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[2006] VSC 109
Supreme Court of Victoria
2006-03-24
Cummins J
Original judgment source is linked above.
Family dispute - rural properties - companies - partnerships - trusts - value of non-monetary contribution by wife and mother - oppression - ss.232 and 233 Corporations Act 2001 - ss.39(f) and 43 Partnership Act 1958 - winding up of company - dissolution of partnership.
THE PROCEEDINGS
1 Before the Court are two proceedings: no. 4542 of 2001 and no. 5151 of 2001. The proceedings are interrelated and were tried together. Essentially both proceedings arise from the separation of husband and wife and the consequences of that separation upon farming and other property. Trevor and Lorraine Yard were married in October 1969 and they lived together at Murrayville, north-west Victoria, in the Mallee country. Two children were born of the marriage. Trevor and Lorraine Yard separated in December 1997 and later divorced. Lorraine Yard commenced proceedings in July 1999 in the Family Court of Australia at Adelaide against Trevor Yard for property settlement and for maintenance. In October 2000 she commenced proceedings in the Supreme Court of South Australia, initially to prevent Trevor Yard and his parents from dealing with the assets of a family partnership and a family company Yardoo Pty Ltd. and thereafter seeking the winding up of Yardoo Pty Ltd and a division of its assets and the dissolution of the family partnership and an accounting of its assets. Trevor Yard's father, Alfred Yard, took proceedings in this Court in February 2001 seeking declarations as to the true ownership of the property the subject in part of Lorraine Yard's South Australian Supreme Court proceedings. Her claim was transferred from the Supreme Court of South Australia to this Court in March 2001, pursuant to the provisions of the Jurisdiction of Courts (Cross-Vesting) Act 1989 and became proceeding no 5151 of 2001. Thus both proceedings were heard in this Court.
2 In proceeding number 4542 of 2001 the plaintiff is Alfred Jeffrey Yard and the defendants are Yardoo Pty Ltd (first defendant), Gladys Maxrene Yard (second defendant), Trevor Jeffrey Yard (third defendant) and Judith Lorraine Yard (fourth defendant). The active defendant to those proceedings is Judith Lorraine Yard. The other defendants did not file defences or contest the claim and were not represented.
3 In proceeding number 5151 of 2001 the plaintiff is Judith Lorraine Yard and the defendants are Trevor Jeffrey Yard (first defendant), Alfred Jeffrey Yard (second defendant), Gladys Maxrene Yard (third defendant) and Yardoo Pty Ltd (fourth defendant). The defendants jointly filed a defence. Only the second defendant, Alfred Jeffrey Yard, was represented by counsel before me. The first defendant, Trevor Jeffrey Yard, effectively stood with his father in defence of the claim. The third defendant, Gladys Maxrene Yard, beyond formally being a party to the filed joint defence, took no part in the proceedings. The fourth defendant, Yardoo Pty Ltd was not represented by counsel before me. No appearance was filed by Trevor Jeffrey Yard, Gladys Maxrene Yard or Yardoo Pty Ltd. As the dispute was a family dispute, those arrangements for representation were appropriate and convenient in the circumstances, especially bearing in mind the burden of costs.
4 As the respective proceedings involve numerous parties with the same surname, it is convenient and appropriate hereafter (unless the context otherwise requires) to refer to the parties as follows: Alfred Jeffrey Yard as Alfred, Trevor Jeffrey Yard as Trevor, Gladys Maxrene Yard as Gladys, and Judith Lorraine Yard as Lorraine (the given name she habitually uses).
5 The sequence of issue of the respective proceedings is as follows.
6 After separation Lorraine commenced matrimonial proceedings against Trevor in the Family Court of Australia at Adelaide. On 5 July 1999, in proceeding number AD3875 of 1999 she made application for property settlement and for maintenance. On 31 October 2000 in the Supreme Court of South Australia in proceeding number 1044 of 2000 Lorraine sought an injunction against the defendants Trevor Yard, Gladys Yard and Yardoo Pty Ltd from dealing with the assets of a family partnership and of Yardoo Pty Ltd other than in the normal course of business. On 15 November 2000 Lorraine filed a statement of claim in that proceeding in which she sought orders to wind up Yardoo Pty Ltd and for an accounting and a division of the company and partnership assets. On 20 February 2001 an amended statement of claim was filed in which Lorraine sought a winding-up of Yardoo and a division of assets between the shareholders and a declaration for the dissolution of the partnership and an accounting of the income and assets of the partnership. Also on 20 February 2001 proceeding number 4542 of 2001 was filed in this Court, in which Alfred Jeffrey Yard is the plaintiff and the defendants are Yardoo Pty Ltd., Gladys Maxrene Yard, Trevor Jeffrey Yard and Judith Lorraine Yard, and in which the plaintiff sought declarations that property the subject or possible subject of Lorraine's claim was his and Orders transferring property in the names of the defendants to him. On 9 March 2001 in the Supreme Court of South Australia, Martin J ordered that proceeding number 1044 of 2000 be transferred to the Supreme Court of Victoria. That order was made pursuant to s 4 Jurisdiction of Courts (Cross-Vesting) Act 1987 and for the reason that the dominant connection of the proceedings was with Victoria. That proceeding became number 5151 of 2001 in this Court. On 27 July 2001 Mandie J ordered that subject to any order of the trial judge, proceeding number 5151 of 2001 be heard at the same time as proceeding number 4542 of 2001. On 10 August, 2001 the Family Court proceedings by order of Judicial Registrar Forbes were stayed until the determination of these proceedings.
7 In proceeding no 4542 of 2001, essentially the plaintiff Alfred Yard seeks a declaration that the property and businesses in the name of Yardoo Pty Ltd and described in Schedules 1 to 4 of the statement of claim are held by it on trust for the plaintiff. Alternatively the plaintiff seeks a declaration that particular shares issued by Yardoo Pty Ltd are held on trust for the benefit of the plaintiff. The plaintiff seeks additional declarations that other scheduled properties be transferred to the plaintiff or held by the defendants as trustees for the benefit of the plaintiff, and for an equitable charge upon the defendants' respective interests in the land described in the schedules. The scheduled properties are stated in paragraphs 32-36 below.
8 In proceeding no 5151 of 2001, essentially the plaintiff Lorraine Yard seeks the winding up of Yardoo Pty Ltd, a division of the assets of Yardoo Pty Ltd amongst the shareholders (of which she is one), a declaration of the dissolution of a partnership the Yards formed in 1976 and which related to properties and businesses (the partnership being of all the parties to the proceeding except Yardoo Pty Ltd) and an accounting of the assets of the partnership, an order for the sale of the partnership land, an equal share in the capital and profits of the partnership, payment to the plaintiff pursuant to the Partnership Act 1958 (Victoria) and a declaration that the defendants or any one of them have no interest in the property owned by the plaintiff.
9 Thus proceeding no 4542 of 2001 is brought by Alfred Yard, the senior member of the family, for declarations to secure the property he maintains is rightfully his; and proceeding no 5151 of 2001 is brought by the former daughter-in-law of Alfred Yard to obtain the property she says is rightfully hers.
10 A brief personal chronology is as follows. The Yard family has resided in Murrayville for three generations. Mr Alfred Yard was born on 31 March 1923 and is now 83 years of age, active, alert and able. He and his wife Gladys were married in 1946. Trevor Yard was born on 17 April 1947 and is now 58 years of age. He and Lorraine Yard married on 25 October 1969. Two children were born of the marriage, Damien on 13 February 1971 and Narelle on 9 October 1973. In 1997 Trevor and Lorraine Yard separated and later divorced. The parties still live in Murrayville.
11 Murrayville is situated on the Mallee Highway 25 kilometres east of the Victorian-South Australian border. It is 110 kilometres west of Ouyen and 30 kilometres east of Pinnaroo, and 560 kilometres north-west of Melbourne and 270 kilometres east of Adelaide. It has a population of some 250. It has an average annual rainfall of 275 mm., slightly less to its north and slightly more to its south. It is fortunate to have good underground water.
12 Of the various blocks and properties, the following is a brief geographical summary.
(a) The Renown Garage is in McKenzie Street, Murrayville (the Mallee Highway). Its registered proprietor is Yardoo Pty Ltd.
(b) The various town blocks are in or adjoining the township. They are Murphy's, Kalm's and Tully's Blocks to the north and the Murrayville Abattoir to the south. The registered proprietor of those blocks is Yardoo Pty Ltd. Szader's, to the south, is registered in the name of Trevor Jeffrey Yard.
(c) Pomona is 3 kilometres north of the township and comprises 1219 hectares. Pomona is constituted by Hawker's, Paul's, Gutsche's and Conlin's Blocks. The registered proprietor is Yardoo Pty Ltd.
(d) The South Blocks Gunamalary are 2 kilometres south of the township and comprise 1089 hectares. They are constituted by Jimmy Mac's, Hallet's, Boetscher's and Wiltshire's Blocks. The registered proprietor is Yardoo Pty Ltd.
(e) Brian's Block, Ngallo is 12 kilometres south-west of the township and comprises 259 hectares. Its registered proprietor is Judith Lorraine Yard.
(f) Lackman's Blocks, Carina are 9 kilometres west of the township and comprise 189 hectares. The registered proprietor is Yardoo Pty ltd.
(g) Hawick is in South Australia, on its Victorian border, 67 kilometres north of Bordertown and comprises 5905 hectares. Its registered proprietor is Yardoo Pty Ltd as to one undivided half share.
(h) Paladin is in South Australia, on the Western Branch Road, 3 kilometres south-west of Lobethal in the Adelaide Hills and 36 kilometres east of the Adelaide G.P.O.. It comprises 57 hectares. Its registered proprietors are Gladys Maxrene Yard, Alfred Jeffrey Yard, Trevor Jeffrey Yard and Judith Lorraine Yard as joint tenants.
13 A brief commercial chronology is as follows. Alfred Yard's father, Harold, purchased the Renown Motor Garage, Murrayville in 1929 and Lackman's Block, Murrayville for his son in 1940. Alfred Yard purchased various blocks in and around Murrayville from the late 1940's to 1969. Mr Harold Yard died in 1969. In 1970 Hallet's Block was transferred from the Estate of Harold Yard to Alfred Yard. In 1973 the property Pomona at Murrayville was purchased. The registered proprietors were Trevor and Lorraine Yard as tenants in common. The partnership of Alfred, Gladys, Trevor and Lorraine Yard was formed in 1975. Yardoo Pty Ltd was incorporated on 1 October 1976 with Alfred Yard allocated one A class share, Gladys Yard one B class share, Trevor one C class share and Lorraine Yard one D class share. At the time of the formation of the partnership and incorporation of the company, family relations including between Trevor and Lorraine Yard were good. In 1981 the property Paladin, near Lobethal, South Australia was purchased. Its registered proprietors were Gladys Maxrene Yard, Alfred Jeffrey Yard, Trevor Jeffrey Yard and Judith Lorraine Yard as joint tenants. In 1985 Brian's Block, near Murrayville was purchased. Its registered proprietor was Judith Lorraine Yard. In 1992 the property Hawick, in South Australia was purchased. Its registered proprietor as to one undivided half share was Yardoo Pty Ltd. On 11 December 1997 Trevor and Lorraine Yard separated.
14 For many years Alfred Yard operated the Renown Motor Garage which was a fuel distributor for the area. It was a successful business. He invested in farm properties but was himself not primarily a farmer. After the 1950's, as roads and vehicles improved, the operations of the Renown Garage declined because the major nearby centres - Pinnaroo and Ouyen, and further afield Bordertown, Keith and Mildura - took over. The Renown Garage became a partnership of A.J. and G.M. Yard, and then A.J., G.M. and T.J. Yard, and after Trevor and Lorraine's marriage in 1969, A.J., G.M., T.J., and J.L. Yard. In the early days few records were kept. Basic accounting was done by "Mallee" Tobin, Alfred's solicitor in Ouyen. The first extant partnership accounts are for 30 June 1975.
15 The parties still reside in Murrayville. Alfred and Gladys live on the south
side of McKenzie Street (Mallee Highway), next to the Renown Motor Garage. Lorraine lives opposite them. Trevor lives on Pomona, just north of the town.
THE CLAIM IN PROCEEDING NO. 4542 OF 2001
16 The claim by Alfred Yard in proceeding no 4542 of 2001 is as follows in paragraphs 17-28 below.
17 During the period from 1939 to 1976 Alfred acquired the properties and businesses in and around Murrayville in the State of Victoria described in Schedule 1 to the statement of claim. (The properties identified in each of the Schedules 1 to 5 are set out below in paragraphs 25 to 29.) Prior to and during 1976, Alfred purchased the property Murphy's Block identified in Schedule 2 which property was registered in the name of Gladys Yard. In or about December 1973 Alfred purchased a farming property at Murrayville known as Pomona Farm described in Schedule 3. At the time of acquiring Pomona Farm it was registered in the names of Trevor Yard and Lorraine Yard as tenants in common in equal shares; the total purchase price of Pomona Farm (including additional plant and equipment purchased for $7,688.60) was $130,000.00 and the purchase price was financed in part by a vendor mortgage of $65,000.00 for five years at 7% interest; the balance of the purchase price was financed by payments made by Alfred; and Trevor and Lorraine did not pay any of the purchase price of Pomona Farm. Prior to purchasing Pomona Farm, on or about December 1973, an agreement was made between Alfred, Trevor and Lorraine Yard whereby it was agreed that Pomona Farm would be registered in the names of Trevor Yard and Lorraine Yard as tenants in common but held by them as trustees for the benefit of Alfred or in the alternative pursuant to a resulting trust in favour of Alfred. The agreement was partly oral and partly implied. It was constituted by discussions between Alfred, Trevor and Lorraine Yard during or about November and December 1973 at Murrayville, Victoria and was implied by the conduct of the parties and by operation of law.
18 In or about September 1976 and pursuant to legal advice received from Irwin Richards solicitors Alfred instituted discussions and made an agreement with Gladys, Trevor and Lorraine ("the agreement") that Yardoo Pty Ltd would be incorporated for the following purposes: to act as a trustee company; to receive the transfer from Alfred and Gladys of all of the property described in Schedules 1 and 2 of which Alfred was the legal and/or beneficial owner; to become the legal proprietor of the land transferred to it by Alfred and Gladys and hold the property upon trust for the benefit of Alfred; to receive the transfer of the property described in Schedule 3 from Trevor and Lorraine and be registered as legal proprietor of that property; to hold the property transferred to it by Trevor and Lorraine upon trust for the benefit of Alfred and to hold the future transfers of property to it upon trust for the benefit of Alfred. It was further agreed that each of Alfred, Gladys, Trevor and Lorraine would be appointed as directors of Yardoo Pty Ltd and issued with one share each. The agreement was partly oral and partly implied. It was constituted by discussions between Alfred, Trevor and Lorraine during or about September 1976 at Murrayville, Victoria. It was implied by the conduct of the parties and by operation of law.
19 On 1 October 1976, Yardoo Pty Ltd was incorporated (hereafter Yardoo).
20 In or about June 1977 Alfred transferred to Yardoo each of the properties and businesses owned by him and referred to in Schedule 1 for the purpose that Yardoo would hold the properties and businesses on trust for the benefit of Alfred.
21 In or about June 1977 pursuant to the agreement, Gladys transferred to Yardoo the property registered in her name and referred to in Schedule 2 for the purpose that Yardoo would hold the property on trust for the benefit of Alfred.
22 In or about June 1977 pursuant to the agreement Alfred requested Trevor and Lorraine to transfer Pomona Farm to Yardoo. Trevor and Lorraine expressed an intention to transfer Pomona Farm to Yardoo for the purposes described in paragraph 16 above.
23 During or about June 1977 pursuant to the agreement and with the knowledge and consent of Gladys, Trevor and Lorraine, Alfred instructed Freeman & Pitts solicitors to prepare transfers and contract for sale with respect to the properties described in Schedules 1, 2 and 3 to be transferred to Yardoo by Alfred, Gladys, Trevor and Lorraine. Accordingly, Yardoo holds the legal title of the property and businesses transferred to it by Alfred, Gladys, Trevor and Lorraine pursuant to an express or constructive trust for the benefit of Alfred.
24 Further or in the alternative, Yardoo has not paid the consideration referred to (sic) in paragraph 20 above and Yardoo thereby holds the legal title of the property and businesses transferred to it by Alfred pursuant to a resulting trust for the benefit of Alfred.
25 Further and in the alternative, Alfred has an equitable charge upon the land described in Schedules 1 and 2 for the purchase price plus interest.
26 After October 1976 Yardoo purchased additional properties which are described in Schedule 4.
27 Prior to the purchase of each of the properties referred to in Schedule 4, there was an agreement between Alfred, Gladys, Trevor and Lorraine whereby it was agreed that the properties would be held by Yardoo on trust for Alfred. The common seal of Yardoo was affixed to each transfer in its capacity as the trustee of each company. Accordingly, the transfers were made in part performance of the agreement. Yardoo thereby holds the legal title to the property and businesses transferred to it by Alfred pursuant to an express trust for his benefit. Further and in the alternative, Alfred paid the purchase price for the purchase of each of the properties and businesses referred to in the preceding paragraph and Yardoo thereby holds the legal title of the property pursuant to a resulting trust for the benefit of the plaintiff. Further or in the alternative, the plaintiff claims against Yardoo an equitable charge upon the property and businesses referred to in Schedule 4 for the purchase price plus interest.
28 Alfred and Yardoo have provided funding and/or made the payments for four other properties described in Schedule 5. Prior to the purchase of the properties listed at paragraphs 5.1 and 5.2 of Schedule 5, there was an agreement between Alfred and Trevor whereby they agreed that notwithstanding the purchase monies were paid by Alfred, both of the properties would be registered in the name of Trevor who would hold the property on trust for the benefit of Alfred. Prior to the purchase of the property listed at paragraph 5.3 of Schedule 5, there was an agreement between Alfred, Gladys, Trevor and Lorraine whereby they agreed that notwithstanding the purchase monies was paid by Alfred both of the Certificate of Title of the property would be registered in the name of Alfred, Gladys, Trevor and Lorraine Yard jointly who would hold the property on trust for the benefit of Alfred. Prior to the purchase of the property listed in paragraph 5.4 in Schedule 5 there was an agreement between Alfred and Lorraine whereby they agreed that notwithstanding the purchase monies were paid by Alfred the property would be registered in the name of Lorraine who would hold the property on trust for the benefit of Alfred.
29 The purchase of each property and registration on the Certificate of Title in the respective names of Alfred, Gladys, Trevor and Lorraine were made in part performance of the agreements referred to in the preceding paragraph. Gladys, Trevor and Lorraine thereby hold their respective legal title in the properties registered in their names pursuant to an express or constructive trust for the benefit of Alfred. Further and in the alternative, Gladys, Trevor and Lorraine hold their respective legal title to the properties referred to in Schedule 5 pursuant to a resulting trust for the benefit of Alfred. Further or in the alternative, Alfred claims against Gladys, Trevor and Lorraine an equitable charge upon the properties referred to in Schedule 5 for the purchase price plus interest.
30 Accordingly Alfred Yard as plaintiff claims:
A. A declaration that the property and businesses in the name of Yardoo described in Schedules 1, 2, 3 and 4 are held by it on trust for the benefit of the plaintiff;
B. In the alternative, a declaration that the following shares issued by Yardoo are held on trust for the benefit of the plaintiff:
2.1 One B class share registered in the name of Gladys Maxrene Yard;
2.2 One C class share registered in the name of Trevor Jeffrey Yard; and
2.3 One D class share registered in the name of Judith Lorraine Yard;
C. An order that Gladys Yard, Trevor Yard and Lorraine Yard transfer their respective shares in Yardoo to the plaintiff or his nominee;
D. A declaration that the whole of the land described in Schedule 5.1 and 5.2 and registered in the name of Trevor Jeffrey Yard is held by him as a trustee for the benefit of the plaintiff;
E. An order that Trevor Yard transfer to the plaintiff or his nominee the whole of the land described in Schedule 5.1 and 5.2;
F. A declaration that the whole of the land described in Schedule 5.3 and registered in the names of the plaintiff, Gladys Maxrene Yard, Trevor Yard and Judith Lorraine Yard is held by them as a trustee for the benefit of the plaintiff;
G. An order that Gladys Maxrene Yard, Trevor Yard and Judith Lorraine Yard transfer to the plaintiff or his nominee the whole of the land described in Schedule 5.3;
H. A declaration that the whole of the land described in Schedule 5.4 and registered in the name of Judith Lorraine Yard is held by her as a trustee for the benefit of the plaintiff;
I. An order that Judith Lorraine Yard transfer to the plaintiff or his nominee the whole of the land described in Schedule 5.4;
J. An equitable charge upon the defendants' respective interests in the land described in Schedules 1 to 5 inclusive;
K. Such further or other directions as the Court may deem just and expedient;
L. That the defendants pay to the plaintiff's costs of this proceeding.
The properties
31 The properties in the Schedules referred to above are as follows.
32 The Schedule 1 properties, said by the plaintiff Alfred Yard to be owned by him are:
1.1 Murrayville Town Block 8, Renown Motor Garage, being the whole of the land comprised in Certificate of Title Volume 4504 Folio 9007, purchased by the plaintiff in 1946;
1.2 Lackman's Block 27 Carina being the whole of the land comprised in Certificate of Title Volume 8669 Folio 321;
1.3 Lackman's Blocks 28 and 28A Carina being the whole of the land comprised in Certificate of Title Volume 925 Folio 933;
1.4 Hallet's Block 1 Gunamalary being the whole of the land comprised in Certificate of Title Volume 8712 Folio 880;
1.5 Jimmy Mac's Block 2 Gunamalary being the whole of the land comprised in Certificate of Title Volume 5662 Folio 1132213;
1.6 Boetscher's Block 7 Gunamalary being the whole of the land comprised in Certificate of Title Volume 9135 Folio 103;
1.7 Wiltshire's Block 8 Gunamalary being the whole of the land comprised in Certificate of Title Volume 8217 Folio 963;
1.8 Tully's Block 3D Danyo being the whole of the land comprised in Certificate of Title Volume 9205 Folio 463;
1.9 Kalm's Block 3F Danyo 8.2 being the whole of the land comprised in Certificate of Title Volume 6316 Folio 1263196;
1.10 A garage business known as "Renown Garage"; and
1.11 Farming operations including animal stock, plant and equipment.
33 The Schedule 2 property, said by the plaintiff Alfred Yard to be owned by Yardoo is:
2.1 Murphy's Block 3D Danyo being the whole of the land comprised in Certificate of Title Volume 8189 Folio 941.
34 The Schedule 3 properties comprising "Pomona Farm" are:
3.1 Gutsche's Block 11 Danyo 1280 acres being the whole of the land comprised in Certificate of Title Volume 8504 Folio 026;
3.2 Paul's Block 12 Danyo 655 acres being the whole of the land comprised in Certificate of Title Volume 8113 Folio 077;
3.3 Hawker's Block 13 Danyo 640 acres and Lackman's Block 14 Danyo 640 acres being the whole of the land comprised in Certificate of Title Volume 8113 Folio 252; and
3.4 Conlin's Block 15 Danyo 432 acres being the whole of the land comprised in Certificate of Title Volume 8263 Folio 056.
35 The Schedule 4 properties being additional properties purchased by Yardoo are:
4.1 Murrayville Slaughter Yards Block 6A Danyo 7 acres being the whole of the land comprised in Certificate of Title Volume 6293 Folio 1258551;
4.2 Herbie's Town Lot 5 Murrayville being the whole of the land comprised in Certificate of Title Volume 7442 Folio 1488365;
4.3 A fifty percent share in a property known as "Hawick Station" being land in the Hundred of Shaugh in the State of South Australia comprising:
4.3.1. Block 20 Shaugh 1482 hectares being the whole of the land comprised in Certificate of Title Volume 4343 Folio 83;
4.3.2. Block 21 Shaugh 2169 hectares being the whole of the land comprised in Certificate of Title Volume 4343 Folio 84; and
4.3.3. Block 22 Shaugh 2254 hectares being the whole of the land comprised in Certificate of Title Volume 4343 Folio 85.
36 The Schedule 5 properties, said by the plaintiff Alfred Yard to be additional properties financed by him are:
5.1 A leasehold interest in Lot 10 Railway Reserve, Murrayville registered in the name of the plaintiff. The plaintiff contributed monies towards the construction of the residence;
5.2 Szader's Lot 9 Murrayville being the whole of the land comprised in Certificate of Title Volume 8242 Folio 474. The plaintiff paid the purchase price and directed that the property be registered in the name of the plaintiff;
5.3 Lobethal South Australia property of about 142 acres being the whole of the land comprised in Certificate of Title Volume 4154 Folio 413 and Volume 4346 Folio 576. The plaintiff directed that the property be registered in his name and in all the defendants' names without any consideration being provided by the defendants. The property has a mortgage in the sum of $150,000.00 in the name of the plaintiff; and
5.4 Brian's Block 31 Ngallo of about 640 acres being the whole of the land comprised in Certificate of Title Volume 8386 Folio 144. The plaintiff paid the purchase price and directed that the property be registered in the name of Judith Yard without any consideration being provided by Judith Yard.
At trial, the claim to Lot 10 Railway Reserve, Murrayville, in which Lorraine currently resides, was not persisted in.
37 A summary of the relevant transfers is as follows (taken from Lorraine Yard's revised witness statement paragraph 26):
Description including reference to Schedule in No. 4542
Jimmy Macks
South Blocks
Murrayville (called Wiltshire's Block in schedule)
Schedule 1.7
Hallet's
South Blocks
Murrayville
(called Boetscher's Block in schedule)
Schedule 1.7
Boetscher's
South Blocks
Murrayville
(called Hallet's in schedule)
Schedule 1.4
Wiltshire's
South Blocks
Murrayville
(called Jimmy Mac's Block in schedule)
Schedule 1.5
Town Block
Murrayville
(Crown Allotment 3E - Paddock) (Murphys)
Schedule 2.1
Town Block,
3F Danyo
Murrayville
Kalm's
Schedule 1.9
CT Vol 9205
Fol 463
(was CT Vol 1055
Fol 845)
LCB 118
Town Block
3D Danyo
Murrayville
Cemetery Road
Tully's Block
(Sold)
Schedule 1.8
Pomona
(Murrayville)
(Hawker's Block)
Schedule 3.3
(i) CT Vol 9252
Fol 933
(previously CT Vol 8242
Fol 538)
GCB 351
Carina
(West of Murrayville)
Schedule 1.3
Alfred Yard (although this is not noted on the Certificate of Title)
Town Block
8 McKenzie Street
Murrayville
(Garage)
Schedule 1.1
38 Essentially, by her defence Lorraine Yard denies that any land was held on trust for Alfred Yard, that there was any agreement to that end, that any resulting trust arose or that any equitable charge applied.
THE CLAIM IN PROCEEDING NO. 5151 OF 2001
39 The claim by Lorraine Yard in proceeding no 5151 of 2001 is as follows in paragraphs 40-53 below.
40 The fourth defendant, Yardoo Pty Ltd is a proprietary limited company incorporated in Victoria on 1 October 1976 whose registered office is 75 Henley Beach Road, Henley Beach in the State of South Australia. Yardoo has four fully paid issued shares. Lorraine Yard, Trevor Yard and Gladys Yard each hold one of the fully paid issued shares and are each a director of Yardoo. Yardoo has since incorporation conducted the businesses of owning and farming land in Victoria and South Australia and of owning and operating a service station in Murrayville in Victoria.
41 In or about 1976 the parties save and except Yardoo formed a partnership known as GM, AJ, TJ and JL Yard (the partnership). There is no written partnership agreement addressing the interests of the partners in partnership property and their rights and duties in relation to the partnership. The partnership had not been dissolved prior to the issue of these proceedings. The partnership conducted the business of farming (including farming by way of joint venture with third parties) on properties owned by Yardoo and by the partnership, alternatively the partners as individuals.
42 Particulars of properties owned by Yardoo are: Jimmy Mack's, Certificate of Title Register Book Volume 8217 Folio 963; Hallet's, Certificate of Title Register Book Volume 9135 Folio 103; Boetcher's, Certificate of Title Register
Book Volume 8712 Folio 880; Wiltshire's, Certificate of Title Register Book Volume 5662 Folios 132 and 213; Town Blocks, Certificate of Title Register Book Volume 9189 Folio 941; Certificate of Title Register Book Volume 6316 Folio 1263196; Certificate of Title Register Book Volume 9205 Folio 463; Herbie's, Certificate of Title Register Book Volume 7442 Folio 1488365; Pomona, Certificates of Title Register Books Volume 8113 Folios 252 and 077 and Volume 8504 Folio 026; Carina, Certificates of Title Register Books Volume 9252 Folio 933 and Volume 8669 Folio 321; Abattoir at Murrayville, Certificate of title Register Book Volume 6293 Folio 1258551; Hawick, Certificates of Title Register Books Volume 5431 Folios 751, 752 and 578 (as to one of two equal parts thereof with the balance being held by others); Certificate of Title Register Book Volume 8263 Folio 056; and Certificate of Title Register Book Volume 4505 Folio 900767.
43 Property owned by the partnership, alternatively by the partners as individuals is: Paladin (near Lobethal in the State of South Australia) Certificates of Title Volume 5328 Folios 368, 369 and 370 (registered in the names of Alfred, Gladys, Trevor and Judith Yard as joint tenants); Szader's, Certificate of Title Volume 8242 Folio 474 (registered in the name of Trevor Yard and held by him on trust for the partnership, alternatively the partners as individuals); and Brian's, Certificate of Title Volume 8386 Folio 144 (registered in the name of Judith Yard and held by her on trust for the partnership, alternatively the partners as individuals).
44 From in or about 1976 to the separation, Lorraine Yard derived benefits as set out hereunder from her shareholding in Yardoo and her participation in the partnership. She received income from Yardoo and/or the partnership which she is presently unable to particularise but which may from time to time have included the following: dividends in respect of her shareholding in Yardoo; fees in respect of her office as a director of Yardoo; a share of the profits of the partnership; wages in respect of work down by her for Yardoo; and wages in respect of work down by her for the partnership. Trevor Yard similarly received dividend income from Yardoo some of which income was expended on day to day expenses for the joint benefit of Lorraine Yard and Trevor Yard. The assets of Yardoo and accordingly the value of the shareholdings of Lorraine Yard in Yardoo were increased during the said period by the acquisition of new property from the proceeds of the income of the partnership, the retention of profits by Yardoo and the improvement of property owned by Yardoo. The assets of the partnership and accordingly the value of the share of Lorraine Yard in the partnership were increased during that period by the acquisition of new property from the proceeds of the income of the partnership, the retention of profits and the improvement of property owned by the partnership.
45 Since matrimonial separation the defendants Alfred, Gladys and Trevor Yard and each of them in their capacity as shareholders and directors of Yardoo have conducted the affairs of Yardoo in a manner that is oppressive, unfairly prejudicial to and/or unfairly discriminating against Lorraine Yard. That conduct is as follows. Lorraine Yard has not received any income by way of director's fees or any dividend in respect of her shareholding in Yardoo. No annual general meeting or directors' meetings have been held as required by Yardoo's Articles of Association; in the alternative if any such meetings have been held, the defendants and/or Yardoo have not notified Lorraine Yard of such meetings as required by the Articles of Association. The defendants and Yardoo have refused repeated requests made by Lorraine Yard for access to financial and other records of Yardoo. The defendants have excluded Lorraine Yard from any involvement in the affairs of Yardoo and from access to any information concerning Yardoo's affairs. Yardoo has disposed of real estate without calling a directors' meeting and without informing Lorraine Yard or seeking her consent. Yardoo in or about July 2000 entered into a contract to sell to VicGrain the whole of the land described in Certificate of Title Register Book Volume 9205 Folio 463 being a town block in Murrayville in the State of Victoria. Yardoo has purported to divest its interest in the service station business at Murrayville to AJ and GM Yard without calling a directors' meeting and without informing Lorraine Yard of the intention so to do or the consideration paid for such interest. The defendants have transferred all the business previously operated by Yardoo away from Yardoo without any consultation with Lorraine Yard. Notwithstanding his position as a director and shareholder of Yardoo, Trevor Yard has asserted that he is not in possession of and therefore unable to disclose to Lorraine Yard the following documents being or evidencing copies of financial statements and income tax returns for Yardoo for period 30 June 1995 to year ended 30 June 1998 inclusive, and later financial statements and returns when available; a split of sales between the service station and other ventures for each year from 30 June 1995; details of the split up of the land and buildings accounts in the Balance Sheets to identify each property, its cost and date of acquisition; details of any unsold wool, grain or stock; details of the ownership and income activities of "MV Kookaburra", and any related expenses (hereinafter called "the company documents"). Trevor Yard has asserted that Alfred Yard and Yardoo have the company documents. Notwithstanding such assertion the company documents have not been made available to Lorraine Yard by Alfred Yard or Yardoo. On 7 September 2000 Alfred Yard and Yardoo arranged to give inspection of the company documents but failed to give such inspection. Yardoo has failed to have available for inspection by Lorraine Yard as a director and shareholder of Yardoo documents as required by sections 198F and 290 of the Corporations Law. Such financial documents as Yardoo has produced to Lorraine Yard are not in accordance with established accounting practice and disclose a significant change in business from the period prior to the matrimonial separation to the period after that separation. In particular, the 1998 financial statements do not include comparative 1997 accounts in either the profit and loss statement or the balance sheet; the 1996 financial statements indicate sales turnover of $457,112.00 but the 1998 statements reveal the only income as being interest received of $6,300; and the 1998 financial statements have no notes to the accounts detailing alleged borrowings from Yard family members. Alfred Yard, Gladys Yard and Yardoo have contested a subpoena to them to produce the company documents in the Family Court of Australia on grounds which include the ground that Yardoo acts as a trustee of assets transferred to it by Alfred Yard or later acquired on behalf of Alfred Yard, of which allegation Lorraine Yard had never heard at any time as a director of Yardoo or otherwise prior to the year 2000. The defendants and Yardoo have opposed an order for pre-pleading discovery of documents in which Judith Yard sought discovery of documents. Alfred Yard has objected to Lorraine Yard entering any premises registered in the name of Yardoo. Trevor Yard or Alfred Yard or a servant or agent acting on their behalf which person is presently unknown to Lorraine Yard did, in or about the first week of November 2000 instruct the Murrayville Branch of the Commonwealth Bank to request the payers of cheques payable to Yardoo to alter such cheques to make the payee Alfred Yard. An extraordinary meeting of Yardoo was purportedly held by the first, second and third defendants on 19 July 1999 without notice to Lorraine Yard at which resolutions were passed purportedly removing Lorraine Yard as a shareholder and director of Yardoo, which acts and conduct were illegal and of no effect. The defendants as directors of Yardoo have not caused any financial statements or returns to be prepared for Yardoo after 30 June 2002. The above actions of the defendants have been taken for the improper purposes of denying Lorraine Yard access to information concerning the affairs of Yardoo, involvement in the affairs of Yardoo and her entitlement to her share of the assets and income of Yardoo, and denying and/or obstructing the prosecution of proceedings taken by her in the Family Court for her proper entitlement on a division by the said Court of the matrimonial assets.
46 Since matrimonial separation the defendants Alfred, Gladys and Trevor Yard and each of them have breached their fiduciary duty owed as partners of the partnership to their partner Lorraine Yard, a contract of partnership being a contract uberrimae fides and have breached the provisions of the Partnership Act 1891 (SA) and/or the Partnership Act 1958 (Vic) in that Lorraine Yard has not received any share from the profits and/or income of the partnership; she has been unable to obtain financial or other partnership records despite repeated requests; and notwithstanding his position as a partner of the partnership and one still actively involved in its business activities Trevor Yard has asserted that he is not in possession of and therefore unable to give discovery of numerous relevant documents. Trevor Yard has asserted that Alfred Yard has the partnership documents but notwithstanding such assertion the partnership documents have not been made available to Lorraine Yard by Alfred Yard. On 7 September 2000 Alfred Yard on an occasion arranged to give inspection of the documents but failed to give inspection of the partnership documents. Notwithstanding their partnership with Judith Yard and their failure to provide the partnership documents for inspection by her, Alfred and Gladys Yard have contested a subpoena to them to produce the partnership documents in the Family Court of Australia. The defendants and the partnership have opposed an order for pre-pleading discovery of documents in which Lorraine Yard sought discovery of the following documents: appertaining to the assets of the partnership including any assets heretofore disposed of by the partnership; financial statements and income tax returns of the partnership for the period from 30 June 1995 to date; evidencing, as between Yardoo and the partnership, the split up of the land and buildings accounts in the balance sheets to identify each property, its costs and date of acquisition; appertaining to any unsold wool; appertaining to any expenditure by the partnership on the acquisition of any motor vehicles, antiques or other memorabilia and chattels; the books of account of the partnership; the books of account of any purported partnership said by the defendants to have commenced since October 1997 or in which any of the first, second or third defendant are presently a member.
47 Trevor Yard by his solicitor has advised Lorraine Yard through her counsel in Family Court proceedings that Trevor, Alfred and Gladys Yard had (purportedly) set up a new partnership to carry on the business of the partnership to the exclusion of Lorraine Yard contrary to the provisions of the Partnership Act (1891) SA or alternatively the Partnership Act 1958 (Victoria). Trevor, Alfred and Gladys Yard have failed to advise Lorraine Yard of any fact or matter pertaining to the partnership and have excluded her from information concerning and involvement in the management of the partnership. Alfred Yard caused to be filed an affidavit of his solicitor Mr. D. A. Starke in the proceedings and dated 8 November 2000 which affidavit asserted that the property at Brians was held on an express trust by Lorraine Yard for Alfred Yard notwithstanding that in February 1999 Alfred Yard asserted that the same property was beneficially owned by the partnership. Trevor, Alfred and Gladys Yard have purported to transfer all of the assets of the partnership to a new purported partnership comprising the three of them without any involvement of or notice to Lorraine Yard. No financial statements or returns have been prepared for the partnership or any partnership after 30 June 2000.
48 Accordingly the affairs of Yardoo are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminating against Lorraine Yard such that the plaintiff is entitled to the relief sought in the prayers for relief A and B or C herein.
49 By reason of the matters pleaded Lorraine Yard is entitled to an order dissolving the partnership pursuant to the provisions of the Partnership Act 1891 (SA) and/or the Partnership Act 1958 (Vic) and other consequential orders sought hereunder.
50 Yardoo is indebted to Lorraine Yard in the sum of $123,171.00. The debt arises pursuant to a loan account recorded in the books of Yardoo in favour of Lorraine in the sum specified and consists as to $85,120 of consideration paid by Yardoo to Lorraine for the purchase of Lorraine's 50% interest in Pomona.
51 Further and alternatively if the Court finds that the partnership has been dissolved prior to the trial of this proceeding: Paladin is owned beneficially by Alfred, Gladys, Trevor and Lorraine Yard in equal shares as tenants-in-common as individuals, and Szaders and Brians are held on trust by the registered proprietors for Alfred, Gladys, Trevor and Lorraine Yard in equal shares as individuals; Lorraine is entitled to declaratory and related relief and well as relief under Part IV of the Property Law Act 1958 (Vic) with respect to those properties; and Lorraine is entitled to orders under sections 43 and 46 of the Partnership Act 1958 (Vic) or alternatively under section 39 and 42 of the Partnership Act 1891 (SA).
52 Accordingly the plaintiff Lorraine Yard claims:
A. The winding up of Yardoo pursuant to s.233 or alternatively pursuant to s.461(1)(f) or (k) of the Corporations Law;
B. A division of the assets of Yardoo between the shareholders;
C. In the alternative to A and B hereof an order pursuant to s.233 requiring the purchase of the shareholding of the plaintiff in Yardoo by the other members of Yardoo, or by Yardoo;
D. Payment by Yardoo of the debt in the sum of $123,171.00;
E. A declaration that the partnership be dissolved as and from such date as may be found by the Court;
E1. The appointment of a court-appointed receiver to the partnership;
F. An accounting of the income and assets of the partnership to the date of dissolution;
G. An order for the partition and sale of the partnership land Paladin, Szader's and Brian's Blocks described in paragraph 39 and 47 above, alternatively an order that Alfred, Gladys and Trevor purchase Lorraine's interest in the partnership land;
H. An equal share in the capital and profits of the partnership;
I. Payment of a sum to the plaintiff pursuant to the Partnership Act 1958 (Victoria) ss.43 and 46 and/or alternatively the Partnership Act 1891 (South Australia) ss.39 and 42.
53 Essentially, by their defence the four defendants deny that the plaintiff Lorraine Yard is the owner or beneficial owner of the property she claims or that any oppressive conduct has occurred and that if the plaintiff is entitled to any relief (which is denied) then the profits of the partnership G.M., A.J., T.J. and J.L. Yard attributable to the use of the partnership assets must be taken into account. The defendants allege the partnership was dissolved on 15 December 1997.
WITNESS EVIDENCE
54 As I have said, the two proceedings, no 4542 of 2001 and 5151 of 2001 were tried together. The earlier issued proceeding, no 4542, proceeded first. In both proceedings, evidence in chief was given by witness statements, commencing in proceeding 4542 of 2001 with that of Alfred Yard. The witness statements substantially proceeded according to chronological sequence. A list of objections to parts of Alfred's statement was filed on behalf of Lorraine. I have upheld a number of objections, being as to speculative or argumentative material and have omitted those parts as inadmissible, as is apparent by their absence from the rehearsal below. However, I have not upheld a number of objections asserting hearsay in statements made (by Penrose, Brodie and Irwin) in relation to the incorporation of Yardoo Pty Ltd as those statements are admissible not as to their truth but as to the fact of their utterance as information received and as to the state of mind of the parties to this proceeding. I have not upheld a
number of objections as to statements by the parties in relation to incorporation as those statements are admissible as state of mind, namely belief and intention. For like reasons, I have not upheld a number of objections to expression of belief and intent by Alfred in his evidence in chief by witness statement, which matters are relevant and admissible, although of course not conclusive of the substantive matter. I have applied the same criteria to the objections to evidence in chief by witness statement of Trevor Yard, Brian Yard, Ian Brodie and John Irwin.
ALFRED JEFFREY YARD
55 Alfred Jeffrey Yard, the plaintiff in proceeding 4542 of 2001, gave evidence in chief by witness statement as follows.
56 He was born on 30 March 1923 and resided at Murrayville. His family had lived in Murrayville for three generations. After leaving school and before World War II he worked for his father Harold Leslie Yard, on his properties and at the Renown Motor Garage. He did not receive a wage but was provided with keep and spending money. During the War he served for three and a half years with the RAAF including in Dutch New Guinea. During the War he returned home each year to help with harvest. Due to a shortage of farm workers he was eligible for discharge in 1944 and continued to work in the manpower program. He returned to Murrayville and took over the Renown Motor Garage and later commenced farming for himself. He started working and earning his own way before the War and he still was doing that almost 60 years later. He is still active and continues to operate the Renown Motor Garage and undertake such farm works as he is able to including driving a tractor and harvester. His business, farming and property activities are referred to in more detail below.
57 The first defendant, Yardoo Pty Ltd ("Yardoo"), is a company which was incorporated on 1 October 1976. Alfred is a director of Yardoo and hold one A class share which was issued on 1 October 1976.
58 The second defendant is Alfred's wife Gladys Maxrene Yard, who was born on 6 January 1920. They were married in 1946. His wife is also a director of Yardoo and the holder of one B class share issued by Yardoo on 1 October 1976.
59 The third defendant is Alfred's son Trevor Jeffrey Yard who was born on 17 April 1947 and is the only child of the marriage. Trevor is a director of Yardoo and the holder of one C class share issued by Yardoo on 1 October 1976.
60 The fourth defendant, Judith Lorraine Yard, married Trevor on 25 October 1969. Trevor and Lorraine separated on 11 December 1997 and subsequently divorced. Lorraine is a director of Yardoo and the holder of one D class share issued by Yardoo on 1 October 1976.
61 Lorraine resides with her current partner in what was the former matrimonial home at Lot 10 Railway Reserve, Murrayville. Lorraine's house is immediately opposite the Renown Motor Garage and Alfred's and Gladys' house.
62 This action arises as a result of the divorce of Trevor and Lorraine and subsequent application by Lorraine for a property settlement in Family Court of Australia Proceeding AD 3875 of 1999. One of the issues which arose in that action was the identification of the property of the marriage and a division of that property. It is Alfred's belief that Lorraine sought to claim an entitlement to or an adjustment for assets which were not property of the marriage and of which Alfred was the real owner.
63 If Alfred's properties are included in the Family Law claim they may have to be sold to pay Lorraine. That would affect his assets and income even though he was not a party to the marriage.
64 As might be expected in this type of situation the parties have aligned themselves along blood family lines. For the purposes of this action Alfred was advised it was necessary for him to join Yardoo, his wife Gladys, and his son Trevor. He has not sought to enter a judgment against them and understands they will abide the result of his claim. The end result is that Lorraine is the only active defendant. Whatever problems have arisen as a result of the actions before the Family Court and this Court, Gladys and Lorraine have maintained a close relationship. Alfred asked his wife to provide a statement and to be a witness in this action. She has consistently refused to be a participant in this action in any capacity. Gladys is not in good health and is unable to travel to Melbourne to attend Court.
The Schedule 1 properties
65 Since commencing business and as a farmer Alfred used various business arrangements including Yardoo and partnerships such as, AJ & GM Yard, and AJ, GM & TJ Yard, and AJ, GM &TJ, JL Yard. Over a long period of time he has by his hard work, timely investments and modest rural lifestyle been able to acquire several farm properties. Those properties are what he would describe as working assets.
66 Documents still in his possession and relevant to each property are contained in the Schedule of Properties. At different times several of the properties owned by him or later purchased by him have at his direction been registered in different names. No matter in what name each property is now registered Alfred has always asserted that he was the real owner of each property and that there was no change to his right to use the land for his own benefit. The properties were to be used and dealt with as he decided.
67 During the period from 1939 to 1976 Alfred acquired in and about Murrayville the properties and business described in Schedule 1. Many of the properties are known within the family and by other residents of Murrayville by the name of a previous owner. They are:
(1) Renown Motor Garage Murrayville Town Block 8. Alfred's father Harold Yard purchased this property on 18 November 1929. Alfred purchased this property from his father and it was transferred to Alfred on 23 April 1951. Alfred did not recall the purchase price. However as part of the agreement he took over a mortgage to the Commercial Bank of Australasia for an amount of about [sterling]240/-. There have not been any mortgages registered on the title since he purchased it. At Alfred's direction the land was transferred to Yardoo on 6 December 1997. Alfred did not receive any payment for the transfer. Located on the land is a business, which is known as the Renown Motor Garage.
(2) Lackman's Block 27 Carina and Lackman's Blocks 28 and 28A Carina. These comprise about 470 acres of grazing land. Alfred's father Harold Yard purchased Lackman's for him in 1966 and it was transferred to Alfred on 24 June 1966. Since Lackman's was purchased it has been used as farming land by a series of partnerships. Alfred did not transfer the land to the partnership and did not receive any rent from the respective partnerships. At Alfred's direction Lackman's was transferred to Yardoo on 6 December 1977. He did not receive any payment for the transfer. There has been one mortgage by Yardoo to the Commercial Bank of Australasia Ltd registered on 8 October 1981 and discharged on 6 March 1991.
(3) Hallet's Block 1 Gunamalary. This comprises 640 acres of farming land. Alfred's father who died on 30 April 1969 devised this land to Alfred. Alfred remembers that he had to pay death and succession duties of about $50,000.00. The property was transferred to Alfred on 13 October 1970. There have not been any mortgages registered on the title since that date. Since Hallet's Block was transferred to Alfred it has been used as farming land by a series of partnerships. Alfred did not transfer the land to the partnerships and did not receive any rent from the respective partnerships. At Alfred's direction Hallet's Block was transferred to Yardoo on 6 December 1977. Alfred did not receive any payment for the transfer.
(4) Jimmy Mac's Block 2 Gunamalary. This comprises 640 acres of farming land and was purchased by Alfred in 1961 from the Gebert family through Elders Real Estate. Jimmy Mac's was registered in Alfred and Gladys' names as joint tenants on 15 March 1961. Alfred had always believed that he was the sole registered proprietor of Jimmy Mac's Block and instructed his solicitors to include that property as part of his claim. Notwithstanding that the property was registered in both names Alfred was the real owner of the land and was entitled to deal with the land as his own. Since the purchase of this land there have not been any mortgages registered on the title. Jimmy Mac's has been used as farming land by a series of partnerships. The partnerships did not pay any rent for the use of the land. At Alfred's direction Jimmy Mac's was transferred to Yardoo on 2 September 1977. Neither Alfred nor Gladys received any payment for the transfer.
(5) Boetscher's Block 7 Gunamalary. This comprises 640 acres of farming land and a derelict farmhouse. Alfred's mother E. M. Yard and Alfred purchased the land from Fred Boetscher and it was registered in their names as tenants in common. Upon Alfred's mother's death she left her half interest in the land to Alfred's sisters Thelma and Floss. He purchased his sisters' half interest. A new Certificate of Title was issued to Alfred on 15 September 1975 and there have been no mortgages registered on the title at least since that date. Since the purchase of Boetscher's Block it has been used as farming land by a series of partnerships. Alfred did not transfer the land to the partnerships and Alfred did not receive any rent from the respective partnerships. At Alfred's direction Boetscher's Block was transferred to Yardoo on 6 December 1977. He did not receive any payment for the transfer.
(6) Wiltshire's Block 8 Gunamalary. This comprises 770 acres of farming land. Alfred purchased this land from the Crown Lands Department in 1954 at an auction in the local Shire Office. The purchase price was [sterling]3,560. There are no mortgages registered on the title since the title was issued to him on 10 August 1954. Since purchasing Wiltshire's Block it has been used as farming land by a series of partnerships. Alfred did not transfer the land to the partnerships and did not receive any rent from the respective partnerships. At Alfred's direction Wiltshire's Block was transferred to Yardoo on 6 December 1977. Alfred did not receive any payment for the transfer.
(7) Tully's Block 3D Danyo. This comprises 30 acres of land. It was purchased by Alfred for an amount of [sterling]220. At Alfred's direction Tully's Block was transferred to Yardoo in 1977. Alfred did not receive any payment for the transfer.
(8) Kalm's Block 3F Danyo. This comprised 30 acres of land. It was purchased by Alfred on 15 March 1950. There have not been any mortgages registered on the title since that date. At Alfred's direction Kalm's Block was transferred to Yardoo on 6 December 1977. Alfred did not receive any payment for the transfer.
The Schedule 2 property
68 As at 1976 Gladys was the registered proprietor of the property described in Schedule 2: Murphy's Block 3E Danyo. Murphy's Block comprises 30 acres of land and was purchased for an amount of [sterling]100. Alfred paid the purchase price for that property. There are no mortgages registered on the title.
69 At Alfred's direction Murphy's Block was transferred by Gladys to Yardoo on 2 September 1977.
1969 family changes
70 During the period from about 1946 to the mid 1960s Alfred's wife Gladys and he traded as a partnership AJ & GM Yard and they had income from both the Renown Motor Garage and from Alfred's farming activities. Alfred had over the years paid for all of the properties which he had purchased and savings in the bank and insurance policies.
71 Notwithstanding that his wife and he traded as a partnership Alfred had by 1969 acquired a number of farming properties in his name. Apart from Jimmy Mac's and Murphy's Blocks they were all registered in Alfred's name as the sole proprietor. Regardless of the income arrangements with Alfred's wife, Alfred always considered that the land was not a partnership asset and that he was the real owner of all the land.
72 After Trevor left school he started work with Alfred as a farm hand. At first Trevor did not receive a wage but was provided with board and spending money. On several occasions Alfred put part of the wool clip and loads of what in Trevor's name as a method of payment. At some point of time that Alfred is not able to identify, Trevor was introduced into the farming partnership of AJ, GM & TJ Yard. That was probably in the mid to late 1960s. Alfred does not recall when or how the change in partnership occurred. It may have been something which Alfred's accountant suggested and implemented. At that time Alfred's accountant was "Mallee" Tobin at Ouyen. Trevor did not pay any money for existing partnership assets such as plant and equipment or livestock and sheep. Alfred did not intend to gift or advance any portion of the partnership assets to Trevor. Alfred does not know if his accountant made any adjustment in the accounts that he prepared. To the best of Alfred's knowledge neither a partnership agreement nor a deed of gift were prepared. So far as Alfred was concerned the businesses of the Renown Motor Garage and the farm just continued on as before and he ran everything. The new arrangement meant that Trevor received an income which was offset against partnership income although Alfred does not recall if Trevor was actually paid any partnership share.
73 Trevor and Lorraine were married on 25 October 1969. At that time Trevor was still young and working with Alfred. Trevor did not have property of his own. Alfred does not know if Trevor had any savings. Lorraine was working as a hairdresser and did not have any assets. Trevor and Lorraine did not at that time have the financial capacity to purchase any asset of significance.
74 After Trevor and Lorraine married the family partnership was changed again to GM, AJ, TJ & JL Yard. Alfred is not able to recall when that change was made. He is not able to recall any conversations with any of his wife, Trevor or Lorraine about the change of partnership. Lorraine did not pay any money for the existing partnership assets. Alfred does not know if his accountant made any adjustment in the accounts that he prepared. Alfred did not intend to gift to Lorraine any capital in the partnership. To the best of his knowledge neither a partnership agreement nor deed of gift were prepared or signed.
75 That was the way things were done in rural Australia at that time. The family changed and the accountant added a new partner, without regard to legal and accounting niceties or the consequences 30 years later. Alfred considered he owned and controlled all the property and assets.
76 Neither Gladys nor Lorraine "worked" fulltime in the partnership businesses. A better description would be "assisted from time to time as necessary or convenient". For example they both spent time at the Renown Motor Garage serving customers if Alfred was called out and provided meals to shearers at shearing time. Lorraine also did lots of other things such as assisting in musters, cut outs, drenching, checking cattle, cleaning sheds which enabled Trevor and Alfred to run the garage and the farm more easily.
77 Regardless of who did what jobs, Alfred considered that he owned the assets being used by the partnership. He made all the relevant business decisions.
The Schedule 3 property - Pomona Farm
78 In or about December 1973 a farming property at Murrayville known as Pomona Experimental Farm being 3007 acres described in Schedule 3 was offered for sale by Fred Bethune. The circumstances of the purchase of Pomona were as follows.
79 Pomona probably was advertised by the agent Elders GM or just local talk in Murrayville. The auction did not reach the reserve price and was passed in for less than $100,000.00. After the auction the agent came to see Alfred at the Renown Motor Garage and asked him if he was interested in purchasing Pomona. Because the Renown Motor Garage is located alongside Alfred's home it is possible his wife was present or nearby. Trevor was also present. The agent and Alfred were the only people involved in the negotiation of the price for the land and equipment.
80 Alfred agreed with the agent that the total purchase price of Pomona Farm (including additional plant and equipment purchased for $7,688.60) was $130,000.00, which was financed by a vendor mortgage of $65,000.00 for five years at 7% interest.
81 After Alfred had negotiated the purchase of Pomona with the agent he told his wife, Trevor and Lorraine that he had agreed to purchase Pomona. Alfred cannot remember the exact words which were spoken. However he does recall that he had several conversations with them. His recollection of the conversations is the cumulative effect of the conversations and not the individual conversations.
82 Alfred regarded Trevor and Lorraine as "kids". Alfred did not have any obligation to buy Pomona for them or to even consult them. Alfred knows it sounds incorrect today but he probably was not at all concerned by what Lorraine thought about the Pomona.
83 The effect of the conversations was that Alfred told them that Pomona Farm had been passed in at auction. He said the agents had offered the property, plant and equipment to him. He had negotiated a total purchase price of $130,000. The vendor had offered mortgage finance of $54,000.00 for a period of 5 years at 7% interest per annum. He had decided to purchase the property and organised finance for the purchase.
84 After he had agreed to purchase Pomona, Freeman & Pitts solicitors for the vendor prepared a Contract of Sale and Purchase. A contract was prepared in the names of Trevor and Lorraine as tenants in common and in equal shares. Although Alfred recalls nominating Trevor and Lorraine as the purchaser he does not recall why they were listed as being tenants in common. Trevor and Lorraine signed the contract on about 12 December 1973 and later a transfer and mortgages. Alfred told Trevor and Lorraine they did not have to worry about paying the deposit or mortgages because the property would belong to Alfred and he would pay the mortgages. Trevor and Lorraine agreed that although the property would be purchased and registered in their names, Alfred would be the true owner and pay the mortgages.
85 After negotiation of the purchase price with the agent Alfred then had a series of discussions and letters with the owner Fred Bethune about the purchase of additional equipment.
86 Alfred referred to C9 being a letter dated 11 January 1974 from Freeman & Pitts to TJ & JL Yard and to C11 being a letter dated 1 February 1974 from Freeman & Pitts to TJ & JL Yard. Alfred was shown the letters by Trevor after he received them. Alfred does not remember obtaining any other legal advice at that time about the registration of ownership of Pomona. Alfred told Trevor it would not matter to Alfred how the land was registered because Alfred would still own the land and pay the mortgages. Alfred recalls that there was a conversation about what would happen when he died. He said words to the effect that the land would be in Trevor's and Lorraine's names and they would not have to pay probate duties.
87 During Alfred's conversations with Trevor and Lorraine they were both keen for him to buy Pomona and they liked the idea of having land in their names. They also knew that they could not afford to purchase Pomona. There was never any suggestion that Alfred or his wife and he were simply giving Pomona to Trevor and Lorraine. They agreed that Pomona would be registered in their names but they would not have any interest in the land.
88 In the settlement statement dated 13 February 1974 the purchase price of Pomona was $130,000.00 of which the vendor provided $65,000.00 finance. The deposit was paid on 12 December 1973 from two accounts, Renown Garage Account as to $10,000.00 and the Farm Account as to $3,000.00.
89 Although those businesses and bank accounts may have been in the names of the partnership Alfred had control of all expenditure and was the only person who had any discretion about the use of the money.
90 The balance of the purchase price required at settlement was $51,690.03 paid from the following sources: AJ Yard: CBA Savings Account, $4,400.00; General Credits, $14,500.00; and repayment loan L Mason, $4,606.00: $23,506.00. GM Yard: CBA Savings Account, $6,500.00; General Credits, $14,500.00; and repayment loan L Mason, $4,606.00: $25,606.00.
91 As nominated in the Contract, Pomona was registered on 18 February 1974 in the names of Trevor and Lorraine as tenants in common in equal shares. On the same day a mortgage was registered in favour of Bethune. In addition to the land and plant and equipment that had been purchased, it was also necessary to stock Pomona. Some of the stock came from the other properties that Alfred owned. It is possible that some livestock and sheep were purchased.
92 After the purchase of Pomona, Fred Bethune continued to direct all of his correspondence to Alfred in respect of any matter incidental to the ownership of Pomona. Documents C13, C14, C15 and C16 are receipts issued by the vendor to T and AJ Yard in respect of both equipment purchases, interest in equipment purchases and interest on the mortgage. Later receipts such as documents C18 and C19 were issued in the names of TJ & JL Yard and also GM, AJ, TJ & JL Yard.
93 Notwithstanding that Pomona Farm was registered in the names of Trevor and Lorraine as tenants in common, Alfred did not advance or gift to either Trevor or Lorraine the deposit of the purchase price paid by him (or his wife) or any interest in the property. Even if he had reason to register or advance a half interest in Pomona to Trevor, Alfred did not have any immediate reason to advance or gift to Lorraine a half interest in Pomona without any liabilities.
94 Trevor and Lorraine held Pomona for Alfred as the real owner. Alfred was entitled to and did direct them as to all aspects of ownership of the property including day to day operations, purchase of equipment, livestock etc and later the transfer of the legal title Yardoo.
Operations 1973 to 1976
95 After the purchase of Pomona, the extended farming operations continued to be conducted as a partnership in the name of GM, AJ, TJ & JL Yard. The partnership used the farming land registered in Alfred's name and also that of his wife, Trevor and Lorraine. Alfred continued to operate the Renown Motor Garage and was the local RACV contractor. They were the same activities of personal effort that he had been engaged in since 1944.
96 Alfred maintained the original business records, invoices and financial statement relating to the farm and Renown Motor Garage. The financial statements and taxation records commence in 1975. In about 1974 or 1975 Tobin ceased to be Alfred's accountant and Ian Brodie of Thomson & Associates ("Thomsons") in Mildura took over.
97 The financial statements for the partnership GM, AJ, TJ & JL Yard for the year ended 1975 were prepared by Thomsons on the basis that the farming and garage operations were all conducted by the partnership. In addition the partnership accounts also assume that Pomona was a partnership asset. The same comments apply to the financial statements for the period 1976 to 1977. Until the above accounts were brought to Alfred's attention he had not since 1973 to the present heard any claim by his wife, Trevor or Lorraine that during the period 1973 to 1977 Pomona was owned in equal share by the members of the partnership of GM, AJ, TJ & JL Yard.
98 The financial statements provide some detail of the overall financial position of the farm and garage activities in 1976-77 but not of Alfred's personal situation.
99 The ownership of Pomona in the financial statements is inconsistent with registered legal ownership of that property and inconsistent with Alfred's claim to be the true owner.
Incorporation of Yardoo 1 October 1976
100 When Alfred's father Harold Yard died in 1969 there were still death and succession duties, gift duties and talk of a wealth tax. Alfred paid a large amount of probate tax when his father died. Alfred wanted to ensure that he would have control of his land and businesses in his lifetime but be able to pass them on without the same type of liability.
101 In the first half of 1976 Alfred's insurance agent Richard Penrose visited him to discuss life insurance matters. Penrose described himself as an investment and taxation adviser. Penrose had a property near Blanchetown in South Australia and worked with Legal & General. Alfred had a good relationship with Penrose. Alfred had over the years purchased a number of insurance policies from him. Document C99 is a copy of a brochure headed "Estate Planning". Penrose gave Alfred a copy of that document and they had a discussion about the effect of succession duties. Penrose knew that Alfred owned a number of properties and had purchased Pomona. They also discussed issues such as retirement and superannuation.
102 The effect of the conversations between Alfred and Penrose was that Penrose told Alfred that personal ownership of assets and partnerships was no longer the preferred method by which farmers should own and operate their business. Alfred should plan for the transfer of the land owned by him upon his death. If he did not then his wife, Trevor and maybe his grandchildren would have to pay succession and estate tax. Penrose gave Alfred the brochure and did a quick calculation of the probate duties. Penrose suggested that Alfred should transfer his properties to a company. Penrose said the purpose was to fix the value of his properties for succession duties and for superannuation purposes. Penrose told Alfred he had done the same thing himself and that his son-in-law was a director and shareholder of his farm. Penrose told Alfred that he would continue to own and operate the land, garage and farm business in just the same way as he always had. He said words to the effect "It won't make any difference".
103 Penrose also recommended that Alfred should invest in some insurance and superannuation policies for each of Gladys, Trevor, Lorraine and Alfred. The cost of the policies in the first three years was very high, about $12,000.00 per year, but after that they would become self-funding and Alfred would not have to pay annual contributions. The policies required each of them to be employed by a company that was conducting a business. Penrose said it would be better if the company operated the garage business.
104 Alfred discussed the proposal with Trevor. Alfred is unable to remember the dates of the conversations but they probably occurred at the Renown Motor Garage or at their homes. Alfred does not remember what was said in detail. He remembers that the effect of what he told Trevor would have been similar to the above. He remembers that he told Trevor that he was going to transfer his land to a company and that he wanted Trevor and Lorraine to transfer Pomona. Trevor said that if Alfred wanted him to transfer Pomona he and Lorraine would do that but he thought the insurance policies were expensive. Alfred does not remember Gladys or Lorraine being present during conversations with Penrose. It is probable that at some point Alfred would have told them what he was thinking of doing. In terms of his relationship with his wife, it was almost 100% certain that he would have told her what he was doing and taken into account any issues she wanted him to consider. As to his dealings with Lorraine he did not have the same obligation to consult with her and he would have told her what he was going to do and expected her to comply. Alfred cannot remember individual occasions or conversations but he has no doubt he told them he was considering transferring all his land to a company and buying some insurance policies. He does not remember how much detail he would have told them.
105 Penrose continued to contact Alfred about the company and insurance policies. Alfred still had some doubts. At some point of time Alfred agreed that he would discuss the proposal with his accountant Ian Brodie and either Penrose or he telephoned and made an appointment to see him.
106 On a date that Alfred does not know he went to Mildura and visited Ian Brodie at Thomsons. Also present were Trevor and Penrose. Alfred does not remember how long the meeting lasted. He does not remember the exact words that were spoken. He is able to remember the effect of the main topics of conversation. He introduced Penrose and told Brodie what he (Alfred) understood to be the proposal presented by Penrose. Alfred told Brodie that he was concerned by probate duties and that Penrose had suggested that he establish a company and transfer all his land to it. That would fix the value for probate duty. In addition he would be purchasing four policies at a cost of about $12,000.00 per year.
107 Penrose then explained the proposal to Brodie in some more detail. Brodie did not like the idea of Alfred transferring his land to a company and did not like the high cost of the policies. Trevor also said he did not like the cost of the policies. Brodie said he could not see any immediate benefit to Alfred. Penrose told all of them that the transfer to the company would not make any difference to Alfred's ownership and use of the land. The benefit came from fixing the price of the land.
108 Brodie did not like Penrose and did not want Alfred to do anything that Penrose suggested.
109 After the meeting with Brodie, Alfred agreed to incorporate a company and instructed Irwin & Richards, solicitors in Mildura. It is possible that occurred during the same visit to Mildura and that Trevor and Penrose were present.
110 After the visit to Brodie, Alfred had several conversations with his wife, Trevor and Lorraine about transferring all of the property that they owned at that time to a new company, the property being owned by Alfred but registered in the names of different family members. The conversations probably occurred at the Renown Motor garage and in their homes. Alfred is unable to remember the exact words which were spoken but recalls that he had several conversations with them individually and together. His recollection of the cumulative effect of the conversations is that he told his wife, Trevor and Lorraine that Dick Penrose had told him that he should put all of the land owned by him into a company. A single owner of the land was better and would have benefits for Alfred. He could fix the value of the land for succession duty purposes. He told his wife, Trevor and Lorraine that it was a good plan and he was going to transfer all the land to a company. He told them they had to transfer the land registered in their names to the new company nominated by him. He told them he had paid for the land and it would not make any difference to the real ownership of the land or farming business. His wife, Trevor and Lorraine told him that they would transfer all the land registered in their names to a company if that was what he wanted. The conversations probably occurred prior to August 1976 and maybe even as early as 1975 and continued through to June 1977 or later when the land was finally transferred to Yardoo.
111 When Yardoo was incorporated Alfred was told that there had to be directors and shareholders. He does not recall why all of them were appointed as directors. It was something he left to the lawyers. He does not recall why each of them was appointed as a shareholder of Yardoo and why they held different classes of shares. No one explained to him that the classes of shares were in effect the same. No one ever told him that if he transferred his land to Yardoo the shareholders would be entitled to claim an interest.
112 In about September 1976 at Murrayville Alfred told Gladys, Trevor and Lorraine that he had arranged to incorporate Yardoo. He told them they needed to name directors and shareholders and that Gladys, Trevor, Lorraine and he would be appointed as directors of Yardoo, and issued with one share each. He does not recall ever being told by Penrose, Brodie or the solicitors what a director had to do or what rights a shareholder had.
113 Document C35 is a letter dated 31 August 1976 to Alfred confirming that Yardoo was being incorporated and requesting arrangements to sign documents. Document C36 is a receipt from Irwin & Richards to Alfred in respect of the incorporation fees. Documents C37 to C39 are Companies Act documents. Lorraine is a signatory of each document. Alfred does not recall the circumstances in which Lorraine signed those documents. His recollection is the documents were signed in Murrayville. Document C40 is the Certificate of Incorporation dated 1 October 1976.
114 In Alfred's answers to interrogatories he said that in or about September 1976 he obtained legal advice from Irwin & Richards solicitors. He had now been shown documents that indicate that two firms of solicitors were engaged to incorporate the company and another to transfer the land. He did not remember that had occurred. He is not able to recall any specific advice from Irwin & Richards and did not obtain any written advice from Irwin & Richards.
115 When Yardoo was incorporated on 1 October 1976 Alfred understood from his discussions with Penrose and Brodie that it had been established for the purpose of transferring all of the properties in Schedules 1, 2 and 3 to the new company. Yardoo would become the legal owner of the land transferred to it and hold the ownership of the property for him. There would not be any change concerning might rights to use the land.
116 Document 49 is a copy of a letter dated 13 October 1976 from Alfred's accountants Thomson & Associates to Freeman & Pitts, solicitors at Auburn instructing them to proceed to transfer assets owned by the Yard family to Yardoo. Freeman & Pitts were Fred Bethune's solicitors and he still held the Certificates of Title for Pomona. Alfred already had all the titles to his land. It is possible Alfred asked Freeman & Pitts to do the transfers after contacting Fred Bethune. He does not remember obtaining advice from Freeman & Pitts.
117 During the period from about October 1976 to June 1977, Freeman & Pitts and Thomson & Associates did those things that were required to enable the transfer to occur including obtaining valuations and preparing relevant documents. Alfred does not know what those procedures were and left Brodie and the solicitors to organise the details. He does not recall what personal or telephone contact he had with Freeman & Pitts. He did receive copies of correspondence such as the following: document C55, letter dated 27 May 1977 from Freeman & Pitts enclosing document C54, letter of the same date from Freeman & Pitts to Thomson & Associates; document C56, copy of letter dated 31 May 1977 from Thomson & Associates to Freeman & Pitts; and document C57, letter dated 17 June 1977 from Freeman & Pitts enclosing transfers and an agreement.
Transfers to Yardoo
118 Document C57 is a letter dated 17 June 1977 from Freeman & Pitts, which enclosed the transfers and advised the amount of duty to be paid on each transfer. Document C50 is a Transfer of Land signed by Alfred and by his wife for the property known as Jimmy Mac's Block. The consideration is $39,972.00. Document C51 is a Transfer of Land signed by his wife for the property known as Murphy's Block. The consideration is $1,620.00. Document C52 is a Transfer of Land signed by Alfred for the following properties, the total consideration being $168,163.00: Hallet's Block, Boetscher's Block and Wiltshire's Block; Murrayville town block 8, being the site of the Renown Motor Garage; Kalm's Block; Lackman's Block; and Tully's Block. Document C53 is a Transfer of Land signed by Trevor and Lorraine for the property known as Pomona. The consideration was $170,240.00. Document C54 is a Transfer of Land signed by Alfred by his wife, Trevor and Lorraine for the business known as Renown Motor Garage. The purchase price for the assets was $17,597.00. Alfred did not regard the Renown Motor Garage as being a partnership or company asset especially given that he was contracted by Mobil as its Murrayville distributor.
119 Once Alfred decided to incorporate Yardoo and transfer the properties there were probably several conversations during the period 1976 to 1977 with Gladys, Trevor and Lorraine about what was happening and the progress of the transfers. Alfred does not recall any objections to any of them to the transfer of the land registered in their names. It was not necessary for Alfred to use any form of threat.
120 He is unable to remember when and where each transfer was signed.
121 Alfred was the real owner of the properties in the transfers. He was the person who was entitled to and who did direct other family members to transfer assets registered in their name to Yardoo. They did agree and did transfer the properties in the manner Alfred directed.
122 So far as Alfred was concerned nothing had changed. Lorraine did not assert any form of entitlement in the land owned by Yardoo until after the divorce and application for property settlement. If Trevor and Lorraine had asserted the same claims immediately after the land was transferred to Yardoo in 1977 Alfred would have been shocked. The transfers were not undertaken for their benefit.
123 The transfer to Yardoo was registered on 26 August 1977.
Consideration Paid
124 Although each transfer refers to a value for the property transferred it was not intended that Yardoo would pay any money to Alfred or to any other person. Document C55 is a letter dated 27 May 1977 from Freeman & Pitts. In that letter Freeman & Pitts sought details of how the company would pay for the land. Document C56 is a letter dated 31 May 1977 from Thomson & Associates to Freeman & Pitts. It was Alfred's accountant Brodie who provided the reply to that request for information. The value on each transfer was put on it because the solicitors required it and stamp duty had to be paid. The value of the land was determined by a local valuer Mr K Lackman. The method of payment by mortgage or loans was determined by Brodie.
125 The transfers were delivered to Freeman & Pitts for registration after they were signed. Document C57 is a letter dated 17 June 1977 from Freeman & Pitts. The documents were to be presented at the Stamps Office without proof of payment and that an acknowledgment of debt by the company had not been prepared.
126 Document C58 is a letter dated 9 September 1977 from Freeman & Pitts. The letter noted that the transfers had been dated 27 May 1977 and that they had been stamped and lodged for registrations at the Titles Office.
127 Document C59 is a letter dated 15 September 1977 to Thomson & associates. Page 2 of the letter noted that Pomona was transferred by Trevor and Lorraine and taken by the company subject to a mortgage of $50,000.00. That was the balance of funds owed to the vendor of Pomona, Bethune. Documents C66 and C67 are letters dated 15 February 1979 and 17 May 1979 from Freeman & Pitts advising that the Bethune mortgage was paid in February 1979.
128 Documents C62 and C63 are letters from Freeman & Pitts dated 27 October 1977 and 15 December 1997. Those letters indicated that the registration of transfers to Yardoo were not complete until about December 1977.
129 Document C103 is an undated letter from Alfred's insurance agent. It appears to have been written after Yardoo was incorporated and possibly after the land was transferred. To the best of Alfred's knowledge that is the only written advice he received from anyone about how the new arrangements would work.
130 Alfred left the accounting and legal details of the transfers to his accountants and the solicitors. He was not provided with a written advice. Based on what Penrose told Alfred, his understanding and belief was that by transferring all the land owned by himself including land registered in the name of his wife, Trevor and Lorraine, Alfred was undertaking a form of ownership which enabled him to continue to own and use the land for his own benefit and provide for an orderly transfer on his death.
131 Alfred does not recall being given advice about the effect of ownership of land by the company or the need for a written trust. At the time of transferring the properties to Yardoo Alfred did not intend to alter his rights as an owner of the land. He did not intend to advance to any other person any interest in the land that had previously been registered in his name.
132 On or about 18 October 1977 Alfred took out four superannuation policies with Legal & General as proposed by Penrose. The annual cost of each policy was AJ Yard, $3,798.38; GM Yard $2,900.23; TJ Yard, $1,448.55; and JL Yard, $1,323.64: total $9,740.80.
133 The policies were later converted to paid up policies. Alfred believes that everyone except Trevor has cashed in the policies and used the proceeds for their own benefit.
134 There is no contemporaneous record in 1973 to 1977 of any gift by Alfred or by his wife to Trevor and Lorraine of any amount that is required to enable a reconciliation of the financial statements of the partnership with those of Yardoo. Alfred did not instruct his accountants to prepare false accounts or engage in any form of tax avoidance. His solicitors provided financial information to his accountants that should have enabled his accountants to prepare proper accounts. Alfred believes that his accountants did what they felt was appropriate at that time in preparing the financial statements. Although Alfred signed and adopted the accounts for partnership and company taxation purposes; he does not accept that the financial statements are a proper or indicative record of the legal or beneficial ownership of the land.
135 He did not intend to advance or gift to Trevor or Lorraine any of the property then owned by him, any of the purchase price or transfer amounts, or any beneficial interest in the properties the subject of the above transfers.
136 The mortgage to Bethune was discharged on 8 March 1979. There have not been any later mortgages registered.
Additional land acquired by Yardoo
137 Since October 1976 Yardoo has purchased the additional properties described in Schedule 4:
(1) Murrayville Slaughter Yards Block 6A Danyo. Document C94 is a copy of the Vendor's Statement to Purchaser. The slaughter yards comprise 7 acres of land near the town of Murrayville which Alfred purchased on 19 October 1992 for $15,000.00. This property was registered in the name of Yardoo on 26 January 1993 and thee have not been any mortgages registered since that date.
(2) Document C95 is a Statement of Adjustments. The purchase price was paid in the following manner: 19/10/92, Deposit Cheque No 420198 from GM, AJ, TJ & JL Yard Farm Account: $1,500.00; 18/1/93, Cheque No 211046 from GM, AJ, TJ & JL Yard Farm Account, $6,512.64; and 18/1/93, Cheque No 728679 from Yard Farm Account: $6,512.64.
138 Document C68 is a Contract of Sale dated 30 April 1980 for Herbie's Town Lot 5 Murrayville. Herbie's was purchased from the estate of Herbert Taylor for an amount of $1,000.00. Alfred has not been able to identify the source of payment although document C69, the deposit receipt dated 30 April 1980 is made out to Yardoo. The title was registered in the name of Yardoo on 16 July 1980 and there have not been any mortgages registered since that date.
139 Hawick, over the border in South Australia, comprises about 15,000 acres of marginal station country used for grazing cattle and sheep. In 1992 Alfred agreed with LS and ME Young to purchase a one half interest in Hawick for an amount of $200,000.00. That interest was registered in the name of Yardoo on 1 July 1992. There are no mortgages registered on the title. However Alfred financed the purchase price by obtaining a loan from his cousin Brian Yard of $125,000.00 at 8% interest. Alfred paid the balance of the purchase price of $75,000.00 from the Yard Farm account.
Properties registered in other names
140 In addition to the properties referred to above Alfred provided funding and or made the payments for four other properties described in Schedule 5:
(1) Alfred does not wish to pursue any claim in respect of the former matrimonial home at Lot 10 Railway Reserve, Murrayville registered in the name of Trevor. Lorraine has lived in that house since the separation.
(2) Szader's Block, Lot 9 Murrayville is an allotment located within the township of Murrayville. Alfred was appointed as an executor of Mrs Rachel Szader's will and was given a half share of this property together with the RSPCA and the Mildura Hospital. Alfred agreed to buy out their entitlements for an amount of $11,118.00 which he paid from a General Credits account. When it came time to prepare the transfer Alfred told his solicitor that Szader's Block should be registered in Trevor's name. That was simply a decision that Alfred made at the time because it seemed convenient to him. When the transfer was prepared Alfred told Trevor he had to sign some documents. Alfred does not recall using any words or phrases indicating that he was advancing or gifting Szader's to him. Szader's was registered in Trevor's name on 31 March 1995 and there have not been any mortgages registered on the title.
(3) Paladin at Lobethal, South Australia is a property of about 142 acres located in the Adelaide Hills. In 1981 Paladin was offered for sale by public auction but was passed in. Trevor and Alfred attended the auction and it is possible Trevor may have put in a bid for Alfred. After the auction Alfred negotiated a price with Mr Alan Hickinbotham and Alfred purchased this property for an amount of $184,000.00. Document C74 is an Agreement between City Centre estates Pty Ltd and GM, AJ, TJ & JL Yard. Document C76 is a receipt dated 28 August 1981 which is made out to GM & AJ Yard. Alfred paid the deposit and part of the purchase price from two General Credits Ltd accounts: AJ Yard Certificate No 30720, $5,800.00; AJ Yard Certificate No 18456, $12,500.00; AJ Yard Certificate No 35975, $8,500.00; AJ Yard Certificate No 49771, $3,400.00: $30,200.00; GM & AJ Yard Certificate No 40122, $2,400.00; and AJ Yard Certificate No 18457, $12,500.00. The balance of the purchase price was financed by a loan from Westpac for an amount of $120,000.00. The property still has a mortgage in the sum of $110,000.00. After agreeing to the purchase Alfred spoke to his accountant and for reasons which Alfred does not know he said Alfred had enough property in the name of Yardoo. Although Alfred had paid the deposit he directed that the property be registered in the joint names of himself, his wife, Trevor and Lorraine. Alfred did not discuss the purchase of Paladin with Lorraine except to say he had bought a new property and that she had to sign some papers. Lorraine did not pay any money for an interest in the property.
(4) Brian's Block, 31 Ngallo comprises about 640 acres of farming land and was formerly owned by Alfred's cousin Brian Yard. Brian was retiring from farming and offered some of his land to Alfred including vendor finance. Alfred agreed to pay Brian an amount and he agreed to lend Alfred an amount to be secured by a first mortgage over the land and other assets. Alfred paid a deposit to Brian and they organised for a transfer of the land. After making the agreement with Brian Alfred spoke to his accountant about the purchase. His accountant said that he already had enough land in Yardoo and suggested that he put it in Lorraine's name. Alfred did not consult Lorraine about the proposed purchase or about any of the terms which he had agreed with Brian. He did later tell Lorraine that he was buying Brian's Block and that the accountant had said to put it in her name. It is probable the conversation occurred at the Renown Motor Garage. Alfred did not remember the details of the conversation. It is probable that it was more than one conversation. Alfred is able to remember the effect of the conversations. He told Lorraine that he had paid a deposit to Brian and that he would be paying all the costs. He told Lorraine his accountant had told him he had enough land in Yardoo. The accountant suggested Alfred register Brian's block in someone else's name such as Lorraine. Alfred told Lorraine that she would have to sign some papers to enable the land to be registered in her name and for Brian to have a mortgage as security for the loan. Alfred did not at any time use any words or phrases indicating that he was gifting the freehold of the Brian's Block to Lorraine. In any event the land was subject to a mortgage. Lorraine agreed that because Alfred was purchasing the land from his cousin on good terms, the land was his but would be registered in her name. Brian's Block was registered in Lorraine's name but she has refused to sign a mortgage in favour of Brian who has retained possession of the Certificate of Title. Lorraine did not pay any of the purchase price or any of the interest due to Brian. Since the purchase of Brian's Block, Alfred continued to pay principal and interest to Brian as if the land was his. He also continued to farm Brian's Block as if it was his although disputes have arisen as to who is entitled to the crops which he has sown. At the time Alfred paid the deposit and later principal and interest he did not intend to advance or gift those money or the beneficial ownership of the land to Lorraine.
(5) Alfred was previously the registered proprietor of Tully's Block 3D Danyo. Tully's was sold to Vic Grain for an amount of $30,500.00.
(6) In addition to the above properties Alfred is also the registered proprietor of a property at Loxton, South Australia which is not the subject of this action.
Financial Statements 1977 to 1997
141 Trevor and Lorraine separated in late 1997. During the period from 1977 to 1997 there were in effect three main businesses: Yardoo as land owner, the Renown Motor Garage and the farming partnership of GM, AJ, TJ & JL Yard. There was no written partnership agreement. The businesses were conducted on the same basis throughout that period. Alfred continued to make all important business decisions on the assumption that all the assets and income were his although he often discussed issues with his wife and Trevor and occasionally Lorraine. Alfred's wife and Lorraine were not excluded from "having their say" but in general they were content to let Alfred do the work.
142 Probably the largest change in business activities related to the Renown Motor Garage. In 1976 it was a successful business operating as a tractor and vehicle dealership and as a bulk fuel and service station dealer for Mobil. During the period 1977-79 activities have reduced significantly and today it is barely operating selling petrol and spare parts. Given Alfred's age he should have closed the doors on that business many years ago. He has since 1946 accumulated a significant amount of scrap farm machinery and old junk cars. Some of it may have some historical value such as a Sunshine Harvester or some older cars. In his opinion none of it has any value even as spare parts.
143 During this period, financial statements and taxation account were prepared regularly by Alfred's accountant. Alfred believed the accounts for both Yardoo and the partnership were maintained in a consistent manner for the whole period.
144 Upon further examination of the financial statements Alfred now believes that the balance sheets for both the partnership and Yardoo do not include any of the additional capital which was paid by him or his wife in the purchase of properties such as Paladin or Hawick.
145 In the 1997 financial statements for Yardoo, in the balance sheet the fixed assets still lists the land transferred to Yardoo in 1976 at historical values and the non current liabilities also appear to be based on the historical value of the transfers with any adjustment for interest.
146 As to the financial statements for the partnership of GM, AJ, TJ & JL Yard in 1997, the partnership funds in the balance have commenced with an equal distribution of the gross sale price of Yardoo by the partnership in 1976 and been adjusted in each subsequent year for share of profit and individual drawings. Alfred believes the partnership and Yardoo accounts are inconsistent with the real ownership. The result is that the same mistakes have been perpetuated in the balance sheet of partnership accounts from 1976 to 1997.
147 Lorraine has never been denied access to the financial statements and was regularly presented with company, partnership and personal financial statements and taxation returns. Lorraine did not participate in the preparation of accounts and other aspects of the businesses simply because she was not interested. Lorraine was content to let Alfred arrange those matters on her behalf as Alfred did for his wife. Lorraine signed accounts and taxation returns without any complaint or inquiry. Until late 1997 Alfred was unable to recall any occasion when Lorraine demanded that she be permitted to exercise her rights as a shareholder, director or partner in the conduct of Yardoo or the partnership.
148 After Trevor and Lorraine separated, the partnership of GM, AJ, TJ & JL Yard was terminated and a further set of partnership accounts for GM, AJ, TJ & JL Yard were prepared by Alfred's current accountants WW Remeljej & Associates. The date of those accounts is 15 December 1997. Financial statements for Yardoo have continued to be prepared on a financial year basis.
149 Alfred's accountant Mark Remeljej has adopted the information in the historical accounts as the basis for those accounts. The financial statements prepared by Alfred's previous accountants are not accurate. At the time of preparation of the final partnership accounts Alfred had not provided to Mark Remeljej a history of the dealings with the properties by the parties to this action.
The Family Court proceedings
150 After Trevor and Lorraine separated on 11 December 1997, Lorraine commenced divorce proceedings in the Family Court of Australia at Adelaide and on 5 July 1999 made application for a property settlement. Lorraine is or has been a member of the partnership of GM, AJ, TJ & JL Yard and a shareholder in Yardoo. At the commencement of the Family Court proceedings Alfred was not a party to that action. Alfred was not joined as a party to the Family Court action until 2003 for limited purposes relating to the sale of the MV Kookaburra which is a boat registered in Trevor's name. In addition, Gladys, the partnership and Yardoo were not parties to the Family Court action.
151 In her application for a property settlement Lorraine made extensive claims not only in respect of the property of the marriage but also property which is in the name of Yardoo and to the partnership. Lorraine's claims did not recognise that Alfred was the real owner of the land.
Supreme Court of Victoria action No 5151 of 2001
152 On 30 October 2000 Lorraine commenced proceedings in the Supreme Court of South Australia Action No 1044 of 2000. That is the action which was later transferred to the Supreme Court of Victoria and is now proceeding no 5151 of 2001. Alfred obtained advice and instructed his solicitors to issue proceedings in the Supreme Court of Victoria to confirm that he was the true owner of the land including that which Lorraine was claiming as hers. Thus on 20 February 2001 was filed proceeding no 4542 of 2001 in this Court.
153 In cross-examination Alfred Yard stated as to the incorporation of Yardoo Pty Ltd, its purpose was to ensure that Trevor was not liable for probate duties upon Alfred's death, in contrast to the situation which had arisen upon Alfred's father's death (83, 88, 90 and 114). To that end, Mr Lackman effected valuations in 1977 so that payment could be made for the transfer of properties to Yardoo (112, 118, 135). The loan accounts recorded real liabilities of Yardoo (114). Although at the outset of cross-examination Alfred stated that discussions occurred "right from the word go" (68) that the properties were held by Yardoo on trust for him and that Trevor and Lorraine "knew" (112) that, he later stated (127):
"I'm suggesting to you that you never talked about a trust of any of these properties in mid-1977? - - -
Well, I didn't know anything about trusts and I didn't know anything about the company but Mr Penrose was the advisor."
"Until you came to speak to lawyers about your case, you did not use the language of 'trust', did you? - - -
I had no use to - no time to even think about using it.
That wasn't a concept known to you? - - -
Nothing ever cropped up to want to use the word 'trust'."
154 Alfred agreed (78) that according to the accounts there was an equal distribution of the profits as between the four partners, and likewise with Yardoo; and that from 1969 to 1997 the business of the partnership and of Yardoo provided the only source of livelihood to Trevor and Lorraine.
155 As to the purported termination of the partnership and cessation of Lorraine as director of and shareholder in Yardoo upon her separation from Trevor, Alfred stated that he knew as a shareholder in Yardoo Lorraine had the same rights as he did (57); that the Yards do not accept Lorraine as a director any further (57 and 69); that he does not accept her as the true owner of her share (61); that the company "voted her out as a shareholder" in May 1999 (63 and 64); that that was because she had withdrawn her services (63); that she refused to attend meetings (64 and 65); that the Yards "overlooked" informing the company accountant that Lorraine was no longer a shareholder and director (72); that the post-1997 annual returns in stating Lorraine was a director and shareholder was "the accountant's mistake" (68); that no gazettal or notice of the removal has occurred (74); and that from December 1997 when Lorraine left Trevor she had no rights to any information in respect of affairs of Yardoo including notice of meetings or
contribution to meetings (142-143). A special meeting of directors of Yardoo Pty Ltd was held on 19 July 1999 (Exhibit 1) which purported to remove Lorraine from the company. Alfred stated that no solicitor's advice had been received prior to the meeting, that the three Yards unilaterally decided to take away Lorraine's share in the company, that he knew that under the articles of association they had no authority to do so, that after the separation Lorraine was expelled from any involvement in the company, and that the 19 July 1999 resolution was because "I control the company, I can do what I like with it". (103). Alfred stated that when Lorraine separated from Trevor Alfred decided to remove from Yardoo any income-earning activities in order that Lorraine be removed from any right to claim access to any source of income from Yardoo and that he did so because "I have the right to do it" (148). In re-examination Alfred stated that he could not recall any occasions when Lorraine told him that she would not attend meetings of Yardoo. A letter (Exhibit A) was tendered dated 22 February 1999 from Judith to Trevor. However that letter relat4ed to non-attendance at one meeting only, that of 25 February 1999.
TREVOR JEFFREY YARD
156 Trevor Jeffrey yard gave evidence in chief by witness statement as follows.
157 The proceedings arise as a result of an application by Lorraine for a property settlement in Family Court of Australia proceeding No AD 3875 of 1999. One of the issues which arose in that action was the identification of the property of the marriage and a division of that property. Lorraine claimed an entitlement to or an adjustment for assets which were not property of the marriage.
158 Trevor has always believed that Yardoo was incorporated to hold the properties owned by his father, and those purchased later for him.
159 During the period from 1939 to 1976 his father acquired in and about Murrayville the properties and business described in Schedule 1. Many of the properties are known within the family and by other residents of Murrayville by the name of a previous owner. Trevor did not contribute to the purchase of those properties. He doubted that in 1969 or later in 1977 he would have known the correct details of whose name the properties were registered in. He always thought that his father owned them all. Prior to the transfer of the Schedule 1 properties to Yardoo in 1977 Trevor did not claim to be entitled to any type of legal estate or interest in them. His only expectation was that he might inherit them upon his father's death. The transfer of the Schedule 1 properties to Yardoo was only intended to change the registered name of the owner. It did not and was not intended to change his father's rights and interest in respect of the properties.
160 Prior to 1977 Trevor did know that his mother was the registered proprietor of the property described in Schedule 2 and known as Murphy's Block. Prior to the transfer of Murphy's block to Yardoo in 1977 Trevor did not claim to be entitled to any type of legal estate or interest in that property. His only expectation was that he might inherit it upon his mother's death.
161 Trevor stated by way of background that after he left school he started work for his father in the Renown Motor Garage at Murrayville. He continued to work there until about 1980. The garage was very busy and operated as a bulk fuel oil and petrol distributor for Mobil. The business also operated a sales and service agency for farm equipment. In addition there was a very busy workshop and field service business. There were many changes in the business over the years. There were two changes which had a big impact on the viability of the business. In about 1980 Mobil changed its distribution arrangements and cut margins. As a result the garage lost a large part of its bulk farm sales. Trevor's father decided to continue with petrol sales at the garage. In addition, distribution arrangements for farm machinery also changed and became more competitive. Murrayville was not a large town. Farmers would travel to larger towns such as Pinnaroo or Ouyen to buy equipment from larger dealers. Trevor's father gave up the agencies.
162 Trevor's father also had some farm land which he share farmed with his cousins Tom and Gordon Yard. When they discontinued the share farming arrangements Trevor bought some of their equipment in about 1970. Although he assisted with some of the farm activities Trevor lived in the township of Murrayville. He mainly worked in the garage business doing local deliveries of fuel, service, on site repairs and RACV callouts. His father conducted the farming activities and Trevor assisted. Trevor did not drive a header to harvest wheat until about 1980. When he was younger he did not receive a wage but was provided with board and spending money. On several occasions his father put part of his wool clip and loads of wheat in his name as a method of payment. Although he was aware that his parents had a partnership AJ and GM Yard, the concept of a partnership did not mean much to him when he was young. He assumed that his father owned everything and ran everything. Trevor did not remember his mother being actively involved in either the farm or garage business except to provide meals for shearers and to assist at the garage.
163 Trevor was introduced into the partnership of AJ, GM & TJ Yard. That occurred when his father ceased the share farming arrangements with his cousin. His father arranged everything. Trevor did not pay any money for existing partnership assets such as plant and equipment or livestock and sheep. He does not remember his father or mother telling him that they were gifting anything to him. To the best of his knowledge neither a partnership agreement nor a deed of gift were prepared. So far as he was concerned the businesses of the Renown Motor Garage and the farm just continued on as before. His father ran everything as if it was his own and Trevor continued working in the garage and assisting with farm activities as required.
164 Trevor met Lorraine in 1967 and they were married on 25 October 1969. Trevor was 22 years of age and Lorraine was 20 years of age. At that time he was working for his father in the garage and did not have property of his own or any savings. Lorraine was working as a hairdresser and did not have any assets and had only a small amount of savings.
165 After Lorraine and he married, the partnership in about 1973 was changed to GM, AJ, TJ & JL Yard. Trevor does not remember any conversations with his parents or Lorraine about the change of partnership. They did not have meetings of the partnership. All decisions were made by his father. Lorraine did not pay any money for the existing partnership assets. Trevor does not remember his parents or him saying that they were gifting the partnership assets to Lorraine. To the best of his knowledge, neither a partnership agreement nor deed of gift was prepared or signed. Regardless of the partnership arrangement Trevor still considered that his father owned and controlled all the property and assets.
166 Neither his mother nor Lorraine worked fulltime in the partnership businesses. They both spent time at the Renown Motor Garage serving customers and provided meals to shearers at shearing time. They all assisted from time to time with some of the farm work such as musters, cut outs, drenching, checking cattle and cleaning shed. However his father did the farm work such as seeding and cropping.
167 When Lorraine and he were married they lived in a caravan behind the Renown Motor Garage. In 1969 he obtained a lease for some land opposite the garage, Lot 10 Railway Reserve, Murrayville registered in Trevor's name. His father arranged for the lease. Trevor did not pay a purchase price for the land. Instead he paid a rent of a $15.00 a quarter. It took about two years to build a house. His father provided accommodation for the builders. His father was the local agent for Adelaide Brighton Cement and paid for all the concrete. In addition he supplied and transported materials such as bricks from Adelaide as part of his weekly run. Trevor had to borrow some money to pay the last instalment to the builder.
168 As to the Schedule 3 property, Pomona Farm, in or about December 1973 a farming property at Murrayville known as Pomona Experimental Farm ("Pomona") was advertised for auction by one of the local agents Elders GM. Pomona was a large wheat sheep farm. It was described as an experimental farm because it had large areas under irrigated pasture. It also produced feed pellets. The owner Fred Bethune ("Bethune") was a pump manufacturer in Melbourne. The property was managed and employed workmen and contractors.
169 Trevor told his father that he should go and have a look at it because it was only four miles from Murrayville. Several farmers lived in Murrayville and drove 15 or 20 miles every day to their farms. Trevor's father and he inspected Pomona and his father told him that he (the father) was interested in purchasing Pomona. Prior to the auction there were several conversations with Trevor's parents and Lorraine about Pomona. Trevor is not able to remember the conversations in detail. He is able to remember the effect of the conversations. His father said he wanted to buy Pomona. Trevor does not remember discussing the finance or the purchase price. His father said he could afford to buy Pomona. Trevor knew that he (Trevor) did not have any money to be able to buy Pomona himself. He does not remember any discussions prior to the purchase about the name in which Pomona would be purchased. Trevor presumed that if his father bought Pomona that it was his and he would be the registered owner.
170 The auction was held in the Murrayville Public Hall. Trevor's father asked him to put in a bid. Bidding did not reach the reserve price and the property was passed in for less than $100,000.00. After the auction Trevor's father and he walked back to the Renown Motor Garage. The agent Mr Lackman followed and arrived almost immediately after they did. Trevor's mother and Lorraine were not present. The agent asked Trevor's father if he was still interested in purchasing Pomona. The father said that he was and that his offer was $130,000.00. They began to discuss the terms. They agreed the total purchase price of Pomona Farm was $130,000.00 including additional plant and equipment and that the owner would give a mortgage of $65,000.00 for five years at 7% interest. The vendor had already offered a mortgage at the auction. Trevor was not involved in the conversation and it only took a few minutes. After his father and Mr Lackman agreed to those terms the agent said it would be necessary to confirm the price with the owner. Mr Lackman then went back to the public hall. When he returned he told Trevor's father the vendor had accepted the offer. The father paid a 10% deposit. Trevor does not remember any conversation about preparation of contracts and transfers at that time, but accepts that such probably did occur.
171 After the meeting Trevor's father and he both told his mother and Lorraine that the father was buying Pomona. Trevor has a strong recollection that Lorraine was in hospital at the time but cannot be certain. Trevor knew that when his father told his mother about the purchase she said, "What do you want to be buying more land for, you've got enough already". Trevor is certain that after the purchase was agreed that his parents, Lorraine and he all discussed the purchase regularly if not daily. Trevor cannot remember the exact words which were spoken. His recollection of the conversations is the cumulative effect of the conversations and not the individual conversations. After the meeting with the agent, someone told solicitors to prepare the Contract of Sale and Purchase. Trevor remembers that before the contract was prepared he had several discussions with his father about topics such as how the land would be farmed, what equipment would be needed, stock, and lucerne production. They also spoke about whose name the land should be registered in. Trevor cannot remember the whole of the conversations. The effect of the conversations was that his father said he had paid a lot of probate tax to have land transferred to him after his father had died in 1969. He said it was like buying the land over again. He said he already had a lot of land in his name and if he put Pomona in his name he would have to pay a lot of probate tax. Trevor told his father that his (Trevor's) best man Malcolm Heintze had to pay his father's life savings to secure his land from the probate duties. Trevor's father told him he was thinking about registering Pomona in Trevor's name so that when he died it would already be in Trevor's name. Trevor said put it in my name for the probate. The father said he was buying the land as his own and paying the purchase price so he could say whose name it was in for now. Later they decided to put it in Trevor's and Lorraine's names.
172 At no time did his father say to him that he was giving Pomona to Trevor and Lorraine or that they would have immediate rights of ownership.
173 Trevor does not remember his mother or Lorraine being a part of the conversations at which his father and he discussed which names to put the land in until after his father had decided what he wanted to do. There were no formal partnership meetings and his mother and Lorraine just went along with what had been decided. Trevor told Lorraine that his father was prepared to put Pomona in their names for the probate tax. It would be good for them because they would not have to worry about probate taxes. Lorraine and he both agreed that even if his father put Pomona in their names he was the real owner. There was a delay in preparing the contracts until his father decided which name to register Pomona in. The agent told the solicitors to prepare a contract in Trevor's and Lorraine's names as tenants in common and in equal shares. Trevor does not remember why it was put in as tenants in common. Lorraine and he signed the contract on about 12 December 1973 and later a transfer and mortgages. His father paid the deposit and later the balance of the purchase price required at settlement $61,690.03. At no time did his father ever say to him or to Lorraine that he or they were making a gift of that money.
174 On 18 February 1974 Pomona was registered in Trevor's and Lorraine's names as tenants in common in equal shares. On the same day a mortgage was registered in favour of Bethune. Lorraine and he both signed all the relevant legal documents. They were not asked to sign anything that said his father was the real owner. Lorraine and he both knew and agreed he had paid for Pomona. It was his property to do with as he pleased until he told them differently. They had agreed with his father when they were discussing the registration and they had agreed when they discussed it at home. At no time prior to the registration of Pomona in their names did his father ever say to him that he was putting one half of that property in Trevor's name as either a gift or an advance on an inheritance. Trevor did not hear his father say to Lorraine that he was putting one half of Pomona in her name as a gift or as an advance on an inheritance. Part of the purchase price of Pomona may have come from a savings account in Trevor's mother's name. Trevor's memory is that his mother was not really concerned about purchasing more land but she went along with what the father wanted to do. Trevor does not remember her ever saying she was buying or paying for Pomona. Trevor's mother never suggested she had a personal right or interest in the purchase money or the future ownership of Pomona or that she was able to control or give it away. At no time did his mother say to him she was giving away any interest in Pomona in the deposit or title to Pomona. She was going along with what the father had decided and what was agreed.
175 Trevor cannot remember when the partnership of GM, AJ, TJ & JL Yard commenced. His recollection is the partnership commenced at this point. Lorraine and he had not paid anything for the partnership interest. He does not remember any conversation about the partnership paying for Pomona.
176 In addition to the land and plant and equipment that had been purchased it was also necessary to stock Pomona. Most of the stock came from the other properties that his father owned. It is possible that some livestock and sheep were purchased.
177 As to operations 1974 to 1976, after the purchase of Pomona the garage and farm businesses continued as a partnership in the name of GM, AJ, TJ & JL Yard. The partnership used all the farming land registered in his father's name and also Pomona. His father continued to operate the Renown Motor Garage and the farming activities and Trevor assisted him with both. Neither Trevor's mother nor Lorraine were involved full time and did not seek to be involved as active partners.
178 On a day to day basis Trevor's main activities continued to be the operation of the garage, the local fuel distribution and service of farm equipment. He was not actively engaged in farming as a day to day business although there were certainly busy times when he was engaged full-time, for example at shearing time and at harvest when he drove a truck to the silos. Lorraine and he continued to live in Murrayville.
179 When his father purchased Pomona there was a lucerne growing and pelleting business. Trevor ran the irrigation activities which required him to operate and maintain the pumps and bores. However there were two workmen who attended to daily activities. The workmen came to the garage to receive their instructions. Contractors did the cubing and pest control work. Later they purchased their own pelleting machine. Trevor's father did all the wheat crops and Trevor did not drive a header or take off a crop until about 1980. His father looked after the sheep also ran about 40 head of cattle. At shearing time they all helped with jobs such as mustering or providing meals. The ownership of Pomona in the Financial Statements is inconsistent with registered legal ownership of that property. The accounts do not show any loans by AJ Yard in respect of the purchase price. Trevor knew Pomona was registered in his and Lorraine's names but his father was the real owner. Trevor does not know how that would be shown in the accounts.
180 As to the incorporation of Yardoo Pty Ltd on 1 October 1976, in the first half of 1976 his father's insurance adviser, Richard Penrose came to the garage. Penrose described himself as an investment and taxation adviser and worked with Legal & General. Penrose had been doing business with Trevor's father for several years. Penrose gave a brochure headed "Estate Planning" to the father. Trevor is unable to recall the exact conversation and it is probable there was more than one. The effect of the conversations was that the brochure indicated that probate tax might be a lot. Penrose told the father that he should transfer the land owned by him to a company. The company would hold the land for him. Penrose said the purpose of the company was to fix the value of the father's properties. Penrose said he had done the same thing himself. Penrose told the father he would continue to own and operate the land, garage and farm business as if they were his own and that "It's a holding company. It won't make any difference". Penrose drew a diagram of a circle with spikes opposite each other. He said the circle was the company. The land would be transferred to the company and registered in its name. The value of the land would be fixed by the transfer value: you can't stop the company so there are no probate taxes. At the end of each spike he wrote a name, Jeff, Gladys, Trevor and Lorraine. He said they would be the directors and shareholders. The shareholders would only have a dollar share and could come and go but they were only worth a dollar. The company could issue more shares to other family members, for example Damien and Narelle, in the future. They would only be worth a dollar. The company holds your land for you and keeps going.
181 Trevor does not remember Penrose saying that the company would own the land for itself or that the value of the shares would be determined by the value of the land. Penrose said something to the effect the shares would only be worth a dollar: you can't take out more than you put in. Trevor does not remember Penrose using terms such as "trust", "family trust", "discretionary trust" or "trading trust". Penrose kept saying things such as "it's just a holding company for your land", "nothing changes, and you still own your land", and "nothing really changes".
182 Penrose also wanted the father to buy some superannuation policies. He told the father if he set up a company and transferred a business to it, they could all be employees and claim superannuation. The cost of the policies in the first three years was very high, about $12,000.00 per year, but after that they could be converted and become self-funding. Penrose was in regular contact with the father to discuss the company and insurance policies. Trevor remembers his father and he agreed to "run it past Brodie".
183 On a date that Trevor does not know, his father, Penrose and he agreed to meet in Mildura visit the accountant Mr Ian Brodie at Thomsons. His father and he drove from Murrayville and Penrose drove from Blanchetown in South Australia. His mother and Lorraine did not come with them to Mildura. Trevor does not remember how long the meeting lasted or the exact words that were spoken. He is able to remember the effect of the main topics of conversation.
184 Penrose explained the proposal to Brodie. Penrose said the father should establish a company and transfer all his land to it; that would fix the value for probate duty; and that ownership by a company would not make any difference to the father's ownership and use of the land. Penrose said the company would also purchase four policies at a cost of about $12,000.00 per year. Trevor said he did not like the cost of the policies but would transfer the land if that's what the father wanted. Brodie did not like the idea of transferring the land to a company and he did not like the hight cost of the policies. It was a lot of money; he was concerned about the effect of things such as a drought. Despite Brodie's concerns and Trevor's own concerning the policy costs the father was intent on transferring the land to a company. Trevor did not object to transferring the land if that is what the father decided and Trevor did not have to pay probate taxes later. Trevor recalls it was agreed to incorporate a company and Brodie was going to organise it.
185 After the meeting with Brodie Trevor drove back to Murrayville by himself. He left his father and Penrose in Mildura to drive back later. Trevor does not remember going to see the solicitor, John Irwin, during this visit to Mildura. His memory is that he left his father and Penrose at Brodie's office and drove straight back to Murrayville. He did ask John Irwin to do other jobs and transfers on other occasions.
186 After the visit to Brodie, the father and Trevor had several conversations with the mother and Lorraine about transferring all the land to a company. Trevor remembers that it was the mother who came up with the name of "Yardoo" for the company.
187 The conversations probably occurred at the Renown Motor Garage and in their homes. Trevor is unable to remember the exact words which were spoken. His recollection of the cumulative effect of the conversations is the father said Penrose said he should put all his land into a company. That would fix the value of the land for succession duty purposes. The father had spoken to Brodie and had decided to go ahead because it would nor make any difference to him still being the owner of the land. The mother, Lorraine and Trevor said it was his land, he paid for it and they would transfer the land in their names to the company.
188 Trevor is not certain of the dates of those conversations or who was present on particular occasions. The conversations probably occurred prior to August 1976 and continued through to June 1977 or later when the land was finally transferred to Yardoo.
189 When Yardoo was incorporated the lawyers wanted to know the names of directors and shareholders. Trevor did not provide that information to Ian Brodie or John Irwin. Trevor thought it was just assumed that the partners should be directors and shareholders. At that time he did not recall any discussions about directors and shareholders other than what Penrose said. At the time he believed that there was a difference in the class of shares. The "A" class was supposed to be full ownership; the "B" class was supposed to be voting rights with a dividend supplied not exceeding $20,000.00; the "C" class was supposed to have voting rights and some dividend; and the "D" class was just voting because there was no input. Although he knew he would be a shareholder in the company he did not at time consider that he would obtain any greater interest or entitlement to his father's land and property than he would if he continued to own it himself. He only had a $1.00 share. So did his father but Penrose had explained the company was holding all the land for him. When Yardoo was incorporated on 1 October 1976 Trevor understood all of the properties in Schedules 1, 2 and 3 would be registered in the name of that company but his father would be the real owner of the land. There was never any suggestion that his father was giving up his ownership or that in some manner Lorraine and he were getting some new or additional interest in the land.
190 As to transfers to Yardoo, during the period from about October 1976 to June 1977, Freeman & Pitts and Thomson & Associates arranged for the transfer of the properties to Yardoo. Trevor signed each of the property transfers in his capacity as a director of Yardoo. Despite what the transfer for the Renown Motor Garage states Trevor had never considered or known it to be owned by the partnership. His father had bought it from his father. He told Trevor that after the War he tried to get a loan from the RSL but they could not arrange it for him. His grandfather lent him the money [sterling]200/-. Lorraine and Trevor both signed the transfer of Pomona as a result of his father's decision to transfer all his land to Yardoo and his request that they transfer Pomona to Yardoo. The transfer to Yardoo was registered on 25 August 1977. If it was just a matter of probate duty then there was no need to transfer Pomona to Yardoo because it was in Trevor's and Judith's names. The requests or directions were made on several occasions during the period from at least September 1976 to June 1977. Trevor is not able to remember each occasion or the exact words used. The effect of the conversations was always the same. His father said that he was the owner of all the land and that Lorraine and Trevor had to transfer Pomona to Yardoo. Lorraine and he both orally agreed to his father's requests. Lorraine and he both voluntarily agreed to sign the transfer of Pomona to Yardoo. They had not paid any money for their respective interest in Pomona which had been registered in their names. They did not receive or expect to receive any payment from Yardoo for the transfer of Pomona. There was no pressure on them to sign the transfer. So far as Trevor was concerned, nothing had changed. Prior to the transfer of Pomona neither Lorraine nor Trevor had ever asserted any claim to the father in respect of the father's land or Pomona. The only reservation Lorraine expressed was the high cost of the policies. At the time of the transfer there was absolutely no suggestion that the father was divesting himself of any of his interest in the land and that the mother, Lorraine and Trevor were thereby becoming entitled to something they did not have before the transfer. His father had owned some of his land since just after the War. Trevor thought he also paid the $4.00 for each of the shares. After the transfer to Pomona neither Lorraine nor Trevor had ever asserted to the father that they had any form of direct or indirect entitlement or interest in the land owned by Yardoo. Trevor had never heard Lorraine make any assertion to the father that she was entitled to an interest in his land. That claim only arose from the Family Court application for property settlement.
191 As to consideration paid, although each transfer refers to a value for the property transferred Yardoo did not have any money. Yardoo could not pay for the land being transferred to it. Pomona had been transferred into Trevor's and Lorraine's names only three years before. It was not a real sale. They had not paid for the land and were not living on it or working it as if owners. In 1977 Trevor was still mainly working in the garage business. He looked after the irrigation and pumps because they were mechanical but daily activities were performed by workmen and contractors. His father conducted the sheep, livestock and cropping on Pomona. Trevor assisted with farming activities on all properties when required. Although Trevor was a director and shareholder of Yardoo, he does not recall being given legal advice about the effect of ownership of land by the company or the need for a written trust if the land was not really owned by the company. He did not know what a trust was. All he knew was before the transfer his father was the real owner of Pomona. Trevor transferred his interest in Pomona because his father exercised his rights as the real owner. After the transfer Yardoo as new owner would hold the land for the father.
192 Although Trevor signed and adopted the accounts for partnership and company taxation purposes he does not accept that the Financial Statements are a proper or indicative record of the legal or beneficial ownership of the land. For example the partnership and company accounts have never recorded the money the father put in to buy Pomona. It was his money which set up the whole business.
193 As to additional land acquired by Yardoo, since October 1976, Yardoo has purchased the additional properties described in Schedule 4:
1. Murrayville Slaughter Yards Block 6A Danyo: The Slaughter yard comprises 7 acres of land near the town of Murrayville and was purchased as a half way stop over when droving sheep between properties. This property was registered in the name of Yardoo on 26 January 1993 and there have not been any mortgages registered since that date. Trevor does not know how the transaction was recorded in the accounts of the partnership or Yardoo. Trevor's son Damien used part of the land for a piggery but that venture failed.
2. Herbies Town Lot 5 Murrayville: Herbies was purchased by the father for about $1,000.00. He intended to build a modern home for himself. The title was registered in the name of Yardoo on 16 July 1980 and there have not been any mortgages registered since that date.
3. A fifty per cent share in a property known as "Hawick Station": Hawick comprises about 15,000 acres of marginal station country used for grazing cattle and sheep. Hawick was offered for sale by a mortgagee in possession. The price was $400,000.00. In 1992 Trevor's father agreed with LS and ME Young to purchase a one half interest in Hawick for an amount of $200,000.00. The Youngs were supposed to live on Hawick and manage it but they did not and the Yards now use different parts of the property. Because there are two separate parties involved in the purchase of Hawick neither can register a mortgage. There are no mortgages registered on the title. The purchase price was financed by obtaining a loan from Brian Yard of $125,000.00 at 8% interest. That loan has not been repaid to Brian. The balance of the purchase price $75,000.00 was paid from the Yard farm account. Although Hawick was purchased with what appears to be partnership funds the land was registered in the name of Yardoo. Trevor's father would have made the decision as to the name in which the land was registered. Trevor does not know how the transaction was recorded in the accounts of the partnership or Yardoo.
194 As to properties registered in other names, in addition to the properties referred to above Trevor's father also purchased four other properties described in Schedule 5 as follows:
(1) Lot 10 Railway Reserve, Murrayville. This is registered in Trevor's name. It is the former matrimonial home.
(2) Szader's Block Lot 9 Murrayville. This is an allotment located within the township of Murrayville. On her death Mrs Szader left this property to the Mildura Hospital and the RSPCA. John Irwin who was on the Hospital Board administered the Estate and offered the property for sale. Trevor had the property valued and put in an offer. Part of the purchase was paid from a General Credits account. Szader's was registered in Trevor's name on 31 March 1995 and there have not been any mortgages registered on the title.
(3) Paladin. This is a property of about 142 acres located at Lobethal in the Adelaide Hills. In 1981 Paladin was offered for sale by public auction by the mortgagee but was passed in. After the auction the agent drove Trevor and his father to Adelaide to meet Mr Alan Hickinbotham who was a builder and financier. He was selling the land. Trevor's father agreed to buy the property for $172,000.00. Part of the purchase price was financed by a loan from Westpac for an amount of $120,000.00 and the balance was paid by the father from his own savings. After Trevor's separation and divorce Lorraine cancelled the Westpac loan because she did not want to be a part of it. Paladin is looked after by caretakers who live in the house. Paladin has not been used by the partnership GM, AJ, TJ & JL Yard for any farming activities. The rent covers outgoings for the property.
(4) Brian's Block 31 Ngallo. This comprises about 640 acres of farming land. It was owned by Trevor's father's cousin Brian Yard who also owned another adjoining block known as the "Home Block". Trevor heard that Brian was interested in selling and went out to see him. He said he would sell Brian's Block for $220,000.00 which included the crops he had already sown. Trevor told Brian he might be interested and would bring his father out. Later they both went out with Brian to have a look at the land and the crops. Later Trevor spoke to his father about purchasing the block. The father did not seem keen and said he had enough land. Trevor told his father it was good cropping ground. Despite its size Pomona does not have good cropping land. Much of Pomona is covered with a lot of stone which is hard on equipment. Trevor's father agreed and said 'I suppose we'd better buy it then'. Trevor went back out to see Brian and told him he wanted to buy the block. Trevor agreed to pay the price that Brian asked including the right to take the crop he had sown. That was probably 6 or 7 bags and worth near $20,000.00. Trevor paid the deposit from a partnership or company account. Brian agreed to lend $100,000.00 at 9.5% to be secured by a first mortgage over the land. Trevor remembers that he had to pay him the balance over 3 years. There was a drought clause and it took another year to pay Brian. After paying the deposit the father and Trevor took the crop off in December. The transfer did not take place until the following year. Before registering Brian's Block Trevor spoke to Ian Brodie. He said there was too much land in Yardoo and not enough income. He suggested Brian's Block should be registered in Lorraine's name. The father agreed. Brian's Block was registered in Lorraine's name on 20 March 1986. In addition there was a mortgage registered to Brian Yard to secure the vendor finance. Lorraine did not pay any of the purchase price or any of the interest due to Brian. It was probably paid from one of the partnership accounts but Trevor does not know how it has been accounted for in the financial statements. The mortgage was discharged in 1990 and the Certificate of Title was sent to Trevor or Lorraine and it was placed in a safe with the other titles. Since the discharge of the mortgage to Brian in 1990 there have been other loans and agreements with Brian. First, Trevor borrowed $50,000.00 to help finance the purchase of the MV Kookaburra, a boat at Echuca. Second, Yardoo borrowed $125,000.00 to finance the part of the purchase price of a half interest in Hawick. Part of the agreement was that Brian would hold the Certificate of Title to Brian's Block as security for the loan. Trevor continued to hold the Certificate of Title in the safe at Lot 10 Railway Terrace, Murrayville being Trevor's former matrimonial home. On a date which Trevor does not know but after the separation he told Lorraine he wanted to collect some personal items and get the contents from the safe. Lorraine refused and told him all the titles had been sent to her solicitors. The Police were called and Lorraine finally agreed to hand over the key to the safe. All the titles were in the safe including Brian's Block. Lorraine insisted that Brian's Block was in her name and that Trevor had to leave the Certificate of Title with her. Trevor told Lorraine and the Police that Brian Yard was supposed to have possession of the title. After that incident Trevor telephoned Brian and told him he should ask Lorraine for the title. Lorraine continues to forward all Mildura Rural City Council Rate Notices to Trevor for payment.
195 As to financial Statements 1977 to 1997, during the period from 1977 to 1997 there were three main businesses: Yardoo as land owner, the Renown Motor Garage and the farming partnership of GM, AJ, TJ & JL Yard. There was no written partnership agreement. Up to 1980 Trevor was mainly employed in the garage and his father ran the garage and farms. The father made the business decisions and Trevor tagged along. At that time there had been changes in the garage business. The father wanted to concentrate on the easier jobs in the garage and workshop. In 1980 Trevor bought a header and it was only from this period onwards that he started farming and cropping. His mother and Lorraine were not excluded from being involved in either the garage or farm business. Over the years they participated in a manner, which they chose, and at a level which suited them. Neither of them was keen about farming.
196 Trevor's father has been running the Renown Motor Garage since 1946. In its day it was a successful business operating as a tractor and vehicle dealership and as a bulk fuel and service station dealer for Mobil. Since 1976 the garage business has reduced significantly and it has not been profitable for many years, including prior to 1997, and cannot afford to pay a real wage. The only reason the garage has not closed down is because it gives the father something to do on a day to day basis. The father enjoys the company and it provides a service to the town.
197 Financial statements and taxation accounts were prepared regularly for both Yardoo and the partnership and maintained in a consistent but inaccurate manner for the whole period. For example if Pomona is an asset of the partnership or Yardoo they have never brought to account the half of the purchase price paid by the father. If Lorraine is the real owner of Brian's Block then her loan account would need to be adjusted for the purchase price.
198 Lorraine has never been denied access to the financial statements and was regularly presented with company, partnership and personal financial statements and taxation returns. They were prepared and sent to the Yards by Ian Brodie. During the period 1973 to 1997 Lorraine did not participate in the preparation of accounts and other aspects of the businesses because she was not interested. Lorraine signed accounts and taxation returns without any complaint or inquiry. Trevor is unable to recall any occasion prior to 1997 when Lorraine demanded that she be permitted to exercise her rights as a shareholder, director or partner in the conduct of Yardoo or the partnership.
199 As to the termination of the partnership GM, AJ, TJ & JL Yard on 15 December 1997 after Lorraine and Trevor separated, the partnership of GM, AJ, TJ & JL Yard was terminated and a further set of partnership accounts for GM, AJ & TJ Yard were prepared by Trevor's current accountants WW Remeljej & Associates. The date of those accounts is 15 December 1997. Financial Statements for Yardoo have continued to be prepared on a financial year basis. Trevor believes that his accountant Mark Remeljej has adopted the information in the historical accounts as the basis for those accounts. The Financial Statements prepared by Trevor's previous accountants are not accurate. At the time of preparation of the final partnership accounts Trevor had not provided to Mark Remeljej a history of the dealings with the properties by the parties to this action.
200 As to actions by Lorraine Yard for dissolution and winding up, Lorraine and Trevor separated on 11 December 1997. Lorraine commenced divorce proceedings in the Family Court of Australia at Adelaide and on 5 July 1999 made application for a property settlement. In her application for a property settlement Lorraine made extensive claims not only in respect of the property of the marriage but also property which is in the name of Yardoo and the partnership. In the conduct of the Family Court action Lorraine sought discovery of documents from the parents, the partnership and Yardoo as if they were parties to the action. No application was made for non-party discovery. On 21 September 2001 the Family Court at Lorraine's request issued subpoenas to the parents and to Yardoo. The subpoenas required the production of broad and inadequately defined documents. After obtaining independent legal advice the father instructed Mr Starke to make application to set aside the subpoenas which was filed on 25 October 2000.
201 As to Supreme Court of Victoria action No 5151 of 2001, Trevor denies that Yardoo or its directors have acted in an unfair, prejudicial or oppressive manner towards Lorraine in her capacity as a shareholder. Yardoo remains a property holding company and its activities are conducted in the same manner as during the period 1976 to 1997. The only change is that the father resumed operation of the Renown Motor Garage. There is little or no goodwill for that business. There is little or no plant and equipment. If the garage was run on a commercial basis the company would have to pay a wage or salary to the father. It would be unprofitable for the company to operate that business. Since 1997 Yardoo and its directors have not undertaken any unusual transactions to the detriment or benefit of any party. For example, there are no payments to directors, there have been no issue of shares, and the company has not incurred any non-business debts. Any decisions made about the conduct of the company's business have affected all parties equally. The only meetings of the company have been statutory meetings. Originally Lorraine was invited to meetings but she informed Trevor's solicitors and Trevor that she did not want to attend meetings. Lorraine has never sought to participate in the management of Yardoo as a director or shareholder. Lorraine has not attempted to call meetings of the directors and shareholders. Trevor has not been notified of any business that Lorraine requires to be presented at a meeting of the directors and shareholders.
202 In cross-examination Trevor Yard stated that the purpose of the incorporation of Yardoo Pty Ltd was to avoid the payment of probate duties upon his father's death (201, 202, 204, 208). His father was "very concerned" that no repetition of the import of probate duty which occurred upon Harold Yard's death recur (201). Trevor's concern was the high cost of the insurance policies promoted by Penrose (206). Brodie did not advise on the matter of a trust (226); Penrose did (224). Penrose said that setting up the company would avoid the payment of probate duty (205). In cross-examination Trevor said "Penrose described this as a trust" (224) but when confronted by paragraph 60 of his witness statement (I do not remember Penrose using words such as 'trust"") he said
I would say, there's 'trust' in the articles of association." (224)
Trevor could not recall when he first remembered the provision as to trust in the articles of association. Trevor was shown a letter Penrose wrote to him and his father (undated, presumably late 1997) in which in paragraph four is stated:
"A Trust for Income purposes can be arranged to share some Partnership or Company Income for the children"
and Trevor agreed that that is the only reference in any Penrose document to a trust. Trevor never set up such a trust (226-227). Trevor said his father has "been calling it a trust all his life or since he put it in" (226).
203 As to the purported cessation of Lorraine as partnership member and director and shareholder in Yardoo, Trevor stated that the record of the company meeting of 19 July 1999 (Exhibit 1) purporting to "remove Judith Lorraine Yard from the company" was in his father's handwriting and Trevor moved that motion because he wished to have it passed because Lorraine was finished with him (187). No legal advice had been received before the motion (188). Trevor's attitude was that after the separation Lorraine no longer had any rights with respect to information as to Yardoo (188) nor as to the partnership (190). She was "voted out of the company"
(188). There was no letter from Lorraine stating that she did not intend to attend the 19 July 1999 meeting (197-198). From December 1997 Lorraine had no rights in respect of Yardoo (198). There would have been a meeting to dissolve the partnership after the matrimonial separation but Trevor could not remember when (195). No notice was ever published of the termination (196).
204 Trevor is the only child of Alfred and Gladys. He was now 57 years, had commenced working with his father at 16 years, and had had no source of livelihood since then other than the Renown Motor Garage and the farming properties (185). Since the separation he had adopted an attitude of hostility towards Lorraine and she had obtained an Intervention Order against him (187).
BRIAN ROBERT YARD
205 Brian Robert Yard gave evidence in chief by witness statement that he is a first cousin of Alfred Yard, who is 18 years older than Brian. He has lived in Murrayville almost all his life. Alfred was always a hard worker, prudent with his finances, and in control of family money matters and property. In 1985 Brian sold Brian's Block. Alfred controlled the financial aspect of the purchase, while Trevor did most of the negotiating. Trevor told Brian that the title would be registered in Lorraine's name for tax purposes. Brian had no dealings with Lorraine. He was briefly cross-examined.
MARGARET ANNE SIMS
206 Margaret Anne Sims gave evidence in chief by witness statement, supplemented by oral evidence before me, that she is an experienced farm operator, having been born and reared on a farm in South Australia and
having been married to a stock agent. She and he separated in 1991. There are two children of the marriage. Ms Sims then did a variety of farm work until April 1996 when she went to work on Pomona farm. She there did general farm work. In December 1997 she commenced a relationship with Trevor Yard and they have since that time lived together at Pomona Farm. She has not been paid a wage since January 1998. She does the work of assistant manager. In 1996 she had some contact with Lorraine which demonstrated that Lorraine had limited practical farming experience. In cross-examination she stated that she had made no demand upon Trevor for payment for her farming work because of their personal relationship (390).
IAN THOMAS BRODIE
207 Ian Thomas Brodie, certified practising accountant, of Mildura gave evidence by witness statement that he has practised as a Certified Practising Accountant since 1973. He was a partner of Thomson & Associates Public Accountants (Thomsons) of Mildura from 1973 to 1996.
208 In 1973 Thomsons took over the accounting practice of Kevin Tobin in Ouyen. Tobin was a solicitor who was also a registered tax agent. He father, "Mallee" Tobin, had been an accountant. One of the taxation files Thomsons took over was that of the partnership of GM, AJ TH and JL Yard. Mr Brodie was Alfred Yard's accountant for some 25 years, until Mr Brodie retired in 1996. Alfred ceased to retain Thomsons in 1998.
209 Accounting standards and practices have evolved greatly since the 1970s. In the farming community it was usual for farming land to be owned by a father, to pass upon death from father to son, and for taxation purposes to bring into the accounts every eligible family member as a member of a partnership in order to give the most effective benefit to the family as a whole. In most instances the partnership did not pay any rent to the landowner. Partnership dividends referred to in financial statements usually stayed in the farm business. Partnership drawings by family members had no relationship to individual entitlements. The dividends were accounted for by increasing the capital or loan accounts of the partners. This was not regarded as tax avoidance but as a practical business arrangement.
210 As to the formation of Yardoo Pty Ltd, in 1976 an appointment was made with Alfred to discuss the incorporation of a company and the transfer of assets as a form of estate planning. Thomsons thereafter rendered professional services to the partnership and later Yardoo. At that time an Estate was still subject to State and Federal Estate duties and that was a matter of concern to many farming families.
211 Mr Brodie described a meeting at his Mildura office in 1976 as to the incorporation of Yardoo as follows.
212 The meeting occurred at Thomson's offices in Mildura. Present at the meeting were Alfred and Trevor Yard and Richard Penrose. Mr Brodie had not met Penrose before this meeting. Penrose was introduced as an insurance and taxation consultant. Alfred said words to the effect that he was concerned about death and succession duties. Penrose had advised him to transfer all of his land to a company. The transfer value would peg the value of his estate. In addition Penrose proposed that Alfred should purchase four superannuation policies from Penrose, one for each of Alfred, Gladys, Trevor and Judith Yard. To do that the garage business would have to be transferred to the company and be the employer.
213 Mr Brodie remembers that Penrose explained the proposal. Mr Brodie does not remember all the details of what Penrose said or of his proposal. Penrose said that the transfer to a company would also fix the value of Alfred's assets. Penrose explained the company would also buy superannuation policies. There was a large policy cost for the first few years. Mr Brodie does not recall at that time any other farmers operating companies, trusts or what are now called trading trusts. Mr Brodie does not recall any reference to trusts. He does remember that Alfred expected to retain the use and control of all the land during his life as if there was no real change in ownership. The meeting did not last for a long time. Mr Brodie said that he did not like the idea. He could not see any immediate benefit to Alfred except for putting current value on the assets. That had little value to Alfred but possibly some long term value to Trevor Yard. Mr Brodie remembers Trevor Yard did not like the cost of the superannuation policies but he did agree with the idea of transferring all the land to a company. Mr Brodie regarded Penrose as a fast talker.
214 Despite Mr Brodie's expressed reservations Alfred seemed intent on proceeding with Penrose's proposal. In Mr Brodie's presence there was no suggestion that Alfred was selling or transferring land to Yardoo in return for money or that he was gifting land to the company or anyone else. Mr Brodie does not recall and does not believe that there was any reference to Trevor, Gladys or Lorraine Yard obtaining an immediate entitlement or interest in the land to be transferred to the company. It is his recollection that Penrose was driving the proposal for his own benefit.
215 Mr Brodie did not provide any advice to Alfred or Trevor Yard concerning the functions of director and shareholders or classes of shares. He did not
provide any advice about the entitlement of shareholders.
216 Counsel for Lorraine Yard objected to substantial portions of Mr Brodie's witness statement as hearsay, speculation or ultimate conclusion. I consider the portions are admissible as evidence of what was said, and are neither hearsay (as not led to the truth) nor speculation. Further, the portions which were objected to as irrelevant I consider are relevant as going to the practices of the times.
217 In cross-examination Mr Brodie stated that at the meeting at his offices in Mildura in 1976 he was "dead against" (256) the Penrose proposal, that he (Brodie) considered that "the transfer of the land under the estate planning was a smokescreen to justify setting up the company" (261), and that Penrose "was after four superannuation policies". However Alfred wished to proceed because of the saving of probate duty as "there was two things he didn't like paying; one was taxes to the government, and two was to his accountant" (257). Alfred "absolutely" (256) expressed to Mr Brodie that he (Alfred) wished to set up a company and transfer assets so as to reduce the impact of estate duty in the future.
218 Mr Brodie stated that he did not consider a trust was involved and never so considered (257, 258, 263). He stated that his understanding was that a transfer for probate purposes depends upon both legal and beneficial title being transferred to the company and that that "would've been pointed out at the time of the interview" (255) at his office. Mr Brodie did not have any subsequent discussions with Alfred as to the implementation of the programme, other than its day to day operation (273).
JOHN STEWART IRWIN
219 John Stewart Irwin by witness statement stated that he is a solicitor practising in Mildura. In 1976 he was a partner in Irwin and Richards. He had had professional dealings with Alfred Yard and the Yard family over several years. In 1976 Mr Irwin was instructed by Trevor Yard to incorporate a company, Yardoo Pty Ltd. Trevor had been referred to Mr Irwin by Mr I. Brodie of Thomsons
220 In 1976 most businesses operated as sole traders and partnerships. Some businesses operated as trading companies. Often an existing business would convert to a company for taxation purposes. It was unusual, although becoming more common, for companies to act as trustees of family trusts. The concept of a shelf company did not then exist.
221 Mr Irwin met Trevor. He does not recall Alfred being present and cannot remember the details of the conversation that occurred.
222 Mr Irwin noted Clause 11(6) of the Memorandum of Association of Yardoo which states that one of the objectives of Yardoo is "to carry on the business of trustees". Mr Irwin was not instructed to prepare a trust deed. He was not asked to provide any advice about a trust. The Memorandum and Articles were signed on 14 September 1976. It was Mr Irwin's practice at signing to explain to the signatories the nature of director's duties and the need for proper records. To the best of his recollection the advice he gave to the signatories on that occasion was limited to such matters. The signatories were Alfred, Gladys, Trevor and Lorraine. Mr Irwin was aware that the Yard family owned a garage and were farmers but he did not know the details of their farm properties or the ownership of them. Mr Irwin was not
asked to, and did not, tender any advice on the matter of the transfer of land to Yardoo, or about death, succession or gift issues. There was no discussion about Yardoo acting as a trustee company. His instructions were limited to the incorporation of Yardoo as a trading company.
223 By agreement Mr Irwin was not called personally as a witness before me.
GLADYS MAXRENE YARD
224 No witness statement of Gladys Yard was produced, nor was she called before me. Counsel for Lorraine Yard submitted that I ought draw a Jones v Dunkel[1] inference from her non-calling. I decline to do so. As appears from Alfred's witness statement (paragraphs 13-14) Gladys has "refused to be a participant in this action in any capacity" and Gladys regards Lorraine as a good friend. Further, Gladys is not well. I accept that Gladys has sought to place a dignified distance between herself and this dispute and in those familial circumstances do not draw a Jones v Dunkel inference from her non-calling.
JUDITH LORRAINE YARD
225 Lorraine Yard, shop assistant, of Murrayville gave evidence in chief by witness statement as follows. She was obliged to take Family Court proceedings after her separation to seek proper distribution of the property of the marriage, and maintenance. Until her solicitors in late 2000 issues subpoenae in the Family Court proceedings to produce documents of Yardoo, there had never been any suggestion that any property, whether real estate, interest in partnerships or shares in Yardoo or otherwise, in her or Trevor Yard's name was not theirs respectively and was held on trust for
anyone else. She believes proceeding no. 4542 was devised by Alfred Yard as a means to defeat her claim in the Family Court proceeding to her rightful share in the property of the marriage.
226 The garage business known at Renown Mobil Service Station was conducted by the partnership prior to the incorporation of Yardoo Pty Ltd. The farming operations of the family were also conducted by the partnership prior to the incorporation of Yardoo Pty Ltd. She does not recall precisely when the partnership was commenced, but it was within a few years of her marriage. Alfred did not purchase the property known as Pomona farm. It was purchased by her and Trevor. Prior to its transfer to Yardoo, the loan from the vendor and the balance of the funds was paid by the partnership. Alfred never suggested that Trevor and she owed him any money from the purchase of Pomona farm. Alfred alleges an agreement in December 1973 for Trevor and her to hold their interest in Pomona Farm as trustee for the Plaintiff's benefit. There was no such agreement. There was never any discussion that Pomona was to be Alfred Yard's directly or indirectly. It was always to be her and her then husband's farm.
227 Lorraine had no intention to transfer Pomona to Yardoo for it to hold on trust for Alfred. It was her and Trevor's property and she was unhappy about and disagreed with the transfer of the property to Yardoo, being a company in which they each held one quarter share. However, she was expected by Alfred and Trevor to sign.
228 Lorraine held no discussions with any solicitors or accountants or other advisers in relation to estate planning issues. She did not recall attending any meetings with solicitors or accountants, but if she did, she did not participate. She was required by Alfred to assign her interest in properties over to a company, in return for which she would get a one-quarter share in the company. She did not take part in any discussions, nor was she present if any discussions were held in relation to setting up any sham company or trust company to hide an interest of Alfred, nor to effectively transfer the properties to Alfred. She was neither a party to any discussions, nor aware of any discussions being held in relation to future property that might be acquired by the family, even though most later acquired property was acquired in the name of Yardoo. In particular, no one expressed, either orally or in writing, any intention or did or said anything to suggest that there was an intention to hold future property on trust for Alfred.
229 In particular, Lorraine did not enter into any agreement that Yardoo would be incorporated (a) to act as a trustee company; (b) to hold property transferred to it by Alfred and Gladys (or either of them) to hold on trust for the benefit of Alfred; (c) to hold property transferred to it by Trevor and her (or either of them) to hold on trust for the benefit of Alfred; (d) to hold future acquired property on trust for the benefit of Alfred; or (e) upon the basis that the shares to be issued in Yardoo, including a share to herself, would be held on trust for the benefit of Alfred.
230 Lorraine denies that Alfred transferred any properties in which he had an interest to Yardoo in order for it to hold that property on trust for him. She also denies that any business in which Alfred had an interest that was assigned to Yardoo was assigned for the purpose that Yardoo would hold the businesses on trust for Alfred's benefit. There were never any discussions to which she was a party with Alfred, in which it was suggested that such would be the basis of a transfer of businesses to Yardoo.
231 Lorraine denies that Gladys transferred her interest in the property described in Schedule 2, nor that she assigned her interest in the property described in paragraph 1.5 of Schedule 1 to Yardoo to be held on trust for Alfred's benefit. There were never any discussions to which she was a party with Alfred, in which it was suggested that such would be the basis of a transfer of business to Yardoo.
232 Lorraine did not express any intention to transfer Pomona Farm to Yardoo for it to hold the property on trust for Alfred. She did not hear Trevor express any intention to transfer Pomona Farm to Yardoo for Yardoo to hold in on trust for Alfred. The first mention of any property or businesses being held on trust arose after the subpoenae referred to in above were issued.
233 Yardoo has given consideration for the transfer of it of Pomona Farm, in the form of the loan accounts raised at the time of transfer, in 1977, in favour of Trevor and Lorraine which, at the end of that financial year, were in the sum of $88,385. After incorporation, each of Alfred, Gladys, Trevor and Lorraine transferred properties or their share in properties to Yardoo, including Pomona. Valuations were obtained by Alfred's advisers in relation to the properties, and purchase prices were determined on the basis of those valuations. Lorraine does not believe there were any discussions in respect to the payment for each property being by way of loan account. Purchases were simply treated as loans in the financial accounts of Yardoo, and this is symmetrical with her understanding that there was a simple sale of properties to Yardoo by various family members who are parties to these proceedings.
234 The financial accounts of Yardoo show loans from the shareholders in varying amounts, from inception. Lorraine believes that these are attributable to loans to Yardoo to enable it to pay the purchase price for land previously held by Alfred, Gladys Trevor and herself. She therefore believes that Alfred, Gladys, Trevor and she have been paid for the properties that they transferred to Yardoo. Her credit loan account with Yardoo in the financial accounts for the financial year ending 30 June 1998 (being the most recent accounts made available to her) is $123,171. Her credit loan account in 1977 was $88,385.
235 Neither she, nor any of Gladys, Trevor or Alfred entered into any agreement whereby the properties were to be held by Yardoo on trust for Alfred. There is no document concerning the properties or businesses which are the subject of these proceedings signed by Yardoo in a trustee capacity for Alfred. Yardoo was the trustee of a superannuation fund but this did not hold any interest in properties or businesses. To the best of her recollection, the monies spent in relation to the properties described in Schedule 5 were paid by the partnership, Trevor and her. Trevor and she built a house at Railway Reserve, Murrayville, which was a long term leasehold. They lived there for some 28 years, and it was to remain for Trevor's and her benefit. This is where she lives now, namely 36 McKenzie Street. As far as she can recall, Trevor would have borrowed money from the bank to purchase the leasehold and to pay for the construction of the house. Trevor was the executor of Mrs Szader's Estate, and held an option to purchase the property following her death. He exercised the option and engaged Irwin & Richards to act for the Estate. They arranged a valuation of the property, and the purchase price was based on that valuation. Trevor allowed their son Damien to live there for a few months, and then Trevor kept a few sheep on the property. The property is now rented out. The partnership paid for the purchase. There was never any discussion about the various properties being purchased or held on trust as alleged by Alfred.
236 On 1 October 1976, Yardoo Pty Ltd was registered. Lorraine holds one D class share in Yardoo. The register maintained by the Australian Securities & Investments Commission records that her share is beneficially owned. Alfred owns one A class share, Gladys owns one B class share and Trevor owns one C class share. Lorraine has seen some annual returns of Yardoo and from 1993. The returns show whether shares are held beneficially. Each such annual return shows that all of the shares in Yardoo are held beneficially. Each of the shares carries the same rights, although they are of different classes.
237 In each year, including the years in which the annual return shows whether shares are held beneficially, the annual return was signed by Alfred. Lorraine remains a director of Yardoo. The other directors are Alfred, Trevor and Gladys.
238 The family did not operate by discussion, but by the command of Alfred. Lorraine did not intend to transfer any property to Yardoo so that it would hold it for Alfred's benefit, other than as a one-quarter shareholder with the same ownership and other rights as herself and her then husband and Alfred's wife. Lorraine never instructed any solicitors to transfer her properties to Yardoo. Alfred may have told them that he had Lorraine's authority, but he never discussed that with her and he did not have any such authority. Lorraine signed what she was required by Alfred to sign without understanding the nature of the transactions for the most part, as she had minimal business experience and was given no or very minimal information. She was generally simply told to sign. However, she was really cross about Trevor and her losing Pomona, as she did know on that occasion that it was being taken away from her to a company in which she would only have a partial interest. Yardoo holds its assets in its own right and not pursuant to any express, constructive or resulting trusts. She has a one-quarter share, and Trevor has a one-quarter share, in the company.
239 Lorraine was never a party to any discussions, nor aware of any discussions concerning the terms on which money was put into Yardoo or expended on its behalf, in the nature of interest, repayment dates or otherwise. Money was simply found from amongst the family assets for the benefit of the family when required. When money was borrowed from other family interest, such as from Brian Yard, it was done by loan secured against the property, as occurred in relation to Lorraine's property known as "Brians". Where properties were acquired by Yardoo or where Yardoo undertook income earning activities after its incorporation, there was no discussion or expressed intention amongst the directors, for those properties to be acquired or the income earning activities to be undertaken by Yardoo for the benefit of Alfred. Yardoo bought these properties and undertook its income earning activities in its own right as a family company to which all members contributed in various ways for the benefit of its shareholders equally. No properties held in the name of Trevor, Gladys, Yardoo or in Lorraine's name were acquired or purchased for the benefit of Alfred, except insofar as he is named on title or he is a one-quarter shareholder in Yardoo.
240 From the early 1970s following her marriage to Trevor in October 1969, Lorraine formed a partnership with Trevor, Alfred and Gladys. They did not enter into a written agreement. From the time of her marriage, Trevor's sole occupation was in working for the partnership in its garage, and from the early 1970s he worked full time in farming activities, and on occasion for Yardoo after its purchase of the garage. The partnership carried on farming activities on various properties.
241 Each of Alfred, Gladys, Trevor and Lorraine contributed to the business of Yardoo and the partnership in different ways. Lorraine worked in the service station on most Mondays in the early years when Alfred had to travel to Adelaide to buy fuel and parts, and significantly more hours during shearing and harvest seasons. She also worked there whenever she was required by Alfred to do so. She occasionally did a full spring clean at the garage, and occasional sweeping of floors, as well as taking RACV calls and relaying them to Trevor and Alfred. On average, other than during shearing or harvest seasons, she estimated that she worked 15 - 16 hours per week in the service station. Her tasks included sales of petrol, oils and spare parts, taking fuel bookings, processing accounts, cleaning and other duties. In addition, she often drove and mustered sheep and cleaned farm equipment and vehicles. During the shearing and harvest seasons, she worked full-time in the garage and cooking for workers employed for shearing or harvesting. She cleaned out houses after workmen left the premises after shearing or cropping. The farming activities of the partnership included running cattle and sheep, and production of wheat, barley, oats, rye, hay and wool.
242 The partnership acquired Paladin at Lobethal, South Australia in 1981. The partnership also owns 555 AMP shares and dividend cheques would have been received by the partnership. The partnership transferred the assets used in connection with the service station to Yardoo for $17,597 being their written down value rather than market value, but did not pay anything for goodwill.
243 Each year, the income of the partnership was split in the same proportions between each member of the partnership. Lorraine has seen some of the partnership accounts and notes that in each financial year in which a distribution of profit was made, those distributions were made equally between the partners (save for rounding).
244 Yardoo operated a business known as Renown Mobil Service Station in Murrayville. It was a successful garage and service station, tractor and vehicle dealership, bulk fuel and gas distributor, sold farm machinery and equipment and spare parts, and was also the RACV depot. Until the early 1990's, Yardoo also derived income from the sale of primary produce such as cattle. Each year, the income of Yardoo was distributed in proportion to the shareholding of each member of Yardoo, namely 25% each. In addition, each of the Yards received a wage in most years.
245 Trevor and Lorraine used the income from Yardoo and the partnership for living expenses. The income from Yardoo and the partnership was the sole source of livelihood of Trevor and herself for the entire period of their marriage. Since her separation from Trevor, she has been excluded from the affairs of Yardoo. She has not received income. She has not received notices of meetings nor been involved in or informed of the business activities of Yardoo (in the ordinary course of business or otherwise), and the provision of financial information has been surrounded by obfuscation and delay. Since in or about late 1997, she has not received any income from Yardoo by way of distributions of cash. She has not been paid any of her entitlements, and Yardoo must owe her any sum the subject of a distribution. She has not agreed to lend any sum back to Yardoo. She has not received sufficient financial information in relation to the affairs of Yardoo to enable her to determine her entitlements or to better determine the value of her shares in Yardoo. Since in or about late 1997, she has not received any notices of meetings of directors or members of Yardoo. She has not received notice of any directors' meeting of Yardoo since late 1997.
246 Since in or about late 1997, she has not received any accounts for Yardoo, whether in draft or in final form, to consider or sign in her capacity as a director. She has now received some financial accounts for the year ended 30 June 1998, included in the court book in the proceeding no. 4542.
247 Since January 2000, she has tried, in the Family Court proceedings, through discovery in the 5151 proceeding, the 4542 proceeding, and through the subpoeneae which she caused to be issued in the Family Court proceeding, to obtain information about the financial position of Yardoo. She has received little information prior to discovery in this proceeding despite consent orders being made in the Family Court proceeding in January 2000 for the provision of documents concerning the financial affairs of Yardoo, and further Orders on 24 May 2000.
248 In cross-examination Lorraine Yard was taken extensively through the accounts, financial records and correspondence over 25 years. She had little personal knowledge of those matters. She stated that most of the financial and commercial information contained in her witness statement had been marshalled by her solicitors. She repeatedly stated that the men (Alfred and Trevor) conducted the business affairs and that she left it to Trevor and that she trusted him. She stated that at the relevant times the events occurred she had "limited knowledge" and "was told the basics" (287). She said
"I wasn't party to all the financial side of things, the men did the business, that was their - women only signed the papers. When the papers were put in front of them, they signed" (297).
She said (in relation to the transfer of Pomona to Yardoo)
- - - Because if you do those things you trust the people that you're married to and if they say this is for our benefit, la di da, di da, then you do it - they put things in front of you to sign and they you do it." (309)
She said (in relation to the conduct of the affairs of Yardoo):
"Even though you were a director of Yardoo, you didn't inform yourself about all the activities of Yardoo, did you?
- - - Well, I wasn't encouraged to you, totally discouraged from knowing what was going on, especially financially." (354).
249 Lorraine stated in cross-examination that when she married Trevor she was working as a hairdresser, had no personal savings as she "spent the last bit on my wedding dress" (291), did a little bit of hairdressing from home after her marriage and thereafter devoted herself to the care and raising of the two children of the marriage. When she could she helped out at the Garage and later on the farms. She and Trevor drew out $400 a month from Yardoo for living expenses. The various services she provided on the farms she "did for nothing for 28 years" (372).
250 As to the various properties, Lorraine stated the following in cross-examination. When she married Trevor she did not think about thereby becoming entitled to participate in or own any of Alfred's assets (294). When Pomona was put in her and Trevor's names, she cannot now remember what discussions occurred (295) but she
"knew it was registered in our names ... I just assume that it was mine and Trevor's, it was our farm because it was in our name (297).
"Do you remember any discussions about the property being registered in your name as a tenant-in-common for estate planning purposes?
Can I suggest to you that the reason was that Pomona was registered in your name in your name and Trevor's name as tenants-in-common was for estate planning purposes only?
"You knew, didn't you, that the property had been purchased for the benefit of Jeff Yard?
You knew that he was the person who paid for it?
- - - I dare say he helped out, as fathers do.
Did he ever say to you, 'Lorraine, here's a gift of money to buy Pomona'?
In fact, he never said to you, 'I'm registering Pomona in your name as a gift', did he?
There was no suggestion that when Pomona was registered in your name, that it was on the basis it had been gifted to you by Gladys or Jeff Yard?
- - - Well, I was left with the assumption that it was bought for Trevor and I, that it was our farm. I believed that. Obviously I was wrong.
"Do you remember any conversations with Trevor Yard about the transfer of land to Yardoo?
- - - Yeah, vaguely, just - just that I - yeah, I wasn't really very happy about losing the farm that we had just acquired for ourselves and - not that I guess we really lost it but it just seemed like it wasn't going to be ours any more it was gone into the company - that was my perspective of it.
You didn't pay anything for that farm, did you?
You knew that you had to transfer it to Yardoo if Jeff Yard told you to, didn't you?
- - - If Jeff Yard said I had to, I had to, yes.
That was the way in which Jeff Yard exercised his control over the company?
And he exercised his control over the land that he owned by telling you what to do with Pomona as well, didn't he?
- - - No, he didn't tell us what to do with Pomona at all, Trevor made the decisions out there." (307-308)
"When the property Pomona was purchased in your name it is correct, isn't it, that you did not expect to obtain any interest in that property or real benefit of ownership of the property until Jeff died, did you?
Lorraine stated that she was "disappointed" at the transfer of Pomona to Yardoo but "probably never made a big fuss about it" (310). Cross-examination proceeded:
"You had never expected to become the owner of 50 per cent of Pomona when you married Trevor, had you?
And even when the purchase was being contemplated you still didn't expect to become the 50 per cent owner of Pomona, did you?
- - - Well, I didn't have the resources to pay it." (310)
As to Brian's Block, because that was registered in her name Lorraine in her initial witness statement said that she and the Yards regarded it as her property, but in her revised witness statement she said that it was always regarded as belonging to the partnership. When asked to explain the inconsistency she replied:
She regarded Trevor as the owner of Szader's Block because his name was on the title, just as hers was on Brian's (346).
251 As to the incorporation of Yardoo, Lorraine stated that at that time she knew she was a director and shareholder of Yardoo (285). She understood that the four Yards were equal shareholders (343). She did not attend any meeting as to incorporation with Alfred, Trevor, Brodie and Penrose (306). She must later have signed the memorandum but does not recall doing so (306). She does not recall any conversations in 1976 about estate planning or about trusts (324).
252 As to the period 1976-1997 Lorraine stated that she "vaguely knew what was
happening" (285). Further:
"Even though you were a director of Yardoo, you didn't inform yourself about all of the activities of Yardoo, did you?
- - - Well, I wasn't encouraged to, totally discouraged from knowing what was going on, especially financially." (354)
253 Lorraine was not cross-examined about the matters of post-separation exclusion from the affairs of Yardoo or about oppression thereby being suffered by her. She was not cross-examined about Exhibit "A", her letter to Trevor of 22 February 1999 stating that she will not be present at the meeting of 25 February 1999; nor was it put to her in cross-examination that she had declined to attend other meetings of Yardoo.
EXPERT EVIDENCE
254 A substantial body of expert evidence was called before me, both as to financial and accounting matters and as to valuations of land, stock, plant and equipment relevant to the matters in dispute in these proceedings.
255 On financial and accounting matters, for Alfred Yard was called Mr Brenton Ellery, qualified chartered accountant and certified practising accountant and partner of Edwards Marshall, chartered accountants of Adelaide and by whom was produced a statement of 28 June 2004 which appended a Report of 24 November 2003 and a Report of 7 December 2004. The 24 November 2003 Report also analysed the balance sheets and financial affairs of the G.M., A.J., T.J. and J.L. Yard partnership from 1974 to 1997 (Appendix 3) and of Yardoo Pty Ltd from 1977 to 1997 (Appendix 4). The 7 December 2004 Report also analysed the financial position of Yardoo Pty Ltd at 30 June 1998 (Appendix 3), 30 June 2000 (Appendix 5) and 30 June 2002 (Appendix 6) and of the G.M., A.J., T.J. and J.L. Yard partnership at 30 June 1997 (Appendix 2) and that of G.M., A.J. and T.J. Yard at 30 June 2000 (Appendix 4). Further, on behalf of Alfred, an affidavit sworn 22 May 2005 of Mr M.A. Remeljej, certified practising accountant, of Adelaide was produced to which were exhibited 14 financial statements prepared by him respectively of the various partnership accounts: as at 15 December 1997 for that of G.M., A.J., T.J. and J.L. Yard; for financial years 30 June 1998 - 30 June 2001 (part year) for that of G.M., A.J. and T.J. Yard; for 30 June 2001 and 30 June 2002 for that of A.J. and T.J. Yard; and for financial years 30 June 1998 - 30 June 2004 for Yardoo Pty Ltd. Mr Remeljej was not called before me.
256 For Lorraine Yard, on financial matters was called Mr M.R. Lipson, qualified chartered accountant and director of Sothertons S.L.A. Accountants, of Melbourne and as to whom a Report of 6 September 2004 was produced which statement analysed the financial affairs of the G.M., A.J., T.J. and J.L. Yard partnership and of Yardoo Pty Ltd, in order to value Lorraine Yard's interest in the partnership and the company up to July 2004; a further Report of 21 October 2004; and a further Report of 9 March 2005 which appended a Report of 4 March 2005 and Supplementary Report of 8 March 2005 as to additional data then received.
257 On matters of valuation, for Alfred Yard was called Mr Lindsay Wapper, qualified valuer, of Adelaide and as to whom the following valuations were produced: as to all the Murrayville and district properties, Hawick and Paladin, each at 24 November 2004; and as to livestock, plant and equipment at 30 November 2004. Also called was Mr Robert Brooke, registered valuer and managing director of Taylor Brooke Pty Ltd, valuation consultants and as to whom a valuation of Paladin as at 28 September 2001 was produced. Also called was Mr D. Harris, registered valuer as to whom was produced valuations of all the Murrayville and district properties as at 3 October 2001, and of Hawick as at 2 October 2001.
258 On matters of valuation, for Lorraine Yard was called Mr C.D. Wakeham, certified practising valuer, formerly of Mason Gray Strange Real Estate and now of Charter Keck Cramer Property Consultants of Melbourne and as to whom the following valuations were produced: as to all the Murrayville and district properties as at 5-15 July 2004, Hawick at 5 July 2004, and Paladin at 12 October 2004; a Report of 7 February 2005 with updated valuations as to the properties, and of 7 March in relation to Carina. Also called was Mr A.J. Robertson, certified practising valuer (plant and machinery) and principal of M.G.S. Valuations Pty Ltd of Adelaide, and as to whom valuation of plant and equipment on the Murrayville and district properties as at 10 July 2004, and at Hawick as at 5 July 2004, was produced, and also an amended Report of 8 February 2005.
259 It is convenient to refer further to the financial and valuation evidence in the section below on consideration of issues.
SUBMISSIONS
260 In order to contain the costs of the proceedings, submissions of counsel were received in written form. Both sets of submissions were comprehensive and thoughtful. I express my appreciation to both Mr Stevens and Mr Jones for the benefit of their submissions and for the substantial assistance to the Court they each provided throughout the proceedings.
261 A summary of counsel's submissions is as follows:
SUBMISSIONS ON BEHALF OF ALFRED YARD
262 Submissions on behalf of Alfred Yard are summarised in paragraphs 263-458 below.
Proceeding No. 4542 of 2001
263 At the commencement of cross examination Lorraine stated that she knew the things stated in Lorraine's statement of her own knowledge. However, during cross examination it became apparent that Lorraine had no more personal knowledge of events and transactions than she ever had during the period 1969 to 1997 and at the commencement of the Family Court proceedings on 5 July 1999. It also became apparent during cross examination that the "facts" deposed to in Lorraine's statement were a re-creation of events by Lorraine's solicitors, a repetition of statements or propositions in Mr Lipson's Report, and a statement of conclusions and argument prepared by Lorraine's solicitors. Lorraine's evidence disclosed that Lorraine did not understand the concept of beneficial ownership. However she claimed to be the beneficial owner of one share in Yardoo; Lorraine signed documents because Alfred said she had to; Alfred was the "controller". Lorraine did not understand the documents; Lorraine had no idea about how money was found in the family. Lorraine would not have been involved in the financial part of things. In 1977 Lorraine did not have any expectation of receiving payment from Yardoo for the transfer of Pomona. That had only become an issue since Lorraine and Trevor separated and divorced and reading Mr Lipson's draft report; Lorraine cannot read and understand a profit and loss statement or a balance sheet; Lorraine did not inspect Alfred's discovered documents; Lorraine did not examine the 3 folders of financial documents; Lorraine did not examine the 2 folders of General Documents; Lorraine's statement was prepared by her solicitors. It was not exclusively her work; Lorraine had not seen the supplementary book of documents comprised in her statement before they were produced to her in court; Lorraine could not identify the parts of her statement prepared by her solicitors and did not know if they had re-created the transactions; Lorraine did not have knowledge of the financial transactions in her statement and did not check the source documents.
264 Notwithstanding a complete lack of independent knowledge of the events, the transactions, the finances, the operation of Yardoo and the Yard partnership, Lorraine stated that there were no circumstances in which she would consider Alfred to be the true owner of the Schedule 1 properties or Pomona.
265 Lorraine's witness statement made assertions and drew conclusions about events and financial transactions which contradict her own evidence that she had no contemporaneous knowledge or understanding of events. The conclusions are statements of hindsight prepared by her solicitors. For example Lorraine asserts that the purchase of properties by Yardoo "were simply treated as loans in the financial accounts of Yardoo, and this is symmetrical with my understanding that there was a simple sale of properties to Yardoo by various family members who are parties to these proceedings." However Lorraine stated in evidence that she transferred Pomona because "Jeff said she had to" and that she signed the documents "without understanding them". Lorraine "did not even think" about those issues in 1977. Lorraine could not read financial statements.
266 The Court should be careful to assess and reject Lorraine's knowledge and evidence of events and transactions which has been the re-creation of events by her solicitors since 1997. That includes her claim to be the beneficial owner of one "D" class share in Yardoo. Lorraine did not know that prior to 1997 or make that claim until after this action started.
267 Lorraine's denials about the purpose of the transactions and Alfred's claim to be the beneficial owner lack credit. They contradict Lorraine's statements that Alfred was the "controller", that he "ruled by command" and Lorraine did what she was told to do. Lorraine does not make any claims of duress, undue influence or unconscionable conduct. Equity would require adjustment of the benefit obtained by Lorraine by bringing to account the assets and purchase money paid by Alfred.
268 The Court should reject Lorraine's statement as evidence in support of the statement of claim in Lorraine's action and the defence in Alfred's action.
Alfred's Claims
269 Alfred claims that he is the beneficial owner of the properties described in Schedules 1 to 5. The starting point is prior to Alfred's marriage to Gladys in 1946. There is no doubt that Alfred was the sole legal and beneficial owner of the land then registered in his name, the business of the Renown Garage and all related livestock, plant and equipment.
270 Subsequent to their marriage Alfred and Gladys conducted both the farming and garage business as a partnership G.M. and A.J. Yard. There is no evidence as to the start and finish of that partnership. Alfred did not transfer to the partnership the real property owned by him and used to conduct the partnership. The inference is that it was a term of the partnership that Alfred permitted his land to be used by the partnership GM & AJ Yard but that it did not thereby become a partnership asset. That is consistent with well established principles of law that the partners may contribute in different ways. There is no reason to assume that Alfred Yard did transfer legal title of his other assets to the partnership GM & AJ Yard, such as actual ownership of the business of the Renown Garage and its assets. It is possible the partnership was only entitled to the income of the business. To the contrary, although Alfred's apparent source of income during that period was the partnership GM & AJ Yard, Alfred purchased additional property in his own name. It is possible the partnership did pay part of the costs of acquisition by way of a notional rent but the additional land did not thereby become an asset of the partnership GM & AJ Yard. Gladys has not made any claim in respect of the property purchased by Alfred during this period. Gladys has not defended the claim by Alfred with respect to the properties in Schedule 1.4 "Jimmy Macs" and Schedule 2 "Murphy's".
271 Similar considerations apply concerning the partnership of G.M., A.J. and T.J. Yard. There is no evidence as to the start and finish of that partnership. Prior to and during the partnership GM, AJ & TJ Yard, Alfred owned and acquired more property in his own name. Alfred remained as the registered proprietor of the land despite the fact that it was used by the partnership GM, AJ & TJ Yard.Alfred and Gladys also had substantial personal savings with General Credits.
Partnership GM, AJ, TJ & LJ Yard ("the Yard partnership")
272 The Yard partnership commenced at an unknown date, after the marriage of Trevor and Lorraine. The most consistent evidence of the parties is that the Yard Partnership commenced at about the same time that Pomona was purchased by Alfred in 1973.
273 Notwithstanding an apparent concession by Alfred that the Yard partnership may have commenced in 1969, paragraph 7 of Lorraine's Amended Statement of Claim in proceeding no. 5151 of 2001 asserted the partnership commenced in about 1976. Lorraine did not know what the status of the Yard partnership was in 1973. Trevor believes that the Yard partnership commenced about the time Pomona was purchased in 1973. The earliest financial statements for the Yard partnership are for the year ended 30 June 1975.
274 In common with the previous partnerships between Alfred, Gladys and Trevor there was no formal or written partnership agreement to establish the Yard partnership. There was no written transfer of any property, plant and equipment or livestock to the Yard partnership. The 1975 Financial Statements for the Yard partnership indicate but do not state the assets of the partnership of GM, AJ & TJ Yard (plant & equipment, livestock, cattle) were transferred to the Yard partnership. There does not appear to have been any consideration given by the Yard partnership to the financial entitlements of members of the previous partnership. Although the Yard partnership used real property owned by Alfred he did not transfer any of the Schedule 1 properties to the Yard partnership. Alfred did not receive rent for use of the Schedule 1 properties.
275 During the period 1974 to 1977 the Yard partnership also used Pomona which was registered in the names of Trevor and Lorraine to conduct part of its farm business. The 1975 Yard partnership accounts included Pomona as an asset of the Yard partnership. The Yard partnership continued until at least December 1997. The members of the Yard partnership have been or are the registered owners of three properties. Pomona was purchased in the names of Trevor and Lorraine as tenants in common but brought into the 1974 Financial Statements as a Yard partnership asset and was transferred to Yardoo in 1977. Paladin was registered in the names of the Gladys, Alfred, Trevor and Lorraine. Brian's Block was registered in the sole name of Lorraine but is now conceded by Lorraine to have been purchased on behalf of the Yard partnership.
276 Pomona was offered for sale by auction. Alfred and Trevor attended the auction but Pomona was passed in. Trevor and Lorraine did not have the financial capacity to purchase Pomona. After the auction Alfred negotiated the purchase of Pomona with the agent Mr Lackman including price and terms. Alfred nominated the purchasers. Pomona was purchased by a contract dated 12 December 1973 in the names of Trevor and Lorraine. The purchase price was $130,000.00, plus various plant and equipment. The vendor agreed to provide $65,000.00 vendor finance at 7% pa. Alfred paid half the purchase price from General Credits accounts in the name of Alfred and Gladys. Pomona was registered in the names of Trevor and Lorraine as tenants in common. The Yard partnership Financial Statements 1975 - 1976 treated Pomona and all related assets and liabilities as belonging to the Yard partnership, included proprietor's funds which assumed that each of the partners had contributed to the purchase of Pomona equally, and did not give any credit to Alfred or to Gladys for the deposit moneys or balance of purchase price paid.
277 Lorraine does not remember any conversations with Alfred, Gladys or Trevor about the purchase of Pomona. Lorraine did not know or remember any details of the purchase including payment of purchase price and registration of Pomona in the names of Trevor and Lorraine as tenants in common. Lorraine agreed Pomona was not gifted to her and Trevor. Lorraine did not know how she paid for her interest in Pomona as a tenant in common.
Incorporation of Yardoo
278 Yardoo was incorporated on 1 October 1976. The effect of Alfred, Trevor and Brodie's evidence is that Alfred was concerned about State and Federal death duties. Penrose, an insurance sales person, proposed that Alfred establish a company, transfer his assets to the company and purchase four superannuation policies; Penrose gave an explanation of how the company would operate; Alfred, Trevor and Penrose met Brodie in Mildura to discuss the proposal; Alfred decided to proceed with incorporation of Yardoo, the transfer of properties to Yardoo and the purchase of the superannuation policies; Brodie probably instructed Mr Irwin, solicitor, of Mildura to incorporate Yardoo; and Alfred, Gladys, Trevor and Lorraine each subscribed for one "A", "B", "C" and "D" class share respectively.
279 Clauses II (6) and (20) of the Memorandum of Association state that the objects of the company include carrying on the business of trustees. Alfred did purchase four superannuation policies from Penrose. Brodie and Irwin did not provide legal or accounting advice about Penrose's advice and company structure.
280 Alfred's statement and evidence concerning the incorporation of Yardoo provides contemporaneous evidence of Alfred's intention. Trevor's statement at paragraphs 56 to 74 provides details of the relevant events. It is independent of Alfred's memory and evidence. It has a degree of familiarity or a ring of truth to it. Brodie provided corroborating evidence concerning the meeting at Mildura with Alfred, Trevor and Penrose. Despite the somewhat laissez faire attitude adopted by Brodie towards the preparation of Financial Statements and what they recorded Brodie presented as a credible witness with an independent memory of events.
281 Lorraine is unable to contradict the evidence of Alfred, Trevor and Mr Brodie. Lorraine knows it happened but has no real memory of events. She does not remember any conversations about the purpose for Yardoo being established. Lorraine did not attend the meetings with Brodie or Irwin. Lorraine did not know she had become a shareholder and did not pay any money to become a shareholder. Lorraine did not know what "beneficial ownership" meant and was not aware the she was the beneficial owner of shares until the start of this action and after her solicitors made searches.
Transfer of Land to Yardoo
282 After the incorporation of Yardoo, Alfred gave instructions to Freeman & Pitts solicitors to transfer the land in Schedules 1, 2 and 3 to Yardoo. The transfer process lasted from 13 October 1976 to December 1977 and is recorded in the correspondence.
283 Alfred submits the correspondence supports the following conclusions: the transfers were undertaken to give effect to the proposal made by Penrose to reduce death duties; there was no contract for the sale and purchase of the relevant properties; and the Memoranda of Transfer are the only written record of the transfers and consideration. The transfers recite the consideration but do not include a receipt or acknowledgement of payment; there is no reference in the correspondence to a cash payment or any application for finance to enable payment by Yardoo of the consideration except by the vendors; Alfred did not give specific instructions as to values and methods of payment; the valuation of the properties transferred was undertaken for stamp duty purposes; and the purchase by Yardoo by way of "loans with appropriate mortgages and/or acknowledgement of debt" was determined by Brodie. Alfred did not give any instructions; Freeman & Pitts did not prepare an acknowledgement of debt and the transfers were passed at Stamp Office without proof of payment; there were no arrangements with third party financiers to provide loan moneys to Yardoo to pay for the land transferred to it; and it was never anticipated that any money would be exchanged upon the transfer of property to Yardoo.
284 Lorraine is unable to contradict Alfred's evidence. The effect of Lorraine's evidence is that she was not party to the discussions about the transfer of properties to Yardoo, and might not have been told about the purpose of establishing Yardoo or the purpose of transferring properties to Yardoo; Alfred was the "controller" and if he said Lorraine had to transfer to Yardoo then she had to; Lorraine did not understand the transactions when she signed the transfer; the transfer of Pomona to Yardoo did not make any difference to Lorraine; Lorraine did not know what finances Yardoo had available to pay for the land transferred to it; Lorraine did not have any expectation of payment from Yardoo; and Lorraine did not make any demand for payment of money from Yardoo.
285 Lorraine's witness statement and evidence support findings that although Lorraine was the registered proprietors of a one half interest Pomona, Alfred did exercise actual control over Pomona; Alfred did direct Lorraine to transfer the legal title of her one half interest in Pomona to Yardoo; Lorraine did transfer her legal title Pomona to Yardoo in the manner directed by Alfred; and in 1977 Lorraine did not expect or receive any payment or benefit for the transfer.
286 Lorraine now asserts that the loan accounts in the Financial Statements of Yardoo constitute payment for the properties. That issue was not raised until July 2004.
287 It is agreed by Brodie, Ellery, Lorraine and Lipson the Financial Statements of Yardoo and the Yard partnership for 1977 do not reconcile and properly record assets and liabilities in respect of the transfer of Pomona to Yardoo.
288 Although Lorraine admits she did not pay anything for the one half interest in Pomona registered in her name, the financial statements of Yardoo and the Yard partnership credit Lorraine for one half of the gross transfer price without deduction of the balance of the Bethune loan $50,000.00 and adjustments for the money paid by Alfred & Gladys upon the purchase of Pomona.
289 Lorraine agreed the accounts do not reconcile, but said it was not a matter which affected her personally, because in 1977 she did not expect that she had any interest in the land transferred to Yardoo. Lorraine now claims the full benefit of those transactions. However she does not offer to do equity.
290 Lorraine does not make any claim of duress, undue influence or unconscionable conduct in respect of the transfer of land to Yardoo including Pomona. If the Court were to undo the transaction relating to the purchase and later transfer of Pomona it would require Lorraine to do equity by recognising Alfred's claims. Lorraine/Yardoo would also not be entitled to retain the benefit of an interest in the Schedule I and 2 properties. The effect of Lorraine's statement and evidence is that she acknowledged Alfred's control and ownership of the Schedule I and 2 properties, Pomona and Yardoo. It was a control Alfred did exercise. It was a control which Lorraine accepted in 1973, 1977 and through to 1997. Lorraine's evidence is a contemporaneous acknowledgement by Lorraine that Alfred was the beneficial owner of the land. In 2004 Lorraine still acknowledged Alfred's control but despite a lack of knowledge of events and transactions denied that Alfred as controller was also the beneficial owner of the properties.
291 Lorraine consistently failed to identify the consideration given or paid by her for the interest claimed by her in Pomona, Yardoo and the other properties. In the alternative Lorraine has failed to show that the receipt and retention of the interests claimed by her are not unjust.
Trusts
292 In the present action there are two alternative types of property which are the subject of the claim by Alfred; first, the land registered in the name of Yardoo and other members of the Yard family which would be subject to the Property Law Act; second, the B, C and D class shares which would not be subject to those provisions. There is no written deed of trust which creates an express trust in respect of the land transferred to or registered in the name of Yardoo or the various members of the Yard partnership. By reason of the injunctions granted by the Family Court, the Supreme Court of South Australia in action 1044 of 2000, and the Supreme Court of Victoria in the cross vested action no 5151 of 2001, Alfred, Gladys, Trevor and Yardoo are prevented from entering into a formal deed of Trust with respect to the land. Yardoo is able to remedy the alleged defect.
293 Proof of an express trust is dependant upon various factors. It is arguable that the transfers of land to Yardoo and issue of shares constitutes part performance of the trust. Further, it is still possible for Alfred who was the legal and beneficial owner of the land prior to the transfer to Yardoo and for Yardoo to acknowledge the trust in writing. The existence of a trust in favour of Alfred is not negated by the fact that one title was owned by Gladys Yard, the history of the purchase of Pomona and the registration of Brian's Block in the name of JL Yard. In the event this Court found that there was evidence of an express trust, the Court should dissolve the relevant injunctions and permit the trusts to be confirmed in writing.
294 Implied or resulting trusts arise where a settlor or testator carries out some intentional act other than the creation of a relationship of trustee and 3
beneficiary from which the court can infer a relationship of trustee and beneficiary. Property Law Act 1958 (Vic) section 19A makes statutory provision.
295 In House v Caffyn[2] Cussen J. held that land under the Torrens system can be subject to a presumption of a resulting trust. The Statute of Uses has not been repealed in South Australia.
296 There are two recognized circumstances where a person transfers an interest in property whether legal or equitable which give rise to a resulting trust. First, if the transferor of property indicates that the transferee is to hold the property beneficially or on a trust that will be decisive. However, if property has been transferred to a person, in joint names or otherwise, without any consideration there is a rebuttable presumption the transferee holds the property including the beneficial interest on trust for the payer or transferor. Second, where a person transfers property on trusts that do not properly or entirely dispose of the beneficial interest. In that instance, the transferee automatically holds the property on a resulting trust for the transferor.
297 In Re Vandervell's Trusts (No 2)[3] Megarry J at first instance suggested that the two classes of resulting trust should be categorized as "presumed" and "automatic" resulting trusts. That approach was considered by the House of Lords in Westdeutsche Landesbank Girozentrale v Islington LBC[4]. At 708-709 Lord Browne-Wilkinson was not convinced the analysis by Megarry J was correct. At issue is the intention of the transferor. Chamber's Resulting Trusts asserted that such trusts required nothing more or less than a transfer of property in circumstances in which the transferor did not intend to benefit the recipient. In Air Jamaica v Charlton[5] Lord Millet accepted that resulting trusts arise by operation of law and give effect to intention but also recognized the corollary in that a resulting trust
" ...arises whether or not the transferor intended to retain a beneficial interest - he almost always does not - since it responds to the absence of any intention on his part to pass a beneficial interest to the recipient."
298 Australian decisions appear to confine the application of resulting trusts to three types of cases:[6] first, where a trust has been expressly created but the interest taken by the beneficiaries does not exhaust the beneficial interest commensurate with the trustee's estate or interest; second, where a transferor has voluntarily transferred property, without any consideration having been provided, the transferee being in equity a stranger to the transferor; and third, where the property has been purchased but the title to the property is placed in the name of another, being in equity a stranger to the purchaser. The second and third circumstances are most relevant to the current actions.
299 Where a person having the legal title makes a voluntary transfer to another in circumstances in which a resulting trust arises then the transfer of the absolute title, legal and beneficial to the transferee does prevent the resulting trust from taking effect:[7]
"... the basic premise on which all trust is built (is) that the conscience of the trustee is affected."[8]
300 The resulting trust is imposed by operation of law upon the transferee's beneficial title: "it is of the nature of a resulting trust that it arises when the entire estate is vested in the transferee and at the very moment it becomes so vested."[9] The equitable estate which follows the transferor arises from the transferor's intention or presumed intention, or according to Lord Millet a lack of intention to pass a beneficial interest. The most common situation in which a resulting trust arises is where property is purchased in the name of another person. The history of the rule is stated by the Vice Chancellor in Wray v Steele[10].
301 Alfred denied that in 1973 it was his intention to give Pomona to Trevor and Lorraine when it was registered in their names. Trevor also stated it was not a gift. Lorraine accepted that position. Alfred told the Court he thought he could have things both ways by treating Trevor and Lorraine as owners of Pomona for death duty purposes but not as owners for family purposes. Even if Alfred's evidence is an incorrect statement of law it was a bona fide statement of Alfred's understanding and intent. According to Alfred's witness statement Alfred's decision to incorporate Yardoo and to transfer property to it was motivated by the desire to reduce the State and Federal death duties which would be payable by his wife, Trevor and possibly his grandchildren upon his death. Alfred's evidence does not refer to Lorraine who at that time had no expectation of being entitled to or receiving any of Alfred's property.
302 Alfred was advised by Penrose who described himself as an investment and taxation adviser. The Legal & General brochure promotes the purchase of insurance policies as a method of saving to pay death duties. It is probable that Penrose was nothing more than an insurance sales person who was motivated to sell four expensive superannuation policies to Alfred. Penrose however "over-stepped the mark" by providing advice about incorporation and transfers of properties. Nothing is known about his qualifications to provide such advice. In 2004 it can be seen that Penrose's advice was inadequate at the time it was given and is now irrelevant due to the repeal of death duties. Regardless of the legal issues which have now arisen as to the adequacy of the advice and efficacy of the legal structure which was adopted in 1977, Alfred did not change his use of the assets and business which were transferred to Yardoo. It is doubtful that in 1977 Penrose's advice was subject to the same scrutiny and examination that it has in 2004. Alfred's intention should be ascertained by his understanding of the transaction as presented by Penrose in 1997. Alfred believed that by incorporating Yardoo and transferring the land to it he could continue to own and operate the land, garage and farming business in just the same way as he always had, Yardoo would hold the land for him, and it would not make any difference. Alfred stated the right of the shareholder in Yardoo was to hold the shares for him. Alfred did not believe Lorraine was an equal shareholder in Yardoo or properties accumulated by the Yard family. Alfred would not have transferred land to Yardoo if it was not being held for him. Alfred's assets went into the company to safeguard them for Alfred. The whole land was to be held on trust for Alfred. That was the idea of Penrose's advice for changing over from private land to the company. Penrose secured it all in the trust on behalf of Alfred. Alfred had full control of the company and could take Lorraine's share away. Alfred believed the company was the trust. Alfred transferred Pomona from the names of Trevor and Lorraine to Yardoo as a means of getting his money back. Yardoo was for the use of all the land for Alfred, nothing would alter Alfred from being the owner. The savings in probate duty would only operate on Alfred's death. Alfred did not get advice from his solicitor or accountant about the effect of transferring the properties. Alfred was advised the change would make no difference, he would have the right to operate exactly the same, it would not go out of his hands the same as if he owned the land. Alfred thought it was easy to avoid death duties by putting the land into the company. Alfred denied the concept of a trust of land occurred only after the Family Court proceedings. Penrose told Alfred the transfers of land did not matter.
303 After incorporation of Yardoo and the transfer of the Schedule 1, 2. and 3 properties, daily operation of the Renown Garage and farming businesses continued in the same manner. The only difference was the name of the registered proprietor of the land and Renown Garage. In 2004 Alfred at 81 years of age is still actively working as a farmer and operating the Renown Garage. Alfred's evidence of intention is consistent with Lorraine's evidence that Alfred was the "controller". Lorraine did transfer her half interest in Pomona as and when directed by Alfred and without any cash payment. Alfred continued to exercise control until at least 1997. Lorraine was indifferent to the effects of the transfer on her until her separation and divorce. Trevor's witness statement corroborates Alfred's evidence of intention. Trevor's statement provides a more detailed outline of the meetings with Penrose and the explanation given about the incorporation and operation of Yardoo. Trevor's evidence should be accepted on this issue.
304 Brodie's statement provides corroboration of the proposal put by Penrose. Brodie knew about such schemes but considered that it was unusual to implement them. There is no evidence of contemporaneous advice by Brodie about the effect of Penrose's scheme. Alfred expected to retain use and control of all the land during his lifetime. The accounts were not intended to record the legal or beneficial ownership of assets. Brodie did not consider the specific effects until cross examined. When asked to give evidence of the explanation that he gave Alfred at the meeting in Mildura, Brodie was limited to generalities. Brodie did not understand the legalities.
305 Ellery's explanation of the operation and effect of Penrose's scheme was not evident in 1977. Although informative it is hindsight and was not the explanation if any given to Alfred in 1976 by either Penrose or Brodie.
306 As a consequence of the advice provided by Brodie, Alfred adversely altered his position in 1977 by changing the legal title to the significant properties he owned or had a beneficial interest in.
307 By analogy Alfred has in effect divested his beneficial interest in land as a consequence of a mistake of fact and law in 1977 as to the consequence of the transaction.[11] When Federal and State death duties were removed the long term consequences of the arrangement lost any relevance as an estate planning device. There is no evidence that in the interim period 1977 to 1997 Gladys, Trevor and Lorraine considered themselves to be beneficial owners of their respective interests. Lorraine did not think about it and now concedes she is not the sole beneficial owner of Brian's Block.
308 Lorraine had no expectation that she was entitled to Alfred's assets. If Lorraine was part of Penrose's scheme which was to take effect on Alfred's death, Lorraine cannot remove assets from the scheme and claim a different benefit from the scheme: the repeal of State and Federal death duties removed the objective; Lorraine's divorce from Trevor terminated the underlying assumption that Lorraine was a person who might benefit upon Alfred's death; and Alfred is still alive and entitled to continuing control of his assets including disposition by his will. Lorraine has not provided consideration. She has not altered her position, proven reliance on her alleged entitlement or proven any prejudice. She has not rebutted the presumption of an implied trust in favour of Alfred.
309 If the transfers of land to Yardoo and later acquisitions were inadequate to create an express or implied trust to the benefit of Alfred then it is still necessary to determine whether equity should intervene and perfect Alfred's claim to be the beneficial owner by construing a trust of the properties in his favour.
310 Snell's Principles of Equity 28th Ed page 192 states:
"A possible definition is that a constructive trust is a trust imposed by equity in order to satisfy the demands of justice and good conscience, without reference to any express or presumed intention of the parties."
Halsbury's Laws of England 4th Ed Vol 48, Para 585 identifies two categories of constructive trust. Those involving profits made by fiduciaries and those created by intermeddling strangers. The categories are not closed and Australian authorities cover a broad spectrum of circumstance.
311 Notwithstanding the statement in Snell a constructive trust will not be imposed by the court whenever the justice of the case requires it without regard to legal or equitable principles. In the case of express, implied and resulting trusts the Court is concerned with the intention of the parties and the effectiveness of the disposition at the time of transfer. In the case of a constructive trust, the inquiry is not about the actual or presumed intentions of the parties but whether according to established principles of equity it would be improper or a fraud for the transferee to deny the trust and to keep the beneficial ownership.
312 Alfred asserts that Lorraine is attempting to obtain or retain a personal benefit, especially with respect the Schedule 1, 2 and 3 properties for which she gave no consideration and to which she is not entitled.
313 The statement of claim in Lorraine's action and Lorraine's defence in Alfred's action do not plead a promissory devise with respect to the various properties; Alfred made any representations as to the future ownership of the various properties or of any reliance; competing claims by Lorraine arising from a contribution to the purchase price of the properties in Schedule 1 to 5; the properties in Schedules 1 to 5 are being held for Lorraine's benefit other than as a shareholder in Yardoo or as a partner in the Yard partnership; a specific claim with respect to Brian's Block which was registered in Lorraine's sole name; or any claim based on estoppel. Lorraine did not file a counterclaim in Alfred's action. Lorraine's statement and oral evidence do not support any such claims. Lorraine's case is that whatever interest she holds in the Yardoo shares or other properties have already been registered and vested in her legally and beneficially.
314 The result is that in the event that the Court is unable to find an express or resulting trust in favour of Alfred, the Court is able to consider the issue of a constructive trust free of any competing claim by Lorraine. In that circumstance many of the authorities have limited application except to divine the underlying rules of equity.
315 The concept of unjust enrichment as a factor relevant to constructive trusts is referred to in Carl Zeiss Stiftung v Herbert Smith & Co [No2].[12] Ford, The Principles of the Law of Trusts at paragraph 21005 examines the equitable remedy of resulting trusts as a restitutionary remedy for unjust enrichment in circumstances there has been no intention to confer a beneficial interest on the transferee. The factual circumstances of Muschinski v Dodds[13] are not readily applicable in this action. Deane J acknowledged that general notions of fairness and justice underlie fundamental equitable concepts and doctrines such as unconscionable conduct and constructive trust. However Deane.J (with whom Mason J agreed) also rejected the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair. After an examination of the authorities, Deane J concluded (at 614):
"Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) 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."
"Once its predominantly remedial character is accepted, there is no reason to deny the availability of the constructive trust in any case where some principle of the law of equity calls for the imposition upon the legal owner of property, regardless of actual or presumed agreement or intention, of the obligation to hold or apply the property for the benefit of another."
"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 (1868) LR 3 Ch App 369 at 374-5 and per Jessel MR, Lyon v Tweddell {1881) 17 Ch D 529 at 531."
The effect of the High Court's decision was that the parties were, in substance, left with their respective interests as legal tenants in common of the subject property but were subjected to an equitable accounting to compensate for the disproportion between their contributions to the purchase and improvement to the subject property.
316 The common purpose or interest which Alfred and Lorraine had arose by reason of the matrimonial relationship between Trevor and Lorraine. Alfred's statements in evidence to the effect that Alfred no longer accepted or recognised Lorraine in Yardoo or the Yard partnership sounded harsh; however, the substratum to that relationship only existed while Trevor and Lorraine were married.
317 The transfer of land to Yardoo had a secondary purpose arising from the matrimonial relationship, being the reduction of death duties upon Alfred's death. That object failed when death duties were repealed.
318 The divorce of Trevor and Lorraine terminated any common purpose between Alfred, Gladys, Trevor and Lorraine as shareholders in Yardoo and as members of the Yard partnership. Although Alfred was not a party to the marriage Lorraine wants to bring the assets contributed by Alfred to account as part of the matrimonial pool.
319 Lorraine agreed that in 1973 Pomona was not gifted to her and Trevor. Lorraine now concedes that although in 1992 she became the sole registered proprietor of Brian's Block that property is owned by the Yard partnership. Loraine has not made similar concessions about her share in Yardoo or the other properties accrued in the period 1977 to 1997. Lorraine has failed to provide evidence in support of a gift or advancement of those interests.
320 Purchase money resulting trusts and resulting trusts arising upon voluntary transfers of property will only be presumed if the recipient of the property is, in equity, a stranger to the transferor or the provider of the purchase money. Where the recipient is not a stranger equity applies a countervailing presumption that an advancement or gift is intended. If a father purchases land in the name of his legitimate child the presumption of advancement will apply. Like the presumption of a resulting trust the presumption of advancement is rebuttable.[14]
321 The following property and assets appear to be affected by the presumption. First, Pomona. In 1973 Pomona was registered in the names of Trevor and Lorraine as tenants in common. Lorraine does not claim it was gifted to her. Second, D class share in Yardoo. Lorraine did not pay for this share and did not claim to be the beneficial owner until after her separation. Although only valued at $1.00 in 1977 the asset backing included the Schedule 1, 2 and 3 properties. Third, Szader's Block Lot 9 Murrayville which is registered in the sole name of Trevor Yard. Fourth, Brian's Block. Lorraine now concedes this is a partnership asset.
322 The transfers to Yardoo, Lorraine Yard (Brian's Block) and to the joint names of all partners (Lobethal) are not subject to the presumption of advancement.
323 There are fewer cases where there has been a voluntary transfer of land.
324 In Alfred's action, Lorraine's amended defence paragraph 17A asserts the consideration for the transfer of Pomona from Trevor and Lorraine to Yardoo was paid by raising loan accounts in Yardoo. Lorraine's defence is limited to the loan accounts relating to Pomona.
325 Lorraine's statement refers to the loan accounts in Yardoo as a form of payment. In 1977 Lorraine did not have any expectation of payment from Yardoo. Lorraine's statement and the allegation that the loan accounts constitute some form of payment has only arisen since Lipson was instructed to provide an expert report. Lorraine was unable to tell the Court how payment was made for the purchase of Pomona, the schedule properties and transfer of Pomona to Yardoo. Brodie agreed that accountants accept loan accounts as a form of payment. However Brodie also stated that the balance sheet prepared by him did not reflect the true position. They were "guesstimates". Ellery also accepted that for accounting purposes loan accounts were an accepted form of consideration. Notwithstanding that evidence, Lorraine's claim of payment by loan accounts is a recent and convenient fabrication by Lorraine and her solicitors to provide an accounting basis for payment where money was not exchanged or intended to be exchanged in 1977. Lorraine did not expect a payment of the loan account during 1977 to 1997.
326 Alfred submits the loan accounts recorded in the Financial Statements of Yardoo and the Yard partnership are inaccurate, cannot be relied upon and do not constitute payment. The evidence of Brodie, Ellery and Lipson relates to "accounting practice" only and is not conclusive of the legal effect of loan accounts as recorded in the accounts. The loan accounts in the financial statements of the Yard partnership do not properly record the purchase of Pomona in 1973. The accounts do not record the source of the purchase moneys. Pomona was registered in the names of Trevor and Lorraine as tenants in common. The Yard partnership accounts record Pomona as an asset of the Yard partnership. The loan accounts in the financial statements of the Yard partnership do not properly record the sale of Pomona to Yardoo. The loan accounts in the financial statements of Yardoo do not properly record the purchase of Pomona from the Yard partnership. The loan accounts and financial statement of Yardoo and the Yard partnership do not reconcile; Alfred has never been paid any money; the entries are only paperwork; Brodie gave strong independent evidence about the methods he used to calculate loan accounts and adjustment between Yardoo and the Yard partnership; they were not intended to record ownership or the true situation; they were guesstimates; the accounts do not record the reduced drawings by Alfred or deposit and purchase money for Paladin; the amounts of the loan accounts were never intended to be paid; no one has ever arranged for finance to pay the loans or made a demand for payment; third party loans would have had a significant effect on Yard partnership income especially as Alfred had previously owned the properties freehold; there are no recorded terms of the loan accounts; the loan accounts are not commercial; and no interest has ever been credited. Equity will examine transactions to determine whether payment has in fact been made.
327 Although Brodie gave evidence about how Penrose's scheme would operate and that he believed it was a genuine transaction, Brodie did not in fact record the accounting transactions in a manner consistent with that evidence. Brodie took no regard of who owned what or owed what. He did not obtain instructions from Alfred.
328 Ellery gave evidence as to the effect of Penrose's scheme. Ellery stated for the scheme to be effective both the legal and beneficial title had to be transferred to Yardoo. It is not apparent that information was known in 1977. Ellery's evidence is contrary to what Penrose told Alfred. Brodie did not give that explanation to Alfred. Alfred told the court he though he could have it both ways.
329 Paragraph 12.15 of the amended statement of claim in Lorraine's action asserts the actions of the defendants (in Lorraine's action) have been taken to deny Lorraine her proper entitlement of a division by the Family Court of the matrimonial assets. The Prayer for Relief in Lorraine's action claims various relief including equitable relief pursuant to the Corporations Act section 461(2)(k). Alfred can clearly identify contributions such as the Schedule 1 properties and payments such as the deposits for Pomona and Paladin. At the very least Lorraine is "triple dipping" especially with respect to Pomona. Lorraine wants the value of the loan accounts at historical levels and the value of all properties at full current value; Lorraine did not pay for the half interest in Pomona registered in her name; even if adjusted the loan accounts for the Yard partnership give Lorraine a credit on the assumption that she owned her half interest in Pomona freehold; Lorraine claims both a loan account credit in the accounts of Yardoo without paying any money for her half interest in Pomona and a one quarter interest in the Schedule 1 and 2 properties transferred to Yardoo in 1977; and even if Lorraine did own an unencumbered half interest in Pomona Lorraine obtained a significant extra benefit in the Schedule 1 and 2 properties without any additional payment.
330 When Lorraine's claim is considered in detail it is apparent that at the commencement of the business relationship Lorraine did not pay money in or contribute any assets. Lorraine's evidence does not clearly identify her financial contribution during the business relationship. At the time of her marriage Lorraine did not have any expectation that she was entitled to any assets owned by Alfred. Any savings of Alfred and Gladys were their money. The transfer of 50% interest in Pomona to Lorraine did not make any difference to her; she just signed the documents. Lorraine did not have the resources to pay for a half-interest in Pomona. Alfred did not gift Pomona to Trevor and Lorraine even though it was registered in their names as tenants in common. Lorraine did not pay any money to become a shareholder of Yardoo. When Yardoo was incorporated Lorraine did not think about any entitlement to the properties in Schedule 1. In 1977 when Pomona was transferred to Yardoo Lorraine did not understand the transaction and did not know what expectation she had of receiving and money from Yardoo. The failure of the 1977 financial statement of Yardoo and the Yard partnership to reconcile was not a matter which affected Lorraine personally. In 1977 Lorraine did not expect to have any interest in the land transferred to Yardoo and did not have any expectation of being paid any money with respect to the properties transferred to Yardoo. Payment of the loan accounts has only become an issue since the divorce and property proceedings commenced in the Family Court. Lorraine had little or no knowledge of the purchase of any of the other properties. Lorraine had no knowledge of the purchase of Paladin. Lorraine conceded that although purchased in the names of the four Yard family members the deposit was paid by GM & AJ Yard. Her claim that it was paid for by the partners was incorrect. Lorraine had no knowledge of the purchase of Brian's Block which was registered in her sole name. Her knowledge of events was based on Lipson's report. Lorraine changed her statement to modify her claim in that property to now assert it was a partnership property. Lorraine knew that even though Brian's Block was registered in her name it was not hers to solely determine what happened to that property. She did not have a say; the men made all the decisions at home. That was true of all the properties purchased by Yardoo or in other names.
331 Neither Lorraine's claim or her evidence assert any form of reliance on issues such as representation or estoppel in so far as they relate to issues such as transfers, registrations, loan accounts or issue of shares in Yardoo. To the contrary Lorraine states she did not know or understand the events and transactions. Lorraine was content to do what Alfred "commanded", to let the men decide. Lorraine is not therefore in a position to deny the intent and purpose of transactions.
332 The uncontroverted evidence is that Alfred has paid money, transferred and acquired properties in Schedules 1 to 5 which have become assets of Yardoo, the Yard partnership and other family members. Alfred has also continued to pay the mortgage secured by Brian's Block. Alfred has not been paid nor was it intended that he would be paid a cash consideration for those properties. 4
In House v Caffyn[15] Cussen J stated
"Speaking generally, the principles of law and equity applicable to land and dealings with land under the general law should, where they are not inconsistent with the provisions, express or implied, of the Act (Transfer of Land Act 1958), be applied to land and dealings with land under the Act."[16]
The Property Law Act 1958 section 67 provides
"67 Receipt in deed sufficient
(1) A receipt for consideration money or securities in the body of a deed shall be a sufficient discharge for the same to the person paying or delivering the same, without any farther receipt for the same being indorsed on the deed."
It should however be noted that although each of the Memorandum of Transfer contains a statement of the consideration, none of them contains an acknowledgement of receipt. In Pascon Pty Ltd v San Marco in Lamis Co-operative Social Club Ltd[17] the Full Court accepted the rule in equity that neither a receipt in the body of a deed nor an endorsed receipt by the vendor for the purchase price was conclusive that the purchase price had been paid.
333 Although each accountant witness agreed that accounting practice and standards recognise loan accounts in financial statements as a debt and a form of payment it is more appropriate to say the financial statements record or evidence transactions. The financial statements are incapable of creating or enforcing the debits and credits unilaterally. Enforcement of transactions in financial statements requires evidence and proof accepted by the Court. The Court should examine the circumstances of the alleged payment by loan account in the current action. None of the parties including Lorraine ever expected to receive any personal payment as a result of the transfers to Yardoo. The issue was irrelevant until the separation and divorce of Trevor and Lorraine. It was evident from the cross examination of Alfred, both in the manner in which questions were phrased by counsel and answered by Alfred, that the underlying assumption was that the Penrose scheme was only intended to have effect and benefit to the other parties upon Alfred's death.
Accounts and Statutory Returns
334 Yardoo and the Yard partnership and had an obligation to maintain records and to prepare true and fair financial statements: Corporations Act 2001 s.86. Yardoo was also required to prepare and lodge Annual Returns: Corporations Act 2001 s.345. The content of the Annual Returns has changed over the period 1976 to the present. For example the 1985 Annual Return requires a summary of share capital. The Annual Returns for 2000, 2001 and 2002 adopt a different format and at an unknown date introduced the requirement to state whether the member was the beneficial owner of the share.
335 The identification of the "beneficial" ownership of the shares in Yardoo Annual Return is not relevant to a company such as Yardoo. That is an issue which arises under definition of a "relevant interest" in Corporations Act 2001 ss.9, 608 and 609 and the identification of the ownership of listed companies and investment scheme Corporations Act 2001 ss.671A to 673.
336 The evidence of Alfred is the Annual Returns were prepared by his accountants without seeking up to date information such as the residence of Trevor. Brodie agreed Alfred did not provide instructions. The information in the annual returns was created from records maintained by Thomson Accountants. Mistakes inserted by one accountant were perpetuated by the successive accountants, Afford Shugg and Remeljej including Trevor's residential address.
337 There is no evidence of reliance by Lorraine upon the accounts and statutory returns prior to 1997. Lorraine did not claim to be a beneficial owner of one "D" class share in Yardoo until after company searches by her solicitors.
338 Notwithstanding the obligation to prepare and lodge accurate Financial Statements and Annual Returns they are simply an item of evidence. The obligation to maintain proper accounts does not prevent a party from proving that the accounts are unreliable or an alternative version. That is something which happens regularly for example with respect to preference claims made under Corporations Act 2001 ss.588FE & FF.
339 Lorraine's claim to be the beneficial owner of the "D" class share does not resolve the issue whether Yardoo owns its assets beneficially or as trustee.
340 Brodie gave evidence which rebuts the accuracy of the Financial Statements prepared by him or at least makes it unsafe to rely on them. Alfred expected to retain use and control of his land as if there was no change of ownership. The accounts and adjustments of accounts between Yardoo and the Yard partnership were "not very scientific"; they were a "guesstimate" by Brodie to achieve an "appropriate result" for taxation purposes. Brodie made entries in the accounts of the Yard partnership irrespective of the legal and beneficial ownership of property. Brodie did things off his own bat for record keeping purposes simply for the purpose of keeping track of transactions. Although loan accounts balanced he would never say they were the true situation. They were guesstimates for taxation purposes. Brodie's first advice to clients about ownership of assets was to ignore the taxation balance sheet. In preparing the partnership accounts Brodie took no account of who owned assets or who owed money. It was just for record keeping. After the meeting with Penrose, Brodie could not recall any discussions with Trevor or Alfred as to the implementation of the transfer of the assets.
341 The Financial Statements, Taxation and Statutory returns for Yardoo and the Yard partnership are not binding on the parties. Lorraine has not pleaded any form of representation, reliance or estoppel with respect to those documents.
342 As to partnership issues, the principles stated in Muschinski v Dodds[18] per Deane J apply.
Joint Tenancies
343 Paladin is registered in the names of Alfred, Gladys, Trevor and Lorraine as joint tenants. Alfred and Gladys are both over 80 years of age. The death of any of Alfred, Gladys or Trevor would provide Lorraine with a windfall change of proprietorship.
344 The amended statement of claim in Alfred's action seeks alternative relief by way of a partition of interests. That should take account of any additional monies paid by Alfred such as the deposit for Paladin.
345 Further submissions on behalf of Alfred Yard were as follows.
346 An important issue arising in this action is the intent of the parties. Lorraine's submissions 5 November 2004 assert that various matters were not put to Lorraine in cross examination. The criticisms are without merit. Lorraine's evidence in chief was to the effect that there were no discussions or agreement about the transactions. That statement was prepared by Lorraine's solicitors. Lorraine's evidence in cross examination was consistently to the effect that she was not present, did not provide instructions, did not have any knowledge of events, did not understand the transactions and did what she was told. Lorraine's denial of knowledge is sufficient for the purpose of the rule in Browne v Dunn.[19]
347 The real issue is one of Lorraine's credit. In 1999 Lorraine's knowledge of events from 1973 to 1997 was so limited she was unable to provide any instructions to her solicitors concerning any transaction. Lorraine is attempting to approbate and reprobate. Lorraine admits she knows nothing about the transactions. Despite that lack of knowledge Lorraine makes a positive assertion that there was no trust of the properties and that Alfred does not have a beneficial interest.
348 The Amended Statement of Claim in Alfred's action claims that the properties Schedules 1 to 5 were acquired and to be held on trust for Alfred.
349 Lorraine's submissions contend that "there is evidence of actual intention which rebuts any presumption of a resulting trust." Notwithstanding that submission and contrary to Lorraine's concession that Pomona was not gifted to her Lorraine's submissions still rely on the presumption of advancement.
350 Lorraine submits that the Court should reject Alfred's claim of an express trust of the Schedule 1 to 5 properties. In Bloch v Bloch[20] Wilson J (with whom the rest of the Court agreed) stated
"While it is true no particular form is necessary for the creation of an express trust, the intention of the settlor to create a trust must be explicit. In every case it is a question of fact for the court to determine whether an intention to create a trust is sufficiently evidenced."
In Bloch's case the court found the circumstances surrounding the acquisition of the property did "not yield with sufficient certainty the expression of an intention to create a trust". The same facts did however present a classic illustration of the creation of a resulting trust.
351 Alfred's evidence supports both his intention that the land transferred to Yardoo in 1976 be held in trust and the purpose of the trust, namely that the land be held on trust for Alfred as the beneficial owner. That evidence is supported by Trevor's statement which independently describes details with Penrose and the operation of the company structure; and Brodie who stated that Alfred expected to retain the use and control of all land during his life as if there was no real change in ownership. Lorraine's concession that Brian's Block is held by her for the Yard partnership recognises the obvious equitable principles which Alfred says applies to all land the subject of Alfred's claim. Lorraine's concession does not however recognise the whole of Alfred's claim.
352 Paragraph 21 of Lorraine's Amended Defence claims that there is no writing signed by Lorraine for such an express trust as required by the Property Law Act 1958 (Vic) Section 53 and the Law of Property Act 1936 (SA) section 29. Both sections are in the same terms. Lorraine's pleading and submissions are without merit. The Property Law Act section 53(1) does not make oral dispositions of land or declarations of trust illegal or void, merely unenforceable. Equity recognises three circumstances where it will not permit reliance on the Statute of Fraud and its modern equivalents:[21] where there has been part performance of an oral agreement; where reliance is an instrument of fraud; and where the imposition of a constructive trust will prevent an unconscionable denial of beneficial interest. Sections 53 (1)(a) and 53(1)(c) differ from 53(1)(b) in that they require the creation or disposition of the interest to be in writing, whereas section 53(1)(b) requires the declaration of trust to be manifested or proved by some writing. Section 53(1)(a) does not apply to declarations of trust in land.[22] For the purpose of Section 53(1)(b) the writing may be created after the declaration of trust.[23] The person able to declare the trust is the beneficial owner.[24] The writing must show not only that there is a trust, but also what the trust is.[25]
353 The judicial approach in numerous cases is to the consistent effect that the Property Law Act section 53(1)(b) operates independently and unaffected by section 53(1)(a). Hagan v Waterhouse[26] adopted the following summary by Lee J in Department of Social Security v James[27]
"... the proper construction of s34(1)(a) and 34(l)(b) does not require a declaration of trust in land to be treated as a special class of equitable interest only capable of being created in writing and further to be manifested and proved by writing signed by the declarant. Section 34(1)(b) would be either an odd exception, or otiose, ifs 34(1)(a) were to be construed as including the declaration in respect of land specifically provided for in s34 (1)(b)."
Authorities dealing with part performance are often in the nature of contractual or promissory representations of the type referred to in Alfred's submissions paragraphs 129 - 132. Lorraine has not made any such claims. Equity will not permit statutory provisions to be used as an instrument of fraud. Although resulting, implied and constructive trust are subject to a specific exemption in section 53(2), the principle applies to trusts of any classification.[28] Lorraine's requirement for strict compliance with the provisions of the Property Law Act section 53 is in equity fraudulent. Bannister v Bannister[29] stated:
"As will be seen from what is said below, the second objection (based on want of writing) in effect stands or falls with the third, and it will therefore be convenient to deal with that next. It is, we think, clearly a mistake to suppose that the equitable principle on which a constructive trust is raised against a person who insists on the absolute character of a conveyance to himself for the purpose of defeating a beneficial interest, which according to the true bargain was to belong to another, is confined to cases in which the conveyance itself was fraudulently obtained. The fraud which brings the principle into play arises as soon as the absolute character of the conveyance is set up for the purpose of defeating the beneficial interest, and that is a fraud to cover which the Statute of Frauds or the corresponding provisions of the Law of Property Act 1925, cannot be called in aid in cases in which no written evidence of the real bargain is available."
354 Rochefoucauld v Boustead[30] established that oral evidence is admissible in order to prevent the Statute of Frauds from being used to commit a fraud, i.e. a reliance on the legal nature of the conveyance and the denial of beneficial ownership.
355 Lorraine does not have locus standi to raise the Property Law Act as a defence. Yardoo is the registered proprietor of the Schedule 1, 2, 3 and 4 properties. Lorraine is one of 4 registered proprietors of Paladin and the plea could only affect her separate interest in that property if any. Lorraine's concession with respect to Brian's Block does not rely on the Property Law Act. Section 53 does not apply to the one D class share in Yardoo registered in Lorraine's name.
356 Ford & Lee Principles of the Law of Trusts, Paragraph 21060 advances the proposition in that, "in every attempted express trust by transfer or purchase there is an obscured resulting trust which may become significant if the express trust cannot take effect." That requires an examination of evidence and indications of intent. Evidence which is inadequate to create an express trust may still be adequate to show an intention to withhold a beneficial interest.
357 Although Pomona was initially transferred to Trevor and Judith as tenants in common, Alfred continued to exercise control over the legal title. Alfred did exercise that control by transferring Pomona to Yardoo in 1976-77. Alfred did not thereby intend that Yardoo would become the legal and beneficial owner. Yardoo is holding land on behalf of Alfred.
358 Gladys, Trevor and Lorraine were each issued with one special class share. That did not mean that they were the beneficial owners of that share. The same issues of express, resulting and constructive trusts apply. In any event Gladys, Trevor and Lorraine did not obtain any direct or immediate beneficial interest in the assets transferred Yardoo.
359 Cope "Constructive Trusts"[31] suggest that the presumptions of resulting trust and advancement are no longer relevant in modern times. Cope refers to Lord Reid's comments in Pettit v Pettit[32] that the strength of the presumptions was diminished in modern times.[33] Those comments are set within the expectations of matrimonial relations and provisions of the Married Women's Property Act 1882.
360 Cope also refers to Deane J's comments in Calverly v Green[34]
"in a case where a presumption of resulting trust or a presumption of advancement applies in circumstances where the relationship between the parties does not, as a matter of modern experience, provide any firm rational basis, for presuming either intention to retain the beneficial interest or to confer it on the other party, the presumption may be found to be of practical importance only in those cases where the evidence of the actual relations between the parties does not enable the court to make a positive finding of intention."
Notwithstanding, Deane J at 266 regarded the presumption of resulting trust and presumption of advancement to be established landmarks and so well entrenched that they could not be discarded by judicial decision. Gibbs CJ discussed the presumption of advancement at 246 - 251. The comments in Calverly v Green should be considered within the context of the claim made between persons in a de facto relationship. At page 252 Gibbs CJ stated that the extent of the beneficial interest of the parties is to be determined at the time the property was purchased and the trust created. Dullow v Dullow[35] is one of the cases referred to in Lorraine's submission about proof of intention_._ Hope AJ at 535 describes the presumption of resulting trust as deg.completely anachronistic" and the presumption of advancement was only to be applied if evidence of actual intention is inadequate.
361 The presumption of resulting trust is based on a policy of preventing fraud by the improper denial of the beneficial interest and unjust enrichment at the expense of others. It is a policy which is fundamental and valid in all societies notwithstanding changes or what might at present be regarded as contemporary standards.
362 Even if the presumptions of law are treated as evidentiary tools capable of rebuttal by evidence there still remains the issue of the onus of proof and i
also the nature of the evidence required. The present law has the effect that Alfred is entitled to the benefit of the presumption of resulting trust and Lorraine has the onus of disproving it. Lorraine may disprove the presumption by such evidence as she chooses including by proof that she falls within the classes of persons entitled to the benefit of the presumption of advancement. Lorraine did not plead advancement or gift. Lorraine answers to interrogatories did not make any claim about advancement. Lorraine's witness statement 1 July 2004 did not give evidence of advancement. Lorraine did not raise this plea until after receipt of Alfred's witness statement. The issues of gift and advancement were first raised in Lorraine's statement in reply 22 July 2004 and repeated in Lorraine's amended statements of 13 September 2004.
363 Lorraine's submission that the presumption of advancement should apply to a joint registration in favour of son and daughter in law does not resolve the issue. Lorraine was initially registered in respect of a separate half interest in Pomona. What was necessary was proof of an actual relationship giving rise to the presumption or proof of an actual intent that Yardoo or Lorraine should be the beneficial owner.
364 Alfred denied any intention to benefit Lorraine personally upon the transfer of Pomona in 1973. Lorraine conceded that the registration of her half interest in Pomona was not a gift. Lorraine is unable to prove an actual and contemporaneous intent of the other transactions because she had no knowledge of them. Alfred's evidence was (if necessary) sufficient to rebut the presumption of advancement. Alfred was the person entitled to make the declaration of trust. Lorraine failed to adduce any evidence in reply of an intention that Yardoo was the beneficial owner of the land transferred to it and that she was beneficially entitled to the one D class share in Yardoo. Lorraine transferred Pomona to Yardoo in 1976 because Alfred commanded her to. Lorraine did not understand the transaction and she signed the transfer documents because she was told to. In 1976 Lorraine did not have any expectation that she or Yardoo would have any interest in the Schedule 1 properties including as a shareholder. The one half interest in Pomona which Lorraine transferred to Yardoo was encumbered with a mortgage to Bethune. Lorraine was credited with the unencumbered value but she gave no explanation of that entitlement. Lorraine did not assert any form of promissory interest or expectation. Lorraine did not make the claim to a beneficial interest until after she commenced the Family Court proceedings in 1999, at which time she was unable to give any details of entitlement claimed by her. Lorraine also failed to adduce any evidence of intention concerning the registration of interests in Paladin. Lorraine formed no intention as to the beneficial ownership of any property.
365 The amended statement of claim in Lorraine's action makes only limited claims with respect to the partnership GM, AJ, TJ & JL Yard ("the Yard partnership"). The best evidence is that the Yard partnership probably commenced at about the time Pomona was purchased in 1973. Paragraph 8 of the Amended Statement of Claim asserts that there is no written partnership agreement. That is agreed. The common law, equitable and statutory rules relating to partnerships are all expressed to be subject to the agreement between the partners. In the absence of agreement the Court is required to look at not only the relevant rules but also the intent of the parties. Alfred Yard asserts that the Yard partnership ceased on about 15 December 1997 which is the date of the last Yard partnership accounts. Alfred does not agree the Partnership Act sections 36 and 41 have not been complied with. The commencement of the Family Court proceedings by Lorraine on 5 July 1997 and claims for property settlement including division of the Yard partnership assets is sufficient. Lorraine previously pleaded that the Yard partnership was terminated on an unknown date after her separation from Trevor and before 1 November 2000. Lorraine also agreed in evidence that the partnership was dissolved prior to 1 November 2000.
366 In paragraph 9 of the amended statement of claim Lorraine now pleads that the Yard partnership had not been dissolved prior to the issue proceedings in Lorraine's action, 30 October 2000. However the Prayer for Relief does not specifically seek a declaration that the Yard partnership is continuing or subsisting. Paragraph 23 of the Prayer for Relief in Lorraine's action seeks an order dissolving the Yard partnership from a date found by the court.
367 Paragraph 10 of the amended statement of claim asserts that the Yard partnership conducted the business of farming on properties owned by Yardoo, one property owned by the partnership (Paladin) and one property owned by Lorraine (Brian's Block). That pleading is relevant to any claim by Loraine for a continuing share of profits made after dissolution. Lorraine conceded that Brian's Block is owned by the Yard partnership. Lorraine's case assumes Paladin is a Yard partnership asset.
368 Paragraph 11.4 and the Prayer for Relief make general reference to assets of the partnership but do not identify the property with any particularity.
369 There are two issues to be decided with respect to Paladin and Brian's Block: first, whether each property is the subject of the claims by Alfred that he is the beneficial owner of both properties; and second, if those properties are not subject to Alfred's claims whether they are property of the Yard partnership and if so the relevant estate which each person holds.
370 The purchase and finance of Paladin and Brian's Block both involve some complexities. It should however be noted that Lorraine did not make any personal payment for the properties and does not claim any greater interest than as a partner. Paladin was purchased by Alfred on 26 August 1981 and the deposit was paid to Alan Hickinbotham Pty Ltd from the accounts of Alfred and Gladys. Paladin was then registered in the names of Gladys, Alfred, Trevor and Lorraine as joint tenants. The Yard partnership did not farm Paladin which has always been occupied by a caretaker. The Yard partnership probably paid the mortgage on Paladin until the Yard partnership was dissolved. Thereafter the current partnership has paid the costs of Paladin.
371 Brian's Block was purchased from Brian Yard in 1985 for an amount of $220,000 which included the planted crops. Brian's Block was registered in Lorraine's sole name although she now concedes that it is a Yard partnership asset. The Yard partnership paid the relevant purchase costs. However it should also be noted that Brian's Block is security for a loan of $175,000.00 from Brian Yard with respect to Hawick (owned by Yardoo, loan $125,000.00) and the MV Kookaburra (registered in Trevor's name, loan $50,000.00). The current partnership farms Brian's Block and pays Brian Yard for costs incurred by Yardoo. Trevor pays Brian for the loan relating to the MV Kookaburra.
372 Alfred did agree that Yard partnership money was used to pay for the balance of the purchase price and finance for Paladin and Brian's Block. That does not negate his claim to be the beneficial owner of those properties.
373 The principle in Stewart v Blakeway[36] and Partnership Act Section 24 (3) has the following effect. If the Yard partnership used Alfred's Schedule 1 properties prior to 1973 it is not disputed the Schedule 1 properties remained Alfred's who would also have been entitled to claim any other land purchased by the partnership. When after 1973 and prior to the incorporation of Yardoo the Yard partnership used Alfred's Schedule 1 properties it is not disputed the Schedule 1 properties remained Alfred's. When after 1973 and prior to the incorporation of Yardoo the Yard partnership used the Schedule 3 property, Pomona, and paid part of the balance of the costs of acquisition, the Yard partnership did not thereby obtain any estate or interest in Pomona. Alfred had paid half the purchase price of Pomona and owned the Schedule I properties from which the Yard partnership derived its income. For the purpose of Section 24 (3) only Alfred had an estate or interest in the Schedule I and 3 properties. Yardoo was not a member of the Yard partnership. When after the incorporation of Yardoo, the Yard partnership used the Schedule 1 and 3 properties and paid the balance of costs of acquisition of Pomona, the Yard partnership did not thereby obtain any interest in the Schedule 1 and 3 properties registered in the name of Yardoo. When Paladin was purchased and registered in the names of Gladys, Alfred, Trevor and Lorraine, the Yard partnership was using land owned by Yardoo in which Alfred had a beneficial interest. Alfred had paid the deposit and the payment of acquisition costs by the Yard partnership did not give the individual members any separate estate or interest, because Alfred beneficially owned the other land being used by the Yard partnership. It was in effect a form of rent. When Hawick was purchased by and registered in the name of Yardoo, Hawick was farmed by and paid for by the Yard partnership. The Yard partnership did not thereby acquire an interest in Hawick. Yardoo's entitlement was subject to Alfred's entitlements. When Brian's Block was purchased and registered in the name of Lorraine, it was farmed by and paid for by the Yard partnership which at that time also farmed the other properties registered in the name of Yardoo. Lorraine was a member of the Yard partnership but did not own the land beneficially. Alfred was a member of the Yard partnership and beneficially entitled to the land registered in the name of Yardoo.
374 In Limberger v Limberger[37] at para 25 Cohen J found that in view of the fact the partnership used the land without paying rent it was not unconscionable for the parents to retain ownership. In circumstances where the Yard partnership did not pay "rent" it is not unreasonable that the Yard partnership should pay the costs of acquisition and it is not unconscionable that Alfred should retain legal and beneficial ownership.
375 If Paladin and Brian's Block are not beneficially owned by Alfred a further issue for determination is whether the land became an asset of the partnership or whether the legal title indicates some other entitlement. If Lorraine's concession that Brian's Block's is held on behalf of the Yard partnership is extended to Paladin then the fact that Paladin is registered in four names does not give each partner a separate proprietary interest in Paladin. Lorraine only had a partnership interest which terminated upon dissolution of the partnership; Lorraine does not have a separate proprietary interest. That is the value of Lorraine's capital in the Yard partnership (including Paladin and Brian's) crystallised at the date of the termination of the partnership.
376 The Partnership Act section 24 (1) states that property brought into the partnership must be held and applied for the partnership. The introduction of items into the Yard partnership accounts were matters determined by the accountants. Alfred and the previous partners did not receive a corresponding credit and Lorraine did not make any payment. The only assets in the Yard partnership the subject of section 24(1) are those acquired during the term of the partnership from 1973 to December 1997. Apart from the taxation schedules in the Financial Statements, there is very little evidence as to what might constitute assets of the Yard partnership. Ellery noted at paragraph 4.10 -- 4.11 of his second report that the book value of plant and equipment at 30 June 1997 was $131,672.00 and considered that the amount of $153,000 as at 15 December 1997 was reasonable. The valuation of Plant & Equipment undertaken by Mason Gray Strange ("MGS") is not an indication of ownership. Lorraine instructed MGS to value all plant & equipment on the various properties. Lorraine conceded that she had no idea about ownership of assets prior to 1997 by Yardoo, the Yard partnership or individuals. Alfred submits the MGS valuation of $450,405.00 includes items not the property of the Yard partnership.
377 Wapper has also undertaken a valuation of the Plant & Equipment which he values at $440,980.00. In addition Wapper has also attempted to identify and value the Plant & Equipment included in the depreciation schedule of the Yard partnership accounts at 30 June 1998, which he values at $79,350.00. 9
Ellery estimated at paragraph 4.13 - 4.18 of his second report that the valuation of livestock at December 1997 was $209,800.00. Lipson in his second report paragraph 5.10 adopted Ellery's estimates at December 1997.
378 The Partnership Act section 39 provides that the Court may make a decree of dissolution of a partnership. Lorraine has relied on the just and equitable provisions of Section 39 (f) and presumably on conduct which would come within section 39 (d) in support of that relief.
379 The Court should also have regard to the following factors. Lorraine was only admitted into the partnership by reason of her matrimonial relationship with Trevor. Although Lorraine did farm work her role was not fulltime. Lorraine did not undertake an active participation in partnership activities. Contrary to her evidence Lorraine did not actually receive the Yard partnership or Yardoo dividends allocated to her. When Lorraine and Trevor separated, Lorraine's participation in the partnership not merely ceased but any continuing role became difficult if not impossible.
380 Lorraine accepted the Yard partnership terminated prior to 1 November 2000.
381 Alfred submits that the requirements for Notice are procedural and not substantive provisions especially where Lorraine does accept the termination. The commencement of the Family Court proceedings by Lorraine on 5 July 1997 and claims for property settlement including division of the Yard partnership assets and the injunctions granted is sufficient notice by Lorraine for the purpose of the Partnership Act section 36 (c). In the alternative the commencement of Lorraine's action in the Supreme Court of South Australia on 30 October 2000 is sufficient notice by Lorraine for the purpose of the Partnership Act section 36 (c). Lorraine has by her own conduct also abandoned any participation in the Yard partnership since 1997 in which case the law will regard the partnership at an end. In the event the Court makes a declaration of dissolution of the Yard partnership, the declaration should be effective 5 July 1997 or in the alternative 15 December 1997 or in the alternative not later than 1 November 2000.
382 The termination date of the Yard partnership will become the valuation date.
383 The effect of section 46 Partnership Act is that until a departing partner is paid his portion of the partnership capital the continuing partners have an obligation to pay the outgoing partner either a portion of the profits attributable to the use of those assets or interest at the rate of 7% per annum on the value of the assets. Lorraine elected for an accounting of profits. Section 46 was considered by the Full Court in Fry v Oddy[38].
384 In the current action several issues arise from section 46. They are that the Yard partnership conducted the business of farmers on land registered in the name of Yardoo and other family members. Income derived from the use of land registered in the name of Yardoo is excluded. Lorraine specifically pleads that the only land owned by the Yard partnership is Paladin and Brain's Block which Lorraine now asserts is a partnership asset. Paladin was not farmed by the partnership and there is no evidence about income derived from that property. Brian's Block was farmed by the Yard partnership and now by the continuing partners. However there is no evidence about the wheat and sheep income derived from that property. For the purpose of Lorraine's action the MGS valuation cannot be relied upon to identify plant, equipment and livestock. Lorraine ceased to provide any work input into the Yard partnership since about December 1997. The accounts do not take into account the work input provided by Ms Sims who has not been paid.
385 The Financial Statements of the continuing partnership from 1997 to 2002 indicates that even taking into account the use of all land (including that registered in the name of Yardoo) and plant & equipment, livestock etc in apparently the same manner there has been a substantially reduced partnership income. That is in part due to the location of the properties in a dry marginal farming area which was severely affected by drought.
386 Section 46 provides an alternative remedy to an account of profits by allowing interest on Lorraine's portion of capital at 7%. In the current circumstances that would be an inequitable remedy in that Lorraine would be placed in a preferred position in that it does not take into account the ongoing finance costs paid by the continuing partners to maintain assets claimed to be Yard partnership assets; low profits and losses by the continuing partnership; reductions of capital; the absence of personal exertion by Lorraine; an allowance for Alfred; an allowance for Trevor as manager; and an allowance for Margaret Sims as full time worker. On Lorraine's best case the gross assets of the Yard partnership available for distribution are: Paladin; Brian's Block; and Plant, Equipment and Livestock according to the depreciation schedule.
387 The expert reports of Lipson and Ellery address the issue of distribution. Lipson's report assumes that as a registered proprietor Lorraine's interest in Paladin and Brian's Block was a personal proprietary interest and not a partnership interest. Notwithstanding the termination of the partnership prior to November 2000 Lipson has in paragraph 9.1 of his Report adopted current land values.
388 The Amended Statement of Claim in both Lorraine's action and Alfred's action seeks alternative relief by way of a division of partnership property. The Property Law Act section 221 provides that joint tenancy and tenancy in common can be partitioned. At present Lorraine is registered as one of four joint tenants in respect of Paladin and the sole registered proprietor of Brian's Block. The death of Gladys, Alfred or Trevor has the capacity to deliver a windfall to Lorraine. Where the legal estate in partnership property is held by some or all the partners in joint names there is an equitable presumption that they hold the land on trust for all partners as tenants in common according to their partnership shares.[39]
Winding up of Yardoo
389 The Amended Statement of Claim in Lorraine's action seeks the winding up of Yardoo pursuant to the Corporations Act Sections 246AA and 461 (2) (f) or (k); in the alternative an order that the other shareholders in Yardoo purchase Lorraine's share.
390 Lorraine's submissions assume that Lorraine is the beneficial owner of the one "D" class share registered in her name; and Yardoo is the legal and beneficial owner of the land registered in the name of Yardoo.
391 In the event that Alfred is the beneficial owner of assets owned by Yardoo then the value of Lorraine's entitlements as a shareholder diminishes significantly.
392 The claim for oppression arose because of an inappropriate attempt by Lorraine to obtain discovery of documents from non parties in the Family Court proceedings. Lorraine's other complaints are without merit. The Renown Garage has been operating at a loss for many years. Brodie adjusted the accounts between Yardoo and the Yard partnership in an arbitrary manner. The Renown Garage does not pay Alfred a salary and Lorraine is not prepared to recognise that entitlement. Plant & Equipment is of nominal value. The sale of Tully's Block 3D Danyo to Vic Grain was undertaken at full value in the ordinary course of business. The extraordinary general meeting on 19 July 1999 which Lorraine's submissions concede was of no effect was undertaken without legal advice and there has been no attempt subsequent to act on the minutes. Lorraine obtained complete discovery and production of all relevant financial records but failed to use them in any manner until 2 July 2004.
393 In the exercise of a discretion to wind up Yardoo the Court should have regard to the following: the primary function of Yardoo was to act as the registered owner of land; the principal business activities were conducted by the Yardoo partnership; although Lorraine was a director and shareholder during the period 1976 to July 1997, Lorraine elected not to participate in management of Yardoo; Lorraine was content to let Alfred and Jeffrey make all decisions; Lorraine did not in fact receive any dividend income from Yardoo during the period 1976 to 1997; Lorraine's complaints relate to management or administration of the business prior to her separation from Trevor; excluding Kalm's Block the properties remain intact. In the event Lorraine's claim is successful Yardoo is solvent and there are significant assets available to make payment to her; a winding up would destroy the business of farming by removing the underlying assets; and a winding up and sale would incur significant costs by way of liquidator's fees and sale commissions.
394 In response to Lorraine's second further amended statement of claim in which she claimed a personal proprietary interest in Paladin and Brian's Block, Mr Stevens submitted the following.
Valuations of Land
395 Alfred and Lorraine have both tendered valuations which include valuations as at different dates. The valuations are summarised in the Schedule of Properties and Valuations prepared by Wakeham.
396 The increased values during the period 1997 to 2005 demonstrate the reason why Lorraine changed her pleadings to assert that she has a personal proprietary interest in the partnership properties. Section 46 Partnership Act provides alternative remedies. In the event that Lorraine is entitled to an accounting of profits made by a continuing use of partnership assets, then land owned by Yardoo does not comprise a partnership asset. Alternatively, Lorraine's entitlement to interest at 7% on the value of a share of the partnership property is fixed at the date of termination. The issue then is the date of termination and the identity and value of the partnership assets at the relevant date. All valuations identify a significant increase in the value of the properties since 1997 which apparently exceed the remedies available to Lorraine under the Partnership Act. Notwithstanding that Lorraine did not give any evidence in support of the new claim and that Alfred was not cross examined directly about the claim, Lorraine now asserts that it was the intent of the parties that property purchased in personal names was intended to vest beneficially in each of Gladys, Alfred, Trevor and Lorraine. Compare the pleadings in proceeding no. 4542 amended defence of the fourth defendant paragraph 29A in which Lorraine claims Paladin and Brian's Block were purchased for the Yard partnership and the apparently contradictory plea in proceeding no. 5151 further amended statement of claim paragraph 21.1. Lorraine's claims in paragraph 10 of the second amended statement of claim about partnership and personal property are pleaded in the alternative; paragraph 21 is a significantly different plea. Paragraphs 10 and 21 did not plead any material facts or give particulars to support the new claim. The amendments do not identify the legal basis of the claim. Lorraine has not made any claim of contractual or promissory representations.
397 The issues raised in paragraphs 10 and 21 are not claims pursuant to the Partnership Act 1958 (Vic) or the Property Law Act 1958 (Vic) but appear to be equitable relief of the same nature as claimed by Alfred. There is no corresponding claim in the Prayer for relief.
398 Lorraine has in effect pleaded a counterclaim that an alternative beneficial interest was created by the same transaction. In paragraphs 26 to 28 of the amended statement of claim in proceeding no. 5151 Alfred claims Paladin and Brian's Block are subject to a trust in his favour. Lorraine's defence traversed the plea with a simple denial. Lorraine's evidence on the issue is at paragraphs 40 to 44 of her witness statement. Her evidence is clear; there were never any discussions about the properties being held on trust for Alfred. There was no reference in Lorraine's evidence to any other conversations or trust such as the personal one quarter interest in Brian's Block. The same issue arises with respect to Szader's Block registered in Trevor's name. Lorraine's position is contradictory: Lorraine's plea recognises that the registered title and related loan account transactions for Brian's Block and Paladin are not determinative of beneficial ownership. That is the same issue raised in Alfred's case in which Lorraine says Alfred is bound by the registered tiles as a transfer of legal and beneficial ownership.
Valuation Evidence
399 Alfred Yard engaged three senior valuers, each of them with substantial experience in rural valuations throughout Australia and the relevant areas in South Australia and Victoria. Each of them has a contemporary knowledge of economic cycles and rural land values. They each identify significant valuation work for bank panels, rural lenders and large rural land owners.
400 Although they appeared to be conservative in their manner and valuations Wapper and Brook adopted a higher percentage increase in the market from 1997 to 2004 than Wakeham, the increase depending on the property. Wapper said the rural market was stable during the 1990s and did not start to move until 2000. Harris' valuation in September 2001 appears to be the "exception" especially with respect to the valuations of the South Blocks and Pomona. In his valuation of Pomona Harris identified but not give details of a relevant sale near Pomona. The sale is identified in Exhibit 11.
401 Wakeham's valuation report in July 2004 did not disclose the issues which he later relied on in his evidence to support his valuations. Wakeham presented as an active advocate for his valuations. The adjustment to his valuations in February 2005 cast doubt on all of valuations. Wakeham's Schedule demonstrates the valuers are at variance not only with the market but also acceptable limits for such valuations. Of significant concern are the adjustments in values of the Murrayville properties Wakeham made for the period July 2004 and February 2005. Wakeham agreed that other regional areas of Victoria did not increase in the same manner during that period.
402 There are several reasons why Wakeham's valuations are at variance with both the market and the valuations tendered by Alfred's valuers. As at 1997 and 2000 Mr Wakeham had only been qualified one to three years and had a limited contemporary knowledge. Wakeham stated that it was difficult for him to determine values eight or nine years ago because he did not inspect comparative sales and relied on reports. Brook, Harris and Wapper at least had contemporary experience. Wakeham's first report of the Murrayville properties, Exhibit K, was a superficial summary of the properties and indicates that he did not identify and correlate all sales relevant to each property. Wakeham failed adequately to identify the value of improvements on each of the comparative sales to identify a cleared, fenced and watered value. Calculations at page 19 and 20 of Exhibit K include improvements in the per acre calculation. Calculations in the letter 2 February 2005, Exhibit N, adopt the same method. Notwithstanding the difficulties which Mr Wakeham claimed about limited access to the Yard properties it did not stop him going back three times. Wakeham adopted the summation method of assessment and elected to publish his report. Wakeham did not qualify the values in the July 2004 report. He appears to have done much of his research after his first report in July 2004. That is the underlying reason for the significant adjustment of values from July 2004 to February 2005 of up to 20%. He again adopted the summation method of assessment and did not revisit the properties. The report of February 2005 demonstrates that his report of July 2004 is unreliable. Wakeham adopted a comparative analysis technique, Exhibit Q, to demonstrate that the valuations undertaken by Alfred's valuers were inconsistent in percentage movement. The analysis also ensured Wakeham adopted consistent variations of values over the period 1997 to 2005. It was an attempt to introduce an empirical formula into an inexact science and a market which has numerous variations at any one time. The rounding out of valuations on page 2 suggest even Wakeham had problems getting the results to comply with an empirical formula. Wakeham's valuations for 1997, 2002 and 2005, Exhibit N, do not refer to the comparative analysis and it was only the tender of exhibit Q and related evidence which disclosed Wakeham's real method of assessment. Notwithstanding Wakeham's evidence that he examined contemporary sales in 1997 and 2000, the comparative analysis technique required all the values and variations adopted by Wakeham to be uniform. He adopted a high valuation as at February 2005 and in effect worked backwards. The result was a foregone conclusion. Mr Wakeham's values would always be a fixed percentage of the 2005 valuation. In addition he adopted a lower percentage of market movement than Wapper thereby limiting the band within which the valuations moved backwards from the current values. The result is that Wakeham's 1997 and 2000 valuations are invariably higher than the other valuers thereby lifting the base value of Lorraine's claim to the Yard partnership in 1997 or 2000. Wakeham's valuations also increase the value of Yardoo's assets in 2005. Given Wakeharn's approach, Harris' contemporaneous valuation of the Murrayville properties in September 2001 looks extraordinary. However Harris' report, and especially the value of Pomona, is supported by the sale of an immediately adjoining property. It is a sale which would have reflected the market in the Murrayville district, including the South Blocks. Wakeham has preferred compliance with the results produced by his comparative analysis to the evidence which he says he relied on. Wapper did not agree that all the properties should have increased by the same percentage during the period December 1997 to February 2005 and had never seen rural land values run in any comparable ratios. Harris' valuations supported by the sales adjoining Pomona demonstrate that Wakeham's comparative analysis has skewed his results.
403 Wakeham asserted that there was strong demand for land in the Murrayville region from adjoining land owners or from other persons looking for an economic holding. Wapper's percentage increases apparently support that proposition but not the past or present value and annual rates of growth from 2000 to 2004. Wakeham said adjoining owners would be the most likely purchasers. Small communities are invariably perfectly informed about the relevant properties and local values. Adjoining farmers often club together to buy large holdings to be divided rather compete against each other.
404 Wakeham's affidavit of 4 April 2005 should only be accepted for the limited purpose for which leave was granted.
405 Mr Wakeham's Schedule as to the Murrayville properties identifies several significant variations between the valuers.
406 The Court should reject Wakeham's valuation of Carina at all relevant times. The only point of agreement is the values of Wakeham and Wapper in mid to late 2004: $180-185,000. Both Wapper and Wakeham agree there was a significant increase in value from 1997 to 2004, 83.7% and 54% respectively. Wakeham's 1997 value is significantly higher than both Wapper's 1997 value, 20% and Harris in 2001, 37.5%. Wakeham identifies an increase of 41 % occurring between 1997, $120,000 and 2000, $170,000.00 and only a further 8% occurring until 2004. The limited movement in the period November 2000 to July 2004 appears contrary to Wakeham's assertion that this was good land for which there was demand in a strong market. Finally Wakeham identifies a further 13.5% increase of $25,000 between July 2004 and February 2005. Wakeham's total increase 1997 to 2005 is 75%. Wakeham has loaded up the increased value from November 2000 to February 2005 in a limited 7 month period. Wapper's evidence is the market started to increase after 2000. Wakeham compared Carina with a property at Panitya, Exhibit P, and also adopted Carina as the base for valuing Brian's Block. At page 17 of his report Wakeham has calculated a per acre rate for lots I and 3 inclusive of improvements. Wapper and Harris considered other factors affected Carina including that it was on either side of a main road near silos. Although regarded as better land than the other Yard properties it was not comparable to the sale at Panitya relied on by Wakeham.
407 The Court should reject Wakeham's valuation of the South Blocks at all relevant times. Wapper and Wakeham both adopt proximate values in mid to late 2004, $884 - 900,000. Wapper and Wakeham also agree that there was a significant increase in value from 1997 to 2004, 88% and 50% respectively. Wakeham's 1997 value is 20% higher than Wapper's value. 149.4. Wakeham identifies a 31% increase from 1997 to 2000 and a further 12% until July 2004. Finally Wakeham asserts a further 16% increase in value of $145,000 between July 2004 and February 2005. Wakeham's total increase to February 2005 is 75%. Again Wakeham has loaded up the increased value from 2002 to 2005 to a 7 month period. Wapper took into account 70 acres of poor, salty, copey land and attributed different value to different parts rather than a single per hectare rate.
408 The Court should reject Wakeham's valuation of Pomona at all relevant times. Wapper and Wakeham agree on proximate values in 1997 but disagree on the 2004 values and are barely proximate if Wakeham's revised 2005 value is included. Both Wapper and Wakeham agree there was a significant increase in value from 1997 to 2004, 52% and 75% respectively. Wakeham's report 2 February 2005 referred to sale of Crown Lots 23 and 26 Murrayville in July 2004 at $228 per acre but he chose to disregard them because the purchaser told him it was a good buy and worth more. An alternative view is that if the property was on the market for a year then there was an adequate period to test, demand and price. Wakeham does not accept that market value can also be defined as exactly the amount someone actually paid for land. Wakeham adopted a rate of $300 per acre or about $741 per hectare. His valuation does not refer to lots 19 and 20 Danyo as a relevant sale. Harris' valuation of Pomona as at October 2001 appears to be inconsistent with Wapper and Wakeham. Harris' valuation at $258 per hectare is supported by Exhibit 11 which is a sale of land immediately adjoining Pomona at 28 February 2000 in the range of $271 - $348 per hectare. It is also consistent with lots 23 and 26 Murrayville referred to above. Wakeham identifies a 28% increase from 1997 to 2000 and a further 36% until July 2004 but allows a 6% decrease to February 2005. Wakeham's total increase in 1997 to 2005 is 64%. Wakeham's increase of 36% from November 2000 to July 2004 is greater than the percentage he allowed for Carina, Brian's and the South Blocks for the same period. The decrease during July 2004 to February 2005 is also inconsistent with the increases which Wakeham allowed for each of the other Murrayville properties in the same period. The quality of land and developments on Pomona is generally poor. Wakeham allowed a lower amount for improvements which affected his per hectare rate. The properties used for comparative purposes were better than Pomona. Harris adopted a value 34% less than the better properties. Wapper adopted a value 30% less than comparable sales. Wakeham's reduction in the value of Pomona during July 2004 to February 2005 flies in the face of his own statements about the market in Murrayville and the consistent movement in values. Wapper did not agree that there was evidence of properties coming back in value although sales had slowed.
409 Mr Wakeham was given leave to file an answering affidavit for the limited purpose of addressing evidence tendered by Mr Brooke.
410 At the hearing on 4 April 2005 evidence was led from Mr Brooke about the identification of land referred to in the Murrayville valuations of Taylor Brooke. The Court received the evidence and Exhibit 11 which related to Lots 19 and 20 of Danyo adjoining Pomona. There was a limited cross examination of Mr Brooke on the new material. Mr Harris also gave evidence about the sales and cross examined. The unidentified sales were always a live issue for the cross examination of Harris. Wakeham's main concern appears to be adjustments for physical characteristics and the timing of the sale. Brooke said he inspected the relevant properties. Harris said he inspected Lots 19 and 20 at the time he did his valuation in September 2001 and he made notes "Adjoins Pomona and similar country". Harris made adjustments to the value of Pomona because "the improvements in all cases and all sales that I had were in better condition than the subject properties". The timing of the sale of Lots 19 and 20, 24 February 2000 is especially relevant to Wakeham's valuation as at November 2000. Wakeham does not say what effect values for Lots 19 and 20 would have had on his own valuation or Mr Wapper's. What the Court is left with is an actual sale at 28 February 2000 in the range of $271-$348 per hectare and Wakehan's rate of $300 per acre or about $741 per hectare. That is a significant 112% increase over the top rate of $348 per hectare. The Court should adopt Harris' valuations of all Murrayville properties in September 2001 as consistent with actual sales including those at November 2000.
411 The Court should reject Wakeham's valuation of Brian's Block at all relevant times. There is no proximate agreement between the valuers at any point of time between 1997 and 2005. Both Wapper and Wakeham agree there was a significant increase in value from 1997 to 2004, 90% and 59% respectively. Wakeham identifies a 34% increase from 1997 to 2000 and a further 21% until July 2004 but a further 17.6% increase to February 2005. Wakeham's total increase is 81.25%. Wakeham adopted the same $400 per acre rate for Brian's Block as Carina although it is located closer to the South Blocks which he valued at $325 per acre. Wakeham's report did not say why he adopted the same rate and did not disclose the relevant difference. Wakeham assumed that Brian's Block had been better managed than the other properties and valued it higher for that reason. The assumption was incorrect. Brian's Block was purchased in 1985 and managed in the same manner as the other Yard properties.
412 The evidence and cross examination reveal other differences between the valuers including identification of comparable sales: Wakeham considered Carina and Brian's Block to be similar; calculation of value of improvements before determining the per hectare value; and individual issues, such as soil type, water, division of titles by road and scrub cover. Notwithstanding the differences it is apparent that there is no consistency in the percentage increases in the value of land in the Murrayville area. The most fundamental criticism of Wakeham's valuations is the manner in which he has treated the movement in values from November 2000 to July 2004 and then from July 2004 to February 2005. Wakeham has brought forward to 2000 the increases in value which the valuers agree occurred between 1997 and 2004.
413 Yardoo and the Youngs each own a one undivided half interest in Hawick. All valuers assessed the value of Hawick on the basis that it was a single holding then divided the value by 2. Both Wapper and Wakeham agree there was an increase in value from 1997 to 2004 being 68% and 55% respectively. Wakeham and Harris agree on proximate values in 2000-01. Wakeham identifies a 18.5% increase from 1997 to 2000 and a further 30.7% until July 2004. Wapper's and Wakeham's values at 2004 are proximate within 5%. Notwithstanding Wakeham's assertion that there was a strong demand for rural land and adjustment to his other valuations Wakeham did not make a further adjustment for the period July 2004 to February 2005. None of the valuations have made allowance for the ownership of Hawick as an undivided moiety interest. Wapper believed the land farmed by Yardoo was inferior to land used by the Youngs and said the value would depend entirely were the division line was drawn. That might also affect the current joint liability to under erosion control orders. In the event that it becomes relevant the Court should allow a significant reduction in the value of Yardoo's one half interest due to factors such as limited ability to sell a one half interest, problems and cost in obtaining orders for partition and sale, uncertainty as to the value of which portion and assets would be included in a partition.
414 The Court should reject Wakeham's valuation of Paladin at all relevant times. Wapper and Wakeham adopt proximate values in 1997 of $488,000 and $510,000 respectively. Both Wapper and Wakeham agree there was an increase in value from 1997 to 2004: 52.8% and 61.75% respectively. This is one valuation in which Wakeham's percentage increase exceeds Wapper. Wakeham and Brooke adopt proximate values in 2000 - 01 of $600 - 615,000. Wakeham identifies a 17.6% increase from 1997 to 2000 and a further 37.5% until July 2004 and no further increase to February 2005. The variation between Wapper and Wakeham at October and November 2004 was significant. Brooke stated that he preferred the valuation of Wapper at November 2004 $746,000 which was a 21% increase on his valuation in 2001. Brooke did not agree all sales relied on by Wakeham such as Verdun and Woodside were relevant. In addition Brooke stated the value of improvements had been underestimated. Page 7 of Wapper's report details the problems of making comparative assessments in the Adelaide Hills. Wapper was very thorough in the analysis of properties he used for comparison. All valuers agree the best use of Paladin is its current use, as a hobby farm. Wapper identified and valued Paladin on the basis that it comprised two distinct types of land, 35% - 40% premium arable vineyard land and the balance steep hill with light grazing including some with scenic value only. Wapper valued the arable land at $18,532 per hectare which is the same as premium vineyard land that Wakeham constantly referred to. Mr Wapper valued the steeper land at $6,178 per hectare. However because it comprises 60% of the land it reduced the average rate to $11,500 per hectare. Wakeham's report does not adopt the same method and he did not undertake a study of the area which could be planted to vines. Notwithstanding the costs of establishing a vineyard Wakeham had an unflagging belief that the "Mums and Dads market" would pay a premium price because if "you have Adelaide Hills on the label the wine will walk out the door". Merely repeating those statements demonstrates a naivete underpinning the valuation. Brooke did not think the lower land was adequately drained or suitable for vineyards although that was a potential use.
415 Lorraine's claim includes an entitlement to a portion of the plant and equipment owned by the Yard partnership. Other than the depreciation schedule attached to the Financial Statements of 30 June 1997 and December 1997 there is no evidence before the Court to identify partnership assets. The Court should adopt the Depreciation Schedule as the only evidence of ownership of plant and equipment. Lorraine's witness statement does not contain any reference to plant and equipment and she has not established a prima facie case to identify any other assets owned by the Yard partnership. Lorraine tendered a valuation report of Mason Gray Strange prepared by Mr Robertson on 8 September 2004. Robertson was instructed to value all plant and equipment located on any of the subject properties. He was not given any instructions by Lorraine about the ownership of those items. Lorraine knew that included items owned by other parties. Robertson was not able to determine the ownership of the plant and equipment which he inspected. He also included in his report valuations for other items which did not exist in 1997 and over which Lorraine has not established any clear claim: sheep and cattle which he agreed would not have been alive in 1997. Income from stock sales is reported in later financial statements.
Wool bales which were not marked and which would not have been present in 1997. Income from wool clips is brought to account in the financial statements. As to hay bales from the 2003 season, although costs of production are included in financial statements this item is not listed as an asset because it supports livestock used to produce income.
416 Wapper prepared a valuation of plant and equipment which was based on the same format as Robertson. Wapper was not given any instructions about the ownership of the plant and equipment which he inspected. Wapper was not able to determine the ownership of the plant and equipment or livestock which he inspected. Wapper did however attempt to identify and value the plant and equipment contained in the Depreciation Schedule at 15 December 1997.
417 Ellery and Lipson reported on the sheep and cattle numbers in 1997. The Court should be careful to avoid bringing both the financial experts values and Robertson's valuations to account.
418 Although Robertson and Wapper agree on the value of many items, the most significant difference in value appears to arise over a few larger items of farm equipment and about which Lorraine has not presented any evidence of ownership. It should also be noted that Wapper did not value all of the items in Robertson's report.
419 Lorraine's second amended statement of claim seeks the appointment of a Receiver to the Yard partnership. On Lorraine's best case her interest in land is owned personally and it would not form a partnership asset. The current sheep, livestock, hay and wool belongs to a different partnership. Lorraine has failed to establish what property a Receiver should be entitled to take possession of without risk of trespass or conversion. A Receiver could not conduct the farm business or Renown Garage on commercial terms.
420 The Court should allow the parties to make further submissions if required.
The Expert Financial Reports
421 The Court has received the financial expert reports of Mr Ellery and Mr Lipson. Ellery stated it was beyond his role to explore the implications of the registration of ownership. Lipson's report was received absolutely but it is again noted that the assumptions and language used by Lipson overstep the functions of a financial expert concerning issues and findings which are properly the subject of determination by the Court.
422 Adopting the substance of the historical Financial Statements it appears that both financial experts are in substantial agreement as to relevant issues. The main difference is the valuations adopted in the respective calculations made by Ellery and Lipson. Ellery also referred to possible dangers which might arise from Lipson's methodology in adopting a current value of Lorraine's interest. The Court should allow the parties to make further submissions if required.
423 That does not mean that there are not differences between the approaches adopted by Mr Ellery and Mr Lipson. There are several issues which arise for consideration. Alfred's claim is that he is the beneficial owner of land transferred to Yardoo in 1997. One objective was to demonstrate the Financial Statements could not be relied upon as proof of beneficial ownership of land by Yardoo. Ellery's first report 24 November 2004 concluded that the Financial Statements prepared by Brodie for the Yard partnership and Yardoo in 1975 - 1977 did not correctly record the financial transactions relating to the purchase of Pomona by Trevor and Lorraine and later transfer to Yardoo. All parties, Mr Brodie and the expert financial witnesses agree that the Financial Statements do not record the purchase transactions correctly and they do not correspond with the registered ownership of the properties. Notwithstanding what Ellery or Lipson say about the Financial Statements and consequential adjustments to the Yard partnership and Yardoo, the Court should accept Brodie's evidence that the financial statements were not intended to and do not reflect the legal and beneficial ownership of assets. No matter what the loan accounts record, or how the principal of each loan account might be adjusted, the liabilities have never been treated in a commercial manner. The Yard partnership farmed the land owned by Yardoo without commercial payment. There has been no intention or attempt to repay the principal of any loan account by the Yard partnership and Yardoo from profits. There has been no attempt to refinance any liability arising from the transfer with a third party using the transferred land as security. There has been no payment or credit for interest on commercial terms. That is consistent with Brodie's witness statement. Those are issues relevant to intent. If there was an intention that Alfred should transfer the legal and beneficial ownership of the land to Yardoo for a commercial price there should have been a corresponding intention that Alfred would be paid on commercial terms. It is not sufficient to simply record a liability in the loan accounts. The effect of the failure to adopt a commercial payment to Alfred was that the profits of Yardoo and the Yard partnership were artificially inflated. It created the false impression they were able to afford the acquisition of additional properties. It was income foregone by Alfred. Even if the loan accounts are adjusted in 2005 in the manner which Ellery and Lipson summarise, after 30 years without interest Alfred will never be compensated for the true value of the properties transferred. That is the reason equity intervenes.
424 In paragraph 20 of Lorraine's Second Further Amended Statement of Claim, Lorraine claims Yardoo is indebted to her in the sum of $123,171.00. There is no corresponding plea in respect of loan accounts as recorded for the Yard partnership at 1997.
425 Alfred's claim is limited to the ownership of the land. It is relevant to note that Gladys, Alfred and Trevor have not taken issue with Lorraine for any claim arising from the annual distribution of profits as recorded in the Financial Statements of either the Yard partnership or Yardoo.
426 Pomona was registered in the names of Trevor and Lorraine as tenants in common. The 1975 partnership accounts treated Pomona as a partnership asset. Ellery's report 24 November 2004 concluded the errors arising in the partnership accounts from the sale of Pomona to to Yardoo had been corrected by subsequent transactions. Mr Brodie said that he was not aware of the earlier errors in the accounts and doubts he made any adjustments with the intent of correcting the errors in the 1995 - 1997 financial statements. Ellery also stated the Yardoo accounts continued to carry the errors relating to Bethune's vendor finance and that the loan accounts should be adjusted. The adjustments for finance provided by Alfred are contained in the second report but that only relates to capital. That does not affect the lack of commercial intent to repay the loans.
427 Lipson's report 7 September 2004 assumed that the purchase money for the original purchase of Pomona by Trevor and Lorraine was provided by the Yard partnership. That assumption by Lipson and inclusion of Pomona as a partnership asset contradicts Lorraine's claim of a gift or advancement. That is an issue for determination by the Court. Alfred stated that it was money sourced from General Credits and he produced copies of the relevant accounts.
428 Lipson's statements and assumptions about the original purchase of Pomona overlooked other accounting issues. If correct there should have been a loan from the Yard partnership to Trevor and Lorraine which they would have been liable to repay when they transferred Pomona to Yardoo. No such loan was recorded in the Yard partnership accounts in 1975. There was no allowance for repayment of principal and interest by Trevor and Lorraine to the Yard partnership. When Trevor and Lorraine transferred Pomona to Yardoo they would therefore have had personal liabilities to Bethune for vendor finance; the Yard partnership for the principal ($15,000) and interest repayments made to Bethune 1993 - 1997; and the Yard partnership for the balance of the purchase price plus interest. No such payment was recorded in the Yard partnership accounts. The accounts credited Trevor and Lorraine with 100% of the transfer price without any liabilities. It is doubtful they would have received any net proceeds if the transaction was commercial, and there may have been a reduction in their loan accounts. Lipson acknowledged that that if properties were not owned by the partnership they should not be included in the partnership account. Lipson also agreed that if Pomona was owned by Trevor and Lorraine as tenants in common and the purchase money provided by the partnership that Pomona should not have been included in the partnership assets; a loan to Trevor and Lorraine should have been included as an asset in the Yard partnership accounts; and that upon the sale of Pomona to Yardoo, Trevor and Lorraine would have a credit for the purchase price but a liability to repay the existing loans. No provision was made for payment of interest by Trevor and Lorraine to the Yard partnership.
429 Lipson's analysis of the transaction is incorrect. It does not support the proposition that loan accounts recorded in the financial statements are a method of payment or a transfer of beneficial ownership. The issues raised by Lipson when analysed correctly demonstrate that both before the purchase of Pomona and upon its transfer to Yardoo, Trevor and Lorraine did not have any capital invested in the Pomona or in the new company structure.
430 Another issue arising from Mr Lipson's evidence is the proper accounting treatment of Paladin and Brian's Block. Lorraine claims that they are partnership assets or in the alternative that they owned beneficially by the parties. Paladin was purchased in the names of Gladys, Alfred, Trevor and Loraine on 14 September 1981 and was included in the Yard partnership Balance Sheet 30 June 1982_._ Alfred stated that he paid the deposit and there is an increase in the loan accounts of Gladys and Alfred. Brian's Block was purchased on 17 December 1985 in the sole name of Lorraine. Brian's Block is recorded as an asset in the Yard partnership. The liabilities to Brain Yard are included although the nature of his loans have changed and now relate to Hawick and the "MV Kookaburra". Alfred said he paid part of the purchase price for Brian's Block and there is a related movement in the partnership capital accounts for Gladys and Alfred.
431 The respective claims made by Alfred and Lorraine concerning Paladin and Brian's Block raise the following alternatives. If the properties are owned by the Yard partnership then the assets and related liabilities should be recorded in the assets and liabilities of the Yard partnership. If the properties are beneficially owned by Alfred then the assets and related liabilities should not be recorded in the assets and liabilities of the Yard partnership. If the properties are beneficially owned by Gladys, Alfred, Trevor and Lorraine as individuals then the assets and related liabilities should not be recorded in the assets and liabilities of the Yard partnership.
432 Lorraine's claim that Paladin and Brian's Block are owned beneficially by the four individuals and Lipson's related evidence raises an obvious inequity. Lipson agreed that such a claim would have been treated differently in the partnership accounts and taxation returns of the individuals. Alfred's evidence is that he paid the deposit and part of the purchase money from savings. Lipson accepted it was an amount of about $64,000 from 1983 to 1985. The effect would have been that Alfred would have paid for the whole or a substantial portion of a one quarter share of the properties and owned that interest freehold or with minimal liabilities. Trevor and Lorraine did not pay anything to purchase their interests and presumably they would have paid their portion and annual interest from income received by them. The Financial Statements prepared by Brodie recorded Paladin as a partnership asset and expenses costs associated with Brian's Block. Once again the related loan accounts are not treated in a commercial manner especially if the relevant interest were owned personally.
433 Lipson's Report stated that it was reasonable to conclude that the Yard partnership had sufficient financial resources to finance the purchase of Paladin and Brian's Block. However when asked about whether the partnership could have afforded the purchase without the capital paid by Alfred, Lipson stated "that asks me to crystal ball backwards." However that is what Mr Lipson has done in reaching his other conclusions.
434 If there was an intention that the parties each own beneficially a one quarter interest in the properties there should have been a corresponding intention that they would each pay for their separate interest in a commercial manner.
435 What Lorraine wants is for the money paid by Alfred to continue to be treated as a non performing loan by Alfred to all of the Yard family members jointly and to have the Yard partnership pay the costs of her ownership. Lorraine's claim also overlooks payments from 1997 to 2005 for a mortgage over Paladin. She wants the capital gains during that period but not the expense. Alfred has not received interest on his additional capital and he has not received income or a credit in the loan accounts for those items. Even if rent is assumed to equal the finance costs Lipson's report fails to give credit to Alfred as a person who has paid for his interest in those properties or to adjust for any income that he should have received as an owner. Lorraine's amended claim is another example of Lorraine overreaching at Alfred's expense. The financial reports indicate the type of return could expect at 7% pursuant to section 47 Partnership Act. The valuation reports and in particular Mr Wakeham presents a bigger prize: large capital gains with no capital invested by Lorraine and costs serviced at Alfred's expense.
436 The last full year of accounts for the Yard partnership was 30 June 1997. Remeljej & Associates prepared accounts dated 30 June 1998 for the termination of the Yard partnership as at 15 December 1997.
437 Remeljej & Associates also prepared accounts for the new partnership which carried forward the assets of the Yard partnership but did not include any liability for the purchase of assets from the Yard partnership. Lipson considered the final accounts had limited value and expressed concerns about the failure to record a liability to Lorraine as a discontinuing partner for her portion of the assets of the Yard partnership. In response to Lipson's criticism, first, Trevor and Loraine are both subject to Orders of the Family Court restraining them from disposing of any assets; and second, the ownership of land partnership liabilities and amounts are the issues for determination by this Court.
438 Lipson's report of 6 September 2004 was prepared before Lorraine amended her claim to include her partnership interest in land as personal property. If Lorraine does own an interest in land personally then the land should not be included as an asset in the Yard partnership and the new partnership does not have a liability to her. Lipson's criticism of the accounts 15 December 1997 is inappropriate because of Lorraine's change of position.
439 Both experts were given the opportunity to comment further. Ellery stated that in the event of an injunction it was appropriate to make the accounting adjustments after the court made orders as to ownership. Lipson stated that for accounting purposes the properties should remain in the partnership hands or person in whose name it is registered. The Financial Statements prepared by Remeljej & Associates have not pre-empted the issues in dispute. The Court should allow the parties to make further submissions if required as to adjustments.
440 Although Ellery and Lipson agree in principle about the accounts and how they might be adjusted, Alfred does not agree that such adjustments provide a proper or an equitable result. That is for the following reasons. The reports assume that existing registered ownership of land is correct. The reports agree that the accounts do not reconcile with related transactions however any adjustments are based on the capital sums at the time of purchase. Lipson agrees that his analysis of the original purchase of Pomona with finance provided by the Yard partnership is incorrect. Lipson agrees that if each party is the owner of a beneficial interest in Paladin and Brian's Block there would have been a different accounting and taxation treatment. The original and subsequent accounts do not deal with the transactions in a commercial manner. Neither Ellery nor Lipson attempt to make adjustments for commercial issues such as interest, let alone the related issues of adjusting profits and distributions. The balance sheets are inflated.
441 Lorraine's claim with respect to Yardoo has different financial consequences. Lorraine claims that as the beneficial owner of one of four shares (which she did not pay for) she is entitled to one quarter of the current assets of Yardoo at the present 2005 value. The claim against Yardoo raises many issues in common with the partnership such as the loan account transactions in 1977. All parties agree the loan accounts are wrong and Ellery stated they have not been corrected. Adjustment to the capital of Alfred's loan accounts in 2005 will not do justice. Underlying all of those issues is Alfred's claim that he provided the initial capital (land and cash) upon which the current assets of Yardoo are based. Again the memorandum of transfer and record of transactions in the loan accounts are not proof of beneficial ownership even if they recite the value of land in 1977. The purchase of Hawick also has parallels with the acquisition of land by the Yard partnership. Both are based on the complete absence of any attempt to give effect to the transactions in a commercial manner.
442 As a director and shareholder of Yardoo, Lorraine had an obligation under ss.181 and 182 Corporations Act to ensure that Yardoo did actually pay Alfred on commercial terms for the land transferred to it. As a shareholder Lorraine knew she did not pay or contribute to Yardoo. Lorraine also knew the loan accounts have never been treated in a commercial manner by payments of principal and interest to Alfred. A more realistic comparison is that Alfred's loans have been capitalised. It is remarkable that Lorraine should claim relief for oppression when Yardoo has failed to pay Alfred any principal or interest for the land transferred to Yardoo in 1977. The orders that Lorraine seeks for 25% of the current value of assets are themselves oppressive if given effect to.
443 As a witness Alfred demonstrated an independent and intelligent recollection of events. His statement is his own. The history of events is well documented. Alfred's evidence can be tested by contemporaneous documents. However documents such as the Memoranda of Transfer and the payment of related stamp duty do not evidence intent per se. The prospective liability for death duties provided the motive to transfer the land but the there was no intention to provide a beneficial interest in the land until Alfred's death.
444 Lorraine asserts the Memoranda of Transfer documents are proof of an intention to transfer the beneficial ownership of land to Yardoo, but does not apply the same analysis to the original purchase of Pomona. Lorraine's evidence and assertions that she was the beneficial owner of one half of Pomona were at best muted. If Lorraine was the beneficial owner of one half of Pomona she should have made an unqualified claim to that effect in 1973 - 77. Lorraine does not claim she had any separate intention 1977 or that her intention as beneficial owner overrides Alfred's intention. To the contrary Lorraine's evidence is she did as she was directed by Alfred to give effect to Alfred's intentions in both 1973 and 1977. If Lorraine was the beneficial owner then she had a corresponding obligation to pay for her land if she was going to exercise any such rights.
445 Lorraine does not apply the same analysis to Brian's Block which was registered in her sole name. There are many parallels with Alfred's claims. No matter what the Memorandum of Transfer records Lorraine again did as she was instructed. Lorraine now says she is not the beneficial owner and that Brian's Block was "purchased by the partnership being carried on by A, G, T and L Yard and that such properties are owned by the partnership legally and beneficially in equal shares".
446 Lorraine claims she is the trustee of Brian's Block. However there is no declaration of trust, no conversations with other family members upon which she relies, no document in writing pursuant to section 53 Property Law Act 1958 and no evidence of intent. These are the same issues Lorraine pleads in defence of Alfred's claim that he is the beneficial owner of Brian's Block.
447 As to Lorraine's further submissions, if Lorraine was the beneficial owner of one half of Pomona prior to 1997 it is reasonable to expect she could have made a claim to that effect in the current proceedings. The submission that Equity would require an adjustment prior to granting relief was intended to demonstrate that Lorraine cannot keep all the benefits without the costs. Mr Lipson agreed. If Lorraine had an expectation during 1973 to 1997 that she did in fact have a legal and beneficial interest in the properties her evidence should have stated when she developed that expectation and why. Alfred says Lorraine did not form any expectation because she knew such an expectation was contrary to Alfred's actual control of the properties as the real owner.
448 As to the submission of compensation for 28 years of marriage to Trevor Lorraine's submissions continue to confuse Alfred's claim in equity with Family Court issues. Alfred did not marry Lorraine and he does not have any obligation to compensate Lorraine for her marriage with Trevor.
449 The submissions assume that Lorraine has achieved some superior or additional right over the prior rights of Alfred. They assume a superior right over Gladys, Alfred and Trevor as members of the Yard partnership. The submissions ignore the following matters. Gladys and Alfred have been married for nearly 60 years. Alfred had operated the Renown Garage since 1951. Alfred accumulated significant assets and savings prior to the marriage of Trevor and Lorraine in 1969, and some before Lorraine was born. The terms of Lorraine's participation in the Yard partnership and Yardoo was not based on commercial considerations but on tax decisions made by Brodie or estate advice by Penrose. The Yard partnership did not pay rent to Alfred. Yardoo and the Yard partnership would not have made the same profits if they had to pay Alfred the value of his properties plus interest on commercial terms. The extra money paid by Alfred to purchase Paladin and Brian's Block.
450 Lorraine's submissions also refer to the need to compensate for her contribution to the Yard partnership. The relevant matters are the following. In 1969 Trevor was employed at the Renown Garage and Lorraine was a hairdresser. They had limited assets saving and possibly prospects. In other circumstances that might have been their lot in life. Trevor and Lorraine did not have the capacity to buy the house which Alfred paid for and Lorraine still resides in. Lorraine did not pay to become a member of the Yard partnership or Yardoo. It was an accounting decision made by Mr Brodie. From 1973 to 1997 Lorraine did obtain personal benefits from the Yard partnership. Trevor and Lorraine spent portion to provide for their family. Since 1997 Margaret Sims has been working to maintain the farm business and properties. Lorraine's claim to a share in partnership assets relates to the amount in excess of drawings but exclusive of normal commercial costs which would have been payable on a third party basis.
451 Although the Partnership Act contains rules of distribution and compensation by continuing partners, Lorraine does not want those rules applied. Section 28 (3) Partnership Act provides for interest on capital at 7% per annum. Section 43 provides that surplus assets are to be paid to the partners. Section 48 (b) contains further rules of distribution. Lorraine did not put any capital into the partnership in 1973 but she wants a minimum of 25% of the capital at the date of termination and preferably 25% of the current value of properties in 2005. Lorraine knows the partnership did not pay commercial interest on the loans and additional money paid by Alfred, but she wants 25% of the additional assets purchased with the money foregone by Alfred.
452 Alfred has not acted with the intention of defeating Lorraine's claims. Lorraine's only realistic expectation was that Trevor as the only child would inherit upon Alfred's death. Alfred is acting to protect his own assets acquired over 60 years and prevent them being taken as part of a matrimonial dispute. His claims are prior in time and in equity.
453 As expected Alfred has made provision in his will for Trevor and his grandchildren. Alfred was not obliged to make any provision for Lorraine and could change dispositions of property during his life. Alfred is not insensitive to Lorraine's position and for example withdrew the claim where Lorraine lives. Lorraine however told the Court there is no way she would recognise any of Alfred's claims with respect to the Schedule 1, 2 and 3 properties. Lorraine wants more out of the Yard partnership and Yardoo than any other person. Lorraine wants the current value of assets which includes at least 25% of the original capital which Alfred contributed. The schedule 1, 2 and 3 properties still exist and have a current value in excess of $2 million.
454 The equitable relief Alfred claims is similar to the result the law would recognise in other circumstances. In 1973 the family partnership was limited to farming land or using garage assets owned by Alfred. Alfred did not have any obligation to bring Lorraine into a partnership. It was a change which was driven by accountants and contemporaneous tax practices. It was never a commercial transaction. If the Yard partnership had continued as a business using land owned by Alfred without the transfer of any land by Alfred to Yardoo or purchase of new properties in the name of other persons, Alfred would have owned all the assets personally and Lorraine would not have any recourse against his assets. If the transfer of land to Yardoo was an illegal contract there is still a resulting trust of the land to Alfred and again Loraine would not be entitled to keep the assets.
455 In summary, the submissions for Alfred are as follows.
456 Prior to 1969 Alfred owned land and had assets. At all times Alfred exercised actual control over the assets. The land and assets owned by Alfred did not form part of the partnerships conducted by Alfred prior to 1973. The transfer of land and assets to Yardoo was a mechanism so that Trevor could inherit without death duties at the time of death. There was no intention to transfer an immediate beneficial interest in the land or shares. The scheme only had effect on Alfred's death. The Memorandum of Transfer and loan accounts was not a conveyance for value. The loan accounts were incorrect and not proof of payment. After the transfer of land to Yardoo there was no intention or attempt to repay any loan account liabilities to Alfred on a commercial basis. The profits 1977 to 1997 would not have been available except for the use of land owned by Alfred, such as the South Blocks, and used by the Yard partnership without rent or compensation, and capital provided to purchase Pomona and Paladin. On a practical basis it is doubtful any Court would unravel the accounts from 1977 to 1997 and reallocate profit for that period. The loan account adjustments in issue relate to historical errors from 1977. Although the adjustments might affect Lorraine's loan account they are inadequate. The only method of doing equity is to make the declarations of beneficial ownership sought by Alfred or reconvey the properties in specie. Alfred's claim to the properties purchased after 1977 is consistent with section 24 Partnership Act and related equitable principles. Lorraine has not established that she has a personal beneficial interest in Paladin and Brian's Block.
457 The Orders sought on behalf of Alfred are that he is the beneficial owner of all the land the subject of his claim. If the Court rejects Alfred's claim and grants relief to Lorraine on the basis of an adjustment of accounts and one quarter of the valuations of the Yard partnership and Yardoo, the effect will be to give Lorraine a windfall. Not because of any business agreement on commercial terms or the conduct of the business on commercial basis but simply because Lorraine happened to be married to Trevor.
458 The Court should not exercise its discretion to wind up Yardoo when it is
apparently solvent and the winding up would destroy the farming activities not only of Alfred and Trevor but also long term provisions for Alfred's grandchildren. The expert financial evidence anticipates that financial adjustments can be made by agreement between the experts as to calculations depending on the judgment of the Court.
SUBMISSIONS ON BEHALF OF LORRAINE YARD
459 Submissions on behalf of Lorraine Yard are summarised in paragraphs 460-506.
460 There is no evidence of any express agreement that Trevor and Lorraine hold the property on an express trust for Alfred. There is no compliance with the formal requirements, in any event, of s.53 Property Law Act. Further, there is evidence of actual intention which rebuts any presumption of a resulting trust (to the extent Alfred provided funds for the purchase, and if such a presumption is not reversed by the presumption of advancement). The intention was to reduce "death taxes". At least $13,000 of the deposit monies for the purchase of Pomona came from partnership funds (Renown Garage Account and Farm Account). The Bethune vendor finance of $65,000 was paid off in the period 1974 to 1979 from partnership funds. Later receipts for interest on the mortgage in respect of the Pomona property were issued in the name of the four person partnership. The subsequent purchase of Pomona by Yardoo from Trevor and Lorraine in consideration of the raising of loan accounts in each of their favour, and in circumstances where no consideration was paid to Alfred or Gladys, is further evidence that Trevor and Lorraine were the beneficial owners of Pomona prior to its transfer to Yardoo.
461 The evidence of Brodie in cross-examination was clear that at and before the incorporation of Yardoo there was no discussion of a trust. Ellery stated that the documents sighted by him confirmed the transactions as genuine transactions which passed legal and beneficial title to Yardoo and that for any effect in minimizing probate or estate duty, beneficial title in all the properties had to be passed to Yardoo.
462 Alfred asserts that he received no payment for the transfer of the Schedule 1 properties to Yardoo, but the accounting evidence of Brodie and Ellery is that the loan accounts constituted such payment. The fact of agreement on the loan accounts being good consideration is sufficient for the loan accounts to constitute legal consideration: Manzi v Smith.[40] In Temples Wholesale Flower Suppliers v FCT[41], the Full Court of the Federal Court first refers approvingly to Whim Creek Consolidated (NL) v FCT [42] which held that a debit to an advance account in the books of a company was held to be a payment (in that instance to the company) as there was an agreed set-off of the sum in question. It is the fact of agreement that the loan accounts will constitute payment that is the key, which is clearly established in this case, inter alia, by (a) the accountant's letter of 31 May 1977 (CB 158) "The purchase of the relevant assets by the Company should be by way of loans with appropriate Mortgages and/or acknowledgement of debt"; (b) the Freeman and Pitts letter to the four Yards (CB 161) "It is understood that the transfers may be passed at the Stamps Office without required proof as to the manner of payment of the consideration, and accordingly have not prepared any acknowledgement of debt by the Company. If necessary some form of acknowledgement will be prepared at a later date"; and (c) the agreement for the sale of business to Yardoo which records (CB 166) "The said purchase price shall be payable on demand and shall be entered in the books of account of the purchaser as a debt owing to the vendors in equal shares."
463 All of the subsequent accounts and Annual Returns were signed by Alfred without any demur. Alfred stated in cross-examination that the agreed method of payment for the transfer of properties to Yardoo was to be the raising of the loan accounts in Yardoo.[43]
464 As to subsequent acquisitions by Yardoo, there is no evidence to support an express trust of the Schedule 4 properties in favour of Alfred. No evidence was led of any agreements, despite this being pleaded. This contention was never suggested in cross-examination to Lorraine. There is no evidence of any affixing of a seal by Yardoo as a trustee company (contrary to AIfred's pleading of his case). The sources of funds in the case of the subsequent purchases by Yardoo also proves that there is no basis for a resulting or constructive trust in favour of Alfred. Alfred was in no case the source of funds so as to raise an inference of a resulting or constructive trust in his favour. The property Murrayville Slaughter Yards (4.1) was registered in the name of Yardoo but paid for from partnership accounts. The property Herbie's Town (4.2) was purchased by Yardoo for $1000 and Alfred accepted in cross-examination that the source of funds for the purchase was Yardoo. The 50% interest in the property Hawick (4.3) was purchased in the name of Yardoo for $200,000 on the basis of a loan from Brian Yard for $125,000 with the balance of funds of $75,000 being paid from a partnership bank account.
465 As to subsequent acquisitions by the partnership there is no evidence of any agreement prior to the acquisition of the properties in Schedule 5 (or at any other time) that they would be held on trust for Alfred. The property Szader's Block (5.2) was registered in the name of Trevor but the Court should find that it is held on a resulting trust for the partnership of four as the source of funds for the purchase (CB 288/290) were three cheques from a partnership AGC Credit Account totalling $21,188. The presumption of advancement does not apply to the purchase of Szader's Block as the funds for the purchase came from the partnership of four, not from one of Trevor's parents. The property Paladin at Loebethal (5.3) was purchased in the name of the four partners in 1981/82 for $178,000 and is registered in their joint names. The source of funds was the partnership. The property Brian's Block (5.4) was purchased in the name of Lorraine for $195,000. The property was paid for by partnership funds. In a letter of 19 February 1999 (CB 166) Alfred and Trevor Yard claim Brian's Block as being a partnership asset of the four partners.
466 Ellery's First Statement records the equal distribution of profits from the partnership, and he accepted in that the partnership operated on the basis of four equal partners and that there was an equal distribution of dividends from Yardoo. Ellery (Para 7.4) records the transfer of legal ownership of the properties, and he accepted that in order for there to be the probate/succession duty effect of reducing liability that there had to be a transfer of both legal and beneficial title.
467 At the time of the formation of the partnership and of Yardoo and of the purchase of the properties there were convivial relations between the family members including Lorraine. Trevor as Alfred's only son could be expected to receive the properties. Alfred was deeply concerned about probate/succession duties. The transfers of all the Schedule 1 to 3 properties was the reflection of this motivation to transfer properties inter vivos to minimise death duties. There is clear evidence to support the conclusion that each of the subsequent purchases by Yardoo (4.1, 4.2 and 4.3) was intended to be held by Yardoo legally and beneficially. At the time of the purchases, the partnership of four was profitable and was used as the source of funds to fund the balance of the purchases other than external borrowings. As the partnership of four had the same equal rights as the shareholding of four the Court should conclude that there was a actual intention that Yardoo hold the beneficial title to the properties. As the partnership funds were the source of funding of the Schedule 4 properties other than external loans there is no basis for Alfred to claim a resulting or constructive trust in respect of any of these properties. There is clear evidence also that each of the Schedule 5 properties was intended to be held as partnership properties. Paladin is registered in the names of all four, and the source of funds was partnership accounts and external borrowings in the name of the partnership. The source of funds for Trevor's purchase of Szader's Block was the AGC General Credits partnership account, and the source of funds for Lorraine's purchase of Brian's Block, other than a loan from Brian Yard, were partnership funds. The Court should find that the latter two properties were held on a resulting trust for the partnership. The fact that Brian's Block was registered in Lorraine's name demonstrates Alfred's determination to avoid probate/estate duties by registering properties in the names of parties who could be expected to succeed to properties on his death (in this case Trevor and Lorraine). This is especially the case when at the time relations between the partnership of four were convivial. All of the evidence is consistent with the one objective of Alfred: to transfer properties away from his own legal ownership with the actual intention that beneficial ownership should be transferred and held so that upon his death probate/estate duties would be reduced. The Court should find that there is evidence of this actual intention on the part of Alfred in respect of the Schedule 1 and 2 properties, and of all concerned in respect of the Schedule 3 to 5 properties. It is not a question of a delayed intention; rather the intention is to make a current disposition of property, albeit for a longer term objective or purpose. Alfred's case, that the properties in Schedules 1 to 5 are held by the various registered proprietors on trust for him, defies approximately 20 years of financial reports and taxation returns which record the ownership and exploitation of the properties by Yardoo and the partnership for the equal benefit of the shareholders and the partners respectively.
468 Lorraine submits that applying the dicta of Gibbs CJ in _Calverley v Gree_n[44], there should be held to be a presumption of advancement applying to a joint purchase in the name of son and daughter-in-law in the case of the original purchase of Pomona. The decision of Yoshino v Niddrie[45] does not stand for the contrary proposition. It merely contains a statement that the matter had not been conclusively determined. The purchase in the name of a son is a classic example of a relationship of loco parentis giving rise to the presumption of advancement, The joint purchase in the name of Lorraine and Trevor, at a time when Alfred was clearly concerned with the impact of death/succession duties, is such a circumstance as referred to by Gibbs CJ at 250 in Calverley v Green "wherein the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred".
469 In any event from the evidence as to circumstances of the transfer of the Schedule 1, 2 and 3 properties in May to December 1977, the Court should infer an actual intention on Alfred's part to transfer beneficial title in all the Schedule 1,2 and 3 properties to a company in which he voluntarily created four equal shareholdings. The Court should not find that there were voluntary transfers (i.e. without consideration) as the shareholder loan accounts provided good consideration at law for the transfers, and the evidence is certain that Alfred was intending to dispose of property to Yardoo to minimise death/succession duties on his death. This is not a case like Manzi v Smith[46] where the only evidence was journal entries and nothing more. Here, the evidence was of the underlying agreement that payment would be made by the raising of the loan accounts. Unlike Manzi v Smith there is evidence of the parties, in particular Alfred, binding themselves by agreement to the raising of loan accounts as being the relevant payments for the transfers of the properties. The parties, unlike Manzi v Smith, adopted the raising of the loan accounts as the fact of payment. The Accountant's letter of 31 May 1977 (CB 158) states "The purchase of the relevant assets by the Company should be by way of loans with appropriate Mortgages and/or acknowledgement of debt"; the Freeman Pitts letter to the four (CB 161) states "It is understood that the transfers may be passed at the Stamps Office without required proof as to the manner of payment of the consideration, and accordingly have not prepared any acknowledgement of debt by the Company. If necessary some form of acknowledgement will be prepared at a later date"; and the agreement for the sale of business records (CB 166) "The said purchase price shall be payable on demand and shall be entered in the books of account of the purchaser as a debt owing to the vendors in equal shares".
470 The Schedule 4 properties were all registered in the name of Yardoo. Herbie's Town (4.2) was purchased using Yardoo's funds. Applying the presumptions referred to by Gibbs CJ in Calverley v Green as the source of funds (other than external borrowings) for the purchase of the Murrayville Slaughter Yards and the 50 percent interest in Hawick was partnership funds, then the presumption would be that Yardoo held these 2 properties on a resulting trust for the partnership members equally. The more natural inference is that it was the actual intention at the time of purchase that beneficial title rest in Yardoo, but the conclusion is clearly open on an application of the relevant presumptions as to resulting trusts, that the interest in these two properties (a 50 percent share in the case of Hawick) were held on a resulting trust for the partnership members equally.
471 The interests held in respect of each of the Schedule 5 properties were held either directly by the four partners (in the case of Paladin) or on a resulting trust for the four partners (Szader's BIock and Brian's Block). The source of funds in the case of the Paladin purchase were the partnership funds. The source of funds (other than external funds borrowed in the name of the Partnership) in the case of each of Szader's Block and Brian's Block were partnership funds and the relevant presumption would apply to impose a resulting trust in favour of four partners equally.
472 If the Court finds that there was an intention to transfer legal and beneficial title to Yardoo, then there are no circumstances of good conscience demanding the imposition of a constructive trust in favour of Alfred. Alfred achieved what he intended to do. There is no aspect of conscience or good faith supporting the imposition of a constructive trust. The Court will have found that the intention of the parties was achieved and there is no place for the further intervention of equity.
473 Alfred's case is that he retained the beneficial ownership of the properties in Schedules 1 to 5, and the purpose of the legal title being transferred out of or held other than in his own name was to minimise the impact of probate/estate duties. On the evidence of Brodie and Ellery, such a purpose could only have been effected if the beneficial ownership was also transferred out of his name or held other than in his own name. If, notwithstanding Lorraine's submissions concerning the evidence in these proceedings, it is accepted that Alfred did indeed retain beneficial ownership of the properties, the only way by which the purpose of minimising probate/estate duties could be achieved would be for his Estate to practise a deception upon the probate/estate duty authorities by failing to disclose that he had so retained the beneficial ownership. Accordingly the trusts alleged by Alfred, if they arose consistently with Alfred's evidence, arose for the illegal purpose of deceiving the probate/estate duty authorities and illegally avoiding probate/estate duties. Trusts set up for an illegal purpose are unenforceable: Nelson v Nelson[47]. Thus, Alfred does not come to equity with clean hands and, even if his case is accepted, he should nevertheless be denied equitable relief. Although illegality has not been pleaded by Lorraine, the court if necessary should of its own motion refuse to enforce the trusts alleged by Alfred and refuse to grant the relief sought by Alfred, as Alfred cannot prove the existence of the trusts without proving the illegal purpose.
474 Yardoo should be wound up. It no longer has any business as, following Lorraine's separation, Alfred transferred the Renown Garage business back to the partnership. This is demonstrated by the Remeljej Accounts as of 30 June 1998. The appropriate time for the valuation of the interests of the shareholders in Yardoo is now, as Yardoo has continued to hold all of the Schedule 1 to 4 properties to the present. Yardoo does not act in any trustee capacity, and the four shares are held by the four shareholders beneficially with equal entitlements. The Court should regard Yardoo as a `quasi-partnership' company[48] whose sub-stratum has failed. In addition, under the `just and equitable' ground for winding up Yardoo: (a) the control and management of Yardoo's affairs have been characterized by oppression; Yardoo is a domestic company in the nature of a partnership whose members are unable to co-operate in the conduct of its affairs; (b) it is now impossible for the planned business of Yardoo with the Renown Garage and livestock transactions to be carried on. Alfred determined after 15 December 1997 that Yardoo would no longer have a business; (c) there is compelling evidence of a breach of directors' duties by Alfred and Trevor in that Alfred has transferred the business of the company away from it, the directors of Yardoo have refused to allow Lorraine any access to information of the books and records of the company, and Trevor and Alfred purported to convene the extraordinary meeting of 19 July 1999 whereby they purported without notice to Lorraine to remove her as a director and shareholder of Yardoo which attempts were clearly illegal and of no effect. No notice of this meeting was given to Lorraine.
475 There is a clear case of "oppressive conduct" in the conduct of the affairs of Yardoo:[49] Yardoo sold Tully's Block (1.8) to Vic Grain in January 2001 without any reference to Lorraine; Alfred and Trevor both stated that from 11 December 1997 Lorraine was not entitled to any information concerning the company's affairs; the business of Yardoo was transferred away from Yardoo without any consultation with Lorraine and so as to directly defeat any claim by Lorraine; Lorraine has been consistently denied access to the financial records of Yardoo; an extraordinary meeting allegedly held on 19 July 1999 (Ex 1) without notice to Lorraine purported (which attempts were illegal and of no effect) to remove Lorraine as a shareholder of Yardoo; Alfred's decision taken after the separation of Trevor and Lorraine to take away from Yardoo all income earning activities so that Lorraine would be removed from having any right to claim access to any source of income; Alfred took active steps after the separation to try and defeat Lorraine having access to any income or any rights of claim to property by removing from Yardoo any sources of income; and Trevor confirmed that it was his intention to remove Lorraine from the company after separation and that he was a prime mover in the purported attempt on 19 July 1999 to remove Lorraine as a director and shareholder from Yardoo.
476 There has been no winding up of the Partnership. The partnership with Lorraine commenced in 1973 or 1974. No notice has ever been given to Lorraine of the holding of a meeting for dissolution, or of the partnership's dissolution under section 36. There has been no Gazettal or newspaper notice as required by s. 41 of the Partnership Act.
477 The Court should order the dissolution of the partnership under s.39(f) (just and equitable ground) of the Partnership Act and the payment to Lorraine of an amount due under s.43 Partnership Act. The Court should adopt the expert Second Report and conclusions of Lipson as to the amount to be paid to Lorraine under s.43 in this respect. Alternatively, if the Court finds that there was a dissolution on or about 15 December 1997, then the Court should order a payment under s.43 in accordance with the Lipson Second Report and make a further order of an amount for payment under s.46 for the use of Lorraine's share of the Partnership assets since dissolution.
478 As the two partnership properties Paladin (5.3) and Brian's Block (5.4) are registered in the names of all four partners and Lorraine alone respectively, there can only be an order for the winding up of the partnership now and if necessary, orders for the sale of both properties as a consequential order to the order for the dissolution of the partnership.
479 Section 36 Partnership Act requires a notice of dissolution to be given by the dissolving partner to the other partners. Such a notice was never given. No meeting had ever been held to resolve to dissolve the partnership.
480 The "just and equitable" ground (s.39(A)) is clearly available to Lorraine on the facts of this case. Whether a dissolution is just and equitable is a question of fact.[50] Section 43 allows each partner upon the dissolution of a partnership to have the partnership property applied in payment of the firm's debts and liabilities and after such payment to leave the surplus assets applied in payment of what is due to the partners. In general, under s.43 the Courts will order a sale of partnership assets on dissolution unless there is an agreement to the contrary. Where a partnership is dissolved, the Court will order the appointment of an independent receiver and manager as a matter of course where the parties are in serious dispute.[51]
481 By virtue of s.46, Lorraine is entitled to a share of the profits made after dissolution such as the Court finds to be attributable to the use of her interest on the capital of the partnership, or at her election to receive interest at the rate of seven percent per annum on the amount of her share of the partnership assets.
Valuations
482 The appropriate date for valuation of the landholdings is now, not 15 December 1997.
483 The company Yardoo is the owner of Pomona, 50% of Hawick, Carina, South Blocks, Town blocks, the Abattoir, the Garage and Herbies. Therefore, any supposed dissolution of a partnership on 15 December 1997 has no significance to the appropriate values to be ascribed to these landholdings which must be valued at current values. All four parties are registered as tenants in common of Paladin and therefore the current value again is the only relevant value. Brian's Block is registered in the name of Lorraine Yard solely and therefore again the present value is the only relevant value. Lorraine's holding of Brian's Block on trust for all four partners is a current holding. The creation of a new partnership of three did not vest ownership of the land in the new partnership. The appropriate date for the valuation of Lorraine's interest is at the time when within this proceeding the Court orders a dissolution of the partnership; that is, current values should be applied.
484 There was no evidence of any meeting in December 1997 to dissolve the partnership or any satisfaction of the requirements of the Partnership Act 1958. There is no evidence of any notice given under s.36(c) Partnership Act at any time.
485 Further, the filing by Lorraine of a proceeding seeking an order for the dissolution of the partnership does not of itself act to dissolve the partnership. The relevant date is the date upon which in this proceeding the Court orders the dissolution of the partnership under s.39(f) Partnership Act and the payment to Lorraine of an amount due under s.43 Partnership Act. The proceeding seeks an order for dissolution and does not of itself institute a dissolution of the partnership.
486 There is no evidence which suggests otherwise than that, upon the incorporation of Yardoo in October 1976 and the issue of the "D" Class Share in Yardoo it was intended that Lorraine would hold that share beneficially. Relations at the time were cordial and it was agreed that all partners would each be given one share in Yardoo, in the same way that all the partners were treated equally in the partnership. The fact is that the shares were issued to each member of the family and the evidence supports the inference that at that time of convivial relations it was intended that each partnership member would receive one share beneficially in Yardoo, as they at all relevant times shared equally in the partnership profits.
487 The Financial Records and Statutory Returns of Yardoo all record, consistently, Lorraine as the beneficial owner of a "D" Class Share in Yardoo.
488 Lorraine Yard submits that the date of the Court Order is a more appropriate date for the valuation of her one "D" class share than the date of the issue of the proceedings or the date of the oppressive conduct: Re London School of Electronics Ltd[52]. The guiding principle in respect of valuing a company's share is that the valuation must be fair in all the circumstances: Reid v Bagot Well Pastoral Co. Pty Ltd[53]. The Court should apply the net asset method applied by both Ellery and Lipson to the valuation of Lorraine's share.
489 It is unmeritorious to suggest that at some time after 15 December 1997 the titles of Paladin and Brian's Block were transferred into a partnership of three (which is the assumption of Ellery's Second Report). All four partners are registered as joint registered proprietors of Paladin and Lorraine is registered as the sole registered proprietor of Brian's Block. There is no evidence supporting a transfer of these properties to a partnership of three. By way of contrast, in the case of the 1976/77 transfer to Yardoo there were valuations and transfers executed, registered and stamped. Under s.53(1)(a) Property Law Act 1958, no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same. Under s.53(1)(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same or by his agent. In the case of the 1976/77 transfer all statutory requirements were met. There is no evidence to support a transfer of Paladin or Brian's Block to a partnership of three at anytime. They remain vested legally as stated, and Lorraine is entitled to an order for 25% of their net values at current values.
490 Irrespective of the case propounded by Alfred of a resulting or constructive trust, there are clearly assets of the four person partnership in the form of stock, plant and equipment. Loans and cash at Bank to which Lorraine has on any view an entitlement irrespective of any arguments as to resulting or constructive trusts. This is clear from Ellery's Second Report (Appendices 2 and 4) and is properly valued by Lipson (Second Report) in his Attachments and at paragraphs 8.5 to 8.8 of his Second Report. Although there were small differences in the capital accounts of different partners as of June 1997_,_ the failure of the partnership of three to produce any Financial Statements after June 2000 means that the only proper approach for the Court to take is to award Lorraine a 25% interest in the net asset pool of the partnership of four on current values. This award should be made irrespective of any findings in respect of resulting or constructive trusts.
491 The Court should find based upon the principles enunciated in Wayde's case that this case represents a clear ease of gross oppression or unfair treatment of Lorraine as a minority shareholder in Yardoo. The extraordinary meeting and illegal events of 19 July 1999 (Exhibit 1) and the total exclusion of Lorraine from any information are proof enough for a finding of oppression under s.232(a), (b) (c) and (e) Corporations Act 2001 as being acts or conduct or proposed resolutions oppressive to, unfairly prejudicial to or unfairly discriminatory against a member being Lorraine.
492 The Court therefore has the jurisdiction under s.233(1) Corporations Act 2001 to order the purchase of Lorraine's D class share by the other members (s.233 (1) (d)). The value which the Court should set for that purchase should be the value set by Lipson in his Second Report (paragraphs 8.9 to 8.14), which like Ellery's Second Report relies upon the insertion of updated valuation figures in the 30 June 2002 Yardoo Accounts (see Attachment Three to Lipson which only differs from Ellery paragraphs 11.2 to 11.4 and Appendix 6 in the values given as current values for the real estate owned by Yardoo) (Wakeham's values as opposed to those of Wapper).
493 No discount should be applied to Lorraine's one D class share when the majority are being ordered to buy out the oppressed minority.[54]
494 In addition to these two amounts, Lorraine is entitled to an order for payment by the other three partners of an amount equal to 25 percent of the net current values of Paladin and Brian's Block. Lorraine is prepared to accept 25% of the net value of Brian's Block although she is the sole legal registered proprietor.
495 Lorraine has a loan account in the books of Yardoo in the sum of $123,171.00 (Reports of Ellery and Lipson).
496 The loan account represents, in part, the consideration paid to Lorraine for the transfer of her half-interest in Pomona. The Court should not make any adjustment to the amount of the loan account because of the manner in which the original purchase of Pomona was funded. No direct evidence has been led by Alfred to the effect that the amount of the loan account was wrong. Brodie does say, in paragraph 53 of his Statement, that "the 1977 Financial Statements for Yardoo are inconsistent with the 1975 and 1976 partnership accounts for GM, AJ, TJ and JL Yard." However, Brodie does not state which set of accounts correctly reflected the parties' intentions at the time, The contemporaneous evidence that is before the Court is the Freeman and Pitts letter dated 17 June 1977 (CB 161) which indicates that consideration of $170,240.00 was to be paid by Yardoo to Trevor and Lorraine in the form of a Ioan account for the transfer of Pomona. Ellery's conclusions in his First Report with respect to the amount of Lorraine's loan account are a reconstruction. Whilst Ellery is in a position to say that there is an inconsistency between the partnership accounts and the Yardoo accounts, he has no knowledge of the parties' relevant intentions at the time of the 1977 transfer or at the time of the purchase of Pomona.
497 The Court should either order payment of the loan account under the common law, or as part of the remedy for oppression under s 233(j) of the Corporations Act 2001.
498 In response to submissions filed on behalf of Alfred, the following is submitted on behalf of Lorraine.
499 Alfred and Trevor Yard have declined to inform the Court as to plant and equipment which is the property of the Yard partnership. Instead, Wapper has merely followed Mason Gray Strange and valued all of the items of plant and equipment which were valued by Mason Gray Strange. Both sides of the argument acknowledge that the Depreciation Schedule of the Yard partnership accounts as at 30 June 1998 is no indication of the items of plant and equipment which were owned by the partnership and Lipson has identified in his analysis that in the 1986/1987 Financial Year the partnership purchased, for instance, $143,344 of farm equipment (paragraph 7.6 of Lipson's Report dated 7 September 2004).
500 If the Court has any doubt as to the items of plant and equipment which were purchased or owned by the Yard partnership, then it should order the appointment of a Court Appointed Receiver to investigate the issue and to report to the Court as to the plant and equipment which is properly partnership property. Such an appointment is justified in circumstances where the parties with, relevant knowledge, being Alfred and Trevor as partners of Lorraine, have declined to inform the Court as to the items of plant and equipment which are partnership property. Their failure to inform as to partnership property should not be a reason for Lorraine to suffer the loss of an award on account of that partnership property.
501 There has been no relevant election by Lorraine Yard of an accounting of profits after any dissolution of the partnership found by the Court, as asserted in Alfred's further submissions, as distinct from a claim for the payment of 7% interest. The Prayers for Relief cover both a claim for the 7% interest and an accounting from the partnership. There is no relevant evidence of the profits of the partnership after particular dates, and in the circumstances the Court should order interest at the rate of 7% per annum under section 46 Partnership Act on the value of assets as from the date of any dissolution.
502 It is erroneous to assert that the statement of claim elected to have an accounting of partnership profits, rather than a claim for interest at the rate of 7% per annum under section 46 Partnership Act 1958. The statement of claim has always claimed an accounting of the income and assets of the partnership to the date of dissolution, and the payment of a sum to the Lorraine pursuant to section 46 Partnership Act 1958 (Vic) or section 42 Partnership Act 1891 (SA). The parties appear to agree that the Victorian Partnership Act applies. There is the clear basis for a claim by Lorraine for interest at the rate of 7% per annum under the Partnership Act and there is no such unequivocal act constituting an election for an accounting of profits, rather than a claim for interest, so as to disqualify Lorraine from the award of interest at the rate of 7% per annum from the date of dissolution of the partnership.
503 The evidence of Wakeham and Robertson should be preferred over the evidence of Harris and Wapper in respect of the valuation of the real estate and the plant and equipment. In respect of the plant and equipment, Robertson had a far greater and specialist experience (38 years) in valuing and auctioning such farm plant and equipment, was totally familiar with each of the items of plant and equipment in issue, and had far greater access to comparable sales evidence to apply in his valuation of the different items. Wapper has only a "part-time" interest in the valuation of plant and equipment and is predominantly a land valuer. In respect of the major items of difference which were the subject of further examination of Robertson and cross examination of Harris, Robertson had access to the comparable sales evidence or the auction value of the item in question, either as a saleable item or as scrap material. He had a much stronger grasp of the current values of the different items if they were to be valued at scrap value and of the costs necessary to transport the items to the scrap dealers.
504 In respect of the valuations of real estate:
(a) Harris agreed in cross-examination with Wakeham's thesis that in the event of the failure to have access to the properties for valuation in December 1997 and November 2000, then the proper approach to valuing the various properties in the Murrayville area was to maintain the ratio of values between properties, whilst within each year period fixing upon a base rate to apply such ratios by reference to the comparable sales evidence available at that date for the property chosen as being the base rate. Wapper's thesis that this was not the valid approach and that one really determined the value at different dates as best one could based upon the available comparable evidence such that valuations would be conducted at different dates for the properties (even though there were no true comparable sales available to use as evidence), is flawed. It is flawed for the reason as demonstrated in Wapper's report in respect of the properties surrounding Murrayville that because of the tightly held nature of properties in the area, sales used as comparable sales were sales which were in excess of two and a half years old at the relevant dates of valuation;
(b) Wapper in fact bases his valuation of the Murrayville properties upon the limited number of comparative sales recorded at pages 31 and 32 of his Report, then while treating these properties as comparable, has proceeded to apply a lower rate per hectare in his valuation of the Murrayville properties without proper regard to the age of the comparative sales and to the geographic proximity of the comparative sales to the subject properties;
(c) arris departs from the hierarchy of properties agreed to by both Wapper and Wakeham, although Wapper has the Carina property as superior to Brian's Block because of a main road frontage which Harris could not perceive as giving any particular advantage to the property when it came to its valuation. This hierarchy of properties with Carina and Brian's Block being the superior properties, followed by South Blocks and then Pomina was departed from by Harris in his assessment of the South Blocks as being the superior property in the hierarchy. This proposition is contradicted by the evidence of both of Wakeham and Wapper;
(d) Wakeham had obviously substantial experience in valuing properties in the Adelaide Hills area. His evidence was that he had valued between 60 to 100 properties and had inspected many of the properties which he used as comparable sales for the purposes of other work, including GST margin work at the time of the introduction of the GST. He demonstrated a high level of familiarity with the Adelaide Hills area and the properties referred to by him in his comparative sales periods;
(e) In respect of Wapper's valuations for December 1997, Wapper only used three sales as comparative sales, but agreed in cross-examination that there was a mistake in his valuation of the comparable sales in that the range of all these comparable sales used for the 1997 valuations should not be $420 - $664 per hectare, but instead to $521 - $664 per hectare. This would have an obvious impact on the figures then applied by Wapper on a per hectare basis to the subject properties in the Murrayville area;
(f) Wapper agreed with Wakeham's assessment that the best two properties were Carina and Brian's Block with his ascription of a higher rate to Carina because of its main road frontage {which factor was disputed by Harris as having any relevance to the issue of value);
(g) Wapper accepted Wakeham's application of $253 per acre in December 1997 to Carina, based upon the Carina sale in February 1996 of 321.31 acres at $269 per acre;
(h) Wapper stated that even though the properties were not available for inspection in 1997 and November 2000, and even though the properties were in the same area being in the immediate geographical vicinity of the township of Murrayville, that one would not expect a similar movement in the properties in the period 1997 to 2000 so as to maintain the ratios of the different properties;
(i) Wapper accepted that he has disregarded for his 1997 valuation the Crown AIlotment 26, Lackman Road, Carina in February 1996, even though it is a property in the immediate vicinity of the Carina subject property and at a relevant time;
(j) Wapper accepted that the sales from June 2004 to July 2004 appearing on page 1 of the further Charter Keck Cramer Report were relevant sales to consider in determining a value for the Murrayville properties;
(k) Wapper stated that in assessing values in 1997 and 2000 that one does not maintain ratios between the properties, but rather works upon the basis of comparative sales for each property at the different dates. This was an approach which was rejected by Harris;
(1) In respect of Paladin that there was no value placed upon the plant and equipment at Paladin because Robertson was denied entry to the property, and Alfred Yard chose not to have had Wapper conduct an inspection of plant and equipment. Therefore a Court Appointed Receiver is necessary to inspect the plant and equipment at Paladin to arrive at a valuation of that plant and equipment;
(m) Wapper accepted that the items valued by him were owned by the Yard family, more reason that the Court should appoint a Court Appointed Receiver to investigate the items of plant and equipment which are truly Partnership items, and to place valuations upon them;
(n) Wakeham stated that the best comparables for use in valuing Carina and Brian's Block were the three Lackman lots which were in the immediately vicinity of Carina and sold at auction in March 2004;
(o) Wakeham stated that there had been an increase of 25% - 35% in land values in the Murrayville area in the period of the last three years;
(p) Wakeham explained his application of different rates to the different blocks making up each of Pomona and the South Blocks;
(q) Wakeham explained the reasons for the unsatisfactory character of the valuation exercise undertaken by Wapper in that in respect of the first sale it was two and a half years old and only comparable to the town blocks; in respect of the other two properties which are medium size parcels, the sales were some two years and two months old, and that with the Carina sale, there is a very high rate attributed to improvements and on an unimproved basis the sale would equate to $653 a hectare;
(r) Wakeham criticised the work of Wapper in failing to take into account the increase in property values in the period between January 2000 (the date of the comparable sales relied upon) and October 2001, when there were significant increases in sale prices achieved in that period;
(s) Wakeham criticised Wapper's work for different periods in that the ratio of values between properties varies dramatically between different dates;
(t) Wakeham explained that his base rate for the various valuation dates prior to 2004 was determined in each case for one property by reference to market evidence, and that the same ratio was then applied as between properties so as to maintain consistency;
(u) Wakeham accepted that properties may sell for values which are different to the ratios applied by him as between properties, but that in the absence of inspections of the properties at the past dates, the only valid approach of a valuer is to approach it in a methodical way based upon the maintenance of the same ratios between properties;
(v) Wakeham explained for the adjustments in the case of South Blocks, as information emerged that the South Blocks were good arable land;
(w) Wakeham stated that in respect of the comparative sales employed by him for the Paladin property he probably would have either inspected 80% of them, or at least driven past 80% of them;
(x) In response to the suggestion that he had undervalued the improvements on the comparable properties for the Paladin valuation, Wakeham referred to the fact that the valuation standards state that when determining a land value, the age and depreciation of improvements is to be taken as the guide, not the replacement cost;
(y) In respect of the Paladin property it was valued by Brooke of Taylor Brooke in September/October 2001 at $615,000, as against the Charter Keck Cramer valuation in November 2000 of $600,000;
(z) Robertson gave evidence that he had been involved in the business of valuing and auctioning plant and equipment for the last 38 years;
(aa) Robertson gave evidence as to the reasons for the values placed by him upon the particular items of plant and equipment inspected by him;
(bb) Robertson's evidence in cross-examination justified the figures given by him to the different pieces of plant and equipment in his evidence-in-chief and his evidence should be preferred to that of Wapper based upon his particular length of expertise in valuing and auctioning farm plant and equipment and also because of the greater detail and reference to comparable sales by him in his ascription of values to different items of plant and equipment as contrasted with the approach taken by Wapper;
(cc) Harris' valuation assessments dated September/October 2001 were contradicted in the case of the South Blocks, Town Blocks, Pomona, Carina and Brian's Block by the higher valuations given by Wapper to these properties for a valuation date three years earlier in December 1997. The Court should approach his valuations with caution, and should prefer the consistent and cogent approach adopted by Wakeham;
(dd) Harris stated that values of rural land did not increase in the period from 1997 to September/October 2001. This is contradicted by the evidence of Wakeham in paragraph 11 of his affidavit sworn 20 April 2005;
(ee) Harris criticised the approach of Wakeham in approaching the valuation and improvements upon the basis that the improvements in these instances will have deteriorated over time, but equally replacement costs will have increased over time so that in the majority of cases it is appropriate to leave the initial improvement value unchanged. Wakeham's response to this in paragraph 12 of his affidavit sworn 20 April 2005 is that it accords with the usual practice in the valuation industry;
(ff) Harris' hierarchy of properties was contradicted by both Wapper and Wakeham. Harris had Town Blocks as the superior property followed by South Blocks and then Carina. Each of the other valuers had a clear hierarchy of properties with Carina and Brian's Block being the superior properties followed by South Blocks and then Pomona;
(gg) Harris stated that there would be no reason for giving a superior valuation to Carina, as against Brian's Block, by reason of Carina being situated on the main road;
(hh) Harris stated that the law of diminishing returns does not apply to rural land. Wakeham responded to this matter in paragraph 16 of his affidavit sworn 20 April 2005;
(ii) Harris accepted that the critical comparable taken by him as being $426 per hectare as of September/October 2001 should in fact have been at a rate of $446 per hectare. This will have an effect on the relevant valuations of Brian's Block, Carina, South Blocks and Pomona by Harris; and
(jj) Harris accepted the approach of Wakeham in having the properties bear in value the same ratios in 1997 and November 2000 as they did in October/November 2001 and November 2004. He also accepted the basis for assessment of particular values at dates other than the present value by means of fixing upon a property and applying a base rate for that property which itself depends upon an analysis of the comparable sales for that property.
505 In respect of the valuations of plant and equipment Robertson gave evidence that he had been involved in the business of valuing and auctioning plant and equipment for the last 38 years. He gave evidence as to the reasons for the values placed by him upon the particular items of plant and equipment inspected by him. His evidence should be preferred to that of Wapper based upon his length of specialist expertise in valuing and auctioning farm plant and equipment, as opposed to Wapper's part-time interest in the field, and
also because of the greater detail and reference to comparable sales by him in his ascription of values to different items of plant and equipment as contrasted with the approach taken by Wapper.
506 There is no basis for the assertion that Lorraine is seeking a windfall. Rather, the position is that Lorraine was made a member of the partnership, certainly because of the fact she became married to Trevor, but that such a partnership was a true partnership in which Lorraine made her own contribution over a lengthy period. There is nothing inequitable in the position being taken by Lorraine that she was an equal partner in the partnership (which fact is undoubtedly the basis of the accounts prepared over a long period), that in respect of the properties in which she is a registered proprietor she has a personal proprietary interest, and that she is the owner of one of the four equal shares in Yardoo.
CONSIDERATIONS APPLICABLE AND CONCLUSIONS
507 I have extensively reviewed the history as stated by the witnesses because it is essential that fact-finding proceed upon an historical and not anachronistic base. Value judgments of a later period, or of today, are to be avoided in the finding of fact and the drawing of inference in matters past. Also, contemporary metropolitan values, so far as they might differ from past rural values, are to be eschewed. Thus I proceed upon the basis of the finding of fact and the drawing of inference in the setting of the events then and there, not here and now.
508 The three central factors operating in the 1970s in the Yard family circle were these. First, Mr Alfred Yard by reason of hard work, long application and prudent management had accumulated substantial assets. Second, he was determined not to lose to government by way of taxes and duties any more of those assets than lawfully were required to be lost. Third, the family situation was for him a happy one. He had a loyal wife, and a hard working son who was happily married. The solution was available: divest himself of assets so that government hands could not reach more than lawfully necessary; and yet retain control. The former - the divesting - was achieved through lawful means: the extension of partnership and the incorporation of a company. The latter - control - was achieved in a time honoured way: he was the head of the family, he expected his wishes to be observed, and they were. The proposition central to proceeding no. 4542 - that the divesting was partial only and subject to trust, express or implied - is in my view ahistorical. That is, it was not what there and then occurred but is an anachronistic overlay, propounded because the control expected to flow from being family head is now inefficacious and thus is called in aid the notion of trust which was not an occurrence at the time the relevant events occurred.
509 There is clear evidence that in the mid 1970s Mr Alfred Yard, by reason of his own hard work and responsible management, had a satisfactory and settled existence. His inclination, an entirely lawful one, was as his accountant Mr Brodie made clear, to provide as little of his hard-earned assets to government as lawfully he could. His concern, as his experience with his father's estate drove home to him, confirmed by his son's friend's experience, was that Trevor's inheritance would suffer in government hands. The fast-talking Penrose, with his eyes on the income from insurance policies, was at hand with the solution. Mr Alfred Yard attended the Mildura offices of his accountant with his son and Penrose. Trevor was concerned at the cost of the insurance policies proposed by Penrose - thus the comment by Penrose to Lorraine Yard that Trevor would be the ruin of the family (305) - but as usual Mr Alfred Yard's wishes held sway. There was no discussion at the accountant's office about trusts or beneficial ownership, as Mr Brodie's evidence and Mr Irwin's witness statement make clear. The matter simply did not arise, because it was no part of the Penrose scheme and it was no part of Mr Alfred Yard's plan. Penrose did not need it because it was irrelevant to his aim; Mr Alfred Yard did not need it because he had personal control anyway. The attempt on behalf of Mr Alfred Yard to dredge to the surface the provisions of the Memorandum (clauses 11(6) and (20)) as to trust capacity is wholly ahistorical. Those provisions were not on Mr Yard's mind. They were not mentioned by Mr Brodie. They were not mentioned by Mr Irwin. They were not part of the intention of Mr Alfred Yard.
510 Mr Alfred Yard's intention was to negate the impact of death duties by divesting himself of ownership of property which otherwise could be liable to government claim upon his death. Divestment was necessary to avoid death duties. His intention would have been successful had he died. Fortunately he is alive and well, a credit to a man of his age and his hard-working and responsible lifestyle. But he achieved his intention.
511 Twenty years of loyal work by accountants confirms the above. The financial management and the books of account of the company and partnership reflect precisely the history: that there was a divesting by Mr Alfred Yard of ownership and there was no trust, express or implied. The evidence of Mr Brodie and Mr Ellery accurately reflects the financial dealings of the partnership and the company at the relevant times; not so the later work of Mr Remeljej. Market valuations were obtained from Mr Lackman. Stamp duty was assessed on the basis that the transactions were genuine as indeed they were. The consideration for the transfers was in the raising of the loan accounts. That was good consideration. The properties (including Pomona as transferred to Trevor and Lorraine and then by them to Yardoo) were transferred in legal and equitable title to avoid government impost.
512 When estate duties were abolished the arrangements were not altered because Mr Alfred Yard had personal control and there was no need perceived by him to undergo the expense of rearrangement. Such was the apparent certainty of rural Murrayville.
513 Things started to unravel when the marriage of his son unravelled. Promptly then Mr Alfred Yard took action to protect what he saw as his interests. Lorraine Yard was excluded in fact, although inefficacious in law, from the partnership and the company. But she commenced Family Law proceedings, and with the aid of solicitors commenced to seek that which is now the subject of proceeding no. 5151. In order to protect his position as he saw it, Mr Alfred Yard then commenced proceeding no. 4542.
514 I do not accept the evidence of Mr Alfred Yard or his son that at the time of the formative events, in the mid-1970s, or thereafter there were discussions about trusts or there was an intention by the parties to establish trusts. Such evidence is contrary to the records, contrary to the events and contrary to the humanity of the then situation.
515 Further, I reject the contention on behalf of Mr Alfred Yard that any resulting trust be found. Mr Yard decided what he wanted to do and which means would be adopted to achieve his end. He achieved his end. That was his choice. Now to assert that that history should be rewritten is contrary to law and to equity. If he had known at the formative times that he would live another thirty years and that death duties would be abolished, he might have done things differently. But he did not know, and what he decided to do, on the knowledge and expectations then his, was rational and sensible. Now to claim the aid of equity in order to rewrite history is of no avail.
516 Nor is it efficacious to assert, as on his behalf it repeatedly is, that Lorraine Yard is seeking a windfall. Time and again it was put in cross-examination, or in submission, that Lorraine made no financial contribution. The literally repeated question "Without paying anything?" at 310 is illustrative of that proposition. Likewise the submission (paragraph 150 of the further submissions for Mr Alfred Yard of 2 May 2005) "No money in, and 25% out". That analysis is inadequate. There are contributions other than financial. Traditionally, farming communities have survived and prospered on non-financial contribution of persons, especially wives and loyal children. So too here. Lorraine Yard made a substantial contribution to the economic viability of the family enterprise. She raised the children - a most significant matter in itself, and also one enabling her husband to work the family enterprise. She maintained the home. As the children grew older, she assisted in the Garage and on the farms, in a limited way but appropriate to her situation. To assert that she has no financial claim because she did not put money in is an inadequate proposition both in law and in equity.
517 I accept the evidence of Lorraine Yard as to the lack of contemporaneous discussion about trusts as truthful and accurate. Lorraine Yard was frank and direct about her lack of knowledge of the men's business. She does not pretend now to know more than then she did. She acknowledged that her present knowledge remains limited. Her comment answer "Obviously I was wrong" - in the answer "I was left with the assumption that [Pomona] was bought for Trevor and I, that it was our farm. I believed that. Obviously I was wrong" (300) - is in my view not an informed admission against interest as contended on behalf of Mr Alfred Yard, but yet another concession by her that there was much else she did not know. I consider the comment is a retrospective comment by her and not an historical statement. The historical statement is "I believed that".
518 What Lorraine Yard seeks in proceeding no. 5151 is no more than the corollary of the historical arrangements that occurred. She might have contributed for 25 years with little financial reward. That has not occurred. The legal and accounting arrangements set in place by Mr Alfred Yard were not so set for her benefit. They were set for the reasons I have stated. But they were set consciously and deliberately. The corollary of the legal and financial arrangements is that Lorraine Yard's claim in proceeding no. 5151 for her quarter share is made out. I find that there was a transfer of legal and beneficial title to the properties in Schedule 1, 2 and 3 to Yardoo Pty Ltd during 1977 on the dates of the respective transfers. I find that Yardoo Pty Ltd still holds such title. Further, I find that Yardoo Pty Ltd subsequently purchased the legal and beneficial title to the properties in Schedule 4. Although in two of the three Schedule 4 properties the funds were partnership funds the transfer of title was consonant with the then intention of the parties. Yardoo Pty Ltd still holds such title. I find that the G.M., A.J., T.J. and J.L. Yard partnership holds the legal and beneficial title to Paladin, which is registered in those names and was paid from partnership funds other than external borrowings. I find that Szader's Block and Brian's Block although registered in Trevor and Lorraine Yard's names respectively are held on trust for the partnership of G.M., A.J., T.J. and J.L. Yard as that was consistent with the overall intention of the parties and the purchases were by partnership funds. Finally, the plant, equipment, stock and cash of the partnership of G.M., A.J., T.J. and J.L. Yard needs to be brought into account as an asset of the partnership.
519 Further, the self-help remedies adopted by Mr Alfred Yard and Trevor Yard following the matrimonial separation have their own consequences. Characteristic of the men's business in the setting up of the arrangements is the men's business of the dismantling after matrimonial separation of the arrangements. The men decided to pursue their own interests as they then perceived them. However this time the arrangements did not achieve the desired end. The end was to exclude Lorraine Yard from the partnership and the company. However, once lawfully established and acted upon as both the partnership and company were, they are not so easy to dismantle. Members cannot unilaterally be disenfranchised. Lawful procedures must be followed. Neither in the case of the partnership (s.41 Partnership Act 1958) nor the company were those necessary lawful procedures followed by Mr Alfred Yard and Trevor Yard. In the partnership, due notice was not given. In the company, oppression was practised. I do not accept the evidence of Mr Alfred Yard and of Trevor Yard that they did not exclude Lorraine Yard from the affairs of the partnership and of the company and that she voluntarily withdrew. The minutes of 19 July 1999 are eloquent of their exclusionary action; her letter of 22 February 1999 is eloquent of non-attendance at a single meeting only. For those reasons the attempted exclusion of Lorraine Yard from the partnership and from the company is inefficacious.
520 I turn to the consequences of the disenfranchisement.
521 As to Yardoo Pty Ltd, both because it is just and equitable to do so and because relevant oppression[55] has clearly and objectively been established, I order pursuant to ss.232 and 233 Corporations act 2001 that the company be wound up. Pursuant to s.233(j) I order payment to Lorraine Yard of her loan account in Yardoo Pty Ltd. Based upon Mr Ellery's analysis which I accept, that amount is $123,171.00.
522 As to the partnership of G.M., A.J., T.J. and J.L. Yard, because it is just and equitable to do so I order pursuant to s.39(f) Partnership Act 1958 (the Act which applies) the dissolution of the partnership. I order pursuant to s.43 of the Act the taking of accounts and the payment to Lorraine of her due share. If necessary I shall order the appointment of a receiver and manager.
523 I turn to the matter of valuation of property and of plant, equipment and stock. The date for assessment of property and of value both for the company and for the partnership is today, 24 March 2006, the date of the ordering of the winding up of the company and of the dissolution of the G.M., A.J., T.J. and J.L. partnership.
524 As to plant, stock and equipment I was impressed by the evidence and analysis of Mr Robertson. He was a most experienced, practical, no-nonsense valuer whose evidence was careful and prudent. Mr Wakeham was not nearly as experienced as Mr Robertson in valuation of plant, stock and equipment and I consider Mr Robertson's evidence should be accepted.
525 As to property, although there is little reference to it in counsel's written submissions (doubtless because it concerned only one property) I was particularly impressed by the evidence of Mr Brooke as to his valuation in September 2001 of Paladin. He was a considered, thoughtful, knowledgeable witness and a valuer of great experience as to the relevant matter (Paladin). I regret to say I considered the evidence including witness statement of Mr Harris somewhat superficial. As to Mr Wapper and Mr Wakeham, each had his strengths. I found Mr Wapper clear and careful, and Mr Wakeham although less experienced particularly bright. In the end I consider that Mr Wakeham's analyses are persuasive in that the analytical quality of them is high and consistent. The detail of that analysis is conveniently set out in Mr Jones' written submission of 29 April 2005 at paragraph 25, rehearsed in paragraph 504 above. I accept Mr Wakeham's valuations except in relation to Paladin as to which I accept Mr Wapper's valuation. The reasons I do so in relation to Paladin are two. First, Mr Brooke supports Mr Wapper as to Paladin (770) and gives reasons therefor which I find persuasive even after considering the matters set forth in paragraphs 3-9 of Mr Wakeham's affidavit of 20 April 2005. Second, the combined Adelaide Hills experience of Mr Brooke and Mr Wapper gives weight to their opinions in contrast to Mr Wakeham's more limited experience as to the Adelaide Hills. On the other hand, I consider that Mr Brooke's evidence before me of his later (April 2005) visit to Murrayville does not tip the balance against Mr Wakeham's analysis as to that area. Mr Brooke's evidence in relation to Murrayville in 2005 was not as considered as that in relation to Paladin in 2001, by reason of time and circumstance.
526 For the reasons set out above I shall make the formal orders I have announced upon the resumption of these proceedings at the convenience of the parties. Consequential orders including costs can then also be made.
[1] [1959] HCA 8; (1959) 101 CLR 298.
[2] [1922] VicLawRp 9; (1922) VLR 67 at 78.
[3] [1974] Ch 269 at pages 289- 290, 294-5.
[5] [1999] UKPC 20; [1999] 1 WLR 1399 at 1412.
[6] Ford Principles of the Law of Trusts para 21000.
[7] Ford Principles of the Law of Trusts Para 21070.
[8] Westdeutsche Bank v Islington [1996] UKHL 12; [1996] AC 669 per Lord Browne Wilkinson at 709.
[9] DKLR Holdings (No 2) Pty Ltd v Commissioner of Stamp Duties NSW [1982] HCA 14; (1982) 149 CLR 431 per Aicken J.
[10] 2V&B 388; [1814] EngR 300; 35 ER 366. See also Dyer v Dyer [1788] EWHC J8; (1788) 2 Cox Eq. 92; 30 ER 42; Napier v Public Trustee WA (1980) 32 ALR 153 at 158 per Aicken J and 246 per Gibbs CJ and Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 612 per Deane J.
[11] Compare comments in David Securities v CBA [1992] HCA 48; (1991) 175 CLR 353 concerning issues such as unjust enrichment, failure of consideration.
[12] [1969] 2 Ch 276 at 300-301.
[13] [1985] HCA 78; (1985) 160 CLR 583.
[14] See generally Calverley v Green [1984] HCA 81; (1984) 155 CLR 242.
[15] [1922] VicLawRp 9; (1922) VLR 67 at 75.
[16] See also Ingram v Ingram [1941] VicLawRp 20; [1941] VLR 95 at 97.
[17] [1991]2 VR 214 at 229-230 per Brooking J.
[18] [1985] HCA 78; (1985) 160 CLR 583 at 617-618.
[20] [1981] HCA 56; (1981) 180 CLR 390 at 396.
[21] Constructive Trusts, M Cope chapter 14.
[22] Department of Social Security v James [1990] FCA 150; (1990) 95 ALR 615.
[23] Barkwork v Young (1856) 26 LJ Ch 153.
[24] Di Pietro v Official Trustee (1995) 59 FCR 470, Hagan v Waterhouse (1991) 34 NSWLR 308, Adamson v Hayes [1973] HCA 6; (1973) 130 CLR 276.
[25] Smith v Matthews (1861) 3 De G F & G 138; [1861] EngR 426; 45 ER 831.
[26] (1991) 34 NSWLR 308 per Kearney J at 385.
[27] [1990] FCA 150; (1990) 95 ALR 615 concerning the Property Law Act 1969 (WA).
[28] Rochefoucauld v Boustead [1897] 1 Ch 196 per Lindley LJ; Cadd v Cadd [1909] HCA 59; (1909) 9 CLR 171 per Isaacs J at 187; Bannister v Bannister [1948] 2 All ER 133 per Scott LJ and Bloch v Bloch [1981] HCA 56; (1981) 180 CLR 390 per Brennan J at 402-403.
[29] (1948) 2 All ER 133 Scott LJ at 136C.
[30] [1897] 1 Ch 196 per Lindley LJ at 207.
[31] Constructive Trusts M Cope pages 781-784.
[32] [1970) AC 777.
[33] See also the comments of Lord Hodson at 811G and Lord Upjohn at 813E-814H.
[34] [1984] HCA 81; (1984) 155 CLR 242 at 270.
[37] BC8801325 Supreme Court of New South Wales.
[38] [1998] VSCA 26; [1999] VR 557.
[39] Rees v Duncan [1900] VicLawRp 96; (1900) 25 VLR 520.
[40] [1975] HCA 35; (1975) 132 CLR 671.
[41] 99 ALR 479 at 487-8.
[42] [1977] FCA 19; (1977) 17 ALR 421.
[43] See Brookton Co-operative Society Ltd v FCT [1981] HCA 28; (1981) 147 CLR 441 at 455 per Mason J at 455 and FCT v P Iori & Sons Pty Ltd 87 ATL 4775.
[44] [1984] HCA 81; (1984) 155 CLR 242 at 246-247 and 251.
[45] [203] NSWSC57.
[46] [1975] HCA 35; (1975) 132 CLR 671.
[47] [1995] HCA 25; (1995) 184 CLR 538.
[48] Ebrahim v Westbourne Galleries [1973] AC 360; Re Yenidje Tobacco Co [1916] 2 Ch 426;
[49] Wayde v NSW Rugby League (1985) 3 ACLC 779 at 803.
[50] Loch v John Blackwood [1924] AC 783; Jenkins and Joaquim v Bennett [1965] WAR42 and Re Tivoli Freeholds Ltd [1972] VR445.
[51] Wedge v Wedge (1995) 12 WAR 489.
[53] [1993] SASC 4323; (1993) 61 SASR 165.
[54] Re D G Brims & Sons Pty Ltd (1995) 16ACSR 559 at 594-5; Mike Gaffkin Marine Pty Ltd v Princes Street Marina Pty Ltd (1995) 17ACSR 495.
[55] Wayde & Anor v NSW Rugby League [1985] HCA 68; (1985) 180 CLR 459.
(1959) 101 CLR 298
(1982) 149 CLR 431
(1980) 32 ALR 153
(1985) 160 CLR 583
(1991) 175 CLR 353
(1984) 155 CLR 242
(1981) 180 CLR 390
(1990) 95 ALR 615
(1995) 59 FCR 470
(1991) 34 NSWLR 308
(1973) 130 CLR 276
(1909) 9 CLR 171
(1985) 3 NSWLR 531
(1975) 132 CLR 671
(1977) 17 ALR 421
(1981) 147 CLR 441
(1995) 184 CLR 538
(1995) 12 WAR 489
(1993) 61 SASR 165
(1985) 180 CLR 459