Sudholz v Sudholz
[2021] VCC 1386
•15 October 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL DIVISION LIST
Case No. CI-18-03393
| MICHAEL JAMES SUDHOLZ | Plaintiff |
| V | |
| DAVID MARTIN SUDHOLZ (In his capacity as Executor of the Will and Trustee of the Estate of the late Peter Maxwell Sudholz) | Defendant |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11−13, 16, 17, 20 November and 2 December 2020 | |
DATE OF JUDGMENT: | 15 October 2021 | |
CASE MAY BE CITED AS: | Sudholz v Sudholz | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 1386 | |
REASONS FOR JUDGMENT
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Subject:EQUITY
Catchwords: Equity – proprietary estoppel – farmland owned by plaintiff’s uncle – whether promises made by plaintiff’s uncle as to future ownership of two parcels of land – uncle died leaving only parcel of land to the plaintiff – whether reasonable reliance – whether detriment if expectation not fulfilled – whether uncle acted unconscionably – appropriate remedy
Cases Cited:Commonwealth v Verwayen (1990) 170 CLR 394; Director of Public Prosecutions v Azizi (Ruling No 2) [2012] VSC 600; Donis v Donis (2007) 19 VR 577; Flinn v Flinn [1999] VSCA 109; Fox v Percy (2003) 197 ALR 201; Gillett v Holt [2001] Ch 210; Giumelli v Giumelli 196 CLR 101; Harris v Harris [2020] VSC 256; Harris v Harris [2021] VSCA 138; Harrison v Harrison [2011] VSC 459; John Holland Pty Ltd v Kellogg Brown and Root Pty Ltd [2015] NSWSC 451; Milchas Investments Pty Ltd v Larkin (1989) 96 FLR 464; Moore v Aubusson [2020] NSWSC 1466; Plunkett v Bull (1915) 19 CLR 544; Sidhu v Van Dyke (2014) 251 CLR 505; Turnbull v Gorgievski [1999] NSWSC 871; Van Dyke v Sidhu [2013] NSWCA 198; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Watson v Foxman (1995) 49 NSWLR 315; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97
Legislation:Evidence Act2008 (Vic)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C H Sparke QC with Mr R K Davis | Marshalls+Dent+Wilmoth |
| For the Defendant | Mr C E Shaw QC with Mr M C McKenzie | T J Mulvany & Co |
Contents
Introduction and summary
Factual narrative
Peter’s Wills
1995 Will
2001 Will
2006 Will
2010 Will
2013 Will
Legal principles
The Witnesses
Objections to evidence
Key issues
(a) Were clear and unequivocal promises made by Peter to Michael regarding Max’s and Sharps?
First promise – 1995
Second promise – 2000
Third promise – 2001
Recurring promises
Analysis
(b) Was it objectively reasonable for the plaintiff to rely on the promises made to him by the deceased?
(c) Did the deceased know or intend that the plaintiff would act in reliance on the promise?
(d) Did the plaintiff actually rely on the promises made to him by the deceased?
(i) Unpaid work
(ii) Failure to buy land
(iii) Boom spray
(iv) Unprofitable share farming arrangements
(e) Did the plaintiff therefore suffer detriment in the nature of additional cost and work for himself and his workers, and by foregoing the opportunity to purchase property?
(f) Was it unconscionable for the deceased to have resiled from his promise by failing to leave the property Sharps by will to the plaintiff?
(g) Whether the appropriate remedy is to make “good” the promises by transferring the property Sharps to the plaintiff, or some other remedy?
HER HONOUR:
Introduction and summary
1Peter Maxwell Sudholz (“Peter”)[1] died on 3 January 2016 aged 90. He had farmed all his life in the Natimuk district. Peter made a last Will dated 7 October 2013 (“the Will”). Probate of the Will was granted to the defendant, David Martin Sudholz (“David”) on 26 April 2016. David was appointed Peter’s sole executor and trustee. The Inventory of Assets and Liabilities (“the Inventory”) filed with the application for probate valued Peter’s estate in the sum of $4,433,767.21 with no liabilities.
[1]The Sudholz family members are referred to by their first names for simplicity without intending any disrespect
2Under the Will, Peter left land known as “Max’s”[2] to the plaintiff, Michael James Sudholz (“Michael”). Michael and David are brothers and Peter’s nephews. Max’s comprises approximately 107 acres in Natimuk and was valued at $312,000 in the Inventory. A small parcel of land known as the “Rams Paddock”[3] comprising 7.65 acres was bequeathed to Michael’s son, Kane Sudholz (“Kane”). Apart from some minor legacies, Peter left the residue of his personal and real estate to David.
[2]Being the land described in Certificate of Title Volume 10040 Folio 750
[3]Being the land described in Certificate of Title Volume 3736 Folio 028 and given to Peter by his late mother
3This proceeding concerns a claim made by Michael over land owned by Peter known as “Sharps”, which comprises 555 acres across three titles on Keytes Road, Natimuk.[4] Sharps was valued at $1,548,400 in the Inventory. Michael claims Peter represented to him that he would inherit not only Max’s but Sharps as well. Michael did not receive Sharps, which was left to David under the Will.
[4]Being the land described in Certificates of Title Volume 8444 Folio 816, Volume 8352 Folio 775, and Volume 8352 Folio 776
4Michael makes a claim based on proprietary estoppel. Based on the expectations created by Peter, Michael claims it would be unconscionable for Peter and now his Estate to deny the promises that Michael claims Peter made to him regarding Sharps. The appropriate remedy is that the promise should be fulfilled. Michael seeks an order that a constructive trust be declared over Sharps in his favour and this land be conveyed to him by the Estate.
5For the following reasons, I was not persuaded Michael’s claim based on proprietary estoppel over Sharps should succeed. Whilst the matter was not free from doubt, I accept Peter made some representations to Michael to the effect that he was leaving him Max’s and Sharps in his will. I was also satisfied those statements could be regarded as promissory in nature and not merely statements of Peter’s then testamentary intentions, which could be revoked at any time. But I was not satisfied Michael proved he suffered any substantial detriment in reliance upon any promises made to him by Peter. Further, I do not consider Peter acted unconscionably by not fulfilling the promise he made relating to Sharps. Consequently, I will dismiss the plaintiff’s claim.
Factual narrative
6The Sudholz family have farmed in the Natimuk district since 1872, following their arrival from Germany. Michael is the eldest child of James David Sudholz (“James”) and Avis Lorraine Sudholz (“Lorraine”). He was born in 1962, followed by his sister, Janet in 1964 and then David, who was born in 1965. Their father, James, was the youngest of six siblings. He had four brothers and one sister, being Joan Hannan (mother of Colin Hannan, cousin to the parties). The brothers were Robert, Geoffrey, Peter, and Keith. Neither Peter nor Keith married or had children.
7Up until 1962, three of the brothers, namely James, Peter, and Keith, farmed together as the Sudholz Brothers partnership on land which they had inherited from their parents. Robert and Geoffrey had earlier ceased their involvement in the family partnership in about 1957 and moved to Stawell to farm there. In about 1962, the Sudholz Brothers partnership was dissolved. The farmland held by the partnership of some 3,281 acres was divided between the three remaining brothers.
8Peter retained land referred to as the “Homestead” which comprised two titles on Creeks Road, Natimuk.[5] The homestead land covered 467 acres. This land was valued in the Inventory in the sum of $1,447,700. Peter lived in the original Sudholz family homestead located at 221 Creek Road, Natimuk where he had grown up. In addition, Peter retained Sharps, comprising 553 acres at Keytes Road, Natimuk. Peter later purchased a property known as Max’s from Max Schmidt in 1991, being a property of approximately 107 hectares located on Natimuk East Road, Natimuk. It lies separate to the body of the Sudholz family land. Both Max’s and Sharps are unimproved land.
[5]Being the land described in Certificates of Title Volume 8444 Folio 815 and Volume 8352 Folio 779
9James retained land described as “Glenbrook” and a block called “Across the Creek” totalling 1,032 acres. He built a house at Glenbrook where the parties grew up. Michael subsequently built another house next door where he and his family live. The parties’ mother, Lorraine, now lives in the original family home at Glenbrook. The Glenbrook house is approximately two kilometres from the Homestead. It is possible to travel between the two dwellings via the paddocks but it is easier and quicker to do so by road.
10Keith, the third brother, retained other property totalling 1,215 acres, including land known as “Fred’s” located on K Sudholz Road, Noradjuha.[6] Keith sold Fred’s in 1997 to Peter and David who acquired the property in equal shares. Keith died in 2008. He left his entire estate to David. A claim for family provision against Keith’s estate was made by Colin Hannan (a cousin of the parties) and his two siblings seeking $250,000 each. The matter was subsequently resolved at mediation.
[6]Being the land described in Certificate of Title Volume 4409 Folio 786
11Michael is a fourth-generation broad acreage farmer who has spent most of his adult life farming in Natimuk. In 1990, James transferred 513 acres to Michael when he got married. Michael also purchased land from Keith in 1993 and again in 1997. The two blocks that Michael bought from Keith were on the land known as Sharps. The remaining five blocks of land comprising Sharps, the subject of this dispute, are depicted on the farm map[7] and formed part of Peter’s land.
[7]See farm maps at CB 66, 206 and CB 2225-2228 depicting the various properties described – see also CB 2229 -2232, being a VicRoads map, which sets out the various Crown Allotments
12James died on 14 March 1994 before his instructions regarding the drafting of a new will were completed. There was litigation over his estate which was subsequently settled. After that was concluded, Michael received the bulk of James’s farmland, being some 656 acres. David inherited approximately 320 acres from James. Lorraine gave Michael 319 acres known as “Gusts” in December 1996. Michael has continued to acquire further property over the years. He purchased a property known as “Wynford” in 2000 which is situated between his land and Sharps. Michael bought a property known as “Hoods” in 2013. Michael and his wife farm together in partnership and own approximately 2,888 acres.
13Michael started share farming paddocks with Peter in 1989. He took on 70 acres at the Homestead, being the paddock known as No 35. He took on the same 70 acres again in 1990 as well as Max’s. Michael deposes that he was eventually share farming over half of Peter’s land. He has farmed Max’s on share or lease with Peter for 25 out of the 27 years that Peter has owned this land. He has share farmed one or more of the paddocks on Sharps since 1999. Michael also share farmed Fred’s, being the land jointly owned by David and Peter.
14Michael and Peter moved to a leasing arrangement in 2012 as a departure from the share farming arrangement they previously had. The lease was initially for one year whereby Peter leased 884 acres to Michael and his wife for an annual rent of $70,720. The land leased was Sharps, Max’s, and part of the Homestead land. The lease was renewed each year thereafter and remained in place until Peter’s death. Peter continued to farm land not covered by the lease, being an additional 246 acres with assistance from David. Michael also did contract work relating to Peter’s unleased land for which he was paid.
15David spent some time in the Northern Territory pursuing other careers before returning to Natimuk in 2011 and taking up farming. Prior to that, the brothers had agreed Michael would share farm the land David had inherited from their father and from Keith. Michael share farmed that land until David returned to Natimuk in 2011. Their share farming arrangement was mostly on a 75/25 basis whereby Michael would receive 75% of the income derived from grain sales but would be responsible for all input costs and management of the share farmed land. Such an arrangement is common practice in agriculture.
16Following David’s return to Natimuk, he started to assist Peter with paying bills and looking after his affairs. David replaced Michael as Peter’s attorney under an enduring power of attorney dated 20 January 2012. Peter was diagnosed with rapid onset dementia in November 2013. Following Peter’s admission to the Natimuk nursing home after a fall in May 2014, David took over management of Peter’s affairs.
17Michael maintains that assurances were given to him by Peter in 1995, 2000 and 2001, and as well as other statements from time to time that he would leave Michael the blocks known as Max’s and Sharps. These representations are dealt with more fully later in the reasons.
Peter’s Wills
18Peter made several wills which were adduced into evidence. Mr Maurice Stewart, solicitor, drew wills made by Peter in 1995, 2001 and 2006. Mr Stewart swore an affidavit on 22 July 2020 which exhibited those three wills. Also in evidence was his legal file for 1995 and 2001 when he was a partner at Trumble & Palmer Lawyers. Mr Stewart’s legal file for 2006 when he was a partner in the firm of Stewart & Lipshut Lawyers was also tendered.
19Peter’s last two wills were drawn by Brown & Proudfoot, solicitors in Horsham. Mr Andrew Wyatt, a retired solicitor who was formerly a partner of that firm, swore an affidavit dated 21 July 2020. Mr Wyatt’s partner at the time drew a will on behalf of Peter in 2010. Mr Wyatt drew the Will in 2013, being Peter’s last will. The legal file of Brown & Proudfoot Lawyers in respect of the Will was tendered.
20It is convenient to deal with the five wills in sequential order.
1995 Will
21Mr Stewart deposes that on 1 November 1995, Michael brought Peter to see him about making a fresh will. Mr Stewart kept a detailed file note of the instructions provided to him by Peter regarding his new will.
22The file note records that Michael was to receive three parcels of land. The first was approximately 100 acres of Crown Allotment 106 (part of the Homestead land), which was to be subdivided. This comprised two paddocks on the east end of the property, next to adjoining property owned by Michael. The balance of Lot 106 was to go to David.
23Michael was also to receive Crown Allotment 116, which can be seen from the relevant Certificate of Title is the land known as Max’s.
24The third parcel of land that was to be left to Michael was Crown Allotment 101,[8] being one of the parcels of land comprising Sharps. The remainder of the land was to go to David.
[8] Marked in yellow on the plan at CB 2229
25In terms of the legacies listed in Mr Stewart’s file note, an amount of $40,000 was to be left to Colin Hannan (Peter’s nephew).
26Mr Stewart wrote to Peter on 3 November 1995 enclosing a new will for his approval. The letter summarised the main points of the will. At point 6 it was noted:
“Crown Allotments 101 and 116 ... and also part of Crown Allotment 106 ... have been left to your nephew Michael. The gift of Crown Allotment 106 will require a subdivision of land and provision has been made for this.”
27Point 7 noted that:
“The balance of your real estate has been left to your nephew David.”
28The will was executed by Peter on 13 November 1995. The will records, amongst other things, that Mr Hannan was to receive a legacy of $40,000. The executors were Michael and Mr Hannan. A legacy was left to Michael of $50,000. Peter further bequeathed to Mr Hannan his Subaru utility motor vehicle, and the choice of any one chainsaw owned by Peter at the date of his death. Paragraphs 2 and 3 of the will dealt with land which was to be left to Michael. He was left Crown Allotment 101, which is comprised in Certificate of Title Volume 8352 Folio 776, being one of the three titles in respect of Sharps land. Peter also left him Max’s, which is Certificate of Title Volume 10040 Folio 750. As per the instructions given, the land at Crown Allotment 106, being part of the land on the Homestead property, was to be subdivided into two lots and split between Michael and David.
2001 Will
29Mr Stewart was instructed to prepare a further will on behalf of Peter in 2001. Peter’s instructions to Mr Stewart are recorded in Mr Stewart’s file note dated 5 March 2001. In terms of real estate, the file note records that it was the same as the 1995 Will but in addition Michael was to get Crown Allotment 96, being some 100 acres comprised in Certificate of Title Volume 8444 Folio 816. Peter also gave some instructions regarding some of the legacies. This will was signed on 4 April 2001.
30The additional land left to Michael in 2001 comprised another part of Sharps land. Thus the 2001 will provided that Michael was to receive two of the three titles of land comprising Sharps.
2006 Will
31In February 2006, Peter instructed Mr Stewart to prepare a new will. Mr Stewart deposes that at the outset Peter told him he was not happy with Michael and the treatment he had been receiving from him. Mr Stewart took detailed notes of his instructions and the reasons why Peter said he was not happy with Michael. His instructions resulted in a significant reduction of land being given to Michael. Exhibit “MAS-3” to Mr Stewart’s affidavit attaches copies of his file notes of will instructions received from Peter dated 16 February 2006 and 23 March 2006.
32Mr Stewart’s file note of 16 February 2006 notes that Peter wished to reduce the benefit to Michael because he did not consult with Peter and “was pushing him around”. Mr Stewart noted Peter said that he would also reduce Michael’s share of the land. He also needed to amend his will as his brother Geoff had died. On 23 March 2006, Mr Stewart noted:
“Peter attended my office to say that he wished to alter his will as he was disappointed with the conduct of his nephew Michael Sudholz and as a result he would give a greater benefit to another nephew David Sudholz.”
33The solicitor’s file note of 23 March 2006 further records:
“In relation to Michael, Peter said that he was happy helping Michael in the past but now his conduct annoys him. He complained as follows:-
1. Michael does not consult with him and does as he pleases – he just goes ahead and does things without Peter’s knowledge.
2. He tries to dominate Peter and acts like a standover man and pushes him around.
3. Michael just thinks of himself and only does things that will benefit himself.
4. Some examples of lack of consultation were
−arranging renewal of the mortgage loan without telling him [and would not repay any of loan]
−taking his equipment and using without asking, eg spray unit put on a bike and not allowed to use the joint shifter
−orders fertiliser etc and just tells Peter how much he owes.”
34Peter told Mr Stewart that he now only wanted to leave Michael a small parcel of land because of his conduct. The effect of the change regarding real estate was that Michael was to receive Max’s only, and the remainder of the real estate was to go to David.
35On 6 April 2006, Mr Stewart’s file note records that:
“Peter said that he still wanted to benefit David with most of the land and farming plant as Michael had enough and Michael had already been helped along the way.”
36On 6 April 2006 Peter signed the will after making some further adjustments and reinstating a pecuniary legacy to Michael. Mr Stewart notes in his affidavit that Peter was otherwise adamant regarding the disposition of his land. The will executed on 6 April 2006 did make a significant change in terms of the disposition of Peter’s real estate. The only real estate left to Michael was Max’s, and the balance was then left to David.
2010 Will
37Peter returned to Mr Wyatt’s firm to prepare his penultimate and final wills. Mr Wyatt had known Peter for the best part of 50 years. He deposed that Peter signed a new will on 29 November 2010, whereby he left Michael part of Crown Allotment 116 (being Max’s) and part of Crown Allotment 96 comprising 84 hectares (being part of Sharps), and the rest of his land to David.
2013 Will
38On 6 June 2013, Peter came to see Mr Wyatt to give him instructions for a fresh will. He discussed the division of his land between Michael and David. Peter said that he was not happy “with the way Michael went along”, and that Michael “was not interested in him, but what [he’d] got.” Mr Wyatt deposes that Peter did not speak at length about his relationship with Michael, but it was obvious to Mr Wyatt that he was very upset with him.
39Mr Wyatt also referred to a conversation that he had with Peter on 9 August 2013 regarding his new will. During that conversation, Peter was critical of Michael and said that Michael was “using him up”, and that he could not trust Michael, because Michael did not give him the results of crops when they had been working together. Peter said that he would leave one block to Michael – the actual block to be decided upon – and land to Michael’s son, and the rest of his land was to go into a trust.[9] There had been some earlier discussion about setting up a trust but this ultimately did not proceed.
[9]At trial, Mr Wyatt made some minor corrections to paragraph 15 of his affidavit to accord with his contemporaneous file note – T625-626
40Mr Wyatt saw Peter again on 23 September 2013 at the Homestead to discuss his will. On that occasion, Peter had decided finally what he was going to do with the land, and the instructions were that Michael was to get Max’s land, being part of Crown Allotment 116, Parish of Natimuk, comprising 106.92 acres, being the land described in Certificate of Title Volume 10040 Folio 750. Kane was to receive the land which has been described as Rams Paddock, and the rest of the land was to go to David.
41On 7 October 2013, Peter came to see Mr Wyatt in his office to sign his will. Peter again raised criticisms regarding Michael’s conduct, including lack of respect, but he did not go into detail. Mr Wyatt said Peter was a very straight and honest man and would be deeply hurt by anyone treating him with lack of respect, particularly a family member. Peter then executed the Will in the terms which were the subject of the grant of probate.
42As can be seen from the various wills made, Peter’s intentions regarding the disposition of his estate changed from time to time. Whilst having been more generous to Michael previously, he subsequently determined to leave the bulk of his estate to David. It appears from the discussions Peter had with his solicitors that his reason for doing so was because he had become increasingly unhappy with Michael’s conduct towards him. For his part, whilst Michael accepts their relationship had deteriorated in later years, he was not aware of the nature of these allegations made against him by Peter. It is clear from the evidence given that Michael previously enjoyed an ongoing and close relationship with Peter, as one might expect from a near neighbour and from a nephew who was fond of his uncle.
43The history of the wills shows that Peter was willing to leave Michael one of the three titles comprising Sharps in 1995. This increased to two of the three titles comprising Sharps in 2001. A change was made in 2006 when Peter decided to leave only Max’s to Michael. In 2010, Peter reinstated part of Sharps but removed it again in his final Will made in 2013.
Legal principles
44The principles relating to proprietary estoppel are not in dispute. They have been stated in well known cases such as Giumelli v Giumelli,[10] Donis v Donis,[11] and Sidhu v Van Dyke.[12] They were recently considered in Harrison v Harrison[13] as well as Harris v Harris.[14]
[10] (1999) 196 CLR 101
[11] (2007)19 VR 577
[12] (2014) 251 CLR 505
[13][2011] VSC 459
[14][2021] VSCA 138
45As said in Harrison v Harrison:[15]
“In its simplest form, the doctrine of proprietary estoppel is conveniently described in the following terms by Handley JA in Delaforce v Simpson-Cook [2010] NSWCA 84, [21]:
‘[Proprietary] estoppel comes into existence when an owner of property has encouraged to 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.’”
[15][2011] VSC 459 at [17]
46In Van Dyke v Sidhu,[16] the elements were stated as follows.
“The principles to be applied in determining the appellant’s claim are not in dispute and were set out by the primary judge at [117] to [135]. As noted above, her Honour proceeded on the basis (at [135]) that the appellant had to establish the following to succeed in her estoppel claim:
(a) the making of a clear and unequivocal promise (such that it was objectively reasonable for the appellant to interpret the promise in a particular way and to act in reliance on that interpretation);
(b) that the respondent’s promise caused the appellant reasonably to assume that a particular legal relationship existed between her and the respondent;
(c) that the appellant acted reasonably in reliance on the promise;
(d) that the respondent knew or intended that the appellant would act in reliance on the promise;
(e) that the appellant’s reliance on the promise was to her detriment; and
(f) that the respondent acted unconscionably in not honouring the promise.”
[16][2013] NSWCA 198 at [40]
The Witnesses
47The evidence in the proceeding was given by way of affidavit and some, but not all, of the witnesses were cross-examined. The parties provided the Court with a list of the affidavits they sought to rely upon when making their closing submissions as well as copies of redacted affidavits.
48On behalf of the plaintiff, the following witnesses were relied upon:
(1) the plaintiff, Michael Sudholz;
(2) Julianne Boak – business consultant;
(3) John Stuchbery – agricultural consultant;
(4) Colin Hannan – cousin of both the plaintiff and the defendant;
(5) Lorraine Sudholz – mother of the plaintiff and the defendant;
(6) Jason Oster – Frank Knight Valuations South Australia. Mr Oster’s valuation report was tendered without objection and he was not cross-examined by the defendant.
49On behalf of the defendant, the following witnesses were relied upon:
(1) the defendant, David Sudholz;
(2) James Taylor – a friend of the deceased. His affidavit of 3 July 2020 was tendered. Mr Taylor did not attend at trial due to ill health;
(3) Maxwell Schmidt – friend and neighbour of Peter. His affidavit of 19 August 2020 was tendered. Mr Schmidt did not attend at trial due to ill health;
(4) Andrew Wyatt – retired solicitor who drew Peter’s wills in 2001 and 2013;
(5) Maurice Stewart – solicitor who drew Peter’s earlier wills. His affidavit of 22 July 2020 was tendered. The plaintiff did not seek to cross-examine him;
(6) Christopher Foster – accountant;
(7) Philip O’Callaghan – ORM Agricultural Consultants Victoria.
50The resolution of the issues in this case depend in part on the Court accepting evidence of what supposedly was said by a deceased person, namely Peter. The promises said to have been made by Peter to Michael are all oral and there is nothing in writing. The parties agreed the Court should apply cautious scrutiny in accepting the evidence of what has been said by a deceased person in the absence of the deceased being able to give evidence. In Plunkett v Bull,[17] Isaacs J said that:
“It is not that the court looks on the plaintiff’s case with suspicion and as prima facie fraudulent, but it scrutinises the evidence very carefully to see whether it is true or untrue.”
[17](1915) 19 CLR 544 at 549
51The plaintiff accepted there must be “an actual persuasion” of the occurrence of any conversation propounded by a claimant who “seeks to rely upon spoken words as a foundation for a cause of action”.[18]
[18]John Holland Pty Ltd v Kellogg Brown and Root Pty Ltd [2015] NSWSC 451 at [94]
52In a recent decision of the New South Wales Supreme Court in Moore v Aubusson,[19] the Court had to consider whether representations were made by a deceased person in the nature alleged. The judgment also helpfully provides a thorough analysis of the relevant case law relating to the principles applying to proprietary estoppel. But in terms of evidence, Ward CJ in Equity said as follows:[20]
“As to the assessment of the conflicting evidence, as the defendant notes, there must be ‘an actual persuasion of the occurrence of any conversation propounded by a claimant’ (the defendant referring to John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94], per Hammerschlag J; and to the summary by Black J of the principles to which a Court should have regard in assessing the affidavit and oral evidence as set out in In the matter of Hillsea Pty Limited [2019] NSWSC 1152 at [16]-[22]). It is noted that these principles include the well-known observation by McLelland CJ in Eq as to the fallibility of human memory over the passage of time in Watson v Foxman (1995) 49 NSWLR 315 (Watson v Foxman) at 319; and that weight should be accorded so far as possible to ‘contemporary materials, objectively established facts and the apparent logic of events’.”
[19][2020] NSWSC 1466
[20]Ibid at [109]
53Her Honour’s observations at paragraph [111] are also apposite:
“While I accept that there is not a higher onus of proof in this regard, it is nonetheless the case that one must scrutinise carefully evidence as to oral conversations with deceased persons (see Plunkett v Bull (1915) 19 CLR 544 at 548-9, per Isaacs J; [1915] HCA 14), and, as in all such cases, I place relatively more weight on contemporaneous documents and the objective circumstances as a whole over the affidavit and oral evidence of those directly interested in the outcome of the litigation.”
54The views expressed by McLelland CJ in Equity in Watson v Foxman bear repeating:[21]
“….human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the process of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”
[21] (1995) 49 NSWLR 315 at 319
55In terms of the witnesses generally, I found Michael to be a truthful witness overall despite the defendant’s attacks on his credit. I accept that Michael was genuinely disappointed and surprised when he learnt that he was not going to receive Sharps following the death of Peter. To some extent, I consider his perception of what has occurred has been affected by what he and other family members described as their “common understanding”, being that a fair outcome would be for Peter to have left his estate equally between Michael and David. This common understanding was also referred to by Lorraine in her affidavit and by Colin Hannan during cross-examination.
56David was an impressive witness in my view. His credit was not criticised by the plaintiff. It was not suggested I should make any adverse findings regarding Lorraine’s credit. I found her to be a credible witness who was doing her best to assist the Court.
57The defendant criticised Ms Boak as not being an impartial witness. In terms of her demeanour, I accept the criticisms made by the defendant that Ms Boak was at times argumentative in the witness box. The plaintiff conceded in closing that she had been “combative” at the start of her evidence. It is also somewhat doubtful that she could remember verbatim, without any hesitation, conversations with Peter that took place some seven years ago. But despite this, I accept the plaintiff’s submission that there was no reason for Ms Boak to confect her evidence simply based on her friendship with Michael and that she did not do so.
58As for Mr Hannan, his evidence was coloured by the fact that he was clearly angry with Peter and disappointed because he left him less money than he thought he was getting. He believed he was going to receive $260,000 under the Will but instead received $5,000. Mr Hannan also displayed an antipathy towards David. This became more apparent during his evidence when volunteered he thought David hated him and described David as a “farce”. I infer this hostility was in part because Keith and Peter had preferred David in their wills and Mr Hannan was resentful he had missed out. Mr Hannan was not an impartial or reliable witness in my view. I do not accept his evidence, raised for the first time in the witness box, that Peter told him he would leave the land “equally” to the brothers given this critical fact was omitted from his two earlier affidavits.
59The expertise of Mr Oster and Mr O’Callaghan was not challenged. There is no reason to make any adverse findings regarding the professional witnesses who gave evidence. Mr Wyatt, who prepared the Will, was a careful and considered witness whose evidence I accept without any hesitation.
Objections to evidence
60The defendant objected to paragraphs 33 and 34 of the affidavit of Colin Kendall Hannan made 26 March 2020 and paragraph 28 of the affidavit of Lorraine Sudholz made 26 March 2020 on the grounds of hearsay.
61Paragraph 33 of Mr Hannan’s affidavit refers to a conversation with a Mr Taylor, who is one of the defendant’s witnesses, who in the end was unable to attend at trial because of ill health. Paragraph 33 of Mr Hannan’s affidavit purports to be evidence that Mr Taylor told Mr Hannan that inter alia, Michael would inherit most of the land and David would inherit the land known as Fred’s. It was said this evidence cannot assist the Court. There was no suggestion that these were matters told to Mr Taylor by Peter and there is no evidence that this was told to Michael with the result that it cannot assist the Court to decide the issues in the case. Put rhetorically, what does it matter what Mr Taylor told Mr Hannan?
62Paragraph 34 of Mr Hannan’s affidavit refers to a conversation that Mr Hannan had with a Mr Lyn Walker, who is deceased. Mr Walker told Mr Hannan that Michael would inherit because he was a “Sudholz”. In his oral evidence, Mr Hannan said this conversation took place some forty years, possibly before 1980. The defendant notes this was before any alleged promises were made to Michael. There is no suggestion that Mr Walker was told any of this by Peter and therefore the evidence is plainly irrelevant.
63In paragraph 28 of Lorraine’s affidavit, she purports to give hearsay evidence of a conversation she had with Jack Miller, who is deceased, in which he told her that Peter told him that he would be leaving his land to Michael and David equally. The date when the conversation between Peter and Mr Miller allegedly occurred or when the conversation between Mr Miller and Lorraine allegedly occurred is not stated. If the conversation occurred before any alleged promise was made, it is irrelevant. Assuming it was made after any alleged promise about which there is no evidence, it is barely relevant to the question of whether Peter made the alleged representations to Michael. There is no suggestion that Mr Miller or Peter passed this information on to Michael. Given the conversation is a hearsay account of an alleged conversation between Peter and Mr Miller at an unknown date, it is of so little probative value that the Court ought not to exercise its discretion to admit it.
64The persons who made the previous representations are not available to give evidence in which case the hearsay rule under s63(2) of the Evidence Act does not apply, subject to notice being given in accordance with s67. The plaintiff did not serve any notice under s67. The defendant submits that the notice requirement should not be dispensed with, particularly when no explanation has been given for the failure to provide the appropriate notice.[22] Additionally, in each instance, the evidence is of so little importance that the discretion ought not to be exercised to admit it.[23]
[22]Director of Public Prosecutions v Azizi (Ruling No 2) [2012] VSC 600
[23]Evidence Act 2008 s162(2)(c)
65The plaintiff’s case is that leave under s67(4) to admit the evidence of Mr Miller should be given despite the absence of a formal notice. It is said a similar position applied in Turnbull v Gorgievski, [24] where leave was sought for hearsay statements attributed to a deceased person and set out in an affidavit were admitted. The court doubted the service of an affidavit per se amounted to notice under s67(1) but gave leave under s67(4) for the evidence to be given as the affidavit set out all the relevant matters which informed the opposing party of the evidence. The fact that there was no opportunity to cross-examine was a matter which goes to weight.
[24][1999] NSWSC 871
66In closing, senior counsel for the plaintiff sought to rely upon the evidence from Mr Miller but conceded it was of low weight. The statements made by Mr Hannan were not pressed. I am willing to dispense with the notice requirement given the defendant was effectively on notice of the evidence to be given when he was served with Lorraine’s affidavit some months before trial and consequently, suffered no real prejudice.
67But I take the view that the alleged conversations are so general and uncertain as to be irrelevant. Therefore, these statements should be excluded as being of no probative value. Consequently, I uphold the objections made by the defendant to these three paragraphs and rule that they are inadmissible.
68The affidavits sworn by Mr Taylor and Mr Schmidt were tendered at trial without either of them being called as they were too unwell to attend. The plaintiff did not object to this course but noted that in the absence of cross-examination, there would be submissions made as to what weight could be placed upon their evidence. In closing submissions, senior counsel for the plaintiff submitted that to the extent their evidence contradicted Michael’s evidence, their evidence should be entirely rejected because they were unavailable for cross-examination.
Key issues
69The parties helpfully agreed that the following issues should be determined by the Court:
(a) Did the late Peter Sudholz make clear and unequivocal promises to the plaintiff, Michael Sudholz, to the effect that he would leave to the plaintiff by his will his properties known as Max’s and Sharps?
(b) Was it objectively reasonable for the plaintiff to rely on the promises made to him by the deceased?
(c) Did the deceased know or intend that the plaintiff would act in reliance on the promises?
(d) Did the plaintiff actually rely on the promises made to him by the deceased?
(e) Did the plaintiff thereby suffer detriment, in the nature of additional cost in work for himself and his workers, and by foregoing the opportunity to purchase property?
(f) Was it unconscionable for the deceased to have resiled from his promises by failing to leave the property, Sharps, by will to the plaintiff?
(g) Whether the appropriate remedy is to “make good” the promises by transferring the property Sharps to the plaintiff, or some other remedy?
(a)Were clear and unequivocal promises made by Peter to Michael regarding Max’s and Sharps?
First promise – 1995
70Three promises are relied upon as providing the basis for the proprietary estoppel claim. Michael claims that Peter made a promise to him initially in 1995. The circumstances were that Peter wished to make a new will. Michael drove Peter to see Mr Maurice Stewart of Stewart & Lipshut, solicitors in Nhill, so he could update his will. Michael did not attend the meeting with Mr Stewart. Following the trip to Nhill, Peter sat Michael down in the kitchen at the Homestead and told Michael he wanted him to know what he had put in his will in case anything happened to him. Michael deposes that Peter told him:
“…. that Colin and myself where (sic) to be executors and that he was leaving me all the paddocks known as Sharps and Max’s, being the land without any improvements as I already had a house and farm buildings.”
71Peter told Michael that he was going to leave David all his machinery as David did not own any machinery at that time. He also said he was leaving David the Homestead land which had the improvements, as he wanted David to live in the Homestead on the farm. Michael deposes further that Peter said Colin Hannan was to receive $260,000 and the Subaru Ute from his estate.
Second promise – 2000
72The second promise is said to have occurred in 2000. Michael had bought a block of land referred to as “Wynford”. This block adjoins Sharps on one side and Michael’s land on the other. Michael said that Peter was very pleased about the purchase. He went on to say that the last time Wynford was sold, his father had wanted to buy that block. Peter said to Michael: “Great, you’ll have that and the land on the other side of it” (referring to Sharps, as it is on the other side of Wynford) and “it will fit well.”
73From this time on, Michael deposes that he took more seriously Peter’s statement that he would inherit the land, in particular Sharps.
74At the time Michael purchased Wynford, he was already share farming part of Sharps land with Peter. After Michael bought Wynford, Peter offered Michael a paddock (known as Paddock No 31) on Sharps land comprising 100 acres for him to farm, saying, words to the effect “you can have that paddock and the income off it to help you pay for Wynford, and when you get Sharps they will work well together.” Michael paid for the expenses associated with farming this paddock, but Peter subsequently changed his mind about giving him the income. However, Peter did agree to Michael’s request that he pay Michael for all the work he had done putting in the crop, including paying contract rates for spraying, sowing and inputs.
Third promise – 2001
75Michael says that Peter encouraged him to purchase a new and bigger boom spray in 2001. He deposes as follows:
“We were at his kitchen table and he told me he wanted to lend me some more money to help with the finance of the bigger boom spray. He told me he would like me to take over spraying all of his land on the basis that one day I would be getting Sharps and Max’s. He discussed that he was having difficulty working out the chemicals needed and the spraying of his crops was all getting too hard for him to work out.”
Recurring promises
76Michael’s evidence is that these statements were repeated at times expressly or by implication. For example, when Peter refused to pay for fuel for Michael’s machinery when he levelled the Sharps block, saying, “It’s going to be yours, so you need to be putting something in for it too.” At times Peter said, “If you want to inherit it you have to do this type of work for nothing” and “These paddocks will be yours one day so you can help me look after them.”
77In 1997, after Peter bought Fred’s with David, Michael says Peter told him that: “David would get his share of Fred’s someday as this would make the land more equal between David and yourself when I go”.
78In 2006 Michael was keen to buy a property called “Haustorfers”. He discussed it with Peter who said, “I have told you I am leaving Sharps and Max’s to you. How will you have time to do the work on my land and be available to do the things for me if you buy more land now?”
79It is contended Michael’s evidence regarding the representations made is corroborated albeit in limited ways.[25] Lorraine says she was told by Mr Miller that Peter had told him he was leaving land to Michael. For the reasons given earlier, I have ruled that this evidence is inadmissible.
[25]Closing submissions of the plaintiff, paragraph 52
80Ms Boak said that Peter had said to her, “He knows what he’s getting, we’ve discussed it … he is going to get it when I’m gone.” She recalled a conversation in Peter’s kitchen and that she was speaking to him about selling land in the way Keith had done. Later in March 2013, he told her he was leaving David the Homestead and the other half of the land he owns with me and the machinery and “Michael’s getting the rest of the land.”
81Michael gave evidence that he told others he was receiving land, mainly to Lorraine, Ms Boak and David. Michael referred to a specific occasion when he told David, as they were driving in a Hilux ute on one of David’s trips to Natimuk leading up to harvest in 2010. He had a conversation with David about protecting Michael’s inheritance when discussing the land David was farming with Peter’s equipment. David has no recollection of the conversation in the Hilux ute.
82Michael also referred to promises having been made to him in an affidavit that he swore in an earlier claim he made for family provision in the Supreme Court. The family provision claim was not pursued. These are the same promises relied upon in this claim.
83Michael submitted the Court does not have to be satisfied that there are “promises of a contractual nature”. The element to be satisfied is that there was “a representation or promise or assurance of the requisite kind”.[26]
[26]Moore v Aubusson [2020] NSWSC 1466 at [347]
84The plaintiff says that the promises made were clear and unequivocal. The first one was in 1995 where Peter said, “I’m leaving you Max’s and Sharps,” and again in 2000 when he said, “When you get Max’s and Sharps”. It was accepted if there was nothing more, some of the latest statements to the effect that Peter had said what he was doing or “You know what I’ve promised you”, would arguably not be enough. However, the foundational promises given in 1995 and 2000 were clear and unequivocal. The plaintiff invites the Court to find that Peter made assurances in 1995, 2000 and 2001 that Michael would inherit Max’s and Sharps which created an expectation in Michael that he would do so.[27]
[27]Paragraph 68 of the plaintiff’s written closing submissions
85The defendant notes that the only witness to the alleged representations made by Peter was Michael. As was pointed out, many of the witnesses in the case accepted Peter was an honest and honourable man. Michael agreed that he was both honest and honourable and that it was unlike him to tell lies. Ms Boak agreed that he was a decent, honourable, and honest person. Colin Hannan also agreed that Peter was an honest and honourable man. David gave evidence that Peter was not a liar or deceitful and was a person of impeccable character. Mr Wyatt said that Peter was an upright and honest gentleman. Mr Foster, the accountant, said that he found Peter to be honest and genuine and never deceitful or difficult in any way.[28]
[28]See paragraph 25 of the defendant’s closing written submissions
86Additionally, several witnesses said it was unlike Peter to discuss his private affairs. Michael said he was not inclined to talk about his private arrangements with other people. David said that in 2002 he asked his Uncle Peter what he was likely to do with his land in his will and Peter said, “That’s my business” and refused to discuss it further. He said Peter had always refused to discuss how he intended to leave his land in his will before 2013. Mr Foster said that over 26 years of his business dealings with Peter, he did not recall him discussing or disclosing to him the details of his will. Mr Wyatt in cross-examination said as follows:
“Look, I can assure you, he would just sit there. He was a very – I’d describe him as a gentleman. He was a quiet sort of fellow, and he’d sit there on the other side of the desk, and we’d be going into all this stuff, and I could see he didn’t enjoy it at all, and um, ah, then he’d say a few words, just a few words. Ah, and those words that he would say to me were the words that I wrote down. He’d never launch into an attack, generally, on Michael. Never.”
87The defendant contends that none of Peter’s earlier wills made in 1995, 2001, 2006 or 2010 ever left Sharps to Michael. As has already been seen, the last Will did not leave Sharps to Michael.
88The defendant says that important evidence was given by David in which he said that after Peter died, he told Michael about the contents of Peter’s Will. Michael was very surprised and obviously disappointed. David asked Michael “if Uncle Peter promised him anything or owed him anything”. Michael replied by saying “No, but he should have. It would have been fair and the right thing to do.”
89Lorraine in her evidence confirmed in cross-examination that after Peter’s death, Michael expressed his disappointment and disbelief that Peter’s Will did not accord with the common understanding. Michael never said anything to her about Peter telling him that he would leave him Max’s and Sharps. The defendant relies upon this evidence as being important. If Peter had made these promises to Michael, one would have expected, after Peter had died and not abided by those promises, Michael would mention that to his mother rather than simply expressing disappointment and disbelief that the Will did not accord with the common understanding.
90Considering these matters, the defendant says the Court ought not to accept the alleged representations were made. The evidence is clear that Peter was almost universally regarded as an honourable man who was reluctant to talk about his financial affairs. He never left a will in which he left Max’s and Sharps to Michael, yet Michael says that Peter told him that he would. Reference was made to the conversation in the kitchen in 1995 after coming back from the solicitor’s office in Nhill. It was said that Peter could not have been mistaken about that when he supposedly told Michael that he was leaving him Max’s and Sharps. If he had said that it would have been a lie told by someone who was honest and decent, and reticent about talking about his private affairs. Further, the fact that Michael did not mention this promise to David or his mother strongly suggests that they were not made to him.
91It was argued that Ms Boak’s evidence should be disregarded because of the issues raised regarding her credit. Additionally, it was said that there was no reason why Peter would have told her he was leaving half his land and/or Sharps or Max’s to Michael. Peter did not tell lies and had no reason to lie to Ms Boak about this matter. Additionally, it was said that if someone such as Peter, who was known to be reticent about his personal affairs and did not tell his accountant of 26 years what was in his will, it was unlikely he would decide to tell Michael’s business adviser, close friend and coach false things about what was contained in his will.
92The defendant argued that Mr Hannan’s evidence should be rejected, namely that Peter was supposed to have said that he was leaving his land equally. Mr Hannan was clearly trying to help Michael achieve what he thought was a fair result. The fact that Mr Hannan only remembered the word “equally” in his oral evidence and did not recall it when he made his two affidavits was telling, such that this evidence should not be believed.
93In addition to arguing that the representations were not made, the defendant maintained the statements relied upon by Michael were not promissory in nature. The first one being the representation made in 1995 about leaving all the paddocks known as Sharps and Max’s. Michael agreed in cross-examination that this was not a promise. He said:
“He just told me what he was putting in his Will.”
94In reference to the promise in 2000, Michael claimed that Peter had said after he bought Wynford:
“Great, you’ll have that and the land on the other side of it”,
referring to Sharps. Again, it was said that this could not be promissory because Peter and Michael knew that Peter could change his will at any time.
95The further representation whereby Peter said to Michael:
“You can have that paddock and the income off it to help you pay for Wynford and when you get Sharps they’ll work well together”
was again not said to constitute a promise.
96The same submission was made in respect of the evidence whereby Michael said Peter said to him:
“If you want to inherit it you’ll have to do [this type of work] for nothing”
or
“These paddocks will be yours one day so you can help me look after them.”
97Michael accepted in cross-examination that Peter never promised him he was getting the land:
“He just told him what was in his Will.”
Analysis
98For Michael to succeed in his claim, the Court must be satisfied that Peter made a clear and unequivocal representation to him that he would leave him Sharps.
99As the plaintiff notes, the wills made different bequests and at no stage was Sharps ever left in its entirety to Michael, but the focus of the inquiry must be whether the alleged statements were made and, if so, whether they amount to clear and unequivocal promises. As is evident in most of these types of cases, the reason they are brought is because the will ultimately made departs from the promises made earlier. The use of the instructions given to the solicitors serves to provide some background context as it is the only contemporaneous evidence of what Peter’s intentions may have been, although this is not conclusive. The issue that remains to be determined is whether Peter made the representations as alleged.
100The first promise is said to have been made upon the return from Mr Stewart’s office in 1995 following Peter giving instructions regarding the preparation of his will. This meeting, as we can see from Mr Stewart’s file, occurred on 1 November 1995, and Mr Stewart kept a note of the instructions provided by Peter. The instructions regarding his intentions in relation to the disposition of his land were that part of the Homestead land was to be subdivided and left to the brothers in equal shares. Michael was to receive Max’s and a part of Sharps land, being Crown Allotment 101.
101Michael’s case is that Peter told him that upon his death:
“I was to receive all of the paddocks known as ‘Sharps’ being 555 acres and ‘Max’s’ paddock, being 106 acres.”
102The first point to be noted here is that the instructions which Peter had just given to his solicitor, Mr Stewart, differed from what Michael claims Peter told him. Peter was willing to leave him a part of Sharps, but it is clear from the file note and the subsequent will that he was not leaving him all the paddocks comprising the Sharps land, being 555 acres. Peter was also intending to leave half of a block of Homestead land to each brother but Michael makes no mention of this. It is curious then that if Peter wanted to give him a rundown of what was in his will that day, he would have omitted this important fact.
103Michael also deposes that Peter told him he was leaving Colin Hannan the sum of $260,000. This conflicts with Mr Stewart’s file note of the instructions given by Peter earlier that day which records Mr Hannan was to receive $40,000. The will did however bequeath to Mr Hannan a Subaru ute, which Michael referred to in his second affidavit. These inconsistencies demonstrate the innate fallibility of human memory which is unsurprising given this conversation took place some 25 years ago.
104As has been seen from the quotations from Moore v Aubusson above, the Court must feel an actual persuasion of the occurrence of any conversation that is alleged to have taken place involving a deceased person. Whilst the degree of proof is still on the balance of probabilities, a Court will exercise cautious scrutiny when considering the evidence which has been provided, and, as her Honour Wood CJ noted, in such circumstances will place more weight on contemporaneous documents.[29]
[29][2020] NSWSC 1466 [109]
105In this instance, there is a contemporaneous document, being the file note made by Mr Stewart, borne out by the will subsequently signed in 1995, which did not leave all the blocks in Sharps to Michael.
106Additionally, Michael has made a mistake about what was said to have been the amount of the legacy that Peter said he was going to give to Colin Hannan. The sum in the instructions was $40,000, not $260,000 as Michael deposes. It may well be that Michael has confused this amount because Colin gives evidence in his affidavit that Peter had told him he was going to leave him $260,000 but that this, as can be seen from the final Will, did not occur. In fact, none of the wills produced into evidence ever recorded a legacy in that amount being left to Mr Hannan.
107It may be that Michael has recalled this figure simply because he has heard Mr Hannan state that that was the position at some time. Mr Hannan had claimed $250,000 in his claim for family provision against Keith’s estate. The two figures may have been conflated. But in any event, this discrepancy about the size of the legacy, and the discrepancy between the allegation that he says that Peter said he would leave all the paddocks known as Sharps, compared with the contemporaneous note recording that he did nothing of the sort, leads me to the result that I cannot be persuaded to the requisite degree that Peter did say he would leave Michael all the blocks of Sharps during their discussion in the kitchen at the Homestead.
108It should be noted that, whilst I am not persuaded on the balance of probabilities, having regard to the contemporaneous note made by the solicitor, it is not to be taken to mean that I consider Michael has deliberately given evidence which he knows to be false. As noted in Watson v Foxman,[30] human memory is fallible, particularly over the passage of time. As Ward CJ in Equity notes in Moore v Aubusson, “weight should be accorded so far as possible to ‘contemporary materials, objectively established facts and the apparent logic of events.’”[31]
[30](1995) 49 NSWLR 315 at 219
[31] [2020] NSWSC 1466 citing Fox v Percy (2003) 197 ALR 201, 210 at [31]
109In line with the apparent logic of events, given the uncontested evidence that Peter was an honourable and decent man and would have no reason to trick or to deceive Michael as to his testamentary intentions, I find as a matter of logic that it was improbable that he would have said to Michael on that occasion he was leaving him all of the Sharps paddocks. This is particularly so in circumstances when his instructions to the solicitor that very day were to the effect that he was leaving Michael only one of the Sharps blocks.
110It may be that Michael has misinterpreted or misunderstood what Peter said, or the matter was not expressly made clear by Peter, but the Court’s function is to determine on the balance of probabilities whether those words, as attributed to Peter, were in fact said. For the reasons given, I am not persuaded that Peter did make a clear and unequivocal promise to Michael in November 1995 that he was to receive all the paddocks known as Sharps. Therefore, I find that Michael has not established this promise was made by Peter in November 1995.
111To some extent, the alleged promise made in 1995 is not critical because on Michael’s own evidence, he deposes that did not take the statements made by Peter regarding Sharps more seriously until 2000.
112The next statement said to have occurred is regarding the circumstances when Michael purchased Wynford in 2000. Michael states that Peter told him he was going to get the land on the other side of Wynford (referring to Sharps) and that when he got Sharps, they (meaning Wynford and Sharps) would work well together.
113Accordingly, the apparent logic would dictate that Peter may well have said this statement attributed to him in circumstances when he was, at this earlier stage, intending to leave some of Sharps land to Michael. I have already stated that I do not consider Michael to be an untruthful witness and I accept his evidence when he says that these statements were made to him.
114Although careful scrutiny is required in respect of statements made by a deceased person, I am persuaded on the balance of probabilities that Peter did say the statements which are attributed to him. The same applies in respect of the statement made in 2001, being the third statement relied upon where Michael deposes that Peter said he would like him to take over spraying all his land on the basis that one day he would be getting Sharps and Max’s. In the background context of the then testamentary intentions of Peter as revealed by the wills in evidence, I am willing to accept Michael’s evidence about this statement.
115As for the recurring promises, such as “It’s going to be yours soon so you need to be putting in something for it too”; “If you want to inherit it, you have to do [this type of] work for nothing” or “these paddocks will be yours one day so you can help me look after them” are consistent with the representation made that Peter would leave Max’s and Sharps to Michael.
116Michael says that, in 2006 when he was keen to buy the property called Haustorfers, Peter said to Michael, “I have told you I am leaving Sharps and Max’s to you”. Peter was concerned then that Michael would not have the time to do work on his land and be available to do things for him if Michael bought more land. The will made around April 2006 removed any entitlement of Michael to inherit Sharps as Peter had become dissatisfied with Michael’s conduct (rightly or wrongly). This casts some doubt on whether Peter would have made such a representation in 2006 although no date is given for the conversation. It is possible it took place before Peter changed his mind and altered his will. But in any event, this conversation is not critical as the promises relied upon by the plaintiff as referred to in the closing submissions were the three statements made in 1995, 2000 and 2001. For the reasons stated, I am satisfied that statements were made by Peter in 2000 and 2001 to the effect that Peter would leave Max’s and Sharps to Michael.
117The next aspect is the defendant contends the statements, if made, were not promises but merely statements by Peter about what he was leaving in his will. The defendant relies upon the fact that Peter, as would be obvious, could have changed his will at any time. Michael himself acknowledged in cross examination that Peter was just telling him what was in his will and Peter did not make any promise to him. This was also borne out by Lorraine’s evidence that Michael did not tell her that Peter had promised him anything. Additionally, I accept David’s evidence about the conversation he had with Michael after Peter died (which Michael denies) in which Michael confirmed that Peter had not made any promise to him but that he should have.
118There is inevitably a question as to whether the plaintiff’s reliance on any testamentary assurance is reasonable given the inherent revocability of wills. That fact alone, however, does not mean that an assurance can never be enforceable if it was not open to a deceased to subsequently change his or her position because of an arrangement already entered into with the promisee.[32] The distinction to be drawn as outlined by Brooking JA in Flinn v Flinn[33] is whether the promise made was not of revocable testamentary instrument but of a gift by will taking effect on death. In Gillett v Holt,[34] the inherent revocability of wills was found to be irrelevant to a promise or assurance that “all this will be yours”. Even when the statement is linked to the making of a will, “the circumstances may make it clear that the assurance is more than a mere statement of present (revocable) intention and is tantamount to a promise”.[35] Even though Peter could change his will, “equity’s focus is not on the promise itself, but on the expectation that it creates”.[36]
[32] Moore v Aubusson [2020] NSWSC 1466 at [398]
[33] [1999] VSCA 109 at [75] – [76]
[34] [2001] Ch 210
[35] Ibid at [227]-[228]
[36] Harris v Harris [2020] VSC 256 at [208]
119The statements made by Peter were in the context of telling Michael about how Peter was intending to leave his land. In 1995, the background was that he wanted Michael to know what was in his will after they came back from the solicitor’s office in case anything happened to him. The statements made in 2000 and 2001 were that Peter was leaving Max’s and Sharps to Michael. But these statements coupled with the so-called recurring promises, do in my view, give rise to what should be properly characterised as tantamount to a promise or an assurance. I consider Peter’s conduct went beyond merely being a statement about his testamentary intentions which could be revoked at any time – the representation he conveyed was that Michael would take the relevant land as a gift upon his death. Consequently, I find that Peter’s assurances to Michael that he would inherit Max’s and Sharps were, having regard to the language used, sufficiently promissory in nature.
(b)Was it objectively reasonable for the plaintiff to rely on the promises made to him by the deceased?
120Having found that representations were made by Peter to Michael in 2000 and 2001 that he would inherit Max’s and Sharps, I consider it was objectively reasonable for Michael to have relied upon those statements.
(c)Did the deceased know or intend that the plaintiff would act in reliance on the promise?
121This issue picks up the second element of equitable estoppel referred to by Brennan J in Walton Stores (Interstate) Ltd v Maher.[37] As the learned author Dal Pont notes in Equity and Trusts in Australia[38] referring to this element of knowledge:
“Although the above is phrased in terms of actual knowledge in the representor, the bulk of authority suggests that it is sufficient if the party sought to be estopped ought to have known or foreseen that the representee would rely on the promise to his or her detriment (“constructive knowledge”). At the same time, because a finding of unconscionable conduct rests on something that piques the conscience, imputed knowledge is not, in the usual case, likely to suffice to substantiate an estoppel in this regard.” (citations omitted)
[37] (1988) 164 CLR 387 at 428-429
[38] Thomson Reuters 7th ed at [10.320]
122A court is unlikely to find unconscionable conduct on the part of a person who lacked knowledge concerning the effect of its representation on the representee.[39] In Milchas Investments Pty Ltd v Larkin,[40] the plaintiff retracted from a deal involving the sale of its property to the defendant but was unaware that the defendant had passed up another purchase opportunity in reliance on the deal. Young J found no estoppel arose as the retraction by the plaintiff was “really no more than asserting that it is unconscionable for the plaintiff to breach a naked promise” which is not enough.[41]
[39] Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 116-117 per Hill J
[40] (1989) 96 FLR 464
[41] Ibid at 474
123The defendant argues that there is no evidence given by Michael of anything that he had said or done to make Peter aware that he was acting in reliance on the promise made. The fact that the relationship deteriorated and Michael himself gave evidence of the friction in 2012/2013 shows that Peter had no notion that Michael was relying on any promise that Peter had made. He made no mention of it to his solicitors and appears to have felt no obligation to leave him any particular property or considered that Michael’s behaviour towards him justified it.
124I am not satisfied on the evidence that it has been established Peter knew Michael was relying on any representation that he would leave him Sharps to his detriment. The acts of reliance claimed by Michael and referred to in paragraph 131 below were never brought to Peter’s attention by Michael or anyone else. Peter was simply unaware that Michael was acting in a particular way or refraining from acting because of what Peter said to him about leaving Sharps in his will. For example, there was no evidence led that Michael told Peter he had decided not to buy other property based on his expectation of inheriting Sharps. He did talk to his uncle about possible opportunities to buy land but he never told him he would not proceed because of his expectation about inheriting Sharps. Similarly, there was no evidence that Michael ever told Peter that their yearly share farming arrangements were inconvenient and disadvantageous to him but that he only remained in this arrangement because of his expectation about Sharps. Senior counsel for the plaintiff conceded in closing submissions that there was no evidence of any express conversation where Michael told Peter he was taking certain steps in reliance upon the promises made.[42]
[42] T 827
125At the time the representations were made, Michael was already giving Peter considerable farming assistance and advice in a similar way to which his father, James, had previously given to Peter. Michael was share farming land with Peter and doing a significant amount of work for Peter as a contractor for which Michael was well paid. He was also doing work for him because he was willing to help his elderly uncle who he liked. Asked rhetorically, how then would Peter have known, or ought to have known, that Michael was doing additional unpaid work over and above the work he was already doing and which he would not have done save for Peter’s statements? There is a certain degree of artificiality in attempting to draw a line between the work Michael was doing with Peter willingly because he wanted to help his elderly relative, compared with extra work he would not have done otherwise unless he was paid.
126I was not persuaded that the claimed acts of reliance were matters which Peter actually knew about or ought to have foreseen because he told Michael about his testamentary intentions regarding Sharps. In my view, he lacked actual knowledge about what Michael now claims he was doing in reliance upon the representation. Nor do I consider that constructive knowledge of the acts of reliance can or should be imputed on the state of the evidence.
127There is also a paucity of evidence to show that Peter intended Michael to act in a particular way in reliance upon any statement. Peter made some casual remarks about Michael needing to do some work if he wished to inherit; for example, when he refused to pay for fuel for Michael’s tractor when he was levelling land at Sharps. The fact that Michael was asking for payment shows that he was not doing something for free because of his expectation – quite the reverse. But the fact that Peter reminded him he needed to do some work for him on the odd occasion because he was leaving him Max’s and Sharps does not, in my view, prove that Peter intended Michael should act in the way that he now claims he did because of the representation made.
128Consequently, I am not satisfied that the plaintiff established the necessary element of knowledge or intention on the part of Peter that Michael would act in a particular way in reliance upon his promise. The plaintiff contends this is a case of estoppel by encouragement. I was not persuaded, on the balance of probabilities, that the evidence proved Peter encouraged Michael to substantially alter his position in the expectation of inheriting Sharps.
(d)Did the plaintiff actually rely on the promises made to him by the deceased?
129As noted by the High Court in Sidhuv Van Dyke,[43] reliance is a matter that must be proved. At paragraph 58, the plurality said as follows:
“In point of principle, to speak of deploying a presumption of reliance in the context of equitable estoppel is to fail to recognise that it is the conduct of the representee induced by the representor which is the very foundation for equitable intervention. Reliance is a fact to be found; it not to be imputed on the basis of evidence which falls short of the proof of the fact. It is actual reliance by the promisee, and the state of affairs so created, which answers the concern that equitable estoppel not be allowed to outflank Jorden v Money, by dispensing with the need for consideration if a promise is to be enforceable as a contract. It is not the breach of the promise, but the promisor’s responsibility for the detrimental reliance by the promisee, which make it unconscionable for the promisor to resile from his or her promise.” (citations omitted)
[43] (2014) 251 CLR 505
130Michael bears the legal burden of proving that he was induced to rely upon Peter’s promises.[44] The reliance must be reasonable.[45] In terms of proof, what is required is satisfaction from the whole of the evidence of the fact of reliance by a plaintiff on the balance of probabilities.[46]
[44] Ibid at [61]
[45] Harrison v Harrison at [371(3)], [384]
[46] Moore v Aubusson [2020] NSWSC 1466 at [402]
131Michael claims the following acts of reliance in consequence of the promises made to him by Peter:
(i) he did unpaid work on Peter’s property which he would not have done save for the promises made to him;
(ii) he did not buy properties that became available to buy;
(iii) he bought a bigger boom spray than he otherwise needed; and
(iv) he could have embarked upon more profitable farm sharing arrangements than those he had with Peter.
(i) Unpaid work
132Michael relies upon a spreadsheet[47] which collates the work he claims to have done over and above any share farming or contract arrangements and for which he was not paid. Michael gave some additional oral evidence at trial about the preparation of the spreadsheet. He was assisted by his accountant in putting the spreadsheet together. They looked up wages on various websites to arrive at an average for costings. He estimated the value of the unpaid work he did for Peter over 27 years from 1995 to 2012.
[47]Exhibit P2 (and at CB 2049)
133In preparing the spreadsheet, Michael estimated the hours spent by him daily in doing tasks for Peter in what he described as a farm managerial role. Such tasks included crisis management, crop rotations, marketing of grain, dealing with chemical residue issues, promoting and supervising legumes, planting programs, implementing advanced farming techniques, day to day involvement of men and machinery, organising contractors/ harvesting/shearers, managing growing crops, assistance in ensuring bills were paid, assistance in machinery purchase decisions and marketing of wool. Michael deposed that the tasks he did would otherwise have been done by a farm manager. Michael claimed that the work not only included time spent with Peter, but also arranging matters for Peter, including time spent on the phone to others.
134The claim made for managerial services totalled $487,390. The hourly rate applied was $35 in 1995 rising to $60 in 2012. As an example, Michael claimed he spent 1,000 hours in the years between 2004 and 2009, claiming $45,000 per annum. This would have resulted in Michael spending 19 hours per week rendering farm managerial services to Peter.
135Michael also claimed in the spreadsheet costs for the hire of plant and equipment that he says he would have otherwise charged Peter. This sum totals $217,360. In addition, Michael claims a labour cost reimbursement for work done by his workmen which he calculates at $51,198. The total sum claimed in the spreadsheet is $755,948.
136In preparing the spreadsheet which he complied in 2018, Michael used his diaries, spray books, grain delivery sheets and his notebooks to assist him in calculating the charges. Pausing here, the spreadsheet was self-evidently not a contemporaneous document. It was prepared only after the commencement of this litigation. To that extent, it is obviously a recent reconstruction, and caution must be exercised in accepting in what may be described as a self-serving document.
137Michael deposed that he would not have done so much work or would have charged Peter contracting rates except that he thought he was getting Max’s and Sharps. He also would have charged him for the use of his equipment, such as the land plane, leveller, tractor, mother bin and wool press, and for the work his men did for Peter.
138Although reference was made to Michael being almost at Peter’s beck and call, in terms of being available to help, it was not put as part of the plaintiff’s claim that Michael suffered a detriment in respect of any care he provided to Peter. For example, various social interactions and the like were not built into the spreadsheet.
139It was also argued on behalf of the plaintiff that a neighbour or nephew would not, year after year, use his own paid workers without charge or to do so at the drop of a hat, or delay his own cropping program, all without payment. Michael denied that the work he did was no more than he would do for a neighbour or as a nephew. He said one might help in a small way, but not sow 200 to 300 acres out of the blue.
140Michael does not claim that he would otherwise have earned elsewhere as a farm manager. Although as pointed out by the plaintiff, this is not necessary, as many cases based on detriment consist of the labour and time contributed by a claimant. It was submitted that all the evidence pointed towards Peter relying upon Michael, and Michael doing management tasks for Peter. Even if it were just 30 hours per month of management and purchasing, as set out in the table at Court Book 3599, that would be time spent by Michael for which he was not getting paid.
141The plaintiff noted the hourly rate for managerial tasks was disputed, having regard to the evidence of Mr O’Callaghan. Even if the rate suggested by Mr O’Callaghan was accepted, the plaintiff contended that there would still be value attributable to the work done in the order of $85,000-$100,000 per annum on current rates. If one assumed the rate ought to be approximately two-thirds of the $144,000 p/a claimed on Michael’s spreadsheet, the value of the time spent with Peter was approximately $325,000 rather than $487,390. However, the plaintiff notes that it is unnecessary to analyse the spreadsheet as if it were an employment or contract claim. The issue is whether Michael suffered a detriment.
142The evidence of Mr Taylor, who was a lifelong friend of Peter’s and assisted him on the farm as a farm hand, was that he did not recall Michael doing anything extra on Peter’s land other than work expected as a share farmer and the contracting work. He says the same thing in respect of the provision of equipment by Michael. This is denied by Michael, who says that he helped Peter and Mr Taylor in tasks he did for Peter. The plaintiff said in the absence of Mr Taylor giving evidence due to ill health, this part of his affidavit should be disregarded.
143The plaintiff notes that Mr Schmidt relates he was told by Peter that, as they aged, Peter asked Michael to help when they could not manage. Michael would send over a contractor. That much is agreed by the plaintiff who says it shows that Michael was doing the organising for Peter. Michael also says that he and his men helped Peter, about which Mr Schmidt is silent.
144The defendant argues that none of these things were done in reliance on any alleged promise by Peter.
145The defendant contends that the spreadsheet should be rejected as evidence of what Michael did for Peter outside of share farming and contracting work. Michael agreed the spreadsheet included marketing strategy for crops, agronomy, paddock planning and the management of livestock which he was doing for Peter before James died. Michael agreed this would be a sizeable proportion of the work. In addition to this, Michael agreed a lot of the work he was doing for his uncle was because he liked him.
146The defendant’s stance was to the effect that a lot of the work undertaken was done because Michael was willing to help Peter either because he was family or out of neighbourliness, and that he did not do work beyond that required by a normal share farm arrangement or normal contracting arrangement. Additionally, he had received a considerable financial benefit from these arrangements which would outweigh any detriment from any unpaid services.
147In terms of equipment, Michael gave evidence that he and Peter did pool their resources in the farming operations. While they had their own machinery sheds, they would often store machinery at each other’s homes and used each other’s water points. He conceded he did use some of Peter’s equipment but that was limited as it was antiquated. He also accepted they bought equipment together.
148The evidence shows Peter paid Michael significant sums for work that Michael did for Peter as a contractor. In his second affidavit, David set out the yearly amounts which Michael had charged Peter for various items, including contract work. Michael did not dispute this and agreed a large amount of money was paid to him in his capacity as a contractor. It is also noted by the defendant that there was a significant advantage to Michael doing contract work as he was charging above the standard rate. There was a controversy about the rates charged by Michael. Mr O’Callaghan and David gave evidence that Michael charged above market rates which Michael disputed.
149The defendant noted that Michael had given no evidence as to how or why he would decide to charge his uncle for contracting work as opposed to deciding to do work for which he would not charge. The defendant submitted the nature of the work claimed in the spreadsheet was grossly exaggerated and that the documents relied upon by Michael to justify the hours claimed in the spreadsheet did not inform or support the hours claimed. When preparing the spreadsheet in 2018, it was suggested that Michael could have no real recollection of the time he might have spent, say, in 1997 or indeed in 2012 talking to Peter about farm management alone, as opposed to other things.
150Further, the fact that Michael, according to Mr O’Callaghan’s report, received a benefit of $51,000, being overpayments or excessive charges for contract work, should be weighed in the balance when assessing the benefit of any unpaid work claimed. The plaintiff says this figure is not entirely accurate as the figures included costs for reimbursement for share farming inputs which Peter was obliged to pay Michael under their share farming arrangements, such as the cost of seed and chemicals. Michael estimated that about half of the invoices were reimbursement and half for contracting charges. In any event, regardless of the exact amounts, the point is that Michael could and did charge Peter for contracting work for which he was paid.
151I regard the spreadsheet as being of little probative weight and exaggerated. It is a reconstruction and not a contemporaneous record. It is obviously self-serving and done to bolster Michael’s case. He himself described it as an estimation. In my view, Michael could not say with any certainty the hours he might have spent performing so-called farm managerial services over a 27-year period in the absence of any contemporaneous records. The documents he did rely upon were used to reconstruct what he might have done rather than being actual evidence of the hours spent. Further, the fact is that Michael did, both before and after his father died, willingly render assistance to Peter for no charge in the form of what might be described as farm management advice. This was in place before any promises occurred. It then makes it an impossible task to differentiate between this work he was always willing to do from work of a similar nature for which he now says he would have charged.
152I accept the defendant’s submission it would be impossible to calculate these items in the spreadsheet with any accuracy given the passage of time and that the spreadsheet is effectively guesswork. I was not satisfied that Michael proved, on the balance of probabilities, that he did the unpaid work claimed or could have charged Peter in respect of the other items set out in the spreadsheet. I am reinforced in this view because I consider it an impossible and artificial task to separate out and assess this fourth category of work from work that Michael was otherwise doing for Peter in his capacity as a paid contractor, share farmer and because he willingly wished to assist his elderly uncle out of love and affection.
153Whilst the assessment is not like measuring damages in a contractual claim, nevertheless the plaintiff needs to be able to establish an actual and substantial detriment arising from the alleged unpaid work. Based on the description given by Michael and guided by the estimate of its value in the spreadsheet, the plaintiff invited the Court to find that Michael had done work for Peter of a substantial nature and a detriment to his own time and resources. Given the uncertain state of the evidence on this issue, I was not persuaded that I could make such a finding.
(ii) Failure to buy land
154Michael stated he would have considered leasing, share farming or buying land but, due to his relationship with Peter and the statements he made, he refrained from doing so. Michael gave evidence that he refrained from purchasing land as the properties Sharps and Max’s would have made for a good economical-sized farm and would have been convenient for shifting machinery. He was comfortable where he was at, and did not feel the need to expand, as he thought he would be share farming and farming the land going forward. He was happy with the size and economy of scale.
155Michael set out information about properties he had considered buying, including attaching brochures about the various properties which were exhibited to his second affidavit. The properties that he considered buying were valued by Mr Jason Oster of Frank Knight. His report provided information as to the capital growth which would have been achieved had these properties been purchased by Michael. The plaintiff also noted that Mr O’Callaghan referred to the strong growth of value of land in the area in his report.
156The plaintiff pointed to evidence whereby Michael said he had finances available to him to purchase. This was verified by Ms Boak, who said that funding would have been available in 2009 when he was considering purchasing a property called “Lowes”. The same applied when another property called “Balls” was being considered and generally.
157It was argued that Michael considered Peter’s concern that if he bought land, Michael would not be able to provide Peter with the assistance he needed. This is in reference to the remark that Peter made when Michael was considering purchasing Haustorfers.
158The plaintiff invited the court to find that, based on the descriptions given by Michael of the land he was interested in buying, he forewent a real opportunity to buy land at a time when he could do so. This was a detriment of a substantial nature.
159Michael contends that because of his uncle’s promises, he did not buy land that he otherwise would have done, had the promises not been made. Michael agreed he was always keen to acquire farming land, which seemed to be a consistent position of other witnesses regarding farmers’ desires generally to acquire more land when possible. He accepted that any promise by his uncle to leave him land did not require him to commit funds and did not negatively impact on his ability to make a down payment. He also accepted it did not negatively impact upon his ability to borrow and that, if he ultimately inherited land, it would decrease his debt-to-equity ratio. Michael also agreed he could have expanded the scale of his operation if he had more land. Therefore, the defendant contends that Michael’s assertion that he refrained from buying land because of Peter’s promise regarding Sharps makes no sense at all.
160Michael did buy Wynford in 2000 which comprised 395 acres. He also bought Hoods which was 343 acres in 2013. A company known as Sudholz Investments Pty Ltd purchased properties called “Ellis” and another property called “Buckos”. This is a company of which Kane, Michael’s son, is the director and secretary. Michael, however, is a 50 percent shareholder in the company. Ultimately, Michael conceded there was no real difference in Ellis and Buckos being Kane’s as opposed to Michael’s. It was contended by the defendant that, having regard to these purchases, Michael did in fact buy land either in his own name or through a corporate entity of which he was a shareholder.
161The evidence reveals Michael did put in a bid for Haustorfers, despite the conversation he had with Peter whereby the latter expressed concern about Michael not being available to work on his land if he bought this land. Michael’s bid of $1,200 per acre was considerably lower than the successful bid of $1,738 per acre. The fact that Michael thought he was going to inherit Sharps did not cause him to refrain from bidding for Haustorfers. Nor apparently did Peter’s concerns about his reduced availability if he did purchase Haustorfers hold any sway.
162I am not satisfied there is the necessary causal reliance between Michael’s assertion that he chose not to buy land and Peter’s statement about Sharps. The mere assertion that one has done something or refrained from doing something because of a promise is not enough - reliance on any statement must be reasonable. I accept the defendant’s submission that it makes no sense that Michael says he refrained from buying land when he could do so, and particularly when he accepted that he and farmers generally are always keen to buy land. It may be a decision Michael took but I am not persuaded that it follows it was a reasonable decision caused by Peter’s statement to leave him Sharps. Additionally, Michael did buy property in 2000 and 2013 (leaving aside the land bought by Sudholz Investments Pty Ltd) which puts paid to the argument that he refrained from buying land because he expected to inherit Sharps.
(iii) Boom spray
163The sum of $31,000 was advanced to Michael by Peter to assist him with the purchase of a new larger boom spray. Michael was charged normal commercial rates in respect of the borrowed funds by Peter and he subsequently repaid the loan.
164Michael deposed that he would not have bought such a big boom spray if Peter had not assured him that one day he would be getting Sharps and Max’s. He said he did not need such a big unit for the work he was then doing but as Sharps is 555 acres and Max’s is 106 acres, he believed he would need a big unit for the future. Michael said he would have otherwise bought a smaller machine and his repayments would have been easier to manage. This contradicts other evidence he gave where he stated:
“As I was sharefarming with uncle Peter, I needed more and larger equipment to complete the farming than I would have required to operate my farm alone. Accordingly, I acquired expensive harvesting, cultivation, seeding, spraying and other equipment to efficiently work the land under my care.”[48]
[48] Affidavit of Michael James Sudholz 14 April 2020, [111] at CB 165.
165Michael said his uncle had lent him money to buy it but agreed to pay Michael for spraying, including on share farmed land, which would have been Michael’s responsibility to spray in any event. Michael agreed this was a generous thing for his uncle to do.
166The defendant disputes that this could be an act of reliance, particularly when Michael bought a new self-propelled boom spray in 2009 before his uncle died and before he would have inherited any land from him. It was not suggested his uncle had made any suggestion regarding the boom spray bought in 2009. Thus, it is argued by the defendant that the fact that Michael bought a boom spray purportedly in reliance on any promise by Peter to leave him land goes nowhere because he had updated that boom spray before his uncle died and before he could have inherited any land.
167The defendant pointed out that farming equipment does not last forever. In 2001, Michael could not have known how long his uncle might have lived for when he bought the larger boom spray. The fact that he claims he did it because he might need a larger boom spray when he inherited land at some future date did not make sense on the defendant’s case. This goes really to the question of whether the reliance claimed was reasonable.
168The boom spray was also purchased in part because Peter was having difficulty spraying his own land due to his advanced years and it suited Michael as well because he was share farming both Max’s and Sharps in 2001. Michael accepted it was in his interests to buy larger equipment when share farming. I accept that the decision to buy the larger boom spray may have been caused in part in reliance on Peter’s promise albeit accepting there were the other reasons to do so. It can be sufficient if in the promise was a contributing factor and need not be the sole reason.
169The issue then is whether Michael’s reliance was reasonable. The defendant’s submission is that any claimed reliance regarding the purchase of a larger boom spray in 2001 was not reasonable. Putting it another way, had he known that Peter would not keep his promise, would he have refrained from buying a larger boom spray in 2001? This is unlikely because Michael was share farming Sharps and Max’s at this stage and his evidence was that he wanted and needed to buy larger and more expensive equipment to perform his share farming arrangements. He was also able to and did charge Peter for using the bigger boom spray. It is debatable then that his decision to buy a larger boom spray was done in reasonable reliance upon the promise, given equipment has a limited life. Michael then did buy a new boom spray in 2009 which was not claimed to be done in reliance on any promise. The matter is not clear cut but accepting his decision was caused in part by Peter’s promise and that he acted reasonably, for the reasons given later, I find that Michael did not suffer any actual detriment in doing so.
(iv) Unprofitable share farming arrangements
170It was agreed that the paddocks on Sharps which Michael share farmed changed from year to year; Michael share farming one year, and Peter farming the next. Michael gave evidence about the disadvantages of year-to-year share farming arrangements. It was claimed that an optimum and more common arrangement was for three to five years, the advantage being that a share farmer can take the benefit of crop rotation decisions and long-term management of the land. Ideally, land is planted to a planned rotation of crops where the planting of legumes, for example, while higher risk, improves the soil for the following year. The land can be managed to manage weeds and the like, with the security of knowing that the work done in any given year would accrue to the benefit of the land in the following year. A year-to-year arrangement opens the share farmer to losing the benefit of a soil-improving crop, with the landowner taking the benefit of the improved soil and weed management if they come back and take the land after one year. This evidence was in effect agreed by David and Mr O’Callaghan.
171The nature of planning for cropping was not contentious, and was essentially that, in the latter months of the year ahead of the cropping season, planning begins, decisions are made about the crops to be sown, decisions are made to hold back grain for the summer harvest to the next season, the summer weeds are sprayed, and paddock preparation is done ready for sewing in April the following year. This work is done in advance to prepare seed and fertiliser.[49]
[49]Mr O’Callaghan, T663.14
172Michael gave evidence that Peter agreed only from year to year as to which paddock was to be farmed, and sometimes changed his mind at the last minute. This was corroborated by Mr Stuchbery.
173Essentially, the plaintiff argues that the detriment in the share farming arrangement goes three ways, namely:
(a) changing paddock from year to year and losing the benefit of the crop rotation;
(b) Peter not making a decision about which paddocks were to be share farmed so that planning could be done ahead of the season;
(c) Peter’s last-minute changes of mind about which paddocks were to be available to Michael.
174Michael gave evidence about putting in a crop, not getting the benefit of the improvement to the soil in the following year and having to remove stubble which degraded the soil. He also described having to drop everything to help out Peter, which would cause some delay in his own cropping program. Despite this, he accepted that this never prevented him from putting his own crops in the ground in time.
175Mr O’Callaghan agreed that it was important to get a crop in at the right time, and that even a short delay can have an impact on yields. Arising out of this, the plaintiff invited the court to find that it was a detriment to Michael to remain in a difficult share farming arrangement with Peter.
176No evidence was led to prove that Michael sustained any actual losses in respect of reduced crop yields or loss of profits in consequence of what might be described as these suboptimal share farming arrangements with Peter.
177Michael did a considerable amount of work for Peter in a share farming arrangement that they had together. Michael gave evidence that the arrangement was of benefit to them both. He also accepted he could have easily got out of his farm sharing arrangement with Peter and that the share farming had nothing to do with Peter’s alleged promises to him.
178The basis of the disadvantageous share farming arrangement was that Michael said he was not able to do share farming arrangements of three years or more with Peter but that he was limited to a yearly arrangement. He accepted that he had share farmed Max’s and Fred’s year after year. He also agreed that if he thought his share farming arrangement was sufficiently disadvantageous to him, he could have just said he was not doing it, but he did not do that. In those circumstances, the defendant contends that any share farming work was not done in reliance on any promise made by Peter.
179From 2012 onwards, the share farming arrangement ceased for Max’s and Sharps and these properties were the subject of leases between Peter as lessor, and Michael and his wife as lessees, as well as Homestead land. So, any disadvantageous share farming arrangements no longer applied for those properties from 2012. The leases were still in place when Peter died in 2016.
180The plaintiff does not contend the share farming arrangement per se was a detrimental one but if Michael had known he would not get Max’s and Sharps, he would have pressed his uncle for a better arrangement. But Michael accepted he could have changed the arrangements if he had wished to but did not do so. The existing arrangements were of benefit to him. It is not as if he would have ceased share farming altogether, rather he might have sought better terms. Given there was nothing preventing Michael from doing so, such as a threat by Peter that he might change his will if he did, I am not persuaded his decision to stay in what might be described as a sub-optimal arrangement (which was debatable given the lack of evidence about loss of yields or profits) was done in reliance upon Peter’s promise about Sharps. Even if it was, such reliance would not have been reasonable in the circumstances in my view.
(e)Did the plaintiff therefore suffer detriment in the nature of additional cost and work for himself and his workers, and by foregoing the opportunity to purchase property?
181The issues of reliance and detriment are interwoven. Although this key issue identifies only two detrimental matters, the plaintiff claimed detriment for the same acts or omissions claimed relating to reliance as set out in paragraph 131 above.
182It is contended by Michael that he has suffered detriment involving life-changing decisions of the type described by Nettle JA in Donis v Donis [50] namely:
“[H]ere, the detriment suffered is of a kind and extent that involves life-changing decisions with irreversible consequences of a profoundly personal nature… beyond the measure of money and such that the equity raised by the promisor’s conduct can only be accounted for by substantial fulfilment of the assumption upon which the respondent’s actions were based.”
[50] (2007) 19 VR 577 at 588-589 [34]
183The plaintiff argues that the work done by Michael and the opportunities foregone, including the choice not to purchase property and the choice to stay year after year in a less profitable share farming arrangement, were each matters of a clearly profound nature.
184Gageler J in Sidhu[51] referred to the question of detriment and noted there can be no real detriment if the party asserting estoppel would have been in the same position in any event. His Honour framed the question of causation as being, “Despite any other contributing factors, would the party seeking to establish the estoppel have adopted a different course (of either action or refraining from action) to that which [the party] did had the relevant assumption not been induced?”[52]
[51] (2014) 251 CLR 505
[52] Ibid at 531, [93]
185In Harris v Harris, the Court of Appeal stated that the “detriment need not consist of expenditure of money or other quantifiable financial disadvantage, so long as it is something substantial”.[53]
[53] [2021] VSCA 138 at [79]
186In the case of estoppel by encouragement, being the case put here, the relevant detriment is not the loss flowing from the mere non-fulfilment of a representation or promise. What must be proved is relevant detriment, namely, actual detriment suffered as well as that which might be anticipated if a defendant is able to act inconsistently with a plaintiff’s assumption.[54]
[54] Moore v Aubusson [2020] NSWSC 1466 at [404] and the cases cited therein
187This is not a case where Michael gave up an alternative career or provided ongoing care to the deceased for no reward on the assumption that he would inherit Sharps, being the more common fact scenarios in cases such as these. Although Michael did help his uncle, this was done as a combination of the contracting work he did for him, their share farming arrangements and because he wished to help his elderly uncle of whom he was fond. If Michael did other work over and above these categories, then I was not satisfied he suffered any actual detriment because of this alleged “extra” work. Despite the assistance he gave to his uncle, Michael successfully developed and expanded his own farming operations over the past 25 years. He agreed in cross-examination that he has built up a very substantial and successful farm. This was confirmed by Ms Boak who agreed Michael is farming a successful farm business.
188In addition to farming land that he owns, Michael has farmed other land that he has leased and share farmed land owned by David and Peter. He share farmed half of the Homestead land, Max’s, Fred’s, and some paddocks at Sharps. From 2012 onwards, he leased Max’s and Sharps from Peter moving away from the previous share farm arrangement. Michael also did contracting work for Peter, for which he was paid significant amounts. Additionally, he has done some contracting work for David and a local farmer, Brian Klowss. Michael was able to achieve all this despite rendering some unpaid assistance to Peter.
189Michael conceded in cross-examination that if he was not doing unpaid work for Peter, which he described as farm management, he would not have worked as farm manager for someone else. He agreed he would not have done this work anywhere else. He also conceded that he did not say his farm would have been more profitable had he not rendered his assistance to Peter. Nor did he say that he would have hired out machinery that Peter was using to someone else for a fee or have hired out his workers. In my view, the result is that Michael is in the same position in any event.[55]
[55] Referring to the test in Sidhu v Van Dyke at [92] per Gageler J
190Michael claims detriment because he says he would have otherwise bought land save for the assurance made to him by Peter. The evidence of Mr Oster goes to valuations of land that Michael claims he was interested in buying and shows the capital appreciation in that land over time. His claim is essentially that he forewent the opportunity to buy land which would have resulted in a capital gain to him had he done so.
191As a farmer, Michael conceded he was always keen to acquire land. There appears to have been no financial restrictions which prevented him from doing so and certainly none which had anything to do with the possibility of inheriting Sharps. Michael was always able to buy more land had he wished to do so. I agree with the defendant’s submission that it makes no sense that someone would refrain from buying land, if they were able to do so, because they were hoping to get other land for free. As it turned out, Michael not only did attempt to buy other land but in fact did so whilst Peter was alive. This contradicts the claim made by Michael that he forewent the opportunity to buy land because of Peter’s promises to him regarding Sharps. In my view, Michael was in the same position regarding the potential purchase of land in any event irrespective of Peter’s promise. That being so, I am not persuaded he suffered any detriment under this head in consequence of any promise made to him by Peter.
192Insofar as the purchase of the larger boom spray demonstrates any detrimental reliance, I am not persuaded this is the case. Michael had already decided to buy a boom spray. He decided to buy a larger one than he would have otherwise done. There was no evidence led as to the difference in sizes between the boom spray he might have bought but for the representation made, nor any information about the difference in price. His evidence was that his repayments would have been easier to manage if he bought a smaller boom spray. This difference alone would not have amounted to a substantial detriment in my view. As has been seen, Peter needed assistance with spraying Sharps and Max’s. There was a benefit to Michael in having a larger boom spray so he could spray this land which he share farmed with Peter and later leased. The evidence also showed that Peter paid him for spraying, which he was not normally obliged to do as a landowner under usual share farm arrangements. Michael accepted that this was a generous thing for Peter to have done. In these circumstances, I do not accept that the purchase of the larger boom spray resulted in any actual or substantial detriment to Michael, let alone that of a life changing nature as contended by the plaintiff.
193As for the alleged disadvantageous share farming arrangements, Michael cannot point to any actual detriment. He did not prove he suffered any reduced crop yields or loss of profits because the arrangements were year to year rather than an optimal 3-to-5-year arrangement. Despite any delays caused by Peter’s indecision or late changing of mind, Michael was always able to get his own crops in the ground in time. I was not persuaded on the evidence that Michael proved he suffered any actual detriment, as is required, because of the so-called suboptimal share farming arrangements. As with the unpaid work, the alleged disadvantageous share farming arrangements had no effect on Michael’s ability to develop and maintain his own successful farming operations. He was in the same position regardless.
194Contrary to the plaintiff’s submissions, I was not persuaded that any of Michael’s actions or inactions which are relied upon amount to “life-changing” decisions as is claimed. I was not satisfied that Michael proved he suffered any actual detriment of a substantial nature which is necessary before an estoppel becomes enforceable.
(f)Was it unconscionable for the deceased to have resiled from his promise by failing to leave the property Sharps by will to the plaintiff?
195A mere assumption by a representee is not enough to establish an equitable estoppel. Nor will evidence showing that a promise has been or will be departed from satisfy the requirement of unconscionability. There must be “something more” namely, an inducement or creation of the assumption by the representor in the representee with the knowledge or intention that it will be acted on by the latter. The representor, it is said, “must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it”.[56]
[56] Commonwealth v Verwayen (1990) 170 CLR 394 at 444 per Deane J
196As I have previously found, Peter was not aware or ought to have foreseen that Michael would act in the way he now claims he did due to Peter’s statement that he would leave him Sharps. I was not persuaded that he had actual or constructive knowledge of the acts of reliance which Michael relies upon. I am not satisfied that there was “something more” in this case, whereby it could be said Peter’s conscience was piqued so that equity should intervene. The mere fact that Peter later breached his promise about Sharps is not enough to attract the principle of proprietary estoppel without the necessary element of unconscionability. I find Peter did not act unconscionably as he did not induce or encourage Michael to act in a particular way and nor did he know or intend that Michael would do so. Furthermore, Peter did leave Max’s to Michael, an asset of some considerable value, which was enough to assuage his conscience, assuming there was any need to do so.
(g)Whether the appropriate remedy is to make “good” the promises by transferring the property Sharps to the plaintiff, or some other remedy?
197As correctly pointed out by the plaintiff, the notion that the court need only give the minimum relief necessary to do justice between the parties was disavowed in Giumelli v Giumelli.[57] As stated in Sidhu v Van Dyke, “where unconscionable conduct consists of resiling from a promise or assurance, which has induced conduct to the other party’s detriment, the relief… is usually the value of the promise.” [58]
[57] (1999) 196 CLR 101
[58] (2014) 251 CLR 505 at [85]
198As I was not satisfied that Michael established his claim for proprietary estoppel, the appropriate remedy does not fall for consideration. If, however, I had found an estoppel, then I accept the defendant’s argument that inheriting a property the size of Sharps worth roughly $1.5million in 2016 would be wholly disproportionate and extravagant to the nature of any detriment alleged to have been suffered.
199The other consideration is that the rights of a third party, namely David, would be affected if Sharps was conveyed to Michael as it would deprive David of his inheritance under the Will. This was a factor which the High Court considered in Giumelli v Giumelli[59] when deciding that equitable compensation was the more appropriate remedy rather than fulfilling the promise. The court found an estoppel in favour of a son who had been promised an interest in a property by his parents. However, the court decided not to impose a constructive trust because the plaintiff’s brother had acquired an interest in the property during the intervening period.
[59] (1999) 196 CLR 101
200If I had to consider the question of any remedy, my view would have been that the transfer of Sharps to Michael would be a disproportionate remedy in the circumstances. The cost of the additional unpaid services he allegedly provided were of a kind which were difficult to quantify but would not have amounted to anywhere near the value of Sharps, in my view, and some lesser form of relief would have been more appropriate. However, Michael was left Max’s which was a substantial and valuable property. I consider this bequest was sufficient to compensate Michael for any detriment he might have suffered in expectation of inheriting land from his uncle.
201For the reasons stated I will dismiss the plaintiff’s claim. I will hear from the parties on the question of costs.
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Certificate
I certify that these 56 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 15 October 2021.
Dated: 15 October 2021
Associate to Her Honour Judge A Ryan
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