Q (a pseudonym) v E Co (a pseudonym)

1. [1]

   MEAGHER JA: The appellant (Q) is the father of the third, fourth and fifth respondent brothers (respectively A, B and C). The first and second respondents (E Co and EM Co) are companies in which Q and his three sons hold an equal shareholding interest, and the sons alone are the directors of each of those companies. This appeal is concerned with the sons’ claim against the father to a proprietary estoppel by encouragement, requiring by way of equitable relief that he make good an expectation, on which each relied to his detriment, that on Q’s death he would leave his farm properties to them.

2. [2]

   The need for the use of pseudonyms in this judgment and the judgments of the primary judge (Ward CJ in Eq), which extends to the anonymisation of the names of non-parties and of properties, companies and business interests, is explained in her Honour’s first judgment (E Co v Q [2018] NSWSC 442 (J1) at [2], [3], [5]-[7]). The same pseudonyms were adopted in her Honour’s third and fourth judgments (E Co v Q (No 3) [2018] NSWSC 646 (J3); E Co v Q (No 4) [2019] NSWSC 429 (J4)). As they are adopted in this judgment, it is not necessary for this Court to make any order prohibiting the disclosure of the name of any person pursuant to the Court Suppression and Non-publication Orders Act 2010 (NSW).

Overview

1. [3]

   During his lifetime, Q’s father amassed considerable wealth and established a family trust (the Sydney Family Trust) out of which that wealth was distributed to Q and his brothers and sisters. In early April 2002, a capital distribution of $14.4 million was made to Q from that trust. At the same time, one of Q’s brothers made a gift of $1 million to each of his nieces and nephews, including A, B and C. By April 2002 Q, then aged 59, was himself conducting a valuable cattle-farming business on 6 unencumbered properties. He had commenced that farming business in 1978 on a different property in the same area. Each of the sons spent part of his childhood on that property. As at July 2002, A, B and C were aged 33, 32 and 28 respectively. At that time, A had been working on one of the farms since 1989 and B, who had a business degree, had worked in various roles for companies in retail management. The youngest son, C, had first worked as a farmhand and then in retail, mainly in liquor retailing, where he continued to be employed until October 2002.

2. [4]

   From at least July 2002, there were discussions between the sons, Q and his advisors concerning how Q would pass his wealth to them, and more specifically the transfer of the assets of Q’s farming business into a new structure to be owned by him and the sons. Those discussions were held in the context of the sons’ then expectation, as understood by their father, that he intended that they and their families inherit his wealth (J1 [774]). There were two significant meetings in September 2002. At the first, on 18 September, and in relation to a specific proposal for the new family business structure, there was discussion about the capital gains tax implications of Q transferring the existing farms to E Co (J1 [777]). At the second meeting on 25 September 2002 it was agreed that while Q would retain ownership of the farms, Q’s livestock and plant and equipment would be transferred to E Co, which would take over Q’s farming operations and employ people previously employed by Q. At the same time, it was agreed that each of the sons would have a role and shareholding interest in E Co and its business, and that the family business structure would involve off-farm investments (J1 [790]).

3. [5]

   Thereafter the three sons, in varying degrees, joined in that family business, A as the manager of E Co’s farming operations. B was responsible for the accounting side of the business, and also assisted with the farms and “off-farm” investments. C looked after off-farm investments, which later included hotels and property development projects, and assisted from time to time on the farms. The sons’ case, which the primary judge accepted, was that they joined and worked in the new family business in these capacities from October 2002 until 2010, relying on the expectation induced by Q that he would make the farms available to the new family business, hold them for his sons during his lifetime, and leave them or the proceeds of their sale to the sons on his death. This is referred to as the “holding/inheritance expectation”.

4. [6]

   In October 2009, the sons became aware of matters which lead to Q’s being charged and found guilty of charges of sexual abuse of two of B’s children, for which Q served a sentence of four years in jail commencing in July 2012 (J1 [49]). In the period after October 2009, the business of the farming operations continued “in much the same manner as it had been before” (J1 [288]).

5. [7]

   On 27 June 2013, Q served a notice of termination of lease on E Co (J1 [352], [353]), and in mid-August 2013 Q made a new will, leaving the residue of his estate to a discretionary trust, the trustee company of which is to be controlled by Q’s sister (J1 [374], [375]). Although the sons are eligible beneficiaries under that trust, in cross-examination Q made plain that, as at 22 August 2013, his wish was that his sons should receive nothing out of the farms (J1 [34]).

6. [8]

   The primary judge upheld the sons’ separate but jointly made claims to an equitable proprietary estoppel, finding (1) that Q created and encouraged in each an expectation the he would hold onto the farms and make them available to E Co during his lifetime, so that on his death they would inherit the farms and (2) that on the basis of that expectation each made a “life-changing” decision not to pursue other career options and joined the new family business, participating in different ways and to different extents from October 2002 until at least 2010 (J1 [808], [812]). The primary judge also held that separate equitable proprietary claims made by E Co and by A were made good. The claim of E Co and the sons to a “joint endeavour constructive trust” was also upheld, but no findings were made in relation to relief based on that claim. Her Honour rejected the sons’ claims in contract and to an express trust, as well as their claim that Q had acted oppressively in the conduct of the affairs of E Co. Lastly, the primary judge held that any relief to which E Co was separately entitled with respect to its estoppel claim was “subsumed” in that to be granted to the sons; and that A’s estoppel claim, which concerned the residence on Property No 4, also did not need to be the subject of separate relief in the light of that proposed for the sons’ claim.

7. [9]

   With respect to that relief, in her first judgment the primary judge concluded that it would be unconscionable for Q now to be permitted to act otherwise than in accordance with the expectation that he would hold the properties during his lifetime so that the sons would inherit them on his death. In circumstances where the relationship between father and sons had “irreparably broken down” (J1 [75]), a “clean break” was necessary, making an order “accelerating the interest of the sons” appropriate, and not out of all proportion to the equity raised (J1 [1216]). To achieve that outcome, in addition to making an order for the transfer of the farm properties to the sons, her Honour proposed that orders to the following effect be made:

8. [10]

   Following delivery of her Honour’s first judgment, the respondents sought leave to adduce further evidence and to make further submissions in relation to the relief her Honour proposed. That leave was granted (J3 [122]). Having received further evidence and argument, the primary judge concluded that the final relief as first proposed should be varied (J4 [12], [677]). Orders giving effect to her Honour’s revised views were made on 1 May 2019. Those orders and declarations, which are the subject of Q’s amended notice of appeal and the respondents’ further amended notice of cross-appeal, vary slightly from those proposed at J4 [677]. They included:

9. [11]

   On 3 September 2019, by consent, the primary judge partially stayed those orders pending the resolution of this appeal, and noted undertakings of the respondents to similar effect.

Issues in the appeal and cross-appeal

1. [12]

   Q’s amended notice of appeal raises the following issues:

   1. (1)

      Whether the primary judge erred in finding that Q’s conduct gave rise to a proprietary estoppel in favour of each of A, B, C and E Co in the absence of a finding that Q by some “positive act” promised, represented or assured that he would make the farms available to E Co during his lifetime and leave them to his sons on his death; it being contended that his “acquiescence” (in the sense of merely standing by) in the sons’ more general assumption that they would inherit the farms under Q’s will, which her Honour did not find was created or encouraged by Q, was insufficient to give rise to a proprietary estoppel by encouragement (ground 1).

   2. (2)

      Whether the primary judge erred in holding that any equity arising out of A, B, C and E Co’s detrimental reliance on such an expectation encouraged in September 2002 could give rise to an equitable interest in properties not owned by Q as at 1 July 2003 (being Properties Nos 10, 11 and 12) (ground 2).

   3. (3)

      Whether the primary judge erred in finding that C relied on the assumption underlying that expectation in “making his time available to assist in the family business and to look for investment opportunities to pursue as part of the family business or with his brothers and with the potential involvement of his father” (J1 [1127]); it being contended that the “appropriate and compelling inference to draw from the whole of the evidence” was that C would have entered into the family business irrespective of whether that assumption was made (ground 3).

   4. (4)

      Whether the primary judge erred in finding that B and C’s reliance on the assumption underlying that expectation was detrimental; it being contended that the countervailing material and professional advantages which accrued to each of them because of their participation in the family business had the consequence that their doing so did not constitute “material detriment” (ground 4).

   5. (5)

      Whether, assuming the sons’ proprietary estoppel claims are made out, her Honour erred in declaring that from 1 July 2003 Q’s farm properties, including those acquired after that time, were subject to a constructive trust for the benefit of A, B and C, and E Co, to the exclusion of Q; and whether as a condition of “accelerating” the sons’ interest in Q’s land, the primary judge ought to have granted the relief proposed in her first judgment, including: (a) the payment to Q of an amount being the net present value of the estimated market rent of the properties over the balance of Q’s life expectancy; (b) the payment to Q of an amount being the book value of the cattle transferred as at July 2003, and the total of the cash sums advanced to E Co; and (c) the immediate purchase by A, B and C of Q’s shares in E Co at a value to be agreed or assessed (ground 5).

2. [13]

   By their further amended notice of cross appeal, the sons and E Co make three responses to the appeal. First, by grounds 1, 2, and 3, they seek to uphold the orders as accelerated made by the primary judge on 1 May 2019 by reference to different formulations of the estoppel claims made below – estoppel by encouragement, estoppel by acquiescence, and also each of those claims “based upon the work performed by A, B and C through E Co”. None of these grounds seeks the “discharge or variation of the decision below” and accordingly each is not properly raised as a ground of cross-appeal (see Uniform Civil Procedure Rules 2005, r 51.17(1)). Secondly, if the orders made by the primary judge cannot be maintained, by grounds 4 and 10 the sons seek to uphold their joint endeavour constructive trust claim and A’s proprietary estoppel claim in relation to Property No 4. Thirdly, by grounds 5, 6, 7, 8 and 9, the sons and E Co seek to uphold the orders made by the primary judge, subject to one amendment, being to order 12 and by reducing the net present value of future rent from $640,000 to $600,000.

3. [14]

   By their further amended notice of contention the sons and E Co also make three responses to the appeal. First, by grounds 1, 5 and 6 they seek to uphold the primary judge’s orders in relation to their primary claim, including her Honour’s findings as to reliance and detriment. Secondly, they contend that her Honour’s orders should be affirmed on the basis of their claim to an estoppel by acquiescence (ground 2) and, alternatively, on the basis of E Co’s separate claim to a proprietary estoppel (ground 3). Finally, they contend for different relief on the basis that their claim to a joint endeavour constructive trust is upheld (ground 4). This last ground is not properly the subject of a notice of contention (see Uniform Civil Procedure Rules 2005, r 51.40(1)), which is to be filed by a respondent who does not “seek a discharge or variation of any part of the orders of the court below”.

Whether Q engaged in conduct supporting a proprietary estoppel by encouragement (ground 1)

1. [15]

   Q’s argument in support of this ground emphasises the distinction between proprietary estoppel by encouragement and proprietary estoppel by acquiescence, the latter understood in the sense of “standing by”. The former, as formulated in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [6], is founded in an assumption as to the future acquisition of ownership of property which has been induced by a representation or promise upon which there has been detrimental reliance by the plaintiff. As Mr Handley observes in Estoppel by Conduct and Election (2nd ed, Thomson Reuters, 2016) at [3-001], a representation or promise “may be implied wholly or partly from conduct or inferred from silence or inaction”. Whether any, and if so what, representation has been made is to be judged “objectively according to the impact that whatever is said [or done] may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee” per Mance LJ in MCI [2004] 2 All ER (Comm) 833 at 844. See also Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18 at [24]-[27] (Lord Rodger) and at [80], [84]-[86] (Lord Neuberger). In this Court, see Galaxidis v Galaxidis [2004] NSWCA 111 at [93]; Sullivan v Sullivan [2006] NSWCA 312 at [85]; and Evans v Evans [2011] NSWCA 92 at [124].

2. [16]

   Proprietary estoppel by acquiescence, on the other hand, describes a much narrower principle, and arises “where a person improves land in the mistaken assumption that it is his own, the true owner being aware of the mistake and deliberately doing nothing to undeceive the other” per Jordan CJ in NSW Trotting Club Ltd v Council of the Municipality of Glebe (1937) 37 SR (NSW) 288 at 308. In such circumstances equity regards it as “fraudulent” for the true owner to set up his existing rights as against the person who has made a mistake as to his legal rights and acted to his detriment on the basis of that mistaken belief: Willmott v Barber (1880) 15 Ch D 96 at 105-106 (Fry J). See generally Estoppel by Conduct and Election at [11-002], [11-008]. As the author observes, “Estoppels by standing by are rare”. The “conduct of the owner which attracts the estoppel... is his silence, but it differs from other estoppels by silence because there may be no pre-existing relationship or duty, and no dealings direct or indirect” (at [11-011]). The “improver acts on his mistaken belief and not on any representation by the land-owner” (at [11-012]).

3. [17]

   Mr Handley’s reference to “other estoppels by silence” recalls the statement of Lord Eldon LC in Dann v Spurrier (1802) 7 Ves Jun 231 at 235-236; 32 ER 94 at 95 that a court of equity “will not permit a man knowingly, though but passively, to encourage another to lay out money under an erroneous opinion of title; and the circumstance of looking on is in many cases as strong as using terms of encouragement” (emphasis added). In Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 at [109] this statement was taken to support the undoubtedly correct view that silence or inaction, in the context of other conduct, may constitute an “element of assurance” in support of a claim to a proprietary estoppel by encouragement.

4. [18]

   Ultimately, however, Q contends that this case is not one of encouragement by silence or inaction taken together with other conduct. It is also contended that the evidence could not support a proprietary estoppel by acquiescence because such an estoppel is confined to mistaken assumptions concerning presently existing rights. Here, as the primary judge observed (J1 [924]), the sons’ expectation was as to the future acquisition of ownership of property, and not to any present entitlement to that property.

5. [19]

   The appellant’s argument commences with a consideration of her Honour’s findings. First, whilst accepting that A, B and C entered into the September 2002 discussions expecting that the farms would be left to them under Q’s will, it is said that her Honour made no finding that Q did anything to induce those “pre-conceived” expectations, or to encourage his sons to maintain them in the context of the implementation of the arrangements involving E Co. Secondly, with respect to the September 2002 discussions, it is said that the primary judge made no finding as to the making of any express promise or statement by Q that he would hold onto the farms so that his sons would inherit them on his death. Furthermore, it is emphasised that when considering the sons’ claims in contract and express trust, the primary judge found that in the September meetings the possibility of Q transferring his land to E Co was not discussed (J1 [740], [417]). It is also said that whilst the primary judge canvassed the issue, her Honour did not make a finding that, at the meeting on 25 September 2002, Solicitor No 2 had given advice that Q’s objective of passing on the properties to his sons could be achieved by his holding onto them so that they passed under his will.

6. [20]

   Ultimately, it is contended that, as is said to be reflected in the primary judge’s conclusion at J1 [981], the conduct of Q which her Honour relied on as giving rise to the proprietary estoppel was not encouragement but “mere acquiescence”, in the sense of standing by:

7. [21]

   It is submitted that this conclusion is to be understood in the context of her Honour’s earlier observations at J1 [47]-[49], and in particular the observation at J1 [47] that “fundamental” to her conclusion in relation to the “holding/inheritance” expectation (a reference to the emphasised words in J1 [981] above) was the acceptance by Q in cross-examination of a succession of propositions as to what he had agreed with his sons, what his intentions were and, critically, as to his awareness of their expectations in relation to the family business and the farms in particular, at the relevant time – namely from 25 September 2002.

8. [22]

   So understood, the essence of her Honour’s finding is said to be that “Q sat silently through two meetings, which were proceeded by a period of talk and activity pertaining to succession planning, in which it was agreed that Q would transfer his grazing business, but not his farms, to a family vehicle, and then acquiesced thereafter in the process of implementing that agreement. The assumption as to inheritance was formed prior to those meetings and it is not found that [Q] induced it. Her Honour did not find that the [sons’] assumption that they would have the use of Q’s lands for the purposes of the family business until the end of his life [was] either created or encouraged at the September meetings”. Finally, it is said that Q’s conduct alone was too ambiguous to constitute encouragement of the formation of the assumptions which underlie the claimed estoppel, and that if the position were otherwise, Q’s belief and knowledge as to his sons’ expectation would not have been a necessary aspect of the primary judge’s reasoning.

9. [23]

   The respondents first observe that, as Q accepts, in some circumstances silence or inaction will convey a promise or representation, and that there will accordingly be cases in which what might colloquially be described as “acquiescence” will give rise, when considered in context, to an estoppel by encouragement.

10. [24]

    However, their principal submission is that the primary judge made a number of findings concerning Q’s conduct which supported her Honour’s conclusion that he had encouraged the sons’ expectation, rather than merely ‘stood by’ as they acted upon it. Contrary to Q’s submission that he sat silently through the September meetings and did not participate in the implementation of the new family business structure, it is pointed out that her Honour found that by 25 September 2002 Q had “agreed in principle” to the new structure, and subsequently adopted and participated in it. His agreement in the new structure was said to involve “the essential elements” of the sons’ expectation. The primary judge had, for one thing, found that the discussions concerning the new structure involved “succession planning”. Also, contrary to Q’s contention, it is said that the primary judge accepted much of the sons’ evidence as to the content of the September discussions, including B’s evidence that Solicitor No 2 had given advice during the second meeting that it was preferable for Q, for capital gains tax reasons, to pass on the farms by his will rather than transferring them to a unit trust.

11. [25]

    Having regard to those findings, and what are said to be other unchallenged findings as to the background and content of those discussions, the sons submit that there was ample support for the primary judge’s conclusion that their expectation was engendered by “the discussions held in September 2002 and [Q’s conduct] in participating in the new business structure following those discussions” (J1 [808]). Reference is also made to her Honour’s finding that given the sons had, to the knowledge of Q, come away from the September meetings with the relevant expectation, it was simply “implausible that he did nothing to create or encourage such an expectation” (J1 [52]-[53]).

12. [26]

    The disposition of these arguments requires close attention to her Honour’s findings and conclusions with respect to Q’s encouragement of his sons’ expectation. At the commencement of her first judgment, the primary judge provided a summary of her critical findings and the reasoning supporting them (J1 [45]-[81]). As is already apparent, the parties rely on aspects of this summary to colour the primary judge’s subsequent reasoning. Her Honour then set out a detailed chronology of relevant events (J1 [82]-[405]). That chronology includes facts which were agreed, or not controversial, as well as matters remaining in contention, particularly with respect to the meetings of 18 and 25 September 2002. In relation to the matters remaining in contention, her Honour noted at J1 [84] that findings “will be set out separately in due course”.

13. [27]

    That chronology is followed by a statement of the “factual disputes” between the parties as formulated by the respondents (J1 [417]). Those “disputes” do not describe particular issues arising with respect to the sons’ separate estoppel claims. Two of those factual disputes are, however, relevant to matters relied on in the argument in support of ground 1. The first, described as question (a)(i), was whether “there was ever discussed the possibility that [Q] would transfer ownership of the farms to the new business entity – especially at the meetings of 18 and 25 September 2002”. The second, question (a)(iv), included “whether Q had induced his sons to believe, and/or stood by in the knowledge that his sons had the belief, that if they joined the new family business they would inherit the farms”.

14. [28]

    Her Honour addressed the first of these disputes in the context of considering a subject referred to as the “major fault line” (J1 [694]-[738]); and the second in the context of considering what was termed the “Dispute as to “transfer” of land agreement or representation” (J1 [741]-[790]). This latter dispute related primarily to the sons’ claims in contract and to an express trust. In the course of making findings in relation to that dispute (J1 [777]-[788]), her Honour made findings which appear to qualify her earlier “negative” answer to question (a)(i) (J1 [740]). In particular, at J1 [780] her Honour found that it was more likely than not “there was discussion at the meeting of 18 September 2002 as to the capital gains tax implications of a transfer of the farms and as to the interposition of a unit trust to hold the assets of the proposed new family business arrangements”. Her Honour’s affirmative answer to question (a)(iv) at J1 [808] was not the subject of any later qualification.

15. [29]

    At J1 [791]-[812], her Honour then considered the “Dispute as to ‘holding/inheritance’ expectation”, finding at J1 [808] that the expectation of the sons’ engendered by the September discussions and conduct of their father was:

16. [30]

    Her Honour next dealt with each of the pleaded claims of the respondents (J1 [813]ff), commencing with the claims in contract, express trust, and for the imposition of common intention or “joint endeavour” constructive trusts. Her Honour then turned to the proprietary estoppel claims (J1 [900]ff), identifying the first legal issue as being whether there were sufficiently clear representations or promises by Q, dealing with that question in relation to the sons’ jointly made estoppel claims at J1 [965]-[982], and concluding at [982]:

17. [31]

    The reference to the “uncommunicated ‘success’ condition” is to a condition which according to his evidence Q imposed, but did not communicate to anybody, as to the basis on which he was participating and would continue to participate in the implementation of the family business structure. His evidence was that at the time of the September discussions, and at all times through to at least June 2009, his intention was that he would hold the properties until he died, when they would be inherited by his sons, subject to their making a success of the farming business (see, for example, J1 [792], [799]). In other words, Q’s understanding of what was expected from him corresponded with that of the sons, except for this uncommunicated condition.

18. [32]

    The second issue which the primary judge identified had two aspects –whether in respect of the estoppel by encouragement each of the sons made the relevant assumption, and whether that assumption was induced by Q (J1 [903], [987]). Her Honour addressed the former aspect at J1 [1002]-[1031], concluding at [1031]:

19. [33]

    The “evidence referred to above” is unchallenged evidence of A and B as to their discussions with Q, or in his presence, before and at the two September 2002 meetings. It included: that leading up to those meetings, B had conversations with Q involving “not just how this new family business might work, but at least in general terms how [Q] would pass on his wealth to us” (J1 [1008], [1010]); that B’s recollection of that first meeting included that Accountant No 1 explained the details of the proposed structure using a whiteboard and, after making his presentation, answered some questions (J1 [1016]); that at the 18 September meeting A first heard the expression “succession plan” and was told that the farms would be transferred into a trust, the trustee being E Co (J1 [1010], [1017]); and that the recollection of B and A of Solicitor No 2’s advice at the 25 September meeting was that if Q transferred the farms to E Co a significant capital gains tax liability would be incurred and that accordingly the farms should not be transferred into the name of E Co, Solicitor No 2’s opinion being that the farm assets should be kept separate from the operational company. Q could then pass on his assets to the sons under his will, and there would be little or no capital gains tax payable (J1 [1017]-[1022]). The respondents submit that her Honour’s conclusion at J1 [1031] necessarily involves a finding that advice to this effect was given by Solicitor No 2 at this meeting, and in Q’s presence.

20. [34]

    The following summary of unchallenged findings and non-controversial facts also includes B’s evidence, as recorded by the primary judge, on aspects of the meetings on 18 and 25 September 2002. The status of that evidence is addressed below.

21. [35]

    Q commenced cattle-farming in about 1978. In 1988, Q sold Property No 1, which had been acquired in 1978, and purchased Property No 2 in 1989. By June 2002, the farm properties owned by Q were Properties Nos 3, 4, and 5 (acquired in 1993), 6 (acquired in 1998), 7 and the Main Property (the latter acquired in 1999, and so named because for some time Q lived on that property) and No 8 (acquired in April 2002 and described by Q as his “retirement block”). Q agreed that from April (following his capital distribution from the Sydney Family Trust) he was “looking to set up [his] sons for their future with money available from” that trust; that it was his intention that his estate be left to his three sons in equal shares; that he assumed that each of them understood that was his position; that from that time he wanted to involve the sons “in a structure whereby they would be set up for their future”; and that to do so he believed it was necessary “to ensure that each of them had a role in the structure going forward”, notwithstanding that he appreciated that each of them had “different skills”.

22. [36]

    On 4 June 2002, Q met with his accountant, Accountant No 1, “to review options that related to the involvement of the sons” in “potential business structures” and the “primary production business” (J1 [113], [773]). There was a further meeting on 11 July 2002, between Accountant No 1 and A, B, C and Q, to discuss “the various options available and issues regarding possible business structures that could be implemented” (J1 [119]). On 29 August 2002, A contracted to purchase Property No 9, described as an “improved pasture beef cattle property which runs in conjunction with fish farming” (J1 [138]-[139], [144]). On the following day, 30 August, Accountant No 1 met with Q and B “regarding a new family business entity structure, purchase [Property No 9] and [N] bottle shop” (J1 [146]). On 2 September 2002, Accountant No 1 spent time discussing “new family entity structure options” for Q’s family with Accountant No 2, also an adviser to Q (J1 [146]). On 9 September 2002, Q’s solicitor, Solicitor No 1, wrote to Q concerning the purchase of Property No 9, referring to “a recent meeting at which time you informed me that a company would be set up to act as the purchaser of the above property” (J1 [152]). On 12 September 2002, E Co was incorporated.

23. [37]

    The meeting on 18 September 2002 was attended by Q, A, B and Accountant No 1. The accountant’s contemporaneous time record describes a “meeting with [Q, B and A] regarding new coy structure, operation of same, will, legal considerations” (J1 [159]). Q could not recall any discussion concerning trusts at this meeting, but he did recall wills being discussed at the meetings of 18 and 25 September, and that those meetings proceeded “on the basis that [he] intended to leave his estate to his three sons and in turn [that he] understood that was his sons’ understanding”.

24. [38]

    B’s note, made at this meeting (J1 [722]), describes a structure in which a unit trust was established to hold the assets of the family business, the unit holders being trustees of separate “family” discretionary trusts for each of Q, A, B and C. B also recalled that, towards the end of the meeting, Accountant No 1 recommended that Q and his sons obtain legal advice on the trust structure which he proposed, and in respect of the various documents they had signed (J1 [168]). Accountant No 1 did not doubt that at this meeting he discussed capital gains tax with Q, A and B. As what was proposed at that time was that the assets of the business would be held by E Co, the likelihood was that the capital assets being discussed were Q’s farm properties (J1 [777]).

25. [39]

    The meeting on 25 September 2002 was attended by Q, A, B and C, Accountant No 1 and Solicitor No 2, who had been retained by Accountant No 1’s firm on behalf of its client, Q (J1 [572]). At that meeting Accountant No 1 handed out a diagram headed “the [XXX] group Existing Capital Structure 25-Sep-02” (J1 [789]). That diagram described E Co as the “Trustee of Unit Trust”, identified the shareholders and directors of E Co as Q, A, B and C, and described the “E Co Unit Trust” as “Owner of Assets”. The discretionary trusts of Q, A, B and C were shown as the unit holders in that trust (J1 [183]). Accountant No 1’s timesheet recorded “family meeting regarding new structure involving [Solicitor No 2]” (J1 [181]).

26. [40]

    B’s evidence was that Accountant No 1 advised that “the farming assets would be held by a trust and the operating entities would lease or rent assets to run the businesses. That is how the trust generates income from its assets. The trust then makes distributions of the income to each of the unit holders, being the family trusts”. Accountant No 1 did not deny that he might have said words to that effect (J1 [194], [195]). B also recalled Solicitor No 2 advising that “there is no need to transfer the assets into a trust. That is something that accountants always suggest to rack up fees. The same result will be achieved if [Q] continues to hold the properties for you until his death when the properties pass to the boys under [Q’s] will but that way you do not pay capital gains tax on the transfer of the land” (J1 [197]). Solicitor No 2 did not give evidence. Accountant No 1 accepted that it was “likely” Solicitor No 2 had said words to the effect attributed to him (J1 [198], [672]). What followed was wholly consistent with that advice having been given and accepted.

27. [41]

    Accountant No 1’s timesheet for 25 September 2002 includes “update [Accountant No 2] and instruct regarding livestock & plant & equip. rollover” (J1 [181]). On or before 3 October 2002, Accountant No 2 prepared a draft letter to Mr Aitken of Stockford Tax Consulting. That letter recorded that Accountant No 2’s client “currently operates a substantial primary production enterprise as a sole trader. As part of his succession planning strategy, he wishes to transfer/sell the business operations to a company. The assets to be transferred/sold are livestock (cattle), plant, machinery and equipment. No liabilities are to be transferred/sold to the new entity.” The draft letter identified the relevant issue as being to advise on “the taxation implications regarding the transfer of plant and equipment and livestock” from Q to E Co (J1 [204], [205]). That reference was to capital gains tax implications.

28. [42]

    The purchase of Property No 9 by Q, rather than A, was completed on 10 October 2002. From about October 2002, E Co conducted the grazing business previously conducted by Q. With effect from 1 July 2003, Q’s livestock (cattle) were transferred to E Co at book value ($758,427, being 2,838 head of cattle at $267.24 per head). An agreement for lease was formalised in minutes of a meeting of directors of E Co dated 1 July 2003, but prepared around 17 March 2004, when that meeting in fact occurred (J1 [251], [252], [255]). Those minutes identify the leased properties as Properties Nos 3, 4, 5, 6, Main Property, 8, 9 and 10 (acquired in October 2003) (J1 [238], [241]). The lease fee payable was $300,000 per year – $250,000 for land and $50,000 for plant and equipment – plus GST; and inclusive of rates, taxes and insurance, which were to be paid by Q.

29. [43]

    In December 2003, Q acknowledged that the properties being managed by A included Property No 10 (J1 [245]). In the period from 1 July 2003 to 30 June 2010, Q advanced monies to E Co totalling $1,572,000. Those advances and the amount for the transfer of the cattle were recorded in E Co’s accounts as debits to Q’s loan account. With effect from 1 July 2003, all of Q’s employees were employed by E Co (J1 [235]).

30. [44]

    EM Co was incorporated in March 2003. B’s evidence was that that company was established as a vehicle through which Q and the sons would make off-farm investments (J1 [227]). In November 2004, EM Co invested $225,000, provided in equal shares by A, B and C, in a property development, the E Project, which was a success (J1 [269], [270]). Later, in about October 2006, EM Co invested $561,000 in the B Project, which was not. The funds for that investment were borrowed by EM Co from Rabobank, on the security of a personal guarantee provided by Q and a first mortgage over Property No 4; after the failure of the B Project that loan was repaid by E Co (J1 [270]). The W Project, though described as an off-farm investment, was ultimately made by Q personally with only peripheral involvement of EM Co. Q purchased 50% of the units in the Unit Trust which held land the subject of the development project, and distributed them equally between himself and each of his sons (J1 [273]).

31. [45]

    The sons’ interests in the P Hotel and the C Hotel were also described as off-farm investments (J1 [303], [313]), though Q has no interest in either hotel. The P Hotel was initially acquired by B and a business partner in August 2010 (B’s wife would acquire B’s partner’s interest on the latter’s death), which acquisition was financed by a loan secured by B’s own home. In July 2011, B and that same partner exchanged contracts to acquire the C Hotel, which was purchased by the corporate trustee of a unit trust (J1 [311]-[317]). Shares in the unit trust were held as to 44 units each by B and his partner, through their family trusts, and as to 6 units each by A and C (on the death of B’s business partner, they would each take half of his interest in the C Hotel). Part of the finance for its acquisition was secured by a mortgage over Property No 7 and the Main Property and Q’s personal guarantee (J1 [314]). In 2013, both hotels were refinanced by Westpac on the security of a $2 million guarantee and indemnity provided by Q, supported by a mortgage over the same properties and guarantees from each of the sons (J1 [354]-[364]).

32. [46]

    The purchase of Property No 10 was completed in October 2003, and for the purposes of the argument on ground 2 it was treated as acquired after 1 July 2003 irrespective of whether the contract for sale was made before that date. Property No 11 was acquired in July 2005, and Property No 12 in September 2005. Upon its acquisition each was used by E Co and included as one of the properties leased by it from Q (J1 [258], [259]).

33. [47]

    No rent was paid by E Co to Q between 1 July 2007 and at least 30 June 2011, during which period there was a drought affecting the rural area (J1 [261], [322]). From late 2011 it was agreed that E Co would pay Q $100,000 per annum, Q remaining responsible for the payment of rates and insurance (J1 [530]).

34. [48]

    At the outset of her reasons, the primary judge noted two matters about the way the sons’ joint proprietary estoppel case was made. First, it did not rest on specific words attributed to Q that engendered the expectation found (J1 [51], [965]). As her Honour observed, that was not necessarily surprising given the time that had elapsed between the meetings in September 2002 and hearing, which commenced in August 2017. Secondly, although the encouragement relied on consisted of discussions and conduct occurring in and after September 2002, the expectations as to “the family farming business being for the benefit of [the sons]” provided the context in which Q’s conduct was to be considered and understood (J1 [21]).

35. [49]

    The expectation which the primary judge found Q encouraged in his three sons (see [20] above) had two aspects. The first was an arrangement under which the new corporate entity, E Co, would carry out the farming operations, for the purposes of which Q’s livestock, plant, machinery and equipment would be transferred to E Co. That arrangement included that each of the sons and Q would have a role in the activities of the company, and that its business would involve potential “off-farm” investments. The primary judge found that as at 25 September 2002, Q and his sons had reached substantial (albeit not binding and enforceable) agreement as to that structure (J1 [790], [740]).

36. [50]

    The second was the “holding/inheritance expectation” that Q would hold onto the farms and make them available for use in the farming business of E Co during his lifetime, and that on his death the sons would inherit them. Ground 1 is directed to her Honour’s finding at J1 [981] that Q encouraged this aspect of the sons’ expectation.

37. [51]

    The primary judge’s conclusion at J1 [808] describes the “holding/inheritance” expectation as “engendered as a result of the discussions held in September 2002 and the conduct of their father in participating in the new business structure following those discussions”. At J1 [981] her Honour refers to Q’s “acquiescence in the discussions for the proposed business structure and implementation of that structure”. And at J1 [47], her Honour described as “fundamental” to her findings Q’s acceptance “as to what he had agreed with his sons; what his intentions were; and, critically, as to his awareness of their expectations in relation to the family business and the farms in particular… from 25 September 2002”.

38. [52]

    Q relies on three particular aspects of her Honour’s findings in support of the ultimate submission that his involvement in the 18 and 25 September 2002 meetings and participation in the implementation of the family business structure was essentially passive, and too “ambiguous” to constitute encouragement of the holding/inheritance expectation.

39. [53]

    The first is the primary judge’s negative answer to question (a)(i) (see [27] above) which was directed to whether there was discussion at the 18 September meeting about the “possibility that [Q] would transfer ownership of the farms to the new business entity”. Later, the primary judge addressed a slightly different question, namely whether the question of capital gains tax was discussed at that first meeting. Her Honour found (J1 [777]) that:

40. [54]

    Her Honour did not make an express finding as to the nature of the “specific” proposal referred to. However, the reference to “a transfer of the farms” at J1 [780] suggests the finding related to the possible transfer of all Q’s farm properties, in the context of discussion as to the “interposition of a unit trust to hold the assets of the proposed new family business arrangements” (J1 [780]). That finding is not inconsistent with her Honour’s earlier finding, which was directed to a different question – Q’s preparedness to transfer ownership (see J1 [694]), a matter assumed in the context of the later finding.

41. [55]

    The second is whether, as Q submits, there was no finding as to Solicitor No 2 having advised at the 25 September meeting that it would be better, in order to avoid capital gains tax liability, for Q to “hold” the farms so that his sons could inherit them under his will, rather than that he transfer them into the new business structure. It is correct that there is no express finding accepting that Solicitor No 2 gave such advice. However, her Honour’s finding at J1 [1031] (discussed at [32]-[33] above) necessarily accepts the evidence of B and A as to the advice given by Solicitor No 2. Their evidence of advice given in those terms was relied on as supporting the finding that the “holding/inheritance” expectation was held; and her Honour made that finding “based on" that evidence.

42. [56]

    Thirdly, Q submits that although her Honour found that there was agreement at the 25 September 2002 meeting that the farms would be made available, there was no finding that it was agreed E Co would have the use of that land for Q’s life. It is said that the primary judge’s finding in that respect was only as to the sons’ “expectation”, the evidence of that being Q’s “concession” (J1 [799], [800]) that his sons entered into the new business on the basis that they would be involved in the farming business with him until he died (J1 [48]). This submission is correct, so far as it goes. However, the primary judge also held that Q knew that this was the sons’ expectation and that their expectation corresponded with his intention at that time, which was that he would hold the farms during his lifetime and leave them to his sons on his death, subject to the satisfaction of the uncommunicated “success” condition (J1 [802], [806]).

43. [57]

    Q’s broader argument in support of this ground commences with the proposition that, whilst the context of the discussions in September 2002 included an existing expectation on the part of the sons that they would inherit Q’s estate, there was no express finding that Q did anything to induce that assumption. That appears to be correct, although, as her Honour observed, it was not “seriously” in dispute that leading up to 2002 Q had given the sons assurances to that effect (J1 [21]).

44. [58]

    Between June and September 2002 there were discussions between Q, his sons and Accountant No 1 concerning the setting up of a “new family business structure” in which each of them would be involved. That structure, and their participation in it, was to be the means by which Q would “pass on his wealth” to his sons, that wealth including money available to Q from the Sydney Family Trust. That was Q’s intention at that time (see [35] above). That intention was communicated to his sons (see [35], [51] above) and Q sought to give effect to it by involving them in discussions with Accountant No 1 from early July 2002 (see [36]ff above).

45. [59]

    At the meeting on 18 September 2002, Accountant No 1 proposed a structure in which E Co, as trustee of a unit trust, was to hold the assets of the family business, the unit holders being trustees of family discretionary trusts for each of Q, A, B and C (see [38] above). The meeting also concerned the operation of that structure, associated legal considerations and, as Q recalled, wills, discussed on the basis that he intended to leave his estate to his three sons (see [37] above). There was discussion about capital gains tax in the context of a structure which proposed the transfer of assets from Q to E Co. At the conclusion of the meeting, Accountant No 1 recommended to Q and the sons that they obtain legal advice on that structure.

46. [60]

    Thus, the shared understanding between father and sons was that Q intended to leave his estate to them and that what he proposed was a business structure in which each of the sons would be involved that would give effect to that testamentary intention. He would also put money distributed by the Sydney Family Trust into the business. The sons would each have a role, and share in its successes. Her Honour made findings to that effect. None of those findings is challenged. They include: (1) that in June 2002 Q was considering how to structure his farming business going forward (J1 [773]); (2) that in the period from at least 11 July 2002, there were discussions as to a new business structure in which the sons were to be involved in the primary production business (J1 [774]); (3) that the effect of what was being discussed leading up to and at the 18 September 2002 meeting was a “succession plan” whereby Q would give effect to his intention that his sons would inherit the farms and family business (J1 [776]); (4) that Q’s intention at that time (subject to the uncommunicated success condition) was that the sons inherit the farms and the family farming business, Q not expecting any benefit from the family business and intending to put money distributed by the Sydney Family Trust into the business for the benefit of his sons and their families (J1 [776]); (5) that, at the time of the 18 September 2002 meeting, each of the sons had the expectation, to their father’s knowledge, that the farms would be left to them under his will (J1 [778]); and (6) that the proposed business structure included the participation and involvement of Q and his sons through the new corporate entity in off-farm investments (J1 [779]).

47. [61]

    Legal advice concerning the structure was given by Solicitor No 2 on 25 September. The effect of that advice was that Q should hold the properties until he died. At that time, they would pass to the sons under his will. Following this meeting, a structure giving effect to that advice was adopted. It included the transfer of Q’s livestock, plant, machinery and equipment to E Co and the retention of the farm properties by Q. However, they were to be made available to E Co, and accordingly to the sons and Q, for the long term.

48. [62]

    In all of this, Q was not a mere bystander. The new family business structure had the involvement of his sons as a central element, and could never have proceeded without Q’s agreement. Q took advice, involved his sons in the discussions with his advisers, and acted in accordance with the advice given. He made clear that the sons’ expectation of inheritance was well-founded, and participated in the development and implementation of a structure directed to giving effect to that expectation by passing on his wealth to his sons and their families.

49. [63]

    Q’s “concessions” in cross-examination (addressed at J1 [791]-[800], [810] and earlier at [47]-[54]) confirm what emerges from the foregoing analysis of his conduct in proposing and effecting his sons’ involvement in the new family business structure. They included: (1) that as at 25 September 2002, Q believed that each of his sons “knew” that they were going to inherit from him (J1 [49]); (2) that Q “encouraged” the sons’ expectation that they would be involved in E Co until he died (J1 [50]); (3) that from 25 September 2002, Q knew that his sons were entering the farming business on the basis that they would be involved in it until he died (J1 [48]); (4) that Q knew that the sons had made “life-changing decisions” to go into the business “for the long term” – until he died – and also knew that they were not aware of his uncommunicated condition that “they made it a success” (J1 [48]); (5) that between September 2002 and October 2009, Q was representing to his “sons that [he would] hold the farms for them and [they would] inherit the farms from [him] without conditions but secretly” keeping to himself a condition that this would only happen if they made a success of it (J1 [48]); and (6) that at no time before July 2012 did Q advise his sons that there was any “risk that they’d be disinherited” (J1 [49]).

50. [64]

    The following evidence of Q is extracted at J1 [799]:

51. [65]

    As this cross-examination shows, Q regarded his sons’ inheritance of the properties on his death as a “right” which they had to “earn”. But he did not tell his sons that. Instead, by agreeing to and implementing their involvement in the new family business structure, he encouraged and allowed them to believe that his purpose in doing so was to create the means by which they would inherit the farming business and assets, and the farm properties. The sons’ involvement required that they decide to join the family business, which was to – and did – make capital improvements to the farm properties. From Q’s perspective, the “purpose of the whole exercise” was that they should do exactly that, whilst unaware that Q might bring the “exercise” to an end if he judged it not to be a success.

52. [66]

    Q’s argument on this ground is essentially that the two aspects of the sons’ expectation, discussed above at [49]ff – that they would implement the new family business structure; and that Q would hold onto the farms for them to use during his lifetime and inherit on his death – were only contingently connected. As the primary judge found, the evidence did not support that view. In Q’s language, the “whole concept” of the new structure “was to see whether they could manage the [rural] side of the business and if they were successful, then through my will they’d inherit the properties” (J1 [792]). Q intended that the new family business structure would provide the means by which his wealth, including eventually his landholdings, was passed on to his sons. Save for the uncommunicated success condition, the sons shared, and acted on the basis of, his understanding of that “whole concept”.

53. [67]

    Q’s participation in the conception and implementation of the new structure did not involve his merely standing by, and was not ambiguous. Q’s concessions in cross-examination, including as to his knowledge of the sons’ understanding of the ultimate purpose of the new structure, demonstrate clearly his own understanding of what he had committed to implementing with his sons. In all the circumstances, there was nothing unreasonable in the sons understanding Q’s conduct as they did – which was, in large part, as he did. Ground 1 must be dismissed.

Whether any equity arising from detrimental reliance on the expectation created could give rise to an equitable interest in after-acquired properties (ground 2)

1. [68]

   The appellant makes three arguments in support of ground 2. First, he submits that the primary judge did not “directly address the proposition” that the expectation encouraged by Q extended to properties acquired after 1 July 2003 (being Properties Nos 10, 11 and 12) for a total amount of $3.215 million, referring only to “the farms” as an undifferentiated group of properties, and that there is therefore no finding about the scope of the expectation as it applied to properties acquired by Q after July 2003. Secondly, it is submitted that Q cannot be bound in conscience in relation to those after-acquired properties, because her Honour did not find any continuing reliance by each of the sons on an expectation of inheriting those properties. Indeed, no such detrimental reliance could have been found, because the sons’ life-altering decisions took place before those properties were acquired. Finally, it is said that the sons’ reliance could not found an equity in relation to the properties acquired after 1 July 2003, because in order to found a proprietary estoppel the underlying expectation must relate to a certain interest in specified land owned by the party estopped at the time of reliance on that expectation.

2. [69]

   The respondents in essence make two points in explaining why her Honour did not need to differentiate between properties held as at 1 July 2003 and those acquired subsequently. First, the sons’ initial expectation as found by the primary judge involved an expectation as to the acquisition of further properties (with money received by Q from the Sydney Family Trust) for use in the family farming business. Secondly, it is said that the sons’ case was put as one of continuing encouragement and reliance, that their expectation and reliance naturally broadened as further properties were acquired, included in the lease agreement, and used by E Co for the purposes of the farming business, and that the primary judge made findings to that effect.

3. [70]

   It is convenient to begin with the scope of the expectation found by the primary judge.

4. [71]

   While many of the primary judge’s references to “the farms”, taken alone, are silent as to when they were acquired, it is clear from the first judgment that the expectation found by her Honour was a ‘floating’ or ‘ambulatory’ expectation which ‘attached’ to and included farm properties subsequently acquired by Q for use by E Co for the purposes of the family farming business, at and from the time of their acquisition. The evidentiary foundation for this finding is set out most clearly in the primary judge’s reasons dealing with whether each of the sons and E Co had made the assumption “that he or it had (or, at least in the context of estoppel by encouragement, would have) an interest in the relevant properties” (J1 [987]).

5. [72]

   The primary judge set out parts of B’s evidence “as to discussions that included A and C” concerning the development of the new family business structure in which Q said, in substance, that he would “continue to scout for additional agricultural properties to buy” (J1 [1007]). Her Honour also noted A’s evidence as to the formation of E Co, including his recollection that he “left the [18 September 2002] meeting understanding that the company/trust we were setting up would own the properties – both the current ones and the ones that would be purchased in the future with [Q’s] money from Sydney” (J1 [1010]). It was “based on” this evidence that her Honour concluded that each of the sons held the expectation relating to “the farms” (J1 [1031]), albeit without specific reference to farms acquired after 1 July 2003.

6. [73]

   Earlier, the primary judge had considered whether the “promise, representation or assurance” given to the sons was sufficiently certain (J1 [948]-[982]), and in that context her Honour adverted expressly to the subject of after-acquired farm properties. Her Honour referred to the observations of Campbell JA (Allsop P and Sackville AJA agreeing) in Waddell v Waddell [2012] NSWCA 214 at [53], where his Honour referred with apparent approval to Thorner v Major, in which Lord Walker and Lord Neuberger upheld an estoppel founded on a representation relating to property likely to change in extent over time. Relevantly, Lord Neuberger said (at [95]):

7. [74]

   Her Honour continued at J1 [963]:

8. [75]

   Her Honour’s subsequent findings as to the plaintiffs’ expectation, based on evidence that the sons expected Q to acquire new farms for the purposes of the family farming business, are to be read in the light of that observation. Once that is done, it is plain that her Honour found an expectation that extended to after-acquired properties.

9. [76]

   The issues in relation to relief were dealt with on that basis, as her Honour’s much later aside at J4 [654] makes clear: “the relevant expectation was never in terms of the holding of the specific farms as such – it being contemplated that there might be a sale or acquisition of one or more properties over which the farming business was to be conducted in the course of the first defendant’s lifetime, albeit after consultation with the sons”. If the appellant’s contention is merely that the sons’ initial expectation could not have encompassed properties they were not then aware of, that contention is answered by her Honour’s finding of a ‘floating’ expectation.

10. [77]

    The appellant submits, however, that as a matter of law the expectation which founded the estoppel, and on which the sons must have relied to their detriment, could relate only to identified property then owned by Q. For that proposition he relies on the statement of Lord Scott in Yeoman’s Row Management Ltd v Cobbe [2008] 1 WLR 1752; [2008] UKHL 55 at [18]-[22], to the effect that the expectation must relate to “a certain interest in land”, and that of Lord Walker in Thorner v Major at [61]:

11. [78]

    Lord Walker went on to qualify that proposition substantially in upholding the estoppel claim made in that case (at [62]):

12. [79]

    As Lord Neuberger noted in Thorner at [93]-[95], the certainty which Lord Scott found lacking in Cobbe related to the nature or terms of the benefit or legal right to be accorded to Mr Cobbe, not to the physical identity of the property the subject of the assurance. As to the latter, it was sufficient that there was “no doubt as to what was the subject of the assurance, namely the farm as it existed from time to time.” Lords Hoffman, Scott and Rodger agreed (at [8], [11] and [28], respectively).

13. [80]

    What Lord Walker referred to as the “retrospective aspect of proprietary estoppel” – that a court is to assess whether it would be unconscientious for a promisor or representor to depart from a promise or representation at the time of the threatened departure: Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 at [81]-[82]; DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 at [72]-[73] – suggests that, provided the expectation or assurance clearly defines the class of assets to which it relates, it is not necessary for all of those assets, or those which are the subject of relief, to have been identified at the time of detrimental reliance. That some assets encompassed by the expectation were acquired after the point of detrimental reliance would, on that view, merely inform the nature and extent of the appropriate relief.

14. [81]

    However, it is not necessary to address these questions in this case.

15. [82]

    The natural reading of the primary judge’s findings is that the sons’ acts of reliance continued until 2010, well after Properties Nos 10, 11 and 12 were acquired. Her Honour’s principal finding of reliance at J1 [1127] related to acts which were of their nature continuing, in that it was always open to the sons to cease to perform them:

16. [83]

    Earlier, at J1 [812], the primary judge found that each of the sons had, “relying on the expectation” induced by Q, “worked in the new family business in varying capacities from October 2002 onwards at least up until 2010 (after which I accept that C’s role in the new family business was much reduced and B’s role was also limited)” (J1 [812]); and in her fourth judgment the primary judge accepted, subject to a presently irrelevant qualification, a submission of the respondents premised on there having been “continuing reliance throughout the period” (J4 [613]). (It is also notable that the acts of reliance of E Co, which the sons controlled, included making capital improvements to each of Properties Nos 10, 11 and 12: J1 [1119], [1129].)

17. [84]

    The appellant makes two submissions directed to the effect of these findings. First, it is submitted that the sons’ “life-changing decisions” had already been made, and that any detriment had therefore been incurred, before Properties No 10, 11 and 12 were acquired. Her Honour’s finding on detriment was that each of the sons either would not have joined in the family business or would have done so in a fashion “that would have protected [their] interests”, and would instead have pursued business opportunities of their own (J1 [1168], [1169]). In respect of A, the finding of detriment is expressly linked to the finding of (continuing) reliance in J1 [1127] (“in not looking to purchase a property elsewhere”). In respect of B and C, her Honour’s findings were that their involvement in the family business structure from October 2002 until 2010 was detrimental; and that their continued involvement was a consequence of continuing reliance on the holding/inheritance expectation. It is wholly artificial to separate the two findings as the appellant proposes.

18. [85]

    Secondly, the appellant submits that even this finding of continuing detrimental reliance is insufficient, and that it would have been necessary for the primary judge to have found acts of reliance specifically on an expectation of inheriting the after-acquired properties; that is, that an expectation concerning those specific properties was a contributing cause of distinct acts of detrimental reliance. That submission does not take account of the expectation which the primary judge found Q encouraged.

19. [86]

    From the times of their respective acquisitions, Properties Nos 10, 11 and 12 were identified farm properties owned by Q. Any acts of continuing reliance were, from those times, acts of reliance performed in the expectation that those properties (in addition to, and not separately from, the properties already held at 1 July 2003) would be held by Q for the sons to inherit them. Q’s submission is essentially that it was necessary for the sons to establish separate estoppels in relation to the after-acquired properties. That is not how the sons’ claim was put, in circumstances where there was continuing detrimental reliance on a unitary expectation at all relevant times; and in any event, the logical consequence of her Honour’s findings is that the elements of a proprietary estoppel by encouragement were established on and from the acquisition of each of the properties acquired after 1 July 2003. Ground 2 should be dismissed.

Whether the primary judge erred in finding that C relied on the expectation in electing to join the family business (ground 3)

1. [87]

   The resolution of this ground does not turn on whether to say that an expectation was a “contributing cause” of certain actions, so that they may be said to have been taken in reliance on the expectation, is to say that those actions would not have been taken “but for” the expectation: cf the primary judge’s consideration of recent authorities addressing the question of reliance at J1 [1039]-[1076].

2. [88]

   Binding authority requires the party relying on the estoppel to establish that it would have acted differently in the absence of the relevant encouragement: Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 9 at [66], [67], [69] (French CJ, Kiefel, Bell and Keane JJ) and [91] (Gageler J). The appellant submits that the two formulations of this question are one and the same. I agree. For their part the respondents accept that if there is a difference between a “contributing cause” and one but for which something would not have happened, it will not determine the outcome of this case.

3. [89]

   Accordingly, this ground is to be determined on the basis contended for by the appellant. Q submits that the question raised by the “but for” test with respect to the encouraged expectation must be answered by reference to a counterfactual in which the sons were presented with the option of participating in the new family business structure with an expectation (in the colloquial sense only) of inheritance, but without any encouragement by Q of the holding/inheritance expectation. Counsel for Q accepted that this counterfactual would include or assume that the sons had been warned by Q that “it’s not guaranteed that this will go on”. That much is consistent with the counterfactual reasoning in Sidhu at [77] and Priestley v Priestley [2017] NSWCA 155 at [124], and also with the influential unreported judgment of Hoffman LJ in Walton v Walton (CA, 14 April 1994):

4. [90]

   Pausing here, one difficulty with such a counterfactual analysis in this case is that the new business structure agreed in principle at the meeting of 25 September 2002 was a family business structure in which all of the sons were to participate together. Central to that structure was that “each of the sons would have a role in (and an interest in the shareholding of) the company” (J1 [790]). There being no challenge to the findings of reliance in relation to A and B, it would seem to follow that in the relevant counterfactual C could and would not have participated in the new family business structure, because it would never have been agreed to or implemented in the absence of the cooperation and participation of his brothers.

5. [91]

   However, that issue not having been the subject of submissions, it is appropriate to address the question as framed by Q, namely whether, had C been warned that Q gave no undertaking or assurance as to the sons’ continued use and inheritance of the farms, C “would have rejected Q’s offer... when that offer was made in September 2002”.

6. [92]

   The primary judge summarised C’s evidence of his participation in the family business at J1 [214]:

7. [93]

   C left his employment in a liquor retailing group in October 2002. He only ever worked in the family business part-time, and had time available each week to devote to his own projects. In 2003, for example, he said that he spent around half of his time each week managing his own investments, his superannuation fund, and those of his wife and his brothers. The remaining half of that time was spent investigating bottle shop and hotel businesses for the family to acquire; he spent one week in six visiting the farms with B. On C’s evidence, the years after 2003 reflect roughly the same general pattern of work. He would spend around two days each week managing personal investments, and his and his brothers’ families’ superannuation. His remaining time was spent working in the family business in various capacities, including assisting B with back office work, helping with the fish farm and investigating potential investments.

8. [94]

   As to what he gave up by joining the business, C believed Q otherwise “would have backed [him] financially to buy, own and operate a bottle shop business” on his own. He had also been “interested in real estate and property developing for several years”, and had he been unable to find a bottle shop business to buy he “would have sought to pursue opportunities in that industry”.

9. [95]

   In January 2011, C invested in a business providing back-end accounting and financial services to real estate agency businesses. In February of the same year, he invested in another business, which involved rental property management, with the same business partner. C conceded that he could have pursued investments of his own, like those he eventually made after 2010, earlier in the period of his involvement in the family business. His evidence was, however, that those investments were prompted by the breakdown of the sons’ relationship with Q in late 2009 and his consequent uncertainty about the future of the family business on which his own family’s livelihood depended.

10. [96]

    C’s evidence about whether he would have continued to work as an employee (whether in the same or a different job) was equivocal at best, both in cross-examination and in chief. He raised as a possibility that he would have continued to work as an employee, but deposed:

11. [97]

    The primary judge was not asked to find that C would have continued in his employment had he not joined the family business (see her Honour’s summary of the submissions made as to C’s detriment at J1 [1163]). Rather her Honour was invited to accept C’s evidence that he would have attempted to ensure “the future of my family by putting my labour and investments to work in some other way”.

12. [98]

    The primary judge’s findings can be set out briefly. Her Honour approached the question using, if only “as one tool” (J1 [1081]), counterfactual reasoning of the form supported by Q. As her Honour stated at J1 [59]:

13. [99]

    Her Honour’s ultimate finding appears at J1 [1127]:

14. [100]

    That finding must be read with the primary judge’s finding on detriment, which, although directed to a distinct element of the estoppel, also involved consideration of C’s acts in reliance on the expectation induced by Q. Critically, at J1 [1168] her Honour found that each of the sons “did not pursue other avenues that were available to him”, and either would not have joined the family business or “would have done so in a fashion that would have protected his interests against the kind of events that transpired in 2013”.

15. [101]

    In making these findings, it is evident that the primary judge placed significant reliance on the evidence of each of the sons as to what their counterfactual decisions would have been (J1 [1155], [1156], [1161], [1163]), albeit that her Honour’s conclusion on reliance was based “on the whole of the evidence” (J1 [1076], emphasis in original). Her Honour generally found each of the sons “to be a credible witness” (J1 [53], [596]), and saw no reason “to disbelieve any of their evidence as to reliance” (J1 [609]).

16. [102]

    The essence of Q’s argument on ground 3 is that the primary judge gave undue weight to C’s evidence, which could only be “hypothetical” evidence of his counterfactual behaviour, and that her Honour failed to engage with the material circumstances which made that evidence “glaringly improbable” or “contrary to compelling inferences”. The finding as to C’s reliance therefore (it is said) involved appealable error of the kind described in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [29].

17. [103]

    First, as to C’s claim that, in the counterfactual, he would have sought “to invest in a business like the one he ultimately invested in many years before 2011 when he did so”, it is said that the evidence demonstrated that this is what he in fact did, without success. Secondly, as to what is said to be his claim that he would not otherwise have given up paid employment, Q submits that C’s own evidence was that he was dissatisfied with working as an employee and might have ceased to work as an employee regardless of whether he joined the family business. Thirdly, it is said that C’s participation in the family business never interfered with his pursuing his own business and investment interests, a consideration which went to the likelihood that C would have entered the family business had he not held the expectation.

18. [104]

    Taking these matters into account, it is submitted that the opportunity presented by joining the family business was sufficiently attractive to make it likely that C would have decided to take it up even if he had been warned that there was no guarantee that the business would continue until his father’s death or that on his death he would inherit a one-third share of the farm properties. It is observed that people “join family in ventures, knowing of the possibility that the family will have a falling out, every day of the week”, and that the mere possibility of (further) securing his inheritance would have been a sufficient inducement.

19. [105]

    The substance of these submissions was raised before the primary judge, and set out by her Honour at considerable length between J1 [1083] and [1099]. Relevantly, her Honour noted Q’s submissions that “the factors motivating both B and C were that they wanted to establish a standalone business; they did not want to be employees; and they saw 2002 as their year of opportunity” (J1 [1083]); that joining E Co involved acquiring a share in a valuable business without immediate cost (J1 [1085]); and that C was dissatisfied with his employment and wanted to invest with his family (J1 [1096]). Her Honour’s finding of reliance was made against that background. Making proper allowance for her Honour’s advantages as trial judge, is that finding shown to have involved error?

20. [106]

    In considering that question, it is to be borne in mind that in the counterfactual the options open to C were not limited to a binary choice between continuing in his retail employment and joining the family business, nor even a binary choice between pursuing investments entirely on his own and joining the family business structure. It was not necessary for C to articulate precisely what he would (counterfactually) have done: Priestley at [147]. Accordingly, the fact that C’s evidence as to his remaining in retail employment only raised that as a possibility, and was qualified by his concessions as to his dissatisfaction with being an employee, does not go very far toward undermining her Honour’s finding. Particularly in view of the $1 million given to him by his uncle in early 2002, C’s options at that time were not so limited.

21. [107]

    The primary judge’s findings acknowledged as a possibility that C would still have become involved with a family business in some form, but in a fashion that protected his interests to a greater extent. None of the matters relied on by the appellant meaningfully assists in excluding that possibility.

22. [108]

    Further, that the business structure agreed at the 25 September 2002 meeting included the making of off-farm investments with the farms as security does not mean that Q would not otherwise have assisted with investments made by the sons outside of that structure, perhaps including by making the farms available as security. Q’s generosity to his sons was not in dispute (J1 [18]), and in the proceedings below the sons argued explicitly that, counterfactually, Q would have assisted them in making investments less “vulnerable to the whims of [Q’s] continued support” (J1 [20], [1087]). There is no evidence to suggest that C would not have had this prospect in mind when deciding whether to accept “Q’s offer”. It was never suggested, and the evidence does not demonstrate, that Q put pressure on the sons to enter into the new business structure (including perhaps by suggesting that his future generosity would be contingent on them doing so) (cf J1 [843]).

23. [109]

    Q emphasises that C “only ever worked part-time and always had days available each week to devote to his own investment projects”, that C conceded he “could have” pursued his own investments during his time working in the family business, as he did after 2010, and that he in fact did spend significant amounts of time investigating bottle shop and other businesses in which to invest. It is said that this is relevant both to whether C would have joined the business (because his role was not burdensome and was consistent with his interests) and to whether C relied on the expectation in not pursuing his own investment projects. There are difficulties with these conclusions. First, the fact that C “could have” pursued his own investments, but did not, in the context where C had agreed to invest with Q and his brothers and where he understood Q to have committed to pass on to him a one third share in the farm properties, demonstrates very little.

24. [110]

    Secondly, C’s concession that he could have pursued his own investment projects followed immediately after his statement that he in fact “pursued investment possibilities that were for the nature of the family business”. C’s evidence as to the time he spent pursuing investment opportunities on behalf of the family business was not “hypothetical”, and was accepted by the primary judge. It is mere speculation to suggest that the outcome of searches by C for a business to invest in on his own would have been the same as the outcome of his searches for a bottle shop or hotel business to invest in on behalf of the family business. In any event, C’s own evidence was that Q’s investment preferences informed his search and that counterfactually, if no bottle shop or similar business could be found, he “would have used [his] experience with real estate” to invest in a real estate or property business (J1 [1163]). C’s off-farm activities were not trivial, and the evidence does not suggest that they did not to some extent compromise his freedom to make his own investments.

25. [111]

    Taking Q’s case at its highest, and supposing (contrary to C’s evidence) that the possibility of inheriting the farms was irrelevant to C, and that the farms were significant only insofar as they would support the business of E Co and the making of off-farm investments, it still does not follow that the “compelling inference” is that he would have joined the family business regardless of the holding/inheritance expectation.

26. [112]

    For one, in the absence of a commitment by Q that he would continue to hold the farms (or in the presence of an express warning that he might not), the continued availability of the farms for use as security for off-farm investments was not guaranteed. The “offer” to C would then have been merely a contingent offer of support for investments that might be made by C together with Q and his brothers, to be assessed against the prospect of C making his own investments with the $1 million from his uncle, quite possibly with support also from Q. Put that way, it is by no means “glaringly improbable” that C would have preferred to take the latter path.

27. [113]

    Nor would the prospect of a share in the grazing business have been as attractive as Q suggests, absent any commitment that there would be properties on which it could be conducted. True it is that, depending on the method of valuation adopted, E Co may now have a real value. But it is also true that, at the time of the September discussions, the new structure being contemplated involved the farming business being conducted on Q’s farm properties, under a lease arrangement providing it with security of tenure.

28. [114]

    The leasing arrangements ultimately made, described above at [42] and [47], serve to underline the point that the viability of E Co’s proposed business structure depended critically on the availability of Q’s farm properties for its use. As the primary judge accepted, E Co’s business would be, in the absence of a right to the continued use of the farms, “effectively inoperable” (J1 [1127]).

29. [115]

    As at September 2002, the offer of a quarter share in a grazing business which was to receive Q’s farming assets other than land, and which might be able indefinitely to continue to use Q’s land, was not so attractive as to make C’s evidence “glaringly improbable”. Turning down the counterfactual offer would have allowed C to go into business on his own, with the possible support of Q, while remaining in a position to inherit the farms or their proceeds (and, indeed, likely also Q’s grazing business or its proceeds).

30. [116]

    It may be accepted, as the appellant submits, that C’s evidence of what he would have done had he been given a warning by Q in the relevant terms should be treated with some degree of caution because it is “hypothetical”. It does not follow that the primary judge was not entitled to place significant weight on that evidence. Her Honour was presumably aware of the risk that each of the sons might give self-serving evidence. And C’s evidence of what he would have done depended on or implicitly involved matters that were not hypothetical, being his aspirations and dispositions at the relevant time.

31. [117]

    In Sidhu at [67]-[69], the evidence-in-chief of the plaintiff was the first of the four matters identified as together demonstrating a “compelling case” of detrimental reliance. The reasoning of this Court in Priestley at [147]-[148] is also inconsistent with the appellant’s submission that the primary judge was required to treat C’s evidence with a high degree of scepticism. When it was put to him, C firmly denied that the promised transfer of Q’s farming lands to E Co or to any other entity was not a reason for him becoming involved. No other suggestion to that effect was put to C.

32. [118]

    In the course of cross-examination, Q made a series of concessions related to his sons’ reliance on the expectation which, although directed primarily to Q’s knowledge and only framed in general terms, provide independent support for the conclusion that C relied on that expectation in entering the family business. Relevantly:

33. [119]

    In actions for deceit, it has long been recognised that a rebuttable inference of inducement is raised by entry into a contract after a representation was made “of such a nature as would be likely to induce a person to enter into a contract”: Smith v Chadwick (1884) 9 App Cas 187 at 196 (Lord Blackburn); Gould v Vaggelas (1984) 157 CLR 215 at 236 (Wilson J, Gibbs CJ and Dawson J agreeing), 250 (Brennan J); [1985] HCA 75. As Gummow, Hayne, Heydon and Kiefell JJ observed in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 351; [2009] HCA 25, that proposition concerns the law of deceit, and “consideration of its application must always attend closely to all of the evidence”. In the law of estoppel, the position remains that there must be reliance in fact, and that the legal burden of proving reliance never shifts: Sidhu at [57]-[61]. As a mere factual matter, however, the position also remains that in some cases it may “fairly be said that, once it is established that the representation was made, the representation together with all the other facts of the case enables the claimant to say that, unless the defendant can elicit some further evidence to the contrary, the claimant will have discharged the onus”: Steria Ltd v Hutchison [2006] EWCA Civ 1551 at [130] (Neuberger LJ).

34. [120]

    Ultimately, the position is this: C did elect to work in the family business, including by working on the farms, on the basis of a representation by Q which encouraged him in the holding/inheritance expectation. That representation made joining the new business structure a much more attractive opportunity. Absent that representation, the opportunity was not without real attraction, but nor were the alternatives available to C, and there would have been nothing surprising or unreasonable about a decision to turn it down, made by a person with significant capital who might reasonably have presumed that future support from his father would be forthcoming. C's evidence, which largely escaped direct challenge in cross-examination, was that he would have turned that opportunity down. The primary judge found, “on the whole of the evidence”, that there was no reason to doubt him. There was nothing “glaringly improbable” or “contrary to compelling inferences” about that conclusion. Her Honour has not been shown to have erred in reaching it.

35. [121]

    As was observed above in the disposition of ground 2, the primary judge’s findings on reliance, in relation to each of the sons, involved continuing reliance on the holding/inheritance expectation. Q makes no separate attack on the finding of continuing reliance by C.

36. [122]

    Ground 3 should be dismissed.

Whether B and C would suffer substantial detriment if Q were to depart from the encouraged expectation (ground 4)

1. [123]

   Equitable estoppels, including proprietary estoppels, share with estoppel in pais the “basal” or “fundamental” purpose of protecting against detriment: Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 418-419 (Brennan J); [1988] HCA 7; Sidhu at [79]-[82]. In this context detriment is the prejudice or disadvantage that the party attempting to set up the estoppel would suffer by reason of his or her change of position in reliance on the encouraged expectation, if it were to be departed from: Grundt v Great Boulder Pty Gold Mines Ltd (1939) 59 CLR 641 at 674-675 (Dixon J); [1937] HCA 58.

2. [124]

   However, the requirement of detriment in proprietary estoppel is to be understood neither narrowly nor technically: Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 at [20]; Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015) at [17-125]. As Nettle JA said in Donis at [20], citing Gillett v Holt [2001] Ch 210 at 232:

3. [125]

   Thus, detriment sufficient to support an estoppel by encouragement need not involve expenditure of money on the property the subject of the estoppel or otherwise, or be capable of financial quantification: Walsh v Walsh [2012] NSWCA 57 at [14]. It is well recognised that detriment in the relevant sense may flow from having significantly changed the course of one’s life: see Riches v Hogben [1985] 2 Qd R 292, where the detriment was constituted by the plaintiff selling his possessions, giving up a house in England, and bringing his family to Australia in reliance on an expectation that the defendant, his mother, would provide a house in his name if he and his family migrated; and Delaforce, where, when settling proceedings in the Family Court, and in reliance on a promise that the deceased would bequeath a property to her, the plaintiff gave up a claim to an amount of $50,000 and did not seek an order that she should have title to the property after the death of her former husband.

4. [126]

   Q emphasises that although the primary judge found that each of the sons had made “life-changing decisions” (J1 [1168]), her Honour did not find B and C’s reliance to have had “irreversible consequences of a profoundly personal nature” that were “beyond the measure of money”: cf Donis at [34] (Nettle JA, Maxwell ACJ and Ashley JA agreeing), adopted in Sidhu at [84]. That submission, the premise of which is dubious in the extreme, attempts to make a formula out of Nettle JA’s observations in applying the relevant principle. As is already clear, it overstates the extent to which they mark out any limitations on the flexible approach usually to be taken to the assessment of detriment.

5. [127]

   Q’s submissions also pick up other language in Donis and Gillett, to the effect that detriment must be “substantial” or involve “something substantial”: see also Australian Financial Services and Leasing Pty Ltd v Hill Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 at [150] (Gageler J). Those references are to detriment or harm which is sufficiently substantial that it would be unconscionable for the party who gave the assurance to depart from it. There may be cases in which an estoppel is established but the disproportion between detriment and expectation is so great that conscience does not require the party estopped to make good the assurance: Sidhu at [85]; Giumelli at [40]-[48]. But for the question of relief to arise at all there must be detriment that is sufficiently substantial (or, to use equivalent expressions, real or material) to bind the conscience of the party said to be estopped.

6. [128]

   The principal point made by Q in his submissions on this ground is that in determining whether B and C would suffer substantial detriment as a result of their reliance if Q were permitted to depart from the holding/inheritance expectation, account must be taken of the “countervailing benefits” received by them by reason of that reliance. It is submitted that doing so is consistent with the approach of Bathurst CJ in Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12:

7. [129]

   In assessing whether B and C would suffer detriment, the primary judge did not expressly have regard to countervailing benefits flowing to them by reason of their reliance on the holding/inheritance expectation. That being so, Q submits that her Honour’s findings expressed as going to detriment went only or primarily to reliance:

8. [130]

   For their part the respondents say that the notion of countervailing benefits is a creature of English law, and inconsistent with the way the requirement of detriment was articulated in Giumelli and Sidhu. They do not, however, submit that the approach of Bathurst CJ in Ashton v Pratt involved error, at one point accepting that “one has regard to... benefits or advantages but they need to be causally related to the nature of the expectation and, as we understand it, we don’t see para 144 providing any support for the conceptual position” of the appellant. Their primary position is that the “benefits” identified by Q are unrelated to B and C’s decisions to join the family business in reliance on the holding/inheritance expectation.

9. [131]

   Where a person has significantly changed the course of his or her life in reliance on an expectation, how far must it be proven that those changes were ultimately to his or her financial disadvantage, all things considered? Consideration of that question must be deferred until its factual premises have been identified and addressed.

10. [132]

    C gave evidence, set out at J1 [1012] and accepted at J1 [1031], as to the roles it was agreed each of the sons would take in the new family business:

11. [133]

    Consistent with that proposed division of labour, B’s evidence was that from October 2002 to August 2010 he worked full time (a minimum of 30 to 40 hours per week) in the business of E Co, primarily in managing “the financial side of the farming operations”. That involved “the preparation and analysis of the management accounts, and dealing with all of the financial, accounting and legal matters concerning the farms”. B dealt with E Co’s insurance broker and its suppliers, and assisted Q in liaising with lawyers, real estate agents and other businesses with which E Co had accounts. He also researched and learned about aquaculture in order to serve as the “relief manager” of the fish farm on Property No 9.

12. [134]

    In the period prior to August 2010 B visited the farms “every two weeks or so, and usually for four to five days at a time”, during which visits he “helped with the physical work, and assisted with whatever was required to be done”. Otherwise, he worked remotely from Sydney.

13. [135]

    After August 2010, when B and a business partner purchased the P Hotel with finance secured by a mortgage over his family home, he spent less time on the farms and working in the business of E Co. However, he continued to visit the farms between once a month and once a fortnight, again usually for four to five days at a time. (The detail of the investments in the P Hotel and C Hotel is summarised above at [45].)

14. [136]

    In each of the financial years ending 1999 to 2002, B’s taxable income was more than double that which he received in any of the years ending 30 June 2003 to 2010.

15. [137]

    B left his current employment in July 2002 “based on [his] understanding”, from preliminary discussions of the new family business, that Q intended him and his brothers to inherit the farms. His evidence was that were it not for the holding/inheritance expectation, he would have found another job in retail management, at a similar level to those which he had previously held, and looked for business opportunities, like those presented by the P Hotel and C Hotel, to pursue with his brothers. There is no challenge to the primary judge’s finding of reliance by B, which effectively accepted this evidence (J1 [1128]).

16. [138]

    C’s evidence as to his change of position is summarised above at [92]-[97]. Her Honour’s finding of reliance by C, the challenge to which has been rejected, accepted that evidence in general terms.

17. [139]

    Q identified seven benefits said to have accrued to B and/or C by reason of their reliance on the holding/inheritance expectation, and estimated their total value at approximately $1.8 million for B and $1.55 million for C. Ultimately it was submitted that the primary judge could not be satisfied, having regard to their enjoyment of the “countervailing benefits”, that B and C would suffer substantial detriment by Q’s departure from that expectation. Those benefits were:

    1. (1)

       They each hold a quarter share in E Co, which (it is said) is worth approximately $4 million (valued according to the market rather than book value of its stock and assuming no liability to repay Q $2.123 million).

    2. (2)

       They enjoy control, together with A, of E Co’s grazing business, and the ability to generate wealth through it.

    3. (3)

       They each received $24,000 each year until 2010, paid by Q in monthly instalments. While those payments commenced well before September 2002, it is said that they were subsequently “factored into the arrangements made” and “characterised as informal remuneration for the shareholders of E Co”.

    4. (4)

       B was paid wages by E Co, and C received a “consultancy fee”, paid to him via his discretionary family trust.

    5. (5)

       They each hold a quarter share in EM Co, incorporated in March 2003 as a vehicle through which Q and his sons would make off-farm investments (J1 [227]). While it now has a negative value, Q says that EM Co presented each of his sons with the opportunity to generate wealth using his properties as asset backing.

    6. (6)

       They each received a return of approximately $480,000 from the W Investment, which, although not made through EM Co, was described by the sons as an “off-farm” family investment.

    7. (7)

       C’s role in the family business was such as to give him the opportunity to pursue his own investments and manage and generate his own wealth.

18. [140]

    What is immediately apparent, particularly in relation to the first, second and fifth of those “benefits”, is that the appellant seeks to have brought to account against the respondents an unrealised ongoing “opportunity” presented by their involvement in the family business whilst at the same time seeking to minimise or put aside the value of the opportunities the respondents might have pursued outside it. In this context it is not obvious why the value of unrealised opportunities presented by the family business should be taken into account in any exercise directed to determining whether the sons suffered detriment by their reliance on the holding/inheritance expectation. Put another way, those unrealised opportunities simply do not form part of the sons’ changes of position on the basis of that expectation.

19. [141]

    As to the first and second benefits, the value of E Co as at 31 December 2017 was the subject of a report by a jointly retained expert, Ms Bateman. In her report of 14 November 2018 she gave E Co’s net assets a negative value of -$641,764. Q takes issue with two aspects of that valuation. The first is that Ms Bateman valued the shares on the basis that E Co was liable to Q for the repayment of $2.123 million (the sum recorded as a book debt), which the primary judge found was not to be repaid during his lifetime (J1 [1234], J4 [29]). It does not follow that it should not be taken into account in an exercise determining E Co’s net asset value on the assumption that it could not continue in business because it no longer enjoyed the use of Q’s farm properties.

20. [142]

    The second aspect of Ms Bateman’s valuation with which Q takes issue is that she valued the company on the basis of the book value ($112,146) rather than the market value of E Co’s cattle livestock. Ms Bateman’s report records at para 59 that her analysis of E Co’s “Trading Statement for Cattle 2015-2017” revealed an average price per head in 2017 of $1,271, and that the number of cattle on hand was 2,120. Q submits that it follows by simple arithmetic that the market value of E Co’s herd of cattle was then approximately $2.7 million, some $2.6 million greater than the book value.

21. [143]

    As a starting point, in any assessment of the value to B and C of their ongoing shareholdings in E Co, regard would have to be had to the position of A, who for the purpose of considering this ground should be treated as having the benefit of a separate proprietary estoppel with respect to the ownership of Property No 4, and perhaps some part of the cattle herd and machinery and other assets of E Co. This complication was not considered in the submissions of the parties on this question and must be put to one side, unresolved. Looked at from the perspective of B and C alone, if E Co did not have the benefit of Q’s farm properties it could not continue in business and was to be valued by reference to its net assets. In that scenario there would remain no unrealised opportunity to generate wealth through their ongoing shareholdings: her Honour’s finding at J1 [1127] that if Q were to depart from the expectation and sell the properties the business of E Co would be “effectively inoperable” is plainly correct. That leaves the company’s net asset value.

22. [144]

    Her Honour appears to have at least accepted the evidence of Ms Bateman that “the value of the business can be no less than the net asset value” because, viewed from the perspective of its owner as personified by Ms Bateman, in her evidence: “I may not actually want to run the farm, I might just sell off the cattle because I can get $1,000 a head for the cattle and I can see all that off” (J4 [42]). While Ms Bateman did not accept Q’s proposed calculation of the market value of the livestock, she did not suggest it was unreasonable.

23. [145]

    As to the third benefit, the monthly allowance of $2,000, the difficulty for Q is that a monthly payment to each of the sons (initially of $1,000) commenced in 1995, expressed as being an indirect distribution from the Sydney Family Trust. The payments increased to $2,000 per month in February 1999. It is not clear that the purpose of or reason for the payments was ever re-characterised. Q points to a letter of Accountant No 2 dated 18 March 2004 recording his understanding of what was resolved at a meeting on the previous day attended by himself, Q, A, B and C, including (J1 [255]):

24. [146]

    That letter is some evidence that Q’s personal gift of $2,000 per month might have ceased had some formal remuneration structure been adopted. It does not show that the monthly payments made after 1 July 2003 (or some later date) were made to B and C as a result of their joining the new family business structure.

25. [147]

    As to the fourth benefit, any wages that B drew from E Co – on B’s evidence, he was employed by E Co in the financial years ending 2007 to 2009 – were presumably reflected in his taxable income for those years, addressed above. C’s consulting fees of approximately $2,000 per month paid to his family trust commenced in early 2011 because the monthly payments from Q had ceased. Plainly they were a benefit that C received by reason of his being part of the family business structure.

26. [148]

    As to the fifth benefit, Q does not seriously cavil with “the fact that [EM Co] is not worth anything”. Even if adjustments were made to Ms Bateman’s valuation by reference to the market value of its underlying assets, the primary judge found that its market value “at best... might be a small amount” (J4 [44]).

27. [149]

    The sixth benefit is the investment in the W Project, said by the respondents not to be connected with the family business structure. The W Project was a property development project, which EM Co investigated but ultimately did not invest in. Instead, Q invested personally, paying for 50% of the units in the trust which held the land and distributing those units equally between himself and each of A, B and C (J1 [273]). His evidence was that the W Project “had nothing to do with [EM Co]” and that his decision to invest was attributable to his being approached personally by the property developer, P.

28. [150]

    B’s evidence was that he was approached by P and another investor, longstanding friends of Q, with the proposal for the W Project, and that the investment was made on behalf of the family. In cross-examination, asked whether the W Project “was a benefit you received by being involved in [E Co]”, C replied, “Yes, it’s a family business”. Granted that the W Project was described by the sons as an “off-farm investment” in the loose sense in which that phrase was used, and that the making of off-farm investments was to be part of the new family business structure, the position remained, as B conceded, that these investments were taken up when and if the opportunity arose.

29. [151]

    That evidence is not sufficient to support a finding that Q’s personal investment in the W Project was causally related to B and C’s being participants in the family business structure. What it shows is to the contrary: the investment was prompted by one or both of Q and B being approached by a longstanding friend of Q with a proposal for Q to invest in the development. It also speaks to the overwhelming likelihood being that Q would have continued to provide and assist his sons with investment and business opportunities even if they had not joined in the new family business structure.

30. [152]

    The seventh benefit, C having time in which to pursue his own business interests, is also a largely unrealised opportunity. Q points only to an investment made through EM Co, and hence reflected in its valuation. As was observed in the disposition of ground 3, that C could have but did not pursue business interests that were entirely his whilst also being involved in the family business does not take matters very far.

31. [153]

    Finally, although in his written submissions Q also relied on B and C’s interests in the P Hotel and C Hotel as a countervailing benefit, they were not relied on as such in oral argument. The circumstances of those investments (see [45] above) remain relevant in that they speak to the likelihood that absent the sons’ participation in the family business structure, Q would have continued to provide financial assistance to his sons, including by the provision of security.

32. [154]

    As Dixon J explained in the passage of Grundt cited above at [123], the assessment of detriment requires that a comparison be made between the positions the sons currently occupy and those they would have occupied had they not changed their positions in reliance on the holding/inheritance expectation. There will be an estoppel if the sons would suffer prejudice or disadvantage by reason of their changes of position if Q were to depart from that expectation. The fact that each has received and retains a quarter share in E Co is plainly a matter to be taken into account in assessing whether they would be prejudiced or disadvantaged in that event.

33. [155]

    There is nothing contrary to Giumelli or Sidhu in having regard to the benefits which accrued to a party attempting to set up an estoppel. The suggestion that doing so reflects English rather than Australian law – as it was put, “positive” rather than “negative” proportionality – confuses two questions, namely whether there is detriment and whether, where there is, the ordinary or usual remedy will be to require the party estopped to make good the encouraged expectation. It is possible to conceive of cases in which a party relying on an expectation will have benefitted so greatly through his or her reliance that he or she would suffer no prejudice or disadvantage if the expectation were departed from. In such a case conscience would be unlikely to require that the party who created the expectation make it good, in whole or part.

34. [156]

    The authorities concerned with “life-changing” decisions do not suggest otherwise. In each of them there is an examination of the change of position which is directed to determining whether those decisions would be liable to operate as a source of prejudice, if the relevant expectations were departed from: see Giumelli at [21]-[27]; Donis at [48]-[60]; Sidhu at [76]-[77]; Gillett at 234-235; Riches at 301.

35. [157]

    What is foreclosed by authority is attempting to quantify all forms of advantage and disadvantage when making a comparison between the relying party’s position in fact and their position as it might have been in the absence of reliance on the encouraged expectation. In oral argument Q’s counsel accepted that that exercise does not require any precise calculation, and that it may involve evaluative judgments as to the possibility of more favourable outcomes in the counterfactual. However, he submitted that “the conditions of B and C here are stark” and that the way the case was put required the primary judge to engage in some form of evaluative process, as the Chief Justice did in Ashton v Pratt (see [128] above).

36. [158]

    Thus, the question becomes whether this was a case in which there were opportunities forgone by B and C through reliance which cannot readily be valued but which nevertheless cannot be rejected as carrying only a fanciful or unrealistic prospect that the party encouraged would have been better off. As Allsop P observed in Delaforce at [5]:

37. [159]

    B worked full time in the business of E Co for the better part of a decade, continuing to do so part time after he acquired his own business interests in late 2010. His income while working full time in that business was considerably lower than it had been while he worked in retail management, which he did roughly until discussions concerning the new business structure began in earnest in mid-2002. And although he eventually acquired significant business interests of his own, he did so much later than he might otherwise have done.

38. [160]

    The primary judge found that had B not joined E Co, he would have continued to work as an employee while looking to pursue his own business interests. He has lost a decade or more in which he could have pursued employment elsewhere whilst attempting to nurture his own business interests and ventures; and done so with the likelihood of financial support from Q. Instead, relying on the expectation Q created as to the particular manner in which he intended to pass on his wealth to his sons, B invested his time and energy in a farming business which has no value as a going concern without the assurance of the use of Q’s properties.

39. [161]

    Turning to C’s position, true it is that his contribution to the business of E Co was much less than that of his brothers. Unlike B, he will not have wasted much of a decade of full time work if E Co is rendered inoperable. On one view, his efforts on the farms will have been amply compensated for by his share in E Co’s net assets. There is, however, a limit to the extent to which it can be held against him that he took the role in the business of E Co it was proposed he would take (see above at [132]).

40. [162]

    More significant so far as C is concerned is that he too has lost the chance of pursuing his own business interests, or of making investments with his family better structured to protect his own position, over the period up to early 2011, also with the likely benefit of Q’s financial assistance. His personal investments in real estate and property development are not without value, but they do not yet provide him with an income; his evidence is that any earnings from those companies are being reinvested to help them grow. His only present source of income, his $2,000 per month “consulting fee”, will be jeopardised should the farms be sold. The likelihood is that his financial position, both income and net assets, would be very different and more favourable had he pursued similar business interests at an earlier point in time with his father’s support.

41. [163]

    The opportunities forgone B and C in this “alternative reality” need not be valued. It is sufficient to observe that significant resources were available to each of them, including the support of Q, and that their opportunities outside the family business were substantial (as is evidenced by their activities after 2010). In those circumstances, even taking account of the value of their respective quarter shares in E Co (principally reflecting the value of its cattle herd), the primary judge was correct to find that both B and C’s reliance on the holding/inheritance expectation involved substantial detriment. Ground 4 should be dismissed.

The measure of relief (ground 5)

1. [164]

   Ground 5 raises a series of related issues. The first, pressed in relation to B and C, is whether the primary judge erred in requiring Q to make good the expectation. The remaining issues arise in the event that challenge fails and concern conditions which Q says should have been imposed on that relief. Those issues are complicated by the decision of the primary judge to “accelerate” the sons’ inheritance expectation by ordering that the farm properties be transferred immediately rather than on Q’s death. No separate objection is taken to that step, which her Honour thought necessary to achieve a “clean break” between Q and his sons, but it cannot therefore be ignored in dealing with the other issues.

2. [165]

   It is as well to note at the outset that there is uncertainty as to the standard of appellate review of relief for a proprietary estoppel claim. Whether House v The King (1936) 55 CLR 499; [1939] HCA 40 applies, on the basis that there is a true discretion as to relief, or whether a trial judge’s assessment of what conscience requires is instead entitled to no deference on appeal, has been left open by other intermediate appellate courts: Fifteenth Eestin Nominees Pty Ltd v Rosenberg (2009) 24 VR 115; [2009] VSCA 112 at [272]; Browne v Browne [2019] WASCA 1 at [96]-[100]. The parties did not address the point, which is, as will be seen, ultimately not material to the outcome of the appeal.

3. [166]

   In terms, ground 5 is directed to whether the primary judge erred in imposing a constructive trust on and from 1 July 2003. The appellant’s objection is not to the declaration of constructive trust as a means of making good the sons’ expectation but to being required to make good the expectation at all. Indeed, if he is, and the expectation is to be accelerated, a declaration of constructive trust will be “akin to orders for conveyance” (Giumelli at [6]) and, in view of the separate order that Q transfer the farm properties, otiose. The observation of the plurality in Giumelli at [10], to the effect that a constructive trust is a remedy of last resort, would tell against a declaration of constructive trust if it were understood to have any other incidents.

4. [167]

   There is no dispute that the sons are prima facie entitled to have their expectation made good: Sidhu at [85]. What is disputed is whether the primary judge erred in not departing from that presumption, having regard to what is said to be the disproportion between the value of that expectation and the detriment suffered by B and C. With respect to that dispute the parties rely on their submissions on ground 4, including as to whether the sons’ case is one to which Nettle JA’s observations in Donis are applicable.

5. [168]

   For that reason two observations made in dealing with ground 4 are again relevant. First, the sons’ detriment is to be considered as part of a broad inquiry as to whether good conscience requires Q to make good the sons’ expectation: AFSL v Hill at [88]; Donis at [20]. Considerations other than detriment are relevant to that inquiry (Delaforce at [3]-[4]), including the nature of the expectation and the conduct of the relevant parties in inducing or relying on it. Q’s (correct) submission that a court of equity “goes no further than is necessary to prevent unconscionable conduct” (citing Waltons Stores at 419) directs attention to the role of proportionality between relief and detriment in assessing what good conscience requires.

6. [169]

   Secondly, it is clear from Sidhu at [84]-[85] that the prima facie measure of relief will “usually” be consistent with conscientious conduct, regardless of whether the party making the claim took “life-changing decisions with irreversible consequences of a profoundly personal nature”. That statement gives compendious expression to the principles governing the assessment of detriment. It is not itself a test. Only in relatively unusual cases, including those in which detriment involves only “a relatively small, readily quantifiable monetary outlay”, will some lesser relief be appropriate.

7. [170]

   The distinctive feature of this case is the size of the sums involved: the farm properties are together worth roughly $20 million and B and C have each received through their reliance a quarter share in a company with substantial net assets. Equally, however, the opportunities foregone or postponed by B and C in reliance on the expectation were opportunities of substantial value, including the opportunity of having Q provide money or security to assist them to acquire and pursue business opportunities of their own. Even considering only B’s reduced income and wasted labour in the period up to 2010, together with the postponement of his acquisition of the P Hotel and C Hotel, the sums involved are substantial. That is, however, likely not the true counterfactual. Determining the extent of the prejudice suffered by B and C in financial terms is a wholly speculative and unnecessary endeavour in circumstances where they acted to their detriment on Q’s assurance.

8. [171]

   It may be accepted, embarking on such a speculation and notwithstanding its difficulties, that the financial disadvantage suffered by B and C would in all likelihood be less than the value of the expectation. However, that is not the question, because in a case such as the present the relief which is necessary to prevent Q’s unconscionable conduct in resiling from his assurance is “usually that which reflects the value of the promise” (Sidhu at [85]; and see Riches at 302; Giumelli at [36]). The question is whether any such inequality involves so great a disproportion between the detriment to B and C and the value of the promise as to render it wholly inequitable and unjust to require Q to make good the expectation. Subject to what follows regarding the conditions on relief, it does not. Q committed himself to a particular means of passing on his wealth, asking only that each of his sons work with him in the family business in the particular capacities to which they were suited. They each did so, giving up not only other employment and investment opportunities but also, critically, other and possibly more favourable means of Q giving effect to his general testamentary intention to pass on his considerable wealth to his sons and their families. That is enough.

9. [172]

   It remains, however, necessary to distinguish the holding/inheritance expectation from that expectation as accelerated. Making good the former would involve requiring Q to hold the farm properties and allow them to be leased by E Co for use in its farming business until his death, and then to leave them to his sons by will. It is not submitted by Q that the expectation should not be accelerated in the event it is held that B and C are entitled to have it made good. But the sons are not entitled as a matter of course to relief giving effect to the accelerated expectation, which is substantially more generous to them, and asks more of Q, than the measure of relief that is prima facie appropriate.

10. [173]

    The sons will receive $20 million of farmland immediately rather than on their father’s death. Practically speaking, they will be free to put an end to the business of E Co and realise the present value of the farm properties (subject to any estoppel of E Co itself, which, given the acceleration of the transfer of the properties, may be at an end: cf J4 [641]). For his part, putting the rental value of the properties to one side, Q will be deprived during his lifetime of the use of the farm properties as a residence and as security. It is not necessary to consider the precise contours of the sons’ understandably imprecise expectation to observe that it contemplated both possibilities, at least to some extent.

11. [174]

    In that circumstance to impose “conditions” on relief, as the primary judge initially proposed, need not involve any “idiosyncratic” exercise of discretion and does not press the maxim “he who seeks equity must do equity” into improper service: cf the objections recorded at J4 [627]. Her Honour ultimately accepted that those objections precluded the imposition of two of the conditions initially proposed, “unless perhaps [the conditions were] necessary to prevent disproportionality” (J4 [647]).

12. [175]

    So to reason involves treating the accelerated expectation as the expectation which the sons were prima facie entitled to have made good, taking account of any disproportionality. But there is no need to identify disproportionality before imposing conditions on relief that would otherwise be more generous than the appropriate measure. Conscience neither requires Q to make nor entitles his sons to receive an unqualified present gift of the farm properties. In that circumstance, placing conditions on the acceleration of relief, which all parties accept is otherwise appropriate, is necessary because “to grant unqualified relief... would exceed any requirements of good conscience and be unduly oppressive of the other party”: see Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 442 (Deane J); [1990] HCA 39; Giumelli at [42]; AFSL v Hill at [153]-[154] (Gageler J).

13. [176]

    To do so does not “substitute moral for legal standards” (cf Langman v Handover (1929) 43 CLR 334 at 351; [1929] HCA 42) or require terms which do not “flow from the legal or equitable rights of the defendant to the suit” (cf Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 at [67]). It may be accepted that the reference in Giumelli at [42] to requiring a party seeking relief to do equity has no broader meaning. But to impose conditions on relief in this case is to do no more than shape relief according to the requirements of conscience, in circumstances where it is accepted that the making good of the encouraged expectation should be brought forward. In substance there is no distinction between qualifying relief by imposing a condition on the party relying on the estoppel and qualifying relief by giving effect only in part to the underlying expectation. So understood the conditions sought to be imposed flow not from any distinct right of Q but from the limits of the respondents’ equity: see eg Crabb v Arun District Council [1976] Ch 179 at 189-190 (Lord Denning MR); Flinn v Flinn [1999] 3 VR 712 at 750-751; [1999] VSCA 109.

14. [177]

    Nonetheless the appropriate conditions are not at large. What good conscience requires must be understood by reference to the position which would have obtained had the holding/inheritance expectation been made good, but not accelerated. As Robert Goff J suggested in Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1984] QB 84 at 108, it would be contrary to principle for a party to “obtain the benefit of rights without incurring the burden of corresponding obligations which he would have incurred if the rights had been enforceable without the aid of the doctrine of estoppel” or, one might equally say, if the otherwise appropriate measure of relief had been enforced.

15. [178]

    It remains to consider the particular conditions which Q submits should be imposed. They are the payment by E Co and the sons of (1) the present discounted value of future market rents for the farm properties over the balance of Q’s life expectancy and (2) the amounts recorded as book debts totalling $2.123 million; and (3) the purchase by the sons of Q’s quarter share in E Co.

16. [179]

    As explained above, the primary judge initially proposed to require payment of the present discounted value of the market rents which would have been payable over the balance of Q’s life expectancy (as to which see J1 [1219] and [1222]). The evidence led following the reopening suggested that after allowing for outgoings to be borne by Q, the net market rents, and accordingly profits to Q, over time would have been or exceeded $160,000 per year (J4 [49], [93]).

17. [180]

    In the fourth judgment, her Honour accepted the submission of the respondents that such a requirement would be “conceptually inconsistent with a recognition that the freehold interest in the properties was held in trust for the sons” (J4 [93], [647]). Her Honour also gave a further and separate reason for not imposing a condition requiring the payment of market rent, namely that “in practical terms [it] would be inconsistent with the basis on which the lease agreement was struck in the context of the joint farming business endeavour in which the first defendant and the plaintiffs were participating” (J4 [651]).

18. [181]

    Those considerations did not, however, prevent her Honour from ordering the payment of the present value of a “notional” rent of $80,000 per annum for that same period (J4 [661]). That sum was “informed by the basis on which, historically, rent for the properties had been set” and was calculated to “support [Q] for the balance of his life” (J4 [658]). Her Honour assessed that rent taking account of the fact that Q would no longer own the properties and accordingly would not be liable for rates, insurance or other outgoings (J4 [659], [661]). Accordingly, in practical terms the difference between the rent fixed by the primary judge and that sought by Q is on the order of $100,000 per annum, and is said to be justified by the evidence of market rents.

19. [182]

    Her Honour’s “conceptual inconsistency” basis for rejecting the condition as sought by Q is, with respect, wrong. If imposing a constructive trust would be conceptually inconsistent with the receipt by Q of a market rent to which he would otherwise be entitled, that would be a good reason not to impose a constructive trust in circumstances where orders for conveyance would suffice. More importantly, however, there is no conceptual inconsistency.

20. [183]

    A constructive trust recognised by way of relief for a proprietary estoppel does not necessarily have the incidents of an express trust, nor those of other species of constructive trust: see Jacobs’ Law of Trusts in Australia (LexisNexis Butterworths, 8th ed, 2016) at [13-02]. In general, it is “a fallacy to suppose that every trustee has the same duties and liabilities”: Earl of Egmont v Smith (1877) 6 Ch D 469 at 475 (Sir George Jessel MR) (speaking of the “trust” between vendor and purchaser, as to which see Tanwar Enterprises Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [53]).

21. [184]

    In Giumelli, it was said of the constructive trust declared by the Full Court of the Supreme Court of Western Australia that it was proprietary in nature and “oblige[d] the holder of the legal title to surrender the property in question”, but did “not necessarily impose upon the holder of the legal title the various administrative duties and fiduciary obligations which attend the settlement of property to be held by a trustee upon an express trust for successive interests”: at [3], [5]. That is, to describe a person as a constructive trustee is not necessarily to say more than that they are estopped from claiming a full beneficial interest in the relevant property.

22. [185]

    As Keane J explained in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [150], a constructive trust of the kind described in Giumelli involves “the legal title of the owner of the property [being] subjected ... to limitations necessary to meet the requirements of good conscience”. That explanation directs attention to two features of such a trust. First, the obligations of principal importance are those impressed on the title to the relevant property, rather than imposed personally on the constructive trustee. Obligations of the latter kind will not invariably be present. Indeed, in appropriate cases relief for a proprietary estoppel may involve the recognition of an equitable proprietary interest without the label of “constructive trust” and its potentially misleading connotation of personal fiduciary obligations: see eg Plimmer v Mayor, &c., of Wellington (1884) 9 App Cas 699 at 713-714; Hamilton v Geraghty (1901) 1 SR (NSW) Eq 81 at 88, 89, 91; and Giumelli at [58]. Secondly, and in this case critically, the incidents of the trust must be consistent with the expectation underlying the claimants’ equity.

23. [186]

    It follows that whether Q should be paid the present value of future market rents, or rents calculated on some other basis, depends not on the recognition of a constructive trust but on the expectation Q encouraged his sons to adopt.

24. [187]

    It is important to note at the outset that the proposed market rent condition was not based on a finding as to the scope of the expectation. At J1 [77], the primary judge explained that the basis for the proposed condition was that “the family business arrangement is now to be brought to an end” and there was therefore no reason that Q would not obtain a market rent for the farm properties, were he to retain them. However, Q could never have retained the properties unencumbered by the family business consistently with the encouraged expectation.

25. [188]

    The primary judge’s finding, consistent with B’s contemporaneous notes (J1 [230]), was that the historical level of rent was “commercial” in the sense that it was intended to satisfy the Australian Taxation Office (ATO) that the lease was the product of an arms-length, commercial arrangement (J1 [29], J4 [87]). Nonetheless, her Honour accepted the sons’ submission that the expert valuation evidence of the properties’ rental value on the open market “did not have regard to the manner in which the properties were in fact historically leased between the parties (on what is said to have been a “commercial” basis, not a “market” basis)” (J4 [85]).

26. [189]

    Her Honour gave significant weight to the evidence, which emerged from Q’s cross-examination and contemporaneous documents (J1 [255]), that the initial lease agreement for a rent of $300,000 per year (including $50,000 for plant and equipment) was not intended to produce a “taxable profit” in Q’s hands (J4 [87], [91]). Q’s intention at the time was that this rental income would be offset by pasture development and capital improvements, together with rates and insurance, all of which would remain his responsibility, E Co being responsible for pasture maintenance and general repairs. That evidence may be accepted. What it does not show is that it was or became an aspect of the expectation of E Co or the sons that Q would not receive any rental income from the farm properties. Indeed, from 1 July 2011 Q’s net rental income of $100,000 less rates and insurance, for which he was responsible, amounted to as much as $55,000 per year (J4 [90]). Thus, the expectation was that E Co would have security of tenure provided that it paid a “commercial” rent. It was initially intended that Q would reinvest that rent in improving the properties, which were used in the farming business, in part to minimise in some way his income tax liability. Nothing further follows.

27. [190]

    The term “commercial” was used to describe a rent which was sufficiently realistic to be described to the ATO as a “market” rent. Nonetheless it is apparent from the history of the lease arrangements between Q and E Co, including the waiver of any liability to pay rent during the period of acute drought from 1 July 2007 to late 2011, that they were generous to E Co and clearly at or below the bottom of any range of market rents.

28. [191]

    In this state of the evidence, any conclusion about the expectation of E Co or the sons with respect to the level of rent will involve a degree of false precision. Doubtless all of the parties assumed that informal renegotiation of the lease arrangements from time to time would both respect E Co’s security of tenure and take account of considerations which included the need to satisfy the ATO, the state of the farm properties, and the respective financial positions of E Co and Q. It is difficult, to say the least, to reconstruct the outcome of those negotiations. The expert evidence of market rents was relevant to the exercise of fixing a notional future rent, but not determinative of its outcome.

29. [192]

    There was no challenge in this Court to the primary judge’s findings as to the likely value of future market rents, which accepted the expert evidence of Mr Tremain, the valuer engaged by the respondents (J4 [93]). Mr Tremain’s opinion was that the net rental, arrived at by deducting from the gross market rental all of the lease outgoings and the costs of substantial pasture improvement (J4 [56], [58]-[59]), “was $166,245 for the period 2018-2022 and $185,611 for the period 2022-2026” (J4 [49]). As her Honour observed, that opinion gave significant weight to E Co’s “wish to conduct farming operations at a profit” (J4 [43]), and might properly be subject to an “adjustment to increase the rent once the proposed pasture development program had taken place” (J4 [93]).

30. [193]

    The primary judge did not expressly have regard to the expert evidence when fixing a notional net rent of $80,000 per year. Erring on the side of generosity to E Co in determining a net rent by reference to that evidence, and accounting for the fact that E Co would not have the use of Property No 11 (to be sold to cover any CGT liability of Q, a step to which there is no separate objection), an allowance for the present value of a notional net rent of $80,000 remains an appropriate condition for the acceleration of relief. On the evidence, that amount exceeds any net rental income Q previously received from E Co. There is no basis for concluding that had the inheritance expectation not been accelerated Q could or would have received any higher net rent consistently with the holding expectation.

31. [194]

    Although by ground 7(b) of their amended notice of cross-appeal the respondents suggest that the present discounted value of a future rent of $80,000 per annum is $600,000 rather than $640,000 (applying a discount rate of 4.5% rather than 3%), no written or oral submissions were directed to whether the primary judge erred in adopting the lower rate of 3% (J4 [662], [663]). Her Honour’s calculation should be left undisturbed.

32. [195]

    The primary judge rejected Q’s claim that the E Co book debts totalling $2.123 million were “repayable during his lifetime” (J1 [1234]). Those debts as recorded consisted of the value of Q’s cattle originally transferred and sums later advanced by Q. Her Honour’s conclusion is consistent with one or other of the following findings in the face of the book entries in E Co’s accounts. The first is that the accounts, which were only prima facie evidence, did not reflect the true position, being that there were no debts due to Q. The second is that while the sums were correctly recorded as loans, it was either a term of the loans, or an aspect of the encouraged expectation, that they were not repayable by E Co until Q’s death. The benefit of the loans would form part of Q’s estate, and presumably (although it is not clear there was any expectation to this effect) ultimately pass to the sons.

33. [196]

    Doubtless because of its significance for ground 4, counsel for Q accepted in argument that the $2.123 million was not due as a debt. However, and accepting that the distinction between these two inconsistent analyses was not always kept in view, it is tolerably clear that the primary judge ultimately preferred the second, which gives some effect to the records in E Co’s accounts. As her Honour observed at J1 [69] and [70]:

34. [197]

    That reasoning proceeds on the basis that the advances, including the loan being the value of the transferred cattle, were not outright gifts and thus repayable, at least in some circumstances – for otherwise there would be no “claim” for their recovery which might be “considered in isolation”, nor any possibility of Q recovering the sum on a winding up – but that it was an aspect of the expectation of E Co and the sons that repayment would not be required until Q’s death.

35. [198]

    The sons’ expectation was that on Q’s death they would inherit the farm properties and Q’s shares in E Co; in all likelihood they would also inherit the benefit of the debts due to Q from the farming business. The latter would no doubt in a practical sense be netted off, either by the debts being forgiven or by the sons assisting E Co with payment. The question then is whether it is appropriate, in circumstances where the sons are to receive the farm properties well in advance of Q’s death, that there should be “accelerated” repayment of the $2.123 million which would otherwise have been due from E Co at that time.

36. [199]

    Q was never to enjoy the benefit of these loans, save perhaps in the event of a winding up of E Co (in which case he might have been entitled to be paid their present value). Nevertheless, in the circumstances of the acceleration of the sons’ receipt of the farm properties, in my view it is appropriate for Q to be repaid the value of the loans. As the sons’ entitlement to enjoy ownership of the properties is to be accelerated, so too should Q’s entitlement to repayment of the advances, which would have arisen on the happening of the event resulting in the sons’ ownership of those properties.

37. [200]

    Accordingly, the orders for relief made in favour of the sons and E Co should be subject to a condition for the repayment by E Co of the loan account, but not subject to interest or to any discount on the basis that the amount might be received earlier than would otherwise be the case.

38. [201]

    The primary judge declared that Q was entitled during his lifetime to participate in any dividends payable in respect of these shares, and that on his death they should be transferred to A, B and C for no consideration (see above at [10]). Q seeks an order for the immediate purchase of these shares by A, B and C at their fair value, to be agreed or assessed. No equivalent order is sought in relation to the purchase or early transfer of the shares in EM Co.

39. [202]

    No principled reason was offered for the imposition of such a condition, other than that a consequence of the acceleration of the inheritance expectation would be that Q would no longer have any interest in the farm properties or the business of E Co (other than in respect of his entitlement to participate as a shareholder in dividends).

40. [203]

    Regardless of the acceleration of the transfer of the farm properties, in view of the encouraged expectation (see J1 [78]-[79]) the only value to Q of his shareholding is the net present value of any dividends payable during his lifetime. There is no evidence which suggests that entitlement has any real value. Historically, E Co was unprofitable even with infusions of capital from Q. His submissions, which address the value of the shareholding on the basis of E Co’s net asset value, ignore the fact that the shareholding was held for the benefit of his sons, except with respect to his entitlement to dividends.

Conclusion

1. [204]

   In the result, grounds of appeal 1 to 4 should be dismissed. The appellant has had partial success in relation to ground 5.

2. [205]

   In view of those conclusions it is not necessary to address the respondents’ further amended cross appeal (subject to [194] above) or further amended notice of contention.

3. [206]

   The parties should attempt to agree short minutes of order which give effect to these reasons, including as to the costs of the appeal. On the face of it, those costs should be borne by Q, subject perhaps to some allowance for his partial success in relation to ground 5. If they cannot do so within 14 days of the delivery of judgment, they should exchange written submissions supporting the orders contended for and remaining in issue. Those written submissions, not to exceed 5 pages, should be exchanged and filed with the Court within a further 14 days. In the absence of any further direction, the final orders to be made will be determined on the papers.

4. [207]

   LEEMING JA: I agree with Meagher JA.

5. [208]

   PAYNE JA: I agree with Meagher JA.