63 Stuart Leckie claims that the family farming arrangement the subject of these proceedings was an 'unfair contract', as that term is defined in s 105 of the Act. The definition provides:
unfair contract means a contract:
(a) that is unfair, harsh or unconscionable, or
(b) that is against the public interest, or
(c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or
(d) that is designed to, or does, avoid the provisions of an industrial instrument.
64 There was no question that this arrangement fell within the wide definition of contract appearing in s 105, even though it involved no legally binding obligations, so far as any of the parties were concerned. This was not a commercial arrangement entered at arms length by property owners who together wished to establish a farming operation as a joint venture. Rather, it was an informal arrangement between close family members, made in order to support a daughter and son-in-law farm a property which they had bought, because the son-in-law wanted to farm. Understandably, the case was not pressed on the basis that the arrangement was unfair for any of the reasons falling within paragraphs (b) to (d) of the definition of unfair contract. What arises for consideration, after the termination of the arrangement, is whether the arrangement was unfair, harsh or unconscionable, given the circumstances in which it came to an end and the consequences of the termination, for the son-in-law.
65 At the outset it must be observed that on the evidence, this was a case where it could properly be said that the applicant was under no constraint or inequality by way of comparison to the respondents, nor was his labour oppressively exploited. This conclusion flowed not only from the evidence of how the arrangement came into existence, but also from how it operated. Over the years, the amount and time of payment of the profits which the farming operation generated to the various family members involved, were always within the entire discretion of Owen and Judy Crockett. Over the course of some 14 years, their discretions were exercised in a way which proved to be of significant benefit to the applicant.
66 As well as the parties to these proceedings, the arrangement also involved the applicant's wife, Wendy Crockett. They were each involved in the farming of four substantial properties, Yeronga Hill, Iona, Westholme and Marysville.
67 The applicant and the three respondents were all working in the farming operation when it came to an end in 2004. Wendy Crockett had also performed work in the operation at various times in the past. She had participated in the arrangement through her partnership with Stuart Leckie. Even after their partnership was brought to an end in 2003, Wendy Crockett continued to receive a share of the profits of the arrangement, until December 2003, after which Stuart Leckie retained all of the profits paid to him by Owen and Judy Crockett for himself, until the arrangement came to an end in 2004. On Stuart Leckie's own evidence, that situation resulted from decisions made by him, not from any agreement reached between he and Wendy Crockett.
68 The financial benefits which flowed to Stuart Leckie under the arrangement were reflected in Owen and Judy Crockett's partnership financial statements, as well as those of the partnership between he and Wendy Crockett and his own financial statements in the period after December 2003. In 2002, for example, Owen and Judy Crockett's partnership made payments of some $91,079 to Stuart Leckie and Wendy Crockett, by way of profit share. The partnership had gross income that year from the farming operation of $452,147.94, total expenditure of $287,974.82, including share farming payments made to family members of $180,000 (including Peter Crockett and his wife), with a resulting net profit of $168,886.85. Owen and Judy Crockett each received $84,443.42 share of those profits, although the drawings which they each took were only some $21,072.72.
69 In other years, the picture was considerably different. In 2003, the share farming payments made to family members were $148,181.82, being shared equally between Stuart Leckie and Wendy Crockett on the one hand and Peter Crockett and his wife on the other. Owen and Judy Crockett's share of profits was $39,746.46 each, but with drawings taken of only some $26,000 each. In 2001, share farming payments to family members were $151,522.72, while Owen and Judy Crockett's share of profits was $5,005.08 each and their drawings $15,891.70 each.
70 Owen Crockett's evidence was that the share of the profits which he and Judy received, did not entirely reflect their own contribution to this farming operation. They took a lesser share than what they paid to their children and their partners. While Stuart Leckie did not concede that to have been the situation, Owen Crockett's view was consistent with the financial records maintained by the partnership he conducted with Judy Crockett. It was also supported by other evidence, including evidence of the work which Owen and Judy Crockett undertook in the operation, as well as the ownership of the properties being farmed at various points.
71 Owen and Judy Crockett managed and operated the entire farming operation, including its financial affairs. They owned Yeronga Hill and in 1990 had reached an understanding with Stuart Leckie and Wendy Crockett, that although ownership of Iona was transferred to them, Owen and Judy would continue to farm Iona. Stuart Leckie undertook general farming work, under Owen Crockett's direction, after Westholme was acquired and the arrangement made. Stuart Leckie and Wendy Crockett owned Westholme and Iona and later paid part of the lease fees for Marysville.
72 Stuart Leckie was the prime caregiver for his and Wendy Crockett's four children, once she was away from the farm working full-time as a nurse. There was a dispute as to whether Stuart Leckie was usually available only to work about 35 hours per week in the farming operation, or whether it was 38, as well as ongoing weekend work. There was also a dispute as to how many weeks holidays per year Stuart Leckie took from the operation, 2 - 3, or up to 12 per year. There was another dispute as to who was more experienced in farming work, Stuart Leckie or Peter Crockett and which of them made the more valuable contribution to the farming operation.
73 Given that the underpayment claim originally made in the summons was not ultimately pressed, it is not necessary to resolve these issues. It should be observed however that even on Stuart Leckie's evidence, Owen and Judy Crocket were always concerned for their grandchildren's welfare and actively encouraged him to care for them, even at times when he offered to help them with required work, which they themselves then attended to.
74 Given the evidence as to the nature of the work Stuart Leckie performed, the hours he worked, even on his own case, the evidence as to the nature of the work performed by Owen and Judy Crockett, and the financial evidence, Owen Crockett's evidence that the share of the farming profits which he and Judy Crockett took, did not reflect the contribution which they made to the family operation, must be accepted.
75 The benefits Stuart Leckie received from the farming operation increased, after he ceased paying any share of the profit he received to Wendy Crockett. This was not as the result of any agreement which was reached with her, or on their evidence, with the respondents. After his partnership with Wendy Crockett came to an end, on his evidence Stuart Leckie appropriated the partnership assets and treated them as his own. After December 2003, he ceased sharing the payments he received from Owen and Judy Crockett with Wendy, even though she remained an owner of Iona and Westholme with him and those payments were by way of distribution of a share of the profits of the family farming operation. Owen and Judy Crockett's evidence that they did not learn of this until November 2004, was not seriously challenged. I am satisfied that if there be, in truth, any issue as to whose evidence should be accepted on this point, that the evidence of Judy and Owen Crockett should be preferred, for reasons which I will return to below.
76 On the respondents' case, by this unilateral conduct, it was Stuart Leckie who, in fact, brought the arrangement which the family had made together to an end in 2003. It is unnecessary to decide the matters which here arise on that basis, but it is certainly a view open on the evidence. There was, after all, no claim advanced that there was any legally binding contract in existence between these parties, but something different - a family arrangement, which perhaps raised moral, rather than legal considerations. Even so, the idea that Stuart Leckie had the right to unilaterally vary such an arrangement by excluding Wendy Crockett from participating in the profits which it generated, even given the informality of the arrangement, is not one which can readily be accepted.
77 The heart of the case pressed by Stuart Leckie was that it was not he who brought this arrangement to an end in November 2004, but Owen Crockett. He claimed that the arrangement was unfair in not requiring that he be given 15 months' notice of its termination and in not ensuring that if it was brought to an end, he either be left in a position where he could himself conduct a profitable farming operation on Iona and Westholme, or that he be entitled to a 1/3 share of the assets of the farming operation. On either basis, the money order claimed was $250,000.
78 For reasons which I will explain, I have concluded that the case, so pressed, was not made out on the evidence.
A one third share of the farming operation
79 It is convenient to firstly deal with the claim that the arrangement was unfair, in not providing that on termination Stuart Leckie should be entitled to a 1/3 share of the assets of the farming operation, valued at $250,000. There were numerous difficulties with the claim so advanced, reflective, no doubt, in part of the time at which the claim was first made.
80 It was first advanced by way of amendment to the summons on the second day of the hearing, after the respondents had put the applicant on notice of deficiencies which they pointed to in the original summons. That this claim had any foundation in what had transpired between these parties while the arrangement persisted, was not made out, or indeed really attempted to be shown on the evidence. There was, for example, no evidence that such an idea had ever been discussed between any of those involved in the arrangement, or that Stuart Leckie had any basis upon which such an expectation could have rested.
81 I am satisfied that on any view of the evidence, a conclusion that the arrangement was unfair on this account, would not be open, given the evidence of the respective contributions made to the arrangement by the applicant on the one hand and the respondents on the other, both when the arrangement was first entered and given what occurred while it subsisted. A consideration of the evidence as to matters such as the property being farmed, the work being performed and the financial contributions made to the operation by those involved in it, could not lead to the conclusion that in fairness, the applicant was entitled to a 1/3 share of the assets of this operation. The claim, so advanced, also suffered from the difficulty that it failed to take any account at all, of Wendy Crockett's interest in the arrangement.
82 On any view of the evidence, if it could be concluded that in fairness, the applicant should have had any entitlement to a share of the assets of the farming operation on its termination, it could only have been a substantially smaller one than that of Owen and Judy Crockett. Whether such assets existed and if they did, what their value might have been, was not established, although certain information relevant to such an assessment, such as a depreciation schedule, was pointed to in submissions. It is of course not a matter for the Court to recast the applicant's claim. It is for the applicant to make out the case advanced in the summons. I am well satisfied that such an onus was not here satisfied.
83 Part of the difficulty with the claim was that it paid no regard at all to the fact of Wendy Crockett's joint ownership of Iona and Westholme, and that she, too, was a part of this family arrangement, which always envisaged that she would share in the profits of the farming operation which the family conducted. After the termination of their partnership, Stuart Leckie treated Iona and Westholme as if he were the sole proprietor. He conceded that thereafter, it was his unilateral decision not to pay Wendy Crockett anything out of the share of the profits which he received and to treat the former assets of their partnership, as if they were also his alone. He neither sought, nor obtained her consent to this approach. Nor did he reveal to Judy and Owen Crockett, that he was not sharing any of the profits he was receiving with Wendy Crockett. From their point of view, their daughter receiving a share of the farming operation was an undoubtedly important aspect of the arrangement.
84 The arrangement had given Stuart Leckie and Wendy Crockett the opportunity to profitably farm Westholme, the property they had purchased in 1990 with the proceeds of the sale of the house Stuart Leckie owned at Cremorne, as well as with money then provided by his father, Ronald Leckie. The opportunity to farm Westholme was provided by Owen and Judy Crockett. Stuart Leckie wanted to stop nursing and go farming. They were prepared to expand their farming operation over Westholme and to have Stuart Leckie work with them, on a profit sharing basis. There is no basis in the evidence to assume that the opportunity to farm Westholme could have arisen without their support.
85 It is convenient at this point to deal with the issue between the parties as to whether the $58,000 provided by Ronald Leckie when Westholme was acquired, was a gift or a loan. It is finally unnecessary to resolve that question, but it must be observed that the evidence given by both Stuart and Ronald Leckie as to this and related questions, was less than satisfactory. Initially, each asserted in affidavits they had sworn that the house at Cremorne was owned by Ronald Leckie and not Stuart Leckie and that the whole of the sum used to purchase Westholme - some $270,000 - was a loan from Ronald Leckie. Similar claims have been made in other proceedings between Wendy Crockett and Stuart Leckie, as to the ownership of Iona and Westholme, however there the alleged loan has been increased by an 'interest' component, to take it to an amount of some $320,000. This evidence was disputed by Wendy Crockett. She understood that Stuart Leckie owned the Cremorne property and that the sum provided by his father was not a loan. Stuart and Ronald Leckie later conceded that their earlier evidence was not accurate. The Cremorne property was owned by Stuart Leckie and the amount of the loan was $58,000.
86 In cross examination, Stuart and Ronald Leckie each explained that their errors had arisen as the result of the lapse in time. Their evidence as to these matters, however, particularly explanations given in cross examination, left considerable doubts in my mind that the evidence was given in a way in which strict adherence to the truth would have required.
87 It is necessary to give some examples of these difficulties, so far as Stuart Leckie was concerned. He explained that the information as to the loan being $250,000, as well as the information as to who owned the Cremorne property, had originally come to him from his father. Stuart Leckie corrected his original evidence, after his father realised that an error had been made in relation to the loan of $250,000 they had first claimed, as well as in relation to the ownership of the Cremorne property. That realisation followed an examination of various documents, which had come to light in these proceedings and which supported what Wendy Crockett had sworn in her affidavits. In the other proceedings, the amount of this loan was nevertheless claimed to be even greater - $320,000, that figure, Stuart Leckie explained, having included an interest component. There was no suggestion in these proceedings that there had ever been any agreement that the 'loan' would attract interest. He was also unable to explain how a loan to his father, appearing in his financial statements in 2004 as $15,000, had increased to $45,000 in 2005. Both figures, on his explanation, related to the loan claimed in these proceedings to have been made in 1990, finally said to stand at $58,000. Such a loan was, however, not reflected in the financial records maintained in respect of the partnership between he and Wendy Crockett.
88 Stuart Leckie persisted with his evidence that the loan of $58,000 from his father was repayable, contrary to Wendy Crockett's understanding. Wendy Crocket was not cross examined on these matters. By way of contrast, Stuart Leckie also explained in cross examination that another loan appearing in his financial statements, of some $75,000 from Owen and Judy Crockett, was not repayable, even though they had asked that it to be repaid. Stuart Leckie could not explain the basis for that understanding, other than that it was advice he had received from an accountant.
89 It was evidence such as this, which raised a concern that Stuart Leckie's evidence was not given in a way consistent with a strict adherence to the truth. It followed that a consideration of his evidence had to be approached with considerable care when conflicts in the evidence required resolution.
90 I return then to the question of the assets of the farming operation. It was not in issue that Owen and Judy Crockett had long been farming Iona, as well as Yeronga Hill. Iona was transferred to both the applicant and Wendy Crockett in 1990, at Wendy Crockett's request, it being understood that despite the transfer, her parents' farming operation would continue unaltered. This transfer was of considerable benefit to the applicant, having in mind the evidence as to the current value of the property, alone. Despite this, the claim advanced in these proceedings fails to pay any regard to this understanding, consistently with the way in which Stuart Leckie had earlier conducted himself in 2004, when the arrangement came to an end. The result was that Owen and Judy Crockett were entirely excluded from farming Iona.
91 When Westholme was acquired later in 1990, Owen and Judy Crockett agreed to farm all three properties, so that the applicant could work with them, with he and Wendy sharing in the profits of the expanded operation. On their evidence, Owen and Judy Crockett funded that operation. There was no suggestion that Stuart Leckie or Wendy Crockett made any financial contribution, in order that the farming operation could then be expanded; that they themselves had any plant, stock or equipment which they contributed to be used in the business; or that it was agreed by Owen and Judy Crockett that Stuart Leckie or their daughter would also be given a share of their farming business, or its assets, which were then used in the expanded operation. All that was agreed was that Stuart Leckie and Wendy Crockett would receive a share of the profits.
92 On this evidence, it could not seriously be thought that this arrangement was unfair to the applicant, at the time it was made, or indeed subsequently. The expanded operation was conducted profitably, with Owen and Judy Crockett managing the operation and Stuart Leckie providing his labour. Given how the profits were shared with Stuart Leckie and Wendy Crockett, they undoubtedly both benefited from the arrangement.
93 Owen and Judy Crockett continued farming in partnership with each other, the partnership meeting the outgoings and receiving the income generated by the expanded operation, and paying a share of the profits made to Stuart Leckie and Wendy Crockett's partnership. The arrangement, so structured, continued until Peter Crockett and his wife also came to participate in 1995. There was no complaint made about that development.
94 Financial records for the partnership between Owen and Judy Crockett before the year ending June 1999 were not in evidence. Whether or not the business and the profits generated grew, when the operation was first expanded over Westholme in 1990, or whether Owen and Judy Crockett kept a reduced share of profits, in order to make payments to Stuart Leckie and Wendy Crockett, was not revealed. A share of profits was certainly always paid to Stuart Leckie and Wendy Crockett and in 1995, Peter Crockett and his wife joined the arrangement and thereafter received the same share of profits to that which Stuart Leckie and Wendy Crockett received. Whether the profits which Owen and Judy received increased, or decreased, after they began farming Westholme in 1990, as was entirely possible, is unknown. The evidence suggested that profits grew, as the business expanded, permitting Peter Crockett to join the arrangement in 1995, but when that occurred and by how much, was not established.
95 The evidence of Owen and Judy Crockett was that they took a smaller share of the profits, because their needs were smaller than those of their children's families. While not conceded, this was not directly challenged.
96 In 2000, the Marysville property was leased and again the operation was expanded. Owen and Judy Crockett's partnership financial records reveal that distributions which went to Stuart Leckie and Peter Crockett and their wives increased from $77,998 respectively in the year ending 30 June 1999, to $90,200 in 2000. In 2000, Owen and Judy Crockett each received profits of $26,373.86 and in 1999, Owen and Judy Crockett each received $12,743. By way of further comparison, in 1998, the share farming payments made by Owen and Judy Crockett in total were similar to 1999 - $95,000 (or some $47,500 to the children's partnerships), out of total expenditure of $175,468.13, but leaving only $13,231.32 profit for each of Owen and Judy Crockett, from a total farm income of $198,743.83.
97 The lease payments for Marysville were met partly by Peter Crockett and partly by Stuart Leckie, so as to ensure that the outgoings for rates on Iona and Westholme and the lease payments for Marysville were similar. Otherwise, the partnership between Owen and Judy Crockett continued financing the operation - meeting expenses, receiving income and paying a share of profits to their children and their spouses, at regular intervals of 6 - 12 weeks, as money became available. Unlike the children and their spouses, Owen and Judy Crockett did not themselves always draw all of their share of the profits out of the business.
98 It was argued for Stuart Leckie that the partnership in effect operated as a 'bank' for the farming operation, with the assets of the operation thereby properly belonging to all of the parties, not to Owen and Judy Crockett, as they claimed. I am satisfied that this is a conclusion not properly available on the evidence. No financial records as to the early part of the operation were in evidence. The evidence as to what then occurred, did not support such a conclusion. There was no foundation established for the view that the assets of the partnership conducted by Owen and Judy Crockett, in some way became, or should have become, assets of the parties to the arrangement, when it commenced in 1990, so far as the applicant was concerned.
99 The applicant's case did not pay any attention to matters such as what assets Owen and Judy Crockett had when the arrangement commenced, which were then used for the operation; what funds were then in the 'bank'; who put funds into the 'bank', while the arrangement was on foot, in order that they were available to be used for the farming operation, particularly as the operation was expanded; what income was received by the 'bank' over the years; what was taken out of the 'bank' along the way and what remained, when the arrangement came to an end. Nor did it pay proper regard to how the profits of the operation were shared, over the years.
100 While expert evidence was led in the proceedings, neither expert addressed this claim, undoubtedly, because of the time at which it was first advanced. The applicant did rely on part of the evidence of Mr Tremain, noting that he had estimated 'that Iona and Westholme provided 24% of the overall profit of the joint farming enterprise'. On its face, that assessment cannot provide a foundation for a claim to 1/3 of the assets, especially if consideration is given to how the profits were in fact shared and the evidence as to the parties' respective contributions to the arrangement, as well as that of Wendy Crockett.
101 While the various financial records in evidence were not sought to be analysed, in order to support the submission made, in my view, on their face, they cannot provide a foundation for this claim.
102 For example, in 2000 and 2001, the profit shares paid to Stuart Leckie and Wendy Crockett were about $77,000; in 2002 and 2003 they increased to over $90,000 and in 2004, they fell to about $88,000. In 2000, the profit shares received by Owen and Judy Crockett were only $26,373.85 each, with drawings of $34,886 each; in 2001 they each received a profit share of $5,005.08 and took drawings of $3,507; in 2002 they each received $84,443.42 profit and took drawings of $21,072.72; in 2003 they received a profit share of $39,746.46 each and took drawings of $26,071.56 and in 2004 their profit each was $63,396.38 each, with drawings of $7,907 taken. Plainly, as was their evidence, Owen and Judy Crockett were leaving money in their partnership in order to be able operate the business, while their children and their partners were taking all of their share of the profits.
103 Given this evidence, it is hardly surprising that there was no evidence that Stuart Leckie had any expectation that if the arrangement came to an end, that he would be entitled to a 1/3 share of the assets of the farming operation. On the financial records of the partnership between he and Wendy Crockett, and finally his own financial records, there was various expenditure on the acquisition of certain plant, stock and equipment, which Stuart Leckie claimed was used in the farming operation. This was disputed by the respondents and Wendy Crockett. On all of the evidence, I am not satisfied that Stuart Leckie's evidence about these matters was not exaggerated. Even assuming that it was entirely accurate, it could not provide a foundation for the claim advanced.
104 The claim was finally sought to be justified in submissions by reference to the work done by Owen and Peter Crockett, and Stuart Leckie. It was argued that the work they each contributed to the operation was similar. That approach paid no attention at all to the nature of the work performed by Owen Crockett, which was plainly of a quite different kind to that of Stuart Leckie. Nor did it pay any attention to the evidence of the work performed by Judy Crockett - her efforts, were seemingly to be subsumed in those of her husband. How such an approach could in justice be available, is entirely unclear to me. It was, after all, not disputed that in addition to the physical farm work which Judy Crockett performed, she always looked after its financial affairs - undertaking the bookkeeping for the operation, as well as paying all the farm accounts and distributing profits when money became available.
105 There was also a dispute as to the nature of the work performed by Stuart Leckie, as opposed to that performed by Peter Crockett, as well as their respective skills and experience and the hours they each worked. Given the conclusions which I have otherwise reached, it is unnecessary to resolve that conflict. The idea that his work ought to, in fairness, have entitled Stuart Leckie to a 1/3 share of the assets of this operation on its termination, was simply not made out.