Turner v O'Bryan-Turner

Supreme Court of NSW|2022-10-05|Before: Ward P, Giles J, The J

Background

The factual background to the dispute is set out in my principal judgment and is not here repeated save as is necessary.
After the principal judgment, the Nick interests (the plaintiffs in the 2017 Proceeding and the defendants in the 2019 Proceeding) appealed from the orders made in the 2017 Proceeding. There was no appeal from the orders made in the 2019 Proceeding. In that proceeding, I found that a series of transactions entered into in 2010 and 2015 were obtained by undue influence and that it would amount to unconscionable conduct for the Nick interests to retain the benefit of those transactions (see [403]-[405] of the principal judgment, extracted below).
On 24 February 2022, the Court of Appeal published reasons (Turner v O'Bryan-Turner (2022) 107 NSWLR 171; [2022] NSWCA 23), allowing the appeal in relation to the 2017 Proceeding in part and setting aside the orders that had been made insofar as they related to Wendy's estate (Meagher JA at [1]; White JA at [151], [155]; McCallum JA, as her Honour then was, at [158]).
Meanwhile, solicitors acting for the David/Karl interests (the first to third defendants in the 2017 Proceeding, as noted above, and the plaintiffs in the 2019 Proceeding) had sought compliance by the Nick interests with certain of the orders made in the 2019 Proceeding (from which, as noted above, there had been no appeal) (see letter dated 18 January 2022 from Turner Freeman to Cleary Hoare (the Nick interests' lawyers at the time of the proceedings before me) and letter dated 25 January 2022 from Turner Freeman to O'Loughlin Westhoff (the Nick interests' current lawyers)).

Present applications

By the July Motion the David/Karl interests have sought to enforce orders made in the 2019 Proceeding, including, relevantly, orders for the re-transfer to John of one half share in the Allawah Forbes Property (and have also sought orders with a view to an application being made pursuant to s 66G of the Conveyancing Act 1919 (NSW) for the sale of that property); an order that Nick transfer 50% of the shares in Allawah Pastoral to John (as had been ordered but had not been complied with); and an order that Nick provide books and account and profit and loss for Allawah Pastoral between 6 May 2015 and for the filing of the summons. As adverted to above, the Nick interests consent to the order sought by prayer 4 of the July Motion (the transfer of shares in Allawah Pastoral, which I am informed has now occurred); and do not oppose the order sought by prayer 13 of the July Motion (the provision of the books of account and profit and loss statements of Allawah Pastoral), but they resist the balance of the relief sought by the David/Karl interests.
By the August Motion, the Nick interests seek is a variation of orders 5 and 6 of the orders made on 12 January 2021 so as, in effect, to exclude the transfer form for the Allawah Forbes Property from the orders that were made setting aside the 2015 Transaction Documents (which would exclude that transaction from those which were set aside as a result of order 6) and which relief (if granted) would render otiose the balance of the July Motion.
The particular orders sought to be varied of the orders made on 12 January 2021 in the 2017 Proceeding are as follows: 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 or insistence upon, the said documents and transactions by the defendants to the 2019 proceedings would amount to unconscionable conduct. 6. Order that the 2010 Transaction Documents and 2015 Transaction Documents be set aside.
The Nick interests seek the insertion of the words "other than the property transfer form for the Allawah Forbes Property (as defined in these reasons)" in order 5 (after the words "2015 Transaction Documents (as defined in these reasons)") and in order 6 (after the words "2015 Transaction Documents").
The perceived difficulty with the above orders arises from the use of the defined term "2015 Transaction Documents". That term was defined at [101] of the principal judgment in the following context: 101. 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.
Pausing here, the Nick interests say that there is no error in the inclusion in the said definition of the property transfer form for the Allawah Forbes Property, it being factually correct that this document was signed at the same time as the other documents referred to at [101] of the principal judgment. Rather, the complaint is that picking up the definition of "2015 Transaction Documents" in orders 5 and 6 without carving out "the property transfer form for the Allawah Forbes Property" from that definition has led to the (the Nick interests maintain unintended) consequence that the orders now purport to set aside the property transfer form in respect of Allawah Forbes despite the fact that this transfer was not in issue in the proceeding and, in any event, the document effected a transfer of property between John and Nick for good consideration.

Relevant legal principles

As noted above, the Nick interests invoke the power to correct a clerical mistake in an order or an error arising from an accidental slip or omission pursuant to r 36.17 of the UCPR or the inherent jurisdiction of the Court to "amend a judgment or order after it has been drawn up where the judgment or an order, as drawn up, is expressed ambiguously or where it fails to express correctly the intention of the court at the time when the judgment or order was pronounced" (citing Coppins v Helmers; Brambles Constructions Pty Ltd [1969] 2 NSWR 279; (1969) 72 SR (NSW) 273 at 276 per the Court (Herron CJ, Sugerman and Mason JJA (as their Honours then were)).
The principles relevant to the application of the so-called "slip rule" (see Mutual Shipping Corporation v Bayshore Shipping Co Ltd ("The Montan") [1985] 1 WLR 625 at 633 per Donaldson MR, where the distinction was drawn between "having second thoughts or intentions and correcting an award or judgment to give true effect to first thoughts or intentions") were considered in Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 (Storey & Keers) and Newmont Yandal Operations Pty Ltd v The J Aron Corporation and Goldman Sachs Group, Inc (2007) 70 NSWLR 411; [2007] NSWCA 195 (Newmont Yandal) and have been applied in a number of cases (see, for example, recently in Anderson v Canaccord Genuity Financial Ltd (No 2) [2022] NSWSC 649 (Anderson v Canaccord Genuity Financial).
In Storey & Keers, McHugh JA (as his Honour then was) with whom Clarke AJA agreed, (at 453) postulated the test for what amounts to an accidental slip or omission (capable of correction under the slip rule or the inherent jurisdiction of the Court) as being whether the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist (see, to similar effect, what was said in Brew v Whitlock (No 3) [1968] VR 504 at 506-507 Winneke CJ, Little and Gowans JJ). McHugh JA posed the relevant question (at 453) as being whether, had the matter been drawn to the attention of the court at the time, the correction would "at once have been made" applying Hatton v Harris [1892] AC 547 (Hatton v Harris) at 558 per Lord Herschell).
In identifying the intention of the Court at the time the orders were made, what is sought to be ascertained is the objective intention of the Court, not the subjective intention of the judge who made the order (Newmont Yandal at [91]; [95]; Anderson v Canaccord Genuity Financial at [53]). However, while subjective evidence of intention is not necessarily admissible (see Newmont Yandal at [91] and [95] per Spigelman CJ (with whom Santow JA and Handley AJA agreed)), it is also accepted that some account may nevertheless be taken of the trial judge's ex post facto observations (see, for example, Form-Quip Ltd v Trafalgar Properties Ltd (Supreme Court (NSW), Giles J, 19 July 1991, unrep). In Newmont Yandal, Spigelman CJ said (at [182]) that: Satellite litigation and delay should be avoided with respect to both the inherent jurisdiction and the slip rule. I agree with Handley AJA that the judge who made the orders is overwhelmingly the preferable person to make the corrections. That s/he may be influenced by, and even express, her or his subjective intention is not a ground for disqualification.
The slip rule is directed at the correction of accidental errors of a clear kind and has no application where "the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist" (see Storey & Keers at 453). There is no time limit in making an application for correction under the slip rule and any amendment takes effect from the date of the original orders (Storey & Keers at 453, citing Hatton v Harris); and the slip rule is not confined to subsidiary or consequential matters such as costs or interest (Storey & Keers at 453).
What the slip rule does not permit is "reconsideration, let alone alteration, of the substance of the result that was reached and recorded" (Burrell v The Queen (2008) 238 CLR 218; [2008] HCA 34 (Burrell v The Queen) at [21] per Gummow A-CJ, Hayne, Heydon, Crennan and Kiefel JJ). Emphasis is here placed by the Nick interests on the further proposition that the proposed amendment must relate to a matter which was in issue in the proceedings or what was incidental thereto (citing Storey & Keers at 453).
In Storey & Keers, McHugh JA, as his Honour then was, said (at 453) that: … It would be contrary to the rationale of the slip rule to allow judgments and orders to be amended to deal with matters which were not in issue in the proceedings. Such matters must be dealt with by way of appeal and in accordance with the principles which govern the raising of new matters on appeal: cf Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438 and Piening v Wanless (1968) 117 CLR 498 (at 453C-D).
With the above in mind, I turn to the submissions made by the respective parties, which may be summarised briefly as follows.

Submissions by the Nick interests

The Nick interests accept that, as the orders are currently framed, the "2015 Transaction Documents" are to be set aside and that (as defined) this expression includes the "the property transfer form for the Allawah Forbes Property". However, the Nick interests contend that the orders made on 12 January 2021 in the 2019 Proceeding were not intended to affect the ownership of the Allawah Forbes Property (and could not have been so intended in circumstances where the ownership of that property was not in issue in the proceedings). The difficulty identified by the Nick interests is that what they say is the unintended consequence of the framing of the orders by reference to the 2015 Transaction Documents cannot be overcome simply by construing the orders as they now stand (referring in this context to what was said as to the proper construction of Court orders in Laming v Jennings [2018] VSCA 335 at [123] per the Court (Kyrou, McLeish and Niall JJA)).
It is noted that although the two sets of proceedings were heard together and determined in a single judgment, and there was an overlap in the parties, the transactions challenged in each set of proceedings were quite different. While they accept that it was factually correct to say that the property transfer form for the Allawah Forbes Property was signed at the same time as the other documents referred to the principal judgment at [101], the slip identified is the use of that definition in the relevant orders.
The Nick interests point to the scope of the issues in dispute in the 2019 Proceeding. In particular, it is noted that in the statement of claim the David/Karl interests relevantly sought: in prayer 9, a declaration that John's entry into the transactions comprised of, and the execution by John of, the Transaction Documents and the Resignation Documents, were obtained by unconscionable conduct or undue influence by or to the knowledge of the defendants (the Nick interests); and, in prayer 10, an order setting aside the "Transaction Documents" and the "Resignation Documents".
The expression "Transaction Documents" was defined at [10] of the statement of claim, which definition did not include the property transfer form for the Allawah Forbes Property. Rather, all of the "Transaction Documents" related to the transaction referred to in the principal judgment as the 2010 Transaction (see [43]ff), concerning the establishment of two "Turner Family Bloodline™ Trusts" and an associated mortgage, loan and promissory note.
The expression "Resignation Documents" was defined at [36] of the statement of claim, which definition again did not include the property transfer form for the Allawah Forbes Property. Rather, the definition of "Resignation Documents" comprised the documents concerning the resignation of John as principal of the two Bloodline™ Trusts, and the resignation of John as director of Allawah Pastoral and transfer of shares in Allawah Pastoral from John to Nick (those documents relating to what was described in the principal judgment as the 2015 Transaction - see at [97]ff).
The Nick interests emphasise that nowhere in the pleading is any allegation made, or any relief sought, in relation to the Allawah Forbes Property (that property being entirely separate from the two Bloodline™ Trusts). It is noted that the Allawah Forbes Property is geographically separate from the Trundle Properties that were the subject of the impugned transactions and that it did not have a long history of ownership within the family (referring to the principal judgment at [38]-[39]), the Allawah Forbes Property having been purchased by Nick and John jointly in 2008 using mortgage finance (see the principal judgment at [40]).
The Nick interests say that the evidence at trial did not focus upon the transfer of the Allawah Forbes Property that occurred in 2015. It Is noted that the solicitor who advised on the 2015 Transaction (Mr Bailey) gave evidence which focused on the preparation of documentation concerning the Bloodline™ Trusts (see the affidavit of Adrian Bailey, sworn 23 December 2019, at [77]-[90]) and did not specifically address the transfer of the Allawah Forbes property; and that Nick's evidence in the 2019 Proceeding in relation to the 2015 Transaction also did not focus on the transfer of the Allawah Forbes property. The transfer documentation for the Allawah Forbes Property was prepared not by Mr Bailey but by a different firm of solicitors (see Nick's affidavit sworn 10 January 2020 at [63]) (McGroders Solicitors).
It is noted that Nick addressed the position of the Allawah Forbes Property in his affidavit sworn in the 2017 Proceedings (being his affidavit sworn 13 March 2017), deposing that: the Allawah Forbes Property was purchased by John and Nick in 2008 for the price of $794,640 (at [38]); in order to purchase the property, John and Nick obtained a debt facility from Rabobank secured by mortgage over the Allawah Forbes Property and the facility was eventually drawn down to $896,126.92 (i.e., an amount in excess of the purchase price) (at [39]-[40]); in 2015 John requested to be removed from title of the Allawah Forbes Property and removed from his liability for the debt owing to Rabobank (at [167]); on 8 May 2015 Nick acquired John's interest in the Allawah Forbes Property in consideration for assuming sole responsibility of the debt to Rabobank which, at that time, stood at $895,125.12 (at [168]-[169]); and at the time of the transfer an appraisal was obtained valuing Allawah Forbes at $794,640 (at [171]). The Nick interests say that the effect of this evidence was that, by assuming liability for John's share of the debt, Nick was in effect paying John more than the appraised value of his share of the Allawah Forbes Property (and it is noted that there was no challenge to Nick's evidence on these matters at the trial).
Reference is made to the references to the Allawah Forbes Property in the transcript of the hearing (T 26.48-27.6; T 27.34-39; T 33.11-15; T 54.45-50; T 73.24-74.34; T 92.14-93.36; T 98.36-99.17; T 252.21-32; T 313.15; T 420.21-38 and T 429.10-17) from which it is said that it is evident that a claim to reverse the transfer of John's interest in the Allawah Forbes Property formed no part of the case run by the David/Karl interests at trial. The Nick interests say that this is further confirmed by reference to the written submissions of the David/Karl interests at trial, which made no mention at all of the Allawah Forbes Property and described the 2015 Transaction in terms which focused on control of Allawah Pastoral and the Bloodline™ Trusts (referring to the submissions at 459-460, 467 (at [44])).
Thus, the Nick interests contend that, both in terms of the pleaded case and the manner in which it was conducted, the reversal of the 2015 transfer of John's interest in the Allawah Forbes Property did not form part of the case run by the David/Karl interests (and it is submitted that it would be surprising, if I had proceeded on the basis that there had been an acquiescence in a departure from the pleadings, that there was no reference to this in the principal judgment).
The Nick interests point to the way in which the "2015 Transaction" was defined in the principal judgment, namely that the "2015 Transaction" (as distinct from the "2015 Transaction Documents") was defined by reference to an "impugned" transaction (see at [8]); that is in terms reflecting the issues actually raised by the pleadings (which did not include the transfer of the Allawah Forbes Property).
Reference is also made to the description in the principal judgment (at [19]-[20]) as to what had occurred in 2015 (John's resignation as a director of Allawah Pastoral, his transfer of shares in Allawah Pastoral to Nick; and his resignation as principal under the respective trust deeds) and as to the consequence of the 2015 Transaction (namely that Nick had become the sole director and shareholder of Allawah Pastoral (the trustee) and, following the almost contemporaneous resignation of his sister, Sara, as principal, the sole principal under the respective trust deeds; and thus had the capacity to control the distribution of the income and assets of those fully discretionary trusts). The Nick interests say that this description accurately reflects the transactions in 2015 that were the subject of the challenge in the 2019 Proceeding and that this is reflected in the ultimate findings in relation to the 2015 Transaction as set out at [403]-[405] of the principal judgment: 404. 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). 405. 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.
The Nick interests say that it is clear from the above that the finding of undue influence and unconscionable conduct was directed to the 2015 Transaction (as defined) relating to control of Allawah Pastoral and the Bloodline™ Trusts, and not to the separate transfer of the Allawah Forbes Property (referring also in this context to [382] and [389] of the principal judgment) and that the scope of this finding reflects the scope of the case brought by the David/Karl interests.
The Nick interests make clear that they do not (and cannot now) challenge the finding that the 2010 Transaction and the 2015 Transaction (as those terms are used in the principal judgment) were affected by undue influence and unconscionable conduct; and that they do not dispute that those transactions should be set aside consistently with order 6 of the orders made on 12 January 2021. What they do dispute is whether it was intended that relief also be granted in relation to the transfer of John's interests in the Allawah Forbes Property to Nick in 2015.
It is submitted that there is an important disconnect between the defined terms "2015 Transaction" and "2015 Transaction Documents" as used in the principal judgment - that the former definition is a label capturing the transaction by which Nick acquired total effective control of Allawah Pastoral and the Bloodline™ Trusts of which it was trustee (see at [8], and [19]-[20] of the principal judgment); but that the latter term consists not only of the documents by which that outcome was given effect, but also includes the transfer form for the Allawah Forbes Property (referring to [101] of the principal judgment).
The Nick interests submit that it cannot have been the Court's intention to set aside the transfer of John's interest in the Allawah Forbes Property in circumstances where: the transfer of the Allawah Forbes Property formed no part of the David/Karl interests' case as pleaded or conducted at trial; and the transaction by which the Allawah Forbes Property came to be transferred formed no part of the findings regarding undue influence and unconscionable conduct. They maintain that an amendment of the orders (to the effect sought by them) is consistent with the scope and purpose of the slip rule on the basis that the error in the orders concerning the definition of 2015 Transaction Documents is accidental and does not reflect the intention of the Court; and that the proposed amendment does not require the Court to exercise an independent discretion or make any fresh findings (i.e., the proposed correction does not seek to reopen the "substance of the result that was reached and recorded" in the Court's judgment - in the words used in Burrell v The Queen at [21]); rather, they submit that the amendments seek more accurately to reflect the reasoning in the principal judgment.
In this regard, the Nick interests point to the reasoning of McHugh JA in Storey & Keers at 453 as instructive. Noting that his Honour there said (as extracted above) that the Court must not allow the slip rule to be used to "allow judgments and orders to be amended to deal with matters which were not in issue in the proceedings", the Nick interests say that in the present case what the David/Karl interests are seeking to do (by opposing the use of the slip rule) is to enforce orders which in their current form deal with matters that were not in issue in the proceeding.
The Nick interests say that it is no answer for the David/Karl interests to say that, because the property transfer form for the Allawah Forbes Property was signed at the same time as the other 2015 Transaction Documents, it must follow that the transfer of the Allawah Forbes Property was also affected by undue influence and unconscionable conduct, since this would involve making a new and different claim than was advanced at the hearing and the subject of the judgment.
The Nick interests further argue that a finding that the 2015 Transactions involved undue influence or unconscionable conduct does not necessitate (or even justify) a finding that the transfer of the Allawah Forbes Property was affected by the same issues. In this regard they point to the uncontested evidence that the transfer of half of John's interest in the Allawah Forbes Property was at full value (when the fact that Nick assumed responsibility for the debt owing to Rabobank is taken into account). The Nick interests say that this evidence suggests that the transfer of the Allawah Forbes Property was "fair, just and reasonable" and therefore rebuts any inference of undue influence or unconscionable conduct (citing Nitopi v Nitopi [2022] NSWCA 162 at [41]; [147]). They contend that the David/Karl interests cannot now criticise the strength of that rebutting evidence in circumstances where that evidence has to be viewed in light of the fact that the transfer of the Allawah Forbes Property was not in issue on the pleadings.
Finally, and noting that they do not oppose orders in the form of prayers 4 and 13 of the July Motion, the Nick interests say that if orders 5 and 6 are varied in the manner they seek then the balance of the July Motion must be dismissed (since there would then be no occasion to require the reversal of the transfer of John's interest in the Allawah Forbes Property and no basis for the David/Karl interests to seek an order for sale; nor would there be any basis for the David/Karl interests to seek a charge over Nick's interest in the Allawah Forbes Property reflecting the refinancing of the property undertaken in May 2021 (cf prayers 6 and 7 of the July Motion).
The Nick interests seek their costs of the August Motion (and say that there should be no order for costs against them of the July Motion in circumstances where they do not oppose the relief sought in prayers 4 and 13, and the balance of the motion should be dismissed).

Submissions by the David/Karl interests

The David/Karl interests oppose the relief sought by the Nick interests. They maintain that there is no ambiguity in the terms of the orders made on 12 January 2021 and, while they appear to concede that the transfer of John's interest in the Allawah Forbes Property was not a transaction impugned in the pleaded claim as such, they maintain that the parties acquiesced in a departure from the pleaded case in this regard.
Reference is made to their opening written submissions of 3 June 2020, in which, under the heading "[u]ndue [i]nfluence and [u]nconscionability", it was said that the case in the 2019 Proceeding was that the "2010 and 2015 [T]ransactions, collectively if not individually, were the product of undue influence and unconscionable conduct", that conduct consisting of Nick's conduct as pleaded and the conduct of Cleary Hoare (Nick's then solicitors) in 2010; and reference being made to the factual matters relevant to the 2010 and 2015 Transactions (see the submissions on the present application at [5]). Some significance is attached in this regard to the fact that Nick did not ask Cleary Hoare to prepare a transfer of the Allawah Forbes Property but went to another firm of solicitors for preparation of the transfer. It is submitted that it was clear from the outset that the 2010 and 2015 Transactions collectively, if not individually, were in issue in the proceedings (though I interpose to note that this begs the question as to what were those transactions) and it is submitted that the transfer of the Allawah Forbes Property was made an issue in the proceedings by the assertions of Nick (that he did nothing wrong).
Reference is made to the definition of the 2015 Transaction Documents (at [101]) - see above) as being the documents signed by John in the presence of, and witnessed by, Mr Nipperess on 8 May 2015; and to the submissions recorded in the principal judgment at [247] (including, in the case of the 2015 Transaction, as to the total absence of legal advice in relation to the documents that Nick had John sign "(by which, with Sara's [Nick's sister] contemporaneous resignation as principal, Nick gained complete control over the Trust assets)") (though I note that this last reference squarely links the documents the subject of that submission to the transactions impugned by the pleading and not the transfer of the Allawah Forbes Property, since that had nothing to do with control of the Trust assets).
The David/Karl interests also refer in this context to what was said at [273] and [274] of the principal judgment (see below), and say that the reference in [274] to the fact that Nick had not suggested that John see Mr Burke (John's solicitor who had been retained in relation to the 2008 Allawah Forbes mortgage) before signing the documents could only have been a reference to the transfer to Nick. In those paragraphs, I said: 273. 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. 274. 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.
Pausing here, the above paragraphs, read in context, relate to the secrecy as to the signing of the documents and the lack of advice in relation to the documents but even accepting that one of the documents signed in 2015 was the transfer of the Allawah Forbes Property, it cannot be said that the signed documents were limited to that particular document, nor does the reference to a solicitor having been retained in relation to the 2008 Allawah Forbes mortgage take the matter any further.
Reference is also made to what was said in the first two sentences of [394] of the principal judgment (emphasis being placed on the plural of mortgages), which paragraph reads in full as follows: 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.
Reliance is placed on the finding at [403] that: The unconscionable conduct arises, if not at the time 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 interest complained in relation to the Trundle property transfers), namely that by these transactions John was putting control of the bulk of his assets potentially out of his power and subordinating his personal interests and 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 had effectively abdicated to Nick.
The David/Karl interests say that the fact that all the documents were executed at the same time (in 2015) points strongly to the circumstance that the whole of Nick's conduct was in issue in relation to those transactions and it is submitted that telling findings have been made in respect of the circumstances that led to the preparation and execution of the various documents. The David/Karl interests say that the covert nature of that exercise and the lack of independent advice in the context of a person clearly showing signs of dementia indicate that it was an issue in the trial; and they say that it is an issue that was made patent by the assertions made in the defence in the 2019 Proceeding to [30] of the statement of claim. It is noted that at [71]-[72], the statement of claim pleaded that John's execution of the Transaction Documents and the Resignation documents was obtained by the undue influence of Nick and/or Allawah Pastoral and was unconscionable. (Those terms, however, as noted above, were not defined as including the transfer of the Allawah Forbes Property.)
As to the above submission, it is noted that at [30] of the statement of claim what is pleaded is that "[t]he entry into the transactions arising from the Transaction Documents, the execution by John of the Transaction Documents, or both, were not disclosed by Nicholas, Allawah or anyone" before 10 February 2017; and that the defence to that allegation pleads, among other things, that in or around January 2015 John expressed to Nick that: his health was declining; he should remove himself from any direct role regarding the Transaction Documents and cease being a director or shareholder of Allawah Pastoral and having any role in relation to the operation and management of the First Trust or the Second Trust; and that he wished to transfer his interest in the Allawah Forbes Property to Nick to be discharged from the approximately $900,000 liability to Rabobank. (Thus, it appears to be contended that Nick put in issue in his defence the transfer of the Allawah Forbes Property.)
Reference is also made to the pleading by the David/Karl interests in their defence at [33] that, in or around March 2015, Nick also conferred with a separate law firm to provide conveyancing services for the transfer of John's interest in the Allawah Forbes Property to Nick upon John's wishes and arranged a meeting between John and his then solicitor, Mr Bill Burke, for the purposes of reviewing John's Will upon John's wish.
It is submitted that there was a clear interrelationship between John's debts that were involved in the calculation of the promissory notes that were issued (reference being made to a pleading at [68] of John's indebtedness to Rabobank including a joint and several liability of $900,000 with Nick to Rabobank in respect of their purchase of the Allawah Forbes Property as joint tenants, and the farming operations they conducted on the Allawah Forbes Property; and that John's equity in respect of his interest in the Trundle properties and the Allawah Forbes Property was approximately $2.471 million on the basis that John had an undivided interest in the entirety of Allawah Forbes as a joint tenant when the entire amount owed to the bank was brought into account).
The David/Karl interests also make reference to Nick's affidavit evidence in the 2017 Proceeding (see his affidavit sworn on 13 March 2017) deposing to the acquisition of the Allawah Forbes Property (see [38]-[43]) having purchased the rural property on or about 31 March 2008 for $794,640 using a facility of $900,000 from Rabobank; that it was eventually drawn down to $896,126.92; and that it was secured by a registered first mortgage over Allawah with John and Nick as mortgagors. It is noted that at [166]-[172] of that affidavit, Nick deposed that he assumed a liability of $100,485.12 less than the amount which his father and he owed Rabobank at the time. Reference is also made to Nick's affidavit filed on 30 January 2020 (see at [67]-[88]) as to the circumstances in which the property transfer form was signed by John; and to the affidavit evidence of the late Wendy Turner (at [97]-[98] of her affidavit sworn on 10 June 2017) in relation to the transfer (in which she deposes that she could not see any money paid to John into any of John's accounts at the time of the transfer of the Allawah Forbes Property to Nick and that the loan that John and Nick had obtained from Rabobank to purchase the Allawah Property was discharged on 10 May 2015 - but unknown to her at the time).
The David/Karl interests refer to cross-examination of Nick at the trial including (at T 73.35ff) the proposition put to Nick that by John signing the Bloodline™ mortgages he was in breach of both his 1999 mortgage with Rabobank and his 2008 mortgage with Rabobank and (at T 85.42ff) as to the transfer of John's interest in the Allawah Forbes Property to himself (in the course of which Nick said that he took on 100% of the liability which was greater than the asset (see at T 86.1-2) - which the Nick interests emphasise was not the subject of challenge); and see also at T 86.11ff (again not the subject of challenge). The David/Karl interests maintain that it is clear from this cross-examination was that what was being asserted was that, as a result of lack of independent advice and undue influence, John had transferred his interest to Nick for effectively nil consideration. They submit that this clearly was an issue in the proceedings; that on the one hand Nick was asserting that he had done nothing wrong, that he was not guilty of unconscionable behaviour and that the transfer was freely made by his father; but that this was at a time when there was clear evidence that he was under some disability and disadvantage.
The Nick interests here emphasise that Nick was not challenged on his evidence that he took on 100% of the liability which was greater than the value of the asset; and said that it was never put to him that this transaction was improvident or unfair or not for full value.
The David/Karl interests point to [83] of the principal judgment where the submission was noted that the grant of the unregistered mortgages as security for the two loans amounted to breaches of, and Events of Default under, John's 1999 and 2008 Rabobank mortgages (noting that security for the acquisition of the Allawah Forbes Property was in part by John making available some of the Trundle properties as security for that loan).
The David/Karl interests say that in the light of the findings at [247], [273] and [274] in relation to both secrecy and lack of independent advice, the reference in the finding at [394] to the Rabobank mortgages in the plural is a reference to both the Allawah Forbes Property and the Trundle properties.
The David/Karl interests refer to the finding of unconscionable conduct at [403] of the principal judgment (extracted above) and submit that this finding extends to the whole of the conduct of Nick in respect of all of the transactions from the inception of the Bloodline™ Trust in 2010 through to 2015. They submit that there was no slip or accidental omission; that Nick had put his conduct in relation to the transfer of the Allawah Forbes Property clearly in issue; and at all material times denied that he exerted undue influence or behaved in an unconscionable manner. The David/Karl interests say that the telling circumstances were that all of the transfers that were executed in May 2015 and witnessed by Mr Nipperess were affected by Nick's conduct; and that this was not the subject of any appeal from the 2019 Proceeding.
It is thus submitted that it was always the intention of the Court to set aside transactions that had been entered into by Nick by procuring John's signature and that the factual findings that were made fully support the orders that were made.
The David/Karl interests refer to the principles applicable to the slip rule outlined in Newmont Yandal and submit that here there has been no obvious error nor any issue that has unintentionally not been the subject of adjudication. They maintain that the real question is whether or not there has been an adjudication as to the issue as to whether or not the Transaction Documents were executed under circumstances where John's signature was procured as a result of unconscionable conduct or pressure (pausing here this perpetuates the difficulty with the overlap of definitions to which reference has been made above, since the Transaction Documents were not defined in the pleadings as including the property transfer form for the Allawah Forbes Property). The David/Karl interests (as do the Nick interests) invoke the test postulated by Lord Herschell in Hatton v Harris (referred to at [129] of Newmont Yandal), namely as to whether, if the matter had been drawn to the Court's attention, the correction would at once have been made.
Further, the David/Karl interests say that if the slip rule applies then the proposed amendment in the present case is not one upon which no real difference of opinion can exist. It is submitted that, by reference to the passages referred to in Nick's affidavit evidence, Nick deliberately put his conduct in issue, and it became an issue in the proceedings. The David/Karl interests submit that the issues chosen at the trial were articulated by Nick in his affidavit evidence and that, to the extent that there was departure from the case as pleaded, there has been acquiescence therein (citing Dare v Pullen (1982) 148 CLR 658; [1982] HCA 70 at 664 per the Court; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 per Ipp JA at [412]ff; Leotta v The Public Transport Commission New South Wales (1976) 9 ALR 437; and Bryant v Quinn [2022] NSWCA 163 at [74]-[79]). It is submitted that mere acquiescence by one party in a course adopted by the other will be sufficient to ground an inference of acquiescence.
Finally, as to the issue of costs, the David/Karl interests point to the non-compliance by the Nick interests with orders made and to the fact that ultimately the Nick interests consented to or did not oppose certain of the relief that had been sought (as noted above).

Determination

The principles applicable on an application pursuant to the slip rule have been summarised above. In the present case, what is significant is that the claim as pleaded by the David/Karl interests did not challenge the transfer of John's half interest in the Allawah Forbes Property and it is clear from the definition I adopted of the 2015 Transaction that I understood the challenge to the 2015 Transaction(s) to be limited to the transactions impugned in the pleadings (which did not include the transfer of the Allawah Forbes Property). That is also evident from the manner in which I described what had occurred in 2015 (at [19] of the principal judgment) and, significantly, the consequences of what had occurred (at [20]). This is also reflected in the ultimate findings in relation to the 2015 Transaction as set out at [404]-[405] of the principal judgment.
It is trite to note that cases are to be determined on the pleadings (save where there has been acquiescence in a departure therefrom) (see the discussion in Brand v Monks [2010] NSWSC 313). In the present case, there is no doubt that the transfer of the Allawah Forbes Property was not an impugned transaction on the pleadings.
The David/Karl interests maintain that the relevant acquiescence took the form of negating the proposition that Nick had done anything wrong. However, the defence by Nick to the claim as pleaded did not put in issue the propriety of the Allawah Forbes Property transaction as such. What Nick was raising at 31(iii) of the defence were matters going to the issue of John's capacity in 2015 (see also at [41]).
I do not accept that the fact that Nick deposed to (and was cross-examined on) the circumstances of the transfer of the Allawah Forbes Property amounts to an acquiescence in a departure from the pleaded case as to the impugned transactions (it being relevant to put in context the circumstances of the impugned 2015 Transactions, as defined). It is significant to my mind that it was not put to Nick that the transfer of the one-half interest in the Allawah Forbes Property was an improvident transaction from John's perspective (particularly when Nick assumed the whole of the liability for that loan and where the amount outstanding was more than the value of the property as then appraised). Had I understood there to have been an acquiescence in a departure from the pleaded case to include as an impugned transaction the Allawah Forbes Property transfer, I have no doubt that I would have made that clear in the principal judgment.
In those circumstances, it would be procedurally unfair to the Nick interests now to treat as encompassed by my findings of unconscionable conduct a transaction that was not impugned at the time. While I accept that issues as to John's deterioration in health and the lack of independent advice would also arise in relation to the transfer of his interest in the Allawah Forbes Property (if for no reason other than that all the documents were signed at the same time and in similar circumstances), the difficulty is that there is an obvious difference in the respective transactions - namely, that the transfer of the interest in the Allawah Forbes Property was accompanied by a significant benefit to John in the discharge of his liability under the mortgage that was secured over that property (which was discharged and the responsibility for which was in effect assumed by Nick in full). Had this transaction been squarely put in issue on the pleadings (or at the hearing by the David/Karl interests) it would, for example, have been open to Nick to point to the circumstances which it is said made that transaction fair and reasonable from John's perspective (whatever might have been the case in relation to the other transactions). The Nick interests maintain that there would have been a good defence on the basis that the purchase was for greater than the then assessed value of the property.
The fact that the transactions involving the Bloodline™ mortgages and resignation documents were found to be the product of unconscionable conduct does not establish that such a conclusion would necessarily have been drawn in relation to a quite different transaction (the Allawah Forbes Property transfer).
Insofar as complaint is made that the David/Karl interests could have challenged that transaction based on the same circumstances that led to the successful challenge of the other transactions in 2015, the problem is that there was no application to amend the pleading (and it is noted that the hearing opened with various amendments to pleadings); and it seems to me that the David/Karl interests are fixed with the forensic decision there presumably taken. The David/Karl interests (pointing to the rejection of Nick's evidence) emotively submit that there would be a greater injustice to John were the Allawah Forbes Property transaction not to be set aside as John's half interest in the property was transferred by sleight of hand to Nick. However, that begs the question as to whether that transfer was ever in issue in the proceeding (and, if it had been, whether the transfer was unjust in all the circumstances - an issue not explored in the hearing nor dealt with in the reasons).
The use of the defined term "2015 Transaction Documents" in orders 5 and 6 has given rise to what I accept was the unintended consequence that a transaction that was not impugned on the pleadings has been ordered to be set aside. I am firmly of the view that this is a case in which, had that consequence been drawn to my attention at the time the orders were made, then I would not have made the orders in those terms (and certainly not without raising debate of the kind that has now ensued). In those circumstances, this is clearly a case in which the slip rule (whether under the UCPR or in the inherent jurisdiction of the Court) is applicable. This cannot be said to be a case where one has had second thoughts as to the scope of the relief to be granted or where this could be said in effect to be an appeal from a considered decision to make orders with that effect.
There should therefore be a variation of orders 5 and 6 of the Court's orders of 12 January 2021 pursuant to the slip rule in the manner proposed by the August Motion. That has the consequence that the balance of the July Motion (other than the relief sought in prayers 4 and 13) should be dismissed. As to costs, there is no reason not to make orders in the ordinary course that the David/Karl interests pay the costs of the August motion.
As to the July Motion, orders should be made in terms of prayers 4 and 13 but the balance of that motion should be dismissed. In circumstances where the David/Karl interests have had a measure of success on that motion (and it cannot be assumed that they would have had the benefit of that relief absent the bringing of that motion) I consider that the appropriate order (adopting a broad brush approach to costs, as is appropriate having regard to the history of the matter to date) is that the Nick interests should pay 20% of the costs of the David/Karl interests in respect of that motion and that the David/Karl interests should in turn pay 80% of the costs of the Nick interests of that motion; and that those sums should be offset against each other.

Orders

For the above reasons I make the following orders:

As to the notice of motion filed by the plaintiff on 6 July 2022: 1. By consent order that the first defendant (Nicholas John Turner) transfer 50% of the shares in the second defendant (Allawah Pastoral Pty Ltd) to the plaintiff (Owen John Turner by his tutor Angelena May O'Bryan) in accordance with the judgment and orders made on 12 January 2021 in proceeding 2019/00307439 (the 2019 Proceeding). 2. Note that the Court has been advised that a transfer has now been signed for the transfer of the shares the subject of order 1 above. 3. Order that the first defendant within 28 days provide books of account and profit and loss for the second defendant between 6 May 2015 and the filing of the summons in the 2019 Proceeding. 4. Otherwise dismiss the motion. 5. Order that the first and second defendants pay 20% of the plaintiff's costs of the motion filed by the plaintiff on 6 July 2022. 6. Order that the plaintiff pay 80% of the first and second defendants' costs of that motion. 7. Order that the costs orders in 5 and 6 be set off against each other such that only the remaining balance be payable to the plaintiff or first and second defendants as the case may be.

As to the motion filed by the first and second defendants on 2 August 2022: (8) Order, pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW) or in the Court's inherent jurisdiction, that orders 5 and 6 of the orders made on 12 January 2021 in the 2019 Proceeding be varied by inserting the words "other than the property transfer form for the Allawah Forbes Property (as defined in these reasons)": 1. in the case of order 5, after the words "2015 Transaction Documents (as defined in these reasons)"; and 2. in the case of order 6, after the words "2015 Transaction Documents". (9) Order that the plaintiff pay the first and second defendants' costs of the motion filed by the first and second defendants on 2 August 2022.

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: 14 October 2022

oldman Sachs Group, Inc (2007) 70 NSWLR 411; [2007] NSWCA 195 Nitopi v Nitopi [2022] NSWCA 162 Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 Turner v O'Bryan-Turner (2022) 107 NSWLR 171; [2022] NSWCA 23 Turner v O'Bryan-Turner (No 2) [2021] NSWSC 101 Turner v O'Bryan-Turner (No 3) [2021] NSWSC 338 Turner v O'Bryan-Turner [2021] NSWSC 5 Category: Consequential orders Parties: Owen John Turner by his tutor Angelena May O'Bryan (Plaintiff) Nicholas John Turner (First Defendant) Allawah Pastoral Pty Ltd (Second Defendant) Representation: Counsel:

Judgment

HER HONOUR: On 12 January 2021, I published reasons for judgment in two related sets of proceedings which had been heard consecutively (with evidence in one being evidence in the other) and which were referred to in that judgment as the 2017 Proceeding and the 2019 Proceeding, respectively (Turner v O'Bryan-Turner [2021] NSWSC 5). Those proceedings related to disputes in essence between various of the children of Owen John Turner (known as John), namely Nick (the son of John's first marriage) and David and Karl (the sons from John's subsequent de facto relationship and marriage); and a company associated with Nick (Allawah Pastoral Pty Ltd). By the time of the proceedings John was suffering from advanced dementia and had no capacity to represent himself or to instruct lawyers to act on his behalf. I made various orders in each of those sets of proceedings, including orders in the 2019 Proceeding for the setting aside of certain transaction documents. Those orders were framed using various definitions that had been adopted in the principal judgment (including, relevantly for present purposes, the 2015 Transaction Documents).
On 18 February 2021, I made orders on the papers as to the costs of the respective proceedings (Turner v O'Bryan-Turner (No 2) [2021] NSWSC 101) and on 8 April 2021, again on the papers, I made orders in relation to the discharge or variation sought by the first to third defendants in the 2017 Proceeding (the David/Karl interests) of certain interlocutory orders that had been made in the 2017 Proceeding (Turner v O'Bryan-Turner (No 3) [2021] NSWSC 338). Optimistically (and no doubt foolishly in light of the history of the disputation to that point between the respective half-brothers), I considered that this disposed of the 2017 and 2019 Proceedings and noted that the Court files would then be closed.
The matter has now again come before me, referred by the Chief Judge in Equity, for the hearing and determination of two notices of motion filed by the opposing sides in this ongoing litigious saga: a notice of motion filed on 6 July 2022 by the David/Karl interests, seeking a variety of relief in effect to enforce, or consequent upon, the orders made by me in the 2019 Proceeding (the July Motion); and a notice of motion filed on 2 August 2022 by the Nick interests, invoking the "slip" rule (see r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)) and in the Court's inherent jurisdiction and seeking the variation of certain of the orders made in the 2019 Proceeding (as I explain in due course) (the August Motion).
The Nick interests have either consented to, or do not oppose, the making of certain of the orders sought in the July Motion (prayers 4 and 13) and it was common ground that if the Nick interests were to be successful on the August Motion then the balance of the July Motion in effect becomes otiose. In those circumstances, it was agreed that it would be appropriate that the August Motion be heard first.
These are my reasons for granting the relief sought by the Nick interests in the August Motion and for the dismissal of the balance of the July Motion. For ease of reference, I will use the same abbreviations and definitions in this judgment as in the principal judgment.

(2022) 107 NSWLR 171

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