at perhaps about line 12:

This is what happened, isn 1 t it? In

1968 earlier in the year, you sent $30,000

to Dr Stone?---Yes.

In June 1969 you wrote to tell him

that you hadn 1 t been able to join him and
that you probably wouldn 1 t be able to join

him for some time?---Yes.

And six months later he sent your wife

$30,000?---Yes.

The precise sum that you had sent him two years earlier?---Yes.

And then there was an objection and the matter

was not taken any further.

So that we submit that evidence alone would

establish that the agreement on which the appellant
based his claim was, as we say, conditional,
the condition was not fulfilled and Dr Stone
honourably refunded an identical sum of money to the appellant 1 s wife. Your Honours, what

is against us, of course, on this aspect of the

case, are the letters that Dr Stone wrote appearing

at page 183 and 185 of the record and, understandably,

the appellant places significance on them but

C2T34/l/ND	54
Orr(3)

we submit that they cannot be taken as a true

indication of Dr Stone's intention in view of

the sworn testimony of the witness to the agreement

that there was no fixed or formal agreement,
that there was no binding agreement made, that

there discussions and negotiations but nothing

more and we would submit that the letters can

be read merely as a means of protecting - the

layman's attempts to protect an investment by

a friend and relation by marriage until agreement

is reached and matters are finalized.

The last passage, really, in the letter

which appears at 183 of the record is relevant.

Dr Stone wrote to Mr Orr, the appellant:

I've sent your cheque to my Bank.

I will safeguard you by sending a note to

Tony Peterson - the Solicitors - Cannan

& Peterson - saying you have paid 30,000

& have a½ share in Cockatoo until such

time as we arrange the other party (school).

This would I imagine protect you for the

time being. Let me know if you think this

is OK.

(Continued on page 56)

C2T34/2/ND	55
Orr(3)

MR CHESTERMAN (continuing):  On one view of that, of course,

it is an assertion or a declaration by the late
doctor that Mr Orr, the appellant, had a half

interest in Cockatoo, but we submit it equally can

mean that the cheque had been received and to protect

Mr Orr's position until finality, agreement is actually

made and the men work out what they want to do, that

the solicitors will be told that, and that is

consistent with the following letter which was sent

to Mr Peterson - that appears at page 185 of the

record:

Dear Mr Peterson

John Orr has just sent me a cheque

for $30,000.00 for his interest
in Cockatoo.
Until we get our 1/3 interest

finalised in case of any accident here

I would state here that he have a\

share of Cockatoo until such time as

any other arrangement is made.

Your Honours, these letters, of course, highlight the

difficulty the respondents had, which is the

foundation of their complaint about delay in laches,

but we submit - - -

MASON CJ:  Why does he lose the half interest if no other

arrangement is made?

MR CHESTERMAN:  I am submitting, Your Honour, that that was

not, in fact, the agreement. That was not, in fact,

the arrangement. The letter was not expressing the

true intention of the parties. It was - - -

MASON CJ:  Well, it is an ineffective intention, is it, to give

him some interest or charge in the property?

MR CHESTERMAN:  I probably think a charge, as to $30,000,

to protect $30,000.	We could not have resisted -
apart from the argument of the LAND ACT, we could

not have resisted a claim for a resulting trust
in the property, Your Honours, because of the

contribution to the purchase price, but we submit the

agreement was not proved, or should not have been

proved - sorry, I will start again. We submit that

the evidence, His Honour was wrong in finding the

evidence established the agreement. It simply

established a resulting trust, apart from the effect

of the LAND ACT.

C2T35/l/HS	56	2/8/88
Orr(3)

:MR. CHESTERMAN (continuing):  The latter is to be seen as no

more than a means of protecting that contribution

and that proportional holding. It is not, we would

submit, necessarily an indication of the deceased's

real intention that Mr Orr was to have a half interest

in the property.

DEANE J:  What would be the resulting trust?

:MR. CHESTERMAN: 30/156ths, Your Honour.

DEANE J:	30 over 156?
:MR. CHESTERMAN:	Yes.

DEANE J: And apart from the LAND ACT defence you would not

dispute that?

:MR. CHESTERMAN:  I do not think we could, Your Honour, no.

I think that was the attitude	we took before the
trial judge.

DEANE J:  I see.

:MR. CHESTERMAN:  Yes. The consequence of, were this Court

to find that this point is a good one but the

LAND ACT point is not a good one for us, then the

result, we submit, would be a resulting trust in

favour of the appellant of 30/156ths or the property.

DEANE J:	And laches would have nothing to say to that?
:MR. CHESTERMAN:	I think that is right, Your Honour, I think

that must be right. Yes, because it is a use of the

trust implication of law, yes.

DEANE J:	I was not suggesting it ·1.was right, I was just
asking you.
:MR. CHESTERMAN:	Yes. Perhaps I should not make the concession

Your Honour, without thinking about it

more, but for the moment I cannot see it. ·

Your Honours, the other evidence against us

on this point was that given by Mr Wild which the

trial judge accepted as being true, and evidence by Mrs Flood, the appellant's daughter; likewise

which was accepted as being true. Your Honours,

we submit that Mr Wild's evidence, though true,

does not assist the appellant's case on this point

because it is inconsistent with the express half

interest and the basis for it claimed by the
appellant. If I may take the Court to page 98

of the record, in Mr Wild's evidence in-chief. Perhaps

I should explain that Mr Wild was a manager employed
by Dr Stone to run his properties between 1971 and

1975.

C2T36/l/MB	57
Orr(3)

MR CHESTERMAN (continuing): At page 98, opposite line 10,

Mr Wild, giving evidence of things said to him

by Dr Stone, said:

He -

that is Dr Stone -

told me that he -

Mr Orr -

was a partner in some of the properties.

Dr Stone had three properties but there is no

suggestion that Mr Orr ever had any interest in

any of them except Cockatoo. Then, also on page 98,

opposite line 33 or 34:

he told me that John Orr owned a third share

of Cockatoo in conjunction with him -

I think that should be "and the" -

and the Queensland University.

Your Honours, there has never been a suggestion that

Mr Orr owned a third of Cockatoo apart from his

evidence in the earlier proceedings that he thought

he had a third because he put up about a third

of the price and there was no suggestion that

the Queensland University could have been a joint

owner with them. GATTON Agricultural College

is a different entity altogether.

Also, Your Honours, at page 99, oppostite

line 6:

at times I asked him -

that is Dr Stone -

1n view of his old age, what would happen	to the properties when he would no longer
be able to work them, or he died, and he
said that his relative from Melbourne would
be coming up to look after them and they would be put into a trust, that they were never to be dispersed or sold, and they were
to be as a memorial to him.

That again, -· acceptj:ng Mr Wild as an honest witness,

is quite inconsistent with what Mr Orr asserted in his evidence as to the agreement between him

and Dr Stone.

DEANE J:  Mr Chesterman, was the letter of 15 January 1968
from Cannon and Peterson to Dr Stone in evidence?

C2T37/l/SDL	58	2/8/88
Orr(3)

MR CHESTERMAN:	Yes, it was part of a bundle of correspondence put in, Your Honour - that is the one at page 186
of the record.
DEANE J:	No, the one at page 186 refers to a letter of
15 January which would have been written seven days after Cannan and Peterson had been told of
Mr Orr's interest in Cockatoo.
MR CHESTERMAN:	Your Honour, I think all the correspondence

is in the record but I will just see if my friends

can remember. I think it could not be found,

Your Honour - that seems to be our recollection.

DEANE J:	Because it is just, I suppose, guessing the
intimation and declaration it would seem that a
week after Cannan and Peterson were told that
Mr Orr paid $30,000 for his interest in Cockatoo
they sent documents in which Dr Stone was declaring
that he did not hold anything as trustee which is all a bit strange.
MR CHESTERMAN:	Yes, it is.

DEANE J: Did anyone from Cannan and Peterson give evidence?

MR CHESTERMAN:  No, Your Honour. Your Honours, if I may

continue with Mr Wild's evidence, at page 102 in

the passage starting at line 40. Line 42:

He told me -

that is Dr Stone -

right from the start that Mr Orr and the

University and himself had a third each, that
he had given that interest to the university

to do tick research and if they didn't exercise

their right to take that option up it became

just he and John Orr to be the owners of it.

Your Honours, again that is inconsistent with the

agreement asserted by Mr Orr.

TOOHEY J: In what way, Mr Chesterman?

MR CHESTERMAN:  Mr Orr gave evidence that there was an express

agreement that he and Dr Stone were to own the

property equally as to half shares, each putting

in half of the purchase price. But here - - -

(Continued on page 60)

C2T38/l/AC	59	2/8/88
Orr(3)

TOOHEY J:  Well, it was also in contemplation that Gatton, or

some comparable institute, might be brought in, in which

case the respective interests would be a third. But in

the absence of Gatton becoming a partner, as I understand
the evidence, the present appellant and Dr Stone would be

half owners.

MR CHESTERMAN:  Your Honour, I accept - - -

TOOHEY J: I do not see any great inconsistency there,

a partnership in contemplation in which each would hold

a half interest subject to the possibility of someone else

joining them.

MR CHESTERMAN: Well, for a start it is the university and not

the Gatton Agricultural College and, secondly, it is

Dr Stone saying that he and Orr had a third each with the

university, but that if the university did not take up its

third, then he and Orr would have a half each, whereas

really it was the other way round; Orr and Stone would have a half each but they may give a sixth each to the

university, or to Gatton, to make it a third.

TOOHEY J:  It is not all that surprising that he might

have expressed it that way or in any event this is someone

recalling what Dr Stone had said earlier on.

MR CHESTERMAN:  We submit, though, that our submission, really, on

this point is this: that the evidence given by the appellant
is the most significant, he was the only witness

left alive to give evidence of the agreement and, when

he himself says that things were nebulous, things were

airy-fairy, things have not reached finality, there was

no agreement, he never got down to details with Dr Stone,

that evidence must be given great weight. The consequence

of it, we submit, is that a finding that there was a

binding agreement made between the men is unsustainable

and is it made sustainable by letters which Dr Stone cannot

explain, which may have two purposes: one, the assertion or

the declaration of the trust, and the other, which we submit,

that it was an interim measure of protecting Mr Orr's

investment until finality of agreement was reached and

the partnership came into operation.

(Continued on page 61)

C2T39/l/VH	60	2/8/88
Orr(3)

MR CHESTERMAN (continuing):  Your Honours, we would point

this out, with respect, that the declaration

of trust constituted by the letters of January

1968 from Dr Stone is at variance with the appellant's

sworn testimony that he was not to get a gift
of the property in any respect but that he was
to pay for a full half share, that is, about

$78,000. That is his sworn testimony and the

letter is inconsistent and says on payment of

30,000 the appellant is a full half owner.

So we submit the letters do not express the true - if the letters are to be taken as

constituting a declaration of trust that was

not the real intention of the letter writer and

it is the true intent:ion. that is important, not

the writing - not the expression in the writing

and may we refer the Court briefly to - - -

WILSON J:  But the letter at page 185 is not inconsistent

with a situation in which Mr Orr would be liable
for a further contribution, is it? In other

words, the 30,000 was a part of his payment in.

MR CHESTERMAN:  Except it says, Your Honour, that:

I would state here that he have a½ share -

WILSON J:  Yes, but that is not saying there is no more for him

to pay.

MR CHESTERMAN:  I see. But if the letter constitutes

Dr Stone a trustee of half the property for Mr Orr

without further payment by Orr,that would be

inconsistent.

WILSON J: It does not say that without further payment

by Orr, that is all I am saying.

(Continued on page 62)

C2T4O/l/ND	61
Orr(3)

MASON CJ: After all, it partly depended on what was

going to happen:	was the third party going to
come in.

MR CHESTERMAN:  Yes. That would, with respect, I think,

support our view, Your Honour, that the letter

cannot be taken as a binding declaration of

trust that as at that moment Dr Stone held the

property as to half for the appellant because

things had not been finalized.

We were simply going to refer the

Court to a judgment of this Court, THE COMMISSIONER

OF STAMP DUTIES (QUEENSLAND) V JOLIFFE, 28 CLR 178 at 181,

in the joint judgment of Chief Justice Knox and

Justice Gavan Duffy. At page 181 Their Honours said:

We know of no authority, and none

was cited, which would justify us in

deciding that by using any form of words

a trust can be created contrary to the

real intention of the person alleged to

have created it. In our opinion the law

is accurately stated in Lewin on Trusts,

11th ed., at p.85: "It is obviously

essential to the creation of a trust, that

there should be the intention of creating

a trust, and therefore if upon a consideration

of all the circumstances the Court is of opinion that the settlor did not mean to

create a trust, the Court will not impute a

trust where none in fact was contemplated."

Your Honour, that concludes our submissions, with one exemption and that is to answer a matter,

I think, put to our friend by nis Honour Justice Deane

concerning, I think, constructive trusts, or implied

trusts. If our submissions on the LAND ACT are

accepted the consequence is there can be no

resulting trust just as there can be no express

trust, and again rely upon a judgment of

His Honour Chief Justice Griffith in

GARRETT V L'ESTRANGE, 13 CLR 430 at 435, again

a case concerning the LAND ACT, but this time

the LAND ACT of New South Wales.

(Continued on page 63)

C2T41/l/JM	62	2/8/88
Orr(3)

MR CHESTERMAN (continuing): His Honour said at 435:

Then, as to the suggested resulting trust.

The resulting trust is said to have arisen in

this way. The first deposit required to

make the application was £13 or £14, which was provided by the applicant from his own money. It was laid down by Lord Eldon a

long time ago (EX PARTE HOUGHTON), that

there can not be a resulting trust contrary
to the provisions of an Act of Parliament.

The suggestion of an implication of law contrary to a positive law is indeed a

contradiction in terms.

So that if our argument is right that the express

trust is prohibited then there cannot be resulting

trust by implication of law,for the same reason.

Your Honours, a similar view-wa.s taken by the Court

of Appeal in New Zealand - I will not refer to it

except to give Your Honours a reference -

PRESTON V PRESTON MD OTHERS, (1960) NZLR 385 at

402, 404 and 405, to the same effect. Your Honours,

those are our submissions.

MASON CJ:  Thank you, Mr Chesterman. Well, Mr Davies, it

may be convenient to adjourn at this stage.	We will
resume at 2.15.

AT 12.44 PM LUNCHEON ADJOURNMENT

C2T42/l/MB	63
Orr(3)
UPON RESUMING AT 2.19 PM:
MASON CJ:	Yes, Mr Chesterman.
MR CHESTERMAN:	Your Honours, although I had finished my

submissions, I notice that I neglected to give

the Court two references which I would like to do.

They both relate to that part of our argument concerned

with delay or laches and both of them are to the effect

that delay depriving defendants of the opportunity of

resisting a claim by reason of evidence being lost is

sufficient. The first is HUGHES V SCHOFIELD, (1975)

1 NSWLR 8, the passage in Mr Justice Needham's

judgment at page 14 from letter D to letter F. The

second is CRAGO V McINTYRE, (1976) 1 NSWLR 729, at

page 748, again between letters D and this time G, in

the judgment of Mr Justice Holland.

GAUDRON J:  Could I ask you, Mr Chesterman, did those cases deal

with express trusts?

MR CHESTERMAN:  Your Honour, one, HUGHES V SCHOFIELD, was an action

to enforce a contract for the sale of property and it

failed because of dealy. The second was an application

to set aside a settlement - both ..... claims,

neither was concerned with an express trust.

GAUDRON J:  Could I refer you to a case of HOURIGAN, I think in

(1934) 51 CLR 619, which, so far· as I understand it was

a case of laches being successfully raised in relation
to an express trust, but where the laches, the successful

laches were established, it seems, in circumstances that

the delay had created an assumption from which it would

be unjust to allow a departure, that is to say the delay

actually had features of an estoppel, rather than

mere delay or mere laches, if you like, and could I

ask you might it not be the case that the principle

is different in cases involving what you might call

interests which have already come into existence from

situations in which relief is discretionary. (Continued on page 65)

C2T43/l/HS	64	2/8/88
Orr(3)

MR CHESTERMAN:  Your Honour, we would submit not. There

are cases which deal with express trusts and the application of the principle concerning delay or

laches to them. One of them is referred to in

the judgment of the primary judge - it is the

judgment of Chief Justice Dixon in this Court.

That is the case, in fact, Your Honour refers to.

It is at page 229 of the judgment of the record.

But, Your Honours, there is an earlier case which

establishes the principle; it is in part (b) of our

list - the case is BRIGHT V LEGERTON, 45 ER 755 at

759 and 760, and there is a picturesque passage

in the judgment of Lord Campbell, the Lord Chancellor,

which perhaps I should read to Your Honours.

At page 759 the Lord Chancellor refers to the rule

that when it comes to the enforcing of express

trusts time is not a bar save in those cases where
time has led to the loss of opportunity to resist

the claim and His Lordship said at 760, about

six lines in from the top:

A Court of Equity will not allow a dormant

claim to be set up when the means of resisting

it, if unfounded, have perished, much less
cast a burden of proving such an affirmative
as, that forty years ago cottage rents were

properly collected when the witnesses who

might have proved the fact have long ago been

called into another state of existence. It

has been beautifully remarked with respect

to the emblem of Time, who is depicted as

carrying a scythe and an hour-glass, that

while with the one he cuts down the evidence
which might protect innocence, with the other

he metes out the period when innocence can

no longer be assailed.

(Continued on page 66)

C2T44/l/AC	65	2/8/88
Orr(3)

GAUDRON J:  Then, the next paragraph:

there is strong proof of acquiescence, with

knowledge of material facts -

I wonder what is meant by acquiescence there?

Sometimes acquiescence is used to mean something

approaching an estoppel.

MR CHESTERMAN:  Yes. But whatever it is, we would submit,

with respect, Your Honour, it is an additional basis for declining relief, in addition to the

ground afforded by the loss of evidence by the passage of time, the death of witnesses and so

on. We were going to submit that if one looks

at the top line on page 760 it is clear that

His Lordship is referring to the principle that
time does not run against the enforcement of express
trusts saving cases such as this where the passage
of time has led to the opportunity being lost

of defending the claim.

GAUDRON J:	Thank you.
MR CHESTERMAN:	Thank you, Your Honours.

MR DAVIES:  Your Honours, might I commence by dealing firstly

with our learned friend's submissions as to whether

the finding of fact that Stone, and consequently

the respondents, held an one-half interest in the

property and trusts for the appellant should

be overturned by this Court. Might I commence
by reminding Your Honours that the trial judge

accepted as truthful witnesses and specifically

said so, both the appellant and the appellant's

daughter. He specifically accepts Mr Orr as

a truthful witness at page 225, line 4, and on

the previous page he specifically accepts Mrs Flood,

the appellant's daughter, as a truthful witness -

that is page 224, line 23. He says in respect

of Mrs Flood:

(Continued on page 67)

C2T45/l/SDL	66	2/8/88
Orr(3)

MR DAVIES (continuing):

Mrs Penelope Flood (Penny) who is the

daughter of Mr Orr said that she went to

Cockatoo in 1969, 1972 and 1974 whilst

staying with Stone. She said that he

frequently referred to her father as a

partner in the property and that he told

her that her father had a half-share in

Cockatoo. I accept her evidence as truthful.

Your Honours, could I also remind you that

His Honour had the opportunity of assessing the

appellant's credibility, not only in this case

but, fortuitously, in the earlier case to which

our learned friend referred in which there was

an action for proof in solemn form and Mr Orr

gave evidence in that case also.

The evidence of both the appellant and his

daughter was that on frequent occasions over

a long period of time Dr Stone said specifically

to the effect that the appellant had a half interest

in Cockatoo. Can I give Your Honours some page

references. First of all, to the appellant's

evidence. The appellant's evidence: page 38,

line about 5, he was asked what would be said

and he said:

Only in the sense that he would say, "Well,

what do you think about that chappie.",

or he might have said, "Well, you know,

you've got half the place.", or something

like that, or Gatton would come into it.

We discussed that too, still discussed giving

a third to Gatton, I know, in that early

time.

And then, on the same page, just below line 30,

in answer to a question:

Anything we talked about was "we" and it

was just understood. I asked him about

what had happened with Gatton and I remember

he said, "Oh well, I don't think they're

very interested.", or, "They don't want

to do the sort of work we want.", something
of that order, "So we'll have the place

together." That is the sort of thing he

would say.

(Continued on page 68)

C2T46/l/ND	67	2/8/88
Orr(3)

MR DAVIES (continuing):  Then much the same thing just a bit

further down, the answer to the next question:

On every trip -

he said something of that kind. Then our learned

friend cited you a passage connnencing on page 58 -

in fact, I think my learned friend might have started

on the previous page - but he took Your Honours

up to about the middle of page 58. Can I ask

Your Honours to look at what Mr Orr said in

cross-examination thereafter and over on to the

following page, and in particular on the following

page because this is relevant also to the question

of payment of the balance.

WILSON J:  What page is this?

MR DAVIES:  This is 59 now. I was taking Your Honours from

58, at about the middle, over to 59 and, in

particular, I was directing Your Honours' attention

to page 59 about line 35 where he is asked:

As a matter of principle, why didn't you

insist on paying the full half share which

you had promised and agreed to pay -

that would be in the original arrangement -

Because I would be brushed aside. It didn't

come into it. I hadn't gone up there. "We

will sort it out when you get here, laddie",

was the sort of thing he would say; "Don't
worry about it."

You say that from December 1967 onwards you and Dr Stone both regarded you as being a

full half owner of Cockatoo?--Yes.

And perhaps I should also mention to Your Honours,

in view of our learned friend's reference to the

payment of $30,000 at a later date from Dr Stone	to Mrs Orr to help her with probate, that after that
date statements were still being made by Dr Stone
to Mr Orr that he had the half interest in Cockatoo, and can I mention, in that respect, specifically page 94,
just from line 40 to 50:

After you received, or rather more accurately

your wife received the letter of 1 January 1970

including Dr Stone's contribution of $30,000

to assist with a probate.

After that time in the visit which you had with

Dr Stone, did he continue to speak of you as a

partner in Cockatoo or having an interest in

Cockatoo?--Yes, he did.

C2T47/l/MB	68	2/8/88
Orr(3)
MR DAVIES (continuing):

Mrs Flood's evidence, Your Honours, page 115,

about line 25, in answer to the question there:

Well, my uncle freely made reference to

my father as being a partner in Cockatoo and

to having a half share in that property. The

conversations would revolve around the property

and what was going on with it.

And then she goes on, and I would ask Your Honours

to look at what she says down to about line 50,

where she gives an example of the sort of thing

he would say:

comments like, "Well, dear, your father

has a half share in this. What do you

think of that? Do you like it?" and he

would say, "One day you will. have an

interest in this."

and so on. And then, on the following page, just

below line 20:

Can you estimate for His Honour now, from

father having a half interest in the

recollection, on about how many occasions your

over those visits which you have mentioned,

property of Cockatoo?--Quite frequently,

mainly when we were out on Cockatoo,

travelling around Cockatoo or sometimes in

the sun room at Stanley Park.

And Your Honours saw from the passage I just read

from His Honour's judgment how often she was out

there with him.

Your Honours, that evidence was, of course,

corroborated by the contemporaneous letters from

Dr Stone to the appellant of 7 January and to

Stone's solicitor of 8 January. They are the

two letters at 183 and 185 which our learned

friend has taken you to and I do not want to

go back to those. What really happened after those

two letters, the letters in which Dr Stone said

that Orr has a half interest, the letter to Orr and
the letter to Stone's solicitor, two things really

happened.	One is that no third party, univers~ty
or Gatton College 1 came into the arrangement.	I
will direct Your Honours a little later to some

evidence which showed that really the purpose of

interesting a government-type research institution
in this was because it was thought by Mr Orr and Dr Stone

that this would assist in later freeholding the

property_ ..

C2T48/l/JM	69	2/8/88
Orr(3)

MR DAVIES (continuing):  So there was a purpose in it which

was of advantage to the partners. That was the

first thing that did not come to pass, and the other thing that did not come to pass is - in fact it came to pass that Stone later brushed aside any offers of

money, said, "Don't worry about it", or "when you're

better off", and so on, and I have just given

Your Honours an example of that in a passage I have

just cited a little earlier.

Your Honours, the other thing I should point out

with respect to those two letters, the letters of

7 and 8 January 1968, they did not come out of the blue.

They were the culmination of numerous discussions

between Mr Orr and Dr Stone, of which Mr Orr gave

evidence. Can I direct Your Honour's attention to

some passages in which that occurs; first at page 20,

about line 20, they were talking about - he was being

asked about inspections they had made of properties

in the area and he answers:

Yes. Frank was very keen on Cockatoo,

so was I for that matter, but it was much

bigger than we originally had in mind, but

he felt that, right, there's enough there

for two people.

And that is reflected in a letter from Dr Stone to

the appellant of 18 May 1967 which is at page 144, and

in the middle of that letter, the middle of that page,

there is a reference to Cockatoo. He said:

I think this Cockatoo could really have

gone off at any time but we are protected

for a month. There is so much land there

that a division of ownership would be

reasonable and would make it	OK for both
parties.

Then if I can go back to the transcript of evidence.

I_ have taken Your Honours to page 20, then on page 22

about line 42:  (Continued on page 71)

C2T49/l/HS	70	2/8/88
Orr(3)

MR DAVIES (continuing:

Had you and he agreed anything or had he

said anything that he was doing that on your

behalf as well as on his own behalf?---It

was agreed that I would go into partnerhsip

with him on Cockatoo if I didn't win this

block in the ballot.

As it turned out he did not.	Then, on page 29,
about line 5, the answer:

You see, in his letter of 19 September he

had brought up the question of giving, it

says, a fifth of the property to the Agricultural

College at Gatton and the object of this

was to try and increase - we had discussions

on freeholding, and the object was - he thought

that perhaps if we brought Gatton into the

picture we might be able to freehold the

lot.

If you would just pause there a moment. -

This discussion about the prospect of freeholding and some perceived benefit of having Gatton involved?---Yes.

That is the business about the advantage of having about that.

TOOHEY J:	Mr Davies, all of this makes it the more difficult to understand the contents of Arthur Robinson & Co's
letter of 13 August.  No doubt you are corning
to that, are you?

MR DAVIES:  I am, Your Honour. The short answer to it really

is that it seems to have been more Arthur Robinson's

mistake than his that Arthur Robinson really thought

that the way in which one determined his equitable

interest was in accordance with the proportion

he had put in and he accepted that advice, really,

of Arthur Robinson. He said, "Look, I went to

Arthur Robinson, told him the facts" - they had the letters, Arthur Robinson had the letters as appears from a subsequent letter from Arthur Robinson,

they forwarded the letters to Stone's executors.

But it appeared that they seemed to have come to

a different view about the law and he said, "Well,

I accepted what they said that notwithstanding the fact of those letters and discussions, and

so on, that the way in which it was determined

was that it was in accordance with the amount

I had put in." But that really seems to have been the

explanation, that is the way he understood it

and I will take Your Honour to his - - -

C2T5O/l/SDL	71	2/8/88
Orr(3)

TOOHEY J:  You say that is reflected in the evidence?

MR DAVIES:  In his evidence, yes. I will take Your Honour

to that shortly.

To just continue on that point, Your Honours, I

will not read any more passages but there is another

passa-ge at page 31, about lines 30 to 40.

The other point I should mention about the

context of those letters is that the evidence

and the letters is.also inherently credible having

regard to the previous relationship between the

parties.

(Continued on page 74)

C2T50/2/SDL	72/73	2/8/88
Orr(3)

MR DAVIES (continuing): Now, our learned friend has told

you, correctly, that the appellant's wife was

Dr Stone's niece, Dr Stone being a bachelor. And

it was a bit more than that because there had been

some previous arrangements including one with respect

to a property called Bottletree Downs which Dr Stone

had put in the names of Mr Orr and his wife.

Mr Orr and his wife were going to go on to i 4 and

when that fell through Mr Orr and his wife transferred

it back to Dr Stone. The evidence on that appears

at page 14, from the top down to about line 30 -

"then he had a car accident" and things happened

and so on.

Your Honours, I think I have taken Your Honours

to the passage, or at least one of the passages,

which indicated the purpose in bringing in Gatton

Agricultural College or some government research

institution because it was thought that that would
improve the prospects of freeholding. That did

not eventuate - that it did not eventuate appears

at page 33, lines 1 to 20 and on page 38, in

particular, at lines 30 to 40. Now, the possibility

that Gatton was going to come in explained the

evidence of Mr Wild, of course, who said that

Dr Stone told him that there were three parties

in the ownership of the property and that the third

one was Gatton. That evidence Your Honours have

been referred to; that was the evidence of Mr Wild

at 98 and that is referred to by Mr Justice Ryan

in his judgment at page 224 lines 15 to 20 and

that is a useful summary of Mr Wild's evidence:

that Orr owned one-third of Cockatoo with

himself and the University and that on many

occasions Stone told him -

told Wild, the manager -

that Orr owned part of Cockatoo.

(Continued on page 75)

C2T51/l/AC	74	2/8/88
Orr(3)

MR DAVIES (continuing): Now, Your Honours, we accept that

that appears inconsistent with the letter which

the appellant's then solicitor wrote to the Public

Trustee on 13 August 1982. That is the letter

at page 205 and I will not take Your Honours

to that again, Your Honours have already been

taken to it. But the point we make is the one

I just made to Your Honour Justice Toohey and

that is that the error in the letter is more

likely to have been one by the solicitors, accepting the plaintiff/appellant as being a truthful witness,

more likely to have one made by the solicitors,

that the appellant's claim should be based on
the presumed proportion of contribution rather

than what was said or declared by Dr Stone.

And that was, as I say, also the appellant's

explanation of that letter. He was asked about

it, I think, on a couple of occasions. One of

them is at page - he was asked specifically about

the proporiton put in at page 73, just below

line 50. He was asked about:

you thought, a third and gave no evidence that you thought you were buying a half -

and his answer was -

What I am really saying, Mr Chesterman,

is that I was not clear what proportion

I had paid for. I had paid $30,000. As

far as Dr Stone was concerned that

represented a half unless a third party

was brought in, and that's the way it always

was. Now, all I - in that letter - I can't

recall the details - but in the letter to

the Public Trustee it was fact that there

was no formal documents on my interest in

Cockatoo other than the letters, but it

was fact that I had paid this money and that maybe it was - that was the reason

Arthur Robinson worded it in that fashion,

I don't know. You say I gave instructions,

but to me as a client - you said it - to
me as a client, the solicitor instructs
the client as to what he should do, what

action he should take, and advises him,

and I followed that sort of advice.

(Continued on page 76)

C2T52/l/ND	75	2/8/88
Orr(3)

DEANE J:  Mr Davies, if we are involved in this factual matter,

is it not what Dr Stone was doing in his wills

throughout this whole period relevant? I notice

that none of them are reproduced. I have asked

whether they are with the exhibits; they do not

seem to be. It would be relevant to know whether

by his will he was leaving half to his niece throughout

this period up until the 1977 action, and so on.

MR DAVIES:  Yes. I cannot suggest for a moment that that would

not be relevant, Your Honour, but I would have to

admit that I have never looked at those, the wills,

Your Honour.

DEANE J:  I notice they are all listed here as being part of

exhibits A and B or something like that.

MR DAVIES:  Yes, I do not think they are ever in a record

that I have looked at and I do not think I ever

asked for them, Your Honour.	I am sorry I cannot
assist you.	The other passage I should mention,

on the point I was just addressing Your Honours

on, that is the letter, continuing in that same

passage I have just read, over to page 75 down to

line 10. He is asked:

your answer was that you thought you were buying a third?--I thought I had

paid for a third.

So that was the explanation which the appellant gave and,

in our respectful submission, an inherently credible

explanation for why the solicitors wrote that

letter, that it was not because of anything specific

that he had told them but the view they took about

what his interest was having regard to what he had

paid. Your Honours, our learned friends also rely
upon what they say the appellant said in the

previous case but, again, can I make the point -

and I have made this already - that Justice Ryan

heard him in both cases, heard his evidence in both

cases, and had the opportunity of assessing his

credibility in both.

It was put to him that in the previous case he had said there was no concluded agreement,and,

of course, there are two aspects of this. One is,

he said, "I meant the formal agreement" - there was

no formal agreement - and, secondly, it appears

that there are really two branches of the arrangement

which was made - I will not put it any higher than

"arrangement"- which was to be made between the

appellant and Dr Stone. The first was with respect

to a half interest in the property and the second

was with respect to a half interest in the business

which really meant him going up there and working the

property and assisting in the management of the

property. He gave both explanations and both of

C2TS3/l/MB	76	2/8/88
Orr(3)

them were accepted by His Honour. His evidence,

I think, with respect to when he said there was

no concluded agreement, he meant no formal agreement,

is a passage our learned friend has already read

to Your Honours and I will not read it again, but

I will just give Your Honours a reference. It is page 62 lines 45 to 55. The evidence as to

there really being two parts to the arrangement,

the first of which was completed, the second which

never came to pass and the second of which was never

suggested by any evidence to be dependent on the

first, conunences, Your Honours - I should not say

"commences"but can I just give Your Honours some

passages of the evidence; page 54. He was asked:

What was the partnership to do?--The

partnership was to run a herd bull enterprise.

(Continued on page 78)

C2T53/2/MB	77	2/8/88
Orr(3)

MR DAVIES (continuing):  It goes back, I think, a little

earlier. Our learned friends read from some earlier

passages, and I will not take Your Honours back to those,

and then I think our learned friends read on page 56,

but if you then go to the bottom of page 56 and then

over to page 57 he is really talking about the

partnership as the actual farm operation and then on

page 75 from lines 20 to about line 40, then on

page 77 at the top, it was put to him:

no partnership until you joined him?--No

working partnership.

No partnership ..... I won't accept it.

There was no working partnership on the

actual farm operation.

Then the same page, lines 20 to 25. Then on the

following page, down the bottom, line 50 over to
about line 10 on the following page which explains

the difference between, so far as he was concerned,

the property and the business. So that really

never eventuated, the business, because the appellant did

not ever go up to the property to work it for various

reasons which he gave evidence about,specifically

on page 55, lines 20 to about 35.

(Continued on page 79)

C2T54/l/HS	78	2/8/88
Orr(3)

MR DAVIES (continuing): There is some more evidence

further down that page about how he said, "Don't

worry about it" - with the balance of the money.

So, in our respectful submission, the oral

evidence showed clearly enough that the arrangement

with respect to the property was that they were to

have half interests. That was the way it was

declared by Dr Stone in his two letters in early

January and that was the way in which Dr Stone

later stated it to be to the appellant, to the

appellant's daughter, and indeed to Mr Wild.

In our respectful submission the Full Court was

correct in refusing to disturb those findings

of primary fact, based as they were on the

acceptance of the honesty of the - and it really

is a question of honesty; it is not a question
of just recollection - witnesses concerned.

Your Honours, can I pass then to the question of laches and can I make the submission at the

outset that where a claim like this one is based

on an express trust, mere delay is not a defence.

The leading authority on that principle seems to

be the decision of the Court of Appeal in

ROCHEFOUCAULD V BOUSTEAD, ( 1897) 1 Ch at 196.

Could I hand up some copies of that decision,

Your Honours, which is not on our list?

In delivering the judgment of the Court of

Appeal which consisted of Lord Halsbury,
Lord Justice Lindley and Lord Justice A.L. Smith,

Lord Justice Lindley said, at page 210, in the

middle of the page:

The principle applicable to cases in which

equitable relief is sought after long delay

is well expressed in Lord Blackburn's

judgment in ERLANGER V NEW SOMBRERO PHOSPHATE CO. And he cites that. That goes over to page 211

and then at the bottom of page 211 he said:

Under these circumstances, to hold that time

is a bar to the plaintiff's claim would be
to decide that, although the Statute of

Limitations is no bar to a suit by a

cestui que trust against a trustee in a case

of an express trust, yet that lapse of time

without more is a bar. Such a conclusion

cannot be correct, and it was decided to

be inadmissible in IN RE CROSS. Even where

there is an express trust, lapse of time,

coupled with other circumstances which render

it unjust to give the plaintiff relief

against the defendant, will induce the Court to
refuse the relief, although no Statute of

Limitations might bar his claim.

C2T55/l/JM	79	2/8/88
Orr(3)

MR DAVIES (continuing):

But in this case, which is one of express

trust, there is nothing except time and that

without more is not sufficient apart from

some Statute of Limitations.

The correct principle really seems to be that

which is stated in the decision of this Court

in HOURIGAN to which Your Honour Justice Gaudron

referred our learned friend. The reference to

that, Your Honours, is 51 CLR 619.

Your Honours, the principle really seems

to be that unless there is 'acquiescence' in the

sense in which Your Honour Justice Gaudron used

that term, or to use the phrase adopted by

Justice Dixon, as he then was, in that case,

"gross delay and prejudice to others"; unless

there is that the doctrine will not apply to express

trusts. Can I take Your Honours to - - -

DEANE J: That is probably so when all you are concerned

about it trustee in cestui que trust but, say,

for example, here, your clienis claim was for

the whole of the property and the only interest in the will left to Mrs Nickerson was the whole of the property, in that situation the failure

of your client to assert his interest might have

led to the testator dealing with his assets in

such a way that whereas he meant to leave a

substantial gift to his housekeeper, she got nothing

at all. It would be strange if - I am not saying

that is this case at all - in those.circumstances,

the law just said to Mrs Nickerson, "There is

nothing we can do about it; you get nothing."

MR DAVIES:  It may be again encompassed by - can I just preface

what I am about to say, Your Honour, by saying,

in our respectful submission, once the finding

is made in our favour that there is an express

trust then no distinction should be made between

the case whether it is a trust for a small part

or a trust for a large part. The rationale of

the decisions in those cases really is that because
there is a pre-existing trust to which no statute

of limitation applies, that therefore there should

not be any laches or acquiescence unless the

acquiescence is amounting to an acknowledgement

that there is no right or that the right is not

going to be pursued or that the laches is so great

that someone has clearly acted to their detriment.

Now, there is no evidence in this case of the

latter.

DEANE J:  But what I was suggesting to you is what I did

suggest earlier and that is that in this sort

of case what you say might well be unanswerable

C2T56/l/SDL	80	2/8/88
Orr(3)

if Dr Stone was still alive and in possession of

his facilities in that one would only be concerned

with their interests. But here the executor is

effectively appearing in the interests of

Mrs Nickerson and the gentleman who was tenant.

MR DAVIES:  Yes.

DEANE J: Now, if, looking at it, it were apparent that if

your client had acted to assert his interest,

the testator would have made other provision
for them instead of leaving them to bear the burden

of your client's claim, it seems to me that you

may have passed out of the simple laches position

as between trustee and cestui que trust. That

is the only point of what I was putting to you.

(Continued on page 82)

C2T56/2/SDL	81	2/8/88
Orr(3)

MR DAVIES:  Your Honour, I would accept that would be so

if, in fact, one can bring that within what

Justice Dixon would say is gross prejudice -

gross laches and prejudice in a situation where

one can show extreme prejudice occurred to someone.

It is not a question, in our respectful submission,

of a mere suggestion that that might be so if - - -

DEANE J:	But you see now we come to the next stage and that
is, your client's delay has led to a situation
where Mrs Nickerson and the tenant could never
show because your client is dead and nobody can say what he would have done if it had been brought
to his attention that half of what he was leaving
t? his two specific beneficiaries was not his to give.
MR DAVIES:	I will come to the factual part of that in a moment, Your Honour, because I would, of course,
question the premises upon which Your Honour is
making those submissions as to the delay. But,
in our respectful submission, this case really
has not been conducted on this basis at any stage. There has been no suggestion that there ha~ been
a prejudice and at the very least there must be some suggestion that there would be some such prejudice - something which would appear as a
reasonable likelihood or even a possibility from
the evidence that that was so and there really is not. There is nothing in the evidence which
would suggest that, in our respectful submission.

DEANE J: It hits you rather between the eyes though,

Mr Davies. What would he have done if he had known

that half of what he was giving to his housekeeper

was not his to give?

MR DAVIES:  I suppose this has all been litigated elsewhere,

Your Honour, but there are difficulties, of course,

about what the testator knew at any particular

time, I suppose. The difficulty, I suppose which -

Your Honour says it hits you between the eyes but,

in fact, the housekeeper was given, as our learned

friend has told you, a substantial part of the

estate in the sense of the properties so, indeed,

it does not really necessarily hit one between

the eyes that she would have been given more of

something else, some other part of the estate.

(Continued on page 83)

C2T57/l/AC	82	2/8/88
Orr(3)

DEANE J:	I see, there were properties other than this
one, were there?
MR DAVIES:	Yes, indeed.
DEANE J:	I had not fully appreciated it.
MR DAVIES:	Perhaps I should have made that point in another

context, Your Honour, because when the - I will

come to it when I am dealing it with laches

and the fact but when the testator was saying

to the appellant in that letter, "These properties

are mine to do what I like with", he was talking

about at least three properties: one, the property

upon which they all stayed which was his main

property, the name of which was Stanley Park,

a second property, called Dorsett, as to which

neither of which is there any suggestion that

anyone other than he had any interest in and

the third property was this property called

Cockatoo.

But before going to the facts, can I just

complete what I was going to say on the question

of law. In HOURIGAN, in the judgment of
Justice Dixon, as he then was - I should make
the point that in Justice Dixon's view HOURIGAN
was not simply a case of an express trust, it
went much further than that because it was not

just a claim in an express trust, it was a claim

for an account. That appears, really -if one

looks at the bottom of page 650, the last sentence

there, going over to the following page,

His Honour said:

Although the pieces of land which formed

part of the estate of Denis Hourigan remain

in specie in the hands of the widow's .. executors,

the case is not one in which it is sought

to bar an ascertained equitable interest

in specific property -

which this is.

The question whether the plaintiff, assuming

a construction of the will in his favour,

possessed or retained an interest in these

pieces of land rested in account.

But having said that and having accepted that

His Honour already put th is case as one not really of an express trus 4 he did seem to accept the

proposition which appears just above the passage

I have just read that:

"The doctrine, that where there is an express

trust delay in seeking relief in respect

C2T58/l/ND	83	2/8/88
Orr(3)

of a breach of it is not material, does
not apply to a case in which there has been

acquiescence or gross laches on the part

of the cestui que trust".

And it does appear that what His Honour was talking

about there was acquiescence in the acceptance
sense and gross laches.

Justice Starke took a more orthodox view, simply adopting the approach which was adopted

by the Court of Appeal in ROCHEFOUCAULD V BOUSTEAD.

That appears from page 638, about point 2 on

that page where His Honour said:

But mere lapse of time, in the case of an

express trust, will not induce the Court

to refuse relief unless coupled with other

circumstances which render it unjust to

grant it. The plaintiff in the present

case has done nothing actively to lead anyone

to suppose that he had abandoned any claim

he might have under his father's will.

And, incidentally, that conclusion of fact was

contrary to the conclusion which Justice Dixon

reached on page 649. I have not read the passage

on page 649 and I will not but it appears that

from the passage on page 649 Justice Dixon reached

the contrary conclusion on the facts as to

abandonment, leading someone to believe that

he had abandoned his claim, and Justice Starke

dissented on the facts and on the conclusion

in that case.

The other member of the Court, Justice Rich,

set out the evidence of acquiescence on page 627

over to 628 and evidence of prejudice on 628

to 629 and then made a statement of the law in

much more general terms ·thari either of the other

Justices, commencing about five lines from the

bottom of page 629 and going over to the end

of that sentence on page 630.

(Continued on page 85)

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MR DAVIES (continuing):  Your Honours, can I then take you to

the facts on this question of laches. The first

occasion upon which the appellant could possibly have

realized that Dr Stone was not accepting that he had

a half interest in the property was on receipt of the

letter to the appellant's wife of 3 December to which

our learned friend has taken you, but can I take

Your Honours back to that correspondence because one

really has to look at these in sequence to see what

the appellant construed from these letters and what

he was entitled to construe from them.

The first is the letter at page 200, which our

learned friends have already read, the second is

Mr Orr's reply at page 203 registering astonishment,

and really more concern about the relationship between

the parties than any question of claims to property,

and the third is Dr Stone's reply to that letter on

page 204. There are really two points we want to

make about those letters and they appear from the

evidence. The first is that - I think I have

already made this point in passing - the appellant

was more concerned, as appears from the letter which
he wrote, about the breakdown of a fond family

relationship than about the assertion of any claim to
property, and the second is that he did not understand
these letters as being a denial of his interest in the
property, but being a complaint, a criticism of his

perceived interference in the management of those

properties, and one can see that, really, if one looks

at first of all page 200 where he says:

These properties are owned by me -

he is really more concerned about what he does with

them -

what I do is my own business and I

don't have to consult anyone.

Then if one goes to page 204 his complaint is right

at the outset:  (Continued on page 86)

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MR DAVIES (continuing):

Repeatedly on your visits here you have

interfered with the men. I have a good

man here .... don't want to lose him.

And so on. So Dr Stone's concern, rightly or

wrongly - and I will come a little later ~o the

influence which was being exercised over him at the

time - but rightly or wrongly it was about his

interference, always interference with the conduct

of the property. Now, can I deal with the evidence,

some part of the evidence on each of those aspects

of the letters, Your Honours. The first is

Mr Orr's concern, greater concern about the family

relationship, and really he is not really crlverting

to the question of effect on his proprietary

interests. At page 87 he is asked - this is in

cross-examination - about the fact that at this stage

he:

was convinced that Mrs Nickerson completely

dominated Dr Stone's thinking.	Do you recall
answering that question?

That was in the previous case.

Well, I am sure I could well have said that,

because that's what I thought.

And it is put to him again.

If that were so -

he is asked -

and Dr Stone under Mrs Nickerson's influence

was writing in the tenor of his letters

of December 1977, weren't you concerned that

your interest in Cockatoo was at risk?---No,

I wasn't. I felt - as far as the future was

concerned, I felt it was with the family.

position to make another will, nor did I think he

would, and I can only say that this question

really wasn't the prime worry. The prime

worry was Dr Stone's mental state and what
could or should be done about it. This question

never came up, despite what is written there.
Those letters just didn't make sense.

Never ever did I think Dr Stone was in a

And then he is pressured again on this about line 30:

If Dr Stone were in that condition, wasn't it

all the more reason that you should take some

step to protect your interest in Cockatoo?--Maybe

it was, Mr Chesterman. I didn't-----

It never occurred to you?--No, it didn't.

Then further down the page and so on.

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MR DAVIES (continuing):  That he did not understand

these letters as impugning his interest,

but rather being critical of perceived interference

and management appears at page 95, just below

line 10:

As far as the letters in December 1977 were

concerned, you said to my learned friend

that you understood that to be that Dr. Stone

was asserting that you weren't welcome on

Cockatoo - weren't welcome on the properties,

I am sorry?--Yes.

And that you shouldn't interfere with the

management of the properties?--Yes.

As you read the letters then did you understand
Dr. Stone in any sense to be impugning your having an interest in the land Cockatoo as

distinct from the business or social matters?

--No, I did not.

Your Honours, this was in December 1977. The

evidence was that the appellant - - -

DEANE J: That is conflict with what he said at page 83

that we were referred to and that is, at about

line 42, where he seems to be saying that he

understood to have been forgetting or denying

his half ownership and explained why he did

nothing.

and his failing mental powers he seemed to

have forgotten or to deny your half ownership

in Cockatoo?--Yes.

MR DAVIES:  Well that is now, perhaps. I do not know that

necessarily was then.

DEANE J: Except he goes on to explain why he did nothing

about it then.

MR DAVIES: Well, he said:

I give the same reasons, that------

What reasons?---Well, how could I go and

reason with Dr. Stone if I had wished to. I felt that was quite impossible and as far as

I was concerned the prGperties., would eventually come to the family, and I let matters take their

course.

It is more consistent with what I said, but what

he is really saying, of course, that he is - it

is really in the context, if you look back early

in that page, it is all to do with Dr Stone not

being in command of his faculties.	And that really
seemed to be his prime concern.

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DEANE J:	How old was Dr Stone in 1967?

MR DAVIES:  He was 87 then, Your Honour. I was just

going to put those letters in their context,

Your Honours. The appellant had seen Stone in

Melbourne in 1976 and had visited Stone in

September of that year, September 1976. That

appears on page 45, line 50. On that occasion

in 1976 Mrs Flood had stayed with him for three

weeks. By that time, that is by September 1976,

the appellant had noticed a marked deterioration in

Dr Stone's mental condition.

Can I take Your Honours then to the evidence in

which that appears, at page 46, line about 30:

On this particular occasion in 1976 it was

just not possible to have any normal sort

of discussion with him. He would lose track

of it. When you asked him questions he

couldn't remember. He just didn't seem to

know much about what was going on. That was

my feeling. He just lost his grip entirely.

On the preceding visits had you gone about

Stanley Park with him, apart from the visits

to Cockatoo?--Yes, I had.

On the visit in 1976 what activity was there

by Dr. Stone in inspecting or doing other

things on Stanley Park?--There was no

activity. The only tima he got out of the

house was when I asked to see Dorset, a new

property that he had purchased.

And Dorset was close by Stanely Park?--It was.

Did the doctor accompany you on the trip to

Dorset?--Yes, he did.

What did you observe of him as regards Dorset,

his knowledge of that property?

It appears then, if you look at page 47, that he

did not even know where Dorset was.	He could not
even tell him anything about it.	So, in 1976 he

really was not too sure where the property he had

purchased was, even though it was close by.	He
was 87 then and hewas 88 - I think I said 87 -

at the exchange of correspondence; 87 then. That

appears on page 49, line 10. Eighty-seven in

1976 and so,88 in 1977.

(Continued on page 89)

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MR DAVIES (continuing):  But going back to pages 46, 47

and 48 it appears that he did not know anything

about Dorset; he did not know where it was; he

could not get there and so on - if you read through

those three pages. So he had detiorated greatly

by then and, no doubt, correspondingly more by

December 1977 although the appellant could not

depose to that. So the appellant, in our respectful

submission, probably correctly, perceived these

letters in December 1977 as an irrational hostility. I

say he perceived that because that is the way he

described it - that is my term not his but that

is, in effect, the way he described it at page 83,

at about line 20: that he was certain he was not

in full command of his faculties. And then the

passage that Your Honour Justice Deane took me

to on that page.

So, really, it seems clear that he formed

the view that there was no point in attempting

at that stage to attempt to reason with Dr Stone

and that he really believed he should let matters

take the i r course in the II f am i 1 y 11 , as he put i t .

That appears at the bottom of 83 and then over

at 84, lines 35 to 40. He said:

I thought the other half of Cockatoo would have been left to my wife or Penny because

he had said so .....

I was not .really concerned about -

Dr Stone with his half and so on.	And then at
85, again - he really thought:

he had lost his memory and he was responding

to what he was told -

by those around him. so that in that situation

there was no point, he thought, in reasoning and

he was naturally disinclined to commence an argument

with a man whom he believed to be deluded and with

whom he had had a fond family.relationship in the

past.

(Continued on page 90)

C2T62/l/AC	89	2/8/88
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MR DAVIES (continuing):  The first occasion on which it actually

occurred to him that his interest may have been

impugned was when he heard that Dr Stone had leased

Cockatoo to the Nimmo's. Whether in fact that

was the first occasion on which he should have

or whether in fact that was an occasion on which

he should have thought that his interest was being

impugned, it was in fact an occasion on which

he thought that and his evidence on that appears

at page 4~ line 50 and page 8~ lines 35 to 55.

Our learned friends really do not complain

of any failure to assert the claim after that,

although they say there was some delay because

they say it was by that time that some prejudice

had been suffered and none subsequently, at least

implicit in the concession and, in our r~spectful

submission, none could.

Our learned friends are not correct in saying

that he did not assert an half interest because,

in fact, as early as June 1982 he asserted that

to Dr Ford, who subsequently became one of the

defendants in this action.	Page 66, just below
line 10:

I saw Dr Ford in June 1982 soon after I

had seen Dr Stone. I told him that I had

this interest in Cockatoo and I told him

what I had paid.

BY HIS HONOUR:  When you say you told him

about this interest, did you make clear what

interest you said you were claiming?---I

would say I would have said a half interest.

So he asserted a claim before he went to his solicitors,

Arthur Robinson, on 13 August, and then they wrote

that letter based on their view of the matter

on 13 August. Your Honours, the trial judge found, at page 228,

that the only possibly relevant witness to the creation of the

trust or admissions agianst interest by Stone, were

Stone himself, Mr and Mrs Orr, Mrs Flood and

Mrs Orr's parents, both of whom had long since

died - so they really were not relevant to the

question.

(Continued on page 91)

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MR DAVIES (continuing):	Stone, on one view, became incapable

of being rational and unbiased in the matter by

December 1977 by the time he was writing these

letters, but Mrs Nickerson was really never a relevant

witness. She could not have said what Dr Stone had

said to her and she was never a relevant witness to

any of the relevant conversations. That appears from

the evidence itself, Your Honours, page 94, lines 15 to 40,

and the other aspect - that is the negative aspect of

it - and the positive aspect of it appears from Mr Orr's

evidence on page 81, lines 40 to 50, that the only

witnesses to the agreement with Dr Stone were Orr, his

parents-in-law and Dr Stone.

WILSON J:  But on page 94 I see she was present at Stanley Park

after the series of inspections in April 1967.

MR DAVIES:	Yes.
WILSON J:	That was too early, was it, for - - -

MR DAVIES:  Yes, it was. They were the inspections which

really- they were inspecting a number of properties.

That was when they were deciding really what - they

looked at a number of properties, Your Honour, and

really that was the series of inspections referred to

before Cockatoo was acquired.

Your Honours, it was not really asserted here

that any third party acquired any rights, or that

Stone, or anyone claiming through him, had acted to

his detriment or really incurred any specific

prejudice by reason of the appellant's failure to

act and there are none of the other factors that might

be relevant to a claim for laches:  it was not a

hazardous or speculative transaction; it did not involve

an account of profit~ there was no reason why the

granting of relief would be impossible or even

difficult. So, in our respectful submission, there

were no other factors other than it is said that if the

claim had been made sooner there might have been some

evidence which could have been given by someone to the

contrary.

(Continued on page 92)

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MR DAVIES (continuing): In our respectful submission,

His Honour performed a correct balancing exercise

and reached a conclusion which this Court, in

our respectful submission, should not interfere

with.

Your Honours, can I just then make some

very short submissions in reply on the question

of illegality.

MASON CJ: Before you come to that, might I say, for my

part, that it seems to me that the testamentary

dispositions may well be relevant and throw some

light on this. We do not know the circumstances,

of course, in which the exhibits are unavailable

to this Court but it should be possible to make

inquiries with a view to ascertaining their

whereabouts and, after all, I take it that your

instructing solicitor prepared these testamentary

dispositions.

MR DAVIES:	No, I
MASON CJ:	You do not think so?
MR DAVIES:	I do not know whether all of them or some, Your Honour, I am not sure of that but I am sure
if they were exhibits in the case they were available
initially and we can certainly make available
to the Court.

MASON CJ:  Yes. I mean, it is possible that they were

uplifted from the Supreme Court at the conclusion

of the proceedings in the Full Court or even

earlier - - -

MR DAVIES:  If that is so it would be one or other of the

parties and I am sure that they could be and

we will undertake to make them available to the

Court.

MASON CJ:	Thank you.
MR DAVIES:	Your Honours, can I go then to the question

of illegality and, first, to the decision of

this Court or, I should say, not the decision

so much but the dictum of Chief Justice Griffith

in this Court which our learned friend relied

on. RV HOPKINS is 20 CLR 464 and the dictum

upon which our learned friend relied appears

at page 470. Your Honours, it is important that

the Act of 1910 wa~ at least at the time of the

decision of RV HOPKINS materially different

from the present provisions.

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MR DAVIES (continuing):  Could I hand up to Your Honours

some copies of the 1910 Act. Your Honours,

section 59 of that Act is the equivalent to

section 91 and we do not suggest that there is

any material difference between those two provisions.

Section 130 is the forfeiture provision - that

is page 120 of the document Your Honours have. Now, Your Honours will see from subsection (1)

that:

Lands acquired by any evasion of or fraud

upon this Act shall be liable to be forfeited.

But there is nothing in section 130 which makes

an acquisition of a holding or the holding of land

in trust a holding by fraud under the Act. So there

is no provision other than in the LAND ACT of 1910

as it then was, no provision other than one for

automatic forfeiture. Subsection (1) I have taken

Your Honours to. If Your Honours look then at

subsection (3) it says:

Upon the forfeiture of a holding by reason

of -

that is the trustee one

or the land having been acquired by evasion

or fraud.

It says what happens in consequence of those.

WILSON J:  Well, if the automatic, or the liability to

forfeiture does not arise from section'l30(1),

does it arise somewhere else? If non-compliance with section 59 is neither an evasion of the Act nor a fraud on the Act, what makes it liable

for forfeiture?

MR DAVIES:  Well, I cannot answer Your Honour what made

it liable for forfeiture before the amending Act

of 1924, Your Honour, which inserted section 130A

which provided in subsection (3) - and this was, of course, after R V HOPKINS, that it was a fraud upon the Act.

WILSON J:	I see.
MR DAVIES:	The other point perhaps I should make is that

there is no provision in the 1910 Act for waiver

of forfeiture. When it was amended in 1924 the

proviso to subsection (2) provided for waiver in

that case only, that is,where there is too much

land held, but not in any other case.

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MR DAVIES (continuing):  Those differences, in our respectful

submission, are material differences. In any event,

of course, what we say Chief Justice Griffiths was

saying in that passage upon which our learned friend

relies is no more than that the question of illegality

and enforceability of the trust is irrelevant to

the question whether there is such a trust which is

liable to forfeiture.	Otherwise, as he quite rightly
says, the exercize would be futile.	So he is really

saying no more than that one question is irrelevant

to the determination of the other without necessarily

arriving at a conclusion that in that event the trust

would be illegal and unenforceable.

Your Honours, the only thing we want to say about

EVANS V THE QUEEN was that the ratio of that case was

simply, as Your Honour Justice Deane pointed out, that

in the events which occurred the holder of a licence

was precluded from maintaining a suit for specific

performance for a lease. So it was really

concerned with the holding of the licensee to :. the right of a licensee to the obtaining of a lease and in that sense, more concerned with, as we would put it

in this case, the right of the lessee, rather than any

person for whom that person may have held in trust.

Your Honours, the consequence of our learned

friend's submission that section 91 stands alone

really must be that the holding itself is invalid

and that conclusion is inconsistent with section 296.

Consequently, in our respectful submission, the

correct construction of the provisions must be as we

have submitted they are.

Your Honours, the only other submission we want

to make is with respect to section 235(4), and the only point we want to make about that is that that provision allows the creation of that trust, the trust to which

it refers, in only one way and says a creation of a

trust of that kind in any other way is invalid and

we would contrast that provision with the words in

section 91, as specifically stated in validity

contrasted with section 91(1).

(Continued on page 95)

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MR DAVIES (continuing):  Your Honours, as our learned friends

did not rely on MAURICE V LYONS I really will

not say anything about it.

The only other matter, perhaps, I should

mention is the result if we are successful. I

should mention, I think, that His Honour found

as a fact that there. had, been improvement over
the interim period in the property in the sum

of $250,000. That appears in the trial judge's

judgment at page 230. Perhaps an appropriate

form of relief would be a declaration upon the

appellant compensating the respondents in the

sum of one half that, that is $125,000;	a declaration
that there is an undivided moiety.	No doubt the

compensation can be made in some other way but

we would be content with something in that form.

They are our submissions, may it please the Court.

MASON CJ:  Thank you, Mr Davies. Mr Chesterman, do you want

to say anything about the form of order that

Mr Davies has suggested? I ask that question,

of course, without indicating in any way that

the Court considers there is substance in what

he has put to us.

MR CHESTERMAN:  We would have submitted that the adjustment should be of the whole sum of $250,000. The property

is worth a little over $1 million and of that sum $250,000 is the result of the efforts of

Dr Stone. So the whole of that amount, we would submit, should be deducted from the value before

there is a division.

DEANE J:	But the estate will continue to own· half of it?
MR CHESTERMAN:	Yes, that 1s so.
DEANE J:	You want your cake and you want to eat it.

MR CHESTERMAN:  Yes, Your Honour.

MASON CJ: Do you wish to reply on your notice of contention?

MR CHESTERMAN:  No, thank you, Your Honour.

MASON CJ:  Very well .. The Court will consider its decision

in this matter.

AT.3;39 PM THE MATTER WAS ADJOURNED SINE DIE

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