HEADNOTE
[This headnote is not to be read as part of the judgment]
The appellants, Bruce and Donna Slade, (the Slades), prior to the events the subject of the present dispute, owned several parcels of farming land (themselves or through a family self-managed superannuation fund) in Quandialla. The respondents, Kellie Brose (one of the Slades' three daughters) and her husband, Garreth Brose, (the Broses) relocated in 2014 from Townsville (where they were then working in the banking industry) to Quandialla following representations by the Broses that if they relocated to Quandialla and worked for the family partnership through which the Slades conducted their farming business, and things worked out, then they would receive an interest in certain parcels of the farming land.
The Broses alleged that, commencing in 2013 and continuing through to 2019, the Slades represented to them (including in the course of family estate planning meetings) that they would be the recipients of future transfers of land and partnership interests, with the intention that the Broses commit themselves to life on the farm; and that, in reliance on those representations, the Broses remained in Quandialla, working the farm. Some properties were transferred to them over the years and there was an acknowledgement that they had a 25% interest (and later apparent acknowledgement of a 50% interest) in the partnership. However, following a catastrophic falling out between the Slades and Broses in October 2021 and January 2022, the Slades renounced the existence of any arrangement they had with the Broses, and began unilaterally to liquidate their rural land holdings and partnership assets. The Broses lodged caveats on the titles to the properties which they alleged were held by the Slades on trust for them (wholly or in part) (the Disputed Properties), by reason of their detrimental reliance on the Slades' representations.
The primary judge, applying the equitable principles of proprietary estoppel by encouragement, found that the Disputed Properties were held on a constructive trust as claimed. The primary judge ordered that the Slades transfer three (not all) of the Disputed Properties to the Broses and that the Broses pay the Slades $500,000 (to reflect the acceleration of the interests that the Broses were acquiring). The primary judge ordered the parties to bear their own costs.
The Slades filed a Notice of Appeal, alleging error in the primary judge's findings as to: the representations made by them, the Broses' conduct in reliance on those representations, and the detriment that would be suffered should there be a departure from the representations. The Slades also alleged error in the failure to find that there had been a relevant change in circumstances, such that it was not unconscionable for them to depart from the representations.
The Broses sought leave to file a Notice of Cross-appeal concerning the orders as to costs. The Broses also alleged that the appeal was futile, on the basis that, since the Broses had registered their interests in the three properties pursuant to his Honour's orders, the indefeasibility of their title to the properties would prevail over any order that the Court of Appeal could make.
Held dismissing the appeal, granting leave to cross-appeal, and allowing the cross-appeal (Ward P at [1], White JA at [372], Stern JA at [373]):
(1) It is not necessary for a plaintiff invoking the doctrine of equitable estoppel by encouragement to show that he or she assumed that a particular legal relationship existed; rather, it is unconscionability which will be decisive (Ward P at [201]). In this case the representations were sufficiently clear, and in a family context it was reasonable for the Broses to rely on the repeated assurances by the Slades that they could and should trust the Slades, and that they would then get most of the land and partnership business (Ward P at [207], [210]).
Waltons Stores v Maher (1988) 164 CLR 387 at 428-429; [1988] HCA 7; Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 considered.
(2) In determining reliance in the context of estoppel by encouragement, the relevant assumption need not be the sole inducement, rather it is sufficient if it is a "contributing cause" (Ward P at [240]); nor is it necessary for the plaintiff to prove "precisely" how the plaintiff would have acted differently (Ward P at [245]). The primary judge made no conflation error (as the appellants had contended). The primary judge made clear that the Broses' relocation to Quandialla occurred in 2014, before the later representations were made; and accepted that it was the Broses' conduct in remaining on the family farm and working for the partnership that was in reliance on the representations made between 2015 and 2019 (Ward P at [246]).
Sidhu v Van Dyke (2014) 151 CLR 505; [2014] HCA 19; Q v E Co [2020] NSWCA 220 considered.
(3) The primary judge did not (as the appellants contended) wrongly assess detriment by reference to the loss of what the Broses expected to receive but, correctly, assessed their detriment by reference to the loss of the career opportunities that were foregone by the decision to move to and remain in Quandialla (Ward P at [278]). The decision to remain, and not take up opportunities elsewhere, was more than sufficient to amount to detrimental reliance when assessed as at October 2021 or January 2022, when the Slades renounced their "agreement" (Ward P at [282]-[283]). In the context of a farming operation conducted over a number of properties and over a number of years, in reliance on the expectation that those properties and business would be transferred to the Broses, there was no error in the primary judge concluding that the countervailing benefits received by the Broses did not assuage the equity raised by the Broses' detrimental reliance (Ward P at [287]).
(4) The Slades' characterisation of their representations as being "conditional" (in the sense that, if the matters there set out were no longer capable of satisfaction, then there would be no reasonable expectation that the transfers of land would be made) could not be accepted; rather, matters such as the intent that family relationships remain intact, and that there be a fair outcome are more readily to be seen as assumptions underlying what was contemplated in the succession planning process (Ward P at [308]). There was no error in the primary judge's conclusion that, in all the circumstances, it was unconscionable for the Slades to depart from the representations they had made and to act otherwise than in accordance with the expectations they had induced (Ward P at [306]).
(5) Given the disposition of the appeal, it was not necessary to determine whether there was power to grant the relief sought by the Slades on the basis that the Broses' interest in the properties was indefeasible (Ward P at [328]).
Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24, White v Tomasel [2003] 2 Qd R 438 considered.
(6) The primary judge erred in holding that, because the Broses' claims as to two of the Disputed Properties were dismissed, they were not substantially successful in the "event" (and hence the general rule that costs follow the event did not apply) (Ward P at [364]). Leave to cross-appeal should be granted and the discretion as to costs re-exercised. The appropriate order was for the Slades to pay 75% of the Broses' costs of the proceedings at first instance, to reflect that the Broses had substantial success on the claims determined by the primary judge, but that the Broses did not receive all the Disputed Properties (Ward P at [370]).