Sullivan [2006] NSWCA 312
Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7
Texts Cited: B McFarlane, The Law of Proprietary Estoppel, (2nd ed, Oxford University Press, 2020)
J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths)
M Blackett-Ord and S Haren, Partnership Law (6th ed, 2020, Bloomsbury Professional)
R I Banks, Lindley and Banks on Partnership (Sweet & Maxwell, 20th ed, 2017)
Category: Principal judgment
Parties: Scott Alexander Macaulay (Plaintiff)
Craig Neil Macaulay (First Defendant)
Christina Jane Kronenberg (Second Defendant)
Tracey Maree Ford (Third Defendant)
Representation: Counsel:
[2]
M Gunning (Plaintiff)
A J McInerney SC/N Kabilafkas (Second and Third Defendants)
[3]
Gordon Garling Moffitt (Plaintiff)
Campbell Paton & Taylor (Second and Third Defendants)
File Number(s): 2021/00238598
[4]
Table of contents
The dispute in broad outline
Some matters of context
The farms
The Partnership
The parties
Neil and Janet
Scott
Christina
Craig
Tracey
The relevant wills
January 1988 Wills
February 2007 Wills
October 2007 Wills
August 2016 Will
August 2018 Will
The facts in more detail
Some preliminary observations about the evidence
Scott's evidence about the representations
The making of the February 2007 Wills
April 2007 - property settlement; alleged assault
The October 2007 Wills
Scott takes work off the farm
Rabobank refinancing in 2010
Janet dies
Mr Twomey suggests that the October 2007 Will be revisited
The June 2015 meeting
The 30 September 2015 meeting
November 2015 - alleged assault
The February 2016 meeting and the 2016 Will
16 September 2016 - alleged assault
31 October 2016 - alleged assault
4 February 2017 - alleged assault
March 2017 - Macaulay family discussions
June 2017 - Neil sees Mr McGroder
30 July 2017 - the ute incident
Neil terminates the Partnership
The 2018 Will
Scott's amendment application in relation to the 2018 Will
Estoppel
Did Neil make the representations?
How did Scott understand the representations?
Reliance
Detriment
Legal Principles - Detriment
The parties' positions on detriment
Has Scott suffered detriment?
Parker v Parker
Was it unconscionable of Neil to resile from the representations?
What relief is appropriate?
The partnership dispute
The Fairfield debt
Was Miltons partnership property?
The 2016 Agreement about Janet's interest in the Partnership
Taking of accounts
Other claims for relief
Constructive trust claims
Succession Act
ORDERS
[5]
JUDGMENT
The parties are the children of the late Neil Macaulay, who died in 2021, and the late Janet Macaulay, who died in 2012.
The plaintiff is Scott Macaulay. The defendants are his brother Craig Macaulay and his sisters Christina Kronenberg and Tracey Ford. I will adopt the naming convention used by the parties and, without intending any disrespect, I will generally refer to the members of the Macaulay family by their first names.
[6]
The dispute in broad outline
In 1989, Neil, Janet and Scott entered into a partnership known as the Parkvale Pastoral Co Partnership (the Partnership) for the purpose of carrying on the business of farming on Parkvale, a property of about 2,121 acres near Parkes. Neil and Janet had acquired Parkvale in 1988 and it was held in their joint names.
In time, two properties adjacent to Parkvale were also purchased. In 1994, the Partnership borrowed funds from the Commonwealth Bank of Australia (CBA) to purchase a 404 acre property directly to the south of Parkvale known as Miltons or Miltons Block but which was sometimes referred to in the evidence as Cordells. Legal title to this property was held by Neil, Janet and Scott as tenants-in-common in equal shares. In 1999, Scott borrowed funds from CBA which he used to purchase a 670 acre property directly to the east of Parkvale known as Fairfield. Scott is the sole registered proprietor of Fairfield. The parties agree that neither Parkvale nor Fairfield was partnership property. There is a dispute about whether Miltons was partnership property.
Scott farmed Parkvale, Miltons and Fairfield in the Partnership for most of his adult life up until 2017, when there was a serious rift in the family. This rift, which had been brewing for some time and which was largely stoked by disagreement as to what Neil's will should provide for Scott and Craig, eventually resulted in Scott being banished from the farm, in the termination of the Partnership, and in Scott being ostracised from the family altogether. There were numerous allegations that Scott had physically assaulted Neil, including one which became the subject of criminal proceedings, where Scott was found not guilty at trial.
Neil gave notice of termination of the Partnership (by then consisting only of him and Scott) as of 1 September 2017 but there has never been a winding up or taking of partnership accounts. The parties remain in dispute as to the partners' entitlements.
In addition to Parkvale and their interests in the Partnership, Neil and Janet acquired some non-farm assets during their lifetime. These included a modest house in Endeavour Place, Parkes, where they lived in their later years. They also accumulated some other savings and investments including superannuation.
By his final will made on 10 August 2018 (2018 Will), Neil left his estate as follows:
1. To Scott, his property at Endeavour Place in Parkes.
2. To Christina, Tracey and Craig, the balance of his estate including the whole of Parkvale and his interest in Miltons, in equal shares.
[7]
Some matters of context
Before addressing the issues in detail, it is convenient to describe some general matters of context.
[8]
The farms
Parkvale is located just north of Parkes on Renshaw McGirr Way (or, as it is also known, the Wellington Road), which runs in a northerly direction but then forks slightly north-east at the junction of Olieview Road, which runs north from that point. The eastern boundary of Parkvale runs along Renshaw McGirr Way and Olieview Road. Miltons adjoins the southern boundary of Parkvale and also borders Renshaw McGirr Way. Fairfield is to the east of Parkvale on the other side of Olieview Road. It is therefore separated from Parkvale by the road.
There were many sketches, paddock-maps and photographs of the properties in evidence. For the purpose only of illustrating the general layout of the properties, I have slightly edited one of those sketches to the following:
Parkvale consists of a mixture of highly arable red loam and clay soils, as well as undulating red granite soils. There are some areas of light timber, a creek line, a homestead and many significant farming improvements around the area of the homestead.
Miltons and Fairfield consist of red and grey loam soils and small areas of light timber. Fairfield has some improvements, consisting of a house, sheds and some grain storage, however at the times relevant to this dispute the farming infrastructure was nowhere near as improved or well-maintained as on Parkvale. That is because the Partnership farmed all of the lands together using the far better and constantly maintained infrastructure on Parkvale.
Fairfield has a couple of dams but does not generally have good access to water. Parkvale, on the other hand, has good water access, including a bore located in the handle of the battle-axe-shaped northern paddock marked AE on the diagram at paragraph [20].
[9]
The Partnership
The parties to the Partnership entered into a written partnership agreement which had effect from 30 June 1989. An unsigned copy of their agreement was in evidence. The parties do not dispute that each of Neil, Janet and Scott had a one-third partnership share until Janet's death in 2012.
The terms of the partnership agreement are fairly conventional. It is relevant to note clauses 10, 11 and 12, which governed the use of and improvements to land owned by partners.
"10. The lands of all partners or any other lands which may be acquired by any partner during the term of this agreement shall be made available for use by the partnership business and the partnership livestock may be depastured thereon during the term or any other operation or activity relating to the partnership business may be carried on thereon during the term and all rates insurances premiums on fixtures thereon (other than insurance premiums on the contents of any dwelling house or chattels in or about any dwelling house which contents or chattels shall not be the property of the partnership) and all other outgoings in respect of the lands shall be paid by the partnership together with a rental as shall be mutually determined by the partners to be paid by the partnership for its use of the lands of any individual partners or lands owned jointly by any of the partners and the partnership is hereby granted a licence by each partner in respect of land now held by him or her or any land as may hereafter be acquired to use the same for the purposes of the partnership as aforesaid until the termination of the partnership in accordance with the provisions hereof provided always that on any partner ceasing to be a partner whether by giving notice of withdrawal or for any other reason whatsoever that partner shall be entitled to have vacant possession of all lands contributed by him or her to the partnership free from any right of occupation or use thereof by the partnership.
11. In the event of it being necessary or desirable in the opinion of the partners to effect any structural improvements on any of the lands of the partners either presently owned or to be owned in the future for the purpose of increasing the productivity thereof or any other permanent improvements the same may with the consent of the other partners be paid out of the partnership funds but in that case in the event of the partnership being determined after expenditure on those improvements then the said partner or partners owning the lands shall pay into the partnership for subsequent distribution between the partners in accordance with this agreement the actual cost of the improvements.
12. Notwithstanding anything herein contained nothing in this agreement shall be deemed to create any partnership in the lands brought under the provisions of the agreement by any partner."
[10]
The parties
All of the Macaulay children were active participants in the proceedings.
[11]
Neil and Janet
There was little evidence of Neil and Janet's life prior to the purchase of Parkvale. Between 1961 and 1970 they had four children, being the parties to these proceedings.
In the 1960s the family lived in Cootamundra where Neil owned and operated a butcher shop. Neil also worked in a farming partnership with his father, Alexander Macaulay, and his brother, Brendan Macaulay, which traded under the name AB & N Pastoral Company (the ABN Partnership). In 1969 Neil and Janet purchased "Glenroy", a small farming property on Gundagai Road near Cootamundra where the family subsequently moved. Neil eventually stopped working as a butcher and leased out his shop in town in order to devote himself fully to farming. Over the years both Neil and Janet and the ABN Partnership acquired other farming properties.
In about 1982 or 1983, there was a falling out among Alexander, Brendan and Neil. It was unclear what exactly this dispute was about, but it appears to have concerned financial matters. This led to a bitter dissolution of the ABN Partnership.
Alexander died in 1985. There was some evidence that Neil thought that the way his father's estate was divided was unfair to him and his other brother Max Macaulay.
In about 1987 or 1988 Neil and Janet sold their other properties. They used the proceeds, together with Neil's inheritance from Alexander's estate, to purchase Parkvale. The evidence suggests that Parkvale was purchased outright by Neil and Janet.
As mentioned above, Neil, Janet and Scott established the Partnership in 1989 in order to farm Parkvale. A written agreement was prepared by Callan & Luff, Solicitors and Tax Agents. Their invoice dated 15 February 1990 suggests that this agreement was duly executed, however only an unexecuted copy was in evidence.
During the 1990s the Partnership experienced commercial success. By leveraging its mix of cropping and livestock farming, it became quite profitable. The family won a string of crop competitions at local and state Royal Agricultural Society shows during this period. In 1994, the partners acquired Miltons as tenants-in-common in equal shares. In 1999, Scott acquired Fairfield. The Partnership conducted its farming business on all three properties but the main homestead and the vast bulk of the farming infrastructure was located on Parkvale.
[12]
Neil died on 9 January 2021. The schedule of property attached to the grant of probate for Neil's estate identified the following assets.
Description Value of share
Endeavour Place, Parkes $470,000
Parkvale $6,100,000
Miltons $1,000,000
Furniture and Personal Effects To be ascertained
Refund of Accommodation Payment to Niola Nursing Home $327,661.48
CBA Farm Management Deposit Account $195,497.76
CBA Cheque Account $71,739.96
CBA Farm Management Deposit Fixed Term Account $114,846.81
Rabobank Account $35,000
Superannuation $658,973
Investment $61,928.88
Amount owing to deceased by Parkvale Farm Pty Limited atf Parkvale Trust $424,855
Farming Plant and Machinery $130,600
Partnership Debt To be ascertained
[13]
Scott
Scott was born in 1963.
Like his siblings, Scott grew up in Cootamundra and then on the family farm Glenroy. Scott finished school in 1978 after achieving his year 10 school certificate and commenced farming with Neil, his grandfather Alexander and his uncle Brendan under the ABN Partnership.
Scott's evidence was that he always wanted to be a career farmer. In 1979 he studied farm technology, wool classing and automotive engineering at Wagga TAFE for 12 months on a full-time basis. In 1981 he obtained a wool classing/sheep classing certification and a mechanical/welding certification from TAFE. He also achieved a chemical usage/poison certification around 1990.
Scott worked for the ABN Partnership until around 1985. From 1985 to 1987, Scott moved to Sydney where he worked for CSIRO in animal production relating to sheep and cattle. For a period of time in 1987, he resided with Christina and her husband, and then moved into rented accommodation.
In January 1988 Scott travelled to Alberta, Canada to participate in a farm exchange organised through the Internal Agricultural Exchange Association. During this exchange, Neil asked Scott to come and work with him and Janet on Parkvale.
In November 1988 Scott returned to Australia and went to live and work with his parents at Parkvale. It was around this time that the three of them established the Partnership. Scott was a partner and worked the farmlands to produce profit for the Partnership, until it was terminated in 2017. I have already referred to the purchase of Miltons and Fairfield.
In 1990 Scott married his first wife Ann-Maree. Together they had three children, all of whom are now adults. At the beginning of their marriage, they lived in the shearer's cottage on Parkvale but soon after moved out.
Scott and Ann-Maree purchased a house on Victoria Street in Parkes some time in the mid 1990s. They lived at Victoria Street until Scott purchased Fairfield in 1999. They then lived in the homestead on Fairfield until 2003 or 2004, when they moved back into Victoria Street as their eldest child was starting high school.
In 2006 a severe drought hit the region. It had a devastating effect on farms and rural families across NSW and the Macaulays were not spared. The drought led to a downturn in the fortunes of the Partnership and Scott was forced to find other work at the mines whilst maintaining his farming responsibilities. It was during this time that Scott and Ann-Maree separated and ultimately divorced.
[14]
Christina
Christina was born in 1961.
Christina assisted her family with farming activities from the time they moved to Glenroy in 1969.
Christina completed the HSC at Cootamundra High School in 1978. In 1980 she moved to Sydney and commenced hospital-based nursing training in Blacktown Hospital which she completed in 1983. In 1985, Christina became a qualified midwife. She completed other nursing training and qualifications throughout the 1980s. Christina worked as a community nurse in the Western Sydney Area Health Service from 1987 to 2001.
Christina currently resides in Parkes with her husband of 39 years, Arno Kronenberg. Together they have four children, all of whom are now adults.
Christina currently works two days each week as a community nurse in Trundle and two days each week as a child and family health nurse at Parkes Hospital.
[15]
Craig
Craig was born in 1966.
He attended Cootamundra High School and St Gregory's College Campbelltown until the end of year 10 in 1982. He then completed a TAFE course in Albury and Cootamundra as a mechanic from 1983 to 1984. During this period Craig worked on Glenroy.
From 1984 to 1988 Craig undertook and completed a boilermaker's apprenticeship. From 1988 to 1994 Craig lived between Cootamundra, Brisbane and Parkvale, intermittently working as a boilermaker, for an engineering company, and on the farm.
In 1994 Craig moved into the cottage adjacent the homestead on Parkvale. In 1996 he married his current wife Julie Macaulay. In 1998 the couple moved into a house in Parkes where they remain to this day. From 1999 to 2005 Craig worked for Australian Topmaking services performing metal fabrication and maintenance work. From 2005 to 2017 he worked full-time at the North Parkes mine.
Craig and Julie have three adult children.
[16]
Tracey
Tracey was born in 1970.
Tracey enjoyed growing up on Glenroy and took advantage of country life. Tracey boarded at Loreto Normanhurst from years 8 to 12 and completed the HSC there in 1988.
Tracey lives on a property in Manildra with her husband Phillip Ford. They have three adult children. From 2001 to 2013, they lived in the Allenby Road house in Orange, which they rented at below-market rates from Neil and Janet. Tracey gave evidence that the purchase of their current home in Manildra was facilitated in 2013 by a $100,000 interest-free loan from the Partnership, approved by both Neil and Scott. I note that this loan does not appear in the financial statements for the Partnership that were in evidence. However, there was evidence that it was partially repaid in cash as to $50,000 and that Phillip worked for the Partnership for a time as a means of further repaying the loan.
[17]
The relevant wills
There was significant dispute as to the circumstances in which Neil and Janet made their various wills. I will return to that issue in the context of my more detailed consideration of the facts. For the moment, it may assist the reader to understand the overall arc of the dispute by noting what each will contained.
[18]
January 1988 Wills
Neil and Janet made mutual wills in January 1988. Nothing really turns on these wills. Broadly, each was entirely in favour of the other but, should the other predecease them, Scott and Christina were appointed executors and each testator left their entire estate equally to such of their surviving children who attained 18 years.
[19]
February 2007 Wills
On 12 February 2007, Neil and Janet made mutual wills (the February 2007 Wills) prepared and witnessed by their longtime solicitor, Mr Bill Thompson of Commins Hendricks in Coolamon, that were partly typed and partly handwritten. Only Neil's February 2007 Will was in evidence but I infer that Janet made a will in similar form at about the same time. The sense of urgency implied by the form of these February 2007 Wills was largely due to the fact that Scott was at that point in the throes of separating from his first wife, Ann-Maree, and a property settlement with her was in prospect.
Pursuant to the February 2007 Wills, Neil and Janet again left their entire estate to the other in the first instance. However, if the other should predecease them, these wills provided as follows:
1. The four children were appointed executors.
2. Furniture, jewellery and personal effects were left to Christina and Tracey.
3. Craig was to be provided:
1. Fairfield "debt free" as from the next 1 February following the testator's death;
2. Stock (ie, sheep) to the value of $50,000.
1. Scott was to be provided:
1. Parkvale;
2. The testator's two-thirds share of Miltons (on the hypothesis that each testator will have inherited their deceased spouse's one-third share);
3. The testator's interest in the farming business subject to:
1. payment of Partnership debt of approximately $300,000;
2. payment of Fairfield debt of $260,000 and the transfer of Fairfield to Craig;
3. "My son" (presumably Scott) being entitled to the income from the farming business until the next 1 February following the testator's death;
4. Payment of $250,000 to each of the testator's other three children should Scott sell, divorce or enter into a property settlement under the Family Law Act 1975 (Cth) or the De-facto Relationships Act 1984 (NSW) (this clause being expressed to apply until 1 February 2017);
5. Scott was to be responsible for funeral expenses.
1. The rest and residue of the testator's estate, subject to debts, was bequeathed equally to Christina and Tracey.
2. Any daughter living in a house had the option to "take that house as her share".
3. Should Scott and Craig wish to "sell or lease" (which in Scott's case I take to be a reference to Parkvale and Miltons and in Craig's case to Fairfield), then they were required to give the other six month's written notice of settlement or the lease would start on the 1 February (which I take to mean the 1 February following expiration of the six month notice period) subject to:
1. Rent or purchase price being market value.
2. If the above cannot be agreed, then rent or purchase price being determined by a registered valuer.
3. The "opt" (which I take to mean the option to sell or lease) to be agreed (which I take to mean agreed by the recipient of the option) by notice in writing.
[20]
October 2007 Wills
Neil and Janet contemplated that the somewhat hurried handwritten February 2007 Wills would be typed out and re-executed in due course. This occurred on 15 October 2007. On that day, each of Neil and Janet returned to Mr Thompson's office at Coolamon and executed mutual wills (the October 2007 Wills) that largely reflected the February 2007 Wills, save for an error that assumed significance for the family in later years.
The relevant changes appeared in clause 4 of the October 2007 Wills, which dealt with the entitlements of the beneficiaries. Because so much turns on the content of this clause, I will set it out in full:
"4. SHOULD my [wife/husband] fail to survive me THEN I LEAVE the whole of my Estate as follows:
4.1 I LEAVE my furniture, jewellery and personal effects equally to my daughters SUBJECT to such items being distributed in accordance with any list that I may leave.
4.2 I LEAVE UNTO my son Craig the following -
4.2.1 The property 'Fairfield' of approximately 600 acres debt free. Craig is to take possession of the property as from the 1st February after the date of my death on the basis that until that date Scott is entitled to farm the farmlands and be entitled to all income after the payment of all expenses.
4.2.2 Stock to the value of $50,000.00.
4.3 I LEAVE UNTO my son Scott the following -
4.3.1 The property 'Parkvale'.
4.3.2 The two thirds my spouse and I own of 'Fairfield'.
4.3.3 Interest in any farming business, capital, loan and beneficiary account, plant and livestock, FMD's but subject to -
(a) Payment of the partnership debt which is approximately $300,000.00 as at the date of my Will.
(b) Scott transferring at his expense the property known as 'Fairfield' to Craig.
(c) the payment of the 'Fairfield' debt of approximately $426,000.00 as at the date of my Will.
(d) My son will be entitled to the income from the farming business until the 1st February after the date of my death and then the stock to the value of $50,000.00 is to be delivered to Craig.
(e) Should my son Scott sell, divorce or enter into a property settlement under the Family Law Act or De Facto Relationship Act then he is to pay the sum of $250,000.00 to each of my other three children. This clause applies until the 1st February, 2017.
(f) My son Scott shall be responsible for funeral and estate expenses.
4.4 I LEAVE the balance of my estate including shares, superannuation, houses subject to any debts owing in relation to the houses equally to my daughters.
4.5 Should any daughter be living in one of the houses then that daughter shall have the option to take the house as part of her share subject to the payment of the debt.
4.6 SHOULD either brother wish to sell or lease then they must give their other brother at least six months written notice and settlement or the commencement of the lease will start on the 1st February after the expiration of that six months notice subject to the following conditions:
(a) Rent or purchase price will be market value.
(b) If market value cannot be agreed upon then the price will be determined by an independent registered valuer.
(c) The option must be accepted by notice in writing."
[21]
August 2016 Will
By August 2016, Janet had died and Neil was in his eighties. An air of rancour and mistrust had settled upon the Macaulay family. There is a significant body of evidence as to the detail of the disagreements that existed among the Macaulay children, including as between Craig and Scott about what each believed they should inherit.
On 26 August 2016, Neil made a new will (the 2016 Will) by which he left the whole of his estate to all four children in equal shares. This 2016 Will was prepared by a new solicitor, Mr Graham Billing of Graham Billing & Co in Orange.
This was a significant departure from the scheme of the 2007 wills. From Scott's point of view, it also represented a serious departure from what, according to his evidence, his father had always told him would happen on his death.
A prominent aspect of the second and third defendants' evidence was that the 2016 Will represented a division of Neil's estate for which Scott, for a time at least, positively advocated and to which he actually agreed. For reasons I will explain, I do not accept that evidence. Neither Neil nor any other member of the Macaulay family could sincerely have believed that Scott wanted or agreed to a four-way split of Neil's estate, including the farms, in August 2016.
As will be seen, Craig believed that this will was an "interim will" designed to stay in place only until Scott turned 55. As I will explain later in these reasons, there is also evidence to suggest that Neil considered this will to be an interim measure.
[22]
August 2018 Will
Neil's final will was executed in the presence of Mr Billing on 10 August 2018 at Orange. It is this will that has been admitted to probate.
As I have already mentioned at [8] above, under the 2018 Will, Scott is to receive the Endeavour Place property but the whole of the rest of Neil's estate, including the entirety of Parkvale and his interest in Miltons, is to go to Christina, Tracey and Craig in equal shares.
Also as mentioned above, and as may be expected, Scott contends that this 2018 Will represented a further serious departure from what he had been promised and from the assumption upon which he claims to have relied to his detriment for many years.
[23]
The facts in more detail
Before addressing the facts in detail, it is appropriate to say a few things about the evidence generally.
[24]
Some preliminary observations about the evidence
First, the parties led a significant amount of affidavit evidence. The text alone of the affidavits came to over 500 pages. The volume of testamentary evidence exceeded the volume of centrally relevant documents by a considerable margin. The defendants in particular approached the evidence as though the proceedings involved a roving commission of inquiry into all aspects of their relationships with Scott over a 15-year period. Much of this evidence was of only marginal relevance to the actual issues in dispute. It included, for example, evidence about Scott using a partnership credit card in October 2005 to buy two pairs of jeans, the good deals on tires Phillip Ford could get from Curtis Bros in Glebe when he and Tracey were dating, and the circumstances in which Ann-Maree received her car in the property settlement with Scott (including whether it was a black or a silver Commodore).
I have not found it necessary to resolve all of the factual disputes between the parties that are the subject of so much back and forth in their sworn affidavits. The parties wisely confined the issues at trial to the real issues in dispute, being:
1. In respect of Scott's claims over Parkvale and Miltons:
1. Whether Neil made the representations (or whether he induced the assumption) for which Scott contends.
2. Whether Scott relied to his detriment on the representations or the assumption such that it was unconscionable for Neil to depart from them.
1. The basis on which the Partnership should now be wound up. This issue involved three principal questions identified at paragraph [14] above. There was originally also a fourth question, namely whether accounts should be taken on a wilful default basis on the footing that Scott had physically assaulted his father, but the defendants did not press this point in final submissions.
As will be seen, the resolution of all of these issues involves a detailed consideration of what happened in the long series of meetings with various financial and legal advisers between late 2014 until the middle of 2017, all of which involved discussions about Neil's testamentary intentions. Neil attended most but not all of these meetings. The evidence about these meetings (in particular, how Neil's testamentary intentions evolved over the final years of his life) was also relevant to Scott's alternative claim for provision under s 59 of the Succession Act.
[25]
Scott's evidence about the representations
Scott's evidence as to the setting in which the relevant representations were made was as follows.
For a period of over 25 years, Scott says that he worked with Neil (and with Janet while she was alive) in the operations and management of the Partnership. The central operations of the Partnership, including the homestead, machinery and infrastructure, were located at Parkvale. During this period of over 25 years (but apart from the period from 2006 or 2007 to 2012 where Scott worked evenly between the mines and the farm), Scott worked with Neil almost every day, performing cropping and livestock activities and engaging in all of the planning decisions for the farms. This work involved regular meetings between Neil and Scott (and at times, with agronomists and stock and station agents as well) at the Parkvale homestead to discuss decisions regarding such things as real property purchases, grain and wool sales, blook lines of livestock, purchases and sale of seed and grain, purchases of fertiliser, long-term soil agronomy and purchases of machinery and infrastructure. Over this 25-year period, Scott and Neil also attended meetings with insurers and financial managers to discuss the management of the partnership business.
Scott said that it was in this setting that Neil would say to him on a regular basis over this 25-year period that the farms would eventually belong to him.
Scott says that the nature of Neil's oral representations up until 2007 was that he would inherit, receive or retain all of the farms, being Parkvale, Miltons and Fairfield. From 2007, however, he says that these representations changed from him ending up with all three farming properties, to him just receiving Parkvale and Miltons. Particular examples of Neil's representations which Scott gave are set out below.
In 1994 when Miltons was purchased, Scott says that Neil said to him words to the effect:
"[Miltons] is a long-term investment that will ultimately belong to you in the future."
In 1999, on the purchase of Fairfield, Scott recalls his father saying to him words to the effect:
"This is yours - at the end of the day you are going to get it anyway - so why should I put my name on it."
He also recalls another conversation with Neil in the early 2000s in which they discussed changing blood lines of sheep. He says that his father said words to the effect:
"Changing the blood lines will maintain and continue the livestock on the farms (being Parkvale, Miltons and Fairfield), and improve our ability to control and manage the farm debt. Changing bloodlines will also ensure the ongoing viability of the farms, which will ultimately go to you in the future."
[26]
The making of the February 2007 Wills
On 12 February 2007, Neil, Janet, Scott, Craig and Christina travelled to Coolamon, near Cootamundra, to meet with Mr Thompson.
The subject of the meeting was succession planning for Neil and Janet. Most likely because of his earlier experience with the acrimonious family dispute involving his own father and brother, Neil wanted his children to participate in his succession planning. He wanted his children to know his testamentary intentions. The immediate impetus for the meeting was that Scott had separated from Ann-Maree and was seeking to resolve a property dispute with her under the Family Law Act.
The fact that Janet also attended the meeting and made a will in the same terms as Neil, and that she did likewise in October of the same year, demonstrates that she also wanted the children to know her testamentary intentions. It would have been no comfort to Neil, who particularly cared about this issue, if the children knew the content of Neil's will but did not know the content of Janet's. There is a fairly strong inference to be drawn that Neil and Janet wanted the content of their February 2007 Wills as well as their later October 2007 Wills to be clearly understood and, ideally, agreed to by their children.
I have already described the overall scheme of the February 2007 Wills. However, it is important to note that there was an alternative testamentary scheme discussed amongst the family in the 12 February meeting so far as the farming properties were concerned. That other testamentary scheme, which was described as "Option 1" ("Option 2" being the scheme ultimately adopted) involved the properties being divided as follows:
1. Scott would inherit Parkvale plus two-thirds of the plant and livestock and assume two-thirds of the partnership debt on condition that he transfer clear title to Fairfield and his one-third interest in Miltons to Craig.
2. Craig would inherit (or receive from Scott) Fairfield plus Miltons, as well as one-third of the plant and livestock on condition that he assume one-third of the partnership debt.
Option 1 therefore involved Craig receiving around 1,065 acres of land, being around one-third of the combined farmlands, but becoming a one-third partner in the Partnership and assuming a corresponding amount of debt. The partnership debt at the time seems to have been about $300,000. The total value of plant and livestock at the time (at least for the purposes of the discussion in February 2007) seems to have been about $450,000.
[27]
April 2007 - property settlement; alleged assault
On about 16 April 2007, Scott and Ann-Maree reached a property settlement.
A theme running through the evidence was that the 2007 wills had somehow been orchestrated so as to give the appearance that Scott's financial position was worse than it really was, in order to improve his prospects of obtaining a favourable property settlement with Ann-Maree.
I am not able to identify any evidence that seriously supports this notion. The true position was far more mundane: the prospect of a property settlement with Ann-Maree was a reason why Neil and Janet felt it important to identify clearly what Scott could expect to receive on his parents' death, as well as the property he would be required to transfer to Craig. As I will explain, Scott's position was somewhat worse under the 2007 wills compared to what he had originally been promised, but that is a matter about which Scott has never complained and which, in any event, likely benefits the defendants.
At around this time, Christina visited Parkvale and claims to have witnessed Scott assaulting Neil. According to Christina, she witnessed Scott launch himself at Neil and punch him "around the chest and head" in an unprovoked attack. She says that Janet came out and broke them up. Scott was briefly cross-examined about this incident but denied that it occurred. He said that he did not assault his father on this or any other occasion. Christina was not asked about this issue in cross-examination.
It was unclear whether I am asked to find that the various alleged assaults, including this alleged assault, actually occurred. Despite the prominence which the alleged assaults assumed in the defendants' evidence, there was a distinct retreat in final submissions from the contention that I should find that each assault occurred. They instead submitted in final written submissions that "when viewed as a whole, it ought be accepted that Scott had assaulted his father and behaved aggressively towards him over a period of time…". In final oral submissions made very shortly after that written submission, the second and third defendants retreated even further. They submitted that the only fact I really needed to find in relation to the assaults (to the extent that it was even relevant) was that Neil had a state of mind that he had been assaulted and therefore the defendants were justified in believing that the assaults had occurred, because Neil had told them so. I am not entirely sure what I was finally asked to find in relation to the assaults. I am however not prepared to make a global or overall assessment of the evidence about the assaults along the rather unclear lines identified by the defendants. An allegation of assault is a serious matter. The appropriate course, in the circumstances, is for me to make findings about each incident according to the evidence proffered in relation to it.
[28]
The October 2007 Wills
The typed copies of the February 2007 Wills attached to Mr Thompson's letter of 19 February contained the error to which I have already referred. Despite what was contained in the handwritten will, clause 4.3.2 of the typed version mistakenly referred to Fairfield instead of Miltons. However, nobody appears to have noticed because on 15 October 2007, Neil and Janet returned to Coolamon to execute new wills which contained that same error. They also executed powers of attorney and appointed enduring guardians, being each other and their children.
It appears that Mr Thompson's suggestion of circulating the February 2007 Wills for consideration by the children was taken up, because both Christina and Tracey recall seeing them. However, neither Scott nor Craig could recall seeing them at the time.
The family again travelled to Coolamon to meet with Mr Thompson in October 2007. It is unclear whether Tracey travelled with them, but nothing turns on this. She appears to have signed an acceptance of her appointment as attorney on 9 April 2007, although this is difficult to reconcile with the date next to her signature on the appointment of enduring guardian being 15 October 2007 (the same date next to Christina, Craig and Scott's signatures on both appointments). In any event, I infer that at least Christina, Craig and Scott were in attendance on 15 October and that, as previously, there was discussion among them as to the content of Neil and Janet's wills. I also infer that, as previously, Neil and Janet wanted their testamentary wishes to be known and understood by their children. I infer that this was important for them and that they understood it to be important for their children, particularly Scott and Craig, who Neil and Janet at that stage expected to inherit the farms.
[29]
Scott takes work off the farm
In late 2006 or early 2007, Scott took a job with Pybar Contractors at the North Parkes Mines. He remained employed there until 2012. He says this was due to the drought and the ensuing downturn in the Partnership's finances, which meant that he was earning only minimal income as a partner.
Scott's sisters refute the suggestion that economic circumstances forced Scott to take on outside work. Whilst they both accept that there was a severe drought that affected the farming operations, they contend that Neil and Janet encouraged Scott to get another job as a way of assisting him with personal issues caused by his failing marriage.
I do not accept that that is an appropriate way to characterise what occurred. The Partnership did suffer a significant drop in income during the period that preceded Scott working in the mines. The total income for the farm in the 2006 financial year was $601,454.10. In the 2007 financial year this dropped to $407,948.53. In the same years, the Partnership went from making a pre-tax profit of $106,019.74 to making a loss of $3,560.48. Scott's total drawings from the Partnership decreased accordingly. In the 2006 financial year, he drew $64,738.72; in the next year his drawings dropped to $36,413.83 and in the year after they dropped further to $15,100.56.
By far the most likely explanation for Scott taking work off the farm is that economic circumstances forced him to do so. Scott had been a farmer all his working life. Following his separation, his personal financial circumstances were strained, as were the circumstances affecting the Partnership generally. It may well be that Neil and Janet also believed it would be good for Scott to work elsewhere in those circumstances. Whatever the motivation, I do not regard the fact that Scott took work off the farm as signalling a general retreat from farming.
At the mines, Scott worked an "even" roster, meaning that the number of days he spent working on the mines was equal to the number of days he had off. He worked 12-hour days, either as day shifts or night shifts.
Scott says that on his days off from the mine he devoted himself entirely to his work on the farm. In cross-examination Scott did admit that he did have some days off work altogether from time to time but maintained that he generally worked evenly between the mines and the farm during the period in which he was employed at the mines.
[30]
Rabobank refinancing in 2010
In late 2010 or early 2011, Scott, Neil and Janet came to the joint decision to refinance the various facilities they had with CBA. Some of these facilities were for personal loans and others were for partnership borrowings. Neil and Janet had a loan facility with a balance of $420,000, which had been taken out to purchase the Endeavour Place property. Scott had a loan with CBA for funds used in purchasing Fairfield. The Partnership also owed money to CBA. The 2010 statements show this liability differently but at least in 2006 and 2008, the accounts showed two separate liabilities owing to CBA, one for an "overdraft" facility and another entitled "bank finance".
Rabobank offered an all-in-one debt facility which provided an interest only loan with no compulsion to continually pay down the debt. Mr Haggarty, the banker at Rabobank who assisted with the refinance, gave evidence in the proceedings. He said that Neil and Scott told him that they were not happy with the service they were receiving at CBA. He remembers that it was their intention to pay down their debt as much as possible to increase their equity in order to buy a new neighbouring property. Scott says they were attracted by the opportunity to consolidate the debt into one account.
Whatever their motivation, on 27 January 2011, Neil, Janet and Scott signed an acceptance and acknowledgment with Rabobank to facilitate the refinancing. An aspect of the arrangement was that Parkvale and Fairfield were mortgaged to Rabobank to secure the facility.
As part of the Rabobank refinancing arrangements, the Partnership took over the personal debts of Neil, Janet and Scott, namely the debts used to purchase Endeavour Place and Fairfield. In the partnership accounts these debts were incorporated into the Rabobank facility. Simultaneously, corresponding loans from the Partnership to Scott, representing the value of his old CBA loan, and to Neil and Janet, representing the value of their old CBA loan, were recognised as assets of the Partnership. Accordingly, the partnership accounts for 2011 records non-current receivable loans named "Loan: Scott Macaulay re: Fairfield" in the amount of $453,288.11 (being the Fairfield debt) and "Loan: NJ & JT Macaulay (Refinance Loan)" in the amount of $420,000 (representing the Endeavour Place debt). The Fairfield debt remained on the financial statements of the Partnership in subsequent years. The Endeavour Place debt was apparently repaid by journal entry in 2014/2015, being "set off" against Neil and Janet's partners' funds which, at the relevant time, had a significant credit balance. For this reason, the Endeavour Place debt no longer appeared in the financial accounts from the 2015 financial year onwards.
[31]
Janet dies
Janet died on 18 August 2012.
On 14 August 2013, probate in relation to Janet's 15 October 2007 Will was granted to Neil as executor of her estate. Janet left her whole estate to Neil. The inventory of property attached to the grant of probate has been summarised at [43] above. There seem to have been no immediate steps to administer Janet's estate. For the three years following her death, it appears that all parties treated Neil as executor of her estate as continuing to own her interest in the Partnership.
[32]
Mr Twomey suggests that the October 2007 Will be revisited
Mr Twomey was Neil's (and the Partnership's) long-term accountant. He had acted for Neil, in one capacity or another, over several decades. Neil had engaged the firm at which Mr Twomey later worked from as far back as the early 1960s.
On 22 December 2014, Mr Twomey wrote to Mr Billing, the solicitor who had recently begun to act for Neil, in relation to Neil's October 2007 Will. The letter summarised a discussion that Mr Twomey had had with Neil and Scott on 16 December 2014. As with almost everything else, the parties were in dispute as to why Mr Twomey was looking at the October 2007 Will in the first place. It is however quite clear that, as Scott pointed out, the impetus for the discussion with Mr Twomey was Neil's health. He was by this stage 79 years old and had been unwell. It is hardly surprising that Neil would ask his long-term trusted adviser to review his October 2007 Will. It would be equally unsurprising if Mr Twomey had instigated the review for the very same reasons.
Mr Twomey's letter of 22 December 2014 raised a number of fairly straightforward issues concerning the October 2007 Will. For example, he pointed out that clause 4.2.2, which provided for Craig to receive stock to the value of $50,000, should probably be revisited to provide that Craig would be given a percentage of stock instead. He pointed out that the reference to Fairfield in clause 4.3.2 was a mistake and should instead be to Miltons. Mr Twomey also noted that the acreage to be held by the two brothers (assuming the transfer of Fairfield to Craig, as was envisioned by the October 2007 Will) would be approximately 80% by Scott and 20% by Craig. It is, no doubt, for this reason that he suggested that clause 4.2.2 should refer to 20% of stock, as opposed to a dollar value.
I am satisfied that Neil's testamentary wishes as at December 2014 had not materially changed since 2007. It is apparent from the terms of the 22 December letter that Neil still wished for his sons to end up owning the farms in the same manner as had been envisioned in 2007. In reaching this conclusion, I have had particular regard to the fact that Mr Twomey gave evidence in the proceedings and was cross-examined. He was a thoughtful witness who expressed himself with care. There were many documents prepared by him in evidence, including file notes and correspondence. In all of that material, it is apparent that he paid careful attention to Neil's instructions and gave serious consideration to his interests, both in his individual capacity and as a partner in the Partnership. His attempts to resolve the present dispute, which attempts are evident from the correspondence, were level-headed and fair-minded. The general antipathy shown towards him by the defendants, particularly by Craig who perceived him to be acting in Scott's interest, was unfounded. I have no doubt that his 22 December 2014 letter faithfully reflects what Mr Twomey was instructed as to Neil's testamentary wishes at that point.
[33]
The June 2015 meeting
On 11 June 2015, there was a meeting in Orange attended by Neil, Scott, Christina, Craig and Tracey, together with Mr Twomey and Mr Billing. The meeting was arranged by Mr Twomey, apparently at the request of Scott. Prior to the meeting, Mr Twomey sent an email explaining that the purpose of the meeting would be "to consider the options going forward after 1 July 2015" and attaching a note setting out some issues concerning the distribution of partnership income after 1 July 2015. He referred to "discussions" (which was likely a reference to discussions with Neil and Scott as well as with Mr Nathan Robinson, who was the accountant at Twomeys who was primarily responsible for preparing the partnership accounts) about reconstituting the Partnership. It is relevant to note the following parts of the note:
"NOTES RE MEETING WITH NATHAN TO DISCUSS MACAULAYS CHANGES AT 1 JULY 2015
Now that we do not have the opportunity to distribute the partnership income 3 ways after 1 July 2015 we need to reassess how the farming operations should continue after this date.
Our discussions centred on a reconstitution [of] the partner[ship] Parkvale Pastoral Co. [P]resently the partners are:
Neil Macaulay 1/3
Estate on Jan Macaulay 1/3
Scott Macaulay 1/3
The [s]hare of the partnership of the late Jan Macaulay transfers to Neil her spouse. If no alterations are made to the partnership, income will split 2/3 Neil and 1/3 Scott. This will resolve in unequal profit distribution for both taxation and personal reasons.
With this in mind we are proposing that consideration be given to the partnership being restructured from 1 July 2015. We will have Scott 50% Neil's Family Trust 50%.
The structure of the trust we are recommending is for Neil to be the trustee and the beneficiaries are himself plus his children and their issue. Also as beneficiaries we should include trusts or companies which are controlled by any [beneficiaries].
The partnership should run for a period of time and we recommend that it does so for 1 year. Then the Parkvale Pastoral Co can be [taken over] by the family trust and operate as a family trust in the farming business..."
Mr Twomey was correct to raise his concerns about the Partnership. Janet had died on 18 August 2012 and it seems partnership income had, for the following three years, been shared equally among Neil, Scott and Janet's estate. However, if Janet's partnership interest had not been dealt with by the 2016 financial year, the whole of the share of partnership income held by Janet's estate would begin to attract tax at the highest marginal rate: see s 14 of the Income Tax Rates Act 1986 (Cth).
[34]
The 30 September 2015 meeting
Neil and Scott met with Mr Twomey again on 30 September. Mr Twomey's notes of this meeting deal, in part, with the question of the Partnership. I will set out that part of his notes in its proper context later in these reasons. In relation to Neil's will, his notes include the following:
"Neil's Will and Land Transfers
It was decided that we should look at the situation of land transferred under Neil's Will.
Presently the Will is very confusing and we have had discussions with all parties and Graham Billing (a Solicitor from Orange) in this regard.
After discussing all matters with Scott and Neil today, it has been decided that we do a few essential things:
1. A new Will needs to be prepared, and in that Will, Neil should ensure that Craig receives approximately 800 acres of land for his benefit upon his passing.
With this in mind it is envisaged that the property of Fairfield, plus the 3 paddocks marked U, AE and Q on the rough map, will be the property that will be transferred. This totals 802 acres.
It was intended that perhaps this could be done prior to Neil's passing by intergenerational transfer, however this does not meet with the satisfaction of Neil and Scott.
At this point the debt of the partnership is such that they require full usage of all land owned by Neil and Scott by Parkvale Pastoral Co for income producing in order to extinguish the partnership debt with Rabobank.
Neil feels that once he passes it will go to Craig accordingly.
If upon review of his will in 3 years time, the debt is low or extinguished then an inter-generational transfer will be considered.
2. In the Will it is envisaged that Neil will pass the property known as Parkvale to Scott on the understanding that Scott will transfer the property of Fairfield to Craig.
Also the 3 paddocks mentioned above will be transferred to Craig.
We still require a clause in the Will to permit the finalization of any harvest to be the change over time for the transfer of such property.
3. I need to look at the value of all the land, plant, equipment and livestock, taking into account the debt to Rabobank. This is to determine exactly how will the distribution upon Neil's death impact on the transfer and the value of the proportions that will go to Craig and what proportions will stay and be transferred to Scott.
4. With this calculation Neil & Scott need to then sit down with Craig to have agreement before a new will [will] be prepared. I feel we do not need to contact the Solicitor until a basis of agreement is found.
5. No changes will be made to the entitlement of Christina or Trac[e]y.
6. The executors will be Christina and Scott."
[35]
November 2015 - alleged assault
By the second half of 2015, Scott and Craig were well and truly divided on the question of what Neil should do about his will. The topic became a sore point that was rehashed in discussions many times over. At no point in those discussions did Scott suggest that he himself should inherit anything more than what was provided for him under Neil's October 2007 Will. Craig, on the other hand, was adamant that he should inherit considerably more than what was provided for him under Neil's October 2007 Will and that this should be at Scott's expense (ie, that Scott should inherit less in order to allow Craig to inherit more).
Christina, Tracey and Craig had also developed a deep antipathy towards Scott by this time. Not all of this was due to the situation regarding Neil's will. In Tracey's case, for example, she stopped talking to Scott in about July 2015 when Scott told her that he did not want her husband, Phillip, continuing to do work on Parkvale. As mentioned above at [68], Phillip had been doing work there in partial repayment of the funds which the partners had lent to them for their Manildra property. Christina and Tracey may have been protective towards their father, which is understandable, and may have seen Scott's response to Craig's demands as being somewhat truculent and uncompromising. They would have witnessed Neil becoming upset at the impasse between Craig and Scott and, in all likelihood, lay a large part of the blame at Scott's feet.
It is relevant to note two incidents that are alleged to have occurred at around this time.
On 5 November 2015, there was an altercation at Parkvale between Neil and Scott while they were transferring grain from one silo to another with an augur and a tractor. The Partnership had purchased a new header and Scott wanted to sell the old one. They had a discussion about this, during which Neil said that it was "his" header and that he did not want to sell it. Scott said that it was property of the Partnership and that he wanted to sell it. Tensions must have been high, because several minutes later Neil approached Scott from behind and struck him hard with a galvanised steel pipe used for fencing. Scott was working heavy machinery at the time and had not heard his father approaching. The blow caused fairly significant bruising which lasted over many days. The defendants did not dispute that Neil assaulted Scott on 5 November, nor did they dispute the photographic evidence as to the extent of the injuries he suffered.
[36]
The February 2016 meeting and the 2016 Will
On 1 February 2016, all of the Macaulays met with Mr Twomey in Young. The purpose of the meeting was to continue the discussions about what Neil's will should provide and, in particular, to "hear Craig Macaulay's concerns as to the amount of land that he felt his father had promised him", as Mr Twomey later described it in correspondence to Mr Billing.
It is important to bear in mind the incorrect and rather unfortunate advice that had by this stage been given to Neil by Mr Billing, which was that Neil could not leave property to Scott on condition that he transfer Fairfield to Craig. As I explained earlier, this meant that Neil felt that he had no choice but to continue down the path of having increasingly unproductive, acrimonious discussions with the children in the hope of reaching an agreement. But, in fairness to Craig, it also meant that he perceived himself to be in a quite precarious position so far as Neil's October 2007 Will was concerned. If this advice was correct (and Craig had no reason to think otherwise) it meant that if Neil died without making a new will, Craig might receive nothing. This circumstance no doubt explains Craig's doggedness in pursuing his own interests at about this time.
Each of the parties, and Mr Twomey, gave evidence about the 1 February 2016 meeting. Save for Christina and Tracey, whose accounts of how Scott supposedly suggested a four-way split of Neil's estate (and Neil's purported agreement to this course of action) were similar, everyone had a different recollection as to what occurred.
Before addressing the matters of disagreement, it is important to note the starting position adopted by Craig at this meeting, which was that he should inherit 1,065 acres of Parkvale, including all of the central areas containing the homestead and the major farming infrastructure, without any associated debt. How and why he considered this to be a fair, let alone practicable, outcome was not explained. Unsurprisingly, Scott did not agree that this would be appropriate. Craig says that it is what his father wanted to do, but I seriously doubt that. As I have already explained, Neil had by this stage warmed to the idea of Craig somehow receiving Fairfield together with some top paddocks of Parkvale. However, there is nothing in any other discussions or correspondence (for example, with Mr Twomey or Mr Billing) to suggest that Neil was at any stage willing to split Parkvale up in the way advanced by Craig at this meeting.
[37]
16 September 2016 - alleged assault
Christina says that on 16 September 2016, she visited Neil at his home in Parkes and he told her that:
"Scott pushed me down again today and dragged me along the ground wanting to know what was in my Will. He always wants to know what's in my will and is telling me what to do with it."
Christina called Scott, who flatly denied that any such thing had occurred. He explained that Neil had fallen in the sheep yard and that he had grabbed Neil by the arms.
The basis on which I am asked to find that Scott assaulted Neil on 16 September 2016 is quite unclear to me. Scott flatly denied that it occurred. There is no other evidence that it did occur, save for the evidence of Christina and Tracey that Neil said it occurred, although each such account of what Neil told them was slightly different. As my conclusions about the November 2015 incident already demonstrate, Neil was entirely capable of making false allegations of assault against Scott.
In these circumstances I am not persuaded that this assault occurred.
[38]
31 October 2016 - alleged assault
On 31 October, Neil visited Craig and told him that Scott had thrown him down in the sheep yards. Neil apparently said that this occurred in the context of a "stranger" arriving to look at the old John Deere 9500 header which by now was for sale.
I am unwilling to accept that Scott assaulted Neil on 31 October 2016, as Craig suggests. Scott gave credible evidence as to what occurred on this occasion and, so far as I can tell, was not challenged on it in cross-examination. He explained that his father had agreed to list the header for sale and that someone had arrived to inspect it. When Neil found out, he became angry and hostile. He (Neil) picked up a loose metal bar and threatened Scott, much as he had done in the previous November. Scott got out of his way and there was no physical contact. Scott avoided him and got on with his work. Scott says that Neil "scampered" away, got into his ute and left. Scott's diary records:
"…The day didn't end well. Dad not trusting my judgment."
I accept Scott's account. I was not given any serious reason to do otherwise. Bolstering my conclusion even further, as well as my inferences above that Neil was perfectly capable of making up false accusations in respect of these assaults, Neil gave a vastly different explanation for the injuries to Dr Whitmill on 15 November, being that he "fell and hit [his] head trying to avoid ram in race…".
[39]
4 February 2017 - alleged assault
On 4 February 2017, Neil visited Craig in a distressed state with a laceration and swelling on his right cheek. According to Craig, Neil said that Scott had punched him in the face and grabbed him forcefully by the left arm and clothing.
I am, yet again, unable to accept that Scott assaulted Neil in the manner reported by Craig.
Scott's evidence in relation to this incident was as follows:
"105. I recall on this day that there were dead crows in an open 20,000 gallon water tank at Fairfield. I believe that Dad was cranky with me over the dead crows in the water tank, and perhaps over leaving a gate [open] as well, even though I recall that Craig was with Dad the previous day when the gate was left open while Craig was gathering firewood, which allowed the rams in with the maiden ewes, something which would never happen. I remember Dad mistakenly blamed me and said to me words to the effect of:
'You should know better.'
106. Dad then fronted up to me and was striking me around my chest and stomach with his fists. Dad then swung himself off balance. I remember trying to hug him in defence to stop him swinging. I did not see any bruising or laceration on his face."
As appears from this evidence, things were clearly not good between Scott and his father. But Scott was not challenged on his account of what occurred on this occasion.
There seems to be no doubt that there was a confrontation of some kind and that the two made physical contact. Scott admits as much. But he says, and I accept, that he did not strike his father or grab him forcefully by the left arm or clothing. Scott's diary note for that day fairly describes what happened:
"Dad's switch went off again over? possibly opening gates - crow in tank at Fairfield? Who knows. I defended another barrage of [blows] Dad falls over. Tells me I'm finished get off. He goes."
[40]
March 2017 - Macaulay family discussions
On 6 March 2017, the Macaulay children all met on the verandah of the Parkvale homestead. One of the topics of discussion seems to have been whether Neil was getting too old to be continuing on the farm and whether he should move into a nursing home.
I gather from the second and third defendants' affidavit evidence as well as Scott's diary entry that the topic of Neil's will was also brought up at this meeting:
"Family meeting 4.30pm @ Farm… Meeting with Family was ? Sell down liquid assets… of which Scott has ½ pay back debt ½ go my way + Fairfield and 130 Ac Miltons. + when Dad deceased Scott ¼ of Total Assets (All agreed Chris Tracey + Craig as we as I. Craig would take this to Dad."
This diary entry is somewhat indecipherable: it suggests that Scott may have agreed to a four-way split of assets at this meeting. However, even the second and third defendants' evidence does not go as far as to say that Scott agreed to a four-way split. In fact, Craig's position was that he believed that Neil had reverted to Option 1 by the time of this meeting. I find that there was no general agreement about the topic of Neil's will on this occasion.
More evidence that Scott did not agree to a four-way split is that the following day, Scott spoke to his father to again try to discern what was happening with his will. He records as follows in his diary:
"Spoke to Dad Re above. He told me that it is not what he wanted but would go ahead. Until I said that it is the only way to go because his intentions have never been signed off on. I told him coming from Craig + Chris that a 4 way split is happening. Dad has denied it and I told him that I would go ahead until he writes down his intentions & signs off. That is why I cannot go forward farming until it is in writing. He has the intentions to see Geoff Twomey for his intention to be written down and signed off so I (Scott) [have] foundation to continue on farming without [being] white anted…"
I particularly note Scott's reference to being unable to go ahead with farming without some certainty as to what his inheritance would be.
[41]
June 2017 - Neil sees Mr McGroder
By June 2017, Scott had sought his own legal advice to determine where he stood. Mr Twomey and Mr Eris Gleeson, solicitor, of Gordon Garling Moffitt in Young had by this point suggested that it might be appropriate in the circumstances for Neil to try to obtain some independent advice about his will "for it to be fair". This was sound advice in circumstances where there appeared to be a significant disconnect between what Neil was saying to Scott about his testamentary intentions and what Scott was hearing from his siblings, who were closely involved in communications with Mr Billing.
Neil, it seems, had come to the same conclusion. Scott's contention that Neil made the appointment to see Mr Dennis McGroder, a solicitor of McGroders Solicitors & Conveyancers in Forbes, on 29 June 2017 was not challenged on cross-examination.
Scott drove Neil to the appointment, but did not attend with him. Mr McGroder took careful and extensive notes of the meeting. Mr McGroder also gave evidence in the proceedings and was cross-examined. He was considered and thoughtful.
Mr McGroder's notes show that he had a lengthy conference with Neil, during which Neil gave him a detailed run-down of his assets and liabilities, the history of the Partnership, and a range of other matters relevant to making a new will. He gave him names, dates, acreages and values. Neil told Mr McGroder that he had never made a will but that he wanted to make a will as follows:
1. Executors and trustees were to be Christina and Scott.
2. Scott was to receive 2,000 acres of Parkvale, on condition that he transfer Fairfield to Craig.
3. Craig was to receive 330 acres at the northern end of Parkvale. These acreages seem a little imprecise, but Mr McGroder twice noted that Craig was to get 1,000 acres unencumbered.
4. His interest in the Partnership was to go to Scott.
5. The Orange house was to go to Tracey.
6. The Parkes house was to go to Christina.
7. The residue was to be divided among the four children.
Mr McGroder also made notes on a paddock plan at the same time. His notes on that paddock plan suggest that Neil wanted paddocks AE, Q, U and V to go to Craig. They also suggest that Miltons would go to Scott and that Scott would be expected to give Fairfield to Craig.
Mr McGroder also noted that Neil's personal solicitor had been Mr Billing. He handwrote a note in red ink whereby Neil authorised and instructed Mr Billing to transfer his file to Mr McGroder, which Neil signed.
[42]
30 July 2017 - the ute incident
On 30 July 2017, an incident occurred involving Scott and Neil that was of lasting significance for the parties.
According to Scott's first affidavit:
"192. The background to this matter is that on Sunday 30 July 2017. I was at Parkvale. John Simpson (our neighbour) called me on my mobile and said words to the effect of:
'Your Dad had broken down in his ute in the laneway. He's walked a kilometre to my place. It looks like he is out of fuel. I'll come down and put 20 litres of fuel in it.'
193. Not long after, John spoke to me again and said:
'I have put 20 litres of fuel in it and tried to start it. But it looks like it is a transmission problem'.
194. I then drove down to John Simpson's place, and towed the ute back to Parkvale with Dad. After this, I took Dad back to Endeavour Place (where Dad was living at the time).
195. As I was coming into town and I said to Dad:
'We need to all sit down and talk about your plans with Parkvale, myself and the others, as it is all coming to a head with Tracey and Craig. Your memory is failing.'"
However, according to Tracey, Neil gave her the following account of the incident:
"On my way back to 'Parkvale' in Kamandra Lane I broke down and started walking and I went in to the first property and they called Scott and he came and picked me up and we towed the ute back to Parkvale.
Scott then drove me home. On the way back to my place at Endeavour Place Scott was asking me about my Will he is always at me about my Will and wanting me to change it to suit him. When we pulled up in the driveway at Endeavour Place Scott became very angry and grabbed me and punched me in the ear in the ute and then Scott put his leg over the gear stick and kicked/pushed me out of the ute with his foot and I landed hard on the concrete. Scott then drove off and left me there."
Neil had a cut to his right ear and reported pain in both his left and right hips. Tracey encouraged him to report the incident to the police, which he agreed to do. He was then accompanied to the Parkes police station by Christina. Neil made a formal complaint and was interviewed by Constable Jayden Hudson.
A transcript of the interview was in evidence. Neil said:
"Well we were driving back from out at the farm. And um he started to talk about the other three, ah it was Christina, Tracey and Craig. That's the other three children. And he reckoned that you know that they didn't deserve anything, and I said 'Well that's not, that's not gonna happen'. And um, then one thing led to another. He said 'I'm doing all the bloody work and he said "they're going to benefit out of it"'. And I said 'well OK, that's the way it's going to be'. And I said 'You will come out of it better than them because you'll get the farm'. And ah one thing led to another he said 'Oh they're getting too much' or something, and I said 'Well, not in my book'. And that's when he pushed me out of the bloody car, onto the onto the driveway. So I just closed the door and went inside but I hit the ground on this side of my ear hit the thing and I knew it was bleeding, but anyway he'd driven off, so I thought well I mightn't see him tomorrow."
[43]
Neil terminates the Partnership
On 1 September 2017, Neil, Craig and Tracey attended a meeting with Mr Billing. Mr Billing had prepared a notice of termination of the Partnership which Neil signed. Craig took charge of serving the notice of termination on Scott, which he did on 4 September 2017.
In view of the AVO, there was no realistic way in which the Partnership could continue in any event, because it had the effect of preventing Scott from attending Parkvale.
The charges against Scott were not heard until late June or early July 2018. Even after Scott was acquitted, the AVO continued for a further three months.
The events of 30 July 2017 marked the end of Scott's association with Parkvale. He has been entirely ostracised from the family ever since. The locks to Parkvale were changed in about January or February 2018. He owns Fairfield, but either Neil or Scott's siblings cut off the water supply from Parkvale. Since about 2018, he has leased Fairfield to Mr Green, who has farmed it in conjunction with his own adjoining property.
Although there was very little evidence about it, it seems that following the dissolution of the Partnership, the Parkvale Trust and its corporate trustee Parkvale Farm Pty Limited were established to conduct the farming operations going forward. No evidence was adduced as to who currently controls the trust. The Parkvale Trust is noted as owing funds to Neil's estate in the inventory of property that is set out above at [44].
[44]
The 2018 Will
From the AVO incident onwards, the other members of the Macaulay family seem to have communicated with Scott mainly through lawyers. On the evidence before me, the main topic of correspondence after Scott was served with the notice of termination was the question of how to wind up the Partnership. The question of inheritance largely fell by the wayside at this point.
On 2 August 2018, Mr Gleeson (on behalf of Scott) put his position in a letter to Graham Billing & Co that Scott and Neil had agreed to be equal partners following Janet's death.
The next day, Neil signed an informal will in Mr Blackwell's presence that someone, quite possibly Mr Blackwell, annotated with the words:
"I HAVE READ THE ABOVE. THESE ARE MY TESTAMENTARY WISH[E]S. I WILL RETURN NEXT WEEK TO SEE MR BILLING TO SIGN MY WILL IN THESE TERMS. I SIGN THIS DOCUMENT IN CASE SOMETHING HAPPENS TO ME BEFOREHAND AS AN INFORMAL WILL."
The document referred to Neil's existing 2016 Will and then stated that Neil wanted to change his will along the lines of the 2018 Will that came to be executed on 10 August. It emerged in cross-examination that the document signed on 3 August had been typed up by Tracey.
The informal will recited that Neil and Janet had "funded" Fairfield; that Scott had been trying to get Neil to "change" his will to "favour him"; and that Scott had tried to get Neil to sign a document that had not "been written by [Neil] (handwritten in red pen)", referring to the authority that Neil signed in Mr McGroder's presence. All of these things were untrue. The document was a jumble of what seem by this stage to have become, for the defendants, convenient truths about what the dispute as to Neil's estate had actually been about and what Scott's position had actually been.
As I have sought to explain, Scott's position was never that Neil should change his will to "favour" him. It was that Neil should not make a new will that significantly detracted from what Scott would have received under the October 2007 Will. Even to say that Scott's position was that Neil should "change" his 2016 Will to "favour" Scott is a fairly significant misdescription of what actually occurred. Even after he had made the 2016 Will, Neil continued to tell Scott that his will would not provide for a four-way split. He continued to tell him that he wanted to leave his estate to Scott just as had been reflected in the October 2007 Will, save that Craig should also receive some top paddocks of Parkvale. From Scott's point of view, he was not seeking to have Neil "change" his will to "favour" him. He was seeking to ensure that Neil made a will that accorded with what he had been promised since 2007.
[45]
Scott's amendment application in relation to the 2018 Will
At the end of all of the evidence and just before closing submissions were to commence, it became clear that Craig wanted to say more about the circumstances in which the 2018 Will was made than had been said in his affidavits up to that date (23 August 2024). His affidavits, I note, had been prepared during the time he was represented in these proceedings by Mr Billing.
Rather than receiving his evidence as to this matter from the bar table, I gave him leave to prepare and rely on an affidavit in which he set out his evidence as to the circumstances in which the 2018 Will had been made. That affidavit was dated 24 August 2024 and was filed in court and read without objection on 26 August. Craig was not cross-examined on the affidavit.
Craig's evidence as to this matter was brief. He described driving his father to an appointment to see Mr Billing on 10 August 2018 and that he believed the purpose of the meeting was to "start drafting a new [w]ill". In addition to Mr Billing and Neil, Christina and Tracey were also present. Mr Blackwell was present near the end. Craig said that Mr Billing produced printed copies of the unsigned 10 August 2018 Will. He said that he was "bewildered" because this was the first he knew of such a will or of the informal will signed by Neil on 3 August. He said that he had only limited time to review the document and that it was rushed.
On the heels of that evidence, Scott made an application to amend his claim to contend that the making of the 2018 Will was attended by suspicious circumstances and that the defendants should be put to proof of the circumstances in which that will had been made, including that Neil had capacity to make it and that Neil made it of his own volition.
I rejected that application at the time it was made. My reasons for doing so were threefold. First, the plaintiff's application as I (and the second and third defendants) understood it was not strictly to amend his claim but to have time to consider and then bring in a form of amended pleading which by that point had not yet been formulated. In the context of an amendment made so late in the trial - the evidence had closed and the parties were about to begin their closing submissions - it would have been inappropriate to make orders which threw open the issues other than in a carefully delineated way and by reference to a specific proposed amendment.
[46]
Estoppel
Scott's principal case is one of proprietary estoppel by encouragement, being that category of equitable estoppel derived from the decision of Dillwyn v Llewelyn (1862) 4 De GF & J 517; 45 ER 1285: see Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 at [80] and Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014, Lexis Nexis Butterworths) at [17-070].
The foundation of proprietary estoppel by encouragement was explained by the plurality in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [6]:
"In these cases, the equity which founded the relief obtained was found in an assumption as to the future acquisition of ownership of property which had been induced by representations upon which there had been detrimental reliance by the plaintiff. This is a well recognised variety of estoppel as understood in equity and may found relief which requires the taking of active steps by the defendant."
In Kramer v Stone at [76] to [105], Ward P said at [77]:
"Proprietary estoppel by encouragement is one of a number of discrete equitable doctrines falling within the rubric of 'equitable estoppel'. The elements common to such doctrines are encapsulated in the well-known formulation of Brennan J, as his Honour then was, in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429; [1998] HCA 7 (Waltons Stores v Maher):
'… [I]t is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs'"
[47]
Did Neil make the representations?
In order to found a proprietary estoppel, a representation must be sufficiently clear. The required level of clarity or certainty is not as high as is required by a contract or by the doctrine of promissory estoppel: Coster v Coster at [169]-[170]; Kramer v Stone at [84]; see also Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109 at [80]; Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 (Delaforce) at [55]. I particularly note what Hodgson JA said in Sullivan v Sullivan [2006] NSWCA 312 at [85], cited with approval in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [147] (Keane J) and [179] (Nettle J) and in Kramer v Stone at [86]:
"Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit."
Scott's evidence about the representations made to him is set out above at [94] to [106]. I have already referred at [90] to [91] to the general caution that should be applied in assessing a witness's evidence about things said so long ago, particularly where that witness stands to benefit from the Court's acceptance of that evidence. I approach Scott's evidence about the representations accordingly.
It is first appropriate to identify the reasons why, in the second and third defendants' submission, I should reject Scott's evidence about the representations.
Christina and Tracey squarely disputed that Neil ever made representations to Scott about inheriting or receiving the farmlands. It was difficult to discern the extent to which Craig joined in this submission although it probably does not matter. As I will explain, Craig gave evidence (which Christina and Tracey did not controvert) that Neil had made promises to him about inheriting or receiving part of the farms, a circumstance that has a bearing on my assessment of Scott's evidence about the same subject matter.
[48]
How did Scott understand the representations?
Christina and Tracey submitted that anything that had been said by Neil as to his testamentary intentions was just that: a statement of testamentary intention, which Scott always understood to be subject to change. They pointed out that Scott had accepted in cross-examination that even before 12 February 2007 he believed that his father would seek to provide for all of his children, including some provision for Craig which might come out of the farms. They submitted that he never in fact understood anything his father said about inheriting Parkvale and Miltons as involving any kind of promise, representation, or assurance, such that Scott should have foreseen that Neil could have changed his mind and devised them to others instead.
It is necessary to set out the three passages of cross-examination on which Christina and Tracey particularly relied in this respect. First, so far as the position prior to 2007 was concerned, they referred to the following:
"Q. Before 12 February 2007 it's correct, isn't it, that you didn't know what your father intended for you and the three other children with respect to his estate in due course, correct?
A. I never saw a will prior to 2007. And the intention of what dad told me many a time, that I was to continue farming.
Q. Before 12 February 2007 you didn't know what your mother's intention was--
A. That's correct.
Q. --with respect to her estate?
A. That's correct. But again, paralleling what I said with dad, she also promoted farming for me. To me.
Q. Whatever your mother's intention with respect to her estate, you knew that she on the passing of your father would be providing in some way for all four children, correct?
A. With me farming and three children, three siblings having residue.
Q. Before 12 February 2007 in respect of your father's intentions with respect to what he proposed on his death and upon the death of your mother, you always understood that he'd provide for all four children, correct?
A. That's correct.
Q. You didn't have an understanding as to how he would do so in the period before 12 February 2007, correct?
A. I can't answer for dad.
Q. I'm asking about your understanding.
A. I - please repeat the question.
Q. Before 12 February 2007 you did not know what your father intended as to how he would divide his estate between the four children in due course following his passing and your mother's passing?
A. I did not know.
Q. But you knew as to both parents before 12 February 2007 it was up to them to decide, correct?
A. Of course.
Q. You knew that they could change their mind with respect to their testamentary intentions in whatever will they had, correct?
A. It's, it's their choice."
[49]
Reliance
Scott is required to demonstrate that he acted in reliance on the relevant assumption and that his reliance was reasonable. Reliance is not to be presumed and the onus is on the plaintiff in proving it: Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [58]; Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165 at [77] (Bathurst CJ with McColl and Macfarlan JJA agreeing); Kramer v Stone at [91]. The induced assumption does not need to be the sole cause for the conduct which amounts to reliance, it need only be a "contributing cause": Sidhu v Van Dyke at [90] (Gageler J).
What is necessary is that the plaintiff must "demonstrate that he or she would have acted differently but for the… assumption" (emphasis added): Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 at [49] per Macfarlan JA (McColl JA and Sackville AJA agreeing); Kramer v Stone at [92]; Sidhu v Van Dyke at [91]-[93] (Gageler J).
In Coster v Coster, I said of this same issue at [183]:
"In Q v E Co (2021) 383 ALR 469; [2020] NSWCA 220, it was pointed out at [88] that authority requires the party relying on the estoppel to demonstrate that they would have acted differently in the absence of the relevant encouragement. Reference was made to Sidhu v Van Dyke at [66], [67] and [69]. It is therefore necessary to consider what would have happened if the representation or encouragement had not been made. A consideration of this question may also disclose whether the party relying on the estoppel has suffered any detriment by reason of their reliance: see Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-675; [1937] HCA 58."
Scott submitted that he relied on the assumption that he would inherit or otherwise receive Parkvale and the remaining interest in Miltons that he did not already own. He submitted that if Neil had not represented to him that those properties would be his one day, he would not have stayed in the Partnership, nor would he have been willing to contribute to the maintenance and improvement of the properties, nor would he have been willing to work so hard for so long (indirectly assisting with paying down the partnership debt) and for relatively small partnership drawings. He states that he would have sought employment outside of the Partnership, and "carve[d] out [his] own life using [his] practical skills, qualifications and experience in cropping and livestock activities". It is reasonable to infer that he would also not have acquired Fairfield, which really only made sense as a viable purchase if combined with adjoining partnership properties.
[50]
Legal Principles - Detriment
In Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61, Dixon J said at 547 that the object of an estoppel "is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment". In Kramer v Stone, Ward P described the task of determining detriment as follows (at [94]):
"In a case of estoppel by encouragement, the relevant detriment is not the loss flowing from mere non-fulfilment of a representation or promise (Verwayen at 429 (Brennan J); and see Neuberger LJ in Steria Ltd v Hutchison [2007] ICR 445 at [125]). Rather, what must be established is that the plaintiff has suffered (or will suffer) detriment if the defendant is permitted to resile from his or her representations or promises."
The concept of detriment in proprietary estoppel is not narrow or confined: Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 at [20] per Nettle JA with Maxwell ACJ and Ashley JA agreeing, cited with approval in Kramer v Stone at [95]. The purpose of the remedy is to do equity. Detriment "need not consist of expenditure of money or other quantifiable financial disadvantage so long as it is something substantial": see Donis v Donis at [20]. Nettle JA also said of the requirement to demonstrate detrimental reliance:
"…The requirement must be approached as part of a broad inquiry as to whether departure from a promise would be unconscionable in all the circumstances."
In determining whether it would be unconscionable to allow a defendant to resile from the induced assumption, it is necessary to identify the nature and size of the detriment suffered (Donis v Donis at [20]; Sidhu v Van Dyke at [83]-[84]). Similarly, the nature of the detriment may also be relevant to the appropriate form of ultimate relief: Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 (Verwayen) at 441 per Deane J cited with approval by the plurality in Sidhu v Van Dyke at [83].
It is often said that the detriment suffered in proprietary estoppel cases involves "life-changing decisions with irreversible consequences of a profoundly personal nature": Donis v Donis at [34]; cited with approval in Sidhu v Van Dyke at [84] (French CJ, Kiefel, Bell and Keane JJ) and in Kramer v Stone at [96]. In Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469 (Q v E), Meagher JA (with Leeming and Payne JJA agreeing) said at [125]:
"Thus, detriment sufficient to support an estoppel by encouragement need not involve expenditure of money on the property the subject of the estoppel or otherwise, or be capable of financial quantification: Walsh v Walsh [2012] NSWCA 57 at [14]. It is well recognised that detriment in the relevant sense may flow from having significantly changed the course of one's life: see Riches v Hogben [1985] 2 Qd R 292, where the detriment was constituted by the plaintiff selling his possessions, giving up a house in England, and bringing his family to Australia in reliance on an expectation that the defendant, his mother, would provide a house in his name if he and his family migrated; and Delaforce, where, when settling proceedings in the Family Court, and in reliance on a promise that the deceased would bequeath a property to her, the plaintiff gave up a claim to an amount of $50,000 and did not seek an order that she should have title to the property after the death of her former husband."
[51]
The parties' positions on detriment
As often happens, the parties' submissions about reliance overlapped quite significantly with their submissions about detriment.
Scott's submission was that he continued working in the Partnership and on the farms for long hours and for little remuneration instead of seeking employment elsewhere or going out on his own. He pointed to his contributions to the development and improvement of Parkvale and Miltons and to his efforts over many years in reducing the debt of the Partnership. He also pointed to his increasing responsibility and workload in managing the farms as Neil grew older. Scott submitted that these choices, made on the basis of his assumption about inheriting Parkvale and his parents' shares of Miltons, amounted to "life-changing decisions, contributions and sacrifices".
Tracey and Christina particularly relied on the reasons of Tennent J in Parker v Parker [2017] TASSC 37 for the proposition that Scott did not suffer detriment by remaining in the Partnership. They placed particular emphasis on a portion of the promisor's submissions extracted by Tennent J at [163] (and apparently agreed by Tennent J at [164]):
"Nor does the defendant's case reveal the necessary detriment which is required: the case essentially comes down to an assertion that the defendant worked long hours for little or no remuneration in the partnership. The flaw in asserting this in support of the constructive trust claim is that this was a requirement of the particular enterprise which the parties embarked upon, in full knowledge of what was required. It is the partnership which was designed to confer mutual benefit upon Ira Parker and the defendant. In consequence of the death of Ira Parker, the defendant will ultimately receive three quarters of the value of the partnership assets. No question of unconscionable denial of this entitlement arises.
Finally, on these claims, there is no evidence upon which the Court could find as a fact that the defendant incurred any additional detriment in reliance upon the vague representations that one day the farm would be gifted to him. All of the work which he did was required to be done in accordance with the partnership. It is true that the amount of work varied, as between Ira Parker and the defendant, from 1995 or thereabouts: but this was to be expected. It is in the very nature of a father and son family farming partnership. The change in work level was in consequence of the aging of the father, and it is not to be causally related to any representation to the effect that the son would ultimately succeed to the assets."
[52]
Has Scott suffered detriment?
Scott's case on the question of detriment is quite straightforward. Had he not been induced to believe that he would one day inherit Parkvale and his parents' interests in Miltons, he would not have continued working in the Partnership. Rather, he would have sought more remunerative options elsewhere. As mentioned above, he would have "carve[d] out [his] own life using [his] practical skills, qualifications and experience in cropping and livestock activities". There is no doubt that Scott worked very hard in the Partnership over a very long period of time. Until 2006 or 2007 when he took work at the mines, he had worked in the Partnership continuously since it was formed in 1989, and on the farms from as early as November 1988. The evidence as to his actual drawings over that period was scant, but there seemed to be no dispute that he had only ever drawn modest amounts from the Partnership. By the 2007 financial year, his partners' funds were in the negative to the amount of $248,102.28, he had personal debt associated with the purchase of Fairfield (which I find below was not a "paper debt"), and he was jointly liable for the Partnership's fairly significant banking facilities of approximately $300,000.
Between 2006 or 2007 and 2012, whilst working at the mines, his contribution to the work of the Partnership was especially taxing. Over the subsequent five years his contributions to the work of the Partnership increased even further as his father's ability to contribute to the farm declined with his advancing age.
I am unable to accept the submission that Scott suffered no detriment because his work in the Partnership was work that he did - and was contractually bound to do - by reason of being a partner. In the light of the authorities to which I have referred, the inquiry is as to what Scott would have done if the relevant assumption had not been induced. Given that Neil ultimately resiled from making good the assumption, it is necessary to determine whether Scott would have been better off overall if he had not relied on it in the first place.
The evidence shows that Scott was and remains hard working and resourceful. He has farmed all his life, save for the recent years in which he has had no real choice but to take work in town because of the AVO, the termination of the Partnership and the ongoing family dispute. He is clearly more than able to manage a moderately large rural property, including in adverse circumstances. Of his siblings, it is quite clear that he is the most adept at farming. This is hardly surprising given that it was his entire livelihood for so long. He is self-reliant and intelligent.
[53]
Parker v Parker
Lastly in relation to the question of detriment it is necessary to address the defendants' submission about Parker v Parker. This was the only authority to which the defendants referred me in closing submissions on the question of detriment.
Parker v Parker concerned three parcels of real estate that made up a farming property in Tasmania which had been held and farmed in the Parker family for several generations. The dispute arose following the death of Ira Parker who, at the time of his death in 2003, was the family patriarch. The litigants were his two sons, Tony and Garth. Ira did not leave a will.
Ira and Tony had farmed as equal partners for over 30 years prior to Ira's death. There was no question that all three parcels were property of that partnership. Ira entered a nursing home during 1998. In 1999 title to all three lots was transferred into the name of Tony alone. Garth, who was entitled on intestacy to a share of Ira's estate, sought to recover Ira's interest in the farming partnership, including his interest in the property that was now in Tony's name, to satisfy his entitlement.
Tony resisted Garth's claims on various bases, some of which are quite difficult to discern. So far as I can tell, none of his claims involved a proprietary estoppel. He did however assert that Ira had held his interest in the partnership property subject to a constructive trust in favour of him (Tony). That constructive trust was said to arise, although it is unclear, by reason of a "common intention", a proposition which might reasonably be thought to invoke the principles described in Green v Green (1989) 17 NSWLR 343, Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. In argument, however, counsel for Tony relied on both Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 and Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 to say that a constructive trust "of some sort" existed: [152].
At paragraphs [153] and [154], Tennent J referred to the authorities upon which Tony relied; at [154] in particular, her Honour set out a passage from the reasons of Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner in which their Honours quoted from the reasons of Deane J in Muschinski v Dodds.
Her Honour then said at [155]:
"However in Giumelli v Giumelli [1999] HCA 10, 196 CLR 101, the High Court dealt with what I loosely describe as a 'farming' case where real property in part was a partnership asset. The court was asked to find that a constructive trust existed."
[54]
Was it unconscionable of Neil to resile from the representations?
The relationship between the element of unconscionability and the doctrine of estoppel is somewhat indistinct. In any case, it has been said that this element "does not exist at large" and "has been said not to be a 'triable issue'": Kramer v Stone at [97]. The learned authors of Meagher, Gummow & Lehane's Equity: Doctrines and Remedies said at [17-040]:
"Where a promise is made, it is not the breach of promise, but the promisor's responsibility for the promisee's detrimental reliance, which makes it 'unconscionable' for the promisor to resile from the promise. Once it is established that the promisee detrimentally relied on the promisor's promise in such a case, it would by definition be unconscionable for the promisor to depart from the assumed state of affairs."
In Kramer v Stone at [98], Ward P set out the "current holistic approach to unconscionability" that was stated by Allsop P in Delaforce at [3]:
"Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character."
I have already found that Scott acted to his detriment in reliance on the representations. The fact of Scott's detrimental reliance, considered in the context of the facts generally, leads me to conclude that it was unconscionable of Neil to resile from the representations by making his 2016 and 2018 wills.
It will be necessary to return to the concept of unconscionability in the context of considering the appropriate relief.
[55]
What relief is appropriate?
It is the case that where an estoppel has been made out the appropriate relief is usually commensurate with the promise that was made. In Sidhu v Van Dyke at [85], the majority said:
"… While it is true to say that 'the court, as a court of conscience, goes no further than is necessary to prevent unconscionable conduct', where the unconscionable conduct consists of resiling from a promise or assurance which has induced conduct to the other party's detriment, the relief which is necessary in this sense is usually that which reflects the value of the promise."
However, there are circumstances where the making good of the promise may not be the appropriate remedy. In Sidhu v Van Dyke at [83] the majority approved what was said by Deane J in Verwayen at 441:
"There could be circumstances in which the potential damage to an allegedly estopped party was disproportionately greater than any detriment which would be sustained by the other party to an extent that good conscience could not reasonably be seen as precluding a departure from the assumed state of affairs if adequate compensation were made or offered by the allegedly estopped party for any detriment sustained by the other party."
Consideration of the proportionality of the relief may be necessary where there is a reason why good conscience would not require a promisor to be held to their promises. However, proportionality is not a necessary constituent part of the doctrine of proprietary estoppel and the starting point when fashioning relief must be the terms of the representation: see Delaforce per Allsop P at [4] and Handley AJA at [92]. Authorities have suggested that modifying the usual relief may be appropriate in circumstances where fulfilling the terms of the representation would be "wholly disproportionate" or "out of all proportion" to the relevant detriment suffered: Ambridge Investments Pty Ltd (in liquidation) v Baker [2010] VSC 59 at [591]-[594], per Vickery J; Verwayen at 413, per Mason CJ; Priestley v Priestley [2017] NSWCA 155 at [164] per Emmett AJA, McColl and Macfarlan JJA agreeing on that point.
The task of fashioning relief should not be seen as a mere balancing equation between different levels of prejudice and detriment. It requires thoughtful consideration of all the circumstances of the case by a court of conscience. In Sidhu v Van Dyke the High Court approached the question of remedy in terms of the "requirements of good conscience": [83]. In Giumelli v Giumelli at [49]-[50] the majority weighed up all of the circumstances of the case and crafted relief "to avoid injustice to others… and to avoid relief which went beyond what was required for conscientious conduct…".
[56]
The partnership dispute
The relief sought by Scott in relation to the Partnership is set out at paragraph 25 of the statement of claim as follows:
"Further or in the alternative, the Plaintiff seeks:
a. an order that the Proceedings be referred to an Associate Judge of the Equity Division of the Supreme Court for the taking of accounts of the Partnership in order to determine:
i. the net profit or loss of the Partnership;
ii. the cost or value of the improvements made to Parkvale by the Plaintiff, as pleaded in paragraph 9(a) [of the statement of claim], for the purpose of determining the amount that is to be distributed and payable to the Plaintiff under clause 11 of the Partnership agreement;
iii. the Plaintiff's capital contributions to the Partnership, for the purpose of determining the amount that is to be accounted to the Plaintiff pursuant to section 44 of the Partnership Act 1892; and
iv. the profits of the Partnership since the purported dissolution of the Partnership on 1 September 2017, for the purpose of determining the Plaintiff's share in the profits of the Partnership that is attributable to the use of the Plaintiff's share in the assets of the Partnership, pursuant to section 42 of the Partnership Act 1892."
By their amended defence filed on 1 September 2023, the defendants admit that there should be an accounting in relation to the Partnership but otherwise deny Scott's contentions in paragraph 25 of his statement of claim. The defendants then make a series of allegations as to the basis on which the affairs of the Partnership should be wound up. The defendants contend:
1. The Partnership had an obligation to pay to Neil's estate "the sum due to it in circumstances where Neil's estate owns two thirds of the assets [of] the Partnership including any interest that Janet's estate may have had in such assets."
2. The Partnership has an obligation to pay Neil's estate the sums due by reason of ss 42 and 43 of the Partnership Act 1892 (NSW).
3. The Partnership has an obligation to pay rent, outgoings and expenses to Neil's estate for and out of its use of Parkvale and Miltons. The defendants rely in this regard on clause 10 of the partnership agreement.
4. Scott owes the Partnership the sum of $453,288.11 plus interest, being the so-called Fairfield debt.
5. Scott failed to make capital contributions to the Partnership. The defendants point to certain partnership accounts that were in evidence, which show a negative balance of partners' funds for Scott.
6. Neil's estate is entitled "to receive two-thirds of the assets of the partnership".
7. Scott was entitled to 50% of the profits of the Partnership "pursuant to an agreement to that effect for the 2016 and 2017 financial years which ceased when [Scott] abandoned the Partnership on or about 30 July 2017…whereupon [Scott's] entitlement to share in the partnership profits for the 2018 financial year reverted back to one third…"
8. Scott breached his obligation to act in good faith to Neil as partners in the Partnership, particulars of which were (a) a few of the alleged assaults to which I have already referred, (b) Scott's failure to have any input into the affairs of the Partnership after 30 July 2017 (ie, when the AVO was issued), (c) various "payments" made for the "personal benefit" of Scott, as detailed in affidavits sworn by his sisters, and (d) in an especially confusing particular, that Craig, Phillip and Isabella Ford (daughter of Tracey and Phillip) were owed a total of approximately $76,000 for doing work for the Partnership after Scott's "abandonment" of the Partnership on 30 July 2017. The pleading then said that accounts should be taken on a wilful default basis, but this contention was abandoned in final oral submissions. The pleading did continue to allege that Neil's estate was entitled to certain assets, together with cash in partnership accounts, however this was not pressed at the hearing.
[57]
The Fairfield debt
Scott's contention in relation to the Fairfield debt is that the estate is estopped from denying that the debt is not genuinely repayable. The claim is based on a promissory estoppel. The basic elements of promissory estoppel are similar to that of proprietary estoppel and were set out in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-9; [1988] HCA 7 and have already been reproduced earlier in this judgment at [325]. At the very core of the action of promissory estoppel is the requirement that the person seeking to invoke the estoppel has acted to their detriment in reliance on the representation of another. Scott says this applies to him in the context of the Fairfield debt.
Before I deal with Scott's evidence as to what his father said to him about repayment of the Fairfield debt, it is convenient to recall the salient facts.
Fairfield was purchased on about 13 July 1999 by Scott. Scott lived in the Fairfield homestead with Ann-Maree and their young children from 1999 to 2003 or 2004. In 2018, Scott leased Fairfield to Mr Green at around $52,000 per year. It is somewhat unclear what happened to the Fairfield homestead in the intervening years from 2004 to 2018 but for the period at least up to the AVO being issued, Scott was heavily involved in the farming of the farmland on Fairfield in conjunction with Parkvale and Miltons.
The evidence does not allow me to reach a conclusion as to where the whole of the purchase price for Fairfield came from, but there was no dispute that the bulk of the purchase price was funded by the proceeds of a loan taken out by Scott from CBA. There was some evidence to suggest that the deposit was paid by the Partnership, but the property was placed solely in Scott's name. The loan was secured by, at least, a mortgage over Fairfield. The evidence does not allow me to reach a firm conclusion as to whether CBA took security over any other assets to secure repayment of the loan to Scott. Some evidence suggests that the partners all personally guaranteed the loan and mortgaged their own properties to secure those guarantees. The Partnership serviced the interest on that loan from the acquisition right up until 2011 when it was subsumed into the Rabobank facility. It is unclear whether this affected Scott's current account with the Partnership.
Fairfield was used in the business of the Partnership. It was farmed in conjunction with Parkvale and Miltons. The Partnership did not pay rent to Scott for the use of Fairfield. There was never any attempt to identify profits attributable to Fairfield.
[58]
Was Miltons partnership property?
As I pointed out in Fragar v Fragar [2024] NSWSC 193 at [124], the starting point for determining whether an asset is partnership property is the proposition that "the acts and intention of the parties ... determine finally and ultimately the question whether property owned by a partner becomes partnership property": O'Brien v Komesaroff (1982) 150 CLR 310 at 322; [1982] HCA 33.
It is also necessary to have regard to ss 20 and 21 of the Partnership Act, which are as follows:
20 Partnership property of firms other than incorporated limited partnerships
(1) All property, and rights and interests in property, originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership, and in accordance with the partnership agreement.
(2) Provided that the legal estate or interest in any land which belongs to the partnership shall devolve according to the nature and tenure thereof, and the general rules of law thereto applicable, but in trust so far as is necessary for the persons beneficially interested in the land under this section.
(3) Where co-owners of an estate or interest in any land, not being itself partnership property, are partners as to profits made by the use of that land or estate, and purchase other lands and estate out of the profits to be used in like manner, the land or estate so purchased belongs to them, in the absence of an agreement to the contrary, not as partners, but as co-owners for the same respective estates and interests as are held by them in the land or estate first-mentioned at the date of the purchase.
(4) This section does not apply to or in respect of an incorporated limited partnership.
…
21 Property bought with partnership money
Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.
The reference here to "contrary intention" is significant in the present case. It is common ground that the Partnership was governed by the terms of a partnership agreement, which was in evidence. I have already set out clauses 10 and 12 of that agreement at [25] above. Clause 10 provides for the Partnership to use the land owned by partners in the business of the Partnership, on the conditions there set out. At the time the partnership agreement was executed, that clause would have been understood to apply to Parkvale, which was owned by Neil and Janet.
[59]
The 2016 Agreement about Janet's interest in the Partnership
It is finally necessary to deal with the question of what happened to Janet's one-third interest in the Partnership after her death.
Again, it is convenient first to recall the salient facts. Up until Janet's death in 2012, each of the partners had an equal one-third interest in the Partnership. Janet's interest in the Partnership was personalty, capable of being dealt with under her will. Under her October 2007 Will, the whole of Janet's estate was left to Neil absolutely and probate of that will was granted to Neil on 14 August 2013. Neither party made any submissions about the terms of the partnership agreement dealing with the death of a partner.
For the three years ending on 30 June following her death, the parties treated Janet's partnership interest as still held by Neil as executor of Janet's estate.
Mr Twomey, at least, seems to have believed that that is what had occurred for the 2013, 2014 and 2015 financial years. The present dispute stems from the steps taken by the parties to sort out what to do for the year ending 30 June 2016 and subsequent years.
The starting point is an email dated 20 May 2015 from Mr Twomey to Mr Billing. This is the email in which Mr Twomey proposed the 11 June 2015 meeting in Orange. In that email he referred to having had discussions with "the Macaulays" about "the need to address 'Parkvale Pastoral Co' which is the partnership which operates the farm". Mr Twomey said that the purpose of the meeting would be "to consider the options going forward after 1 July 2015."
Mr Twomey attached a note, which I take to be of or in relation to the discussion to which his email referred. The sections of Mr Twomey's note that are relevant for this part have already been set out at [152] above.
It is apparent that Mr Twomey put the question of what to do about Janet's partnership interest on the agenda for the June meeting because he realised it needed to be resolved for the upcoming financial year.
Mr Twomey's email of 10 June 2015, to which I referred at [154] above, included at item 2:
"Look into the structure of 'Parkvale Pastoral Co' going forward from 1 July 2015. Do we continue with a partnership[?] What will Neil do with the share from Jan[?]"
It is also relevant to note that no one kept notes of the 11 June meeting. Mr Twomey did not, but said that he believed that Mr Billing was taking notes. However, if Mr Billing did keep notes, none were produced. In any event, the evidence suggests that this matter was indeed discussed at the 11 June meeting, as each of the defendants say that Neil agreed to a 50:50 split at this meeting (though each contend it was to profits only).
[60]
Taking of accounts
I agree with the parties in that a taking of accounts is necessary.
For the reasons I have given above, the taking of accounts should be done on the basis that:
1. The Fairfield debt was not a "paper debt".
2. Miltons was partnership property.
3. Neil was entitled to receive whatever amount of capital was due to Janet as at 30 June 2017, when it was transferred to him.
4. Neil and Scott operated as equal partners in the Partnership from 1 July 2015 until 1 September 2017.
[61]
Constructive trust claims
Scott has advanced claims further or in the alternative for orders designating Parkvale and the portion of Miltons that Scott does not already own subject to a common intention constructive trust and a joint endeavour constructive trust.
Given that I have found that Scott has made out a claim for proprietary estoppel, it is not necessary to address these claims.
[62]
Succession Act
Scott also advances a claim for further provision out of Neil's estate pursuant to s 59 of the Succession Act. It is not necessary to address this claim for the following reasons.
First, as I have already found that Scott is entitled to most of Parkvale and all of Miltons by way of his proprietary estoppel claim, I do not see any circumstance in which Scott would be entitled to further provision.
Secondly, even if I am wrong about Scott's entitlements to Parkvale and Miltons, I still do not think it appropriate to deal with the Succession Act claim given the opacity around Scott's financial circumstances. It is imperative in applications for further provision under the Succession Act that the Court has access to updated, accurate information about the applicant's financial circumstances: see Baker v Baker [2024] NSWSC 559 per Hammerschlag CJ in Eq at [21]-[24]. Because it remains necessary to wind up the Partnership, it is not presently possible to determine Scott's financial circumstances with any degree of precision. This is by no fault of any of the parties. An accurate figure can only be produced once there has been a taking of partnership accounts.
[63]
ORDERS
The declarations and orders of the Court will therefore be as follows:
1. Declare that the defendants, as executors of the estate of the late Neil Macaulay, hold their legal interests in the following properties on trust for the plaintiff subject to the conditions set out in order (2):
1. "Parkvale", located at Parkes, NSW, comprising Lots 122, 138, 145, 153, 155 and 188 in Deposited Plan 750132, Lot 61 in Deposited Plan 750160, Auto-Consol 8404-189, Auto-Consol 10847-200, Auto-Consol 10706-102, Auto-Consol 10706-103, and Lots 1 and 2 in Deposited Plan 1130686, save for the paddocks marked U, AE and Q on the paddock map annexed to these orders; and
2. "Miltons", located Parkes, NSW, comprising Lots 72, 73 and 74 in Deposited Plan 750160 and Lots 1-5 in Deposited Plan 1097809.
1. Declare that the plaintiff's interests under the trusts identified in order (1) are subject to the following conditions:
1. That the plaintiff shall convey free and clear title to "Fairfield" to the first defendant;
2. That the plaintiff shall renounce the devise of the property at 2 Endeavour Place, Parkes under the will of the late Neil Macaulay dated 10 August 2018.
1. Declare that the plaintiff and the late Neil Macaulay carried on the Parkvale Pastoral Co Partnership (the Partnership) as equal partners on and from 1 July 2015 until the termination of the Partnership.
2. Declare that the interest of the estate of the late Janet Macaulay in the capital of the Partnership as at 30 June 2017, being the sum of $249,223.19, was assigned to the late Neil Macaulay on 30 June 2017.
3. Declare that the plaintiff's liability to the Partnership in relation to the refinancing of the Fairfield debt, being the amount of $453,288 recorded in the financial statements of the Partnership for the year ending 30 June 2017 under the heading "Loan: Scott Macaulay re: Fairfield", was duly payable.
4. The statement of claim is otherwise dismissed.
5. The parties are to file short submissions and any additional evidence on the question of costs as follows:
1. Plaintiff on or before 4:00PM on 4 February 2025.
2. Defendants on or before 4:00PM on 14 February 2025.
3. Plaintiff in reply on or before 4:00PM on 21 February 2025.
[64]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 03 December 2024
The executors of Neil's estate are Christina, Tracey and Craig. Probate of the 2018 Will was granted on 31 January 2023.
By statement of claim filed on 20 August 2021, Scott seeks a variety of orders in relation to Parkvale and Neil's interest in Miltons. His claim seeks no relief in relation to Fairfield because that property is in his name and, until the final hearing when the defendants briefly contended that it was partnership property before abandoning the point, it had never been suggested that Fairfield was partnership property.
The gist of Scott's claim is that the 2018 Will represents a serious departure from representations made by Neil over many years as to Scott's eventual ownership of Parkvale and Miltons. He says that he relied to his detriment on the representations and the assumption to which they gave rise and that it was unconscionable of Neil to depart from them by making the 2018 Will. His case is that rather than seeking more remunerative opportunities elsewhere, he devoted the bulk of his working life to the Partnership, the revenue of which was largely used to improve Parkvale and to pay down significant partnership debt.
This general case is articulated in a number of ways. In addition to his contention that the defendants are estopped from denying the representations or assumption, Scott contends that he and his parents were parties to a joint endeavour that came to an end without attributable blame. Scott further contends that he and Neil at some point had a common intention that Neil would hold his interests in Parkvale and Miltons for Scott's benefit.
The primary relief which Scott seeks are declarations and orders that:
1. The defendants, in their capacity as executors, hold their interests in Parkvale and Miltons subject to a constructive trust for Scott's benefit;
2. The defendants' interests in Parkvale and Miltons are subject to a charge or lien in favour of Scott for his disproportionate contributions;
3. The defendants are estopped from denying the truth of and departing from the pleaded representations and assumption; and
4. The defendants are liable in equity to reverse the detriment occasioned to Scott.
So far as the Partnership is concerned, Scott seeks orders for a taking of accounts and consequential orders. The defendants agree that such orders are appropriate, however it is necessary to resolve several issues concerning the partners' entitlements before doing so. The principal questions in this respect were (1) whether, following Janet's death, Neil and Scott agreed to split Janet's one-third partnership share equally such that they became equal partners, as Scott contends, or whether her share passed to Neil such that Scott remains a one-third partner, as the defendants contend, (2) whether Miltons was partnership property and (3) whether a debt owing from Scott to the Partnership, as shown in the financial reports of the Partnership for many years and which related to the refinance of funds originally borrowed by Scott to purchase Fairfield, was genuinely required to be repaid. This last issue was generally referred to by the parties as the "paper debt" or the "Fairfield debt" issue.
Scott alternatively seeks an order for provision under s 59 of the Succession Act 2006 (NSW).
At the time they filed their defences, the defendants were jointly represented. By the time of the hearing, however, Craig was unrepresented. The second and third defendants (Christina and Tracey) say that Neil never made any representations as to whether Scott would inherit Parkvale or any other property. They say that he never relied to his detriment on any such promises in any event.
Craig did not rely on a separately pleaded defence and so his position, at least so far as the pleadings were concerned, was aligned with his sisters' position. However, his evidence and submissions were to the effect that his father did indeed make representations as to both his and Scott's eventual ownership of Parkvale and Miltons, but that his recollection of these representations differed from Scott's (and his sisters') recollection.
There was limited evidence as to how the Partnership kept its accounts in the period prior to 1 September 2017. For many years, the partners engaged Mr Geoffrey Twomey of Twomeys (as it is now known) in Young and Cootamundra as their accountant. On the basis of Mr Twomey's evidence and those accounts that were before the Court, I infer that the partners kept their books and managed their financial and tax affairs in an orderly way at least up until the breakdown of relations associated with the present dispute.
The Partnership conducted a mixture of farming activities, principally cropping and livestock (sheep). It was generally successful. Although there were ups and downs, it was a profitable enterprise overall. The period of drought between 2006 and 2009 was especially difficult. In 2007, for example, although the Partnership recorded farm income of over $400,000, consisting of gross profit from sheep trading and revenue from sales of grain crops and wool, it ultimately made an overall loss of $3,560.48.
The fortunes of the Partnership improved from the 2010 financial year onward, with income returning to pre-drought levels.
The 2006 and 2008 accounts show that the Partnership had liabilities to CBA totalling about $366,000 and $330,000 respectively, consisting of both current liabilities and non-current liabilities. The 2010 accounts are less clear, but the Partnership seems to have at least had current liabilities to CBA of about $340,000. In 2011, however, the Partnership refinanced with Rabobank and the existing debt to CBA was folded in with other personal debts of Neil, Janet and Scott. A liability of $1,200,000 to Rabobank was therefore recorded in the 2011 accounts. I will say more about this refinancing in due course.
By the 2018 financial year, the amount owing under the Rabobank facility had been reduced to less than $200,000.
In 2001 Neil and Janet purchased a house on Allenby Road in Orange. Tracey and Phillip lived in the house from then until 2013 and paid $150 a week in rent. Neil sold the Allenby Road property in 2018.
In 2005 Neil and Janet decided to buy a house in town. Janet had become involved in a number of community associations and other activities in Parkes. It was becoming tiresome to travel in from the farm. Neil and Janet also had regular social engagements in Parkes. The couple purchased a house in Endeavour Place, Parkes and moved there from the homestead on Parkvale.
Janet began to exhibit signs of cognitive decline in late 2008 or early 2009. Her condition deteriorated and she eventually moved into Niola Nursing Home in Parkes in either late 2011 or early 2012. Janet died on 18 August 2012.
The Partnership continued to operate with Neil and Scott as the remaining partners. I will separately deal with the evidence as to how the parties dealt with Janet's partnership share.
Save for the issue about how Janet's interest in the Partnership was dealt with by Neil as her executor, there is no issue about Janet's estate. The schedule of property annexed to the grant of probate of her October 2007 Will showed the following assets.
Description Value of share
Miltons $181,500
Partnership $26,666.66
Endeavour Place, Parkes $200,000
Allenby Road, Orange $129,000
Parkvale $1,172,314
I will deal with the evidence about Scott and Ann-Maree's property settlement as well as Scott's work off the farm later in these reasons. For now, it is relevant to note that Scott moved onto Parkvale in 2006 or 2007 following his separation with Ann-Maree. By this point, his parents had moved to Endeavour Place. It was unclear as to how long Scott remained living at Parkvale after 2012. I infer from the evidence that in 2015, his new partner Cathie purchased a home at Hillcrest Avenue, Parkes and that Scott moved there at some point. He and Cathie were married on 8 March 2017. The Hillcrest Avenue property remains Scott's permanent address.
Cathie had three children prior to meeting Scott. They are all now adults. Other than the real estate that Scott and Cathie each own (to which I have already referred), their savings consist mostly of superannuation.
The overall scheme of the February 2007 Wills so far as the farmlands were concerned was therefore that Scott would inherit both Parkvale and Miltons, subject to the whole of the partnership debt, on condition that he first transfer to Craig free and clear title to Fairfield.
It is important to notice clause 4.3.2. Neither Neil nor Janet was a registered proprietor of Fairfield and, except for a brief moment at the final hearing, there was never any suggestion that it was partnership property. It is obvious that the reference to Fairfield in this clause should have been to Miltons which, ex hypothesi, the surviving spouse would own as to two-thirds upon the other's death. This is after all what the February 2007 Wills had provided. The balance of clause 4 treats Fairfield, correctly, as being owned by Scott.
Subject to this error, the overall scheme of the October 2007 Wills so far as the farm was concerned was the same as that set out in the February 2007 Wills.
Secondly, some witnesses gave evidence as to conversations and events that occurred a long time ago. In particular, several of the representations on which Scott's case depends were, on his evidence, made over a long period of time and were not written down. In Coster v Coster [2024] NSWSC 1104 at [50]-[53], I referred among other matters to the decision of Black J in In the matter of Hillsea Pty Ltd [2019] NSWSC 1152 at [16]-[22], where his Honour helpfully collected and explained the authorities on how the Court should approach the evidence of statements made long before the evidence is given, of a witness whose account is uncorroborated, and where the witness would be a beneficiary of the evidence.
As in Coster v Coster, I approach my assessment of the evidence as to such matters in the light of what was said by Black J in In the matter of Hillsea Pty Ltd. As in that case, I particularly have regard to what was said in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] by Gleeson CJ, Gummow and Kirby JJ:
"Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical."
My description of the facts set out below represents my findings on material issues of fact. I will not generally set out the evidence on which my findings are based, save for those matters where it is necessary to do so in order to explain my findings about significant discrepancies or disagreements in the evidence.
I will deal with Scott's evidence about his father's representations in a slightly different way. I will first set out Scott's evidence as to what Neil said. I will then turn to the other facts in issue and, having made findings as to those matters, I will return to the question of whether or not to accept Scott's evidence in the light of all the other facts and having regard to the defendants' various submissions as to the reliability of Scott's evidence and the inherent likelihood, or unlikelihood, that the representations were made.
Scott referred to several representations made by Neil at meetings in Forbes with Mr Christopher Haggerty and Mr Nick Turner during the 2010/2011 refinancing with Rabobank, to the effect of:
"Scott is the next generation to run the farms and service the Partnership's debt."
Scott also said that his father made a representation to him in 2013 after Janet died, in reference to Janet's share in Miltons:
"Well, this is going to be yours one day anyway."
From about 2005 to 2017, Scott said that Neil would say in meetings with Mr Ian Wright and Ms Karen Wright of AUSURE Insurance in Orange:
"The farm and the business will be…Scott's in the future."
From about 2008 to 2017, Scott said that Neil would say in meetings with Mr Peter Yelland (the Partnership's agronomist) that:
"Parkvale will belong to [Scott]."
In further annual reviews in respect of the Rabobank facility from 2010 to 2017 most likely held in Forbes, Neil would say to Mr Haggarty and Scott:
"Scott is the next generation to continue running Parkvale and service the Partnership's debt. He will ultimately have these properties to continue operating the Partnership."
Scott's evidence was that from 2010 to 2017, in meetings with Mr Geoffrey Rice (the Partnership's stock and station agent), Neil would say:
"Parkvale Pastoral Co and the farm (Miltons and Parkvale) will continue with Scott into the future. Parkvale will ultimately belong to Scott."
The prospect of "inheriting" one-third of the farming properties, or about 1,065 acres, is a notion that assumed enormous significance for Craig. It is a notion that animated all of his interactions with his father and with Scott about Neil's estate throughout 2014, 2015 and 2016, despite the fact that neither his father nor his mother adopted Option 1, either in their February 2007 Wills or their October 2007 Wills.
In fact, the reason why Neil and Janet adopted Option 2 was that it better suited Craig at the time. That is because he had at that stage recently purchased a house and a block of land and had a mortgage. Should his parents have died at that point, Option 1 would have saddled him with additional debt. Option 2, on the other hand, involved no debt. It also involved Scott paying him $250,000, at least potentially, pursuant to clause 4.3.3(e) (set out at [75] above) of the typed versions of the February 2007 Wills.
On 19 February 2007, Mr Thompson wrote to Neil and Janet, copying in Mr Twomey, enclosing typed versions of the February 2007 Wills which Neil and Janet had executed at their Coolamon meeting. He described the wills as "interim wills", and suggested that once Neil, Janet and Mr Twomey were all agreed that the typed version of the wills was accurate:
"a copy of …the Wills be distributed to the kids and if need be a meeting be organized in person or by way of telephone hook up with any of the kids that aren't available to run through the advantages and disadvantages of the Will so that everyone has a clearer understanding as to what is happening and if anyone has got any concerns they have the right to express those concerns".
Mr Thompson's understanding of what Neil and Janet wanted so far as their testamentary intentions were concerned reflects the fact, to which I have already referred, that Neil and Janet wanted their children to know and agree to what was in their wills. They wanted to be transparent about the family succession plan.
Mr Thompson also wrote:
"The Wills have been prepared on the basis of the [principle] that fairness rather than equality is the goal of Neil and Jan. Scott has received the bulk of the farmlands on the basis that Scott has been farming except for a short period of time overseas and at the CSIRO. However there has been a clause included that [states] that should Scott or his estate sell prior to the 1st February, 2017 then the other children would receive a greater share."
The letter also contained a document setting out the financial implications of Option 1 and Option 2.
Craig said that even though his father chose Option 2, he in fact intended to choose Option 1. He recalled that Janet said to him in the car-ride back to Parkes:
"Will you be happy with 'Fairfield' and 'Miltons Block[?]'"
In the course of his cross-examination, Craig was adamant that his parents wanted to adopt Option 1 at the meeting, not Option 2. He said that there was a whiteboard on which the options were written and that this was "burn[ed] in [his] mind".
I am unable to accept that Craig's recollection of these aspects of the February 2007 meeting is accurate. His recollection of his parents' testamentary wishes is contradicted by the February 2007 Wills executed that same day and by the correspondence from Mr Thompson. I have no doubt that the February 2007 Wills correctly reflect the testamentary wishes of both Neil and Janet at the time they were made.
So far as this incident is concerned, I can accept that Christina recalls matters as she has set out in her affidavit, but I am not prepared to place decisive weight on her recollection in circumstances where Scott was asked about the incident and gave a cogent denial, and where there was no other evidence as to the incident. There was no suggestion, for example, that Christina had ever mentioned this alleged assault to Scott or to her other siblings. I am therefore not persuaded that the incident occurred as Christina recalls it.
All parties accept that Scott did continue to work on the farm during his days off from the mines. However, Scott's siblings suggested that his role during this period was subordinate to Neil's and that Scott was only one of a number of people who assisted in the running of the farms at that time. In particular, Tracey says that she and her husband Phillip took an active role in assisting Neil with farming. Craig maintains that he "would assist with the farm regularly and often" and that Scott's work on the farm dropped significantly whilst he was at the mines. Christina says that her son Paul Kronenberg also assisted.
Scott accepts that some of the family did help out from time to time during this period, but he denies that his participation in the farming activities dropped significantly.
Whilst I accept that other members of the family did help on the farm during this period, I find it most likely that Scott did, in fact, maintain a very heavy farming workload despite his work at the mines. He lived on Parkvale throughout this period, unlike the other deponents who claim to have knowledge of his level of work there. For the entire period that Scott was working on the mines, Phillip and Tracey were living in Orange and Phillip was working on his own family's farm. Craig was working full-time at North Parkes Mines and living in town, off the farm. For most of this period from 2007 to 2012, Paul was still school-aged, and likely had other commitments to balance with farmwork. His parents (Christina and Arno) also lived in town in this period.
Ann-Maree gave evidence of Scott's high level of commitment and hard work with which he approached farming. She said, and I accept, that his commitment to the farm, including through financially difficult periods, produced a lot of stress and was a cause of the breakdown in their relationship. Mr Richard Green, a neighbour, also gave evidence of Scott's skill and dedication to farming.
I find that the Partnership's continued success during the period in which Scott was employed at the mines was to a significant degree due to the fact that Scott continued to work long hours on the farm. I find that this period was one in which Scott worked exceptionally hard to ensure the Partnership's ongoing viability. The business of the Partnership did not suffer during Scott's period of offsite work. Instead, by the 2010 financial year, the Partnership's income had recovered to its pre-drought levels and was making a healthy profit.
The course of discussion and correspondence among the family members about Neil's existing October 2007 Will and what he should do about updating it quickly devolved into a quagmire of claims and counter-claims, especially as between Craig and Scott, all aired in an atmosphere of hostility and mistrust. As had been the case in 2007, Neil remained keen for the question of inheritance to be openly discussed and to be something about which everyone should agree. This meant that there were many meetings between family members and their advisers at which the issues were discussed.
On 10 June 2015, Mr Twomey sent further correspondence to Scott, Mr Billing and Mr Robinson with a proposed agenda for the meeting. Mr Twomey suggested that Scott should circulate the agenda to his siblings but Scott could not recall if he had done so. The four agenda items were as follows:
"1. Discuss Neil's new will and show errors in old will. Go through suggested changes as per Twomeys correspondence. Get input from Graham Billing re his meeting with Neil and the girls.
2. Look into the structure of 'Parkvale Pastoral Co' going forward from 1 July 2015. Do we continue with a partnership[?] What will Neil do with the share from Jan[?]
3. Consider the use of a Family Trust for the farming operations.
4. Consider intergenerational land transfers to siblings who wish to carry on primary production."
It seems that all of these issues were discussed at the meeting.
Scott's recollection of this meeting was a little blurry, in the sense that when he prepared his first affidavit he was mistaken as to the year in which it occurred. However, I am satisfied that the substance of what he recalls that Neil said (as set out below) is correct:
"100. During the meeting I recall that we discussed clause 4.3.2 of the Will. Dad said to everyone at the meeting words to the effect of:
'What Scott has (referring to Fairfield) is to go to Craig, and what I have (referring to Parkvale and his two-thirds interest in Miltons) is to go to Scott. This clause has the wrong property. Miltons goes to Scott, not Fairfield because Scott owns Fairfield.'
101. Dad also said words to the effect:
'The house in Orange is to go to Tracey (who was living in it at the time). My share in the super is to be split between Tracey and Christina. The Parkes house (being the residence that Dad purchased in 2005) is to go to Christina.'"
He then recalls that Craig said in response to Neil:
"That is not what I wanted. I want a third of the total area of the farms".
Craig's position was that, on Neil's death, he should inherit or otherwise come to hold a third of the total farmlands, being an area of 1,065 acres, together with a third of the assets of the Partnership, but without any partnership liabilities. This was significantly more than what Neil had provided him in his October 2007 Will. Craig's evidence was that he said the following at the 11 June 2015 meeting:
"Dad and I have had discussions and he told me he wants to have a third of the farmland and of the Parkvale Pastoral Company assets…"
However, even Craig did not suggest that this was a proposition with which anyone at the meeting agreed. Scott's diary entries following this meeting show that he did not consider there to have been any agreement as to what Neil's will should provide. For example, his diary entry on 15 June 2015 records:
"Discussions with DAD & Craig Re Will (no agreement)…"
I accept that Craig said the words he claims to have said at this meeting, as set out above. But I do not accept that Neil agreed with that proposition, either at the meeting or shortly thereafter. So far as Neil's testamentary wishes were concerned, they remained as expressed in the October 2007 Will, save that he was clearly amenable to further discussion about the division of the farmland in the hope of reaching some agreement with his children.
It is also relevant to note Scott's response to what Craig said. As the defendants pointed out, Scott did not couch his response in terms of a deviation from some longstanding promise that Neil would leave him the whole of the farms. Rather, Scott considered that Craig's position was "unfair" in that it represented much more than what had been provided to Craig under the October 2007 Will. This distinction has some significance for the defendants' case.
Finally, I note that Neil had been quite unwell in the period leading up to the meeting. He attended but was subdued and contributed little to the discussion.
The question of what to do about the partnership interest held by Janet's estate was the subject of a further meeting with Mr Twomey during that week. On 22 June 2015 he sent a further email to Mr Billing about that topic which I will set out in the context of dealing with that aspect of the matter.
In July and August 2015, Neil, Craig, Christina and Tracey met with Mr Billing to discuss Neil's testamentary wishes. Craig gave evidence to the effect that Neil indicated in those meetings that his wishes had changed. However, as I will explain, to the extent Neil expressed any such change to Scott it seems only to have been along the lines of what was communicated at the 30 September 2015 meeting, which I will describe next.
I have set this part of Mr Twomey's note out in full to demonstrate that, as at September 2015, Neil was starting to tell both Mr Twomey and Scott that his testamentary intentions had changed, but only to the extent of allowing Craig to have land totalling 802 acres. Those 802 acres would comprise Fairfield plus some paddocks from the top of Parkvale, including the paddock marked AE which contains a bore. The rationale for such a gift was that, as explained earlier in these reasons, Fairfield does not have a reliable source of water. Neil, it seems, was of the view that Fairfield on its own was not a viable farming proposition. He does not however appear to have been considering a will along the lines for which Craig was contending, namely one that would see Craig end up with 1,065 acres. At the same time, a departure from the scheme of the October 2007 Will to allow Craig to inherit a few of the top paddocks of Parkvale was not something that Scott seems to have regarded as particularly unfair at the time.
As item 4 in his note suggests, Neil considered it important to get agreement to this course from Craig. The need for agreement was a function of two things. The first was that, as previously, Neil wanted his children to agree to the split of assets in order to avoid disputes later on. The second was that, by this stage, Mr Billing had begun to express the opinion that it was not possible for Neil to make a testamentary gift of Parkvale to Scott on condition that he transfer Fairfield to Craig, as contemplated by the October 2007 Will. As such, his testamentary plan could only be achieved by a combination of inter vivos transfers and testamentary gifts.
According to Craig, Neil visited him on the evening of the following day (6 November) and told him about the altercation. However, as Craig tells it, Neil said that Scott had thrown him (Neil) to the ground and "was attacking" him. According to Craig, Neil also said that this had prompted him to tell Scott that the Partnership was finished. Craig says that he called Scott to confront him about the incident on that same evening, at which time Scott apparently agreed to the proposition that he had thrown Neil to the ground. On Craig's account, Craig then said: "this has got to stop".
I do not doubt that Neil told Craig that he had been thrown to the ground and attacked by Scott. But I have difficulty in accepting that that is what actually occurred. Scott was cross-examined by counsel for Tracey and Christina about the incident, but it was not suggested to him that he threw his father to the ground or that Scott "was attacking" Neil, as Craig alleges he was told by Neil. This is not a criticism of counsel for Tracey and Christina, who asked a series of perfectly fair questions to elicit Scott's account of what occurred, remembering that neither of his clients were present either when the incident occurred or when Neil told Craig about it. Nor did Craig suggest to Scott that the incident had occurred in the manner set out in Craig's evidence.
The evidence which Scott gave about this incident was straightforward and entirely believable. Scott's account was also corroborated by his diary. Scott did generally keep a diary in which he mostly but not exclusively recorded events related to the management of Parkvale. It was not suggested to him that his diary entry in relation to this incident was mistaken.
Christina and Tracey submitted that Scott's evidence as to what occurred on 5 November 2015 came "after a long period" (which I take to mean that, in their submission, he prevaricated about the point when pressed in the witness box) and that his explanation was "unconvincing" because it involved the proposition that Neil's attack on Scott came five to ten minutes after they had been arguing.
I reject those submissions. Scott was, as I have noted, only asked very open questions about what occurred. He was obviously upset by the topic but even then, he certainly did not resist answering any of the questions put to him.
I also do not find his evidence about the incident to be in any way unconvincing. Scott was a fit and able 52-year-old when the incident occurred. The notion that he would have "thrown" his 80-year-old father to the ground, "attacked" him, and then blithely turned his back to carry on with his work, only to have his father recover immediately and come at him with a fencepost in revenge, seems like a far less likely explanation for what occurred than that offered by Scott. If the 80-year-old Neil was to land a heavy blow on Scott, which he unquestionably did, then it is more likely to have been the result of, essentially, a stealthy attack from behind, which is what Scott says happened.
Scott's diary for 5 November gives a record of the incident:
"…Heated words with DAD. Needed to sell 9500 Header & Combine. Dad said no its his he brought it. I was told to leave the farm swearing + fence post straddled across left side (spleen)? Very sore.
I left very [disappointed] with dad. Maybe the 81st yrs wants total control? Doesn't recognise what I've done over the years."
Scott's diary for 8 November records the call between Craig and Scott (and, to the extent it matters, contradicts Craig's evidence that this call occurred on 6 November):
"… Craig [c]alls saying he had a go at some barley.
I told him of the actions of Thursday just gone. He said he would talk to Dad and get back with me?"
The evidence on this issue favours Scott. His account is largely corroborated by his contemporaneous diary entries. Scott's account is also more inherently believable. If Craig was told by his 80-year-old father on 6 November that Scott had thrown him to the ground and attacked him, and if Craig had honestly believed that that is what had occurred, it seems highly unlikely that Craig would have simply said to his brother "this has to stop" and then carried on with a discussion about the harvest (as he claims). Had Craig been told of the assault and had he believed Neil, it is highly likely that, at the very least, he would have told his sisters about the incident, which he did not.
I am comfortably satisfied that Scott did not assault his father on 5 November 2015.
I also favour Scott's account of an incident that occurred a few days later on 9 November 2015. According to Craig, Scott was "abusive" towards his father in the course of an argument that took place on Parkvale. The argument was sparked by the fact that Neil had failed to secure the nozzle to the hose of a fuel pod. The fuel pod had a 400 litre capacity and sat on the back of a ute. Neil would drive the ute around and refuel farm equipment using the pod. Because Neil had failed to secure the nozzle to the hose of the pod, the nozzle fell to the ground and the hose had been dragging around behind the ute. Scott noticed what had happened and became annoyed. Neil nonetheless blamed Scott for the failure. An argument ensued, which may well have been heated, but I reject Craig's evidence that Scott was being "abusive" towards his father about the issue and that there was shouting and yelling. In fact, Craig was himself operating heavy machinery at the time and his evidence in the witness box about what he heard was equivocal. Even so, Scott accepted that there may have been "yelling" involved but he flatly denied that there was anything "abusive" about the way he dealt with the situation. According to Craig, Neil told Scott during this argument that the Partnership was over and said: "you won't get an inch of this place".
Scott's diary for 9 November records:
"Craig still yet to call?
Saw Chris 'K' told of predicament. Wasn't very worried except for Dads ageing. Then showing her my bruising telling her he struck after I walked away…"
This note seems to be a reference to the 5 November incident. To that extent, it confirms the conclusion I have already reached about that incident. I note that it says nothing about the alleged incident on 9 November.
The defendants did not ever explain the significance of either the 5 November or 9 November incident. Christina and Tracey, in final submissions, set out the evidence relating to these incidents together under the heading "Alleged Assault #2", but did not ask me to make any findings about it. Craig did not address any particular submissions to the incidents at all. I nonetheless infer that the significance of the 9 November incident was that it could (on one view) be some evidence that Neil had decided by this point that he wanted to terminate the Partnership and that he did not want Scott to inherit any part of Parkvale or Miltons. To the extent it matters, I find that Scott yelled at his father but that he was not "abusive". I also find that Neil said "you won't get an inch of this place", as Craig recalls. I have already set out my conclusion as to the 5 November incident above.
It is also important to note one further matter. Someone, probably Mr Billing, had by this stage also advised that it was not possible (or, perhaps, that it was undesirable) for Scott to transfer Fairfield to Craig by way of intergenerational transfer until such time as Scott had turned 55. This advice, which was also mistaken, meant that another of the avenues by which Neil's wishes might have been met was blocked.
Craig's proposal therefore did have one thing going for it, at least so far as he was concerned: it was a testamentary plan that could be adopted immediately and would not suffer from the supposed difficulties identified by Mr Billing. But Craig's proposal was utterly unacceptable to both Neil and Scott for reasons that will have been obvious to everyone at the time. It produced nothing but more discord. It is not surprising that Neil was very emotional and upset during the meeting. In fact, he left in tears before it was concluded.
As noted, there was general disagreement in the evidence as to what else occurred at this meeting. It is helpful to approach the evidence in the light of the particular fact which Christina and Tracey say I should find, which is that all parties - including Scott and Neil - reached agreement that Neil should make a new will that simply split his estate equally among his children.
Christina and Tracey both said that Scott suggested that Neil should split his estate four ways. According to Christina's affidavit, Mr Twomey then said: "I've spoken with Neil and he is happy with the four-way split and wants to go with that" to which Neil replied: "Yes I want to do that. It is fair and it should put an end to all this arguing."
In cross-examination, Christina put it like this:
"Q. So at one point in this meeting Scott's objecting to Craig getting a third of the farmlands. You accept that?
A. Yes.
Q. You accept that your dad left upset?
A. Yes.
Q. Next minute you want us to believe that Scott then just stood up, put his hands in the air and said, 'I'll go a four-way split'?
A. That's it."
Tracey's affidavit evidence was to like effect. However, in cross-examination she was more equivocal about whether Neil actually agreed to the idea:
"Q. Just focus on the question. At no point in the meeting did your father agree to a four-way split, did he?
A. Well, when, when he came back in again, they said - Geoff [Twomey] said 'Well, I'll go and get your father and bring him back in to say that - what you've all agreed to', because Scott made the suggestion of the four-way split because he was sick of it. He said 'I'm - I've had enough. I haven't got kids to worry about.' Then they brought dad back in the room and, and Geoff thought that was a good idea because that's fair, because he was the one that said that land values and, and shares and that all fluctuate and - with pricing, and he thought that was a fair suggestion, the four-way split. So then it was agreed, and yeah..."
A note prepared by Tracey at the time is even more equivocal. It records:
"…Scott threw arms in air saying he had enough + there was a suggestion made to pool everything in together + split 4 ways. Geoff [Twomey] went out to Dad + told him what was going on + brought him back in. Geoff though this was a fair suggestion as it was too hard to give people individual things as prices and circumstances change..." (emphasis added)
Craig, on the other hand, said that the four-way split was his suggestion but that he proposed only that it would serve as an "interim" measure until Scott turned 55, at which time (so he thought) Scott could transfer Fairfield to him by way of intergenerational transfer. He said that there was unanimous consent by the children to the idea of an "interim" will on this basis, including by Scott. Leaving aside the question of whether Scott agreed to this idea at all, Craig's recollection that the four-way split was discussed as an "interim" measure does tend to ring true. As I have already pointed out, Craig must have seen the status quo (ie, the October 2007 Will) as a big problem for him. A four-way split on an "interim" basis was better than nothing.
Craig accepted in cross-examination that Neil had not agreed to the four-way split at this meeting:
"Q. Your dad didn't agree to a four-way split at this meeting, did he?
A. Yes, that's correct, yeah, at, at this meeting, yes.
Q. He did not agree, correct; is that what you're saying?
A. Yeah, I'll, I'll agree with that, yes."
Incidentally, the defendants said that it was Mr Twomey who said that Scott could not transfer Fairfield by way of intergenerational transfer until he reached age 55. I very much doubt this. On cross-examination, Mr Twomey gave evidence that he saw no such difficulty. Craig's cross-examination on this point also tends to confirm that Mr Billing was to blame for this particular misconception. This is, I think, another instance of Craig tending to paint Mr Twomey's involvement in a negative light.
Scott was adamant that neither he nor Neil agreed to the proposed four-way split at the meeting. His evidence about the meeting is however internally inconsistent in one respect. According to his first affidavit, Christina and Tracey said in the meeting:
"Land values are rising - Dad's 2007 will is not fairly distributing the estate given that land values are rising. The estate should be split four ways."
On the other hand, in his second affidavit he denied that there was any discussion at the meeting about a four-way split and, confusingly, said that he stood by the account given in his first affidavit. He did however say in this later affidavit that one or more of the defendants raised the topic of a four-way split in the carpark after the meeting by saying "to appease dad how about we go 4 ways?", which Scott rejected. In this later affidavit, Scott said that he replied by saying:
"That will never work - you should not gain from my sweat, toil and effort on the farms."
He also said that Neil was not present at the time of this discussion. I note that Scott's diary for 1 February 2016 contains the following:
"… Craig wanted old will to stand up but then [contradicted] it to his favour. Land grab + assets with no debt 1065 Ac.
Dad once again didn't listen to reason and threw his hands in the air and walked out…"
It is relevant to note one additional matter in Scott's evidence that was not challenged. According to Scott, there was also discussion at the meeting about Craig receiving Fairfield plus three top paddocks of Parkvale, along the lines of what Neil had been discussing with Mr Twomey on 30 September 2015 and which he also discussed with him after this 1 February 2016 meeting, as I will describe below. Scott said at the meeting that Craig's proposal, being the proposal described at [158] was unfair, but that he was willing to accept Neil's suggestion that Craig should receive Fairfield plus three paddocks in the north of Parkvale.
Mr Twomey recalled that there was a discussion of a four-way split at the meeting. His recollection was that Scott did not think that a four-way split was fair because "as a partner of the Partnership he felt he had contributed significantly, in terms of costs and work, to the infrastructure on Parkvale". In a further affidavit, Mr Twomey said that he believed there was no agreement by either Neil or Scott at this meeting that Neil's estate would be left equally to his children.
In cross-examination, Mr Twomey gave the following evidence:
"Q. At this meeting on 1 February 2016 there was some discussion, was there, raised by Christina and Tracey about a consideration being given to a four-way split between the children? Is that your recollection?
A. Well, I was asked to do an assumption as to what would constitute the estate of Neil Macaulay if his assets were distributed equally to the children and what would be the outcome without distributing any physical assets, but rather distribute 25% of the assets equally between the four siblings, yes.
…
Q. So Neil was--
A. It was discussed it wasn't - there was no decision actually made at that meeting."
Mr Twomey's recollection that the idea of a four-way split was essentially a modelling exercise to better understand the parties' positions was to some extent corroborated by a note of the meeting which he prepared at the time. The note is illuminating in a couple of ways. First, it demonstrates that the position being adopted by Scott at this meeting was somewhat conciliatory. After setting out Craig's proposal, Mr Twomey noted:
"Scott felt that Neil wanted the property to be split by Scott transferring 'Fairfield' to Craig and Craig receiving the top paddocks of 'Parkvale'."
This is a reference to Neil's compromise solution as set out at [165] to [166] above. This solution represented less than what Scott was entitled to under Neil's October 2007 Will and less than what he believed he had originally been promised prior to 2007. Mr Twomey's note does not suggest that Scott objected to this solution.
Secondly, the note does strongly suggest that the idea of a four-way split was discussed, but it is somewhat equivocal as to whether any of Neil, Scott and Craig considered it to be a real solution to the impasse. The note does suggest that Neil thought a percentage split of the whole estate might be a solution. The note includes the following:
"… Decisions
To decide what is the better way of handling the distribution of primary production land i[t] would be necessary to do a proper appraisal of the value of the land and exactly who will receive what. 'Parkvale', 'Fairfield' and 'Milton's' have all been roughly valued at $1350 per acre but this would have to be checked because with the bulk of the improvements are on 'Parkvale' and it's valuation would be higher. Neil needs to decide whether his original will is a true indication of his intentions. It would appear he had discussed with Craig that he would receive one third of all his rural holdings then this does not equate to what would be the interpretation of his will that was made back in 2008 by [Commins] Hendricks Solicitors in Coolamon.
The two girl siblings Christina and Tracey are quite happy with what they receive however following discussions that was had at the meeting it was proposed that perhaps Geoff Twomey should do an assumption as to what would constitute the Estate of Neil Macaulay and if his net assets would were distributed equally to the children then what would be the outcome. Without distributing any physical assets but rather distribut[ing] 25% of the net assets equally with the four siblings. This exercise may give us better indication of the outcome then it would mean that there would not have to be periodic reviews [of] Neil's will and he has indicated that this is a better way to address the situation. Following his passing it would be up to the siblings to decide what they would like to prefer to take as in assets then the boys Craig and Scott would sort out what parcels of land they prefer."
As I read it, the note may be saying one of two things. It may be saying that the estate should be valued in order to work out whether the existing distribution is fair. It may also be read as saying that Neil was content with a four-way split, with Scott and Craig to take land equal in value to their one-quarter share after he has died.
In the light of this note and having particular regard to Mr Twomey's evidence in the witness box as set out above, I find that there was discussion of a four-way split at the meeting but that neither Neil nor Scott actually agreed to a distribution on that basis. In this regard, I note three additional matters.
The first is that if, as the defendants contend, Neil wanted to split his estate four ways in 2016, it is difficult to see why there would be any need to obtain valuations at that point. I note that Mr Twomey obtained valuations very shortly after the meeting. Valuations would be relevant to working out whether a particular distribution of assets was fair. They would be far less relevant, if at all, to working out whether a four-way split was fair - the only valuations that would be probative in this case would be when the estate was administered (ie, following Neil's death) to reflect the present value of the land.
The second is that Mr Twomey reported to Mr Robinson and Mr Billing on the outcome of the meeting. His note in relation to that matter sets out his somewhat inconclusive impressions of what the will should provide in the light of the meeting. However, it contains no mention of a four-way split.
The third is that Mr Twomey had a meeting with Neil on 29 February 2016 because, according to a letter which Mr Twomey wrote to Mr Billing on 29 March 2016, Mr Twomey had the impression at the 1 February meeting that Neil "appeared to be confused with the intentions of his children" and so he asked Neil to visit him alone when he was next in Cootamundra. Neil instructed Mr Twomey at that meeting that his testamentary wishes were as follows.
So far as Christina and Tracey were concerned, Neil expressed a wish to essentially retain the distribution of assets as set out in the October 2007 Will. By this stage, Mr Twomey had obtained valuations (as already mentioned) and so he was able to indicate that the value of each daughter's inheritance would be $950,000 as at that date.
So far as Scott and Craig were concerned, Neil expressed his wishes by reference to a paddock map and explained that Craig should receive "approximately 1000 acres", being Fairfield plus the paddocks marked AA, U, AE, Q and AD in the northern part of Parkvale. According to Mr Twomey:
"Neil thought that this split would enable Craig to carry on [a] farming business with access to a bore and all his land would be adjoining. The property would be highly arable and would be sufficient to conduct a profitable farming venture."
He then referred to what the split would represent in terms of value, according to the recent valuations, then continued:
"Neil is still of the opinion that Fairfield plus the top paddocks of Parkvale be given to Craig and the balance given to Scott. This would occur on the condition that Scott transfers Fairfield to his brother Craig by intergenerational transfer. Using the appraisal of Geoff Rice [ie, the recent valuations]… then [e]ffectively Scott would receive 57% of his father's land and improvements [by] value and Craig would receive 43%."
He added:
"I need to discuss the result [ie, the percentage values] with Neil before I meet with Craig and Scott. However, I would be pleased to have your input as [to] how this can be legally explained in Neil's will."
The letter also explained that Neil wanted Craig to receive one-third of the livestock.
One might wonder how the parties managed to find their way from this juncture to being mired in the current litigation as they now are. In particular, one might wonder how Neil came to execute the 2016 Will in August 2016, which provided for a four-way split of his entire estate, given his wishes as expressed at 29 February. Here was a clear articulation of Neil's testamentary wishes that would see each son receive a viable parcel of excellent farming land with reliable access to water. Craig's desire to receive "one-third" of the farmlands would be satisfied. Scott's inheritance would be less than what he was set to receive under the October 2007 Will and even less than what he might originally have expected, but it represented an outcome to which he had already indicated his broad assent. The only difference between this proposal and the one to which Scott had indicated his assent at the 1 February meeting was that, under this proposal, Craig would receive five paddocks at the top of Parkvale instead of three. So far as Christina and Tracey were concerned, they would each receive what they had been promised all along under the October 2007 Will.
It is at this point that the roles played by Christina, Tracey and Mr Billing assume increased significance in the narrative.
An invoice from Graham Billing & Co to Neil dated 26 August 2016 reveals that on 28 April 2016, Graham Billing had a conference lasting several hours with Neil, Christina, Craig and Tracey. The invoice states:
"…discussing at length various issues in relation to Neil and the possible scenarios for the distribution of estate."
Mr Billing's note of that meeting contains almost nothing. It only records Neil as being present and says "1/2 approx of Parkvale" above the word "Craig", but otherwise only lists some email addresses. It says nothing about the fact that he prepared and witnessed Neil's execution of a new Enduring Power of Attorney in favour of Christina and Craig on that same day.
On 3 May 2016, the same invoice shows that Mr Billing had a conference lasting in excess of one hour with a surveyor:
"…discussing possible partition of the property Parkvale as discussed with Neil and family on 28 April 2016 and the three possible options and handing him copies of various documents he will see what can be done with the portions as they presently stand."
There was no evidence as to what the "three possible options" were, nor was there any evidence as to what "documents" were provided to him in relation to those options. The fact that Mr Billing undertook this work is further proof, if it be needed, that Neil had not agreed to a four-way split at the February 2016 meeting.
On 9 June 2016, the invoice shows a meeting lasting almost one hour between Mr Billing and Mr Twomey:
"…discussing at length his suggestion that the estate be divided equally four ways see my notes."
The picture painted by Mr Billing's invoice and notes (such as they are) is very difficult to reconcile with other evidence in the proceedings.
Neither Christina nor Tracey made any mention in their affidavits of their attendances on Mr Billing over this period. Christina does say that Neil said to her on several occasions after February 2016 that he intended to "…make a new will and split everything four ways", but she makes no mention of the fact that she was at the same time meeting with him and Mr Billing to explore options to split Parkvale. The failure by Christina and Tracey to mention these ongoing discussions about what Neil should do are significant in the light of their other evidence, namely that the question of what Neil should do was resolved by agreement at the 1 February 2016 meeting. It is plain, in the light of the ongoing discussions with Mr Billing, that Neil had reached no such conclusion.
One aspect of Mr Billing's invoice that is particularly curious is his entry for 9 June 2016, which refers to a "suggestion" by Mr Twomey that Neil should make a will providing for a four-way split of his estate. It is unlikely that Mr Twomey suggested to Mr Billing on 9 June or at any other time that Neil should make a will splitting the whole of his estate four ways.
Contemporaneous documents prepared by Mr Twomey, together with affidavit evidence on which he was not challenged, demonstrate that throughout the period between 1 February 2016 and late 2016 - and, as will be seen, even well after Neil executed the 2016 Will - he was continuing to explore ways by which Neil could give effect to what Mr Twomey believed to be his testamentary intentions, namely as set out at [213] to [218] above and [243] to [245] below. As Mr Twomey explained in his 6 December 2022 affidavit:
"22. I recall attending an accountants' conference at Yates Baker McLean in Orange, in mid-June 2016. During my visit to Orange, I did call in to say hello to Graham Billing. This was the first time I had attended Mr Billing's office.
23. I did not say to or confirm with Graham Billing that there was an agreement between Neil Macaulay and his family on 1 February 2016 that Neil would leave his estate to his four children equally. I would never have contemplated this. I do not remember ever suggesting a four-way split. Further, I would not have gone to the trouble of:
a. meeting the Macaulays and Neil on 1 and 29 February 2016;
b. preparing the letter dated 29 March 2016, and the file note and spreadsheets detailing what was discussed at the meetings on 1 and 29 February 2016; or
c. meeting Neil and Christina Macaulay on 27 October 2016 (as I gave evidence of at paragraphs 59-67 of my First Affidavit);
if I had understood or confirmed that Neil had decided to leave his estate to his four children in equal shares."
An email from Mr Twomey to Craig on 18 July 2016 refers to his 9 June meeting with Mr Billing but makes no mention of a four-way split. To the contrary, the purpose of the email was for Mr Twomey to provide Craig with information about his (Craig's) own plan to split Parkvale and to request further information about that plan.
A further email from Mr Twomey to Craig on 23 August 2016 dealing with the same topic was to like effect.
Mr Billing's filenote of the 9 June discussion with Mr Twomey was in evidence but it is rather cryptic. It contains a note that "everything else" might be split four ways without saying what might not be split four ways. It also says "2/3" directly underneath that entry, which suggests that there was a question about whether "everything else" was to be split four ways or three ways.
It is relevant to recall that 26 August 2016, being the date of the invoice, was the day Neil executed his 2016 Will which had been drafted by Mr Billing and which provided for a four-way split of his entire estate. Yet, the invoice contains no reference at all to the signing of the 2016 Will. It refers to nothing later than the 9 June meeting with Mr Twomey and rather gives the false impression that the four-way split of the entire estate was at the specific suggestion of Mr Twomey. The invoice does not refer to taking instructions, drafting, or witnessing the execution of the new will.
A file note produced under subpoena shows that on 20 June 2016, Mr Billing had a lengthy discussion with Tracey. The note says "leave everything equally". It also says "details of my discussions with Geoff Twomey", which is unexplained. The subpoena also uncovered that Mr Billing prepared several drafts of a new will on the basis of a four-way split. One draft is struck through by hand and dated 5 July 2016, and all contain various hand annotations. It appears that Mr Billing treated the 20 June 2016 telephone discussion with Tracey as amounting to instructions to prepare a new will for Neil.
On 19 July 2016, Mr Billing had a further discussion with Tracey. His note states: "Discussing arrangements to see father…"
On 19 August 2016, Mr Billing had a brief discussion with Tracey at which they seem to have agreed for Neil to see Mr Billing on 26 August 2016.
Mr Billing apparently kept no record of any kind as to Neil's instructions to prepare the 2016 Will. It is unclear whether he ever spoke to him about the will prior to presenting it to him for execution. A subpoena requiring production of such documents returned nothing. He also apparently kept no note or record of the execution of the 2016 Will.
The defendants submitted that the circumstances in which the 2016 Will were made were not relevant to the issues in dispute. They pointed out that there was no challenge to Neil's capacity, despite such a challenge having been foreshadowed. They submitted that it was not really necessary for the Court to determine the rights and wrongs of the parties' various disputes concerning Neil's 2016 Will and 2018 Will and all of the related matters that were discussed with them over this period. I will deal with the plaintiff's application to amend their claim in respect to the 2018 Will later in these reasons.
The defendants are largely correct about those matters, but not entirely. It is true that it is unnecessary to analyse all of these interactions in anywhere near the detail that the parties' (but especially the defendants') evidence might suggest. However, on Scott's case the 2016 Will represents the first major departure from what Neil had hitherto promised him. This was of course disputed by the defendants. In fact, a significant aspect of both Tracey's and Christina's evidence (as I have already noted) was that the 2016 Will was something to which Scott positively agreed. If I were to accept their evidence on that point, Scott would have enormous difficulty in succeeding in his principal case.
However, for reasons which should be apparent from my account of what happened at and subsequent to the 1 February 2016 meeting, and from my account of how the 2016 Will came to be executed, I entirely reject their contention that the 2016 Will represented a division of Neil's estate that Scott had agreed to at any stage. It is obvious that he did not agree to it. I do not accept that either of Christina or Tracey honestly believed, as at 26 August 2016, that the execution of the new will represented a division of Neil's estate to which Scott agreed.
Two additional considerations reinforce my conclusion about that matter.
First, Craig was keenly interested in the making of a new will but even he did not think the 2016 Will represented his father's real testamentary wishes, in the sense that he believed his father was still anxious to make a "final" will that actually divided up the farms between the sons, as had been discussed over so many years. He explained in cross-examination that as far as he was aware, his father only intended to make the 2016 Will as an "interim" measure and that it should have said so. Craig's evidence was that it was merely an "interim" will until such time as Scott turned 55 when (as he had been led to believe) he could then give him Fairfield by way of intergenerational transfer and Neil could otherwise give effect to the testamentary plan which he had expressed to his sons over so many years, namely to split the farms between them.
Secondly, Christina and Tracey took steps to hide the new will from both Scott and Mr Twomey. In the weeks and months following the execution of the new will, Mr Twomey and Scott laboured under the impression that Neil was still exploring a way of making a new will that would split the farms between Scott and Craig. Christina claimed to have told Scott about the 2016 Will on 8 October. Scott denies that this occurred. Given Christina's later behaviour in relation to this matter, I am not prepared to accept her evidence that she actually told Scott about the will on 8 October.
In particular, Christina took Neil to a meeting with Mr Twomey in Cootamundra on 27 October 2016. Mr Twomey kept a note of the discussions. It is evident from that note and from Mr Twomey's evidence that they had an extensive discussion about how Neil could achieve what Mr Twomey still believed to be Neil's testamentary wishes, namely by an intergenerational transfer of Fairfield from Scott to Craig and by devising Parkvale to Scott, save for some of the top paddocks which would go to Craig. He explained that there was no age barrier, contrary to what they had been advised by Mr Billing. He also explained the CGT and stamp duty consequences. He explained what the split would represent in terms of value of the overall estate by reference to valuations he had obtained in the meantime.
However, neither Neil nor Christina informed Mr Twomey that Neil had, in fact, executed a new will just two months prior to that meeting. Christina said in evidence that she assumed Mr Twomey knew about it. I am unable to accept that evidence. There was nothing to suggest that Mr Billing had told Mr Twomey about it prior to the meeting. At this point, Christina and her siblings quite wrongly believed that Mr Twomey was only acting in Scott's interests, not Neil's, which is why she was at the meeting at all. She cannot have believed in those circumstances that Mr Twomey would know about the new will unless one of the defendants, Mr Billing or Neil told him. Nor did they advise Mr Twomey about the will in reply to his follow up correspondence on 3 November.
Further, when Scott saw that funds had been withdrawn from the partnership bank account and paid to a company associated with Tracey and her husband on about 19 September 2016, he called Tracey who told him that it was for reimbursement of Neil's legal fees. He was provided with only the last page of Mr Billing's invoice which did not disclose the nature of the work done (and only contained the 9 June entry to which I have already referred). Tracey did not tell him that the legal fees were for making a new will.
Scott's own evidence as to when he found out about the 2016 Will was somewhat inconsistent. He originally said that he did not find out about it until late 2017. However, his diary for 19 September 2016 shows that Craig told him that his father had made a new will splitting the estate four ways:
"…Craig Informed me FARM (DAD'S) is willed to go x4 I told him it wouldn't work! With me at the moment managing it."
Christina and Tracey submitted that Scott's insistence that he did not know about the new will in the face of his diary entry of 19 September 2016 reflects poorly on him. I am not so sure. Scott points out, with quite some justification, that when he asked his father directly whether he had made a new will, Neil was emphatic that he had not. This is corroborated by his diary entry for 21 September:
"Spoke to Dad Re - will saying repeating what Craig said. He got heated and said its not going 4x.
Craig gets FAIRFIELD after I sign + 3 paddocks Parkvale.
Arrange (Dad) for meeting Graham Billing's for Friday 11.00am."
None of his siblings provided him with a copy of the 2016 Will.
I am therefore not prepared to ascribe much significance at all to the fact that Scott said he did not know about the 2016 Will until late 2017, despite Craig having told him about it on 19 September. No doubt, looking back on it, Scott recalls that the 2016 Will was executed behind his back and that its existence was (a) explicitly denied by his father and (b) deliberately kept from him by his siblings, at least for some time. He is justified in recalling matters that way.
Neil also told Mr McGroder that he had spent 15 years in the army reserves or national service and that he had been called up to Afghanistan for 12 months. This was a delusion, but no party invited me to draw any particular conclusion about it. In fact, several witnesses gave evidence that Neil had been having delusions about military service, including fighting in Afghanistan and even the Boer War, from about 2014 following some surgeries.
For his part, Mr McGroder was well aware that he was dealing with a new and elderly client and, as was appropriate, he took care to determine whether he considered him to have capacity to make a will. His view at the time was that Neil did have capacity. Neil's extensive recollection of his assets and liabilities, names, dates, acreages (and so on) no doubt gave Mr McGroder confidence in that regard. The fact that he also had a clear view as to how he wished to divide up his estate would also have been apparent to Mr McGroder.
When Scott returned to collect Neil, there was a discussion about what had occurred. Mr McGroder read out Neil's instructions. Scott did not raise any concerns, nor did his diary entry of the same day reveal any concern about what Neil had told Mr McGroder:
"Meeting with Dennis McGroders Re Dads Intentions of will. Totally independent of us all. I left Dad with Dennis he told of his intentions all good wrote down. Secretary Called my phone come and get Dad. All went well according to Dennis straight forward. Dennis to get in contact couple of weeks."
Pausing again at this point, one might also wonder how the parties managed to get from this juncture to their present dispute. Here again was a clear articulation of Neil's testamentary wishes that would seem to have resolved everyone's issues. His testamentary wishes were, essentially, what he had been articulating for some time but which he had hitherto been told was not possible. He had however found a new solicitor to whom he had given instructions quite independently of any of his children and who happily seems not to have shared Mr Billing's view of the law. The only ones who might have been displeased with these testamentary wishes were Christina and Tracey, because their inheritance under the 2016 Will was significantly more than what they would have inherited under what Neil was proposing at this June 2017 meeting. But they insisted in evidence that they never took much notice of their own inheritance.
Unfortunately, it was not to be. Mr McGroder forwarded Neil's handwritten authority to Mr Billing by letter dated 30 June 2017. When Mr Billing received it on 4 July, he forwarded it to Tracey and Christina, not Neil. On 7 July, he and Mr George Blackwell of Blackwell Short Lawyers in Orange, met with Neil to obtain instructions as to how to proceed. Neil met first with Mr Blackwell alone and Mr Billing joined them later. Mr Blackwell kept notes of the meeting. Mr Blackwell gave some evidence but was not cross-examined. The defendants did not explain, through Mr Blackwell or otherwise, how Mr Blackwell came to be engaged by Neil or for what purpose.
Neil, it seems, gave Mr Blackwell a remarkable account of how he came to sign the authority. He said that he and Scott saw Mr Twomey and they "discussed tax" but also "saw [Mr Twomey] write something out with a red pen" (suggesting that Mr Twomey had drafted the authority, which was incorrect). He then said that on the way back, Scott was "going to meet his solicitor in Forbes" (my emphasis), being Mr McGroder. This was also incorrect. Neil then said that he went in and that the "solicitor asked a few questions."
Mr Billing then obtained a series of explicit instructions from Neil (which were recorded by Mr Blackwell with "Gb" notations) as to what he wanted to do. Neil acknowledged his responses to these instructions by signature. For example, "are your instructions to me that I am not to comply with the authority document": "yes" with "NM" written next to the word "yes". Either Mr Blackwell or Mr Billing then had Neil sign and date a note that read: "they've been pulling the wool over my eyes...that's why I came over here today."
Either Mr Blackwell or Mr Billing then took a series of instructions, in a similar format, from Neil as to three assaults. These seem to correspond to at least two of the alleged assaults I have already discussed and which I am not prepared to find actually occurred.
Mr Billing wrote back to Mr McGroder in two letters on 19 July in combative and accusing terms, declining to comply with Neil's handwritten authority and challenging Mr McGroder to respond to a series of very pointed questions about the circumstances in which he had seen Neil and how the authority had been drafted.
It is difficult to know what to make of these circumstances. I have no doubt that the instructions Neil gave to Mr McGroder were freely given and that he knew exactly what he was doing when he did so. He engaged in a long and detailed discussion with Mr McGroder about making a will. Mr McGroder knew nothing of Neil or his affairs prior to the conference and the only possible source for his extensive notes about Neil's affairs was Neil. Neil even advised Mr McGroder that Mr Billing was his personal solicitor. The fact that he did not mention his existing 2016 Will to Mr McGroder (or Mr Twomey in October 2016) must, I think, be because he considered it to be a temporary solution, just as Craig said.
At the same time, Neil must have known that he was not telling Mr Billing the truth when he gave him his account of the meeting with Mr McGroder. The account he gave Mr Billing is simply incredible when viewed against the other, reliable evidence as to how the meeting with Mr McGroder took place and what Neil said during it.
It is not possible to know exactly what Neil had in mind when he gave his obviously false explanation to Mr Billing. The most likely explanation is that, by this point, he was trying to please all of his children and their divergent views as to what his testamentary wishes should be.
Neil made further reference to the fact that Scott said that his siblings were entitled to receive "nothing" under his will.
Scott was also brought in and interviewed by Constable Hudson, along with two other officers. A transcript of his interview was also in evidence but it was quite indistinct in places. Scott said that he and Neil had argued, but not about Neil's will. Rather, Scott had said that they needed to have a family meeting to discuss Neil's ongoing position in the light of the fact that he was 82 years old and (it seems, though it is unclear) that he should probably not be working the farm any longer. Scott referred to his father's cognitive decline, which he characterised as Alzheimer's. He denied that he had thrown him from the vehicle or assaulted him. He said that his father had gone "off like a bean" and gotten cranky at the subject of a family meeting. He said that Neil had flailed around getting his seatbelt off. Scott said he witnessed Neil go to his front door and that he had turned around to hurl some profanities at Scott. Scott then drove off.
Scott's diary note for the day was as follows (part of which was written over the page in the 5 and 6 August 2017 sections):
"… got a call from John Simpson (Dads broken down).
Dropped off Dad endeavour place he gets [agitated] and charges me with assault.
Dads done it against with management not going his way.
[Christina] & Dad went to police. I was charged with [assault] + AVO + 2 Arms charges. All night in lock up
…
Sunday 30th around 4:30pm call from John Simpson (PSP). Re: Dad broken down in Kamandra Ln out of fuel. John said dad didn't look [too] well after walking 2-3 ks down to farm. John's couldn't get going wasn't fuel[.] Gear box look stuffed. Dad told John to go Scott would be there soon. I arrived put the two on back to P'Vale. Tied + feed Dogs[.] [B]rought Dad back to town some way in I mentioned to Dad for a family meeting again he fired up and [said] what for. I told him of his [welfare] and his decision making. I'm still driving he got very [agitated] until his driveway. Where he untangled himself from seatbelt got out walked to the door when I [made] sure he had his housekey. He then walked In threatening me again. I left for Hillcrest Telling Cath of my ordeal."
Scott was charged with assault occasioning actual bodily harm under s 59(1) of the Crimes Act 1900 (NSW) and some other unrelated firearms offences relating to the storage of an air rifle. An apprehended violence order was also made. It was not clear from the face of the AVO document whether the "prohibitions and restrictions that may be imposed" (which included orders about contact and places which Scott could not go) were actually imposed on top of the orders about behaviour. However, no one disputed Scott's evidence that the effect of the AVO was that he could not go onto Parkvale. The assault charge proceeded to trial sometime in June or July 2018 and Scott was found not guilty.
As with all of the other alleged assaults, the defendants seemed to resile from asking me to make specific findings about what occurred on 30 July 2017 although the final position was a little unclear.
Senior counsel for the second and third defendants formally put to Scott that he assaulted Neil on 30 July 2017 in cross-examination, but took the matter no further in final submissions. If that were all there was, I would simply decline to make any finding about the incident on the footing that I was not at all persuaded, to a degree appropriate to the seriousness of the allegation, that Scott had assaulted his father.
However, there is more to it. The account given by Neil to the police was seriously out of kilter with what the evidence otherwise shows about the ongoing family dispute concerning Neil's will. As I have emphasised in setting out the history of the matter, Scott's consistent position from 2007 onwards was that he should inherit or receive Parkvale and Miltons and that he was happy to do so on condition that he transfer Fairfield to Craig. By 2017, his position had softened somewhat to accommodate his father's desire to leave more land to Craig. Thus, as I have explained, Scott was also willing to accept that Craig would end up with Fairfield and some top paddocks of Parkvale.
Against this background, there are two related aspects of what Neil told the police that I am completely unable to accept as reliable. The first is that Scott supposedly wanted his siblings to receive nothing and that he became angry when his father said it was fair for them to receive "anything" at all. At no point had that been Scott's position or anything even remotely like it.
The second is that Neil supposedly said to Scott: "you will come out of it better than them because you'll get the farm." This, of course, is what Neil had been telling Scott all along (or at least, that he would inherit Parkvale and Miltons on the conditions already discussed). It is precisely what Scott wanted and precisely what he thought a four-way split would deny him. The notion that Scott became inflamed when told he was going to inherit the farm is one that I simply cannot accept.
Neil's account of the argument with Scott that supposedly sparked the assault is quite fanciful when viewed in the light of what the ongoing dispute between them was actually about. It is an account which Neil cannot possibly have believed to be true at the time he gave it to the police. This is a circumstance that throws serious doubt on the reliability of what he said to the police about the assault itself.
One possibility is that Neil believed his account to be true but that he was simply mistaken about what had been said. That seems most unlikely in view of the way Neil had just recently dealt with Mr McGroder, on the one hand, and Mr Blackwell and Mr Billing, on the other. As I have noted, his wildly divergent dealings with them may have been calculated to try to please different people in different ways. Even so, if Neil were that badly mistaken about the discussion with Scott in the moments preceding the alleged assault, it would equally throw serious doubt on the reliability of what he said to the police about other aspects of the incident.
In the circumstances, I accept Scott's account of the incident. I reject the submission that Scott assaulted Neil on 30 July 2017.
The 2018 Will was executed at Mr Billing's office a week later, on 10 August 2018. Mr Billing did not give evidence.
As mentioned above, Neil died on 9 January 2021 and probate of his 2018 Will was granted to the defendants on 31 January 2023.
Secondly, and more importantly, the circumstances which the plaintiff sought to characterise as suspicious were, by and large, circumstances about which the plaintiff had known for some considerable time. Craig's affidavit dated 24 August 2024 would have been relevant to the issue, but the point could have been taken well prior to the commencement of the final hearing on the basis of other evidence. In fact, one of the very first salvos in this dispute was a letter from the plaintiff's solicitors dated 20 April 2021 in which Ms Rachael Power of Gordon Garling Moffit contended that Neil lacked capacity to make the 2018 Will.
Thirdly, the proposed amendment would have given rise to a large factual issue that could not have been resolved on the basis of the evidence already before the Court. That is because the parties would at that point be entitled to rely on further evidence, which had not been gathered, as to the circumstances in which the 2018 Will had been made and, in all likelihood, the state of Neil's cognitive health at that time.
Her Honour also said at [81]:
"The foundation for an estoppel by encouragement, as summarised by Kitto J in Olsson v Dyson (1969) 120 CLR 365 at 378; [1969] HCA 3 (Olsson v Dyson) by reference to the decision in Dillwyn v Llewellyn, is conduct which induces a change of position for the worse in reliance thereon. In Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 (Delaforce v Simpson-Cook), Handley AJA at [21], expressed an estoppel by encouragement as one that may arise 'when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to [his or her] detriment'."
It follows that the issues for determination are as follows:
1. Did Neil make the representations?
2. Did those representations induce an assumption in Scott's mind as to an interest in the properties?
3. Did Scott act in reliance of that assumption?
4. Will Scott suffer detriment if the representation is not fulfilled?
5. Was it unconscionable of Neil to resile from the representations?
6. If the above issues are found in Scott's favour, what form of relief is appropriate in all of the circumstances?
Christina and Tracey submitted that, "over time, Scott has come to a view that the work he had performed on the farms, meant that he deserved to receive the farms on which to continue the work of the Partnership for the benefit of himself and his family." They submitted that, as a consequence, "Scott's evidence about the Pleaded Representations is a recent invention, whether by a process of reconstruction in which he unconsciously aligned his recollection to justify his claims, or through conscious misrepresentation."
They pointed to a number of circumstances which, they submitted, showed that it was inherently unlikely that Neil ever made the representations to Scott. For example, they referred to the fact that there was no written record of the representations made before the 2007 wills (despite that the Partnership had been operating for 18 or so years) and that Scott's sisters were unaware of their parents' intentions in this respect. They placed particular emphasis on the fact that in 2007, when Neil and Janet made mutual wills leaving Parkvale and their two-thirds of Miltons to Scott on condition that he convey Fairfield to Craig, Scott did not immediately protest that this represented a breach of an earlier promise or earlier promises that he would receive the farms unconditionally. They submitted that it "stretches credulity" that Scott was content with the idea that Fairfield should go to Craig if, as Scott claims, his father had previously promised that he would inherit or otherwise receive the farms.
I generally agree with the defendants as to how to approach the issue of whether Neil actually made the representations. As already explained, it is important to approach this issue with an appreciation of objectively established surrounding facts and the apparent logic of events. It is also necessary to have regard to contemporary materials, but they exist here only for 2007 and then, for the most part, for the period post 2014.
The facts show several things that, in my view, shed light on whether Neil did in fact make the pleaded representations to Scott prior to 2007.
First, Neil was someone who believed strongly that his children should know his testamentary intentions. The punishment through which he put himself between early 2015 and early 2017 in trying to get his children to agree to one or other of his plans for his estate is explicable in large part by his desire that his testamentary wishes should not only be known but agreed to. As I have explained, throughout this period he was also being advised that his testamentary wishes could only be achieved through agreement. There was also evidence to show that his desire to sort the matter out during his lifetime was, in the first instance, attributable to his earlier unpleasant experience with the family dispute involving his own brother and his father, and the unfairness he felt from his own father's estate administration which likely arose from this dispute.
Secondly, in all of the wrangling that occurred in the 2015 to 2017 period about making a new will, Neil's desire that Scott should receive Parkvale (or at least most of Parkvale) and Miltons was quite constant. Having been told that his existing will was defective or overly complex, he clearly wanted to find a way for Scott to obtain Miltons and at least most of Parkvale. This continued to be the case even after Neil made the 2016 Will, which provided for a four-way split. Craig's point about that will, namely that he believed it to be an interim arrangement, does tend to ring true when considered in the light of how Neil behaved both before and after it was made: see [213] to [218], [244] to [245] and [268] to [276] above. Given the advice he was receiving at the time about the deficiencies in his existing will, this is unsurprising. In particular, in the period right up to the making of the 2016 Will and for some considerable period thereafter, Neil continued to actively explore ways to achieve a split of his estate that would see Scott inherit at least most of Parkvale plus Miltons. Neil apparently did not consider the 2016 Will to be the end of the matter. He almost certainly saw it as an interim or holding measure, as Craig suggested. Neil's continuing desire to achieve an outcome whereby Scott wowuld receive at least most of Parkvale plus Miltons suggests, I think, that Neil felt some obligation in that regard.
Thirdly, and relatedly, there seemed to be no dispute that Neil made quite serious promises to Craig as to his own inheritance. Craig's evidence was that his father had explicitly and consistently promised him one-third of the farmlands from at least as early as 2012 or 2013 and probably much earlier. This, of course, is something that cannot be reconciled with what Scott says his father had promised him in those years. But on the question of whether Neil made promises to Scott about inheriting Parkvale and Miltons at all, it is important to appreciate that Neil did also make promises to Craig in respect of the farmlands.
Fourthly, Neil cared deeply about the farms. At least since 2007, he wanted his sons to inherit them (one way or another) and to continue to farm them. Craig and Ann-Maree both gave evidence that Neil had envisioned such a scheme even before 2007. Neil was deeply interested in the farms being viable into the future. When he first started to discuss splitting up Parkvale with Mr Twomey in September 2015 (as to which, see [165] to [166] above), it was in a way that would ensure the continuing viability of the farms for Scott, on the one hand, and Craig, on the other. The idea of Scott and Craig inheriting the farms (one way or another) was clearly very important for Neil.
Fifthly, Neil, and Janet, had a cogent rationale for wanting Scott to receive the farms. In 2007, they expressly wished the farms to be divided upon principles of "fairness rather than equality" (see above at [116]) and felt that as Scott had (at this point) worked the farms for most of his adult life, he should receive the bulk of them. In saying this, Neil and Janet were recognising Scott's entitlement to Parkvale and Miltons. This coheres with Scott's case that Neil had made similar promises to him previously.
These circumstances all strongly suggest that Neil probably did make promises to Scott about inheriting or otherwise receiving the farm. It is inherently likely that someone with such strong feelings about his sons inheriting the farms, and who wanted his feelings on that front to be not only known but agreed to by all of his children, and who continued to hold those strong views in the face of disagreement and even after making a will providing for a four-way split, would have made representations to both of his sons that he wanted them to inherit the farms.
As Christina and Tracey submitted, however, the pleaded representations were in the following terms:
"…that the Plaintiff would:
a. inherit and / or become the owner of the whole of Parkvale and Miltons; and
b. continue to farm and wholly own Parkvale, Miltons and Fairfield in his own right once Neil ceased being a partner of the Partnership ('the Representations')."
Scott gave evidence as to the representations made to him by Neil, which were invariably in slightly different terms to the pleaded representations. For example, see [94] to [106] above. The defendants did not object to Scott leading evidence of representations in a form that differed from the pleaded representations. Instead, they submitted that his case should be rejected in limine because the evidence did not support the pleaded representations.
The defendants pointed to no prejudice whatsoever arising from the fact that Scott's evidence differed from the terms of the pleaded representations. I note that Scott's evidence as to what his father said to him was largely set out in an affidavit sworn on 27 February 2022, almost two and a half years before the commencement of the final hearing. It is therefore appropriate to proceed on the basis that Scott's case as to what his father said to him is that contained in his evidence.
Even so, if it matters, Scott's evidence does on any view support at least the first of the pleaded representations.
The real difference between the pleaded representations and Scott's evidence concerns the second pleaded representation insofar as it includes a representation as to Fairfield, which Scott already owned. I will explain why I accept Scott's evidence that Neil did make such a representation in the years prior to 2007; and why it is of no particular consequence that Neil's representations in the years following 2007 did not include a promise that Scott would be able to keep Fairfield.
Before I come to that issue, it is necessary to consider the remaining aspects of the defendants' challenge to Scott's evidence about the representations.
It is true, as the defendants submitted, that Scott did not claim to have told his sisters about any promises made by his father and that they did not recall Neil mentioning any such promises. But it is also quite clear that the topic of who would inherit the farms was openly discussed among the Macaulay family well prior to 2007. Craig's own evidence was that prior to 2007, Neil and Janet "were always saying, 'the boys will be getting the farms.'" He said that they would say this during family discussions. Ann-Maree, Scott's former wife, also recalls Neil and Janet saying well prior to 2007 that Scott and Craig would inherit the farms, although her recollection was that there would be a two-thirds (Scott)/ one-third (Craig) split which is somewhat more corroborative of Craig's account. Even so, I am not in these circumstances prepared to discount Scott's recollection on the footing that his sisters say that they were unaware of any such promises until these proceedings were commenced.
The defendants next submitted that Scott's failure to protest the 2007 wills is a strong indication that Neil had never made the pleaded representations to him. They submitted that if, as Scott claims, his father had promised him that he would receive Parkvale and Miltons unconditionally (ie, that he would also get to keep Fairfield), he must have been aggrieved that in 2007 his parents were only willing to devise Parkvale and Miltons to him on condition that he first assign Fairfield to Craig, free of debt.
The fact that Scott did not protest the 2007 wills does not demonstrate that he was never promised anything. It shows only that Scott did not regard the scheme of the 2007 wills as involving an unreasonable departure from what he had been promised. In the light of his evidence that Neil's promises did change over time, this is not very surprising. At some point between 1999, when Scott purchased Fairfield, and 2007, when his parents made new wills, Scott came to accept that his parents also wanted Craig to receive some of the farmlands after they died. The whole course of the dispute with his siblings about Neil's estate demonstrates that Scott accepted that it was reasonable for his father to leave Parkvale and Miltons to him on condition that he transfer Fairfield to Craig. This is not a circumstance that causes me to conclude that Neil never made the original promise.
Similarly, I am not prepared to put much weight on the fact that during the period between 2015 and 2017 when there was so much disputation about Neil's testamentary intentions, Scott couched his position in terms of "fairness" instead of his "entitlement". By this time, there was no question that he had been promised Parkvale and Miltons under the October 2007 Will, albeit conditionally. The real issue in dispute between 2015 and 2017 was not whether Scott really did have such an entitlement, it was the extent which, and how, that entitlement was to be eroded in order to accommodate Craig's dogged insistence on inheriting 1,065 acres, which was much more than he would have received under the October 2007 Will. It was in these circumstances quite natural for Scott to point out that what Craig was asking for was "unfair". The evidence shows, unsurprisingly, that Scott's notion of fairness in this context was closely bound up with the fact that since the October 2007 Will was made (and even prior to this), Scott had worked extremely hard to dramatically improve the fortunes of the Partnership. I am not prepared to find that Scott's attitude was simply that Neil should decide on a "fair" division of the estate without reference to any previous promises.
In all of these circumstances I find that Neil did make the representations which Scott recalls. His evidence about the representations is not "recent invention", as the defendants submitted.
They also referred to the following in relation to this issue:
"Q. Before 2007, and you've told us that you understood your parents would provide for the four children in some way, correct?
A. That's correct.
Q. You'd appreciated, hadn't you, that in providing for the four children in some way your father had in mind to provide in some way for Craig from the farms, correct?
A. That's in dad's mind, that's correct.
Q. You weren't sure how he would do that, correct?
A. That's correct.
Q. You weren't sure what he had in mind with respect to whether it was Parkvale, Miltons or Fairfield, correct?
A. We were still accumulating assets. That's correct.
Q. But you did understand before 2007 that whatever he had in his mind, he did intend that Craig would in some way receive some of the farming properties, correct?
A. No, that's not correct. Prior to 2007?
Q. Yes.
A. Yes, that's not correct.
Q. Had you turned your mind to it or not?
A. Well, Craig was working outside--
Q. Please, did you turn your mind to it before 2007 or not?
A. Did I - beg your pardon again?
Q. Did you turn your mind to whether Craig - your father had in his mind that Craig would from the estate in due course receive some part of the farming properties?
A. Some part of the - some part of mum and dad's estate. Not necessarily farming properties.
Q. But did you turn your mind to whether it might include, that is before 2007--
A. Yeah, yes, that--
Q. --some of the farming properties?
A. That, that would be correct.
Q. So it was an assumption on your part that Craig, like each of you, your parents would provide in some way for the four of you, that's the first step, correct?
A. That's correct.
Q. Then the second step is that that could include your father providing for Craig in some way--
A. That's correct.
Q. --out of the farms, correct? Yes?
A. I said that's correct."
In relation to the period after 2007, they particularly referred me to the following passage of evidence:
"Q. From 15 October 2007 you understood that it was your father's intention with respect to his will and it was your mother's intention with respect to her will, both of 15 October 2007, that in due course when they both passed you would not be the sole owner outright of Parkvale, Fairfield and Miltons, correct?
A. I would not be, that's correct.
Q. From 15 October 2007 in respect of your father's intentions in his will and your mother's intentions in her will, both of that date 15 October 2007, you understood that you would not have the sole right to farm Parkvale, Fairfield and Miltons?
A. That's correct."
These passages of cross-examination do not go nearly far enough to make good the proposition for which they are relied upon. They demonstrate that Scott knew that: (a) his parents could change their wills; (b) they would probably seek to make provision for Christina, Tracey and Craig out of their estate; and (c) as at some point prior to 2007 and certainly thereafter, Neil wanted to leave some part of the farmlands to Craig. But they do not demonstrate that Scott was ever willing to accept, without complaint, that his father would leave Parkvale and Miltons to anyone other than him.
I find that Neil's representations to Scott, over the years, were quite reasonably understood by Scott to be representations upon which he felt he could rely. He did not understand them to be mere statements of testamentary intention that might change at any time: see Kramer v Stone at [133] to [136]. The fact that Neil and Janet went to such lengths in 2007 (and that Neil went to even greater lengths in subsequent years) to seek the children's agreement to their testamentary plans strongly suggests that they wanted their children to be able to rely on what they told them about their inheritance. Neil's statements quite reasonably induced an assumption in Scott's mind that he could rely on what his father told him would happen when his parents died, namely that he would inherit Parkvale and the portion of Miltons which he did not already own. From at least as early as 2007, Scott assumed that this would be on condition that he transfer Fairfield to Craig.
The defendants, on the other hand, say that Scott's decision to stay in the Partnership had nothing to do with any assumption about owning the farms. They submitted that Scott always wanted to be a farmer. They point to his farming work before the representations were made, his TAFE qualifications, his work at CSIRO and his farming exchange in Canada. They rely on the fact that Scott returned to the farm, joined the Partnership and began work even before the representations were made. This last point assumed great significance in the defendants' case. They submitted that from the point in time when Scott joined the Partnership, right through to September 2017, he really had no choice but to continue working on the farm regardless of whether he believed he would receive the farms or not because, as a partner, he was bound to continue to do so and had become so entangled within the Partnership that he could not have afforded to leave. Their case was, explicitly, that the "die was cast" from the moment he joined the Partnership.
I am unable to accept this submission. Scott worked on the farms as they expanded over the years in a family partnership with his parents. There were numerous significant decision-points along the way: the purchase of Miltons; the purchase of Fairfield; a large number of expensive farm improvements; machinery purchases; the drought; the Rabobank refinancing. At any one of the decision-points that I have mentioned, and probably at many other points, it would have been open to Scott to seek an exit from the Partnership and to instead devote his considerable ability and resourcefulness in working a farm of his own. It is, I think, unreal to approach Scott's presence on the farm as being explicable only by the fact that he was in a legal partnership with his parents.
It is also unreal to approach Scott's presence on the farm on the basis that he could not afford to leave it. I doubt that he was never able to afford to leave it. But to the extent there were times when Scott could not have afforded to leave the Partnership, it was only because he was heavily financially committed to it, which is rather his point. A large part of his indebtedness related to the purchase of Fairfield plus his one-third of Miltons, both of which purchases only made sense as adjuncts to the property owned by his parents, being Parkvale and the other two-thirds of Miltons. I infer that if the representations had not been made, Scott would not have purchased Fairfield or a one-third interest in Miltons. He would instead have purchased property that he was able to farm in his own right.
It is also appropriate to consider whether the acts of reliance also involved counterbalancing benefits. This has been described in England as looking at the question of detriment "in the round" and as part of the determination as to whether the representee would be "overall, worse off" than if they had not acted on the assumption: The Law of Proprietary Estoppel, (2nd ed, Oxford University Press, 2020) at [4.113]; see also Walker LJ in Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P & CR 8 at [51].
In Q v E, Meagher JA considered the relevance of so-called countervailing benefits in proprietary estoppel claims and came to the following conclusions at [154]:
"… the assessment of detriment requires that a comparison be made between the positions the sons currently occupy and those they would have occupied had they not changed their positions in reliance on the holding/inheritance expectation. There will be an estoppel if the sons would suffer prejudice or disadvantage by reason of their changes of position if Q were to depart from that expectation. The fact that each has received and retains a quarter share in E Co is plainly a matter to be taken into account in assessing whether they would be prejudiced or disadvantaged in that event."
As Meagher JA explained in the next-following part of his Honour's reasons, it is a mistake to approach the task by attempting a precise quantification of benefits and detriments flowing from reliance. The task "may involve evaluative judgments as to the possibility of more favourable outcomes in the counterfactual." His Honour framed the question in that case as being whether:
"…there were opportunities forgone by B and C through reliance which cannot readily be valued but which nevertheless cannot be rejected as carrying only a fanciful or unrealistic prospect that the party encouraged would have been better off."
It is relevant here to refer, as Meagher JA did at [158], to the reasons of Allsop P in Delaforce. The plaintiff in that case was the deceased's former wife. The defendant was the executor of the deceased's estate. The couple had divorced some years prior. During the negotiations for the property settlement the wife made it clear that she had a personal attachment to a house that the couple owned. The husband wished to retain the house but made a promise to the wife that he would leave the house to her in his will. The wife relied on the promise and agreed that the husband could take the house. This promise was included as a notation in the consent orders but was never made binding during the settlement process. The husband subsequently died, but he failed to leave the property to the plaintiff in his will. The wife successfully brought a claim against the husband's estate in proprietary estoppel, which was upheld in the Court of Appeal.
The relevant element of detriment in Delaforce was that, in the absence of the promise, the wife would have had the opportunity to pursue her claim to the house through family law procedures. The primary judge had ruled that this was not tantamount to detriment. However, from the viewpoint of the Court of Appeal assessing her estoppel claim years later, although the question of whether she would have succeeded on that front was somewhat speculative, the plaintiff could still establish that she had relied to her detriment on the promise. Allsop P explained the position at [5] as follows:
"The importance of keeping a party to a representation or encouragement previously made is all the stronger where, as here, the encouragement or representation has been relied upon by a party to abandon a course of conduct that could possibly have led to a different outcome. This can be described in the language of loss of a chance that is not fanciful or unrealistic, or in the language of proceeding thereafter on the basis of a new or changed convention or conventional basis. Such expression of the matter is not different to how Dixon J put the matter in Grundt v Great Boulder Proprietary Gold Mines Ltd [1937] HCA 58; 59 CLR 641 at 674-675…That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position. Of course, if it is self-evident or can be clearly demonstrated that the case was fanciful or otherwise doomed to fail, there may be no real detriment; but that was not the case here. The respondent gave up her right to propound her case in the Family Court on the faith of the deceased's representation. It was not self-evident, or otherwise clearly demonstrated, that she could not have been successful in securing her rights to the subject property after the death of the deceased."
Tracey and Christina submitted that Parker v Parker was analogous to the present case. They submitted that the above-quoted passage supplied a complete answer to Scott's claims of having suffered detriment by continuing in the Partnership.
Tracey and Christina also submitted that Scott's financial and personal arrangements were so enmeshed with the Partnership and the properties that he would not have been able to extricate himself even if he had wanted to. In particular, they note his liability to the Partnership (the accounts showed him with negative partners' funds over a very long period) and the personal guarantees he had provided over the farming properties as part of the financing arrangements. This submission might equally be understood as being a point about reliance and Scott's supposed inability to do anything but continue on in the Partnership.
I therefore do not have any doubt that, had he not been led to believe that he would inherit Parkvale and his parents' interests in Miltons, he would have struck out on his own. Had he done so at a young age, it is reasonable to suppose that he would have done as Neil did and contributed his available capital to purchasing and improving a farming property of his own.
It is necessary to take account of the benefits he has enjoyed from his continuation in the Partnership. These are, however, somewhat elusive. Shortly before the Partnership was terminated, the financial accounts show him to have negative partners' funds of $125,924.43 as at 30 June 2017. He does own Fairfield in his own right, but that is a property that is really only viable as an annex to its larger neighbour, Parkvale (or, as it is currently being worked by Mr Green, as an annex to another larger neighbouring property). It does not have reliable access to water. It has nothing like the farming infrastructure of its neighbours. This last circumstance came about precisely because the Partnership devoted its resources to improving the infrastructure on Parkvale, not Fairfield. Fairfield also remains encumbered. The loan taken out by Scott to acquire it remains unpaid.
Scott also owns an interest in Miltons, but this makes even less sense as an investment from Scott's personal point of view. As I will explain below, Miltons was property of the Partnership. As matters stand in terms of the winding up of the Partnership, he cannot farm it in its own right, even if he wanted to. It also seems to have no significant infrastructure at all.
All of these circumstances mean that Scott now finds himself invested in some rural holdings, but they are white elephants. They are far from worthless, but they cannot be farmed in their own right. It is reasonable to postulate that if Scott had left the Partnership when young, he would have invested in different properties that were capable of being farmed in their own right and for his own benefit. Had he done so, it is likely that he would be better off than he is now. This conclusion involves, to some extent, a consideration of the kinds of uncertainties described by Allsop P in Delaforce (at [5]), namely an "alternative, complex and now hypothetical body of human conduct." Even so, the evidence suggests that the upshot for Scott is that he would have been altogether better off if he had not relied on the assumption that he would inherit Neil's interests in the farms.
Her Honour then set out the full text of paragraphs [2] to [8] of the reasons of Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli v Giumelli. It is important here to recall what paragraph [8] of those reasons said:
"Nor does the present case itself turn upon what was identified by Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner as: 'the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them.' There was a joint endeavour which included the parties to this litigation and others. This was in the form of a partnership, the affairs of which have given rise to other litigation. As will appear, the delay in resolving the partnership dispute does have a significance for the determination of the relief which the respondent should be granted with respect to the promised lot."
It was in that context that Tennent J then held:
"Counsel for [Garth] submitted that, as [Ira] and [Tony] chose from the start to regulate their affairs as a partnership, the general principles identified in Baumgartner and Muschinski v Dodds did not apply, the view taken by the High Court in [Giumelli]. With respect, I agree."
Her Honour seems here to have accepted the proposition that Tony could not assert a Muschinski v Dodds or Baumgartner v Baumgartner constructive trust in circumstances where he and Ira "chose from the start to regulate their affairs as a partnership". But neither Parker v Parker nor Giumelli v Giumelli is authority for the proposition that this would also be true for a proprietary estoppel case. In Giumelli v Giumelli at [8], the majority simply explained that the Court was not in that case concerned with the principles considered in Baumgartner v Baumgartner. Their Honours were most certainly not saying that the principles of proprietary estoppel could not apply where the parties "chose from the start to regulate their affairs in the form of a partnership."
As is apparent from paragraph [8] itself, Giumelli v Giumelli concerned a joint endeavour in the form of a partnership. The Dwellingup property (being the property at the centre of the dispute), however, was not partnership property: [13]. Of particular relevance is the so-called "third promise" made by the plaintiff's parents, namely that they would subdivide the Dwellingup property to include a lot containing the house which the plaintiff had built, if he agreed to stay working in the partnership.
The primary judge had held that the plaintiff had suffered no detriment by relying on this third promise, because he was already a partner at the time the third promise was made, and he simply chose to stay working in the partnership.
On appeal to the Full Court of the Supreme Court of Western Australia, the majority held that the plaintiff did in fact suffer detriment by staying on in the partnership in reliance on the third promise. On appeal to the High Court, those conclusions as to detriment were affirmed (although the High Court came to a different conclusion in respect of relief). The majority said at [27]:
"In this respect, we prefer the conclusions reached by Rowland J and Ipp J in the Full Court. Rowland J approached the matter on the footing that, even if it be conceded that Robert had not suffered an appreciable loss of income by remaining in the partnership, the detriment suffered by him was the loss of the property which he worked to improve, not to obtain immediate income from that exercise but to gain the proprietary interest. For that, Robert gave up the opportunity of a different career path. Ipp J pointed out that the reasoning of the primary judge placed no weight upon the circumstance that the partnership had no security of tenure and did not own the real estate. His Honour continued:
'Accordingly, had [Mr and Mrs Giumelli] not undertaken to transfer the [P]romised [L]ot to [Robert], he would not have remained in the partnership and worked on improving the new orchard. The work done on the Dwellingup property by [Robert], at the expense of the partnership (including [Robert's] share), while benefiting [Mr and Mrs Giumelli] (by adding to the capital value of their property) only stood to benefit [Robert] if the partnership continued for a sufficiently long period, and if [Mr and Mrs Giumelli] honoured their promises to him. As the partnership terminated (through no fault on the part of [Robert]) before the new orchard became productive, [Robert] in fact received little, if any, benefit from developing the new orchard. It was because [Robert] had foreseen this very possibility, and was therefore reluctant to continue as a partner, that [Mr and Mrs Giumelli] had made their promises on which he relied.'" (footnotes omitted)
Nothing in Giumelli v Giumelli supports the general proposition that work done as a partner cannot give rise to detriment for the purposes of a proprietary estoppel claim.
Parker v Parker takes matters no further. All that was decided by Tennent J at [160] of Parker v Parker was that Tony did not suffer any relevant detriment by continuing in the partnership, in circumstances where (as described at [163] and agreed with by Tennent J at [164]) the property was partnership property and where, on her Honour's findings, he would therefore end up with three-quarters of it in any event, being his partnership share (one-half) plus half of the remainder through his entitlement to Ira's estate. Those circumstances are very far removed from this case.
The relevant representation in this case was that Scott would inherit Parkvale together with his parents' interests in Miltons. Since at least as early as 2007, Scott understood that promise to be conditional, namely he would first be required to assign his interest in Fairfield to Craig. If that were all, I would find that the appropriate remedy here was a declaration of a constructive trust over both Parkvale and the estate's interest in Miltons on condition that Scott transfers Fairfield to Craig free of debt.
However, there are other considerations.
First, it is necessary to take account of the fact that, in the events that have happened, Neil devised the Endeavour Place property to Scott instead of the farming properties. In final oral submissions, Scott accepted that any relief he obtained ought to be subject to a condition that he disclaim that gift.
Secondly, for reasons explained below, Miltons was property of the Partnership. This has the consequence that, on a dissolution of partnership, the former partners hold their interest in Miltons subject to a trust for sale as explained in Commissioner of State Revenue v Rojoda Pty Ltd (2020) 268 CLR 281; [2020] HCA 7 at [31]-[35] (Rojoda). As matters stand, it seems unlikely that Miltons needs to be sold in order to allow the Partnership to be wound up.
At the same time, Neil treated his interest in Miltons as property that was capable of being left to Scott in his will or otherwise transferred to Scott. This is not necessarily inconsistent with Miltons being partnership property. However, in fashioning relief it is appropriate to have regard to the existence of the trust for sale. In my view, any interest which Scott acquired by reason of his detrimental reliance on Neil's promises about Miltons should be subject to the rights of the former partners under the trust for sale. In other words, Scott's claim in proprietary estoppel to Miltons should be deferred to the rights of the former partners to have recourse to Miltons (if required, which presently seems doubtful) to meet partnership liabilities.
Next, the facts show that from about 2016 Scott was content for his father to make a new will that would give Craig some of the top paddocks of Parkvale to make his inheritance viable. Scott's stance was, in my view, that he did not regard that further concession to Craig as amounting to an unconscionable departure from what Scott had hitherto been promised, much as it may have irked him. The precise terms of that additional condition were, of course, never agreed. The evidence reveals two potentially reliable indications of what Neil had in mind and what Scott was willing to accept (ie, that he did not regard as unconscionable). One such indication is to be found in what Neil told to Mr McGroder on 29 June 2017, namely that Craig should receive Fairfield plus the paddocks identified as AE, Q, U and V on the paddock map marked up by Mr McGroder. However, it is not entirely clear whether Scott regarded this division of the farms as involving an unconscionable departure from what he had been promised. A second and, in my view, more reliable indication of what Neil intended and what Scott was willing to accept is to be found in what Neil told to Mr Twomey in the 30 September 2015 meeting referred to at [165] to [166] above. As I have noted at [203] above, this is a proposal which Scott said he was willing to accept at the meeting on 1 February 2016. This proposal would have involved Craig receiving Fairfield plus three paddocks of Parkvale totalling approximately 802 acres.
However, if I were to hold the estate to Neil's promise subject to the condition that Scott transfer Fairfield and some top paddocks of Parkvale to Craig, Scott's siblings will find themselves in a very different position than what might have resulted if Neil had kept his promise to Scott in the first place. That is not unusual in cases such as this, because the imposition of a constructive trust over what would otherwise form part of a residuary estate necessarily reduces the entitlements of residuary beneficiaries. However, the presence of the "condition" to which I have referred gives rise to a peculiar difficulty. As matters stand, Craig is entitled to one-third of the residuary estate, which he shares with his sisters. If Craig now receives Fairfield plus some top paddocks of Parkvale, which would be the effect of holding the estate to the conditional promise which Neil made to Scott from about late 2015, then Craig will be in a far better position than what he would otherwise have been, and this will be at the expense of Christina and Tracey. If Neil had simply kept his promise to Scott, it is almost certain that Craig would have ended up with Fairfield and some of the top paddocks of Parkvale, but with none of the residuary estate, which would have been instead divided equally between his sisters.
It is necessary for me to take the position of all parties into account in determining the appropriate relief. However, there is a limit. I am not at liberty to rewrite Neil's will. It is also both necessary and appropriate for any relief to be sufficient to prevent the unconscionability that arises from Neil's failure to honour his promise to Scott. That unconscionability is, in my view, appropriately redressed by the making of orders and declarations to the effect that the estate holds Parkvale (except for the top paddocks AE, U and Q), and its interest in Miltons subject to a constructive trust in favour of Scott, but that Scott is required to assign his interest in Fairfield to Craig (free of debt) and to disclaim his devise of Endeavour Place.
It will be up to Craig, Christina and Tracey to determine whether and, if so, how their interests are to be adjusted as among themselves to take account of the orders giving effect to Scott's claim.
I see no injustice to the other parties arising from this outcome. Christina and Tracey will receive less than they were expecting from their father's estate, but spoiled expectations do not amount to injustice. Furthermore, this result is not wholly disproportionate to the detriment suffered by Scott. The detriment that he has suffered was substantial and "was of a kind and extent that involved life changing decisions and irreversible consequences of a profoundly personal nature, beyond the measure of money": Priestley v Priestley at [167] per Emmett AJA.
Scott filed a reply on 5 September 2023 by which he traversed the allegations in the amended defence. He particularly pleaded that he and Neil had come to an agreement on 30 April 2016 as to their future interests in the Partnership, namely that:
1. Neil and Scott agreed to receive an equal share of Janet's estate's "share of the Partnership assets" such as trading stock;
2. On and from 1 July 2015, Neil's estate owned one-half, not two-thirds, of "the Partnership's assets or net assets"; and
3. The taking of accounts of the Partnership and the determination of the partners' respective entitlements to the "capital, assets and profits of the Partnership" pursuant to ss 42 and 43 of the Partnership Act should be on the basis that Scott and Neil's estate each had "an equal share in the Partnership's assets or net assets."
In relation to the Fairfield debt, Scott contends that Neil's estate is estopped from relying on the debt, essentially on the basis of numerous representations said to have been made by Neil over the years to the effect that Scott was not required to repay it. This is what the parties referred to as the "paper debt" representation. On the basis of that representation, Scott contends that he assumed that he would not be liable to repay the Fairfield debt if his assets were not subject to any further property settlement under the Family Law Act after his settlement with Ann-Maree.
The parties' pleaded case in relation to the Partnership is in some respects confusing. It seems to proceed, at least in part, on the mistaken understanding that, on termination, partners are entitled to divvy up partnership property according to their partnership interests, regardless of their entitlement to partners' funds after a taking of accounts. So, for example, the defendants seem to suppose that if Miltons was property of the Partnership, then each of Scott and Neil's estate will simply be entitled to divvy it up in percentages that match their final partnership share, which is either as to half each or, alternatively, one-third/two-thirds.
That view of what happens to partnership property on dissolution of a partnership is mistaken. On dissolution, subject to agreement otherwise, partnership property is held on trust to meet the claims of partners: see Rojoda at [31]-[35]. Whether or not any particular item of partnership property is divided up between partners according to their partnership share will depend on what the partners' final entitlements come to, which will be a product of an accounting exercise. It may very well transpire that the partners' final ownership interest in Miltons will align with their legal title, but it should not be assumed.
As mentioned, in final oral submissions the second and third defendants abandoned the contention that there should be a taking of accounts on a wilful default basis. The defendants' contention that they were specifically entitled to (a) the balance standing to the credit of partnership bank accounts and (b) the agricultural assets of the Partnership as described in a Pickles Valuation, was not pressed. Had it been, I would have rejected it. The entitlement of Neil's estate to that or any other partnership property will depend on the outcome of the taking of accounts.
The only aspects of the pleaded partnership dispute that were still in issue at the time of the hearing were as follows:
1. Is Scott required to repay the Fairfield debt?
2. Did Neil and Scott agree in April 2016, or at any other time, that the one-third interest held by Janet's estate in the Partnership was to be divided between them, such that they would thereafter be equal partners as to 50% each?
In addition, the parties were, by the end, in dispute as to whether Miltons was partnership property.
I have already described the Rabobank refinancing at paragraphs [141] to [144] above. As noted, an aspect of that refinancing was that certain pre-existing personal liabilities of the partners were rolled into the new all-in-one Rabobank facility for which the partners were jointly liable. The debt was thereafter serviced out of income earned by the Partnership from its farming activities.
At least for the 2013 and 2015 years (on the evidence before me), financial statements were signed by both Neil and Scott. The financial statements for these years show that the Partnership recorded a debt from Scott to the Partnership in the amount of $453,288.11, which represented the amount of the Fairfield debt taken over by the Rabobank facility.
The 2013 financial statement also shows debts owing by Neil, representing the amount of his and Janet's Endeavour Place borrowings which had also been taken over by the Rabobank facility. I note that in financial statements for the 2015 financial year, that indebtedness had disappeared, having been set off against the credit balance of Neil and Janet's partners' funds and thus "repaid".
Scott's evidence as to the Fairfield debt was as follows.
According to Scott, his father started to refer to the Fairfield debt as a "paper debt" from as early as 2007. In his affidavit sworn on 12 September 2023, Scott recalls that his father said to him in 2007, on the drive home from Coolamon on the occasion when his father signed the October 2007 Will:
"The Fairfield debt is a paper debt to you, against and in case of another relationship failure. It will be wiped in 2017."
Scott says that his father said to him on a number of occasions:
"The loan for Fairfield and the loan for Endeavour Place cancel each other out. Also, the Fairfield loan produces an income for us, whereas our house does not."
On the basis of representations such as this, Scott says that "from 2007 onwards" he did not consider that he would be liable for the Fairfield debt. He says that he made no attempt to remove it from the financial statements of the Partnership because he "didn't think the debt was going to be called upon or taken into account against me in any accounting of the Partnership."
Scott's case was cast in terms of an estoppel. His detrimental reliance on the representation was said to be that by reason of his father's representations, he lost the opportunity to correct the financial statements of the Partnership.
I have considerable difficulty in accepting Scott's case in relation to the Fairfield debt. According to Scott, Neil first said that the Fairfield debt was not genuinely repayable in 2007. But in 2007, Scott's liability was to CBA, not the Partnership. There was a small (approximately $6,000) debt recorded as a liability of Scott in the partnership financial statements for the 2007 and 2008 financial years, which was not explained, but that is all. The Partnership did not take the Fairfield debt over until the 2011 financial year. It makes no sense that Neil would have said in 2007 that Scott was not required to repay the Fairfield debt to the Partnership.
Furthermore, to the extent the Fairfield debt was the subject of discussion at the time, the wills made by Neil in both February and October 2007 make clear that, so far as Neil and Janet were concerned, Scott would be required to transfer Fairfield to Craig free of debt. In other words, they recognised that Scott had a liability to repay the Fairfield debt and that he, and not Craig, was to repay it if Neil and Janet were to die and if Scott was to inherit Parkvale and two-thirds of Milton.
Neither the February 2007 Will nor the October 2007 Will linked the repayment of the Fairfield debt to being "wiped in 2017", as Scott now recalls. To the extent those wills said anything about 2017 it was in clause 4.3.3(e), as to which see paragraph [75] above. Scott seems to have conflated this with the Fairfield debt.
I am in these circumstances not persuaded that Neil made the so-called "paper debt" representation to Scott in 2007. It makes no sense that he would have said such a thing at the time.
I also doubt that he made such a representation after the Rabobank refinancing in late 2010 or early 2011. From that time onwards, the financial statements of the Partnership recognised that the partners assumed the whole of the liability associated with the all-in-one facility, including what had previously been their personal liabilities for the Fairfield debt (in the case of Scott) and the Endeavour Place debt (in the case of Neil and Janet), the latter being removed in the 2015 financial accounts.
I can accept that Neil said to Scott that their respective liabilities to the Partnership "cancel out", in the sense that they were in roughly similar amounts and so they might simply agree that neither would be repaid. I can also accept that Neil said that the Fairfield debt "produces an income for us". However, it is difficult to see how or why the Partnership, having assumed and discharged a debt on behalf of one of the partners, would not be entitled to look to that partner to recoup the amount repaid to Rabobank. It is also difficult to see why Neil would say otherwise. In his own case, the resulting liability was repaid by reducing his and Janet's partners' funds in the manner I have mentioned. Scott, however, seems to have had consistently negative partners' funds over several years and so he is required to find another way to discharge the liability.
It seems inherently unlikely that Neil would have made the "paper debt" representation after late 2010 or early 2011. In circumstances where Scott nonetheless signed off on financial statements in which the debt was recorded after this point, I am not persuaded that the representation was actually made.
Even if I had accepted that Neil did make such a representation, I would have found that Scott had not relied to his detriment on that representation. I am not able to identify what Scott did in reliance on the representation that was to his detriment and that would now render it unconscionable for the Partnership to assert the liability. It is true that he has a liability to the Partnership, but that does not amount to detrimental reliance. It just means he was mistaken about the existence of the liability. The argument that, by reason of the promise, he lost the opportunity to correct the accounts fails for the same reason.
I am therefore unable to accept the submission that Scott's liability to the Partnership for the Fairfield debt was only a "paper debt" or that the estate is in any way estopped from enforcing it. The last period for which there were finalised and signed partnership financial statements was for the year ending 30 June 2017. At that point, the accounts showed a liability of $453,288. In my view, this amount was payable.
The defendants addressed no submissions to the question of whether Scott was required to pay interest on this loan. There is no evidence that it was repayable with interest. I find that it was not. This is consistent with the way other loans to the partners were treated in the accounts, such as the loan to Neil and Janet in respect of the Endeavour Place property.
The reference to lands "brought under the provisions of the agreement" in clause 12 would have been apt to include Parkvale. But clause 12 is a powerful indication that the parties also did not intend other land held by partners to become partnership property. Rather, the intention was that land owned by partners could be used in the business of the Partnership, subject to the conditions in clause 10, but that it would not thereby become partnership property.
The defendants' refer, understandably, to the fact that Miltons was purchased using a loan taken out by all three partners and that the loan repayments appear always to have been borne as a partnership expense. That would very often be a powerful reason to conclude that land was intended by the partners to be partnership property, as I found in Fragar v Fragar at [134] (see also Lindley and Banks on Partnership (Sweet & Maxwell, 20th ed, 2017) at [18-03]-[18-04]).
The defendants also pointed to the fact that Miltons was recognised as an asset of the Partnership in its financial accounts. Mr Twomey confirmed that, at least for the 2012 financial accounts, Miltons was recorded under "Land and buildings" on the balance sheet to the amount of $291,000. This value and recording convention was consistent for the 2010 to 2017 accounts, and for the draft 2018 accounts, on the evidence before me.
Clause 12 of the partnership agreement suggests that the partners' individual ownership interests in Miltons were not intended to become property of the Partnership. The Partnership was arguably always intended to be limited to the earning and sharing of profits from farming, not from ownership of the land on which those activities took place.
However, it is necessary to weigh the evidence as a whole. When regard is had to how the partners acquired Miltons and the way they recorded their interests in it in their partnership financial statements, which must have been presented to banks in connection with partnership financing, I find that they did intend Miltons to be treated as partnership property, despite the terms of clause 12 of the partnership agreement.
Mr Twomey took the topic up with Neil and Scott again at a meeting on 30 September 2015. This is the meeting to which I referred at paragraph [165] above. His note of that meeting includes the following:
"This is a recording in relation to my visit to Neil and Scott Macaulay in Parkes on 30 September 2015.
Transfer of Partnership
It has been decided that from 1 July 2015, the partnership of Parkvale Pastoral Co will now only have 2 partners with equal equity.
1/3 equity that was held by the Estate of Jan Macaulay will now transfer to Neil and Scott equally.
They will now both have 50% equity and this will not require any change to ABN or TFN or banking arrangements as they are jointly and separately liable for any debt of the partnership.
We will need to do the relative transfer of livestock and plant and equipment elections when the 2016 income tax return for the partnership is lodged…"
Mr Twomey's evidence about this meeting was as follows:
"24. The first matter we discussed was the adjustment of the share of equity in the Partnership between Scott and Neil. As I record in my typed notes, Scott and Neil decided that from 1 July 2015, as the two remaining partners of Parkvale Pastoral Co, they would each have an equal equity in the Partnership.
25. I said to Scott and Neil, words to the effect of:
'We will need to do the relative transfer of livestock and plant and equipment elections when the 2016 tax return for the Partnership is lodged'.
I explained that this was necessary to ensure that the ATO [does] not assess the transfer at market value. This would have had a serious impact on the income tax for the 2016 year to both partners.
26. Scott and Neil agreed to do this, as I have noted in my typed notes of this meeting on 30 September 2015."
Scott's recollection of this meeting was contained in his primary affidavit. He recalled that he and his father agreed that the equity of the Partnership "should be changed….to ½ each for Dad and I".
On 30 April 2016, Neil and Scott signed a notice to the Commissioner of Taxation in relation to a change in ownership of "all the trading stock of the Partnership as at 1 July 2015" and notifying the Commissioner of their agreement that the provisions s 70-100(4) of the Income Tax Assessment Act 1997 (Cth) will apply in respect of the change. The notice specified that the persons owning trading stock before the change were Neil, Scott, and the estate of the late Janet Macaulay, as to 33.33% each. It specified that the persons owning trading stock after the change were Neil and Scott, as to 50% each.
On the same day, Neil and Scott also signed a notice to the Commissioner of Taxation advising him that there had been a change in the ownership of "all the property of the Partnership on which depreciation has been claimed as at 1 July 2015" and notifying him of their election for rollover relief under s 40-340(3) of the Income Tax Assessment Act 1997. The notice specified that the persons owning property before the change were Neil, Scott, and the estate of the late Janet Macaulay, as to 33.33% each. It specified that the persons owning property after the change were Neil and Scott, as to 50% each.
In an extract from financial statements for the Partnership for the year ending 30 June 2016, the partnership profit was split 50:50 as between Neil and Scott. It is not clear if these were the final accounts for 2016 but I infer that this equal split is the basis on which the financial statements for that year were finalised, because Neil's individual tax return for that year discloses an identical amount of income from the Partnership. This equal distribution is also reflected in the 2016 values as set out in the 2017 financial statements.
Neil and Scott also split the partnership profit equally for the year ending 30 June 2017.
In draft 2018 accounts, also prepared by Twomeys, the profit is split 50:50. Those accounts also show a movement in the Proprietors' Funds account in that they show that Janet's positive balance of partners' funds had been transferred to Neil.
This last-mentioned fact seems to have spurred the dispute about what, precisely, Neil and Scott agreed concerning the Partnership after Janet's death. The defendants contend that the agreement was nothing more than an agreement to split profit 50:50 and that this was only for certain years. They contend that, consistently with the fact that Janet's capital account remained unaffected for some time and was ultimately transferred to Neil, there was no agreement between Neil and Scott about becoming 50:50 partners generally.
The defendants' arguments about this issue tend to conflate two distinct concepts. It is important to draw a distinction between a partner's interest in the partnership, on the one hand, and the balance of a partner's capital, on the other. The former is a description of the extent of the partner's rights and obligations as against the other partners and in relation to partnership property. The latter is an accounting entry that approximates the partner's capital, being the sum the partner would be entitled to receive, or would be obliged to contribute, on a notional winding up of the partnership, worked out on the basis of the partner's percentage partnership interest (among other things) as at the date of the accounts. The latter may be nil or even negative, notwithstanding that the partner has an ongoing interest in the partnership.
As to the first issue, in Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 at 450; [1980] HCA 6, Barwick CJ, Stephen, Mason and Wilson JJ explained that the right to receive partnership profits is not separate and severable from a partner's interest in the partnership itself:
"The fundamental consideration, as we see it, is that the partner's fractional interest is an entire chose in action; it is capable of division by assignment into further fractions, but it is not capable of division by assignment so that the right to participate in partnership profits which is inherent in the interest is hived off from the rest of that interest. Consequently, a partner's entitlement to participate in profits is not separate and severable from the interest of the partner."
The right to receive profits is, as their Honours pointed out at 449, "inherent in the partner's interest in the partnership", although they noted that this right might be excluded by the partnership agreement. An agreement to split profits equally is, generally speaking, also an agreement to share equally in the partnership.
In the present case, the fact that the parties agreed to split the profits of the Partnership equally for the years ending 30 June 2016 and 30 June 2017 is a powerful reason to conclude that they understood themselves to be equal partners from 1 July 2015. The position would be different if the partners had found some other means of sharing the profits, such as suggested by Mr Ryan, or if they had somehow reached an agreement that the division of profits was not to reflect their partnership interests for the 2016 and 2017 financial years (which the evidence does not support).
The notices signed by each of Neil and Scott on 30 April 2016 demonstrate that they had come to an agreement about the whole of their respective partnership interests, and not an agreement limited to the splitting of profit. That is because the notices related to the partners' altered interests (ie, altered partnership interests) in partnership property. Had they done no more than agreed to share profits in proportions that differed from their partnership interests, even assuming that to be possible, then there would have been no occasion to notify the Commissioner of any change in the interests they held in trading stock or depreciable assets.
The defendants pointed out that there is no evidence of any agreement as to how to deal with the CGT consequences of their agreement, such as in relation to (for example) Miltons, which was partnership property. That however is not a reason to conclude that the partners did not reach agreement as to their respective partnership interests. It tells me no more than that the potential CGT consequences of the change in partnership interests may have been overlooked.
As to what occurred with Janet's share of the partnership capital, there is some confusion in the documents. The 2015 to 2017 accounts do not show any movement in the capital accounts to reflect the fact that Neil had inherited Janet's share of the capital of the Partnership. However, in a letter dated 13 November 2018, Mr Twomey explained that there had in fact been a movement in the capital accounts in the 2017 financial year and that this occurred by way of a ledger entry, a copy of which was provided. The ledger entry shows that the balance of Janet's capital (or "Proprietors' Funds") account, being the sum of $249,223.19, was transferred to Neil's capital (or "Proprietors' Funds") account on 30 June 2017.
The defendants relied on a report prepared by an expert accountant, Mr Weston Ryan, on these issues. The letter of instruction from Mr Billing to Mr Ryan dated 2 August 2022 was relevantly as follows:
"1. Please assume that a meeting at Yates Baker McLean Chartered Accountants in Orange on 11 June 2015 it was agreed that as and from the financial year ending 30 June 2016 the profits of Parkvale Pastoral Co partnership would be distributed 50/50 between Neil Macaulay and Scott Macaulay. Please assume also that there was no agreement to change the equity shares (or capital accounts) of the partners in Parkvale Pastoral Co and that the share [of the] late Janet Macaulay in the partnership passed to Neil Macaulay pursuant to her Will.
Q. Would such an agreement and this, change to the equity accounts of the partners have required tax election documents.
2 Q. Was the agreement to change the profit distribution of the partners in Parkvale Pastoral Co from 2/3 to Neil Macaulay and 1/3 to Scott Macaulay to 50/50 reflected in the Financial Statements of Parkvale Pastoral Co for the years ended 30 June 2015, 2016 and 2017.
3 Q. Was there any change in the equity (or capital accounts) of Neil Macaulay and Scott Macaulay in Parkvale Pastoral Co to 50/50 recorded in the Financial Statements for the financial years ended 30 June 2015, 2016 and 2017."
In his report dated 4 August 2022, Mr Ryan expressed the following opinions in response to Mr Billing's three questions.
1. An agreement to alter the distribution of profit "would not alter the underlying capital accounts of the partners other than in relation to the distribution of profits." He pointed out that there were ways of distributing profit to a partner in a proportion different than their percentage partnership interest. He said that this was possible by a partner assigning a right to receive a partnership distribution or by the payment of a "salary", which is not treated as a deduction for the purpose of calculating the partnership net income or loss under s 90 of the Income Tax Assessment Act 1936 (Cth).
2. He agreed that the financial statements for the 2016 and 2017 years divided the partnership profit 50:50.
3. There was "no change in the equity or capital accounts of Neil Macaulay and Scott Macaulay in the financial statements…for the years ended 30 June 2015, 2016 and 2017" that reflected the partners "each holding a 50% interest".
These opinions were hardly surprising given the way the questions to him were framed. The proposition inherent in Mr Billing's first question was that a partner's percentage interest in the firm must generally align with his or her "capital" account. However, that is not so. In Partnership Law (6th ed, 2020, Bloomsbury Professional) the learned authors Mark Blackett-Ord and Sarah Haren said at 9.3:
"A partner's capital is his contribution to the partnership capital. It will remain as a book-keeping entry, and will be irrelevant to the annual profit share unless (unusually today) profit share is computed by reference to it or interest upon the capital account has been agreed between the partners. He may not withdraw his capital without his partners' consent. Its amount remains of little significance until the net assets or liabilities of the firm are distributed or shared on dissolution, when it becomes very important indeed."
I therefore do not see the continuing presence of an entry for Janet's partners' funds in the 2016 and 2017 accounts as revealing much about the present question at all.
As I have already noted, the accounting entries for Janet's partners' funds for 2016 reflect that the continuing partners (Neil and Scott) recognised a liability to her estate as at the end of the 2015 year, namely up to the point at which Neil and Scott became equal partners. Mr Ryan seemed to think that the continuing recognition of Janet's partners' funds showed that Neil and Scott must not have agreed to anything other than a profit split for the 2016 and 2017 years. However, I cannot accept that conclusion. It elides the distinction between an outgoing partner's entitlement to capital, which is what these entries seem to represent, and the continuing partners' interests in the Partnership, including their entitlements to the net assets of the Partnership on a winding up. I also note that, in expressing his opinions, Mr Ryan was expressly instructed that the agreement between Neil and Scott was only as to profit, which of course is the very question in issue. It is also significant to note that Mr Billing did not inform Mr Ryan about the existence of the 30 April 2016 notices. When confronted with the existence of those notices in the witness box, Mr Ryan accepted that it would have changed the financial statements that he prepared in draft form for the financial years 2018 through to 2021 in a more favourable way to Scott in respect of his capital balances.
I therefore conclude that the Partnership was carried on between 1 July 2015 until its termination on 1 September 2017 on the basis that Neil and Scott were equal partners.