Stone v Kramer

[2021] NSWSC 1456

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Stone v Kramer [2021] NSWSC 1456

Hearing dates:

20 to 27 November 2020

Decision date:

10 November 2021

Jurisdiction:

Equity

Before:

Robb J

Decision:

The plaintiff has established his case that he is beneficially entitled to the property known in these proceedings as the Colo Property. However, the granting of that relief to the plaintiff will be subject to the condition that the plaintiff is to return to the estate of the deceased the $200,000 legacy. See pars [250], [251], [252], [338]-[345]. The parties should consider these reasons and confer as to appropriate short minutes of order to give effect to them and provide draft short minutes of order to the Associate to Robb J.

Catchwords:

ESTOPPEL — Proprietary estoppel — Encouragement — Where the plaintiff was a sharefarmer on property owned by the deceased for approximately 40 years — Where the defendants are the executors of the deceased’s estate — Where the plaintiff claimed the deceased made an oral representation to him years ago that she would leave the property to the plaintiff — Where the deceased failed to do so — Where there was no witness to the representation and it was not in writing — Where the Court considered the credibility of the witness and circumstantial evidence to determine whether the representation was made — Where the Court found the plaintiff to be an exceptionally credible witness who was both truthful and reliable — Where the Court found on the balance of probabilities and on the basis of both credibility and circumstantial evidence that the representation was made — Where the defendant argued that the deceased did not know that the plaintiff was relying on the assumption — Where the Court found the deceased had constructive knowledge — Where the defendants argued that even if the representation was made, the representation was not the sole reason why the deceased stayed on the property and continued share farming — Where the Court held that it was sufficient for the plaintiff to have established that the representation was a significant factor in his decision to stay and continue share farming — Where the defendants argued that if the Court found the representation had been made, it would also have to make a finding that the deceased was dishonest — Where the Court held that it did not have to make a finding of dishonesty in order to find that the deceased acted unconscionably

ESTOPPEL — Proprietary estoppel — Encouragement — Where the defendants raised defences as to why the plaintiff’s conduct disentitled him to equitable relief — Where the defences raised were to the effect that the plaintiff deceived the deceased in relation to accounting matters, that the plaintiff failed to conduct the share farming operation in a proper and workmanlike manner, that the plaintiff had received rent-free accommodation for the period in which he performed the share farming agreement, that the plaintiff failed to maintain his house on the farm, that the plaintiff received loans from the deceased which were forgiven over time, and that the deceased made a considerable monetary gift to the plaintiff in her will — Where the Court dismissed all defences raised by the defendants

Legislation Cited:

Evidence Act 1995 (NSW)

Cases Cited:

Commonwealth v Verwayen (1990) 170 CLR 394

Dable v Peisley [2009] NSWSC 772

Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84

DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348

Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105

Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599

Foran v Wight (1989) 168 CLR 385

Fox v Percy (2003) 214 CLR 118 at 129; [2003] HCA 22

Gautam v Health Care Complaints Commission [2021] NSWCA 85

In the matter of Hillsea Pty Ltd [2019] NSWSC 1152

John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467

Moore v Aubusson [2020] NSWSC 1466

Nigel Watts Fashion Agencies Pty Ltd v GIO General Ltd [1994] NSWCA 365

Nguyen v Cosmopolitan Homes [2008] NSWCA 246

Priestley v Priestley [2017] NSWCA 155

Q (a pseudonym) v E Co (a pseudonym) (Q v E Co) [2020] NSWCA 220; (2020) 383 ALR 469

Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466

Simpson-Cook v Delaforce [2009] NSWSC 357

Trentelman v The Owners – Strata Plan No 76700 [2021] NSWCA 242

Vukic v Luca Grbin; Estate of Zvonko Grbin [2006] NSWSC 41

Waddell v Waddell [2012] NSWCA 214

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

Warner v Hung; Bellpac Pty Ltd (recs and mgrs apptd) (in liq), Re [2011] FCA 1123; (2011) 297 ALR 56

Watson v Foxman (1995) 49 NSWLR 315

Withyman v NSW [2013] NSWCA 10

Category:

Principal judgment

Parties:

David Stone (plaintiff)
Hilary Kramer (first defendant)
Jamie Ferrer (second defendant)

Representation:

Counsel:
L Ellison SC/ Dr H Bennett (plaintiff)
C Harris SC (first and second defendants)

Solicitors:
Lane Associates (plaintiff)
Piper Alderman (first and second defendants)

File Number(s):

2017/261027

Judgment

1. The plaintiff, David Lindsay Stone, commenced these proceedings by filing a statement of claim on 28 August 2017 against the defendants, Hilary Lorraine Kramer and Jamie Ferrer. The defendants are the executors of the estate of the late Dame Leonie Judith Kramer, under a grant of probate made by this Court on 2 December 2016 of a will made by Dame Leonie on 11 November 2011. Dame Leonie died on 20 April 2016.

2. As a practical matter, the defence of the claim has been conducted by Hilary Kramer on behalf of the two executors.

3. Hilary Kramer is one of two daughters of Dame Leonie, the other being Jocelyn Anne Kramer.

4. Dame Leonie's husband was Dr Harry Kramer, who died in 1988.

5. As the parties did at the hearing, I will, with no disrespect intended, refer to the people involved in the events with which these proceedings are concerned by their first names, save that I will use the titles of Dr Harry and Dame Leonie.

6. The proceedings concern the entitlement to a rural property at Upper Colo (the Colo Property or the Farm), which is about 100 acres in size.

7. At the time of her death, Dame Leonie was the owner of the Colo Property. By her will, she left the Colo Property to Hilary.

8. The essence of David's claim in these proceedings is that, in leaving the Colo Property to Hilary rather than to David, Dame Leonie acted unconscionably in conflict with representations that had been made to him by Dr Harry and Dame Leonie to the effect that the Colo Property would be left to David, in return for David continuing throughout Dame Leonie's lifetime to conduct share farming on the Colo Property under an oral share farming agreement. David claims that he continued with the share farming agreement, and undertook additional tasks on the Colo Property, in the expectation that Dame Leonie would bequeath that property to him, in circumstances where he did not, as he otherwise would have, follow a different occupation in which he would have enjoyed a better economic reward by way of higher or more commensurate income and savings and provision for his old age.

Pleadings

9. In his statement of claim, David relied upon two representations that he claimed were made to him by Dr Harry, which he called the First and the Second Succession Plans, and a third representation said to have been made to him by Dame Leonie after the death of Dr Harry, called the Third Succession Plan. I prefer to refer to the Succession Plans as the first, second and third representations.

10. The context in which these representations were claimed to have been made was a share farming agreement made between Dr Harry and David in 1975, which, according to David, continued throughout the balance of the lifetimes of Dr Harry and Dame Leonie, with a number of minor changes.

11. The terms of the share farming agreement as alleged by David are set out in par 4 of the statement of claim:

(a)   The agreement was oral;

(b)   The plaintiff would grow crops and maintain the Colo Property;

(c)   Dr Kramer would pay all operating costs except fuel;

(d)   Dr Kramer and the plaintiff would pay half the fuel costs;

(e)   The plaintiff would reside in one of the houses on the Colo Property rent free;

(f)   The plaintiff would receive a retainer of $600 per quarter ($2,400 p/a); and

(g)   The plaintiff would receive half the gross proceeds from the sale of produce and cattle.

12. The defendants filed separate defences on 11 October 2017. Hilary filed an amended defence on 31 July 2019. In keeping with the approach referred to above, I will treat the amended defence as if it expressed the defence of each defendant.

13. By her amended defence, Hilary admitted that, at the beginning of 1975, David commenced a share farming agreement with the joint owners of the Colo Property, who were Dr Harry and Dame Leonie.

14. In par 4.2 of the amended defence, Hilary alleged that the terms of the share farming agreement were as follows:

(a)   the plaintiff would grow crops and undertake other farming activities on the Colo Property as might be agreed from time to time, and maintain the Colo Property and the machinery, equipment and buildings on it;

(b)   the plaintiff would do so in a proper and workmanlike manner so as to minimise the operating costs and maximise the gross proceeds of the Share Farming Agreement, and keep the machinery, equipment and buildings in reasonable repair;

(c)   Dr Kramer and Dame Leonie would pay half the operating costs including the fuel costs and the plaintiff would pay the other half;

(d)   the plaintiff would reside in one of the houses on the Colo Property rent free;

(e)   Dr Kramer and Dame Leonie would pay the plaintiff a quarterly 'bonus', which in 1975 was $325;

(f)   Dr Kramer and Dame Leonie on the one hand and the plaintiff on the other would share equally the gross proceeds from the sale of produce and cattle.

15. Hilary then added that she:

4.3   admits that in about September 1975 Dr Kramer and Dame Leonie agreed to amend the Share Farming Agreement by agreeing to pay all of the operating costs, so relieving the plaintiff of the obligation to pay any of those costs;

4.4   admits that in about March 1980 Dr Kramer and Dame Leonie agreed to amend the Share Farming Agreement by agreeing to pay 2/3^rds of the fuel costs, so reducing the plaintiff's contribution to the total expenses of the Share Farming Agreement to 1/3^rd of the fuel costs;

4.5   admits that the quarterly 'bonus' was regularly increased, so that by June 1988 Dr Kramer and Dame Leonie were paying the plaintiff a 'bonus' of $1,250 per quarter;

4.6   otherwise denies the paragraph.

16. Hilary did not admit the allegation made by David in par 5 of the statement of claim that he and Dr Harry adhered to the terms of the share farming agreement.

17. In the statement of claim, David pleaded the representations that he alleges were made to him in the following terms:

6.   In the early 1980s Dr Kramer orally represented to the plaintiff he would leave him a life interest in the Colo Property in his will (the First Succession Plan).

7.   The context of the First Succession Plan was the plaintiff would continue with the Share Farming Agreement and otherwise assist Dr Kramer and his family with management of the farm.

8.   In 1987 or 1988 Dr Kramer represented to the plaintiff he had made an agreement with the deceased, that Dr Kramer would leave the Colo Property to her in his will, but that in her will she would then leave the Colo Property to the plaintiff (the Second Succession Plan).

9.   The context of the Second Succession Plan was that the plaintiff would continue with the Share Farming Agreement and otherwise assist Dr Kramer and his family with management of the farm.

10.   As executor and beneficiary of the estate of Dr Kramer, the deceased was obliged to adhere to the Share Farming Agreement, the First Succession Plan, and the Second Succession Plan.

11.   In 1988, after the death of Dr Kramer, the deceased represented to the plaintiff that the Colo Property was to pass to him upon her death, together with a sum of money (the Third Succession Plan).

12.   The context of the Third Succession Plan was that the plaintiff would continue with the Share Farming Agreement and otherwise assist the deceased and her family with management of the farm.

18. Hilary responded to David's allegations concerning the making of the representations by not admitting them and by, in substance, alleging that David did not adhere to the terms of the share farming agreement, or otherwise assist Dr Harry or Dame Leonie by virtue of the matters set out in pars 21 and 21A of the amended defence.

19. Hilary specifically responded to the allegations made by David in respect of the first and second representations, being the subject of representations made to him by Dr Harry, by pleading that the Colo Property was owned jointly by Dr Harry and Dame Leonie while Dr Harry was alive, so that Dr Harry did not have any entitlement unilaterally to create any interest in the Colo Property, and that, upon Dr Harry's death, his interest in the Colo Property passed to Dame Leonie by survivorship.

20. In pars 13 and 14 of the statement of claim, David alleged that, by her oral third representation, Dame Leonie encouraged and induced in David an expectation of inheriting the Colo Property on Dame Leonie's death, such that he was entitled to rely on the third representation being put into effect, and that the expectation induced by Dame Leonie in David arose reasonably from Dame Leonie's conduct.

21. David pleaded the source of the alleged encouragement or inducement specifically in the particulars to par 13, where he alleged that Dame Leonie said to him:

[Dr Harry] always admired your honesty. [Dr Harry] and I did agree the farm will pass to you upon my death and I want you to know there will also be a sum of money.

22. It should be noted that Dame Leonie did make a bequest of $200,000 to David in her will.

23. David alleged in par 15 of the statement of claim that Dame Leonie knew of David's expectation or belief. The particulars of knowledge given are:

(a)   The deceased observed the plaintiff continuing to adhere (sic) the Share Farming Agreement, being his part of the arrangement;

(b)   The deceased informed Jocelyn she had changed her will and that the plaintiff no longer was going to inherit the Colo Property, and Hillary found out about this at a later time;

(c)   Jocelyn advised the deceased the (sic) she ought to tell the plaintiff about the change but the deceased refused to do this;

(d)   The deceased intentionally failed to tell the plaintiff she no longer intended to leave the Colo Property to him in her will, and so he continued to believe that he would inherit the Colo Property on her death and adhered to the Share Farming Agreement, and the deceased continued to observe the plaintiff working on the Colo Property, he in ignorance of her change in plan.

24. David pleaded in par 16 that he altered his position in reliance on the expectation, and in pars 17 and 18 that he will suffer detriment from the altered position if the expectation is not fulfilled.

25. David alleged in par 19 that the circumstances render it unconscionable for the defendants to not fulfil the expectation induced by the deceased. He pleaded in par 21 that Dame Leonie was estopped from making the 2011 will inconsistent with the third representation, and that the defendants, as executors, are bound by the representation of Dame Leonie.

26. Finally, David pleaded in par 23 of the statement of claim:

23.   In the premises, and subject to the principles of equitable or proprietary estoppel, the defendants hold on trust for the plaintiff the Colo property to fulfil the representations made by the deceased and the reasonable expectations therein induced.

27. In her amended defence, Hilary did not admit the allegations made by David concerning the conduct of Dame Leonie, or that Dame Leonie knew that David had altered his position on the basis of any representations made by Dr Harry or Dame Leonie.

28. In particular, Hilary said in par 18 of the amended defence that there was no change in David's conduct after the alleged representations were made to him, as he remained working on the Colo Property purportedly in accordance with the share farming agreement in the same way as he had done prior to the alleged representations.

29. In her amended defence, Hilary pleaded the following specific defences to the whole of the statement of claim:

21.   The plaintiff did not comply with the terms of the Share Farming Agreement.

PARTICULARS

(a)   the plaintiff did not act in a proper and workmanlike manner so as to minimise the operating costs and maximise the gross proceeds of the Share Farming Agreement, in that he planted crops which he did not thereafter properly tend with the result that the crops could not be harvested or sold, causing the loss of all of the costs of planting the crop and the failure to obtain any proceeds from the sale of the crop.

(b)   the plaintiff was occupied for long hours as the Captain of the Local Rural Fire Service, or otherwise a Senior Officer with the Rural Fire Service, and he was unable to, or failed to, carry out any work on the Colo Property with the result that crops could not be planted, harvested or sold, causing the loss of all of the costs of planting the crop and the failure to obtain any proceeds from the sale of the crop;

(c)   the plaintiff failed to maintain the house in which he lived on the Colo Property, with the result that it became ridden with termites, requiring the defendants to spend approximately $20,000 to eradicate the termites and repair the damage they had caused;

(d)   he failed to account to Dame Leonie for all proceeds of produce grown on the Colo Property;

(e)   further particulars will be provided in the defendants' evidence.

21A.   The plaintiff dishonestly failed to account to Dame Leonie for all produce grown on the Colo Property.

PARTICULARS

(a)   From at least 2007 the plaintiff purchased seed and seedlings, and incurred fertiliser, herbicide, fuel and other expenses in and about the cultivation of the crops grown from that seed and seedlings, but recorded no sale of some of the crops produced by that cultivation and retained all of the proceeds of sale of some of those crops with the dishonest intention of having Dame Leonie contribute, through the share-farming agreement, to the costs of cultivation of the crops but keeping the proceeds of sale of some of the crops for himself. Further particulars will be set out in the expert report of Richard Ivey.

(b)   On the plaintiff's own records, there is money he has not paid to Dame Leonie in at least the three years prior to her diagnosis of dementia, being the period of at least 2006 to 2009.

(c)   On the plaintiff's own records, there is money he has not paid to Dame Leonie for the period in which the plaintiff knew that Dame Leonie had dementia and could not reasonably understand the quarterly reconciliation process she undertook with the plaintiff, being the period of 2009 to 2010.

(d)   On the plaintiff's own records, there is money he has not paid to Dame Leonie for the period after she appointed the first defendant as her attorney, being the period of 2010 to 2014.

21B.   In the circumstances pleaded in paragraph 21A above the plaintiff lacks clean hands, and equity should refuse the relief sought by him in these proceedings.

22.   Even if the asserted representations were made, it was not unconscionable for Dr Kramer or Dame Leonie to resile from them.

PARTICULARS

(a)   the defendants repeat the particulars to paragraph 21 above;

(b)   during the last 30 years or more of the operation of the Share Farming Agreement the plaintiff was entitled to one half of the gross proceeds from all farming activity carried out on the Colo Property, irrespective of whether the Share Farming Agreement made a profit or a loss, while only having to pay ½ of the fuel expenses;

(c)   in addition, the plaintiff and his family had rent-free accommodation on the property for almost 40 years;

(d)   and the receipt of a quarterly 'bonus' which was paid irrespective of the net financial result of the Share Farming Agreement and irrespective of the plaintiff's failure to maintain the Colo Property;

(e)   in the period after the death of Dr Kramer the plaintiff took total control of the share farming operations including the nature and extent of any work he carried out, subject only to obtaining agreement from Dame Leonie or the defendants for any significant capital purchases;

(f)   Dr Kramer and Dame Leonie from time to time lent money to the plaintiff, the repayment of much of which they forgave him;

(g)   Dame Leonie made a gift of $200,000 to the plaintiff in her Will;

(h)   the plaintiff many times stated that he would not want to live anywhere else than on the Colo Property;

(i)   the defendants repeat paragraph 21A above.

23.   Additionally or alternatively, the defendants say that, in the light of the matters pleaded in paragraphs 21 and 21A above, the relief to be granted to the plaintiff should be something less than the claimed beneficial interest in the Colo Property, and should be limited to equitable compensation which takes into consideration and reflects:

(i)   the benefits that the plaintiff received from remaining on the property after the representations were made,

(ii)   the losses to Dame Leonie as a result of the matters set out in paragraphs 21 and 21A above, and

(iii)   the fact and amount of the legacy provided to the plaintiff in Dame Leonie's last Will.

Legal principles governing David’s entitlement to the interest claimed

30. The most appropriate way to classify David’s claim for a proprietary interest in the Farm is to describe it as being based upon an estoppel by encouragement.

31. In the following consideration of the legal principles that govern David’s claim, I have avoided an expansive consideration of the authorities and attempted instead to distil those principles through the medium of relevant decisions of the New South Wales Court of Appeal. It is desirable to state the principles as clearly and simply as possible, which is an objective that tends to be obscured by an extensive examination of the reasoning in prior cases that have considered the application of the fundamental equitable principles in the multiplicity of circumstances to which they have been required to be applied.

32. In Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, Priestley JA (Hope and McHugh JJA agreeing) considered the decision of the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (Waltons Stores), particularly the observations made by Brennan J at 429, and said at 472:

… In explaining why I agree with the steps in Powell J's reasoning, I have the benefit of the High Court's decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, delivered after Powell J's judgment. The decision in Waltons makes it unnecessary to deal with the earlier estoppel decisions discussed by Powell J. Waltons enables the statement of some relevant propositions more certainly and simply than was previously possible. The following can I think be distilled from the reasons in Waltons notwithstanding the somewhat different language used by different judges … (3) Equitable estoppel operates upon representations or promises as to future conduct, including promises about legal relations. When certain conditions are fulfilled, this kind of estoppel is itself an equity, a source of legal obligation. (4) Cases described as estoppel by encouragement, estoppel by acquiescence, proprietary estoppel and promissory estoppel are all species of equitable estoppel. (5) For equitable estoppel to operate in circumstances such as those of the present case there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable. (6) Equitable estoppel may lead to the plaintiff acquiring an estate or interest in land; that is, in the common metaphor, it may be a sword. (7) The remedy granted to satisfy the equity (which either is the estoppel or created by it) will be what is necessary to prevent detriment resulting from the unconscionable conduct…

33. In Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, Priestley JA (Kirby P agreeing) at 610 said:

From the foregoing, I draw the conclusion that if it were permissible, in this Court, to read Attorney-General of Hong Kong v Humphreys Estate along with Waltons, it would be right to expand proposition 5 from Silovi to read as follows:

5. For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable.

34. After considering the authorities relevant to the case in the above extract, his Honour said at 612:

In the result, it seems to me that it is appropriate to summarise the present position of the law concerning common law and equitable estoppel in Australia, following the High Court's decision in Waltons as in the seven propositions in Silovi, with the expansion of proposition 5 earlier set out, and subject to the warning observation, that as this case shows, those propositions may need clarification or elaboration in the light of the particular circumstances of later cases.

35. It is of relevance to the present case that Priestley JA’s third proposition is that equitable estoppel operates upon representations or promises as to future conduct. It is not necessary that the representation be promissory in form. His Honour’s expanded fifth proposition may be satisfied if the representation by the defendant encourages the plaintiff to make an assumption that an interest will be granted to the plaintiff by the defendant, and the plaintiff relies upon the assumption in circumstances where departure from the assumption by the defendant would be unconscionable. Subjective knowledge by the defendant that the plaintiff is acting in reliance upon the assumption encouraged by the defendant may contribute to a departure from the assumption being unconscionable. However, the issue of whether the departure is unconscionable depends upon the particular circumstances of the case, so that if the nature of the representation and the circumstances in which it is made are calculated to induce reliance by the plaintiff, departure from the assumption may be unconscionable even if the defendant does not subjectively understand that the representation has motivated the plaintiff’s reliance.

36. In Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469 (Q v E Co), Meagher JA (with whom Leeming and Payne JJA agreed) said of the representation necessary to establish a proprietary estoppel by encouragement:

[15] Q’s argument in support of this ground emphasises the distinction between proprietary estoppel by encouragement and proprietary estoppel by acquiescence, the latter understood in the sense of “standing by”. The former, as formulated in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [6], is founded in an assumption as to the future acquisition of ownership of property which has been induced by a representation or promise upon which there has been detrimental reliance by the plaintiff. As Mr Handley observes in Estoppel by Conduct and Election (2nd ed, Thomson Reuters, 2016) at [3–001], a representation or promise “may be implied wholly or partly from conduct or inferred from silence or inaction”. Whether any, and if so what, representation has been made is to be judged “objectively according to the impact that whatever is said [or done] may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee” per Mance LJ in MCI [2004] 2 All ER (Comm) 833 at 844. See also Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18 at [24]–[27] (Lord Rodger) and at [80], [84]–[86] (Lord Neuberger). In this Court, see Galaxidis v Galaxidis [2004] NSWCA 111 at [93]; Sullivan v Sullivan [2006] NSWCA 312 at [85]; and Evans v Evans [2011] NSWCA 92 at [124].

37. The proposition, accepted by Meagher JA, that the meaning and effect of the representation must be determined objectively according to the impact that whatever is said may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee is relevant to the present case.

38. In Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 (Doueihi), Gleeson JA (Beazley P and Leeming JA agreeing) referred, at [153], to an argument put by the appellant in that case, based in part on the first proposition of Brennan J in Waltons Stores, to the effect that an assumption must be established that a particular legal relationship existed or would exist between the parties, and that in the latter case the party inducing the assumption would not be free to withdraw from the expected legal relationship. Gleeson JA, at [154]-[158], considered authorities that dealt with the issue of whether a failure by a party to perform an executory promise may be found to be unconscionable, and the requirement that “something more” than mere reliance on an executory promise is necessary to be sufficient, and said:

[158] Although as already noted, some doubt has been expressed as to whether the joint judgment of Mason CJ and Wilson J and the judgment of Brennan J in Waltons Stores dealt with the case on the basis of promissory estoppel (see the comments of Handley AJA in DHJPM v Blackthorn at [122]), the context of their Honours’ references to Humphreys Estate seems to me to be promissory estoppel. The need for “something more” than mere reliance on an executory promise, is readily understandable in cases of promissory estoppel where the parties expect to enter into a contract or otherwise formalise their legal relationship. Without “something more” a departure from the basic assumptions underlying the transaction between the parties is not unconscionable. The “something more” manifested in Waltons Stores was an expectation or assumption that “a particular legal relationship” would exist and that the other party would not withdraw from the negotiations (Mason CJ and Wilson J at 406, Brennan J at 422–423).

[159] The difficulty with the appellants’ argument is that it seeks to apply Brennan J’s first proposition, formulated in the context of a promissory estoppel case, where the parties intended to enter into a contract, to a different case where the expectation or assumption created or encouraged by the party said to be estopped is that “an interest” would be granted, in circumstances where the parties did not believe they needed to enter into a contract or otherwise contemplate formalising their legal relationship. There are a number of reasons why that approach should not be accepted.

39. In the course of elaborating the reasons to which he referred, his Honour said:

[164] Secondly, Handley AJA did not say in DHJPM v Blackthorn that Brennan J’s first proposition applied to a case where the parties did not contemplate or believe they needed to enter a contract or otherwise formalise their legal relationship.

[165] Thirdly, as Meagher JA also observed in DHJPM v Blackthorn (at [49]), the reference in Brennan J’s first proposition to an expectation that “a particular legal relationship would exist” and that the party said to be estopped “would not be free to withdraw” from it, draws attention to two essential aspects of the expectation in cases where the parties expect to enter a contract. DHJPM v Blackthorn was a commercial case involving experienced businessmen who, as Meagher JA found (at [42]), must be taken to have contemplated and intended that any proprietary or other right of occupation would be created by a binding contract.

[166] It would be wrong, however, to read the reasons of Meagher JA as suggesting that the six propositions of Brennan J are to be applied in every case of proprietary estoppel in a mechanical fashion. As the primary judge noted, Priestley JA made this very point in Austotel v Franklins (at 615–616), when observing that while the “tests” of Brennan J may not represent the majority views of the High Court, they provided a useful check. As the primary judge also recognised (at [137]), it would also be wrong to ignore that in Waltons Stores, Mason CJ and Wilson J did not say that the party asserting that estoppel must have assumed that a particular legal relationship existed, or that the party said to be estopped would not be free to withdraw from an expected legal relationship.

[167] Fourthly, the difference in the formulation of Brennan J’s first proposition and the more succinct formulation of what Priestley JA distilled from the different judgments in Waltons Stores in Silovi v Barbaro (Hope and McHugh JJA agreeing), and subsequently in Austotel v Franklins, reflects the fact that Brennan J’s propositions were not formulated to take into account the different circumstances of cases, like the present, where the assumption that an interest would be granted is made by parties who do not intend to enter into a contract or otherwise formalise their legal relationship. Meagher JA recognised so much in DHJPM v Blackthorn (at [52]), when he observed that Priestley JA had expanded his proposition (5) in Austotel v Franklins to take account of the different circumstances of that case. As the primary judge noted, that formulation was cited with approval by a full court of the Federal Court in S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd at 653.

[168] Fifthly, I do not regard the observations by Meagher JA in DHJPM v Blackthorn (at [53]), concerning the passage from Lord Kingsdown’s speech in Ramsden v Dyson (set out at [68] above), as importing a requirement of an expectation of “a particular legal relationship” when the expectation or assumption relates to an interest in property that would be granted. Meagher JA was careful in his language not to go so far. His Honour said (at [53]) that:

[53] [t]he requirement that the promise or expectation be intended by the promisor and understood by the promisee to affect their legal relations applies equally to cases where a contract is not contemplated and the expectation is that some interest in land will be granted. That appears from the statement of Lord Kingsdown in his dissenting speech in Ramsden v Dyson (1866) LR 1 HL 129 at 170.

…

40. The present is a case in which the parties did not contemplate that they would enter into any formal legal agreement, and David does not put his case on the basis of promissory estoppel. In the context of a consideration of whether there is a dichotomy between arms-length/commercial and domestic/family cases, Gleeson JA said:

[173] The dichotomy between arms-length/commercial cases and domestic/family cases is not to be seen as fragmenting equitable principles. As Handley AJA explained in DHJPM v Blackthorn, this distinction reflects the nature and circumstances usually found in two types of cases.

[174] After observing that estoppels by encouragement have been applied in a wide variety of factual situations, Handley AJA referred to the two categories of case and continued at [104]–[105]:

[104] … Most fall into one of two categories; those where the parties are in a domestic or family relationship, and those where the relationship is commercial. Parties in the latter category typically contemplate a legal relationship and frequently intend to enter into a contract or otherwise formalise their expectation.

[105] In domestic or family cases, the parties are not at arm’s length and usually have no intention of entering into a contract or formalising their expectation. The party encouraged will frequently expect to receive a gift, inter vivos or testamentary.” (Emphasis added)

[175] Importantly, Handley AJA did not suggest that the dichotomy between arms-length/commercial cases (of which DHJPM v Blackthorn is an example) and domestic/family cases was universal, nor that it is a finite framework. Read together, his Honour’s qualifications, including particularly that “most” cases fall into one of two categories, emphasised that it is the circumstances of the case which are decisive as to whether an equitable proprietary estoppel is made out. His Honour’s careful language allows for the potential for the parties, in either of the two categories, or indeed in a mixed category, to have different expectations as to entry into a formal written agreement from those usually or typically held in a commercial case or a domestic/family case.

…

[178] So long as it is appreciated that the dichotomy between arms- length/commercial cases and domestic/family cases is not universal or finite, no difficulty arises in using these labels to describe different categories of case. As always, however, care must be exercised when using shorthand labels to describe the context. This is more so because, as the primary judge recognised, many cases do not fall neatly into such separate categories. Ultimately, the circumstances of the case are what is important, including the nature of the relationship between the parties and whether they contemplated that any interest to be granted or promise to be performed was to be created by a binding contract: DHJPM v Blackthorn at [56].

41. The evidence in the present case suggests that the relationship between David on the one hand and Dr Harry and Dame Leonie on the other was an informal halfway house between a commercial and a domestic one, and that even though there was an underlying commercial relationship in the form of the share farming agreement, the parties to that agreement substantially acted upon the basis of trust and the give and take that would commonly characterise a domestic relationship.

42. In Simpson-Cook v Delaforce [2009] NSWSC 357, Bergin CJ in Eq said, in a passage approved by Ward J (as her Honour then was) in Dable v Peisley [2009] NSWSC 772 at [129]:

29 It is also important to remember Walker LJ’s caution that: (1) the “flexible doctrine” of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments; (2) the quality of the relevant assurances may influence the issue of reliance; (3) reliance and detriment are often intertwined; and (4) whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood: at 227 and 230. The following principles relevant to the circumstances of this case may be gleaned from Walker LJ’s analysis in Gillett v Holt: (1) promises unsupported by consideration are initially revocable, however detrimental reliance on such promises make them irrevocable; (2) there must be a sufficient link between the promises relied on and the conduct which constitutes the detriment; and (3) detriment can be financial or otherwise, however if other than financial it has to be substantial.

43. In Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84. Allsop P (Giles JA agreeing) gave the following explanation of the Court’s approach to fashioning relief when a proprietary estoppel has been established:

[3] I agree in particular with Handley AJA that the reasons of Gleeson CJ, McHugh J, Gummow J and Callinan J in Giumelli v Giumelli (1999) 196 CLR 101 appear to remove as a governing principle in the relief to be granted in equitable or proprietary estoppel cases the notion of enforcement or vindication only of the “minimum equity”: see Giumelli (at [40]–[48]). That, of course, does not make irrelevant matters that can assuage the detriment brought about by the resiling from the representation or encouragement by the party concerned. It does mean, however, that relief in such cases is not to be measured by weighing detriment too minutely in order that it be converted into some equivalent of cash or kind, as if one were measuring the consideration for a commercial bargain. Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character. Equity has always had a place in keeping parties to representations or promises: see for example, Burrowes v Lock (1805) 10 Ves Jr 470; 32 ER 927; Horn v Cole 51 NH 287; 12 Am Rep 111 (1868); S W Symons (ed), J N Pomeroy, A Treatise on Equity Jurisprudence 5th ed, Vol 3 (1941) San Francisco, Bancrof-Whitney at 179–188 [802]–[803]; R Meagher, J Heydon and M Leeming, Meagher, Gummow and Lehane's Equity: Doctrine and Remedies 4th ed (2002) Sydney, Butterworth LexisNexis at 556–560 [17–065]–[17–070] and 567–568 [17–110].

[4] Proportionality of the claimed interest or remedy to the prejudice or detriment is undeniably a relevant consideration, and sometimes of consider­ able importance. It should not, however, be transformed into a necessary constitutive element of a cause of action to be pleaded or proved by the party seeking relief. To do so would elevate one consideration above others, and in particular above the importance of making good an expectation by encouragement or representation: Plimmer v The Mayor, Councillors and Citizens of the City of Wellington (1884) LR 9 App Cas 699 at 713–714; Riches v Hogben [1985] 2 Qd R 292; Giumelli (at [10] and [35]). It would tend to equate the analysis to one requiring that the party encouraged receive no more than it can prove that it suffered in detriment. This would see the equity become one of compensation for proved equivalent detriment. The equity is a broader one based on the just and conscionable satisfaction in appropriate fashion of the equity arising from the expectation created in another by encouragement or representation. As Handley AJA says, the role of proportionality is better understood, in a doctrine dealing with the legitimacy or otherwise of resiling from an encouragement or representation that has created an expectation, as assisting in an assessment whether what is claimed or contemplated to be granted is disproportionate or unjust in all the circumstances.

[5] The importance of keeping a party to a representation or encouragement previously made is all the stronger where, as here, the encouragement or representation has been relied upon by a party to abandon a course of conduct that could possibly have led to a different outcome. This can be described in the language of loss of a chance that is not fanciful or unrealistic, or in the language of proceeding thereafter on the basis of a new or changed convention or conventional basis. Such expression of the matter is not different to how Dixon J put the matter in Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674–675. For instance, if, as here, in reliance upon a representation or encouragement, a court case is abandoned and the representation or encouragement is later sought to be resiled from, the party to whom the representation or encouragement was made and in whom the expectation was raised is left in the position not only of the loss of the entitlement to pursue his or her rights in the case in the past, but also is likely to be in the position of being unable to demonstrate what would, or even may, have happened in the case, it being an alternative, complex and now hypothetical body of human conduct. That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position. Of course, if it is self-evident or can be clearly demonstrated that the case was fanciful or otherwise doomed to fail, there may be no real detriment; but that was not the case here. The respondent gave up her right to propound her case in the Family Court on the faith of the deceased's representation. It was not self-evident, or otherwise clearly demonstrated, that she could not have been successful in securing her rights to the subject property after the death of the deceased.

44. Handley AJA added:

[56] Although there are statements in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and The Commonwealth v Verwayen that relief in these cases must be limited to removing or reversing the detriment suffered by the party entitled to the estoppel, the joint judgment in Giumelli (at 120 and 125) established that there is no such restriction. The detrimental reliance that supports the estoppel need not constitute, in any sense, a consideration moving to the party bound. It is a unilateral element of the estoppel and not the price paid for it.

[57] Relief depends very much on the facts and, as the Privy Council said in Plimmer (at 714), “the Court must look at the circumstances in each case to decide in what way the equity can be satisfied.”

…

[63] The Court should, prima facie, enforce a reasonable expectation which the party bound created or encouraged: R Meagher, J Heydon and M Leeming, Meagher, Gummow and Lehane's Equity: Doctrine and Remedies 4th ed (2002) Sydney; Butterworth LexisNexis at 567–568. In Ramsden v Dyson (1866) LR 1 HL 129 at 170 Lord Kingsdown said: “If a man … under an expectation created or encouraged by the landlord that he shall have a certain interest [acts to his detriment] upon the faith of such promise or expectation … a Court of equity will compel the landlord to give effect to such … expectation” (Lord Kingsdown's principle). In Chalmers (at 681–682), the Privy Council said that if such an estoppel is established “a court of equity will prima facie require the owner … to fulfil his obligation”. In Attorney General of Hong Kong v Humphreys Estate (Queen's Gardens) Ltd [1987] AC 114 at 121 Lord Templeman said:

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

[64] In Giumelli, the joint judgment (at 123) quoted with approval this statement of Deane J in The Commonwealth v Verwayen (at 443):

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

[65] The joint judgment in Giumelli continued (at 123):

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

45. These principles were recently considered and applied by Bathurst CJ in Trentelman v The Owners – Strata Plan No 76700 [2021] NSWCA 242. His Honour said:

[116] In Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10, the plurality stated at [6] that the equity which founded the relief claimed in such cases as Dillwyn v Llewelyn (1862) 4 De GF & J 517 at 523 was founded on the assumption of future ownership of property which had been induced by representations upon which there had been detrimental reliance by the plaintiff. That reasoning was adopted by the plurality in Sidhu v Van Dyke at [2], see also Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 at [131]-[136].

[117] In Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84, Handley AJA, in dealing with a claim of proprietary estoppel by encouragement, summarised the circumstances in which such an estoppel came into existence in the following terms (at [21]):

“[21] The proprietary estoppel upheld by the judge was an estoppel by encouragement. Such an estoppel comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part. The general principles governing this form of estoppel were not in dispute, here or below.”

[118] What needs to be added to that summary is that it must be shown that the detrimental reliance makes it unconscionable for the promisor or representor to depart from the promise or representation: see Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [147]-[150].

[119] As can be seen from the submissions of the appellant to which I have referred, the first basis on which she seeks to challenge the conclusion of the primary judge is that the representation was incapable of creating an expectation in the Owners Corporation that the lot owners would have the use of the pool. In that context, there are a number of matters which may be noted at the outset.

[120] First, notwithstanding the requirement that there must be certainty in the promise to give rise to the requisite expectation, an equitable estoppel can be established notwithstanding the expectation is based on a promise or representation that would not be sufficiently certain to amount to a valid contract, or is formed on the basis of vague assurances: DHJPM Pty Ltd v Blackthorn Resources Ltd at [54]; Evans v Evans at [121]-[125]; Flinn v Flinn at [80]-[81].

[121] Second, and allied to the first point, as Hodgson JA pointed out in Sullivan v Sullivan [2006] NSWCA 312 at [85], a promise or representation will generally be sufficiently clear to support an estoppel if it was reasonable for the representee to interpret the promise in a particular way and to act in reliance on that assumption: see also Doueihi v Construction Technologies Australia Pty Ltd at [197]; Evans v Evans at [124].

[122] Third, depending on the particular context, a proprietary estoppel may be established where the promise or representation relied upon did not define the interest the party was expected to receive: see Sullivan v Sullivan at [16] and the cases there cited, in particular Flinn v Flinn at [80]. In Cobbe, Lord Walker summarised the position in the following terms (at [68]):

“[68] It is unprofitable to trawl through the authorities on domestic arrangements in order to compare the forms of words used by judges to describe the claimants’ expectations in cases where this issue (hope or something more?) was not squarely raised. But the fact that the issue is seldom raised is not, I think, coincidental. In the commercial context, the claimant is typically a business person with access to legal advice and what he or she is expecting to get is a contract. In the domestic or family context, the typical claimant is not a business person and is not receiving legal advice. What he or she wants and expects to get is an interest in immovable property, often for long-term occupation as a home. The focus is not on intangible legal rights but on the tangible property which he or she expects to get. The typical domestic claimant does not stop to reflect (until disappointed expectations lead to litigation) whether some further legal transaction (such as a grant by deed, or the making of a will or codicil) is necessary to complete the promised title.”

The Share Farming Agreement

46. The terms upon which David entered into the share farming agreement with Dr Harry, and then continued the agreement with Dame Leonie after Dr Harry’s death, provide an important part of the context in which the Court must decide whether it should accept David’s evidence concerning the representations that he alleges were made to him by Dr Harry and Dame Leonie. That is because the likelihood that Dr Harry and Dame Leonie would have thought it fit to leave David an interest in the Colo Property is linked to the apparent value of the share farming agreement to David, the distribution of the benefits of the agreement between the parties, and, as will be seen, the income that it was capable of generating for David.

47. A claim by a plaintiff farm worker that a grazier for whom he worked had made an oral representation that the grazier would leave a major sheep station to the farm worker may well be improbable, but the position may be entirely different where the farm involved is small and commercially unviable, the farming operation is conducted as a close personal collaboration between the owner and farmer, and the assurance of the inheritance by the farm worker may be a supplement to what otherwise would be an inadequate income from working the farm.

48. This issue is also significant to Hilary’s claims that David breached the share farming agreement by failing to minimise operating costs and maximise the gross proceeds of the agreement, and by failing to keep in good repair the house in which he lived on the Colo Property.

Evidence of the terms of the Share Farming Agreement

49. David’s evidence was that he never entered into any formal written share farming agreement with Dr Harry and Dame Leonie. It was not put to him in cross-examination that this evidence was incorrect: see T 62.12.

50. Although David said that the share farming agreement was oral, he did not give evidence of the conversations that gave rise to the agreement. Instead, in par 15 of his 24 August 2017 affidavit, he stated that the oral agreement contained the terms pleaded in par 4 of the statement of claim (see [11] above). Hilary was not privy to the conversations between David and her parents whereby the terms of the share farming agreement were agreed. Nonetheless, in her amended defence, she asserted that the share farming agreement had the terms pleaded in pars 4.2 and 4.3 (see [14] and [15] above).

51. The terms of the share farming agreement were largely agreed on the pleadings, and most differences were not significant. The only significant differences asserted by the parties was that Hilary pleaded in par 4.2(a) that David was required to “maintain the Colo Property and the machinery, equipment and buildings on it”, and in par 4.2(b) that David was required to conduct the share farming operation “in a proper and workmanlike manner so as to minimise the operating costs and maximise the gross proceeds of the Share Farming Agreement, and keep the machinery, equipment and buildings in reasonable repair”.

52. Hilary listed her understanding of the terms of the share farming agreement in her 14 August 2018 affidavit at par 16 in the following terms:

a)   all expenses except for fuel were paid by my parents;

b)    the only expense that Dave was required to pay was half of the fuel costs;

c)   income from produce was shared equally between my parents on one hand, and Dave on the other;

d)   Dave was to be paid a quarterly bonus for work done towards maintaining and improving the property; and

e)   as part of the agreement, Dave continued to live rent-free in the four-bedroom house previously occupied by his parents and siblings.

53. This statement by Hilary of the terms of the share farming agreement is not significantly different from David’s statement as to his understanding of those terms.

54. Hilary’s evidence does not support the inclusion in the share farming agreement of the additional terms pleaded in par 4.2(a) and (b) of the amended defence that I have set out above. Hilary said nothing about those terms in her evidence.

55. Moreover, it was not directly put to David in cross-examination that the share farming agreement contained terms that were as onerous as those alleged by Hilary. Rather, David was asked whether he had negotiated with Dr Harry terms of the agreement that were more beneficial to him than the terms under the written agreement his father had worked under. David responded: “I don’t agree with that” (T 62.35).

56. The following hand-written note made by Dr Harry in his first quarterly reconciliation for the period ended 30 September 1975 (Court Book 629) is relevant to the determination of the terms of the share farming agreement. The transcription may not be entirely accurate because the handwriting is not entirely legible:

Because of economic difficulties Stone found it almost impossible to meet his [ordinary?] ½ share of expenses. Agreed therefore that we would meet all costs other than fuel, which would be shared. Income from produce would be shared equally between H & LJ Kramer on one hand, & D Stone on other. In addition a quarterly bonus of $325.00 would be paid to D Stone for work done towards improving property e.g. fencing, painting of buildings.

57. Not only is this note relevant to Dr Harry’s appreciation of the financial difficulties faced by David in conducting the share farming operation, but the final words perhaps cast light on the true extent of the work required of David in relation to the improvement of the Colo Property. The extent of the work that David was required to do in return for his quarterly bonus was in the nature of maintaining the fencing and painting buildings. That falls far short of a positive obligation to “maintain the Colo Property and the machinery, equipment and buildings on it”.

58. Another note in Dr Harry’s handwriting concerning the March 1980 quarter recorded a change in the terms of the share farming agreement (Court Book 631):

*Because of rapid rise in cost of fuel agreed that henceforth we will pay 2/3 and David 1/3.

59. David acknowledged, however, in par 21 of his 24 October 2018 affidavit in reply, that it was his role to assess which crops were best grown to gain the best yield for the farm.

Share farming agreement with David’s father

60. It is instructive to compare the terms of the written share farming agreement entered into between David’s father and Dr Harry and Dame Leonie with the manner in which the evidence shows that the share farming agreement operated.

61. David’s father entered into a share farming agreement in 1965 with the predecessor in title to the Colo Property to Dr Harry and Dame Leonie.

62. Hilary tendered a formal written share farming agreement between David’s father and Dr Harry and Dame Leonie made on 28 June 1970. The agreement was 13 pages long and dealt in detail with the obligations of the share farmer and the farm owners. It was a conventional share farming agreement, in which most of the income and expenditure was borne equally by the parties, and the share farmer was required to contribute significant resources.

63. Clause A5a of the agreement states that: “The Farmer shall keep all buildings, fences and other improvements on the farm in as good repair order and condition as the same are in at the date hereof fair wear and tear and damage by fire only excepted”. Clause A5b states: “He will keep the property clean and tidy and attend to the eradication of such noxious weeds or vermin as may otherwise infest the farm”. There is no evidence that the oral share farming agreement with David included such a term, and there is nothing to suggest that Dr Harry or Dame Leonie ever complained to David of the fact that this alleged term was not adhered to or that they complained to David of the state of the Farm with respect to its order or condition generally. Clauses B2 and C1 obliged the Owners (that is Dr Harry and Dame Leonie) to provide a house rent-free for the Farmer. The agreement was more complex than the share farming agreement, as, for instance, clause A10 obliged the Owners to take out insurance for crops with the premiums payable equally by the Owners and the Farmer.

64. It is clear from a comparison of the way the share farming agreement operated in practice with the terms of the formal written agreement to which David’s father was a party that the arrangement between David and Dr Harry and Dame Leonie was on quite different terms. For instance, the written share farming agreement required the parties to bear all costs of the farming operation equally, while the share farming agreement did not. Indeed, the hand-written accounts prepared by Dr Harry stated in relation to the expenses incurred when David’s father was the share farmer: “FARM EXPENSES (SHARED WITH HE STONE)”: see Court Book 2885. When David became the share farmer in 1975, Dr Harry wrote: “FARM EXPENSES (NOT SHARED)”: see Court Book 2889.

65. David gave uncontradicted evidence that his father terminated his share farming agreement with Dr Harry and Dame Leonie because he was unable to make a sufficient living to support his wife and children, and his wife wanted to live a more suburban life.

Terms of the Share Farming Agreement

66. The evidence does not establish that the share farming agreement contained a term that required David to maintain in good order the house in which he lived from his own resources. As will be seen, it is obvious from the evidence that at no time did David earn enough from the share farming agreement to maintain the house; which is a fact that must have been obvious to Dr Harry and Dame Leonie.

66. I am also not satisfied that the share farming agreement contained a term that, in an absolute sense, required David to conduct the farming operation with a minimum of costs and a maximum of income that was possible in relation to the farming operations on the Colo Property. I find that the share farming agreement probably included an implied term that David would conduct the farming operation with reasonable care, and that he would use his best endeavours in the circumstances to minimise costs and maximise returns. However, the content of that obligation must be assessed having regard to the obvious fact that David did not have any independent financial resources to apply to the share farming operation, and, as will be seen, his earning capacity was meagre and wholly inadequate to fund any onerous obligation to maintain and improve the Colo Property.

67. In fact, it is likely that all of the costs of maintaining and improving the Colo Property fell within the obligation of Dr Harry and Dame Leonie to pay all operating costs, and was within their discretion as to how much they wished to outlay for those purposes. The share farming agreement probably imposed upon David a residual obligation to apply his labour to the maintenance and improvement of the Colo Property to the extent that was consistent with his ability to conduct the share farming operation.

68. However, the share farming agreement was not an arm’s length agreement, under which the owners made the land available to the farmer on the basis that the farmer would use his own resources to conduct the farming operation, and where the obligation to bear costs and the entitlement to share income would be split equally between the owner and the farmer.

Essential nature of the Share Farming Agreement

70. The share farming agreement was a much less formal arrangement than the agreement with David’s father. Its primary objective, from the perspective of Dr Harry and Dame Leonie, was to enable them to have a farming property in reasonable proximity to their home in Vaucluse, which they could enjoy at their leisure and which presented as an operating farm. Dr Harry was an eminent doctor and Dame Leonie was a notable professor of Australian literature, who rose to a position of great distinction in society. They did not have the time to operate the Colo Property by themselves, and their aspiration to be able to enjoy an idyllic farming property depended upon their being able to secure the services of a farmer like David, who was prepared to work hard for very little income. The share farming agreement was more of a collaboration than a conventional share farming agreement.

71. I infer that Dr Harry and Dame Leonie were content to enter into a more informal oral share farming agreement with David, on terms that were more favourable to the share farmer, because they realised that the Colo Property was not a viable economic proposition for the purpose of conducting a formal and conventional share farming operation. If Dr Harry and Dame Leonie wanted to have the lifestyle benefit of owning and being able to visit an operating farm in the Colo Valley, they had to find a farmer, such as David, who would be prepared to conduct a share farming operation on the Colo Property, on more favourable terms than had been given to David’s father, and within the significant restraints on the capacity of the Colo Property to earn income from farming operations.

72. It is also necessary to bear in mind when considering Hilary’s claim that David did not conduct the share farming operation in a competent way that he had no training as a farmer. It is likely that he learned farming practices and techniques from his father while he was a schoolboy, by helping around the Colo Property outside school hours. Having completed his Higher School Certificate, David moved to Surry Hills in 1971 and worked for the NSW Mines Department in a clerical position. David successfully re-sat his HSC to improve his results, and in 1972, he enrolled in Agricultural Science at Sydney University. Whilst at university, where he attended full-time in the first year and part-time in the second year, David worked casually on home building and renovation work to support himself. David discontinued his studies in 1973. David probably learned something about farming in the brief period that he pursued the Agricultural Science course. By the time that David began to farm the Colo Property under the share farming agreement in 1975, David did not have a substantial amount of farming experience.

73. Given the relatively small scale of the farming operations that were able to be carried out on the Colo Property, and the uncontradicted evidence that David’s father had abandoned share farming the property because of his inability to earn an adequate income, it is likely that Dr Harry and Dame Leonie would have understood that David did not have substantial farming experience or resources, and that he would have to ‘learn on the job’ with Dr Harry’s assistance. It is also likely that Dr Harry and Dame Leonie’s aspiration would have been to enjoy the benefit of owning a working farm in circumstances that minimised the annual losses that they otherwise would have incurred from the farming operation on the Colo Property.

Significance of David’s membership of the Rural Fire Brigade

74. In final oral submissions, Hilary abandoned the allegation in par (b) to the particulars to par 21 of the amended defence that David’s performance of the share farming agreement was inadequate because he devoted too much time to the performance of his senior roles in the Rural Fire Service.

75. It should be noted, in any case, that Dame Leonie recorded in a number of her quarterly reconciliations that the need for David to engage in Rural Fire Service duties had impeded his ability to perform the share farming agreement. However, there is no evidence that she complained of this fact, as opposed to having accepted it as effectively her contribution as the owner of the Colo Property to the cooperative efforts of local landowners to protect themselves and their neighbours from loss through bushfires. In her reconciliation for the March 2002 quarter, Dame Leonie wrote (see Court Book 633):

*NB The last 2 quarters were severely affected by heat drought and bushfires. David was on duty as captain of the Upper Colo Bush Fire Brigade from Christmas Eve 2001 until early February 2002. This resulted in a loss of 1000 bags of potatoes (worth approx $20,000) which could not be [?], and of unplanted planned crops.

76. Later, in her reconciliation for the March 2006 quarter, Dame Leonie wrote (see Court Book 635):

*Crops failed (beans + watermelons worth $20,000) because of extreme heat) + fire duties.

77. The claim that David breached the share farming agreement as a result of the performance of his obligations as a member of the Rural Fire Brigade therefore introduced a nonissue into the proceedings.

78. Consequently, it is not necessary to refer in detail to the evidence given by David to refute the assertion that his activities as a member of the Rural Fire Service diminished the quality of his performance of the share farming agreement. However, that evidence should not be ignored. David served his community as a member of the Rural Fire Service and its predecessor, the local bush fire brigade, from 1975, the year in which the share farming arrangement began. He rose from a member to a captain, and from 1 September 2003 to 5 July 2012, he was Deputy Group Captain at the Hawkesbury Fire Control Centre. David was awarded a number of Rural Fire Service long service awards and medals, and on 17 February 2011, he was awarded what his Member Report describes as “National Medal # Clasp 1”. The clasp signifies an additional 10 years of service above the 15 years required in order to be eligible to be nominated for the National Medal, which is awarded to members of eligible organisations whose members serve or protect the community at the risk of death, injury or trauma.

79. Not only does this service by David do him considerable personal credit, but it is also relevant to the determination of the issues in these proceedings.

80. First, I consider that it is legitimate to take into account David’s long service and achievements as a member of the Rural Fire Service in judging his credibility as a witness. David is unlikely to have risen to the rank of Deputy Group Captain without his peers in a largely voluntary organisation being satisfied of his character and reliability.

81. Secondly, David’s evident competence which, according to David’s Member Report, involved him in planning, training, assessment and crew leader roles, assists the Court in being able to find that, if David had terminated the share farming agreement at about the time that he claims Dame Leonie made her representation to him, David had good prospects of obtaining reasonably remunerative, long-term alternative employment.

David’s evidence of representations and reliance

82. I propose to set out David’s evidence in chief as well as excerpts from his cross-examination in some detail. The reason for including lengthy extracts from the cross-examination is that it is necessary for the purpose of explaining my judgment as to the credibility and reliability of the evidence given by David. That is a crucial matter in this case, because the circumstances are that David’s ability to establish his claim is substantially dependent on the willingness of the Court to accept him as both a truthful and reliable witness as to conversations that occurred as long as 40 years ago in private, and where in each case the persons who are alleged to have made the representations are now deceased.

First Representation

83. In pars 19 and 20 of his 24 August 2017 affidavit, David gave the following evidence about the first representation:

19.   In the early 1980s Harry and I were sitting at the dining room table of his house on the Colo Property. We had just finished reconciling the quarterly books when Harry said to me to (sic) words to the effect:

“I am dealing with my Will and have decided to give the Colo Property to the girls on condition you receive a life interest, so you can work the Colo Property as your own for your life. The only other condition is that the family retain use of this cottage”

…

20.   I regarded Harry as a good and decent man having then worked with him for near on 6 or 7 years at the time when he told me about the First Succession Plan (and knowing him from when he worked with my father). He had stuck to the bargain we had verbally agreed as regards the Share Farming Agreement so naturally I believed him when he said how is (sic) Will would be prepared and the First Succession Plan would operate.

I said words to the effect of:

“Thank you, Harry, I really appreciate what you have offered me.”

to Harry and the First Succession Plan was never discussed between us again.

84. In relation to the first representation, David conceded that Dr Harry brought up the subject of his will without any introduction, and this surprised David (T 67.42). Dr Harry was a private sort of person (T 68.8). When it was put to David that he used the phrase “life interest” because that was something that he had heard from his lawyers, he said: “I think that’s correct” (T 69.1). David said that Dr Harry had not used the words “life interest”, but that he had explained that the Farm would be his to work for the rest of his life (T 69.41). Asked whether the statement made by Dr Harry “just came out of the blue, without any preliminary conversation about wills or the future” David replied (T 71.20): “That’s correct”.

85. David was asked questions directed at obtaining a concession that, whatever Dr Harry had said to David, it was not an offer, in the sense of a promise made in exchange for some promise in return. In this and following extracts, I have abbreviated the transcript in order to focus on what I consider to be significant exchanges: (T 73.16 - 76.35)

Q. Then you say you never had another discussion with him about that again. Is that right?

A. That's correct.

Q. I want to put to you that you did not say to him that you appreciated what he had offered you. You didn't use the word "offer", did you?

A. I am going to stay - stick with what I've put in my affidavit, and that's - to the best of my recollection, that is true.

…

Q. Mr Stone, he didn't impose any conditions on what he was telling you that his intention was, did he?

A. The only condition he imposed were the - was the girls would have access to - to the property.

Q. But he didn't say to you, "If you stay here, I will make a will that leaves you able to stay as long as you like." He didn't say that, did he?

A. I think he did say that, because that's what he expressed to me, was that that's what - what it meant. That's what he was saying to me, was that he had changed his will such that I would be able to stay there for as long as I like to work the farm.

Q. But he didn't say to you that you had to do anything to be entitled to whatever he was going to give you in his will. Do you understand?

A. Except to - except to continue farming.

Q. He didn't say that, though.

A. No, no, no, he didn't, no.

…

Q. No. I'm saying to you that when he told you he was going to give you an interest in his will, he didn't ask you to do anything in exchange for that, did he?

A. Beyond farming as I had been farming, is that what you're saying?

Q. No. He didn't even ask you to do the farming as you had been farming.

A. I think that reasonably would be implied.

Q. But he didn't say that, did he?

A. No, he didn't say that.

…

Q. He didn't require you to do anything in exchange for what he said he was going to do.

A. Except to continue farming.

Q. But he didn't say that, did he?

A. I think it - but it was reasonably implied by me.

Q. You thought that that's what he meant.

A. Yeah, that's right.

Q. But he didn't say that to you.

A. He didn't say those words. Well, he said so long as I kept - so long as I was there, that life interest existed.

Q. But you haven't said that in your affidavit. Just read again what you say in paragraph 19 of your affidavit.

A. I've read that.

Q. You don't say there that he said to you "if you're living on the farm", or that he imposed any condition on the statement that he was making about what he had decided to do in his will. Do you see that?

A. Yeah, I - I - I understand what you're saying. I think - yeah, I - if that's your position, I accept that.

…

Q. That’s your position.

A. My position is as is stated and, like I say, I understood it implied that I would - it was on the condition I stayed there to farm.

Q. But I'm putting to you that he didn't impose that condition on the statement he made, did he?

A. No, no.

…

Q. He didn’t say to you that you had to do anything, or refrain from doing anything, to receive the gift that he was talking about giving you in his will, did he?

A. That’s correct.

Q. And I take it that you knew, at the time of this conversation, that, of course, a person can always change their will. You knew that, didn’t you?

A. I understand that that’s a general state of wills, yes.

Q. So you knew that at the time he was telling you about a will he was thinking of making, he might very well make a different will in subsequent years.

A. I actually didn’t entertain those thoughts.

Q. But you knew that that could happen.

A. Generally, yes.

Q. And - now, in any event, you made no note or record of this statement that you say he’d made.

A. No, I didn’t.

Q. And you had no later conversation with him about it.

A. That’s correct.

Q. And you had no later conversation with anyone about it.

A. I can’t recall. I won’t be - I’m not prepared to say I’ve not had a conversation with anyone about it, but I’m not prepared to say I know details of any conversation.

Second Representation

86. David gave the following evidence in his 24 August 2017 affidavit concerning the second representation:

21.   In about 1987 or 1988, again at the dining room table of the Kramer’s house on the Colo Property, Harry and I had a conversation and Harry said words to me to the effect:

“I don’t want to upset you but I am not long for this world. I have been diagnosed with cancer. I have also changed my Will and the girls will not be inheriting this place. Leonie wants the farm transferred to her and whilst I have agreed, it’s on the basis she and I have agreed it will go to you, outright, on Leonie’s death. Like before, the girls will always have use of the cottage.”

At this time, Harry also said words to me to the effect:

“When you inherit the farm you will be free to do whatever you like with it. You can sell it, borrow money against it; whatever you like.”

…

23.   Within one month or thereabouts after I had the conversation with Harry about the Second Succession Plan I was in the main shed at the Colo Property and Hilary walked into the shed. Hilary said words to me to the effect:

“Dad’s changed his Will and you’re going to get the farm. You’re the best person to look after the farm.”

87. In the following paragraphs David gave evidence that, before the second representation, he had had doubts about the long-term viability of the share farming arrangement and whether he would remain on the Farm. Those doubts were dispelled when Dr Harry made the representation to him. David acknowledged that he had no other discussions about inheriting the Farm with Dr Harry other than on the two occasions mentioned. No witness was present at either of the discussions. David said that he considered Dr Harry to be a man of his word, and, if Dr Harry said that he would do something, then David expected he would do it. He had experienced that Dr Harry had adhered to the oral share farming agreement. David said that this was an incentive for him to stick to the share farming agreement, as the inheritance would compensate for the meagre income, he was deriving from the share farming agreement.

88. David said in par 30:

The Second Succession Plan overcame the negatives and addressed the concerns I had about remaining on the Colo Property because I would inherit the property and therefore have something to show for my efforts and to make up for the poor income. What’s more, I believed Harry’s word and trusted Leonie would honour the arrangement as he had explained to me.

89. Further, David said in par 32: “I did not question or enquire further with Harry about reducing to writing the Second Succession Plan as I knew Harry and Leonie to be people of esteem, honour and integrity…”

90. The following cross-examination occurred on the subject of the making of the second succession plan. Again, I have abbreviated the transcript: (T 78.22-T 86.23)

Q. Now, Mr Stone, I take it that you know that when Harry and Leonie purchased the property, they purchased it as joint tenants. You know that now.

A. I know that now.

Q. And you know that in a joint tenancy, when one party dies, the other joint tenant automatically obtains the interest of the deceased joint tenant. You know--

A. I understand that now.

Q. --that now. And you know that it doesn’t matter what’s in the will of the joint tenant who dies; the property automatically passes to the other joint tenant. You know that.

A. I’m aware of that.

Q. Right. Now, having that knowledge - does having that knowledge cause you to doubt what you say in paragraph 21 that Harry told you about his will and Leonie’s position?

A. Not at all.

Q. All right. And you say that he went on to say, he’s agreed to transfer the property to Leonie; is that right?

A. That’s my understanding, yes.

Q. But on the basis that it would go to you outright on Leonie’s death.

A. That’s correct.

Q. Are you sure that he said that to you?

A. That’s my recollection.

Q. And he said, “Like before, the girls will always have use of the cottage.”

A. That’s correct.

Q. So - you understood from that, you say, that Hilary and Jocelyn would always be able to use the house in which the Kramer family had been living; correct?

A. That’s correct.

Q. But, look, Mr Stone, you knew at each of the reconciliations that fuel had been delivered, didn't you?

A. That's true.

Q. You knew from the delivery docket that was left under the brick how much the fuel had cost. You knew--

A. Not always.

Q. Those documents that I've directed your attention to - except for that last one, which is illegible - all have an amount of money on them, don't they?

A. There are times when they'd deliver fuel and just - they'd leave a quantity and didn't put a price to it.

Q. But you could easily have included in your reconciliation the amount - for example - of $3,677.65 on the delivery docket at page 4635, couldn't you?

A. I certainly could.

Q. But you didn't do that because you knew that she hadn't referred to it to you and therefore she had likely forgotten that it had been paid by her.

A. That's not my understanding of this. When I read what Hilary had put, I went back through this process to look and try and understand why that - that could - that has happened and to this day I don't have a clear understanding. But I understand your accusation now is that I intentionally defrauded Leonie of money and I reject that. That's not true

Q. You knew that these monies had been paid by her for the fuel, didn't you?

A. I think it - I knew that it - that the bills went to her.

273. David acknowledged that he knew that Dame Leonie was receiving and paying the fuel bills and that he had an obligation to pay her one half of those amounts.

274. The cross-examination continued at T 117.32:

Q. But because of the condition that she was in at these reconciliations each quarter, she often would have forgotten that she had made those payments.

A. I don't know what - I have no understanding of how this - how this has happened.

Q. You took advantage of that

A. No, I did not take advantage of that. I was not aware of it until Hilary brought this up in this documentation. I have looked at it; I can't - I do not have a - a clear understanding of how this has happened, but I know for sure that I did not deliberately take advantage of Leonie.

Q. You were indicating in your quarterly reconciliations that there was no fuel adjustment but you knew that she had paid for fuel.

A. I would have put that in because there was no - nothing presented to me but that - that often was the case - is that these things didn't get paid in - in a - in an orderly manner. They got - went - sometimes went into different quarters. But I accept that there's an accountability and I accept that it would be in part my responsibility to cross-check. I don't have an understanding of why this happened. I - I still don't. I - it's got me baffled.

Q. But it happened over a period of three full years, Mr Stone--

A. That - that's correct, and I--

Q. One fuel payment in three full years that could not possibly have paid for all of the fuel that was used during that period, could it?

A. No, no, I accept it. I accept that.

Q. You must have known at the time you were preparing these reconciliations that there was fuel that she had paid for, to which you'd made no contribution.

A. I don't recall it - I don't recall that at that time. You're saying that I was aware of what was going on. I accept that there was a responsibility for me in all of this. But I look at this now, and I cannot get an understanding of how this has happened.

275. David’s explanation for how the errors had been made in the quarterly reconciliations was that the long-term practice of the Kramers had been to present evidence of payments made by them at the time of the reconciliations and David had simply acted upon the information that was provided to him by Dame Leonie.

276. Remembering that Dame Leonie was considered to have testamentary capacity as late as 11 November 2011, I do not accept the insinuation made by Hilary that David must have been aware that Dame Leonie’s advancing dementia was responsible for her failures to claim a share of the fuel bills that she had paid, and that David had dishonestly taken advantage of Dame Leonie’s disability. The most likely explanation for these events is that Dame Leonie retained a commanding presence and that David simply followed the time-honoured process that had always been adopted in striking the quarterly reconciliations, and that he was not sufficiently alert to the deterioration in Dame Leonie’s capabilities to take adequate care to scrutinise the claims made by Dame Leonie.

277. The deficiency of $9,875.79 in David’s contribution to fuel costs spread over three years is an average of $823 per quarter. While that amount is not inconsequential, given the meagre returns from the share farming operation, I do not consider it to be so great as to justify a finding that David was motivated by any intention to dishonestly take advantage of Dame Leonie.

David’s obligation to farm in a proper and workmanlike manner

278. Hilary pleaded in par 22 of her amended defence that, even if the representations asserted by David were made, it was not unconscionable for Dame Leonie to resile from them. One of the particulars for that claim, by reason of Hilary's repetition of the particulars to par 21, was that David had not conducted the farming operation under the share farming agreement in a proper and workmanlike manner.

279. Hilary did not, in her submissions, provide any conceptual framework to support her claim that an alleged breach by David of a common law contractual duty to conduct the farming operation competently should excuse Dame Leonie from being found to have acted unconscionably in departing from a representation to David that she would leave the Farm to him in her will.

280. Dame Leonie made her will on 11 November 2011, which was some time after she was diagnosed with dementia in 2010. It has been accepted that Dame Leonie had testamentary capacity when she made her will. Even allowing for earlier reduced cognitive capacity on Dame Leonie's part, there is no evidence that Dame Leonie, at any time from 2007, formed the opinion that David was not conscientiously performing his duties under the share farming agreement, or that any breach by him of his contractual obligation towards her justified Dame Leonie in declining to leave the Farm to David in her will.

281. It is therefore difficult to see why, in principle, any breach by David of any common law contractual obligation that he owed to Dame Leonie could be a valid exculpation for conduct on the part of Dame Leonie that Equity would consider to be unconscionable.

282. Furthermore, Hilary has not demonstrated that Dame Leonie suffered a loss as a result of David’s alleged incompetence that was of a magnitude that would justify the Court in declining to make an order that had the effect that David would inherit the Farm.

Mr Ivey’s opinion

283. Hilary relied on an expert report dated 14 August 2019 by an agronomist, Richard Ivey. Mr Ivey was instructed to provide an opinion about the income that could have been generated on the Farm by a competent share farmer working under the terms of the share farming agreement, assuming competent but not exceptional managerial skills.

284. Mr Ivey's report was based on the profit and loss statements of Dame Leonie for 2009 to 2014 and the income tax returns of David for 2010 to 2016. Mr Ivey separated these years into two periods, being before and after a significant irrigation redevelopment that was completed in late September-early October 2011, following which there was evidence of increased scale and intensity of vegetable and fruit production on the irrigated area of the Farm. Mr Ivey prepared his report on the basis that Dame Leonie and David were to share the income and the cost of fuel in accordance with the terms of the share farming agreement.

285. Mr Ivey provided his opinion based upon the evidence of the seedlings and seeds purchased for the purposes of the share farming agreement for the financial years of 2008 to 2015. Mr Ivey concluded that, assuming competent but not exceptional managerial skills, if all of the seedlings had been planted, the total estimated potential gross income from the sale of produce that could be expected to be grown from those seedlings was $374,948 excluding GST. That estimate of potential gross income made no allowance for selling costs, industry levies, packaging, freight and production costs.

286. Mr Ivey's average year budget before the irrigation redevelopment assessed that the Farm was capable of generating a total income of $65,101 with total operating expenses of $55,585, giving an operating return of $9,515. After allowing for a depreciation of $6,000, the operating profit was $3,515. The equivalent average year budget after the irrigation redevelopment generated a total income of $82,526 with total operating expenses of $69,445, giving an operating return of $13,080. After allowing for a depreciation of $8,500, the operating profit was $4,580.

287. On this basis, applying the terms of the share farming agreement, the net annual return of Dame Leonie for the two periods would be losses of $26,335 and $30,882 respectively. The net annual return to David would be $35,850 and $43,963.

288. Mr Ivey calculated that Dame Leonie incurred substantial losses over those periods, and that in the financial years of 2009 to 2014, Dame Leonie made losses of $21,206, $17,728, $22,468, $32,568, $33,683 and $52,571.

289. On my calculations, the total actual loss incurred by Dame Leonie over the six-year period was $180,224. Mr Ivey calculated that the loss should have been $173,697, a difference of only $6,527.

290. In comparison to the estimated potential gross vegetable and fruit income in the financial years of 2008 to 2015 of $374,948, Mr Ivey calculated that the actual sales data for fruit and vegetables (excluding oranges and potatoes) was $132,753.

291. The clearest exposition of the factual basis of Hilary’s claim, based upon the expert opinion of Mr Ivey and the difference between the number of seedlings and seeds purchased and the proceeds of crops sold (fruit and vegetables excluding oranges and potatoes), is found in Tables 9 and 10 of Mr Ivey’s 14 August 2019 report. I have combined those tables to create the following table (which lacks elegance because Table 9 was prepared on a financial year basis and Table 10 on a calendar year basis):

Year	Quarter	Actual Sales	Potential sales
2006	March
2006	June
Total
2006	September	$606
2006	December	$6,638
2007	March	$2,192
2007	June	$5,493
Total
2007	September	$7,419
2007	December	$3,094
2008	March	$0
2008	June	$6,065
Total	$16,578	$41,790
2008	September	$6,075
2008	December	$0
2009	March	$2,655
2009	June	$0
Total	$8,730	$39,864
2009	September	$6,717
2009	December	$8,216
2010	March	$0
2010	June	$0
Total	$14,933	$30,113
2010	September	$0
2010	December	$0
2011	March	$32,276
2011	June	$12,335
Total	$44,611	$91,552
2011	September	$845
2011	December	$0
2012	March	$1,002
2012	June	$3,002
Total	$4,849	$43,690
2012	September	$0
2012	December	$0
2013	March	$2,712
2013	June	$1,067
Total	$3,779	$62,150
2013	September	$0
2013	December	$0
2014	March	$0
2014	June	$13,572
Total	$13,572	$39,797
2014	September	$10,772
2014	December	$0
2015	March	$0
2015	June	$0
Total	$10,772	$25,992
2015	September
2015	December
Total	$132,753	$380,550

292. Mr Ivey concluded that there was little or no apparent, explainable relationship between potential sales (based on seedling and seed purchases) and actual sales. Mr Ivey expressed the opinion that, in the ordinary course, assuming competent but not exceptional managerial skills, a notable correlation between the farm enterprise expenses and produce sales would be expected.

293. At pars 114 and 120 of his report, Mr Ivey offered a number of explanations for the lack of an apparent relationship between potential and actual sales, and between costs and sales, some of which involved inadequacy in the data provided to Mr Ivey. However, one of the explanations was: "crop husbandry and managerial inputs may not have been of a sufficient standard to produce the expected relationships between costs and actual sales."

David’s evidence in response

294. The most significant feature of David's 18 October 2019 affidavit in response to Mr Ivey's report is the impression that it creates in the reader of the enormous workload undertaken by David, largely without assistance, over the period that the share farming agreement was in effect. In response to the passing growing seasons, David was required to work hard and long, often in a way that must have been exceedingly demanding and frustrating, because of the inefficiencies of the farming process and the limited equipment that was available.

295. The best example of this is the evidence given by David in par 21 of his affidavit concerning the steps that were necessary to irrigate the growing crops on the Farm before the irrigation system was improved in about 2011.

296. David also gave evidence concerning the frequency and seriousness of the flooding of the Colo River (evidence that was supported by the affidavit of Wendy Elizabeth Ward affirmed 17 October 2019 concerning rainfall and flooding records).

297. David responded to Mr Ivey's list of produce grown on the Farm by explaining that certain types of produce had not been grown or had only been grown in very limited quantities.

298. In par 25 of his affidavit, David responded to Schedule 4 of Mr Ivey's report, in which Mr Ivey estimated the potential gross income from vegetable and fruit production, by explaining the process by which David sold the Farm's produce at the Grower's Market, and the reasons why David understood that the price that he received was about 30% less than the wholesale price.

Mr Stephens’ opinion

299. David responded to Mr Ivey's report by serving a report dated 4 November 2019 by an expert agronomist, Mr Michael Richard Stephens.

300. In essence, Mr Stephens expressed the following opinion. The operation of the Farm under the share farming agreement has been an ‘undercapitalised business, limited by insufficient labour, poor soils, inadequate machinery, a poor irrigation system and layout and has been subject to the vagaries of the market’. Mr Stephens said that the business is too small to enjoy the economies of scale and too big to allow time for the farmer to produce meaningful off-farm income. Although the new system of irrigation was an improvement, it was still not fully automatically controlled, and was required to be operated manually by driving a tractor to the pumps on the river. The adequacy of the water flow in the Colo River did not ensure that the correct amount of water could be supplied to crops at the correct time. Mr Stephens opined that the performance of the farming business was inhibited by a lack on David's part of detailed agronomic knowledge backed by independent agronomic advice.

301. Mr Stephens set out, in par 16 of his report, the inputs and outputs from vegetable farming, the absence of which may lead to lower yields. Mr Stephens explained, in par 18 of his report, how the size of the Farm placed it in a "no man's land", where it was not small enough to be farmed by a single family that could earn off-farm income, and not large enough to be farmed with full economic efficiency.

302. Mr Stephens explained, in par 20.1, that the soil on the Farm appeared to be low in organic matter and tight, and, in par 20.4, that parts of the terrain of the paddocks on the Farm are undulating and unsuitable for the purpose of irrigated vegetable production.

303. Mr Stephens said, in par 20.5, that the combination of machinery and labour necessary to ensure efficient and timely production has been absent from the Farm.

304. Mr Stephens concluded, in par 27 of his report, that Mr Ivey's method of calculating gross income made insufficient allowance for the factors that Mr Stephens had listed in his report that made the farming operation on the Farm inefficient. Mr Stephens added:

… Most properties where commercial vegetable farming is practiced have rich volcanic or flood plain or free sandy soils with high organic matter. They also have irrigation systems which deliver the correct amount of water to plants at the right time. Most vegetable properties have sufficient machinery and labour to carry out all the farming operations in a timely manner. Based on my review of the Documents and inspection of the Colo property, the Colo property has none of these attributes.

305. In pars 29 to 34 of his report, Mr Stephens responded to Mr Ivey's opinion that, in the period of 2008 to 2015, the gross vegetable and fruit income from the Farm should have been $374,948. Mr Stephens first concluded that the effect of the presence of wild radish would have reduced the cabbage and cauliflower return by 35%, from $221,395 to an amount of $143,906. That adjustment would reduce Mr Ivey's estimate of achievable gross income to $298,000, which should then be reduced by a further 30% to allow for the difference between the wholesale price and the price received by the grower. Mr Stephens concluded that the estimated achievable gross income should be $208,600, rather than the $374,948 estimated by Mr Ivey.

306. This figure for achievable gross income estimated by Mr Stephens is still substantially higher than the amount of $132,753 achieved by David over the period.

Joint expert report

307. Mr Ivey and Mr Stephens conducted an expert witness conclave and produced a joint expert report that was filed on 27 April 2020. Both experts were cross-examined concurrently, although their evidence was given remotely.

308. With some exceptions, the expert witnesses maintained the opinions that they had stated in their reports.

309. My assessment of the expert witnesses is that Mr Ivey based his opinion more on theoretically achievable results in accordance with published statistical data, while Mr Stephens took that data into account, but in addition was more influenced by what he considered to be the day-to-day reality of David's experience as a share farmer on the Farm over the relevant period.

310. While both experts calculated their budgets on the basis that the share farmer had competent but not exceptional managerial skills, Mr Stephens gave more weight to the fact that a share farmer in David's position would need technical advice and the resources to achieve the budgets, which David did not always have.

311. While Mr Ivey based his opinion as to the achievable income on published data, Mr Stephens also considered evidence that small local producers had to pay commissions in the order of 30% to the agents who sold their produce wholesale.

312. Mr Stephens considered that it was significant that Mr Ivey had not interviewed David, although he had inspected the Farm.

313. The expert witnesses disagreed as to whether, there being sufficient irrigation water in the Colo River, the correct amount of water could be supplied to crops at the correct time.

314. I consider that a significant difference between the opinions expressed by the two expert witnesses arose out of the assumptions that they made in determining their theoretical budgets concerning what David was required to supply under the share farming agreement.

315. In particular, Mr Ivey assumed that a competent share farmer would apply the share farmer's own skills and knowledge to the management of the farm business or engage other professionals where the share farmer's own capacity, skills and knowledge were not sufficient. According to Mr Ivey, it is the share farmer's role to identify and arrange to secure the resources required for the operation of the farm business, including plant and equipment, irrigation infrastructure, crop inputs and labour. It was Mr Ivey's opinion that matters such as crop inputs and labour would be under the direct control of a competent share farmer. Mr Stephens' response was, in effect, that these assumptions did not reflect the reality of the operation of the share farming agreement. The farming operation was ‘undercapitalised and limited by insufficient labour, poor soils, inadequate machinery, a poor irrigation system and layout, and was subject to the vagaries of the market’. David lacked expert agronomic knowledge and did not have available independent agronomic advice.

307. In this respect, the following points of disagreement were recorded in the joint expert report:

The Experts disagree whether the sufficiency of labour, soils machinery and the irrigation system were taken into account in Mr Ivey's Analysis.

Mr Ivey expresses an opinion about the commercial potential of the Colo Property for a sharefarmer competently farming the Colo Property under the terms of the share farming agreement rather than an opinion about Mr Stone's competence as a sharefarmer. For this reason Mr Ivey's Budgets internalise these factors and assume that they are under the direct control and management of a competent sharefarmer.

Mr Stephens' opinions externalise these factors and are based on the actual, historic performance of Mr Stone.

317. Mr Ivey was of the view that there are no inherent relationships between the size of vegetable production businesses and the timing of operations and quality of produce. The critical determinants are the skills, capability and application of the management team. To the contrary, Mr Stephens' opinion was that the Farm is too small to enjoy economies of scale and too big to allow time to produce meaningful off-farm income. There is an inherent relationship between the size of vegetable production businesses and the timing of operations and quality of produce. Mr Stephens said that many small vegetable farms rely on an abundance of family labour which was not available in this case.

318. Mr Stephens acknowledged that, with the benefit of hindsight, it would have been better for David to avoid planting the cabbage and cauliflower crops that he did plant, because of the wild radish infestations, but the fact is that they were planted and the presence of wild radish reduced the yield.

319. Another assumption of significance made by Mr Ivey was that a competent share farmer would be responsible for arranging soil testing if required, and had direct control over the nutrient management for crops on the Farm, the operation of the irrigation system, the weeds, the marketing and packaging of produce, and the method and timing of harvests. Mr Ivey also assumed that produce would be sold on the open market with prices received reflecting prevailing market prices.

320. To the contrary, Mr Stephens was of the view that it is unreasonable to hold David accountable for the soil type, and that, in determining the responsibility of the share farmer, it is necessary to take into account that a share farming agreement is shaped over time by the accepted practice and actions of the parties to the agreement.

321. I have not attempted to summarise all of the issues in the joint expert report in respect of which the experts have expressed agreement or disagreement. In considering the significance of the differences between the expert opinions expressed by the two witnesses, it is necessary to have regard to the reason why the expert evidence has been tendered and the use to which that evidence can properly be put in determining the issues raised by the case.

322. This is not a case where Hilary has claimed an amount of damages for breach by David of a common law contractual obligation to conduct the share farming operation competently and to achieve a reasonable economic return for the landowner. Rather, the issue is whether the performance by David of his obligations to Dame Leonie was so deficient that her conduct in resiling from her representation to him should not be considered to be unconscionable.

323. That being the case, I consider that the approach adopted by Mr Stephens is the most apposite and is to be preferred over the approach adopted by Mr Ivey. The issue is not the theoretical optimal return that David could have achieved from conducting the share farming operation proficiently, but rather whether, given the unique arrangement between David and Dr Harry, and then Dame Leonie, and having regard to the reality of the farming operation, David's conduct of the share farming operation was deficient. I find that Hilary has not established that David's conduct of the share farming agreement disentitles him from whatever equitable relief he may otherwise have been given.

324. I should also record that I preferred the evidence of Mr Stephens generally to that given by Mr Ivey. I mean no disrespect to Mr Ivey whose reports were competently prepared. However, I consider that the assumptions made by Mr Ivey concerning the share farmer's resources, in relation to being able to pay for external expert advice, to conduct soil testing, and to control the level of machinery and other farming inputs, were assumptions that are simply not consistent with the circumstances of the share farming agreement in this case, and the relative resources of David and the Kramers. Mr Ivey assumed that David had resources that may generally be expected to be available to a competent share farmer, which David clearly did not have, and could not have afforded, given his meagre income from the share farming operation. The Kramers were well aware of the reality, and did not in fact expect David to apply to the farming operation the various resources that were assumed by Mr Ivey in his report.

325. The reality is that the Kramers always recognised that the Farm was incapable of generating a reasonable income for David, which is reflected in the portion of his income that was paid in the form of bonuses. The Kramers must also have recognised that the operation of the share farming agreement would most likely generate continuing losses for them.

David’s entitlement to rent-free accommodation

326. One of the factors relied upon by Hilary to establish that it was not unconscionable for Dame Leonie to resile from the representation asserted by David was that David and his family had rent-free accommodation on the Farm for almost 40 years: see amended defence par 22(c).

327. It is true that David was entitled to occupy the second cottage on the Farm rent-free as an incident of the share farming agreement. However, the value of that benefit to David should be measured against the standard of accommodation that it provided David and his family.

328. The best evidence of the real circumstances experienced by the occupants of the cottage is in the following unchallenged evidence given by David’s former de facto partner, Maureen, in her affidavit of 23 October 2018:

23.   The house I lived in with Dave lacked what I regard as basic living essentials. By this I mean, there was no fresh water to wash clothes. The water supply for washing clothes was bore water. It was harsh on clothes and discoloured them. There was no bore water tap connected to the house which meant I had to wash the clothes in the open, adjacent to the bore water tap and sink outside the house and had a washing load for a baby, two young girls, Dave and myself. There were no insect screens on the windows and there were a multitude of insects, including mosquitoes, that entered the house if the windows and doors were not closed and some insects managed to find their way indoors regardless of closed windows and doors. In the summer months the house was often very hot and it was stifling hot if there was no breeze. To the best of my understanding, there was no insulation in the roof nor between the inner and outer walls of the house. In the winter months the house was very cold and the fire place was small and did not heat up the entire house. The kitchen had a grill and a cook top; no oven. There were no ceiling fans and nor was there any air-conditioning unit. There were holes in the rainwater tank. There was no window in the bedroom Dave and I shared. The ceiling sagged in places. The veranda at the front entrance to the house was dilapidated whereby floor boards had weathered away and were broken; it was not safe to walk on and anyone walking toward the front of the house could not avoid seeing the dilapidated veranda.

24.   Vermin entered the house. Many times, when I would first go into the kitchen of a morning, I had to wipe the bench tops clean from mouse droppings. I often checked cupboards and drawers for mouse droppings and I removed them. I had to be ever vigilant of the manner by which I stored food to ensure no vermin infested the food supplies. There were mosquito larvae in the drinking water which came from the rain water tank attached to the house. I had to check the drinking water before giving a glass of water to anyone and checking the water in the kettle before boiling the water to remove the mosquito larvae. On one occasion I found a Diamond Python in -in the roof cavity of the house.

329. Plainly, David’s rent-free accommodation must have had a value to him. However, Hilary made no attempt to lead evidence to establish the effective value of that benefit. Given the extremely meagre income that David earned from the share farming agreement, I am not satisfied that his entitlement to enjoy the rent-free accommodation was sufficiently valuable to be of any significance in determining whether it was unconscionable for Dame Leonie to fail to leave the Farm to David in her will.

David’s obligation to maintain his house

330. Hilary’s claim in particular (c) to par 21 of the amended defence that David did not comply with the share farming agreement because he failed to maintain the house in which he lived is not made out, given that I have found that the share farming agreement did not contain a term requiring David to maintain the house.

Entitlement of David to half the proceeds of sale of produce and a bonus

331. Even though it is true that the share farming agreement contained terms entitling David to half the proceeds of sale of the crops and the bonus, as alleged by Hilary in par 22 particulars (b) and (d), those receipts only constituted the meagre income enjoyed by David. This entitlement could not in Equity deprive David of his right to the equitable relief that he claims.

Loans made to David

332. Although there is evidence of loans being made by the Kramers to David from time to time, Hilary has not established the case raised by par 22 particular (f) of the amended defence that David over the course of time has been forgiven loans to a value that had the effect that it was not unconscionable for Dame Leonie not to leave the Farm to him in her will. Such evidence as there is, suggest that generally loans that were noted in the farm accounts were required to be repaid by David out of his later shares in the proceeds of sale of the crops. While it may be that some relatively small loans that were made to him were forgiven, the aggregate amount of the loans has not been shown to justify the Court in denying David the equitable relief that he seeks.

David’s desire only to live on the Farm

333. David freely acknowledged in his evidence his love of farming and living a rural life. However, once it has been established on the balance of probabilities that David, for financial reasons, would have terminated the share farming agreement and sought alternative employment, if he had not believed that he would inherit the Farm, the fact that he is the type of person who acknowledges a preference for an outdoor working life is of little relevance to his entitlement to relief. There is no way that the Court can place a value on this factor, and it would have to be weighed against a myriad of other considerations, such as the extreme hard work that was required in order to conduct the farming operation single-handedly, and the requirement that he live in the inadequate accommodation that he had for decades.

Bequest of $200,000 to David

334. In particular (g) to par 22 of the amended defence, Hilary relied upon the fact that Dame Leonie had made a gift of $200,000 to David in her will as a reason for why it was not unconscionable for her not to leave the Farm to David.

335. David’s evidence was that, when Dame Leonie made the third representation to him, she told him that, as well as leaving the Farm to him “there will also be a sum of money”. The amount of the gift was not mentioned. David did not say in evidence that he expected a gift in any particular amount, or that the expectation was a factor in causing him to continue throughout the life of Dame Leonie to conduct the share farming operation, rather than to have found alternative employment.

336. There was some evidence from Jocelyn that, in circumstances where Dame Leonie had said that she did not intend to leave the Farm to David, she proposed to make a gift to David in her will of $75,000, and Jocelyn urged her to increase that amount. Dame Leonie ultimately did increase the gift to $200,000.

337. Accordingly, not only did David not propound the case that he had an expectation to receive any particular bequest in Dame Leonie’s will, but there are grounds for the Court to believe that the bequest that he in fact received under the will was at least substantially more than he would have been given by Dame Leonie if she had acted under a belief that conscience required her to leave the Farm to David.

Appropriate relief

338. As I have recorded above when considering the applicable legal principles, the Court is no longer required to approach the issue of relief on the basis that a party who establishes a right to property by estoppel by encouragement is only entitled to the “minimum equity”. In principle, I consider that this is a proper case for requiring Dame Leonie’s estate to make good the third representation.

339. Hilary submitted that the Court should consider providing alternative relief to David, but Hilary has done nothing to show what alternative relief may be equitable, or to assist the Court in formulating any appropriate orders or to determine a proper value for the relief that she says should be awarded in lieu of an order that the Farm be transferred to David.

340. I am satisfied, however, that it would not be equitable to Dame Leonie’s estate for the Court to order that the Farm be transferred to David in circumstances where he was entitled to keep the $200,000 bequest as well.

341. I appreciate that, if David is required to return $200,000 to Hilary as executor of Dame Leonie’s estate, that may have a practical effect on David’s ability to keep the Farm.

342. However, it may be that the quantum of David’s entitlement to costs as a result of his success in these proceedings will be for an amount that may be set off against the obligation to repay the $200,000 in a way that will extinguish that obligation.

343. The parties should consider these reasons and confer as to appropriate short minutes of order to give effect to them and provide the draft short minutes of order to my Associate.

Costs

344. David is entitled to an order that Hilary pay his costs of the proceedings. I will hear David if he claims an entitlement to an order that the costs be payable other than on the ordinary basis.

345. I record that, if I had found against David on his claim for an order that the Farm be transferred to him on the basis that he was entitled to assert an estoppel by encouragement against Dame Leonie’s estate, I would have nonetheless ordered Hilary to pay David’s costs of all of the defences raised by her as to why David should be denied the remedy that he sought. I consider that all of these grounds, particularly the dishonesty and the incompetence claims, were completely separate from David’s claim to enforce the estoppel by encouragement against Dame Leonie’s estate.

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Endnote

Amendments

17 December 2021 - Amendment to tables format

Decision last updated: 17 December 2021