Protheroe v Protheroe

[2023] NSWSC 188

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Protheroe v Protheroe [2023] NSWSC 188

Hearing dates:

26, 27, 28, 29, 30 September, 4, 5, 6 & 7 October 2022

Date of orders:

1 March 2023

Decision date:

09 March 2023

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Plaintiff’s claim on the statement of claim in detinue and conversion reserved for determination after submissions in relation to the disposition of stock, plant and equipment on the properties and the opportunity for an audit of the whereabouts of such items. A declaration made on the cross claim that the defendant/cross claimant is entitled to beneficial interest in the properties on terms that the plaintiff/ cross-defendant be provided with sufficient funds to conduct a small hospitality business.

Catchwords:

EQUITY – equitable estoppel – claim for a constructive trust – the defendant/cross claimant, the son, farms two properties (and at times other associated properties) held in the name of his father, the plaintiff/cross-defendant – the son alleges that the father made representations to the son, or caused the son to assume, that the son would have the benefit of the properties upon the father’s retirement from farming the properties, or alternatively upon the father’s death – the son claims he acted upon the representations to his detriment or that he acted upon assumptions the father induced him to hold – the son claims that the father holds the properties on constructive trust for him to make good the promises made or the assumptions – whether the representations were made or the assumptions held – whether the father was aware that the son was relying upon the representations, or was acting on the assumptions – whether the son suffered detriment as a result of the representations or the assumptions – whether it would be inequitable if the father did not make good the representations relied upon or the assumptions made by the son – whether the son’s claim is statute barred – whether any discretionary defences apply – what is the appropriate remedy.

Cases Cited:

Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582

Delaforce v Simpson-Cook (2010) 78 NSWLR 483

Giumelli v Giumelli (1999) 196 CLR 101

Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112

Plimmer v Mayor of Wellington (1884) 9 App Cas 699

Priestley v Priestley [2017] NSWCA 155

Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220

Reid v Commonwealth Bank of Australia [2022] NSWCA 134

Sidhu v Van Dyke (2014) 251 CLR 505

Thorner v Major [2009] UKHL 18

Walsh v Walsh [2012] NSWCA 57

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

West Asset Holdings Pty Limited & Anor v Sara Investments (NSW) Pty Ltd & Anor [2023] NSWSC 136

Category:

Principal judgment

Parties:

Plaintiff: Colin Henry Protheroe
Defendant: Brian William Protheroe

Representation:

Counsel:
Plaintiff: A. Crossland; B. Flaherty
Defendant: J. Brown; P. Muscat

Solicitors:
Plaintiff: Charles, Lethbridge, Attwood Marshall Lawyers
Defendant: Phillip Robert Williams, Dick & Williams Lawyers

File Number(s):

2019/00257744

Publication restriction:

No

Judgment

1. The Protheroe family have farmed two properties, Elmore, and Shannon Vale, near the township of Narrandera for over a century. In these proceedings two family members, a father and son, contest the beneficial ownership of these two properties and some associated farming equipment.

2. The plaintiff/cross-defendant, Colin Henry Protheroe, is the father of Brian William Protheroe, the defendant/cross claimant. Each of them and the other members of the Protheroe family who gave evidence referred to one another by their first names. Without intending any disrespect to any party, these reasons adopt the same convention.

3. The principal contest in these proceedings arises from Brian’s cross-claim against Colin in which Brian seeks a declaration that Colin holds the whole or part of Elmore and Shannon Vale on trust for him. Colin’s primary claim as plaintiff seeking the recovery of certain farm machinery was originally commenced in the District Court and transferred into this Court, once it became evident that Brian was claiming beneficial ownership of Elmore and Shannon Vale.

4. Brian’s cross-claim alleges that over almost three decades Colin made representations to him and caused him to hold assumptions that he would either be entitled to Elmore and Shannon Vale upon Colin’s retirement or that he would inherit them upon Colin’s death. Brian says he acted to his detriment upon those assumptions and that Colin should now make them good. Colin disputes that he made any such representations, or that he caused Brian to hold any assumptions of that kind. Colin also says that Brian’s claims are barred by a release in a settlement deed that he signed in 2017 or should be dismissed on various discretionary grounds.

5. Colin’s claim as plaintiff is for damages for $131,986 for the detention or conversion of farm machinery. In general terms Brian denies that Colin owned the farm machinery, that he converted it, or that Colin has established that it had the value alleged.

6. Brian and Colin are the only contestants in these proceedings. Colin originally brought the detinue/conversion proceedings against Brian as first defendant and against Colin’s other son, John, as second defendant. But Colin discontinued the detinue/conversion proceedings against John. The Court directed that parties give notice of Brian’s cross-claim to John to ascertain whether he wished to participate in them but he declined.

7. Mr A. Crossland together with Ms B. Flaherty, instructed by Charles, Lethbridge, Attwood Marshall Lawyers, appeared for Colin. Mr J. Brown together with Ms P. Muscat, instructed by Phillip Robert Williams of Dick & Williams Lawyers, appeared for Brian. In a case with a long history and complex facts the Court was much assisted by the analysis of the legal representatives on both sides.

8. These reasons first set out a narrative of events relating to the cross claim. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded. For reasons of economy this narrative does not generally include reference to versions of the facts that have been rejected.

9. Following this narrative of findings on the cross claim these reasons deal with legal issues presented by the cross claim. These reasons do not deal with Colin’s relatively minor primary claim in conversion and detinue, as it may be able to be more aptly resolved or decided in the course of a relief hearing in relation to the cross claim. But first some general observations about the credibility of the principal witnesses who gave oral evidence are recorded.

Credibility of Witnesses and Parties

10. Colin Protheroe. Colin was a tough minded and robust individual who has long been used to exercising autonomy in making decisions about his business interests. He came across as a determined, self-reliant, and flinty individual who held firm views about his dealings with his son, Brian, and the righteousness of the position he takes in these proceedings. He had an excellent memory for dates and amounts of money and seemed to have a ready grasp of relevant financial material. But he was intensely bitter about how he perceived he had been treated by his sons, Brian and John. He regarded them as having plotted against him in dealings with the NAB bank in 2016. His disapproval of this aspect of their conduct frequently bubbled to the surface during his answers under cross-examination and profoundly warped his attitude towards Brian and John.

11. Colin maintained discipline in answering questions. He mostly listened carefully to what was asked of him and was generally able to answer “yes” or “no”. But when it came to uncomfortable questions on issues on which he had strong views he would frequently answer the question he would have preferred to have been asked or he would argue a case which was irrelevant to the question or he would avoid answering directly by gliding to another topic. Throughout his evidence he needed to be reminded several times to attend to the question. Changing the subject is a conversational device he appears to have frequently used to avoid difficult issues when dealing with Brian and he reprised it in the Court room. But when forced to attend the topic he could often give candid answers. This approach to giving evidence made his evidence unreliable in relation to contentious matters but otherwise generally reliable about less important detail.

12. Colin’s account was that he had no significant discussion with his son Brian about Brian’s succession to the farming property that they operated. The Court does not accept this evidence. Colin demonstrated a lack of insight into Brian’s long articulated assumption and expectation that he would succeed to the use of, or would inherit, Elmore and Shannon Vale. But the Court must judge matters and events objectively on grounds other than Colin’s perception.

13. Colin’s evidence is best understood by sketching parts of his personality. The Court had a strong impression that Colin could be quite difficult in interpersonal dealings when he wanted to be. Being difficult had served Colin well in getting his own way in business. Being difficult had become a well-practised routine for him in deflecting hard issues like his son’s expectations. The technique worked well against Brian, who had deferred to his father’s displays of obstinacy, partly out of continuing filial loyalty.

14. But something worse between Colin and Brian was evident in the courtroom. As will be seen in the narrative below, events in 2016 had destroyed their relationship, leaving a residue of smouldering aggression on Colin’s side, and preventing any future farming cooperation between them.

15. Brian Protheroe. Brian was a considered witness, with a steady demeanour. He is an inventive farmer with a ready grasp of the commercial side of agricultural enterprise. He was philosophical about his father’s changeable nature. The narrative of findings below confirms what the Court saw in the witness box: that Brian is a patient man. His first plan was to wait out the uncertainty created by his father about his interest in Elmore and Shannon Vale. But changes in his personal circumstances ultimately made that position untenable.

16. Brian answered questions directly and very much to the point. He sought to engage with the substance of what was asked of him. He was a dependable witness in all aspects of his testimony. He was prepared to make concessions against his own interest, and he was not willing to venture evidence beyond what he believed he could genuinely recall.

17. From about 2014 – 2015 Brian navigated a very difficult conundrum, with a clarity that was born of a genuine hope that he would maintain a reasonable relationship with his father. By then he realised that his father had misled him about his entitlements under what became known in the proceedings as the Strontian Trust. But he resisted the conclusion, pressed expertly upon him in cross-examination, that he could not and did not trust his father after that. He maintained an ambivalent relationship with his father: on the one hand becoming very cautious in his dealings with his father, but on the other hand hoping against hope that his father would come good on his promises. He refused to lose faith in his father, partly because maintaining their relationship was important to him, and partly because he believed that eventually they could work something out.

18. Brian had a very specific recollection of where various important conversations with his father took place. He was able spontaneously to add detail to his evidence about these critical conversations, which showed he was drawing upon a genuine recollection of them. His evidence is wholly accepted.

19. And finally in response to Colin’s hostility described above, Brian’s attitude seemed to be one of resignation. But at the time of the litigation he accepted that this would always be his father’s stance towards him.

20. Amanda Protheroe. Brian’s wife, Amanda, gave short evidence. Amanda’s evidence was honest, reliable and of considerable assistance to the Court in understanding Protheroe family dynamics. She is a commercial and taxation accountant. She was precise, organised, and direct in answering her questions asked of her. She was ready to engage with her questioner to assist the Court with the best that her memory could offer. Her evidence is wholly accepted.

21. She had an excellent memory for detail. This was partly grounded in her professional practice. She took extensive notes of relevant conversations. Her notes were taken in an objective manner shorn of unnecessary or biased commentary as is sometimes seen in notetakers in intra family disputes. The Court had an opportunity to compare her oral testimony with some of those notes and it was evident that the notes were accurate. They are accepted where they are in evidence as a faithful account of the conversations in which she was involved.

22. Colin viewed Amanda as interfering in the internal affairs of the Protheroe family. But Amanda was just persistent. She asked questions about Protheroe family financial structures. Given her professional background this is hardly surprising. Moreover, Brian had long found it difficult to ask his father about succession issues partly due to various conversational barriers his father had erected. Amanda penetrated these obstructions. But in contrast to Colin’s perception, in doing so her motivation was not to cause trouble but to gain financial clarity, so that she and her husband, Brian, could plan their family’s future on a sound financial footing.

23. Henriette Nielsen. Colin’s wife, Henriette Nielsen, gave brief evidence in which she was cross-examined about a range of financial issues. She was inclined to jump between different topics in her answers. But this style of answering was not due to any lack of candour on her part. She was straightforward in her answers and prepared to make concessions against interest in giving truthful answers.

24. Henriette’s interest in and commitment to a farming life on Shannon Vale and Elmore came through all her evidence. She clearly gained great satisfaction from farming activities and from helping her husband Colin whenever and however she could with farm work on their two properties.

25. Barbara Eadie. Colin’s first wife, Barbara Eadie gave evidence by AVL from Court facilities provided with the assistance of the Magistrate’s Court in Tasmania, where she lives. Barbara is the mother of Brian and John. She appeared a little nervous in the giving of her evidence, perhaps because of the unfamiliarity of the AVL in courtroom environment. But her evidence was honest, direct, and reliable.

26. Barbara was surprisingly free of animus towards her former husband. But she was a sound observer of his character. She was able to give insights into his personality that accorded with the Court’s own observations. At one point she described Colin as a person who “wanted it his way or no way”, when it came to money matters. This accurately captured Colin’s single-mindedness on such issues. Her evidence is wholly accepted.

The Protheroe Family Farms Near Narrandera

27. Elmore and Shannon Vale lie on Strontian Road about 15 km to the south of Narrandera in the triangle with the Newell Highway to the west and the Sturt Highway to the east. William Protheroe, Colin’s grandfather, and Brian’s great-grandfather purchased Elmore in about 1920. William’s son Henry took over the management of Elmore in the 1930s. Henry in turn handed management of Elmore on to Colin in the 1960s.

28. Shannon Vale lies adjacent to and to the west of Elmore, although the two properties are separated by a public road. Colin acquired Shannon Vale in the 1970s. Elmore and Shannon Vale became part of a larger farming enterprise which Colin and Brian expanded until 2008 when it totalled just under 14,000 acres. Colin and Brian encountered financial difficulties requiring most of the properties in the family enterprise to be sold between 2016 and 2018. Only Elmore and Shannon Vale now remain after this contraction. Annexure A to these reasons is map of the various properties referred to later in these reasons that were acquired by Colin and Brian in addition to Elmore and Shannon Vale.

29. When Colin took over Elmore from his father Henry in the mid 1960’s he commenced an ambitious program of farming property acquisition which was complete to its first stage in 1989. In the mid 1960’s Elmore was held by Colin’s parents, Henry and Grace. In 1968 he purchased Piney Range a dry land property of about 625 acres south-west of Elmore. In 1970 he purchased Shannon Vale a dry land property of some 670 acres immediately to the west of Elmore. In 1979 he purchased Inverleigh a dry land property of 1,361 acres north of Elmore towards Narrandera. Then in the 1980’s he purchased two adjacent properties to the east of Elmore, Bartagunyah, a dry land property of 1,050 acres and Hazelwood, an adjacent dry land property of similar size. Finally in 1989 Colin purchased Delwood, a dry land property of 690 acres immediately south of Shannon Vale. Each of Shannon Vale, Inverleigh and Delwood were on Strontian Road, Narrandera. The next expansion of the Protheroe family farms did not occur until after 2000.

The Early Years

30. Brian and John grew up on Elmore with their parents Colin and Barbara, who had married in 1972. Their grandparents Henry and Grace were living nearby on Shannon Vale. Brian was born in 1976 and John in 1979. Each of Brian and John became involved in farm work from a young age.

31. Both Colin and his father, Henry, taught Brian and John the skills required to contribute to the family farming operation. These skills included feeding and managing stock, cultivating, and harvesting crops, driving trucks and tractors, building and fixing machinery, fencing, and welding. From about the age of 10 Brian had learned many of these skills and had by then become useful to the family farming enterprise. Colin conveyed to Brian the importance of learning these skills for his own future as a farmer and Brian readily absorbed them.

32. During their primary school years Brian and John usually spent their weekends assisting Colin on Elmore. When Brian was in secondary school, Colin started to expand his farming operations from the base at Elmore and Shannon Vale. He purchased four more farms near Elmore and Shannon Vale. These properties were Hazelwood and Bartagunywah east of Elmore, and Delwood, and Rock View, west of Elmore.

33. From an early age Brian believed he would make a life for himself on the family farm. Brian had the impression that Colin was buying these properties so there would be a farming enterprise big enough for him and for John. But Colin’s wife, Barbara was worried about the debt they were incurring in acquiring these properties.

34. Barbara’s evidence confirms Brian’s impression. Colin told her on a number of occasions when Brian and John were growing up and in the 1970s and 1980s new farming properties were being acquired, words to the effect, “You know I am doing this all for the boys”.

35. Brian boarded at the Yanko Agricultural High School, near Leeton, during his secondary schooling. There he studied agriculture up to year 12. He returned to the family farms during school holidays to assist Colin. He was generally allowed to finish school two weeks early in December so he could make it home to assist during the busy harvest period.

The Hydro Tavern – 1992 to 1993

36. In 1992, Colin and Barbara began looking at acquiring a motel business. They both had interests in going into business beyond farming. Colin did not seem to be wholly satisfied by life on the family farms. The Hydro Tavern in Leeton came up for sale at the end of 1992 at a receiver's auction. It was about 60km away from the family farm.

36. The Hydro Tavern was purchased as a going concern with existing staff for $620,000. Colin and Barbara took over its management in early 1993. Colin rented a residence nearby. Colin was keen on this investment but Barbara less so.

37. But difficulties in Colin and Barbara’s marriage soon came to the fore. The purchase of the Hydro Tavern added to tension between the couple. Breaking point was reached in mid-1993 when Barbara left Elmore. Brian and John remained there with Colin. Stability was important for their schooling. Brian was in year 11 in 1993. Barbara left the region for a few months before coming back to live in Leeton but in a new relationship. Throughout the course of the separation, Colin came and went from Elmore and spent long periods managing the Hydro Tavern in Leeton.

38. Towards the end of his secondary schooling, Brian began to consider his options for tertiary education. Brian tailored his year 11 electives in anticipation of his tertiary study. They included 3-unit mathematics, physics, chemistry, agriculture, and economics. He elected to take these subjects thinking he might possibly study engineering or agronomy at the tertiary level.

39. Two factors ultimately moulded Brian’s preferences about his areas of further study. First, Barbara’s separation from Colin adversely affected Brian’s studies, leading to his decision to drop physics for year 12, and to opt for 3-unit agriculture. Second, Brian could see his future at the farm more clearly, and he believed that Colin needed him there to help. At this time Colin’s farming operation totalled about 7000 acres, centred closely around Elmore and Shannon Vale, and was very demanding, testing the limits of the family’s labour resources. Colin’s only day to day assistance was his aging father Henry, and two other permanent employees. Brian was needed on the farms.

40. During the early part of Colin and Barbara’s separation, Colin began to spend more time in Leeton managing the Hydro Tavern. Brian obtained his driver’s licence when he was in year 11 in 1993. To commit more time to the family farms, Brian began to return to Elmore every Friday afternoon to assist with farm work over the weekend.

Brian’s HSC Choice: University or the Farm – 1994/1995

42. Brian finished high school in 1994. Leading up to Brian’s Higher School Certificate (“HSC”) exams, he began to look more closely at his university options, which he discussed with his career advisor. Brian became more clearly focused on pursuing tertiary study that would be useful on the farm. He applied for admission to study for bachelor’s degrees, one in science at the Roseworthy Agricultural College at the University of Adelaide, and the other in rural science at the University of New England in Armidale (“UNE”). Brian received offers for admission to both universities.

43. Brian told Colin that he wanted to accept UNE’s offer for a rural science degree, which would allow him to specialise in agronomy. Colin rejected this idea. Brian claims, and Colin disputes that Colin said to Brian words to the effect, "I didn't put all these fucking farms together for you to piss off to uni for four years and have a good time." Despite Colin’s denial the Court accepts this was said. Brian was taken aback by this, but not entirely surprised.

44. Colin agrees with part of Brian’s evidence on this subject. Colin accepts he did say that if Brian took UNE’s offer and went away to university, then “do not expect this [meaning the farm] to be here for you when you get home”. Brian says he took this as a threat. In the Court’s view it was a threat primarily designed to remind Brian that Colin had the power to dispose of the family farm as he saw fit depending on economic circumstances, so it would be wise for Brian to comply with Colin’s wishes. Whilst Colin did not deny saying that the farms, “may not be here when you come back", just what that meant and what its effect was on Brian became matters of controversy.

45. They are important because they are the first conversations setting up a relationship in which Brian subsumed his financial and career independence to his father’s wishes. And in the Court’s view the meaning conveyed by the statement that the farms, “may not be here when you come back" was clear enough: Colin was intimating that unless Brian did what Colin said, Brian would have little chance of succeeding to these farms to which he was so attached.

46. But Colin denied this was his motive and this was the effect of what he said. It is difficult to understand Colin’s various attempts under cross-examination to give a different account of his motivation for making this statement. None of them make much sense.

47. Colin took two approaches in cross-examination when challenged about this statement. First, he explained that his reasons for making that statement were merely related to the financial position that the family was in at that time and were not an attempt to discourage Brian from going to university. 1994 was a drought year and it is not to be doubted that the Protheroe family farms were financially stretched when these conversations took place.

48. Second, he said that Brian made the decision to defer going to university for himself and that Brian had calculated that it was in his own best interests not to go to university. Colin also says that he did not speak to Brian about the subject of going to university very much, so he argues he could not have influenced Brian’s decision. Neither approach outlined by Colin accords with reality. Neither approach could really be sustained, as closer examination of Colin’s cross examination demonstrates.

49. The following exchange occurred in cross examination on this subject:

“The Court:   Did you encourage him to go to university, or not?

Colin:   No, we never talked much about it. He said he wanted…he put it off at that stage because we just started leasing an irrigation farm, so that's when he put it off at that stage. But if he'd had wanted to go to uni, I never stopped him.

The Court:   But my question was, would you have encouraged him, did you ever encourage him to go to university?

Colin:   Well, I don't no, we didn't have a conversation, I don't think, but I wouldn't have stopped him from doing it though.

Mr Brown:   Just so I understand that question; didn't you say to him "if you're going to go away to uni don't expect this to be here for you when you get home"?

Colin:      I've always said I said that, yes.

Mr Brown:   Didn't you take that as encouraging [him] to not to go to university if he wanted a future in farming?

Colin:      No.

Mr Brown:   What else could it possibly be that you said those words?

Colin:   Him staying home wouldn't have stopped the drought, and that's what I was getting through. Just because he stays home doesn't make it rain, and that's what I was getting at. We were in a critical financial position with the bank, and the pub was running all right, and my point was if the pressure comes on us from the bank they may not be there; I had no control over it. And [just] if you work harder and it doesn't rain, it doesn't make your farm any more viable.”

50. Mr Brown’s question confronted Colin with one available implication of the words that Colin agreed that he used: that Colin was encouraging Brian not to go to university if he wanted a financial future in farming on the family property. But Colin’s attempt to repel that suggestion makes little sense. Colin’s statement in explanation, “just because he stays home does not make it rain”, attempted to demonstrate that Colin was indifferent about whether Brian should go to university: pointing out that the property faced financial risk whether Brian went to university or not.

51. But it did make financial sense to Colin for Brian to stay on the property. Brian’s labour would help make the enterprise more viable. That in turn would assist the family enterprise in surviving the financial pressures it faced. Indeed, Colin was very exercised about the viability of the farms at that time.

52. Colin discouraging Brian from going to university because Colin needed Brian’s labour on the property to save costs makes much more sense as an explanation for what was said than Colin being indifferent to Brian’s choice. The following exchanges occurred between the Court and Colin, and Mr Brown and Colin, on this subject. At the conclusion of the exchange Colin accepted the inference that the Court has drawn in these reasons but then resiled from it, probably because he realised it would disadvantage his case.

“The Court:   But you're saying, but you agree you said to him "if you go away to uni for four years it mightn't be here when you come back"?

Colin:   Well, I didn't realise it was four years, I thought it was only one year, to be honest.

The Court:   But however long it was, you agree that you said something like ‘If you go away for a period of time it mightn't be here when you come back’?

Colin:      Correct, yes.

The Court:   But if he stayed there, it wouldn't be necessarily there either?

Colin:      That's correct.

The Court:   So, it doesn't make any difference whether he went to uni, or he stayed?

Colin:      That's right.

The Court:   If it makes no difference, why would you say to him "it may not be here when you get back"?

Colin:      Well,

The Court:   What I'm saying to you is

Colin:      Yeah.

The Court:   Your case seems to be it makes absolutely no difference whether he's here or he's at university, that the property might not be there in two or three years' time?

Colin:      Yep.

The Court:   My question is why would you bother saying that to him?

Colin:      Well, I think I just pointed out the situation we were in at the time.

The Court:   But why would you point out the situation you were in at the time, in response to him saying that he was going to university?

Mr Brown:   The only possible answer, realistically, to that question, sir, is because you were conveying to Brian that if he stayed on the farm there was a chance farming would be his future; correct?

Colin:      Yes, right oh.

Mr Brown:   What you were doing was encouraging him to stay on the farm, because it was his future; correct?

Colin:      Wrong.”

53. Colin’s first response was to agree with the implication that Mr Brown put to him that he was conveying that “farming would be his future”. But when it was pointed out that could be characterised as “encouraging” Brian, Colin backed away from his answer. But his first answer was correct: in making this statement Colin was encouraging Brian to stay on the farm by holding out that “his future” was in the farm.

54. Colin sought unconvincingly to defend his position in the following further passage of cross examination. First Colin says in this passage that Brian’s presence on the farm would not have saved it. In a worst-case financial scenario that is possibly correct. But Brian’s presence on the farm probably made it marginally more viable. When counsel firmly put that explanation to Colin, he accepted the logic of the questioner but denied that he thought that way at the time. Finally, Colin returns to emphasising the theme that Brian was a free agent and simply made his decision stay to on the farm because of Brian’s perception of his own financial best interests.

“The Court:    Well, was another reason that –

Colin:   No, well as I said, the banks were heavy on us, and we may not have had the farm in 12 months' time. Brian staying there wouldn't have stopped the banks moving in.

Mr Brown:   Was his labour of value to you, or let me put it this way, if Brian had gone to university would you have had to hire someone to replace him, which would have increased the cost of the operation?

Colin:      We already had people working on the farm.

Mr Brown:   Listen to my question

Colin:      Yes.

Mr Brown:   I'm asking about Brian's labour. If he had gone to university, would that have increased the costs of the operation, because you would have had to hire someone to replace the labour that he provided?

Colin:      Well, fair enough, yes.

Mr Brown:   That would have been your expectation?

Colin:   I wouldn't have thought of it that way, but we would have had to do that. That was--

Mr Brown:   So, all right, well so the disadvantage to the business of him going to university is it would have increased the costs, the outgoings of the business?

Colin:      Yeah

Mr Brown:   And potentially made it less profitable?

Colin:      Yes.

Mr Brown:   Therefore, made it slightly more likely that the bank might take it over?

Coin:      Correct.

The Court:   All right. Yes, Mr Brown.

Mr Brown:   And so, that's - isn't that the reason perhaps that you said "if you go to university, it mightn't be here when you come back" because the costs of the operation would have increased?

Colin:   It's possible but I probably wouldn't have looked at it that way, but it's probably the bottom line.

Mr Brown:   Well, I mean, why wouldn't you look at it that way? It makes economic sense, doesn't it?

Colin:      Yes.

The Court:   All right, Mr Brown.

Mr Brown:   So, it was in your interests to encourage him to stay on the farm, correct?

Colin:      No.

Mr Brown:   Well--

Colin:   I did - look, if Brian wanted to go to uni he could have. I didn't stop him from going to university.

Mr Brown:   No, no. Sir--

Colin:   But what we did in the short term when Brian made the decision not to go, we then leased an irrigation farm which was his interest and what he wanted to do.

Mr Brown:   You were encouraging him to stay on the farm at that point, correct?

Colin:   Well, that was an interest he had that we worked on. Yes. He was quite happy working on that.

Mr Brown:   It's fair to say, isn't it, that you wouldn't have been able to lease that farm without Brian's assistance, correct?

Colin:   We wouldn't have even looked at leasing it without Brian's interest, because he wanted the interest, and I done that for him.

Mr Brown:   You would have had to pay for additional staff to lease another property, correct?

Colin:      It wouldn't have happened.

55. Colin was partly right. Brian was interested in working the new leased irrigation farm. But Brian’s interest in that was not so great that he did not wish to go to university to deepen his knowledge of agricultural science.

56. The Court accepts Brian’s account of his reaction to this statement: that it was perceived as a threat. Colin well knew by the time Brian left school that Brian was interested in making his future working life on the family farm and the threat of it not being there in the future was a powerful lever pushing Brian to abandon his ambition to go to university.

57. Colin was quite unabashed that he did not encourage his son to go to university. But as is explained further below, there was a powerful reason for Colin taking this position at the time. He wanted to keep the Hydro Tavern afloat as well as the Protheroe family farms. He was unsure that he would be able to do both without the benefit of Brian’s already developed farming expertise and first-hand knowledge of the Protheroe family farms. Colin’s interest in the Hydro Tavern further supports the inference that Colin did not want to leave Brian with any real choice about going to university.

58. Brian’s account of the effect that Colin’s statement that the farm “may not be here when you come back", had on him is compelling. And the Court infers that is the way that Colin intended it to work: as a powerful indication to Brian that Colin controlled when and how Brian might succeed to ownership of the farm and that if Brian wanted to succeed to the farms, he must constrain his near-term economic freedom in conformity with Colin’s wishes. This conclusion is consistent with Barbara’s evidence that Colin was very controlling with finances in their relationship.

59. Not pursuing tertiary education in rural science was a tangible economic and career disadvantage for Brian. It foreclosed many other employment options. But in cross-examination Colin could not, or more accurately would not, recognise it as a detriment. This is illustrated by the following further passage of cross examination. Colin’s first line of defence was to say that Brian freely made “his decision” not to go to university for his own reasons, including excitement about being involved in a new leased irrigation farm. Colin then accepts many of the premises against him but will not accept the conclusion that Brian suffered detriment by not undertaking tertiary study, because Colin had encouraged him to stay on the property.

Mr Brown:   Do you accept that farmers' sons going off to Ag school's a good thing?

Colin:      Yes.

Mr Brown:   It helps them for their future, correct?

Colin:      Yes.

Mr Brown:   In some sense Brian suffered a detriment by not going off to university, correct?

Colin:      It was his decision, yes.

Mr Brown:   But you were aware by staying on the farms he was giving up that opportunity, correct?

Colin:   Look, he deferred it for 12 months, and in that 12 month we then leased an irrigation farm, which he was extremely interested in, and that's probably had a lot to do with why he didn't go ahead with it.

The Court:   Can you just listen to Mr Brown's question, and the question was by staying on the farms he deferred that opportunity, that is, the opportunity to increase his educational background. Mr Brown's question was do you agree that he was deferring that opportunity?

Colin:      Could you ask me again please sir?

Mr Brown:   You were aware that Brian was giving up the opportunity to go to university to assist you on the farms, correct?

Colin:      Yes.

Mr Brown:   Therefore, he was not going to have that opportunity and gave it up, correct?

Colin:      Yes.

Mr Brown:   You were aware at that time that he was not being paid a wage, correct?

Colin:      Yes. Yep.

Mr Brown:   And that he could have, for instance, gone and worked as a farm hand on another property, correct?

Colin:      Yes.

Mr Brown:   He could have gone and pursued another career, such as trucking, correct?

Colin:      We had - yes.

Mr Brown:   You knew that at that time he was suffering because he didn't go and work as a farm hand, correct?

Colin:      No.

Mr Brown:   He was suffering because he wasn't getting wages, correct?

Colin:   Well, he was getting money whenever he wanted it, so that's wrong.

Mr Brown:   I just want to go back a step. He wasn't being paid a weekly amount, correct?

Colin:      Correct.

Mr Brown:   You were aware of that, correct?

Colin:      Yes.

Mr Brown:   He didn't have the opportunity to save his own money, correct?

Colin:      Correct.

Mr Brown:   You were aware that he didn't have the ability to save his own money, correct?

Colin:      Correct.

Mr Brown:   You were aware that he was suffering a detriment by continuing a life on your farms, correct?

Colin:      Wrong.”

60. This passage of cross-examination also illustrates Colin’s understanding of another long-term detriment suffered by Brian, quite apart from his choice not to go to university. Colin well understood that his decision not to pay Brian a wage precluded Brian from saving his own money. This was a continuing weekly detriment to Brian of which Colin was aware.

61. Brian says, and the Court accepts, that he left this conversation with Colin with the clear impression that Colin required him back on the farm, that he should not go to university, that the farm would be Brian’s financial future if Brian stayed and worked on the farm consistent with Colin’s plans. The bottom line was that if Brian stayed, he could expect to gain a financial interest in the family farming enterprise. Moreover, Colin must have appreciated that this was Brian’s thinking.

62. Acting on Colin’s statements, Brian decided to live and work on the farm on a full-time basis without wages and to put off going to university. Brian kept his options open for 12 months. He accepted the UNE position but deferred it for 12 months to work on the farm. Then, when UNE sought Brian’s decision after the deferral period, he contacted the university and told them he would not be taking up the offer.

60. Colin was conscious that Brian had foreclosed his career options to work on the farm because of what Colin had said to him. That inference may confidently be drawn from these exchanges between Colin and Brian. Brian believed Colin would at some future time succeed to ownership of the farm. And Colin knew that was the idea he was instilling in his son. But Colin is not prepared to admit that now.

61. Barbara’s evidence also supports these conclusions. Brian confided in his mother in 1994 that he wanted to do more “ag study, to help me with the farm”. But he told Barbara “dad thinks it’s a waste of time though and wants me to stay here”. Barbara made an observation to Brian which gives insight into Colin’s business interests:

“That’s funny because your father actually wanted to be an accountant but his father pressured him into returning to the farm, which he eventually regretted.”

One Farm, Two Entrepreneurs, and Their Competition for Capital

65. Although Brian and Colin are different in character, they share a deeply ingrained entrepreneurial spirit. Their conversations about the time of Brian’s HSC and final university choice were the earliest signposts of a fundamental family dynamic that was to persist for decades: if they could not agree, they would have to compete for limited family capital to realise their separate business ideas.

66. Their personalities and business ambitions were so different it was unlikely they would agree in the long-term about using the family’s limited capital. Brian was first and foremost a farmer and saw himself building wealth out of a farming enterprise. Farming was only one of Colin’s business interests. He saw his talents as also leading him to success in the hospitality industry, either in the Hydro Tavern or later in a motel business. Indeed, from time to time, he spoke to family members of one day retiring from farming to run a motel business. Curiously Colin had rejected Barbara’s early ideas about opening a retail clothing shop, yet many of Colin’s entrepreneurial interests beyond farming were in retail industries. In contrast, Brian was never interested in anything other than farming. Colin and Brian must both have been aware of this contrast in the breadth of their respective business interests.

67. By 1994 Colin was already heavily financially committed to the Hydro Tavern and was convinced he could make it profitable, but it required his close personal attention and backup financial support from the complementary working capital of the Protheroe family farms. As earlier explained, he knew that running the Hydro Tavern would take him away from the farm for long periods. Barbara explains that Colin “spent nearly every day managing the tavern”. Colin thought that Brian was the best replacement for him on the family farm. Brian was passionate about farming and already a competent and dedicated farmer. Brian was committed to the family farm and knew it better than anyone who could be employed to replace him. Colin had confidence in Brian to manage the farms. These were powerful reasons for Colin to want Brian on the farm from 1995.

68. But as might be expected, much was left unsaid in these early conversations when Brian was leaving school, about where this would all lead in the long-term. Three unstated matters were left uncertain: the terms on which Brian would return to the farm, the amount of Brian’s likely future interest in the family farming enterprise, and the timing of his acquiring it.

69. Colin soon filled in the first of these uncertainties. When Brian stayed on the farm from 1995 Colin did not offer him a wage. Instead, the arrangement that had developed during Brian’s earlier teenage years persisted into his twenties and then his thirties: he was given accommodation, enough money to purchase clothing and the necessities of life and a small allowance for entertainment. Brian accepted this arrangement and in the early years never asked for a wage. Colin knew Brian accepted it, because of Brian’s lack of protest. There is no evidence in Colin’s case that he offered Brian a wage in these early years and that Brian declined it.

70. This aspect of their understanding was significant at several levels. It represents the first decision in the competition for capital between father and son. Paying Brian even a modest wage would have begun to set Brian up financially but would have slightly depleted the capital of the family farming enterprise. But Colin was not prepared to offer to sacrifice even that relatively small amount of family capital to allow Brian to accumulate his own independent wealth incrementally. This gives insight into Colin’s thinking. Keeping family capital under his control and at his sole disposition was important to him, as was keeping Brian in a state of financial dependence upon him. Moreover, not paying Brian a wage on the farm also strongly confirms Colin’s financial motives for inducing Brian not to go to university.

71. And given Brian’s entrepreneurial nature his acceptance of going without wages was also an unmistakable signal to Colin that Brian was expecting to benefit in other ways in the long-term, by succeeding to ownership of the Protheroe family farms. Brian is intelligent and clearly conscious that most of his contemporaries were earning wages. But he was content to bear what was in substance an extended financial adolescence that left him behind his wage-earning contemporaries, because he was looking towards his financial advantage in the long term. None of this would have been lost on Colin.

72. But the other two uncertainties remained: the amount of Brian’s likely future interest in the family farming enterprise, and the timing of Brian acquiring it. These uncertainties were to persist for decades, partly because Colin did not know himself what that interest would be and when it would be conferred on Brian and partly because Colin was content to leave it that way, as it gave Colin more freedom of manoeuvre with family capital.

Brian Makes Further Career Choices -1995 to 1997

73. Between 1995 and 1997 Colin and Brian together committed to several expansions of the family enterprise. They agreed to lease an irrigated property in Coleambally together in 1995 and they set up a separate bank account in Westpac in their joint names. But Colin still needed to finalise a property settlement after the dissolution of his marriage to Barbara. In 1996, Colin sold the two adjacent properties Hazelwood and Bartagunyah situated just to the east of Elmore and Shannon Vale, to fund his property settlement with Barbara.

74. From his earliest years Brian had been interested in acquiring some assets in his own name to help secure his financial independence. He says that in the years 1996 and 1997 he had discussions with Colin about purchasing some land in his name. His evidence about this is somewhat vague. Colin disagrees that any such conversations took place. But Brian’s evidence on this subject is accepted, not only because the Court generally prefers his testimony over Colin’s but also because similar conversations occurred later between the pair, and because eventually some land was purchased in Brian’s name.

75. Brian forewent other financial opportunities in the 1995 – 1997 period to stay on the family property. Despite Colin’s evidence to the contrary, the Court accepts Brian’s evidence that in about 1996 he was offered the chance to purchase an interest in a general freight and haulage truck business. Given his entrepreneurial nature it is not surprising that Brian was interested in purchasing an interest in such a business, even at a young age.

76. Brian says, and the Court accepts, that when this opportunity arose Colin’s preference was, once again, for Brian to continue working on the family farm. Brian let this opportunity pass for much the same reasons that he gave up his opportunity to go to university.

77. But Brian still had no capital of his own: he could not invest without his father’s consent. His father wanted him on the family farm, and he assumed from what Colin had said to him that he would have an interest in it in the long-term.

The Protheroe Family Trust and Farm 55 – 1997

78. After his divorce from Barbara, Colin set up a new family trust structure. The divorce settlement had been in prospect for some time after Barbara and Colin separated and it was ultimately finalised only in June 1998. On 10 April 1997 Colin caused CH Protheroe Pty Limited (“CHP”) to be incorporated with himself as the sole director, secretary, and sole shareholder. Brian and John became directors of CHP in June 2000.

79. The CH Protheroe Family Trust (“the Family Trust”) was established through a discretionary trust deed of the same date. Colin was named as the appointor of the Family Trust and CHP as its trustee. The trust deed named Colin and John as beneficiaries.

80. The same year, 1997, Colin sold his Rock View property, which was immediately to the west of Shannon Vale, to fund the acquisition of a new property known in the proceedings as “Farm 55”, a 548-acre irrigation farm in Coleambally, about 80 km west of Narrandera. Farm 55 had a 1,325 mega litre water licence.

81. Farm 55 was acquired in Brian’s name, a course which had been suggested by Colin’s solicitor at the time of its acquisition, partly in response to Brian pushing his interest in having some family asset in his own name. Farm 55 was purchased with the proceeds of sale of Rock View and borrowings Brian sourced from RaboBank, secured over Colin’s existing farm properties.

The Sale of Farm 55 and the Introduction to Strontian – 2002

82. Farm 55 Brian was not long in Brian’s name. In 2002 Colin decided to sell Farm 55 to fund a different land expansion closer to Narrandera than Elmore and Shannon Vale. Colin’s preference usually had greatest weight in family discussions with his sons. Colin regretted following his lawyer’s advice to acquire Farm 55 in Brian’s name. He never agreed to put land in Brian’s name again.

83. Indeed, when Colin sold Farm 55 he said to Brian, “there is no need for any of the farms to be registered in your name”. Colin denies saying this. But the Court accepts he did. It reflects what happened in subsequent years. It is likely that Brian sought an explanation from Colin about acquiring more property in his own name and this is what Colin told him in reply.

84. And such a reply fits the immediate context. In 2002 Colin and Brian were beginning to accumulate potential irrigation properties closer to Narrandera. In 2002 CHP started this expansion by entering a farm sharing arrangement on a 6,650-acre property known as “Strontian”, on Strontian Road, Narrandra, in an area between Elmore and Shannon Vale and the township of Narrandera. The arrangement involved cropping Strontian on a 50/50 share basis with its then owner, David Farley.

85. This venture worked out profitably and led to the later ideas of the Protheroe family purchasing Strontian and two other properties close to Strontian, Wallaringa and Glen Ayre, and developing them for irrigation.

86. Colin’s father, Henry, had given advice and assistance to the family for many years after his retirement from active farming. He died in 2002.

The Strontian Trust – 2004

87. Colin created another discretionary trust in 2004, the Strontian Trust. Colin was the appointor of the Strontian Trust, CHP the trustee, and Colin, Brian, and John were members of the class of discretionary beneficiaries. The Strontian Trust become the vehicle for the acquisition of Strontian, Wallaringa and Glen Ayre.

88. The profit sharing agreement with Mr Farley was terminated, and CHP as trustee of the Strontian Trust purchased the two properties, Strontian and Wallaringa, the latter being a property of 1,510 acres, for a combined purchase price of $4 million. Brian planned to develop these two properties for large scale irrigation farming. Colin agreed but Brian was the author and driver of the business concept.

89. By the time of the hearing the parties had widely divergent views about the purpose of the Strontian Trust. This uncertainty indicates that Colin did not discuss with Brian and John what he and his sons could expect from the Strontian Trust. The ambiguity surrounding the Strontian Trust concerned the ultimate discretionary allocation of its assets. But in the near term its objective in the acquisition of two properties suitable for irrigation, Strontian and Wallaringa, was commonly understood.

90. It would not have been difficult in 2004 to identify and discuss some general understanding of how the assets of the Strontian Trust were likely to be distributed. But it was not in Colin’s nature to do that. It suited him to leave ambiguous the intended distributions from the Strontian Trust. Moreover, he probably did not have fully developed ideas about its purpose.

Brian and Amanda – September 2006 to 2007

91. Brian met Amanda in September 2006 when he was 30. She gave disarmingly frank evidence that whilst she admired Brian greatly and was much attracted to the idea of a romantic relationship with him, the lack of separation of his financial affairs from those of his father and the depth of his father’s control over his financial future caused her major disquiet. She was surprised that at the age of 30, he still did not receive a wage for his long hours on the family farms but merely was given access to a store account, and permission to draw about $100 a week, well below average weekly earnings for the time. She helped him open his first bank account. Until then he had used Colin’s bank account.

92. But Amanda stayed and their relationship deepened. Brian and Amanda were married four years later in October 2010. But through 2006 and 2007 Amanda persuaded Brian that greater definition was required in his financial relationship with his father. This created a three-way tension. Amanda continued to seek greater definition of Brian’s financial entitlements. Brian kept diplomatically raising the issue with Colin, hoping against hope that his father would come good with a promise of greater certainty. Colin remained uncommitted on the subject. Only a later financial crisis brought a reckoning among these positions.

93. It is no coincidence that the next contested set of conversations between Colin and Brian took place at the commencement of Amanda and Brian’s relationship. Brian says, and the Court accepts, that in late 2006 or early 2007 more than once he had a conversation with Colin in which he asked Colin “How do I know I’m going to have anything to show for all this work?” Colin told him “Look, you’ll inherit the farms and John will get the pub”.

94. Colin disputes this conversation. But objective factors point to it occurring, apart from the Court’s preference for Brian’s evidence over Colin’s. First, it comes not long after Amanda and Brian commenced their relationship and Amanda had a clear-thinking determination to resolve these ambiguities. Brian quickly saw the reasonableness of her approach, although he was a little slow in execution. Second, the timing is consistent with Brian’s own rising desire for clarity about property he would ultimately hold in his own name. And third, it coincides with other related events.

95. Earlier in 2007, Colin engaged Mr Graham Myers of Pinnacle Accounting as the new accountant for the Protheroe family farming businesses. Amanda worked at Pinnacle Accounting at that time. But her role there created tension with Colin. He seemed discomforted by the possibility that she might learn about his financial affairs. Although the details are disputed and need not be resolved, Colin ultimately changed accountants in 2008 to RSM Bird Cameron.

The Purchase of Glen Ayre – 2008

96. In early 2008 another property on the Sturt Highway, Glen Ayre, just to the north of Wallaringa and even closer to the Murrumbidgee River than Wallaringa, came up for sale. Colin and Brian approached the NAB for finance to acquire Glen Ayre as it had great potential for irrigation development. Colin took out a loan facility of $5 million, and CHP as trustee of the Strontian Trust acquired Glen Ayre. The NAB supplemented this finance facility to CHP, with an overdraft facility with a maximum limit of $1.5 million and an equipment finance facility.

97. After taking possession of Glen Ayre, Colin and Brian began drilling for water and liaised with the NAB to finance the development of irrigation infrastructure on Glen Ayre. Their idea was to develop irrigation infrastructure to drought proof the Protheroe farming operations.

98. Brian was heavily involved in designing and installing the irrigation infrastructure on the three Strontian Trust farms. He saw irrigation as the future of farming. He put his views to work using the capital borrowed from the NAB. Much is to be inferred from Colin allowing Brian to develop Glen Ayre and the other Strontian Trust farms in this way. Colin can only have inferred that Brian was committing such unpaid personal industry into the Strontian Trust farms in the expectation that in the longer term some part of the Protheroe family farms would be his.

New Family Relationships – 2009 to 2010

99. Protheroe family relationships changed yet again in the years 2009 – 2010. In 2009 Colin commenced a relationship with Henriette Gyberg, who he married in February 2010. The marriage led Colin to ask Brian to leave Elmore. Colin moved back into Elmore and leased out the Hydro Tavern. By April 2009 Henriette was living at Elmore with Colin, together with her two children from her previous relationship.

100. In June 2009, Colin’s mother Grace died. Her estate which included Elmore and her home in Narrandra passed to Colin and to Colin’s sister, Vivienne. In mid-2009 Brian and Amanda moved out of Elmore and into an 80-acre property, “Bee Farm” near Wagga, which is about 100 kilometres east of Narrandera.

101. These events heightened Amanda’s concern about Brian’s financial independence from his father. Colin had just asked Brian to leave Elmore. Henriette and Colin were now living at Elmore. What that meant for giving effect to Colin’s prior statements to Brian about succeeding to the family farms was unclear.

102. Brian and Amanda both wanted clarity. Brian was still not being paid a wage. This led to the next group of conversations between Brian and Colin. In late 2009 Brian approached Colin. Brian says, and the Court accepts, that Colin assured Brian in these conversations that the farms were still “his future”, thereby reinforcing the statements he had previously made to Brian.

103. Colin disagrees with this account, but it is correct for several reasons. The Court prefers Brian as a witness. Colin still did not want Brian to leave the family farming enterprises at that time. Colin wanted to retain Brian, who was by then a very experienced and capable farmer in his early 30s. The Hydro Tavern was not the main driver of Colin’s motivation for wanting to retain Brian at this time. Rather, Brian’s expertise was needed to complete the irrigation development and expansion on the Strontian Trust properties.

104. In 2009 Colin had given no serious thought to giving effect to his earlier statements made at the time of Brian’s HSC that implied Brian would succeed to the family farms in the longer term. Even at the time of the hearing Colin seemed bewildered at having to face up to this issue. It is probable that to satisfy Brian’s questions and to keep the family farming enterprise going, Colin once again used the technique that had worked in the past: he gave Brian a vague assurance that “the farms were his future”. Brian continued to believe that one day his father would make good on this statement, although he was uncertain as to how that would happen.

105. Amanda thought Colin’s bona fides needed to be tested. By late 2009 she had introduced a firm of financial advisors, Peppin Financial Planners (“Peppin”), to Brian with a view to encouraging Colin to participate in succession planning. Colin attended a meeting with Mr Rob Brown at Peppin. Ultimately Colin rejected these requests for clarity in succession planning. He did not want to face it, saying to Brian, “Everything’s working fine the way it is. Why does it need to change?” John finally persuaded Brian to shelve his requests for succession planning as it was “upsetting” Colin.

99. Colin did not inherit Elmore until after his mother’s death in 2010. By early 2010 Colin and Brian had completed the irrigation infrastructure on Glen Ayre at the cost of about $2 million. The capital for this investment had been raised through debt finance, laying the groundwork for the family’s later problems with the NAB.

100. In August 2010 Colin made a will which he appointed Brian and John, his executors and trustees and gave a legacy of $150,000 to Henriette and a right to live in Elmore rent-free for six months after his death. He gave Brian the properties, Piney Range, Delwood, Shannon Vale and Inverleigh, together with farming plant, machinery tools, equipment, motor vehicles and livestock, subject to the liabilities related to those assets. He gave Elmore and the Hydro Tavern to John on the basis he took over its liabilities. This 2010 will was generally consistent with the expectation Colin had created in Brian between 1993 and 2010.

101. By late 2010, prompted by the forced move away from Elmore and Amanda’s advice, Brian began to press Colin more robustly for something of his own. He started by asking Colin for a wage. Colin and Amanda were married in October 2010. Until then the couple had been substantially making their way with Amanda’s professional income. Marriage to an extent forced the issue. Remarkably, in late 2010 for the first time at the age of 34, Brian firmly pressed for a wage. Brian said to Colin, “I need a consistent wage. Living out of the company account is not going to cut it. I need some independence”. Perhaps struck by the absurdity of the situation, and given Brian’s recent marriage, Colin eventually agreed.

102. But on one level the arrangement that resulted reveals Brian’s lack of bargaining power and gives an insight into Colin’s thinking. Colin agreed to pay Brian $2,500 per fortnight for working up to 100 hours a week. If these long hours could be tolerated, Brian’s pay worked out at $12.50 per hour, well below average weekly wages in 2010.

103. But even reaching $2,500 per fortnight was difficult. Brian said to Colin, “that’s only $625 a week. Its below the minimum wage. It’s just a bloody joke”. Brian argued his case comparing his position adversely to that of another Protheroe employee at the time, Lloyd Hill. But Colin ultimately concluded the negotiations by saying, “It’s the best I can do”. Brian made enquiries and had other offers but declined them, partly because so much of his life had already been invested in the Protheroe family farms.

104. The wages negotiation became wide ranging. Brian also asked for some of the farms to be put into his name “so I have got something to work towards in the future” and declaring to Colin “I want to take all this set up over eventually”. Such statements from Brian must have made it clear to Colin that Brian saw his future as taking over the Protheroe farms “eventually”. This part of the conversation evolved into discussions about splitting the properties and Colin retiring, although ultimately nothing was resolved. The conversation proceeded in the following manner:

“Brian:      ‘I don’t know. I’ll have to work something out.

Colin:   I’m sick of this. What if I just cash in the farms, sell it all and go and do something else, move down the coast?’

Brian:   ‘What about my position? I have nothing’.

Colin:   ‘You can have the irrigation farms. With the aggregation debt’.

Brian:   ‘But I want these farms as well one day. They’re the key to our whole operation, they’re our best farms’.

Colin:   ‘If you have $3.5 million, you can buy the farms’.

Brian:   ‘Really? I haven’t got any money. You know that’.

Colin:   ‘Well that’s your bad luck then isn’t it’.”

112. Things cooled down a few days later and Colin approached Brian at Elmore when no-one else was around. He said something to the effect, “You know, look, I’ll try and sort out this wages thing. I don’t want you to leave. We’ve got a lot going on here. To go off and work for someone else it just throws everything in. Everything we’ve worked for”. Shortly after, Brian and Colin settled on a payment of $2,500 per fortnight.

113. But Colin did not pay these sums strictly as a wage, deductable from the revenue of the family farming enterprise. Rather, unbeknown to Brian at the time, the payments were accounted for as drawings from a beneficiary account maintained by CHP. Colin’s choice to pay Brian this way rather than as wages, shows him deciding to exchange Brian’s labour for a share in the revenues of the family enterprises. Colin was treating him as more than a mere employee. But on the other hand Colin was merely paying Brian with Brian’s own money.

114. Brian increasingly began to see his future in the Strontian Trust properties, that he had been most closely involved in aggregating and developing for irrigation, burdened as they were with considerable debt obligations. But there was ambiguity as to whether that was the part of the Protheroe family farms to which Brian would succeed.

115. Despite their other differences Brian and Colin still managed to work cooperatively on the decisions that had to be made in the family farming business. But this cooperation led to Colin making statements to Brian during their discussions that reinforced in Brian’s mind that he would succeed to an interest in the Protheroe family farms.

116. In April 2011, some properties to the west of Shannon Vale and Elmore were being sold by the NAB. As succession planning discussions with Colin were not progressing, Brian and Amanda saw these sales as an opportunity to buy. But Brian had no capital and no savings, so was not able to borrow to acquire these properties. Realising acutely the disadvantages of his position he continued to bring up succession planning with his father. Typically he would receive responses “you have nothing to worry about”, “I’ll look after you”, and “why do you need farms in your name?” Colin could be more specific at times saying, “It’s half yours anyway” and “You’ll have it one day”. Colin denies making such statements but the Court accepts he said these words.

117. Statements such as these did not dwell specifically upon Brian inheriting the Protheroe farms after Colin’s death. Rather they implied that Brian could gain an interest in the Protheroe family farms before that. But as narrated above Colin had talked to Brian about his inheriting the forms, whilst John would inherit “the pub”.

118. Nor does the Court interpret some of these statements as the promise of strictly one half of the family enterprises, which were a mixture of heavily leveraged land, stock, plant and equipment. Such statements should objectively be understood as complementing Colin’s other not infrequent statements to Brian that he, Colin, could retire one day from the farms and open a motel or other hospitality business. The idea that Colin was conveying, albeit vaguely, was that this was one scenario by which Brian might realise his “future” in the Protheroe farms, though the nature of the interest was still left vague.

119. These statements hinted at resolving two persisting uncertainties about Brian’s interest in the Protheroe family farms: the quantum of Brian’s interest and when he would succeed. But for Brian the situation was nevertheless confusing. Colin had also made statements about a different scenario: Brian inheriting the Protheroe family farms one day.

The Hydro Tavern Fire – 2011

120. The Hydro Tavern had been a constant source of conflict between Brian and Colin. At various times Brian had wanted Colin to sell it. The Court accepts Brian’s evidence that Colin received an offer of $3.5 million to sell the hotel, probably in 2010. To Brian’s chagrin, Colin refused it. Brian tried to persuade him to accept the offer, on the basis that acceptance would allow them to operate their farms almost debt free. This turned out to be a fateful decision. Their debt to the NAB continued to rise.

121. The Hydro Tavern was badly damaged by fire in 2011. Its first mortgage was about $600,000 and it was insured for about $1.8 million. Throughout 2012 Colin conducted the difficult negotiations to settle the insurance claim. He obtained an insurance payout of about $1.2 million, which he used to meet general creditors and to partially pay out the NAB's overdraft facilities.

122. But from about this time Colin’s relationship with the NAB began to sour. The Protheroe family’s lending facility with the NAB fell into default in 2012.

123. The fire at the Hydro Tavern ended one long-running dispute. There was conflicting evidence the relative financial viability of the Protheroe farms and the Hydro Tavern. Colin’s belief was that the Hydro Tavern subsidised the operation of the farms. Amanda did an analysis in 2009 to show that in her opinion the reverse was true. The Court does not have to resolve this issue, even if it were possible to do so. But if Amanda were right, it shows the high value of Brian’s labour and managerial expertise on the farms for Colin. If Colin were right, the inference of Brian’s value to the operation is equally available. If the farms needed to be subsidised, they also needed to be run on a lean budget and that is just what Brian was doing by the application of his high value/low cost skills.

124. Brian and Amanda moved back to a leased residence in Narrandera in January 2013, where they had their second child in August that year.

The NAB Proceedings – 2014

125. NAB threatened proceedings against CHP and Colin in 2013. This led to a farm debt mediation between the NAB and the Protheroe family in October that year. By this time the Protheroe family owed the bank about $11.9 million. Under a Heads of Agreement signed at the conclusion of the farm debt mediation, by NAB but not by the other parties, the bank indicated it was willing not to move to sell the Protheroe family farms until April 2014, if the facilities remained unpaid. In January 2014 Colin went on the offensive and filed a complaint with the Financial Ombudsman Service about the NAB’s administration of the NAB facilities. But the NAB facilities continued in default until April 2014.

126. At the time of the farm debt mediation the family had been attempting to market the Strontian Trust farms, totalling some 10,000 acres, for sale in a single irrigation – themed parcel. Colin obtained valuations for Strontian of $5.29 million and Glen Ayre of $2.23 million. Colin and Brian’s objective was that their sale would clear the substance of the NAB debt leaving them with five properties, Elmore, Shannon Vale, Inverleigh, RockView and Delwood, and Piney Range and a small residual debt.

127. In November 2014 the NAB brought proceedings in this Court against Colin and CHP as trustee for the Family Trust and as trustee for the Strontian Trust, to recover the outstanding debt on the loan facilities that had been provided to Colin and CHP from 2008. By then the core debt, overdrafts, equipment finance, and all accrued default interest was close to $12 million.

128. The extensive negotiations between the time of the farm debt mediation in October 2013 and the commencement of the NAB proceedings 2014 led to another important set of conversations between Colin and Brian about Brian’s interest in the Protheroe family farms. Colin still needed to keep Brian onside so he could negotiate and settle with the NAB on the basis that he and Brian could still operate a valuable farming business together.

129. The context for these conversations had changed. The NAB was about to take possession of the Protheroe family farms. Brian had already made a considerable financial sacrifice by investing well over 20 years of his life at no or reduced wages for the sake of the farms being his “future”. Colin understood he needed to keep Brian close whilst the NAB threat was at its height. But Colin also understood that Brian would no longer be satisfied with vague statements about the farms being “his future”. So Colin calibrated his statements more precisely. He had spoken vaguely before about retiring from farming to open a motel business. But this time he wove that into his statements to Brian because he needed to provide Brian with greater certainty. He correctly sensed that Brian was drifting away by then.

130. In this context then Colin said to Brian on several occasions, "If we do get out of this, I'll probably go and do something else. Maybe I'll go down the coast. You can lease the farms off me or something. We'll work it out." This statement was not a surprise to Brian. Colin was merely providing greater definition to statements he had previously made about retiring into the hospitality industry and leaving Brian to run the family farms.

131. Colin’s statement worked. It kept Brian interested. Colin and Brian began to discuss another possible scenario after the sale of the Strontian Trust farms: to divide up what remained. They surmised that the NAB might require the sale of Inverleigh to cover residual debt if the Strontian farms did not reach the reserve. That would have left four properties after the sale of the Strontian Trust farms, Elmore and Shannon Vale, and nearby to their south Delwood, Piney Range. The following conversation took place between Brian and Colin about splitting up these properties between them:

“Colin:   Well, you can have Delwood and Piney and I’ll keep Elmore and Shannon Vale.

Brian:   I would prefer to have Delwood and Shannon Vale, but we can work something out”.

132. Brian said he preferred Delwood and Shannon Vale because they had a common boundary. But as often occurred in these conversations between them, Colin did not take a clear position on this suggestion. This conversation is corroborated by Amanda’s evidence. The conversation shows Colin was prepared to discuss the division of the properties, thereby reinforcing for Brian that such a possibility existed, consistent with what he had understood of their prior dealings. This continued to give Brian the impression that Colin was prepared to work towards such a division of the remaining properties. That gave Brian confidence that in the medium term some resolution could probably be reached between him and Colin after the Strontian Trust farms were sold.

Colin’s Policy of Strategic Ambiguity – 2014

133. This 2014 discussion gave Brian and Amanda hope that they would be able to move into Delwood, on which a near century old residence is found. Brian assessed it as old but needing a lot of preparatory work before he and Amanda could move in. They moved from Bee Farm into a rental property in Narrandera. They began to clean the Delwood house up with a view to moving in, hopeful that the Strontian Trust farms would soon be sold and that there was a fair chance that on a split of the remaining Protheroe properties they would end up with Shannon Vale and Delwood.

134. Much work was required to make the Delwood house liveable. It had been unoccupied for many years, it was dusty and dirty. Brian and Amanda pulled up old carpet, cleaned inside and around the house and mowed the surrounding lawns. They purchased a second-hand kitchen from Leeton for about $1,500. They pulled out the old kitchen and installed the second-hand kitchen. They were excited about the possibility of moving out of town to Delwood. To do the renovations they commuted out from Narrandera to Delwood. Their travels to Delwood and their renovation activity were well known to Colin.

135. Brian explained to Colin why he was cleaning up Delwood and that he and Amanda were looking to move out of town for the sake of their children. Brian’s explanations to his father included information about the detail of his and Amanda’s renovation work at Delwood. Colin listened to what Brian was telling him, without communicating any disapproval of the work, which continued as a result.

136. Several weeks later Colin’s mood changed. Just why is unclear. But it is probable that he realised that if Brian and Amanda continued with their renovations and planned move into Delwood his freedom of manoeuvre would be limited and he may ultimately have to cede Delwood to them. Colin was not ready for that yet.

137. Out in the paddock one day Colin initiated conversation with Brian about the work going on at Delwood. The conversation was to the following effect:

“Colin:   You've just turned up at Delwood and pulled all the carpet up. You're just doing whatever you want.

Brian:   I told you that was what we were going to do. We were planning to move into that house. The carpet's 50 or 60 years old. You can't have kids on that. We're cleaning the house up and going to move in. What did you expect?

Colin:   Well the farm's still in my name. It's not in yours. You're not to do anything else there anymore."

138. Brian found this conversation disarming. He could not understand what appeared to him to be a complete about face by Colin. He protested to Colin, “I worked all these bloody years on a promise”.

139. This conversation plays out in miniature the story of Brian’s dealings with his father. It represents Colin’s strategic use of ambiguity, starting with the appearance of initial acquiescence, followed by denial, generating confusion in Brian. Again and again over many years Colin used this technique in dealing with Brian to keep control of assets and avoid making difficult decisions that he did not wish to make.

140. But Colin’s policy of strategic ambiguity had nearly run its course. This conversation became something of a watershed that caused Brian to realise that he needed to take steps to secure his own future, even if that was to be at his father’s expense.

141. Brian decided to distance himself from the NAB proceedings. He allowed Colin to negotiate with the NAB through his solicitor, Mr Quigley. Brian realised that his primary focus needed to be on creating financial stability for his own family. This led to the development of an idea in July/August 2015, which ultimately led to an irreconcilable breach between father and son.

142. Colin changed his will in 2015 after the Hydro Tavern had burnt down. In his February 2015 will he revoked his 2010 will and gave Henriette the benefit of his life insurance policy. He gave Elmore, Inverleigh, and Piney Range to Brian. In the absence of the Hydro Tavern being available to give to John, he gave John Delwood and Shannon Vale, but subject to Henriette having exclusive use of the house on Elmore and its curtilage for six months from the date of his death. This February 2015 will was generally consistent with the nature of the expectations that Colin had by then created in Brian.

Brian Takes his Own Course – Mid 2015

143. Having lost faith in being able to deal with Colin, Brian and Amanda decided to work around him. They began to explore the possibility of taking over the core debt secured over the farms to retain them. Brian and Amanda’s combined skill sets were potentially attractive to lenders. Brian had managed the farms productively for a long time. Amanda was a qualified accountant and had an independent income. The couple crafted together an extensive business plan. They obtained informal preapproval from several banks to take over the properties.

144. But there were two obstacles, Colin and the NAB. When the idea was first broached with Colin he reacted with fury, saying, “I can’t believe you went behind my back like that and undermined me and the dairy deal”. The “dairy deal” was one of the proposed ideas for selling the Strontian Trust farms. Brian responded to his father expressing his genuine opinion of the situation, “we are just trying to salvage something. The dairy deal isn’t happening”.

145. Dealing with the NAB was equally difficult. The solicitor for the NAB informed Amanda and Brian, as might be expected, that as the debt was in Colin’s name and five of the properties were in Colin’s name his consent was required for any restructuring as Brian and Amanda were proposing.

146. The nature of their proposal was not fully elaborated in the evidence. But it appears to have been that Amanda would buy the farms by obtaining finance through the ANZ Banking Group Ltd (the ANZ) to pay out the NAB and then some properties would be transferred back to Colin through a different entity, but all now funded by ANZ finance facilities. Among other issues conflict soon developed about how many properties, each side would control or lease.

256. The identification of these essential matters for a framework for moulding final relief, prompts the need to consider other issues which will require further submissions from the parties at a supplementary relief hearing. These other issues are dealt with below.

257. Setting a Retirement Date. Several of the Court’s findings point to Colin’s retirement being the date from which Brian could be expected to enjoy the Protheroe farming properties. Brian and Colin discussed Colin’s retirement without setting a date. Colin never insisted that even if he became incapable of farm work, he would nevertheless stay on the farms until he died. Neither Brian nor Colin would have disagreed during the various discussions about the future of the farms with the idea that an able bodied Brian should replace Colin once he was unable physically to manage the farms himself.

258. Setting Colin’s retirement date is a central integer in any calculations based upon the above framework for relief. But Colin now resists any notion of retirement. In addition to a general reluctance to retire, Colin long avoided making decisions to surrender or divide assets, inhibiting any discussion with Brian of the timing of his retirement.

259. The Court accepts the evidence of Brian, Henriette, and Amanda that from about 2008 Colin was talking about the possibility of retirement and his retirement options, including opening a motel or similar business. And before that he had spoken of retiring one day in general terms. At the time of trial Colin was 74. Although a resilient character, even Colin realised he must ultimately accommodate a need for a less demanding lifestyle as he ages.

260. Colin had ACL joint damage when he was young, but he professed in evidence that it did not affect him. He underwent a heart bypass surgery in 2018. He accepted that farming would one day become too physically taxing for him, and conceded “I trust once I probably got in my 80s, I’d probably have trouble doing those sorts of things”. Henriette, although not Colin, accepts that they always seem to be “behind” in managing the farms, which is a struggle for them. She says getting help is not affordable.

261. And Colin had his own definition of retirement. He said that he never discussed with anyone the concept of “retiring”. Rather he explained, “I might change the avenue I am going down, but I have no intention of tiring”. He saw retirement as, “hanging around waiting to die”. He was quite definite, “I do not intend to do that”.

262. But he also firmly denied that his intention in life was to “stay on Elmore till the day you die”. He said that “when I got to the stage where I could not work it, I would liquidate Elmore and put the money to something else”. But if that meant totally liquidating Elmore that would directly conflict with what he must have understood were Brian’s beliefs about taking over Elmore. Colin had firm ideas that he would transition into another business and that he would have to use capital from Elmore to make that transition. The critical conflict here between father and son was the terms upon which that transition would occur.

263. Colin can only retire from farming and set up another business when he is young enough to manage the transition to another form of less demanding work. Realistically that date should be set in Colin’s case at an age when he is self-possessed and flexible enough to make that transition, having achieved all that he realistically can on the farming properties, and before he is incapable of establishing a new business.

264. In the Court’s view that age for Colin would probably be somewhere between the ages of 76 and 78. Colin presently has sufficient energy to transition to another business. But it can reasonably be expected that at some time between 76 and 78 both managing Elmore and Shannon Vale and establishing a new business would become too difficult for him.

265. Based on this reasoning, the parties should put submissions about the retirement age that should be used for calculations.

266. Financial Structure of Relief Based on Colin’s Retirement. Colin talked about liquidating Elmore after he ceased managing the family farms and transferring out capital to fund another business. This raises the question of how this should be done in moulding relief.

267. Both parties rejected two possible relief outcomes. Selling Elmore and Shannon Vale and dividing the proceeds between father and son is one possibility. But neither Colin nor Brian pressed such an option on the Court. The Protheroe family’s long association with these two properties leads both father and son to want to retain them. And an option in which Colin and Brian each occupy Shannon Vale and Elmore would be not workable. The AVO was not that far in the past. During the proceedings father and son did not speak to each other. Requiring the two to live that close would not be a ‘clean break’ and would impose a discomfort upon them that neither of them should have to bear. Neither wanted that.

268. Retention of the Protheroe properties but with only the father or the son operating them should be accepted as the foundation for relief. Then fulfilment of the initial representations and the 2000s representations point to one of two outcomes.

269. The first outcome, which is consistent with the structure of the essential matters flowing from Court’s narrative of findings, is that Brian would take over Elmore and Shannon Vale from Colin’s posited retirement date, with Colin vacating the properties and using some capital released from Elmore and Shannon Vale to set up a business elsewhere, such as a motel business. Implicit in this is Colin enjoying sufficient of the released capital to be able to establish himself in another hospitality related business. Whether that capital was paid to Colin in one lump sum or in tranches over time, or in periodic payments is a further refinement of the remedy which can be the subject of submissions.

270. The second outcome does not require the structure of the essential matters flowing from Court’s narrative of findings to be fulfilled, but it would require Brian to receive equitable compensation as if those essential matters had been fulfilled. In this second outcome Colin would stay on the property and retire there and choose to pay a capital sum either in one lump sum or over time to Brian to enable Brian to set up elsewhere. This is a solution which involves less dislocation for Colin. Colin is already on the property and has expressed a desire to stay there. Brian is established elsewhere. It may be that when Brian considers these reasons he may decide to stay elsewhere and take financial compensation based upon the Court’s findings. So Brian should be required, considering the Court’s findings, at some stage in the course of granting final relief to make a final decision to elect to return to the Protheroe farms or to stay elsewhere.

271. Brian’s submissions to date indicate that returning to Elmore and Shannon Vale is the course he wishes to take. If that is the position that he maintains that is what the Court will order. But the parties could perhaps even now stay where they are. The Court does not wish to dislodge Colin from Elmore and Shannon Vale unless Brian is committed to returning there and farming them.

272. But if the second outcome is even now to be pursued the question arises as to what financial adjustments would be required between the parties. Final submissions canvassed the financial adjustments that were applied in Q v E Co. That case involved what was described as a “holding/inheritance expectation” allegedly created by a father in his sons. The assumption in Q v E Co was that rural properties would be held by the father/promisor for use in the family farming business, until the father died when he was expected to pass them on to his sons by will. In Q v E Co, as in this case, the father/promisor, was still alive at the time of the hearing and in the proceedings had unsuccessfully resisted relief for the transfer of the family farming business. The relief mechanism applied in Q v E Co involved accelerating the receipt of the rural properties from the posited future date of the father’s death, forward to date of the Court’s orders. But that precise approach is not appropriate in this case, in which an inheritance representation does not feature prominently and where the primary discussions have related to Colin’s retirement not his death.

273. If the second outcome is to be pursued Colin would for the rest of his life be occupying property to which the Court has found Brian is entitled. On this outcome the market rental value of Elmore and Shannon Vale may yet be one of the relevant factors in moulding relief. But if Brian chooses the second outcome he will still have to be compensated, as if the first outcome had been fulfilled.

274. Another feature of the financial structure that should be considered in moulding relief is the nature of payments between the parties. If Brian is to return to Elmore and Shannon Vale (the first outcome) a single capital payment to Colin has several advantages: setting up the parties earlier, less protracted conflict and greater near-term certainty to all family members. Complexity in future obligations is likely to have the potential to generate future conflicts that would be avoidable by a simple break point measured at Colin’s retirement date.

275. How Should Fulfilment of Brian’s Expectation Be Calculated? The parties should put submissions in the final relief hearing about calculating the relief the Court should grant to intervene and fulfil Brian’s expectations. The primary approach to this issue should be attuned to Colin’s need for capital to establish a small rural hospitality business on his retirement. But Colin’s capital requirements must be balanced against the need to maintain, if possible, the viability of Elmore and Shannon Vale in Brian’s hands. If Colin had fulfilled Brian’s expectations without the Court’s intervention, they would both have had to face finding this balance. This issue has not yet been the subject of evidence or submissions and has only emerged from the Court’s findings. If Colin wishes to pursue it, the Court will afford him an opportunity to do so at the relief hearing.

276. One of the essential features of the expectation created in Brian was that on retirement Colin should be able to commence a motel business or other similar small rural hospitality business. That indicates that their financial arrangements on separation should have been for Colin to be left with reasonably sufficient capital to fund a viable venture of this type. Brian and Colin were aware of each other’s independent personalities, a factor which implies they both must have understood there would be a separation of their capital on Brian’s retirement, so they could pursue independent business lives.

277. But in the final competition for capital the guiding mutual expectation which can be inferred is that they would each have had the objective of conducting an independent viable business from which they could earn a living, Brian from Elmore and Shannon Vale and Colin from a small rural hospitality business. The parties’ submissions about relief should framed with this fundamental mutual expectation in mind.

278. The Court should consider proportionality. The relief moulded here in outline is proportionate to the detriment suffered by Brian. His detriment represents a weekly loss of wages during the prime years of his working life between 1993 and 2016, a period of 23 years. During that period his earning were suppressed below his earning potential on the open labour market and substantially suppressed before 2010. An outcome that gives him control of Elmore and Shannon Vale whilst giving his father what his father led him to believe his father wanted to do on retirement, is not disproportionate.

279. Mr Crossland argues that Colin suffered losses more than the current combined value of Elmore and Shannon Vale in pursuit of the joint farming business that Brian sought to benefit from and through which the three properties Glen Ayre, Wallaringa and Strontian were ultimately lost to pay the enterprises’ debts. The argument is that Brian has in effect had his opportunity, by being given the chance to develop the Strontian Trust properties and it would now be disproportionate to award him more.

280. Mr Crossland developed the argument by saying that the combined total acreage of Strontian and Wallaringa of 8,160 acres was more than twice the combined acreage of the dry land properties that Colin owned in his own name of some 3,991 acres. Colin mortgaged all his land by 2008 some $8,300,000, to acquire the Strontian Trust properties, which by 2013 had risen to some $11,300,000.

281. But this argument is not persuasive for several reasons. Brian had suffered substantial detriment before the Strontian Trust properties were acquired. Colin held the Strontian Trust properties in a discretionary trust and never committed to them being earmarked for Brian’s benefit. Brian never understood that the Strontian Trust properties were the only properties to which he could look to fulfil his expectations.

282. Consideration should be given to the impact on third parties. Mr Crossland argued that the two third parties who are potentially most affected and whose interest must be considered are Henriette and John. That submission is accepted as far as it goes. But the way the Court has moulded relief, their interests are indirectly considered. They will both have claims upon Colin’s estate, which will comprise the not insubstantial capital that he will take away with him from Elmore and Shannon Vale consequent upon the Court’s grant of relief.

283. The Court must also consider the issue of hardship to Colin. That too has been considered in the way that the Court has moulded relief. Colin has an opportunity to put submissions about the timing of his retirement within certain age limits. He will have ample notice of his forced retirement from Elmore and Shannon Vale and he will have the capital to set up another income producing business. These factors address any hardship that might be suffered by Colin.

284. It is not readily possible to quantify Brian’s financial detriment from relying upon the assumptions that he did. Any attempt at quantification would begin with tracking average weekly earnings of agricultural property managers from the early 1990s until 2016. That would need to be balanced against the accommodation, allowance and lodging Brian received up until the time of his marriage. From the time of his marriage onwards, when he moved away from Elmore and Shannon Vale the value of his lodging would not need to be deducted. But an interesting question arises as to whether the “wages” he received should be deducted from any calculation of detriment. Given they were advances from his own beneficiary account, he might still be considered to be wageless, and the advances treated as a notional credit upon against such relief as the Court might grant.

285. But the law does not require the Court to attempt to quantify in financial terms all forms of advantage and disadvantage from a making of a comparison between Brian’s position in fact and his position as it might have been in the absence of reliance on the encouraged expectation: Walsh v Walsh [2012] NSWCA 57 and Q v E Co at [157]. And the opportunities that Brian forewent because of his reliance cannot be rejected as carrying only a fanciful or unrealistic prospect that he would have been better off had he not relied upon the expectation that Colin created in him: Delaforce and Q v E Co at [158] and [163].

286. Dealing with the plant and equipment. The amended cross claim seeks the declaration of trust with respect to the farm machinery and stock. The first issue is whether the plant equipment and stock should be the subject of constructive trust found by the Court. The second issue is about the value of that equipment, and its whereabouts, both of which are disputed.

287. The Court has not yet dealt with the first issue of whether Brian has a constructive trust over the plant equipment and stock. This is because it may not be necessary to do so. What is more important is to identify that plant stock and equipment and ascertain its value.

288. The expectation created in Brian would have led to the result that the plant equipment and stock would have been cooperatively divided and distributed to make the necessary capital adjustments for each party upon Colin leaving the joint enterprise of the Protheroe farms and Brian taking over. Whoever now owns the stock plant and equipment may not matter: they are assets that are available and will need to be brought to account to satisfy the future capital requirements of each of Brian and Colin in setting up a separate viable business for himself upon fulfilment of Brian’s expectations.

289. One way or another they will need to be brought to account. Brian submits that an adjustment can be made to the relief granted to alleviate any concerns about Colin’s financial future. He submits that the Court might for example refuse to impose a constructive trust over plant and equipment and stock. The submission is based on a contention that the plant and equipment that Colin has in his possession or control have a value exceeding $750,000. Brian submits that this adjustment would ultimately be equivalent or comparable to the sum which would be required to be paid if the Court were to take the approach adopted in Q v E Co, with the additional buffer that Colin has also received the livestock. Brian submits that the combination of all items of plant equipment and stock will leave Colin with not less than a capital sum of approximately $1,000,000, which should be sufficient for his future.

290. The Court can act upon the existing evidence in relation to the valuation of plant, equipment, and stock and if the parties submit that it is the most efficient way to deal with issues of those moveable items, the Court will do so. The assumptions mutually made between Colin and Brian must have been that such details could be worked out when the bigger issues of the timing of the transfer of the Protheroe family farms were resolved.

291. At least two choices arise before the Court in dealing with the stock plant and equipment. First, the Court can attempt to determine the value of these assets and their whereabouts on the existing disputed evidence. This brings with it the potential unfairness arising from the Court acting on the, at times, sketchy evidence about questions of value and the possession of chattels.

292. Second, the Court could appoint a Court expert under Uniform Civil Procedure Rules 2005, r 31.46 to do an up-to-date audit and valuation of all movable property in contest, with a view to ascertaining its present value, with a view to it being brought to account in the final reckoning between these parties. This course has the advantage of providing the Court and the parties with up-to-date value and possession information about these movable items. It has a disadvantage of adding to the parties’ costs. But that disadvantage can be alleviated by the Court expert having recourse to the existing evidence as to value and only undertaking such additional work as is necessary.

293. Court experts are being appointed in an increasingly flexible range of situations: West Asset Holdings Pty Limited & Anor v Sara Investments (NSW) Pty Ltd & Anor [2023] NSWSC 136. The parties should either reach agreement or put submissions to the Court about the options raised here.

294. Some Mechanics of Relief. The balance of issues needs to be resolved in the near term, so this dispute can be quelled, and so there is near-term certainty about the most efficient and productive use of Elmore and Shannon Vale. The legal representatives of the parties have co-operated efficiently to date. But the parties need to understand that they should not waste the remaining value of Elmore and Shannon Vale in a needlessly excessive and expensive contest about moulding relief.

256. Reducing legal costs from this stage forward is important. The Court could order a mediation to take place based upon these reasons. The Court may consider appointing trustees for sale of Elmore and Shannon Vale and staying those orders until further order. If there is any delay in performance of Court directed steps on either side, the parties would know that the Court can move rapidly to a decisive form of enforcement of its orders. The Court may appoint a Court expert to deal with issues of stock plant and equipment. The parties will need to address these issues today directions hearing to plan the relief hearing or other consequential orders.

Conclusion and Orders

297. As earlier indicated these reasons do not deal with Colin’s relatively minor primary claim in conversion and detinue, as it may be able to be more aptly resolved or decided during a relief hearing.

298. Accordingly, the Court makes the following declarations, notations, orders, and directions:

1. NOTE that in these orders the following expressions shall have the following meanings:

1. the plaintiff/cross-defendant is referred to as “Colin”,

2. the defendant/cross claimant is referred to as “Brian”,

3. the expression “Elmore” refers to the rural property known as “Elmore” on Strontian Road, Narrandera in the State of NSW 2700 [address not published],

4. the expression “Shannon Vale” refers to the rural property known as “Shannon Vale” on Strontian Road, Narrandera in the State of NSW 2700 [address not published];

2. DECLARE on the Cross Claim that Colin holds both Elmore and Shannon Vale on constructive trust for Brian upon terms that Brian is entitled to require Colin to transfer both properties to Brian,

1. at a time that the parties would reasonably have expected from their mutual dealings that Colin was likely retire from farming on Elmore and Shannon Vale; and

2. in exchange for Brian paying to Colin upon the said transfer a sum reasonably calculated to provide Colin with the capacity to acquire and conduct a viable small rural hospitality business from the date of his retirement from farming on Elmore and Shannon Vale;

3. DIRECT that the parties put submissions to the Court based upon Court’s findings and reasons as to,

1. Colin’s reasonably expected date of retirement in declaration 2(a);

2. the sum to be paid by Brian in exchange for the transfer of Elmore and Shannon Vale in accordance with declaration 2(b);

3. the proper orders to be made in relation to the plant, equipment and livestock on Elmore and Shannon Vale and orders otherwise disposing of Colin’s claim on his Statement of Claim;

4. NOTE that the Court otherwise reserves for further consideration

1. the relief to be granted on Colin’s Statement of Claim; and

2. all other issues of consequential relief the Cross Claim;

5. ADJOURN these proceedings for further directions to Tuesday, 14 March 2023 or such other date as may be convenient to the parties and arranged with the associate to Slattery J; and

6. GRANT liberty to apply.

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Annexure A

Amendments

10 March 2023 - [17] "deceived" to "misled"

[251] full stop after "rigid", capital "B" for "because" and comma after "skill"

03 April 2023 - [60] third line, "understood that Colin's decision not to pay him" to "understood that his decision not to pay Brian"

[73] "Bartangunaygh" to "Bartagunyah"

[88] & [89] "Walleringa" to "Wallaringa"

[142] line 1, "Brian changed his will" to "Colin changed his will"

[156] line 3, "to keep Colin on the farms" to "to keep Brian on the famrs"

[184] line 1, "in defence of Colin's cross claim" to in defence of Brian's cross claim"

[214] line 1, "Colin had a high degree of conviction" to "Brian had a high degree of conviction"

[271] line 4, "retires there and chooses" to "retire there and choose"

[274] line 4, "Brian chooses the on the second" to "Brian chooses the second"

03 July 2023 - [22] "But content to" changed to "But in contrast"

[273] [insert] "a" before "father in his sons"' insert "/" between father promisor"; insert "at" before "the time of the hearing"

Decision last updated: 03 July 2023