Tremain-Cannon v Tremain - [2020] NSWSC 646

Supreme Court

New South Wales

Medium Neutral Citation: Tremain-Cannon v Tremain [2020] NSWSC 646
Hearing dates: 9-13 December 2019
Date of orders: 02 June 2020
Decision date: 02 June 2020
Jurisdiction: Common Law
Before: Harrison J
Decision:
(1) Judgment for the defendants.
(2) Order the plaintiff to pay the defendants’ costs.

Catchwords:
CONTRACTS – where son of defendants alleges the existence of an agreement that he would be given a one-third interest in agricultural lands owned by his parents and a similar interest in the partnership conducted from the land – where son alleges terms of the agreement to be that these benefits would be given to him if he gave up a career in Newcastle and returned and remained to assist his parents by working on the farm at Peak Hill following the death of his brother – whether promises were made at all – whether terms of the alleged agreement were clear and unambiguous – whether terms sufficiently certain to constitute an enforceable agreement – whether agreement alleged made in fact
ESTOPPEL – promissory and proprietary estoppel – where son alleges that he gave up a promising career in Newcastle and returned to the family farm – whether son remained working on the farm for little or inadequate remuneration in reliance upon representations or assurances from his parents that if he did so he would be given a one-third interest in agricultural lands owned by his parents and a similar interest in the partnership conducted from the land – whether representations or assurances made as alleged – whether son altered his position to his detriment in reliance upon the representations or assurances – whether defendants resiled from the position consistent with the making of the alleged representations or assurances – whether it would be unconscionable for the defendants not to fulfil the son’s expectations by acting in accordance with the alleged representations or assurances
Legislation Cited: Conveyancing Act 1919 (NSW)
Cases Cited: Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Beck [2016] NSWCA 218
Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39
Construction Technologies Australia Pty Ltd v Doueihi (2014) 17 BPR 33,457; [2014] NSWSC 1717
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26
Delaforce v Simpson-Cook (2010) 78 NSWLR 483
Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247
Evans v Evans [2011] NSWCA 92
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Galaxidis v Galaxidis [2004] NSWCA 111
Gillett v Holt [2001] Ch 210
Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
LCY Pty Ltd v Ma [2017] VSCA 383
Lukaszewicz v Polish Club Limited [2019] NSWSC 446
Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674
Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106
Palagiano v Mankarios [2011] NSWSC 61
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19
Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466
Sion v NSW Trustee and Guardian [2012] NSWSC 949
Sledmore v Dalby [1996] EWCA Civ 1305; 72 P & CR 196F
Waaka v Francois [2017] NSWSC 744
Watson v Foxman (1995) 49 NSWLR 315
Zagame v Zagame [2014] NSWSC 1302
Category: Principal judgment
Parties: Blake Tremain-Cannon (Plaintiff)
Leanne Margaret Tremain (First Defendant)
Ray Owen Cannon (Second Defendant)
Representation:
Counsel:
H K Insall SC with R M O’Brien (Plaintiff)
S Balafoutis SC with D Stretton (First Defendant)
Solicitors:
Campbell Paton & Taylor Pty Ltd (Plaintiff)
Warwick McCarthy & Co. Solicitors (First Defendant)

File Number(s): 2016/210278
Publication restriction: Nil

Judgment

HIS HONOUR: The plaintiff Blake Tremain-Cannon is the son of the defendants Leanne Margaret Tremain and Ray Owen Cannon. These parties have both throughout the hearing and in their written submissions conveniently referred to themselves and other family members by their given names. I propose to do the same.

Blake’s case

The following matters are taken from Blake’s affidavit sworn 25 August 2017.
Blake was born in 1984 and is currently 35 years of age. He is married to Danielle. They have two children aged 6 and 3. Blake’s mother Leanne was born in 1955 and his father Ray was born in 1956. Leanne and Ray married in 1979 but separated in 2007 and divorced in September the following year. Their younger son Jordan, Blake’s brother, was diagnosed with bowel cancer in 2008 and died in 2011.
Leanne and Ray have for many years conducted a farming and merino stud business in partnership on and from four properties in or near Peak Hill, which is located between Dubbo and Parkes on the Central Western Slopes of New South Wales. The partnership is known as the R O Cannon & L M Tremain Partnership. The four properties, collectively referred to as the family farm, are known as Westray, Lynlee, Bulgandramine and The Woolshed Block. Leanne and Ray own both Westray and Lynlee as joint tenants. Bulgandramine is owned by Ray. The Woolshed Block is owned by Ray and his siblings.
Blake completed his schooling in Peak Hill in 2002. He moved to Newcastle to play rugby league for the Newcastle Knights and to study at Newcastle University. In 2006, he completed a business degree and a Certificate IV in finance broking. From March 2007 until May 2008, Blake worked as a coal mining recruitment consultant for Hays Personnel Services in Newcastle.
In April 2008, Jordan was diagnosed with terminal cancer. In about May that year, Blake and Danielle returned from Newcastle where they lived to the family farm to assist Leanne and Ray with work in the partnership and to provide company and support for Jordan. Blake commenced work on the farm in mid-2008. He was not paid a wage at this time. Blake has continued to work on the farm since then.
When he first moved to live in Newcastle, Blake’s mother would call him regularly and they would speak for long periods on the phone. Blake has given evidence that during these conversations, Leanne would often say words to the following effect:

“We are going broke. What are we going to do about it? The debt and spending is out of control here and we are heading for a clearing sale. We owe over a million now and we are never going to get out of debt. Ray is hopeless. I’m going to divorce Ray soon. If I ever turn out like Bill, get a gun and shoot me.”

Blake said that he would respond with words to the effect of:

“If you’re unhappy, things need to change. What can you do about it to change things?”

Blake spent four years playing rugby league for the Newcastle Knights before joining Hays in early 2007. In late 2007, while still living in Newcastle, Blake had a conversation with his parents to the following effect:

“Can you come home one weekend to have a family discussion on how the farm ownership is going to be split. We need to make sure that there is some financial separation but the partnership remains fully intact for Jordan.”

According to Blake, he returned home shortly after this in order to attend a family meeting. It was one of several similar meetings. Blake maintains that his parents said to him words to the effect of:

“There is room for you to return in the future if you want to. You and Jordan make a great team.”

Blake alleges that this had been said to him many times throughout his whole life.
In 2007, as a trainee recruitment consultant, Blake’s base salary after nine months with Hays was $35,000 plus superannuation. He earned approximately $50,000 to $55,000 when commissions were taken into account. In early 2008, Blake was promoted from trainee to consultant and was offered a base salary of $70,000 with a guarantee of $100,000 plus superannuation, including commissions. He was offered a similar job with Chandler McLeod recruitment agency. He was also being paid between $500 and $1,000 per game with the Newcastle Knights.
In June 2008, when Jordan’s health and the financial position of the partnership were both deteriorating, Blake attended a meeting at the Westray home with his parents, his wife and his brother. Also in attendance were Paul Clyburn and Will Harris as representatives from Parkes Rugby League Club and North Parkes Mine. During this meeting, Blake was offered a contract to play with the club for $800 per game and a job at the mine driving a dump truck. That job was worth $70,000 per annum. Blake said that he declined the offer of the job because he was “led to believe that the family was relying on [him] to work on the family farm.”
Blake said that on numerous occasions either over the phone or face to face in the presence of Danielle and Ray or privately, usually at the Westray home, his mother said to him:

“If you left, the whole lot would have to be sold. This place has no future at all without you.”

Blake said he recalls that around July 2008, he was standing in the front paddock below the house cutting burrs when he had a telephone conversation with his mother as follows:

Blake: “I left a $100k per year salary at 23 to return home to help you and Ray. It would be nice if the people I was trying to help would start helping themselves”
Leanne: “I don’t think Ray appreciates the sacrifices you have made. I did a similar thing with my parents.”
Blake: “Helping on weekends and school holidays is very different to giving up your day job and all your income.”

Following this, Blake attended a mid-morning meeting at the Westray house with his parents and his brother. Blake said that during this meeting he said, “I require some wage or income as I cannot continue to work for free”. Leanne and Ray both said that they agreed. Blake said that Leanne then said, “We could sell up and you could have some of the money”. Ray said, “We could sell Lynlee to reduce the debt”. There was no agreement about either of these suggestions. Blake said that Ray suggested that the partnership overdraft could be increased and that he could draw a wage. However, there were bills dating back to September 2008 then still unpaid and Blake was negotiating and communicating with some of the creditors. Ray said, “We must trade our way out of it”. Blake said that he was asked again by both his parents to “hang in there”. They said, “It will be worth it for you”. They said, “The sacrifices will be worth it down the track”.
Blake said that he and Danielle both “sacrificed” their jobs to return to help the partnership. He commenced working on the farm without payment on average about 80 hours per week. He received no wage and lived off his savings. He also used some of his savings to assist the partnership. He paid for renovations to the home on Lynlee.
Towards the end of 2008, it was becoming increasingly clear to Blake that the way the farm was being run, including without paying him a wage, could not continue. At the end of 2008, Blake and Jordan each paid $2,500 in reduction of monies owing to Greg Cannon on Bulgandramine as the partnership was behind due to its financial difficulties. Blake said that he did this because he believed, as a result of what his parents had told him, that it would be in his interest to assist the farm to release the financial pressure on the partnership.
Blake said that “on multiple occasions” his parents said to him, both separately and individually, at Westray that “things will change in the near future”. Ray said, “You need to be patient”. Leanne said, “Hang in there”. Blake then said this at paragraph 67 of his principal affidavit in these proceedings:

“As a result of what Ray and Leanne said to me, I stayed and worked on the farm because I was led to believe that I would be included in the partnership and land or paid a wage as the family farm would eventually be mine. Had these words not been said to me, Danielle and I would have left for Newcastle shortly after Jordan was to pass away. I continued to work for the partnership without payment.”

In about June 2009, Blake had another conversation with his parents as follows:

Blake: “I need some sort of wage. I can’t keep working for nothing for much longer.”
Leanne: “I agree.”
Ray: “I’ll get you your own cheque book tomorrow.”

Blake did not receive a cheque book.
Throughout 2009, Leanne and Ray continued to tell Blake that the farming business would one day be his. They said that Jordan was not likely to recover and that the sacrifices he was making would be worth it down the track. Blake said that he continued to believe that he would be compensated for the work he was doing “by being included in the partnership and land”.
Blake said that 2009 was a tough farming season. There was below average rainfall. The 2008 harvest season had also been poor. Hay and grain were scarce. Most farmers typically destocked. However, the partnership stud was overstocked and feeding livestock was labour intensive. Blake handfed sheep daily to ensure that the standards were met and their genetic stock was not lost. During 2009, Leanne repeatedly said to Blake, “Things will get easier in the future.” Leanne also said: “You are working for yourself. This will be yours. Hang in there.”
Shortly before Christmas in 2008, Blake and members of his family travelled to Yeoval to work on West Timbie, a property then owned by Leanne’s father. They worked there from early in the morning until late at night. They left to return to Peak Hill at about 11pm. On the drive home, Leanne, Jordan and Blake had the following conversation:

Leanne: “Things will get easier in the future. I have arranged for us to get the bigger block at Yeoval and Val to get The Valley and some other assets to make it fair. This will mean if they want to sell in the future we would try and borrow the money to buy them out.”
Blake: “It will be when, not if.”
Jordan: “Val might not want to sell but all the others will.”
Blake: “We would probably need to borrow 2 million to buy it and we would be unlikely to get the deal we got with dad’s family.”
Leanne: “Even without it, it would give us some economies of scale. Grandfather will die first and Nanna has already said she will be much easier to get along with. There’s Nanna’s house in Dubbo, her jewellery and some cash if need be.”

From about the middle of 2009, Ray and Leanne said to Blake on numerous occasions:

“You’ll be included in the partnership and the land so you can stay on the property and it will provide a future for you.”

During this period, Ray also said:

“I have spent my life trying to create something for you boys to take over and one day call your own. It’s my dream to work alongside my two boys in the family business.”

Also during this time, Leanne said to Blake:

“What is mine is yours. It will be you who benefits from our properties at Peak Hill and West Timbie because, by the time I receive West Timbie, I will be too old to do anything with it. Nanna had long said it will be the grandkids who actually benefit from this place.”

Blake said that during 2010, discussions surrounding his involvement in the partnership increased. Ray regularly raised the issue with him and Leanne. Ray would say, “We need to think about the future.”
During that year, Danielle had almost completed her teaching degree and needed to advise the Department of Education about her location preferences. Blake and Danielle had to make a decision about their future. Blake told his father that if nothing was finalised soon, they might have to leave after Jordan died. Shortly thereafter, Blake had a conversation with Leanne as follows:

Leanne: “The only person that does well in farming is the person who gets to sell it. That will be you and not me as I will leave everything to you.”
Blake: “I have no intention of ever selling the farm. I hope to leave it to my family but I can’t keep working for nothing.”
Leanne: “You should tell Ray he needs to go and get a job as a truck driver or work in the mines. You could hire someone to help you run the farm and I will match Ray dollar for dollar to pay down the debt.”

At the end of 2010, Blake put his cousin Toby Cannon on a rural traineeship to work on the farm. Jordan was unwell. Ray was having difficulties following the separation and with Jordan’s health. Leanne was not working on the farm. Blake said he was struggling to get the work done.
Shortly after Toby commenced, Leanne and Blake had another conversation as follows:

Leanne: “Get Ray to get a job and I will go back teaching after Jordan dies and we can both contribute the same amount to the farm and you will run it with Toby.”
Blake: “I’m not kicking him off his own farm whilst Jordan is dying from cancer or ever for that matter.”
Leanne: “Let’s face it, Ray is fucked. You’re the future here and you should get a go now.”

Jordan died in April 2011. He left everything to Blake. That included Jordan’s Border Leicester stud business known as Grow On.
From 2011 until 2015, Blake put all the income he received from Grow On into the partnership. This amounted to $99,750. Blake said that he made this and other contributions in cash and kind from the Grow On operations because of “the promises that Ray and Leanne made to [him] in words to the effect ‘you will benefit from this in the future when you own the lot’.”
Discussions about Blake’s inclusion in the partnership increased in about May 2011. Blake and his parents agreed to attend Rural Biz, an agri-business company, “to assist in finalising a way forward”. This meeting took place on 2 August 2011 in Dubbo. Blake says that during the course of the meeting “a number of positions were agreed”. The following conversation occurred:

Ray: “I want Blake included in the business immediately…it is his birth right…he has proved himself as an asset to the business.”
Leanne: “I agree.”
Lynn and Kathy: “I think that Blake should own and operate the business. He should get the trading assets and all the debt and half of Westray. Ray would take a step back and work for Blake. He would keep Bulgandramine and his ute. This would mean that Leanne and Ray don’t work together.”
Blake: “I don’t think Ray will like giving up ownership and working for me.”
Lynn: “It can work. My husband works for our son. It just takes a bit of getting used to. Leanne will get half of Westray all of Lynlee and the SAMM stud.”
Leanne: “I want to retain the SAMM stud and the car. I’ll pay my own insurance.”
Ray: “I prefer the merinos anyway so I’m fine with that.”

A letter dated 4 August 2011, recording what was said at this meeting, was later prepared by Kathy Sims. That letter is in the following terms:

“Dear Ray,
I am writing to give you a record of your family meeting held at our offices on 2 August 2011. Present at the meeting were Ray Cannon, Leanne Tremain, Blake Cannon (after lunch), Lyn Sykes (chair) and Kathy Sims.
The meeting opened with development of a genogram (attached) and a brief history of the family’s acquisition of farming land. Land purchases were Lynlee (1980, 246ac, $63,500), Westray (1985, 680ac, $204,000), Garryowen (1989, 465ac, $165,000) and Bulgandramine (2000, 2134ac). Bulgandramine was acquired through inheritance of 498ac and a debt of $190,000 to Ray’s siblings, payable over 10 years. Approximately $60,000 of this debt has been paid to date.
Lyn clarified that the main task for the meeting was to discuss a division of property between Ray and Leanne. She asked each person about their hopes and concerns for the meeting.
Ray: Ray’s hopes and concerns were:
• find a reasonable resolution
• both to move forward
• keep the stud intact
• maintain equity and economy of scale

Ray is full time on the farm, and is the stud master. Bulgandramine is a 3 generation Cannon property. He currently lives in the B&B unit on Westray.
Leanne: Leanne’s hopes and concerns were:
• find a fair and equitable outcome
• hold half of the land and be a farmer

• make her own financial decisions
• get a conclusion to the current situation
• move forward
• ensure her parents are not involved in the property settlement.

Leanne is teaching at the Juvenile Justice Centre in Dubbo and lives in the homestead on Westray.
ISSUES DISCUSSED
Agreed values of assets and liabilities
Following discussion, a listing of assets and liabilities at agreed values was developed and is attached.
Land values were considered again following the lunch break and confirmed as the values to be used during the rest of the meeting.
Basis for division of assets
It was agreed that:
•    the inherited portion of Bulgandramine (approx. 500ac) will be held by Ray and will not be included in division of assets
•    Leanne and Ray each have entitlement to 50% of the remaining net assets.
•    farming land will pass to Blake.

Division of assets
After discussion, it was agreed that some farming assets should transfer to Blake now and the remaining assets be divided between Ray and Leanne.
It was agreed that assets (not including vehicles currently being used by Ray and Leanne) will be divided as shown in the table below:

Ray

Leanne

Blake

Land:

Westray/Garryowen

529,000

529,000

Lynlee

350,000

Bulgandramine

990,500

Livestock:

   SAMM stud

126,000

   Balance of livestock

622,000

Plant & Equipment

358,000

Water Licence
________ _________
175,000

TOTAL ASSETS

   990,500

1,005,000

1,684,000

Less: Debt

1,011,700

NET ASSETS

$990,500

$1,005,000

$672,300

Ray and Leanne will have ownership for the vehicles they are currently using. Leanne will assume responsibility for insurance of her vehicle from policy renewal in 2012.

Future management
It was agreed that:
• Blake is to have full management control of the farming business, with full decision making control
• Leanne can continue to run the SAMM stud on Westray.

Housing
It was agreed that:
•    Leanne and Blake will give Ray a written undertaking that, while they own Westray, he can continue to live rent free in the B&B unit on Westray for as long as he wants.
•    Leanne will give Blake a written undertaking that, while she owns Lynlee, he can continue to live in his current house on Lynlee rent free for as long as he wants.
•    Blake and Leanne will discuss any planned improvements to either of their houses and all costs are to be recorded.
•    Leanne and her partner will make a contribution to electricity costs to be calculated as 50% of the cost of electricity on Lynlee (Blake’s house).

Other agreements
It was agreed that:
•    Each person will organise a binding financial agreement with their partner that partners will not claim on farming assets in the event of relationship breakdown or death. All present agree that if children are born, the relevant binding financial agreement is to be reviewed to ensure that assets may pass to children at the death of their father/mother.
•    Ray and Leanne are to seek advice on the effects of proposed asset transfers on their likely eligibility for future Age Pension.
•   Current partnership is to pay costs of implementing all decisions made today.
•    Ray will contact David Hando (accountant) for his help in implementing the decisions and for a recommendation of a solicitor (preferably in Dubbo).
•    Details of these arrangements will be kept confidential to the family and professional advisors. The message to be given to others will be ‘We have reached a tentative agreement, and the details are confidential.’

Lyn asked each person to rank their feelings at the beginning and end of the meeting and to provide a closing comment.

Beginning

End

Closing Comment

Ray

6/10

5.5/10

It has gone reasonably smoothly, with some concessions made

Leanne

1/10

1/10

Mixed emotions – it’s a big change

Blake

6-7/10

6-7/10

Figures are only a part of it, we need to work out how to keep everyone happy. It will be a new challenge

Would you please check this record carefully and let me know of any errors by 19 August 2011. If no alterations are requested, it is agreed that this is a true record of the meeting.
Lyn and I thank you for the opportunity to work with your family and wish you all the best in implementing your decisions.
Kind regards”

Shortly after the 2 August 2011 meeting with Rural Biz, Blake said that he became “increasingly concerned that Leanne was not going to make good of [sic, on] the agreement reached” there. He said that he “was worried because nothing had progressed since the meeting”. Blake said he was “also worried because during the Rural Biz [meeting] [he] had agreed that [he] would take 50% of the land of Westray and all of the debt and if Ray or Leanne decided to sell Lynlee or Bulgandramine [he] would not have a say in it”.
Blake decided to speak to Ray about his concerns. Ray said:

“Let’s have another meeting. This time with John De Bomford. He is experienced in these sorts of matters. He knows and understands our business and financial position and would probably be happy to help if we asked him.”

A meeting was arranged for October 2011. The following conversation took place at the meeting:

Leanne: “Our debt level is over one million dollars. I don’t think there is a good future in farming. How would we ever pay it back?
John De Bomford: “There are people out there that are geared a lot higher than this place and the ones that have been consistently profitable I can count on one hand. It has been tough as you guys know.”
Leanne: “I’m worried that the agreed split in the Rural Biz meeting was unfair on Blake because he is taking all the debt and if he hit some bad seasons and commodity prices fell it would make it very difficult to service the debt he didn’t create. I would prefer the business split into two smaller businesses so Ray and I were independent of each other. I will have a partnership with Blake where he works half the time and he can spend the other half of his time with Ray in that partnership.”
Blake: “We already went over this in the Rural Biz meeting. It isn’t practical and it would be an administrative nightmare for me to manage and I don’t think it would be commercially viable. If that’s the way it’s going to be I would rather get paid what I’m owed and leave and not return.”
John De Bomford: “It would be silly to lose your economies of scale as it would threaten both entities’ overall viability. It would ensure you both struggled to make ends meet for the rest of your lives probably.”
Blake: “I did have concerns initially about the Rural Biz changes as I was exposed to other people potentially selling Lynlee and Bulgandramine out from under me because I’d have no ownership in them. If this occurred there would be nothing I could do about it and then I would have all these animals with nowhere to run them as well as nowhere to live. I would much prefer an interest in all properties so that no one can sell anything, without all parties agreeing. This would make sure no irrational decisions were made.”
Ray: “Blake needs to be included in the business immediately. It’s his birth right and he has proven himself as an asset to the business during a very tough period. He deserved [sic, deserves] to be remunerated for his efforts over the last three and a half years and this inclusion into the partnership and land would ensure he is adequately compensated and would give him a long-term future in the business and the industry. Farming is a young person’s game and as Leanne and I are nearing retirement age it makes sense for succession planning to occur now. We have both always told the boys it would be theirs in the future.”
John De Bomford: “Succession is something that is viewed very favourably by banks as it shows a long-term future plan for the business and gives them confidence, particularly with someone like Blake who is young, degree qualified and very commercial. This is rare in farming as he could command significantly more elsewhere.”
Leanne: “I’m happy to include Blake in the partnership. I’d be happy to give him a third share in my assets and land and if Ray did the same he would be an equal partner.”
Ray: “I’ll give him half of mine.”
Blake: “I don’t need half and it would be simpler to keep it all the same and have an equal three way partnership and division of assets.”
John De Bomford: “It would certainly be cleaner.”
Leanne: “If the business is to remain as one then Blake would need to be the manager. He would need to have full decision making authority but should consult with the other partners on important matters.”
John De Bomford: “So the agreement now is that Blake will be included in the partnership and land as an equal partner.”
Leanne: “I’m not comfortable with Ray being able to spend my money. Blake should become sole signatory on the cheque book with Ray and me going off the cheque book. Once that happens you two can go on a direct debit system for small wages until the business could afford to increase the wages. This would occur when Blake deemed it could be afforded.”
Ray: “I’m not going off the cheque book in my own business.”
Leanne: “Blake should be in charge. It’s his time.”
John De Bomford: “It will reduce conflict between Ray and Leanne if Blake managed the money.”
Blake: “We will have a direct debit system for wages so it’s not like you’re not going to have any money.”
Leanne: “How would the bank view this arrangement in terms of the mortgages?”
John De Bomford: “The security isn’t changing, just the ownership of the land so they won’t have a problem at all with Blake’s inclusion in the land. It will be viewed as a major positive. The major concern is their interest payments being met.”
Ray: “Should we meet with the bank to discuss the changes we are going to implement with them?”
John De Bomford: “I wouldn’t yet. It’s important to maintain bank confidence until you guys have sorted out how you’re going to implement it. I would speak to the accountant and solicitor before the bank.”
Leanne: “Would a family trust or partnership be the best way to go for the restructure for the entity.”
John De Bomford: “You should speak with John Curley. He has done some work for me on some of my companies.”
Leanne: “What about stamp duty on the transfer of the title to Blake. Would those portions lose pre-GST status or not.”
John De Bomford: “I think you better meet with John Curley about this as well.”
Leanne: “What about Danielle? You will need to get a prenuptial agreement.”
Blake: “What about Peter?”
Leanne: “Peter is harmless and Ray will probably have a partner in the future as well that [sic, who] we will need to consider.”
John De Bomford: “Bottom draw [sic, drawer] loans can be used as a protective measure. This is a loan that can be called in to protect kids from a divorce. It is there only as a last resort protection mechanism and can a loan called in as a priority to divorce proceedings if necessary. John Curley in Dubbo specialises in this area and will be able to help with Blake’s inclusion into the business. I will arrange the meeting.”
Leanne: “I’ve heard of bottom draw loans. Bruce Hodges has one for his kids to protect them.”

Shortly after this meeting, Leanne wrote to Blake in the following terms:

“Ray and I have agreed to
‘Bulgandramine’ + shed block
Ray’s
‘Harvey View’ & ‘Garry Owen’ (known as Westray)
Leanne’s
‘Lynlee’
Tenants in common
50% share each
Leanne to keep her superannuation about $50,000
Her shares *Sigma
* BHP trade of 1,000 shares
Money in her bank acc. About $60,000
Each retain 50% share in stock, plant & anything else.”

On 21 November 2011, Blake, Leanne and Ray met with John Curley in Dubbo. Blake said that this was to discuss “rollover provisions, current ownership, proposed transfers, CGT implications, securing homes, asset protection, and business restructuring and binding financial agreements”. Blake said that he understood that the focus of the meeting was to implement what “we had agreed upon” at the meeting with John De Bomford and in particular what was the best way for him to be included in the partnership while ensuring that the assets were protected.
Following that meeting, John Curley wrote to Leanne, Ray and Blake in the following terms:

“Dear Leanne, Ray & Blake,
In our meeting Monday 21st November we discussed marriage breakdown & rollover of assets, succession planning.
You have been meeting with John De Bomford, who has been acting as mediator and succession planner. You have asked what would be the results if this plan is implemented. These are notes from our meeting & subsequent investigations on my part re queries raised.
Rollover provisions
Leanne asked if land owned pre capital gains would retain its status if the marriage rollover provisions of subdivision 126-A applied. The answer is yes! The relevant provision is:
S126-5(6)
For a disposal case where the transferor *acquired the asset before 20 September 1985, the transferee is taken to have acquired it before that day.
However I would need to check with a tax lawyer but I cannot find any provision that would allow a rollover to Blake. If the pre CGT land is to go to Blake the pre CGT status is probably lost. On transfer any share to him would be at current market value. But this is not likely to be an issue??
Current ownership & proposed transfers
•   Lynlee is pre CGT land & currently owned as joint tenants by Ray & Leanne. Any transfer to the other party would retain its pre CGT status. Not sure if I have the correct transferee. If it is to go to Blake then refer to preceding paragraph.
•   Westray is pre CGT land & currently owned as joint tenants by Ray & Leanne. The desired aim is to transfer Ray’s share to Blake. As mentioned no capital gain occurs & Blake’s share will be valued for CGT purposes at current market value. Leanne’s share remains pre CGT.
•   Garryowen is post CGT land and owned as joint tenants by Ray & Leanne. Ray’s share is to go to Blake. No tax should be payable due to small business reliefs available under Division 152. Approximate calculations below.
•   Bulgandramine land was pre CGT & owned by a Pty Ltd company of the same name. 10 years ago it was transferred to Ray. As such it transfer value should be the correct cost base for CGT calculations. I think from my notes the average transfer value was $116/acre. Ray to keep 498 acres & 800 acres to be transferred to Blake – this will be a CGT event but will not have any stamp duty due to relief under intergenerational transfer.

Capital Gains Tax
Using Garryowen as an example no CGT should be paid. You have advised that you pass both tests of ‘net assets’ under $6 million & business turnover below $2 million.
As such, the market value of Ray’s share is $550,000 (I am not sure if this is the value of Ray’s 50% share or the total value of Garryowen). Its cost base is approximately $165,000. Therefore the gain is $385,000. As the asset is ‘active’ we can take both 50% general discount & 50% active asset reduction leaving a taxable gain of $96,250.
Assuming Ray has not used any of his lifetime retirement limit of $500,000 no tax will be payable as he can further reduce it by using the Retirement Exemption. Fortunately you do not have to retire to access this. For nil cash to be outlaid you do not need to be over 55 years of age. Ray advised this was the case.
Securing homes
Leanne was fearful that transfers of land to Blake could put at risk her security over her own home. This can be addressed by 2 simple methods:
1. Use of life insurance on Blake, to be held by Leanne. The proceeds from this could be used to pay to Blake’s estate.
2. Use of peppercorn rent on home used by Leanne such that whoever held land would be purchasing/taking over with Leanne having full rights to her residence.

The second method should also be used by Ray, as he will be living on land owned by Leanne & Blake.
Securing Blake’s asset protection
I mentioned that land transferred to Blake could be tied up with a loan. The aim of this is to ensure that only any increase in property value would become subject to a claim in the event of a split up. Indeed this can also be used to secure Leanne’s title over some of the land that her house is on. The counter side of this are that they are potential estate assets that may be subject to a claim by a new or existing partner. So careful consideration is needed.
Business Structure & proposed change
The business is currently conducted by a 50/50 partnership between Ray & Leanne. There is currently 1 million of debt. It was suggested Blake should be admitted as an equal 3rd partner. Due to rollover relief for both stock & plant this can be achieved at nil tax cost (in simple terms Blake needs to hold a 25% SHARE AT MINIMUM for this to be effective).
The issue of personal drawings was discussed but no amounts were set. I strongly suggest that regular amounts are paid from the partnership account to members personal accounts – the partners are then free to use these funds however they like. Currently Leanne is working and has stated she does not need drawings. In the event she lost her job however she would also need to draw from the partnership. These amounts need to be documented and I would strongly suggest a partnership agreement is drawn up. In a good year partners may feel a bonus is warranted. This should go to all partners equally. If you feel this should be different then I suggest your share’s [sic] of the partnership should reflect this.
Partnership agreement
As suggested above it would be very sensible to document your expectations of how the arrangement would work. In normal close knit families this is rarely done. However partnerships between different families have least trouble when partnership agreements are in place. Examples of things you may wish to include in the partnership are expected work commitment, holidays, remuneration and decision making ie does the decision need to be by majority or should it required agreement by all.
Solicitors
I have mentioned to you that it is imperative that you each receive independent legal advice. Only in this way can you insure the courts will sign off on your divorce arrangement. I will attach ATO advice on this matter as the CTG rollover is only available if all correct steps are made.
I have further considered solicitors and believe it should matter little who you should consult because if any of you are not committed to the arrangement then it will fall through. However I have provided a few names of solicitors that can provide the above:
• Andrew Graham (partner) from Peacocke Solicitors – phone …
• Brian Goodall (partner) from Booth Brown & Samuels, or
• Kane Olney (partner) from Booth Brown & Samuels – phone …
• Evan Jones from Lovett & Green – phone …

Evan is probably a little far as he is located at Warren, but as I was dealing with him recently I can vouch that he is capable.
I could provide more names and will do so if needed but these should suffice.
Powers of Attorney & Wills
Once you progress further you will need to attend to these as well.
Binding Financial Agreements
These were also discussed and their limitations in ensuring that assets are passed to intended people. These should be discussed when visiting the solicitor.
Next Step
I believe the first step is to make contact with a solicitor once you are comfortable about the likely outcome.
Regards”

Blake said that “as a result of this meeting, [he] continued to believe that [he] will be included in the partnership”.
In January 2012, Ray suffered a heart attack while on holidays in Sydney.
The farming season for 2012 was a drought year. Blake was not paid a wage but continued to inject money into the partnership from Jordan’s stud “to solve the cash flow issues with the partnership”.
During the time that Ray was recovering, the discussions around the restructuring of the partnership were brought to a standstill. However, Blake’s workload increased significantly.
At paragraph 122 of his affidavit, Blake said this:

“I knew that in order to preserve the family farm and my future, based on the promises that had been made to me, I had no option but to increase my workload. During this time, Leanne did not contribute financially or physically to assist the partnership.”

In early 2012, Leanne moved from Westray to Dubbo to live with her then partner Peter Maher. Blake said that he has seen Leanne at Peak Hill rarely since then.
In about May 2012, Blake and Ray had lunch with their Rabobank manager, Charles Perry, in Dubbo. In early October 2012, Blake and his parents met with John De Bomford at the Westray showroom. The following conversation took place:

John De Bomford: “We are here to discuss the progress since we last met. John Curley has given me a summary of what was discussed with him. It sounds like all the agreements that were made are positive and can be implemented in a tax efficient and low cost manner particularly the stamp duty relief due to the fact that it was for intergenerational transfer of land. This is a key point and a huge saving which makes it very doable. He also clarified for me that marriage rollover provisions would maintain their pre CGT status, which I remember was one of your concerns Leanne. So that’s positive as well. CGT will not be detrimental to anything we have proposed, which is obviously helpful. Housing security which was one of everyone’s original concerns can be overcome with life insurance and the use of peppercorn rent. So that augers really well for the future. He told me he mentioned the next step would be a discussion with a solicitor.”
Ray: “I have spoken to a solicitor and he told me that it would be reasonably simple to implement the transfer of land and not too expensive.”
Leanne: “John Curley was good but tried to overcharge us by billing research
of some of my questions but I sorted that out.”
Ray: “My health and the wedding plans have slowed the partnership talk down a bit but I have not changed my mind. I still want Blake included as a 1/3 partner in the business and land.”
Leanne: “I haven’t changed my mind either and I think Blake is doing a fantastic job in difficult circumstances.”
John De Bomford: “I think things have improved significantly and speaking with many clients recently at the sales there was a lot of positive commentary about the stud.”
Blake: “That is nice to hear but I want to get moving on the restructuring. I have been working for four and a half years in the business for no wages and I was told last August I would be included immediately and that was 15 months ago. In the meantime, I have worked seven days a week, most weeks, something which the partners are not doing, and it is frustrating. I can’t continue to run on fresh air.”
Ray: “You are working for yourself.”
Leanne: “The sacrifices will be worth it in the future.”
John De Bomford: “That is understandable and the reason we are here today is to sort these kinds of matters. It shouldn’t be allowed to drift along. It’s not in anyone’s best interests for that to occur.”
Leanne: “It’s more important to me that things are done right. I’ve worked hard my whole life and put every cent I’ve had into the place. I need security because I don’t want to wind up being destitute.”
John De Bomford: “It is important to overcome this issue by having everyone clear on the direction you guys have said you wish to head in. So that everyone is clear we had Westray to Leanne, Bulgandramine to Ray and Lynlee to be tenants in common. The partnership assets such as stock, plant and equipment, water licences are split 50/50 with a restructure to include Blake as an equal partner across all asset classes, including the land. The transfers to be based along portion lines.”
Leanne: “I need to keep the car.”
Ray: “That’s fine I’ll have the ute.”
Leanne: “I want to keep my super as the farm already has most of it and Ray hasn’t paid me back from the fodder shed.”
Ray: “It was your idea to build it.”
Leanne: “You promised that the farm will pay me back when it could.”
Blake: “That is true I remember that.”
Ray: “Well it hasn’t been able to yet. I don’t have any super as it all went to the farm but that would be fine if she will agree to move forward with what we have already agreed upon.”
Leanne: “I want to keep all the shares.”
Ray: “You mean the family share portfolio.”
Leanne: “No, they are mine.”
Blake: “You can’t have a divorce and want half of the other person’s assets and yours remain yours. Divorces don’t work that way.”
John De Bomford: “What does the share portfolio consist of?”
Leanne: “I have 1,000 BHP, some Woodside, Sigma and Oz Minerals. Ray owns half the Oz Minerals the rest belong to me.”
Ray: “That sounds fair.”
Blake: “That is ridiculous.”
John De Bomford: “What is the value of the portfolio roughly?”
Leanne: “I’m not sure.”
Blake: “You must have a rough idea.”
Leanne: “I haven’t looked recently.”
Ray: “What was it the last time you looked?”
Leanne: “I can’t remember.”
Ray: “If this is going to be a sticking point, I’m prepared to sacrifice the shares for Blake’s benefit.”
Leanne: “I want to keep all the cash in my bank account.”
Ray: “The family cash at the bank? You must be joking.”
Leanne: “It’s my tutoring money. It’s the only money you never got your hands on hence why I still have it and you’re not getting any of it.”
Ray: “Some of the child endowment money that was supposed to be spent on the boys not [sic, got] siphoned into your personal bank account.”
Blake: “You made a significant portion of that money tutoring in this building for cash while the business was paying all the expenses. You have to be a bit fair here.”
Ray: “I will move forward without it as long as I get a guaranteed rent free life tenancy.”
Leanne: “That doesn’t worry me.”
Ray: “I want that in writing.”
Leanne: “Okay.”

At paragraph 130 of his affidavit, to which no objection was taken, Blake said that at the conclusion of this meeting, he believed “the agreement reached” was as follows:

To speak with a solicitor

Meet with the accountant Mark Job to get advice on whether a partnership or family trust was the most suitable

To make the necessary changes at Rabobank by maintaining the existing account just by adding Blake’s name to it and changing the signatories on the account to only him

Ray was to have Bulgandramine

Leanne was to have Westray

Lynlee to be tenants-in-common

The partnership to remain intact

Blake was to become an equal partner across all asset classes including the land

Business would pay restructuring costs

Blake was to assume managerial control

Leanne was going to continue to teach

Ray drafted a note following the meeting in the following terms:

“2nd Meeting John De Bomford Oct 2012
Leanne and I have agreed,
Bulgandramine – Ray
Westray to Leanne
Lynlee – Tenants in Common
Stock Plant – 50/50
Ray to take life tenancy on current residence
Move to restructure partnership to include Blake on 1/3 capacity of all assets
If this happens, then
Leanne keeps her Super (50k)
Family cash at Bank (60k)
Family Share Portfolio (50-60k) BHP Sigma WPL OZL
Family Car Mazda 6 (30k)”

Leanne also drafted a note following the meeting as follows:

“My primary objective is to keep the farm operational so I do not wish to sell any land. Ray’s sol. has advised Blake that the Family Court will sign off on shared property. Thus it would appear that a settlement involving me taking W & sharing the Lynlee block with Ray is possible. I realise this is not a completely equitable solution but Ray is unlikely to agree to anything else as he wants ownership of a block with a house. This is an option I feel I can live with. I need to reach a conclusion soon as economic & health issues are becoming increasingly significant.”

Blake said that following this meeting, Leanne said to him on a number of occasions that “the Family Court will never sign off on Lynlee as tenants-in-common”. John De Bomford is said to have commented on this saying, “If that is the case you can just transfer it to Blake”.
At paragraph 137 of his affidavit, Blake then recites the details of an undated conversation in the following terms:

Ray: “I don’t have a problem with that.”
Leanne: “I don’t agree with that. I want to have a meeting with Andrew to discuss this. He will be able to help as he has gone through something similar.”
Blake: “This isn’t fair. You are getting more than your fair share and we are covering all your responsibilities while you contribute nothing.”
Leanne: “What return on investment am I getting for 1.5 million?”
Blake: “You don’t own the farms, they are financed so we are paying them off for you. We are improving them at the same time improving capital gain and paying your bills. You get a direct benefit from what we do. We get no benefit from what we do?”

Andrew Tremain is Leanne’s first cousin and an investment banker. On 16 February 2013, Blake and his parents took part in a meeting chaired by Mr Tremain at the Westray homestead. The meeting lasted about six hours. It included the following dialogue among those present:

Andrew Tremain: “The reason I have agreed to help is because I care about everyone in this family and thought it was in everyone’s best interests to have things resolved sooner rather than later. I am grateful for the support that you, Leanne and Ray, gave me when I was younger and I hope I can help now. Blake can’t continue to live on the smell of an oily rag and presumably he wants to have a family of his own to support in the near future and the current arrangement here won’t allow that. If Blake isn’t getting a wage then he needs to be compensated in equity.”
Blake:   “We are approaching 5 years since I have been paid anything and that can’t continue. It’s straining on Danielle’s income and reducing our quality of life. I was assured years ago that I had a future here. Danielle and I have made major career and life decisions based around verbal assurances and inducements I was given by both of you.”
Ray: “You do. I am ready to have you included as a 1/3 partner in the business and land and I have been for years. We have already agreed to include you on the portion lines since it was first formally discussed with Rural Biz.”
Leanne: “I’m concerned about the future. I don’t want to end up homeless.”
Ray: “That’s ridiculous.”
Andrew Tremain: “Leanne you are going to be far more financially secure in the future than most people with what is coming your way. If you’re ever homeless there will be people living in tents on the side of the Newell Highway before it gets to that.”
Blake: “If Leanne wants out of the partnership we need to work out how to compensate her so she leaves the business immediately.”
Leanne: “I’ve only ever wanted to be a farmer. I want to remain part of the partnership.”
Ray: “Partners contribute. What are you going to do?”
Leanne: “I’m not going to put any of my money into the partnership unless you get a job and then I’ll match you dollar for dollar.”
Ray: “That won’t be happening.”
Blake: “What are you going to contribute then?”
Leanne: “I’ll work weekends and school holidays on the place to make a contribution and when the debt was paid out you can send me one third of the profits.”
Andrew Tremain: “Obviously the wages paid would need to be reflective of the individual time and effort put in.”
Ray: “We have already agreed several times to include Blake in the partnership. Why don’t we stop wasting our time here and find out if Leanne is going to honour her commitment she has given him.”
Leanne: “I am happy for Blake to have a third share of the partnership and the land but I want protection from Danielle.”
Blake:   “I want protection from Peter.”
Ray: “We have already spoken about a bottom drawer loan.”
Blake:   “Danielle has already agreed to sign anything required, has Peter? You’re just stalling. I can’t keep working for free. Soon you’ll have to figure this out on your own.”
Leanne: “If that happened the whole lot would have to be sold.”
Ray: “That’s not your call to make. You don’t own the whole lot and you told Blake he had a future here because you wanted to keep the whole farm operational with him to manage it as it would all be his in the future. If you didn’t he wouldn’t be sitting here now. So don’t try and blackmail him now…”
Andrew Tremain: “Let’s all remain calm and move on to what was agreed with John De Bomford late last year.”
Ray: “I get Bulgandramine, Leanne was to have Westray and Lynlee to be tenants in common. I get rent free life tenancy on the cave. Business to be split three ways to include Blake. Blake is to be a 1/3 partner in the partnership and all the land.”
Leanne: “Blake to be manager. Ray and I will go off the cheque book and Blake will run it. The restructure will be paid for by the business and will occur after the land transfers are completed and the Family Law Court matters are finalised but I don’t think the Family Law Court would sign off on tenants in common on Lynlee. I should have Lynlee because Ray has more raw acres and therefore more potential for capital gain.”
Blake:   “We are here to discuss and sort out reality not potential and that wouldn’t be fair we have already been over this many times. Based on your valuations that would see you having 54.5% of the land with no consideration for his [sic, my] inheritance.
Andrew Tremain: “I’m not sure the Family Law Court will approve any property remaining tenants in common, they like separation.”
Ray: “I’m not giving up that property as well or I will have no house in my name. The Family Law Court will rubber stamp whatever we agree upon. We don’t need them dictating to us.”
Blake:   “It isn’t a fair split, he has conceded far more than you at every mediation session.”
Leanne: “If I get Lynlee, the partnership restructure can happen immediately and I’ll give Ray the written guarantee for rent free life tenancy. At the conclusion of the meeting, we agreed to meet with Mark Job to enact the new structure.”
Blake:   “If you were to get Lynlee you would need to contribute $30,000 to the Elders working capital account.”

Blake said that the minutes of that meeting were taken in the following terms:

“16/2/13
Terms of Agreement
Original Agreement – in presence of Ray Cannon, Leanne and Andrew Tremain
Independent valuations Leanne got
Leanne Westray ($1,215,000) Lynlee ($300,000) ($1,515,000)
Ray ($1,250,000) Bulgandramine + life tenancy in current residence Woolshed Block $46,667
50:50 on all stock & plant/equipment until restructure occurs
$1,265,556 Leanne 54.5% land Ray 45.5% land
30k into Elders account (Leanne to contribute token for additional land)
Partnership restructure (3 Partners Equal, Blake 1/3 each property)
Money into Jordan’s headstone.
Contribute to partnership by working weekends/school holidays, helping as partner.
She retained her superannuation all family cash at Bank & share portfolio valued at approx. 100k-150k
Business would pay all restructuring fees
Family car to Leanne solely
All houses are on Leanne’s blocks, 2 brick houses, 1 cottage & Ray’s residence
Ray to have life tenancy on his current residence.”

Following that meeting, in about March 2013, Blake and Leanne had another conversation in these terms:

Blake: “I am putting a lot of faith in your word. I don’t have anything in writing about my inclusion in the farm and I don’t want to be screwed out of it.”
Leanne: “Why would I try to screw you out [of] it?” Jordan is gone there is no one else.”

Blake said that on 13 April 2013, [which I think should have been a reference to 11 April 2013] he and his parents had a meeting with Mark Job in the Peak Hill office. Blake said that he understood the meeting was to agree on the most suitable structure to include him in the partnership. During the meeting, the following further conversation occurred:

Mark Job: “A partnership would suit your circumstances better than a family trust because it was simpler, fairer and cheaper to create”.
Blake: “The business is rarely profitable and taxation concerns are [sic, are not] that high on the agenda at the moment”.
Mark Job: “This will give you greater flexibility and wouldn’t have costly workers compensation and fringe benefit tax implications.”
Blake: “We can set up a direct debit system for wages be set at $350 per week for Ray and $250 per week for me until the business could afford to pay more.”
Mark Job: “That sounds low.”
Ray: “That is more than I’m getting now.”
Blake: “Anything will be more than I’ve got since 2008. We will increase it in the future as the business gets stronger.”
Leanne: “Once all debt is paid off you can send me one third of the profits each year.”

On 30 April 2013, Mark Job sent out a letter to Blake and his parents entitled New Business Structure and Succession Planning in the following terms:

“Dear Ray, Leanne & Blake,
Re: New business Structure and Succession Planning
We refer to the above and our meeting on 11th May [sic, April] 2013 when we discussed the inclusion of Blake in the business and the transfer of farming properties.
With regards to the business structure in conducting the day to day operations of the farm, I believe a Partnership of the 3 parties would be the most efficient and cost effective.
Please note this does not give the partners the protection of the corporate veil, as if the business was conducted through a company and/or family trust with regards to creditors. However the vest bulk of any liabilities that the business owes are secured by mortgages held by the banks, which would give the business no protection.
In addition if you decide to operate as a partnership, a partnership agreement should be drawn up by your solicitor. Your partnership agreement should not only cover split of profits, but provision for dissolution of partnership and how disputes are to be settled.
Succession planning with regards to farming hand. Hand can be transferred to Blake directly or transferred to a family trust controlled by him, this hand will have to be valued by a registered valuer to comply with Australian Taxation Law.
Items to be considered with regards to any hand transfers will be the amount of debt that will be needed to be transferred. Any loan documents that need to be drawn up between the parties. Provision for any capital gain tax that may apply to the transaction, you do have access to the small business concessions which will limit this liability.
Aged Pension Consideration.
Under the correct rules for aged Pensions any land that is transferred for no consideration, will be treated as a gift for 5 yrs, and will be inducted as an asset for that period.
There are some exceptions from the assets test for primary producers. If the individual has owned and operated the property as a farmer for more than 20 yrs the property title that includes the principle [sic] place of residence (house), can be excluded from the assets test. (Please note that there is a limit on the value of that property).
We would suggest that you should seek legal advice as to which land would be subject to gifting rule and which titles may be excluded from the aged pension.
Yours faithfully
Peter Woods & Associates”

In June 2013, Blake and his father met with Charles Perry from Rabobank. Blake said that during this meeting “we discussed my inclusion into the partnership and land”. The following conversation also took place:

Blake: “We’ve met with mediators and discussed my inclusion into the partnership and the land.”
Ray: “Farming is a young person’s game. It will be good to have Blake as a trading partner and some land of his own.”
Charles Perry: “When you’ve got it finalised let me know and I will help you out as best as I can. Despite the difficulties the debt is being reduced and we have confidence that you will be able to continue.”

In July 2013, Blake and his mother met with Charles Perry at Rabobank. Blake said that the purpose of the meeting was to sign the necessary documents for him to become the sole signatory on the partnership cheque book so as to replace both Ray and Leanne. During this meeting, Blake said to Mr Perry “we will be finalising the restructure of the business and I will let you know as soon as the land is transferred”.

That same month, Blake called into Leanne’s former partner’s home in Dubbo to collect some items for the farm, when he was on his way home from football training. They spoke as follows:

Blake: “When are you going to start contributing and helping like we had agreed?”
Leanne: “I’m not putting any time or money into the farm again. It’s a bottomless pit that has taken my time and money for over 30 years and I’m over it.”
Blake: “Hang on, you weren’t over it when you were crying in the meeting with Andrew and saying you needed the two properties because all you have ever wanted to be was a farmer.”
Leanne: “I’m not silly.”
Blake: “You know that wasn’t what we agreed upon, so what am I supposed to do then.”
Leanne: “Figure it out because it will be yours down the track. You will benefit a lot more from the farm than I ever will.”

In August 2013, Blake and his father had lunch with Charles Perry at the Rabobank National Ram Show and Sale. They had a conversation that included these words:

Ray: “We are in the process of Ray’s inclusion into the partnership and getting some land.”
Charles Perry: “Let me know if there is anything I can do to assist the process.”

Blake said that shortly after his daughter Sloan was born, relationships became strained. In May 2014, shortly before Leanne was due to leave for an extended holiday, he spoke to his mother as follows:

Blake: “You better come over to home before you go and get this stuff sorted out and meet Sloan.”
Leanne: “Your kid will be raised by a pack of black fellas. I’ll never have anything in common with it.”
Blake: “My mistake. I’ll never ask you again.”

Leanne’s mother died in June 2014. Leanne’s sister told Blake that his wife was not welcome at the funeral on 1 July 2014.
Several months later, Mark Job spoke to Blake:

Mark Job: “Leanne contacted us back on 30th June to cancel the new partnership. I called Ray to let him know.”
Blake: “No one has mentioned anything to me. This is my first time I’ve heard of it. What does that mean?”
Mark Job: “There is nothing much we can do if she is not agreeable.”

Shortly after this, Blake spoke to his father:

Blake: “I’ve just spoken with Mark Job and he said Leanne cancelled the partnership. He said he spoke with you about it.”
Ray: “I don’t remember talking to him about that.”

Mark Job wrote the following letter on 10 July 2017:

“Raymond Cannon
Lynlee
…
To whom it may concern
RE: RO Cannon, LM Tremain & B Tremain-Cannon
ABN: 31 393 786 800
Our office conducted an interview with the above clients on 13 April 2013. Discussed at that meeting was setting up of a new business structure, a new partnership to replace an existing partnership RO Cannon & LM Tremain. The partners in that new partnership included Ray and Leanne plus Blake their son.
Before the new partnership could commence trading, I advised that they would have to consult the bank involved, to open a new bank account. In addition they would need to consult a solicitor for a partnership agreement. Please see attached correspondence dated 30 April 2013, which was a summary of some of the matters raised at the meeting.
Our office arranged the application for an Australian Business Number (ABN) for the partnership which was issued on 18 April 2013.
Our office was advised later by Leanne by telephone, that she did not want to be partner in the new partnership and wanted it wound up. Since the new partnership did not have a bank account and conducted no business to my knowledge, it was unable to operate.
Following that telephone call, our office applied for the ABN to be cancelled, we received correspondence from the ATO on 4 July 2014 that the registration was cancelled. (Please see attached)
All Business Activity Statements and Income Tax returns lodged with the Australian Taxation Office were NIL returns.
I have attached 5 activity statements that were lodged with the ATO and historical details for ABN 31 393 786 800.
Yours sincerely,
Mark Job
Peter Woods & Associates”

Blake said that in September 2014, Leanne attended the sales with her father and purchased rams. Blake was around that time still continuing to work, in his words, “based on the agreements that were previously made”. Blake was unaware that Leanne had cancelled the new partnership until about October 2014.
Blake said that, prior to this, Leanne had had multiple opportunities to speak with him or Ray and advise them what she had done. Blake spoke with his mother on 1 and 2 July 2014 and she did not indicate that she had contacted Mark Job and cancelled the new partnership. Blake said that he continued to work on a low wage in the belief that the new partnership was “progressing”. He said that he could have been paid significantly more, on an industry standard wage, but was under the belief that debt reduction was in the best interest of the new partnership of which he was “soon” to be part.
On 4 June 2015 and 6 July 2015, Blake emailed his parents as follows:

“Emailed 4/6/2015 [Handwritten]
Dear Mum and Dad,
I am writing to seek clarification on our agreed business restructure and property transfer issues. These issues have remained outstanding since late 2011. I note they were revised/discussed in 2012 with John De Bomford and Rural Biz and later with Andrew Tremain in early 2013 before our accountant in May 2013.
I believe it is time this expediently resolved for the betterment of everyone concerned. My contribution over the past 7 years has been undeniably significant and remains uncompensated. I have now forgone over $750,000 in wages and superannuation not to mention other opportunities that would not have had as much associated negativity and stress involved. I gave up that income and did not pursue other opportunities based on the promise you both made me to transfer 1/3 interest in properties and partnership to me.
I need to know when the 1/3 transfer will occur as promised. I have always operated the business in good faith with a strong focus on ethical and moral behaviour and it would be extremely disappointing if that were to my personal detriment. These unresolved issues are a threat to the success of the business and are a matter of urgency to resolve our finance issues for our pending review. I would appreciate a reply within 7 days.
Blake
* * * * * * * * * * * * * *
Emailed 6/7/2015 [Handwritten]
Dear Mum,
I have not received a response from you to my last letter.
Dad has indicated he is willing to honour the agreement we have reached.
I do not understand why you have not responded to my letter and otherwise confirmed that you will honour the agreement we have.
I have obtained legal advice, the effect of which is that I can approach the Supreme Court and have Orders made giving effect to our agreement. I am advised that cost could be anywhere between $50,000 - $100,000 depending on the way you approach those proceedings, but if I am successful you will have to pay most of my legal costs.
I do not want to go to court, but I cannot remain in this state of limbo any longer. If you do not confirm that you will honour the agreement by 13 July 2015, I will start the proceedings in the Supreme Court.
I hope that course is not necessary and I look forward to your early and favourable reply.
Blake.”

Leanne responded on 13 July 2015 as follows:

“Dear Blake
Thank you for your undated requests. The property is currently being dealt with by the Family Law Court, under the Consent Order: DUC244/2008 dated 4/7/13 and until that is finalized I have no opportunity to make any arrangements.
Mum
13/7/15”

Blake responded as follows:

“23/7/15
Mum
I do not understand why the Family Law proceedings between you and Dad are preventing the agreement that I have with you and Dad being finalised. However, if you would confirm that you will honour the agreement with the transfer of a 1/3 interest in the properties and partnership assets to me, as Dad already has, I will consider not taking any further action at present.
Blake”

In late July 2015, Charles Perry recommended that Blake speak to Robert McGorman, a senior rural financial counsellor about resolving some issues. Leanne spoke to Mr McGorman separately. Mr McGorman wrote to Ray and Blake on 29 July 2015 in the following terms:

“Proposal
Wed 29/07/2015 4:43PM
Ray & Blake
This email is common to all parties – with only the blue section being the proposal from the other party. By utilising email both parties get a written copy of the other parties’ proposal at the same time.
As far as the process is concerned
1. I have met with both parties and each has had an opportunity to outline their particular side of the situation
2. Each has put forward a proposal to bring resolution to the ongoing saga
3. Proposal will be put to each party for their consideration – the purpose of this email
4. Negotiations can then take place to try to reach agreement
5. Arrangements will need to be made with Rabo (and any other parties) depending on whether an agreement is reached or not
The matters of agreement to date are
- Both parties agree
ס This has gone on long enough and it’s time to bring matters to a resolution
ס A 3 way partnership is no longer an option
- Both parties recognise that if the current consent orders are not agreed to, then the matters will have to be sorted out by the legal system – which is both costly and time consuming.
In terms of the proposals there are 2 issues
a. The end point
b. The process to get there
At this stage the proposals focus on the end point. If there is agreement on that then the process to get there can be discussed / arranged. If the end point is not agreed then how we might get there is not a worth [sic] consideration.
Rays proposal for the final outcome is:
- That the spirit of the family agreement as discussed in April 2013 be honoured, and adjusted to allow for a 2 way partnership (rather than a 3 way partnership) and the properties be signed over as follows:
ס Westray 2/3 Leanne and 1/3 Blake
ס Lynlee 2/3 Leanne and 1/3 Blake
ס Bulgandramine 2/3 Ray and 1/3 Blake
- Leanne’s share in Westray & Lynlee to be paid out by the new partnership over time with discussions regarding leasing of property in the meantime.
- New partnership to take over all debt
- Leanne to be paid out her share of the Cannon Tremain Partnership
- In the event that this were the agreement Blake would make no further claim for property.
Leanne’s proposal for the final outcome is:
- The consent orders dated 4th July 2013 be honoured and property be distributed as follows
ס Westray 100% Leanne
ס Lynlee 100% Leanne
ס Bulgandramine 100% Ray
ס Water Access Licence 100% Leanne
ס Machinery as outlines [sic] in the orders
ס Livestock as outlined in the orders (with some consideration being given to swapping commercial sheep for stud sheep to keep the stud together)
ס Debt 50/50 split
ס Cannon Tremain Partnership to be wound up
ס Ray’s occupancy to be the Farm Stay unit only
ס Leanne will operate or lease her properties.
- In the event that this is not implemented by 31st August 2015 all properties, livestock, machinery to be sold, debt to be repaid and the balance to be split on a 50/50 basis between Ray and Leanne.
Now I realise this is not what either party had in mind but before any decision is made, make opportunity to consider the pros and cons of the proposal and consider if any of the proposal is acceptable – bearing in mind the time and money that the legal option will cost.
I will phone you tomorrow when I get a chance to discuss further so any negotiation that is needed can begin.
Regards,
Robert McGorman
Senior Rural Financial Counsellor
Rural Financial Counselling Service – Central West” (Emphasis added.)

The current position for Blake, as at 25 August 2017, was as follows. He remained the sole signatory on the cheque book. He worked 75 hours per week. He managed the entire business including three sheep studs. He ran a dry land cropping program and lamb feed lot, commercial sheep and wool enterprise.
In terms of running the business, Blake said that he did all the book work, BAS returns, payroll and liaising with the accountant and the bank manager, bank reviews, budgeting, income projections and market research on when and how best to market commodities. He dealt with suppliers, clients, truck drivers, agents and any other necessary third parties. His brother-in-law now works for the enterprise with Ray so that Blake has more time to work on, as opposed to in, the business. He now devotes more time to the stud website, social media profile and marketing.
Danielle works as a permanent teacher at Peak Hill Central School working 2 to 3 days per week. They now have two children. Ray lives on Westray. Leanne lives in her home in Dubbo.

Ray’s affidavit

Ray swore an affidavit on 27 April 2018. Despite the fact that Ray is a defendant, he was not independently represented and supported all of Blake’s claims. For presently relevant purposes, nothing to which Ray has deposed contradicts or derogates from Blake’s evidence to which I have just referred in some detail.

The pleaded case

Blake’s case is pleaded in terms of his amended statement of claim filed on 3 May 2017. In general, Blake contends first that the defendants are bound by an agreement made with him to bring him into a new partnership with them on specified terms, including the transfer to him of legal interests in certain properties owned by his parents on and from which the partnership business is conducted and as an equal partner with them. Blake contends secondly that he is entitled to the same benefits as those that he would receive if the contract were performed upon the basis that he altered his position to his detriment in reliance upon his parents’ promises that they would include him in their partnership and transfer legal interests in their properties and that it would in such circumstances now be inequitable and unconscionable for his parents to resile from their promises.
It is instructive before proceeding further to examine the precise way in which these contentions are pleaded. Paragraphs 12 to 29 of the amended statement of claim are in these terms:

“12. In 2008 and 2009, following commencing work for the defendants on the Family Farm and for the Partnership, on a number of occasions, the plaintiff told the defendants that he required to be compensated for the work he was doing for the defendants on the Family Farm and for the Partnership otherwise he would return to his career and stop working for the defendants on the Family Farm and for the Partnership.
13. The defendants induced the plaintiff to continue working for them on the Family Farm and for the Partnership telling him that he would receive an interest in the Partnership and Family Farm and/or be otherwise properly compensated.
14. Relying on the inducement, the plaintiff continued to work for the defendants on the Family Farm and in the Partnership to his detriment, the detriment being that he did not return to his career and did not receive an income similar to that which he would have received had he returned to his career.
15. The plaintiff worked with Jordan on a property known as West Timbie, owned and/or operated by the first defendant’s parents. The work was for two days per fortnight for which the plaintiff and Jordan received payment.
16. In 2010, on a number of occasions, the plaintiff told the defendants that he required to be compensated for the work he was doing for the defendants on the Family Farm and for the Partnership otherwise he would return to his career and stop working for the defendants on the Family Farm and for the Partnership.
17. The defendants induced the plaintiff to continue working for them on the Family Farm and for the Partnership as he would receive an interest in the Partnership and Family Farm and/or otherwise be properly compensated.
18. On 2nd April 2011 Jordan died.
19. Following Jordan’s death, the plaintiff again considered his future with regard to working on the Family Farm and for the Partnership.
21. Both the defendants were aware that the plaintiff had offers of employment in Newcastle with businesses known as Hays and Chandler Macleod respectively.
22. The plaintiff did not have a legal interest in the Family Farm or the Partnership and had not and was not being paid a wage. In effect, at the time of his brother’s death, the plaintiff had foregone (approximately) in excess of $300,000 in income.
23. From 2011 to 2013, on a number of occasions following Jordan’s death, the plaintiff told the defendants that he required to be compensated for the work he was doing for the defendants on the Family Farm and for the Partnership otherwise he would return to his career and stop working for the defendants on the Family Farm and for the Partnership.
24. The defendants induced the plaintiff to continue working for them on the Family Farm and for the Partnership as he would receive an interest in the Partnership and Family Farm.
25. Relying on the inducements the plaintiff continued to work for the defendants on the Family Farm and in the Partnership to his detriment, the detriment being that he did not return to his career and did not receive an income similar to that which he would have received had he returned to his career.
Particulars
25.1 In or about October 2011 the plaintiff and the first and second defendants attended a meeting chaired by John De Bomford who was the first and second defendants’ former bank manager and a former financial rural counsellor. The meeting took place at the second defendant’s residence on Westray.
25.2 During the course of the meeting, it was agreed that the defendants would transfer a 1/3 interest in the Family Farm and the Partnership (including plant and equipment, assets and stock) (the Transfer) to the plaintiff on the basis that the plaintiff would continue to work on the Family Farm and for the Partnership (the Agreement).
25.3 Reliant on the Agreement, the plaintiff continued to work for the defendants on the Family Farm and in the Partnership to his detriment, the detriment being that he did not return to his career and/or did not receive an income similar to that which he would have received had he returned to his career.
25.4 On or about 21st November, in a meeting with John Curley, the Agreement referred to in paragraph 27 above [sic!] was confirmed.
25.5 There were further discussions between the plaintiff and the defendants which culminated in a further meeting in or about February 2013 with Andrew Tremain, the first defendant’s first cousin (an investment banker) during the course of which the Agreement was confirmed.
25.6 On the afternoon of 11 May [sic, April?] 2013 a meeting was held with the defendants’ accountant, Peter Woods & Associates where the Agreement was confirmed and it was further agreed that a new partnership would be created between the plaintiff and the defendants to be known as the Cannon, Tremain and Tremain-Cannon partnership. The partnership was created and its ABN is 31 393 786 800.

26. The plaintiff continued to work for the defendants reliant on the Agreement and to his detriment.
27. Whilst the first defendant has confirmed the Agreement the first defendant, despite repeated requests, has failed to give effect to the Agreement.
28. The second defendant has confirmed that he will give effect to the Agreement, but cannot do so without the first defendant doing so.
29. Further, and/or in the alternative, the plaintiff says the defendants are estopped from denying the Agreement and/or not giving effect to the Agreement as the Plaintiff acted to his detriment in reliance on the inducements, representations and the Agreement as pleaded above.”

The case pleaded in contract does not in terms specify the consideration allegedly passing from Blake to his parents. It would appear, however, to be accepted on both sides that Blake’s contention is that he worked on the family farm for little or no reward and that his parents’ agreement to compensate him in the way he alleges was made in consideration of his performance of that work.

Leanne also denies Blake’s subsequent promises or assurances that he would be made an “equal partner” or “included as a one-third partner in the business and land”. However, even if made, those proposals did not simply mean that Blake and his parents would become tenants-in-common in equal shares of the land and partnership assets. That is because these discussions continued to evolve as the several meetings already referred to make clear.
As an example, the Rural Biz proposal on 2 August 2011 was that Blake should “get the trading assets and all the debt and half of Westray”. That is, Blake would co-own Westray with Leanne.
At the meeting in October 2011, according to John De Bomford’s oral evidence, the parties only discussed transferring Lynlee. In cross-examination, John De Bomford said “Lynlee was [the] property that was the one that was sort of discussed as the simplest, easiest transaction, it was a separate title, he was living there, so that was the property that was, was discussed for transfer”. John De Bomford said he did not recall any discussion about Ray and Leanne transferring a third of Westray, Bulgandramine or Lynlee.
During the meeting with Mr Curley on 21 November 2011, Ray said for the first time that he was “happy to give [Blake] a third of Bulgandramine”, meaning Blake would co-own Bulgandramine with Ray, although it is unclear what the remaining division of property would be. According to Mr Curley’s letter sent after the meeting, Ray was to transfer his half-share in Westray to Blake and to transfer 800 acres of Bulgandramine land to Blake.
At the meeting in October 2012, according to John De Bomford’s oral evidence, the only property that was discussed as being transferred to Blake was Lynlee. Shortly following the second De Bomford meeting, Blake suggested transferring Lynlee to him rather than it being owned by Leanne and Ray as tenants-in-common. Leanne did not agree with this. The issue of Lynlee was never resolved.
At the meeting on 16 February 2013 with Andrew Tremain, the possibility of Blake having a third share of the partnership and land was discussed, but the proposed form of his ownership was not clarified. Leanne’s concerns about the prospect of her property passing to Danielle as part of a divorce settlement if that occurred were also not finalised. Under cross-examination, Andrew Tremain rejected the suggestion that Leanne agreed to move ahead with the partnership straight away in exchange for Ray giving up his claim in relation to Lynlee.
Finally, Mark Job’s letter following the meeting of 11 April 2013 refers to “[i]tems to be considered with regards to any land transfers”, but does not specify what land, if any, would be transferred to Blake.
For an estoppel to be found, the representation must be sufficiently clear and unambiguous. In Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [35] and [147]-[157], the High Court held that a landlord’s statement to tenants that they would be “looked after at renewal time” was too ambiguous to create an estoppel requiring renewal of the lease. Similarly, in Palagiano v Mankarios [2011] NSWSC 61, White J held at [10] and [43] that the deceased’s statement to his son that “It’s all been worth it” and “You will own this home one day with [your brother and sister]” were insufficiently clear to found an estoppel, but were merely statements of the deceased’s testamentary intentions at the time. A representation may, however, be sufficiently clear “if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely”: Galaxidis v Galaxidis [2004] NSWCA 111 at [93]. The quality or specificity of the assurances may bear on questions of reasonable reliance and detriment: Delaforce at [55].
I have no doubt that Blake was led to believe that the family farming business and the lands from which it operated would one day be his. Several references in the evidence make that clear. Many conversations refer to the future. Blake referred to one of them quite early in the piece: "As a result of what Ray and Leanne said to me, I stayed and worked on the farm because I was led to believe that I would be included in the partnership and land or paid a wage as the family farm would eventually be mine." (My emphasis) However, that statement and statements to the same effect are in my view clearly insufficient to found the estoppel upon which Blake relies.

Reliance: reasonable reliance

Nor am I satisfied that Blake reasonably relied upon anything that Leanne said or did.
Blake bears the onus of establishing that he relied on Leanne’s alleged representations, otherwise referred to in this case as Leanne’s promises or assurances. Reliance is a fact to be found; it is not to be imputed: Sidhu v Van Dyke at [58]. Blake must show that he reasonably acted differently because of the representation or that “but for” the representation he would not have acted as he did: see Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106 at [45]-[59].
Leanne referred to Gillett v Holt [2000] EWCA Civ 66; [2001] Ch 210 at 232, cited in Sion v NSW Trustee and Guardian [2012] NSWSC 949 at [108]:

“There must be sufficient causal link between the assurance relied on and the detriment asserted. The issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it. Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded – that is, again, the essential test of unconscionability.”

Leanne maintained that Blake did not rely on Leanne’s alleged promises and assurances, or if he did, his reliance was unreasonable. Leanne made the following detailed submissions.
First, the most significant decision Blake made was to give up a well-paid job in Newcastle, return to the family farm with Danielle and begin working for the partnership for no wage. That life-changing decision happened in May 2008, prior to any of the alleged promises or assurances.
Secondly, Blake knew his parents did not get along and could not work together. Rural Biz expressly recommended a proposal that “would mean that Leanne and Ray don’t work together”. Andrew Tremain told him from about May 2008 that it is impractical to run a family farm as one business with divorced parents. It was unreasonable to rely on any promise or assurance requiring an ongoing business relationship between Leanne and Ray. Making Blake the sole signatory on the partnership chequebook was unlikely to solve the problem when Leanne and Ray would still have to make business decisions together as equal partners.
Thirdly, Blake asserts that in 2010 Leanne told him she would “leave everything to [h]im”, that Ray was “fucked” and should get an off-farm job, and that Blake should run the farm with his cousin Toby Cannon. If those statements were made (contrary to Leanne’s evidence), they strongly suggested Leanne would be keeping “everything” during her lifetime and not transferring it to Blake. Leanne’s comments about Ray also show she had no intention of an ongoing partnership with him. Thus, as at 2010, there was no suggestion on the table (if there ever had been) of an equal partnership or of any ongoing business relationship between Leanne and Ray.
Fourthly, Blake’s primary reliance evidence is set out above at [19] and [234]. Leanne suggested that it suffered from the following difficulties:

Any “evidence of what a witness would have done in a hypothetical situation [is] characteristically if unintendedly self-serving and influenced by what has happened in fact, [and so] is rarely of much worth”: LCY Pty Ltd v Ma [2017] VSCA 383 at [86].

At the time Blake allegedly changed his position (by continuing to work on the family farm after Jordan died, rather than returning to Newcastle), the 2010 discussions had already occurred and there was no suggestion on foot that land would be transferred to him or that he would be made a partner while Leanne was alive. Objectively, he had no reasonable expectation to that effect. Any reliance in April 2011 or thereafter with respect to an equal-thirds partnership was unreasonable.

Blake was not relying on any promise or assurance that he would be given a one-third interest in the land and partnership assets but upon vague assurances of being “included” in the partnership and land in an unspecified sense and at an unspecified time, or that he would be “paid a wage” in an unspecified amount at an unspecified time and that the family farm “would eventually be [his]”. References to “eventually” were as consistent with the receipt of benefits after his parents died as with what might happen during their lifetime. Leanne submitted that reliance on such vague assurances was unreasonable, and in any event the assurances were devoid of relevant content such as specified shares of the land and partnership assets.

Blake confirmed in cross-examination that he and Danielle “made the call” to stay in Peak Hill prior to the Rural Biz meeting:

“Q. Was it at this point you committed to living at Peak Hill, was it?
A. Post my brother dying, once, once the funeral and that sort of thing had occurred and somewhat subsided, we’d had family discussions about - I was being contacted from my - from my former employer and, and the Chandler McLeod recruitment agency as well. We had to make a call on whether we stayed in Peak Hill or whether we left.
Q. You made the call?
A. We made the call because of the assurances I was given from both parents that we were going to progress along, trying to solve their divorce but keep the properties intact, and then from - I had a clear, I guess, pathway forward which with a, a meeting was booked with Rural Biz, and I was told I would be included in the partnership. So, once I got that assurance, Danielle sent that email and we, we changed the direction of where she’d be teaching because of that.
Q. You made that call before the meeting at Rural Biz?
A. Once I had the assurance the meeting was going to happen, we made that call, because I trusted my parents, yes.
Q. There was no assurance to you, at that point, that you would be given a third of the land, was there, at that point?
A. The one-third figure wasn’t discussed at that point, no. But there was an assurance I’d be brought in, yes.
Q. To the partnership, generally?
A. Brought into the partnership, yes.”

This occurred prior to any promise of a one-third interest in the partnership. Leanne submitted that Blake’s decision was based on vague “assurances” from Leanne and Ray that he would be “included” or “[b]rought into” the partnership in a general sense.
Fifthly, Blake had strong incentives, both financial and sentimental, to ensure the continuation of the partnership on the family farm:

In October 2011, Blake told his former boss David Walker: “This farm means a lot to me and my family. I want to be able to pass it on to the next generation.”

After Ray’s heart attack in January 2012, Blake said he increased his workload “to preserve the Family Farm and [his] future based on the promises that had been made to [him]”.

Leanne submitted that Blake also had other reasons to stay. He was getting by with money from playing rugby league and living rent free on Lynlee with some of his living expenses paid by the partnership. Ray and Leanne had agreed he should be paid for his work on the farm, even though the partnership could not afford to do this until 2013. Moving house back to Newcastle would have been inconvenient.
Sixthly, the quality or specificity of assurances may bear on reasonable reliance and detriment: Delaforce at [55]. As already noted, the proposals for ways that Blake might be included in the partnership kept changing, and Leanne’s alleged assurances were too vague reasonably to be relied upon.
Seventhly, Blake could not reasonably rely on promises or assurances allegedly made at the six meetings. They took place while the Federal Circuit Court property settlement proceedings were still on foot. Blake was aware of those proceedings, which would determine Leanne and Ray’s ownership of assets. Blake could not reasonably rely on any promises or assurances about those assets while the outcome of the proceedings was unknown. Ray accepted that he needed to know how his and Leanne’s assets would be divided before they could develop a plan to include Blake.
The meetings were also lengthy, with no formal minutes kept, and new details or options continued to emerge and change. Blake could not reasonably rely on what was supposedly promised unless the promises were clearly documented and confirmed. The meetings were patently preliminary: the parties were exploring options and seeking advice as to the consequences, not committing to outcomes. Statements made in that tentative and provisional context could not reasonably be relied upon, particularly given the need to obtain further legal and accounting advice. It could not reasonably be assumed that such advice was a mere formality or that an identifiable proposal would become a reality.
Leanne has also said, and I accept, that Ray and Blake were pressuring Leanne during these meetings to agree to their “succession planning” agenda. Blake could not reasonably rely on any assurances apparently given by Leanne unless she otherwise confirmed them. On the contrary, Leanne made it clear in writing what her position was, and it did not conform to Blake’s version of what these meetings produced.
There was significantly no agreement as to how the mortgages over the farming lands would be discharged, refinanced or otherwise dealt with as part of any proposed transfer to Blake or how the caveats would be dealt with, how much debt Blake would take on, or the terms of any loan agreement. The partnership had a notorious struggle with debt that could not easily or obviously be resolved. This was not a case where the objective circumstances or alleged promises left no room to doubt that matters would proceed.
Nothing at any of the meetings reached the stage of an agreement requiring only that the details be committed to writing. The parties never consulted a solicitor to implement any of the alleged promises, even after the consent orders of July 2013, or to seek independent legal advice. The terms of any partnership agreement were never settled and unsurprisingly no written partnership agreement was ever prepared. Effectively none of the suggestions or recommendations of the experts approached for assistance was ever followed or adopted. Anything discussed at the meetings remained preliminary, incomplete and provisional at best. It was unreasonable for Blake to place any reliance upon such a high level of uncertainty.
Significantly, shortly following Leanne and Ray’s conciliation conference on 31 October 2012, they both told Blake of Ray’s offer to buy out Leanne’s interest in all land and partnership assets for around $1.5 million. Blake says he was “shocked” to hear of this proposal as it contradicted earlier proposals. Leanne submitted that any earlier proposals could not, at this point, reasonably be relied upon unless they were again discussed and confirmed.
Blake conceded that after the final meeting with Mark Job in April 2013, there was still a series of issues that needed to be resolved before any transfer of land was to occur.
Blake says that after the meeting with John Curley on 21 November 2011, he “continued to believe that [he] will be included in the partnership”. That was at best a hope, not a reasonable belief. There is no evidence he relied upon that belief.
Leanne made the point that there is no documentary evidence to support Blake’s reliance case. Even though Blake wrote to his mother in the terms earlier recorded, he did not say that anything he did or refrained from doing was as the result of his reliance upon Leanne’s assurance that he would be given one-third of the land and an equal interest in a partnership.
Finally, Leanne emphasised that there was certainly no reliance on promises of a one-third interest in the partnership and the land after July 2015. At that time, Mr McGorman sent an email setting out the parties’ respective positions, including Leanne’s position that the property be split in accordance with the consent orders and that no transfer be made to Blake. In cross-examination, Blake acknowledged that any work he did on the farm since he received the email was in the knowledge that Leanne did not wish to transfer any property or partnership asset to him.
Blake submitted, in response to Leanne’s assertion that her promise was not the sole inducement to him to stay on the property and that this must undermine any claim that he relied on the promise, that was made, that it is sufficient if the representation played a part in the decision: Sidhu v Van Dyke at [71]. Blake maintains that that is clearly what occurred here.
In my opinion, it was not reasonable for Blake to have expected, based upon anything said or done by his mother at any time, that she would give him a significant share of her land holdings and partnership assets. Blake’s return to Peak Hill was understandable in the highly emotionally charged atmosphere that attended his brother’s fateful diagnosis. I have no doubt that Blake reasonably felt a strong familial obligation to assist his parents with their business and their marriage at a time of significant stress, and with their son suffering from a terminal illness.
As years passed, two things appear to me to have occurred. First, Blake became more and more involved in working on and indeed managing the family farm. He invested significant time and energy for little initial reward in attempting to resurrect a business from what might neutrally be described as a difficult position. He saw his efforts bear fruit and his financial position correspondingly improved.
Secondly, Blake’s successes in reinvigorating the family farm have brought his relatively uncertain and undocumented status into sharp focus. It was apparent to me, having observed Blake in the witness box and having listened closely to his evidence, that he felt that his efforts were both underappreciated by his mother and deserving of some greater recognition. A review of the several meetings that have figured so prominently in these proceedings bears witness at the very least to Blake’s concern to put in place some formally structured arrangement with immediate effect, as opposed to what was likely to have been (and what in my uninstructed estimation probably remains) the certain albeit distant prospect of inheriting the family farm.
Blake has throughout these proceedings consistently emphasised his mother’s intelligence and strength and independence. These things were evident when Leanne gave evidence. I believe her denials that she promised or assured Blake that she would take steps to transfer land that she owned to him during her lifetime if he came back to the family farm or, more likely from Blake’s point of view, if he stayed there and helped. I am satisfied that it was unreasonable for Blake to treat anything his mother said as an assurance or promise or representation that she would do so. Indeed, Blake’s own evidence was that Leanne said to him in 2010, “The only person that does well in farming is the person who gets to sell it. That will be you and not me as I will leave everything to you.” (Emphasis added.) Without intending to be unnecessarily critical or pejorative, I consider that Blake stayed and worked on the farm because it suited him to do so. I am satisfied that nothing to which Leanne gave even grudging support ever amounted to a plan or scheme or proposal that was sufficiently certain or concrete to have permitted Blake reasonably to have assumed it was going to occur.

Detriment

As Blake’s submissions uncontroversially assert, for his estoppel case to succeed he must also show detriment. His pleaded detriment is “that he did not return to his career and did not receive an income similar to that which he would have received had he [done so]”. Leanne submits, and I accept, that this requires a comparison between Blake’s hypothetical salary away from the family farm if he had pursued his original career and the actual income and financial benefits he received as a consequence of his decision to continue working on the family farm. Leanne emphasised that the benefits Blake received because of his decision to stay on the family farm include:

wages, bonuses and other financial benefits received from the partnership, and, since 2016, received from a new partnership with Ray which operates partly on the family farm;

wages for agricultural work in and around Peak Hill (such as at his maternal grandparents’ property and casual work for Elders), which he would not have received but for his decision to stay on the family farm;

money received from renting out the cottage on Westray, and rent and electricity contributions from Peter Maher (Leanne’s former partner) when he was living on the family farm; and

money received from playing rugby league in or around Peak Hill, bearing in mind that Blake would also have played for a team if he had remained in Newcastle.

Leanne summarised these benefits in a series of tables, ultimately reduced to incorporate some of Blake’s criticisms, to the following:

Year

Income

Other benefits

Total

2011-2012

$42,086.00

$17,200

$59,286.00

2012-2013

$13,982.13

$17,200

$31,182.13

2013-2014

$18,100.00

$17,200

$35,300.00

2014-2015

$20,000.00

$25,000

$45,000.00

2015-2016

$118,934.22

$25,000

$143,934.22

2016-2017

$89,955.80

$25,000

$114,955.80

2017-2018

$92,458.03

$25,000

$117,458.03

2018-2019

$118,147.18

$25,000

$143,147.18

2019-2020

(half year)

$145,123.89

$12,500

$157,623.89

TOTAL

$658,787.25

$189,100

$847,887.25

AVERAGE (8.5 YEARS)

$77,504.38

$22,247

$99,751.44

Blake contended, in response to Leanne’s submission that detriment can be evaluated by comparing the amount of income that Blake might have earned in an alternative career with the amount of income that he has obtained from any source since 2011, as “contrary to principle”. He similarly characterised Leanne’s contention (relying on the same figures) that the relief he claimed is disproportionate to any detriment he may have suffered or that the detriment has been diminished by reason of these payments.
In the first place, the question of detriment involves the position as at 2015, when Leanne resiled from the agreement, not the position today. The question is whether, as at 2015, when the cause of action, if any, arose, Blake had suffered detriment by acting on the assumption induced by Leanne. Blake submitted that he had plainly suffered detriment. At the most basic level, there was a clear disparity between what Blake could have earned in an alternative career, plus additional income in his spare time from playing football (on a broad estimate, hundreds of thousands of dollars) and the amount he had earned in the period from 2011 to 2015 from the partnership (which would be less than $100,000). But secondly, and more importantly, the question of detriment is not restricted to this arithmetical comparison: Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [21]-[22], [26]-[27]. Here, the detriment included not only the monetary loss but Blake's loss of the opportunity to pursue an alternative career, to build his own life and acquire his own property.
The figures contained in Leanne's tables for the period after July 2015 are simply irrelevant to the estoppel claim. In Giumelli, the detriment was the detriment suffered by Robert up to the point at which the defendants resiled from their promise. This was the period during which Robert continued with the partnership. Once the defendants resiled from the promise, Robert left the farm and any income obtained by him from any source thereafter was simply irrelevant. Here, Blake has remained on the farm notwithstanding that Leanne has resiled from her promise. However, according to Blake, any benefits received by him from the partnership after July 2015 are irrelevant to the estoppel claim.
In any event, according to Blake, the figures put forward by Leanne in the tables in Section H of her closing written submissions do not accurately represent benefits obtained by him from the partnership. Blake dealt with these matters in a Schedule attached to his final written submissions.
In my opinion, the key to resolving this aspect of the dispute is the fact that after Leanne, according to Blake, resiled from her promise, Blake, unlike Robert in Giumelli, did not leave the farm and return to Newcastle but instead remained where he was and continued on with his work, ultimately in his role as the manager of the family farm. He remained living where he was enjoying the same advantages, such as rent free accommodation, that he had enjoyed from the start. Blake also did so from 2015 until the hearing of the proceedings and he conspicuously continues to do so. Even if it is technically correct to say that the benefits in the post-2015 period are irrelevant, which I doubt having regard to the fact that they are derived from the same or similar endeavours, the very fact that Blake did not leave Peak Hill is itself a reliable indicator that he was not sustaining or suffering any detriment in fact. It is difficult for me to accept that Blake’s position is detrimentally different than it would have been but for Leanne’s alleged assurances or representations having regard to the fact that he has not sought physically to extricate or remove himself from the position in which he finds himself. Any suggestion that Blake may have chosen to remain where he is so as not to frustrate any possible order in his favour that may have required Leanne to comply with or make good upon her alleged assurances is not to the point.
As Blake has submitted, reliance and detriment are matters to be determined by reference to inferences to be drawn from the whole of the evidence. I consider that the calculation of any detriment Blake may have suffered requires a comparison between his hypothetical off-farm income, for example, if he had stayed and worked in Newcastle, with the actual income he has received as a result of his decision to stay on the farm.
The 2015–2019 period generated the highest annual income at Peak Hill for Blake. It is very important in the present case to draw a distinction between a disappointed expectation, which I have instead found to be a disappointed hope, and the sustaining or incurring of a detriment caused by the disappointment. Blake’s so-called detriment does not flow from Leanne’s failure to fulfil his alleged expectation, even though fulfilling it may be one way of compensating him for it. Blake bears the onus of demonstrating that he altered his position to his detriment so that he has been and is now measurably worse off than if he had stayed working in Newcastle. In my view, the evidence does not support that contention. Blake has suffered disappointment according to his own lights, but has not relevantly suffered any detriment.
Although my conclusions will by now be apparent with respect to Blake’s estoppel claim, I should note specifically with respect to the issues identified at [146], that I find as follows:

Did Leanne and Ray, on any of the relevant occasions, induce Blake to believe that he would receive an interest in the partnership and the family farm or that Leanne and Ray would transfer a one-third interest in the partnership and family farm to him? No.

Were the alleged inducements sufficiently clear and unambiguous to support an estoppel? No.

Did Blake rely on the alleged inducements to his detriment? Blake neither relied upon the inducements, nor did he do so to his detriment.

If so, was such reliance reasonable? On the assumption, contrary to my finding, that Blake relied upon the inducements, such reliance would not have been reasonable.

Is it unconscionable in all the circumstances for Leanne to resile from the inducements (if made)? No.

Other matters

Leanne has raised other matters in response to Blake’s claim. These include the contention that the relief claimed is disproportionate to the detriment alleged, that specific performance of a promise to include him as a partner amounted to a collateral attack upon orders made by the Federal Circuit Court, which require a dissolution of the Cannon-Tremain partnership through an equal division of assets, and an allegation that Blake is disentitled to equitable relief by reason of his own improper conduct in the observance and discharge of fiduciary obligations imposed upon him in his control and use of the partnership’s funds. Having regard to the conclusions I have reached, it is unnecessary, and in the case of the alleged improper conduct preferable not, to consider these matters further.

Conclusion

It follows that the proceedings must be dismissed with costs.

*************

Decision last updated: 03 June 2020

Medium Neutral Citation:	Tremain-Cannon v Tremain [2020] NSWSC 646
Hearing dates:	9-13 December 2019
Date of orders:	02 June 2020
Decision date:	02 June 2020
Jurisdiction:	Common Law
Before:	Harrison J
Decision:	(1) Judgment for the defendants. (2) Order the plaintiff to pay the defendants’ costs.
Catchwords:	CONTRACTS – where son of defendants alleges the existence of an agreement that he would be given a one-third interest in agricultural lands owned by his parents and a similar interest in the partnership conducted from the land – where son alleges terms of the agreement to be that these benefits would be given to him if he gave up a career in Newcastle and returned and remained to assist his parents by working on the farm at Peak Hill following the death of his brother – whether promises were made at all – whether terms of the alleged agreement were clear and unambiguous – whether terms sufficiently certain to constitute an enforceable agreement – whether agreement alleged made in fact ESTOPPEL – promissory and proprietary estoppel – where son alleges that he gave up a promising career in Newcastle and returned to the family farm – whether son remained working on the farm for little or inadequate remuneration in reliance upon representations or assurances from his parents that if he did so he would be given a one-third interest in agricultural lands owned by his parents and a similar interest in the partnership conducted from the land – whether representations or assurances made as alleged – whether son altered his position to his detriment in reliance upon the representations or assurances – whether defendants resiled from the position consistent with the making of the alleged representations or assurances – whether it would be unconscionable for the defendants not to fulfil the son’s expectations by acting in accordance with the alleged representations or assurances
Legislation Cited:	Conveyancing Act 1919 (NSW)
Cases Cited:	Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Beck [2016] NSWCA 218 Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 Construction Technologies Australia Pty Ltd v Doueihi (2014) 17 BPR 33,457; [2014] NSWSC 1717 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 Delaforce v Simpson-Cook (2010) 78 NSWLR 483 Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247 Evans v Evans [2011] NSWCA 92 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Galaxidis v Galaxidis [2004] NSWCA 111 Gillett v Holt [2001] Ch 210 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 LCY Pty Ltd v Ma [2017] VSCA 383 Lukaszewicz v Polish Club Limited [2019] NSWSC 446 Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674 Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106 Palagiano v Mankarios [2011] NSWSC 61 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Sion v NSW Trustee and Guardian [2012] NSWSC 949 Sledmore v Dalby [1996] EWCA Civ 1305; 72 P & CR 196F Waaka v Francois [2017] NSWSC 744 Watson v Foxman (1995) 49 NSWLR 315 Zagame v Zagame [2014] NSWSC 1302
Category:	Principal judgment
Parties:	Blake Tremain-Cannon (Plaintiff) Leanne Margaret Tremain (First Defendant) Ray Owen Cannon (Second Defendant)
Representation:	Counsel: H K Insall SC with R M O’Brien (Plaintiff) S Balafoutis SC with D Stretton (First Defendant) Solicitors: Campbell Paton & Taylor Pty Ltd (Plaintiff) Warwick McCarthy & Co. Solicitors (First Defendant)
File Number(s):	2016/210278
Publication restriction:	Nil

Ray	Leanne	Blake
Land:
Westray/Garryowen	529,000	529,000
Lynlee	350,000
Bulgandramine	990,500
Livestock:
SAMM stud	126,000
Balance of livestock	622,000
Plant & Equipment	358,000
Water Licence	________	_________	175,000
TOTAL ASSETS	990,500	1,005,000	1,684,000
Less: Debt	1,011,700
NET ASSETS	$990,500	$1,005,000	$672,300

Beginning	End	Closing Comment
Ray	6/10	5.5/10	It has gone reasonably smoothly, with some concessions made
Leanne	1/10	1/10	Mixed emotions – it’s a big change
Blake	6-7/10	6-7/10	Figures are only a part of it, we need to work out how to keep everyone happy. It will be a new challenge

Year	Income	Other benefits	Total
2011-2012	$42,086.00	$17,200	$59,286.00
2012-2013	$13,982.13	$17,200	$31,182.13
2013-2014	$18,100.00	$17,200	$35,300.00
2014-2015	$20,000.00	$25,000	$45,000.00
2015-2016	$118,934.22	$25,000	$143,934.22
2016-2017	$89,955.80	$25,000	$114,955.80
2017-2018	$92,458.03	$25,000	$117,458.03
2018-2019	$118,147.18	$25,000	$143,147.18
2019-2020 (half year)	$145,123.89	$12,500	$157,623.89
TOTAL	$658,787.25	$189,100	$847,887.25
AVERAGE (8.5 YEARS)	$77,504.38	$22,247	$99,751.44