Turner v O'Bryan-Turner

Chronology

1. Before setting out that relevant chronology of events, I will describe in some more detail the Turner family members.

Family members

1. I have referred above to the relationships within the Turner family, namely that John has two children from his first marriage (to Wendy Patton), Nick and Sara (each of whom is now in his or her 40's), and two children from his subsequent relationship with Wendy O'Bryan-Turner (to whom I here refer simply as Wendy), namely, David and Karl.
2. John had been a farmer all his adult working life, having left school in Year 10 and then having attended Yanco Agricultural College (see T 84.26-29). The David/Karl interests say that John had no relevant experience as a company director nor any financial expertise with trusts or the like (though, as I note in due course, John was a director of Allawah Pastoral for some time). Meanwhile, the Nick interests point to the fact that John was a director (with his father, Ken) of a family company at an earlier time and Nick gives evidence that his father had for a time attended once or twice yearly meetings with the accountant (but there is no evidence as to the extent or nature of John's participation in those meetings).
3. There are competing submissions as to John's general level of intelligence, but it is not necessary here to do more than note that John had no tertiary education and was described by a family friend (Mr Gary Nipperess) as not "book-smart" (particularly when compared with his father, Ken, and Nick). It is also relevant here to note that, when Ken ceased to carry out the bookwork in respect of the farming properties, that task was assumed by Wendy, not John. That said, it appears that there was consensus that John was regarded in the community as a good farmer and that he was interested in, and kept up to date as to, farming matters generally. At least in the last ten years or more of Wendy's life, all the bookwork and the financial aspects of management of the Trundle Properties were handled by Wendy (with the assistance of John's accountant, Mr Mark Job).
4. I have referred already to John's father, Ken. At the time of the relevant events in 2010, he was in his 90's. By late 2009, Ken was living in a nursing home in Parkes and had a "hobby farm" on the outskirts of Parkes (see Nick's affidavit sworn on 10 January 2020 in the 2019 Proceeding (Nick's Second 2019 Proceeding Affidavit) at [5]).
5. Nick, after leaving school, obtained a degree in agricultural economics majoring in risk management, from Armidale University (see T 40.38-48) and worked two years with the Commonwealth Development Bank (at that point in time, the rural bank of the Commonwealth Bank of Australia) (see T 41.49-50) before being employed as a rural bank officer by Primary Industry Bank of Australia (PIBA), which later became Rabobank, in 1998 at the Dubbo branch (see T 41.37-40). In 2002, Nick became the inaugural bank manager of the Forbes branch of Rabobank (see T 45.31-46). Nick now works as an agricultural consultant and manages the Allawah Forbes Property (see below) that he formerly co-owned with John.
6. Sara, Nick's sister, suffers from a disability (although it is not clear to me precisely what that disability is). Sara is married and lives in Melbourne.
7. John and Wendy were in a de facto relationship for some years (commencing from about 1995 or 1996, or perhaps as late as 1998, after John's divorce from his first wife in 1992). They married in a ceremony at the Allawah property in November 2016 before John was admitted to permanent care in the nursing home in Forbes in December 2016. Neither of John and Wendy's children (David and Karl) has any tertiary qualifications. Indeed, David left school in 2014 after completing Year 10 and Karl left school in early 2016 before completing Year 11. With no disrespect to either of them, it is clear from their cross-examination that neither David or Karl exhibits the financial or business acumen or intelligence of their tertiary educated half-brother, Nick. This is relevant insofar as their ability to understand the transactions into which they entered (at Wendy's behest) in 2015 seems to me to be low (which I consider in further detail in due course).
8. David and Karl, by the time of the hearing before me, were in their early 20's. As adverted to, as at the time of the transactions the subject of challenge in the 2017 Proceeding, Karl was a minor and David had only recently turned 18.
9. It seems clear that there was little familial affection between Nick on the one hand and David and Karl on the other, presumably due to the animosity between Wendy and Nick (as to which, I will say more in due course).

Trundle Properties

1. By 1999, John was the sole registered proprietor of the Trundle Properties (known as Garden Vale, Allawah, Sunnycroft, Woolharinga (sometimes referred to in the affidavit evidence as Wooleringa), Nellyvale and Sunrise), comprising a total landholding of 2,331.4 hectares or 5,715.47 acres. The earlier of those properties were acquired variously by John's grandfather or father, Ken; and then transferred to John (as part of an intergenerational transfer, for no or nominal consideration). The last of the Trundle Properties (Sunrise) was acquired by John on 9 April 1999. The acquisition of Sunrise was financed at least in part by a loan obtained on or about 9 April 1999 by John from Rabobank of approximately $200,000, which loan was secured by a Rabobank mortgage (a registered first mortgage over Woolharinga, Nellyvale and Sunrise).
2. Up until the events in question, John carried on business as a farmer and grazier in his own name on the Trundle Properties.

Commencement of Allawah partnership in 2008

1. In or around March 2008, John and Nick commenced the Allawah partnership, purchasing a property at Forbes (the Allawah Forbes Property) in joint names. The purchase was fully debt financed (by Rabobank, with whom Nick then worked as a rural bank officer), by mortgage secured over the Allawah Forbes Property and three of the Trundle Properties which were owned solely by John (specifically, Woolharinga, Nellyvale and Sunrise). A local solicitor in Trundle (Mr William Burke) acted on behalf of John and Nick on the transactions in relation to the purchase of the Allawah Forbes Property.

Events in 2009

1. It appears that the purchase of the Allawah Forbes Property and/or the partnership between John and Nick in relation to that property may have been the catalyst for, or exacerbated existing, tensions between Nick and Wendy. David in cross-examination readily accepted that there had been disharmony between the two (see, for example, at T 50). The cause of that disharmony is unnecessary here to determine. Nick was adamant in cross-examination that Wendy had been abusive and aggressive towards him (which was corroborated by his wife, Olivia, and evidenced perhaps by his mobile telephone appellation for Wendy of "crazy lady"). Wendy, for her part, in the evidence given on commission, complained of Nick's conduct towards her (which was corroborated by Angelena).
2. Suffice it to note, for present purposes, that it is alleged by Nick (and does not seem to be disputed by the David/Karl interests) that, from about 2009, Wendy blocked John's telephone calls and that she obstructed Nick's access to John (although, on Nick's own evidence, as the David/Karl interests emphasise, Nick was able to see his father on a relatively regular basis - whether at Allawah Forbes Property or at the club in Trundle and occasionally at the Allawah property itself).

2010 Transaction

1. It is Nick's evidence that, during a visit to Ken's farm (it seems from his affidavit that he places this at some time in late 2009 or early 2010 - see, for example, Nick's Second 2019 Proceeding Affidavit at [6]), Ken expressed to him concern that he had heard that there had been some problems between Wendy and John and Ken expressed a desire that something be done to protect the farm and, "keep the farm in our family for the future" (see Nick's Second 2019 Proceeding Affidavit at [6]). Nick says that, about a month later, Ken expressed a similar concern to John in a conversation at which Nick was present (see Nick's Second 2019 Proceeding Affidavit at [9]).
2. Pausing here, it is not insignificant in my opinion, particularly in the context of the undue influence and unconscionable conduct allegations, that the concern, on Nick's evidence, emanated from Ken, not John himself. Further, I consider it not insignificant that what Ken was apparently concerned about, on Nick's evidence, was keeping the farm in the Turner family - not dividing the farms as between the children of the respective relationships. I return to this in due course.
3. By this time, three of the Trundle Properties (namely, Garden Vale, Allawah and Sunnycroft) were unencumbered (which, I understand, remains the position) and the other three (namely, Woolharinga, Nellyvale and Sunrise) were encumbered, being subject to the Rabobank mortgage.
4. Nick has deposed that some time after conversations with Ken and John, in the first quarter of 2010, he was at a social gathering with Mr Nick Field (a peer of Nick's), who was then an accountant at Pigot Miller Wilson in Forbes. Nick's evidence is that he raised with Mr Field the issue as to what could be done to protect "the farm" (by which I understand him to be referring to the six Trundle Properties as a whole). Nick deposes that Mr Field told him about a firm of solicitors who had a "structure called the Bloodline™ Trust" that could be set up to keep assets in the bloodline (i.e., in those related by blood in the family) (see Nick's Second 2019 Proceeding Affidavit at [10]) and that, some time after this, he (Nick) raised this with John at a meeting at the Allawah Forbes Property and offered to make an appointment with the lawyers (see Nick's Second 2019 Proceeding Affidavit at [11]).

15 April 2010 meeting with Cleary Hoare

1. On 15 April 2010, there was a meeting at the offices of Pigot Miller Wilson in Forbes attended by Ken, John and Nick. Also present at that meeting were Mr John Ioannou (a principal of the firm) and Mr Adrian Bailey (then an employed solicitor at the firm), both of whom were (or still are) solicitors at Cleary Hoare Solicitors (Cleary Hoare) (and both of whom gave evidence in these proceedings).
2. Nick's account of that meeting (see Nick's Second 2019 Proceeding Affidavit at [14]ff) closely mirrors that of Mr Bailey (an issue raised by the David/Karl interests as being adverse to his credit - see at [205]ff below).
3. Nick says that, at that meeting, Mr Ioannou "led the discussion" after instructions (see Nick's Second 2019 Proceeding Affidavit at [14]); that John said that he had a farm that was handed down to him from his father and that had been in their family for a long time; and that he was worried that Wendy was going to leave him and what might happen to the farm. Nick says that John said that, "I want to try to protect it for the future"; and that he wanted to be able to protect the farm for Nick and Sara and their children (but that he had some concerns about Sara's husband as well and wanted to protect the asset from him too) (see Nick's Second 2019 Proceeding Affidavit at [14]). Nick says (as also do Mr Bailey and Mr Ioannou) that Mr Ioannou confirmed that John was, "happy to talk about this in front of Nick and [Ken]".
4. Mr Bailey's evidence is that, at the start of the meeting, Ken spoke about himself and his background (including that Ken had topped the State in mathematics, was Shire president for 21 years and had received an OAM - none of which, I interpose to observe, has any apparent relevance to the discussion then at hand) and that Ken had inherited "the farm" from his father and had bought a few parcels over his lifetime and that he and his wife had sold the properties to John so that he could continue their family business. Mr Bailey deposes that Ken said John had told him that he had had problems recently with Wendy and that she had threatened to leave him; and that Ken was worried that, if she did, she would take some of the farm with her (see Mr Bailey's affidavit sworn on 23 December 2019 (the Bailey Affidavit) at [17]). Mr Bailey's recollection was that Ken said that the main farms should go to his first children and the more recently acquired farms to be split between all the children (see Bailey Affidavit at [17]).
5. I interpolate to note that this seems to be the first time that a division as between the children of the respective relationships was raised; and it is perhaps not insignificant that the reference to "recent farms" was in the plural, whereas the transactions documents appear to be predicated on only the last acquired farm being the subject of a trust that included David and Karl.
6. Mr Bailey also has deposed (see at [21]) in very similar terms to the conversation set out at [14] of Nick's Second 2019 Proceeding Affidavit, except that he added that John had said that, "[t]he extra land that [he] bought around the time Wendy came along can be protected for my two children with her".
7. Mr Bailey (whose evidence is that he was the note-taker at the meeting but that he can no longer find the note-pad on which those notes were taken) has deposed (see Bailey Affidavit at [19]) that, at some time in the 15 April 2020 meeting, Nick mentioned the value of the properties and liabilities, as follows: Dad has around $3.2 million worth of property. He has around $2.4 million with a $250,000 liability to Rabobank and him and I jointly own a property worth around $800,000 with a liability of $900,000. Only one property has been acquired recently and it's worth a bit over $200,000
8. Nick's recollection of this part of the conversation (see Nick's Second 2019 Proceeding Affidavit at [14]) is that he (Nick) said: Dad's total land holdings including some land owned with me in Forbes is worth about $3.2 million. The land in Trundle is worth about $2.4 million with about $250 thousand in debt with Rabobank. The jointly owned property in Forbes is worth about $800 thousand, although there's $900 thousand owing on it, so it's in negative equity.
9. Pausing here, the David/Karl interests maintain that John's testamentary objective (for the farms to pass to his children) was not achieved by the 2010 Transaction Documents (to the knowledge of both Mr Bailey and Nick).
10. Mr Ioannou's evidence (in his affidavit sworn on 7 January 2020 (the Ioannou Affidavit) at [11]) was that John said that he wanted to protect the Turner farms, to keep the farming business in the family for future generations and for the farms to pass to his children intact; and that he wanted to make sure that the farms, "go to my children and not my current partner". It is relevant to note that Mr Ioannou did not there distinguish between farms for the children of the first marriage and farms for the children of the later relationship.
11. Each of Nick, Mr Bailey and Mr Ioannou recalls that it was Mr Ioannou who gave advice at the 15 April 2010 meeting as to asset protection. Specifically, Mr Ioannou's evidence is that he advised John on his options using his "standard structure" (see, for example, at [19]) (Mr Bailey describes it as the "standard CHS presentation"). Both Mr Bailey and Mr Ioannou give evidence that Mr Ioannou referred to the option of there being a binding financial agreement. Mr Ioannou's evidence is that he advised that this was the best option. By all accounts, John said words to the effect that Wendy would not sign anything of that kind. Both Mr Bailey and Mr Ioannou give evidence that John said that he could not tell Wendy about this meeting or any advice that Cleary Hoare gave and that they would need to direct anything in writing to Nick instead and that Nick would make sure it got to John (see Ioannou Affidavit at [22]; Bailey Affidavit at [29]). Relevantly, neither Mr Bailey nor Mr Ioannou deposes that they received instructions that Nick was authorised to make decisions for John or to give instructions on his behalf.
12. Mr Ioannou's evidence is that he formed the belief that John wanted to do something to protect his assets from his current partner for the benefit of his children because, "he was not confident that the farms would naturally pass to his children under any Will he might have" (see Ioannou Affidavit at [13]). Pausing here, the David/Karl interests say that the 2010 Transaction provided no legally enforceable protections or safeguards in relation to John's testamentary objectives or for the provision of financial support for any care he may need should he become physically or mentally infirm.
13. As to the explanation given by Mr Ioannou as to the "Bloodline™ Trust" (a structure apparently trademarked by Cleary Hoare) (see Ioannou Affidavit at [28]ff), this included that: The final option involves you making a gift to a discretionary trust, the trust lending the money back to you, a loan agreement and mortgage between you and the trust and, if you want, a mortgage being registered over your property to secure the loan. […] … A discretionary trust means the trustee can choose who will receive something and just because you receive something one year doesn't mean you'll receive something the next year. […] Our "[B]loodline[™] trust" is a discretionary trust which was created by us and we have a registered trademark over it. It has been specially designed to allow assets to pass to your nominated bloodline only, but it allows any income generated by those assets to be distributed to any beneficiary including your spouse. You get to choose who will be your bloodline. […] Trusts are slightly odd structures in law because they are not legal entities like you or a company, but the trustee effectively holds legal title over the money on the table. It is the trustee's name on any bank account and on title for any property and it is the trustee who calls the shots - the trustee chooses which beneficiary should receive anything. […] However, the real power resides in the principal or appointor. The principal can be a beneficiary and also a trustee. The role of a principal is separate to the other roles and whoever holds this role has the power to hire or fire the trustee. So if you were the principal, you don't need to be the trustee because you can fire the trustee at any time and appoint yourself as the new trustee. You can exert ultimate power and control by firing the trustee and appointing a new one whenever you want. The major benefit of using a trust is that you can deposit wealth into the trust and that wealth won't form part of your estate. You can also craft the trustee to allow succession of control of the truest to whomever and whenever you want. You can even nominate successor principals. The trick to protecting your estate is to get your value from left to right with minimal tax and duty consequences. […] The best solution is to pick up your assets and move them from left to right but tax and duty costs make it undesirable. The alternative is secured debt. This relies on a valuation of your personal wealth. Because you own property, you will need to get a valuation of the property. A real east agent valuation is fine rather than a formal valuation as we just need some way to determine the value. We then subtract your bank liabilities to arrive at your net equity. If we go ahead with this option you'll need to provide me with the valuation and your net equity before we finalise this process. The first step in the process is for you to gift the net equity to the trust. […] The next step is a corresponding transaction where the trust lends the amount of the gift back to you to close the loop. […] Like any financier, most will lend if they can take security over the property. In effect, the trust is like a bank but you must remember that it is subject to the notional estate clawback [to which Mr Ioannou had earlier referred in the context of the option of leaving the property by Will] within 3 years of your death. […] Going back to the gift, you won't need cash to make the gift. From my experiences, journal entries in financial statements are not enough so you will need a cash-equivalent. We use a bearer promissory note, which is a cash-equivalent negotiable instrument. Under the Bills of Exchange Act, a negotiable instrument is, in plain English, a two-party cheque. You know what a cheque is: it is my promise to you that I will pay you a sum of money and it gives you the right to go to my bank, present it and be paid the sum I promised you. […] A bearer promissory note is the same document but without a bank. Just like a cheque, if I give you a cheque for $1 million and you don't cash it, it goes stale. So you need to close out the bearer promissory note because it can't be left outstanding. […] So the transaction works this way. If you're worth $5 million, you draw a bearer promissory note for $% million which is supported by equity in your property. To evidence the gift, you deliver an "IOU" to the trust. The trust acknowledges its receipt of the gift and it goes into the trust as a gift. [..] But just like holding onto a cheque in the real world does not make sense, the bearer promissory noted needs to be cashed in or cancelled. So the same bearer promissory note is passed back to you but we don't want it to be a gift. We try to move value away so the trust lends it back to you. […] In lending it back to you, a simple loan agreement is prepared between you and the trustee. Interest is not required to be paid and the loan is repayable on demand. […] Redelivery of the bearer promissory note by the trust to you cancels it but the note has been effective to evidence movement of $5 million from you to the trust and back to you. […] The trust will ideally take security over your personal assets for $5 million by a mortgage, just like a bank. […] The mortgage should be registered so that the security is enforceable, though there is a duty payable of around 0.6% of the value of the mortgage. […] Despite the cost of mortgage duty, it is always preferable to stamp and register the mortgage to ensure that the trust is a secured creditor. Without the mortgage, the trust is an unsecured creditor meaning that it would line up with any other person making a claim. Security gives the trust priority.
14. Mr Ioannou's evidence is that he did not recall any issue arising in the course of the meeting to suggest that John did not understand what he was saying (see, for example, at [50]). However, I interpose to note that there does not appear to be any account of anything said by John which might have indicated that he did indeed have an understanding of the not uncomplicated trust concepts and transactions there being proposed - rather, Mr Ioannou, as does Mr Bailey, seems to rely on John not looking perplexed, or asking any questions, and on John responding when questioned to the effect that he understood, which seems to me to be an inadequate basis on which to test whether John had any real understanding of the complex structure there being put forward.
15. Meanwhile, Mr Bailey gives a similar account of the explanation given by Mr Ioannou of the "Bloodline™ Trust" option (see Bailey Affidavit at [31]ff]). As I have said, he, too, did not recall John exhibiting or saying anything to suggest that he did not understand the concepts involved (see at [35]). As to this evidence, again, I make the same observation as that above.
16. Mr Bailey has deposed that Mr Ioannou said that they would send a letter summarising the discussion and confirming the quote; and that their client agreement would also be sent; and that John said to make sure it went to Nick (see at [38]-[39]). Mr Ioannou gives a similar account of this (see at [54]). Relevantly, Mr Ioannou deposes that, after the meeting, he had no contact with either John or Nick (see at [59]). He thus appears to have taken the role of "marketing man" for the "Bloodline™ Trust" structure. Indeed, all communications thereafter appear to have been with Mr Bailey.

Letter dated 22 April 2010

1. By letter dated 22 April 2010, Mr Bailey wrote to Nick, referring to the meeting on 15 April 2010. Mr Bailey's recollection is that he prepared this by reference to notes taken at the meeting, which he no longer has. The letter summarised Mr Bailey's understanding of "your current position" (which included reference both to John's assets and to Nick and the family's concern that, should John separate from his "new" partner, the pre-relationship assets would be at risk in any family law dispute); and the letter identified "your objectives" broadly as: 5. In a legitimate way, to protect your assets, or the value of them, from unexpected attach from creditors, whoever those creditors may be. 6. To do so in a way in which you can retain access to, and the benefit of, those assets or value.
2. It is apparent from the letter that there was no consideration given to the potential conflict between John's position and that of Nick (as an interested person in the transactions there contemplated).
3. The letter made a number of recommendations, the final recommendation being: 17. Therefore, we recommend that: 17.1 Two new discretionary trusts are set up which is fully discretionary, i.e., with no default beneficiaries. Preferably the trusts would be what we call "Bloodline™" Trusts, which restrict the flow of capital to only the descendants of a particular person; 17.2 John "gifts" an amount equivalent to his net worth in the pre-relationship assets to one trust, and an amount equivalent to his net worth in the post-relationship assets to the other trust; 17.3 That gift is evidenced by appropriate documentation certifying that the payment is by way of gift but in a way not to attract any stamp duty obligations; 17.4 The amount of the gift is then lent back by the trust to John under a loan agreement and the loan agreement provides for security to be taken, eg, a mortgage; 17.5 The mortgage is stamped (at 0.4% of the net value being dealt with) and, at an appropriate time, is registered. The appropriate time will depend upon further discussions with John and discussions without bank.
4. Relevantly also, the letter stated: 18. If you proceed, the documentation will be accompanied by a comprehensive letter of advice confirming the processes and the consequences and benefits.
5. Significantly, there was no such comprehensive letter of advice in evidence (nor is there any suggestion that any such letter of advice was ever sent). This is a point which the David/Karl interests emphasise, namely the lack of any (let alone any independent) legal advice (nor any accounting advice) given to John as to the implications of the transactions (as to which, see further below) - simply a broad outline of the concept (in essence as a marketing presentation) before the formal retainer of Cleary Hoare as solicitors for both John and Nick.
6. Nick has deposed that he read through the 22 April 2010 letter and then called John (from Nick's wife, Olivia's, telephone) to arrange a meeting. That meeting took place, according to Nick, several days later at Ken's house; on which occasion he says he gave an explanation of the proposed transaction (see Nick's Second 2019 Proceeding Affidavit at [21]) and told his father that he needed to be sure that he wanted to go ahead this because he (Nick) did not want to, "get these guys fired up and the clock ticking on costs"; and that, "[i]f I [Nick] go ahead and authorise these guys, you've [John] got to be prepared to sign up" (see Nick's Second 2019 Proceeding Affidavit at [22]). Nick has deposed that his father said (see Nick's Second 2019 Proceeding Affidavit at [22]): Well, I'm happy to do it. It's what I want. It's what I need to do. We can all live on the farm and do what we've always done; but there'll be some protection there for the future in case Wendy doesn't just threaten [sic] leave next time. You can tell them we'll go ahead.
7. Nick rejected (see at T 97.9ff) the suggestion in cross-examination that he was here pressuring his father to sign the documents - his desire apparently being to avoid unnecessarily incurring legal fees.
8. Nick deposes that he also called his sister, Sara, in Melbourne and told her about the "Bloodline™ Trusts" (see Nick's Second 2019 Proceeding Affidavit at [23]). There is nothing to suggest that Sara had any real understanding of what was then being proposed.

5 May 2010 email

1. By email on 5 May 2010, Mr Bailey wrote to Nick, advising that he would have the client agreement to him the next week but providing a breakdown of costs and stating: If you choose to take security over the loan by way of mortgage, mortgage duty on the mortgage would be $8,180.00 on a figure of $2,060,000 in equity. If you do not wish to pay mortgage duty now, we can partially execute the mortgage and hold it in escrow until you give us instructions to finalise it - i.e. either when there is a threat on the horizon and you need to register it to secure the loan, or if mortgage duty is abolished and is no longer payable, which will be on 1 July 2012.
2. Thus, it appears to have then been contemplated that the documentation was to be executed but held in some fashion in abeyance only to be relied upon if and when necessary (i.e., presumably if and when the feared event, namely Wendy leaving John, occurred). This, however, bespeaks a misunderstanding as to the concept of execution in escrow - which is that the party executing the relevant document becomes immediately bound, albeit that the transaction is subject to satisfaction of the escrow condition. This seems also to be the explanation for the incorrect belief that the mortgage was not liable for stamp duty on execution.

Instructions in relation to 2010 documents

1. Nick has deposed to a conversation with John after he received the 5 May 2010 email (he says on an occasion when John came to the Allawah Forbes Property) in the course of which he says his father expressed the desire not to have the mortgage registered - and duty paid - until later and only if necessary (see Nick's Second 2019 Proceeding Affidavit at [27]), after which Nick's evidence is that he sent an email to Mr Bailey. That appears to be the email of 7 May 2010, in which Nick responded to Mr Bailey's 5 May 2010 email, providing instructions as to various details required to prepare the documents, and saying, "[a]m thinking at this stage to just have [two] people involved, ie Dad and myself, unless you suggest otherwise??".
2. Nick's evidence is that a few days later he received a telephone call from Mr Bailey, in which Nick advised Mr Bailey that John did not want to register the mortgage just yet unless it was necessary (as Nick says he discussed in the conversation with John referred to above) and Mr Bailey agreed to put it in safe custody until they told him to register it.

Costs Agreement

1. By letter dated 10 May 2010, Mr Bailey wrote to Nick referring to "your instructions to proceed with our asset protection recommendations" and enclosing an "Important Notice to Client", addressed to both John and Nick (and signed by both as recipients of the notice and being dated 3 June 2010), together with a Costs Agreement (which identified only Nick as the "Client" - see Schedule 1 Item 1). The Costs Agreement was nevertheless signed by both John and Nick, and was also dated 3 June 2010.

Incorporation of Allawah Pastoral

1. On or about 11 May 2020, Allawah Pastoral was incorporated, with John and Nick as its two directors and equal shareholders (each holding 12 ordinary shares). That remained the shareholding and directorship of the company until 1 June 2015 (see at [19] above).

2010 Transaction Documents

1. By letter dated 13 May 2010, Mr Bailey forwarded to Nick the 2010 transaction documents (the 2010 Transaction Documents), namely: two Turner Family Bloodline™ Trust Deeds; two resolutions of Allawah Pastoral accepting trusteeship of the respective trusts; a statutory declaration of John regarding each of the "Bloodline™ Trusts"; Bearer Promissory Note and Receipt relating to each of the "Bloodline™ Trusts"; a resolution of trustee for the respective trusts regarding the Bearer Promissory Note in respect to each "Bloodline™ Trust"; a Loan Agreement between the trustee of each of the "Bloodline™ Trusts" and John; and a mortgage by Allawah Pastoral over properties registered in the name of John in relation to each of the "Bloodline™ Trusts".
2. The 13 May 2010 letter enclosed a schedule of steps to put in place the asset protection recommendations and noted, inter alia, that the mortgage documents should not be dated "as per your instructions for us to hold them in escrow" and that the amount of the gift should be left blank and would be completed once values were confirmed.

Estimated values of Trundle Properties

1. Mr Bailey subsequently forwarded to Nick a schedule setting out details of the acquisition and stated current values of the Trundle Properties as follows: Garden Vale (acquired in 1921, to which a value of $560,000 was attributed); Allawah (acquired in 1941, to which a value of $590,000 was attributed); Sunnycroft (acquired in 1962, to which a value of $250,000 was attributed); Woolharinga (acquired in 1963, to which a value of $255,000 was attributed); Nellyvale (acquired in 1979, to which a value of $540,000 was attributed); and Sunrise (acquired in 1999 for $85,000 and to which a value of $215,000 was attributed) (all of which properties were in John's name). The schedule noted that the Allawah Forbes Property was acquired in 2007 in Nick and John's names jointly, and a value of $800,000 was attributed to it. The document noted that Woolharinga, Nellyvale and Sunrise were mortgaged to Rabobank for a loan in the name of John for $250,000 and the Allawah Forbes Property was mortgaged to Rabobank for a loan in John's and Nick's names for $900,000.
2. Nick advised by email dated 9 June 2010 in response to the above that the valuations were probably all 10% under market values; and that John's facility of $250,000 was currently drawn to $160,000 and that the Allawah Forbes facility was almost fully drawn at $900,000.
3. On Mr Bailey's subsequent calculations (see file memo of 22 June 2010), Mr Bailey calculated the net equity of the "pre-assets" (i.e., assets prior to John's relationship with Wendy) at $2,254,500 and the "post-assets" at $216,500.

Execution of 2020 Transaction Documents

1. As I have noted, the 2010 Transaction Documents were dated 3 June 2010. It appears that some additional documents were provided to Mr Bailey by Nick in Forbes in late August 2010. The two "Bloodline™ Trust" documents were submitted to the Office of State Revenue for stamping on or around 27 August 2010. The stamping of those documents was confirmed to Nick by letter dated 29 September 2010 from Mr Bailey.
2. Pausing here, the David/Karl interests say that the "loans" represented 100% of John's then estimated equity in real property, noting that the loans were repayable on demand (as to Nick's knowledge of this, referring to Nick's Second 2019 Proceeding Affidavit at [21] and see T 72.30ff); that each contained a trigger clause for interest (cl 4); and each provided for the capitalisation of interest (cl 4.4). It is also noted by the David/Karl interests that the grant of the unregistered mortgages as security for the two loans (unregistered mortgages over Nellyvale, Woolharinga and Sunnycroft for $2,254,500 and an unregistered mortgage over Sunrise for $216,500) amounted to breaches of, and Events of Default under, John's 1999 and 2008 Rabobank mortgages.
3. Allawah Pastoral held the loans and mortgages as trustee pursuant to the two fully discretionary "Bloodline™ Trusts" (see Cleary Hoare's letter dated 22 April 2010 to Nick at [17.1]); and Nick accepted that he knew the trusts were fully discretionary (see, for example, at T 78.17).

Death of Ken and David commences work full-time on Trundle Properties

1. Relevantly, the next matters to note in the chronology of events are that, in March 2014, Ken died; and, by late 2014 or early 2015, John had ceased active farm work. At the end of 2014, David left school and around then began work full time on the Trundle Properties.
2. On or about 1 January 2015, David became registered as an individual sole trader for the purposes of the GST, the name of the business entity so established being under his name. In cross-examination, it was apparent that this was something put in place by Wendy and/or the accountant, Mr Job, and that David had little knowledge of the structure by which he was working on the farm.
3. From some point in 2015 to 2016, Wendy, David and Karl began to observe that John was displaying short term memory loss (although they deny that John had lost capacity before June 2016). Pausing here, as noted above, the Nick interests place the loss of capacity as by September 2015.

Steps taken by Nick in relation to "Bloodline™ Trusts" in 2015

1. Nick has deposed that, in early 2015, John came to the Allawah Forbes Property to inspect the crops and they had a conversation in which John said that his health was not as good as it used to be and that he thought that, "it's time to get me removed from the trust so I don't have any role just in case I get worse" and asked Nick to arrange for this to occur (see Nick's Second 2019 Proceeding Affidavit at [58]). Nick's evidence is that he asked his father whether he should get a Will and an attorney and his father said he was "not 100% sure" what his current Will looked like but that he did need one and asked Nick to arrange that with Mr Bill Burke.
2. Pausing here, there is nothing to corroborate that the request was made by John and I have some difficulty in accepting this as a plausible account of events. This is not least because there is nothing to suggest that John had focussed on his role in Allawah Pastoral or in relation to the "Bloodline™ Trusts" at all in the period from 2010 to 2015, nor why John would at this stage have thought of being '"removed' from the trusts.
3. On 19 January 2015, Nick sent an email to Mr Bailey, referring to the 2010 "asset protection structure" that had been put in place and advising that: … the next concern is that Dads [sic] health is deteriorating with tests being carried out to see if he has some type of dementure [sic] illness. If he does I am worried that he may mistakenly give his defacto enduring power of enterny [sic] which would then provide additional complications.
4. I interpose to observe that the concern that John might give an Enduring Power of Attorney to Wendy was prescient since that is precisely what occurred in June 2015, though the suggestion that this would be mistaken appears to be Nick's personal gloss on things.
5. In this email, Nick also queried whether the structure that had been put in place allowed for protection under "this type of scenario" and, if so, what were the "steps required to be completed to finalise everything". By this, it seems that Nick contemplated that the 2010 structure had not yet been active or completed.
6. Mr Bailey responded on 22 January 2015 by email, having reviewed the relevant Bloodline™ Trust Deeds, and noted that there were provisions in the Bloodline™ Trust Deeds to the effect that a principal would cease being principal if he or she lost capacity; and, if that were to happen to John, that Nick and Sara would continue on as principals. This email went on to state that: There are still the trustee company shares to deal with, and if your father were to give his partner power of attorney she would be able to act in that role, but you as the Principals could "sack" the company as trustee and replace it if that were to occur. One step you may want to consider is either having your dad give you and your sister a power of attorney now, or removing him from the trustee company now.
7. Nick has deposed that he did not quite understand the response and that he asked Mr Bailey for a meeting (see Nick's Second 2019 Proceeding Affidavit at [60]).
8. Nick has deposed to a meeting with Mr Bailey in a coffee shop in Orange on 2 February 2015 (see Nick's Second 2019 Proceeding Affidavit at [61]) in which he says that he told Mr Bailey he was "worried about [John] losing it and Wendy running off with everything or getting him to sign everything over to her". I note that this was seemingly a constant refrain with Nick but not far removed from what ultimately happened, albeit that Wendy did not ever "run off" or leave John (indeed, she married him in November 2016). Nick has also deposed that Mr Bailey, inter alia, recommended that "you have John resign as director and principal and transfer his shares while he has capacity" and that an independent person would need to witness his signature on the resignation as principal (see Nick's Second 2019 Proceeding Affidavit at [61]).
9. By reference to a file note dated 2 February 2015 by Mr Bailey, Mr Bailey records this meeting with Nick (described by Mr Bailey as an "Estate Planning Update"). Relevantly, the file note recorded that: 1.1 Meeting with Nick Turner in Orange on 2 February 2015 to discuss the work that we carried out for his father in 2010, which was secured debt to two separate Bloodline® Trusts in relation to estate challenge. Since then, Nick's father had been gradually losing capacity and there is the chance that he would lose full capacity in the short to near future. Suggested to Nick that although not crucial, he should have his father resign as a director and transfer shares in the corporate trustee as well as confirming his resignation as a principal of the deed (Nick and his sister are currently co-principals). 1.2 Also advised implementing a Power of Attorney before he loses capacity. Due to the chance of a challenge, went through how Nick could provide evidence of his father's capacity when signing the documents, ie independent person present, etc. Nick gave instructions to prepare the documents and we are to open a new file and send them out.

2015 Transaction Documents

1. By letter dated 20 February 2015, Mr Bailey forwarded to Nick documents making provision for John's resignation as principal for the respective trusts, along with the resignation of John as director of Allawah Pastoral and transfer of shares in Allawah Pastoral. Although the letter referred to an Enduring Power of Attorney form appointing Nick as attorney, Nick's evidence is that this was not with the parcel of documents and that it was subsequently sent by email on 4 March 2015 by Ms Alice Chen, a secretary at Cleary Hoare (see Nick's Second 2019 Proceeding Affidavit at [66]).
2. I note that that Enduring Power of Attorney form in its terms contemplated the provision by Mr Bailey of a certificate under s 19 of the Powers of Attorney Act 2003 (NSW) (Powers of Attorney Act) as to his explanation of the effect of the power of attorney to the principal before it was signed and that the principal appeared to understand the effect of the power of attorney (and certifying that he witnessed the signature of the power of attorney by the principal). However, it is apparent from what happened that Mr Bailey did not witness the execution of this or any other of the documents, and no Enduring Power of Attorney was executed by John in favour of Nick.
3. Nick has also deposed that he read through the documents, contacted Mr Burke (the local solicitor) about them and took them over to show his father the documents (see Nick's Second 2019 Proceeding Affidavit at [67]ff).
4. There were then some communications between Cleary Hoare (specifically, Ms Alice Chen) and Nick in early April and May 2015 as to the execution of the documents.
5. Nick's evidence (see Nick's Second 2019 Proceeding Affidavit at [75]ff) is that the following documents (the 2015 Transaction Documents) were signed by his father in the presence of, and witnessed by, a long-time friend of the family, Mr Gary Nipperess, on 8 May 2015: a resignation of director document in relation to Allawah Pastoral; a Deed of Resignation of Principal for each of the "Bloodline™ Trusts"; a share transfer form in relation to the shares in Allawah Pastoral; and the property transfer form for the Allawah Forbes Property.
6. Nick's evidence is that he then contacted his sister, Sara, and told her that their father seemed to be struggling and that he had met with the lawyers about the trusts and what to do now before their father "goes downhill"; and that, "[w]e're going to take Dad out of the trusts". He also has deposed that Sara said she did not want to be involved and that he asked her to send a letter saying that she wished to resign (see Nick's Second 2019 Proceeding Affidavit at [90]ff).
7. Nick has deposed that, in late May 2015, after he had received the signed documents from Sara, he sent "all" the documents, except the Allawah Forbes Property transfer, to Cleary Hoare by post. He also forwarded letters dated 20 May 2015 from Sara resigning as principal of the Turner Family Bloodline™ Trust effective as from 20 May 2015.
8. It is not disputed that the David/Karl interests had no knowledge of the 2010 Transaction or of the 2015 Transaction until after the present dispute arose.

John's deteriorating health

1. According to the medical notes in evidence, on 26 May 2015, John was referred by his general practitioner, Dr Allison, for an ACAT assessment.
2. Dr Allison also referred John for a CT brain scan, the referral noting "severe memory loss". That brain scan was carried out in Forbes on 10 June 2015 (and it would appear that nothing adverse was revealed on the brain scan).

Meeting with Mr Helby on 10 June 2015

1. Meanwhile, on the same day as the brain scan was undertaken in Forbes (i.e., 10 June 2015), Wendy and John attended the offices of a solicitor in Forbes (Mr Christopher Helby). There were two meetings with Mr Helby on 10 June 2015, one before the brain scan was taken and one about three hours after that first meeting.
2. Pausing here, I understand that Mr Helby had no familiarity with the Turner family (John's previous solicitor on the Trundle property conveyances was a Mr William Burke). It seems likely that Wendy instructed Mr Helby, rather than Mr Burke, because she did not wish Nick to become aware of the steps then being taken. Specifically, instructions were given in relation to the preparation of an Enduring Power of Attorney appointing Wendy as John's attorney. It seems likely, though this is not clear on the evidence, that this was the occasion on which instructions were also taken for John's last Will.
3. Mr Helby was unable to give evidence in the proceedings (having advanced brain cancer) and had not been prepared to provide evidence except under compulsion of a subpoena, so all that was available from him were his file notes (and no adverse inference of the kind described in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (Jones v Dunkel) can be drawn from his absence). With this said, although his file note of instructions in relation to the later correspondence was in evidence, there was no file note of his instructions in relation to the Enduring Power of Attorney, Enduring Guardianship or John's Will (see, for example, T 10).
4. By the Enduring Power of Attorney executed by John and Wendy on 10 June 2015, John, as principal, appointed Wendy his attorney and Wendy accepted that office. The Nick interests emphasise that John's Enduring Power of Attorney did not authorise Wendy, as John's attorney, to give a gift of all or any real property of John (namely, in the events that later happened, the Trundle Properties) or any personal property of John, save that Wendy (as John's attorney) could give "reasonable gifts" (as provided for by s 11(2) of the Powers of Attorney Act) out of John's personal property.
5. The Enduring Power of Attorney contained the following express acknowledgements by Wendy: 6. Acceptance by attorney (a) I accept that I must always act in the principal's best interests. (b) I accept that as attorney I must keep my own money and property separate from the principal's money and property. (c) I accept that I should keep reasonable accounts and records of the principal's money and property. (d) I accept that, unless expressly authorised, I cannot gain a benefit from being an attorney. (e) I accept that I must act honestly in all matters concerning the principal's legal and financial affairs. Failure to do any of the above may incur civil and/or criminal penalties.

Diagnosis of dementia and ACAT assessment

1. In June 2015, John's general practitioner (as will be recalled, Dr Allison) received a report as to John's memory loss and a score of 16/30 (which I understand to be low) for a mini mental examination conducted by a registered nurse (Ms Bellach).
2. On that same day, the Enduring Power of Attorney granted by John in favour of Wendy was registered.
3. On 18 June 2015, Dr Allison referred John to a geriatrician (Dr Saber) at Westmead for assessment.
4. On 23 June 2015, there was a teleconference (attended by John and Wendy) with Dr Saber.
5. I understand that there was another consultation with Dr Saber. Ultimately, Dr Saber saw a significant decline in cognitive function.
6. John was ultimately diagnosed as having alcohol induced dementia. John was referred for an ACAT assessment on 13 July 2015 and the assessment resulted in a determination on 17 July 2015 that John was assessed as requiring permanent high care. Ms Bellach reported to Dr Allison that John was declining quickly. Ms Kerry Williams began to attend at the Allawah home on a regular basis to assist with John's care from around this time.
7. Pausing here, it is alleged by the Nick interests (see at [31] of the amended statement of claim) that, by no later than the end of September 2015, John lacked capacity because of mental incapacity (the initial pleading placed this date as being June 2016). Meanwhile, and as I have adverted to, the David/Karl interests, in their amended defence, admit that John lacked capacity from no later than June 2016 but not before.
8. It is perhaps of some relevance to note that, to the extent that the Nick interests are correct and John lacked capacity by no later than the end of September 2015, this is only some three months after the June 2015 documents were signed and witnessed by Mr Helby (as to which, see above) and some four months after the 2015 Transaction Documents were executed in May 2015 (as to which, see at [101] above). Moreover, if any challenge were to be made as to John's Will on the basis of incapacity (and, as noted above, Nick has foreshadowed a potential challenge), it would be relevant to note that, in the period around June 2015, Mr Helby at least appears not to have been concerned as to John's capacity to understand and give instructions in relation to the Enduring Power of Attorney.
9. It is said by the David/Karl interests that judicial note may be taken both that dementia is a mental illness and that it is an illness where a person may be capable one day and incapable the next (noting that Mr Bailey said the same at T 251.44). It is said that it cannot be assumed that, because John was formally diagnosed with dementia at any particular point in time, he was necessarily incapable on any given day thereafter.
10. In this regard, I note that, in other cases, I have heard expert medical evidence as to the nature of particular forms of dementia (see, for example, Varma v Varma [2010] NSWSC 786), but there was no such evidence in the present case and there are limits to the judicial notice that can be taken of such matters. Suffice it to note that the evidence here would not permit a finding that there was a loss of mental capacity such as would have deprived John of the capacity to enter into the relevant transactions at the respective times, notwithstanding that there were clearly concerns as to his declining cognitive ability from 2015 onwards (noting also that the test of capacity is issue-specific - see, for example, Barrett J, as his Honour then was, in Szozda v Szozda [2010] NSWSC 804, as considered in, for example, A v N [2012] NSWSC 354) and that what would be necessary to consider would be John's ability to understand the particular transaction and give instructions if he were given a careful explanation of the transaction (even simply and slowly, if necessary). That cannot here be assessed on the evidence before me and that is so irrespective of my taking judicial notice of the above matters.
11. That said, emphasis is placed by the David/Karl interests on the evidence that John saw Mr Helby (with Wendy silent at the back of the room) when he gave instructions for an Enduring Power of Attorney to be drafted; that John saw Mr Helby alone when John executed that document; that John saw Mr Helby alone when John gave instructions for his 2015 Will; and that John again saw Mr Helby alone when he executed the Will. It is noted that the National Australia Bank (NAB) spoke to Mr Helby subsequently, and NAB's contemporaneous note records: … we have gained comfort after speaking with the solicitor who has ensured [sic] us that Owen was in a healthy and stable frame of mind when his most recent and last Will was completed.
12. It is submitted that this is the reasonable inference to be drawn from the fact that John saw Mr Helby on the various occasions referred to above in the absence of Wendy.
13. At this juncture, it is relevant to note that, although Mr Helby was not capable of giving evidence at this hearing, he attested to the understanding of John as to the giving of the Enduring Power of Attorney and he took instructions for, and prepared, John's Will. He also communicated in his September 2015 correspondence with Nick's solicitors that he had had instructions directly from John. It is not lightly to be assumed that Mr Helby did so without being conscious of his responsibilities and duties both to his client and as an officer of the Court. Rather, the available inference here to be drawn is that Mr Helby did not consider John's mental functions at that stage to be so impaired as to have deprived him of the necessary capacity to understand what he was there doing. Indeed, as late as November 2016, a marriage celebrant who, one would also consider was cognisant of the responsibilities of that office, seems to have determined that John was then capable of understanding and making the marriage vows then made (which also suggests that John's mental capacity was at the very least fluctuating over the period through to when he permanently lost capacity).

Nick's letter dated 17 September 2015

1. By letter dated 17 September 2015, Nick wrote to Wendy referring to the "deterioration of [John's] health and his inability to manage the properties in the way that he once used to" and sought the opportunity to contribute towards the management of the Trundle Properties. It seems clear from the letter that Nick understood (or at least suspected) by then that Wendy held a power of attorney for John (since he asked to see a copy of that document). Inter alia, the letter requested that Wendy "remove the current bar on both my mobile and house phones" so as to allow Nick to speak with John at his home.
2. The response to this letter came from Wendy's solicitors (by letter dated 30 September 2015 per Mr Helby) to the effect that Wendy was then in hospital following surgery and not able to respond to Nick directly at that time.

John's 9 October 2015 Will

1. Meanwhile, Wendy and John had gone to see Mr Helby in Parkes in relation to a draft Will for John. Mr Helby emailed that draft Will to John's email address (the evidence is that John did not operate his email account so it is likely that this was received and reviewed by Wendy).
2. As executed on 9 October 2015 (and witnessed by Mr Helby and a legal secretary in Parkes), John's Will appointed Wendy his executrix and trustee and provided, in summary, for Wendy to receive a life estate in the Allawah property (or, in the alternate, accommodation should she wish) and a legacy of $200,000; for Sara to receive the sum of $200,000; and left the residue of his estate to David and Karl. There was no provision made for Nick. Specifically, cl 7 of the Will stated: 7. I have made no provision for my son NICHOLAS JOHN TURNER as I have provided land for him at Forbes during his lifetime and I further understand that both my children SARAH JANE GORMAN and NICHOLAS JOHN TURNER will benefit from the Estate of their mother whose assets come primarily from properties at settlement which she and I had after our separation.
3. Pausing here, Nick says that the proposition that John had provided land for him at Forbes is incorrect, since the property was the subject of debt finance and Nick ultimately took over all of the debt (and that this is relevant when considering John's state of mind at this time). It is, however, relevant to note that John had provided assistance in relation to the acquisition of this property in the sense that he had provided security over the three Trundle Properties in connection with the debt financing (including the 2008 Rabobank mortgage - see at [40] above); and, at least in that sense, he had made some form of provision for Nick albeit not commensurate with the gifts made under the Will for David and Karl.

Further correspondence

1. By letter dated 19 November 2015, Cleary Hoare (acting for Nick) wrote to Mr Helby pressing for a response to Nick's letter of 17 September 2015. Mr Helby responded the same day that he had sought instructions.
2. Mr Helby's typed file note (clearly made after the above November 2015 correspondence) was as follows: With regards to Nick Turner's letter dated 17th September 2015 & Cleary Hoare's letter dated 19th November 2015 I have received the following response & instructions from Owen John Turner & Wendy O'Bryan-Turner for who both attended my office with the following response to Nick's letter. John is fully aware of Nick's inability to accept Wendy & his relationship which extends over 20 years. Nick has also had the inability to accept their 2 sones they have together David & Karl. John also knows that he had set Nick up fairly & adequately for which he supplied his assets for Nick to purchase property in the Forbes district along with any profits Nick received from the Forbes properties Nick got to keep. John is also aware that Nick will sufficiently benefit from his mother's Estate whose assets come primarily from properties at settlement which she and John had after their separation. John is also aware that Wendy, David & Karl are currently managing the farming operations & that he is able to communicate verbally. He is very happy with this arrangement. John also knows he has made Wendy his Power of Attorney to avoid any further conflicts Nick would cause with Wendy, David & Karl & it is with this reason he appointed Wendy whilst he was of sound mind. Wendy is quiet [sic] perplexed why Nick would be of the view that it would be of the view that it would be understandably difficult for Wendy & her sons to manage such a farming operation. This has been their lives over the past 20 years. The boy's [sic] involvement with their father over their lifetime has taught them enough to continue to run the farms successfully as their father did. Nick has made himself quiet [sic] clear to Wendy & the boys that he never wanted them involved in his life & has made it impossible for them to accept or believe anything Nick proposes with regards to John's circumstances. Nicks [sic] choice] to have nothing to do with the boys, his bullish & abusive confrontations with Wendy leaves her quiet [sic] adamant that a working relationship will never happen. John & Wendy both agree that Nick needs to stop meddling in their affairs and Wendy would like to assure Nick that she is more than capable of handling the financial assets of Johns as has been the case for the past 10 years when she was handed the financial affairs by Johns [sic] father Ken who had previously looked after them & that the boys & herself along with Johns [sic] verbal input & future projections will see the farms managed appropriately.
3. Mr Helby responded to the 19 November 2015 letter by letter dated 24 November 2015, advising that he had discussed the matter with both John and Wendy and, in summary, conveying his instructions that his clients did not "feel any need for Nick's intervention in view of many years of ongoing difficulties between Wendy and her boys and your client". The letter concluded: Our instructions are that we are not to provide your client with copies of the power of attorney and there would seem to be no reason why they should be provided. The operation continues the way it has for a very long time now and whilst Mr Turner is not in the health that he may once have been he seems quite clear on his requests that he be left to continue what he has been doing for a very long time.
4. The response from Cleary Hoare to the above (by letter dated 15 February 2016) was to cavil with various of the factual assertions contained in that letter (namely, it was asserted that Wendy had been doing the bookwork for ten years, not twenty, and it was said that Nick had never had any "difficulties" with either Karl or David). Furthermore, confirmation was sought as to who was providing instructions to Mr Helby (John, Wendy or both) and whether his instructions were that John was continuing to operate the farm.
5. Mr Helby responded by letter dated 19 February 2016, stating that he had sent the letter on to John for his instructions and that, "[w]hen we last spoke with [John] it was quite apparent that he did not wish to provide this information". Pausing here, this could not be tested as Mr Helby was incapable of giving evidence at the hearing, but there is nothing from which I could properly conclude that Mr Helby was there deliberately misstating what had occurred. I can only conclude that, at the time, Mr Helby did in fact speak with John and, on whatever basis, satisfied himself that this represented John's wishes and instructions.

Karl's registration for GST and leaving school

1. Meanwhile, on or about 1 January 2016, Karl was registered for GST as a sole trader, registering as a business entity under his own name.
2. In about April or March 2016, without completing Year 11, Karl left school and commenced working full time on the Trundle Properties.

David and John's partnership

1. Some months later, on or about 29 June 2016, a family partnership was registered for GST under David and John's names (the DJ Turner & OJ Turner Partnership). It is said that whatever was John's personalty at that stage amounted to his contribution to that partnership (see T 22ff in opening submissions). There was no written partnership agreement. In cross-examination, David accepted that he had not contributed any capital to the partnership on its inception (see, for example, at T 118). The partnership accounts, however, record a contribution of some $177,000 (see T 121.10ff).

Wendy and David's partnership

1. On or about 3 August 2016, Wendy and David registered a partnership for GST purposes (the W O'Bryan-Turner & DJ Turner Partnership). It appears that the capital contribution recorded as having been made by David to that partnership was the capital contribution from the DJ Turner & OJ Turner Partnership.

Wendy's diagnosis with terminal cancer

1. Meanwhile, from about February 2016, Wendy had been having medical tests. In May 2016, she had lower rib pain and John was placed in respite care for a short period. In July 2016, she had a bad cough and scans suggested that she might have cancer.
2. In August 2016, Wendy was diagnosed as having stage 4 lung cancer and, at that stage, was given a prognosis of six months to live (although she ultimately lived until 2018).
3. Each of David and Karl admits that he knew of the diagnosis of lung cancer and that, at the time, Wendy understood that she had only six months to live.
4. From August 2016, Wendy needed oxygen to be administered (which meant that when she travelled to appointments she needed to be accompanied by either David or Karl to assist with the oxygen bottles - the use of which was evident on the video recording of Wendy's evidence on commission in these proceedings).

Consultation with Ms Stephanie Hughes

1. On 8 August 2016, Wendy attended a conference (of around one hour and 20 minutes) with Ms Stephanie Hughes, a solicitor who had by then taken over Mr Helby's legal practice (he having retired). Ms Hughes' handwritten file note of that conference included the following. 8/8/16 12.30 - 1.50 Conference w Wendy Husband John 67 yrs. Dementia. Full time care Wendy recently diagnosed w lung cancer Accountant - Mark Job Problem son Nicholas Turner […] Wendy would like to effect John's Will now. Overdraft $500,000 w Rabobank. trying to refinance w NAB […] Discussed various transfer possibilities - 2 boys + Wendy Succession planning Wendy to discuss further w Mark + we may have a joint conf to discuss + decide. In meantime Wendy will try to arrange re-finance Rabobank - NAB.
2. A further handwritten file note which was produced on subpoena, dated 31 August 2016, in what I understand to be Ms Hughes' handwriting, includes reference to a partnership with David: Turner Pastoral Co Partners - Wendy + David all livestock, P + E will be transferred. Mark acct is in the process of this […] W to sell any remaining shares of Johns asap Most sold previously Notes - Nicholas works @ Rabobank @ Forbes - Adrian Perry - Rabobank contact @ Dubbo Need to arrange transfer without Nicolas knowing - Wendy unwell Terminal cancer - Please do CA + D + letter enc. est. cost $10-20k. Request $10k in trust Disbursements inc. property vals - Need to arrange transfer of all properties into JOINT TENANTS - David John Turner - Wendy Joan O'Bryan-Turner as Trustee for Karl John Turner
3. A subsequent handwritten file note, again as I understand it in Ms Hughes' handwriting and apparently recording a telephone conversation lasting seven minutes, recorded that: 2/9/16 Teleph w Mark + Sam of Peter Woods Accts "Capital protected trust" is proposed. David can be appointed because 18 yrs. - Yr to Yr Y - discretionary trust - Capital in trust - hard wind to boys Stephen Harvey - Head Lawyer ACIS Partnership K + D no wendy @ all Stamp duty exemption. I'm to get Counsel's advice + get back in touch after 16/9/16 w Mark + Samantha
4. As foreshadowed in the above file note, Ms Hughes then sought advice from Counsel and accounting advice as to what she described as "[s]uccession planning".

John's life policy

1. Meanwhile, by letter dated 6 September 2016 (the same day as the application was made in relation to the Rabobank facility), Wendy (using the Enduring Power of Attorney) wrote to AMP Life Limited requesting withdrawal paperwork in respect of John's life policy. That application was duly submitted (dated 11 September 2016) (see Ex AP). The net withdrawal benefit received was $80,163.30 and it is said that those amounts were transferred to the account of one of the family partnerships that had been established (see T 23).

Instructions to Counsel

1. By letter dated 14 September 2016, Ms Hughes sought advice from Mr Wallis of Counsel as to "succession planning". The instructions provided in the letter included the following: 1. [John] - 67 years old, is suffering severe dementia which requires full time care. He has lost mental capacity. […] 9. Wendy has now been diagnosed with Terminal Lung Cancer. Wendy has an oxygen tank strapped to her 24/7 at present. The prospects are not good. There is quite some urgency about this matter. 10. Wendy is trying to sort the properties out before anything happens to her - doctors have given her no exact time frame, but at the same time, not much time left. 11. Wendy would like to effect John's Will immediately. Enclosed herewith is a copy of John's Will. 12. Wendy is appointed as John's Enduring Power of Attorney, a copy of which is enclosed for your assistance and review. 13. As to how this transaction should be structured and effected is unclear to us and we seek your advice in this respect. 14. The idea is to structure some sort of succession plan so that David and Karl will have the properties in their names as soon as possible, whether in personal names or some entity. 15. There is limited debt, in the vicinity of $500,000 presently by way of Mortgage with Rabobank and Wendy is trying to re-finance this [sic] loans with Rabobank to the NAB. 16. The NAB have indicated that they may be able to do this as well as set up ongoing capital finance to keep the farms running. 17. John's son, Nicolas [sic], from his previous marriage is a concern to Wendy and it is anticipated that he will make a Family Provision Claim on John's estate. Wendy would like to do all things possible in order to prevent this and properly effect John's Will now. 18. Nicholas has previously tried to stand in the way of anything being done regarding the Trundle farms. 19. Nicholas has not worked on any of the properties at Trundle and therefore, contributes nothing to them. […] 21. Nicolas [sic] is left no provision in Johns Will, dated 9 October 2015, as John felt that he had provided enough for Nicolas [sic] in his lifetime, including land in Forbes. 22. Wendy would like to transfer all of the properties into David and Karl's names. Karl is under 18 at the moment, so it would probably go into Wendy's name as trustee for Karl until he turns 18, but we also propose a corporate entity structure as a possible solution, as well as a tax and risk effective solution for these young men moving forward. 23. We are contemplating whether a Trust should be set up for the family to own the land. 24. The ultimate goal is to secure the properties in David and Karl's control and possession upon Wendy and/or John's passing. 25. Provision also needs to be made for the ongoing care of John as long as he lives.
2. From the content of these instructions, it is readily apparent that the focus was on preventing a claim by Nick in respect of the Trundle Properties and ensuring that control and possession of those properties be with David and Karl, in circumstances where Wendy was expected to die in the near future and John was said to have lost capacity and to require ongoing care. Indeed, it seems that no focus appears to have been given to the question whether Wendy could properly exercise John's power of attorney to effect any transaction which might be proposed as a means of attaining the stated objectives in the letter.
3. By email on 15 September 2016, Ms Hughes conveyed to Counsel the urgency of the need for advice in relation to Wendy due to the diagnosis of terminal cancer.
4. An internal file note of 20 September 2017 (by an "LN") noted, inter alia, that "[w]aiting on Barrister for his advice" and that "Intergenerational Transfers are on file BUT will need to confirm if they are going into individual names or a Trust/partnership". The note also made reference to a query to the "OSR as to whether the Exemption form for Stamp Duty [could] be used for a partnership."
5. By email on 21 September 2016, Mr Wallis sent through some "preliminary points" on the matter, including that: 3. I hardly need to tell you this but you need to be clear who you are acting for. While the immediate giving effect to the provisions of the [W]ill by a transfer to the sons (or a trust under which they are beneficiaries) is in their interests and I presume accords with the wishes of Ms O'Bryan, it does leave Mr. Turner exposed if the boys do not "do the right thing by him" especially if Ms O'Bryan predeceases him and he has no one to protect his interests.
6. Ms Hughes confirmed by email of 22 September 2016 that she was aware and had contemplated each of the matters that Mr Wallis had raised.
7. Mr Wallis then provided his advice by email on 23 September 2016.
8. By email dated 26 September 2016, Ms Hughes conveyed Counsel's advice to Wendy (at John's email address) (which advice, I note, focussed on the anticipated potential claim by Nick on John's estate, not on the legality of the means by which the transaction was to be effected): […] Counsel's advice as follows: 1. In Counsel's opinion it is not possible to effect the required transactions in a way that makes them "litigation proof". This applies whether the required transfers are to your two sons directly or to a trustee (natural or corporate). The Succession Act is specifically drafted to cover those situations. The relevant sections of the Act provide that where there has been a relevant property transaction (that is a transfer of property (and/or some other transactions) that is not for full consideration) the property may form part of "notional estate" and therefore be available to meet a family provision order under Chapter 3 of the Succession Act. 2. Where the transaction is entered into with the intent to defeat a family provision claim then it will be a relevant property transaction if entered into within three (3) years of the death of the deceased. 3. Any potential claim by Nicholas will have to overcome his father's express wishes as contained in his [W]ill, the fact that he has been given some provision by way of the Forbes properties (though we do not have full details of those properties or the extent to which Mr Turner made possible their purchase, the lack of contact (as I understand it) between Mr. Turner and Nicholas for some time and the superior claims of Wendy (if she survives Mr. Turner) and the boys. 4. The stronger potential claim would belong to Sarah who is left "only" $200,000 and who has not been estranged from her father (on my understanding of my instructions). However, we note you are not concerned about this. 5. For completeness on this issue, Counsel does not think that Sarah needs to be given her entitlement under the Will now but for obvious reasons it would be best not to leave the estate unable to meet that payment. 6. The transfer of the property to a trust may provide advantages from a succession perspective and from a taxation perspective that may not flow from a direct transfer to the boys. This is particularly the case where there are two (2) boys and their potential future families involved. 7. Given the concerns about the possible claims of Nicholas any Trust Deed should be drafted to exclude Nicholas and Sarah (or their issue/children) but should include John and Wendy. We are happy to assist with settling the Trust Deed but would propose that ACIS provide the draft Deed for our amendment as this will be both cost and time efficient. 8. While it is dangerous to try to, and impossible to, predict the future it would be recommended that the boys agree (possibly when both are 18) as to arrangements that will apply if they fall out in the future so far as the control of the trustee company is concerned (and or division of the assets of the trust while they are the only beneficiaries).
9. The ultimate recommendation from Ms Hughes was that the land be transferred to a trust with the shares in the trustee company held by Wendy and/or the David and Karl and that thereafter they could be transferred to David and Karl in due course. It was noted that there were potential stamp duty implications of such a course (and further consideration was to be given to any exemptions applicable). It was noted that, if John lived for more than three years following the transfers of the property, then it would be increasingly difficult for Nick to succeed in any claim on John's estate, "[b]ut nothing is ever impossible". Ms Hughes concluded that, "[s]o we just need to look at this as the succession planning that it is. That is, what is the most effective way to structure the ownership of the land for both boys moving forward indefinitely".
10. By handwritten note dated 4 October 2016, it appears that Ms Hughes recorded a telephone conversation with Wendy: […] [R]ead through Council's [sic] email advice + discussed structure WOBT of the view that properties should just be transferred to the boys. Discussed Wendy + John being maintained/looked after by the boys, if transfer all assets now. NAB hasn't gone any further. Until after Mark (accountant) + Wendy to see 12/10/16 @ 2pm + farm tax return - email accounts + advice I'm not required @ meeting + advise structure - need to consider/prepare certificate for indep advice for Karl
11. A typed file note dated 7 October 2016 of "LN" states: SRH said we are transferring straight into the Boys names. Karls [sic] name will be done via Wendy - then Wendy will leave it to Karl in her Will.
12. There is then a handwritten file note dated 10 October 2016 (again, seemingly of Ms Hughes) that records: 4:09pm Teleph. w Wendy 20 mins Bank won't lend to a minor so unencumbered properties, transfer to David + Karl + Wendy + encumbered properties the same way too. → email NAB re: proposed ownership → Email acctnats. proposed properties be held as joint tenants rather than tenants in common $7000 Not Wendy → she has only pd us $10,000 via chq→
13. There followed a series of file notes from 11 October 2016 onwards referring, inter alia, to documents for intergenerational transfers, applications for exemption of stamp duty and the bank's position as to a transfer to someone under 18 years (i.e., Karl). In the course of those notes there is reference in a handwritten file note of 20 October 2016 to "[p]revious finance approved in 2009 but didn't proceed because Nick's farm still mortgaged by Rabo + they wouldn't release" and that "[n]o reason Rabo can refuse refinance now"; and, in a handwritten file note, dated 21 October 2016, of a telephone discussion with Wendy: Discussed 2 rounds of transfers 1st round - Wendy + David as tenants in common 2nd round when Karl = 18 yrs joint tenants W + D + K after 1st round + simultaneously, Wendy will do will gifting her share to Karl. Having provided for David during life - New POA for John if something happens to Wendy. John no longer has capacity - EG " " so can't do new POA or EG if something happens to Wendy No assets left in John's name after properties all transferred out No life insurance, shares, cash or anything else Wendy can think of Operating Partnership: Wendy + David = current […]
14. The substance of those instructions was then conveyed by Ms Hughes by email on 21 October 2016 at 3.32 pm to Mr Micheal Watts, Agribusiness Manager at NAB.
15. Ms Hughes' handwritten file note continued: 4.10pm Further ph conf w W O'B Plan to have John in full time care @ Trundle soon Boys to financially provide for Father until his death
16. Each of David and Karl executed mirror wills (David on 24 October 2016; Karl on 1 December 2016). The Wills were prepared by Ms Hughes' firm and the execution witnessed by two legal secretaries (Ms Austin and Ms Newham) in the case of David's Will and by Ms Hughes and Ms Austin in the case of Karl's Will.
17. An internal NAB document (undated) refers to the proposed refinance and includes the statement that Wendy had, "now been told by her doctors that she could live for up to [four] years". The note also makes reference to the NAB manager, Mr Watts, having spoken with the solicitor, "who has ensured [sic] us that [John] was in a healthy and stable frame of mind when his most recent and last Will was completed" and that, "[t]his shows that all property is to be left to David and Karl".
18. By letter dated 10 November 2016, NAB advised Turner Pastoral Co (the partnership between David and Wendy) that facilities had been approved of up to $600,000 (NAB Business Markets - Flexible Rate Loan) and $20,000 (Farmers Choice Farm Management Account Overdraft).
19. The settlement of the discharge of the Rabobank mortgage was scheduled for 25 November 2016 (the funds required for settlement totalling $585,853.20)

Marriage of Wendy and John on 25 November 2016

1. On 25 November 2016, Wendy and John were married at the Allawah property in a ceremony officiated by a marriage celebrant. Angelena was one of the witnesses to the ceremony and was adamant in cross-examination that John had capacity to understand what was then taking place (see T 235.18).

Events in December 2016

1. By late 2016, Wendy was in considerable pain and, as noted above, required oxygen to assist with breathing.
2. On 16 December 2016, John was placed in permanent care in the nursing home in Forbes (where he still resides). I interpose to note that the David/Karl interests emphasise that Nick has paid "not one cent" of the cost of John's care and accommodation at the nursing home (that being paid for by David and Karl out of the income from the farm).
3. On 20 December 2016, Wendy executed a statutory declaration (presumably in connection with the financial arrangements made for the placement of John in care) in which she declared that John's only assets as at that date were $30.
4. Pausing here, it is said by the Nick interests that the challenges to the 2010 Transaction and 2015 Transaction do not impact on the relief sought by them in the 2017 Proceeding (see T 23); and that, if the 2010 Transaction and 2015 Transaction stand, then Allawah Pastoral is a secured creditor and, if John's last Will is valid, then John's estate will be burdened by that security.

Transfer of Trundle Properties

1. Meanwhile, from 11 November 2016 to 5 January 2017, transfers, for no consideration, executed by Wendy (exercising the Enduring Power of Attorney granted to her by John) were registered in respect of the various Trundle Properties, specifically: transfers of Garden Vale, Allawah and Sunnycroft to Wendy, David and Karl as joint tenants; and transfers of Nellyvale, Woolharinga and Sunrise, to Wendy and David as tenants in common in equal shares.
2. The reason for the difference in the transfers was that the Nellyvale, Woolharinga and Sunrise properties were the subject of mortgages in favour of NAB (as will be recalled, the Rabobank mortgages having been refinanced) and the NAB would not deal with Karl who was then a minor. Therefore, the arrangement was reached as between Wendy, David and Karl, that under Wendy's Will, her interest in the Nellyvale, Woolharinga and Sunrise properties would pass to Karl such that he and David would jointly hold all of the Trundle Properties.
3. On 12 December 2016, the Rabobank mortgages were discharged and the NAB mortgages were recorded on the register for Woolharinga, Nellyvale and Sunrise.

Demand of 10 February 2017

1. By letter dated 10 February 2017, Cleary Hoare contended, inter alia, that the transfers were liable to be set aside for either being unlawful or beyond power and that Wendy's conduct amounted to a fraud on the power and that Wendy had breached her fiduciary duties to John as his attorney (and that Wendy, David and Karl had actual or constructive knowledge of the matters asserted in the letter). Furthermore, undertakings were demanded from each of Wendy, David and Karl, by 17 February 2017, in substance, not to deal with any of the Trundle Properties or make drawings on any facility with NAB secured by the NAB mortgages and that Wendy not utilise the Enduring Power of Attorney to enter into any further personal or financial transactions other than for meeting John's personal livelihood and medical expenses (failing which an application for urgent interlocutory relief from this Court was foreshadowed).
2. It appears that this gave rise to concern that a caveat might be placed on the properties and a complaint that Rabobank had been notified of settlement instructions (contrary to the instructions that had been given by or on behalf of Wendy).

File note of 15 February 2017

1. There is in evidence a handwritten file note of Ms Hughes recording the following: 1. 15/2/17 1 hr 20 mins Telep. w Wendy + David + Karl She has read Phil Wallis lived together 22 yrs. WOT [Wendy] had spoken to John about transferring property to boys because of Nick and John very comfortable. W. very concerned about how Nick got information - from UPI/bank Informal lease 3 yrs to Rob Hellier (stock + station agent) for 300 acres Discussed operating account + overdrafts W. cannot stop using loan facilities because they are required for the day to day operation of the business, daily living exp's , + John'c are costs + running business 2. W + J got married late last yr + Nick is saying "how did she get him to sign" W. asked why mortgages not registered. Discussed John's opinion - would it be likely John didn't want Wendy to get any assets? W says John was male shovanistic [sic] + after his 1st marriage breakdown he wouldn't want Wendy to get anything. But would want assets to go to boys Karl + David ltr of confidentiality Not authorised to disclose any information pertaining to (entity) wout the express written authority of the parties,. I'm to draft a ltr(bare bones) for Wendy to use as a template. 3. W agreed to EPOA being sent W. confirmed that Nick is a bully to women + he used to ring @ time W was diabetic + calls were so distressing that it was literally "dropping" w / collapsing to ground + then W was diagnosed w diabetes, which explained sugar - collapsing 4/6/15 ASIC letter confirming key changes'appointment/cessation of Director + shareholding W. to scan _+ email to me ltr/dorro from Rabobank W. must keep using accts Wendy about to sell house in Parkes + hand over Trundle business W wants me to talk to Mark Accountant + see what he recommends
2. On or about 24 February 2017, Ms Hughes took instructions from Wendy as to her Will.

Commencement of 2017 Proceeding

1. Pausing here, it can thus be readily observed that this is one of those cases where each side's suspicions of the other appear to have been justified as events transpired. The suspicions harboured by Nick as to Wendy's likely conduct in relation to the farms, and vice versa, were equally borne: Wendy did indeed effect transfers of all of the Trundle Properties with the result that John's estate therefore retained no interest in the Trundle Properties (and they would not be available, depending on the date of John's eventual death, to meet any claim by Nick against the estate - say, for provision out of John's Will); and Nick, for his part, took steps (some years before the transfers of the Trundle Properties) that would have the result that Allawah Pastoral had priority (at least to the value of the alleged loans) as secured mortgagee under the unregistered mortgages in respect of the amounts the subject of the 2010 Transaction.
2. It is relevant to note that, as adverted to above, the circumstances in which the transfers occurred were that Wendy obtained legal advice from Ms Hughes (the solicitor who had taken over Mr Helby's legal practice) as to whether (and how) she could effect a transfer of the Trundle Properties into David's and Karl's names (as Ms Hughes put it, to give effect now to the provisions of John's Will) so as to put the Trundle Properties beyond the reach of Nick. Wendy's intention to that effect can be seen from Ms Hughes' contemporaneous file notes and correspondence between Ms Hughes and Wendy, including communication of the advice of a barrister in Sydney as to this issue. Ms Hughes (who did not give evidence in the proceedings) consulted with John's accountant (Mr Job) and with a barrister (as will be recalled, Mr Wallis), and also communicated with NAB (which was refinancing the loan) prior to effecting the transfers. Ms Hughes initially advised Wendy to transfer the properties to a trust but it appears that, after discussion with Wendy, the decision was made (in consultation with Ms Hughes) to transfer the properties directly to "the boys".
3. As also noted, as Karl was a minor at the time, and NAB would not lend to a minor, the transfers of Woolharinga, Nellyvale and Sunrise were to Wendy and David as tenants in common in equal shares, with Wendy bequeathing her interest in those properties to Karl such that upon her passing (then expected within months) David and Karl would own the Trundle Properties equally. It is said by the David/Karl interests that this intent is corroborated in Ms Hughes' notes (and as communicated to NAB). It is noted that the intent of equal sharing between David and Karl was also expressed in Wendy's Will dated 9 March 2017.
4. Relevantly, Ms Hughes advised Wendy that the Enduring Power of Attorney empowered Wendy to transfer title to the Trundle Properties, as occurred. Therefore, insofar as there is an allegation of fraud against Wendy (and the fraud exception to indefeasibility was, albeit faintly, pressed - see below) it is relevant to note that Wendy was clearly acting with the benefit of, and in accordance with, legal advice as to her ability to enter into the respective transactions.
5. The 2017 Proceeding was commenced on 15 March 2017. There were a number of interlocutory skirmishes in that proceeding, which it is not necessary here to recount.

Wendy's death

1. Wendy died on 26 August 2018 (after, as noted above, having given evidence on commission in the 2017 Proceeding).
2. On 15 December 2018, Angelena was granted probate of Wendy's Will and became the executrix of Wendy's estate.

Commencement of 2019 Proceeding

1. The 2019 Proceeding was commenced by statement of claim filed on 2 October 2019. Again, there were a number of interlocutory skirmishes in relation to this proceeding (which it is again not necessary here to recount).

Issues for determination

1. With the preceding in mind, logically in terms of the chronology of events, the issues for determination can be summarised as follows: 1. first, the challenge by the 2019 plaintiff to the 2010 Transaction and subsequent 2015 Transaction in relation to the "Bloodline™ Trusts"; and 2. second, the challenge by the 2017 plaintiffs to the transfers by Wendy of the Trundle Properties (and related claims, including for an account in relation to the use of John's assets by Wendy in her capacity as his attorney).

Deferred provisional ruling

1. Before turning to the assessment of witnesses and the issues for determination, it is convenient at this stage to deal with the provisional admission of a valuer's report that was tendered only during the course of the hearing (the Opteon Report). The David/Karl interests object to the admission of the Opteon Report for two reasons: first, that the Nick interests had had sufficient opportunity to prepare their case (and there had been orders made for the service of evidence which had long since expired); and, second, that no explanation had been given for not obtaining an expert valuer's report before the hearing.
2. More specifically, in submissions, the David/Karl interests point to the following procedural history of the matter in support of their objection to the tender of the Opteon Report.
3. It is noted that, on 12 September 2019, directions were made for the 2017 plaintiffs to serve by 8 November 2019 evidence upon which they relied (in chief) and by 31 January 2020 (evidence in reply); and that, on the same date, the case was tentatively fixed for trial; that, on 10 October 2019, the trial date was confirmed; and directions were made for the Nick interests to serve by 22 November 2019 evidence upon which they relied (in chief) and by 14 February 2020 (evidence in reply).
4. On 17 February 2020, the case was listed for a seven-day hearing commencing on 9 June 2020 and, on the same day, a 'guillotine order' was made, prohibiting the parties from serving further affidavit evidence without leave of the Court.
5. On 25 May 2020, the David/Karl interests' objections were served upon the Nick interests' solicitor. Objection was taken to the Herron Todd White (HTW) valuation report (the HTW Report) (in the evidentiary objections served shortly before the hearing, I might add) which, in terms, referred only to values in 2016. It is noted that no report, admissible or otherwise, had been obtained by the Nick interests in relation to present-day values (notwithstanding the claim for equitable compensation made in both the original and amended statements of claim).
6. In due course, at the hearing, the HTW Report was admitted (as to the fact of communication of the valuation, not its truth) on 9 June 2020 (at T 35.38-41), which is when Counsel for the Nick interests foreshadowed seeking leave to obtain and rely upon an expert report on that matter (see T 35.43-44). That issue was again raised on 10 June 2020 (see at T 179.19), on which occasion, I indicated that I wanted to hear what prejudice it was said would be suffered by the David/Karl interests if there were to be (as I was considering might be feasible) the appointment of a single expert valuer; and in response, on 11 June 2020, the David/Karl interests filed in court an affidavit from their solicitor, largely going to discretionary considerations against such a course (see T 181.29ff) (specifically, principally in relation to the anticipated delay that would be caused thereby but also as to cost if a shadow expert were considered necessary to be appointed). I made directions permitting an inspection to be undertaken and for the expert to provide a report and I indicated that no ruling on the admission of the report would be made until later (see T 185.17; T 185.45-186.5).
7. The David/Karl interests say that the admission of the Opteon Report requires leave being granted from the guillotine order made on 17 February 2020 (see at [191] above), some four months prior to the trial and over three years since the proceedings commenced (with the David/Karl interests here invoking the principles articulated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 (Aon)).
8. It is said (and I accept the force of this complaint) that the Nick interests have proffered no explanation for the failure to obtain an expert valuation report at an earlier time (although, as I apprehend their oral submissions, the likely explanation is that it was not until the evidentiary objection to the HTW Report that it was appreciated that it might be necessary). Indeed, particular reference is made by the David/Karl interests to the statement of the majority (Gummow, Hayne, Crennan, Kiefel, as her Honour then was, and Bell JJ) in Aon (at [103]) that: 103. … Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.
9. It is said by the David/Karl interests that, here, there is no explanation, that there is no evidence that the absence of such evidence was not the result of a deliberate forensic decision and no evidence of the circumstances which gave rise to the application so that those circumstances could be weighed against the effects of any delay (noting the objectives of the rules and the purpose of guillotine orders). It was submitted that there should be a requirement for an explanation from a party who is seeking relief from the consequences of a guillotine order and, failing the provision of such an explanation (which might then be tested in cross-examination), leave should be refused. It is further said that the Nick interests have had over three years properly to prepare their case, and so have had more than a reasonable opportunity to do so.
10. That said, the David/Karl interests ultimately indicated in closing submissions that they did not wish to obtain a shadow valuation report, did not contend that they suffered any prejudice in the Opteon Report being admitted into evidence, did not wish to cross-examine the author of the Opteon Report and otherwise had no other evidentiary objections to the contents of the Opteon Report.
11. Meanwhile, the Nick interests say that there is no substance to the objections raised by the David/Karl interests to the Opteon Report in circumstances where the David/Karl interests do not wish to obtain an expert report in response or to cross-examine the expert, do not object to the substance of the report and accept that they do not suffer prejudice by its admission (see [51] of the David/Karl interests' submissions in reply). It is submitted that the single expert report should be admitted into evidence as it assists in determining the real issues in dispute conformable with ss 56 to 58 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act).
12. Having regard to the fact that the David/Karl interests do not have any substantive objections to the single expert report, it is said that little is to be gained from the submission that the Nick interests were on notice from 25 May 2020 that the David/Karl interests were objecting to the HTW Report (that being just over two weeks before the hearing) and that, in the context, the course adopted in respect of a single expert report was appropriate with respect to s 56 of the Civil Procedure Act. It is noted that the single expert report is limited to the issue of quantum only, and that it will become relevant if there is a finding in favour of the Nick interests in determining the quantum of relief to be granted to John.

Ruling re deferred provisional ruling

1. There is no doubt that the Opteon Report was obtained very late in the course of the hearing (at the expense of the Nick interests) and there was no real explanation for the delay in obtaining such a report. I can only infer that it was due to the fact that it was not appreciated that reliance might not be able to be placed on the HTW Report. However, balancing that against the lack of any real prejudice to the David/Karl interests, the fact that it was obtained without delay to the finalisation of the hearing, and that its admission could be accommodated, having regard to the statutory mandate for the just, quick and cheap resolution of the real issues in dispute, I have concluded that it should be admitted.
2. I am fortified in this decision by the fact that, ultimately, it will not affect the relief that I consider should be granted in respect of Wendy's admitted conduct in exercising the Enduring Power of Attorney beyond power (as I explain in due course) or Wendy's not admitted, but as I have found, breach of fiduciary duty in the transfer of the Trundle Properties to herself and to David and Karl (as I also explain in due course).
3. Accordingly, I remove the provisional qualification on the admission of the Opteon Report (a report of Mr James Simpson).
4. I also pause here to note that, although there was some criticism (or at least implicit criticism) put in cross-examination of David and Karl as to the current condition of the Trundle Properties, it is also relevant to note that the area had been in drought for some time prior to the hearing (apparently causing the need to de-stock breeding ewes - see cross-examination of David and Karl) but that, other than an increase in the overdraft, David and Karl have managed (albeit they accept with a struggle and with the benefit of at least some moneys from the estate of their grandfather, Ken) to keep the Trundle Properties operating within the NAB facility limit of $600,000.

Credibility of witnesses

1. I turn then to the credibility of the witnesses.

Nick

1. It is submitted by the David/Karl interests that all witnesses who gave evidence in person, with the exception of Nick, were credible witnesses. However, the David/Karl interests say that Nick's evidence on any significant matter should not be accepted unless against interest, or unless it is corroborated by other credible evidence.
2. As to the issue of Nick's demeanour, the David/Karl interests refer to the observations of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 (see at [30]-[31]) as to the import of demeanour and the exhortation there for conclusions to be drawn, as far as possible, on the basis of "contemporary materials, objectively established facts and the apparent logic of events" (see at [31]).
3. More specifically, it is submitted that Nick was not a credible witness and that, on all significant factual matters, his version of events is not corroborated by any witness, contemporaneous document, objective fact or the inherent probability of events. It is said that, in cross-examination, Nick was frequently evasive, did not give direct answers to questions, volunteered material not the subject of the question and dissembled.
4. In this regard, the David/Karl interests point in particular to Nick's evidence that he had trouble contacting John because his phone was blocked. It is said that, to the contrary, Nick gave evidence that he contacted John on a number of occasions in the relevant period: by using his wife's phone (in May 2020 - see at Nick's Second 2019 Proceeding Affidavit at [26]; in June 2010 - see Nick's Second 2019 Proceeding Affidavit at [37]; in August 2010 - see Nick's Second 2019 Proceeding Affidavit at [48]; in September 2010 - see Nick's Second 2019 Proceeding Affidavit at [54]-[57]; in February 2015 - see Nick's Second 2019 Proceeding Affidavit at [68]; on further unspecified occasions - see, for example, T 87.26-31), by some unspecified means in May 2015 (see Nick's Second 2019 Proceeding Affidavit at [74]) and by simply driving to the farm (in February 2015 - see Nick's Second 2019 Proceeding Affidavit at [69]; in May 2015 with Mr Nipperess - see Nick's Second 2019 Proceeding Affidavit at [78]). It is noted also that Nick gave evidence that he saw John at the Allawah Forbes Property (in early 2010 - see Nick's Second 2019 Proceeding Affidavit at [11]; in May 2010 - see Nick's Second 2019 Proceeding Affidavit at [27]; in early 2015 - see Nick's Second 2019 Proceeding Affidavit at [58]), at Ken's (in early 2010 - see Nick's Second 2019 Proceeding Affidavit at [9]; in April 2010 - see Nick's Second 2019 Proceeding Affidavit at [20]-[21]); at the Club (in March 2014 - see Nick's affidavit sworn on 13 March 2017 (Nick's 13 March 2017 Affidavit) at [123]-[124]; in January 2015 - see Nick's 13 March 2017 Affidavit at [130]; in December 2015 - see Nick's 13 March 2017 Affidavit at [218]-[219]; in April 2016 - see Nick's 13 March 2017 Affidavit at [245]), by meeting him at the Club when told John was there by some of his friends (see at T 90.45-49) and by telephoning John via the Club (on 1 March 2015 - see Nick's 13 March 2017 Affidavit at [133]). It is noted that John went to the Club every afternoon at around 5 pm in 2015 and 2016, and would stay there for a couple of hours (see David 's affidavit sworn on 29 July 2017 at [26], Karl's affidavit sworn on 29 July 2017 at [20], and in the cross-examination of Angelena at T 232.29-31).
5. Furthermore, submissions are also made adverse to Nick's credit as to the fact that parts of Nick's affidavit evidence are nearly identical to parts of Mr Bailey's affidavit sworn a month prior to Nick swearing his own (reference here being made to Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40, citing Palmer J in Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674). The David/Karl interests say that Mr Bailey's affidavit was first in time and that he was an honest witness judging by his direct answers to questions and his willingness to make appropriate concessions, and that Nick's evidence (that his subsequent affidavit was the sole product of his recollection - see, particularly, T 60.14-16) cannot be believed. The David/Karl interests say that this evidence is self-evidently incorrect and is adverse to Nick's credit, as is the fact that that part of his affidavit is nearly identical to Mr Bailey's.
6. It is further submitted that the evidence of Nick that (despite being a bank officer for twelve years, and the manager of the Forbes branch of Rabobank for eight) he did not know that entering into the Bloodline™ mortgages would be a breach of John's earlier mortgages (see T 73.31-43, T 76.37-77.3) is not credible, noting that it was accepted that such terms are standard (see T 265.47).
7. Finally, it is said that Nick gave inconsistent evidence, specifically as follows: he said he did not know the loans were repayable on demand (see at T 93.22-24) despite having said he did know this (see, for example, T 72.30); and, in his first affidavit he said that all of the 2010 Transaction Documents were executed at the offices of Piggott Miller (see Nick's 13 March 2017 Affidavit at [108]) but later gave evidence that all of the documents were signed at his home except for the two statutory declarations (see Nick's Second 2019 Proceeding Affidavit [43]-[44]).

Ruling re Nick

1. As to the submissions made against Nick's credit, I accept that there were some inconsistencies (as identified above). However, to my mind, such criticism only goes so far. For example, in terms of the inability to contact John at his home, this is corroborated by the contemporaneous letter of 17 September 2015 in which Nick requested that Wendy remove the bar (see at [125] above) and, in any event, both David and Karl accept that Wendy told them she had placed a bar on Nick's phone.
2. As to the criticism of Nick's demeanour and the submission that he avoided directly answering questions, my observation was that Nick was wary in cross-examination and appeared to be cautious of being led into unintentional admissions. I formed the impression that this is the explanation for the difficulty in obtaining direct answers from Nick on various lines of questioning. However, I did not consider that Nick was not attempting to give honest evidence to the questions put to him.
3. While I accept that it is implausible that Nick, as a former bank officer (and indeed as a then bank manager at the relevant time), would not understand that entering into the Bloodline™ mortgages might be a breach of John's earlier Rabobank mortgages, I accept that he may not have turned his mind to this at the time.
4. As to the similarity in the wording of Nick's affidavit and that of Mr Bailey, this does give me pause. As noted in, for example, Rosebanner Pty Ltd v Energy Australia [2009] NSWSC 43 (and consider also, for example and albeit not in precisely the same context, the observations in Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731; [2005] NSWCA 110), where there is close similarity (or a "cut and paste") between witnesses' affidavits, then this can lead to a conclusion of collusion or at the very least to uncertainty as to what is in fact the witness' own recollection. However, here, there is little room to doubt that a presentation of the so-called "standard" form was given by Mr Ioannou at the 15 April 2010 meeting (see at [47]ff above) as to the Clearly Hoare Bloodline™ product and I draw no adverse inference from the fact that Nick's account of this so closely matches that of Mr Bailey.
5. It is well known that evidence of conversations with deceased persons must be scrutinised carefully (see Watson v Foxman (1995) 49 NSWLR 315 at 319 per McLelland CJ in Eq). The same must follow for evidence of conversations with those not now capable of giving their own evidence. Following, I therefore approach Nick's evidence with the usual caution in relation to his evidence of conversations with John (since John is not now capable of giving his own version of what was or was not said) and I treat with caution statements that are not corroborated and are in his personal interest, but I do not make any adverse credit finding against him.
6. I now turn to Wendy and her evidence.

Wendy

1. For the David/Karl interests, it is said that Wendy was a credible witness, noting that she made many concessions (for example, she freely admitted that she put a bar on Nick's phone, albeit she said that this was because she was tired of his abuse) and she freely admitted that one of the reasons for the 2016 transfers of the Trundle Properties was because of Nick.
2. It is said that Wendy's contemporaneous conduct bespeaks honesty. Most particularly, reliance in this regard is placed on the fact that she retained a solicitor (Ms Hughes) in relation to the 2016 transfers, told her all relevant matters including her desire to "effect John's Will now" (see Ms Hughes' contemporaneous file notes - excerpted above). It is noted that Wendy sent, via Ms Hughes, a copy of the Enduring Power of Attorney and John's Will to NAB before the refinance; and that what could and might be done was raised with John's accountant in September 2016 and Counsel's advice was sought and provided in September 2016 (again, see above).
3. It is noted that contemporaneous notes record Wendy's instructions that provision needed to be made for John's ongoing care "as long as he lives". While it is accepted that there is no legally enforceable mechanism which resulted from that instruction, it is said that the fault with that lies with Ms Hughes, rather than Wendy. It is noted that Ms Hughes discussed this with Wendy on 5 October 2016 and that the "boys" were to provide for their father (which they have in fact done).
4. It is said, again, that full disclosure was made to NAB. It is also said that Wendy was cognisant of, and willing to provide for, Sara's bequest of $200,000 in John's Will. It is noted that her evidence of her conversation with John in 2008 (in relation to Allawah Forbes Property) is factually accurate; and that her evidence of John's interests and hard-working nature is corroborated by all other witnesses, as was her evidence of John's respect for Ken and his "rough but generally jovial personality" (see Wendy's affidavit sworn on 10 June 2017 (Wendy's Affidavit) at [89]).
5. It is also said that Wendy cared deeply for John as evidenced by her contemporaneous conduct. For example, it is noted that, notwithstanding that John was in respite care in May 2016, the institution's notes record Wendy visiting him every day and showering him and taking him home for one day (22 May 2016). It is said that, together with David and Karl, Wendy provided for John's care needs without any assistance from Nick. Again, it is noted that Wendy instructed Ms Hughes that John's testamentary intention that Sara receive $200,000 be honoured.
6. The David/Karl interests say that when John saw Mr Helby in June 2015, Wendy's evidence is that she sat at the back of the room when the Enduring Power of Attorney was being initially discussed (without participating); that Wendy was absent when John signed the Enduring Power of Attorney, absent when John gave Mr Helby instructions in relation to John's 2015 Will (see Wendy's Affidavit at [101]-[107]) and absent when John executed that Will in the presence of Mr Helby on 9 October 2015 (see Wendy's Affidavit at [123]). It is said that such conduct stands in stark contrast to that of Nick. Further, it is said that, in general terms, Wendy's evidence accords with Mr Helby's contemporaneous letters and file notes (which, as noted, include Mr Helby taking instructions from John).
7. It is noted that, when Wendy first wished to transfer the Trundle Properties, Wendy did not try and hide that fact from John's legal and financial advisers; that Wendy spoke both to Mr Job and to the NAB officer; and, rather than seeking out a solicitor who was a stranger to John, Wendy first tried to retain Mr Helby (see, for example, Wendy's Affidavit at [149]) but Mr Helby had retired and Ms Hughes had taken over his practice, so Wendy retained Ms Hughes.
8. It is again emphasised that Wendy was quite open and honest about her reasons for the transfers (see, particularly, Wendy's Affidavit at [151]-[159]), namely: to defeat any claims by Nick and Sara (said to be a well-placed suspicion given that at that time there was still secret the 2010 Transaction and the 2015 Transaction); her concern that Nick would interfere in the running of the property; that there was no other source of income to provide for John's care needs (and Nick's history of contributing nothing towards John's care); that she then had a life expectancy of six months; and that John's Will (again, drafted and executed in front of Mr Helby in the absence of Wendy) provided that the properties were to pass to David and Karl (the two people most familiar with operating the farms) and thus would place David and Karl in the best financial position to provide for John.
9. It is said that Wendy was also open and honest in giving evidence that, if John did not own any property, then John's financial care needs would be less (see, particularly, Wendy's Affidavit at [159]).

Ruling re Wendy

1. As adverted to already, I did not have the benefit of seeing Wendy give evidence in person but I did have the benefit of the video recording of her evidence in Parkes (played in Court on 12 June 2020, each of Angelena, David and Karl excusing themselves, for no doubt understandable reasons, during the giving of that evidence) and Counsel for both sides were able to comment on aspects of Wendy's evidence and demeanour on that occasion. No objection taken to any of the questioning on that occasion was pressed when the matter was before me.
2. One observation in particular made by Counsel for the Nick interests was as to a lengthy pause at one stage in the course of cross-examination (before an objection was raised to the question) (see at T 277). It was accepted that Wendy was in extreme pain and discomfort and was having difficulty in the witness box, and it was noted that Wendy gave evidence at the beginning that one of the effects of the medication was the slowing of her memory (see at T 276.42-45).
3. My observation of Wendy was that she made no attempt to dissemble. She was blunt in her responses and accepted readily that she had taken the steps she did in order to prevent Nick from interfering with the Trundle Properties. I accept that she was an honest witness who gave her evidence as best she could in the circumstances.

David/Karl and ruling re David/Karl

1. There was no submission made to the effect that either David or Karl was not an honest witness. Indeed, the Nick interests rely on various of their answers (such as that each knew he was getting a substantial benefit from the transfers of the Trundle Properties without paying anything for the properties) as supportive of their claims in relation to knowing assistance and/or knowing receipt.
2. There was some suggestion in cross-examination that the affidavit evidence adduced from David and Karl was not in each of his own words (see, for example, the cross-examination of David as to his understanding of words such as "commensurate" in his affidavit). In this regard, I accept that it is highly likely that the affidavits were prepared on instructions from David and Karl, but not in their own words. That said, there is nothing to suggest that the affidavits do not in substance reflect their instructions or the substance of their recollection of relevant events.
3. Each of David and Karl gave evidence in a matter of fact and laconic manner. Without intending any disrespect, neither progressed in his schooling beyond Year 10 and both appear to be of low academic intelligence. David's evidence was to a large degree given in a monosyllabic manner; Karl's evidence was characterised to a large extent by answers that bespoke an assumption rather than an actual recollection (such as, "I would say", or that she or they "probably would have"), though it seemed to me that a genuine flavour of Karl's understanding of the situation was revealed by some of his answers (such as when he said that he thought it more likely that Wendy had changed banks because she did not want Nick to "stickybeak" into their finances and when he said that Nick had had nothing to do with them for 20 years so why would he suddenly want to have anything to do with them now).
4. Both readily admitted matters such as their receipt of substantial benefits as a result of the Trundle Properties transfers and as to their lack of independent assets. Likewise, both readily admitted that there was animosity between Wendy and Nick. Significantly, both said (and I accept this as being the most likely explanation of events) that they signed the relevant documents as instructed by their mother, Wendy. Neither professed any knowledge or understanding of the bookkeeping or accounts (and, again, I accept this evidence as truthful and consistent with their overall evidence).
5. I accept each of David and Karl as an honest witness genuinely endeavouring to assist the Court in the giving of his evidence. Relevantly, on the Barnes v Addy (1874) LR 9 Ch App 244 (Barnes v Addy) issues (which I discuss below), I find that neither had any actual knowledge of any fraudulent or dishonest design by Wendy in relation to the Trundle Properties transfers and neither received the benefit of those transfers knowing that there was any wrongdoing in the use of the Enduring Power of Attorney by Wendy in that regard. The fact that, inter alia, the transactions were effected with the benefit of legal advice, and to the knowledge of the incoming bank mortgagee, is to my mind fatal to any suggestion that David or Karl knew or ought reasonably to have known that there was any breach of fiduciary duty or wrongdoing on the part of their mother vis-a-vis their father. Indeed, I accept that their understanding is most likely to have been that Wendy was structuring John's affairs in the best interests of John and their family as a whole in light of her then contemplated to be imminent death, albeit that they knew that she was doing so in an attempt to prevent interference by Nick in relation to the Trundle Properties. The subsequent conduct of David and Karl in supporting their father in his care at the nursing home reinforces my conclusions as to their understanding of the arrangements their mother was putting in place at the time (and I note there was some feeling in the answer by David - at T 176.45 - when asked about Nick's contribution to his father's care, namely "not a cent").
6. I now turn to dispose of the issues for determination in each proceeding.

2019 Proceeding

1. I turn then to the issues in relation to the 2019 Proceeding, since they are logically anterior to the events and issues the subject of the 2017 Proceeding.
2. It is convenient first to consider the submissions for the 2019 plaintiffs (that is, the David and Karl interests).

David/Karl interests' submissions

1. The David/Karl interests plead a number of matters in challenging the impugned transactions.
2. First, various challenges are made to the import and effect of the impugned promissory notes, and associated transactions.

Promissory notes

1. First, it is said that the promissory notes are void and of no effect by reason of non-compliance with s 89(1) of the Bills of Exchange Act 1909 (Cth) (Bills of Exchange Act). Section 89(1) defines promissory notes as follows: A promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to or to the order of a specified person, or to bearer.
2. The David/Karl interests say that, here, neither of the notes contained any written term that the sums referred to therein would be repayable on demand or at a fixed or determinable time in the future. It is said that there was no "sum certain" specified in the documents when John signed them; and there was no statement that the notes would be repayable on demand or at a fixed or determinable future time.
3. More specifically, the David/Karl interests say that it is not in dispute that, when executed, no sum was stated in the notes (i.e., this was left blank) (as was the "amount" referred to in the resolution of directors and the loan agreements). Thus it is said that the notes were not "promissory notes" as defined.
4. In the alternative (if the notes were not void and of no effect for the above reasons), the David/Karl interest say that, upon the proper construction of the statutory declarations executed by John on 3 June 2010, the term "promissory notes" in the statutory declarations meant only promissory notes that complied with s 89(1) of the Bills of Exchange Act. It is said that, if that is correct, then there were no "gifts" of the two sums to Allawah Pastoral and that the effect of what happened is that John lent the sums to Allawah Pastoral (as opposed to them being gifts).
5. The significance of this is that Allawah Pastoral lent the same sums to John and, in doing so, the loans from John to Allawah Pastoral (and hence it is said that the loans from Allawah Pastoral to John) cancelled out the loans from John to Allied Pastoral (in that one repaid the other). In the circumstances, it is submitted that there were thus no cash advances from Allawah Pastoral to John pursuant to the terms of the loan agreements.
6. Further, in the alternative, the David/Karl interests say that, upon its proper construction, the term "cash advance" in cl 2.1 of the loan agreements did not include promissory notes that did not comply with the Bills of Exchange Act or the notes delivered by Allawah Pastoral to John. In those circumstances, it is said that there were no cash advances from Allawah Pastoral to John pursuant to the terms of the loan agreements.

Undue influence and/or unconscionability

1. Second, the David/Karl interests raise a claim based on undue influence and unconscionability. Specifically, it is said that the 2010 Transaction and 2015 Transaction, collectively if not individually, were the product of undue influence and unconscionable conduct (consisting of both Nick's conduct as pleaded in the statement of claim and the conduct of Cleary Hoare in 2010).
2. As to the Cleary Hoare advice, it is submitted that: in the case of the 2010 Transaction, this was deficient in significant respects; and, in the case of the 2015 Transaction, there was a total absence of legal advice in relation to the documents that Nick had John sign (by which, with Sara's contemporaneous resignation as principal, Nick gained complete control over the trust assets).
3. As a result, it is said that this outcome was not what John had instructed Cleary Hoare he wanted to achieve (assuming the evidence from Nick, Mr Bailey and Mr Ioannou as to the meeting of 15 April 2010 is accepted - see at [47]ff above); and not the subject of any advice from Cleary Hoare.
4. The David/Karl interests say that one view open on the documents is that Cleary Hoare was misled (intentionally or otherwise) by Nick as to various factual matters relevant to the 2010 Transaction and 2015 Transaction (see also cross-examination at, for example, T 89).
5. In any event, it is submitted that, even on the evidence led by the 2019 defendants, John received deficient and not truly independent legal advice from Cleary Hoare in relation to the 2010 Transaction (as particularised in the statement of claim at [24]-[25] and which it is said are largely admitted, on a practical level, on the evidence led by those defendants).
6. The David/Karl interests say that one striking feature of this matter is that, although Cleary Hoare advised John about "Bloodline™ Trusts" in general terms, Cleary Hoare never met with John, nor advised him orally or in writing, about the terms of the particular documents he signed, nor the practical legal effects and consequences which would arise from those documents when signed.
7. It is noted that Nick and Allawah Pastoral plead, in essence, that Cleary Hoare did not owe a duty to advise John of many of the matters pleaded (specifically, at [25] of the statement of claim in the 2019 Proceeding). The David/Karl interests submit that this is wrong in law but, in any event, they say that, whether or not Cleary Hoare was retained to give such advice, in an undue influence case the absence of advice on the matters pleaded is significant.
8. In this context, reference is made to what Kirby P, as his Honour then was, said in Stivactas v Michaletos (No 2) [1994] ANZ ConvR 252 (Stivactus v Michaletos) about circumstances where advice is given: … However, where advice is given, it must be both independent and effective for the purpose of enlivening the client's appreciation of the transaction, its legal effects and the alternatives (if any) which are open to the client. […] The fatal flaw in the procedures put in place by the appellant, to guard against just the kind of challenge which later eventuated, was the inability of the independent solicitor to establish that he sufficiently drew to the respondent's attention, so that she understood, precisely what she was doing, the alternatives which were available to her in law to effect her wishes, the comparative advantages of those alternatives and that she nonetheless preferred to transfer her properties to the appellant. It is worth noting that the transfers were kept secret from other members of the family - something unlikely to happen if they were the product of a fully informed mind, sure of its decision.
9. The David/Karl interests say that there is no dispute that Cleary Hoare was retained by both John and Nick (referring to the admission to that effect by the 2019 defendants in their defence at [6]). They submit that there was a conflict between the interests of those two clients and thus that Cleary Hoare was in a position of conflict. It is noted that John was the donor of substantial assets and that Nick was one of a number of (competing) beneficiaries.
10. Furthermore, it is said that, on the evidence, John received no legal advice at all from Cleary Hoare (or any other solicitor) in relation to the 2015 Transaction in which John relinquished all control he had over the trusts to Nick, one of the named (competing) beneficiaries of the trusts.
11. It is further said that there is no dispute on the evidence that John did not receive, nor was he advised to obtain, independent accounting advice in 2010 or 2015; nor that the 2010 Transaction and 2015 Transaction were kept hidden from Wendy, David and Karl until 10 February 2017 (referring to the correspondence from Cleary Hoare to Mr Helby in this regard).
12. The David/Karl interests say that the transactions were improvident from John's point of view; that John was ignorant of the consequences of entering into those transactions; and that, in substance, John was a volunteer and received no consideration.
13. It is submitted that the contemporary materials, objectively established facts and the apparent logic of events lead to the conclusion that John was the subject of undue influence and unconscionable conduct (or alternatively undue duress), and that the transactions should be set aside. Further, on the proper construction of the transaction documents, it is said that John owes nothing to Allawah Pastoral.
14. As to unconscionable conduct specifically, reference is made to Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81 (Blomley v Ryan), where Fullagar J listed (at 405) some examples of such disability "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary" and, more recently, Wu v Ling [2016] NSWCA 322 where Bergin CJ in Eq, with whom Leeming JA and Payne JA agreed, said (at [95]): 95. The circumstances affecting a party which may induce a court of equity to set aside a transaction are varied and cannot be satisfactorily classified: Blomley v Ryan per Fullagar J at 405. In Blomley v Ryan Kitto J said at 415: "This is a well-known head of equity. It applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands."
15. In this case, it is said that the most significant (but not the only) relevant factors were John's ignorance of legal matters, inexperience in transactions of the type entered into in 2010 and 2015, lack of assistance or explanation of the documents he signed in relation to those transactions where assistance and explanation were necessary, an aversion to "bookwork" and legal documents, a lack of independent legal and accounting advice, his lack of education and his complete dependence on others (in this case Ken and Nick and with whom he had some emotional dependence) to tell him whether he should sign the legal documents.
16. The David and Karl interests also draw attention to the point of principle that the special disadvantage is the inability of John to make a judgment as to one's own best interest and that a relevant "special disability" need not arise out of "sickness, age, sex, infirmity of body or mind, drunkenness [or] illiteracy". It is noted that complete dependence upon a trusted adviser can be just as much a disability for this purpose as the emotional dependence in Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 (Louth v Diprose) and Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 (Bridgewater v Leahy). It is said that the question to be answered is whether, by reason of John's reliance upon Nick, Ken and Cleary Hoare (individually or collectively) for advice, John was not in a position to protect his own best interests.
17. It is further noted that unconscionable conduct looks to the attempted enforcement or retention of the benefit of a dealing with John who was under a special disability. It is emphasised that unconscionable conduct is a ground of relief which will be available whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is taken of the opportunity thereby created; and that unconscionable conduct may consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances. It is also noted that the absence of immoral or dishonest motives is not sufficient to preclude equitable intervention, nor is it necessary to establish that the defendants actively sought to procure John's assent (although, it is nonetheless submitted that this is what happened in this case).
18. Furthermore, it is also submitted that equitable principles may be invoked to set aside a gift even where John was perfectly competent to understand and intend what he did, noting that the relevant question is not whether John knew what he was doing, had done, or proposed to do, but how the intention was produced.
19. It is next submitted that, if the transaction is not fair, just and equitable (and the onus of proving such falls on the 2019 defendants), then the transaction will be set aside.
20. In relation to undue influence, attention is drawn to the following principles. First, it is noted that, whether the grantor was perfectly competent to understand what he or she did or was of weak mind, is not determinative, as enthusiasm itself may be the result of the exercise of undue influence. Second, the character of the grantor, his age, physical and mental condition, education and intelligence may be relevant considerations. Third, it is noted that an intelligent person with a mind of his or her own may obtain relief if reliance is placed unquestioningly on a relative's advice. Fourth, it is said that a grantor's lack of experience in commercial or business dealings will be relevant; as will the fact that the transactions were shrouded in secrecy. Fifth, it is noted that ignorance of the consequences of the action is significant.
21. It is also noted that undue influence is concerned with the quality of the consent or assent of the weaker party. It is submitted that a presumption of undue influence arises where the donee is in a position to exercise dominion over the donor by reason of the trust and confidence reposed in the done and, if that presumption is found, the onus to rebut that presumption and to justify the retention of the benefit conferred. Following, it is said that this would require that it be shown that the conferral of the benefit was the independent and well understood act of someone in a position to exercise a free judgement based on information as full as the recipient.
22. In this regard, the David and Karl interests emphasise that: Cleary Hoare was not authorised to take instructions from Nick (see, particularly, the evidence of Mr Bailey at T 242.8-28 and Nick at T 64.40- 65.2); Nick was not authorised to give instructions to Cleary Hoare on behalf of John (Mr Bailey at T 242.8-28, Nick at T 64.40-65.2); Nick was also a client of Cleary Hoare (see the defence at [6]); and that there was an unrecognised conflict of interest. In that regard, it is also noted that Mr Bailey thought that there was no conflict because they (i.e., Nick and John) appeared to have a joint view of what they wished to occur (see, particularly, T 238.10-12), but that (it is said) Mr Bailey failed to look past the initial desires of John and Nick to the practical effects and consequences of John signing the documents, including who would control the trustee and how the controller(s) of the trustee might distribute the trusts' income and capital of these fully discretionary trusts. It is said that, once those practical effects and consequences are considered, the conflict is clear.
23. It is also noted that it was Nick who suggested to John that he and John should be directors of the trustee and that he, Sara and John should be the "controller of the trusts" (see Nick's Second 2019 Proceeding Affidavit at [27]).
24. Furthermore, emphasis is placed on the fact that none of the 2010 Transaction Documents was explained to John by Cleary Hoare or any other solicitor (see, particularly, Nick's evidence at T 66.43-45; T 83.18-21); and that Mr Ioannou, the senior lawyer at the 15 April 2010 meeting, assumed all necessary advice would be given to John later (i.e., that if John decided to pursue the transaction and before the documents were signed - see, particularly, at T 257.44-T 258.12), but that did not occur.
25. It is also said that the evidence of Nick, Mr Ioannou and Mr Bailey as to what was said at the 15 April 2010 meeting, and Nick's and Mr Bailey's evidence of what happened subsequently, establishes that John was not given any proper legal advice. In particular, it is noted that John was not advised as to the following matters: as to the meaning and effect of the significant terms of the documents he was signing; that his execution of the mortgages would constitute events of default under his 1999 and 2008 mortgages with Rabobank; that the 2010 Transaction Documents did not give effect to his express desire to protect the Trundle Properties for his children (other than protecting a sum of money, which was not John's stated intention); of the matters he should consider, and the implications of his ability to allow for succession of control of the trust, and his ability to nominate successor principals (see Ioannou Affidavit at [32]); as to the powers of the directors of the trustee (see, particularly, Mr Bailey's evidence at T 243.36-40); that, if Nick became sole director of the trustee, he would have full power, subject to the laws of New South Wales, as to whom to distribute the income and capital of the trusts (see, particularly, Mr Bailey's evidence at T 243.42-46); as to the practical consequences for the operation of the trusts should John pass away or become mentally incapable (see, particularly, Mr Bailey's evidence at T 245.18-29); as to the practical effect of the 2010 Transaction Documents on John's testamentary intentions and abilities (see, particularly, Mr Bailey's evidence at T 245.31-34); and as to the loan terms relating to repayment on demand, and the liability for interest and capitalisation of interest (see, particularly, Mr Bailey's evidence at T 245.36 - T 246.9).
26. In this connection, it is noted that Nick admitted that, at the time of the 2010 Transaction, John was entitled to know the full practical consequences of signing the documents (see T 83.31ff). Similarly, complaint is made that Cleary Hoare never provided John with the "comprehensive letter of advice confirming the processes and the consequences and benefits" that Cleary Hoare told Nick would accompany the documentation (see at [66] above).
27. It is further said that Nick was given negligent advice by Cleary Hoare that mortgage duty did not have to be paid within three months of first execution of the mortgages. It is noted that no instructions as to who were to be the directors and shareholders of the trustee were given by John at the 15 April meeting (see, particularly, Mr Bailey's evidence at T 242.41-44).
28. It is also emphasised that the signing of the documents was kept secret from Wendy, David, Karl and John's accountant (as will be recalled, Mr Job) until February 2017; and it is contended that, in substance, John was a volunteer.
29. Further, it is noted that John received no independent accounting advice (see defence at 36) and that, although John had retained Mr Burke, solicitor, in relation to the 2008 Allawah Forbes mortgage, Nick did not suggest that John should see him before executing the documents.
30. Other features to which reference is here made are as follows: it is said that John's understanding of the 2010 Transaction Documents was, even on Nick's evidence, grossly incomplete; that all John knew was that the Bloodline™ transactions would protect him if Wendy left him; and that John did not express any understanding or knowledge of all the other practical legal effects the 2010 Transaction Documents would have for him including the effect on his testamentary objectives. It is said that Clearly Hoare was grossly negligent in taking instructions from Nick when the firm was not authorised to do so and this was known to Nick.
31. More particularly, it is noted that, to the knowledge of Nick, Clearly Hoare gave no advice to John as to the terms and effects of the documents he was signing. Reference is made to Bridgewater v Leahy where Gaudron, Gummow and Kirby JJ said (at [100]): 100. Where the complaint is of unconscionable dealing, the point is rather different. As Manning J put it in Re Levey; Ex parte Official Assignee, "the Court does not allow any person to take advantage of any known weakness of the vendor" and the Court asks whether that party had "the opportunity" of professional advice as to "the effect of what he [was] doing". This denial of the opportunity to have "the assistance of a disinterested legal adviser", rather than speculation as to what might have followed had it been pursued, is an element in the unconscientious conduct in respect of which equity intervenes to deny the entitlement of the disponee to retain the property in question, unless the disponee shows the disposition to have been "fair, just and reasonable". [Footnotes omitted]
32. In the present case, it is said that such advice as was given was not independent; that the 2019 defendants admit that both John and Nick retained Cleary Hoare and that it is obvious that their interests were in conflict and hence John did not have the assistance of a "disinterested legal adviser".
33. It is said that a presumption of undue influence arises in this case as a result of the following circumstances which are said to establish John's reliance on Ken and Nick as advisers in relation to the legal agreements he signed.
34. First, that when it came to legal agreements, Nick (and Ken) were dominant and John subordinate. It is noted that, in assessing that matter the High Court said in Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 (Kakavas) (at [144]): 144. It is pertinent to note here the observations by Dawson, Gaudron and McHugh JJ in Louth v Diprose that proof of the interplay of a dominant and subordinate position in a personal relationship depends, "in large part, on inferences drawn from other facts and on an assessment of the character of each of the parties"… [Footnotes omitted]
35. Following, emphasis is placed on the evidence that John frequently signed documents without reading them (see, for example, Wendy's Affidavit at [82]; Karl's oral evidence at T 193.40-48). It is also said that, as conceded by the 2019 defendants, it probably was the case that John did not read the legal documents in detail. It is said that this accords with the evidence that: Ken had done John's clerical and administrative work for the farming and grazing business (see Wendy's Affidavit at [31]) until 2007 (see Wendy's Affidavit at [39]) when Wendy took over with the assistance of John's accountant, Mr Job (Wendy's Affidavit at [40]-[46] and [80]); that John left the attempted 2009 refinancing of the Rabobank facility (to NAB) to Wendy (see Wendy's Affidavit at [58]-[60]); and that, when required to sign any bank documents, John would tell Wendy that she should read them and tell him if they were in order (see Wendy's Affidavit at [80]). It is said that this is also consistent with Wendy's evidence that John did not know that what he signed in 2008 included a mortgage over the Trundle Properties (cf Wendy's Affidavit at [60]-[62]); and consistent with Mr Nipperess' description of John as being not "book-smart" (at [34]). It is similarly noted that Mr Nipperess' evidence is that Ken and Nick were "more 'book-smart'" (at [23]), that Nick was very much like Ken, but both Ken and Nick were very different to John.
36. In the circumstance that John did not read legal documents before signing them, the David/Karl interests say that it becomes significant that it was Ken and John who suggested that John find some way to protect himself from Wendy (see Nick's Second 2019 Proceeding Affidavit at [6]; [9]); that it was Nick who found Cleary Hoare; that Nick and Ken accompanied John to the 15 April 2010 meeting; that it was Ken and Nick who (after that meeting) said that John should proceed with the "Bloodline™ Trust" transactions (see Nick's Second 2019 Proceeding Affidavit at [17]); and that Nick then purported to explain the effect of the 2010 Transaction to John. It is said that that explanation was, as Nick must have known, grossly incomplete and that Nick pushed John towards signing the documents (see, for example, Nick's Second 2019 Proceeding Affidavit at [18]-[22], saying that "you've got to be prepared to sign up") at the end of which it is said that John expressed an obviously grossly incomplete understanding of the full effects and consequences of what he was signing.
37. Thus it is submitted that the presumption of undue influence that arises from those circumstances has not been rebutted. Indeed, it is said that the evident inability of John to make a judgement as to his own best interests is illustrated by Nick's constant reference to "we" in his evidence and cross- examination. It is noted that, as Nick saw it, he, Ken and John were one, Cleary Hoare was advising that group (see, in particular, Nick's evidence at T 59.17) and were putting into effect what the group desired, not what John wanted or what was in John's interest (see also at T 58.12-14; T 59.44ff).
38. The David and Karl interests also here point to the fact that there were two trusts, supposedly so that John's pre-relationship and post-relationship assets could be protected differently, but that neither trust was so constructed. It is said that, in all matters of substance, the trusts are identical and do not refer to pre-relationship and post-relationship assets (and that Mr Bailey conceded as much in cross-examination).
39. Even had the trusts differentiated between the assets in accordance with the diagram that is in evidence, it is said that this diagram is inaccurate. For example, although the diagram notes Garden Vale and Allawah as pre-relationship assets, the David and Karl interests point out that those farms were acquired by John, to Nick's knowledge, in 2007 and, in that sense, are post-relationship assets (see Ex 3). In that way, it is said that Nick misled Cleary Hoare as to which properties were prior to, and post, John's relationship with Wendy.
40. It is also submitted that the 2010 Transaction Documents were not fair, just or equitable. Specifically, when combined with what occurred in 2015, it is said that the transactions (as a whole) gave John no legally enforceable protection to have the assets used for his own benefit (should he become mentally or physically incapable or both), or for whatever reason ceased to be a director of the trustee, and provided no legally enforceable protection for his testamentary objectives.
41. In this respect, reference is made to what Allsop P, as his Honour then was, said in Johnson v Smith [2010] NSWCA 306 (at [6]): 6. … Here, in the circumstances, the transaction could not be characterised as just, fair and reasonable if the transfer from the disadvantaged mother gave her no legally enforceable protection to have the moneys used if necessary for her own benefit…
42. Ultimately, the submission made is that John signed the 2010 Transaction Documents because he was urged to do so by Ken and Nick who desired that he do so; he was in the habit of signing legal documents put before him; the documents were not the subject of any legal advice and were not even properly explained by Cleary Hoare or Nick; he did not understand them; and the documents had disastrous financial implications for John which were never explained to him. It is said that all of this was known to Nick.

John's resignation in 2015

1. As to the 2015 documents effecting to John's resignation, in addition to the above, it is said that, to the knowledge of Nick at or prior to John signing those documents: Nick had a concern over John's mental capacity (see, particularly, at T 86.32-38), which concern was not attempted to be addressed by Nick; Mr Bailey gave some advice to Nick as to steps that could be taken to satisfy himself that John had capacity (see Mr Bailey's evidence at T 251.10 - T 252.19), none of which Nick attempted to take; Mr Bailey volunteered to visit John, an invitation Nick did not take up; John received no legal advice from Cleary Hoare or any other solicitors in relation to the 2015 Transaction; and the signing of the 2015 Transaction was kept secret from Wendy, David, Karl, John's usual accountant (Mr Job), the solicitor (as will be recalled, Mr Burke) John had previously retained and Mr Helby.
2. It is said that Nick knew that the effect of what John was signing was to remove John as a director of the trustee, and as a principal under the trusts (see T 92.22-28); and that he also knew (as Cleary Hoare knew) that, with Sara's (subsequent) resignation, he was sole principal (see T 92.44ff).
3. It is submitted that the conflict of interest that Cleary Hoare had at this time was extreme; namely, that the firm advised one client (Nick) and armed that client with the documents which, in effect, transferred the other client's (John's) assets entirely to Nick's control.
4. I now turn to consider the submissions made for the Nick interests.

Nick interests' submissions

1. The 2019 defendants (as will be recalled, Nick and Allawah Pastoral) maintain that the 2010 Transaction were, and remain, legally valid and effective. It is emphasised that they were commercial transactions and that, at the time, there was no suggestion that John had any lack of mental capacity (pointing also to the evidence that John was a man that spoke his own mind, did not suffer fools and was adamant that Wendy would not sign anything and was not to know about the meeting).
2. It is also noted that, under the respective trust deeds, if John lost capacity, as a principal he was automatically removed (see cl 9.11.5) and, if he were the sole principal, his powers would be exercised by his legal personal representative (under cl 9.7). It is said that John could also make the appointment under cl 9.6 (though, I interpose to note that it is difficult to see how that could be done after he lost capacity).
3. It is noted that at the time of establishment of the "Bloodline™ Trusts" (referred to, apparently interchangeably, in the submissions as the Bloodline® Trust and Bloodline®(No.2) Trust as well as the "Bloodline™ Trusts"), John's Will nominated Nick and Sara as executors/trustees, being his personal legal representatives on his death. It is said that it is not coincidental that those same persons were joint principals of those trusts, nor is it coincidental that those children of John's who were of age became principals and therefore controllers of the trusts.
4. The Nick interests say that it fails logic to suggest that Nick would exert undue influence, or engage in unconscionable conduct, to include his sister as a joint co-principal where he could have excluded her (noting that Mr Bailey had suggested that John and Nick be principals but that Nick had included Sara). It is said that Sara resigned as principal of her own volition and that it is not alleged that Nick pressured Sara to resign.
5. Pausing here, I note that the evidence as to Sara's involvement, from Nick, seems to be that Sara did not want to be involved and did not want confrontation with Wendy - hence it might well be that he did not anticipate any resistance or active participation from Sara even from the outset; but this is no more than speculation and I draw no conclusions one way or the other from her lack of involvement.
6. As to the unconscionable conduct and undue influence allegations, it is said that it is common ground that John was an intelligent, capable businessman who operated an efficient, successful farming business over a long period of time, and who studiously kept abreast of material financial considerations in respect of the business, including weather, local news, reports on prices and the like.
7. Again however, pausing here, I have already noted that there is a dispute as to John's experience as a businessman, albeit that it is not disputed that he was a good farmer and it is not disputed that he kept up to date and was mainly interested in rural affairs.
8. Reference is made to Nick's affidavit evidence as to attending the offices of Yates Baker McLean Accountants with his father and grandfather (see Nick's Second 2019 Proceeding Affidavit at [105]-[115]), there being at least one meeting per year, sometimes two, to discuss both the farm accounts and tax planning, in which Nick says that John was an active participant and demonstrated an understanding of financial matters on a more strategic level than simply book-keeping.
9. Nick also says that John was familiar with the running of a company, having been a director of Jowenkenbe Pty Ltd, the family company which held Allawah and Garden Vale and transferred those properties to John on 18 December 2017 for nominal consideration. It is noted that John, Ken and Ken's wife, Bertha, were directors and shareholders of the company from establishment on 1 May 1974 until deregistration on 23 September 2008. I note, however, that there is nothing to shed light on what John did or understood in relation to company affairs in this period.
10. The Nick interests say, as I have adverted to above, that it is also common ground that John had his own independent mind, spoke his mind, made his own decisions and did not suffer fools. It is said that John made significant financial decisions without informing Wendy, or informing her only of the fact that he had made a decision. Again, that, however, does not address questions of John's understanding of what he was there entering into and its implications for him in the future.
11. The Nick interests submit that John attended the 15 April 2010 meeting (driving some distance to do so) with an independent mind and his own free will. In particular, reference is made to the following exchange in the cross-examination of Mr Ioannou (at T 259.20-22; T 260.10-12): Q. Can I ask you, you did watch John Turner, that is observe him, to see whether you could pick up any signs of pressure or anxiety? A. Yes, I did. […] A. Well, I, I guess in my mind, the - I,I worked on the basis that he attended the meeting free - of his own freewill, he proceeded and, and, and he signed the documents…
12. It is said that this accords with Mr Ioannou's affidavit (see at [16]-[18]), in which he said (at [18]) that, had be sensed some pressure or anxiety on the part of John, he would have followed his usual practice and removed Ken and Nick, "because the assets were owned by John and the "Bloodline® Trust" strategy was intended to deal with John's assets". Mr Ioannou's evidence is also that he does not recall ever having to do that when meeting any "rural prospective client".
13. Pausing here, it is clear that at this meeting, therefore, Mr Ioannou was viewing John (at least if not also Nick and Ken) as a prospective client (consistent with the fact that no costs retainer or client agreement had been prepared by then, let alone signed).
14. Reference is also made to Mr Bailey's affidavit (at [21]; [92]; [93]). Most relevantly here, Mr Bailey has deposed (at [94]) that: 94. Nick did not appear to have any undue influence over John at any time. The concerns raised by John are common concerns within the rural sector, and I cannot recall a meeting with a farming client where they have not expressed a desire to keep the farming and within the family. This is particularly true with respect to farming land that has been held for long periods of time
15. Following, emphasis is placed on the fact that, at this meeting, the solicitors had no sense of John being overborne or subject to pressure. It is noted that Mr Bailey was not cross-examined on his statement that he did not observe Nick exerting undue influence over John at any time.
16. Again, pausing here, as I have already adverted to, I place little weight on the evidence of Mr Bailey and Mr Ioannou as to their observations of John in this meeting and their opinion as to his understanding of the concepts there explained. To my mind, unless they tested this understanding at the time - say, by asking John to explain what he understood - the lack of a question or perplexed look by John would be equally consistent with him simply acceding to the propositions being put to him and not rocking the boat, so to speak, with his son and father. Indeed, the complaint by Counsel for the Nick interests that the basis for Mr Helby's certification of the Enduring Power of Attorney or acceptance of instructions from John cannot be tested in the usual way reinforces the difficulty of relying on the evidence of the kind given by Mr Bailey and Mr Ioannou as to their perception of John's understanding of the trust concepts there discussed. To my mind, it is hardly a secure foundation on which to form a view in hindsight as to John's understanding and, in any event, there is no evidence at all to suggest that John was told, let alone understood, that the effect of what he was doing might be that he could potentially be in a situation where he had no control over his assets and his ability to provide for himself was subordinated to a claim by a company (now one in which he has no interest at all and certainly no control) to recover almost the entire value of his properties. Put in those terms, the improvidence of the transaction is striking, and it highlights the need for this to have been carefully explained to John.
17. However, I do note that the Nick interests refer in this context to Mr Bailey's evidence that Mr Ioannou explained the main positions within a trust relationship and operations of the structure, the nature of a discretionary trust, including beneficiary rights and lack of interest in trust assets, the role and power of a principal and that there should be more than one, that repayment and interest are payable on demand and that mortgages could secure the loan. Mr Bailey's observation was that John listened attentively and, when Mr Ioannou asked John if he had any questions, John stated "No" (see Bailey Affidavit at [34]-[36]); and to Mr Ioannou's evidence that he did not recall John asking any questions and it was his usual practice to stop if he felt that the person was lost (see Ioannou Affidavit at [49]). Again, I make the same comment as earlier in this context.
18. Pausing here, as to the submission by the Nick interests (see, for example, at T 435.22ff) that the 2010 and 2015 documents were commercial documents or reflected a commercial understanding or agreement, it is said that although the 2010 and 2015 documents are similar to commercial documents, the transactions themselves were not for a commercial purpose, and hence it is submitted that it would be incorrect to interpret anything which was done as being "commercial". It is said that there was no "understanding and agreement" as submitted by counsel for the Nick interests (see at T 435.23).
19. In amplification of the preceding, the Nick interests say that all parties (John, Nick, Mr Ioannou and Mr Bailey) understood, and acted on the basis that, all communications were to go through Nick, and not John. It is noted that, at all times, John did not operate an email account and John expressly stated that he could not be contacted by solicitors. It is said that the only possible way communication could occur was through Nick, whether by email or telephone; and that when something important occurred, Nick called John to arrange a meeting to discuss it; and, likewise, when important documents were sent, Nick arranged a meeting with John so that he could review the documents.
20. In response to this, the David/Karl interests say (and I accept) that it is clear that the senior lawyer present (Mr Ioannou) regarded the meeting as being an "introduction" to the Bloodline™ product (his view being that, if John desired to pursue the Bloodline™ trust arrangement, "further instructions" would be taken from John - see T 257.44-50). It is said that this is consistent with the fact the costs agreement was not sent to, nor signed by, John until after the meeting. Emphasis is placed by the David/Karl interests on the evidence that Cleary Hoare (to its knowledge and to the knowledge of Nick) was not authorised to take instructions from Nick. It is said that it follows that Nick was not John's authorised agent, that John did not clothe Nick with ostensible authority and nor did Mr Bailey allege that he took instructions from Nick on the basis of ostensible authority. The David/Karl interests say that Mr Bailey wrongly took instructions from Nick when he was not authorised to do so. It is submitted that nothing that Cleary Hoare did after the 15 April 2010 meeting (including entering the figures into the promissory notes and loan agreements, which Mr Bailey did - see Bailey Affidavit at [68]-[69]) was authorised by John and that this was to the knowledge of Nick.
21. Returning to the Nick interests' submissions, it is said that John had a loving and mutually respectful relationship with his father, Ken, and a loving, mutually respectful and trusting relationship with his son, Nick (neither proposition of which appears to be disputed). It is said that the relationship between John and Nick extended further than familial affection when they entered into a farming partnership, which included the purchase of real property; and that, at the time, John's trust and confidence in Nick was such that Nick was a signatory to John's loan account with Rabobank. Further, it is noted that the purchase included an additional loan to which John and Nick were jointly liable and John had granted security over a portion of his real property, demonstrating (it is said) John's affection, confidence and trust in Nick and also John's willingness to benefit his children.
22. Pausing here, to my mind, all of this reinforces the contention by the David/Karl interests that there is a presumption of undue influence arising out of the close relationship of trust and confidence.
23. The Nick interests also place emphasis on the fact that John consciously excluded the properties known as Allawah and Garden Vale, which included the family homestead, from the list of security with respect to the additional loan (and that this exclusion continued with respect to the particular transaction documents). Likewise, emphasis is also placed on the history of the intergenerational transfers of the Trundle Properties. It is noted that, in April 2010 at the time of the meeting with Cleary Hoare, John's then testamentary intentions were recorded in his last Will by which John gifted his entire interest in both realty and personalty to his four children equally (and nothing was gifted to Wendy). It is said that John's testamentary intentions were that his property was to go to his bloodline and stay in the Turner family as the properties had been since 1921. Again, pausing here, that does not, however, explain how there is not an inconsistency between the two "Bloodline™ Trusts" and a testamentary intention that all four children benefit equally under the Will.
24. The Nick interests say that the 15 April 2010 meeting (attended by three generations of the Turner family) was a meeting where the three family members had a joint view as to what they wanted to achieve. It is said that John's instructions to Cleary Hoare during the meeting (being the sending of documents to Nick, as opposed to himself) was rational, in that John did not want Wendy finding out and John had a trusting business relationship with Nick and trusted Nick to pass on information and/or documents in a straightforward manner. Interestingly, to my mind, emphasis is here placed on the fact that Nick was intelligent, university-educated and experienced with financial matters - those being aspects of the case that the David/Karl interests rely upon as supporting the presumption of undue influence.
25. Insofar as the 2019 plaintiff alleges that a presumption of undue influence arises against Allawah Pastoral in respect of John's entry into the relevant transaction documents, the Nick interests say that John was a director of Allawah Pastoral, together with Nick, and an equal shareholder with Nick. It is said by the Nick interests to be unclear on what basis, whether presumptive or otherwise, Allawah Pastoral is alleged to have exerted undue influence on its own director and equal shareholder.
26. Pausing here, I note that, in reply submissions, the David/Karl interests say that Allawah Pastoral is not only a necessary party to the proceedings but also it is a party against which lies a case of unconscionability or undue influence. In that regard, it is noted by the David/Karl interests that unconscionable conduct looks to the attempted enforcement or retention of the benefit of a dealing with John who was under a special disability (citing Bridgewater v Leahy at [74]); and that, here, Allawah Pastoral (now controlled solely by Nick) seeks to retain the benefit of the 2010 Transaction and 2015 Transaction with John and enforce the dealings with John by pressing for a sale (referring to T 435.38) and taking the proceeds of sale ahead of John's care needs.
27. Meanwhile, the Nick interests say that the 2019 plaintiff must establish that, as at entry into the transaction documents, Allawah Pastoral was controlled solely by Nick and that Nick overwhelmed John as his common director. It is noted that there is no allegation that Nick was the sole controlling mind of Allawah Pastoral, that Allawah Pastoral was established at the time of entry into the transaction documents (thereby precluding an antecedent relationship) and that there is no evidence of any decisions made by Allawah Pastoral post entry into the transaction documents which may indicate undue influence. It is thus said that there is no pleading of the material facts upon which a claim of undue influence against Allawah Pastoral can be made out and that the claim is without basis and ought not have been brought.
28. Pausnig here, to this, the David/Karl interests say that the actions of Nick are imputed to Allawah Pastoral to the extent that Nick was a director of that company and his knowledge (in this context) was the knowledge of Allawah Pastoral. Therefore, it is said by the David/Karl interests that what is true of Nick's knowledge and conduct is equally true of Allawah Pastoral.
29. I note that similar submissions are made as to the allegation that John's execution of the resignation documents was obtained by Allawah Pastoral's undue influence. Additionally, it is said that, at the time of executing those documents, John was aware that he was not able to continue managing his affairs and requested that he be removed from the trust and cease to have any role. It is said that it is not to the point that John did not receive proper or independent legal advice as to the nature of either the transaction documents or resignation documents, in circumstances where Allawah Pastoral also did not receive such advice. It is said that the effect of this is that, upon execution of the documents, the parties to those documents relied upon the same advice.
30. It is also said to be not to the point (cf the allegation by the 2019 plaintiff) that the 2010 Transaction Documents are ineffective. It is said that the parties to those documents executed those documents on the belief that they were effective; and, if ineffectual, it does not give rise to unconscionable conduct. It is noted that it is not alleged by the 2019 plaintiff that John lacked capacity to execute both suites of documents, nor is it alleged that John's position as director and equal shareholder of Allawah Pastoral was overwhelmed by Nick.
31. The Nick interests say that John attended the 15 April 2010 meeting voluntarily, executed the 2010 Transaction Documents voluntarily (after having driven approximately 70 kilometres to do so) and that he later requested that he be removed from the trust and cease to have any role.
32. As to the position of Nick, it is said that there is no allegation that Nick was the sole controlling mind of Allawah Pastoral and it is noted that Nick relied upon the same (or same lack of) advice in respect of the 2010 Transaction documents as John. It is said that Nick was in no better position than John to assess whether the impugned documents were prudent and effective.
33. As to the resignation documents, again, it is said that John was aware that he was not able to continue managing his affairs and requested that he be removed from the trust and cease to have any role; and that, continuing with John's instructions as to preclude Wendy from the dealings, Wendy was unaware of those documents.
34. Furthermore, it is noted that, in around March 2015, Nick met with John and: provided the draft 2015 resignation documents to John for his review; informed John that he made an appointment for John to see his regular solicitor (Mr Burke) about signing the documents and preparing a Will and Power of Attorney, and John refused. It is said that no pressure was exerted upon John by Nick to sign the documents and no further meeting was held for around two months.
35. Aside from the share transfer form, it is said that the resignation documents went no further than would ordinarily occur in the event John did in fact lose capacity; namely, his removal as principal and removal as director.
36. As to the share transfer form, it is said that, absent its execution, John's shares would fall to his estate to be managed by his attorney (not yet appointed) and/or executor and trustee under his Will; and that, at the time, the nominated executor and trustee was Nick and his sister (as will be recalled, Sara), jointly, who were also the remaining principals.

Determination

1. First, it is desirable to consider the issues raised as to the efficacy of the 2010 Transaction Documents. It is convenient, at this stage, to consider the nature of promissory notes.
2. At the outset, I note that the codification of the law relating to bills of exchange is described by the learned author of Riley's Annotated Bills of Exchange Act and Cheques and Payment Orders Act (4th ed, 1994, LawBook Co), as follows (at p 11): By 1878 there had developed a body of English law relating to bills of exchange, cheques, and promissory notes which was contained in some 2,500 cases and seventeen statutes. It was peculiarly adapted to codification, because it was so largely precise and formal. In that year Mr (later Sir) Mackenzie Chalmers published a Digest of this law. He subsequently received instructions from organizations of bankers and merchants to prepare a draft Bill, which was introduced into Parliament in a form which did little more than codify the existing law. It was referred to Select Committees of both Houses, a few amendments were made which altered the law or settled doubtful points, and the Bill duly became the Bills of Exchange Act, 1882 … … By 1890 all the Australian Colonies had passed Acts closely following it, and it has now been adopted in substance by most of the English-speaking world. The Parliament of the Commonwealth of Australia … enacted in 1909 the Bills of Exchange Act 1909, which on coming into force superseded, with respect to bills of exchange, cheques, and promissory notes drawn or made thereafter, the relevant existing State legislation …
3. I have already excerpted (see at [240] above) the statutory definition of a "promissory note" as provided by s 89 of the Bills of Exchange Act.
4. It is relevant also to note that, by s 95 of the Bills of Exchange Act, the statutory provisions applicable to bills of exchange, subject to certain matters which are not here relevant, apply mutatis mutandis to promissory notes.
5. As to the legislative provisions regulating that a note record a defined time for repayment, I note that it has been held that a promissory note must specify either that it is payable on demand, or at some future time. If the latter, then it has been held that the specified time must be capable of being determined with certainty or at a fixed date. For example, in Williamson v Rider [1963] 1 QB 89; [1962] 2 All ER 268 (Williamson v Rider), a note specifying that payment was to be made "on or before" a specified date was held to be invalid (and, see also Gore v Octahim Wise Ltd [1995] 2 Qd R 242 (Gore), which I consider below).
6. With this said, there does seem to be some controversy in the authorities as to whether a note which specifies a date on which the maker must repay the principal, but thereby confers on the maker a discretion to make payments from time to time prior to that date, is a "promissory note" for the purposes of the Bills of Exchange Act (or equivalent legislative regimes).
7. So, for example, the plaintiff in Vidler v Sallaway (1862) 1 SCR (NSW) 246 sued upon an instrument under which the defendant promised to pay the plaintiff (or bearer) a specified sum "on or before September 1861". Stephen CJ held that the instrument was not a valid "promissory note", stating (at 247): … in my opinion, this instrument is not a promissory note at all, but an agreement by the defendant to pay this money in all September, that is on any day in September, at the defendant's option, and would be satisfied by a tender of payment by the defendant, on any day before the end of that month. But the uncertainty as to the day of payment prevents this instrument from operating as a promissory note.
8. Wise J substantially agreed with the learned Chief Justice, while Milford J dissented, stating (at 247): Although I do not consider the case free from doubt, the tendency of my opinion is that the words 'on or before September,' ought to be construed most unfavourably to the party using them, and, therefore, that the instrument is a promissory note payable on the first day of September.
9. In Crouch v The Credit Foncier of England, Ltd (1873) LR 8 QB 374, a company, Credit Foncier, issued debentures, in each of which it promised as follows: … subject to the conditions indorsed on this debenture … to pay to the bearer [a specified amount] on the 1st of May 1872, or upon any earlier day upon which this bond shall be entitled to be paid off or redeemed, according to the … printed conditions indorsed hereon …
10. Relevantly, those conditions provided for some of the debentures to be redeemed at an earlier date to be determined by lot. In the events that happened, one of the debentures was stolen and was later purchased by the plaintiff. The defendants refused to pay. A question of law was reserved for the Court, namely whether the plaintiff could maintain an action for payment of the debenture notwithstanding that the debenture had been stolen and that the plaintiff had derived title from the thief. Blackburn J delivered the judgment of the Court, relevantly stating (at 384): … the contract of the Credit Foncier is not merely to pay the money, but also to cause a portion of the bonds to be drawn in the stipulated manner; and anyone entitled to sue on the contract contained in this instrument would be entitled to sue for damages, if the company did not fairly give him his chance of having his bond drawn according to the stipulated conditions. And it is obvious that such a contract as that cannot be a promissory note.
11. In Balck v Pilcher (1909) 25 TLR 497, the plaintiff sued upon an instrument which contained a promise to pay a specified amount "on or before the 7th October 1907". In issue was whether the instrument was chargeable with stamp duty as a promissory note.
12. Ridley J held that the instrument was not a promissory note. As Buss JA, as his Honour then was, noted in Emu Brewery Mezzanine Ltd (in liq) v Australian Securities and Investments Commission (2006) 32 WAR 204; [2006] WASCA 105 (Emu Brewery) (at [111]), "the judgment does not contain any reasoning in support of this conclusion". However, as noted by his Honour also, it appears from Ridley J's reported observations in the course of oral argument that his Lordship reached this conclusion on the basis that the date of payment was uncertain.
13. It is unnecessary here to consider more of these cases, though I note that more recently, in Emu Brewery, Buss JA concluded (at [146]) that: 146. … if a note specifies a date on which the maker is obliged to repay the principal, but also confers on the maker a right, in its discretion, to make payments from time to time on account of principal prior to that date, the existence of the right does not mean that the note is not a "promissory note" for the purposes of s 89 of the Bills of Exchange Act.
14. More specifically, I say that it is unnecessary here to consider this matter further because the impugned notes here, on their face, render it simply impossible to discern any date for repayment, discretionary or otherwise.
15. As to the requirement of sum certainty, as may be observed by reference to the statutory definition, to be valid, a note must be sum certain, noting also, for example, the emphasis of McLure JA (as her Honour then was) in Emu Brewery (at [12]) that, by definition, a promissory note is an instrument, the contents of which consists substantially of a promise to pay a definite sum of money and of nothing else.
16. Again, here, the impugned notes, at least when executed, simply contained no sum, such that I do not see how there can, in any requisite sense, have been compliance with the statutory requirements. It follows (subject to what I consider below) that these were not valid promissory notes.
17. With this in mind, it is convenient to delineate this aspect of the dispute into three sub-issues, as follows.
18. First, what is consequence, if any, if the purported promissory note does not satisfy the statutory definition?
19. Second, can the maker of a note authorise another to fill in the amount payable and/or the date payable (i.e., like a blank cheque, so to speak)?
20. Third, if so, does the note, by the insertion of those terms, then become compliant with the legislation and therefore, in that sense, valid (either at that time or retrospectively)?
21. I turn to the first of those issues.

Consequence, if any, of non-compliance with the statutory definition

1. As an initial matter, it is to be noted that s 5 of the Bills of Exchange Act provides: 5 Application of rules of bankruptcy and common law (1) The rules in bankruptcy relating to bills of exchange, cheques, and promissory notes, shall continue to apply thereto notwithstanding anything in this Act contained. (2) The rules of common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, shall continue to apply to bills of exchange, cheques, and promissory notes. [Emphasis added]
2. Similarly, I note what was said regarding the Bills of Exchange Act by the High Court in Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128; [1932] HCA 40. The precise issue on that appeal is not here precisely relevant, but it is instructive to excerpt what was said by Dixon J, as his Honour then was (at 137-138): When from the general body of the law rules governing a special kind of instrument were selected for formulation in a statutory shape, it was inevitable that what was stated should, not only for its proper understanding but for its practical application, continue to depend upon the whole content of the law of which it formed a coherent part. The subject could not be isolated. Bills of exchange and promissory notes have very special characteristics, but they are not and could not be removed from the operation of the general law of status, of obligation, and of remedies. Further, heads of law which deal with particular relations, with transactions of a special nature and with general conceptions of property must continue to include bills and notes within their operation. For the most part, the rules of common law and the doctrines of equity cover this ground but statute plays its part. The capacity of lunatics is not, but that of married women and infants is, materially affected by legislation. The validity and effect of a transaction between solicitor and client is not, but between money-lender and client is, dealt with by statute […] It is an obvious but most important consideration that the very nature of the statute as a partial code or digest of rules of law militates against any interpretation which would render inoperative or inapplicable rules of law or statutory provisions which theretofore had gone to the determination of rights and liabilities in connection with such instruments.
3. I note also what was said, to similar effect, by Starke J (see at 134).
4. More recently, the Bills of Exchange Act, in relation to impugned promissory notes, was the subject of consideration by Williams J in Gore. In short, there, instruments were executed containing a clause in the following terms: "4. The Promisor may repay the Principal Sum in whole or part at any time without premium or penalty, together with interest (if any) on the amount prepaid accrued to the date of prepayment".
5. Following a review of the authorities, and following Williamson v Rider, which I have referred to above, Williams J concluded (at 250): Paragraph 4 of this note gives the payer the right to make payment other than upon presentation of the note in accordance with its tenor. That introduces, in my view, a degree of uncertainty with respect to payment which has, or may have, marked consequences so far as the negotiability of the note is concerned. Here the law is not concerned with whether the terms of a contract are so uncertain as to render the agreement a nullity, but with whether or not there is such uncertainty because of the contingency as to the time for payment as to make illusory the negotiability of the instrument. In my view cl. 4 has the effect of rendering illusory the negotiability of this document as a promissory note. It may be there is good reason from the commercial point of view for the payer always to be in a position to redeem the bill. However, he may always purchase the instrument prior to maturity; that is a matter to which Danckwerts LJ referred in Williamson at 97 relying on a passage from Chalmers' Bills of Exchange. The payer of a promissory note always has the right to purchase it thus putting an end to his obligations thereunder; but that is a vastly different thing from creating a negotiable note containing a provision that it may be paid out at the option of the payer prior to maturity date. The documents here are not, therefore, promissory notes… [Emphasis added]
6. Crucially, however, Williams J went on to observe that, notwithstanding that the impugned documents were not valid promissory notes, the defendant might nevertheless succeed, in accordance with the usual principles, if it could prove a contract (or contracts) supported by consideration providing for the payment(s). On the facts of the case, his Honour held that the defendant could so succeed (see at 250).

Authorisation to a stranger to execute terms of the note

1. With those observations in mind, I turn next to the question, adverted to above, whether the Bills of Exchange Act permits the maker of a note to authorise another to 'fill in', so to speak, those essential terms of the promissory note.
2. In my researches, I have been unable to locate any authority on this point (and, indeed, the parties have not referred me to any authority that is of assistance).
3. As an initial matter, I note that s 89(2) by its express terms provides that, "[a]n instrument in the form of a note payable to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker".
4. This might tell toward a construction that the maker of a note cannot delegate or authorise another to execute a promissory note, or at least such execution will be ineffective until the note has been indorsed by the maker.
5. However, as a matter of statutory construction, and not least noting the terms of s 5 (see at [349] above), I do not see a basis for concluding that the legislative regime prohibits a maker of a note from delegating to another, or authorising an agent, to complete, or fill-in, essential terms of a promissory note, including delegating or authorising the act of indorsement itself. However, and that tentative view notwithstanding, there remains an issue, to my mind, as to the time by which such execution (and, as the case may be, indorsement) must be completed. It is convenient to deal with that under the third of the questions adumbrated above.

Retrospective validity?

1. Again, in my researches, I have been unable to locate any authority on point (and, again, the parties have not referred me to any authority that is of assistance).
2. Nevertheless, I note that s 90 of the Bills of Exchange Act provides: 90 Delivery necessary A promissory note is inchoate and incomplete until delivery thereof to the payee or bearer.
3. To my mind, this provision tells toward a conclusion that a promissory note must be complete in its terms, whether executed personally by the maker or by a properly authorised agent, before delivery to the payee or bearer. This is, I think, also consistent with the authorities and principles that I have made reference to above. It is consistent with the legislative purposes (as to which, see the observations of Williams J that I have excerpted above).
4. It follows that, whether the promissory notes were here later filled in or indorsed (whether personally or otherwise), they remained invalid as promissory notes for the purposes of the Bills of Exchange Act.

Bloodline™structure in the present case

1. Turning with the above in mind to the so-called Bloodline™ structure, or perhaps more accurately, the implementation of that structure in the present case. This, to my mind, presents a number of issues.
2. First is the fact that the mortgages were not stamped for duty. It is clear from Mr Ioannou's explanation of the structure that it was contemplated by him that the mortgages would be stamped for duty. Mr Bailey's explanation for the fact that they were not seems to be twofold: first, that they were not liable for duty until "fully executed" (by which he seems to mean dated); and, second, that the mortgages were to be held in escrow.
3. As to the first of those explanations, it is clearly wrong. The relevant legislation provides that the liability for stamping is when the document is first executed by a party thereto (and it is clear that this could be before the document becomes legally effective, since there is provision for a refund if it does not become effective).
4. As to the second of those explanations, it highlights the second of the issues (see further below) which is what the parties contemplated would be the effect of execution of the documents at that time. Suffice it here to note, however, that the concept of delivery in escrow does not appear to have been clearly understood by Mr Bailey (see, for example, the discussion in Halsbury's Laws of Australia (online) at [140-060]). Where a document such as a deed is executed and delivered in escrow, this means that it is delivered conditionally, to take effect on the occurrence or non-occurrence of a specified event or condition as the case may be, but the party executing the document is bound by it and cannot resile from it.
5. Thus, the Bloodline™ mortgages would have been liable for stamp duty when first executed (and, hence, I required that there be an undertaking given that the Commissioner be notified of the transaction and of the party primarily liable for duty - as I understand it, John) before those documents were admitted into evidence in the proceeding.
6. Second then is the issue as to what was meant by the holding of the Bloodline™ mortgages in escrow. It is not clear what was the intended escrow condition, but it seems most likely that it was Wendy leaving John (since this was the concern that had apparently been expressed by Ken to both Nick and John and the concern that led to the attempt to put in place an asset preservation structure). It might arguably have been a decision by John to activate the asset preservation regime (but that might be inconsistent with him being bound by the document executed and delivered in escrow). In either event, it is clear that the condition was not satisfied: Wendy did not leave John (albeit that she did transfer the Trundle Properties out of his name) and not only did she continue to visit him in respite care but the couple were married in November 2015; and John did not, on the evidence, turn his mind to activating the asset preservation regime (even accepting for present purposes that the conversation with Nick in early 2015 occurred and that it meant that he thought the regime was then in place) at a time when he still had mental capacity.
7. Therefore, on one view of things (and, indeed, the view I take), which seems to me consistent with the way that Mr Bailey understood the arrangement was to operate and consistent with the mortgages not being registered but held in escrow until some future time when it might be necessary to register them, the asset preservation structure was something put in place but the operation of which was to be in abeyance unless and until the condition to which it was subject (or occurrence on which it was predicated) had happened.
8. Pausing here, I note that, assuming that the Bloodline™ mortgages were and are inoperative, that would still arguably leave in place the loan agreements.
9. The third issue then is as to whether the 2010 Transaction are to be taken as a composite suite of transactions or whether some (such as the loan agreements) could stand independently of the others. In oral submissions. it was said, for example, that even if the mortgages were inoperative that would leave the loan arrangements standing. The answer to this is most likely that the parties understood the suite of documents only to become operative as part of a composite package such that if one were ineffective so were they all. However, it is not necessary to determine this because it was accepted by the Nick interests that if the first step in the Bloodline™ structure fails then the whole structure fails (see, for example, at T 403.46-47), which brings me to the fourth of the issues raised by the 2010 Transaction.
10. Fourth, what is the effect of the document purportedly executed as a promissory note? I have referred above to the argument of the David/Karl interests that the note does not satisfy the definition in the Bills of Exchange legislation because the time for repayment is not stated and it is not for a fixed sum certain. As to the former, I do not necessarily consider that this affects its validity, though, for the reasons explained above, there is considerable force to the proposition that it does. However, it is unnecessary to reach a concluded view on this given the absence here of sum certainty. Indeed, as to the latter, it is clear that the document was blank as to the sum that was the subject of the promissory note at the time it was signed and, thus, as I have explained above, it could not satisfy the definition.
11. Following then, the Nick interests have three answers to this: first, that when the documents were executed and returned to Cleary Hoare they were held conditionally and subject to the amount being inserted and that, when the amount was later inserted, all the steps involved in the Bloodline™ structure then became operative (see T 400.40ff) and they become effective on that date; second (which was candidly recognised as being a more difficult argument), that when the amount was inserted into the promissory notes they became effective retrospective to 3 June 2010 (the date of execution) (see T 400.45); and, third, the Nick interests invoke the principles of conventional estoppel - that there was a common assumption and understanding of the parties to the transaction that the instruments would be effective and as to what they were seeking to do and that John is estopped from asserting otherwise (see T 400.46ff).
12. As to those contentions, the first two suffer, to my mind, from the problem that I am not satisfied that John gave any instructions in relation to the insertion of a particular amount into the promissory notes. Neither Mr Bailey nor Mr Ioannou had any direct dealings with John after the 15 April 2010 meeting. True it is that they say they received instructions to communicate with John through Nick but they both appeared to accept that this did not amount to Nick being authorised to give instructions on behalf of John (as opposed to conveying John's instructions) and there is no evidence of an instruction from John himself as to the amount of the promissory notes. While I accept that on the accounts given of the 15 April 2010 meeting there was a mechanism by which the amount was to be calculated, that does not amount to authorisation simply to enter an amount without reference to John once the valuations were obtained (as is evident from the fact that Mr Bailey submitted the proposed valuations for instructions from Nick; and it was Nick who responded thereto).
13. Therefore, I am not persuaded on the balance of probabilities that Cleary Hoare was duly authorised to complete the promissory notes by entering the amount payable (and I note Mr Bailey agreed that the sum was written into the notes in his handwriting at a later date), so as to make the promissory notes effective whether as from the date the sum was entered or retrospectively from the date of execution of the notes. In any event, the authorities referred to above would suggest that, once delivered, it was not open later to add the sum certain so as retrospectively to validate the promissory notes.
14. As to the conventional estoppel argument, I note that the principles applicable have been considered in, for example, Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 (and see also, for example, Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713). The principal difficulty I have with this contention is that I am not persuaded that John understood at the time that the Bloodline™ structure was to be effective unless and until it became necessary to invoke the structure for asset preservation purposes. Indeed, John's reported agreement to the structure (that we can all still live on the farms) is inconsistent with this (as is his then - i.e., 2009 - testamentary intentions that the farms be shared equally by all of his four children). Accordingly, for this reason, if nothing else, the plea of a conventional estoppel fails.
15. The Nick interests accept (see at T 401.9) that, if none of the above contentions is correct (which is what I have concluded), then there is no sum certain and, as bills, they become legally ineffective. However, it was then said that the issue is whether or not the promise to pay (if not a legally enforceable promissory note in accordance with the legislation) is still operative as a gift of a chose in action (other than through the bearer or promissory note) which promise or chose in action is cancelled out by the loan back which, on the Bloodline™ structure, gives effect to the loan (see T 401.10ff).
16. The difficulty with that analysis is that it assumes that handing over an unenforceable promissory note is a gift of a chose in action, which presupposes that the giving of the note has given rise to some legally enforceable obligation (see T 402.3-5) but the Nick interests disavow that Allawah Pastoral would have had any cause of action on the unenforceable note (because it would be a promise unsupported by consideration) (see, particularly, at T 402.17ff).
17. Following, it seems to me that what all of the above demonstrates is that what was being put in place was a structure (for, euphemistically termed, "asset preservation" purposes) which could be activated in due course if necessary but that was not intended to have any immediate effect. Indeed, that seems consistent with Nick's request for advice in 2015 as to whether, if the structure applied to the then current scenario, it was necessary to "finalise" anything.
18. Therefore, I consider that the 2010 Transaction (or transactions) was and is ineffective to impose any liability on John to Allawah Pastoral in relation to the amounts the subject of the loan agreements.
19. As to the 2015 documents, I consider that the conversation recounted by Nick with his father in early 2015 (as to his father being removed from the trust) is implausible in that it assumes that John had some understanding that his role in the "Bloodline™ Trust" structure required something active of him (when to all accounts and purposes he had not been required to do anything at all in relation to the "Bloodline™ Trusts" in the five or so years since they were purportedly put in place); and, in any event, his statement that he did not want to be involved (assuming it was made) is equally consistent with a recognition that the asset preservation structure was no longer necessary because Wendy had not left him. However, the real issue as to the 2015 Transaction is not as to the resignation of John as principal and as director of Allawah Pastoral, since that would necessarily have occurred once he ultimately lost capacity, but as to the transfer of his shares in Allawah Pastoral, in respect of which he had no independent advice whatsoever (and the reason for which is unclear if what he wanted was simply to be removed from involvement in the trust or any responsibilities as director). That brings me to the claims based on undue influence and unconscionable conduct.
20. As to the claim based on presumed undue influence, it is desirable at the outset to note that, in Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41 (Johnson v Buttress), Latham CJ said (at 119): The jurisdiction of a court of equity to set aside gifts inter vivos which have been procured by undue influence is exercised where undue influence is proved as a fact, or where, undue influence being presumed from the relations existing between the parties, the presumption has not been rebutted. Where certain special relations exist undue influence is presumed in the case of such gifts. These relations include those of parent and child, guardian and ward, trustee and cestui que trust, solicitor and client, physician and patient and cases of religious influence. The relations mentioned, however, do not constitute an exhaustive list of the cases in which undue influence will be presumed from personal relations. Wherever the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter, the presumption of undue influence is raised. [Emphasis added; citations omitted]
21. There need not be a finding that, here, Nick (or his grandfather, Ken) did in fact exercise dominion over John, only that he was in a position to exercise dominion. Where a presumption of undue influence exists, the donee must positively justify the retention of the benefit conferred (see, for example, Winefield v Clarke [2008] NSWSC 882 (Winefield v Clarke) at [44] per Barrett J, as his Honour then was). The improvident nature of the transaction in question may be a probative of influence and of the probability that the transaction was produced by that influence, even without any calculated manipulation.
22. Here, John is incapable of giving his own account of what happened and so hence the need carefully to scrutinise the evidence to ascertain whether what the Nick interests put forward as a probable and credible account really happened (see, for example, Barkley v Brown [2009] NSWSC 76 at [151], quoting Huguenin v Baseley (1807) 14 Ves Jun Supp 273 at 299-300 per Lord Eldon LC) (Huguenin v Basely)).
23. As to unconscionable conduct, the principles set out in Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447; [1983] HCA 14 (Amadio), as developed in Kakavas and the other cases, are well known. I have also previously referred to the extra-curial writings of Sir Anthony Mason about the doctrines of undue influence and unconscionable dealing in "The Impact of Equitable Doctrine on the Law of Contract" (1998) 27 Anglo-American Law Review 1, where reference is made to a "class 2B" relationship (see at 6-7) (using the terminology adopted by the English Court of Appeal in Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923; [1992] 4 All ER 955), namely: My understanding of undue influence, not altogether fashionable in the light of modern English decisions, is that it denotes an ascendancy by the stronger party over the weaker party such that the relevant transaction is not the free, voluntary and independent act of the weaker party (Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447 at 461,474). In other words, it is the actual or presumed impairment of the judgment of the weaker party that is the critical element in the grant of relief on the ground of undue influence (See Peter Birks and Chin Nyuk Yin, On the Nature of Undue Influence, Ed. J. Beatson and D. Friedmann, "Good Faith and Fault in Contract Law" 57 et seq.). The list of the old relationships of influence from which undue influence was presumed supports this view: solicitor and client, doctor and patient, spiritual adviser and novice or parishioner, parent and child, guardian and ward and possibly express trustee and beneficiary (See Meagher, Gummow and Lehane, Equity, Doctrines and Remedies, 3rd edn (1992) s 1519). In these relationships, called class 2A relationships in Barclays Bank plc v. O'Brien ([1994] 1 AC 180 at 189), the weaker party, dependent on the stronger party, is not likely to bring to bear a free, voluntary and independent judgment to a transaction involving the parties to the relationship, whether it is a contract or a gift. Class 2A relationships are to be distinguished from class 2B cases where a de facto relationship of trust and confidence will raise a presumption of undue influence. [Emphasis added]
24. The present is not a case where there is presumption of undue influence merely by reference to the parent/child relationship (since that operates where it is the child who confers a benefit upon the parent, not vice versa - see Urane v Whipper [2001] NSWSC 796 and Whereat v Duff [1972] 2 NSWLR 147 (Whereat v Duff)). The question here is, rather, whether there was a sufficient relationship of dependency upon or ascendancy exercised by the relevant party (here, relevantly, Nick) over John (see, for example, Tulloch (deceased) v Braybon (No 2) [2010] NSWSC 650, where Brereton J, as his Honour then was, referred to the question as to whether the relationship was one of "dominion or influence" - see at [80]).
25. I am satisfied on the balance of probabilities that there was a sufficient relationship of dependency by John upon Nick (or ascendancy exercised by Nick over John) at around the time of the 15 April 2010 meeting, and the subsequent execution of the 2010 Transaction Documents, to give rise to the presumption of undue influence (i.e., that Nick "stood in a position of undue influence towards" John). I have so concluded for the following reasons. First, there was an accepted relationship of trust and confidence between the two. Second, it is clear that Nick was the better educated of the two. Third, it was Nick (after the discussion with Ken as to concerns that Wendy might leave John and have a claim on the farms) who arranged the meeting with Cleary Hoare and it was Nick who appears to have provided much of the instructions in relation to the proposed transaction, including subsequent comment as to the estimated values of the farms (Ken seems to have played a leading role in introducing the background to the meeting). Fourth, in this context, it is relevant to note that, by 2010, Wendy was doing all the bookkeeping and accounts (not John), which bespeaks an inclination on the part of John to leave the financial detail to others (and relevantly, in the context of the Bloodline™ transactions, to Nick). To my mind, the fact that John was someone who spoke his own mind does not stand against such a conclusion, nor does the fact that he wished to keep it secret from Wendy. Fifth, it is significant, in my opinion, that there was no further direct contact between John and the lawyers from Cleary Hoare (all the dealings were effected through Nick), with the only further explanation of the transaction apparently being given by Nick.
26. I am satisfied that there was a sufficient relationship of dependence such as to place Nick in a position where undue influence would be presumed over John in relation to entry into the Bloodline™ transactions. It therefore falls on Nick positively to justify the retention of the benefit conferred on him. Where the presumption is not rebutted, equity will intervene and set aside the transaction (see Johnson v Buttress at 119-120 per Latham CJ and at 134-135 per Dixon J, as his Honour then was; Winefield v Clarke at [27] per Barrett J, as his Honour then was). It is not necessary for there to have been an actual use of influence for the purpose of obtaining the benefit (i.e., that undue influence be proved as a fact). Moreover, as Asprey JA said in Whereat v Duff (see at 167), in those circumstances: … The court does not act on the ground that any wrongful act has been committed by the donee, but on the ground of public policy and to prevent the relations which existed between the parties and the influence arising therefrom being abused: Allcard v. Skinner (1887) 36 Ch D 145 at 171.
27. Following, what Nick is therefore required to show in order to resist the setting aside of the Bloodline™ transactions (under which he clearly received an indirect benefit - namely the ultimate ability, given the events of 2015, to control distribution of the trust income and capital and the ability to determine what stance Allawah Pastoral could take in relation to the loans secured over the Trundle Properties) is that the transactions were the independent and well understood acts of John made when he was in a position to exercise a free judgment based on information as full as that of Nick (see, for example, Allcard v Skinner (1887) 36 Ch D 145 at 171 per Cotton LJ).
28. It is clear that, when undue influence is raised, one looks to the quality of the consent or assent by the weaker party (see, for example, Amadio at 474 per Deane J). The fact that the deceased may have expressed the intention to make a gift (or, in this case, to enter into the particular transaction, namely the Bloodline™ structure) is not sufficient (see, for example, Whereat v Duff at 168-169 per Asprey JA); rather, the question is how that intention was produced (see also Huguenin v Basely). I note also, in this context, the recognition by the Privy Council in Poosathurai v Kannappa Chettiar (1919) LR 47 that the burden thrown on the person in "a position to use his dominating power" is a heavy burden "of establishing affirmatively that no domination was practised so as to bring about the transaction …".
29. One way of rebutting the presumption of undue influence is to point to the receipt of independent, competent and sufficient legal or other advice (though the lack of such advice, while a relevant factor, is not determinative - see Johnson v Buttress; Stivactas v Michaletos and authorities considered in Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153; (2007) ANZ ConvR 615 at [116]-[128] per Brereton J, as his Honour then was).
30. Here, to maintain the impugned transactions, Nick must show affirmatively that John knew what he was doing at the time of the transaction, in the sense that he understood its effect and the significance of that transaction in relation to himself; and that it was done at the incidence of John's own free and independent will. It is in this context that the adequacy of the advice provided by Cleary Hoare becomes particularly relevant (and see the passage cited from Stivactus v Michaletos at [253] above). I hasten to add that it is not necessary here to entertain debate as to whether the advice was negligently given or otherwise nor to enter into debate as to the duty of care owed by solicitors when giving advice preparatory to entry into a client relationship or during what here seems to have been little more than a marketing presentation (though I would have thought that on a test of the type described in Hedley-Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, a duty of care would arise even in such a situation).
31. To my mind, what is here telling is that John did not receive advice as to the potential implications for him in relation to his future circumstances nor as to the implications for him on his then present circumstances vis-a-vis his existing Rabobank mortgages. That means, to my mind, that the advice he received was not sufficient to show that the transactions were entered into when he was fully apprised of all of the relevant implications thereof. Insofar as the Nick interests say that John had as much information as Nick did at the time, the important difference it seems to me is that Nick was giving the instructions that put in place a regime that was of potential benefit to him (and in respect of which he had a clear conflict of interest) while knowing (as he must have done) that John did not have as full an understanding as he did as to the transaction being put in place.
32. It is relevant to bear in mind (see Whereat v Duff) that, where the presumption is not rebutted, the Court does not proceed on the basis that the stronger party (Nick) has committed a wrongful act but, rather, acts on the basis of public policy and to prevent the relations which existed between the parties, and the influence arising therefrom, being abused. Here, it is to prevent the unconscionable retention of a benefit arising out of the transaction in question.
33. Accordingly, I find that the presumption of undue influence has been established and has not been rebutted in relation to the 2010 Transaction.
34. As to the unconscionable conduct claim, in Amadio, Deane J noted (at 474) that: The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (see Union Bank of Australia Ltd. v. Whitelaw, at p. 720; Watkins v. Combes, at pp. 193-194; Morrison v. Coast Finance Ltd., at p. 713). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.
35. In Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 at 713 (to which Deane J referred in the passage extracted above), the elements of an unconscionable bargain were set out as follows by Davey JA: On such a claim the material ingredients [of an unconscionable bargain] are proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of these circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable…
36. I note also that, in Turner v Windever [2003] NSWSC 1147 (Turner v Windever), Austin J adopted (see at [105]) the following summary of the elements of unconscionable dealing (based on cases such as Blomley v Ryan per Kitto J; Amadio; Louth v Diprose; and Bridgewater v Leahy): first, that the weaker party must, at the time of entering into the transaction, suffer from a special disadvantage vis-a-vis the stronger party; second, that the special disadvantage must seriously affect the weaker party's capacity to judge or protect his or her own interests; third, that the stronger party must know of the special disadvantage (or know of facts which would raise that possibility in the mind of any reasonable person); fourth, that the stronger party must take advantage of the opportunity presented by the disadvantage; and, fifth, that the taking of advantage must have been unconscientious. His Honour observed that, once the first three of those elements is established and the improvidence of the transaction shown, the plaintiff's task is "made easier by an equitable presumption to the effect that the improvident transaction was a consequence of the special disadvantage, and that the defendant has unconscientiously taken advantage of the opportunity presented by the disadvantage" (see at [106]). I note, again, also what was said by the High Court in Kakavas.
37. The requisite disadvantage or disability must be one which seriously affects the ability of the weaker party to make a judgement as to his or her own best interests (see, particularly, Amadio at 462 per Mason J, as his Honour then was; Turner v Windever at [105] per Austin J).
38. In the present case, the Nick interests say that the provision of inadequate legal advice (they do not concede it was negligent) is not a requisite disability. I agree. However, where there is a requisite disability and inadequate advice is given, then it may well make it unconscientious for the stronger party to rely on the transaction (and the advice) in question.
39. I consider that John was at a special disadvantage in relation to the 2010 Transaction, not least because he had been prevailed upon by his father and son to consider taking steps to protect against a perceived threat that Wendy might leave him and take the farms (or make a claim against the farms), he was clearly under some emotional pressure from Ken to "keep the farms in the Turner family" and, on Nick's evidence, he was adamant that the transactions be kept secret from Wendy. It appears to be accepted that he was not a man as "book-smart" as Ken or Nick; rather, he was a successful farmer with an interest in rural affairs. It is clear that his experience in company and trust matters was minimal and he played no active role (at least by this stage) in the financial management or accounting of the farming business (that had been conducted by Ken and then by Wendy). The idea that John understood the trust concepts involved in the Bloodline™ structure as explained to him by Mr Ioannou seems to me to be quite implausible (indeed almost fanciful). Rather, it seems to me likely that what John understood was that he was putting in place an asset preservation structure that could be used if necessary to protect the farms against claims by Wendy but that would not affect his ability to make testamentary dispositions in relation to the farms (and would enable his family to stay on the farms and for them to remain in the Turner family).
40. The unconscionable conduct in this context arises, if not at the time that the transactions were put in place, at the time that Nick or Allawah Pastoral sought to retain the benefit of and invoke those transactions. The improvidence of the transactions is apparent (and, perhaps ironically, is the same improvidence as the Nick interests complain about in relation to the Trundle Properties transfers), namely that by these transactions John was putting control of all the bulk of his assets potentially out of his power and subordinating his personal interests in his ongoing care to a secured loan which could be called in at any time by a company (Allawah Pastoral), the control of which he later effectively abdicated to Nick. That brings me to the 2015 Transaction.
41. In my opinion, there can be little said to justify the 2015 share transfer to Nick and it is unconscionable conduct for Nick to seek to retain the benefit of that transfer when he was well aware at the time that his father had no independent legal or accounting advice in relation thereto and he was also conscious of his father's deteriorating mental state (and had been advised what steps could be taken to satisfy himself as to his father's capacity but chose not to take those steps).
42. Therefore, to the extent that the undue influence/unconscionable conduct claims remain necessary to determine in light of my findings as to the 2010 Transaction, I find that they have been made good as against Nick and that it would be unconscionable for Allawah Pastoral (under the control of Nick) now to seek to retain the benefit of those transactions.
43. As to the defence based on conventional estoppel, it suffers from the difficulty that I am not satisfied that John relevantly understood the nature of the transactions entered into at the relevant time.
44. As to the defence based on laches, the David/Karl interests did not know of the 2010 Transaction and 2015 Transaction until February 2017 and so cannot be accused of delay in prosecuting the claims and, in relation to John, there is the same difficulty as to his relevant understanding and deteriorating mental condition.
45. I now turn to dispose of the issues raised in the 2017 Proceeding.

2017 Proceeding

1. It is convenient first to adumbrate the submissions made for the Nick interests.

Nick interests' submissions

1. At the outset, I note that in opening submissions it was made clear that the 2017 plaintiffs are not proceeding with the claims made under the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law; nor in relation to any breach of s 37A of the Conveyancing Act 1919 (NSW); nor for breach of a common law duty of care by Wendy as John's attorney acting under the Enduring Power of Attorney granted to her in 2015.
2. With this said, the 2017 plaintiffs emphasise that, in cross-examination, Wendy agreed that, when she signed the acceptance in John's Enduring Power of Attorney, and at all material times thereafter, Wendy as John's attorney: was agreeing to act honestly in all matters concerning John's legal and financial affairs; always had to act in John's best interests, and not in anyone else's interests; was given the power to manage John's money and property in John's best interests, not in her own best interests or in the best interests of her sons (David and Karl); had to keep her own property and money separate from John's; unless expressly authorised, could not gain a benefit from being John's attorney, including being given money or property; and was not permitted to obtain money or property of John's unless Wendy was expressly authorised by John's Enduring Power of Attorney and Wendy had to act in accordance with this obligation. Further, it is noted that Wendy accepted that she was not told anything by Mr Helby, the solicitor who witnessed John's signature on John's Enduring Power of Attorney and gave the s 19 certificate, that there was anything in John's Enduring Power of Attorney that allowed Wendy to receive a benefit out of John's money or property under that power of attorney, or that Wendy could give a benefit out of John's money or property to David or Karl.
3. It is said further, and in any event, that Wendy, as a matter of law, having signed and accepted John's Enduring Power of Attorney on its terms, is taken to have known the express powers, and limitations, which Wendy had as John's Enduring Power of Attorney.
4. I interpolate to observe that none of this appears to be disputed by the David/Karl interests.
5. The Nick interests point to the fundamental principle that, unless given an express power in the instrument which creates the power, an attorney cannot exercise that power to benefit himself and/or others out of his principal's property; noting that an attorney obtains property of the principal for the attorney's own benefit if there is a direct link between the exercise of the power by the attorney and the benefit (that is, the act of the attorney must be the cause of the benefit). It is said that the same principle must apply where a third party obtains the benefit: the act of the attorney must be the cause of the benefit to the third party.
6. Reliance is also placed on ss 11, 12 and 13 of the Powers of Attorney Act. It is said that the legal effect of ss 9 to 13 of the Powers of Attorney Act is that, in the absence of express words contained in the instrument, a prescribed power of attorney does not confer authority on the attorney to give gifts or to confer benefits on the attorney or third parties. It is said that ss 11 to 13 restate the general law as stated in Tobin v Broadbent (1947) 75 CLR 378; [1947] HCA 46, as applied to a power of attorney in the prescribed form.
7. In this connection, reference is made to Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209, where Leeming JA (with whom Bathurst CJ agreed at [1]) stated (at [115]-[116]): 115. As between principal and agent, the agent is a fiduciary, and speaking generally is required not to place himself or herself in a position of conflict, nor to obtain a profit or benefit from the position, without first obtaining fully informed consent: see most recently Howard v Commissioner of Taxation [2014] HCA 21 at [33] and [56]. Those fiduciary obligations inform the decisions on which reliance has been placed in the decisions dealing with s 163B, particularly the way in which instruments conferring authority have been construed. However, the obligations imposed by equity are ordinarily subject to the terms of the contractual arrangement between principal and agent; each of those fiduciary obligations "must then accommodate itself to the relationship between the parties created by their contractual arrangements": Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 99. 116. Questions of... fiduciary obligation focus upon the internal relations between principal and agent...
8. It is noted that in Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21, the High Court restated some of the essential obligations and liabilities of a fiduciary: a fiduciary relationship imposes upon a fiduciary obligations to the principal not to obtain any unauthorised benefit from the fiduciary relationship and not to be in a position of conflict; these fiduciary duties are proscriptive obligations; fiduciaries must exercise their powers honestly for the purposes for which they are given; the content of the fiduciary duty is moulded by the particular instrument under which that duty is created; and a fiduciary, in equity, has a liability to account for a breach of these fiduciary duties.
9. It is alleged that the Trundle Properties transfers were effected when John lacked mental capacity (this is not admitted) and in circumstances where (these being admitted): John did not execute the instruments of transfer; and Wendy, signing as the transferor, failed to comply with the Registrar-General's directions, made pursuant to s 12D of the Real Property Act 1900 (NSW) (Real Property Act), in relation to execution of land dealings by an attorney. This direction stated that execution by a person as attorney for a party must include: the registration number of the power of attorney; the attorney's name; and a statement that the person signing is the attorney for the party.
10. On each of the Trundle Properties transfers, Wendy (by signing as the transferor) certified, as the transferor, that each such transfer was correct for the purposes of the Real Property Act, when this was not the case (as is admitted).
11. Pausing here, the David/Karl interests also admit that, at the time of the Trundle Properties transfers, Wendy knew: John lacked mental capacity and had diminished physical capacity (see at [31]-[32] of the defence); John did not execute any of the Trundle Properties transfers; the matters relating to the execution of the Trundle Properties transfers set out in the pleaded claim (see at [35] of the amended statement of claim, which is admitted in the defence). It is also admitted that, at that time, Wendy knew that the Trundle Properties transfers were provided to the Chief Commissioner of State Revenue to obtain an exemption from duty under s 274 of the Duties Act 1997 (NSW), which was granted, and lodged with New South Wales Land and Property Information for registration for recording on the Register maintained by the Registrar-General, which registration occurred. It is admitted that Wendy represented to the Chief Commissioner of State Revenue and the Registrar-General that Wendy was authorised to execute the Trundle Properties transfers as transferor; and that the effect of the Trundle Properties transfers and their recording on the Register maintained by the Registrar-General is to remove the major (or alternatively a significant) part of John's property, namely the Trundle Properties, from John's estate, thereby significantly diminishing John's estate available for: payment of John's debts and liabilities, present and prospective; distribution in accordance with the terms of John's Will; and any family provision claims which might be made upon John's estate under the Succession Act 2006 (NSW).
12. The David/Karl interests also admit that, at the time of the Trundle Properties transfers, they did not make the Registrar-General and his delegates aware of the above matters.
13. The David/Karl interests also admit that the Trundle Properties transfers had the effect of transferring title of the Trundle Properties from John to Wendy, David and Karl in their various interests as set out in the pleading and would reduce John's assets available to creditors. The David/Karl interests deny, however, that Allawah Pastoral is a creditor of John and say that, if Allawah Pastoral is presently a creditor of John, then the documents and transactions which created that situation are liable to be set aside for the reasons pleaded in the 2019 Proceeding.
14. The Nick interests say that a consequence of the Trundle Properties transfers was that John no longer owned his major asset (i.e., the Trundle Properties), which he had accumulated from his parents (and in part from their parents) as well as purchased by John (as will be recalled, Sunrise), in circumstances where John was shortly to be placed or had been placed into permanent care in a nursing home and where John would incur liabilities to that nursing home for his ongoing permanent care and to other third parties for any other needs, until he died.
15. It is said that the effect of the transfers was that John's significant and major assets (again, the Trundle Properties) were no longer available to John to meet John's economic obligations, present and prospective (until he died); and that John would now be subject to Wendy, David, Karl, Nick and Sara looking after John, when none of them had any legal obligation to do this.
16. Pausing here, as may be evident from the preceding, none of this seems here to be disputed by the David/Karl interests, save that they point out that in fact David and Karl have met John's financial obligations and continue to do so - and indeed they are prepared to offer an undertaking to continue to do so and have invited relief in the way of a charge over the Trundle Properties to that effect (as to which, see below).
17. It is also noted by the Nick interests that, at the time of the Trundle Properties transfers, Wendy had terminal cancer and it was predicted that Wendy was going to die within a year. It is said that it was inevitable that, as Wendy's cancer progressed, Wendy would be unable to derive income to provide for John or manage John's affairs; and it is noted that, at the time of the Trundle Properties transfers, David was 18 years old (having left school in Year 10, when David was 17 years old) and Karl was 17 years old and in Year 11 at high school.
18. It is submitted that alleged statements in the past by John to Wendy (not recorded in or forming part of the terms of John's Enduring Power of Attorney) provided no basis for Wendy as John's attorney exercising her powers in accordance with those alleged, and undocumented, statements.
19. Thus, it is submitted that Wendy's breaches of her fiduciary duties and fraud on the power were egregious.
20. The Nick interests further say that "some vague, non-legally binding and undocumented arrangement or understanding which might possibly have existed" at the time of the Trundle Properties transfers between Wendy, David and/or Karl that they would look after John's financial requirements in the nursing home, and that when Wendy died, David and/or Karl would continue to do this, is not an answer to the inequitable conduct engaged in by Wendy, David and Karl. Nor, it is said, is "some notion" that the Trundle Properties transfers had to occur so that Nick could "not get his hands" on the Trundle Properties an answer. It is said that John was simply stripped of his major assets, namely the Trundle Properties, at a time when he was in a nursing home and completely vulnerable; and that John's assets should have been there for John.
21. It is also noted that Allawah Pastoral, as trustee for the "Bloodline™ Trust", did not know of, and did not provide its written consent (being a term of the unregistered "Bloodline™ Trusts" mortgages) to the Trundle Properties transfers and their recording on the Register maintained by the Registrar-General; and that, at the time of the Trundle Properties transfers, Nick and Sara did not know that they had been effected by Wendy, David and Karl, nor did they know of the NAB mortgage.
22. In addition to the limitations on Wendy's powers as John's attorney, it is said that Wendy's acceptance of the terms of the office as John's attorney, as a matter of law, means that Wendy is taken to have known the terms and legal effect of the instruments she executed, including: John's Enduring Power of Attorney; the Trundle Properties transfers; and the instruments relating to or concerning the Trundle Properties transfers.
23. Following, it is submitted that Wendy's execution of the Trundle Properties transfers, as if she were John, and issuing instructions on behalf of John (as she did) and other relevant steps, was not expressly authorised by the terms of John's Enduring Power of Attorney. It is said that, in so acting, Wendy breached her proscriptive fiduciary duties to John, being the "no profits obligation" and the "no conflict obligation". Further, it is said that Wendy engaged in conduct which was a fraud on the power that she had under John's Enduring Power of Attorney.
24. It is noted that Wendy was also a participant in and recipient of this conduct as a transferee under the Trundle Properties transfers; and it is alleged that David and Karl were participants in, and recipients of benefits and property occasioned by, Wendy's breaches of her fiduciary duties and her fraud on the power.
25. The Nick interests maintain that each of Wendy, David and Karl each had the requisite degree of knowledge within the first and second limbs of Barnes v Addy (see below).
26. Following, it is contended that each of Angelena, as Wendy's executrix, David and Karl holds her or his registered and equitable interests in the Trundle Properties on trust for John. Further or in the alternative, it is alleged that Angelena, as Wendy's executrix, David and Karl are liable to pay equitable compensation and damages and to account to John for any profits made as John no longer has those assets; and that both legal and/or equitable interests of Angelena, as executrix, David and Karl in the Trundle Properties should be charged with the value of such equitable damage and compensation and any profit made.
27. In that regard, it is said that the NAB mortgage "will have to be dealt with" and that this will require Woolharinga, Nellyvale and/or Sunrise to be sold to discharge the debt secured by the NAB mortgage (as to which, see below as to the David/Karl interests' complaint that NAB was a necessary party to be joined to the proceeding). It is noted that the NAB loan (which the NAB mortgage secures) is in default, and has been so (and, indeed, steadily increasing) for some time.
28. The Nick interests also contend that, in all the circumstances, the fraud exception to indefeasibility applies to the circumstances surrounding the Trundle Properties transfers (though in oral submissions it was frankly conceded that this was a very difficult argument to make as against David and Karl - see at T 22).
29. I note, for clarity here, that the alternative argument, if the fraud exception to indefeasibilty cannot be established, is the claim for equitable compensation, equitable damages and for an account to be taken on the willful default basis due to the breaches of duty by Wendy.
30. It is noted that the issue for determination in this regard is whether the requisite degree of "moral turpitude" is established and whether it is established against Wendy, David and Karl and, if not against all, then against whom is it established. If, or to the extent that, the ''moral turpitude" is not established, then the Nick interests contend that Angelena, as Wendy's executrix, David and Karl hold their interests in the Trundle Properties on trust for John; and, further or alternatively, hold their interests in the Trundle Properties subject to a charge in respect of the amount of equitable damages or equitable compensation or any profit that they are liable to pay John.
31. As adverted to above, when the NAB mortgage was entered into, it secured some $580,000, which was used to repay the indebtedness, in the name of John, to Rabobank. The indebtedness to NAB secured by the NAB mortgage is now some $670,000.
32. In that regard, it is said that, from 11 June 2015 until her death, Wendy, as John's attorney, applied and used John's money and personalty for the benefit of Wendy, David and Karl. Indeed, complaint is made that Wendy was not authorised by John's Enduring Power of Attorney, and had no power as John's attorney, to apply and use John's money and personalty for the benefit of Wendy, David and Karl, save for reasonable gifts as provided for by s 11(2) of the Powers of Attorney Act, which was, and is, of limited application and compass.
33. As to relief, the further submissions are to be noted.
34. By reason of Wendy's, David's and Karl's conduct in relation to the use of John's money and personalty, it is said that: Angelena, as executrix of Wendy's estate, should be required to furnish accounts and other information to the Court or to a person nominated by the Court in relation to John's estate and Wendy's conduct, comprising acts and omissions, as John's Attorney, pursuant to s 36(4)(e), alternatively s 36(4)(g), of the Powers of Attorney Act; Angelena, as executrix of Wendy's estate, should be required to lodge with the Court a copy of all records and accounts kept by Wendy, as John's attorney, of all dealings and transactions made by Wendy, as John's attorney, pursuant to s 36(4)(e), alternatively s 36(4)(g), of the Powers of Attorney Act; that such records and accounts lodged by Angelena, as executrix of Wendy's estate, with the Court, should be audited by an auditor appointed by the Court and that a copy of the report of the auditor should be furnished to the Court; and Wendy's estate should bear the expense of such audit and report, pursuant to s 36(4)(e), alternatively s 36(4)(g), of the Powers of Attorney Act; there should be an inquiry and report on the conduct of Wendy, as John's attorney, pursuant to s 36(8)(b) of the Powers of Attorney Act; and that the Court should make other orders, as the Court thinks fit, in relation to Wendy's conduct, as John's attorney, pursuant to s 36(4)(g) of the Powers of Attorney Act.
35. By reason of Wendy's misuse of John's Enduring Power of Attorney, and the fact that Wendy is now dead, it is said that the Court should formally revoke John's Power of Attorney pursuant to s 36(4)(f) of the Powers of Attorney Act and an instrument should be prepared and filed in the Register of Deeds which publicly notes this. Pausing here, relief of this kind does not appear to me, at least initially, to be necessary given that Wendy has since died. However, to the extent the parties consider that such an order should here be made, I invite the parties to bring in a submission as to this point in accordance with my orders below.
36. Further, it is submitted that, by reason of what has occurred, John's estate should be subject to management, and a manager should be appointed, under s 41(1)(a) and 41(1)(b) of the NSW Trustee and Guardian Act 2009 (NSW) (NSW Trustee and Guardian Act).
37. It is noted that, to date, the New South Wales Trustee has declined to take over management of John's estate because it is an onerous obligation and, unless relief is made in the 2017 Proceeding, John's estate will have no assets of any monetary value. It is said that, once John's estate is restored with assets which it had or an equivalent monetary value to what it had less deductions for appropriate liabilities, the New South Wales Trustee can be appointed as the manager.
38. Pausing here, I understand that the David/Karl interests would agree to the appointment of the New South Wales Trustee as John's manager. The issue is whether the New South Wales Trustee should be appointed manager prior to John's estate being restored or if John's estate has no assets.
39. Further, it is said that orders should be made in relation to the administration and management of John's estate and functions of the manager of John's estate pursuant to ss 64(1), (2) and (3) of the NSW Trustee and Guardian Act.
40. In particular, it is submitted that John's personal property and income should be rendered available for payment of the debts and engagements of, and otherwise for the benefit of, John, including but not limited to: the moneys which were owing to Rabobank secured by the Rabobank mortgage, by paying such moneys to NAB; payment of John's indebtedness to Allawah Pastoral as trustee in the amount of the "Bloodline™ Trusts" loans, as well as other amounts now owing or which in the future become owing by John to Allawah Pastoral as trustee for the "Bloodline™ Trusts" pursuant to the terms of the Bloodline™ Trusts loan agreements and unregistered "Bloodline™ Trusts" mortgages; and otherwise, as thought necessary or desirable, for the care and management of John's estate. It is said that orders should be made to this effect, pursuant to s 65(1) of the NSW Trustee and Guardian Act.
41. The Nick interests contend that John's property should be sold, mortgaged, dealt with or disposed of, as thought most expedient, for the purpose of raising or securing or repaying (with or without interest) money which is or to be, or which has been, applied to any one or more of the following purposes: payment of John's debts or engagements; payment of any debt or expenditure incurred for the maintenance (including future maintenance), or otherwise for the benefit of John including, but not limited to, the cost of John's care in an aged care facility, medical and other needs; costs with respect to any actions taken for the purpose of complying with any order or direction of the NSW Trustee and Guardian Act or any transfer or conveyance under ch 4 of the NSW Trustee and Guardian Act; remuneration, of a specified amount, to the manager of John's estate. It is noted that orders may be made to this effect, pursuant to s 65(2) of the NSW Trustee and Guardian Act.
42. Further, it is said that orders should also be made pursuant to ss 65(3), 66(1)(a), 67(1), 68(1), 79 and 115 of the NSW Trustee and Guardian Act.
43. By reason of what has occurred, John's lack of capacity, and the fact that he will remain in the nursing home until he dies, it is also contended that: the partnership between David and John, and any other partnership of which John is a member, ought be dissolved, and orders ought made to this effect, pursuant to s 79 of the NSW Trustee and Guardian Act, alternatively in equity; and consequential orders ought be made in relation to the winding up of such partnership(s), including preparation of partnership accounts, payment of partnership liabilities and payment of any surplus to the parties, including John (and, if appropriate, that a receiver be appointed to conduct the winding up of any such partnership(s)).
44. I now turn to the submissions made for the David/Karl interests.

David/Karl interests' submissions

1. The David/Karl interests say that, in the 2017 Proceeding, there is no dispute that: John became progressively physically and mentally unwell and eventually required to be admitted for fulltime care late in 2016; as a result, someone had to work and manage the Trundle Properties and generate income to provide for John and his immediate dependents (Wendy, David and Karl); Wendy, David and Karl worked and managed the Trundle Properties; and they have provided for John financially since he ceased working the farm and since he has required care. As adverted to above, the David/Karl interests emphasise that Nick has contributed nothing (it is said) towards John's financial needs since John ceased working the farm and since John has required care.
2. As has been adverted to above, the David/Karl interests accept that Wendy was not authorised under the Enduring Power of Attorney to transfer title of the Trundle Properties to herself and David and Karl (see the defence at [25]). However, in terms of Wendy's subjective state of mind, it is noted that the evidence is that an independent solicitor (Ms Hughes) advised Wendy that she was empowered so to do. Insofar as fraud has been pleaded against Wendy, the David/Karl interests say that this allegation was not put to her in cross-examination and must be dismissed. Alternatively, it is submitted that it is clear on the evidence that Wendy was legally advised that it was allowable and that she accepted that advice. Thus, it is said that Wendy did not have the state of mind fraudulently to have transferred the properties.
3. While it is denied that there was a breach of fiduciary duty in relation to the transfer of the Trundle Properties, in closing submissions, it was in effect conceded that, if such a breach were to be found, some form of order for equitable compensation would be almost inevitable.
4. The David/Karl interests do, however, argue that the result of the Trundle Properties transfers was broadly consistent with John's testamentary intentions (albeit effected at an earlier point in time) as expressed in his October 2015 Will drafted and signed before another independent solicitor (as will be recalled, Mr Helby) and was consistent with John's expressions of intent both to Mr Helby (as recorded in his contemporaneous documents) and to Wendy. The David/Karl interests further submit that the transfers were wholly or partially for John's benefit (in a "wider sense") and in accordance with his wishes (as corroborated by the terms of John's Will, and the statements to Wendy and to Mr Helby as recorded in Mr Helby's contemporaneous documents.
5. Pausing here, there is also evidence from David and Karl, albeit to be treated with caution as it is evidence that cannot be tested with John, that, after his admission to the nursing home and possibly before, he made statements to them to the effect that the farms were to be theirs.
6. It is noted that Wendy's intent in transferring the Trundle Properties was to "effect John's Will" (this being the instruction to Ms Hughes) in order to prevent a family provision claim being made by Nick and to provide for John's care. Wendy's evidence to that effect is said to be corroborated by Ms Hughes' contemporaneous file notes and Ms Hughes' letter to Counsel seeking advice (as to which, see the chronology of events above). It is further said that Wendy's intention was that John's bequest to Sara in John's Will was also to be honoured.
7. The David/Karl interests say that the transactions were structured in such a way that Wendy (who at the time knew that she had been diagnosed with terminal cancer) would be a transferee, her interest in the land would then pass according to her Will, as communicated to NAB; so that, in the end, David and Karl would own the properties equally. It is submitted that, in that way, Wendy never intended to benefit personally (as she said in her own cross-examination); that a portion of the properties was transferred to her simply because of Karl's then minority but that Wendy would then execute a new Will providing for Karl (corroborated by Ms Hughes' file note of 21 October 2016 - again, see in the above chronology) given Wendy's limited life expectancy. Indeed, a Will to that effect, witnessed by Ms Hughes, was executed by Wendy on 9 March 2017. Thus, it is submitted that Wendy did not breach the fiduciary duties she owed to John.
8. In terms of the Trundle Properties more specifically, three of the properties (Garden Vale, Allawah and Sunnycroft) were held by Wendy, David and Karl as joint tenants. It is noted that, upon Wendy's death, by operation of law, the whole of the land now remains with David and Karl. The other three properties (Woolharinga, Nellyvale and Sunrise) were held by Wendy and David as tenants in common in equal shares. They are subject to a registered mortgage in favour of NAB. The David/Karl interests note that NAB has not been joined to the proceedings (and, as adverted to, they say it was a necessary party to be joined insofar as its interests may be affected by the relief here sought - the Nick interests' response to this seems to be simply to say that NAB will have to be "dealt with" but it is not suggested how this will be done).
9. In terms of Wendy's management of John's financial affairs, and the account now sought to be taken in this regard, the David/Karl interests point out that she was not cross-examined as to any wrongdoing, and that none of the financial documents sought to be tendered going to that and related issues was put to her. Accordingly, it is said that this part of the Nick interests' case should be dismissed or, alternatively, determined solely on the evidence put to Wendy in cross-examination.
10. As to the submission by the Nick interests (see, particularly, in oral submissions at T 438.45ff) of procedural unfairness in that certain matters were not put to Wendy in cross-examination because things may have been expedited or rushed (the premise of which the defendants cavil with in any event), it is said that this does not excuse the procedural unfairness of not putting those matters to Wendy.
11. The David/Karl interests say in this regard that: the matters and transactions upon which the Nick interests rely, and to which objection is taken, were not dependent upon receipt of Wendy's affidavit evidence (contra T 439.19-22), noting that the Nick interests' case at this hearing was solely or almost solely dependent on documents; that the documents to which objection is here taken on this issue were either available to the Nick interests before Wendy was cross-examined or were obtainable (by issuing further subpoenas) by them before that time (noting that documents were produced by Rabobank, NAB, Commonwealth Bank of Australia; Peter Woods & Associates, John's accountant, the Commissioner of State Revenue and the Office of State Revenue before Wendy's cross-examination); and that unfairness does not depend on whether or not the failure to put the documents and transactions to Wendy was deliberate or not (see T 439.26). It is said that the sole question is whether the Nick interests, who either had the documents or could have obtained them, should now be permitted to advance a case which was required to be put to Wendy as a matter of basic fairness in the sense identified in Browne v Dunn (1893) 6 R 67 (and whether, it not having been put, places the David/Karl interests in a significantly compromised forensic position in seeking to rebut that case).
12. The David/Karl interests say that the situation was not one where the Nick interests were "dealing with the cards … dealt with at the time" (as was submitted at T 439.19). Rather, the David/Karl interests point out that the Nick interests had pleaded in the original statement of claim that Wendy had applied and used John's money and John's estate for the benefit of Wendy, David and Karl (see the heading immediately preceding [44] of the statement of claim), and that this was the case that was verified by Nick and the subject of the solicitors' certification at the relevant time.
13. In any event, the David/Karl interests cavil with the proposition that Wendy's cross-examination was rushed, pointing out that the 2017 Proceeding was commenced on 15 March 2017, the motion for expedition was filed on 3 April 2017, expedition was ordered on 11 April 2017 and Wendy's evidence was taken a little over two months later on 13 June 2017. It is said that the Nick interests had, before and after 15 March 2017 and up until 13 June, to prepare that part of the case against Wendy.
14. Further, it is said that the Nick interests could have made an application to cross-examine Wendy further after the day she was cross-examined (that being 13 June 2017) and a reasonable time before her death if, indeed, further time to prepare that part of the case was needed in order to put the matters to her, but no such application was ever made. Insofar as the rhetorical question was put in closing submissions for the Nick interests (at T 439.41-43) that "[i]f Wendy was able to prepare the accounts for everyone at this time then why didn't she just prepare or keep the separate accounts? She knew she was dying…", the David/Karl interests complain that Wendy was never given an opportunity to respond to that.
15. In this regard, reliance is also placed on the observation by Hunt J in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 (at 16) that: It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. That rule of practice follows from what I have always believed to be rules of conduct which are essential to fair play at the trial and which are generally regarded as being established by the decision of the House of Lords in Browne v Dunn (1894) 6 R 67.
16. It is noted that the Nick interests have made no submission that notice had clearly been given of the cross-examiner's intention to rely upon the matters the subject of present objection before Wendy's cross-examination or death.
17. As to the relief sought in terms of the taking of accounts, similar complaint is made that Wendy's management of John's financial affairs was not the subject of any cross-examination as to any wrongdoing; that no documents were put before her, no transactions were the subject of any cross-examination and no suggestion was put to her that her management of John's affairs was in any way lacking.
18. Furthermore, it is noted that the taking of accounts is a discretionary remedy and must serve a useful purpose (see Mulherin v Quinn Villages Pty Ltd [2007] QSC 231, cited in In the Matter of Vicad Pty Ltd; Pottie v Dunkley [2011] NSWSC 166; (2011) 82 ACSR 541 at [84]).
19. It is submitted that this case is not one where the taking of accounts is ordinarily ordered as a matter of course, such as upon the dissolution of a partnership where there are mutual accounts. It is said that, to justify the making of such an order in a case such as the present, the 2017 plaintiffs are required to plead and prove that they are entitled to some sum from the 2017 defendants, although they may be uncertain as to the quantum of that sum (see, for example, National Australia Bank Limited v Rowe [2018] WASC 330 and the authorities cited therein). It is noted that no such evidence has been provided because nothing of the sort was put to Wendy in cross-examination.

Nick interests' response re procedural unfairness issue and taking of accounts

1. It is desirable at this juncture to interpose in order to note that, in response to the above submissions by the David/Karl interests as to procedural unfairness because matters as to the accounts were not put to Wendy, the Nick interests say that it is not simply that matters were "rushed" but, additionally, that the Nick interests were not provided with any update as to Wendy's health improving (or not deteriorating) and that the parties were preoccupied with procedural motions filed by the David/Karl interests.
2. In terms of the chronology of the procedural matters to which the David/Karl interests have referred, the Nick interests say that: the defence in the 2017 Proceeding was filed on 31 May 2017 but not served on them until the evening of 9 June 2017; that Wendy's affidavit was sworn on 10 June 2017 and served that evening; and that, on 12 June 2017 (that being the Queen's Birthday public holiday in New South Wales), the Nick interests' solicitors travelled from Brisbane to Parkes, and counsel from Sydney to Parkes, for Wendy's cross-examination on 13 June 2017. It is said that, thereafter, on the medical evidence and what had been disclosed to the Court by the David/Karl interests, the Nick interests proceeded on the basis that Wendy was soon to die. In this regard, complaint is made that the David/Karl interests never informed the Nick interests that Wendy was not deteriorating as quickly as her initial prognosis predicted or that she was taking medication which was prolonging her life. It is also noted that Sackar J made orders, as follows: on 23 June 2017, for pleadings and evidence as the matter remained on the expedition list; on 18 August 2017, granting the defendants leave to file a motion to restrain Cleary Hoare from acting (and, relatedly, that a further notice of motion was filed by the defendants on 8 September 2017 seeking the removal of Nick as tutor and Cleary Hoare as solicitors on the record and that, subsequently, the parties attended an unsuccessful mediation).
3. The Nick interests also point to the events (which occupied their time and led to the incurring of costs) as to the appointment of the NSW Trustee and Guardian as receiver and manager of John's estate by orders made on 13 December 2017, preparation for the hearing of the motion on 26 June 2018 (pursuant to orders made on 22 March 2018) and the filing on 20 July 2018 of a further notice of motion (after the hearing on 26 and 27 June 2018 but before judgment on 25 July 2018 - see Turner v O'Bryan-Turner [2018] NSWSC 1140), seeking to amend the then cross-claim but later amended to include the removal of Nick as tutor (see motion filed 21 February 2019) (contrary, it is said, to the orders of Rees J made on 9 October 2018 and the subject of indemnity costs orders - see Turner v O'Bryan-Turner [2019] NSWSC 258).
4. It is said that the motions caused significant time and costs to be incurred in circumstances where the parties could have otherwise used that time and those costs for the substantive proceeding. It is noted that, for the purpose of the motion to restrain Cleary Hoare, Nick gave evidence (and was cross-examined) on his limited financial capacity to continue the proceedings, yet, subsequently, the David/Karl interests filed the further motion.
5. As to the second point raised by the David/Karl interests, the Nick interests accept that the documents speak for themselves.
6. As to the third point raised by the David/Karl interests, the Nick interests say that the documents which revealed the use of John's personalty were irrelevant until the matters were put in issue; that the David/Karl interests had merely pleaded a non-admission (see, particularly, at [44] of the defence filed 31 May 2017); and that the Nick interests were not in a position to prepare for a detailed cross-examination on accounting in these circumstances.
7. As to the fourth and fifth points raised by the David/Karl interests, the Nick interests say that the David/Karl interests were aware that bank statements had been sought and that such statements were able to be relied upon as evidence. It is said that the transactions speak for themselves in that John's personalty was applied for purposes not to his benefit; that the transactions were within the David/Karl interests' knowledge, more particularly Wendy's knowledge; and that Wendy was aware that an account was being sought. It is submitted that, in circumstances where Wendy was the attorney at the time and owed fiduciary duties to John, Wendy should not have pleaded a non-admission and put John to proof; and also that she should have addressed the matter in her affidavit evidence.
8. As to the sixth and seventh points raised by the David/Karl interests, the Nick interests point out that Wendy died while a motion was on foot. Additionally, it is said that after Wendy's evidence had been taken on commission, her evidence was considered to have been closed.
9. Finally, it is noted that the David/Karl interests had indicated their intention to call Mr Job (as will be recalled, the long-standing accountant of John, Wendy, David, Karl and their respective businesses) as a witness and that he had intimate knowledge of their financial affairs, yet the David/Karl interests failed to call him, giving rise, it is said, to an adverse inference concerning the financial affairs of those for whom Mr Job acted.
10. In sum, the Nick interests emphasise that, here Wendy's breach of fiduciary duty concerned the entirety of John's estate, specifically the transfer of all his interest in real property, a transfer of his business, plant and equipment, livestock and other assets in connection with the business, the use of all funds in accounts owned by John, as well as use of his financial assets including his life insurance plan with AMP. It is said that the intentional end result was that John was stripped of all assets but that it is sufficient to demonstrate Wendy's breach by transferring John's interest in real property. Accordingly, it is said that an account should be ordered to determine which assets of the John's estate were transferred by breach of a fiduciary duty owed by Wendy, an accounting party.
11. With the preceding in mind, it is convenient now to dispose of this procedural unfairness point.

Ruling as to procedural unfairness issue

1. As to this issue, it is convenient also to deal with the provisionally admitted documents that were tendered as going to this issue.
2. While accepting that the situation in relation to Wendy's cross-examination was not ideal (in that it occurred in advance of the trial at a time when her death appeared imminent) and also that there were no doubt logistic and forensic issues that determined the extent of the cross-examination of Wendy on that occasion, it does seem to me that it is difficult for the David/Karl interests now to meet a case dependent to a large extent on Wendy's knowledge of transactions when she is no longer available to give evidence; and where there was an opportunity for that to have occurred while she was alive.
3. That difficulty is illustrated by some of the transactions to which I was taken, including the placement of amounts in Wendy's NAB share trading account but which would need to be assessed by reference also to credits back into Wendy's general account. I did give consideration (and raised this with Counsel during submissions) as to whether it might be appropriate for there to be a limited account (as to the use of the funds obtained on the cashing in of the AMP life insurance policy) but, ultimately, I have concluded that a further enquiry is likely to be futile given Wendy's death and hence the inability to obtain evidence from her as to the particular transactions (including, for example, automated teller machine transactions at the Club).
4. As to the Jones v Dunkel inference that is sought in relation to the failure of the David/Karl interests to adduce evidence from Mr Job, I accept that Mr Job (as the accountant for the David/Karl interests) might be considered to be in their "camp" so to speak, although it is relevant here to note that Mr Job was also John's accountant and, in the 2017 Proceeding, Nick acts as John's tutor. Indeed, it seems to me that it was equally open to the Nick interests to call Mr Job to give evidence. In any event, even if a Jones v Dunkel inference were to be drawn (and I am not satisfied that it should be here), it would not permit an inference to be drawn that was positively damaging to the David/Karl interests' case; and, rather, simply that anything about which he might have been able to give evidence would not assisted them. To my mind, that does not advance matters in relation to the taking of accounts.
5. In any event, I have in mind that there is a discretion whether or not to order an account and that it will not be ordered where to do so would be onerous or of little likely utility. Furthermore, I consider that here it would be necessary to be satisfied that it is in John's interest so to do. I am not so satisfied, for the reasons that I explain when I come to the question of the relief to be given in respect of Wendy's breach of fiduciary duty. It is sufficient here to say that, broadly speaking, it seems to me that John's interest lies in being protected financially in relation to his future care for the rest of his life and in his testamentary intentions being able (within the usual course of events) to be met. It seems to me that this can be accommodated by a charge over the Trundle Properties for that purpose and that the expense of an accounting process of likely limited utility will not be of any real assistance to John in his current situation.
6. Following therefore, the exhibits provisionally admitted as going to the issue of an account (which were subject to the procedural unfairness limitation) will be rejected and I am not proposing to order that an account be taken.

David/Karl interests' submissions (continued)

1. Returning to the submissions of the David/Karl interests, it is said that, as to the case put against David and Karl, they simply did what their mother, as advised by Ms Hughes, suggested. It is said that their subjective states of mind were entirely innocent. It is noted that they have pleaded, and rely upon, the indefeasibility provisions of the Real Property Act and it is said that there is no evidence of fraud of the relevant type to overcome those provisions.
2. Furthermore, if the Nick interests are found to have a prima facie entitlement to relief in relation to the Trundle Properties, the David/Karl interests submit that, in the exercise of the Court's discretion, relief should be denied because the grant of relief would not be what John would want (as opposed to what his tutor, Nick, desires) and the 2017 plaintiffs have not joined the mortgagee of three of the Trundle Properties (namely, the NAB) as a party to the proceedings.
3. In that connection, while it is accepted that evidence of conversations with deceased persons is always the subject of careful scrutiny, it is submitted that the evidence is that John, as opposed to his tutor (Nick), would not wish these proceedings to have been brought. It is said that John's contemporaneous statements of intent were to the effect that the Trundle Properties should pass to David and Karl, and that those statements to Wendy are corroborated by the recollection of the independent solicitor (Mr Helby) as confirmed in his contemporaneous notes (and, indeed, reflected in John's Will dated 9 October 2015).
4. As to the claims by Allawah Pastoral and Nick against Wendy, David and Karl, it is said that neither of those plaintiffs has a cause of action against the David/Karl interests and their cases should be dismissed with costs.
5. In summary, in this respect, the David/Karl interests accept that there is not much that can be said in defence of Wendy in the 2017 Proceeding other than that her subjective state of mind was honest given her open disclosure of all relevant facts to an independent solicitor (Ms Hughes), counsel and the NAB, and that she was told by Ms Hughes that what was being done was allowable pursuant to the terms of the Enduring Power of Attorney. However, significantly, it is said that David and Karl are not liable under either limb of Barnes v Addy.
6. As to the Barnes v Addy claim against David and Karl, the David/Karl interests note that the Nick interests in their outline of submissions rely upon both limbs of Barnes v Addy (i.e., both knowing receipt and knowing assistance); and that reference was made in opening submissions to reliance upon the fourth category of knowledge from Baden Delvaux & Lecuit v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France SA [1993] 1 WLR 509 (Baden Delvaux), namely, knowledge of circumstances which would indicate the facts to an honest and reasonable person (i.e., a general understanding that fraud, breach of trust or breach of fiduciary duty had occurred).
7. The David/Karl interests say that the fourth category of knowledge is not pleaded and should not be further considered; rather, that what is pleaded is first category knowledge (i.e., actual knowledge), and no other Baden Delvaux category. It is noted that the statement of claim pleads knowing receipt and knowing assistance (see, particularly, 52 and (g) and see also 43 and 44). More specifically, in those paragraphs, it is pleaded that David and Karl "knew or ought to have known" certain matters. It is accepted that the reference to "ought to have known" may be a reference to second category wilful blindness, or third category failure to make enquiries; but it is said that neither of those categories of knowledge has here, in fact, been pursued.
8. As to the category of knowledge here required on the pleading (see particularly at T 436.23ff) (i.e., knew or ought to have known), reference is made to the judgment of Owen J (at [933]) in Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 39 WAR 1; [2008] WASC 239 (Bell First Instance) (see, particularly, T 437.2ff). In particular, again, the David/Karl interest say that what has here been pleaded by the Nick interests is a case of actual knowledge (i.e., Baden Delvaux category 1), not a case of actual knowledge of facts which to a reasonable person would suggest a dishonest and fraudulent design (i.e., Baden Delvaux category 4). In that connection, it is said that the expression "ought to have known" is not a pleading of Baden Delvaux category 4 as a matter of plain English and that Baden Delvaux category 4 knowledge does not include facts not actually known to David or Karl (other than those known to an agent, for example, where such actual knowledge is imputed to them).
9. It is said that "ought to have known" is a common law expression which relates to various common law and statutory causes of action, and that this is how Owen J came to consider the expression in Bell First Instance (referring to his Honour's judgment commencing at [903] and, particularly, at [905]). It is noted that his Honour did not relevantly extend that expression and that (at [932]), Owen J, in analysing the Baden categories, said: 932. …. Items (2) and (3) are often referred to as species of actual knowledge. The latter two categories are forms of constructive knowledge. Item (2) is commonly called 'Nelsonian blindness'. Proof of the kinds of knowledge in (4) and (5) may be sufficient to allow a court to infer, in the absence of proof to the contrary, that a person had one of the subjective states of mind referred to in (1), (2) or (3) …
10. It is also noted that (at [4740]) his Honour observed that the knowledge required under the second limb (i.e., knowing assistance) had been authoritatively settled by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 (Farah), and Owen J quoted (at [4741]) the judgment of the High Court in Farah, specifically: […] 177. The result is that Consul supports the proposition that circumstances falling within any of the first four categories of Baden are sufficient to answer the requirement of knowledge in the second limb of Barnes v Addy, but does not travel fully into the field of constructive notice by accepting the fifth category. In this way, there is accommodated, through acceptance of the fourth category, the proposition that the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons. […]
11. Thus, it is said that one examines the actual knowledge that David and Karl had, and then whether a reasonable person having that same actual knowledge would have drawn particular conclusions. It is also noted that his Honour (at [4743]) stated that the position with the first limb (i.e., recipient liability) was less clear but arrived at the conclusions set out at [4748]. It is said that there is no "ought to have known" in Owen J's formulation of knowledge (see at [927] of Bell First Instance - i.e., Baden Delvaux category 4).
12. It is also noted that the Nick interests opened on the basis that the knowledge of Ms Hughes should be attributed to David and Karl (and Wendy) (see at T 21.37). In that connection, complaint is made that there is no such pleading of such an attribution of knowledge; and, having regard to the fact that there has not been any application to amend the pleadings, that this point should be dismissed.
13. It is said that this is a case similar to Bird v Bird [2013] NSWCA 262, where actual knowledge was the category of knowledge put in that case (as it is here), and actual knowledge of a breach of fiduciary duty has not been proved.
14. As to knowing assistance, reference is also made by the David/Karl interests to what was said in George v Webb [2011] NSWSC 1608 (at [260]): 260. In the case of accessorial liability for knowing assistance (the second limb of Barnes v Addy), the third party must have assisted in a breach of trust or fiduciary obligation with knowledge of a "dishonest and fraudulent design" on the part of the trustee or fiduciary (knowledge being required in the sense considered above). Mere knowledge of facts which would have put a reasonable person on inquiry will not attract liability. The requirement that the third party must have participated in a dishonest and fraudulent design, requires conduct which is "morally reprehensible". Dishonesty is not used in the sense of criminal conduct or actual fraud in the common law sense. Nevertheless, it seems clear that what is required is more than a mere breach of duty. (Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397-8 per Gibbs J as his Honour then was, citing Selangor United Rubber Estates Ltd v Craddock (No 3) [1968] 2 All ER 1073; Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 225 FLR 1, at 531 per Owen J.)
15. Following, it is said that there is no evidence (and it was not put to David and Karl) that they had knowledge of a dishonest and fraudulent design, nor did Wendy engage in a dishonest and fraudulent design. It is noted that, in Farah, the High Court said (at [179]; [186]) that the relevant passages in Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8 (Consul) establish, at Australian law, that dishonest and fraudulent designs can include not only breaches of trust but also breaches of fiduciary duty, but that any breach of trust or breach of fiduciary duty relied on must be dishonest and fraudulent (and that "dereliction of duty is insufficient to merit the description 'dishonest and fraudulent'").
16. As to knowing receipt, it is said that "knowledge" means a third party's knowledge that the relevant property was trust property being misapplied or transferred pursuant to a breach of fiduciary duty or trust. It is said that David and Karl had no such knowledge. It is said that David and Karl simply did what their mother, as advised by Ms Hughes, suggested; that they were transparently honest witnesses; and that their contemporaneous subjective states of mind were entirely innocent.
17. Furthermore, as noted, the David/Karl interests have pleaded, and rely upon, the indefeasibility provisions of the Real Property Act. It is said that no suggestion of fraud was put to them in cross-examination and that there is no evidence of fraud of the relevant type to overcome those provisions (as to which, see for example, Anderson v Anderson [2016] NSWSC 1204 per Hallen J).
18. As to Wendy, it is submitted that, "in the real world", what Wendy did was the best solution to accommodate both John's testamentary objectives (as expressed to an independent solicitor) and financial care needs. It is said that, as history has shown, David and Karl have provided for their father's financial needs, even to the extent of taking off-farm jobs to provide themselves with some income (I understand that being about $1,260 per fortnight in 2017 which would approximate $33,000 per annum) for their own financial needs whilst the farm's limited income (during the drought from the end of 2016 until the last few months) (see T 224.47-225.17).
19. Finally, as to relief, the David/Karl interests also emphasise that the two "Bloodline™ Trust" mortgages have not been stamped. The David/Karl interests say that, Wendy having died, her interest as joint tenant in Garden Vale, Allawah and Sunnycroft has ceased with the result that David and Karl are the joint owners of those unencumbered properties. As noted above, Wendy and David are, or were, tenants in common in equal shares in relation to Woolharinga, Nellyvale and Sunrise and those three properties are encumbered by the NAB mortgage. As I have noted, the David/Karl interests say that NAB was a necessary party whose interests might be affected and that it should have been but was not joined to the proceedings. Accordingly, it is said that the problem of the kind identified in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 here arises.
20. Following, it is said that if the Nick interests are found to have an entitlement to relief in relation to the Trundle Properties, in the exercise of the recognised judicial discretion, relief should be denied because the grant of relief would not be what John would want (as opposed to what Nick wants). It is said that on everybody's case, John was clear that he wanted his farm to stay in the family; and that any order for equitable compensation against David and Karl will prevent that desire from being realised.
21. Pausing here, it is again to be noted that John's statements of intent to Wendy as to what was to happen to the Trundle Properties, namely that they should go to David and Karl, are corroborated by the independent solicitor (Mr Helby), confirmed in his contemporaneous notes, and reflected in his Will dated 9 October 2015, all of which ae consistent with each other.
22. The David/Karl interests submit that, subject one matter, the status quo should be maintained. They say that the status quo achieved, and continues to achieve, John's dual desires of meeting his testamentary objectives and providing for his care.
23. That one matter is that David and Karl are willing to have a charge or other similar legally enforceable obligation to care for their father. Specifically, they will submit to any reasonable order of the Court imposing upon them legal obligations to provide for John. It is said that their conduct proves beyond doubt that they have provided for their father for nearly four years, and any fair assessment would be that they fully intend to continue to do so. Having said that, they recognise that the law may require more than their transparently honest intentions, and so will consent to any reasonable legal obligations to do so.

Determination

1. At the outset, I note that it is accepted that there was no power under the Enduring Power of Attorney for Wendy to transfer the Trundle Properties to herself. I also note that it is recognised that someone entrusted with the management of another's finances is accountable to the principal, this being a position of trust and confidence which gives rise to a fiduciary relationship, and, as a result, a duty to keep proper accounts (see, for example, Hospital Products Limited v United Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 (Hospital Products)).
2. It is clear that Wendy was not authorised by the Enduring Power of Attorney to confer benefits upon herself, at least not without the due consent of John (see, for example, Perochinsky v Kirschner [2013] NSWSC 400; and consider also Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68 at [68] per Emmett JA, with whom Bergin CJ in Eq agreed).
3. I also consider that it is comfortably established that Wendy's conduct was in breach of the proscriptive fiduciary duties that she owed to John, albeit that I accept that she may have acted in the honest belief that what she was doing was in the interests of John and their family as a whole and that he would be adequately provided for by David and Karl.

John's mental capacity

1. As to the finding sought by the Nick interests as to John's lack of mental capacity, in the absence of expert evidence, I am unable to conclude that he lacked mental capacity from no later than the end of September 2015. I accept that the evidence is that his mental condition was deteriorating during 2015 and that he exhibited symptoms of dementia during that period. However, it was impressed upon me by Counsel for the Nick interests that it would be unsafe to take judicial note of dementia or dementia-related illnesses given that the conditions attendant upon those illnesses may vary according to the type of dementia and any other conditions suffered (such as depression, or the like).
2. Again, in the absence of expert medical evidence, I am not comfortable making a finding on the balance of probabilities as to the particular date by which John had permanently lost mental capacity, particularly in circumstances where, during 2015, there was at least one solicitor (Mr Helby) who took instructions from John. Indeed, Mr Helby took instructions not only as to the Enduring Power of Attorney, appointment of guardian and his Will in or about June 2015, he then finalised John's Will for execution in October 2015 and also, according to his file note and his contemporaneous correspondence with Nick's solicitors, he took instructions in November 2015 as to the matters raised in Nick's September 2015 correspondence. Accordingly, I must proceed on the basis, at least given the paucity of other cogent evidence in this respect, that Mr Helby had formed an opinion (necessarily a lay opinion but made in a professional context where he must have been conscious of his obligations to the Court and his client(s)) as to John's ability to understand the transactions there being contemplated. Similarly, there also was a marriage celebrant who apparently considered that John had sufficient capacity to participate in the marriage ceremony in order for the marriage celebrant to comply with the celebrant's duties in officiating at the ceremony.
3. I should add, in relation to the last point, that, as unlikely as it might have seemed given his deteriorating mental health during the course of 2015, Angelena was adamant that John knew what was happening on his wedding day. Indeed, I should here record that Angelena looked me squarely in the eye when she gave that evidence and I accept that it was her truthful evidence and genuine, albeit lay, opinion at the time. I also note that I considered David and Karl to be genuine in their evidence that John, in the course of nursing home visits, had expressed the wish to them that they have the farms.
4. None of the preceding seems to me to be inconsistent with someone whose cognitive function was declining but who, at least from time to time, had some vestigial mental capacity.

Claim against Wendy

1. Returning then to the claim against Wendy, it is well known that a trustee is liable for breach of trust even if that breach is innocent and in good faith (see, for example, Boardman v Phipps [1967] 2 AC 46). The same may be said in general for a fiduciary in breach of fiduciary duty. However, the question of relief here arises.
2. The object of equitable compensation was said in V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd [2013] FCAFC 16; (2013) 296 ALR 418 (see at [55]) to be restitution of what the victim has lost. More specifically, the Court there noted that the primary purpose of such relief, by reference to Nocton v Lord Ashburton [1914] AC 932 and Re Dawson (1966) 84 WN (Pt 1) (NSW) 399, is compensatory (and there citing the 4th edition of Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (R P Meagher, J D Heydon and M J Leeming, 2002, LexisNexis) at [23-02]) As noted by Mason J, as his Honour then was, in Hospital Products (see at 109), equity "does not assume jurisdiction to punish a fiduciary for misconduct by making [the fiduciary] account for more than [the fiduciary] actually received as a result of [the] breach of fiduciary duty".
3. More recently, in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43, Gageler J, having considered what a defendant must demonstrate in order to establish that it is inequitable to order an account of the value of the whole of the identified benefit or gain (see at [92]) went on to caution (at [94]) that, "[t]he judgment to be made [i.e., as to relief] must accommodate the stringency of the equitable obligation to be vindicated to the need to ensure that the remedy is not 'transformed into a vehicle for the unjust enrichment of the plaintiff'" (quoting Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561; [1995] HCA 18).
4. Here, the relief that would vindicate the underlying principles of fiduciary duty that Wendy breached would ordinarily be to order that the property transferred to, and still held by, her be held in trust by her estate for the benefit of John and equitable compensation for the balance of the real property transferred to David and Karl; or, alternatively, equitable compensation for the value of the Trundle Properties at the relevant time. However, it is abundantly clear that this will be of little practical benefit to John (other than to provide a fund from which his future needs can be made good) and, indeed, might even operate to some extent to the disadvantage of his estate (for example, if it caused him to lose the benefit of concessional rates or governmental assistance available in relation to his nursing home accommodation). The ultimate beneficiaries of such a vindication of Wendy's breach of fiduciary duty would likely be the beneficiaries of John's Will (after his death) - those being (subject to any challenge by Nick) David and Karl and, to the extent of the legacy left to her, Sara.
5. I do not suggest that an order for equitable compensation against Wendy's estate for the value of the Trundle Properties transferred by her out of John's name in breach of her fiduciary duty to him would operate unjustly to enrich John. However, I cannot see that he will practically benefit from such an order beyond the benefit that he would receive if there were to be relief fashioned so that the Trundle Properties were to be charged with the provision for his ongoing needs during his lifetime (and for the legacy to Sara under his Will).
6. Following, I therefore consider that the appropriate relief is to make good John's estate by way of orders that ensure that his financial needs are met and his testamentary intentions are honoured. That is, more specifically, that the appropriate relief is that put forward by the David/Karl interests - namely, that there be a charge on the three Trundle Properties in which Wendy's estate retains an interest (Woolharinga, Nellyvale and Sunrise) to secure the necessary funds and for the Court to accept the undertaking by David and Karl that they will provide for their father's needs during his lifetime and will honour his bequest to Sara. I will invite submissions as to how that charge should be expressed, noting that it would have to be subordinate to NAB's interest as registered mortgagee (not least since NAB was not joined as a party to the 2017 Proceeding).

Claim against David and Karl

1. As to the claim against David and Karl, this relevantly turns on the issue of their knowledge of Wendy's breach of fiduciary duty, noting that there is no doubt that they received their respective interests in the Trundle Properties for no consideration as a result of Wendy's breach of fiduciary duty and they participated in that breach of fiduciary duty by signing the relevant documents. Pausing here, I record that I leave aside the question whether, for the purposes of the second limb of the rule in Barnes v Addy, this was a dishonest and fraudulent design by Wendy and say only that, on that issue, I am not persuaded that it was fraudulent given Wendy's reliance on the advice received from Ms Hughes as to her power to enter into the transactions nor do I consider that it has been established to be dishonest in circumstances where I accept that Wendy's instructions to Ms Hughes were to the effect, misconceived as it was, that she wished to give effect to John's testamentary intentions in advance of his death.
2. As to the pleading issue, I am prepared for present purposes to treat the pleading of "knew or ought to have known" as a sufficient pleading of Baden Delvaux category 4 knowledge (as to which, see again at [495]ff above), but I do not accept that there has been a sufficient pleading to permit the Nick interests to rely on attribution of knowledge from Ms Hughes to David and Karl.
3. Turning then to the knowledge requirements in Barnes v Addy claims, it has been observed that, "[c]onfusion surrounds the equitable liability of a third party to a trust or fiduciary relationship who participates in a breach of the trust or fiduciary duty" and that this confusion is compounded by an "absence of consensus in courts that share a common Chancery law heritage" (see P Ridge, "Participatory Liability for Breach of Trust or Fiduciary Duty" in J Glister and P Ridge (eds), Fault Lines in Equity (2012, Hart) 119 at 119).
4. At the outset, it is desirable to distinguish more clearly between liability for knowing receipt (that is, the "first limb in Barnes v Addy") and liability for knowing assistance (that is, the "second limb in Barnes v Addy").
5. It is convenient to deal first with knowledge requirements in knowing assistance claims.

Knowledge requirements for knowing assistance

1. As observed by Ridge, until recently, jurisdictional differences in approach to knowing assistance were excused on the basis that appellate Australian courts had not had a proper opportunity to consider the Privy Council's rationalisation of principle in 1995 in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 (Royal Brunei).
2. In this connection, it is to be noted that, in 2007, the High Court in Farah did not endorse Lord Nicholls' reformulation of principle, instead adhering more closely to nineteenth century authorities and also the earlier decision of the High Court in Consul, though did leave open following Royal Brunei in the future.
3. Furthermore, there exists a body of authority, much of which precedes Farah, endorsing the change of approach in Royal Brunei (see, for example, Beach Petroleum NL v Abbott Tout Russell Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 at [405]; [413]-[414] per Spigelman CJ, Sheller and Stein JJA (Beach Petroleum); Aequitas Ltd v Sparad No 100 Ltd (formerly Australian European Finance Corp Ltd) [2001] NSWSC 14; (2001) 19 ACLC 1006 at [392] per Austin J but cf Cadwallader v Bajco Pty Ltd [2002] NSWCA 328 at [199] per Heydon JA, as his Honour then was).
4. At this juncture, it is instructive to consider the relatively recent decision of an unanimous bench (Santamaria, McLeish and Niall JJA) of the Victorian Court of Appeal in Harstedt Pty Ltd v Tomanek (2018) 55 VR 158; [2018] VSCA 84 (Harstedt).
5. The facts of the appeal may be briefly stated. Harstedt Pty Ltd (Harstedt), as part of a failed investment scheme, invested funds into a bank account in the name of Apollo Development Enterprises Pty Ltd (Apollo). In dishonest and fraudulent breach of trust, those funds were misappropriated by Apollo and transferred to an overseas bank account in the name of a third party. The funds then vanished. Mr Tomanek, the respondent, was the company secretary of Apollo. At trial, Harstedt unsuccessfully alleged that Mr Tomanek was liable to it for the lost moneys as a knowing assistant. Relevantly, the trial judge held that Mr Tomanek had no knowledge of the dishonesty of Apollo's breach of trust. Harstedt then appealed on four grounds. Relevantly, the second ground of appeal related to whether, in circumstances where Mr Tomanek knew of the transfer of moneys to the overseas account and that Harstedt had not consented to that transfer, Mr Tomanek knew of Apollo's dishonest and fraudulent breach of trust; and, following, the third ground concerned whether Mr Tomanek, armed with such knowledge, "assisted" that breach of trust.
6. The Court noted (at [70]) that the necessary elements of liability for knowing assistance may be conventionally adumbrated as follows: first, that there exists a fiduciary duty owed by the fiduciary (as trustee or otherwise); second, that there exists or there was a "dishonest and fraudulent design" on the part of the fiduciary; third, that there is or was assistance by the third party in that design; and, fourth, that there is or was knowledge on the part of the third party of the circumstances constituting that design (see also Farah at [160] and Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [259] per Finn, Stone and Perram JJ (Grimaldi)).
7. Pausing here, as to the second of those elements, I note that this requires that there be a "dishonest and fraudulent design" on the part of the fiduciary, such that the breach of fiduciary duty itself must be a dishonest and fraudulent one (see Farah at [179]). However, there is some dissonance in the body of decided cases as to the precise meaning of "dishonest and fraudulent" in this context (see, for example, Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; [2012] WASCA 157 at [2121]-[2126] per Drummond AJA, with whom Carr AJA relevantly agreed cf Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [11] per Gleeson JA and [84]-[120] per Leeming JA, with whom Gleeson JA agreed (Hasler)). However, in Harstedt, the parties did not on the appeal impeach the trial judge's conclusion that Apollo's breach of trust was a dishonest and fraudulent one.
8. As to the knowledge requirement, as adverted to, the Court stated (see at [84]ff) that the third party, to be liable, must have known, or had reason to know, of the fiduciary's dishonest and fraudulent design (citing Grimaldi at [259]; and see also Nicholson v Morgan (No 3) [2013] WASC 110; (2013) 8 ASTLR 277 at [61]-[68] per Edelman J, as his Honour then was); and, crucially, that it is not necessary that the third party itself have acted dishonestly (citing Farah at [163]), noting that liability for knowing assistance is distinct from the liability of a third party who procures or induces a breach of fiduciary duty (citing Farah at [68]).
9. As the Court also noted, and indeed as I have made reference to throughout, there has at least in the past been a custom to analyse the knowledge requirement by reference to a scale of five categories, as set out by Peter Gibson J (as his Lord Justiceship then was) in Baden Delvaux. Specifically, those categories being (see at 235; 242-243): (1) actual knowledge; (2) wilfully shutting one's eyes to the obvious; (3) wilfully and recklessly failing to undertake such inquiries as an honest and reasonable person would undertake; (4) knowledge of circumstances which would indicate the facts to an honest and reasonable person; and (5) knowledge of circumstances which would put an honest and reasonable person on inquiry.
10. As to the third to fifth categories, the Court in Harstedt noted that: the third category "involves such a calculated abstention from inquiry as would disentitle the third party to rely upon lack of actual knowledge of the trustee's or fiduciary's wrongdoing" (quoting Grimaldi at [261]; and see also Belmont Finance Ltd v Williams Furniture (No 1) [1979] Ch 250 at 267 per Buckley LJ); the fourth category is "designed to prevent a third party setting up his or her own 'moral obtuseness' as the reason for not recognising an impropriety that would have been apparent to an ordinary person" (quoting Grimaldi at [261], citing Consul at 398 per Gibbs J, as his Honour then was); while the fifth derives from the equitable doctrine of a bona fide purchaser for value without notice (citing Grimaldi at [261]).
11. I note, as did the Court in Halstedt (see at [87]), that the High Court in Farah endorsed Peter Gibson J's distillation of principles in Baden Delvaux and indicated that knowledge falling within any of the first four of these categories (but not within the fifth category) represents the law in Australia (see at [177]-[178]).
12. It remains only to observe, as to Royal Brunei, that the High Court in Farah noted that Lord Nicholls' formulation of principle represents a general principle of equitable accessorial liability (see at [162]); and, again, the High Court chose not to adopt his Lordship's more generalised formulation and, in so doing, there maintained the distinction between third party liability for procuring or inducing the breach of fiduciary duty and liability for assisting or participating in that breach (see at [163]). The significance of this for present purposes is that the High Court made clear that, in relation to claims for knowing assistance, the dishonest and fraudulent design must be on the part of the fiduciary, not the assistant (see at [160]; [179]), it is not necessary to demonstrate that the third party itself acted dishonestly (see at [163]) and that "knowledge", in the sense of the first to fourth categories identified above, is necessary.
13. As the Court in Halstedt commented (at [96]), the approach adopted in Royal Brunei impermissibly, "shifts focus from the third party's knowledge of the dishonest and fraudulent design on the part of the fiduciary to the dishonesty of the third party itself" (emphasis omitted) and that this, "signifies a departure from the conventional understanding of liability under the second limb of Barnes v Addy by imposing liability with respect to any breach of fiduciary duty so long as the third party itself was objectively dishonest" and it dispenses with the "knowledge" requirement explained above, which, at least since the decision in Farah, is the law in Australia (cf Beach Petroleum at [405]; and see also, for example, Comgroup Supplies Pty Ltd v Products for Industry Pty Ltd [2016] QCA 088 at [54] per Margaret McMurdo P, Atkinson and Mullins JJ).
14. In Hasler, Leeming JA considered with approval (at [131]) the reasons of the primary judge (see at [290]-[298] per McDougall J) to the effect that, whether or not, subjectively, the accessory appreciated that what was going on was dishonest or fraudulent was immaterial: the relevant issue being that the facts which were there known to the accessory, regarded objectively, demonstrated a breach of fiduciary duty by the fiduciary (and the activities of the accessory assisted in, or facilitated or furthered that breach).
15. I now turn to knowledge requirements in claims for knowing receipt (that is, the "first limb in Barnes v Addy").

Knowledge requirements for knowing receipt

1. The requisite degree of knowledge, on the part of the third party recipient, in claims of this class was considered by the Full Court of the Federal Court in Grimaldi. Relevantly, the Court (Finn, Stone and Perram JJ), in a unanimous judgment, said (at [268]): 268. The High Court in Farah Constructions did not settle the knowledge/notice requirement in relation to recipient liability. Nonetheless, from at least the 1990s and in the wake of the Baden classification, judges had begun in recipient liability cases to generalise from what had been said both by Gibbs J (at 398) and by Stephen J (at 412) with whom Barwick CJ agreed, about the insufficiency of traditional, or category (v), constructive notice - though not of category (iv) notice - as a basis for personal liability. To allow that, as Stephen J commented, would be "to disregard equity's concern for the state of conscience of the defendant": at 412; see eg Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 103G; Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Ltd at 105; Hancock Family Memorial Foundation at 209; Tara Shire Council v Garner [2003] 1 Qd R 556 at [66]-[72]; Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 54 ATR 241 at [54]-[60]; see also United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 252-254. In Kalls Enterprise Pty Ltd (in liq) v Baloglow (2007) 63 ACSR 557 - a decision which post-dates Farah Constructions - the New South Wales Court of Appeal applied Baden's categories (i)-(iv), but not category (v) to a knowing receipt claim. Kalls Enterprise in turn has been applied subsequently: see eg Horsman v MG Kailis Pty Ltd [2009] WASC 166; Fodare Pty Ltd v Shearn (2011) 29 ACLC 11-036.
2. Accordingly, for the purposes of knowing receipt, knowledge in any of the four categories identified above (see at [539]) is sufficient.
3. As the Full Court went on to say (at [269]-[270]): 269. There is, in other words, an established line of judicial decision and opinion both at first instance and in intermediate courts of appeal spanning at least 20 years adhering to the view taken in the above cited cases. We do not consider that that view is plainly wrong and should be rejected. On the contrary! Finally, for the sake of completeness, we should note we do not consider that what was said by Bryson J in Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd (2001) 38 ACSR 404 at [469]-[478] is inconsistent with that view. Commendably, his Honour emphasised the fault based character of recipient liability: "[u]nconscionability cannot be fictionalised, and the grounds on which constructive trust liability is imposed should be real and substantial": at [471]. 270. Accordingly, we do not consider the primary judge erred in law in finding that knowledge falling within category (iv) of Baden was sufficient for the imposition of liability for knowing receipt…
4. I do not consider that the view expressed by the Full Court, or in those other decisions cited by the Full Court, is plainly wrong and I am here bound as a matter of precedent to follow Grimaldi.
5. In any event, even if I thought otherwise, I note that in Kalls Enterprises Pty Ltd (in liq) v Baloglow [2007] NSWCA 191; (2007) 63 ACSR 557, the Court of Appeal (Giles JA, with whom Ipp JA and Basten JA agreed) held that it is sufficient, in a claim for knowing receipt, that the third party recipient had constructive knowledge of the kind captured in the fourth category (but not the fifth) in the classification deployed in Baden (see at [199]).

Application to the facts in this case

1. Relevantly, therefore, for both limbs of liability what here must be determined is whether David and Karl had knowledge of circumstances which would indicate the facts to an honest and reasonable person.
2. On the knowing assistance claim, again, it is accepted and cannot be doubted that Wendy owed John a fiduciary duty in the exercise of powers under the Enduring Power of Attorney granted to her. I do not accept that the evidence establishes a "dishonest and fraudulent design" on the part of Wendy (in the sense used in the authorities referred to above), notwithstanding that she acted with the deliberate intention of transferring John's real property into her and their sons' names; but, in any event, even if there was, while I accept that David and Karl received their interests in the Trundle Properties and assisted in that exercise by executing the relevant documents, I do not accept that they did so with the requisite knowledge (i.e., I do not accept that the evidence establishes that there is or was the requisite degree of knowledge on the part of David or Karl of the circumstances constituting, on this hypothesis, a fraudulent or dishonest design).
3. I accept that the fourth category is "designed to prevent a third party setting up his or her own 'moral obtuseness' as the reason for not recognising an impropriety that would have been apparent to an ordinary person" and that one does not take into account subjective opinions. However, what is required is to assess whether there is knowledge of circumstances that would indicate the facts to an honest and reasonable person in the position of David and Karl. In NCR Australia Pty Ltd v Credit Connection Pty Ltd (in liquidation) [2004] NSWSC 1 (cited by Owen J in Bell First Instance at [4694]), Austin J referred the reasonable person with similar knowledge. It is, in this context, that the David/Karl interests point to the limited knowledge, intelligence and expertise on the part of David and Karl and, indeed, that those matters take on particular significance.
4. Even leaving aside the age and inexperience and level of education of David and Karl, it seems to me that an honest and reasonable person in their position, being taken by their mother to a lawyer for the purpose of a proposed transaction and no doubt relying on the lawyer's advice that the transaction was one that could be lawfully effected, knowing that the Trundle Properties were being transferred out of John's name for no consideration for the purpose of effecting his testamentary intentions in advance and so as to prevent interference by Nick in the Trundle Properties, would not thereby be aware of facts and circumstances that would indicate to that person that the transaction was a breach of fiduciary duty owed to John (or a misuse of the Enduring Power of Attorney under which the transaction was being effected), let alone one that was a dishonest and fraudulent transaction (see Farah at [179]).
5. As to the knowing receipt claim, the same finding as to knowledge applies. I cannot see that an honest and reasonable person in the position of David and Karl would have knowledge of circumstances that indicated the fact that Wendy had misapplied the Enduring Power of Attorney or John's property. That is only reinforced by the fact that neither Ms Hughes nor Mr Wallis (both of whom it may readily be inferred had a greater degree of knowledge and expertise, as qualified lawyers, than David and Karl who did not finish secondary school let alone any tertiary education) also clearly did not turn their minds to this issue. Otherwise, I repeat my preceding observations.
6. Accordingly, I find that the knowing assistance and knowing receipt claims against David and Karl are not made good.

General observations as to balance of relief sought

1. Finally, as to the relief sought in relation to the winding up of the respective partnerships of which John was a partner, it seems to me that this is a matter that could be dealt with by the remaining partner or partners and that it is not necessary for orders to be made.
2. However, I will hear any submissions to the contrary. My tentative view is that I would be prepared to make the declaration sought at prayer 17 of the amended statement of claim as to John now being incapable of managing his affairs, if that be considered efficacious, but I am not prepared to re-appoint the NSW Trustee and Guardian to manage John's estate without consultation with the NSW Trustee and Guardian as to whether such an appointment would be with consent in all the circumstances.
3. I will therefore invite submissions as to whether, in the circumstances, the NSW Trustee and Guardian should be approached to see whether it would consent to appointment as financial manager of John's estate in light of the relief here granted; or whether some other person should be appointed as manager of John's estate. Further, I see no reason for an order that the registration of John's Enduring Power of Attorney in favour of Wendy be cancelled (since she is no longer alive to make use of it) but, if it is perceived that there is a need for this, this can be addressed in written submissions.

Orders

1. In the 2019 Proceeding, I make the following orders: 1. Declare that the First and Second Promissory Notes (as defined in these reasons) were void and of no effect. 2. Declare that, by reason of the First and Second Promissory Notes being void and of no effect, Owen John Turner owes no moneys to Allawah Pastoral Pty Ltd pursuant to the First or Second Loan Agreements (as defined in these reasons) or at all. 3. Declare that the unregistered First and Second Mortgages (as defined in these reasons) are inoperative and do not secure any moneys loaned by Owen John Turner to Allawah Pastoral Pty Ltd. 4. Order that the First and Second Mortgages (as defined in these reasons) be delivered up to the solicitors for the plaintiff in the 2019 Proceeding for cancellation. 5. Further and in the alternative, declare that the entry by Owen John Turner into the transactions comprised of, and the execution by Owen John Turner of, the 2010 Transaction Documents (as defined in these reasons) and 2015 Transaction Documents (as defined in these reasons), were obtained by undue influence, to the knowledge of the first defendant to the 2019 Proceeding and, through him, the second defendant to the 2019 Proceeding; and that the retention of the benefit of, or insistence upon, the said documents and transactions by the defendants to the 2019 Proceeding would amount to unconscionable conduct. 6. Order that the 2010 Transaction Documents and 2015 Transaction Documents be set aside. 7. Direct the parties to file brief written submissions as to costs by 5 February 2021 with a view to dealing with the issue of costs on the papers, if possible.
2. In the 2017 Proceeding, I make the following orders: 1. Direct that the parties to provide brief written submissions as to the extent of the charge to be imposed over the Woolharinga, Nellyvale and Sunrise properties (as defined in these reasons) in accordance with these reasons, along with any other submissions in relation to relief including as to costs, and proposed short minutes of order, by 5 February 2021, with a view to determining those issues on the papers, if possible. 2. Otherwise, dismiss the proceeding.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 January 2021