Wayne Terry Kerr v JP & M Kerr

CATCHWORDS : EQUITY - Trusts - Constructive trust - Common intention - Proprietary estoppel - family farming enterprise - ownership of properties on which family business conducted - extent of beneficial interests of family members in the properties and business

Galaxidis v Galaxidis [2004] NSWCA 111 Gillett v Holt [2001] Ch 210 CASES CITED : Grant v Edwards [1986] Ch 638 Green v Green (1989) 17 NSWLR 343 Watson v Foxman (1995) 49 NSWLR 315

Wayne Terry Kerr - plaintiff JP & M Kerr (Billabidgee) Pty Limited - first defendant PARTIES : Bullatale Pastoral Pty Limited - second defendant John Percival Kerr - third defendant John Percival Kerr and John Douglas Mulham (in their capacity as executors of the estate of the late Mona Kerr) - fourth defendant Gregory Raymond Kerr - fifth defendant

COUNSEL : M Heaton QC/A Paterson - plaintiff G Waugh - defendant

SOLICITORS : Fetter Gdanski (by their City Agents Swaab Attorneys) - plaintiff Hargraves - defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2802/05 Wayne Terry Kerr v JP & M Kerr (Billabidgee) Pty Limited & Ors JUDGMENT 1 His Honour: In these proceedings the plaintiff, Wayne Terry Kerr (Wayne) seeks declaratory relief as to the extent of his interest in the properties known as "Billabidgee" and "Warrawool", near Deniliquin, New South Wales, and in the farming business conducted on them. 2 The first defendant, JP & M Kerr (Billabidgee) Pty Limited, is the registered proprietor of the properties. The second defendant, Bullatale Pastoral Pty Limited ("Bullatale") is the trustee of the JP Kerr Family Trust (the Trust) and the owner of the farming business including stock, crops, equipment and shares which is and, at all relevant times, has been carried on by members of the Kerr family. On 1 February 2005 it was appointed trustee of the Trust in place of John P Kerr Nominees Pty Limited which had been the trustee since about 2 May 1975. 3 The third defendant, John Percival Kerr (John), is the father of Wayne, Gregory Raymond Kerr (Greg) and Barry John Kerr (Barry) and the widower of the late Mona Kerr. At all relevant times since 30 November 1979 he has been a director of, and the owner of one of the two issued shares in, the first defendant. Since 11 March 1977 he has been a director of, and the owner of one of the two issued shares in, John P Kerr Nominees Pty Limited. Since 17 January 2005 he has been a director and the secretary of, and the owner of one of the two issued shares in, "Bullatale". 4 The fourth defendants, John Kerr and John Douglas Mulham are the executors of the will of the late Mona Kerr (Mona) who died on 20 January 2004. She was married to John, and is the mother of Wayne, Greg, and Barry. Between 30 November 1979 and her date of death, she was a director and the secretary of, and the owner of one of the two issued shares in, the first defendant. Between 11 March 1977 and her date of death she was a director of, and the owner of one of the two issued shares in, John P Kerr Nominees Pty Limited. The shares are a part of her estate. 5 The fifth defendant, Greg, has been a director of John P Kerr Nominees Pty Limited between 4 June 1991 and 6 October 1992, and since 22 August 2004. Since 17 January 2005 he has been a director of, and the owner of one of the two issued shares in, "Bullatale". 6 John was born on 8 July 1936 and is now 70 years of age. Wayne was born on 26 October 1958 and is now 48 years of age. Greg was born on 4 May 1961 and is now 45 years of age. Mona was born on 11 August 1937 and was 66 years of age when she died. 7 "Billabidgee" was purchased by the first defendant on 19 December 1979. It includes the property known as "Towool", and has an area of about 2,374 hectares. "Warrawool" was purchased by the first defendant on 6 November 1985 and has an area of about 1,328 hectares; it is immediately adjacent to the eastern boundary of "Billabidgee". The properties were run as one in the conduct of the family business of cropping and grazing by John, Mona, Wayne and Greg until the relationship finally broke down in April 2003 and Wayne left to live and work elsewhere. 8 At the commencement of the hearing it appeared that the proceedings would involve the ventilation of a wide range of issues indicative of a long and bitter family dispute. It must be pleasing to the parties and to their legal representatives that during the course of the hearing the scope of the contest narrowed considerably so that the primary questions for determination were not as to the existence of Wayne's beneficial interest in each of the properties and the business, but as to the extent of his interest at the present time. 9 It was common ground that all members of the family worked very hard in the conduct of the business to survive financial difficulties, and contributed equally to the improvement of the properties and to the increase in their value. It was common ground that the business was, and should be, treated in the same way as the properties. It was common ground that both Wayne and Greg were entitled to an interest in the properties and the business, and that the interests of each were the same. 10 Furthermore, it was agreed that there should be a declaration that Greg holds the tri-axle trailer and the rice header on trust for "Bullatale" as trustee for the Trust. It was also agreed that there should be a declaration that John holds the Incitec Pivot shares in his name on trust for "Bullatale" as trustee of the Trust. It was also accepted that at the conclusion of this litigation the properties would have to be sold. 11 Wayne seeks declarations against the first defendant that it holds "Billabidgee" on trust for him as to 37.5 percent, and as to a further 12.5 percent subject to a life interest therein of John, and that it holds "Warrawool" on trust for him as to 50 percent. He also seeks consequential relief. Although his claims for relief are based on a number of grounds, reliance was principally placed on the assertion of the existence of a common intention constructive trust, alternatively on the existence of statements and representations which, in the circumstances, gave rise to an equitable proprietary estoppel. The defendants accepted that Wayne is entitled to a declaration on the basis of an estoppel, but dispute the extent of the interest he claims in each property. Background 12 The following narrative is of events which provide some background for the better understanding of Wayne's claims. Most of these matters including, in particular, the account of discussions and conversations are taken from his affidavit of 21 September 2005. His evidence of matters relevant to the issues to be decided was generally undisputed. In this context it should be observed that the core of the dispute concerned the findings to be made based on the whole of the relevant evidence, of which the conversations were significant components. 13 From the early 1970s John and Mona owned and operated a farming property known as "Oakdale" near Narrandera. On 24 June 1971 the Trust was established for the conduct of the family farming business to which, on 2 May 1975, John P Kerr Nominees Pty Limited was appointed trustee. Wayne and his brothers helped John and Mona work the property and with share farming activity during their school years after school, weekends, and in school holidays. On leaving school in 1974 Wayne began working fulltime at "Oakdale" and in share farming, as did Greg when he left school in 1977. 14 In late 1977 the Kerr family decided to sell "Oakdale" and to buy another property. It was considered that "Oakdale" was not big enough to support all the family, and that it was necessary to buy a larger farming property which required development. "Oakdale" was put on the market, and inspections were made of a number of properties for purchase. During 1978 and 1979 there were family discussions (usually at mealtimes around the kitchen table) in which it was said that a bigger property would provide Wayne and Greg with the opportunity to own land which would be developed by their labour. 15 In September 1979 an offer was made to purchase "Oakdale". Shortly afterwards, John, Mona, Wayne and Greg inspected "Billabidgee" and on the way home discussed its prospects to the effect described by Wayne as follows (affidavit, para 46): "We also discussed the buildings, the fences and what would need to be done, including constructing a workshop, machinery sheds and more grain storage. We discussed that work needed to be done in respect of the irrigation systems. The conversation continued in words to the following effect: John: 'If you [referring to Greg and I] want to own land, this is the only way you can do it. This is the way forward. This is the only way for you to own your own land. We cannot afford improved land.'

Mona: 'John and I don't need to do this; 'Oakdale' is enough for us. I will have to leave all my friends if we do this. But we will do this for you.'

John: 'This is the place. We will buy it. We will buy this land for all of us.'" 16 In about October 1979 contracts for the purchase of "Billabidgee" were signed. On 29 November 1979 the first defendant was incorporated to be the purchaser of the property. John told Wayne that purchase by a holding company would help safeguard the property for him. 17 On 27 May 1980 the sale of "Oakdale" and the purchase of "Billabidgee" were settled. 18 In 1983 Barry left school, undertook an apprenticeship as a motor mechanic, and ceased any relevant involvement with the family farming activities. 19 In conversations with Wayne during 1983 Mona made statements to the effect that "… the farm is meant for Greg and you" and "… The farm is yours". 20 In January 1984 John, Mona, Wayne and Greg met in the kitchen at "Billabidgee" to discuss the need to borrow monies as a result of earlier severe flooding. Wayne's version is the following (affidavit, para 56): "Mona: 'Are you sure that you want to borrow more money?'

Wayne: 'Yes. We still have good potential and can overcome this loss.'

John: 'It is ok to go into debt to improve our own land because what ever improvements we make are ours.'

Greg: 'I agree with borrowing more money, we don't have a choice.'

Wayne: 'We can overcome this, but need to borrow the money.'

Mona: 'If you boys believe that your future is here and you want to own this place, yes, I will agree with you borrowing more money.'" 21 On about 8 February 1985 John, Wayne and Greg learnt that "Warrawool" was for sale. At the "Billabidgee" homestead that night there was a conversation described by Wayne as follows (affidavit, para 60): "John: 'Because 'Warrawool' is next door we needed to consider its purchase. It will provide more land for a bigger operation.'

Wayne: 'The property requires a lot of work but it is worth buying even though we will need to borrow nearly all the purchase price.'

Mona: 'I am not keen on the idea because it will require us to increase our debt. I am not sure about borrowing more and going more into debt.'

John: 'The family will not get anywhere unless we try.'

Wayne: 'I can see the advantages of purchasing 'Warrawool' and am in favour of the move. However I am concerned about whether our bank [I was referring to the NAB] will approve the finance as we will have to borrow 100% of the purchase price.'

Mona: 'We do not have the money. I am not keen on the move because we will have to borrow the lot.'

Wayne: 'I am concerned about whether we will be able to borrow that amount of money.'

John: 'There are lots of advantages of a bigger farm. We will be able to have more sheep and will be able to grow a bigger crop. We have to try. The family will not get anywhere unless we do.'" 22 A few days later, whilst inspecting "Warrawool", John said to Wayne (affidavit, para 61): "By buying this place we will have a much bigger farm and a better future for Greg and you; you will have a liveable area each." 23 Afterwards, Mona said to John and Wayne (affidavit, para 62): "By buying 'Warrawool' Greg will be secured because of the larger area of land." 24 On 2 April 1985 whilst inspecting "Warrawool" with Wayne and Mr Peter George, a local bank manager, John suggested that the property would be purchased in the name of the existing landholding company. Later that day there was a discussion about the purchase during which Mona said (affidavit, para 68): "The land is for Greg and you. Putting the land in the name of the landholding company is to safeguard Greg and you from possible future claims in the event of divorce." 25 In about May 1985 it was agreed to lease "Warrawool" from the vendor pending arrangements to finance its purchase. Upon taking possession "Warrawool" was operated as part of the business with "Billabidgee". 26 On 15 July 1985 Mona made a will in which, after providing for the payment of debts, expenses and duties, she left her estate to her children as tenants in common in equal shares. 27 On 6 November 1985 contracts were exchanged for the purchase of "Warrawool", and settlement was effected on 31 January 1986 when the first defendant became its registered proprietor. 28 Between about 1984 and 1986 Mona and Wayne had several discussions about ownership of land and how to provide for Barry off the farm in which Mona said (affidavit, para 82): "John and I are trying to provide Greg and you with security. The land will go to you; but we also want to provide something for Barry. The problem is providing something for Barry without putting Greg and you at risk of the business's financial position. But Barry had made his choice. Greg and you have worked hard and the land is to be Greg's and your's; half each." 29 On 13 January 1996 John made a will by which, subject to payment of debts, expenses and duties, and to the gift of some vehicles and other items and to a legacy of $50,000 to Barry, he left the residue of his estate to Wayne and Greg as tenants in common in equal shares. Having regard to the evidence as to the usual practice of John and Mona it is likely that Mona on or about the same date made a will in similar terms. 30 On about 12 May 1997 whilst working on a tractor Wayne suffered severe injuries to his skull and left eye. It was a time when the National Australia Bank was pressing for reduction of the debt of the business. On 3 June 1997 Mona visited him in hospital and the following conversation took place (affidavit, para 116): "Mona: 'John and Greg aren't able to do the job that you have been doing running the business. If you had died in the accident we would have had to sell up.'

Wayne: 'I think you would get by as a lot of the hard improvements have been completed, the clearing and levee banking. I had hoped you would continue to run the farm for the benefit of my family, so that they could have my half of the business which was to go to me.'

Mona: 'You and Greg were to always get half each of the farm. Greg loves your boys so much that he has told me that he was going to leave his half to the boys. Your family will always be looked after.'" 31 In early September 1997 the family was still under pressure to reduce the debt. At that time John, Mona, Wayne and Greg had the following conversations (affidavit, paras 119, 120): "119 At the beginning of September 1997, I had a discussion with Mona at the office at 'Billabidgee', in words to the following effect: Wayne: 'I think the only way to get the water to grow the extra rice and to keep the bank off our back is for me to use part of my insurance payout for my eye.'

Wayne: 'The business can survive if we grow extra rice. You have always said that the farm and business was Greg's and mine, half each.' Mona: 'You know it is, Greg and you are to get half each.' 120 I then went down to the workshop from the office, to talk to John and Greg about my decision to use my insurance payout. We had a conversation to the following effect: Wayne: 'We need to grow extra rice to take pressure off us financially. The business can survive if we can generate more income and profit. But to do this we have to buy temporary transfer water and the bank will not lend us the money to do it.'

Wayne: 'I have the money from my eye injury payout to use to buy the extra water.'

Wayne: 'This will give us the chance to get on top of our financial problems, besides I believe we can make this work, when half of the farm is mine and my family's.'

John: 'Of course, half of this is yours.'" 32 On about 11 September 1997 QBE Insurance Limited paid out the sum of $50,000 in respect of Wayne's injury. On about 12 September 1997 Wayne paid the sum of $26,915 from those funds for the purchase of a temporary water transfer to grow the rice crop for that year. Subsequently, he caused the remaining funds to be paid in various ways for the purposes of the farm enterprise. 33 In about September 2000, in the kitchen at "Billabidgee", John and Mona showed Wayne, Greg and Barry a copy of their wills in either draft or unsigned form as prepared by their solicitor. The relevant contents of the documents were similar to each other, and to those of the wills which John and Mona signed on 25 September 2000. Relevantly, the documents included the following provision: "3 I leave my whole estate to my Trustees upon the following trusts:- (a) To transfer my share in J.P & M. KERR (BILLABIDGEE) PTY. LTD. A.C.N. 001 812 611 and JOHN P. KERR NOMINEES PTY. LTD. A.C.N. 008 514 770 to such of my sons WAYNE TERRY KERR and GREGORY RAYMOND KERR as shall survive me for a period of thirty (30) days and if more than one in equal shares as tenants in common SUBJECT TO the payment by JOHN P. KERR NOMINEES PTY. LTD. A.C.N. 008 514 770 as Trustee of the J.P. KERR FAMILY TRUST of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) to my son BARRY JOHN KERR , free of interest, at the rate of TWENTY THOUSAND DOLLARS ($20,000.00) per year for five (5) years commencing twelve (12) months from the date of my death, and then annually thereafter and subject to …" 34 On this occasion Mona said (affidavit, para 158): "We have done wills to ensure that Wayne and Greg each get half of the farm as we have promised." 35 The documents were passed around. Wayne read them out loud and there was the following conversation (affidavit, para 158): "Wayne: 'The effect of the wills is that Barry will receive a total of $200,000.'

Mona: 'That is not right; Barry will get $100,000 in total.'

Wayne: 'No, according to the wills, Barry is to get a total of $200,000. But I think that, given the amount of the total family assets, that is pretty fair.'

Mona: 'If you have any problems with this come back to us, but this is what John and I are planning to do.'" 36 Subsequent conversations about the wills were described as follows (affidavit, paras 159, 160): "159 On the following day there was a conversation between John, Mona, Greg and I held in the office at 'Billabidgee'. The conversation was to the following effect: Wayne: 'I am happy with the wills, what you have done there is good. Can we talk about succession planning now? Your will talks about what will happen on your death, but a succession plan is about handing on ownership in a planned way.'

Mona: 'We have done our wills and there is your security. Your interest in the farm is protected and secured because you will inherit your half and it is unnecessary to consider a succession plan. What more security could you want?'

Mona: 'We won't change it, we have given our word. What more can you want. You won't get anything else.' 160 Between mid 2000 and late 2002 there were about 9 or 10 conversations between Mona and I or between John and Mona and I in which I again asked for a succession plan to be put in place and in which Mona said words to the effect: 'We have shown you our wills. That is your security. We won't do anything else.'" 37 From about March 2001 differences arose between Wayne and his wife on the one hand and John, Mona and Greg on the other over numerous matters including a succession plan under which ownership of the properties and the farm enterprise would pass to Wayne and Greg. It is unnecessary to refer to the details. It is sufficient to note that on 20 July 2001, over Wayne's opposition, the situation had developed to the point where John, Mona and Greg voted to sell the properties. 38 On 6 September 2001 Wayne caused a caveat to be lodged over the properties in which he claimed an equitable estate in fee simple as a tenant in common to the extent of one half share of the land. The facts relied upon, so far as are relevant, were stated to be: "An equitable estate in fee simple as a tenant in common to the extent of one half share pursuant to agreements made orally between the Registered Proprietor, its directors and shareholders John Percival Kerr, Mona Kerr, Gregory Kerr and the Caveator, firstly, in about 1979 and to the effect that property described (… 'Billabidgee') was being purchased for farming in the beneficial ownership of John Percival Kerr, Mona Kerr, Gregory Kerr and the Caveator and secondly, the agreement made orally between those parties in about 1985 to the effect that the property described (… 'Warrawool') was being purchased for Gregory Kerr and the Caveator, alternatively the aforesaid equitable interest as a beneficiary under a constructive trust arising from those agreements, the common intention and understanding of those parties, the Caveator's work and capital contributions to the Land and farming enterprise to his detriment in reliance on those agreements, intentions and understandings to the knowledge of the Registered Proprietor, John Percival Kerr, Mona Kerr and Gregory Kerr, alternatively the said equitable interest arising under the doctrine of proprietary estoppel based upon those facts, alternatively an equitable charge over the Land to the value of the Caveator's contributions arising under that doctrine and based upon those facts." 39 On 12 October 2001 the property was put up for auction but no bids were received. 40 Subsequently, attempts were made to resolve the differences between family members, but without success. 41 On 3 December 2002 Mona executed a will which, subject to a gift to her granddaughter, and to the payment of debts, expenses and duties, left her estate to John provided he survived her for a period of 30 days failing which the estate was to pass to Wayne, Gregory and Barry in equal shares as tenants in common. John's evidence (T pp 132, 133) was that it was likely he made a will on the same date in similar terms. 42 On 23 April 2003 Wayne and his family left their home at Towool Cottage on "Billabidgee" to live elsewhere. Since then he has taken no part in the conduct of the farming business. Wayne's case 43 As to the interests in "Billabidgee", Wayne claims that he and Greg each presently have a 37.5 percent interest in the property in addition to a 12.5 percent interest subject to a life interest of John. As to the interests in "Warrawool", Wayne claims that he and Greg each presently have a 50 percent interest in the property. 44 I turn first to the "Billabidgee" claim. It is submitted that the discussion in September 1979 in which they decided to buy the property resulted in the common intention, and represented, that John, Mona, Wayne and Greg would each have a one quarter share interest, and that upon the death of a parent one half of that parent's share would pass to each of Wayne and Greg, the proposition being that each parent's share was for life only. Thus it was put that, upon Mona's death, Wayne and Greg became entitled to one half of her interest so that each now has a 37.5 percent interest in the property, and become entitled to the same division of John's share when he dies. 45 It was submitted that the common intention and representation to this effect is evidenced in the conversations and discussions set out in Wayne's affidavit of 21 September 2005 (particularly paras 36-48, 53, 55, 56) and in his oral evidence, with which John, in cross-examination, substantially agreed, as did Greg to the extent his recollection allowed. Reliance was also placed on the wills of John and Mona made on 13 January 1996 and 25 September 2000. I understand that Wayne acknowledged that provision should be made for Barry to receive the sum of $100,000 from his portion of John's share. 46 I turn now to the "Warrawool" claim. For Wayne it was submitted that his evidence of the conversations between about 8 February and 20 March 1985 (affidavit 21 September 2005 paras 60-62, 65, 66, 82) demonstrate the common intention and representation to the effect that "Warrawool" would be bought for Wayne and Greg in which each was to have a one half beneficial interest to be held by the first defendant as a safeguard against claims arising from future divorce. It was put that statements, for example, by John (affidavit para 61): "By buying this place we will have a much bigger farm and a better future for Greg and you; you will have a liveable area each", and by Mona (affidavit para 68): "The land is for Greg and you. Putting the land in the name of the landholding company is to safeguard Greg and you from possible future claims in the event of divorce" clearly represented that "Warrawool" was purchased for Wayne and Greg in equal shares and would be held by the first defendant in trust for them as tenants in common in equal shares. 47 It was put that the "Warrawool" conversations should be understood in the context of a common concern that if Wayne and Greg were to have a secure future it was necessary to buy more land for them, in addition to the interests which they shared with their parents in "Billabidgee". It was argued that as the underlying purpose of the purchase of "Warrawool" was for Wayne and Greg it was consistent with what was said that from the time of its purchase it was intended that they should hold it in equal shares, and that neither John nor Mona were to hold any beneficial interest in it at all. It was submitted that the fundamental distinction between the family arrangement under which each property was bought was that "Billabidgee" was bought for all of John, Mona, Wayne and Greg whereas "Warrawool" was bought for Wayne and Greg only. The defendants' case 48 As to "Billabidgee", the defendants accepted that the property was purchased for John, Mona, Wayne and Greg in equal one quarter shares, and was held in the name of the first defendant to protect the sons from a divorcing wife. 49 However, the defendants submitted that there was nothing in the relevant conversations which indicated that the parties had turned their minds to the question as to what was to happen to the share of a parent on his or her death, or which established a common assumption that the parents were to provide for their shares to pass to the sons in their wills. Although it was accepted that it was always intended that upon the death of the surviving parent Wayne and Greg would have the shares of the parents in the property, it was denied that it was the common understanding that each parent was bound to leave his or her share to them and was not free to leave it to the surviving parent. In support, reference was made to Mona's will of 15 July 1985, the terms of which were said to be inconsistent with the intention or understanding for which Wayne contended. 50 Furthermore, it was put that it was relevant that at the time of the "Billabidgee" conversations John and Mona were in their early 40s, happily married, living and working together, from which it may be inferred that, absent clear evidence to the contrary, it was contemplated that each would leave his or her estate to the other to better secure the retirement of the survivor. 51 Thus for the defendants it was submitted that it was consistent with the "Billabidgee" arrangement that Mona should have left her share to John in her will of 3 December 2004. It was put that having regard to all of the circumstances it could not be said that the statements and representations relied upon by Wayne were sufficient to establish his claim to a present entitlement to a one half interest in Mona's share. 52 As to "Warrawool" it was submitted that there was no evidence of a common intention or assumption that it was to be held on a different basis to "Billabidgee". It was put that nothing is to be found in the relevant conversations, taken with regard to the surrounding circumstances in which they took place, which indicates with sufficient clarity and unambiguously that from the outset Wayne and Greg were to own it in equal shares to the exclusion of the parents. 53 Reliance was put on the undisputed evidence that it was always intended that "Warrawool" would be held by the same company as "Billabidgee", and would be run with it, and that all the farming business was conducted upon both properties as if they were one, and that the approach of the parties to the business was that they were in it together on an equal basis. That is to say, the probability is that the parties had the same intention and acted upon the same assumptions when they bought "Warrawool" as they had and did when they bought "Billabidgee". 54 It was submitted that the evidence as to the manner in which the parties conducted themselves continuously over many years weighed strongly against Wayne's claim that "Warrawool" was bought and held in a substantially different way to "Billabidgee". Had it been intended that "Warrawool" was bought for the sons alone it would be reasonable to expect that an appropriate arrangement would have been made to identify and secure their interests accordingly. The fact that this did not happen is an indicator that there was no intention that this property would be held only for them and differently to "Billabidgee". 55 The defendants also made a general submission that evaluation of Wayne's evidence of the conversations referable to both properties should be undertaken with great caution having regard to the lapse of time between the times of the conversations and his first attempt to recall them when he saw his solicitor in about September 2001 and caused the caveat to be lodged. It was relevant to take into account that the preparation of Wayne's affidavit of 21 September 2005 was based upon his recollection of events which had taken place many years in the past unaided by contemporaneous notes, and that in cross-examination he accepted that the words of the conversations as set out in the affidavit were not those actually spoken at the time, and that he had engaged in a process of reconstruction as to when and by whom words were said at various times. Principles 56 The issues left for determination are the extent of Wayne's beneficial interests in "Billabidgee" and "Warrawool" at the present time. The task for the Court is to ascertain whether the evidence of the conversations and events relied upon establish, or enable it to be inferred, that it was the common intention or representation that the extent of his interests should be as he claims them to be. 57 The circumstances in which a court of equity will intervene to declare the existence and extent of a beneficial interest in property were considered in Green v Green (1989) 17 NSWLR 343 in which, with reference to Grant v Edwards [1986] Ch 638, Gleeson, CJ said (pp 355, 356): "Addressing the question of the quantification of the plaintiff's right, his Lordship pointed out that even after it has been established that the parties had a common intention that both should have a beneficial interest in the said property and that the claimant has acted to his or her detriment there will still remain a question as to the extent of the claimant's beneficial interest. Here again, if contributions have been made they may be of importance in the resolution of that question. Even in a case where a court can infer an actual intention to share ownership of real estate it is, of course, extremely rare that the parties will be people of such sophistication that they advert to or contemplate some particular form of legal title. Thus the court may have to resort to the application of such principles as that expressed in the maxim 'equality is equity': Gissing v Gissing (at 908) per Lord Diplock. The Vice-Chancellor said ([1986] Ch 638 at 657): 'Where, as in this case, the existence of some beneficial interest in the claimant has been shown, prima facie the interest of the claimant will be that which the parties intended: Gissing v Gissing [1971] AC 886, 908G. In Eves v Eves [1975] 1 WLR 1338, 1345G, Brightman LJ plainly felt that a common intention that there should be a joint interest pointed to the beneficial interests being equal. However, he felt able to find a lesser beneficial interest in that case without explaining the legal basis on which he did so. With diffidence, I suggest that the law of proprietary estoppel may again provide useful guidance. If proprietary estoppel is established, the court gives effect to it by giving effect to the common intention so far as may fairly be done between the parties. For that purpose, equity is displayed at its most flexible: see Crabb v Arun District Council [1976] Ch 179. ...' There is another important aspect of the reasoning in Grant v Edwards that should be mentioned. Mustill LJ (at 651) observed that although a number of judgments in this area refer, for simplicity of expression, to intention or conduct "on acquisition" of the relevant property, in a given case the relevant events leading to the finding of an interest in the claimant may occur after acquisition, and beneficial interests may change in the course of the relationship between the parties. This observation was expressly approved by the Privy Council in Austin v Keele 290; (at 609; 587)." 58 Thus it is recognised that although evidence of an express agreement may be lacking, a common intention that the parties would share the beneficial ownership of the property may be inferred from words or conduct of a less explicit kind. 59 Gillett v Holt [2001] Ch 210 was a case concerned with the doctrine of proprietary estoppel which provides a basis for a court to grant relief to prevent unconscionable conduct. It held (pp 225, 233-4) that when ascertaining whether promises and assurances repeated over a period of many years as to future rights over property were sufficient to found a successful claim for equitable relief, it was necessary to stand back and look at the claim in the round. 60 Consistently, the approach to be taken by a court in cases such as the present was explained in Galaxidis v Galaxidis [2004] NSWCA 111. After reviewing relevant authorities Tobias, JA (with whom Giles, JA and Hodgson, JA agreed) said (paras 93-95): "93 In my opinion, the effect of this Court's decision in [ Australian Crime Commission v Gray [2003] NSWCA 318] is that even if a representation is insufficiently precise to give rise to a contract (as in the present case), that fact does not necessarily disqualify the representation from founding a promissory estoppel. Much will depend upon the circumstances in which the representation is made and the context against which it is to be considered. In its context, the representation is sufficiently clear and unambiguous if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely. In these circumstances, it would be unconscionable for the representor to deny responsibility for the detriment that arises because of that reliance.

94 On the other hand, if it is not reasonable for the representee to rely on the meaning he attributes to the representation in that had he acted reasonably he would have attributed an innocent meaning to the representation, then it cannot be unconscionable for the representor to deny responsibility for the detriment that the representee sustains because of that unreasonable reliance.

95 A significant part of both the appellants' and the first respondent's written submissions were directed to asserting on the one hand and denying on the other that the first and second conversations lacked clarity and were ambiguous. However, in my opinion, whether they were sufficient to sustain an estoppel does not matter. What is of importance is that those conversations, as well as the third conversation, should be considered (as the primary judge held ([151])) as a series to be evaluated together in order to ascertain the intention of Mr and Mrs Galaxidis and the reasonable meaning of Mr Galaxidis' words. Furthermore, it is both appropriate and necessary to consider the whole history of the relationship between Mr and Mrs Galaxidis on the one hand and John and Nikolaos on the other in order to provide a context against which the conversations (and in particular the third conversation) are to be understood. I therefore turn to that consideration." 61 As Wayne relies upon the cumulative effect of the conversations and events to establish his claims it is apt to refer also to the principles stated in Watson v Foxman (1995) 49 NSWLR 315 at pp 318-319 per McLelland, CJ in Eq: "Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as 'misleading') within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court 'must feel an actual persuasion of its occurrence or existence'. Such satisfaction is 'not ... attained or established independently of the nature and consequence of the fact or facts to be proved' including the 'seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding': Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ), in the absence of some reliable contemporaneous record or other satisfactory corroboration … What I have said above as to the cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ) is equally applicable, mutatis mutandis, to the causes of action based on contract and on equitable estoppel (with the added requirements, in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee)." Findings 62 In accordance with the principles referred to I have given careful consideration to the evidence of conversations and events referable to the circumstances in which the parties decided to buy each property. In addition, it was necessary to consider the whole of the evidence as to the nature, extent, and development of the business on the properties being the enterprise in which all were directly involved for about 24 years until Wayne's departure in April 2003. 63 The inquiry is necessarily broad as to whether the statements and events over many years are sufficient to establish the intention or to found the estoppel which Wayne must prove to obtain the relief he seeks in each case. Although the substance of his evidence is undisputed, the detail of his version of the relevant conversations requires evaluation in a commonsense way having regard to the circumstances then prevailing and to the inherent likelihood that they have the effect for which he contends. Such an approach is required because, apart from the wills, there is no relevant contemporaneous record or other objective evidence to refer to. "Billabidgee". 64 I find on the whole of the evidence that there was a common intention and a continuing representation on which Wayne acted that he, John, Mona and Greg each owned a one quarter share in "Billabidgee", and that upon the death of a parent he and Greg would inherit that parent's share. Although nothing was said in any conversation about when or how the parents' shares were ultimately to come to these sons, in my opinion it was reasonable for Wayne in circumstances where all were living and working together on an equal footing to expect that each would make the necessary provision to leave his or her share to them. I generally accept the submissions made on Wayne's behalf in support of his claim for relief in respect of "Billabidgee". 65 The effect of the arrangement as I find it to be was that each was to have a one quarter share as tenants in common, and that upon his or her death the parent's share would be left equally to Wayne and Greg. In my opinion it is improbable that it was intended or assumed that conferral of a beneficial interest in a parent's share would be postponed until after the death of the surviving parent, or that one parent was free to leave his or her interest to the other so that the entitlement of Wayne and Greg was dependent upon the survivor leaving both shares to them. 66 Strong support for this conclusion is found in the wills of the parents of 13 January 1996 and 25 January 2000, the terms of which are consistent with the conversations relied upon by Wayne referable to "Billabidgee". 67 I have not overlooked Mona's will of 15 July 1985 which provided for the bulk of her estate to be left to her children namely Wayne, Greg and Barry, as tenants in common in equal shares. It was submitted for the defendants that the will is inconsistent with the existence of a common intention that her share in "Billabidgee" should be left to Wayne and Greg or, indeed, as to the existence of any arrangement by which the parents' shares would ultimately pass to Wayne and Greg. However, there was no evidence of the circumstances in which this will was made, and its explanation is a matter for speculation. Whatever may be said about it, in my opinion its effect does not outweigh the totality of the evidence to which I have referred which supports the finding that Wayne and Greg each became beneficially entitled to a one half share in Mona's interest in "Billabidgee" upon her death. It may be accepted that the provision in this will, which leaves her estate to the children in equal shares, is inconsistent with her statements that "Billabidgee" was for Wayne and Greg, and to the other relevant evidence, but the only conclusion I make about it is that it is an unexplained departure from the course of conduct in relation to the properties and the business in which all participated over many years and it should not be an obstacle to the grant of relief. 68 Accordingly, I find that the first defendant holds "Billabidgee" on trust for Wayne as to 37.5 percent, and as to a further 12.5 percent upon the death of John. He is entitled to such form of relief as is necessary to give effect to this conclusion. "Warrawool" 69 For Wayne to succeed it was necessary for him to demonstrate that it was the common intention that "Warrawool" was to be owned on a basis substantially different from the ownership of "Billabidgee". In this case proof is required that a statement or representation was made which, in the context of the family operating the business, was to be reasonably understood to mean that "Warrawool" was to be owned by Wayne and Greg as tenants in common in equal shares and John and Mona would have no beneficial interest in it. 70 On my assessment of them in the context of the circumstances in which they took place the conversations do not convey a sufficiently clear and unambiguous statement or representation which is reasonably capable of being so understood, or demonstrate that Wayne in fact held any expectation that his interest was different from his interest in "Billabidgee", or that either he or the others acted upon the basis that the interests in "Warrawool" were different. 71 On this issue I accept the defendants' submissions. It is unnecessary to recite them. I find that the evidence that the parties operated "Billabidgee" and "Warrawool" as one for the shared purpose of the family business, and the absence of any evidence of any claim or acknowledgement that the interests in "Warrawool" were in any way different to those in "Billabidgee" render it inherently unlikely that there existed a common intention or representation that the beneficial interests in "Warrawool" were to be different from those in "Billabidgee". For example, John's statement prior to purchase that "… the land is for Greg and you …", or Mona's statements on several occasions between 1984 and 1986 that "… the land will go to you but we also want to provide something for Barry … the land is to be Greg's and yours; half each …" or Mona's statement on 3 June 1999 on the hospital visit "… you and Greg were to always get half each of the farm" taken in context are statements similar to those made in discussions referable to "Billabidgee". In my opinion they do not suggest acknowledgement that "Warrawool" was or would be held differently. Nor am I persuaded that the statements made during September 1997 which are set out in para 31 above, taken either alone or against the background that "Warrawool" had been then in the family for about 12 years, provide a reasonable basis for Wayne to assume that he and Greg were always to own it not equally with, but to the exclusion of, the parents. 72 Furthermore, acceptance by the parties that they always held equal beneficial shares in the farm enterprise, similar to the ownership of "Billabidgee", supports the likelihood that the beneficial interests in "Warrawool" are similarly held. 73 The parcel of evidence which, in my opinion, effectively negates Wayne's case is that of the occasions in September 2000 and subsequently when the wills of John and Mona were discussed. (The detail is set out in paras 33-36 above). Relevant to these events is the fact that since at least the time of his serious injuries on 12 May 1997 Wayne had been anxious to arrange a succession plan by which the beneficial interests in the properties and in the farm enterprise were defined, and his interests were secured for the future benefit of himself and his family. 74 The evidence shows that Mona stated that the position of John and herself was that the wills secured the interests of Wayne and Greg in "the farm". It is apparent that the references to "the farm" meant, and was understood by all to be a reference to, both properties. Nothing was said by anybody which suggested that the beneficial interests in the properties were different. Neither Wayne nor Greg asserted that they were then entitled to own "Warrawool". Although Wayne raised the question of a succession plan in September 2000 and afterwards, he appears to have accepted Mona's assurances that the wills were his security and would not be changed. 75 Understandably Wayne was concerned to have his interests in the properties and the business secured. These occasions were obvious opportunities for him to assert his claim that he was then entitled to one half of "Warrawool", but he failed to do so. Instead, he expressed satisfaction or, at least, acceptance of the provision in each will which left the shares in the first defendant and John P Kerr Nominees Pty Limited to Wayne and Greg in equal shares as tenants in common subject to the payment to Barry of $100,000. These provisions were consistent with the common intention and assumption that the parties had equal interests in both properties held by the first defendant and the business held by John P Kerr Nominees Pty Limited. In my opinion, in the circumstances, Wayne's failure to protest his present entitlement to one half of "Warrawool" on these occasions supports the finding that it is improbable that the conversations referable to "Warrawool" demonstrated the common intention or representation upon which his claim for relief is based. 76 For the above reasons I find that there is no evidentiary basis for distinguishing the extent of the interests in "Billabidgee" from the extent of those in "Warrawool". It follows that, in my opinion, the arrangement was that John, Mona, Wayne and Greg each owned a one quarter share in "Warrawool" and that upon the death of a parent Wayne and Greg would inherit that parent's share. Accordingly, I reject the claim for relief in respect of "Warrawool". I find that the first defendant holds this property on trust for Wayne as to 37.5 percent, and as to a further 12.5 percent upon the death of John. He is entitled to such form of relief as is necessary to give effect to this conclusion. Conclusion 77 As earlier noted (paras 9, 10) it was agreed that declarations should be made in respect of the interests in the business conducted by the Trust, the tri-axle trailer, the rice header, and the Incitec Pivot shares. It was also accepted that an order should be made for the sale of the properties. 78 I direct the parties to prepare short minutes of declarations and orders appropriate to give effect to the findings as to the extent of the beneficial interests in the properties, and to the matters about which there was no dispute. It will also be necessary for an order to be made which gives effect to the agreement that provision is to be made for the payment of the sum of $100,000 by each of Wayne and Greg to Barry. 79 The parties should have the opportunity to be heard as to costs failing agreement on this issue. 80 Arrangements should be made with my Associate by 4.00pm 27 October 2006 for the re-listing of the matter.

06/10/2006 - typograchical errors - Paragraph(s) Coversheet: Catchwords

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