Walsh v KC & WL Brain Pty Ltd

[2023] NSWDC 38

District Court

New South Wales

Medium Neutral Citation:

Walsh v KC & WL Brain Pty Ltd [2023] NSWDC 38

Hearing dates:

28 February 2022, 2-4, 7-9 March 2022, 11 May 2022, 15-18 August 2022.

Date of orders:

3 March 2023

Decision date:

03 March 2023

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

I find that the Defendant is entitled to the proceeds of the Dalree rice crop harvested in April 2017. I shall hear Counsel as to appropriate orders concerning the disposition of these proceedings.

Catchwords:

CONTRACT – REAL PROPERTY LAW – FIXTURES – FRUCTUS NATURALES – FRUCTUS INDUSTRIALES – Rice crop planted by farmer before exchange of contracts for sale of farm – Whether oral contract concerning rice crop – At time of exchange of contracts and completion of sale of farm rice crop growing on the farmland – Rice crop not excluded from fixtures incorporated in sale – Documents provides to purchaser to enable him to take the proceeds of the rice crop - Purchaser entitled to rice crop – Whether system for sale of seed between farmer and SunRice severed rice crop from the land.

Legislation Cited:

Conveyancing Act 1919 (NSW)

Personal Properties Security Act 2009 (Cth)

Cases Cited:

Pasley v The Commissioner of Inland Revenue [1958] NZLR 332

Sapfor Ltd v Commissioner of Stamps (SA) (1997) 97 ATC 4535; (1997) 36 ATR 272; BC9702829

Saunders (Inspector of Taxes) v Pilcher [1949] 2 All ER 1097 (CA)

Texts Cited:

Shorter Oxford Dictionary, 5th edit. Vol. 2

Category:

Principal judgment

Parties:

Plaintiff – Alan David Walsh
Defendant – KC & WL Brain Pty Ltd

Representation:

Counsel:
Plaintiff – Mr Gunning, M.
Defendant – Mr O’Connor, J.
Solicitors:
Plaintiff – Rural Law
Defendant – Walsh & Blair Solicitors

File Number(s):

2020/00107856

Publication restriction:

Nil.

Judgment

Introduction

The Plaintiff’s background

Defendant’s background

“Dalree”

Early interaction of the parties

The Dalree Rice Crop

The contract for the Sale of Dalree

Legal principles

The Plaintiff’s argument

Consideration

The pleadings

Plaint: [3]

Plea: [3]

Reply: [1]

Plaint: [4]

Plea: [4]

Plaint: [5]

Plea: [5]

Reply: [2]

Plaint: [6]

Plea: [6]

Plaint: [7]

Plea: [7]

Plaint: [8]

Plea: [8]

Plaint: [9]

Plea: [9]

Plaint: [10]

Plea: [10]-[10L]

Promissory estoppel

Proprietary Estoppel

Estoppel by convention

Reply: [3]

Plaint: [11]

Plea: [11]

Reply: [3]

Plaint: [23]

Plea: [23]

Reply: [4]

Other matters

(A) The Plaintiff’s health

(B) Unacceptable claims

(C) The water issue

Other aspects of the Plaintiff’s evidence

The attitude of the Brains to the PJV

Finding and disposition

Judgment

Introduction

1. HIS HONOUR: These proceedings arise out of the sale by the Plaintiff to the Defendant of a rural property known as “Dalree”, near Coleambally, in 2017. The volume of the evidence presented to the Court is great and the time taken to present the evidence and to make submissions has been lengthy. However, the parties have agreed on a mechanism which might yet shorten the proceedings.

2. The proceedings were commenced by a Statement of Claim filed on 9 April 2020 in Sydney. A Defence was filed on 26 May 2020, together with a Cross-Claim brought by the Defendant against the Plaintiff. On 24 June 2020, the Plaintiff filed a Reply to the Defence and a Defence to the Cross-Claim. A Reply to the Defence to the Cross-Claim was filed by the Defendant on 31 July 2020. The pleadings have been subsequently amended.

3. The Judicial Registrar set the matter down for hearing in Sydney for 4 days commencing on 17 May 2021. However, neither party appears to have been ready for that hearing. Extensive directions were made by Smith SC DCJ in Sydney on 27 April 2021 in an attempt to cure procedural irregularities. On 10 May 2021, the matter went before the List Judge, Wilson SC DCJ when his Honour made orders inter alia:

1. vacating the hearing date of 17 May 2021 in Sydney;

2. transferring the venue of the proceedings to Wagga Wagga; and

3. setting the matter down for hearing in Wagga Wagga in the sittings commencing on 28 February 2022.

Further procedural consent orders were made by the Registrar at Wagga Wagga on 18 August, 23 October and 22 December 2021.

4. This matter was listed before me in the sittings at Wagga Wagga commencing on 28 February 2022. The hearing of this matter commenced on Tuesday 1 March 2022 and continued until 2.55pm on 9 March 2022 when it was abruptly stopped by my falling ill and being admitted to hospital. The hearing was then scheduled to re-commence on 11 May 2022 bit could not proceed then because of the death of a close relative of one of the principals of the Defendant and for another reason. The hearing was then relisted for 4 days commencing on Monday 15 August 2022. On Thursday 18 August 2022 I reserved my decision of the major issue in the case, as suggested by Counsel.

5. At the centre of the dispute is the issue of who is entitled to the proceeds of the sale of a rice crop that was planted on Dalree by the Plaintiff prior to the exchange of contracts for the sale of Dalree by the Plaintiff to the Defendant but was still growing, yet to be harvested, at the time of completion of the sale. If the Plaintiff be entitled to the rice crop, then the Defendant is entitled, on a quantum meruit basis, to its contribution to the rice crop, but, if the Defendant be entitled to the rice crop, then the Plaintiff is entitled, on a quantum meruit basis, to its contribution to the rice crop. The parties were also discussing entering into a joint venture to farm their properties together, that is Dalree and new properties that the Plaintiff proposed to buy nearby, known as the “Hawker Aggregation”. To that end the parties were working on each other’s property. Since the joint venture never came to fruition; the parties agree that each is entitled on a quantum meruit basis, for the work or contribution each made to the other:

1. the Plaintiff is entitled to the value of the work he did on Mr Roy Brain’s rice crop (Mr Roy Brain is the father of Mr Ken Brain, a principal of the Defendant); and

2. the Plaintiff is entitled to his improvement of the pasture of Dalree; and

3. the Defendant is entitled to its contribution to the harvest of the Hawkers Aggregation wheat crop; and

4. to the harvest of the Hawker Aggregation rice crop; and

5. the cost to it of agisting the Plaintiff’s sheep on Dalree; and

6. the value of wheat screenings and some seed.

(See Transcript 18-08-22 pp 204-205). The dispute about these claims is one of quantum.

6. The parties have asked me to determine, initially, who is entitled to the Dalree Rice Crop and that decision will enable them to prepare schedules of the various quantum meruit claims that are relevant after that decision and, perhaps, to the shortening of this litigation, but at least to a m0re expeditious disposal. I shall proceed accordingly.

7. The Plaintiff handed up 6 lever arch binders containing 2464 pages. Each affidavit that was read has been given an exhibit number. There is much duplication of material. In addition, other affidavits and documents went into evidence. The documentary evidence amounts to about 3000 pages. There are 696 pages of transcript. The transcript recorded at Wagga Wagga (days 1 to 7) is not continuous – the first page of each day’s transcript is “1”. The transcript recorded in Sydney is continuous, but again starts at page 1 on day 8, and concludes at page 236 on day 11.

The Plaintiff’s background

8. Mr Alan David Walsh was born in 1957 at Deniliquin. He is a third generation farmer and a third generation rice grower. In 1929 his family were “original rice growers”. His father moved to Wakool to grow rice there when “they opened up rice” in the late 1940s. In 1956, the Plaintiff’s father moved to “Archdale”, Mayrung Rd, Deniliquin where the Plaintiff commenced to work as a young man at 13 years of age, i.e. about 1970. “Archdale” is used to farm both cattle and sheep, and mixed cropping, including rice. Rice cropping began at Archdale in 1970.

9. Around 1976, the Plaintiff bought a dairy farm with the intention of improving the property and selling it at a profit. He did that for 10 years (Exhibit A [8], Exhibit C [265]). In 1984 he bought Archdale from his parents and has continued to run the property since that time. He then purchased a rice farm close to Deniliquin which he thought had good subdivision potential. He ran that farm for 12 years, working hard to improve it. He then subdivided the property and sold it.

10. Between 1976 and 1995, he also worked as a harvesting contractor in addition to running his farming properties. He developed familiarity with harvesting, loading and transporting wheat, barley and rice.

11. In or around 1996, he purchased a property of 5,000 acres called “Waringah” at Conargo. He developed 2,000 acres for irrigation with 2 deep bores and grew 600 acres of rice. He sold this property in or around 2007. His farming experience in dry periods caused him to realise a need for diversification, and that lead him to look for a property near Coleambally, where there was surface water irrigation.

12. In or around 2003 he purchased “Dalree” in the Coleambally Irrigation Area. I shall say more about this property below. According to the Plaintiff’s evidence, he “had to rip and re-laser all of the existing paddocks and put new stops in to fix the irrigation system” (Exhibit A [13], Exhibit C [271]).

13. The Plaintiff has extensive experience in the rice industry. His evidence contains this:

“17. From 2000 to 2014, I was a Director on the Sun Rice Board. This role required me to assist in the total management of Rice Growers Limited which included such tasks as looking after the finance, hiring the CEO and finance officers, setting the price for what rice would be worth for that year, monitoring the 2,000 employees working in rice mills in Australia and overseas and OH&S issues.

18. I was also Chairman of Rice Research Australia for around six to seven years which was a sub-committee of Sun Rice that concluded research into developing new varieties of rice.

19. I was on the board of Riviana which is a subsidy company of Rice Growers Limited and assisted with selling rice products to supermarkets.

20. I was the Secretary of the Rice Growers Association at Deniliquin for 15 to 16 years.

21. I was a delegate for the Rice Growers Association in my region and participated in Central Executive Rice Grower Association meetings where we would discuss matters in the agricultural political sphere such as water, green issues and how to do best practice in regards to growing rice.

22. I also spent six years on the Southern Riverina Irrigation Council as delegate.”

Defendant’s background

14. The Defendant company is used by Mr Kenneth Charles (“Ken”) Brain and Mrs Wendy Leigh Brain to carry on their farming business. Mr Ken Brain is the son of Mr Roy Brain, a farmer, the owner of farms 570 and 571, nearby the farms owned by the Plaintiff and his son and daughter-in-law at Coleambally. Mr Ken Brain attended Coleambally Central School, completing year 10 at the age of 17 years. He has dyslexia. In cross-examination what he said in his affidavits or was said in documents about which he was cross-examined had to be read to him, not by him. Like Mr Walsh, Mr Brain worked in his youth on his father’s holdings. At age 24 or 25 he married his wife on 11 March 1989. They have seven children who, as at 23 October 2020, ranged in age between 30 and 20 years. Of those, at the relevant time, six assisted in the operation of the family farming business: Jared, Kymberley, Lukas, Shelby, Ellie, and Amy. Over the years Mr and Mrs Brain have acquired five properties:

Farm 600 in 1986;

Farm 601 in 1992;

Farm 2008 in 1999;

Farm 597 in 2006; and

Farm 2007 (Dalree) in 2017.

Their homestead is Farm 600, Graham Road, Coleambally.

15. As a result of his dyslexia, Mr Ken Brain is not well educated. He, however, struck me as a committed, hard-working farmer, well conversant with his work environment and modern farming practices. Mrs Brain also struck me as a hard-worker and astute businesswoman. Like many who have a reading difficulties, Mr Ken Brain relied heavily on his memory, which could be more acute than others’.

16. Mr and Mrs Brain’s accountant, Mr Gerard O’Brien of Albury, gave evidence. His affidavit of 22 December 2021 (Exhibit 10) contains this:

“5. As at 2016, Ken and Wendy’s farming business was transitioning from a traditional rice based summer cropping business to a more diverse corn summer cropping business while maintaining their traditional winter cereal and oil based crops. Ken and Wendy had expanded and improved their existing holdings to a high degree, and to be able to exploit the opportunities offered in a corn-based summer cropping program, more land and water was required to better take advantage of economies of scale.”

A little later he said on oath:

“The rice industry was in trouble at that time because water had become a much more valuable and expensive commodity and rice in general requires more water than the equivalent corn crop. Its water use efficiency compared to corn meant that a business decision to move away from rice was a sensible business decision.”

He encouraged Mr and Mrs Brain to pursue corn as their summer cropping mainstay.

17. Analysis of the Brains’ financial records allows one to make this chart of relevant farm income over three financial years:

Financial years ending 30 June

Product        2014 ($)   2015 ($)   2016 ($)

Cattle           50,082     26,634     166,321

Oats             (1,100)       -               -

Canola         177,609   191,239   98,666

Maize           183,023   503,045   807,599

Soy Beans   315,674   100,418   185,361

Barley           27,932          -         50,002

Wheat          230,939   314,490   462,832

Rice             376,249   342,213   172,961

Contracting  11,550      4,995       9,350

The pattern of these figures is consistent with Mr O’Brien’s evidence.

“Dalree”

18. The evidence is replete with descriptions of Dalree, including multiple copies of what could be called an “advertising blurb” – see, e.g. Exhibit A, tab 2 of ADW-1, Court Book (“CB”) p109. The most comprehensive description is contained in a CBRE Valuation of the property which was obtained by the National Australia Bank (NAB) which was the banker for both the Plaintiff and the Defendant. It can be found at Exhibit 1, Exhibit KCB1 p 91 / CB p2087. The title details contained in the Contract for Sale of Dalree (Exhibit A, tab 8 of ADW-1, CB p 119) ought also be considered. Dalree could be considered a quadrilateral with its eastern border on Kidman Way, its southern border on McLennons Bore Road (5 kms) and its western boundary on Cadell Road (3.4 kms). This quadrilateral contains 9 lots. Its south eastern corner is at the intersection (a T intersection) of Kidman Way and McLennons Bore Road. To this quadrilateral has been added, on the north eastern side Lot 2 in D.P.598665, a property known as “Pine Lodge Well”. The addition of that lot extended Dalree’s frontage to Kidman Way to 3.7kms. Dalree is known as Farm 2007. Pine Lodge Well was formerly known as Farm 8201, but, in general, all Dalree was Farm 2007. Dalree is approximately 20 radial kilometres south-west of Coleambally and 40 radial kilometres north of Jerilderie. According to the Valuation Report its locale is “Gala Vale”, but to all who gave evidence in this matter its locale is Coleambally.

19. Dalree’s land uses are:

Irrigation – Laser Levelled Flood      680.00 ha      45%

Dryland (Cropping)            750.00 ha      50%

Dryland (Grazing/Support Land)      79.73 ha      5%

TOTAL               1,509.73 ha      100%

As has been mentioned, Dalree is in the Coleambally Irrigation Area. Irrigation is controlled by Coleambally Irrigation Co-operative Ltd (“CICL”). The farmer is entitled to shares in the Co-operative, which shares carry the water entitlement, and the shares pass with title to the land. Dalree has a permanent surface water allocation of 741 megalitres (ML) and a delivery entitlement of 2,500 ML. It also has a permanent groundwater allocation of 1467 ML and a groundwater extraction limit of 2934 ML. The property has a circa 50 ML turkeys nest storage dam to hold irrigation water and an equipped bore capable of extracting 12.5ML of groundwater per day.

20. Improvements include:

1. a 4-bedroom transportable dwelling with roof-mounted evaporative air conditioning;

2. a 4 stand shearing shed and yards;

3. a machinery shed/workshop;

4. a 200 sq. m. storage shed;

5. 4 silos; and

6. cattleyards.

The boundary fences were described as in a sound stock-proof condition.

21. After the inspection carried out on 21 November 2016, the valuers said:

“We have been advised by the owners [Plaintiff] that the 2016/17 summer cropping program includes 150 ha of rice, which has recently been planted. We have been advised that the winter cropping program included a total of 250 ha sown to wheat and 50 ha of barley. At the date of valuation, harvest was taking place”.

22. The valuers made a valuation of $6,250,000, made up in this fashion:

$

Irrigated Land                          1,530,000

Dry Land (Cropping)                1,125,000

Dry Land (Grazing/support)      87,703

CICL Water Entitlements          1,092,975

Groundwater                             2,273,850

Structures                                 140,675

Total                                          6,250,203

The total was obviously rounded down: The greater part of the valuation was the water entitlements ($3,366,825).

Early interaction of the parties

23. Since the purchase of Dalree by the Plaintiff, he and the Brains could be described as “neighbours”. Despite my repeated request, neither party put before me a map showing the location of the Defendant’s properties, Dalree, the Hawker Aggregation, and Roy Brain’s farms (Farms 570 and 571). Nevertheless, the evidence makes it clear that the Defendant’s properties were close by, if not contiguous, with Dalree and at least one of the Hawker Aggregation farms was contiguous with Dalree. The Brains did some contract work for the Plaintiff. On 6 November 2013, the Brains billed the Plaintiff for 33 hours work harvesting Canola at $350 per hour ($12,705), which the Plaintiff paid on 5 December 2013. On 14 December 2015, the Brains billed the Plaintiff for “Big N Application”, which I understand to be fertilising with nitrogen, over 143 ha which took 24 hours at $250 per hour, a total $6,600 after the addition of GST. The Plaintiff paid that account on 23 December 2015.

24. The Plaintiff’s affidavit of 31 August 2020 (Exhibit A) contains this material:

“25. In or around 2012, I approached Ken to ask whether he was interested in buying Dalree. At that time, I was under a fair bit of pressure from my family to stop driving the 200 kilometres a day from Archdale to Dalree. I had also reached the point where I had finished tidying up Dalree and had it running efficiently. I believed the next step was to expand the irrigation which would have required me to borrow funds. At that time, I had no sons at home helping me. It was just me running both Archdale and Dalree and, as there were few properties coming on the market in the Deniliquin area, I could not justify continuing operations on Dalree if I could find a suitable alternative property closer to home.

26. During this initial discussion with Ken, I said:

‘I am thinking of selling Dalree. Would you be interest in buying it?’

Ken responded with words to the effect of:

‘I would love to but we are pretty well loaded up with costs and wouldn’t be able to afford it for three or four years.’

27. Shortly after this conversation, I put an offer in on a property in Deniliquin whereby I asked the Vendor to sell the property to me on the terms that I would pay it off over three or four years. Whilst the vendor considered that offer, I approached Ken and said:

‘I’ve approached a seller in Deni about whether he would offer me terms so that I could pay off the farm over three to four years. If he agrees, I could do the same for you with Dalree if you would be interesting in something like that?’

Ken responded with words to the effect of:

‘That is something I would certainly consider.’

28. Unfortunately, the Vendor of the property in Deniliquin was not willing to proceed on those terms and, as such, I could not afford to sell Dalree to the Brains on those similar terms.

29. In or around June 2016, I became aware that properties a series of properties owned by Colin and Trevor Hawkers were coming on the market…”

The last sentence which I quoted is inaccurate. Annexure C to an affidavit of Mr Ken Brain sworn on 20 December 2021 (Exhibit 5) is an article from the “Weekly Times” published on 16 December 2015 which (without the photograph of the Hawker brothers) says this:

“THE numbers have added up for farming brothers Colin and Trevor Hawker.

The pair’s six irrigation farms – known as 204, 208, 209, 219, 2001 and 2006 – plus one dryland block called “Pine Lodge”, have been in the family’s hands for 50 years.

Located 17km south of Coleambally, in southern NSW, the properties are either close or adjoining.

‘Our father, Bill Hawker, took up the farm in 1965 as a soldier-settler,” Trevor said.

‘It was a virgin block with just four corner pegs, a water wheel and drainage point and he and our mum, Flo, developed the place from there.

COLEAMBALLY, NSW

PROPERTY: Cropping

SIZE: 1680ha

SALE: Private

PRICE: $16 million

AGENT: Ruralco Property

CONTACT: Justin Buchanan, 0427 544 522

‘Colin and I took on the running of the farm in the early ‘70s and purchased more farms in later years.’

…

Soil types vary from self-mulching grey and red clays to loams and sandy ridges, with pastures of sub-clovers and winter-active lucerne.

‘We used to run up to 2000 first-cross ewes when we were younger, but these days we have about 65 Angus cows,’ Trevor said.

‘Neighbours here grow cotton, corn and summer crops, but we mainly stick to rice, with 320ha sown this summer, plus winter cereals.’

Water rights include 7787ML in general security licence from Coleambally Irrigation Co-operative Ltd, 7787ML delivery entitlements and 324.5ML of History of Use entitlement.

‘Coleambally has one of the most advanced open channel systems around,’ Trevor said.

‘We have eight Rubicon flumes, seven of which can deliver up to 30ML a day, plus district drains and recycle channels.’

Fronting Kidman Way, farm 209 includes a four-bedroom home with office, two bathrooms, two living areas and five-car garage.

Other infrastructure comprises a shearing shed, sheep and cattle yards, machinery sheds, workshop and six grain silos. There are a further two homes and a cottage, stock yards, machinery sheds, four silos and water infrastructure on the other holdings.”

Annexure A to the same affidavit is an email from Justin Buchanan to the Brains dated 23 February 2016 enclosing a sales blurb for each of the Hawker Aggregation Farms (Farms 204, 208, 209, 219, 2001, 2006 and Pine Lodge). The Hawker Aggregation had been on the market since at least the end of 2015, and perhaps earlier as Mr Brain’s affidavit suggests at [17].

25. After describing the Hawker Aggregation, the Plaintiff’s first affidavit continues thus:

“30. At this time, I approached Ken and said:

‘The Hawker properties are coming up. What do you think about the idea that I sell you Dalree, I buy the Hawker properties and we’ll combine them together and form one big operation? That way, you would have a succession plan for your kids and my kids could come back to the farm or just become investors. I’d work on the properties and run the rice crops and work out a plan to improve both properties and you can run your corn. I am happy to sell you Dalree for $6.5 million.’

Ken responded with words to the effect of:

‘Yes, yes. We’ll be in that. I can see just how well that would work.’

31. Shortly after this conversation with Ken, I had a discussion with my banker at NAB, Randall Holmes and advised him of the deal that has been discussed. I advised Randall that I would get Ed Glowery, solicitor with Glowerys in Deniliquin to act on my behalf.

32. As the Brains were also seeking finance from the NAB for their purchase of Dalree, I left it to them to organise that finance.

33. After a few weeks, NAB advised me that they required a valuation of both Hawkers and Dalree before proceeding with finance. Tom Burchell, a local valuer, had previously carried out a valuation on Hawkers for another potential buyer however NAB advised me that they were unable to accept that valuation and another one would need to be done. NAB advised me that, if I wanted Tom Burchell to carry out the valuation, then it would have to be done three months’ apart from the previous one. Due to this, everything was held up for another few weeks until three months had passed since the previous valuation.

34. In or around September 2016, I worked with NAB in order for them to prepare budgets for Archdale Farms to assist them in making their decision in relation to financing me to purchase Hawkers. I advised NAB that I intended on planting approximately 150 hectares of rice on Dalree in October 2016.”

26. In his first affidavit, sworn on 23 October 2020, Mr Ken Brain referred to the fertilising at Dalree which he thought was “in about October 2015” (the bill suggests it may have been later). His affidavit continued:

“8. While I was carrying out the fertiliser work for Alan in October 2015 referred to at paragraph 7(b) above, I recall having a conversation with Alan in words to the following effect:

Alan said:   ‘I may be selling Dalree in the future. Would you be interested in buying it?’

I said:       ‘Yes, definitely I would consider it. But I would need to speak to Wendy and the family about it and I would have to run it by the bank for finance approval.’

9. After the conversation with Alan in October 2015, we approached our bank, the National Australia Bank (NAB), to give notice that we had been invited to potentially purchase a property. We made enquiries with the NAB as to whether we could afford to purchase another property and, if we could, what was needed to be done to prepare for the purchase. Although we were not aware of the sale price Alan would be seeking for Dalree, the bank informed us that we could afford to purchase another property in the area, but that we needed to submit a business plan.

20. On 7 July 2016, I received a telephone call from Alan. We had a conversation in words to the following effect:

Alan said:    “I am wanting to buy a place closer to home, are you still interested in Dalree?’

I said:      “Yes, we are still interested but need to discuss it with the bank.”

11. On 11 July 2016, Wendy, Jarod and I drove to meet Alan at his house at his property, ‘Archdale’, near Deniliquin NSW. Alan was recovering from a hip operation. I had a conversation with Alan in words to the following effect:

Alan said:    ‘If I sell you Dalree, I will purchase another property. Would you be interested in forming a partnership to create benefits of scale for both our businesses?’

I said:      ‘We would need more information. I don’t quite understand what you have in mind for the partnership.’

12. At the time Alan did not elaborate on what he meant by forming a partnership. I understood that Alan wanted to sell Dalree because he was sick of travelling the 200km round trip each day from Deniliquin NSW to Coleambally NSW.”

27. Some time in August 2017, Mr Brain became aware that the Plaintiff intended to purchase the Hawker Aggregation. His affidavit then continued thus:

“16. On 28 August 2016, Wendy and I inspected the Hawker properties with Alan, Colin Hawker, Trevor Hawker, and Justin Buchanan – a real estate agent. These were the properties Alan was interested in purchasing if we purchased Dalree.

17. Colin and Trevor Hawker indicated that they wished to sell the Hawker properties for about $16 million. Whilst we were at Hawkers, Alan had discussion with Colin and Trevor Hawker regarding his potential purchase of the Hawker properties. I recall Colin Hawker and Alan having a conversation to the following effect:

Colin said:    “If the properties are to sell, we would include the full water allocation and the (winter) crop will be given in. If settlement is delayed, then you will be given access to the properties immediately to plant rice and you will get the proceeds of the rice harvest. However, if the sale falls through, then both parties will reimburse the other for work/costs incurred.”

Alan said:    “Yes I agree with that. Let’s get things rolling.”

The purchase of Dalree

18. In August 2016, following our visit to the Hawker properties, we were preparing to submit a business plan to the NAB to obtain finance to purchase Dalree. In order to submit the plan, we needed to know the Dalree sale price and what crops were to be included in the sale.

19. In about late August 2016, I had a conversation with Alan to the following effect:

I said:      ‘We need to know how much we need to borrow to purchase Dalree and whether we can put a rice crop.’

Alan said:    ’The price is $6,500,000. I’ll be putting a rice crop in whether the sale goes ahead or not. If the sale goes ahead, the rice crop is yours, you just have to reimburse my costs.’

I said:       ‘Okay. If you put the rice in, we will pay the water bill and we will include the costs of the water and the costs of planting the rice crop in the business plan we submit to the bank.’

20. On 9 September 2016, we submitted a business plan to the NAB. Based upon what Alan had told me in August 2016, the budgets in the business plan included the expected proceeds from the rice crop to be planted on Dalree in October 2016 and the expenses of planting and growing that rice crop…

21. In about late September or early October 2016, Alan visited Wendy and me at our home. Alan and I had a conversation at the kitchen table in words to the following effect:

Alan said:    “I’m going ahead with the purchase of Hawkers. Have you heard from the bank regarding finance for Dalree?’

I said:       “The business plan is lodged. I am waiting to hear back from them.’

Alan said:    ‘As soon as you know, let me know because I need to sell Dalree so I can buy Hawkers.’

I said:      ‘Okay. I included the rice crop expenses in the business plan. Can we have access to Dalree to plant the rice?”

He said:   ‘No. I’ll be planting the rice.’

22. On 10 October 2016, we received an email from Randall Holmes (‘Mr Holmes’), Senior Agribusiness Manager, NAB, advising that the bank had granted conditional finance approval for our purchase of Dalree. A copy of Mr Holmes’ email is at page 91 of exhibit KCB-1. The important conditions of the finance approval included inter alia that:

(a)    a valuation of Dalree was to be completed with a value of $6.5 million to be achieved as a minimum; and

(b)    any change to operations and/or operating entity was to be notified to NAB in advance and would not be implemented without NAB approval.

23. On 17 October 2016, we instructed Mr Holmes to engage CBRE to conduct a valuation of Dalree.

24. On 19 December 2016, we received an email from Mr Holmes stating that he had received the CBRE valuation.”

28. Like her husband, Mrs Brain swore an affidavit on 23 October 2020. It became Exhibit 2. It is found at Vol. 4 CB p1237. It contained this material:

“7. In about October 2015, Ken was performing contract work for Alan applying BigN fertiliser to Alan’s rice crop on Dalree. Ken returned home and said words to the following effect:

Ken said:    ‘Alan has offered to sell us Dalree.’

8. Ken and I then had a long discussion about whether we could afford to purchase Dalree and whether it would suit our farming operation. We had been considering expanding our operation for a few years and decided that Dalree was an opportunity to diversify our portfolio.

9. In mid to late 2015, a portfolio of farming properties owned by Trevor and Colin Hawker (collectively referred to as ‘the Hawker properties’) were advertised for sale. The Hawker properties are also located in the Coleambally area of New South Wales.

10. In late 2015 Ken and I discussed the possibility of purchasing the Hawker properties as another option for us to buy. Ken and I considered that we could not afford to purchase all of the Hawker properties but could possibly purchase some of the properties if they were sold individually.

11. In about February 2016 we enquired with the Hawker’s real estate agent as to whether Trevor and Colin Hawker would consider selling one or two of their properties separately. The agent did not respond to this request.

12. On 7 July 2016, Ken received a telephone call from Alan. After the call, Ken said to me words to the following effect:

Ken said:   ‘Alan has again offered to sell us Dalree. He said he wants to purchase a property closer to his home in Deniliquin.’

13. On or about 11 July 2016, Ken, our son Jarod, and I travelled to visit our daughter and granddaughter in Blighty (near Finley). Ken had also arranged to meet Alan at his home ‘Archdale’ in Deniliquin to discuss our potential purchase of Dalree. This was the most convenient location for the meeting as Alan had recently undergone a hip operation. During the meeting, Ken and Alan had a conversation in words to the following effect:

Ken said:   ‘We are definitely interested in Dalree, but we need to talk with our accountant so we can put a plan together to take to the bank for approval. We can’t fully commit until we know that the bank will back us.’

Alan said:   ‘Okay. I will hold Dalree for you until you hear from the bank. But what would you think about joining forces to save on our inputs? We would create an economy of scale for both our businesses.’

Ken said:   ‘We’d need more information before we can consider that.’

14. Ken, Jarod and I discussed Alan’s suggestion on our way home. We were not quite sure what Alan was getting at. I assumed that Alan wished to combine purchasing power so that we could ask for discounts from suppliers for larger amounts of inputs, such as fertiliser and chemicals.

15. After the meeting with Alan in July 2016, Ken and I telephoned our accountant, Gerard O’Brien (‘Mr O’Brien’) of RSM Australia, to discuss purchasing Dalree. Mr O’Brien advised us to put together a budget to see if the purchase of Dalree was feasible.

16. On or around 18 July 2016, Alan turned up at our place. I had a conversation with Alan in words to the following effect:

Alan said:   ‘I’ve been thinking about this partnership and think it could really work. You have all the labour and I have the knowledge and contacts.’

I said:       ‘I don’t know how this would work; our kids have their own ambitions.’

Alan said:   ‘I will arrange for us to meet with my financial planners at Peppin Planners, they’re really good at this stuff.’

17. On 25 July 2016, Ken and I met with Rob Brown (‘Mr Brown’) at Peppin Planners in Deniliquin. Alan was not present. At this meeting we had some preliminary discussions with Mr Brown regarding the possibility of a partnership with Alan.

18. In the months that followed, Alan arranged further meetings for us with his financial planners at Peppin Planners and his accountant, Brian McLeary (‘Mr McLeary’) of Brian McLeary & Co Accountants. The concept of a partnership was floated however, ultimately, the parties did not commit to any partnership agreement.

19. During July and August 2016, I spent most of my time constructing budgets and putting together information for Mr O’Brien, our accountant, to create a business plan for the purchase of Dalree to present to the National Australia Bank (‘NAB’).

20. In the Coleambally region, a rice crop is planted in October each year and harvested in about March/April of the following year. A rice crop was due to be planted on Dalree in October 2016.

21. The issue of when the purchase of Dalree would settle was important as I needed to know whether to include the costs and proceeds of the Dalree rice crop (Dalree Rice Crop) in the budget to be presented to the NAB.

22. In or about August 2016, while drawing up the budgets to submit to the NAB to support the finance application, I had a conversation with Ken to the following effect:

I said:      ‘If we get finance approval and the purchase of Dalree goes ahead, will settlement happen in time for us to plant a rice crop on Dalree?’

He said:    ‘Yes, I think we will be in possession of Dalree in time to plant the rice crop.’

I said:      ‘You will have to talk to Alan about the rice crop if things don’t go to plan and settlement was delayed.’

He said:   ‘I will when I catch up with him.’

23. The following day, I had a further conversation with Ken. We said words to the following effect:

Ken said:    ‘I caught up with Alan today. He wants $6.5 million for Dalree. I also spoke to him about what is to happen with the rice crop. Alan said that he will plant a rice crop if settlement is delayed, but once everything settled the rice crop will be ours and we will fix him up for his costs in planting the rice crop.’

I said:       ‘That’ll be good. I will include that in the budget’.

24. Based on this conversation with Ken, I included the costs of planting, and the profits from the Dalree Rice Crop in the business plan.

25. On 9 September 2016 we submitted the business plan to the NAB.

26. Although Alan had informed Ken that he intended to plant the Dalree Rice Crop if settlement was delayed, it was our preference to plant the rice crop ourselves. We decided that if settlement did not occur in time for us to be in possession of Dalree to plant the Dalree Rice Crop, Ken would approach Alan and request early access in order to plant the rice crop ourselves.

27. The purchase of Dalree did not occur in time for us to take possession of Dalree to plant the Dalree Rice Crop ourselves. This was due to delay in obtaining finance approval and because Alan’s purchase of Hawkers was not ready to settle at that time.

28. In about late September 2016, I had a conversation with Ken.

I said:       ‘We are running out of time to get the rice in on Dalree. I think we need to talk to Alan about getting access to plant the rice.’

Ken said:    ‘I’ll speak to him about it.’

29. In about early October 2016, Ken and I had a further conversation in words to the following effect:

Ken said:    ‘I spoke with Alan today about requesting access to Dalree to plant the rice crop on Dalree. Alan told me not to worry about it as he was already planning on planting 150 hectares. He confirmed that once the sale of Dalree settles, we can have the proceeds of the rice crop provided we fix him up for his costs in planting the rice crop. Because he agreed to give us the proceeds of the rice crop, I offered to pay the entire water bill for the rice crop at the end of the season.’

I said:       ‘It’s a pity we can’t plant the rice ourselves.’

30. On 10 October 2016, we obtain finance approval from the NAB to purchase Dalree.

31. If Ken and I had known that we would not be receiving the Dalree Rice Crop sale proceeds, we would have withdrawn our offer to purchase Dalree because we would have received no rice income from Dalree until April 2018 from the 2017 rice crop that would have been planted in October 2017.

32. In December 2016, I was with Ken and Alan when they had a conversation to the following effect:

Alan said:   ‘Can you give me a hand with the wheat harvest on Hawkers and for the cost of that work, I’ll deduct it from what you owe me for the Dalree rice crop costs.’

Ken:      ‘Okay’.

33. In late December 2016, we helped Alan with the harvest of the wheat crops on Hawkers.”

I have quoted that in extenso as it introduces new issues as to the proposed partnership, but it does show chronologically how things occurred. It does, of course, as one would expect, provide corroborative evidence for her husband’s position on pre-contract discussions about the Dalree rice crop.

29. These were the opening thrust and parry in a duel of affidavits. The contest may be summarised thus:

Deponent      Date               Exhibit

Plaintiff          31-8-2020       A

K. Brain         23-10-2020     1

W. Brain        23-10-2020     2

Plaintiff         17-11-2020      B

K. Brain        22-2-2021        3

W. Brain       22-2-2021        4

Plaintiff         20-10-2021      C

K. Brain       20-12-2021       5

W. Brain      20-12-2021       6

Plaintiff        16-2-2022        J

W. Brain      25-2-2022        9

K. Brain       3-3-2022          8

30. The Plaintiff has maintained throughout that his initial approach to Ken Brain, asking him whether he be intended in buying Dalree was “in or about 2012”. What his reason for doing this was, and Ken Brain’s response, can be seen in Exhibit A [25]-[26] quoted in [24] above. Mr and Mrs Brain maintain that this was only in or about October 2015, at the time when Ken Brain was doing contract fertilising work on Dalree for the Plaintiff, as described in [23] above. On this issue I prefer the evidence of Mr & Mrs Brain. Their interest in expanding their farming operations appears to have coincided with the placing of the Hawker Aggregation on the market and it is clear that they showed an interest in buying some of the Hawker farms. That is corroborated by an inquiry they made to the relevant property agent: see Exhibit 5[10] and annexure “A” thereto, to be found at CB Vol 4, p 1644. If the Plaintiff had enquired some three years earlier about the Brain’s being interested in buying Dalree, I believe it likely that the Brain’s would have remembered it, and being interested in expanding their farm operations, have approached the Plaintiff to see if he were still willing to sell Dalree. Furthermore, if the Plaintiff felt pressured to sell Dalree for any reason, it is hard to accept that he stayed on at Dalree for a further four years before needing to sell it and then buying “next door” at Coleambally, and the Hawker Aggregation is slightly closer to Coleambally than is Dalree.

31. In his second affidavit (Exhibit 3), Ken Brain gave evidence of a conversation he said occurred with the Plaintiff in January 2016 to this effect:

“…in January 2016 I had a further conversation with Mr Walsh to the following effect:

I said:       ‘Are you still interested in selling Dalree and have you sourced a property to buy?’

He said:   ‘Don’t be scared to look for another farm. I’m still working on getting my hands on ‘Whiporie’ but the owner wants to fix the farm up before he sells.’

I said:       ‘Okay. Trevor and Colin Hawker are selling their properties. I might find out some information about them.’”

That evidence was immediately followed by evidence about the Brains making enquiries of the Hawkers’ property agent re the Hawkers’ selling to them only some of their farms, to which I have just referred. The occurrence of this particular conversation is bluntly denied by the Plaintiff (Exhibit C[3]) but other than a general contest on credibility, there is no reason to reject it.

32. The Plaintiff has maintained throughout that it was “in or about June 2016” that he offered to sell Dalree to the Brains for $6.5M. In his second affidavit, the Plaintiff said that this conversation took place at the Brain’s house: Exhibit B[3]. Ken Brain has maintained throughout that this conversation did not take place: Exhibit 1 [76](d) and, specifically, that there was no firm offer to sell Dalree or that the sale price of $6.5M was stated.

33. Ken Brain maintains that on 7 July 2016 he had a telephone conversation with the Plaintiff, as set out in [10] of Exhibit 1 which I quoted in [26] above. This is denied by the Plaintiff (Exhibit B[4]) but is corroborated by Wendy Brain (Exhibit 2 [12] – see [28] above). More important than Wendy Brain’s corroboration is documentary corroboration: Exhibit 3 [131](c) a diary note to be found at CB Vol 4, p 1535, which on the 7 July 2016 records, inter alia,:

“Alan Walsh rang at 11.00 about Dalree.”

I have no hesitation in accepting Ken and Wendy Brain on this issue.

34. In Exhibit 1 [11] Ken Brain describes a meeting that he attended at the Plaintiff’s home, Archdale, on 11 July 2016, together with his wife and son Jarod: see [26] above. He is corroborated in that regard by Wendy Brain in Exhibit 2 [13]: see [28] above. The occurrence of this meeting is not disputed. What was discussed, or, perhaps, the language used is disputed: Exhibit B [5]:

‘In relation to paragraph 11, I confirm that Ken, Jarod and Wendy came to my house to discuss the purchase of “Dalree” however, during this conversation, we discussed further the idea of a joint venture between our two families. I deny that I discussed a partnership and deny that Ken ever said the word “partnership” to me. The language used was always “joint venture”.

There may be a legal difference between some forms of joint venture and a partnership, but, amongst laymen, it is not more than a quibble.

35. In his second affidavit (Exhibit 3) Ken Brain added a further piece of the conversation at the meeting of 11 July 2016:

“8. I refer to paragraph 11 of my October Affidavit, in which I referred to a meeting Wendy and I had with Mr Walsh at his property ‘Archdale’ on 11 July 2016. In addition to the conversation stated in paragraph 11 of my October affidavit, at the meeting on 11 July 2016 Mr Walsh and I had a conversation to the following effect:

I said:    ‘If I buy Dalree and you buy another property, why would I want to join a partnership with you when you are looking for property in Deniliquin and I’m looking for property in Coleambally?’

He said: ‘I suppose that’s right.’

9. As Deniliquin and Coleambally are about 150km apart, I could not see how Mr Walsh and I could work in a partnership together.”

That drew this parry from the Plaintiff in Exhibit C:

“6. The conditions that year were consistent with the previous rice harvests I had experienced in relation to how regularly the trucks were being filled up to take a load into the silos. Based on my observations, the capacity of the harvesters in relation to how much they could strip per hour was not affected by poor conditions.

7. Later in the harvest, towards the end of May and early June 2017, we received some rainfall and there was a bit of lodged rice. The expression refers to where sections of the rice crop have fallen over and the grain head is located closer to the ground than if the crop was standing up straight. Other than that, it was the normal standard conditions for harvesting rice.”

That drew a riposte from Ken Brain in Exhibit 5 [11] which was denied by the Plaintiff in Exhibit J [5]. I shall not cite either of those paragraphs. Suffice it to say that I am not prepared to accept this further piece of conversation alleged by Ken Brain for two reasons: (a) it ought to have been included in his affidavit Exhibit 1; and (b) I am persuaded on all the evidence that the Plaintiff was very prepared to sell Dalree to the Brains if he could buy another property or properties and the likelihood was that it or they would be nearby: the proposed joint venture (“PJV”) would only be successful if the properties were nearby, and, preferably, contiguous.

36. Ken Brain’s second affidavit, Exhibit 3, contains this:

“10. On 13 July 2016, I had a conversation with Mr Walsh in words to the following effect:

I said:       ‘Are you still interested in selling Dalree and have you sourced a property to buy?’

He said:    ‘Don’t be scared to look for another farm. I’m still working on getting my hands on ‘Whiporie’ but the owner wants to fix the farm up before he sells.’

I said:       ‘Okay. Trevor and Colin Hawker are selling their properties. I might find out some information about them.’

11. On 13 July 2016, Wendy and I sent an email to Mr Walsh, which included a list of potential properties in the Coleambally area in the vicinity of Dalree without knowing if they were for sale. A copy of that email is at page 1 of exhibit KCB-2.”

The annexure can be found at CB Vol 4, p 1295:

“Farm 199   Laurie Patterson

Farm 534   John Lyell

Farm 541   Richard Fletcher

farm & block 2000+ meg

Farm 559    Will Lyell

Farm 560   Vicki Meyer

dry

Farm 561   James Sadleir

Farm 562   Andrew Jackson snr

All but the top two are adjoining, along Graham Road”.

The original email was sent on 13 July 2016 at 6pm. The Plaintiff’s parry to this is continued in Exhibit C:

“6. In relation to paragraph 8, I refer to paragraph 5 of my November Affidavit which addressed paragraph 11 of Ken Brain's October affidavit. In relation to the further conversation that Ken brain refers to, I deny that this conversation took place.

7. In relation to paragraph 9, at the time of approaching the Brains in relation to running our business together, I had conveyed to Ken Brain that I was willing to sell my property 'Archdale' and move closer to Colleambally. As such, Ken Brain's comments about Deniliquin and Coleambally being 150km apart are surprising. Ken was aware that I had gone and inspected a 100-acre block at Jerilderie in interest of selling 'Archdale' and moving closer to Coleambally for the purposes of the joint venture. The block was a lifestyle property for my partner, Belinda to run her sheep on and a place for me to go home to."

However, that raised the question: what was the purpose of the email? That question has not been satisfactorily answered by the Plaintiff. I accept the explanation of Ken Brain and, therefore, the conversation to which he deposed that occurred on 13 July 2016. Of course, this raises the question of when was it that the Plaintiff became aware that the Hawker Aggregation was on the market, and when did he become interested in it?

37. As my consideration of the conversation of 13 July 2016 raised the issue of Roy Brain’s Farms, I should say something about the holdings of other members of the Brain family near Coleambally. Both Mr Roy Brain, Ken’s father, and Mr David Brain, Ken’s brother, owned nearby farms. Roy Brain’s farm is 440 ha and was a mixed farming operation consisting of rice and cattle. It was also on Graham Road, Coleambally. It was the farm on which Ken Brain grew up. He had worked on it with his father for more than 20 years until his brother David “returned to the farm” (Exhibit 5 [26]). The evidence is that David also had his own property nearby by 2016. I understand that each of Roy’s and David’s properties consisted of two (original) farms. On Roy’s 80^th birthday, 26 November 2016, David “did a runner” and walked away from Roy’s farm and then Ken and Wendy Brain started managing Roy’s farm, which they had stopped working on when David had returned to Roy’s property. David Brain did not commit to selling his property until mid-2017 (Exhibit 5 [27]). In Exhibit C [34] the Plaintiff referred to Roy Brain’s farm becoming “run down” in the period that Ken Brain was not working on it, a period which the Plaintiff believed was about 17 years. One might, accordingly, reasonably believe that the Plaintiff might refer to Roy Brain’s farm unfavourably.

38. It is common ground that on 25 July 2016, Ken and Wendy Brain met with Mr Rob Brown of Peppin Planners at Deniliquin. This had been arranged by the Plaintiff, in his seeking to interact with the Brains in the PJV. The Plaintiff had been a client of Mr Brown for about 20 years (T, 7-3-22, p40.42). According to Ken Brain, Mr Brown said words to this effect:

“Mr Walsh wanted me to meet you to obtain information about your family and your business to look at this joint venture proposal”.

On Tuesday 26 July 2016 at 8.52am Mr Brown forwarded an email to both the Brains and the Plaintiff. Its first line is this:

“I spoke with Alan last night and Ken this morning.”

The meeting with Ken and Wendy Brain was on the previous day. It appears to be likely that he met the Plaintiff at Deniliquin on that morning, and he has mistakenly juxtaposed the forenames. That email enclosed a document headed “Family Strategy Development – draft concept for Ken and Wendy Brain” erroneously dated “26 July 2015”. It has 9 pages. On that last page this is recorded:

“What’s agreed…

Dalree price is fine. Subject to finance

AW buys more land and water. Deal can be adjusted to fit the number of farms purchased.”

On the second page this is recorded:

“What’s the deal look like?

AW buys another 4 farms. Adjoining or 4 to 8 kms away. The deal created scope to eventually buy AW out if he wanted.”

39. The document prepared by Mr Brown points to these issues:

1. according to the Brains, the price for Dalree had not been agreed, and was not agreed until late August 2016, and semble, after 28 August. See Exhibit 1 [16] to [19], cited above at [27], (“the Dalree price issue”), and

2. according to the Plaintiff, he was considering buying the Hawker Aggregation of 7 farms “in or around June 2016” see Exhibit A [29] to [30], cited above at [24] and [25], although in his oral evidence the Plaintiff said in cross-examination that he discovered that the Hawker Aggregation was for sale “In probably June, late June…” (T, 3 March 2022, p28.23), (“the Hawker discovery issue”).

40. I shall now deal with the Dalree Price issue. In Exhibit 3 [20](a) Ken Brain said this:

“in relation to the statement “Dalree price is fine. Subject to finance’, at that time we did not know the exact price for which Mr Walsh intended to sell Dalree. We had been advised by the NAB that they would consider an application from Wendy and I to purchase a property…” [my emphasis]

In Exhibit B [13], the Plaintiff maintained that he told Ken Brain “in our initial discussion in June 2016” that the price of Dalree was $6.5M and relied on another document prepared by Mr Brown which reiterated what was contained in that of 26 July 2016. In Exhibit 5 [21], Ken Brain said this:

“… as at 26 July 2016 we were not sure whether Dalree was definitely on the market for sale, given that Mr Walsh indicated the sale was subject to various conditions and had not confirmed the sale price. I do not agree with Rob Brown’s comment “Dalree price is fine”. It is not consistent with the conversation we had with Mr Brown. We had a good knowledge of the value of farms and water in the area. However, we still had to have discussions with Mr Walsh about the inclusions with the sale of the property and whether he would be retaining any of the water assets. As such, the price was not known at that time. We were told the price in late August 2016. I refer to paragraph 19 of my October 2020 affidavit.” [my emphasis]

I am persuaded on this evidence that it is highly likely that at some time prior to late August 2016, the Brains were aware that it was highly likely that the price for Dalree was $6.5M, before a formulaic “the price is $6.5M subject to finance and subject to legals” might have been intoned. It is likely that at some earlier stage the Plaintiff mentioned an indicative, tentative or “ball-park” figure to the Brains, which they were happy to proceed with, given their own intimate, local knowledge. Ken Brain’s intransigence to admit frankly he was aware of what the price would be is the result of the intransigence adopted by each of the parties in this adversarial litigation.

41. Furthermore on this issue, it is clear from the evidence of Wendy Brain, quoted in [28] above that, during July and August 2016, she spent most of her time constructing budgets and putting together information for their accountant, Mr Gerard O’Brien, to create a business plan for the purchase of Dalree to present to the NAB. That business plan was submitted to NAB on 9 September. Why would Wendy Brain do that work and incur the cost of their accountant doing further work with those budgets/information if there were no knowledge of the price? For example, what if the Plaintiff said that the price for Dalree was $10M? The work and cost involved would have been in vain. Another clue on this issue is provided by NAB: an email from the bank to the Brains dated 26 August 2016, referred to by the Plaintiff in Exhibit C [27] and annexed to that affidavit is this:

“The assumptions behind the budget would be needed.

Also, details of the property, ie: Acres, Megalitres etc.

Will existing machinery be sufficient or will another set of plant or specific items need to be upgraded?

How will the property and increased workload be managed.

Working on a $6.5m purchase price, the land transfer stamp duty is c.$340,000- however a fair amount of the purchase price would be water (I would expect) so this figure should be less. Therefore, between this and the increased cashflow requirement, you may be looking to increase your debt load by c.$7/$7.5m (cashflow budget will help determine this figure here).”

Of course, “working on a $6.5M purchase price” is quite different to “given a $6.5M purchase price”. As the business plan was formally submitted on 9 September 2016, it is likely that some earlier draft had been sent to the bank, merely assuming a formal price of $6.5M.

42. I shall now deal with the Hawker discovery issue. In Exhibit C [14] the Plaintiff said that he became aware of the Hawker Aggregation being for sale after he saw an advertisement in “the newspaper” in or about June or July 2016. The newspaper is not identified, nor has the advertisement been put into evidence. On 14 July 2016 there was a telephone discussion between the Plaintiff and his accountant, Mr McCleary about the PJV and they met on the following day. Notes made by Mr McCleary on 15 July include:

“Tax deal on purch(ase) of Hawkers”.

Thus it is clear that by mid-July 2016 the Plaintiff was discussing with his accountant the purchase of the Hawker Aggregation. I am unable to find in the evidence an earlier corroboration of the Plaintiff’s being aware of the Hawker Aggregation’s being available for purchase. According to Exhibit C [16] Mr McCleary told the Plaintiff that:

“A number of the Hawker properties are pre 1984 assets so that will mean there will be large allowances that we can claim.”

43. The Plaintiff had a second meeting with Mr McCleary on 22 July 2016. The notes of that meeting have been put before me, as were the notes of the meeting on 15 July 2016. The notes of this second meeting do not specifically refer to “Hawkers” but there are at least 2 entries which strongly suggest Hawkers. The first is this:

“3, James could own land in this deal. Would get rent if not a ‘partner’ in the trading structure. This makes farm negative geared asset and not ‘active’. Negative gear loss would be surer than trying to get $20,000 of farm income…”

This refers to a proposal by the Plaintiff that his son, James, perhaps with his partner, Rachael Harker, might own one of the seven Hawker properties, perhaps a form of succession planning. The second entry is this:

“7. ……

Water as high as possible for stamp duty reduction”.

Stamp duty was payable only on the actual land value, not on the value of the water rights appurtenant to the land, and, therefore, increasing the value of the water rights reduced the amount of stamp duty payable on the conveyancing transaction. This occurred for each of the parties on the purchase of Dalree and of the Hawker Aggregation. It is inconsistent with the Hawker Aggregation being described as “underdeveloped”, an adjective used by Mr Rob Brown. Exhibit 9 (Hawker Aggregation Valuation dated 21 November 2016) informs on p 14:

Land Types                                    Approximate Area      Proportion

Irrigation – Laser Levelled Flood   1,169.40 ha                 70%

Dryland (Cropping)                        55.00 ha                      3%

Dryland (Grazing/Support Land)   456.41 ha                    27%

Total                                              1,680.81 ha                 100%

It also informs on pp 18-19, that six of the seven farms have surface water entitlements with CICL. Whence Mr Brown obtained “4 undeveloped farms” is not adequately explained.

44. There was, however, am attempt to explain it, proposed by Ken Brain. On 26 July 2016 the Plaintiff arranged a meeting of the Brains, Mr Brown and himself and Mr McCleary at his office. Exhibit 3 contains this:

“26. During the meeting, Mr Walsh said words to the following effect:

‘I asked my agent to approach your brother David about selling his and your father Roy’s properties to me.’

27. During the meeting Mr Walsh left the room to take a phone call. When he returned he said words to the following effect:

‘My agent told me that Roy won’t sell his two farms but David will. So I will have to keep looking for more farms to purchase.’”

Ex C [12] contains this parry:

“In relation to paragraph 26 and 27, I agree that I had raised the possibility of purchasing Ken’s brother David’s and his father Roy’s farms but that was done before this meeting…… I do not recall having a discussion during that meeting with Justin Buchanan, my stock and station agent at the time”.

Ken Brain’s riposte to that was that David Brain did not commit to sell his property until mid 2017 (see [37] above).

45. Nevertheless, the Plaintiff seems to have been dilatory in pursuing his purchase of the Hawker Aggregation. There was an inspection of the Hawker Aggregation attended by both the Plaintiff and the Brains – see Exhibit 1 [16]-[17] quoted in [27] above. As could be expected, there is a dispute between the parties as to why the Brains participated in this inspection: the Plaintiff at Exhibit B [11] said:

“I had thought it was reasonable that the Brain’s who attend the inspection of the Hawkers properties with me as they would ultimately be the properties that the joint venture would operate. The Brains had no hesitation in attending.”;

Whereas Ken Brain in Exhibit 3 [33] said this:

“On 24 August 2016, Mr Walsh inspected the Hawkers properties. Wendy and I also attended the inspection with Mr Walsh because we had expressed interest to purchase the Hawker properties, which comprised seven farms, and considered that if Mr Walsh only offered to purchase some of the Hawker properties, Trevor and Colin Hawker might agree to sell the remainder to us. Furthermore, we were unsure at that time as to whether Dalree was genuinely on the market for sale because Mr Walsh had said to me words to the following effect on 11 July 2016 (in the conversation I refer to at paragraph 10 above):

‘I will not go ahead with the sale of Dalree until I have secured another property.'

The Plaintiff did not approach his bank (NAB) until he telephoned Mr Randall Holmes on Monday 12 September 2016. Mr Holmes generated an email of 13 September 2016, about which the Plaintiff was cross-examined on 3 March 2022:

“Q. Do you agree this is an email you received from Mr Holmes on 13 September 2016?

A. Yes.

Q. He’s simply telling you that you were looking at selling Dalree for $6.5 million?

A. Yes.

Q. You’re looking at retaining Archdale; you’re looking to purchasing Hawker Aggregation for $16 million; and you’ll sell some land. It then suggests the funding table: $16 million; the costs, 200,000; the funds required are 16.2 million; take off the sale proceeds of Dalree and you’re borrowing requirement’s 9.7 million; you’ve got an existing debt of 2.6 million; the borrowing requirement is increased to $12.3 million; and then there’s a land sale, 1.4. So the required is 10.9 million you need to borrow, is that correct?

A. That’s correct.

Q. Then assets and liabilities are listed. The second page, page 68, it talks about cash flow that you would be receiving for the financial years 16/17, 17/18. He asks you some questions in relation to the cash flow, and he says at the bottom in the middle of page 68:

‘I think it would be best for you to provide cash flows for the three years, including Archdale, given it forms part of your income producing asset base. A month-by-month cash flow would be ideal as this will help determine the peak debt working capital requirement, but also allow me to calculate a more accurate interest cost.’

Then security is referred to; he says at the bottom, ‘Alan, it will be great if you can confirm change, clarify the above, or perhaps work on some revised cash flows.’ If you could turn to page 70, you’ll see that Mr Holmes sent Mr and Mrs Brain an email on 19 September 2016 asking them to forward that or print that and provide that email to you, which is below, that is the email of 13 September. Do you see that email?

A. I’ve got page 70, yes.

Q. If you can you see, I’m reading from the top, ‘Ken and Wendy, and Alan, as discussed, please print and provide to Alan. Thanks Randall’?

A. Yes.

Q. That email was sent to Mr and Mrs Brain and that’s because your email was having problems around this time and you couldn’t send and receive emails?

A. That’s correct.”

Eventually, NAB gave the Plaintiff approval for a loan of $12.3M to buy the Hawker Aggregation (see T.03/03/22 p35.19). NAB’s offer was not taken up straightaway for two reasons: a delay in obtaining a valuation and the Plaintiff’s concern about the quantum of the fees the bank was proposing to charge the Plaintiff. The later led to his “shopping around” with both the Commonwealth Bank and the ANZ Bank.

46. Drawing these considerations together provides this chronology:

7 July: the Plaintiff telephoned Ken Brain re Dalree

11 July: meeting of the Plaintiff and the Brains at Archdale

13 July: Ken Brain sent a list of properties to the Plaintiff

14 July: the Plaintiff telephoned his accountant, Mr McCleary

15 July: meeting of the Plaintiff and Mr McCleary in which the Hawker Aggregation is discussed.

I conclude that it is likely that at the meeting on 11 July, the Plaintiff discussed selling Dalree to the Brains for about $6.5M in order to buy another property or other properties nearby, in order to pursue the PJV. He knew that the Hawkers Aggregation was for sale but wished to consider other properties nearby, perhaps because of the size/price of the Hawker Aggregation. Clearly, the Plaintiff approached the purchase of the Hawker Aggregation cautiously.

The Dalree Rice Crop

47. As set out by Wendy Brain in her first Affidavit, Exhibit 2, quoted above at [28], on 9 September 2016 the Brains presented their business plan to NAB and the bank approved their finance on 10 October 2016, albeit the valuation was not made until 21 November 2016. Exchange of contracts could not occur before this date. As the sale of Dalree was contingent on the purchase of the Hawker Aggregation, exchange could not take place until after both a bank approval of finance for this purchase and the making of a satisfactory valuation report for this property (also on 21 November 2016). As deposed to by Wendy Brain, in the Coleambally area, a rice crop is planted in October each year and harvested in about March/April of the following year (see [28] above).

48. Ken Brain’s first affidavit, Exhibit 1, contains this evidence:

“30. In October 2016, the summer crops typically grown in the Coleambally region – maize, soybeans and rice – were due to be planted. At that time, the NAB had not given finance approval for Wendy and I to purchase Dalree. As the sale proceeds from the rice crop (the Dalree Rice Crop) had been included in the business plan, I wanted to confirm with Alan that because of the settlement delay, we would receive the proceeds of sale from the rice crop crop that was due to be planted by Alan on Dalree at that time.

31. It was important to me to clarify with Alan that the Dalree rice crop was to be planted and that we would receive the proceeds of sale from the crop because I was aware if the rice crop was not planted and we were not to receive the sale proceeds, we would have to wait 12 months until late 2017 before we received any sort of income from Dalree, given that the next rice crop would not be planted until October 2017.

32. Around early October 2016, I met Alan at Dalree at which time we had a conversation. This conversation was within a week of our earlier conversation referred to at paragraph 21 above. We said words to the following effect:

I said:      ‘I haven’t heard from the bank. It’s looking like settlement is going to take a while. I just want to confirm that you’re planting the rice and that I will pay for the water and I will receive the proceeds from the rice crop.’

Alan said:   ‘Yes, I’m planting the rice. You will receive the rice crop. You can pay me back my planting costs when the sale all goes through.’

I said:       ‘Okay that’s great, we’ll pay the water bill and your input costs so keep your invoices and we’ll fix you up once settlement happens as long as we get the proceeds of the rice.’

Alan said:    ‘Yes, I agree. That’s fine. I’m getting the proceeds from the Hawkers rice crop this coming year, and you will get the proceeds from the rice crop growing on Dalree to help you pay for the farm.’

33. Following this conversation with Alan at Dalree in October 2016, I am aware that Alan planted the Dalree Rice Crop and planted a rice crop on Hawkers.

34. In reliance upon the various conversations I had with Alan from August 2016 to October 2016relating to the sale proceeds of the Dalree Rice Crop, I agreed to pay for the water bill for water needed to irrigate the Dalree Rice Crop and to pay the purchase price for Dalree of $6,500,000.”

In [36] of the same affidavit, Ken Brain pointed out that the cost of irrigation water was one of the largest expenses involved in growing a rice crop. In considering that evidence one must also consider Wendy Brain’s evidence in Exhibit 2 [28] to [29], quoted in [28] above. The conversation deposed to by Ken Brain which I have just quoted amounts to an oral contract. Did this conversation take place?

49. Exhibit B, the Plaintiff’s second affidavit contains this:

“17. In relation to paragraph 32, I deny that the conversation set out in that paragraph took place.

18. In relation to paragraph 34, Ken and I had a conversation very early on, when discussing the joint venture and my sale of ‘Dalree’ to the Brains, that I did not have enough water to grow the rice crop on ‘Dalree’ and that I would need to purchase more water. In or around February 2017, I said to Ken:

‘There’s 2000 megs up for sale at $2.00 per meg. I’ll buy that and then we’ll have enough water to finish the ‘Dalree’ rice crop and we can use the balance to water some pasture.’

Ken replied:

‘That sounds like a plan.’

19. The Coleambally Irrigation water year ran from July 2016 to May 2017. When Coleambally Irrigation put their bill in, settlement of ‘Dalree’ had occurred and, whilst some of the water had been used to water the Dalree Rice Crop, the balance had been used to water pasture on ‘Dalree’ which Ken and Wendy had the benefit of. So far as I understood it, the expense was to be subsumed into the joint venture and, as such, it did not worry me that Ken was paying a bill.”

As I understand the evidence, the vast majority of the irrigation water was used on the rice crop. I also find it difficult to understand how watering pasture before completion, could assist a purchaser after completion. My immediate reaction to this evidence was, if the Plaintiff be entitled to the rice crop, why not pay for the water himself? This question has not been satisfactorily answered.

50. Exhibit 1 contains this evidence:

“37. Sunrice is a business that purchases rice from farmers in the Coleambally region.

38. In about February 2017, I had a conversation with Alan to the following effect regarding the requirements of Sunrice to receive payment in respect of the Dalree rice crop:

Alan said:    ‘You need to make sure you get the rice delivery cards organised in your name for Dalree so that you get paid for the rice on Dalree on time.’

I said:       ‘I have been waiting for settlement to go through, then I will call Sunrice.’

39. In order for the defendant to receive payment from Sunrice of Dalree Rice Crop sale proceeds, it was necessary to transfer the Sunrice registration formerly held by Alan for Dalree to the defendant. In order to sell rice to Sunrice, a rice grower is issued with a delivery card which relates to and identifies a specific property where the rice for that rice grower is grown. When a rice crop is delivered to Sunrice, the grower must present the delivery card to Sunrice with the rice. The purpose of the delivery card is to ensure that the origin of the rice can be tracked to the specific property where it was grown, and so that the grower can be paid for the crop.

40. The delivery cards are issued by Sunrice in about February to Mach each year before harvesting of the rice crop that was planted in about October of the previous year.

41. From 14 March 2017, my solicitors corresponded with Sunrice to arrange the transfer in registration from Alan to the defendant of Dalree in order for the Defendant to receive payment of the sale proceeds from the Dalree Rice Crop.

42. On 23 March 2017, my solicitors lodged the transfer registration with Sunrice.”

The Plaintiff has admitted the conversation disposed to in [38] saying he was “acting on the basis that we were operating under a joint venture agreement”: Exhibit B [22]. There was no joint venture agreement. There is a confession but no actual avoidance. Nevertheless it brought this riposte from Ken Brain:

“131. In addition to the above evidence, in reply to Mr Walsh’s affidavit dated 17 November 2020, I rely on the following evidence:

…

(k) As to paragraph 22, I deny that Mr Walsh agreed to the transfer of the Sunrice delivery cards pursuant to any joint farming agreement. The Sunrice delivery cards were registered in the name of the defendant and required us to nominate our own bank account details to receive the proceeds. Mr Walsh did not request that payment be made into any joint bank account. We had no joint bank account.

Further, both my solicitors and Mr Walsh’s former solicitor, Mr Glowrey, gave notice to Sunrice on 23 March 2017 and 28 March 2017 respectively, that from 22 March 2017 the Dalree Rice Crop, being the first rice crop to be harvested on Dalree in the Autumn of 2017, was to be delivered in the name “K.C. & W.L. Brain Pty Ltd CAN 073 090 150’. In this regard I refer to the Notice of Transfer of a Rice Growing Farm (Notice of Transfer) sent by our solicitors to Sunrice on 23 March 2017 and the Notice of Transfer signed and sent by Mr Glowrey on behalf of Mr Walsh dated 28 March 2017. A copy of each Notice of Transfer is at pages 244 – 245 of Exhibit KCB-2.

… As of 28 March 2017, when Mr Glowrey signed the Notice of Transfer for Mr Walsh, I had not received the draft farm business model Mr Simpson referred to in his email dated 4 April 2017, or any of the agreements Mr Glowrey referred to in his email dated 19 April 2017 that he claimed were needed to establish the joint farming agreement.”

The “Notice of Transfer of a Rice Growing Farm” dated 28 March 2017 signed by Mr Glowrey is Exhibit N. Endorsed on it is this:

“The first rice crop to be delivered to the Board in the name of the Transferee from this will be that harvested in the autumn of 2017.”

Mr Glowrey had been the Plaintiff’s solicitor for 30 years. (T03.03.22 p18.21).

51. The Plaintiff’s parry to this evidence is in Exhibit C [82]:

“83. In relation to paragraph 131(k), I only allowed the Dalree Rice Crop to be delivered in the name of K.C. & W.L. Brain Pty Ltd CAN 073 090 150 as I believed that we were operating under the umbrella of the proposed joint venture. Ken Brain and I had had a conversation in or around December 2016 where he said:

‘I really struggle to manage my cashflow throughout Autumn as we don’t get the profits from our corn crops until July. It’s going to be tight.’

Whilst I understood that the joint venture agreements had not yet been finalised and there was still work to be done, based on the positive indications and correlating behaviour from the Brains, I was confident in allowing the Brains to deliver the Dalree Rice Crop in their name and to receive the payments from Sunrice on the understanding that it was to be used as working capital under the joint venture and that these payments would make the transition into the joint venture smoother for them whilst they awaited their corn crop proceeds. I was led to believe from the Brains’ behaviour that we were working towards the joint venture where our working capital accounts or overdrafts would be rolled into one so any proceeds from the Dalree Rice Crop would be available to be used for the purposes of working capital for the benefit of the joint venture. Given that the Brains have now pulled out of the proposed joint venture and allege that they never intended on proceeding with a joint venture, the proceeds of the Dalree Rice Crop need to be reimbursed to me.”

Ken Brain’s riposte was this in Exhibit 5 [45]:

“45. As to paragraph 83, I deny the conversation. When on 23 March 2017, the ay after settlement of the sale of Dalree, Mr Walsh transferred the Dalree Rice crop to Wendy and me, and delivery cards were subsequently issued I our name by Sunrice (which meant that Wendy and I would receive the profits from the Dalree rice crop) Mr Walsh did not say or indicate in any way that the transfer of the rice crop was part of any joint venture arrangement. I assumed and believed that Mr Walsh transferred the Rice crop to Wendy and me on the day after we settled the sale of Dalree because he had agreed we would receive the proceeds of sale of the rice crop. I deny the transfer of the Dalree Rice crop to Wendy and me would make the transition into the joint venture smoother whilst we waited to receive our corn crop proceeds. I never had a discussion with Mr Walsh about needing the proceeds of the Dalree Rice Crop whilst we waited for profits from the corn crop that was to be planted in 2017.”

52. It is common ground that, as a result of the Plaintiff’s negotiations with the Hawker brothers, they permitted him to receive the rice crop on the Hawker Aggregation that the Plaintiff would cultivate and harvest, at the Plaintiff’s expense, but to his profit (see Exhibit C [33]). The rice harvested from Dalree amounted to 1,572 tonnes (Exhibit A [58]). The rice harvested from the Hawker Aggregation amounted to 4,918.32 tonnes (see Exhibit ‘C’ [236] to [238]). In Exhibit 5 [25] Ken Brain deposed to this conversation:

“25. As to paragraph 33, I was aware of the agreement because on or about November 2016 I had a conversation with Mr Walsh to the following effect:

He said:    “I have agreed to reimburse Colin and Trevor Hawker their costs of planting the rice crop on Hawkers as I will receive the rice.”

I said”      “The same as we have agreed to do with you for Dalree?”

He said:   “Yes.”

This conversation is flatly denied by the Plaintiff: Exhibit J [5].

53. In my assessment, the flaw in the Plaintiff’s position about the Dalree Rice Crop can be seen in this evidence given at Wagga Wagga on 3 March 2022:

“Q. You received the proceeds of the Hawkers rice crop after you purchased Hawkers?

A. Yes.

Q. What were the net proceeds of that crop you received?

A. I’d have to look that up.

Q. Could you give us an estimate?

A. 1.4.

Q. $1.4million?

A. Yep.

Q. So the Hawkers rice crop was 450 hectares?

A. Yep.

Q. The Dalree rice crop was 150 hectares?

A. Yes.

Q. So the Hawkers rice crop was three times the size of the Dalree rice crop?

A. Yes.

Q. And the Dalree rice crop proceeds of sale were approximately $660,000?

A. (No verbal reply)

Q. So you would think that the sale price of the Hawkers rice crop would be approximately three times and you’re saying around $1.4 million?

A. Well, there go you go; you knew.

Q. I don’t know the figure, but I think we can both agree that it’s approximately $1.5 million or more?

A. Yep.

Q. After you purchased Hawkers and sold Dalree to the Brains, did you ever indicate to them that they would be receiving a share or proportion of the Hawkers rice crop proceeds?

A. No.

Q. If the agreement that you were working towards entering was that you would both share the income that was generated from Hawkers and Dalree rice crops, why wouldn’t you have indicated to them at some point that they were entitled to receive a proportion of the Hawkers rice crop?

A. I negotiated the contract of Hawkers, which was a separate sale farm to the sale of Dalree, so it was totally separate, and remembering that it was still proposed, we, we didn’t have anything signed.

But I had agreements from Ken all along the line that we were heading down that path, and there was a matter of signing the necessary papers and, and going through the necessary process to actually bring that, so that it was a binding agreement, and we hadn’t reached that path. But we were working together to get to that path.

Alan replied with words to the effect of:

“Of course.”

3. I completed and signed an Offer to Purchase Unspecified Water Parcel with Waterfind, the Water Broker I used to source the water.

…

4. Over July and August 2016, I purchased a total of 3,100 megalitres of water and parked it on Alan Walsh’s Murrumbidgee water account. The following documentation confirms the purchases:

(a) 200 ML purchased on or around 14 July 2016 from AR & DM Papaolo;

….

(b) 400 ML purchased on or around 27 July 2016 from Amberley Pastoral Co

…

(c) 505.9ML purchased on or around 27 July 2018 from T A Field Estates Pty Ltd

…

(d) 494.1 ML purchased on or around 27 July 2016 from T A Estates Pty Ltd

…

(e) 1000 ML purchased on or around 9 August 2016 from T A Field Estates Pty Ltd

…

(f) 500 ML purchased on or around 10 August 2016 from Daniel and Marilyn Rosato

…

5. I confirm that I paid for all of the above purchases.”

A further affidavit of the Plaintiff sworn 5 May 2022 was also read (Exhibit T) and the Plaintiff was further cross-examined (T 15-08-22, p7-28). This time the cross-examination was to the effect that pre-contracted disclosure by the Plaintiff showed that as at 14 December 2016 the remaining available water for Dalree was 4,385.6ML, but that was before Mr Moore’s 3,100ML were transferred back to him. However, searches which ought to have been made by the Defendant’s solicitor with CICL after exchange and prior to settlement would have disclosed the transfer of 3,100 ML back to Mr Moore.

86. The attack on the Plaintiff’s credit was wholly unsuccessful and ought not to have occurred. The issue was raised late. If it had been raised earlier, the Plaintiff may have been able to have the evidence from Mr Moore and from himself that was eventually led, and the matter would not have taken Court time. The Defendant must pay the costs thrown away by raising this issue.

87. The issue could have been relevant to how much water was needed to be spent on the Dalree Rice Crop prior to completion of the Dalree sale, but that issue evaporates once it is determined that the Defendant is entitled to the Dalree Rice Crop and has paid for the water in any event, there being no longer any suggestion that Dalree water was transferred e.g. to Archdale or to the Hawker Aggregation.

88. However, the evidence concerning this issue does show that the Plaintiffs memory was not the best: he could not remember dealing with Mr Moore in July 2016 and January 2017, both critical times in his relationship with the Brains. Furthermore, his cross-examination on 15 August 2022 showed him to be argumentative and, at times, obdurate.

Other aspects of the Plaintiff’s evidence

89. In Exhibit A, the Plaintiff said this on oath:

“44. I was informed by NAB That the valuation came back at around $6,200,000.00 which was under the agreed upon price of $6,500,000.00.Due to this, I was contacted by Randall Holmes at NAB who said words to the effect of:

‘The valuation is under the purchase price. Have you got any crop there that you can throw in to bring the value up to get this across the line?’

I replied with words to the effect of:

‘Yeah. I’ve got around $300,000.00 worth of wheat and barley crop in that I can add to the deal.’

He replied:

‘Great. That should do it.’

45. As such, I agreed to include 300 hectares of wheat and barley which had been grown on Dalree during the 2016 Winter cereal growing season and which had been harvested by late December 2016.”

In evidence he said this:

“Q. So you're saying that when you had the discussion when?

A. The, the discussion was with the valuer; he rang me up and said, "You're 250 short of what you need to be. Have you got anything that we can put in?" and I said, "Well, I'll put the rice crop in", and he said, "Well, the rice crop's no value because it's only just been planted", and he said, "Have you got any other crops available?" and I said, "There's some wheat and barley there". And he said, "How much?" and I told him, and he said, "Well, that, that would suffice to make up the 6.5 million", so I agreed on that basis. The crops were not harvested.

Q. So you're saying the crops were not harvested?

A. Yes. At the time of the, at the time of the discussion the crops were not harvested.”

The actual valuation of Dalree by CBRE is $6.25M. It makes no mention of the inclusion of any crops, even when referring to the Contract of Sale (p 52 of the valuation). It is more likely that the conversation was with Mr Holmes of NAB rather than with one of the valuers. However, in the conversation deposed to in the affidavit there is no mention by the Plaintiff of seeking to include the rice crop and it appears to me to be unlikely that Mr Holmes would say a recently planted crop had no value, because the Plaintiff would have said to him something like this, which he told me on 4 March 2022:

“Q. There's a number of factors that can affect whether or not a rice crop matures. That's correct, isn't it? For instance, the rice crop can fail because of storms, floods, pests?

A. Yes.

Q. There's a risk that every crop may fail?

A. Yes.

Q. You don't know when you plant the rice in October what the extent of the yield will be from that crop in the next year around April-May?

A. Given that I've been growing rice continuously for 45 years, never lost a crop, and really one particular year was really cold which was totally out of the box, reduced the average yield by a ton but apart from that I've produced a crop of average or better in all those 45 years of growing rice.”

The inconsistency which I have just discussed suggests recent invention.

90. The Plaintiff’s case is that he adopted a complex way of extending the Defendant a loan:

“Q. On your own case, there was no need for you to transfer the Dalree rice crop to the defendants because you would've received the proceeds of sale, you could've put them into a joint account, and you could've said to Mr and Mrs Brain that "The funds are there; you can use those funds if you need to until your corn crop proceeds come in", that's correct?

A. You're, you're proposing just another way of doing things.

Q. But I'm putting to you that there is absolutely no reason for you to transfer the Dalree rice crop to the defendants?

A. That's your opinion. That's your opinion.

Q. No, I'm asking you do you agree?

A. Well, I, I saw an opportunity to help Ken and Wend out. I--

Q. But you could've just lent them money?

A. I say, that's, that's, I, I did that, right. I saw an opportunity.

Q. Why didn't you just lend them money?

A. I could have.

Q. So you went to the effort of transferring the Dalree rice crop to the Brains to allow them to borrow some money off you?

A. In the short term, I suppose yes.”

Why he did not adopt this simple procedure is not adequately explained.

91. Immediately after that answer I asked the Plaintiff to calm down for a minute and then this evidence was given:

“Q. Would you go to page 636 of volume 2, please? I think you've got it open there.

A. Yep.

Q. You go back to the preceding page, 635 at paragraph 21:

‘I'm not sure why it says four undeveloped farms because there were seven farms altogether in the Hawker Aggregation. I believe this is an error on Rob Brown's part. I am confident the reference to undeveloped farms is a reference to the Hawker Aggregation. My belief is that the Hawker Aggregation was underdeveloped and not undeveloped.

Both the Brains and I knew there would be a lot of work to do in bringing the Hawker Aggregation properties up to scratch and I believe that both the Brains and I saw this as an opportunity for growth. In the discussion referred to in paragraph 9 above, Ken and I had discussed that the profits generated by me in growing the Dalree rice crop and the Hawkers rice crop would be put towards developing Hawkers to bring the property to a standard that I had achieved at Dalree.’

Then you annex a document from Rob Brown, dated 26 July 2016, correct?

A. Correct.

Q. Then in the next paragraph, the above email was sent after Rob Brown had an initial meeting with Ken and Wendy Brain, right, and then paragraph 23, you say the email from Rob Brown confirms your understanding at the time. Now, at the time can only be July 2016, correct?

A. Correct.

Q. At that time, the Dalree rice crop wasn't even in the ground, was it?

A. (No verbal reply)

Q. Nor was Hawkers rice crop, and, as I understand it, and correct me if I'm wrong, and I'm often wrong, but I thought the Brains didn't inspect the Hawker Aggregation until August?

A. That's correct.

Q. Sorry?

A. That is correct.

Q. So how could you be confident that Ken and Wendy Brain were aware "that profits generated by me, through the Dalree and Hawkers rice crops, be attributable to me and those crops would be used to develop Hawkers" when they haven't even looked at Hawkers and, therefore, there could've been no consideration about farm 204 being the one to develop first?

A. Your Honour, it's my understanding that they did look at the property at an earlier stage, I might be wrong. But the properties are on the roads, virtually next door to them, it's not very far away. So, they, they would've had a good understanding looking over the fence what, what it is, you know, so, yeah.

Q. But this is all speculation; you hadn't signed any contract for the sale of Hawker Aggregation, had you?

A. No.

Q. You hadn't obtained and finance for it?

A. No.

Q. Hadn't even explored the question of finance for it?

A. No.

Q. Hadn't negotiated at all with the Hawkers?

A. No.”

This, in my view, smacks of implausibility.

The attitude of the Brains to the PJV

92. Both the written and oral evidence of the Brains is replete with disavowals of any intention at any time to participate in the PJV. Such disavowals are, in my view, reflective of the falling out of the parties after 1 June 2017 and do not reflect their true approach to the PJV prior to that time. For example, they attended meetings arranged for them to attend (sometimes without the presence of the Plaintiff) with personnel from Peppin Partners and with Mr McCleary, the Plaintiff’s long time accountant, and gave them such information and details as they required. A few examples of the evidence shows that initially the Brains were interested in the PJV. Mr Robert Brown swore an affidavit on 23 July 2021 (Exhibit F). It contains this material:

“26… I confirm that I met with Ken and Wendy Brain on 23 February 2017. I do not believe that Alan Walsh was there. My understanding was that Ken and Wendy Brain and Alan Walsh had met with Brian McCleary at his office a few days earlier to arrange for a company to be registered which was to be the trustee of a unit trust that would operate the joint venture. I was provided with certain documents that needed to be signed by Ken and Wendy Brain and Alan Walsh by Brian McCleary’s office and the Brains attended my office on 23 February 2021 to sign.

27. In relation to paragraph 54, I deny that Ken Brain stated that he would not commit to a joint farming arrangement. I confirm that we had discussions around needing to develop a financial model that his accountant could go through with a fine tooth comb before finalising the agreement. In addition, I do not recall having to persuade either Ken or Wendy Brain to attend, or participate in, these meetings. It did not take any additional organizing or effort on my part to get them there. They continued to show up. I was only responding to what had been agreed that we would act on. I deny that I said: ‘Come to a meeting with Brian McCleary’. I would not have done that spontaneously. Brian McCleary is a very busy man and I would not have expected to just walk the Brains over to his office and have him meet with them. Any meeting with Brian McCleary, or Peppin Planners, would have been booked in advance. In addition, as set out in paragraph 26 above, it was my understanding that the Brains had already met with Brian McCleary.

28. In relation to paragraphs 56 and 57, I deny that I attended a subsequent meeting that day at Brian McCleary’s office. Ken and Wendy Brain signed the documents at my office. I deny that I stood over Ken Brain whilst he was signing documents.

. Ken and Wendy Brain gave me no indication that they were not aware of the contents, and purpose, of the documents they signed in the meeting held on 23 February 2017. I deny that at any time during my dealings with Alan Walsh and the Brains that Ken or Wendy Brain expressed any concern about any of the documents that they signed.

29. On the night of 23 February 2017, I received an email from Ken and Wendy Brain referring the Farm Co-Operatives & Collaboration Pilot Program. I recall that this was a program where the government was putting money into joint ventures. This email and its contents were consistent with my impression that Ken and Wendy Brain were actively and willingly exploring the idea of a joint farming agreement with Alan Walsh.”

The email of 23 February 2017 at 6.04pm is addressed to both the Plaintiff and Mr Brown and is itself instructive as to the Brains attitude at the time:

“Subject: grants program

Alan, Rob

This is a link to the website of a Farm Co-operatives & Collaboration Pilot Program funded by the Australian Government

still working my way through it but would love your thoughts on how or if we can use it. Even if we are only getting the free advice I think it will be very helpful

The Bulla Burra example with John Gladigau is very similar to what we are proposing

Ken and Wendy Brain”.

In cross-examination Mr Brown gave this evidence:

“Q. If I could take you to paragraph 29, you say that, "On the night of 23 February 2017", this is after the meeting that you attended with Mr and Mrs Brain and Mr Walsh and Mr McCleary, "I received an email from Ken and Wendy Brain referring to the Farm Co-operatives and Collaboration Pilot Program." You say then that, "This email and its contents were consistent with my impression that Ken and Wendy Brain were actively and willingly exploring the idea of a joint venture, a joint farming agreement with Mr Walsh." So still at that day it was nothing more than an idea of the joint venture being entered into by the parties?

A. Yeah, the - Ken was asking would this funding be of use in, to, to assist them in putting the joint venture together.”

93. It is also correct that at least Ken Brain signed necessary documents that lead to the formation of AGKWAL Pty Ltd on February 2017. This was designed by Mr Cleary to carry on the PJV. The initial directors and shareholders in this company were the Plaintiff and Ken Brain. A copy of the company search is annexed to Exhibit 3 and may be found at CB Vol 4 p 1333. I am unable to accept Ken Brain’s assertion at Exhibit 3 [59] that he did not knowingly give his consent or knowingly sign any documents to be appointed as a director of the company. He may not have been able to read the documents but I am confident that Mr McCleary would have explained to Ken Brain what the documents were, probably pointing out that this was an anticipatory formality so that the PJV could be set up. Mr McCleary gave this evidence in his affidavit of 31 May 2021 (Exhibit D):

“9. On 3 February 2017, I received an email from Rob Brown regarding the proposed joint venture arrangement. Attached to this email was a document entitled “Family Strategy Development – draft concept for Ken and Wendy Brain”.

10. That document aligned with my understanding of where we were up to in relation to sorting out the joint venture arrangement as at 3 February 2017 and what my role in the arrangement was. Annexed hereto and marked with the letter “E” is a true copy of this email and its attached document entitled “Family Strategy Development – draft concept for Ken and Wendy Brain”.

11. In relation to paragraph 55, I deny that this meeting occurred as alleged by Ken Brain. I actually met with Ken and Wendy Brain on 20 February 2017. Annexed hereto and marked with the letter “F” is a true copy of my calendar showing this appointment.

12. During the meeting on 20 February 2017, we discussed the establishment of a unit trust. Wendy Brain gave me the suggested name for the business, AGKWAL. I asked a member of my staff to do a search of the ASIC data base of organisations and business names to make sure the name AGKWAL had not already been registered. Annexed hereto and marked with the letter “G” is a true copy of those results.

13. During this meeting, I asked for, and was provided with, the information that I required to get the trustee company established with out shelf company provider. Mr Brain gave me his address, full name, date and place of birth. Mr Walsh, who attended the meeting as well, gave me his place of birth (as I already had his full name, address and date of birth). I handwrote those details on the ASIC search results referred to in paragraph 12 above. I told Mr Walsh and Mr Brain: ‘In order to register the company with ASIC, the unit trust will need a tax file number and, as the unit trust will be paying for things such a fuel, wages and tax, it will require an ABN to be registered.’ This advice was noted down in my handwriting on the search results.

14. I recall that Mr Walsh and Mr Brain both said:

‘We are going to be the directors.’

15. Mr Brain also handed me a struct5ure diagram of his family business and told me which of his entities were to hold the units in the unit trust. Mr Brain said:

‘The unit holder will be KC & WL Brain, and KC & WL Brain Pty Ltd ATF Brain Family Trust.’

16. I circled that entity on the structure and hand wrote the comment ‘units in AGKWAL U/T’. Annexed hereto and marked with the letter ‘H’ is a true copy of that structure diagram.

17. From 20 February 2017 to 23 February 2017, the shelf company provider that we use sent various documents to be signed. During this process, I was alerted to the fact that we required Wendy Brain’s middle name. A member of my staff contacted Mrs Brain and was provided with her middle name and her email address.

18. Once I received the Power of Attorney document from our shelf company provider, I provided that document to Rob Brown who was to meet with the parties on 23 February 2017. I believe that the Power of Attorney document was signed by Ken Brain and Alan Walsh with Rob Brown on 23 February 2017. I was not in attendance at this meeting as I was in our office at Hay all of that day as I see clients there on a regular basis. Hay is 124 kms north Deniliquin. Annexed hereto and marked with the letter “I” is a true copy of my calendar for 23 February 2017.

19. I met with Rob Brown on 23 February 2017 who provided me with the signed Power of Attorney and I sent it on to our shelf company provider. Annexed hereto and marked with the letter ‘J’ is a true copy of my calendar showing this appointment.

20. Subsequent to 24 February 2017, both my staff and I contacted Ken and Wendy Brain and Alan Walsh on several occasions to organise for them to come into our Deniliquin office to sign the various other documents that had been sent to me by the shelf company provider however farming activities always took precedence for them and that signing did not eventuate.

21. On 2 March 2017, I received an email from Rob Brown regarding the proposed joint venture arrangement. The email attached a document entitled ‘Draft terms for Ken and Wendy Brain, Alan Walsh, James Walsh and Rachael Harker’. This document stated:

a. Business and unit holders agreement. The agreement covering the operators and business; K&W and AW as individuals, shareholders and directors and the business and as unit holders:

i. The entity is AGKWAL Unit Trust – a discretionary unit trust. ABN is 15303391014. We will provide trust deed.

ii. The trustee is AGKWAL P/L. We will provide ASIC extract.

iii. 50% of the units will be owned by Brain Family Trust. Trustees are KW & WL Brain and KC & WL Brain Pty Ltd.

iv. 50% of the units will be owned by Alan Walsh Family Trust. Trustee is Archdale Farms P/L.”

94. The attitude of the Brains to the PJV prior to the falling out that commenced on 1 June 2017 was not that which they now ask me to believe. It is ex post facto rationalization, based on their reaction to the claim by the Plaintiff to the proceeds of the Dalree Rice Crop. As I said at said at [55] above, this has caused me to approach the evidence of Ken Brain with circumspection. The PJV offered something to both parties: the Plaintiff would have the Brains, hard-working, progressive and reliable farmers as his working partners as the Plaintiff approached his seventh decade, and the Brains would have the benefit of his acquired expertise in rice farming and rural property development. I believe it to be likely that the Brains’ initial attitude to the PJV is best summarised in a document prepared by the NAB, created by Tony Gigliotti for Ms Jessica Davis, on 29 September 2016 but updated on 13 October 2016, CB Vol 3 p 837, which contains this at p 839:

“I met with the Brains yesterday and they have said there is a lot of water to go under the bridge prior to forming a partnership with Walsh. They may look to assist each other on a contracting [point] of view and see how they get on. [Their] words were, maybe in 18 months, two years we may be looking at doing something formally together.”

In less than 12 months the relationship had failed.

Finding and disposition

95. I find that the Defendant is entitled to the proceeds of the Dalree rice crop harvested in April 2017. I shall hear Counsel as to appropriate orders concerning the disposition of these proceedings.

Decision last updated: 20 November 2023