//
[2014] QSC 218
General information, not legal advice.
Supreme Court of Queensland
2014-08-29
Ann Lyons J
Original judgment source is linked above.
ESTOPPEL - ESTOPPEL BY CONDUCT - PROPRIETARY ESTOPPEL - where the plaintiff and first defendant were married for 18 years - during that 18 year period the plaintiff and the first defendant lived and worked on a property owned by the second and third defendants (the first defendant's parents) - the plaintiff claims that she and the first defendant were induced into working on the property due to representations by the second and third defendants that they would one day inherit the property - where the plaintiff and the first defendant separated in 2009 - where the plaintiff claims a proprietary estoppel against the defendants for the fulfilment of the representation
EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - CONSTRUCTIVE TRUSTS - GENERALLY - where the plaintiff and first defendant were married for 18 years - during that 18 year period they lived and worked on a property owned by the second and third defendants - where since 1993 the plaintiff and the defendants were involved in the management of the property and associated businesses - whether there was a joint endeavour between the plaintiff and the defendants - whether that joint endeavour created a constructive trust
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 followed
Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 cited
Donis v Donis [2007] VSCA 89 referred
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 85 cited
Flinn v Flinn [ [1999] 3 VR 712; [1999] VSCA 109 cited
Germanotta v Germanotta [2012] QSC 116 cited
Gillett v Holt [2001] Ch 210 at 323 cited
Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 followed
Sidhu v Van Dyke [2014] HCA 19 cited
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 cited
West v Mead [2003] NSWSC 161; (2003) 13 BPR 24,431 cited
Willetts v Marks [1994] QCA 006 cited
[1] Brian and Majella Nolan have successfully run a number of farming enterprises on the Darlings Downs for more than five decades. They are both in their early seventies and have been married for the last 51 years. They have six children. Given the number of parties with the same surname, for ease of reference I shall refer to everyone by their first name. The eldest of Brian and Majella's children is Anthony (Tony) and he is currently 49 years of age. Tony was married to Donna Nolan for 18 years and they spent the 18 years of their marriage working a farming enterprise and running a spraying business on a property outside Dalby called "Kitcombe", which was owned by Brian and Majella.
[2] Tony left the marriage on 14 December 2009 having commenced another relationship. In these proceedings, which were commenced on 31 March 2010, Donna seeks recognition of her contribution to the family farming enterprise by way of declaration of a constructive trust or equitable lien in her favour either on the basis of her future expectation that she and Tony would one day take over the farming properties and the associated farming and spraying businesses or on the alternate basis that she was engaged in a common endeavour with Tony, Brian and Majella in relation to the farming enterprises conducted by the fourth defendant, Nolan & Son Pty Ltd ("Nolan & Son").
[3] Donna and Tony subsequently divorced in 2011. Donna continued to reside at the Kitcombe property with their three children until 23 May 2014. She then moved to a house in Dalby. Tony instituted Family Court proceedings on 31 July 2010. In the Family Court proceedings Tony sought final orders in his property proceedings by way of a declaration that Donna "did not have any right, title or interest in the farming properties nor was she entitled to an equitable lien or constructive trust over the assets and undertaking of Nolan & Son Pty Ltd."[1] There has been no property settlement in the Family Court proceedings and those proceedings are adjourned until the present proceedings in this Court are determined. Tony essentially argues that he was simply a farm hand working for wages on his parent's property, that Donna made no contribution to the farming enterprise and that he had no expectation that they would one day take over the property.
[4] Brian and Majella Nolan purchased the farming property Kitcombe, 10 kilometres outside Dalby in 1985, having previously owned a farm outside Warwick, and a property at Taroom called Warraka Downs from 1967 to 1984. Kitcombe was purchased in August 1985 for $699,230 of which $490,000 came from the proceeds of Warraka Downs and $245,000 was borrowed. The property comprises 366.10 hectares of good farming land over three parcels and is situated approximately 90 kilometres west of Toowoomba. The aggregation is on "treeless plains country" and consists of "black, self mulching 'Waco' clays".[2] The property which is bisected by the Jandowae- Dalby Road has generally been used to grow crops including cotton, sorghum and chickpeas.
[5] The property has two separate dwellings on individual titles. The joint valuation report indicates that the main residence which is of "fibresheet" construction is in "fair to poor condition"[3] with stump movement and deflection in numerous external and internal walls. The main house has a granny flat attached and there is also a small cottage on the property. The valuation of the property at Kitcombe as at 19 June 2014 is $2.3 million dollars. The valuation remains unchanged from 1 January 2010.[4]
[6] Brian and Majella's other children are Christine aged 47, Michael aged 45, Jacinta aged 44, Suzanne aged 42 and Kieran aged 38. Tony initially attended boarding school in Brisbane but when the family purchased a home in Toowoomba in 1980 to facilitate the children's education, he completed his secondary education in Toowoomba. After leaving school Tony worked with his father on Warraka Downs from early 1983 and was initially paid $140 per week plus board and keep at that property.
[7] Tony and Brian worked the property during the week and returned to the family home in Toowoomba on the weekends. When Warraka Downs was sold in August 1984 Tony and Brian worked the property on a contract basis until Kitcombe was purchased in August 1985. They then worked that property during the week and continued to return to Toowoomba on weekends where the rest of the family lived.
[8] Donna and Tony commenced a relationship in late 1985 and they married in May 1991. After their marriage they lived at Kitcombe in the main house. Brian continued to work on the farm and would stay out at the property during the week in the granny flat attached to the main house. Donna was a hairdresser at the time of her marriage and continued working as a hairdresser in Dalby during the early years of the marriage.
[9] In 1992 Brian and Majella sold the family home in Toowoomba and rented a house. The youngest child Kieran finished school in 1994. In 1996 Brian and Majella purchased land at Spring Creek Drive in Dalby and subsequently built a home on the site. The house was funded by borrowings repaid by the business. They resided in the small cottage at Kitcombe during the construction period.
[10] Brian commenced selling real estate for Doug Carswell Real Estate in Toowoomba and continued in that role until 1996. He maintained an involvement in Kitcombe during that period. In 2000 Brian and Majella began taking holidays, including overseas holidays.
[11] Michael also worked on the property for two years from 1989 until 1991 some 12 months after finishing at the Dalby Agricultural College, in the 18 month period from the end of 1996 until June 1998, in 2000 and at the end of 2003 to 2004. His evidence was that he was paid wages and worked about 60 hours per week. Kieran also stated that he worked on the property from 1998 until 2000 (approximately 18 months) undertaking general farming duties.
[12] Tony and Donna's first child Charlie was born in December 1994 and their twin sons Nicholas and Harrison were born in September 1996.
[13] The fourth defendant, Nolan & Son, was incorporated on 27 March 1985 and was initially known as Valneen Pty Ltd until the name was changed on 6 January 2005.[5] Its directors from 1985 until 2005 were Brian and Majella. Tony and Donna became partner on 6 January 2005.[6] The B & M Trust is a discretionary trust and was settled on 3 May 1985 and has Brian and Majella as its primary beneficiaries and their children and grandchildren as secondary beneficiaries.[7] Valneen (subsequently Nolan & Son) was the trustee of the Trust.
[14] There was a farming partnership between Brian and Majella and the fourth defendant from 1985 until 1993 called "BK & MA Nolan & Son". That partnership operated the farming business of growing crops on Kitcombe, which was leased by the partnership from Brian and Majella, and by performing contract farming work on other properties.
[15] On 1 July 1993 when Donna was expecting her first child she was made a partner in that farming partnership with Tony, Brian and Majella Nolan. Donna had a 25 per cent share, Tony 25 per cent, and Nolan & Son (formerly, Valneen) was trustee as to 50 per cent.
[16] An agricultural spray business was commenced by Tony and his brother Michael in 1996 and was registered as Nolan Ag Spray Pty Ltd on 22 November 1996. When it commenced it was 50 per cent owned by Nolan & Son Pty Ltd and 50 per cent by Yadita a trust controlled by his uncle Pat Nolan and his wife Cynthia until November 2003. The initial directors of Nolan Ag Spray were Tony Nolan and his brother, Michael, until 28 June 2001. Donna then became a director of Nolan Ag Spray on 28 June 2001 on Michael's retirement. By 2001 the trust had acquired 100 per cent of Nolan Ag Spray. Donna and Tony were, after that time, the only two directors of Nolan Ag Spray and they carried on the business.
[17] In 1998 Brian and Majella made new wills. Drafts of those wills were enclosed in a letter to Brian and Majella, dated 8 April 1998, from their solicitor John Edgar which stated:[8]
"Your first concern is to make adequate provision for Tony and Donna in the event of your joint deaths, in order to recognise the commitment made by them in the management of the farms, given that they have worked for less than standard commercial rates of reward, and they have willingly shared the farm debt load personally."
[18] The 1998 wills provided for a devise of the eastern block of Kitcombe to Donna and Tony, charged with repayment of 40 per cent of the farm debt with the balance to the surviving spouse on trust. In the event that both did not survive the wills essentially provided:[9]
(a) For a gift of the house at Spring Creek Dalby to such of the three daughters who survived;
(b) For a gift of their shares in Nolan & Son to Donna and Tony;
(c) For a gift to Donna and Tony of any monies owing by the Trust to them;
(d) For an effective discharge of all but 40 per cent of the farm debt from their residual estates;
(e) Directions to deal with the Trust's share of the partnership and Nolan Ag Spray as beneficially owned by Donna and Tony; and
(f) For a gift of the balance to the sons who survived.
[19] In June 2000 Brian and Majella made new wills which provided:[10]
(a) For a devise of the western block of Kitcombe to Tony;
(b) For a devise of the eastern block to the other 5 children;
(c) The grant of an option to Donna and Tony to buy the eastern block, together with the right to sharefarm this block;
(d) The use of proceeds of AXA insurance policies to reduce the farm debt;
(e) The sale of the Spring Creek Drive house to reduce farm debt;
(f) For a gift of their shares in Nolan & Son to Donna and Tony;
(g) For a gift to Donna and Tony of any monies owing by the Trust to them;
(h) Directions to deal with the Trust's share of the partnership and Nolan Ag Spray as beneficially owned by Donna and Tony; and
(i) A direction to supply a copy of the wills to the manager of the National Australia Bank at Dalby to facilitate the repayment of the farm debt.
[20] In December 2004 the partnership ceased and was replaced in the accounts by the trust. Donna and Tony became shareholders and directors of the trustee company, Nolan & Son on 6 January 2005.
[21] In late 2005 or 2006 a decision was made to sell Kitcombe and it was placed on the market for $2.1 million but later withdrawn from sale after an offer of $2.075 was rejected.
[22] In 2008 Kitcombe was again placed on the market.
[23] Brian and Majella made new wills in January 2010 three weeks after Tony and Donna separated.[11] The general affect of these wills is that the assets are to be left equally amongst the six children.
[24] The plaintiff's claim is essentially argued on two different bases. The first aspect of the argument is based on an equitable estoppel founded on Donna's expectation that she and Tony would obtain the future ownership of the farming properties and the spraying business. Alternatively it is argued that Tony, Donna, Brian and Majella were all engaged in a common endeavour at Kitcombe in relation to the farming enterprise and the farming business. The relief claimed for those alternate claims is the same namely, the declaration of a constructive trust although the quantum for each claim varies.
[25] In order to determine the plaintiff's claim, a number of findings need to be made in relation to a number of critical questions which includes an analysis of some of the following issues:
(i) was there a future expectation by Tony and Donna?
(ii) was there recognition or encouragement of that expectation by Brian and Majella?
(v) was there a common endeavour between Brian, Majella, Tony and Donna?
(vii) what was Donna's contribution to the endeavour?
[26] Before any of those questions can be answered, it is necessary to consider the evidence which has been given by Brian, Majella, Tony, Donna, Michael and Kieran Nolan as well as by the Nolan family accountant Brendan Vaughan from Williams Hall Chadwick Accountants. In particular it is necessary to make findings in relation to the credibility and reliability of that evidence as well as the significance of that evidence.
[27] I consider that the evidence given by Michael and Kieran Nolan was in the most part uncontroversial and was not particularly relevant to any of the critical issues. I accept that they both worked on the farm at various periods and their evidence was that Donna was not involved in outside work around the farm while they were there. Michael worked on the farm during four periods, the most substaintial of which were before Tony and Donna were married and when the children were very young, under six. Similarly Kieran worked on the property when Tony and Donna had three children under the age of six. I also note that neither of them resided in the main residence at Kitcombe and generally lived in Dalby.
[28] Michael's evidence was that he worked long hours on the farm "up to sixty hours a week"[12] and that he was paid about $20,000 for fulltime work for the year. Michael ultimately conceded in his evidence that he was unaware of the work Donna did on the farm in the periods he was not there.[13] That was clearly the case with Kieran's evidence also.[14] I otherwise accept in general terms the evidence that they gave.
[29] Brendan Vaughan has been Brian and Majella's accountant since 1992. He and his firm also acted for the Nolan Group including Tony and Donna until 2010 and he continues to act for Brian and Majella. He is related by marriage to Brian as he is married to Pat Nolan's daughter Debra. Despite the fact he has been involved with the family and the family farming structures for decades I found the evidence he gave to be vague and unhelpful. He did not recall meetings that he held with the parties about succession planning. He denied ever receiving a copy of the 1998 Wills although the evidence indicates that Mr Edgar sent him copies in draft form. He did not recall the specifics of a meeting on 27 November 2011 or a file note he prepared.[15] On some occasions he could not explain where particular figures or calculations had come from.[16] Overall his evidence did not provide any real illumination and I did not find that his recollection of events was of any real assistance on any critical issue although some of the contemporaneous notes and documents he prepared were of assistance in clarifying or confirming evidence given by others.
[30] Generally, Tony was hesitant and indeed reluctant in some aspects of his evidence. In particular he was reluctant to agree that Donna had made the contributions she claimed to have made in relation to the farm. However, when he was confronted by documentary evidence he was willing to concede an issue and made appropriate concessions once shown vehicle log books and some of his own diary notes.[17] He was also willing to concede that at some point probably around 2003 he made known to Donna the general content of his parent's wills.[18]
[31] I have reservations however about the evidence he gave about the circumstances surrounding the proposed sale of Kitcombe in 2006 and the discussions about the use of the sale proceeds.[19] His evidence was in identical terms to that of his parents. That evidence was that he and Donna would only receive the proceeds of the sale of the machinery worth around two or three hundred thousand and nothing more. Donna's evidence was that they would get a house of around $500,000 and keep the machinery so they could continue to run Nolan Ag Spray. A file note dated 27 November 2007 prepared by Brendan Vaughan the accountant clearly shows that at that point in time the farm was worth $2.2 million and that there were other assets including plant worth $350,000 and crops of $350,000.[20] After debts were deducted it showed a net cash position of $2.1 million. Vaughan confirmed the contents of the note under cross-examination[21] and he also confirmed that the drought plan prepared in 2007 also indicated that there was a plan to "sell the farm in the short to medium term to pay up the bank debt and allow Brian and Majella to retire and Tony and Donna to purchase a house."[22] Significantly the 27 November file note recorded an entry in relation to houses as "Tony-Dalby- 500,000".[23] As the equipment was worth a maximum of $350,000 it would not have funded a house of $500,000. I accept Donna's evidence in this regard given it is supported by documented, contemporaneous evidence.
[32] I also consider that the evidence given by Tony was very similar to that given by his parents, not only in relation to the issue of sale proceeds, but also in relation to the sale of Kitcombe in 2006. The similarity of the evidence given has caused me some concern. Tony initially stated in his evidence that he was not at his parents home when the offer to purchase came through and was very vague about the circumstances of the offer. He did, however, then mirror his father's evidence in relation to the offer which had been made. He stated, "He'd already reduced his price. The offer, I might add, was a very sketchy offer. Nothing was put in writing. He refused to put anything in writing."[24] The wording is so similar to the words used by his parents that I have real concerns as to whether it was his independent recollection of the events in question.
[33] Whilst I have some general reservations about Tony's evidence I have some very real concerns about the veracity of some of the evidence given by Brian and Majella. They are both clearly very worried that their family farming enterprise, which they have worked very hard for over a number of decades, could be vulnerable to a claim by Donna as a result of her divorce from Tony. I consider that this fear has coloured their evidence and I do not consider that Brian and Majella gave their evidence in a forthright and honest way but rather they gave a revised history of events given their concern about the possibility of losing the farm. I also consider that they had rehearsed their evidence as their answers were put in almost identical terms on many topics.
[34] In relation to the role Tony played on the farm Brian's evidence was as follows:
"Do you agree that from 1993 onwards that Tony and Donna were managing the farm?---They were working the farm under my management.
So you disagree that they were managing the farm?---Yes.
All right. You said yesterday that Tony was a "farm-hand"; that's what you said?---Yes.
Can I suggest to you that he wasn't just a farm-hand, he was actually a manager of the farm on a day to day basis?---I disagree with that.
Can I ask you to agree that from the formation of this partnership, that Tony and Donna were committed to the farming business?---They had - they weren't there because of anyone forced them, they could have left at any time.
So you disagree with that as well, do you?---Yes."[25]
[35] Neither do I consider that Majella's evidence in this regard is credible:
"Do you agree that from that time, that is the formation of the partnership in 1993, Tony and Donna started to manage the farm?---Tony has never managed the farm.
So are you saying that your earlier evidence is the true state, that is Tony was always a farmhand on the farm? Is that your evidence?---Well, I - I don't know what you call a farmhand.
Well, that was - that was what you said in evidence earlier?---Okay. All right then, he was a farmhand."[26]
[36] I do not accept their evidence that Tony was just a 'farm hand' as it is not supported by the facts, particularly the letter of Mr Edgar in April 1998 which acknowledged Tony and Donna's commitment in the "management of the farms".[27] Neither do the partnership arrangements which were in place support such a proposition.
[37] I also consider that both Brian and Majella were evasive in the answers they gave and the following exchange with Majella in relation to the 2010 will, which was made after Tony and Donna's separation, is illustrative of this approach:
"Yes. And the main clause, 3B, you can see there - I don't need to read it in full - but you can see that the general effect is an equal split between your six children in relation to the bulk of your estate?---Yes.
Yes. And you'll agree, won't you, that you were concerned to make sure that if anything happened to you and your husband, that assets would not fall into the hands of Tony, which might be subject to a Family Court or other type of claim by Donna? That's right, isn't it?---Well, we wanted - wanted our children to be the beneficiaries of our wills.
Yes. I don't think that answered my question. Was one of the - are you saying that the change to your wills had - you had no concern about Donna potentially making a claim?---That we had no concerns?
Well, you seem to suggest that the true intention was to leave it equally to your six children when I asked you whether it was because you were concerned about a claim, so I took it to you - that you were actually saying you disagreed; perhaps I misunderstood your answer?---Well, by this time we had decided that the only fair way - fair thing to do was to - was to have it our six children all equal.
Are you saying that your 1998 and your 2000 wills were unfair, Mrs Nolan?---No, I did not say that.
No. In fact, the change here is not a true testamentary intention by you and your husband at this point in the sense of what you think is fair, but it's designed to try to avoid assets falling into the hands of your son which might be subject to a claim? That's the purpose of this will, isn't it?---Well, I suppose that would be fair enough too because we wanted all of our children to be - and we've be talking about wills for so long over this whole litigation case, that all I've heard about is my dying and I would like to live a little bit."[28]
[38] Brian and Majella also both stated, in response to questions in cross-examination, that they had very little knowledge about a number of subjects, including the legal structures behind the partnership as well as issues such as the concept of casual wages and the cost of repairs. When the questioning got difficult Brian's strategy was to become more and more argumentative. I also consider that they both avoided answering particularly difficult questions by indicating that the question should be referred to their accountant. The following exchange is illustrative of Brian's attitude and it relates to a fairly straightforward question in relation to repairs which was something he could well have answered particularly given his earlier evidence that Nolan Ag Spray wasn't profitable because of large repair bills:
"And so you'll agree, won't you, that nearly $4,000 out of $90,000-odd is not what you'd call a large proportion of the gross funds being spent on repairs and maintenance, is it?---I can't comment on that. I'll have - you have to refer those questions to Mr Vaughan."[29]
[39] The following exchange outlines his attitude in relation to the payment of wages:
"Well, you understand there's a difference between working full-time and getting paid on a - on a weekly basis? That's right, isn't it?---I don't really understand what you're saying.
Well, you try to give the view that both Michael and Kieran were working full-time on the farm?---Yes.
Whereas the accounts show that they were actually working on a - a casual basis?---Yes, but I did explain to you that the term casual was used, but they were still being paid full-time.
So did you tell Mr Vaughan when he was preparing these accounts that they were casual?---They have their own method. I think you'll have to ask Mr Vaughan that.
So you do agree that he would have prepared the accounts based on what you had told him had happened during the year, yes?---He based his accounts on the - on documental evidence that we gave him."[30]
[40] Similarly Brian's view in relation to the effect of a personal guarantee given by Donna to National Australia Bank in an amount of $1.25 million was as follows:
"Yes. And also she signed personal guarantees to the bank for the business?---When she was a director she did - director of the trustee.
And you accept that if the business had failed, that she would have been at risk of being a bankrupt because of those guarantees? That's right, isn't it?---No, I reject that statement.
So if the business failed, she didn't have the means to be able to pay back the bank debt, did she?---No.
No. And she was at risk of becoming bankrupt, wasn't she?---No.
[41] I find their claimed lack of knowledge difficult to accept given their close involvement over many decades in the farming enterprise and I conclude that much of their claimed ignorance was feigned. I also consider their refusal to accept basic propositions to be illustrative of their argumentative approach.
[42] There is furthermore one particular area of evidence which ultimately led me to conclude that Brian gave untruthful answers when it suited him. I have particular concerns in relation to evidence he gave about the preparation of his will and the contents of Mr Edgar's letter in 1998. Brian's evidence in response to questions about that letter was as follows:
"Now, it says, doesn't it, "Your first concern is to make adequate - adequate provision for Tony and Donna in the event of your joint deaths in order to recognise the commitment made by them in the management of the farms given that they have worked for less than standard commercial rates of reward and they have willingly shared the farm debt load personally."?---Yes.
So that accurately reflects, doesn't it, what you had told Mr Edgar back in 1998?---No, it does not.
So you're saying Mr Edgar has this wrong?---Mr Edgar has - has got it wrong there, and I informed him of it.
And when did you say you informed him about the fact that it was wrong?---I phoned him shortly after.
That's simply untrue, isn't it, Mr Nolan? You never informed Mr Edgar that this was wrong?---I did inform him it was - that it was wrong."[32]
[43] Significantly, Mr Edgar's file at the time was disclosed in the third party disclosure process and is in evidence. There is a file note of a telephone call but it is not in the terms alleged by Brian. This was put to Brian in the following way:
"This is a notation of a telephone call to Brian returning his call with instructions that the will is drafted, is in order except with the following, and the three things that you wanted changed is the spelling of somebody's name, there's a description of land, and you've read from the title deed, so you had those available to you, and there was a - an issue about what was to happen with the western block, yes?---Yes, that's what it says.
And he was returning your telephone call to him, yes?---That's what it says.
And nowhere in there does he suggest that there was any complaint from you that your letter - that his letter was somehow inaccurate?---No, because I telephoned him much earlier than that.
And if he - you had done that, you'd agree that there would be an attendance sheet or a notation on the file by Mr Edgar as to that telephone call, wouldn't there?---No, I don't agree with that.
Right. But you do agree that your instruction was that the will, as drafted by him, was agreeable to you save for those very small changes that are indicated in that memorandum, yes?---Yes."[33]
[44] Similarly I consider that Brian gave contrived evidence in relation to the destruction of the copies of the 1998 and 2000 wills as follows:
"Yes. Can I ask you to start with paragraph 4, which is on page 3. On page 4 you said this, 'Upon or shortly after executing new wills it was my usual practice to incinerate or shred and put in the bin copies Majella and I held of wills that had been the current wills immediately prior to the execution of new wills.' Do you remember writing that?---Yes.
Yes. 'I did so because the former wills were revoked upon the execution of the new wills and the arrangements under the revoked wills were no longer to be acted upon.' That was your reason given as to why that was your practice, isn't it?---Yes.
Yes. Now, if I go - ask you to go back to paragraph 3C, please, that's on the previous page, page 2. Sorry, 3B first of all. And it refers to you and your wife's original executed wills which are executed on 28 June 2000. The 2000 wills were shredded and put in the bin by you in 2010 shortly after the 2000 wills were executed; do you remember swearing that?---Yes.
And you said that was in accordance with your practice?---Yes.
All right. Let's have a look at 3C, please. In 3C you say, 'The original memorandum dated 16th April 1998 from Majella and me addressed to Anthony Nolan and Donna Nolan were shredded and put in the bin in early 2010 after the 2010 wills were executed.'?---Yes.
According to your practice you destroy - should have destroyed in 1998 memorandum in 2000 when you made your new wills; isn't that right?---Yes."[34]
[45] Accordingly, I have grave reservations about the evidence given by Brian and to a lesser extent by Majella. I do not consider that the evidence they gave was totally accurate and I will only rely on their evidence if it is substantiated by other evidence in some way.
[46] I accepted Donna as a witness of credit and I consider that she was generally able to substantiate claims she made by reference to contemporaneous documentation. In particular she was able to show, by recourse to diary notes and log books, some substantiation for work she claimed she performed around the farm at various times.[35] I also accept that the date of Donna's witness statements indicate that she had knowledge of the contents of the 1998 and 2000 wills made by Brian and Majella prior to their disclosure in the discovery process for this trial. Clearly that substantiates her evidence that she was told about the contents of the wills by Tony and Brian as she had no way of otherwise knowing that information.
[47] Similarly Donna's evidence in relation to the proposed sale in 2006 and the agreement that she and Tony were to receive sufficient proceeds from the sale of Kitcombe to purchase a house in Dalby for around $500,000, is in fact independently supported by the evidence of the family accountant by way of a file note prepared by him around that time.[36]
[48] The first aspect of Donna's claim is based on an equitable estoppel founded on her expectation that she and Tony would obtain the future ownership of the farming properties and the spraying business. The relevant principles in relation to equitable estoppel have been discussed by the High Court in a number of decisions including Waltons Stores (Interstate) Ltd v Maher,[37] Commonwealth v Verwayen,[38] Giumelli v Giumelli[39] and most recently Sidhu v Van Dyke[40]. In Waltons Stores (Interstate) Ltd v Maher[41] the Court held that a person whose conduct creates an assumption by another that he will obtain an interest in the first person's land and on the basis of that expectation alters his position or acts to his detriment then that conduct may bring into existence an equity in favour of the second person. The nature and extent of the equity depends on the circumstances. The Court stated:[42]
"One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J. in Grundt, at p 675; .... Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption."
[49] The relevant legal principles were recently examined by McMeekin J in Germanotta v Germanotta.[43] As his Honour explained, generally a plaintiff must show three things namely an assurance by the defendants, a reasonable reliance on that assurance and detriment by the plaintiff. As his Honour explained at the heart of the case is essentially an argument that the parents in that case had acted unconscionably in denying the claims. Similarly, here, the essence of the claim is that the Nolans are acting unconscionably in denying Donna's claims. Donna argues in her claim based on equitable estoppel that the unconscionability that attracts the intervention of equity is the failure by the defendants, having induced or acquiesced in the adoption of the assumption or expectation with knowledge it would be relied on, to fulfil that assumption or expectation or otherwise avoid the detriment.
[50] The plaintiff argues that a defendant's knowledge or intention may be found where the defendant encourages a plaintiff to adhere to an assumption or expectation already formed or acquiesces in an assumption or expectation then a conscience objection ought to be stated. In this regard reliance is placed on the statement of principles by Brennan J in Waltons Stores in the following terms:[44]
"When the adoption of an assumption or expectation is induced by the making of a promise, the knowledge or intention that the assumption or expectation will be acted upon may be easily inferred. But if a party encourages another to adhere to an assumption or expectation already formed or acquiesces in the making of an assumption or the entertainment of an expectation when he ought to object to the assumption or expectation - steps which are tantamount to inducing the other to adopt the assumption or expectation - the inference of knowledge or intention that the assumption or expectation will be acted on may be more difficult to draw."
"80. The defendant repeatedly contended that to found an estoppel a representation must be "unambiguous", or "clear", or "unequivocal". But a promise may be definite in the sense that there is a clear promise to do something even though the something promised is not precisely defined, and this has always been recognised in the cases. Although the speech of Lord Kingsdown in Ramsden v. Dyson (1866) L.R. 1 H.L. 129 was in gracefully expressed dissent, his statement of the law has long been accepted as authoritative. This is what he said (at 170-1):
"The rule of law applicable to the case appears to me to be this: If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation. This was the principle of the decision in Gregory v. Mighell [1811] EngR 580; 18 Ves 328, and, as I conceive, is open to no doubt. If, at the hearing of the cause, there appears to be such uncertainty as to the particular terms of the contract as might prevent a Court of equity from giving relief if the contract had been in writing, but there had been no expenditure, a Court of equity will nevertheless, in the case which is above stated, interfere in order to prevent fraud, though there has been a difference of opinion amongst great Judges as to the nature of the relief to be granted. Lord Thurlow seems to have thought that the Court would ascertain the terms by reference to the Master, and if they could not be ascertained, would itself fix reasonable terms. Lord Alvanley and Lord Redesdale, and perhaps Lord Eldon, thought this was going too far; but I do not understand any doubt to have been entertained by any of them that, either in the form of a specific interest in the land, or in the shape of compensation for the expenditure, a Court of equity would give relief, and protect in the meantime the possession of the tenant."
[52] The plaintiff must further show a detriment suffered as a consequence of the reliance on the assumption induced by the defendants. As explained by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd:[47]
"That other must have so acted or abstained from acting upon the footing on the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from the representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption on which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him, then it is allowed, his own original change of position will operate as a detriment."
[53] Accordingly the plaintiff argues that the matters which Donna must establish to found an equitable estoppel in the circumstances of this case are as follows:
"(i) that the plaintiff acted (or abstained from acting) in reliance upon an expectation that the plaintiff would acquire an interest in the defendants' property, in this case Kitcombe;
(ii) that the defendants acquiesced in or by their conduct reinforced her expectation, and thereby encouraged the detrimental reliance of the plaintiff; or failed to deny the expectation with knowledge that the plaintiff was relying on it to the plaintiff's potential detriment; and
(iii) that the expectation could be fulfilled only by transfer of the defendants' property, a diminution of the defendants' rights or an increase in the defendants' obligations."
[54] The plaintiff also argues that where the elements of equitable estoppel are made out then the Court should give relief for the enforcement of the expectation Reliance was placed on the decision of Delaforce v Simpson-Cook,[48] where Allsop P stated:
"3 I agree in particular with Handley AJA that the reasons of Gleeson CJ, McHugh, Gummow and Callinan JJ in Giumelli v Giumelli [1999] HCA 10; 196 CLR 101 appear to remove as a governing principle in the relief to be granted in equitable or proprietary estoppel cases the notion of enforcement or vindication only of the "minimum equity": see Giumelli at 123-125 [40]-[48]. That, of course, does not make irrelevant matters that can assuage the detriment brought about by the resiling from the representation or encouragement by the party concerned. It does mean, however, that relief in such cases is not to be measured by weighing detriment too minutely in order that it be converted into some equivalent of cash or kind, as if one were measuring the consideration for a commercial bargain. 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. Equity has always had a place in keeping parties to representations or promises: see for example, Burrowes v Lock [1805] EngR 89; (1805) 10 Ves Jr 470; 32 ER 927; Horn v Cole 51 NH 287; 12 Am Rep 111 (1868); J N Pomeroy, Vol 3 (5th ed, 1941) at 179-188 [802]-[803]; R Meagher, J Heydon and M Leeming, (4th ed, 2002) at 556-560 [17-065]-[17-070] and 567-568 [17-110]."
[55] In this regard, I note that the recent decision of the High Court in Sidhu v Van Dyke[49] endorses such an approach. In particular, the majority held:
"84 If the respondent had been induced to make a relatively small, readily quantifiable monetary outlay on the faith of the appellant's assurances, then it might not be unconscionable for the appellant to resile from his promises to the respondent on condition that he reimburse her for her outlay. But this case is one to which the observations of Nettle JA in Donis v Donis are apposite:
'[H]ere, the detriment suffered is of a kind and extent that involves life-changing decisions with irreversible consequences of a profoundly personal nature ... beyond the measure of money and such that the equity raised by the promisor's conduct can only be accounted for by substantial fulfilment of the assumption upon which the respondent's actions were based.'
[56] As Deane J held in Verwayen, and approved by the High Court in Giumelli v Giumelli:[50]
"the question whether departure from the assumption would be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all circumstances of the case including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted."
[57] I turn now to a consideration as to whether these elements are present in this case and in particular has there been:
(i) a representation or assurance by the defendants which led to an expectation;
[58] Donna's claim for proprietary estoppel is based on the fact that she expected that she and Tony would succeed Brian and Majella to the ownership of Kitcombe subject to paying off the debt and providing for Brian and Majella in their retirement. She argues that this expectation was encouraged by Majella and Brian. Donna argues that the expectation was formed basically because Tony was the eldest son and the only one really interested in farm work at Kitcombe. The evidence clearly indicates that he was a hard worker and that he had always worked for his parents on their farms prior to his divorce.
[59] Donna also argues that Brian and his brother had been given assistance by their family to purchase their own properties and that Tony had a similar expectation. Reliance is also placed on the fact that Tony had worked on his parents' farming properties ever since he finished school and that it was significant that the name "Nolan & Son" was a reference to Tony only and not the other two sons. Donna also argues that it is significant that in 1993 she was brought in as a partner with Tony and his parents under the business name BK & MA Nolan & Son which was held as to 25 per cent by Donna, 25 per cent by Tony and Nolan & Son (Valneen Pty Ltd) was trustee as to the remaining 50 per cent.
[60] Donna also relies on the fact that during some of the period Brian was working off farm in Toowoomba selling real estate. It was also clear that Brian and Majella did not treat Kitcombe as their home and they usually resided in homes in either Toowoomba or Dalby. They lived at a cottage on Kitcombe for a short period in 1996 when their home was being built in Dalby. Brian also stayed at times in the granny flat.
[61] Donna argues that her expectation was that she and Tony would be on the farm forever which is supported by the fact they always lived in the main residence at Kitcombe. She also argues that this is supported by the 1998 and 2000 wills which, she states is based on an express recognition by Brian and Majella, as confirmed in John Edgar's letter to them, of the contributions they had made to the farm, including their long hours and the voluntary assumption of the debt. Donna argues that both sets of wills provide "different mechanics for the same purpose", namely a hand over of Kitcombe to Tony and Donna in the event of their deaths. She argues that it is consistent with the expectation that ultimately they would take over the farm.
[62] I consider that the evidence that Donna gave that they were made aware in general terms "that they would be looked after" around 2000 when Brian and Majella were preparing for their first overseas trip, was credible evidence. Donna could recall the discussion at the Spring Creek Drive home around the dining table and that it took place shortly before the holiday in Europe about which there was some apprehension. She states that they were told that Brian and Majella had made new wills and were getting things in order before they left. I consider that the content of those wills was not discussed in any great detail but I am satisfied the conversation occurred and that Donna was herself aware in general terms of the contents of those wills by early 2000.
[63] I also accept that at some point Tony made known to Donna the content of those wills. Tony himself stated that he thinks around 2003 he would have discussed those wills with Donna. I note that Donna's knowledge of the general content of those wills has in fact been confirmed by the contents of the 1998 and 2000 wills.
[64] I also consider that Tony had the dominant part to play at Kitcombe. As I have previously stated I consider that he was more than a farm hand and was indeed the manager, although I am sure he had discussions with his father as to the overall plan for the farm. I also consider that there were some discussions in relation to farm succession, particularly with the Bank. I accept that there is a file note which records that the manager of the NAB was told in 2003 that there was a succession plan in this regard.
(i) She and Tony would take over ownership of the farm at Kitcombe and associated farming and spraying businesses;
(ii) Brian and Majella's house at Spring Creek Drive would be paid for;
(iii) She and Tony would take over the remaining debt; and
(iv) They would provide Brian and Majella with a comfortable lifestyle in their retirement.
[66] I acknowledge that there can be an expectation even if it is vague. However I cannot find any clear evidence that there was a representation or assurance by Brian and Majella that Tony and Donna would ultimately succeed to all of the property called Kitcombe and all the farming operations at Kitcombe. In particular I am not satisfied that they were told that they would receive all of Kitcombe without any recognition of the rights of the other five children. I accept that their role at Kitcombe was to be recognised but both the 1998 and 2000 wills essentially left half the property to Tony and Donna. The rest of the property was essentially left to the other five children with an ability to either pay down the debt or an ability to buy out the other five siblings.
[67] Accordingly I am not satisfied to the requisite degree that there is sufficient evidence that would have led them to an expectation that they would one day take over all of Kitcombe and the farming and spraying business subject only to the retirement needs of Brian and Majella. It does not seem to me to follow that when Brian and Majella retired Tony and Donna would take over actual legal ownership of the entire farm at Kitcombe, which was owned by Brian and Majella personally as joint tenants.
[68] Whilst I accept that in December 2004 Donna and Tony were made equal shareholders and directors of Nolan & Son, this was not necessarily another step whereby Brian and Majella were indicating they were going to hand over all of the farming business to her and Tony absolutely and to transfer legal title to them. I accept that it was expected that Tony and Donna would live at the farm given Tony was managing the bulk of the work on the farm and that there was a house available for their use. It would seem to me that it was generally assumed that this was the convenient thing to do.
[69] I am not satisfied that the discussions about farm succession, which no doubt occurred in general terms from time to time, ever got to the point where it was indicated to Tony and Donna that they would succeed to all of Kitcombe and the entire farming business
[70] Accordingly, I am not satisfied that there was a clearly articulated expectation in the specific terms argued by the plaintiff. I also have concerns as to whether there was an expectation that was indeed common amongst all of the parties. In my view, the preferred inference available on the evidence is that there was an expectation that there would be some recognition of Tony and Donna's role on the farm at some point in the future but it was not that they would receive all of Kitcombe after Brian and Majella's needs were taken care of. I consider a variety of scenarios were considered from time to time in order to recognise that contribution but I do not think there was a clear expectation as to what the recognition would be.
[71] I also accept that there had never been a promise or representation to leave the entire farm at Kitcombe by a testamentary instrument.
[72] I should at this point proceed to discuss the third question as to whether there was detriment as the issue of detriment is an essential question in an understanding of this case.
[73] I accept that the home the family lived in at Kitcombe was relatively humble as it was a converted school house. However, whilst it was not to a high standard it was satisfactory. I accept that the house was hot in summer and cold in winter and that there were frog and mice plagues at times. However that would not have been an experience which would have been too dissimilar to many other farming families in that community. It's invariably part of life on a farm. The photos in evidence also indicate that when they resided in the house as a family the home was comfortable and cheerful, no doubt due to Donna's efforts, but that it was equipped with air-conditioning and heating and therefore moderately comfortable.
[74] It was uncontroversial that the family resided there without having to actually outlay money for rent which would obviously have been a benefit. Neither is there any evidence that Tony and Donna spent considerable money on the house at Kitcombe or that they renovated or expanded it to their financial detriment. Accordingly I am not satisfied that living in the main residence at Kitcombe could be accurately characterised as a detriment.
[75] I accept however that Donna and Tony worked in the family farming business and received drawings and did not receive a consistent salary. I am satisfied on the evidence before me that the farming hours were long and that the plaintiff did assist in the overall business from time to time. There is evidence that she assisted in harvesting when required, she also would pick up farming items as needed and provide other assistance. She was clearly involved in the spraying business and would take phone calls and prepare invoices.
[76] It is also clear that she accepted some of the risk in relation to the debts and helped to support the family from her wages during difficult financial times. This invariably made more funds available to the farming enterprise.
[77] I also accept that Tony did not seek other employment or advancement given his contribution to the family farming business which undoubtedly assisted in the support of his parents. It would seem clear to me that on leaving school Tony had made a decision to work on the land. He worked for his father on the family farm straight after school and was continually employed on the land until 2010. Rather than working on his own endeavours he chose to continue working for his father and built up the family farming enterprise rather than an independent venture of his own choosing. When he married Donna they clearly chose to continue down the path of working for the family enterprise rather than branching out on their own. It my view part of the detriment to Tony and Donna was the decision they took to continue to build up the joint enterprise rather than their own individual enterprise. In order to build up the family enterprise they would have both forgone the opportunity to work on a farming venture of their own or work for another rural enterprise for greater reward.
[78] It would also seem to me that the factual scenario in this case in this regard is in some ways analogous to the facts in Donis v Donis, although in that case specific promises had been made and had led the wife:[51]
"...to accept living at the Mernda property rather than purchase a home of their own in the closer in suburbs which was her preference, to spend their money on their Mernda house...... On the collapse of the marriage and the separation of the parties it could be seen that these decisions had disadvantaged the plaintiff. If she and Steven had taken the course of buying their own home and had applied their money on that home, or even saved it, she would have had an asset....I do not overlook that in the statement of claim the only detriment pleaded was the making of the contributions but all of these factors to which I have referred were raised in the evidence and were readily apparent. It is clear, when the facts and circumstances are regarded overall, that the plaintiff's detriment is not confined to the contributions."
[79] The decision in Gillett v Holt[52] also held that detriment is not a narrow or technical concept and need not consist of the expenditure of money or other quantifiable financial detriment but rather it must be "something substantial". In my view there was some detriment to Tony and Donna in taking on the family farming enterprise and remaining involved in it in exchange for some future benefit which was not stated in any precise terms.
Was there a detriment in reliance on the expectation?
[80] While I accept that there was some evidence of reliance on and an expectation of some unspecified future benefit and some evidence of detriment as a result of that reliance I should make it very clear that I am not satisfied that any detriment suffered was as a consequence of reliance on the specific representation that they would ultimately succeed to Kitcombe. As I have indicated, I am not satisfied that the family lived at Kitcombe in reliance on the specific representation that they would one day succeed to the beneficial ownership of the whole of Kitcombe and the farming enterprise.
[81] Whilst I am satisfied there was reliance and some detriment I am not satisfied that the detriment, such as it was, was actually a consequence of a clear representation which was made by the second defendant and the third defendant or that there was a clear and common expectation. In short I am not satisfied that there was such a specific representation in the terms alleged or a common expectation and that it was that specific representation or common expectation that caused Donna to adopt a particular course of action to her detriment. Particularly, I am not satisfied that the representation was to the effect that she and Tony would acquire the beneficial interest in Kitcombe. I am not satisfied that there is any clear evidence that Donna relied on any representation to the extent argued.
[82] Accordingly, I do not consider the elements of equitable estoppel are established. This aspect of the plaintiff's claim must fail.
[83] In the alternative the plaintiff seeks to assert a constructive trust on the basis of a common endeavour between Tony and Donna and Brian and Majella Nolan. The legal principles in relation to a constructive trust was set out by Deane J in Muschinski v Dodds:[53]
"Like most of the traditional doctrines of equity, it operates upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct (cf. Story, Commentaries on Equity Jurisprudence, l2th ed. (1877: Perry), vol. 2, par.1316; Legione v. Hateley, at p 444). The circumstances giving rise to the operation of the principle were broadly identified by Lord Cairns L.C., speaking for the Court of Appeal in Chancery, in Atwood v. Maude, at p 375: where 'the case is one in which, using the words of Lord Cottenham in Hirst v. Tolson ((1850)) 2 Mac. and G. 134 [1850] EngR 313; (42 ER 52), a payment has been made by anticipation of something afterwards to be enjoyed (and) where ... circumstances arise so that future enjoyment is denied'. Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do (cf. Atwood v. Maude, at pp 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 ChD 529, at p 531)."
[84] The real question then is the question of unconscionability and in this regard the Court is guided by equitable principles. In Willetts v Marks [54] the Court of Appeal held that a constructive trust does not depend on a common intention of the parties but is actually imposed by equity regardless of the actual or presumed intention and it is a remedy which prevents the unconscionable retention of property. The principles were considered by the High Court in Baumgartner v Baumgartner[55] as follows:
"His Honour pointed out (at p 614) that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention "to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle". See also p 617. In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged (at p 616) that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust."
[85] Baumgartner[56] also established that where a common endeavour is established then the usual rule is that there should be an equal division of property, particularly when the parties have contributed over a substantial period of time:
"Equity favours equality and, in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create a joint home, there is much to be said for the view that they should share the beneficial ownership equally as tenants in common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind. The question which has caused us particular difficulty is whether any such adjustment is necessary in the circumstances of the present case to avoid any injustice which would otherwise result by reason of disparity between individual financial contributions. The conclusion to which we have come is that some such adjustment is necessary."
[86] I consider that the principles of Baumgartner which related to a de facto relationship also apply to relationships between parents and their offspring and have been applied in this manner in a number of other cases.[57]
"the courts do not draw artificial distinctions between the situation of a plaintiff who makes a direct financial contribution to an asset, one who makes a financial contribution which enables his or her partner to expend more of that person's money upon the asset or one who contributes time and effort directed towards an asset rather than simply towards the maintenance of the relationship itself."
[88] In particular, the court can take into consideration the pooling of financial resources, the contribution of labour and the contributions to family welfare by way of domestic assistance, home making and parenting. Where the contributions are not financial, it is clear that a "precise accounting" is not required. There is no doubt that a constructive trust is a flexible solution which depends on the circumstances of the case as to its manner of execution.
[89] In my view from at least 1993, when Donna was made a partner, there was a common endeavour which involved a partnership between Donna, Tony and Nolan & Son as trustee. In 2004 that partnership was replaced by the trust and Donna and Tony became equal shareholders with Brian and Majella and they were also appointed directors of Nolan & Son.
[90] Furthermore I consider that the accounting and banking documents substantiate the submission that the farming enterprise at Kitcombe was a common endeavour. In particular, the farming venture was referred to by the title "Nolan Group" by Williams Hall Chadwick in their tax planning. It is also clear that the whole group was looked at in terms of tax minimisation schemes. I also accept that all applications for finance which were submitted to the bank looked at assets and liabilities of the entire group which was considered collectively.
[91] There is no doubt that Donna started working part time in 2001 and then graduated to full time work in 2004. In this regard it is significant that the personal effects of Tony and Donna were included as assets in a statement of financial position of Nolan & Son Pty Ltd which was submitted to the Queensland Rural Adjustment Authority ("QRAA") as well as other banks and institutions. It is also clear that those applications included the entire enterprise as a single primary production enterprise which included the farm business, Nolan Ag Spray as well as Donna's income from her work with the Dalby Shire Council. I also note that both the Kitcombe and Spring Creek Drive properties were secured by mortgages for loans repayable by the trust and that those loans were maintained by the businesses which included Nolan Ag Spray. The evidence indicates that the spraying business was a very reliable source of income for the family.
[92] It is also clear that farm management deposits including those in the name of Donna were treated as assets of the common endeavour and listed as assets of the trust. On one occasion, a deposit in Donna's name in the amount of $40,000 was withdrawn which resulted in a taxable income increase which in turn triggered a liability on behalf of Donna to repay a family tax benefit. It would seem uncontroversial that the profits from the spray business were transferred on the books from Nolan Ag Spray to the trust and that the profits were given to the trust for the collective benefit of all the parties, which included the income stream for the common enterprise in the applications to the QRAA.
[93] I accept that Donna did meet at times with the accountants and the bankers but that this was not a common occurrence on her part. It would seem to me that those meetings primarily occurred with Brian, Majella and Tony. Significantly however the plaintiff assumed responsibilities as co-borrower and guarantor. That included the personal guarantee to NAB in the sum of $1.25 million as well as being a guarantor in relation to a series of chattel mortgages for farm machinery and vehicles, including spray coupes.
[94] There is no doubt that the plaintiff commenced part time work in 2001 with the Dalby Council and then went back full time in 2004. It is clear that the wages the plaintiff earned during this time were good and the earnings were significant in terms of a contribution to the family unit. Donna's income was also included as part of the common endeavour and more importantly I consider that her wage allowed the family to live without substantial drawings from the partnership. It would seem patently obvious that given she had an income from her employment there were not larger drawings from the partnership or the trust. I accept that had she not had this income stream when the drought hit the family would have been in a financial situation where it would have been difficult to continue the farming operation.
[95] I accept that Tony did most of the physical work on the farm but I accept that Donna also contributed and helped out. I am satisfied that she did do some physical work but she was particularly involved with the spray business as a director and that she did invoicing and banking for the business. She moved vehicles when required and she would also pick up parts and chemicals for the business. She also took telephone bookings for the business.
[96] There is no doubt that the plaintiff also contributed by way of support at the farm for Tony and by caring for and being heavily involved with the children. I accept that she carried out extensive domestic duties in circumstances that were not ideal. I also consider that the 1998 and 2000 wills acknowledged the role she had played on the farm particularly given the letter of Mr Edgar which confirmed to Brian and Majella that the wills had been drafted to acknowledge the role she and Tony had played in relation to the farming enterprise. This clearly constitutes in my view independent evidence of an acknowledgment of this detriment by Brian and Majella.
[97] Accordingly not only am I satisfied that there was a common endeavour but I am also satisfied that there has been a detriment suffered by Donna as a result of her involvement in the common endeavour. I also consider that the detriment was a direct consequence of the pursuit of the common endeavour
[98] I am also satisfied that it would be unconscionable if Brian, Majella and Tony received the benefit of Donna's contributions to the farming enterprise without some compensation to her. As Campbell J acknowledged in West v Mead:[60]
"Part of the justification for imposing the Baumgartner constructive trust is that the parties have been jointly building up assets, on the basis that those assets will be available for the joint endeavour in the future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and the assets acquired from it, would be used for their ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were built up."
[99] In my view all of the parties in this case were working together to build up joint assets. I also consider that Donna was clearly contributing to the common pool on the basis that the assets so built up would be used for the common benefit of the parties. I consider that it would be unconscionable for Brain and Majella to end up with all of the assets now that the relationship has broken down. As Nettle JA explained in Donis v Donis[61] the decision in Giumelli means that departure from the assumed state of affairs is contrary to the requirements of conscientious conduct and it depends on the precise circumstances to ascertain whether such a departure is permitted.
[100] The plaintiff has clearly submitted that the claim in this respect is based on a common endeavour trust and not a common intention trust. Accordingly, it would seem clear that some of the decisions relied upon by the defendants in relation to common intention trusts are not relevant to the question of a common endeavour trust.[62]
[101] As Flinn v Flinn[63] acknowledged, there is a great deal of flexibility in terms of the approach to the appropriate relief. Similarly in Donis v Donis Nettle JA stated:
"Accordingly, like his Honour, I do not see how one could define in terms of mathematical precision the ultimate measure or amount of the qualitative considerations which need to be allowed for. In the circumstances of this case, the best the judge could do was to make a broad-brush (and to some extent necessarily subjective) assessment of the figure, and that is what he did. To my mind the logic of his Honour's analysis is clear enough, and in accordance with principle, and for reasons which follow I think that the quantum is not exorbitant"[64]
[102] I consider that the plaintiff is entitled to a constructive trust on a proportionate of the assets of the common endeavour. In terms of relief in this case I consider that there should be an equitable division having regard to the contributions of the parties and the expectation as to future rewards. There is no doubt that the second and third defendant worked very hard all their lives and that the second defendant commenced farming in 1956 and that they acquire Kitcombe in 1985 from their own resources. Majella assiduously kept the books of the family businesses for decades. It is also clear that the Toowoomba home was sold in 1996 to reduce the debt on Kitcombe. I also accept that the plaintiff did not pay any money to become a partner but I have already outlined the contributions I consider that she made to the common endeavour and will not repeat them. There is no doubt that Tony did most of the physical work at Kitcombe over the twenty five years he worked on the property.
[103] Despite all of those factors the parties themselves reached an agreement about how all their various contributions should be recognised. In my view, the evidence indicates that they did this in 2006 when Kitcombe was put up for sale. In my view the evidence indicates that the parties came to an agreement and the basis of the agreement evidenced by Vaughan's file note,[65] his evidence in court, and the "Nolan Group Tax Summary for year ended 30 June 2006".[66] That material shows that at that point in time the net surplus cash position was $1.6 million - $1.7 million after the liabilities and the value of the Dalby property and the personal effects of Brian and Majella are removed. My analysis of the available information also supports such a conclusion. [67]
[104] Accordingly I accept the submission of the plaintiff that the approach of the parties in 2006 when consideration was given to the respective allocations of the parties at the time Kitcombe was listed for sale is the appropriate methodology to adopt.
[105] In this regard I am satisfied that the evidence indicates that Tony and Donna were to receive about $500,000 plus the equipment from Nolan Ag Spray which was valued at around $310,000. That is a total of $810,000. That represented for Tony and Donna approximately 50% of the unencumbered value of Kitcombe plus 100% of the value of the all spray equipment and vehicles.
[106] In my view this should be the methodology adopted. Accordingly, I consider that Donna should receive 50% of the allocation which was to be assigned to her and Tony. That would be a figure of approximately $405,000.
[107] In order to check the fairness of this approach, I have also taken into account the common endeavour alternate methodology as suggested by the plaintiff. That approach involves a consideration of the increase in the net value of the assets in the relevant period. On that approach it would seem that in 1992 that value was $864,000 and the net position currently is $2,530,600. Accordingly it would seem to me that the increase in the net assets of the common enterprise is in fact also about $1.6 million. Donna's 25% share of that is in the order of $400,000. Accordingly I consider that my figure of $405,000 is appropriate in all of the circumstances. However, one additional factor needs to be considered before a final calculation is made.
[108] As Donna lived at Kitcombe rent-free from 14 December 2009 until 23 May 2014, a deduction in her entitlement is appropriate. Donna is currently paying $315 per week for a property in Dalby. I consider the deduction to acknowledge her rent-free accommodation for this period should be $69,300 which equates to $300 rent per week for Kitcombe. Accordingly, the figure of $335,700 together with interest from December 2009 until today, is the figure I consider to be appropriate in all of the circumstances.
[109] I also consider that the terms of the orders should be as submitted by the plaintiff in paragraph [194] of the Plaintiff's Closing Submissions. I will however hear from the parties as to costs and the final form of the orders which are required.
[8] Exhibit 27, Trial Bundle, Volume 1.1 of 3, Tab [10].
[9] Exhibit 27, Trial Bundle, Volume 1.1 of 3, Tab [16] and [17].
[10] Exhibit 27, Trial Bundle, Volume 1.1 of 3, Tab [18].
[11] Exhibit 27, Trial Bundle, Volume 1.1 of 3, Tab [21] and [22].
[17] See T4-58, ll 5 - 10, T4-63, ll 9 - 11, and T4-74, ll 4-7.
[27] Exhibit 27, Trial Bundle 1.1 of 3, Tab [10].
[41] [1988] HCA 7; (1988) 164 CLR 387 at 404.
[44] (1988) 164 CLR 387 at 423.
[45] [1999] VSCA 109 (4 August 1999); [1999] VSCA 109; [1999] 3 VR 712.
[46] [1999] VSCA 109; [1999] 3 VR 712 at 738 - 739.
[47] [1937] HCA 58; (1937) 59 CLR 641 at 674.
[48] [2010] NSWCA 84; (2010) 78 NSWLR 483 at 493.
[49] [2014] HCA 19 (16 May 2014) at [84] - [85].
[50] (1999) 196 CLR 101 at 123.
[51] [2007] VSCA 89 at [14].
[52] [2001] Ch 210 at 323.
[53] [1985] HCA 78; (1985) 160 CLR 583 at 619.
[55] [1987] HCA 59; (1987) 164 CLR 137 at 148 per Mason, Wilson & Deane JJ.
[56] [1987] HCA 59; (1987) 164 CLR 137 at 148 per Mason, Wilson & Deane JJ at 149 per Mason, Wilson & Deane JJ.
[57] See for instance Giumelli v Giumelli (1999) 196 CLR 101; Sweetenham v Wild [2005] QCA 264; Flinn v Flinn [1999] VSCA 109; [1999] 3 VR 712.
[59] [2002] WASCA 63; (2002) 25 WAR 360 at 364.
[62] In particular Gissing v Gissing [1970] UKHL 3; [1971] AC 886, neither do I consider Engwirda v Engwirda [2000] QCA 661 relevant in this case.
[64] [2007] VSCA 89 at [24].
[66] Exhibit 27, Trial Bundle 1.2 of 3 at Tab [84] and T6-19, ll 14 - 20.
[67] On the material currently before me I assess the position of the joint endeavour as at December 2009 as $1,708,600.This calculation is based upon the information contained in Exhibit 1 and Exhibit 19 and the information given by through the parties in their evidence. The agreed valuation report, values the Kitcombe property at $2.3 million as at 1 January 2010. In respect of the equipment, given that the plaintiff estimated that the equipment was worth $310,000 and Exhibit 19 shows that at June 2010 the "Plant and Equipment" was worth $593,000, I chose the mid-point between these two figures of $400,000 to represent the Equipment's worth at the end of 2009. Exhibit 19 places the net liability at June 2010 as $991,400.
Nolan
Nolan & Ors [2014] QSC 218
(1987) 164 CLR 137
(2010) 78 NSWLR 483
(1937) 59 CLR 641
(1985) 160 CLR 583
(1988) 164 CLR 387
(1999) 196 CLR 101
(2014) 308 ALR 232
(2002) 25 WAR 360