Rogers v Rogers
[2001] VSC 141
•11 May 2001
| SUPREME COURT OF VICTORIA |
| COMMERCIAL & EQUITY DIVISION |
No. 7166 of 1998
| BERNARD WILLIAM ROGERS | Plaintiff |
| v | |
| GERARD ANTHONY ROGERS | Defendant |
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JUDGE: | Hansen J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9–12 October 2000 | |
DATE OF JUDGMENT: | 11 May 2001 | |
CASE MAY BE CITED AS: | Rogers v Rogers | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 141 | |
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Estoppel – Proprietary estoppel – Contract – Uncle and nephew – "Family farm" in Berriwillock – Promise to leave farm by will – Detriment – Relief.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr S P Newton | Taylor Whelan & Whelan |
For the Defendant | Mr N A Moshinsky QC | Dwyer Mahon Robertson |
HIS HONOUR:
In the Mallee about midway between Bendigo and Mildura is the township of Berriwillock. For upwards of 100 years, members of the Rogers family have farmed there. Over the years down to 1996, the family farm came to be owned by the defendant. He is now in dispute with the plaintiff as to entitlement to the farm.
The plaintiff Bernard William Rogers, aged 38, is the nephew and godson of the defendant Gerard Anthony Rogers, aged 64. In early 1990 the plaintiff, who had been living in Inverleigh (near Geelong), went to live in Berriwillock and work there on the family farm with the defendant. His case is that he did so on the faith of a promise and representations made by the defendant as to making the plaintiff a partner in the farming business and leaving the farm (and later the defendant's entire estate) to the plaintiff by his will. He stayed working on the farm until early 1998 when the defendant spoke of selling part of the farm. Not long afterwards, the defendant did sell part of the farm. In September 1998 the plaintiff filed a writ. He claims the defendant is in breach of a contract to leave his estate to the plaintiff by his will and to take no steps to prevent such a gift. Alternatively, he asserts equitable rights by way of constructive trust to the farm (including the proceeds of sale of the part sold) or, in lieu, to payment of the amount adjudged to represent the financial benefit which the defendant obtained from the plaintiff's labour.
1. Background
I now set out by way of background some facts which I understand not to be contentious. To the extent that they are in dispute, they are facts as I find them to be.
Daniel Rogers was the blacksmith at Berriwillock until 1970. He and his wife, Margaret Ellen Rogers, had three daughters and two sons. The daughters were Frances Rita Watson, Mary Julia Rogers and Carmel Margaret Rogers. Frances is now in a nursing home, and Mary and Carmel are retired or semi-retired Josephite nuns. The sons were William Leonard Rogers, the plaintiff's father, and the defendant. The plaintiff and his wife Gaylene Elizabeth Rogers have two children, referred to in evidence as "Elly" and "Paddy". Elly was born in July 1989 and Paddy in August 1991. Gerard never married and has no issue.
I should clarify what is meant by "the farm". It is unirrigated farmland which has been used mainly for cereal cropping—mainly wheat, barley and peas—and consists of several Crown allotments in the Parish of Tungie on various certificates of title acquired by family members sequentially up to 1968. As to allotments 10, 23 and 31, they were registered variously to Daniel and Margaret. In 1955 Daniel, Margaret, William and Gerard together purchased allotment 11. Later, William and Gerard jointly purchased allotments 9 and 12. In 1980 Gerard bought out his brother's interest in allotments 9, 11 and 12 for a total of $130,000. Daniel died on 29 November 1980. Under his will, his property was left to Margaret for life, and then to Gerard on condition that he pay William $10,000 within five years of Margaret's death. Margaret died on 19 January 1994. By her will, Gerard became entitled to her estate absolutely. Also, he paid William the $10,000 required by Daniel's will. Thus it was that in 1994 Gerard came to own the entire farm: allotments 9, 10, 11, 12, 23 and 31. In addition, in 1996 Gerard purchased allotment 28 from a neighbour called Drury for about $108,000. The allotments total 3,236.43 acres approximately. There is no homestead on the farm.
I mention at this point that after Bernard stopped working on the farm, by a contract of sale dated 2 April 1998 Gerard sold allotments 9, 10 and 11, which together comprise 1,388.21 acres approximately, for $421,252.34. This calculates as roughly $303 per acre. The price was payable as to $40,000 by way of deposit and the balance five years from the date of the contract, with interest payable in arrears on 1 March 1999, 2000, 2001, 2002 and 2003 and on the settlement date at 8% per annum commencing as at 1 June 1998. The purchasers have the right on any day for the payment of interest to reduce the principal owing by payment of $20,000 or a multiple thereof. The sale included five fixed silos and a barn on allotment 10, and four fixed silos and a machinery shed on allotment 11. I accept the expert evidence of Noel Francis Dyett that the three allotments were sold at "realistic market prices".[1] Of the remaining allotments, namely 12, 23, 28 and 31, which Dyett valued at $492,000 and which are not sufficient to constitute a viable farm in their own right, Gerard works three of them himself and the other one is subject to a share-farming arrangement to his benefit. The building improvements on these allotments are mainly constructed on allotment 23 and comprise a large machinery shed and a shearing shed. There are also five silos. The farm plant and machinery remaining in Gerard's possession has been valued by Dyett at $338,040. I accept Dyett's valuations.
[1]I add that in cross-examination Dyett agreed in relation to allotments 9, 10 and 11 that "taking the silos into account … a price of approximately $350 per acre" was achieved. The calculation was not explained but was presumably related to the value of the nine silos.
Moving back in time, until the blacksmith business which Daniel had conducted closed in 1970 the farm was let to share-farmers. Daniel and William then farmed the land themselves. At this stage Gerard went to Western Australia to work as a drilling rig operator. He returned to Berriwillock in about 1978 to work on the farm, but there was not room there for both brothers: the farm did not generate sufficient income for them both and this, amongst other things, caused resentment between them. And so Gerard bought out his brother in 1980, as already mentioned, and in early 1981 William moved to Geelong with his family to start a new life.
Bernard, however, stayed on the farm. He had started a four-year farming apprenticeship with his grandfather in 1977 and had been working on the family farm alongside his father. When his father left Berriwillock in 1981, Bernard stayed to complete his apprenticeship, now working alongside Gerard. But he too left after the harvest of 1981. (The harvest begins in mid-November and lasts for 4–5 weeks.)
Gerard continued to operate the farm on his own,[2] occasionally hiring help at harvest time. He had borrowed from a bank most of the $130,000 required to buy out William's interests in the farm, and he paid off the debt over about five years after 1980. His evidence was that there were good farming years in 1983, 1986 and 1988; 1987 was an average year, although the crops did get frosted; there were dry years in 1984 and 1985; and 1982 was a drought. After 1988, the farm usually made a loss after allowing for upgrading farm equipment. He used profits from the farm to upgrade machinery, and invested the surplus in short term deposits. He drew on his personal savings whenever the farm operating account became short of funds. Thus, apart from a short period after the 1982 drought, he was able to operate the farm out of profit and savings rather than debt.
[2]In terms of ownership of the farming business, he was in partnership with Margaret and, it appears, remained in partnership with her estate for some years after her death.
Meanwhile, Bernard took up the life of a shearer. At first after leaving the farm, he went shearing in New South Wales for 6–7 months of the year, returning to Berriwillock the rest of the time to do shearing and farm hand work. In 1986 he and Gaylene, who had grown up together in Berriwillock, were married. They lived in a caravan, travelling around New South Wales and Queensland to where there was shearing work; Bernard worked as a shearer and Gaylene as a rousabout and cook. They returned to Berriwillock for a month's holiday each year, although Bernard would do casual work if it was available.
In early 1988, Bernard and Gaylene settled in Inverleigh. At first they rented a house, and then in 1989 they bought one. Bernard worked for a shearing contractor for about 9–10 months of the year. Gaylene continued to work as a rousabout. Towards the end of 1988, Bernard worked for Gerard driving a wheat truck for the harvest.[3] This appears to be a continuation of the pattern of doing casual work in Berriwillock at this time of year.
[3]Gerard gave evidence of writing to Bernard in Queensland in October 1988 asking him to telephone him reverse charges; when Bernard rang, Gerard asked him to work on the harvest and he agreed. Bernard had no recollection of how he came to work driving the harvest truck that year. While nothing turns on the question, I do not take Gerard's evidence as contradicting Bernard's statement that he was already living in Inverleigh by that time.
These facts are sufficient background to the events which are the subject matter of this litigation.
2. The pleadings
In paragraph 3 of the statement of claim, the plaintiff claims that between October 1989 and February 1998 the defendant represented and promised the plaintiff that if he came to work on the farm full time and continued to do so, then:
1.the defendant would pay the plaintiff an income of $20,000 per annum increasing to $38,000 per annum;
2.he would make the plaintiff a partner in the farming business;
3.the defendant would leave the farm to the plaintiff in his will; and
4.the plaintiff would ultimately have full control of the farm.
In the extensive particulars to this plea it was stated that the defendant also told the plaintiff he would buy a house for the plaintiff's family, that he would leave the plaintiff the farm machinery in addition to the farm itself, and that he would leave his entire estate to the plaintiff. In paragraph 8 it is alleged that the defendant was bound by a contract with the plaintiff to leave his entire estate to the plaintiff by will and to take no steps to prevent himself doing so.
In paragraph 4 the plaintiff claims that, acting on the promise and representations, and to the knowledge of the defendant:
1.in February 1990 he and his wife sold their house in Inverleigh which they had bought in February 1989, thereby suffering loss;
2.they lived in a dilapidated rented house in the Berriwillock area and spent their own money to repair it;
3.later they purchased a house in Berriwillock, which they renovated, improved and maintained;
4.they gave up their employment and employment opportunities in Inverleigh;
5.he worked on the farm, usually 7 days a week for as long as 15–16 hours a day during cropping and 8–10 hours a day at other times, for an income of $20,000 (later increased to $25,000) which was substantially less than he could have earned if he had stayed in Inverleigh and substantially less than the defendant would, in the usual course of farming operations, have had to pay an employee;
6.he sometimes did contract cropping for the defendant for which the defendant received payment, but he received no additional income;
7.due to financial hardship they cashed in an insurance policy and ceased to maintain a personal superannuation fund.
As a result of the reassurances, promises and representations of the defendant during the time the plaintiff was working at the farm, the plaintiff decided, to the defendant's knowledge, to continue to live and work in Berriwillock (paragraph 5). The defendant benefited financially from the plaintiff's work, in that he acquired a full-time employee for significantly less than the usual rate of remuneration who improved the value of the farm (paragraph 7).
In paragraph 6 it is alleged that in February 1998 the defendant told the plaintiff that he was proposing to sell the farm, denied having made any promises to the plaintiff, and said he would acquire an alternative farm for the plaintiff. The defendant thus displayed an intention not to perform the contract; this constituted a breach of the contract, and the plaintiff has suffered loss as a result of the breach. See paragraphs 9 and 10.
Alternatively, in paragraph 11 it is alleged that the defendant is estopped from denying that the plaintiff is entitled to absolute ownership of the farm (together with improvements and machinery), or to such other interest as the Court deems appropriate. Then, in the further alternative, it is alleged in paragraph 12 that it would be unconscionable for the defendant to refuse to transfer the farm (with the improvements and machinery) to the plaintiff either absolutely or to such extent as the Court deems appropriate. Finally, in a further alternative, it is alleged in paragraph 13 that it would be unconscionable for the defendant to retain the financial benefit which he obtained as a result of the plaintiff's work on the farm.
In the prayer for relief, the plaintiff seeks a declaration that the defendant is bound to leave the plaintiff the farm (including the improvements and machinery) by will and damages for breach of contract. He also seeks a declaration that the defendant holds the farm (including the improvements and machinery) on trust for the plaintiff, either absolutely or in such proportion as the Court deems appropriate, or an order that the defendant pay to the plaintiff such amount as the Court deems in all the circumstances to be just and reasonable.
In the main, the defence merely denies the plaintiff's allegations. It is admitted that in late 1989 the defendant told the plaintiff he intended to leave the farm to him and had made a will to that effect, that late in 1989 the parties agreed that the defendant would employ the plaintiff as a farm hand at $20,000 per year and in 1994 agreed to increase the amount to $25,000, and that between approximately 1994 and 1998 the parties traded as equal partners in a livestock enterprise. Otherwise, the defendant denies the promises and representations listed at [13] above. It is alleged that the plaintiff and his wife did not act on the basis of any promise or representation of the defendant. There is an allegation that the defendant derived no greater benefit from the plaintiff's work than he would have from the work reasonably carried out by a person employed at reasonable rates to perform such work. The defence concludes with a plea of the Statue of Frauds: if there was a contract to leave his estate to the plaintiff, it was a contract for the disposition of an interest in land, it was not evidenced by writing, and the defendant relies on s. 126 of the Instruments Act 1958.
During the trial the plaintiff filed a reply for the purpose of raising a plea in answer to the defendant's plea of the Statute of Frauds. All that the reply does is to allege there were acts of part performance of the contract, the acts being those summarised at [14]. The reply does not raise the constructive trust case as an answer to s. 126 but that is in fact how the plaintiff conducted the case.
3. The witnesses
At this point I introduce the eight witnesses and comment on credit issues. The plaintiff and his wife gave evidence. The plaintiff also called the valuer Noel Francis Dyett, Ronald Thomas Corbett, Paul Gerard Carty, Geoffrey Thomas Barry and Raymond Joseph Clarke. The only witness for the defendant was the defendant himself.
The plaintiff was the main witness in the case. He struck me as a practical and conscientious man of the land, and as an honest witness. His evidence, put simply, had the ring of truth. It was put to Bernard in cross-examination that in several respects he had overstated the detriment he had suffered, but I do not find that this was the case; there was no unreasonableness or excessiveness in his evidence, looked at in the context of the evidence as a whole, which gave me cause for concern in accepting it. A point made against Bernard in final address was that he and his wife had not been candid, in that he had failed to produce their tax returns or financial records before 30 June 1991 or explain their absence. The evidence was that Bernard engaged Clarke, who was Gerard's accountant, at about the time he moved to Berriwillock. It was not clear whether he had an accountant before then. In any event there are amended assessments for Bernard for the 1988/89 and 1989/90 tax years which state his amended taxable income, the amount of tax payable and other items usual on an assessment These were issued upon application by Clarke after he commenced to act for Bernard and Gaylene. The amendments in each year increased the rebates by allowing for the spouse rebate which had obviously been overlooked. It is of course axiomatic that returns had been lodged, at least in those years; I accept that the plaintiff and his wife had done so. I also accept that genuinely copies were unable to be found and produced to the Court. I reject the submission that the failure to produce the tax returns or other financial records affects adversely the credit of Bernard and his wife. Further, the information in the amended assessments together with the other evidence satisfactorily indicates the relevant financial position.
Gaylene gave evidence that was generally confirmatory of her husband's. She too was, in general terms, an impressive witness. Against her too, there were suggestions that she was inflating the detriment suffered. For instance, in cross-examination it seemed to be suggested that the family finances could not have been too bad if she and Bernard were able to produce a $10,000 deposit on the house they bought in Berriwillock in 1994; they would have had about $20,000 plus interest to live off up to that time. I do not think the suggestion fairly represents the situation. I conclude below at [67] that Bernard and Gaylene were having to dig into their savings to the extent of some $7,000 in the first two years they were in Berriwillock to fund their basic living expenses and make their house livable; I do not consider they were profligate in doing so. Without wishing to pre-empt my findings as to detriment, I can say this was a significant detriment and certainly not a point against the credit of Gaylene or her husband. Another point which defendant's counsel said went against Gaylene's credit was her inaccuracy in recollection of the date when the income received from Gerard allegedly increased from $20,000 to $25,000. Initially in examination-in-chief, based on her recollection of the conversation with Gerard that I recount in the next paragraph, she said it was 1994 or 1995; when in cross-examination she was shown her tax return for 1991/92 which showed joint share-farming receipts of $25,000, she accepted on the face of the documentary evidence that the conversation must have occurred in 1992. At this point the inference may have been open that she was trying to overstate by two years the time on which they had to live on the lower income. However, it is apparent from the facts as I find them below at [78] that the income from Gerard fluctuated for some years before settling on $25,000 per year from the 1995/96 financial year. Their income was in fact at a relatively constant level until at least mid-1995. It is perfectly consistent with Gaylene's version of events that the conversation occurred at the time she initially said, as a precursor to the permanent increase to $25,000 per year that followed soon after. Moreover, her evidence is consistent with the admission in the defence that the agreement to increase $25,000 was in 1994: see [18] above. I accept Gaylene's timing in this regard and find it to be the fact. My view of her as an honest witness remains unaltered.
The defendant was described by Corbett as an introvert who did not say very much and by the plaintiff as "a man of few words" with whom "a discussion doesn't go very long", and I formed the view that this is an accurate description, both from accounts of witnesses of conversations that Gerard was involved in and from the way he gave his evidence. The following passage in cross-examination, recounting a conversation between Gerard and his mother Margaret about leaving the farm to Bernard, is indicative:
"I told her I was considering making my will in favour of Bernie, and she agreed with me.
Did she tell you why she agreed? --- No.
She didn't at all? --- She didn't need to, no.
Did the discussion go not beyond what you've just told us then? --- To the best of my recollection, no."
So too is one of the few specific conversations of which there are different versions, namely a conversation between Gerard and Gaylene when she came to his house to discuss the financial situation in which she and Bernard found themselves. I have already concluded in the previous paragraph that the conversation occurred in 1994 or 1995, as claimed by Gaylene. According to her, she went to see Gerard, whom she knew would be at home because he had just had an operation on his knee. It was raining, so she took the paper in for him. She explained how hard it was to survive on $20,000 a year and that it was affecting their family life in that she and Bernard were always fighting about money, or the lack of it. Gerard did not respond. He sat looking at Gaylene, which made her so uncomfortable that she just left. Later, Bernard went to see Gerard and they got $5,000 more per year. According to Bernard, he went to see Gerard before his wife (I think the order is not important) and told him they could not live on the wages they were on, and they would have to try to increase it, to which Gerard merely shrugged his shoulders. Gerard's account was quite perfunctory. Agreeing that Gaylene did come to him at one stage and ask that Bernard be paid more money, he said: "I don't really know why she came for that time, because she—she spent so much time crying." He did not refer to the content of the conversation at all, but I think he answered on the basis that Gaylene's account, which he had heard in court, was accurate. I find that to be the case.
Even allowing for differences of personality and uncomfortableness with the formality of giving evidence in a court proceeding, the reticent and perfunctory nature of Gerard's evidence could be interpreted adversely as reluctance to give a full and frank account; alternatively, his evidence may be a gloss or summary, and thus not ideal evidence in form; alternatively, it may reflect a lack of full recollection; alternatively, it may allow an inference about the reliability of the evidence of his conversants, in that they would be more likely to remember the few words that he actually spoke. While his reticence and perfunctoriness on its own could not be determinative, it is a feature of Gerard's evidence which I must take into account, although not necessarily ungenerously to him, in considering its reliability.
However, there were also some specific inconsistencies in Gerard's evidence, which taken together cast doubt on his reliability and credit.
The first of these was in relation to Gerard's will made on 17 November 1989, by which he devised "the whole of my real property, together with all my farming plant, equipment, implements and machinery thereon and all livestock thereon" to Bernard (provided he survived Gerard by 30 days) or failing that to Gaylene (provided she survived both Gerard and Bernard by 30 days). Bernard and Gaylene were also beneficiaries to the residuary estate as to two equal parts, together with Frances as to two equal parts, and Mary and Carmel as to one part each. While being cross-examined about his intentions in making such a will, Gerard stated that Bernard was the main beneficiary under his previous will. A call was made for the previous will. In response the defendant's counsel produced a copy will dated 24 June 1980, which Gerard accepted as his prior will. The beneficiaries named in the will were Daniel and Margaret during their lifetime, and then William and Frances as tenants-in-common in equal shares absolutely. In other words, Bernard was not named as a beneficiary at all. Regardless of what significance I may eventually attach to the new will, Gerard's initial evidence, which was shown to be false by the production of the will—a production to the Court which only followed a specific call by counsel for the plaintiff—was plainly an attempt to belittle its significance. I do not accept that Gerard was innocently mistaken on a fact so basic to the case. He impressed me as a person who would be keenly alive to the identity of the main beneficiary in his will.
The second problematic area of Gerard's evidence relates to his investments in ostriches. At first in cross-examination, he said that in the early 1990s he bought a half share in three ostriches for about $50,000, then another pair for about $30,000 (as an estimate) and then another adult bird for a price he could not recall. The impression given at this stage was that he spent $100,000 or less on six ostriches. Having been shown his tax return for the 1992/93 financial year, Gerard accepted that in that year he had spent $200,998 for seven birds, and that there had been a natural increase of seven birds. A bit later in the cross-examination, I asked Gerard about some figures in his 1996/97 tax return, which still referred to the ostriches, listing opening stock of 10 and natural increase of 14, with stock on hand valued at $104,466; his answer was that the ostrich venture ceased very soon after that tax year, when a disease wiped out much of the stock, and he was no longer sure whether he had any stock remaining. If this were all, I might be able to accept that Gerard merely had a lapse of recollection, even though his answers were substantially inaccurate or incomplete in relation to amount, number and timing, and thus quite misleading. However, this was a matter to which he had sworn in his answers to interrogatories on 18 May 2000. In response to an interrogatory about the costs, profits and losses of his business ventures and investments since 1987, he said in relation to ostriches: "I also paid $10,000 in 1992 for a share in a trio of ostriches. The cock bird has been infertile, the eggs have been minimal. One hen has died and I consider the share to be worthless." Not only does this substantially conflict with his position in oral evidence, but it exposes that he had been asked to make a considered answer on the topic relatively recently, less than five months before he gave his oral evidence, and he had either not undertaken the task with the attention appropriate to giving sworn answers in serious litigation or he had attempted to mislead the Court. I find that the latter is the true explanation. He gave false evidence. The purpose was to have the Court accept a description of his financial circumstances in the relevant period that was less than the fact, which I find was as stated in his tax return.
The ostriches issue also relates to the third area of Gerard's evidence that is relevant at this stage, and that is the amount of his savings. At this stage I merely assess Gerard's evidence for its internal consistency; I will make findings of fact below. His evidence in chief was that the greatest amount of savings he had ever had was $180,000–200,000 in the mid-1980s; in cross-examination he said it was $150,000–180,000. However, he also said that he paid for the ostriches out of those savings, as well as about half of the $108,000 that he paid for allotment 28 (the other half came from selling a silo full of barley). A further area of spending was on farm equipment. The depreciation schedule to the tax return for the farming business[4] for the 1997/98 financial year lists a substantial number of items of farming equipment acquired in 1994, 1995 and 1996 at a cost of $348,461. A number of these items are stated to have been acquired on 20 January 1994, the day after Margaret died. The aggregate stated cost of these items is $120,802. Some of their values are low, if not minimal, and suggest they were acquired at an earlier time perhaps by Margaret, at least in part, perhaps by the partnership. For present purposes that point does not matter. The depreciation schedule is Gerard's, at least in respect of the amount of the $227,659 spent after 20 January 1994, and in re-examination he said that all items on the schedule were necessary items of expenditure. I accept his evidence that much of the amount he spent was paid out of savings and earnings from the farm; I infer from this, in combination with his claim that the farm was barely profitable from 1988 onwards, that some of the savings must have related to the pre-1988 period. Having got to this stage, however, simple arithmetic demonstrates that something is amiss in these statements: if the source of these funds was as he said, then he must have had more than $180,000–200,000 in savings in the mid-1980s. I conclude that this evidence is a factor weighing against the reliability of Gerard's evidence as a whole. His downward revision of the figures in cross-examination was, I find, another attempt to downplay his own financial situation.
[4]By this I mean the partnership between Gerard and Margaret (or later her estate) that I refer to at footnote 2 above.
The overall picture that emerges of Gerard's credit and the reliability of his evidence, based on my comments in the preceding paragraphs and my general impression of him in the witness box, is that I must approach his evidence with considerable circumspection. Such an approach is also consistent with the overall probabilities of the case: in a nutshell—and I will set out the facts in detail below—it seems against the balance of probabilities that a man should uproot his family against the wishes of his wife in order to move to a remote part of Victoria and take on work the remuneration for which was low or uncertain. In the result I conclude that I prefer the evidence of Bernard and Gaylene to that of Gerard. Where Gerard's evidence conflicts with that of Bernard or Gaylene, I prefer the latter witnesses.
I now refer to the other witnesses, each of whom I found to be honest and reliable. Indeed I did not understand their credit to be attacked. I merely describe why they were called. Dyett, a valuer working in north central Victoria, gave evidence of the value and condition of the farm in November 1999. Corbett is a farmer from Berriwillock and a Rogers family friend. He gave evidence relating to Gerard's intention to create a trust to hold the farm, with the objective of both minimising tax and devolving the assets to Bernard. Carty is a shearing contractor who has known Bernard for over 20 years. He worked alongside Bernard as a shearer, and his evidence went towards showing the financial position Bernard would have been in if he had continued in that line of work. Barry is a farm hand who worked on the farm adjoining the Rogers farm. His evidence went towards confirming the hours that Bernard worked based on observations of him in the next paddock. Clarke was the accountant for both Bernard and Gerard. He gave evidence of a meeting at Gerard's house in 1997 attended by himself, Bernard and Gerard. I will mention the evidence of these witnesses only to the extent necessary.
4. The promises and representations
I turn to the evidence as to the promises and representations made by Gerard to Bernard. The plaintiff and defendant's respective versions in this respect were completely different. I set them out in turn.
Bernard and Gaylene's version
In 1989, Margaret had a heart attack and was in hospital for a few days. According to Bernard and Gaylene, Gerard telephoned Bernard to advise that Margaret was ill and had asked to see Bernard, Gaylene and Elly, her recently-born granddaughter. He also asked Bernard if he would consider coming back on to the family farm full time. Bernard said they would come up on the weekend—which was 3–4 October, the weekend of the Swan Hill Show—and visit Margaret who was at the Sea Lake Hospital, and they did so. After they saw Margaret, Bernard and Gerard spoke alone outside the hospital.
Gerard asked Bernard if he would come up and do the harvest that year, which Bernard agreed to do, and they discussed Bernard moving to Berriwillock to work full time. In the course of the conversation Gerard spoke of a partnership, that he was thinking of semi-retirement, and that if Bernard would return to work on the farm, he could eventually take it over. Bernard told Gerard that he had bought a house, that he had a new baby, that he had stepped into a good shearing run, and described his then financial prospects, namely that he could earn up to $1,000 net per week or about $34,000–38,000 net per year as a shearer.[5] Gerard said that he could start Bernard on $20,000 and gradually build up to that amount. Bernard told Gerard he would have to go home before the harvest and tie up a few loose ends. He was excited about the prospect of returning to the farm and eventually taking over where his father had left off. However, he did not give Gerard an answer as to moving up to work on the farm full time.
[5]At first, in examination-in-chief, Bernard's evidence was that he said he was earning $34,000–38,000 per year. In cross-examination he accepted, based on his notice of amended assessment for 1988/89, that his actual income in that year was about $35,000 and his net income about $25,000; and he said that these figures were about the same as what he had earned in the preceding two or three years. He made clear that the $34,000–38,000 figure is what he said he could have earned, as a net figure. I accept Bernard's evidence, based on the documentary evidence, as to what he did actually earn. I accept that Bernard was inaccurate in his first answer describing what he said to Gerard and clarified himself when cross-examined. This is in accordance with the probabilities in a conversation of this type, where he was discussing a future situation and would be describing his prospects in general terms. It was put by the cross-examiner that the $34,000–38,000 figure was what he was earning gross, and that this is what he told Gerard; this would have been the level of income that Gerard was trying to match. But there was no evidence from Gerard that he was relying on such a figure.
Bernard described the conversation to Gaylene. According to her evidence, he said that Gerard had offered him a partnership in the farm. First Bernard was to help with the harvest, and then consider returning to the farm.
After returning to Inverleigh, Bernard telephoned Gerard to confirm that he was coming to work on the harvest. When he did so and worked alongside Gerard, they got on well together. There were further discussions about Bernard returning to the farm. Gerard said that Bernard's initial income would be $20,000 and this would gradually build up to what he was earning from shearing. He said there would be a partnership. He said he was interested in semi-retirement and taking holidays, and that Bernard would eventually take over the farm. Bernard recalled one specific conversation they had while working on the header: Gerard said that he had left the farm and machinery in his will to Bernard, as the last surviving Rogers. In general discussion, Bernard asked what sort of housing was available in Berriwillock. Gerard said that there could be nearby land with a farmhouse, namely 600 acres belonging to Cootes, that might soon be for sale; if so, Gerard would buy it and incorporate it into the farm. Bernard would be able to live there with his family, but until then he would have to rent a house in town.
Bernard returned to Inverleigh after the harvest. He discussed the situation with Gaylene, who in evidence said he recounted it thus: Gerard had asked him to come back onto the farm, he had left everything to him in his will, he had spoken further of a partnership, he wanted to semi-retire and have holidays. Bernard also discussed Gerard's offer with his mother. Neither his wife nor his mother were in favour of him taking up the offer, although Gaylene was happy to go to Berriwillock if that was what Bernard wanted. In spite of the reservations expressed by his wife and mother, Bernard telephoned Gerard and told him he would come and work on the farm after putting his affairs in order in Inverleigh.
Bernard told the people he had been shearing for that he would not be available to work for them in future. Bernard and Gaylene sold their house. They moved to Berriwillock in about March 1990 and Bernard began working on the farm. I describe their living and working conditions in detail in the section titled "Detriment" below.
In a conversation soon after Bernard began work, Gerard repeated that Bernard would get $20,000 paid six monthly. However, it soon became apparent that Bernard and Gaylene would struggle to get by on that arrangement. Bernard asked whether he could be paid weekly, but Gerard said the cheques would be too dear and that Bernard should get used to being paid six monthly since he (Gerard) received his income only periodically—mainly once a year after harvest. Some time during the first year they were there, Bernard told Gerard that, on the wage he was receiving, he would have to work off the farm to supplement his income. Gerard agreed that Bernard could go shearing whenever it did not interfere with farm work. Bernard did in fact go shearing for periods during September and October each year. Later, from about 1992, he also supplemented his income by running sheep on the farm. This was a partnership enterprise between Gerard and Bernard, in that they shared the profits equally although Bernard alone was responsible for tending the sheep: Bernard's evidence was that Margaret was the source of the initial funds, which were paid back from the sale of wool and lambs. In or about 1994, the parties agreed (in the circumstances I have described at [22]–[23] above) that Bernard's income would increase from $20,000 to $25,000, although the actual amounts paid by Gerard are set out below at [78]. I also mention at this point that, after the first four years, Gerard provided Bernard with a vehicle. Three weeks before Bernard left, Gerard provided another, fairly new vehicle as a replacement.
Through the eight years or so that Bernard worked on the farm, 5–6 times a year Bernard discussed with Gerard the financial circumstances of the farm. Gerard would say: "It's not making no money". When Bernard asked whether there was any debt over the farm, Gerard said there was none. Based on what had been produced off the land and the amount of machinery that been bought, as well as his observations of the produce coming off neighbouring farms and how those families lived, Bernard did not accept Gerard's statement that the farm was making no money.
Through that time, Bernard also periodically raised with Gerard the financial arrangements between them. At first it was 2–3 times a year; later it became 5–7 times. They were not long discussions. Bernard would ask when the partnership was going to happen and when his wage would increase. Gerard would always say: "I'll go down and see the accountant in June and I think we'll get something worked out then". However, nothing ever happened. If Bernard asked why nothing had happened, Gerard would say, "Well, I've left it all to you in my will", and that would be the end of the conversation.
In later times, when the frequency of the discussions increased, Bernard would ask about his wage, the partnership and when he would take over running the farm. Gerard would reply: "Well, I think I'll go down to Melbourne and discuss it with [Clarke]". In one or two discussions, Gerard finished the conversation saying: "You've got no need to worry anyway, I've left all the farm and machinery and all my assets to you anyway". He said Carmel and Mary did not need the money or land, being Josephite nuns, and that Frances was well looked after: "there's no one else to leave it to, so I'll leave it to you". Bernard replied by saying: "It's a very, very nice offer and gesture, [Gerard], but I just can't survive on what I'm doing at the moment. I've got to get on with life now, with a young family and trying to bring them up and educate them. I've got to try and get something moving now." Gerard would respond: "I'll try and arrange a meeting with the accountant and we'll try and get something going" On a few occasions Gerard told Bernard that he'd been to Melbourne but there was no outcome. And so, in early 1998, Bernard organised a meeting himself. The meeting was in Berriwillock and was attended by Bernard, Gerard and Clarke. They discussed Bernard's pay and the partnership, and how Gerard's will was well and good but did not help Bernard at the time; Gerard spoke about putting the farm into a trust so that he could retire and go on the pension and Bernard could take it over. In cross-examination, Bernard added that they discussed the possibility of Bernard leasing or buying the farm from Gerard, but he said: "There's no need to do that because it's all left in the will anyway". Clarke's account of this meeting in general corroborated Bernard's evidence: he said it occurred in 1997 or thereabouts; Bernard convened the meeting, seeking more money and more control in running the farm; at the meeting, Clarke suggested that a family trust might achieve this and described its mechanism; the meeting ended after about two hours but no specific action was decided upon. No arrangement was in fact put in place as a result of the meeting.
Then, in January or February 1998 when Bernard returned from a 17-day holiday in Perth, he found it was the talk of the district that the Rogers farm was for sale. He received various telephone calls asking why he was selling part of the farm. He saw a real estate agent pull up outside the machinery shed one day and drive around the property with Gerard. He found some people looking over the farm, saying they were going to buy it. I quote from the transcript of Bernard's examination-in-chief:
"What did you say? --- I told them they're on the wrong place.
Why did you tell them that? --- Well there's—there was definitely no—no reason to sell the farm. I—and I couldn't see any reason, it was—well virtually it was left to me in the will, it wasn't there to be sold."
After a week or ten days, Bernard went to see Gerard about the situation. Gerard said that an estate agent had suggested to him a price for the land which was too good to refuse. He said that he was broke. He further said that he would buy a farm somewhere else; Bernard did not take this seriously, in the circumstances. Bernard described how he was stunned, devastated and upset at the news:
"Why were you upset? --- Well, I put—I put a good eight or nine years of my life up there—I give away a lot to come up there. In the meantime I'd been promised he'd leave the farm to me, I put my wife and family through a lot. And I worked the farm like it was my own. I put my heart and soul into it for a lot of time, and give up a lot for it. And just for being sold off like that so cheaply—it was—it's something you don't want to hear every day."
When Bernard asked Gerard where that left him, Gerard merely said: "I suppose you'll have to get another job". At this stage, Bernard determined to quit the arrangement. He said he would tidy up the details with the sheep and drop the ute off. He did so, obtained a cheque for his wage to date and, as Bernard said, "that was it". Not long afterwards, Gerard sold allotments 9, 10 and 11 as I have mentioned.
Gerard's version
Gerard recounted a very different version of events leading to Bernard's arrival in Berriwillock. He had no recollection of Bernard coming to visit Margaret in hospital. He said that he telephoned Bernard in about October 1989 and asked him to help with the harvest like he had the previous year. He did so.
One day, which Gerard said was early 1990, while Gerard was on his bed on the verandah of his house reading the paper, Bernard came to him and asked if he could have a permanent job on the farm; thus the initiative is reversed compared to Bernard's version. Bernard said he couldn't make any real money at Inverleigh and what would be the possibilities of a job. Gerard thought about it for a moment and agreed, considering that he was getting older and it would be advantageous for him to have someone to help him. Gerard told Bernard that he had made a will in Bernard's favour; in giving his evidence, Gerard was at pains to make the point that this was after Bernard had agreed to come and work on the farm. He said he never discussed the will with Bernard again. There was no discussion about salary or working conditions at this stage: this happened only after Bernard started work. Gerard denied he had said, at this time or at any stage, that Bernard would have eventual control of the farm. Bernard expressly denied such a conversation on the verandah.
Without further discussion, according to Gerard, Bernard arrived in Berriwillock and started work. About a week later, in the ute coming home from the farm, Gerard said he could afford to pay Bernard $20,000 per year in half-yearly instalments and that Bernard could go shearing if there were quiet times on the farm. Bernard agreed to those terms. Gerard denied saying that cheques were too dear to pay him more frequently.
In relation to the sheep trading enterprise, Gerard claimed that he had bought the initial mob; he did not say whether he was repaid out of the proceeds of the enterprise. He said he assisted with the sheep at shearing time and with marking lambs, and occasionally went round the sheep.
Gerard said Bernard raised the topic of a partnership several times. He described a conversation while travelling home in the ute: Bernard raised the topic; Gerard responded that the farm could not make enough money to have sufficient funds for both of them; to which Bernard made no comment. Another time when Bernard raised the topic, Gerard asked him if he would be able to withstand the year of no income in the event of a drought.
Apart from this, the only evidence from Gerard in respect of discussions about Bernard's finances was in relation to the meeting between Bernard, Gerard and Clarke. Gerard said that Clarke's evidence on this topic, which he had heard in court, was basically correct; he added that he thought it was quite unnecessary to go to the expense of creating a trust of which Bernard, Gaylene and their children would be the beneficiaries, because the farm was already left to them in his will; but he did not say so during the meeting.
In relation to the possible sale of the farm, Gerard's evidence was that in January or February of 1998 a real estate agent told him he could get $375 an acre for the farm—that would value the farm at over $1,000,000. It being a high price, Gerard said: "Get it if you can". In March, Bernard came to see him about the possible sale of land, but Gerard could not tell him anything because nothing had happened; no land had been sold and there were no offers. Gerard told Bernard that if the farm was sold, "[w]e'll buy a better farm" with the proceeds; according to his evidence, he said this because he intended to better himself and Bernard along with him. A day or so later, Bernard came back and said without elaboration: "I want to finish up". Gerard was a bit shocked and did not reply. He denied saying that he was broke or that Bernard would have to get another job. They then made arrangements to wind up the sheep trading.
Resolution
As I have said, the two versions of events are incompatible, and I must decide between them. In summary, I find Bernard and Gaylene's version more probable than Gerard's. There are a number of factors which point in favour of this finding, in addition to my general comments about Gerard's evidence at [23]–[29] above.
First, the admission in the defence that in late 1989 Gerard told Bernard he had made a will leaving the farm to him accords with Bernard's account more than it does with Gerard's, both as to the time and content of the statement. In his oral evidence Gerard did two things: he shifted the time to early 1990 and merely said he "had made a will in [Bernard's] favour". The latter could have comprehended anything from a moderate legacy to the entire estate. But the admitted fact is that he told Bernard he intended to leave him his farm and had made a will to that effect. Not only is it an admitted fact, which counsel for the defendant never sought to withdraw by amendment, but it accords with Bernard's evidence and is also fairly reflective of the will, which left Gerard's real property, including plant, equipment and livestock, to Bernard absolutely. According to Bernard, Gerard said he had left him the land and machinery; I have no doubt that Gerard's statement meant and was understood by Bernard to mean that livestock was also included. A question arises as to why Gerard's evidence took the form it did, that is, of departing from the precision of the admission in the defence. I find that he fashioned his evidence to avoid the conclusion that his statement concerning his will was a factor which induced Bernard to work on his farm. His argumentative response in respect of the timing of his statement about the will shows an awareness of this point.
Secondly, I do not accept that Bernard was in such a difficult financial situation in Inverleigh that he needed to take the initiative to look for other work. The defendant's counsel attempted to establish in cross-examination that Bernard and Gaylene were oppressed by money trouble at the time. Bernard had 9–10 months' shearing work per year, from which he could have expected to earn about $1,000 per week after tax. I describe their housing situation in detail below, but the key point in this context is that they had missed one or more of the monthly mortgage repayments for their house in Inverleigh during 1989. But according to Gaylene the bank had not sent them a letter requiring them to catch up on their instalments. Bernard and Gaylene both explained that Bernard did not go shearing for about a week when Elly was born in July in order to look after Gaylene and the baby, and that there was a lot of wet weather at that time which meant that less shearing work was available; this was the reason they had trouble with the repayments. In other words, it was not because his income was unreliable. Bernard worked picking potatoes or restumping houses when there was no shearing, but this was not because they were desperate for the money but rather because he was a worker by nature.
On this last point, the evidence was consistent that Bernard was a person who was prepared to work hard. Gaylene said so, and Gerard agreed. Carty said Bernard was a solid worker and that he would employ him tomorrow. What is more, Bernard had considerable prospects in the shearing industry: in September 1989 he had joined "the A team" on his employer's list of shearers, meaning that he had a steady flow of work for 11–12 months of the year, as opposed to 9–10 months previously. In addition, according to Bernard's evidence, he had been offered a shearing run by a contractor, for which he would not have to contribute any capital and from which he estimated he could earn $1,200–1,500 per week, which his evidence seemed to indicate was after tax. Bernard and Gaylene's opinion was that things were settling down and improving financially. Bernard denied expressly that it would be hard to live off shearing in their circumstances in Inverleigh. I accept his evidence and infer that, despite any difficulties he may have had in paying the mortgage due to the circumstances I have described, he was not in dire financial straits such as to make the statements ascribed to him by Gerard. I accept the explanation in cross-examination of both Bernard and Gaylene that the difficulties were temporary and related to the birth of Elly and the weather. They were not caused by an inability on Bernard's part to get work.
Thirdly, in assessing the probabilities involved in the two accounts of events surrounding Bernard's move to Berriwillock, I consider the general position of Gerard in late 1989 and early 1990. His mother had had a heart attack: she ultimately recovered and lived a further four years, but it is readily to be inferred that her condition at the time was such as to remind Gerard of his own mortality and to consider the future of the farm and his own future in relation to it. Even if he did not necessarily know the precise details of Daniel's or Margaret's wills, I do not think it is disputed that he was aware that he would have control and full ownership of the farm once Margaret died.[6] I find that he was so aware. He was unmarried with no children, and his own evidence was that he considered Bernard the appropriate beneficiary for the farm under his will. I infer from this evidence an element of wanting to keep the farm running in the family. In those circumstances it would not be likely that Gerard would have gifted the farm to Bernard on the basis that he (Gerard) would work the farm until he himself died and that Bernard would take over at that point, by which time Bernard might be out of touch with farming practice and/or unwilling to maintain the farm. It is probable that he considered in some way how the transition would be made, including how he would be provided for once he was older and unable to run the farm on his own. This position is perfectly consistent with the offer which Bernard said Gerard made and the making of the will in the terms described at [26] above.
[6]There was a suggestion during cross-examination of Bernard that Gerard would not have made representations of the type alleged, because he did not own all of the farm at that point in 1989: some of the land was registered to Margaret. That may be so, but Gerard did not tell Bernard this and he was not otherwise aware of the fact. I think that in the circumstances Gerard himself had a reasonable expectation that his mother would predecease him and that accordingly the entire farm would be his to deal with as he wished. I conclude that this factor does not militate against adoption of Bernard's version of events.
In addition, considering Gerard's financial position at the time, even allowing for what is common knowledge and the evidence as to the unpredictability of farming income, Gerard's financial position must have looked fairly positive to him: he said that he usually made a loss after 1988, but at the time currently under consideration he had had three good years out of the last seven, plus one average year, during which he had accumulated considerable savings. In the circumstances, the statements ascribed to Gerard by Bernard's account do not seem improbable.
Fourthly, Gerard's version is inherently unlikely in its suggestion that Bernard would just show up for work on the farm without discussing such a basic factor to his future prospects as his level of income. It is worth remembering that Bernard was uprooting his family from a lifestyle into which they had settled not so long ago. Although there were certain advantages and benefits to moving back to Berriwillock—Gaylene would be near her mother[7] and farming was all that Bernard had ever wanted to do—according to the evidence of both Bernard and Gaylene she was against the move. Bernard discussed the matter with his mother, who like Gaylene was not "very happy at the decision"; it was clear from the way Bernard gave that evidence that his mother was against it. There were factors in favour of staying in Inverleigh—they had recently purchased a house there, they were within comfortable distance of Bernard's parents in Geelong, and they had various employment prospects, in Bernard's case the shearing and shearing contracting that I have mentioned, and in Gaylene's case continuing her work as rousabout and shearers' cook, or working as a hairdresser, for which she was qualified. In the circumstances, the probability is that Bernard would not have lightly taken a decision to move to Berriwillock without a firm basis, including matters such as his income, working conditions and accommodation.
[7]Gaylene's mother became ill in about 1992 and was nursed by Gaylene, but this was not a factor at the time the relevant decisions were made about moving to Berriwillock.
In the same way, it is improbable that Bernard would stay in Berriwillock for some eight years, during which he had to suffer considerable detriment in terms of income and lifestyle, as I find below, without a compelling basis for doing so. I find that that basis was the repeated assurances from Gerard that he had left the farm (later the farm and machinery, and then all Gerard's assets) to Bernard in his will and that accordingly he had nothing to worry about. I consider it improbable that Gerard having mentioned the will once, the topic would never be raised again. In light of the financial position in which Bernard found himself, it is in accordance with the probabilities that, as Bernard stated in his evidence, he would periodically raise issues such as his income level, the promised partnership and the will.
All the indications are against Gerard's version of events. Accordingly, I accept in general terms the evidence of the plaintiff and find it to be the fact. Specifically, I find as follows.
As to the circumstances in which Bernard and his family arrived in Berriwillock in 1990, I find that Gerard and Bernard spoke outside the hospital; Gerard asked Bernard to work on the farm for the harvest and Bernard agreed; Gerard asked Bernard whether he would like to return to the farm to stay; Gerard said he was considering semi-retirement; Gerard said he and Bernard would form a partnership and Bernard would eventually take over the farm; Bernard described his existing housing situation and income; Gerard said he would start Bernard on $20,000 and gradually build up to that level of income. During further conversations while working on the harvest, I find Gerard repeated his previous statements and, during a specific conversation while working on the header, he told Bernard that he had left the farm to Bernard in his will. It is in any event an admitted fact that in late 1989 Gerard told Bernard that he intended to leave the farm to him and had made a will to that effect (and which he had in fact done on 17 November 1989). Gerard also said that if Cootes' 600 acres and farmhouse came up for sale, he would buy it; Bernard would be able to live in the farmhouse and the land would be incorporated into the farm. I find that Gaylene was opposed to moving to Berriwillock, but that in spite of the opposition Bernard decided to do so. I find that his decision was made in reliance on Gerard's promises and representations about the housing and income he proposed for Bernard and about his intentions for the disposition of the farm. I conclude that Gerard made the promises and representations in the knowledge that they would induce Bernard to come and work on the farm.
In relation to the eight years that Bernard was working on the farm, I find that he was initially paid $20,000 in half-yearly instalments. Gerard agreed that Bernard could go shearing whenever it did not interfere with farm work. From about 1992, I find that Gerard and Bernard engaged in a sheep trading partnership, the initial funds for which were provided by Margaret; she was paid back from the proceeds of the enterprise. In or about 1994, I find the parties agreed to increase Bernard's income to $25,000; but this is the admitted fact in any event. Throughout the eight years, I find that Bernard periodically asked Gerard about his wage, the partnership and control of the farm; Gerard said words to the effect that he would see Clarke and try to work something out, but nothing ever came of it; in order to reassure Bernard as to why there was no action, Gerard repeatedly told Bernard that he had no need to worry because Gerard had left Bernard the farm and machinery and all his assets to him in his will. Eventually, Bernard arranged a meeting between himself, Gerard and Clarke during which a family trust was discussed; no action resulted from this meeting. I find that in staying on the farm for so long despite various hardships—of which, I find below, Gerard was aware—Bernard relied on Gerard's repeated reassurances about leaving the farm to him in the will. Gerard knew and intended that Bernard would rely on the reassurances to stay on the farm; this is apparent from their repeated nature and their gradual growth in compass to include not only the farm but also the machinery and later all his assets.
In relation to Bernard's departure from the farm, I accept that Bernard was genuinely shocked and upset that, after he had "put his heart and soul into it" for so long, Gerard was seeking to sell the farm which "wasn't there to be sold". Gerard's unfeeling statement that "I suppose you'll have to get another job", which I find he made and which refutes his earlier promises, was the trigger for the breakdown in relations between the parties.
5. Detriment
A substantial part of the defendant's final address on the estoppel claim was concerned with whether Bernard suffered any and what detriment in acting in reliance upon Gerard's promises. The question was whether Bernard had satisfied the requirement of detriment to succeed on the estoppel claim. Not that detriment was the only issue raised by the defendant on this claim; among other issues was reliance itself. The submission on detriment raised a number of issues of fact which it is necessary and now convenient to deal with. Unless stated otherwise, the evidence comes from Bernard and/or Gaylene. For the reasons I have set out at [23]–[29], except where I make some specific comment I accept the evidence and find it to be the fact.
Assets and capital
As mentioned above at [11], by the end of 1989 Bernard and Gaylene were living in their house in Inverleigh. They had bought it for $85,000. They paid a deposit of about $20,000, which they had saved while shearing in New South Wales and Queensland. The mortgage repayments were $769 per month. They spent about $5,000 on new furniture. They added security doors, painted the house, repaired some of the fencing and established a garden. When they decided to move to Berriwillock, they sold the Inverleigh house. It fetched about $92,000. They got back most of the $20,000 equity they had put in initially.
They then spent two years renting a house for $10 per week. The low rent reflects the poor condition of the property, which I discuss in detail below. The owners, who did not wish to rent the property in light of its state, stipulated that they would not be responsible for repairs and maintenance. Bernard and Gaylene therefore spent about $3,000 and contributed their labour on repairing the house to make it livable. The $10 per week was thus not a real measure of their total outgoings on accommodation.
During this time, in 1991, Bernard and Gaylene made their one and only payment of about $3,000 into a personal superannuation fund. After that, they could not afford to make any contribution. Also in 1991, they terminated an investment policy because they could not maintain the monthly contributions. They recovered about $3,000.
Then in 1992 they bought a house in the township of Berriwillock, in which they still live. The purchase price was $28,000. They had about $10,000 of their own savings to put towards the purchase price. Bernard asked Gerard for a loan of $10,000 to assist in the purchase, but he refused. I infer that they borrowed the $18,000 to complete the purchase. They also borrowed $10,000 from a bank to extend and renovate the house. They engaged a builder to perform the extension and renovation. In order to keep labour costs down, Bernard took three days off the farm to help; he also took some half and quarter days off, but always made up the time by doing his farm work early in the morning or late at night. Later, they also bought the adjoining block of land for $1,000. Their mortgage repayments are $155 per fortnight on a mortgage of about $32,000. There was no evidence as to their current level of equity in the property.
To summarise Bernard and Gaylene's position in relation to assets, before they came to Berriwillock they had equity in the Inverleigh house which was realised at $20,000. They used some of that (about $3,000) to contribute to a superannuation policy. They spent about $3,000 improving a rental property to make it habitable. They had about $10,000 available in 1992 to put into their new house. As to the remainder of about $4,000, I infer from the fact that they now have no savings that they spent it on living expenses while they were living in Berriwillock, although a proportion of their outgoings went towards paying the mortgage and thus increasing the equity in the new house. The Inverleigh property was valued at 3 October 2000 at $95,000; the Berriwillock property was valued at 9 August 1999 at between $42,000 and $47,000. Inverleigh is located near Geelong on a busy highway, while Berriwillock is a small township on the Calder Highway some distance south of Sea Lake. I am not able hard to draw any specific conclusion as to the better investment or about potential for capital growth of the respective assets, although it might be supposed the balance lay with Inverleigh. I can conclude in general terms that Bernard and Gaylene's capital base has been substantially depleted by the need to use a sizeable portion of the capital sum they brought with them to Berriwillock for general living expenses.
Accommodation and amenity
As mentioned already, Bernard and Gaylene had been living in a caravan while working as shearer and rousabout respectively. There were a number of reasons for the change of lifestyle from caravan to house and mortgage. First, Bernard and Gaylene had been away from their families and friends for some time and wanted to be back in Victoria. Secondly, Bernard had consulted Carty, who had been doing shearing work around Inverleigh, and heard that there was plenty of shearing work in the area. Thirdly, their daughter Elly was born in July that year, and Gaylene thought it would be better to lead a settled life. Gaylene summed up their position as follows:
" When we first got [to Inverleigh], we—Bernie—had decided it was good shearing, that this was where he wanted to be. I was happy, I made good friends, there was lots of opportunities for the kids had we had them, and we were happy, we were—we were settled."
The house they bought was a recently-built three-bedroom brick house of about 12–15 squares. The toilets and laundry were inside, and there was a double garage and good fences. As mentioned, they bought new furniture and improved the exterior of the house.
The only property that was available for rental in or near Berriwillock when Bernard and Gaylene moved there was a weatherboard house about four kilometres out of town. Photographs of the house taken shortly before the trial, show the external condition similar to that when Bernard and Gaylene moved there. It was in a dilapidated state, totally unsuited and quite shocking for habitation by a family. There were four main rooms—two bedrooms, a lounge and a kitchen—with a verandah. One room had old carpet, one had linoleum, and the others had bare floorboards. Parts of the verandah, if its state would permit that description, could not support weight; Bernard fenced them off so that the children would not fall through. The bathroom, laundry and toilet were outside. They had to renovate the bathroom to make it safe to bathe in; the ceiling was falling in and holes had been punched through the walls. There was no running water; they had to have it connected. The house was not insulated and there was no heating or cooling save for an open fireplace in one room. It was infested with mice and spiders; they had the house sprayed, but they could not get rid of the mice. There were exposed electrical wires; they engaged an electrician to fix them. There was a separate garage, but it blew over in a wind storm. The furniture they had bought for the Inverleigh house did not fit in the house, and they had to have it stored. They lived there for about two years.
Bernard told Gerard about the house on a good number of occasions but Gerard never visited. During this time, the Cootes property came on to the market; Gerard did not buy it, saying it was too expensive. Bernard told Gerard that they could not keep living in their current house and that they would have to try to buy something; Gerard said: "Don't rush out and buy something. I've got Drurys in mind. I think it'll come up shortly". This appears to be the property that Gerard bought in 1996. If it did in fact come up for sale at that stage, Gerard did not buy it. The housing situation resulted in tensions between Bernard and Gaylene; she was distressed, amongst other things, about trying to bring up two young children in a house in that state. It is clear that they had to endure a very significant decrease in their standard of accommodation for the first two years that Bernard was working on the farm.
Photographs indicate their new house in Berriwillock township offers satisfactory accommodation and indeed is a pleasant home. Berriwillock has most of the same facilities as Inverleigh, but there is no state primary school in Berriwillock, at the very time when Elly and Paddy would be attending. Gaylene did not work when they moved to Berriwillock, due to her parenting role and because she was nursing her mother. Since about the start of 2000 she has worked for the local shire. She earns about $700–800 per fortnight on a casual basis. She has completed a certificate in community health and hopes to work in a nursing home. Bernard is now working as a tanker driver and machinery salesman, earning $28,000 per year gross. He believes he is qualified to shear or farm; he has limited employment opportunities in other fields without an educational certificate or tertiary degree. Particularly in Bernard's case, there is an element of his current life options being curtailed by virtue of having been on the farm at an important stage in his working life.
Remuneration and work done
I have described Bernard's income and earning potential in the shearing industry at Inverleigh at [52]–[53] and footnote 5 above. I add that Carty said that his top shearer earned $60,000 gross in the last financial year working 9–10 months of the year. Carty said that he himself earned $120,000 in the last financial year as a shearing contractor. There was no evidence as to Gaylene's income level before the move to Berriwillock, but I accept that she was working and had an income.
While he was on the farm, Bernard performed the whole range of work required on a farm of that type. At about Easter time there was cropping. In about November there was harvesting. He did contract harvesting for other farms. He helped in the construction of a grain shed. When he did not have specific tasks, he did general maintenance such as weeding and fencing. Later, when they ran sheep on the farm, he would tend the sheep.
I do not mean to give the impression that Bernard worked the farm entirely on his own: Gerard was working too, as his evidence attested. They worked on the fences together. They each worked on weed eradication, sometimes together and sometimes separately. When they were doing fencing or weeding, they worked about the same number of hours per day. However, during cropping and harvesting Gerard did not put in as many hours as Bernard, due to the nature of the tasks they respectively undertook: Gerard's role was more supervisory.
It is clear that Bernard was dedicated. He was not a nine-to-five worker. During the cropping and harvest he would work up to 16 hours a day, 6–7 days a week. In the first few years especially, he barely saw his wife and children: Gaylene would bring the children out to where Bernard was working so that they could sometimes spend time together. His long hours were confirmed by the evidence of Barry, who sometimes saw Bernard working in the neighbouring field late at night, and by the evidence of Corbett, who heard him on the CB radio, again late at night, obviously still at work. He did not take much time for leisure. He was not able to play football as he had done in Inverleigh, because he was not able to commit to regular training during the week. He did not necessarily take the weekends off. Some years he worked through Easter. He did not take holidays over Christmas, resting only on Christmas Day. He did take time off to go shearing each year through September and October. He also took occasional days off when refurbishing his house. But he always asked Gerard before taking time off, and he was careful not to let his absence interfere with farm work.
Bernard's remuneration consisted initially of $20,000 per year paid in half-yearly instalments. Later it was agreed to increase it to $25,000. According to Gerard, he did not treat Bernard as a conventional employee, thinking of him as a share-farmer: he did not look into award rates of pay; he did not provide any of the benefits (such as meals, sick leave, annual leave) provided for in the award; he did not arrange for WorkCover insurance. He did not pay Bernard overtime or additional rates for working on weekends and holidays. He did not pay Bernard anything more than his salary for doing the contract harvesting, despite the additional income earned for the farm. There was a suggestion in Bernard's evidence was that Gerard instructed the accountant Clarke, who was now also accountant to Bernard and Gaylene, that Bernard and Gaylene be treated for tax purposes as share-farmers, from which they would obtain the benefit of income splitting and averaging, but in his evidence Clarke merely said that he probably suggested it to Bernard and Gaylene.
I have summarised Bernard and Gaylene's financial position over the relevant years at Berriwillock for which information is available in the following table derived from their tax returns and notices of assessment, which I accept as accurate.[8] The joint share-farming receipts represent the basic income received from Gerard: the amount is distributed equally between Bernard and Gaylene after allowing for expenses. From 1992/93, Bernard's share-farming receipts include his profit or loss from the sheep trading venture, which is distributed equally between him and Gerard; I note that there were losses in 1992/93, 1993/94 and 1996/97; there was a comparatively large profit in 1995/96.
[8]The last two columns show figures as assessed, i.e. from notices of assessment issued to Bernard and Gaylene by the Australian Taxation Office; what I have called "combined net income" is their combined taxable income less tax on taxable income and Medicare levy, but with a credit for any rebates. I have extracted figures in the other columns from their tax returns, where available. For Bernard, there is a discrepancy between the amounts in the tax returns and the total taxable income that appears on his notices of assessment. This was not explained. I use the figures from the tax returns merely because they give an idea of the break down of income between share-farming and shearing. The 1997/98 figures, I would infer, include income received after Bernard quit the farm.
FY
Joint share-farming receipts
Bernard
Gaylene
Combined taxable income
Combined net income
Share-farming
Shearing
90/91 $17,395 $15,982 91/92 $25,000 $9,981 $2,473 $9,981 $17,189 $16,123 92/93 $22,500 $8,396 $10,183 $8,880 $23,733 $21,407 93/94 $22,500 $7,966 $6,924 $8,372 $19,487 $18,041 94/95 $20,000 $9,344 $8,197 $8,242 $21,943 $20,173 95/96 $25,000 $20,882 $8,374 $10,408 $35,951 $31,657 96/97 $25,000 $7,652 $8,095 $9,565 $26,075 $23,582 97/98 $20,421 $19,154
It is clear that Bernard and Gaylene were struggling financially at times during their period in Berriwillock: I have referred to their fights about money; Gaylene said they would be broke every six months; they were not able to go to football-related social functions, which formed an important part of local social life; they could not afford the $70 bus trip to send the children to see Play School in Kerang; Gaylene thought there were probably lots of other things that they just went without.
They tried to ameliorate the position by asking Gerard for more money. I have already described the occasion when Gaylene and then Bernard went to see Gerard at his house: see [23] above. Bernard asked if he could be paid at more regular intervals, but Gerard refused. In addition, as I have found, Bernard raised the topic of the financial arrangements between them several times each year, including the level of his wage. The fluctuations in the amounts Gerard actually payed are apparent from the above table; it is equally apparent that they did not increase greatly over time.
To conclude this section on Bernard's work and remuneration, the nature of the work he did could probably be described as normal for that work environment, but the long hours without extra pay were not. He put up with a level of remuneration from his farm work which was not high in objective terms, which was lower than he could have earned as a shearer, and which did not increase as he had been promised. His dedication and commitment was consistent with a belief that he had a long-term interest in the farm, and more than as an employee or share-farmer. It was not consistent with being in a position where Gerard could in good conscience tell him "I suppose you'll have to get another job" if he sold the property.
Benefit to the defendant
Benefit to the defendant provides a mirror image of detriment suffered by the plaintiff. I now consider three heads of benefit to Gerard: cheap labour, improvements to the farm increasing its value, and the state of Gerard's other assets.
The first point relates to the cost of Bernard's labour. I have found the amounts that Bernard was actually paid and concluded that his remuneration was not commensurate with his long hours without extra pay. Counsel for the defendant submitted in final address that, regarded overall, Bernard received benefits, in terms of the amount paid and favourable tax treatment, that were similar or greater than the benefits required under various industrial awards, although he did not identify precisely which of the many awards he provided was applicable. As Bernard was not treated as an employee, the awards are not relevant to his remuneration. But they are a reminder that, if Gerard had hired one or more employees to do the work that Bernard in fact performed, he would have been liable for various incidental costs such as overtime, penalty rates, superannuation and WorkCover premiums. He would have had to make allowance for various forms of leave. He himself would have had to undertake administration related to the employment, as well as supervise the employee(s). By inducing Bernard to work on a farm in the belief that he would one day own it, Gerard obtained a worker who had an interest in staying on the farm and promoting its long-term development; and he avoided the various incidental costs of employment, as well as the burden of administration and supervision. It would be particularly important that Gerard have a worker on the farm as he grew older himself.
Next I consider the value of the farm. Bernard's evidence was that the farm was fairly run down when he arrived in 1990. A lot of general maintenance work was required on fencing. The majority of internal fences had to be pulled out and replaced so that stock could be held in. He estimated the fencing was 40–50 years old when he arrived, and that there had not been regular maintenance since he left the farm in 1981 after his apprenticeship. There were trees down over fences. There were also problems with weeds and rabbits. A shearing shed and yards and sheep dip had not been used for a fair while and required work. Gerard might have been doing a bit of ongoing rabbit and weed control, Bernard thought, but it could not have been a great deal. Gerard denied that the farm was run down when Bernard came back to the farm. He said that between about 1984 and 1989 he had completed about 3½ miles of fencing. He said that weeding was ongoing work, meaning I think, that he had worked on the weeds before Bernard arrived.
There was independent evidence on the state of fences, weeds and pests from Dyett. His valuation report dated 29 November 1999 stated that fencing varied from poor/fair to good, and classed it overall as fair to good and generally sheep proof; he observed no significant weeds or pests. When he gave his oral evidence, he said that, assuming Bernard's evidence to be true, without Bernard's work the value of the farm could have been 30–40% less than stated in his report. But this evidence from Dyett does not assist me in resolving the conflicting assertions of Bernard and Gerard. For the reasons I have already stated, I prefer Bernard's evidence and find it to be the fact. Without determining the amount, I do find that he substantially improved the value of the land by his labour.
The final point is the state of Gerard's assets. It is not meaningful to distinguish between assets held as part of the farming business and assets held by Gerard personally; I infer that these were intermingled and all sourced from farm proceeds.[9] As I have already stated, according to Gerard he essentially operated the farm out of savings, which were between $150,000 and $200,000 in the mid-1980s, but says that since 1988 there was usually a loss. This is supported in general terms by the tax returns for the farming partnership and Gerard individually between 1991/92 and 1996/97, although I make no finding about them. He appears to have lived modestly: he said he spends about $100–150 per week on living expenses. But he made some substantial expenditures over the years: I have found that he spent $200,998 on ostriches in 1992/93; as the depreciation schedule to the partnership's 1997/98 tax return shows and as I find to be the fact, the farming business spent $348,461 on farming equipment in 1994, 1995 and 1996, of which $227,659 relates to the period after 20 January 1994 and is directly attributable to him; in addition, a previous depreciation schedule for 1992/93, which I accept as the fact, shows that in partnership with Margaret he spent $453,394 on equipment between 1985 and 1993; he bought allotment 28 for $108,000 in 1996, and I accept his evidence that he paid about half of this out of savings and the rest from selling a silo full of barley (which constitutes proceeds of the farm). His current position is that he owns absolutely property valued at $492,000 and machinery valued at $338,040; the balance from the sale for $421,252 of allotments 9, 10 and 11 is due in 2003 and in the meantime he is receiving interest of about $30,500 per annum; he said his savings were down to about $35,000 in 1998, but they are now at about $100,000; he owns some Telstra shares which he bought for approximately $6,000. He may also have remaining ostrich stock.
[9]As to other possible sources of assets, Gerard said he got good wages working as a drilling rig operator in the 1970s, but there was no evidence that he had savings from this period; in fact he said that "all the savings … are earnings on the farm". Also, Gerard said he owned his home. This is the home in Berriwillock on the verandah of which various conversations are said to have occurred. There was no evidence about how he came to own it, but it may be safe to assume that it was the family home which he inherited when Margaret died. In any event, there was no suggestion that he was paying rent or mortgage repayments out of proceeds of the farm.
According to Bernard, as I mentioned at [39] above, Gerard repeatedly said that there was no debt over the farm but "[i]t's not making no money". Bernard could not see why this was so, based on his observations of production on the farm and the way neighbouring farmers were living. Nor can I, based on an examination of the figures in the previous paragraph. It is apparent from those figures that there was substantial income generated by the farm, leading to substantial purchases and reserves for Gerard. Some of the income may relate to the period before Bernard began to work on the farm, but much of it relates to the period he was working. Again without determining its value, I find that his labour contributed to the generation of the income. The only comments I make on how Gerard used it are that: I am not able to say whether expenditure on machinery was necessary or otherwise, although Gerard did say he was aware of the depreciation benefits of buying machinery; the ostrich investment was apparently a total disaster; and he chose to spend money on ostriches and machinery, and to hold reserves of cash and barley, rather than increase Bernard's salary.
Summary
Bernard and Gaylene suffered various detriments as a result of their reliance on Gerard's promises and representations. Their capital base was depleted through having to use capital amounts for living expenses. They lived in substandard accommodation for two years. Bernard worked long hours for remuneration that did not reflect the duties he performed. I find Gerard was aware of their general financial and housing position. He took the benefit of Bernard's labour, which I find was more than what he would have obtained from a mere employee; the benefit was apparent in improvement to the value of the farm and substantial farm proceeds which Gerard could use for purchases and savings.
6. The contract claim
Counsel for the plaintiff did not press this claim in final address and, although he did not say so, I take it to have been abandoned. Nevertheless for the sake of clarity I note the submissions of counsel for the defendant and make some observations.
In summary, counsel for the defendant submitted as follows:
1.On the evidence, the contract that the plaintiff intended or understood was not one for "the entirety of [the defendant's] estate" as pleaded in paragraph 8 of the statement of claim. Rather, the contract, assuming there be a contact, concerned the farm only. Hence the claim should fail on the basis the contract alleged in paragraph 8 was not established.
2.Even accepting there was a contract, the law stated in Fortescue v Hennah[10] and Palmer v Bank of New South Wales[11] permitted the defendant to sell part of his property as he had, certain qualifications on his ability to do so expressed in Palmer not being applicable in the present circumstances.
3.The remedy for breach of a contract not to revoke a will is damages, not specific performance.[12] In any event it was too late to obtain specific performance in this case.
Counsel also said that the claim was barred by s. 126 of the Instruments Act, there being no note or memorandum of the contract, and that the plea of part performance raised in the plaintiff's reply was contested. Counsel did not elaborate on these statements.
[10](1812) 19 Ves Jun 67; 34 ER 443.
[11](1975) 133 CLR 150.
[12]Counsel referred to Jarman, A Treatise on Wills, 8th ed at 27-28.
Having made these submissions, counsel turned to the alternative claim of an estoppel which was the principal burden of his submission. I note that in doing so, counsel relied on some matters that concerned the contract claim as much as the estoppel claim. The submissions were:
1.The defendant's statement of intention or promise to leave his farm to the plaintiff was revocable. The arrangement was "very loose" and "pre-supposed the right of either party to back out of the arrangement".
2.The defendant's statement or promise lacked a sufficient degree of certainty to be enforceable even under principles of equity.[13] The uncertainty was found in the fact that when the parties spoke, and up to the death of Margaret, the defendant's interest was to an extent and in respect of some of the allotments only that of a remainderman, although the interest was vested. During Margaret's life she was a life tenant under the Settled Land Act 1958 and it might have been necessary for a part or parts of the farm to be sold to provide for her. Hence the uncertainty was not as to the language of the promise but as to the course of future events which might mean that a part or parts of the farm were disposed of prior to the death of the defendant.
3.There was no intention to create legal relations. It was a mere family arrangement with no legal obligations attaching.
If these points were intended to be understood as also relating to the contract claim they should have been pleaded in the defence relating to it, but they were not and no application to amend was made. The defence having admitted that the defendant told the plaintiff that he had left his farm to him in his will, otherwise denied the alleged promises and representations and denied the contract, the points mentioned were of a kind that, if they were relied on in answer to the contract, should have been pleaded in order to properly and clearly identify the issues for determination on the contract claim.
[13]In this respect counsel referred to Flinn v Flinn [1999] 3 VR 712 at [78]-[92].
When counsel for the plaintiff followed with his final address he concentrated on the estoppel claim. He did not expressly state that he abandoned the contract claim but he made no separate submission in support of it. Hence it was only at a late stage of his submissions that he referred to the defendant's submissions based on Fortescue and Palmer and then, without any detailed analysis at all, he merely said they were distinguishable because they related "to the question of contract … rather than the equitable estoppel". This comment reflected that he was pressing the plaintiff's case on the basis of estoppel only. He added as a second distinguishing feature that in those cases the agreement was not to leave specific property, whereas it was in this case.
Counsel for the plaintiff did address a submission on the issue whether the promise was revocable. He relied on a passage in Flinn at [75] and submitted that the defendant had made an irrevocable promise.[14] He also briefly submitted that the fact the defendant had a remainder interest was irrelevant as the parties had proceeded on the basis the defendant would own the property when he died.[15] Counsel for the plaintiff did not identify these submissions as relating to the contract claim and, properly understood in the context of his submissions, they were not so made; they were delivered under the umbrella of a submission on the estoppel claim.
[14]I consider this point below.
[15]See my comment at footnote 6 above.
A particular point on which counsel for the plaintiff did not address was the applicability in the circumstances of s. 126. As I have stated, counsel for the defendant mentioned it but developed no argument on it at all. Counsel for the plaintiff did not mention, let alone seek to establish, part performance; accordingly I take the plea in the reply to be abandoned. Perhaps counsel for the plaintiff regarded the Statute of Frauds point as irresistible against the claim on the contract, at least so far as the land was concerned. But whether that be so or not, I see no reason why I should explore that issue or indeed the contract claim generally and the other points concerning it raised by counsel for the defendant when counsel for the plaintiff chose not to address a submission on the claim. There were other points on which it would have been necessary to have clarification to determine the contract claim: at what point in time is the contract alleged to have come into being?; was the subject matter of the alleged contract "the farm" or "the entire estate"?; was there variation of the contract through time?; if I granted a declaration as to a contract, how would it interrelate with any equitable relief? Counsel for the plaintiff did not mention any of these points. In any event, as I have said, I take the contract claim to have been abandoned. It is impossible to comprehend that counsel did not intend abandonment when he did not address upon it.
Before referring to the equitable estoppel claim, I mention a passage of McPherson J in Riches v Hogben,[16] where his Honour discusses the relationship between contractual and equitable relief:
" What distinguishes the equitable principle from the enforcement of contractual obligations is, in the first place, that there is no legally binding promise. If there is such a promise, then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law not to replace it."
[16][1985] 2 Qd R 292 at 301, referred to in Giumelli v Giumelli (1998) 196 CLR 101 at [35].
I do not comprehend his Honour's statement to prevent consideration of the equitable estoppel claim in the present case. In particular, I do not consider that it falls upon me, in the face of apparent abandonment of the contract claim by the plaintiff, to determine that claim before considering the equitable estoppel case which was very much the focus of the trial. I now turn to that case.
7. Equitable estoppel
As already mentioned, the relief sought by the plaintiff was proprietary in that he claimed a declaration that the farm, improvements and machinery were held on trust for him either absolutely or in such proportion as the Court deemed appropriate, or, alternatively, that in the moulding of such relief in equity as may be adjudged appropriate to the circumstances he be awarded a sum of money.
Counsel were not in dispute as to the relevant principles on which the claim fell to be determined, that is, the principles as to the circumstances in which equity will grant relief to avoid the plaintiff suffering detriment as a result of the defendant departing from the expectations created in the plaintiff as to the state of affairs between them. The differences between counsel concerned the application of the principle stated in the cases. Both counsel referred to Flinn v Flinn;[17] counsel for the plaintiff submitted that it was this case, while counsel for the defendant sought to distinguish it. They also referred on the matter of relief to Giumelli v Giumelli.[18] In addition, on the general principles of estoppel, including the question of what constitutes detriment, counsel for the defendant referred to Walton Stores (Interstate) Ltd v Maher,[19] Commonwealth of Australia v Verwayen[20] and Grundt v Great Boulder Proprietary Gold Mines Ltd.[21] I have had regard to these authorities. I add a reference to the recent decision of the Court of Appeal in England in Gillett v Holt.[22]
[17][1999] 3 VR 712.
[18](1999) 196 CLR 101.
[19](1988) 164 CLR 387.
[20](1990) 170 CLR 394.
[21](1938) 59 CLR 641.
[22]Delivered in March 2000 and now reported at [2001] Ch 210. The first instance decision of Carnwath J ([1998] 3 All ER 917) was referred to by Brooking JA in Flinn at [67], [73] and [92].
In Flinn at [76], Brooking JA said in relation to the findings in that case that:
" the promises made were, and were intended to be, and were reasonably understood and acted upon by the promisees as, promises of the making, not of a revocable testamentary instrument, but of a gift by will taking effect on death."
I adopt that statement as being appropriate in this case. Based on my findings summarised at [59] as to the circumstances in which the promise was made, I am in no doubt that, objectively considered, Gerard's intention, as reasonably understood and acted upon by Bernard, was that Gerard would neither revoke his will leaving the farm to Bernard nor dispose of the farm or part thereof so as to prevent the will operating. The quid pro quo was that Bernard would work on the farm on particular terms. Acting—to Gerard's knowledge—in reliance on that promise and the representations and reassurances surrounding it,[23] Bernard came to work on the farm and continued in that position for eight of his most active and productive working years. He suffered detriment and Gerard obtained an advantage[24] as a result of the failure by Gerard to fulfil the expectations created by Gerard's promise and representations. This failure crystallised when Gerard took steps to sell the farm and told Bernard, "I suppose you'll have to get another job",[25] and, shortly afterwards, actually sold part of the farm.
[23]See particularly [59]–[60] above.
[24]Both summarised at [88] above.
[25]See [61] above.
I conclude that the elements of equitable estoppel are made out.
8. Relief
I would class the detrimental change in position suffered by the plaintiff as a result of his reliance on the defendant's promises and representations as substantial. In the first two years, he and his family suffered housing conditions which were quite appalling. They depleted their own capital to a significant extent to make the house livable, as well as for basic living expenses. For an extended period, they endured a reduced level of income and the plaintiff worked with a level of dedication and commitment which went beyond that of a mere employee. Further, the overall circumstances placed an ongoing stress on them. They gave up opportunities for different career and lifestyle options. In particular, the plaintiff lost the benefits that might have come if he had devoted his energies to other economic activity.
It is clear from the authorities that considerable flexibility may be exercised in granting relief in this type of case. I have careful regard to the statements in Verwayen,[26] Giumelli[27] and Flinn[28] on the scope of relief in equity. In short, it is a question of regarding the circumstances of the case to decide in what way the equity can be satisfied: see Giumelli at [10]. That may extend beyond an order which compensates mere financial detriment to an order which compels performance of the promise: it is sufficient in this regard to refer to Giumelli at [34]–[48]; see too Flinn at [118]–[128]. In Giumelli at [27], the majority of the High Court approved the approach of Rowland J in the Full Court, which they stated thus:
" even if it be conceded that Robert had not suffered an appreciable loss of income by remaining in the partnership, the detriment suffered by him was the loss of the property which he worked to improve, not to obtain immediate income from that exercise but to gain the proprietary interest." [29]
In Flinn at [121], Brooking JA noted the pertinence of those words to the case before him, and so too are they pertinent in this case. The detriment suffered by the plaintiff is more than the mere dollar value of his effort, expenditures and enhanced value of the farm. It includes the lost opportunity and "the loss of the property which he worked to improve, not to obtain immediate income from that exercise but to gain the proprietary interest".
[26](1990) 170 CLR 394 at 441–3 per Deane J.
[27](1999) 196 CLR 101.
[28][1999] 3 VR 712 at [118] ff per Brooking JA.
[29]Citing Giumelli v Giumelli (1996) 17 WAR 159 at 166.
Yet, standing back and considering the circumstances overall, I do not believe it is practical or in accordance with the equities to enforce the defendant's promise by imposition of a constructive trust. Such a trust could only be declared on the basis of recognising the interest of the defendant during his lifetime, and other appropriate conditions. That would provide no present relief to the plaintiff, while it must tie up the farm until the death of the defendant, which might not be for decades. That seems to involve taking a chance as to what will remain of the farm, and in what condition, at the defendant's death. In the meantime, the quid pro quo of the plaintiff working on the farm would not exist. Moreover, the remaining allotments do not constitute a viable farming unit.
I conclude, having regard to all the circumstances, that provision for payment of a money sum is the appropriate way to meet the equitable claim. This is not by way of enforcing the promise in the sense of requiring payment of the present value of the promised farm. Rather, it is a sum which sufficiently addresses the equity of the plaintiff. This approach has the merit of releasing the parties from further reliance on each other. It also avoids trying to devise a regime that would be required to operate over many years. I am guided, in general terms, by the detriment suffered by Bernard (in its several aspects, including the loss of the property) and the benefits achieved by Gerard, although these are not readily quantifiable in simple dollar terms. I refer to the loss of the property because, in the circumstances of the litigation and observing the evident stress and unhappiness of the parties and the ill will between them, it seems unrealistic to act on the basis that when Gerard dies his estate will be as it is now—or even include a viable farm—and be left to Bernard. There was evidence from Dyett that the cost of purchasing a farm (with stock and farm machinery and equipment) in Victoria able to provide income for one family would be $750,000 or more. But I do not think this is an appropriate measure of the position in which Bernard should be placed as a result of this case; to do so would be to give him a windfall accelerated benefit.
The parties did not give me figures as to the present value of any particular sum of money, whether representing the value of the farm as it is, or was, or otherwise. They left me to do the best I could, assuming there be relief for the plaintiff and no constructive trust. That is, they left it to me to fashion the relief, including the arriving at any amount, that I considered accorded with the justice of the case in light of the relevant principles. It seems to me, having regard to all the circumstances, that the appropriate amount is $250,000 payable forthwith, with provision for interest and with security for payment in the form of a charge on allotments 12, 23, 28 and 31 and the proceeds of the sale of allotments 9, 10 and 11. There should be a restraint on the defendant dealing with those items of property until payment.
I shall stand the matter over for counsel to consider the form of orders, and shall then hear them on that matter and the question of costs.
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