Rodda v Ian Rodda Pty Ltd

[2015] SASC 95

Supreme Court of South Australia

(Civil)

RODDA & ANOR v IAN RODDA PTY LTD & ANOR; IAN RODDA PTY LTD v RODDA & ANOR

[2015] SASC 95

Judgment of The Honourable Justice Nicholson

1 July 2015

ESTOPPEL - ESTOPPEL BY CONDUCT - PROPRIETARY ESTOPPEL

ESTOPPEL - ESTOPPEL BY CONDUCT - ACT, OMISSION OR ASSUMPTION - REPRESENTATION GENERALLY - NATURE OF REPRESENTATION

EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - CONSTRUCTIVE TRUSTS - OTHER PARTICULAR CASES

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - DISCHARGE BY AGREEMENT - GENERALLY

This action concerns a claim for relief in equity with respect to valuable farming land and other associated farming assets. The first plaintiff, Stuart, is the son of the second defendant, Ian. The second plaintiff, Shannon, is Stuart’s wife. The second defendant, Ian Rodda Pty Ltd, is a company incorporated by Ian for the purpose of acting as trustee of two family trusts, through which the farming business is conducted. Ian and Stuart worked together for over 18 years as part of that business. In 2012, following a sustained period of disharmony between the two, their relationship irretrievably broke down. Stuart was excluded from the farming business. In 2014, Ian removed Stuart from his will, such that, whilst that will remains as Ian’s testamentary intentions, Stuart no longer enjoys any expectation of succeeding in the future, in whole or in part, to the farming land and assets.

Stuart asserts that throughout their working relationship, Ian made representations to him that he would one day take over the farming business; further, that he and his wife Shannon relied on those representations to their overall detriment by committing their life to working on the farm. Both Stuart and Shannon now seek a proprietary remedy recognising their entitlement to beneficial ownership of the farming land and equipment. They also seek the payment of monies owing to them by way of unpaid profit distributions from the two trusts.

Ian denies any such representations were made to Stuart, and contends that any expectation held by Stuart to take over the farming business was unfounded and unreasonable. In the event that such representations did occur, and were reasonably relied upon, Ian contends that neither Stuart nor Shannon have suffered any detriment in that they have been handsomely rewarded for their contributions to the farming business over the years. Further, it is contended that their conduct in the later years has been such that the requirements of good conscience should preclude any entitlement to equitable relief. In addition, the first defendant (as plaintiff in a subsidiary action) seeks recovery of a sum of $135,000 lent to Stuart and Shannon in 2010 to finance the purchase by them of another farming property.

Held:

1. Over the course of the working relationship, various representations were made by the defendants (through Ian) to the plaintiffs regarding Stuart’s future ownership of the farming land and equipment.

2. Stuart and Shannon reasonably relied on those representations to their detriment.

3. The detrimental reliance became irreversible once the defendants resiled from the plaintiffs' induced expectation.

4. There has been no conduct engaged in by either plaintiff that should disentitle them from equity’s protection.

5. The plaintiffs are entitled to a proprietary remedy moulded so as to recognise in a just and proportionate manner their unfulfilled expectation as to a beneficial interest in the farming land and equipment. The parties are to be heard further as to the precise nature of the remedy.

6. With respect to the $135,000 loan in 2010, that loan was subsequently forgiven by Ian on behalf of Ian Rodda Pty Ltd, such that the amount is no longer owing.

Giumelli v Giumelli [1999] HCA 10, (1999) 196 CLR 101; Delaforce v Simpson-Cook [2010] NSWCA 84, (2010) 78 NSWLR 483; Sidhu v Van Dyke [2014] HCA 19, (2014) 308 ALR 232, (2014) 251 CLR 505; Sullivan v Sullivan & Ors [2006] NSWCA 312, applied.
Dillwyn v Llewelyn (1862) 4 De Gf & J 517, 45 ER 1285; Ramsden v Dyson (1866) LR 1 HL 129; Riches v Hogben [1985] 2 Qd R 292; Commonwealth v Verwayen [1990] HCA 39, (1990) 170 CLR 394; Donis & Ors v Donis [2007] VSCA 89, (2007) 19 VR 577; Fifteenth Eestin Nominees Pty Ltd v Rosenburg [2009] VSCA 112, (2009) 24 VR 155; Barnes v Alderton [2008] NSWSC 107; Weeks v Hrubala [2008] NSWSC 162; Dable v Peisley [2009] NSWSC 772; Sledmore v Dalby [1996] EWCA 1305, 72 P & CR 196; Flinn v Flinn [1999] 3 VR 712; Gillett v Holt [2001] Ch 210, considered.

RODDA & ANOR v IAN RODDA PTY LTD & ANOR; IAN RODDA PTY LTD v RODDA & ANOR
[2015] SASC 95

Civil

NICHOLSON J.      

Section A.  Introduction

1. This matter involves a family dispute essentially between father, Ian Rodda, and son, Stuart Rodda, concerning valuable farming land and a profitable farming business on the Yorke Peninsula in South Australia.  The legal title to each of the various components of the farming land is either held by or controlled by Ian.[1]  The business is conducted by Ian through two discretionary trusts and is under Ian’s sole control.

   [1]    Throughout the trial all members of the Rodda family were referred to by their first names.  Without suggesting any undue familiarity, I will continue to do this in these reasons.  From time to time I will refer to Stuart Rodda and his wife, Shannon Rodda, as the plaintiffs and Ian Rodda Pty Ltd and Ian Rodda as the defendants and notwithstanding that in a related claim heard concurrently (referred to later) these roles are reversed.

2. The first plaintiff, Stuart, is the eldest of four children of the second defendant, Ian.  The second plaintiff, Shannon Rodda, is the wife of Stuart.  The first defendant, Ian Rodda Pty Ltd (IRPL), is a company that was incorporated by Ian in 1977 in order to facilitate the running of his farming business.

3. Stuart and Shannon assert that they are entitled to proprietary remedies recognising their beneficial ownership of the farming land and the plant and equipment used in the farming business upon the application of the principles underlying:

   (a)that branch of proprietary estoppel described as estoppel by encouragement; and/or

   (b)constructive trusts.

4. Stuart and Shannon also assert an entitlement, effectively in debt, with respect to the balance of moneys said to be owing to each of them as recorded under their names in the beneficiary accounts of two trusts,[2] the Ian Rodda Family Trust (IRFT) and the Yaringa Proprietors Family Trust (YPFT), through which, for many years now, IRPL, as trustee of both trusts, has conducted the farming business.

   [2]    Which derive from unpaid trust distributions over the years.

5. In related proceedings, heard at the same time as the main proceedings, IRPL, in its capacity as trustee for the YPFT, seeks to recover from Stuart and Shannon, in their capacity as trustees of the Ocean Downs Family Trust (ODFT)[3] an amount of $135,000, said to have been lent to them and now due for repayment, together with unpaid interest.  Stuart and Shannon admit the loan but maintain that they are no longer indebted because the loan was forgiven in 2011.

   [3]    This is a family trust established by Stuart and Shannon in or about 2008 to enable them to pursue money making activities independently of the wider family whose interests arise under the YPFT and the IRFT.

6. From 1994 until 2012, Stuart and Ian, together, worked the family farming properties and built up a very successful farming business.  December 2012 saw a culmination of the deterioration in their personal relationship that had been worsening over many years.  As a consequence, their working relationship came to an abrupt end with Stuart being expelled from the farming business. 

7. In general terms, it is Stuart’s and Shannon’s case that, between 1994 and 2012, things said and done by Ian and the nature of Ian’s and Stuart’s relationship, as fostered by Ian, were such as to lead Stuart and Shannon, reasonably, to expect that they would take over the farm, being both Yaringa and Ocean Downs, just as Ian took it over from his father.  At times throughout these reasons I will refer to Ian’s words and conduct relied on in this respect, compendiously, as his representational conduct or similar.  Stuart and Shannon maintain that they conducted themselves in ways they otherwise would not have, in reliance on this induced expectation.  Precisely how and when they were to take over was not made clear to Stuart by Ian.  As such, the topic of “succession planning” (discussed further below) became another focus for difficulty and disagreement between Ian and Stuart. 

8. The defendants have defended the claim on a number of bases.  Primarily, they deny the making of any relevant representations and contend that any expectation held by the plaintiffs in this regard was unfounded and any reliance thereon was unreasonable.  In the event that the plaintiffs did rely upon any such expectation, the defendants submit that they did not suffer any detriment in doing so, as both Stuart and Shannon were handsomely rewarded for their time on the farm.  The defendants also argue that, as a result of various factors, including the nature of the alleged representations and the conduct of the plaintiffs, the requirements of good conscience do not admit of any remedy and that the fulfilment of any claimed expectation would be extravagant and disproportionate to any proved detrimental reliance.

   Section B.  General factual overview

9. What follows under this heading unless otherwise indicated, are findings based on the pleadings and the evidence.  Most are not in contest.  To the extent any of the following findings is contested I have made it on the basis of my overall preference for Stuart’s evidence as being the more reliable, as compared with that of Ian, for the reasons discussed below together with such other reasons as indicated.

10. Ian was born in 1948 to Edgar and Nora Rodda and was 66 at the time of the trial.  He was one of six siblings (three boys and three girls).  The Rodda farming business commenced three years later in 1951 when Edgar purchased a property called “Yaringa”, located outside the town of Weetulta on the Yorke Peninsula of South Australia.  Yaringa comprises sections 294, 295 and 296 which total approximately 460 hectares or 1137 acres.  Upon purchasing the property, Edgar’s family resided at the homestead on section 294. 

11. In 1964, Ian left school and commenced working for his father on Yaringa.  The business was conducted through a partnership styled E & N Rodda & Sons.  The initial partners were Edgar and Nora with each son becoming a partner upon reaching 20 years of age.  Ian’s three sisters did not participate.

12. On 20 March 1970, Ian purchased from Edgar sections 295 and 296 (but not 294, the homestead section) being the whole of the land comprised in Certificate of Title Register Book Volume 5568 Folio 515, for $68,464.20.  The purchase was financed by a loan from the Savings Bank of South Australia.  Ian used the wages he earned by working on Yaringa to service the loan.  Ian permitted the E & N Rodda & Sons partnership to continue to farm these two sections.  The purchase price was used by Edgar to buy a farming property for another son, Bruce, in the upper south-east of South Australia.[4]

    [4]    T325.

13. In 1973, E & N Rodda & Sons began to sharefarm[5] a neighbouring property called “Ocean Downs”.[6]  Oceans Downs consists of ten paddocks which total approximately 478 hectares or 1183 acres.  The ten paddocks run in two parallel lines of five (serviced by a central private road) in a westerly direction from Yaringa.  The two western most paddocks abut a coastal frontage to Gulf St Vincent.  As part of the sharefarming arrangement, the homestead on Ocean Downs was also leased for Ian and Rosemary, whom he had recently married.

    [5]    Sharefarming is an arrangement whereby a party farms land owned by another party, usually, for an agreed percentage of any profit made.

    [6]    Appendix A is a Google Earth map showing the relative locations of Yaringa, Ocean Downs and a third property of relevance, Lindsays.

14. Ocean Downs together with Yaringa, represent the whole of the farming land to which Stuart and Shannon claim to be entitled.

15. More will be said later about the differences between Yaringa and Ocean Downs.  For now it is sufficient to note that Yaringa is a superior farming property.  It produces a greater crop yield per acre.  The two paddocks on Oceans Downs that are closest to the coast have poor quality sandy soil that does not retain water well.  The middle four paddocks contain substantial areas of sheet rock, a type of limestone that routinely has to be broken up and removed either by hand or with the assistance of a mechanical stone picker in order to facilitate cropping.  Yaringa can be continuously cropped.  However, the Ocean Downs paddocks, at least whilst under the Rodda’s care, have been rotated annually between crop and pasture.[7]  Pasture permits sheep to be run but the substantially better money comes from cropping.  The farming operations are centred on Yaringa; it has substantially more and superior shedding and most of the mobile plant and equipment, when not in use elsewhere, is housed there. 

    [7]    There was conflicting evidence given by Ian and Stuart as to the potential for Ocean Downs to be continuously cropped in the future with the employment of new techniques.  Ian expressed the view that the land could be continuously cropped.  Stuart did not agree.  The issue is of some relevance and I will need to return to it.

16. On 12 September 1974, Stuart was born to Ian and Rosemary, followed by Mark (1975), Adrian (1979) and Annemarie (1983).

17. In 1977, the IRFT was established with Edgar as settlor, and IRPL as trustee.  The IRFT is a discretionary trust.  In that same year Edgar transferred section 294,[8]  being the balance of the Yaringa land still in his name, to IRPL in its capacity as trustee of the IRFT.  Neither IRPL nor Ian paid anything to Edgar for the transfer of section 294.  However, as with sections 295 and 296, and notwithstanding the change of ownership, Ian permitted E & N Rodda & Sons to continue to farm section 294.

    [8]    Certificate of Title Volume 5568 Folio 516.

18. Upon incorporation in 1977, Ian and Rosemary became the directors and shareholders of IRPL. Following Rosemary’s death in August 2003, Ian became the company’s sole director and shareholder.  At all material times, Ian has been the directing mind of IRPL in all its capacities.[9]  At all material times, IRPL has been the sole trustee of the IRFT, the beneficiaries of which include Ian, each of his four children, their respective spouses, and Ian’s grandchildren.

    [9]    The trial has been conducted on the basis that Ian’s conduct is attributable to and is the conduct of both himself and IRPL.  No issues of agency or authority arise.

19. In 1979, IRPL, as trustee for the IRFT, purchased Ocean Downs from a third party for $180,000, financed by way of a $30,000 contribution from the farming business, $90,000 in vendor finance and a $60,000 loan from the National Australia Bank.  The ten paddocks on Ocean Downs comprise the whole of the land in Certificates of Title Volume 6017 Folio 620 and Volume 5171 Folio 44.  In addition, IRPL acquired the Crown Conservation Lease over the coastal land abutting the two western most paddocks.[10]

    [10] Crown Lease Volume 1648 Folio 46.

20. This ownership structure for both Yaringa and Ocean Downs remained in place until and at the time of trial.  In summary, Ian is the registered proprietor in fee simple of sections 295 and 296 of Yaringa and IRPL, in its capacity as trustee of the IRFT, is the registered proprietor in fee simple of section 294 of Yaringa, as well as all of the Ocean Downs farm land.  IRPL is also the holder of the Crown Conservation Lease over the coastal fringe.

21. In 1978, at the age of 29, Ian made his first will by which he left his estate to Rosemary but, if she did not survive him, to his children in equal shares.  Only Stuart and Mark had been born at that time. 

22. In 1982 Ian, Rosemary and their three sons moved into the Yaringa homestead and Edgar and Nora moved into the Ocean Downs homestead.  In 1985, Edgar and Nora bought vacant land in Maitland.  At about this time, Ian, who was still farming the two properties with Edgar, discussed with his father his taking over the family business.  Edgar and Nora built a home in Maitland to which they moved when Edgar retired from full time farming in 1995.

23. While growing up on the farm, Stuart got on well with Mark and Annemarie but not with Adrian; the two of them never saw eye to eye.  From an early age Stuart showed a keen interest in farming.  He helped his father and grandfather with various tasks after school including shearing, weeding and handpicking the sheet rock off Ocean Downs.  His contributions to the work on the farm increased as he entered his late teens.  He acquired his truck driver’s licence at the age of 17 and assisted with carting grain to the sale silos.  Whilst in his final years at Maitland Area School, Stuart established a small but profitable pig-raising enterprise on the farm.  Stuart retained any profits.  It was, in a sense, a learning exercise encouraged by Ian.  Stuart left school after matriculating in 1991.  He was 17.

24. Stuart spent the majority of 1992 at home working on the farm with his father and grandfather.  In 1993, he commenced a wool classing[11] course at Marleston TAFE.  This was encouraged by Ian and Rosemary who wanted each of their children to have the security of a trade or other qualification even if, ultimately, they wanted to be a farmer. 

    [11] Wool classing is a certified trade in which people are trained to produce uniform and predictable lines of wool by examining the wool in its raw state and separating it into lines of varying quality.

25. The wool classing course required one year of theoretical training to be followed by six months of practical training.  Stuart only ever considered wool classing to be a back-up plan.  His ambition always was to return home and work on the farm.

26. By 1994, Stuart had completed the theoretical component of his wool classing course.  However, he spent periods of time away from the farm during 1994 either undertaking his practical training at sheep stations in the north of South Australia and in New South Wales or performing general roustabout work.  He returned for March and April to help with seeding and then from October onwards for harvesting.[12]

    [12] Whilst farming on the Yorke Peninsula is an all year activity there are two periods where the work is particularly intense requiring more labour and longer hours of work each day; seeding and spraying in approximately April through to June and harvest time which starts in or around October and can extend to early in the new year.

27. There was a dispute at trial between Stuart and Ian concerning the circumstances in which Stuart returned home to the farm in late 1994.  Stuart said that he came home following a request from his father.  Ian denied saying this.  I am satisfied that a conversation along these lines did occur.  In addition to my general preference for Stuart’s evidence where it conflicts with Ian’s (discussed below) Stuart was the right age and wanted to farm the properties, Edgar was approaching retirement and the farm was not yet particularly financially successful.  It is only natural that Ian would have a preference to involve Stuart more rather than hiring labour. 

1. In any event, by the close of 1994 Stuart had returned permanently, living with his mother and father at the Yaringa homestead.  The farming business was being managed predominantly by Ian at this time; Edgar’s day to day contributions had significantly diminished.  By this time the business was, in effect, largely free of external debt and remained so throughout Stuart’s involvement.

2. By 1995, Stuart’s work on the farm had increased.  However he was absent for short periods during the first half of the year in order to complete the practical component of his wool classing course.  For the periods at home working on the farm Stuart received a wage of approximately $150 per week. 

3. By this time, Mark, then aged 19, was boarding at the University of Adelaide’s Roseworthy campus studying a bachelor of Agricultural Business Management, Adrian, then 15, was boarding at Westminster College in Adelaide, and Annemarie, then 11, was attending the local primary school.  Stuart finished his wool classing training and became qualified in 1995.

4. In June of 1995, the YPFT was established with IRPL also as the sole trustee.[13]  The YPFT is also a discretionary trust.  IRPL, as trustee, (and therefore Ian, by virtue of his position as sole director and shareholder of IRPL) has the discretionary power to distribute trust income for the benefit of the trust’s beneficiaries, which include Ian, his children, their spouses, and Ian’s grandchildren.

   [13] See Deed of Variation of Settlement, 14 October 2003, P105, TB 2/25 which refers to the Deed of Settlement dated 30 June 1995 (not now available).

5. From this point onwards the E & N Rodda & Sons partnership ceased to conduct the farming business which, in some way, not fully explained by the evidence, was assumed by IRPL as trustee of the YPFT.  Again, Ian and IRPL, as the registered proprietors of the Yaringa and Ocean Downs land, made the properties available to the YPFT for this purpose.  

6. In March of 1996, Stuart visited Canada for about seven months to participate in an international agricultural exchange.  He met and became engaged to Shannon.  Stuart returned home with Shannon in late 1996.  They married (in the United States) in August 1997 after which they returned, almost immediately, to live in the Ocean Downs homestead.  Stuart thereafter worked with his father on a full time basis.

7. The Ocean Downs homestead had been vacant for some years and was in very poor condition.  Stuart and Shannon undertook renovations, repairs and maintenance works necessary to make it more liveable.  This included plastering and painting the walls, laying new carpets and flooring, installing a new roof, re-landscaping the garden and other general cleaning and upkeep.  Part of the work was undertaken by Stuart and Shannon and part with the help of hired contractors.

8. In January 2000, a holiday shack at Balgowan[14] was purchased from funds made available through the YPFT.  The shack was purchased in the names of Mark and his wife Kelly (one third), Adrian (one third) and Rosemary (one third).  This was one of a number of occasions when funds generated by the YPFT were used to benefit Stuart’s siblings.  Also during 2000, the YPFT made a distribution to Mark and one to Adrian to assist each to purchase a house.  Adrian received $60,000 which assisted him to buy a house in Royston Park, and Mark $15,000 for a house in Glenelg.

   [14] Balgowan is on the coast of Gulf St Vincent south of Ocean Downs.

9. Adrian returned home to work on the farm for a few months in 2000, after completing his university studies.  During this period he had a physical altercation with Stuart in the shearing sheds witnessed by Ian.  According to Stuart, a verbal argument turned violent and Adrian tried to stab Stuart with a set of shears.  Adrian did not agree with the entirety of Stuart’s account although conceded that they argued and that he threatened Stuart with the shears.  The precise details of the altercation do not matter.  The incident illustrated the level of antipathy they have always had towards each other and which has never abated.  Also of potential relevance (dealt with later) is that Ian was present during the altercation.  After this incident, Adrian left the farm and obtained employment with Elders.  By this time, Mark was also working for Elders having been appointed as its State Wool Manager.

10. Over the period 2002 to 2004, Stuart and Shannon carried out further and more substantial renovation and extension work on the Ocean Downs homestead.  The work was completed with the assistance of contractors and at a cost in excess of $140,000.  It was paid for, in the first instance, from YPFT funds.  However, all payments were debited to Stuart’s YPFT loan account.  Stuart also contributed substantially by his own labour in order to save on overall costs.  Further building work was done in 2012 following water damage caused to one of the bathrooms.  The cost of this work ($16,968) was financed in the same way.

11. By 2002, the farming business had become quite successful; income and profits were increasing.  On the advice of Sam Morano, Ian’s accountant at the time, the YPFT began to deposit excess cash with the National Australia Bank in the form of farm management deposits or bonds.  In short, a recognised primary producer can have income hypothecated to a farm management deposit (FMD).  Money so deposited is not taxable until withdrawn.[15]  There are limits as to the total amount that can be hypothecated in this way and as to the maximum number of years for which an FMD can be retained.  They are essentially a risk management tool to enable better planning and provision for uncertain and variable future events.  Insofar as they are used to smooth out income over a period of tax years, they can assist in reducing the overall tax liability that otherwise would be incurred.  Stuart qualified as a primary producer, as did Shannon.  In 2002, Ian arranged for $20,000 to be deposited in Stuart’s name, the first of a number of amounts deposited in this way in the names of Stuart and Shannon over the ensuing years.

    [15] Apparently a deposit can be withdrawn during a given financial year without incurring tax as long as it is reinvested within that same year.

12. In March 2003, Rosemary was diagnosed with a terminal illness.  It progressed rapidly and in June she was advised that it was no longer treatable.  Ian and Rosemary arranged for their solicitor, Mr Thiele, to draft new wills.  Rosemary’s draft will (subsequently executed) was to the effect that her entire estate was to go to Ian if he should survive her.  Ian’s draft will (not subsequently executed) provided that his entire estate was to go to Rosemary should she survive him but, if not, then to be distributed as follows:

    ·Any interest in the Balgowan shack to Stuart and Annemarie jointly;[16]

    ·Sections 295 and 296 of Yaringa to Adrian, with any mortgages or debts over the property to be discharged upon transfer;

    ·All of Ian’s shares in IRPL, together with any interest he had in the IRFT and the YPFT, and all of Ian’s farm management bonds, to Stuart;

    ·The proceeds of Ian’s life insurance and superannuation policies to Annemarie;

    ·Ian’s investment portfolio with Argosy Wealth Consultants to Mark;

    ·$5,000 to each of his grandchildren; and

    ·The balance of the estate to Mark and Annemarie.

    [16] Ian had no such interest at the time.  However, as at 2003, it would have been anticipated that Ian would survive Rosemary and succeed to her one third interest in the shack.

13. In around early July 2003, a family meeting was held at the Yaringa homestead to discuss the two draft wills.  Present at the meeting were Ian, Rosemary, Stuart, Shannon, Mark, Kelly Walker (Mark’s wife), Adrian and Annemarie. All, apart from Rosemary, gave evidence.  However, their respective recollections about the meeting were limited and were not entirely consistent.  The meeting constitutes an important watershed in the plaintiffs’ case.  On one view, any expectations that Stuart and Shannon had before this meeting in 2003, concerning their entitlement to the farm properties, were modified as a result of the terms of Ian’s draft will as disclosed to Stuart and Shannon at the meeting.  I will need to return to this meeting. 

14. Very soon after the meeting Rosemary signed her will (17 July 2003).  She passed away on 1 August 2003.  Ian did not sign his draft will nor any other will at this time.  However, Stuart was told by Rosemary that both wills had been signed about two weeks after the meeting.[17]

    [17] T339.

15. Understandably, Ian was extremely upset for a period following Rosemary’s death.  It would appear that they were happily married.  They had been very close companions for many years while together building the farming business and raising their family.  Ian, during his evidence, struck me as quite taciturn and reserved and not one to readily express his emotions without provocation.  He was provoked to do so during his cross-examination and revealed much more of his character than had been revealed during his relatively anodyne examination in chief.  I expect that he had been very dependent on Rosemary in all, particularly family, matters outside the day to day management of the farm.

16. According to Stuart and Shannon, Ian, in effect, dropped his bundle for about two years and Stuart was forced to shoulder the lion’s share of the physical work on the farm.  Ian denied this and said that nothing much changed in this respect.  He remained in charge of all farm activities and the division of labour continued as before.  I do not need to resolve this disagreement; it is of no assistance to the determination of the dispute.  It concerns an aspect of human nature where different perceptions might readily and genuinely be held.  However, I am satisfied that Ian would have been, at least emotionally, well below par for quite some time after Rosemary’s death which quite likely had some effect on his work.  I expect that the truth lies somewhere between the contrasting accounts.   

17. In the middle of 2005, Ian met Judy Kearsley.  They soon became very companionable and in February 2009 became engaged to marry.   Judy ended the engagement in late 2009.  However, they remained and still are close companions. 

18. Ian’s relationship with Judy contributed to a number of instances of quarrelling within the family.  In this respect, I am satisfied that there has been some rewriting of history by all of the children with, perhaps, the exception of Mark.  Initially, Stuart and Shannon were pleased that Ian had found someone who made him happy again.  However, over time and as they saw more of Judy, they grew to dislike her.  Adrian and Annemarie also rejected Judy during the early years of their involvement with her.  I am satisfied that Stuart (and also Shannon), Adrian and Annemarie became concerned about the level of influence Judy may have had on Ian and about the potential risk they perceived her to pose to their inheritance (unfounded in my view). 

19. By the time of the trial, Mark, Adrian and Annemarie had sided with Ian against the very real threat that Stuart posed to their respective inheritances.  Any differences with Judy had been patched up and Stuart and Shannon were presented as the only ones antagonistic towards Judy and the ones whose behaviour undermined Ian’s relationship with Judy.  Again, it is not necessary that I resolve the detail of this vignette in the family history.  However, I am not satisfied that any of Ian, Judy, Stuart, Adrian and Annemarie have been entirely frank about the respective relationships between Judy and each of the latter three.  Further, as far as Ian, Mark, Adrian and Annemarie are concerned, there has been a closing of the ranks on this issue and generally. 

20. What is clear enough is that Judy (not necessarily through her own fault) became a divisive influence as far as Ian on the one hand and Stuart and Shannon on the other were concerned.  This contributed to the ultimate breakdown of the personal relationship between Ian, as father, and Stuart, as son.

21. Between 2000 and 2012, Stuart and Ian were the sole contributors to the running of the farm.  From 2000 onwards all of Stuart’s siblings were pursuing education and careers off the farm.  Edgar’s participation progressively decreased after Stuart returned to the farm in late 1994.  Edgar had retired from farming completely by 1998.  Edgar passed away in October 2007. 

22. There was a dispute at trial as to the respective contributions of both Ian and Stuart at certain points of their working relationship.  As earlier referred to, Stuart said that Ian was very depressed during the two years following the death of Rosemary and was unable to perform at the same level as previously.  Ian said that during their last couple of years on the farm together, Stuart’s contributions, particularly in the peak periods of seeding and harvesting, suffered because he was also sharefarming another property.  There is probably an element of truth to both complaints.  However, they are of marginal, if any, relevance. 

23. Ian relied on running lists of date entries, said to have been contemporaneously compiled, to refresh his memory of days when he alleges Stuart was not present and working on the farm during 2012.  He was extensively cross-examined on this evidence.  It was put to him (which he denied) and later submitted to the Court that these apparent running lists were not contemporaneous records but fabricated for the purpose of the trial.  I’m not prepared to find a deliberate fabrication.  However, I do not accept the records to be entirely reliable as to their content.  The records themselves comprise, essentially, dates with little commentary.  Where there is commentary it is minimal; for example, alongside certain dates Ian wrote words such as “sulking”, “west coast” and “finished reaping”.  I am not satisfied that Ian’s recollection, as given in Court, of the reasons why he recorded the dates or the reasons why he understood Stuart to be absent from the farm on a particular date and as to the extent of any absence, is reliable. 

24. There is no doubt that Stuart was absent for a not insignificant number of days or parts of days just as it has been demonstrated, through the cross-examination of Ian with reference to his credit card records, that he also was absent for a significant number of days during 2012.  However, I do not understand farming to be a desk job where people ordinarily attend between 9am and 5pm.  There is a certain amount of work to be done at any given time and the hours are worked as necessary to do that work.  As discussed elsewhere, I am satisfied that both Stuart and Ian worked very hard and consistently on Ocean Downs and Yaringa as and when necessary.  In addition, Stuart was working on other properties and there were times when he would leave for a period of time and then return.  It made sense for him to manage his workload.  No doubt the same could be said about Ian.  It was up to him to manage his workload.  There is little, if anything, in the evidence to suggest that either Stuart’s or Ian’s absences caused particular problems for the running or profitability of the farms. 

25. By the time that Ian started to record days when he understood Stuart to be absent and at the time he gave his evidence in Court on this topic, Ian had developed a fixed mindset.  He was very angry with Stuart because of the pressure Stuart was imposing with respect to his perceived need to sort out the succession.  In my view, many of Ian’s complaints about Stuart’s absences and behaviour were characterised at their most negative and in this light.

26. I received extensive documentary and oral (essentially from Ian, Stuart and Shannon) evidence concerning work and life on the farm during the period 1994 to 2012.  I am satisfied: that Ian and Stuart (at least from and after his late teens) have shown themselves to be extremely hard working, skilful and competent dry land farmers; that for the duration of their working relationship each worked consistently throughout the year and at peak times for very long days; that this work was often very physically demanding; and that they worked as a “partnership” in the sense of dividing the tasks according to their strengths and interests while consulting with one another and engaging in joint decision making but with Ian, ultimately, being responsible for the significant decisions.[18]  I am satisfied that over the course of their working relationship, both men contributed broadly equally in terms of the time, labour and (at least, during the last ten years or so) expertise that went into building up the farming business to the successful enterprise it had become by the end of 2012 when Stuart left. 

    [18] I expect that Stuart, through his 20s and 30s, would have had a greater physical capacity than Ian would have had through his mid 40s to mid 60s.  But the farm was heavily mechanised and Ian would have made up for Stuart’s physical advantages in other ways, including through his knowledge and experience.

27. Whilst Ian and Stuart had an extremely effective working relationship until late 2012, their personal relationship was never close; it certainly was more strained than one might ordinarily expect from a father and son who were content to work together every day over many years.[19]  Their personal relationship deteriorated further after Rosemary’s death.  My impression is that she, as might be expected, was loyal to her husband and protective of her first born son.  She would intervene on Stuart’s behalf, during periods of tension or disagreement.  Ian described her as the mediator.[20]

    [19] T550-551 (Stuart).  Mark described their relationship as “always strained” (T1621-1622).

    [20] T1126.

28. In addition to working both Yaringa and Ocean Downs, Stuart and Ian farmed other properties that had been leased, from time to time, by IRPL or by Ian and Stuart, on behalf of the YPFT.  In March 2000, a one year lease was acquired over a property owned by John Clasohm known as “Treedale”, situated north of Maitland.  The lease was extended in 2001 but came to an end in early 2004.  From 2005 to 2008, Ian and Stuart leased “Golden Oasis”, a farm of approximately 1250 acres owned by Stephen Clasohm, situated about 25 kilometres from Yaringa.  That lease included an option to purchase which was not taken up. 

29. A third property, known as “Lindsays” and which shared a boundary with Yaringa to the north, was leased by IRPL from 2007 until 2013.[21]  The Lindsays lease contained a right of first refusal.  The Lindsays property, which comprised four sections, was purchased by interests controlled by Ian on 15 March 2013 for $3.5 million. Of that purchase price, $2,100,000 was financed by way of a RaboBank loan.  It is likely that the remainder of the funds were sourced internally, including approximately $600,000 from the YPFT funds.[22]

    [21]  The lease over Lindsays was acquired by IRPL trading as Yaringa Proprietors, being a business name that it had registered to assist with the running of the family farming business.

    [22] The account ledgers for the YPFT reveal a $50,000 debit to the cheque account in May 2013 for “Deposit – Lindsay farm purchase” and a second $544,934  debit in June 2013 for “Lindsay farm purchase payment” (See P135, p26). When these account entries were put to Ian in cross-examination he agreed that the $50,000 deposit probably came from YPFT, but denied that the larger amount of $544,934 did. Ian was unable to explain the later entry, simply maintaining that it was incorrect (T1396-1397). 

30. In 2008, Stuart commenced to sharefarm a property owned by his Uncle Andrew (Rosemary’s brother) called “Hogans”.  Hogans is about a twenty minute drive from Yaringa.  The sharefarming was conducted not by or on behalf of the YPFT, but by or on behalf of the newly established Ocean Downs Family Trust (ODFT) of which Stuart and Shannon were the trustees.  The ODFT is a discretionary trust with Stuart, Shannon and their children included as beneficiaries.

1. The Hogans sharefarming arrangement continued from 2008 through to 2012 and became a further focus for conflict between Stuart and Ian in the later years.  Stuart had to balance his work at Hogans with his work at both Yaringa and Ocean Downs.  This was particularly difficult during the busier periods of seeding and spraying and harvesting.  To some extent, Stuart was able to accommodate this by working extremely long hours during these busier periods.  However, this was not a complete answer such that, during harvest time in both 2010 and 2011, Stuart personally employed and paid a driver, Mr Ian Marshall in 2010 and Mr Craig Purdue in 2011, to help cart the grain from Yaringa and Ocean Downs.  Stuart wanted to hire Craig Purdue for the 2012 harvest on the same basis.  However, as a result of the fall out with Ian and over Stuart’s protest, Ian engaged and paid Craig Purdue to cart grain for that harvest. 

2. In early 2010, Adrian was working for RaboBank in Mount Gambier.  He entered into a contract to purchase a farm property at Lock on the Eyre Peninsula.  He was unable to settle the purchase and, by arrangement, Stuart and Shannon took over and completed the purchase in their capacities as trustees of the ODFT.  The Lock property is leased to a local farmer.  As at the time of trial the rent had only been sufficient to cover the holding costs with a little left over.

3. One matter about which Stuart and Ian did agree was that their relationship declined after the death of Rosemary in August 2003.  Their relationship had always been a difficult one, particularly once Stuart and Ian started to work together.  No particular reason was given for this.  It appears to me to be, at least in part, a result of the transformation of a father son relationship into an adult day to day “co-worker” relationship.  Both men struck me as headstrong and Ian as particularly demanding and controlling.  He struck me as a person with very fixed views, particularly about how the farm should operate and be managed, and as a father for whom nothing Stuart did was ever quite good enough. 

4. Of course, in the case of a difficult personal relationship there typically will be some fault on both sides.  However, I expect there would have been similar difficulties whichever of the three sons had stayed at home and worked the farm with Ian as the common factor.  A revealing moment came in Ian’s evidence towards the end of his cross-examination when he described Stuart as “very comfortable... farming under my umbrella, being my worker.”[23]  This was how Ian saw the relationship from early in the piece.  It was not how Stuart saw it. 

   [23] T1340 (my emphasis).

5. In the early years, Rosemary appeared to perform somewhat of a mediating and pacifying role between the two.  Whilst it is evident that their personal relationship deteriorated over the years after Rosemary’s death, the working relationship between the two remained strong enough until just before Stuart ceased working on the farm in late 2012.  By late 2012, their personal relationship had broken down irretrievably.  This brought their working relationship to an end.  Until then the business, through their joint efforts, had returned a substantial profit in most years. 

6. The evidence of Stuart and Ian concerning an event in November 2012 that precipitated the final breakup was in stark contrast.  At least one encounter between the two took place at the Yaringa homestead sometime in November 2012.[24]  Stuart insisted that there was only the one and that it occurred on 15 November.  Ian’s evidence chopped and changed and ultimately was confused and confusing.  On one view of his evidence, he recalled two separate encounters but both on the same day which was about 8 or 9 November. 

   [24] It is to be understood that Ian and Stuart had, by then, ceased to be on speaking terms, apart from essential interactions to do with the work on the farm.

7. Shannon and Stuart said that they went to Yaringa early in the morning of 15 November and approached Ian, who was burning rubbish in an outside bin adjacent to the homestead.  Shannon surreptitiously recorded the conversation on her mobile phone.  Stuart and Shannon asked Ian about his plans for succession and his intentions with respect to the proceeds of the 2012 harvest.  Ian confirmed that he had hired Craig Purdue to help him with the 2012 harvest but was otherwise reluctant to talk to Stuart on the basis that he had been advised not to by his lawyers.  Shannon’s recording was not tendered.[25]  Nevertheless, it was disclosed to the defendants and, ultimately, the terms of this conversation as described by Stuart and Shannon and the fact that it took place on 15 November 2012 were not challenged.

   [25] As such, there was no need to consider the requirements of and restrictions imposed by the Listening and Surveillance Devices Act 1972.

8. However, Ian gave evidence that a second encounter between the three of them took place on the same day, this time on the patio of the homestead.  According to Ian, he was attacked with a verbal tirade and farrago of insults by both Stuart and Shannon.  They aggressively insulted him and demanded to know when he would retire and leave and what he was going to do with the proceeds of the 2012 harvest.  Ian’s evidence, in this respect, was supported by Judy, who said she overheard the argument from inside the Yaringa homestead and took notes.  Stuart and Shannon denied that they spoke to or treated Ian in this manner.  I do not need to resolve this dispute.  Even if a second conversation did take place and it was as vitriolic as Ian and Judy assert, it would not, in my view, be of any significance to the question of “disentitling” conduct by Stuart for reasons I later elaborate.  However,  I have reservations about accepting Ian’s and Judy’s account.  On balance, I am satisfied that Judy and Ian have reconstructed their account.  There may have been a second or other conversations but they have deliberately exaggerated tone and content.  The evidence concerning this incident does not cause me to doubt the wisdom of, in general, preferring Stuart’s evidence over Ian’s where there is conflict that cannot otherwise be resolved, as discussed in Section C.

9. The increasing tension that had been building between Stuart and Ian came to a head on 1 December 2012 during harvest time.  Stuart had finished his harvesting work at Hogans and had returned to Yaringa to assist with grain delivery work.  He had delivered two loads of grain to the silos in Wallaroo and had returned to Yaringa to obtain a third load when he was approached by Ian and Judy.  Judy informed him that he was no longer required to work on the farm and that he had been dismissed.  That was the last day Stuart worked on the farm.  I am satisfied, and it is not in dispute, that the relationship had irretrievably broken down.  

10. On 20 December 2012, Stuart and Shannon, who had by then engaged solicitors, registered caveats on the titles for both Yaringa and Ocean Downs.  Ian, by this stage, also had engaged solicitors.  A letter was sent to Stuart’s solicitors, dated 17 January 2013, confirming that Stuart’s services were no longer required. 

11. On 1 February 2013, Ian signed a new will by which he, in effect, left everything to all four children, that is, including Stuart, equally.  However, by a further will, dated 10 April 2014, Stuart has been removed as a beneficiary altogether.  Under his latest will, as at the time of trial, Ian’s estate was left to Mark, Adrian and Annemarie in equal shares. 

12. From the date of Stuart’s dismissal, the interactions between Stuart and Ian have been limited to negotiations between their respective legal representatives.  Stuart and his family continue to reside at the Ocean Downs homestead but Stuart has no involvement with the farm.  Ian still lives at Yaringa and continues, now with the assistance of Adrian, to farm Ocean Downs, Yaringa and Lindsays.

13. Since being dismissed from the farm, Stuart has undertaken various jobs to generate income.  Whilst assisting a local farmer to burn canola rows during April 2013, Stuart suffered severe burns to his body.  He was hospitalised for 15 days and had to wear a burns suit for the best part of a year.  In December 2013, Stuart and Shannon purchased farm land at Black Rock for $460,000.  This was financed by way of a loan from the Commonwealth Bank for $500,000.  Black Rock is some two hours or more drive from Ocean Downs.  Nevertheless, Stuart is farming on Black Rock in order to generate income for his family.  Neither Stuart nor Shannon has received any income from the YPFT or the IRFT since sometime in 2012.  Stuart did not receive a trust distribution for the 2012/2013 financial year (or at any time thereafter) and, therefore, has received nothing with respect to the 2012 or later harvests.  

14. Wages and other financial benefits were received by Shannon and Stuart in the period between 1995 and 2012 from both the YPFT and the IRFT.  Precisely what they received and in what form was the focus of extensive documentary evidence and written and oral submissions.  The essentials concerning the financial arrangements over the period that Stuart worked on the farm are explained later in these reasons.

    Section C.  The witnesses

15. In the plaintiffs’ case, evidence was adduced from Stuart and Shannon.  The defendants called Ian, Mark, Adrian, Annemarie, Judy Kearsley, Kelly Walker, David Nelson (financial advisor from the National Australia Bank), Andrew Thiele (lawyer) and Travis Wilton (accountant),  

16. The major contest was between the evidence of Stuart and Ian.  Whilst there was much common ground in their evidence, there were matters of significance with respect to which their respective accounts differed.  Both Stuart and Ian gave their evidence over a long period of time, a matter of days in each case.  Both were extensively and robustly cross-examined.  I had a good opportunity to observe and to listen to the way in which they gave their evidence. 

17. Ultimately, I am satisfied that Stuart was a truthful witness.  If anything, he was understated in the manner by which he expressed his claims, particularly as to the representations and conduct of Ian that he relied upon.  It would have been very easy (and difficult to challenge) for Stuart to have asserted representational words and conduct, particularly in the early days of their relationship, that were clear and definite as to content.  He did not do this.  His evidence concerning the conversations he said took place between himself and Ian and as to Ian’s representational conduct towards him, as relied upon, had no air of contrivance.  It appeared natural; the type of conversation and behaviour one might expect to have taken place in all of the circumstances. 

18. Stuart’s evidence concerning what Ian said and did and the way he spoke and acted was consistent with Ian’s taciturn and standoffish character that became apparent to me when observing his presentation in the witness box.  In general terms, Stuart’s evidence had the ring of truth about it.  That is not to say that he was entirely reliable. 

19. The events about which evidence was given spanned an 18 year period from late 1994 to 2012 inclusive.  The events largely involved ordinary day to day interactions between family members, in particular, between Ian and Stuart as they worked together on the farm.  They were not the type of interactions, verbal and otherwise, about which either party, at the time, would have been particularly guarded.  They were not the type of interactions, the precise detail of which, necessarily would be remembered. 

20. Having said this, I have no doubt that Stuart from very early on in the relationship was looking to his and his family’s future as being on the farm.  It is readily understandable and likely that he would have taken to heart and retained a memory of things said and done by Ian that were consistent with or indicative of this future.  However, it is less likely that Ian would have had any particular concern, at the time, in the sense of needing to retain a clear recollection of the things he said and did when developing the working relationship with his son.  Of course, over that period of time and given the subject matter of the interactions as have now been seen to be relevant, there is scope for and I expect there has been, a level of reconstruction by both Stuart and Ian.  On Stuart’s part, I am satisfied that any such reconstruction was innocent.  I am also satisfied that the essential aspects of his evidence, insofar as they bear on his claimed entitlements (with one exception) and even where some reconstruction may have been involved, are reliable.

21. I also accept Shannon as truthful and generally reliable.  Apart from some isolated topics, to be dealt with, her evidence is not of particular assistance because she did not have the direct material interactions with Ian that Stuart had.  Furthermore, it is only natural that, over the years, Shannon’s understandings would have become conditioned to some extent by things said and done by Stuart.  To a degree, and on the important issues, Shannon’s evidence is a reflection of the fact that she is married to and unquestionably loyal to Stuart and of the fact that they worked together as a partnership with Stuart’s work on the farm and acquisition of a farming future for his family as the centrepiece of that partnership.

22. I was significantly less impressed with the evidence of Ian.  During cross-examination, Ian had an almost relentless propensity to deny or not remember as a first response.  The decline in his affable manner, apparent frankness and apparent willingness to assist the Court once examination in chief ceased and cross-examination commenced was stark.  Ian denied, almost as a matter of course, any aspect of Stuart’s case that was not documented in some way and where it was, he often refused to accept the obvious, even on occasions when it caused no real harm to his position.  I found Ian to be dogmatic and often evasive.  At times he was untruthful.  His behaviour towards his son, Stuart, in the second half of 2012 and first half of 2013 displayed a harshness and a bitterness towards him and a lack of forgiveness[26] that, in my view, coloured much of his evidence about past events.

    [26] For example, when Stuart suffered his burns injuries in 2013 as a result of which his life was at risk in the early days, Ian did not visit nor offer any assistance to Shannon and Ian’s grandchildren.  Indeed at about this time, he went out of his way to ensure that their phone account was no longer in the name of and to be paid for by the YPFT.

23. Ian displayed a poor memory but there also were times when he was shown to be, at best, uncooperative, disingenuous and evasive or, at worst, untruthful.  Examples of Ian being either evasive and deliberately misleading or lying include his evidence concerning:  his conduct in having the plaintiffs’ phone and electricity accounts stopped when Stuart was recovering from his burns in April 2013; his request for Stuart to return to the farm full-time in 1994; his non-participation in a conversation about increasing wages when Shannon was pregnant; the complete absence of discussions with Stuart about wages; the shed altercation with Adrian; the question of ownership and entitlement to the FMDs and unpaid trust distributions; the question of what he said to Mr Nelson in 2010 concerning succession which was directly contradicted by Mr Nelson; the lack of any discussion with Stuart about his future on the farm;[27] the RaboBank application to finance the purchase of Lindsays; his refusal to admit that purported amendments to the trust deeds effected after this litigation commenced were directly aimed at the plaintiffs when this obviously is the case; the patio conversation; his attitude to the five separate occasions when the plaintiffs claimed Centrelink benefits which each time had to be repaid when their income was subsequently adjusted by unpaid trust distributions and the forgiveness of the Lock loan for $135,000.  These are just some of many examples which caused me to regard Ian’s evidence overall as unsatisfactory and unreliable.  Some of the examples are referred to again elsewhere in these reasons.

    [27] T1321.  Ian’s evidence here is quite remarkable.

24. During the trial I formed the view, confirmed afterwards upon my re-reading of the transcript, that on the issues of significance where Ian and Stuart’s evidence differed I had a distinct preference for Stuart’s account.  In general, I would not be prepared to accept Ian’s evidence on such issues unless it is corroborated by documentary records or other reliable oral evidence.  Leaving aside events of the second half of 2012 and thereafter, at which time the relationship between Ian and Stuart had plainly deteriorated to an irretrievable position and at which time there was poor behaviour on both sides, I have a clear preference for Stuart’s and Shannon’s accounts of the interactions between them and Ian. 

25. Judy Kearsley’s evidence was confined to aspects of the relationship she and Ian, as a couple, had with the siblings.  It, ultimately, was of little, if any, assistance.  In any event, I do not accept her as a reliable witness, particularly with respect to the patio conversation incident.  The letters she sent anonymously to the plaintiffs[28] on their face suggest that one should be very cautious before accepting her evidence at face value.  Furthermore, she lied to Stuart and Shannon about not sending these letters.[29]  With some limited exceptions, the evidence of Mark, Adrian and Annemarie also has been of little assistance.  This is for two reasons. 

    [28] Exhibits P178, 178A. 

    [29] T1533.

26. First, each of these siblings had little to do with either Stuart or Ian while they worked together on the farm and lived in close proximity to each other over the relevant 18 year period.  None of the siblings had direct knowledge of relevant events including, in particular, conversations that occurred between Stuart and Ian, their day to day interactions and the circumstances of the various financial distributions orchestrated by Ian.  Much of their evidence can only have been informed by discussion with Ian and, to a lesser extent, Stuart, over the years. 

27. Second, the evidence of Mark, Adrian and Annemarie is compromised to an extent because, by the time of trial, they had plainly taken the side of their father which coincided with their own financial interests.  Each had and still does have a spes succesionis which has come under threat because of Stuart’s claims. 

28. Messrs Nelson, Thiele and Wilton in my view, did their best to assist the Court; I am satisfied that each was truthful and essentially reliable in the evidence they gave.  Each is a professional or at least some steps removed from the fray and each had the assistance, to some extent, of contemporaneous documentation which served to refresh their memory of events.  Again, the evidence of these independent persons, whilst of assistance in limited respects, did not address directly the issues between Stuart and Ian.  None had any involvement in the day to day interactions between Stuart and Ian. 

    Section D.  Legal principles

29. This case, at least insofar as liability is concerned, is to be determined in accordance with the principles underpinning proprietary estoppel by encouragement, as explained in the line of cases from Dillwyn v Llewelyn[30] and Ramsden v Dyson[31] through to Riches v Hogben[32] and Commonwealth v Verwayen[33] and then to Giumelli v Giumelli[34] and Sidhu v Van Dyke.[35]

    [30] (1862) 4 De Gf & J 517; 45 ER 1285.

    [31] (1866) LR 1 HL 129.

    [32] [1985] 2 Qd R 292.

    [33] [1990] HCA 39; (1990) 170 CLR 394.

    [34] [1999] HCA 10; (1999) 196 CLR 101.

    [35] [2014] HCA 19; (2014) 308 ALR 232; (2014) 251 CLR 505.

30. In the event that liability were to be established the question will arise whether the imposition of a constructive trust, in favour of the plaintiffs (or Stuart alone), over all or part of the farm properties and the moveable plant and equipment employed in the farming enterprise, as sought by the plaintiffs, would be the appropriate remedial response.[36]

    [36] See Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at [2]-[6].

1. According to the plurality in Giumelli, the equity which can support relief of this nature is:

   found in an assumption as to the future acquisition of ownership of property which had been induced by representations upon which there had been detrimental reliance by the plaintiff.[37]

   The plurality in Giumelli[38] further observed:

   This is a well recognised variety of estoppel as understood in equity and may found relief which requires the taking of active steps by the defendant.

   [37] Giumelli at [6] (Gleeson CJ, McHugh, Gummow and Callinan JJ) endorsed by a differently constituted plurality in the High Court in Sidhu at [2] (French CJ, Kiefel, Bell and Keane JJ).

   [38] At [6].

2. Handley JA, in Delaforce v Simpson-Cook[39] has described the underlying principle in similar terms.

   The proprietary estoppel upheld by the Judge was an estoppel by encouragement.  Such an estoppel comes into existence when an owner of a property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment.  If these matters are established equity may compel the owner to give effect to that expectation in whole or in part. 

   A helpful explanation of relevant principles has been provided by Allsop P (with whose reasons Giles JA agreed) in Delaforce v Simpson-Cook.[40]

   I agree in particular with Handley AJA that the reasons of Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli v Giumelli appear to remove as a governing principle in the relief to be granted in equitable or proprietary estoppel cases the notion of enforcement or vindication only of the “minimum equity”... . That, of course, does not make irrelevant matters that can assuage the detriment brought about by the resiling from the representation or encouragement by the party concerned. It does mean, however, that relief in such cases is not to be measured by weighing detriment too minutely in order that it be converted into some equivalent of cash or kind, as if one were measuring the consideration for a commercial bargain. Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character. Equity has always had a place in keeping parties to representations or promises... .

   Proportionality of the claimed interest or remedy to the prejudice or detriment is undeniably a relevant consideration, and sometimes of considerable importance. It should not, however, be transformed into a necessary constitutive element of a cause of action to be pleaded or proved by the party seeking relief. To do so would elevate one consideration above others, and in particular above the importance of making good an expectation by encouragement or representation... .  It would tend to equate the analysis to one requiring that the party encouraged receive no more than it can prove that it suffered in detriment. This would see the equity become one of compensation for proved equivalent detriment. The equity is a broader one based on the just and conscionable satisfaction in appropriate fashion of the equity arising from the expectation created in another by encouragement or representation. As Handley AJA says, the role of proportionality is better understood, in a doctrine dealing with the legitimacy or otherwise of resiling from an encouragement or representation that has created an expectation, as assisting in an assessment whether what is claimed or contemplated to be granted is disproportionate or unjust in all the circumstances.

   The importance of keeping a party to a representation or encouragement previously made is all the stronger where, as here, the encouragement or representation has been relied upon by a party to abandon a course of conduct that could possibly have led to a different outcome. This can be described in the language of loss of a chance that is not fanciful or unrealistic, or in the language of proceeding thereafter on the basis of a new or changed convention or conventional basis. Such expression of the matter is not different to how Dixon J put the matter in Grundt v Great Boulder Proprietary Gold Mines Ltd... . For instance, if, as here, in reliance upon a representation or encouragement, a court case is abandoned and the representation or encouragement is later sought to be resiled from, the party to whom the representation or encouragement was made and in whom the expectation was raised is left in the position not only of the loss of the entitlement to pursue his or her rights in the case in the past, but also is likely to be in the position of being unable to demonstrate what would, or even may, have happened in the case, it being an alternative, complex and now hypothetical body of human conduct. That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position. Of course, if it is self-evident or can be clearly demonstrated that the case was fanciful or otherwise doomed to fail, there may be no real detriment; but that was not the case here. The respondent gave up her right to propound her case in the Family Court on the faith of the deceased’s representation. It was not self-evident, or otherwise clearly demonstrated, that she could not have been successful in securing her rights to the subject property after the death of the deceased.

   [39] [2010] NSWCA 84; (2010) 78 NSWLR 483 at [21].

   [40] At [3]-[5] (references and citations omitted).

3. In Sullivan v Sullivan & Ors[41] and in Delaforce v Simpson-Cook[42] Handley AJA discussed in some detail a number of principles which govern the granting of relief in an estoppel by encouragement case.  The summary of principles, as set out in Sullivan, has been approved in a number of authorities[43] and, in my view, nothing said by the High Court including in the later decision of Sidhu[44] is contrary to or inconsistent with that formulation of principles.  In what follows, I provide a truncated summary of the principles, as identified by Handley AJA, omitting his Honour’s discussion and reference to authority.

   [41] [2006] NSWCA 312 at [11]-[32].

   [42] [2010] NSWCA 84; (2010) 78 NSWLR 483 at [54]-[69].

   [43] See for example, Donis & Ors v Donis [2007] VSCA 89; (2007) 19 VR 577 at [19] (fn 12), [39], [40] (Nettle JA with whose reasons Maxwell ACJ and Ashley JA agreed) (special leave to the High Court was refused, [2007] HCA Trans 609); Fifteenth Eestin Nominees Pty Ltd & Ors v Rosenburg [2009] VSCA 112; (2009) 24 VR 155 at [269] (fn 158); Barnes v Alderton [2008] NSWSC 107 at [43] (Young CJ in Eq); Weeks v Hrubala [2008] NSWSC 162 at [40] (Young CJ in Eq); Dable v Peisley [2009] NSWSC 772 at [200] (Ward J).

   [44] [2014] HCA 19; (2014) 308 ALR 232; (2014) 251 CLR 505.

   (i)A proprietary estoppel by encouragement may be established where the conduct of the party estopped did not define the expectation.  Although, the quality of the assurances which give rise to the expectations may influence the issue of reliance and the question of reliance and detriment are often intertwined. 

   (ii)The detrimental reliance that supports the estoppel need not constitute, in any sense, a consideration moving to the party bound.  It is a unilateral element to the estoppel and not the price paid for it.

   (iii)Relief depends very much on the facts: the circumstances of each case will determine the way in which the equity can be satisfied. 

   (iv)Since Giumelli, it is not the law in Australia that the Court is to look for the minimum equity to do justice to the plaintiff.[45]

   [45] Handley AJA expresses the proposition that since Giumelli it is “probably not the law”.  However, bearing in mind decisions after Delaforce (in 2010) and, in particular, Sidhu v Van Dyke [2014] HCA 19; (2014) 308 ALR 232; (2014) 251 CLR 505 at [85], the proposition can be expressed in the stronger form as set out in the text.

   (v)Relief may be moulded to recognise practical considerations such as the need for a clean break.

   (vi)The court must also take into account the impact of its orders on third parties and any hardship or injustice they would suffer.

   (vii)Relief may be refused or reduced if the plaintiff’s equity has been diminished by later events.[46]

   (viii)Subsequent events may also enlarge the plaintiff’s equity.

   (ix)Relief may also be limited where the enforcement of the plaintiff’s expectation would be out of all proportion to the detriment; this is particularly so where the expectation was not defined and the court has a broader discretion.  (This notion is amplified in the next full paragraph).

   (x)The courts should, prima facie, enforce a reasonable expectation which the party bound created or encouraged.  In Giumelli[47] the plurality judgment quoted, with approval, Deane J in Commonwealth v Verwayen.[48]

   Prima facie, the operation of an estoppel by conduct is to preclude departure from the presumed state of affairs.  It is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded.

   The plurality judgment continued.[49]

   The prima facie entitlement to which [Deane J] had referred would be qualified if that relief would “exceed what could be justified by the requirements of conscientious conduct and would be unjust to the estopped party”; an appropriate qualification might be a requirement that the party relying upon the estoppel do equity.

   [46] An example given is Sledmore v Dalby [1996] EWCA Civ 1305; 72 P & CR 196 where the plaintiff’s equity based on his improvements had been fully amortised over 18 years of rent free occupation.

   [47] At [42].

   [48] (1990) 170 CLR 394 at 443.

   [49] At [42] (Gleeson CJ, McHugh, Gummow and Callinan JJ).

4. Subparagraph (ix) above has the potential to be of significance in this case.  I set out in full Handley AJA’s development of that proposition.[50] 

   [50] Delaforce at [62]-[69] print).

   Relief may also be limited where the enforcement of the plaintiff’s expectation would be out of all proportion to the detriment: Jennings v Rice [2003] 1 P & CR 100 CA, 104, 111, 115. This is particularly so where the expectation was not defined and the Court has a broader discretion: ibid at 114.  A gardener had looked after an elderly widow and been promised that “he would be alright” and “this will all be yours one day”.  He was awarded £200,000, and the Court of Appeal rejected his claim to the house and contents worth £435,000.

   The Court should, prima facie, enforce a reasonable expectation which the party bound created or encouraged: Meagher Gummow & Lehane “Equity Doctrine and Remedies” 4th ed 2002, pp 567-8.  In Ramsden v Dyson (1866) LR 1 HL 129, 170 Lord Kingsdown said: “If a man … under an expectation created or encouraged by the landlord that he shall have a certain interest [acts to his detriment] upon the faith of such expectation … a Court of equity will compel the landlord to give effect to such … expectation” (Lord Kingsdown’s principle). In Chalmers v Pardoe [1963] 1 WLR 677 PC, 681-2, the Privy Council said that if such an estoppel is established “a court of equity will prima facie require the owner … to fulfil his obligation”. In Attorney General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114, 121 Lord Templeman said:

   “The authorities expound and illustrate the principle upon which a litigant who is led to believe that he will be granted an interest in land and who acts to his detriment in that belief is enabled to obtain that interest.”

   In Giumelli (above) the joint judgment at 123 quoted with approval this statement of Deane J in Verwayen [1990] HCA 39, 170 CLR at 443:

   “Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs.  It is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded.”

   The joint judgment continued:

   “The prima facie entitlement to which his Honour had referred would be qualified if that relief ‘would exceed what could be justified by the requirements of conscientious conduct and would be unjust to the estopped party’.”

   See also Flinn v Flinn [1999] 3 VR 712 CA, 749.

   In Sledmore v Dalby (1996) 72 P & CR 196 CA, 203 Roch LJ, delivering the principal judgment, approved the statement in Snell’s Equity 29th ed p 576 derived from Griffiths v Williams (1978) 248 EG 947, 949 per Reginald Goff LJ, and In re Basham [1986] 1 WLR 1498, 1510 per Nugee QC:

   “The extent of the equity is to have made good, so far as may fairly be done between the parties, the expectations of A which O has encouraged.”

   Sledmore v Dalby was followed in Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475, 517-8.

   In Jennings v Rice [2003] 1 P & CR 100 CA, 114 Robert Walker LJ said:

   “… there is a category of case in which the benefactor and the claimant have reached a mutual understanding which is in reasonably clear terms but does not amount to a contract. … In such a case the Court’s natural response is to fulfil the claimant’s expectations.  But if a claimant’s expectations are uncertain, or extravagant, or out of all proportion to the detriment which the claimant has suffered, the Court can and should recognise that the claimant’s equity should be satisfied in another (and generally more limited) way” (emphasis supplied).

5. For the plaintiffs to succeed under the principles underpinning proprietary estoppel by encouragement, they will need to establish the following.

   (i)That Ian, on behalf of himself (with respect to the property in his name) and on behalf of IRPL (with respect to the property in its name), materially represented (through words and or conduct) to Stuart and Shannon, or at least to Stuart, and encouraged in them an expectation that they were to acquire a proprietary interest in relevant property.

   (ii)The content, to a sufficient degree of precision, of the representational conduct and the nature of the expectation thereby encouraged.

   (iii)That Stuart and Shannon, or at least Stuart, acting reasonably in the circumstances, relied on the representational conduct and the expectation engendered.

   (iv)That Ian and, through him, IRPL, have resiled from the expectation engendered.

   (v)That Stuart and Shannon, or at least Stuart, will suffer detriment from that resiling and the nature of that detriment. 

   (vi)The nature and quantum or measure of any relief that, in equity, should be allowed.

   Section E. Further and more detailed findings of fact

6. In addition to or in supplementation of the matters found in Section B, I make the following findings subject to any qualifications as expressed in this section.  I have endeavoured to make apparent where findings are expressed and where evidence leading to a finding is discussed.  In my view, the findings are justified by the oral and documentary evidence, after taking account of my preference for Stuart’s evidence where it conflicts with Ian’s and is not otherwise contradicted by documentary or other oral evidence which I have found to be reliable. 

   The period prior to July 2003

7. From a young age Stuart was a hard worker and had a love of farming.  From as early as eight years old[51] he wanted to be a farmer when he grew up.  With some relatively minor exceptions, he has spent his working life on Yaringa and Ocean Downs.  He is the only sibling to have done this. 

   [51] T170.

8. It became apparent very early that Yaringa and Ocean Downs was big enough for only one of the brothers to stay and farm full time with Ian.  Mark and Adrian have forged successful careers away from the family farm.  Mark has pursued a financially successful agribusiness career.  He would appear to have no interest now in personally working on the family farm.  Adrian has had a banking career and has been successful in buying and selling real estate.  As at the time of trial, he was farming his own property in Victoria.  He was also, but only following Stuart’s departure in December 2012, assisting Ian.

9. From at least 1994 onwards, Ian and Edgar were keen to acquire additional farming land.  Stuart, as he became more involved, shared this goal.  For a variety of reasons, nothing was purchased until Lindsays in 2013 although a number of leasehold interests were acquired and farmed.  Early in 1994, Ian and Edgar attempted, unsuccessfully, to purchase the Gropes farm.[52] During the course of a discussion about the purchase of the Gropes farm, Ian said to Stuart words to the effect, “we are going to buy this land together as a family farm or as a farm, or as a family,[53] and you are going to have to work to help pay this off.”[54]   At one point Ian said words, to the effect, “you are going to [or, can] be part of this.”[55]  Stuart understood this to mean that he was going to be part of the farm and that he had a future on the farm.[56] 

   [52] T183-187, diary entry 4 February 1994, P164.

   [53] These were alternatives given by Stuart.

   [54] T184.

   [55] T184.

   [56] T187

10. At the time when Ian and Edgar had reached the limit of the amount they were prepared to bid at the auction, Stuart (who was then about 19) offered to contribute $3,000 of his own funds.[57]  Stuart was disappointed when the purchase was lost.[58] 

    [57] T183, 1349 (Ian).

    [58] Stuart’s evidence generally and see Rosemary’s diary 4 February 1994, P164.

11. Ian could not recall Stuart offering to contribute any of his own money to the purchase, but said that $3,000 wouldn’t have been of much assistance given that he was raising his bids by $10,000 at a time.[59] 

    [59]  T1349.

12. In addition to my being satisfied of Stuart’s general reliability as an historian, these last two matters tend to support the finding that Stuart had an interest in the Gropes opportunity over and above that of a 19 year old son watching his father and grandfather at an auction.  I accept Stuart’s evidence that a conversation of the nature described above took place.  I accept Stuart’s evidence to the effect that he understood Ian to be saying that Stuart was to be part of the farming business and would be an owner with Ian over time.[60]  I accept that this was Stuart’s genuine understanding at the time.  I accept that, over time, as a result of other similar representational conduct by Ian, this genuine understanding was reinforced.  The exact content of the understanding and whether or not Stuart acted reasonably in arriving at such an understanding are matters that will need to be addressed.

    [60] T187

13. Stuart came home to the farm to work (subject to his short term wool classing commitments) at the end of 1994.[61]  Whilst I have no doubt that this had always been Stuart’s desire, he did so at Ian’s request.  I accept Stuart’s evidence that at some time in 1994, Ian had said words to the effect “we’re getting busier.  We’d like you to come home as much as you can between your sheds”.[62]

    [61] T227, 539.

    [62] T228, the reference to “sheds” is a reference to Stuart’s wool classing commitments.

14. Ian denies making such a request or having any conversation about Stuart returning home to work full time.[63]  Ian’s evidence on this topic is not plausible.  At one stage, Ian went so far as to say that he never discussed Stuart’s future on the farm.[64]  This is one of a number of examples where Ian denied, and sometimes persistently denied, the obvious.  There was never any question of Mark coming to work on the farm or waiting for Adrian to be old enough.  These possibilities might have been pursued had Stuart, the oldest and, as at 1994, the most readily available, not been interested.  But he was interested.  Edgar was getting older and was slowing down.  Edgar and Nora moved to Maitland on about 30 June 1995, with Edgar’s contribution on the farm diminishing greatly from that time onwards. Even if no other land were to be acquired, Yaringa and Ocean Downs required two people most of the time.  Furthermore, it was only natural that Ian would want one of his sons to work on the family farm just as he did when Edgar was in charge.  This was also a common experience in the area.[65] 

    [63] T1180, 1272, 1334.

    [64] T1321.

    [65] T232, 374-377.

1. As just mentioned, a consideration of importance to the extent of any remedy is this notion of acceleration; the fact that any proprietary remedy to which Stuart is to be entitled will operate to deprive Ian of part of his property and to advantage Stuart, during Ian’s lifetime and at a time earlier than otherwise might have been the case had the representational conduct been adhered to.

2. To the extent Stuart has a proprietary entitlement, it will be because the title to the property, the subject of that entitlement, is now and perhaps has been for some time, at least in equity, in Stuart.  That is, it is no longer Ian’s property and, given Stuart’s proprietary interest, should not be regarded as otherwise available to form part of Ian’s estate divisible amongst his beneficiaries on death.  Nevertheless, if Stuart’s reasonable expectation was only to receive the farming business or part of it, either in specie or by way of equivalent value, upon retirement by or inheritance from Ian, the giving of a proprietary remedy now will involve this element of acceleration of the benefit the subject of the disappointed expectation.  This is not a disentitling factor but a matter going to assessment.[284]

   [284] See, for example, Gillett v Holt [2001] Ch 210.

3. Whilst it is not the case that the Court should search for the “minimum equity” to do justice in the circumstances and it is not a case of assessing or measuring or weighing the detriment minutely in order to convert it into some equivalent of cash or kind, there must be a sufficient proportionality of any interest or remedy ultimately granted when compared with the prejudice or detriment suffered by the plaintiffs and the overall justice of the case.[285]

   [285] See generally Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 at [3] and [4] (Allsop P with whose reasons Giles JA agreed).

4. The starting point for the remedy is the fulfilment of the expectation engendered.  It is not necessarily the case that a claimant should be restricted to receiving no more than it can prove that they suffered by way of detriment.  It is not a case of identifying an equity in terms of compensation for proved equivalent detriment. 

   The equity is a broader one based on the just and conscionable satisfaction in appropriate fashion of the equity arising from the expectation created in another by encouragement or representation.  As Handley AJA says, the role of proportionality is better understood, in a doctrine dealing with the legitimacy or otherwise of resiling from an encouragement or representation that has created an expectation, as assisting in an assessment whether what is claimed or contemplated to be granted is disproportionate or unjust in all the circumstances.[286]

   [286] Delaforce at [4] (Allsop P with whose reasons Giles JA agreed).

5. The present is also a case where the importance of keeping the defendant to the representation or encouragement is all the stronger because the encouragement or representation has been relied on by Stuart and Shannon to abandon a course of conduct that could have led to a different outcome.[287]  In Delaforce, Allsop P described this[288] as the language of loss of a chance that is not fanciful or realistic.  In the present case, alternative courses of conduct were identified in the evidence of Stuart but all directed at his unwavering intention to acquire his own capital asset, a farm in his name.  As Allsop P in Delaforce pointed out:[289]

   That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel.  Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position.  Of course, if it is self-evident or can be clearly demonstrated that the [alternatives were] fanciful or otherwise doomed to fail, there may be no real detriment;... .

   The qualification in the last sentence of the statement of principle by Allsop P does not apply in this case.

   [287] Delaforce at [5].

   [288] At [5].

   [289] At [5].

6. A proprietary estoppel by encouragement may be established and a remedy forthcoming even where the conduct of the party estopped, in this case Ian, has not defined with clarity the expectation.  However, as Handley AJA put it,[290] the quality of the assurances which give rise to the claimant’s expectations is an important factor and their quality may influence the issue of reliance and the issue of reliance and the question of reliance and detriment are often intertwined.

   [290] In Sullivan v Sullivan & Ors [2006] NSWCA 312 at [16] and Delaforce at [55].

7. Relief is to be moulded to recognise practical considerations, such as the need for a clean break, and to take into account the impact of any orders on third parties and any hardship or injustice they, or indeed, the party estopped would suffer. 

8. Ultimately, any relief will be dependent on the facts and circumstances of the particular case.  The proposition, taken from Giumelli,[291] to the effect that a court should prima facie enforce a reasonable expectation which the party bound created or encouraged, is qualified by the requirement of proportionality which finds its manifestation in the manner discussed earlier at paragraphs [90](ix) and (x) and [91] which I will not repeat here.

   [291] Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at [42].

9. The issue of the appropriate remedy in this case, bearing in mind the need for proportionality, is particularly challenging for the following reasons.  The plaintiffs’ expectation prior to July 2003 was that they would, in time, assume ownership of the assets of the farming business, in particular, the two farms Yaringa and Ocean Downs and the then existing plant and equipment, together with control over the operation of the business.  However, this was only ever to be on terms that proper accommodation was to be allowed with respect to Stuart’s three siblings and at a time of Ian’s choosing, either early retirement or death.  At no time was the notion of proper accommodation explored in any significant way.  Stuart and Shannon’s detrimental reliance over the eight years or so between late 1994 and early 2003 is to be viewed and assessed against this qualified expectation.  Furthermore, whilst each of Ocean Downs and Yaringa has always been a significant and valuable farming property, the farming business itself to which Stuart aspired was not, by any measure, as successful and valuable as it came to be during the period 2003 to 2012. 

10. After July 2003, the plaintiffs’ detrimental reliance continued but during this period with a different but more clearly understood expectation. As at July 2003, Stuart and Shannon’s expectation had become that as described earlier at paragraph [244]. I am satisfied that Ian neither said nor did anything that either reduced or increased the content of that represented expectation and, this is so, notwithstanding that Stuart attempted to persuade his father otherwise. Ian’s conduct thereafter was such as to lead Stuart to believe that there was a possibility of achieving a change in Ian’s attitude. However, the fact is that Stuart was unsuccessful in these endeavours.

11. To my mind, it is not as simple as finding that the July 2003 representational conduct merely crystallised the hitherto less certain material expectation in Stuart and Shannon that had been encouraged by Ian.  It is not as simple as finding that it was this “crystallised” expectation on which Stuart and Shannon had relied to their detriment.  Stuart had a different and potentially greater, in content, expectation during the first eight years or so of his reliance conduct.  It is not the case that Ian’s representational conduct in July 2003 merely served to clarify the content or value of the earlier expectation by allowing for an appropriate (according to Ian) provision for his other children. 

12. As I described it earlier, July 2003 was a watershed in the relationship.  Until then, Stuart expected to receive both farms subject to accommodating the just entitlements of his siblings in some non-defined way; thereafter he was led to expect something considerably inferior. 

13. On way of looking at the matter is to characterise Stuart’s pre-July 2003 expectation as one whereby he would receive the two farms but would have to compensate his siblings in an amount calculated broadly on the basis that Stuart would have become entitled to a quarter interest, ultimately on inheritance if not before, but with a substantial uplift on the basis of the eight years or so he had committed to the building up of the farms with minimal remuneration. 

14. On the other side of the ledger is the consideration that, even though the nature of the expectation took on a more definite and limited form in July 2003, the value of the “new” expectation, thereafter, steadily increased as Stuart and Ian continued to work and improve the farming business.  To take a simple but not insignificant example, as a result of the substantial profits made in the years after 2003, through the efforts of both Stuart and Ian, substantial monies were set aside to which Stuart has had access (the FMDs) and is now entitled to have access (the unpaid profit distributions).  In addition, the plant and equipment (the control, at least, over which would have gone to Stuart had the July 2003 draft will come into effect) has been substantially renewed and was said by Ian, as at the time of the RaboBank application, to have a value to the order of $1.5 million.

15. Further, it is not to be forgotten that in addition to the financial benefits now available to Stuart and Shannon (their FMDs and unpaid profit distributions) Stuart and Shannon have had 18 years of comfortable rent free accommodation and access to farm produce and farm consumables such as motor fuel. 

16. In my view, the plaintiffs’ equity will be satisfied in one or other of two ways.  However, I wish to receive further submissions from the parties on the topic of discretionary considerations which would serve to indicate which of these two ways is the more appropriate. 

    Pathway A

17. The centrepiece of pathway A is the declaration of a constructive trust in the plaintiffs’ favour over Ocean Downs, together with a substantial fund by way of equitable compensation: in lieu of a constructive trust over a portion of the plant and equipment used in the farming business and the FMDs in Ian’s name and also recognising or allowing for the finding that the pre-July 2003 equity bore a relationship to the farming business (ie, including Yaringa) as a whole.[292]  Payment of the equitable compensation would be secured by a charge over Yaringa. 

    [292] Cf; Giumelli v Giumelli.

18. In my view, given the lack of specificity concerning the timing of when the plaintiffs’ expectation was to come into effect had Ian not resiled from it, the plaintiffs’ entitlement to a constructive trust arose as at the time that expectation was taken away from them, that is, in practical terms, 1 December 2012.  It follows that consequential orders for an account of profits with respect to the Ocean Downs property[293] and interest on the amount of equitable compensation, outstanding since 1 December 2012, should also be made.[294]  In due course, I will hear the parties further on these issues.

    [293] Whilst strictly a matter that would fall to be considered as part of any taking of accounts, it seems to me that the plaintiffs should not be required to give credit for their rent free occupation of Ocean Downs after 1 December 2012 given that it has been, in effect, their property since then.

    [294] I have considered whether or not the equitable compensation being in lieu of a constructive trust over a portion of the plant and equipment should also give rise to an order for an account of the profits arising from its use since 1 December 2012.  However, there is a level of artificiality and complexity about this that suggest to me that it is not appropriate.  In the circumstances, the plaintiffs will need to make do with interest.

19. I turn to the question of the amount of equitable compensation.  An allowance for the full value of the plant and equipment as at 2012 would be substantially overly generous given that much of the reliance conduct occurred prior to the acquisition of the new plant and equipment and the substantial increase in its value.  However, Stuart would have expected that Ian’s FMDs (part of the July 2003 representation) were to remain throughout at or about $400,000.  Further, Stuart, for eight years or so, expected to acquire both Yaringa and Ocean Downs (on terms).  There is also the issue of acceleration insofar as both the constructive trust over Ocean Downs and the payment of the equitable compensation is concerned although, in this respect, Ian’s relatively advanced age for a full time active farmer must be borne in mind.  Doing the best I can with what can only be a broad axe approach, I would order the amount of $1.5 million as equitable compensation, with respect to which an entitlement arose as at 1 December 2012.

20. If I were to proceed down Pathway A, I would make final orders and declarations as necessary, in time, to reflect the following outcomes.

    1.Judgment for the plaintiffs in the main action, action no. 664 of 2014.

    2.Judgment for the defendants in the subsidiary action no. 846 of 2014 such that the claim of the plaintiff, Ian Rodda Pty Ltd, for repayment of the loan of $135,000 is dismissed.

    3.The first defendant, Ian Rodda Pty Ltd, holds the property Ocean Downs on constructive trust for the plaintiffs and has done so since 1 December 2012.

    4.The first defendant, Ian Rodda Pty Ltd, and the second defendant, Ian Rodda, are jointly liable to pay the sum of $1.5 million by way of equitable compensation to the plaintiffs.

    5.There is to be a mortgage or charge registered on the certificates of title for Yaringa so as to secure the payment by the first and second defendants of the equitable compensation of $1.5 million.

    6.There is to be an account of profits (with all due allowances) earned by the first defendant, Ian Rodda Pty Ltd, arising from its possession and use of the Ocean Downs property on and after 1 December 2012.

    7.There is to be an order for interest, to be assessed, on the equitable compensation as ordered for the period 1 December 2012 until the date of judgment.

    8.There will be judgment for the first plaintiff, Stuart Rodda, against Ian Rodda Pty Ltd as trustee of the Yaringa Proprietors Family Trust in the amount of $308,983.

    9.There will be judgment for the first plaintiff, Stuart Rodda, against Ian Rodda Pty Ltd as trustee for the Ian Rodda Family Trust in the amount of $74,982.

    10.There will be judgment for the second plaintiff, Shannon Rodda, against Ian Rodda Pty Ltd as trustee of the Yaringa Proprietors Family Trust in the amount of $313,674.

    11.There will be judgment for the second plaintiff, Shannon Rodda, against Ian Rodda Pty Ltd as trustee for the Ian Rodda Family Trust in the amount of $59,858.

    Pathway B

21. Bearing in mind the potential further application of the approach of the High Court in Giumelli v Giumelli to the facts of this case, it would be open to order, in the alternative to putative orders 3, 4 and 6 above, that the defendants are to pay equitable compensation in the amount of $4.75 million.  For this purpose there is no reason not to ascribe a value to Ocean Downs, as at 1 December 2012, of $3.25 million in accordance with the Wapper valuation.  In the case of Pathway B, putative order 5 would require a mortgage or charge to be registered over the certificates of title for both Yaringa and Ocean Downs by way of security and putative orders 1, 2 and 7 to 11 inclusive would remain.

22. I have reviewed the plaintiffs’ submissions as to the various alternative remedial responses open to the Court, on the plaintiffs’ case.  In my view, each of those proposed remedial responses overreaches what would be a just and equitable outcome that is proportionate to their detrimental reliance, when regard is had to the considerations I have outlined to this point. 

23. In particular, I have given consideration to whether or not a constructive trust ought to be ordered with respect to Yaringa rather than Ocean Downs with its superior fixtures plus a less amount by way of equitable compensation.  However, in my view this would not be sufficiently faithful to the nature of the expectations encouraged nor would it, given the proximity of the three properties – Lindsays, Yaringa and Ocean Downs – pay sufficient regard to the very real need in this case for remedies designed to assist with a clean break particularly if, as the plaintiffs have offered, Ian were to continue to live in the homestead.

24. I have also given consideration to whether or not a constructive trust ought to be ordered with respect to Yaringa and Ocean Downs and the plant and equipment but with Stuart being required to pay a substantial sum (many millions) over a number of years to Ian and IRPL (the plaintiffs’ preferred position).  However, again, this would not be sufficiently faithful to the nature of the expectations encouraged and would not be a just solution.  In particular, it would deprive Ian of all that he has worked for all of his life and provide him with an inadequate and uncertain return almost by way of forced sale.

25. I am concerned that there may be discretionary factors that should lead the Court to prefer one rather than the other of the two pathways I have resolved to propound including, for example, the desirability of a clean break and the practicality and viability of farming Ocean Downs on a stand alone basis.[295]  I am concerned that the parties’ submissions dealing with the appropriate remedy (if any, on the defendants’ case) were given in a broader factual context than now will apply and, to a degree, involved hypothetical considerations.  Now that, upon my findings, there is to be a remedy granted and its quantum has been identified, I invite further submissions confined to the nature of the discretionary considerations to which the Court should have regard before determining whether to make orders to bring into effect Pathway A or Pathway B.

    [295] In addition to matters already raised as relevant to this issue, there is Ian’s evidence (at T1359) that it is the ability to farm both Yaringa and Ocean Downs that justifies the size of the machinery presently owned and used.

26. As part of that process, I invite the plaintiff to prepare draft minutes of orders that would give effect to both Pathway A and Pathway B and, in each case, together with such other proposed orders considered necessary to give full and proper effect to the plaintiffs’ entitlement as provided for by these reasons.

27. I also will hear the parties further on the issue of whether the sums ordered to be paid pursuant to putative orders 8, 9, 10 and 11 above should carry interest and, if so, the basis of calculation.

28. In due course, I will hear the parties on the question of costs.  The plaintiffs also complain about certain variations made by IRPL to the trust deeds for each of the YPFT and the IRFT[296] which, on their face, have potential costs implications.  They seek a declaration that these variations are void.  It presently is unclear to me whether the issues that arise on the pleadings, in this respect, are moot and as to the standing of the plaintiffs to raise them.  It may be that the issues that need to be addressed here, if any, will be clarified once final orders are made and questions of costs are resolved.  I propose to remain reserved on this aspect of the plaintiffs’ claim.  I will give liberty to apply.  In due course, if either party satisfies me that the matter should be resolved I will hear further submissions.

    [296] Statement of claim paragraph 108.