Evans v Braddock

HIS HONOUR: This is a sad, and unfortunate, dispute involving, principally, the family of Robert Fitzgerald Evans (“Robert”) and his wife, Sheelagh Macquarie Evans (“Sheelagh”), both of whom are now deceased. The first Plaintiff is their son, Timothy Fitzgerald Evans (“Timothy”); the first Defendant is their daughter, Margaret Gael Braddock (“Gae”); and the second Defendant is their only other child, Sheelagh Kerryn Evans (“Kerry”). (Throughout these reasons, I shall refer to the family members, where necessary, after introduction, by the name he, or she, is known within the family. This is for convenience and to avoid confusion, and I hope it will not be thought discourteous.) The other parties involved in the proceedings are the second Plaintiff, Mount Mill Pty Limited (to which I shall refer as “Mount Mill”), a company incorporated in 1957 by Robert, and the third Defendant, Philip King Hawley (“Philip”), who is a solicitor who had acted for Sheelagh from about 2004 until her death and who is one of the executors of Sheelagh’s Will.

Timothy, first, filed a Summons on 21 August 2012, in which he sought a family provision order under the Succession Act 2006 (NSW) out of the estate and/or notional estate of Sheelagh and a declaration that the proceeds of sale of a property located at Eastbank Avenue, Collaroy (“the Collaroy property”) were, and any asset into which those proceeds of sale had been transmitted was, notional estate of Sheelagh.

Initially, the matter came before the Registrar on a number of occasions. On 9 October 2012, the Registrar made an order, by consent, that Timothy file and serve a Statement of Claim. Timothy filed a Statement of Claim on 18 January 2013 (outside the time prescribed by the Registrar’s order). In this document, he was the only Plaintiff named. He filed an amended Statement of Claim on 12 February 2014 in which Mount Mill was joined as the second Plaintiff, and a further amended Statement of Claim on 18 August 2014, upon which he, and Mount Mill, each now relies.

The Defendants filed one composite Defence to the Statement of Claim on 13 February 2013; a Defence to the amended Statement of Claim on 19 March 2014; an amended Defence to the amended Statement of Claim on 20 May 2014; and a Defence to the further amended Statement of Claim on 22 September 2014. It is the Defence to the further amended Statement of Claim upon which they now rely.

On 5 July 2013, when the matter was listed before me for directions, I noted that “although there is a claim for a family provision order, the thrust of the Plaintiff’s case is for a declaration of trust based on an estoppel”. In the events that occurred subsequently, Timothy did not proceed with his claim for a family provision order. He sought leave to discontinue that claim and that part of his case was dismissed on 7 March 2014.

In the further amended Statement of Claim, Timothy and Mount Mill articulated the relief sought in the following way:

Counsel for the Plaintiffs, in summary, stated:

In fact, there was a third basis of the claim, although, I think, by the conclusion of the case, that it may have been subsumed in the claims set out above. The third basis was that the transfer of the Collaroy property, in 1981, from Mount Mill's ownership to the joint ownership of Robert and Sheelagh was made in breach of the duties that each owed, as directors, to Mount Mill.

In summary, the Defendants denied that Timothy and Mount Mill were entitled to any relief, with the result, they submitted, that the further amended Statement of Claim should be dismissed. They submitted that the elements to be proved for the claims of proprietary estoppel and common intention constructive trust to succeed were not established. They pleaded, in addition, that even if the factual bases of the claims could be established, all of the claims for relief were time-barred. They relied upon the six year limitation period prescribed by the Limitation Act 1969 (NSW) and by s 1317K of the Corporations Act 2001 (Cth), which, they submitted, applies by analogy to equitable claims (Gerace v Auzhair Supplies Pty Ltd (in liq) [2014] NSWCA 181; (2014) 310 ALR 85, at [70]). They also pleaded that the doctrines of laches, acquiescence and prejudicial delay were applicable. Finally, they submitted that there had been no breach of director’s duties by either Robert or Sheelagh.

In broad terms, the Defendants relied upon the failure of Timothy, and of Mount Mill, to take any steps to challenge the transfer of the Collaroy property to Robert and Sheelagh, as joint tenants, until after the death of Sheelagh. They asserted that, even on the Plaintiffs’ case, Timothy knew of the transfer of the Collaroy property from 1983, but he did nothing until he brought these proceedings.

Although each party sought an order for costs in the pleadings, which claim I would normally deal with in these reasons, they requested, at the conclusion of the oral submissions that I not deal with the issue of costs. Each declared that submissions may need to be made to determine the nature of the costs, and how the burden of those costs should be borne. I am prepared to abide the request and I shall make directions to enable any costs issue to be determined after the parties have had an opportunity to consider these reasons.

I begin by setting out some of the background. The facts which lie behind the issues require some elaboration. Some of the events I shall describe date back to the 1950’s and 1960’s, others to the 1980’s and 1990’s. I shall start by identifying the facts that are uncontroversial. I have taken these from admissions made in the pleadings relied upon at the hearing, from the affidavits, or from the submissions, where it is clear that there is no dispute about them.

Robert died on 6 September 2001. He was then aged almost 94 years, having been born in October 1907.

Sheelagh died on 24 August 2011. She was then aged 97 years, having been born in July 1914.

Robert and Sheelagh married in about 1935. Timothy was born in April 1936 and is now almost 79 years of age; Gae was born in July 1940 and is now 74 years of age; and Kerry was born in January 1947 and is now 68 years of age.

Robert left a duly executed Will made by him on 16 March 1994 and a codicil to that Will dated 13 August 2000. The executors named in that Will were Sheelagh, Timothy, Gae and Kerry. This court granted Probate in common form of that Will and codicil to those executors on 17 September 2002. (There were earlier testamentary instruments made by Robert upon which Timothy relies. I shall refer to parts of Robert’s last Will and codicil, and to parts of the earlier testamentary instruments, later in these reasons.)

In the Inventory of Property attached to the Probate document, there was included as property owned by Robert at the date of death, a “Loan to T F Evans $100,000” (Timothy) and a “Loan to Mt Mill - $90,000”. (The amount of $190,000 had, in fact, been loaned by Robert in about 1988. As will be read, Timothy borrowed $100,000 of the amount loaned to purchase Kerry’s shares.)

In the affidavit of executors filed in support of the Summons for the grant of Probate (part of Ex. TFF), the liabilities of Robert’s estate included $192,654, being a debt due to Mount Mill by Robert.

Timothy accepted that neither of the loans identified in the Inventory of Property as debts due to Robert at the date of death had been repaid by him or by Mount Mill. He also stated that Robert’s debt to Mount Mill, which had been identified in the affidavit of the executors, had not been repaid either.

(There was a question raised during submissions about whether the loans were not repayable after six years from the date of the loan, since each appeared to have been a loan repayable on demand. It was submitted that a cause of action for its repayment would have arisen at the time of the advance, not when demand was made for it. The relevant limitation period for the commencement of a claim for the repayment of the loan is six years in accordance with s 14 of the Limitation Act. If more than six years had passed, the debtor would be entitled to plead s 14(1)(a) of the Limitation Act as a defence to the claim. Such a defence would defeat the claim for recovery of moneys lent: Faraday v Rappaport [2007] NSWSC 34, at [102]. Whether the parties to the loan transactions, either expressly or by necessary implication, demonstrated an intention that a demand was required in order to create a liability to repay, was not investigated.

The question identified proved somewhat of a distraction, as senior counsel for each of the parties, ultimately, seemed to accept, and, in any event, I am satisfied, that what the executors of Robert’s Will, Timothy, and Mount Mill, probably agreed to, following Robert’s death, was to treat the loans as off-setting each other. The result was that no amount was to be paid to Mount Mill out of Robert’s estate, and no amount was to be paid, by either by Timothy or Mount Mill, to Robert’s estate.)

In the Inventory of Property, the Collaroy property was disclosed as property jointly held by Robert and Sheelagh (with a disclosed value of $550,000). Thus, it did not form part of Robert’s estate as it passed by survivorship to Sheelagh.

Sheelagh left a duly executed Will that she made on 14 April 2004 and a codicil that she made on 16 February 2011. This court granted Probate in common form of that Will and codicil to Kerry, Gae and Philip on 22 August 2012. (Timothy had been named as an executor in the Will but was removed as an executor in the codicil.) (I shall refer to parts of the last Will and codicil and to parts of an earlier Will made by Sheelagh later in these reasons.)

The gross value of Sheelagh’s estate was estimated to be $513,627. The Collaroy property was not disclosed in the Inventory of Property as part of Sheelagh’s estate at the date of death, as, a few months before, it had been sold by Sheelagh.

Robert had been a grazier. From about 1927, he had conducted a farming business on a property, comprising about 2,200 acres, known as “Coomber”, near Rylestone, in the Central Tablelands region of New South Wales. He had been given “Coomber” by his father. Sheelagh and he had lived there during their marriage, and Timothy, Kerry and Gae grew up there.

In 1956, after completing his schooling and then spending 18 months as a jackeroo, Timothy returned to “Coomber” to work with Robert. He continued to do so until Robert’s death and continues to do so.

At various times, after 1957, Mount Mill purchased other rural properties, namely “Glenmore” (778 acres) in 1960, “Johnson’s Block” (about 430 acres) in the early 1970’s, “Walsh’s Block” (about 192 acres), in 1976 and “Kildare” (528 acres), which adjoined “Glenmore” and “Walsh’s Block”, in 1990.

At, or about, the time Timothy started working on “Coomber”, he purchased land known as Ferndale North. Robert lent him the purchase price of £8,000, which he asserted he had repaid over about 9 years. In the early 1970s, Timothy also purchased a property known as “Mullholland’s Block” (about 400 acres).

All of the properties owned by Mount Mill, and by Timothy, were used as part of Mount Mill’s grazing operations. (Ferndale North was, for a short time, farmed by Timothy alone.) Timothy accepted that Mount Mill had paid £500 per year to him for the use of Ferndale North.

Mount Mill was incorporated on 30 May 1957. It is an Australian proprietary company limited by shares.

On 13 December 1957, Mount Mill resolved to adopt the current Articles of Association. Robert was appointed Governing Director, a position which he held until February 1997. The two other directors of Mount Mill, during that period, were Sheelagh and Timothy.

As was not uncommon at the time of Mount Mill’s incorporation, the express purpose of incorporating Mount Mill was to shield the property and farming assets from death and estate duties, payable on the death of the founder of the company, which, then, were levied on deceased estates by both the Commonwealth and the State Governments: Robertson v Federal Commissioner of Taxation (1952) 86 CLR 463; Gorton v Commissioner of Taxation (Cth) (1965) 113 CLR 604. Under such a scheme, “the founder (in this case, Robert) owned shares which gave him (or her) control of the company for life. The founder could pay salaries and dividends to himself, and others (in this case, Sheelagh and the three children), during his lifetime, at his discretion, but the rights attached to those shares lapsed on death and their value accrued to other shareholders”: Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462, per Handley AJA (with whom Giles JA agreed), at [106]. Also see, Schaeffer v Schaeffer (1994) 36 NSWLR 315, per Handley JA, at 319 - 320.

Mount Mill’s objects are set out in Article 3 of the Memorandum of Association dated 30 May 1957. The objects include:

Timothy acknowledged, in cross-examination, that he knew that Robert, as the Governing Director, “had the power and control to do what he liked with his company and its assets”: T48.46 - T48.48. In fact, Robert was able to "control the business and management of the Company and [had] authority to exercise all the powers authorities and discretions …expressed to be vested in the Board or the Directors generally or individually and all the other Directors of the Company for the time being, if any, shall be under his control and bound to conform to his directions in regard to the Company's business": Article 51(a) of Mount Mill’s Articles of Association.

Mount Mill had different classes of shares. Until February 1997, Robert held 6 of the issued A class ordinary shares, the only class of shares to which were attached voting rights. He also held 100 F class shares. Timothy held one A class ordinary share, 10,500 B class shares and (in 1957) 9,500 C class shares. Initially, Gae was issued with 500 C class shares (which Timothy later acquired), Kerry was issued with 500 D class shares (which Timothy also later acquired) and Sheelagh was issued with 100 E class shares. Pursuant to Mount Mill's Articles, the B, C, D, E and F class shares had no voting rights, but the holders were eligible to receive dividends at the discretion of the directors and were entitled to a share of the assets on a winding up.

Timothy accepted that “when the shares [in Mount Mill] were issued to [him], it was simply a round-robin of cheques” (T48.50 - T49.02) and that in December 1962, he did not have a lot of money to enable him to pay for those shares.

Between about 1960 and 2000, Mount Mill's income, at least in part, was used to make payments to, or for the benefit of, each member of the family, for personal expenses, such as for living expenses, for the cost of cars, or for housing renovations. There are multiple examples of advances made to one, or other, of the family members, including to Timothy, in the evidence.

In 1960, Timothy married Helen. They moved into a house that had been built for them on “Coomber”. They had three children, Stephen, Anthony and Penelope. Only Stephen has played a part in these proceedings. He started working on the farm in the early 1980’s. Anthony, commenced working on the farm in about 1985.

In 1993, Timothy purchased Kerry’s 500 D class shares for $100,000, which amount he borrowed. (As previously mentioned, this is the amount shown as “Loan to T F Evans” in the Inventory of Property which formed part of the Probate of Robert’s Will.)

Gae states that she transferred her shares to Timothy between 1967 and 1976. She says that she received cheques, as payment for those shares, but is unable to recall the amount she received or whether they were drawn on Mount Mill, or on Timothy’s, bank account. Timothy states that the amount he paid, by instalments, for Gae’s shares, was $3,380.

In February 1997, Timothy was appointed the Governing Director and Stephen, was also appointed a director. Robert and Sheelagh each then ceased to be a director. By a resolution dated 26 February 1997, Robert gifted his 6 A class ordinary shares and 100 F class shares, and Sheelagh gifted her 100 E class shares, to Stephen in trust for Timothy. Timothy then became the sole beneficial shareholder in Mount Mill, with all the issued shares in the company either held by him absolutely, or held by Stephen on trust for him.

By Conveyance dated 25 November 1960 (a copy of which is Ex. TFC), Mount Mill purchased, from Robert, the whole of “Coomber” for £53,650. The purchase price was paid from proceeds lent by Robert to Mount Mill. (Although the Conveyance refers only to the land, the parties agreed that Mount Mill also purchased the livestock, machinery and other plant and equipment used to conduct the farming operations.) There is no evidence that Robert was repaid this amount by Mount Mill.

Mount Mill remains the registered proprietor of the land comprising “Coomber”. It is the entity through which the farming business is conducted.

In April 1965, Mount Mill purchased the Collaroy property for £13,000 (Ex. TFE). Mount Mill was registered as proprietor of an estate in fee simple in that land under the Real Property Act 1900 (NSW). The Collaroy property was purchased as a holiday house for the use, predominantly by Robert and Sheelagh, but also for use by Timothy, Gae and Kerry. Various family members continued to use it as a holiday house until about 2002. Timothy acknowledged that he and his family had the use of the Collaroy property “for short periods”.

By a Contract for Sale dated 25 May 1981, Robert and Sheelagh agreed to purchase, and Mount Mill agreed to sell, the Collaroy property for $165,000. The Contract was executed under the seal of Mount Mill. Subsequently, the Transfer, which was dated 19 June 1981, was executed by Mount Mill, as transferor, under its common seal, attested by Robert, as Governing Director, and, by Robert and Sheelagh as the transferees.

Although the Transfer acknowledged receipt of the agreed consideration of $165,000, there was a dispute about whether, in fact, Mount Mill did receive the consideration disclosed in the Transfer. It will be necessary to return to the circumstances surrounding the purchase and sale of the Collaroy property later in these reasons.

Mount Mill paid some of the annual outgoings, including council and water rates, insurance, utilities, general maintenance and, from time to time, the costs of renovations. (Some of the costs associated with the Collaroy property were also paid by Robert and Sheelagh personally.) There is a summary of amounts evidencing the payments made from Mount Mill’s bank accounts in respect of the Collaroy property for the period between 26 February 1965 and 30 July 1990 (Ex. TFA(7)). The total of the amounts identified in this summary, after May 1981 (the date of transfer to Robert and Sheelagh), according to my addition, is slightly more than $22,000.

On Robert’s death, Sheelagh, by transmission, became the sole registered proprietor of the Collaroy property.

In 2002, Sheelagh moved from “Coomber” to a house, purchased in her name, in Mudgee. The purchase of that property was financed by a loan. Thereafter, the Collaroy property was rented and Sheelagh applied the rental income to repay the loan.

In 2011, Sheelagh decided to sell the Collaroy property. The Transfer, which was dated 10 March 2011, was signed by Sheelagh, as transferor, and her signature thereon was attested by Philip. The Transfer was registered on about 17 March 2011. The gross sale price of the Collaroy property was $1,550,000.

Shortly after the completion of the sale of the Collaroy property, pursuant to a direction to pay dated 16 February 2011, signed by Sheelagh, Kerry and Gae received, equally, the net proceeds of sale of the Collaroy property. Each received $709,679. Neither gave any consideration for the receipt of those proceeds of sale. Each has spent some part of the amount received.

(Despite a paragraph in the Defence to the further amended Statement of Claim, to the effect that Gae and Kerry “each spent the proceeds from the sale of the Collaroy property” and that each holds “none of the sale proceeds on trust”, there is no issue that should an order for payment be made to Robert, or to Mount Mill, there will be sufficient funds to satisfy any order, and that Gae and Kerry will do so, from the balance of the proceeds of sale that each has received (T163.36 - T163.48; T181.15 - T181.16).

Timothy says that it was not until after Sheelagh’s death, and when his solicitor carried out a title search on 16 August 2012, that he found out that the Collaroy property had been sold.

There was really no dispute about the contents of the various Wills that Robert and Sheelagh had each made, a copy of which was in evidence.

Senior counsel submitted that the testamentary documents to which reference has been, and will be, made, were “not inconsistent”, and that the Plaintiffs “certainly draw some comfort from the nature of those testamentary dispositions to the extent they're not inconsistent with the case put forward by the plaintiff. We can draw some assistance by way of corroboration”: T158.38 - T158.41. It is only necessary, therefore, to refer in detail, to the part of the Wills that provide for the devise of the Collaroy property.

By a Will dated 1 April 1981, Robert did not specifically refer to the Collaroy property (as the Will predated the purchase of the property). After bequeathing all of his shares in Mount Mill to Timothy (upon a certain condition) and leaving a pecuniary legacy of $1,000 to each of his grandchildren alive at the time of his death, he left the rest and residue of his estate, after the payment of debts, funeral and testamentary expenses, to Sheelagh.

There is a codicil to a Will that Robert made on 20 February 1982, but a copy of that Will was not in evidence.

By a Will dated 21 October 1988, Robert purported to devise the Collaroy property to Timothy, Gae and Kerry as joint tenants. (I have used “purported” because it will be remembered that the Collaroy property had been purchased by Robert and Sheelagh as joint tenants.)

By a Will dated 8 June 1990, Robert purported to devise the Collaroy property to Timothy, Gae and Kerry as joint tenants.

By his last Will, dated 16 March 1994, Robert purported to devise the Collaroy property, together with the furniture and furnishings at the property, solely to Kerry. However, by the codicil dated 13 August 2000, Robert revoked the purported devise of the Collaroy property and furniture and furnishings to Kerry, and purportedly made a devise of that property, together with the furniture and furnishings at the property, “unto my children equally”.

By a Will dated 28 July 2000, Sheelagh devised “any real estate and contents I may own at the date of my death to my three said children in equal shares as tenants in common”.

By her last Will, Sheelagh devised her real property at Mudgee, and the Collaroy property as well, to Kerry and Gae as tenants in common in equal shares. The Will stated in Clause 7:

Having set out the facts which were not seemingly the subject of any dispute, I turn now to other background facts which it is necessary to determine because they are not agreed. Unravelling these facts will provide the answers to the present case.

It is necessary to come to a concluded view about the circumstances surrounding the purchase of the Collaroy property, and then its sale, by Mount Mill, to Robert and Sheelagh since these events are of some importance. It will be necessary to determine the facts cautiously because the events occurred so long ago.

Similarly, it will be necessary to carefully consider the evidence of the conversations upon which the substance of the Plaintiffs’ case is based, it being accepted by counsel for the Plaintiffs that there is no contemporaneous document in evidence, and no other direct corroboration, which supports the making of any promise or assurance as is relied upon by the Plaintiffs.

It will also be necessary for the Court to determine what conduct of the Plaintiffs, if any, was in reliance on any alleged promise or assurance made to Timothy, and whether any detriment was suffered by either of the Plaintiffs.

Also, because the conversations about the Collaroy property are said to have been with Robert and/or Sheelagh, it is necessary to bear in mind the need for careful scrutiny to which that evidence should be subjected since those conversations are said to have been with a person who is deceased at the date of the hearing: Plunkett v Bull (1915) 19 CLR 544, per Isaacs J at 548 - 549. Neither is available, at the hearing, to admit, or directly deny, Timothy’s specific allegations.

McLelland CJ in Eq cited Plunkett v Bull in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, at 789, in which case, his Honour wrote that "in a claim based on communications with a deceased person, the court will treat uncorroborated evidence of such communications with considerable caution". Whilst there is no absolute legal requirement for it, the court should look for some corroboration: Re Hodgson (1885) 31 Ch D 177, at 183; Day v Couch [2000] NSWSC 230, at [9]; Weeks v Hrubala [2008] NSWSC 162, at [20]).

Whelan J in Webb v Ryan [2012] VSC 377, at [22], referred to the difficulties in assessing evidence, in such circumstances, stating:

As was observed by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315, at 318 - 319:

In that case, his Honour was talking of a cause of action founded on s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act 1987 (NSW): see the discussion by McDougall J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813, at [10] - [18]. However, as McLelland CJ in Eq also pointed out, the views apply to all types of litigation.

I also remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]:

The credibility of a witness and his, or her, veracity may also be tested by reference to the objective facts proved independently of the evidence given, in particular by reference to the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities: Armagas Ltd v Mundogas S.A. (The “Ocean Frost”) [1985] 1 Lloyd’s Rep 1, per Robert Goff LJ, at 57. Also see, In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547, per Black J, at [7].

A court, in cases involving events which occurred long before the litigation, usually prefers to rely upon contemporaneous, or near contemporaneous, documents, which will often provide valuable and, usually, more revealing, information than what may be flawed attempts at recollection of those facts by persons with an interest in the outcome of the litigation: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200, per Jagot J, at [1247]. Greater weight is usually accorded to such documents, as often they provide a safer repository of reliable fact, particularly when it is clear that they have been prepared by a person with no reason to misstate those facts in the documents and where there is no suggestion that the documents are other than genuine: Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160, per Kenneth Martin J, at [157].

In this regard, I have also found useful what Lord Pearce wrote, in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403, at 431:

The circumstances of this case, make what was written by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben’s of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep), at 122 - 123 (in a passage cited with approval by the High Court when it upheld his Honour’s decision: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599, at [15]) appropriate to remember:

Finally, I should mention an article by the former the Chief Judge at Common Law, P McClellan entitled “Who Is Telling the Truth? Psychology, Common Sense and the Law” (2006) 80 ALJ 655, in which he wrote, at 665, quoting a passage from the “Guidelines Relating to Recovered Memories” (2000) of the Australian Psychological Society:

In relation to the events surrounding the purchase, and then the transfer of the Collaroy property, there are some contemporaneous, or near contemporaneous, documents available. The documents were in evidence and were relied upon by one party or the other.

In this case, there is no sound basis for refusing to accept, at face value, the contents of the contemporaneous, or near contemporaneous documents, relied upon, to which documents I now shall turn. The parties proceeded upon the basis that the documents were genuine and that they accurately reflected the steps actually taken or the events that had occurred. I shall also do so. (Unless otherwise recorded, a copy of the documents formed part of the affidavit evidence.) I shall now turn to these documents.

In relation to the purchase of the Collaroy property, a journal entry, apparently in Robert’s handwriting, regarding cheques drawn, contains a notation, dated 2 April 1965, which states “Mt Mill Ltd - Loan to help buy Collaroy house - £9,000”. There was no evidence that Robert was repaid.

At the hearing, Timothy tendered three original cheque butts for cheques drawn on the bank account of Mount Mill (Ex. TFE), each of which is in Robert’s handwriting. The first in time, dated 1 March 1965, shows the amount £1,267, and bears the notation “Dalziel & Vivers Pty Ltd Deposit on [Collaroy]”. The second, dated 6 April 1965, shows the amount £11,746/7/3, and bears the notation “Cutler Hughes Harris & Garwin [Solicitors], Balance on Collaroy house (£11,700) and rates (£46/7/3)”. The third, dated 26 April 1965, shows the amount £89/18/5, and bears the notation “Cutler Hughes Harris & Garwin Solicitors acting on [Collaroy] purchase”.

The first document relevant to the events surrounding the Transfer of the Collaroy property to Robert and Sheelagh is described as an “Aid Memoir” (sic). It is a typewritten document, which appears to be a copy of a document, created some months earlier (23 April 1981), with typewritten alterations which, I infer, were added on, or about, 2 June 1981. That document, as amended, which appears to have been created by Ralph Larkins, Solicitor, is in the following form (after amendment):

(I should mention that in 1980 Robert James Hunter (referred to as “Bob Hunter”) is described as the “Principal Accounting Officer” in the firm of Chartered Accountants who prepared the financial records of Mount Mill and in 1981 he is described as the Secretary of Mount Mill in 1981 (Ex. TFL).)

The next document is a copy typewritten letter, dated 4 June 1981, from Mr Larkins to Robert. It is in the following terms:

The next document is a copy handwritten letter, dated 5 June 1981, from Mr Larkins to Robert. It is in the following terms:

The next document is a copy cheque butt, (No. 591580), bearing date 19 June 1981, which includes the notation “R F Evans Loan $170,000.00”. It may be inferred, from a subsequent document, that the cheque was drawn on Mount Mill’s bank account.

The next document is a copy of a receipt, dated 22 June 1981, which confirms the receipt, from Robert, into Mr Larkins’ Trust account, of an amount of $4,165 “on account of Stamp Duty, fees and costs you from Mount Mill Pty Ltd – purchase Collaroy property”. (A copy of the Memorandum of Costs from Mr Larkins states how the amount of $4,165 was disbursed.)

The next document appears to be a copy of the front cover of a bank book, with a notation in Robert’s handwriting, which states:

The next document (Ex. D4) is the Mount Mill “Balance Sheet as at 30th June 1981”, which shows, under the heading “Sundry Debtors” “R F Evans $172,193”. On the front cover, there is a notation, in Robert’s handwriting, stating “Showing my debt to Company after purchase of Collaroy House”.

The next document is a copy typewritten letter dated 3 July 1981 from Mr Larkins to Robert. It is in the following terms:

The next document is one described as “Reports, Balance Sheet and Supporting Accounts of Mount Mill for the financial year ending 30 June 1980” (Ex. D3). On the front cover of this document, in Robert’s handwriting, the following statements appear:

A copy of the Balance Sheet of Mount Mill for the financial year ending 30 June 1996 disclosed Robert as a debtor to the company ($192,654.30). The Directors Report and the Statement by Directors was signed by Robert, Sheelagh and Timothy.

The Defendants rely upon what is said to be an admission in a letter dated 25 October 2011, from Timothy’s solicitor, addressed to Kerry, as one of the executors of Sheelagh’s estate, which letter included:

Timothy’s evidence was to the effect that all but the part of the paragraph quoted, relating to the forgiveness of the loan by Mount Mill, accurately recorded the true facts. He denied that he had told his solicitor that the loan had been forgiven (T91.26 - T91.29).

Despite the denial by Timothy, and despite senior counsel for the Plaintiffs suggesting that the solicitor who prepared, and sent, the letter might be called (T109.08 - T109.25), this did not occur. Whilst senior counsel for the Defendants submitted, faintly, that the court should accept the fact asserted, namely the forgiveness of the loan, I am satisfied, on the whole of the evidence, that the loan referred to, in fact, was not forgiven in 1982 or 1983. I have dealt with my conclusion regarding how the executors of Robert’s Will, Timothy and Mount Mill treated the various loans by way of set-off earlier in these reasons.

On the third day of the hearing, the Plaintiffs tendered the Balance Sheet, Income Account and Investments Schedule for Robert, for the financial year ending 30 June 1981 (Ex. TFM). This document confirms that Robert was prepared to have the whole of the purchase price and associated costs and expenses of the Collaroy property ($172,193) treated as having been borrowed, from Mount Mill, solely by him, and to have Sheelagh’s interest in that property treated as a gift to her by him.

Senior counsel for the Plaintiffs did not suggest that the sale price of $165,000 was less than market value. In any event, whilst a copy of the valuation was not produced, it is clear from the contemporaneous documents written by Mr Larkins, that a valuation had been carried out to enable the purchase price to be ascertained, that the purchase price accorded with the valuation, and that the Commissioner for Stamp Duties had accepted the valuation in stamping the Contract.

For the reasons I have identified above, it is necessary to consider Timothy’s evidence carefully, since, as he correctly acknowledged, he is the only person who is able to give any evidence of the conversations that he had with Robert and Sheelagh about the Collaroy property.

It was not in dispute that Timothy had the onus of proving each of the necessary elements required to establish the case pleaded.

In their written submissions filed following the conclusion of the evidence, the Defendants submitted that the court would need to determine, at least, the following facts in dispute:

Timothy was extensively cross-examined. This was unsurprising because the Plaintiffs’ case depends upon the acceptance of his evidence. I had the opportunity to observe him closely whilst he was giving his evidence. He was almost 79 years old at the time of the hearing. He had an impressive command of some of the details of his own case. When asked, he stated that the affidavits that had been relied were all, truthful, accurate and complete; that he had a good memory; that he had a good recall of the events recorded in his affidavits; and that he could remember the details of the conversations that he had with Robert and Sheelagh accurately and completely: T30 - T31. Whilst giving his evidence, I did not observe signs of any cognitive deficits.

Having considered his affidavit and oral evidence very carefully, I have concluded that his recollection, about some of the events, is unreliable, and his evidence, in part, was tailored, not necessarily intentionally, to what he perceived to be the best advantage for his case. In stating this, and despite the strong attack against credibility in submissions made on behalf of the Defendants, I do not conclude that he deliberately attempted to fabricate evidence, or to mislead the court.

Rather, I consider that there was clearly a very strong emotional overlay to the case; that Timothy is convinced of the righteousness of that case and has a strong belief in the Plaintiffs’ cause and what he sees as his entitlement, with the result that these matters have affected some of the evidence given by him. That emotional overlay is even more significant since he is contending, principally against his two sisters, that a promise was made, and relied on, and in circumstances where he is seeking to make good his sense of disappointed hope.

I have borne in mind that throughout the proceedings, Timothy and Mount Mill were legally represented. It seems reasonable to infer, as I do, that Timothy’s two affidavits, to which I shall refer, were prepared with the assistance of his lawyers. Therefore, in expressing these conclusions, naturally I have also considered the possibility of fault lying with the person(s) who drafted the affidavits rather than with Timothy (especially since he asserted that the statement regarding the forgiveness of the debt in his solicitor’s letter was incorrect). However, I do not believe that such fault exists because the variations demonstrated by documents created prior to the commencement of these proceedings, some in Timothy’s own hand, are so marked and are of such substantial significance. They contradict some important parts of the evidence upon which Timothy must have given instructions. In addition, I cannot say that I found some of Timothy’s evidence on the disputed matters convincing. I am unable to safely rely on all his evidence.

In his affidavit in chief, Timothy relied, principally, upon the following conversations with Robert, which conversations he stated in his only affidavit in chief read at the hearing (at paragraphs 53 and 73):

In relation to the conversation said to have taken place in 1983, other than stating the relatively few words that he stated had been uttered by Robert, Timothy provided no context whatsoever. During oral submissions, when I raised this as a “problem” with senior counsel for the Plaintiffs, he seemed to accept, or at least understand, correctly in my view, that this could be so: T212.32 - T212.36.

Timothy also stated, in his affidavit in chief, that following the conversation in 1983, he “was shocked and disappointed” and that “[i]t had never occurred to me that Collaroy would not remain part of Mount Mill”.

Timothy stated that he had no knowledge of the contents of the letters from Mr Larkins (a copy of which he had annexed to his affidavit) until after his father’s death. He maintained, under oath, that he had no knowledge of the transfer of the Mount Mill property to Robert and Sheelagh until 1983, when Robert had told him about it. This is despite the assertion in his affidavit, that from the late 1970’s, Robert had limited his “productive participation” to office work, including doing the cash book, paying bills and wages, and doing the banking, and that during the periods that Robert and Sheelagh went to the Collaroy property, it was he (Timothy) who “was responsible for the office work as well as the farming work”. Later, in the same affidavit, he had also stated, however, that Robert “exercised almost total control over Mount Mill” until about 1990.

In relation to the conversation said by Timothy to have taken place in June 1995, the only context provided in his affidavit was that it had occurred “following a conversation with my wife”. Timothy’s wife, Helen, gave no evidence, and what the conversation between them was about is not disclosed. Accordingly, again, there is no context. Only the words said to have been spoken by Timothy are stated.

Furthermore, there is no response, by Robert, in answer to the statement “That is not what you had promised”, said to have been made by Timothy, given in Timothy’s affidavit. It is highly unlikely that no response was made by Robert. Yet, the statement by Timothy as to what he said is all that the evidence reveals.

It was not until his only affidavit in reply, made on 30 January 2015, less than 2 weeks before the hearing, that Timothy gave evidence that the “subject [of the Will] came up again in or about the late 1990s (sic)”, at which time Robert is alleged to have said: “I will do what I said I would do previously and change my will back so that Collaroy is left three ways. As I mentioned in an earlier will, following my death I would like you to look after Kerry’s welfare if need be”.

In the same affidavit, Timothy added, also for the first time, that in about late 2000, Robert also said “[e]ach of your mother and I have made wills that leave Collaroy to you and your sisters equally as originally promised”.

I am not able to accept that either of these conversations, with Robert, in fact, occurred. As stated, neither was referred to in Timothy’s affidavit in chief. To omit each of these conversations from that affidavit is a serious omission. In relation to the second conversation, because there had been a specific reference in his earlier affidavit, to the codicil made by Robert in August 2000, and the Will made by Sheelagh in July 2000, but not to the conversation said to have taken place, the omission is even more serious and even less explicable.

In relation to Sheelagh, all that Timothy asserted in his affidavit in chief was that she had been present during the first of the conversations and that she did not say anything. In his oral evidence in chief, leave for which was granted, he added (T24.33 - T26.02):

Timothy relied upon the following conversations with Sheelagh, also set out in the affidavit to which I have referred:

Timothy added in his oral evidence in chief, leave for which was granted, at T26.04 - T26.28:

During cross-examination, Timothy acknowledged that another, different, version of the first conversation said to have occurred with Robert, in Sheelagh’s presence, had been given by him. In an affidavit sworn on 2 April 2013 (which affidavit he did not read in these proceedings), filed in support of his claim for a family provision order, he had stated (the relevant paragraphs of which are set out in Ex. D5):

He had earlier stated, in the same affidavit:

The difference between the two versions of the conversation said to have taken place with Robert was explored in cross-examination, during which Timothy gave the following evidence (at T31.39 - T31.50; T36.38 - T37.33):

This evidence raises a real doubt whether Timothy recalled, with precision, the words used by Robert.

Timothy was also asked some questions about the assertion in his affidavit in chief, which was read in the proceedings, that he did not know about the transfer of the Collaroy property until 1983. I shall set out relevant parts of the cross-examination (commencing at T38.16 and ending at T45.04):

During his submissions, Mr Willmott SC submitted that the last answer given, and the use of the words “That was always my hope” was not determinative of the Plaintiffs’ claim. He submitted “That's a matter of words. You can't fix a technical word o[f] expectation on a witness”: T176.37 - T176.38. With respect, I disagree. I find the answer to be a true indication of Timothy’s mental state. To the extent that he said otherwise, I tend to think, he was influenced as set out earlier.

I find rather odd Timothy’s statement that it had never occurred to him that the Collaroy property “would not remain part of Mount Mill” since the undisputed evidence is that the Collaroy property was used by all members of the family as a holiday house. It had never formed part of the farming operations of Mount Mill. He did not explain in his affidavit, and he was not cross-examined on, the reasons for expressing that view.

The letter about which Timothy was cross-examined was one dated 31 March 2002 (a copy of which was Ex. D1), which he had written to Roderick H McGeoch, a solicitor and family friend, who Gae and Kerry had consulted. Mr McGeoch had written a letter dated 7 February 2002 (part of Ex. D1) to which Timothy’s letter responded.

In his letter in response, Timothy had written:

Timothy’s letter dated 5 October 2005 (Ex. D2), was addressed to Sheelagh. In that letter he had written:

I have referred to his answers in cross-examination.

It is extremely difficult to accept Timothy’s stated lack of knowledge until 1983, when, for example, Ex. TFM (the Balance Sheet Income Account and Investments Schedule for 30 June 1981 for Robert), tendered by him, revealed the “Collaroy property (Half Share)” as an asset, and a debt to Mount Mill of $172,193. Timothy had been a director of Mount Mill since it was incorporated. He had, by 1981, been involved with Mount Mill for over 20 years. He did not give any evidence that he had not seen the Balance Sheet Income Account and Investments Schedule at, or about, the time it had been prepared or subsequently during the lifetime of Robert and Sheelagh.

Timothy also stated that he recognised, at the time of the conversation with Robert in 1983, that Mount Mill had lost a valuable asset and that it was only because Robert had made the promise that he did not take any further steps. The statement is difficult to accept because it ignores the fact that, in 1983, there was no reason to believe that the debt due by Robert to Mount Mill, which was for an amount that included the purchase price of the Collaroy property, was not repayable by Robert to Mount Mill (unless it was forgiven). In those circumstances, Mount Mill had not, in fact, lost a valuable asset. It had simply sold the Collaroy property and had a debt owed to it by one of the purchasers for the purchase price.

There was other cross-examination of Timothy that did not paint him in the most favourable light and which confirms my view that I cannot have confidence in his evidence. Again, documents which were written by, or to, him, during Robert’s lifetime, were relied upon to found the cross-examination.

I should mention that these were documents, a copy of each of which was annexed to the affidavit sworn on 1 November 2014, of Timothy’s son, Stephen. Senior counsel for the Defendants submitted that I should not regard this disclosure as evidencing Timothy’s compliance with an obligation to disclose the whole truth. To the contrary, it was submitted that the significance of the correspondence had not been appreciated by the Plaintiffs at the time the affidavit was served. There is probably some merit in this submission although it is not necessary to determine the issue either way.

The documents to which I have referred concerned one, or more, applications, made by, or on behalf of, Mount Mill, to the NSW Rural Assistance Authority, commencing in or about November 1995, for a Drought Exceptional Circumstances Certificate. To obtain such a Certificate, an application for either Drought Relief Payment through the Department of Social Security, or Austudy through the Department of Employment, Education and Training, was required.

In a letter dated 28 December 1995, addressed to Mount Mill, following receipt of the application, it was noted that “Mr R F Evans & Mrs S M Evans are partners in the company, and that their off farm assets exceed $163,500.00”. In response, Timothy in an undated letter, signed by him, wrote, stating amongst other things:

When confronted in cross-examination with the terms of this letter, Timothy admitted that he had written it in order for there to be rural assistance granted to Mount Mill and because he thought it would be to the financial wellbeing of Mount Mill and that of his family to obtain rural assistance. He said that what he had stated he believed to be true at the time. However, when faced with what he had written about what he had been told, he, at first, said “I don't recall it”, but then, when pressed further, said, at T71.16 - T71.27:

He had not included in his affidavit in chief any conversation with either parent, after 1983 and prior to 1995, in which he had been told that Robert’s and Sheelagh’s “private assets have nothing to do with our Property (Company) & are promised to [his] two sisters”.

In a letter dated 19 April 1996, from the NSW Rural Assistance Authority addressed to Mount Mill, which is headed “Your appeal for Exceptional Circumstances for Drought Relief” the following passage appears:

There is no doubt that Timothy read this letter as it bears his handwriting.

In a letter dated 21 May 1996, from the NSW Rural Assistance Authority addressed to Mount Mill, which is headed “Appeal – Application for Drought Exceptional Circumstances Interest Subsidy Grant” states:

The Statutory Declaration, which is one signed by Robert, to which reference is made is in the following terms:

There is another Statutory Declaration, signed by Sheelagh, which is in the following terms:

There was a large amount of time spent cross-examining Timothy about these documents. It would unnecessarily further encumber these reasons to set out, in detail, that cross-examination. For the most part, the answers he gave confirm that Timothy is not a reliable witness. I am unable to accept his assertion that he had forgotten, completely, the events that had occurred and what had been done by, and on behalf, of Mount Mill, to obtain drought relief assistance.

I set out the substance of the evidence given by Timothy during that cross-examination to justify the conclusions I have reached:

Furthermore, some of the evidence given by Timothy was not supported by his son, Stephen. Importantly, Stephen stated that Timothy had the overall say in the running of the property by 1995, and that the applications which were made for drought relief were made with Timothy’s assistance, authority and approval: T98.16 - T98.28. He stated that it would have been wrong to say that Timothy “played relatively no role at all in these applications”: T99.08 - T99.10. To the contrary, Timothy “played a significant role” in the preparation of the applications: T99.12 - T99.17.

No adequate explanation was provided by Timothy for the significant inconsistencies between the facts of the case propounded by him and the contents of a number of the letters and the Statutory Declarations. It may be that he did not examine the contemporary documents in depth before giving his evidence.

I should mention, also, that Timothy did not state that he expected that Robert and Sheelagh would not be free to withdraw what he alleged was said by Robert in the presence of Sheelagh and upon which Timothy said that he had relied. Even if that evidence were given, it would have been impossible to accept in the light of the documents to which reference has been made.

Earlier in these reasons, I set out some of the disputed questions of fact that were dependent upon acceptance of the evidence of Timothy. I now set out my specific findings in relation to those disputed facts:

Stephen was cross-examined. I have noted the relevant transcript references at paragraph 143 above and need not say anything further in relation to his evidence.

Gae and Kerry each was cross-examined. Whilst each gave the impression of being somewhat defensive, I find that she was endeavouring to recollect, to the best of her ability, the events that had occurred.

Gae gave evidence of several conversations with Robert about the terms of his Will. She said that on one or two occasions in the 1980’s, he had said to her that on his death Timothy would be getting Mount Mill, the property and the stock and that she and Kerry would receive “the remainder of my property, the shares, the Collaroy property and any other property left over” so that they were looked after.

Later, in the late 1980’s or early 1990’s Robert told her that he was thinking of changing his Will to leave the Collaroy property solely to Kerry. She stated that Robert did not tell her of the codicil made in 2000.

Kerry referred to a conversation that she had with Robert about his testamentary intentions, so far as they related to her and her siblings. She confirmed his intention to leave Mount Mill, the property and stock to Timothy and to leave the rest of his assets to her and Gae. She, also, was unaware of the codicil made by Robert in 2000 until after his death.

Each corroborated the substance of the statement made by Timothy, to which I have referred above, that he “hoped” to receive a one third share of the Collaroy property. Each also stated that it was only after the death of Robert, that Timothy had asserted that there was “a promise” by both Robert and Sheelagh to leave him that share of the Collaroy property. Each also stated that Robert had not told her of any “promise” made to Timothy in respect of the Collaroy property and that she had never heard either Robert, or Sheelagh, use the word “promise” in relation to his, her or their future intentions.

It is useful to remember the evidence, in cross-examination, given by Gae at T113.20 - T113.44:

Interestingly, the assertions of fact seem to accord with the true facts, albeit, that in the early 1990’s the shares in Mount Mill owned by Robert and Sheelagh had not been transferred to Timothy. However, there was never a suggestion that they were not going to be.

And at T123.31 - T125.16, Gae gave the following evidence:

Senior counsel for the Plaintiffs commented upon the fact that there was no denial by Sheelagh of the assertions made by Timothy in his correspondence, firstly to Mr McGeoch (part of Ex. D1), and then to Sheelagh, the original of which was sent to Philip (Ex. D2).

In relation to the letter to Mr McGeoch, I note that there is no “promise” alleged, but rather an assertion is made that Timothy had “agreed to” the transfer by Mount Mill of the Collaroy property in 1981 “on the condition that I would retain a 1/3 share of this property”, an agreement that he subsequently denied as to the date in cross-examination. (Of course, Timothy had never owned a one third share of the Collaroy property so, in truth, there was nothing to “retain”.)

I note, also, Timothy’s evidence that in about October 2004, Sheelagh told him that she had changed her Will and that she was leaving the Collaroy property to Kerry and Gae. The response he says he gave does not include an assertion of any promise, but simply that “I was supposed to get 1/3 of the Collaroy property” and that it “was transferred from the company without my knowledge or approval”.

In relation to the letter dated 5 October 2005, addressed to Sheelagh, I note, again, that there is no assertion of any promise, or any reliance on any promise. Rather, Timothy states that Robert “told me it would be left to the three of us 1/3 each”. He also stated that if Sheelagh “did not want to leave me a share … that it be held in trust for Kerry so that any money accrued from that legacy could go to Kerry if needs be… [and then] following Kerry’s passing on that legacy go to my three children… This would also fulfill (sic) [the] spirit of Dad’s earlier Wills when Collaroy belonged to the Company that it would be for the use of & or benifit (sic) of all the family”.

Furthermore, despite a conversation asserted by Timothy that he said to Kerry in 2003, in the presence of Sheelagh, “[a]ll I want is what Dad promised; that is, a one third share in the Collaroy property”, I do not accept that Timothy asserted any such promise. Interestingly, all he states is that Sheelagh said that she would not do anything without discussing it with him first.

What is described above is inconsistent with any belief held by Timothy that Sheelagh was bound by what Robert is alleged to have said in her presence and that she would not be free to withdraw what had been said by Robert in her presence. It suggests that what was to happen with the Collaroy property on Sheelagh’s death could be the subject of discussion and how it would pass then may be changed from the terms of any alleged promise.

In any event, in relation to the letter addressed to Sheelagh (Ex. D2), Gae wrote to Philip a letter dated 2 November 2005 (Ex. TFG) in which she explained that Sheelagh was “very happy with things the way they are and would simply like to be left alone”, and that “she doesn’t want to be faced with all these family problems, she’s made her decision that she feels is the right one and would just like a bit of respect for that”. It was not suggested to Gae that what she had said did not reflect Sheelagh’s views as expressed to Gae.

Kerry, also, acknowledged that Sheelagh had told her that Timothy would not be happy about the terms of her last Will because he had indicated he wanted, or would like, a third share of the Collaroy property. Again, what is said reveals a hope, rather than an expectation based upon an irrevocable promise.

It is interesting to note that each of Gae and Kerry admitted, without any prevarication, that she knew that Robert’s, and Sheelagh’s, long held, and expressed, intention was for Timothy to receive all of the shares in Mount Mill. Each, however, denied any knowledge of the alleged promise.

Where there is any conflict of evidence between that of Timothy and that of Gae or Kerry, I prefer the evidence of Gae and Kerry.

Philip was cross-examined briefly. He confirmed that there was a meeting, in his office, at which Sheelagh and Timothy had attended. The purpose of the meeting was that Timothy wanted to discuss the Collaroy property and the fact that it had been left to his sisters and that he would take no benefit under Sheelagh’s Will.

Philip confirmed that Timothy may have said that the Collaroy property had been transferred from Mount Mill without his knowledge and approval, but he had no recollection of Timothy saying “anything about a promise”: T138.47 - T138.50. Philip also confirmed that Sheelagh had “never mentioned … the details of any promise made by her or her late husband to [Timothy] about the disposition of the Collaroy property, such as that she had promised him a one third share of the Collaroy property upon her death”. Finally, he stated that Sheelagh, when discussing her testamentary intentions, was “very definite that she wanted her daughters to receive the entirety of her estate (aside from the small bequest to [Timothy] and the gift to Helen Evans)”.

Philip’s contemporaneous diary note states that she was “most adamant” about leaving her property at Mudgee and the Collaroy property to the “girls” and that “Tim had been well taken care of in his lifetime with Coomber etc…”. Objectively, this was factually accurate.

It is inconceivable that if there were the number of conversations, said by Timothy to have taken place, about the transmission of one third of the Collaroy property to Timothy upon Robert’s and Sheelagh’s death, that Sheelagh would not have mentioned it to Philip. It is also inconceivable that if a promise had been raised with Philip, he would not have discussed it with Timothy.

There is no reason at all to doubt Philip’s evidence. In the case of any conflict of evidence, I prefer Philip’s evidence.

I have earlier set out the broad submission made on behalf of the Plaintiffs. I shall now turn to the submissions, in more detail, on which they relied. I have taken these, principally, from the written outline of submissions filed prior to the hearing.

On the proprietary estoppel claim, the Plaintiffs submitted that Robert’s words “(i)t will be left” rather than “I will leave it” clearly suggested that both Robert and Sheelagh (who is said to have been present, listened to, and did not dissent from what her husband had said), promised Timothy that the survivor would ensure that one third of the Collaroy property would pass to Timothy. Sheelagh adopted Robert’s promise by her silence, so that were she to survive Robert, as occurred, she would be bound by that promise. Implicit in Robert’s words was the promise that each would organise his and her testamentary dispositions such that the survivor would devise the Collaroy property to Timothy and his two sisters in equal shares. As stated, the Plaintiffs submit that Robert’s words amounted to “estoppel by encouragement”.

Then, it is submitted, that the court should accept that Timothy relied on the promise through his conduct of accepting the transfer of the Collaroy property out of Mount Mill because of the promise and that he did not turn his mind to what he would have done if the promise had not been made. He stated, and the court was asked to accept, that he “recognised that Mount Mill … had lost a valuable asset. I think that had my father not made the promise I would at least have sought legal advice.”

It is then submitted that there was detriment suffered by Mount Mill because it took no action to recover the Collaroy property. It suffered that detriment in reliance, by its agent Timothy, on Robert and Sheelagh’s promise. It suffered further detriment by continuing to pay all of the outgoings on, and the utilities connected to, the Collaroy property up until 1990 and the costs of insurance up to 2003.

It is also submitted that Timothy suffered detriment as the value of the shareholding was diminished.

It was next submitted that the necessary relief to do justice between the parties is that Gae and Kerry should be required to pay to the Plaintiffs the sum of $473,119 (being one third of the net proceeds of sale of the Collaroy property), plus interest calculated from 10 March 2011 to date.

In relation to the common intention constructive trust, it was submitted that Timothy, Robert, Sheelagh and Mount Mill had agreed, understood and arranged, to use the income and profits from the farming operation for the benefit of the family as a whole. Mount Mill’s acquisition of the Collaroy property was for the benefit of the members of the family.

The joint relationship or endeavour between Robert, Sheelagh and the Plaintiffs was said to have continued until it ended “without applicable fault” when Robert died.

The Plaintiffs also stated, in their oral submissions that the joint endeavour ended upon the resignation of Robert and Sheelagh as directors of Mount Mill in 1997. Thus, Robert and Sheelagh held the Collaroy property on common intention constructive trust until it was sold and when Sheelagh as the survivor would have received the proceeds of sale, which would have been held on the same trust. Those sale proceeds remained impressed with the trust when they passed into the hands of Gae and Kerry.

The appropriate relief in the circumstances, it was submitted, was a declaration that one third of the net proceeds of sale of the Collaroy property received by Gae and Kerry is, or was, held on constructive trust by them for Timothy and/or Mount Mill and an order that Gae and Kerry pay to Timothy and/or Mount Mill an amount equivalent to that sum plus interest. In the alternative, it was submitted that the equity could be satisfied by an order for equitable compensation in the same amount plus interest.

Finally, it was submitted that Robert and Sheelagh, as directors of Mount Mill, each breached what was described as “the no conflict rule as well as the no profit rule” when Robert arranged for the title to the Collaroy property to be transferred into their joint names. Their duties to Mount Mill, so it was said, included the duty to act in all matters concerning the company in good faith and for a proper purpose. They chose to put their own interests ahead of the interests of Mount Mill; and they made a profit using their fiduciary positions. It was submitted that Robert, in short, exercised his voting power so as to deprive Mount Mill of its property and diverted it to himself and his wife. The ‘round robin’ involving the issue of the cheques recorded above was, presumably, designed to conceal this. Thereafter, they held their interests in the Collaroy property on constructive trust for Mount Mill.

In addition, it was submitted, that Timothy, as a shareholder of Mount Mill, in circumstances where the board of directors (namely Robert and Sheelagh) would not commence proceedings against themselves, could have brought a claim on behalf of Mount Mill against the directors. Yet it is accepted that “[w]hen he learned of his father’s acts in causing the title to the Collaroy property to be transferred into his and his mother’s name, Timothy took no action”. The lack of action was based upon his reliance on the promise made by Robert, as discussed above. It is then submitted that had he brought an action, the relief sought would have been the restoration of the Collaroy property to Mount Mill.

The principal submission made on behalf of the Defendants was that Timothy was “a very unsatisfactory witness” whose evidence should not be believed unless it was independently corroborated or was against his interests. Various examples were provided.

It was submitted that unless the disputed facts (referred to earlier) were established, the proceedings based upon an equitable estoppel must fail.

In relation to the submissions of the Plaintiffs that Robert and Sheelagh had acted in breach of their duty as directors to Mount Mill, the Defendants submitted that a review of Mount Mill’s Memorandum and Articles of Association revealed that Robert was solely vested with the power to carry out Mount Mill’s business. Furthermore, as expressly set out in the Memorandum of Association, the company’s business (or objects) included providing for the welfare of persons in the employment of the company, as well as the wives, widows and families of persons in the employment of the company. In addition, the Memorandum of Association expressly provided that Mount Mill could exercise its powers and use its assets to benefit the company’s employees and their families by “grants of money, pensions or other payments”.

Given that Robert was an employee of the company and Sheelagh was his wife, it was entirely within the objects of the company for Robert, to use his power, as Governing Director, to transfer an asset of the company to benefit himself and his wife, just as it would have been had he used his power to transfer the Collaroy property into the names of his three children. There was no scope to read into Mount Mill’s Memorandum or Articles some otherwise unexpressed limit to the objects or powers, on the basis of general fiduciary law. Even if each did owe a duty of care of a fiduciary nature to Mount Mill, one had to assess that duty and any conflict in the context of the circumstances of the company.

It was pointed out by the Defendants that the Plaintiffs did not allege that Robert, as Governing Director of Mount Mill, did not have the power to sell the Collaroy property. Nor did they allege that in exercising his power to sell the property Robert was actuated by some improper purpose. It was also submitted orally that even if there was a breach, there was no detriment as all shareholders, that is, all family members including Timothy, continued to enjoy the benefit of Collaroy as they had always done.

The Defendants compared Mount Mill’s company structure to a Gorton scheme-type company: see, The Commissioner of Taxation (Cth) v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336. The Defendants referred to two paragraphs of the judgment of Aicken J (with whom Barwick CJ relevantly agreed), at 407 and 412, about the exercise of the powers of a Governing Director, and whether such exercise could be the subject of a successful derivative action by a shareholder.

Relevantly, Aicken J stated:

His Honour returned to the topic at 412:

The Defendants submitted, in conclusion, that in light of the Memorandum and Articles of Association of Mount Mill, and the powers given to Robert as Governing Director, “there could be no complaint made about the fact that he and his wife purchased the Collaroy property under the circumstances in which it occurred”: T203.6 - T203.9.

It was also submitted that even if there was a breach of duty by Robert and Sheelagh, Mount Mill could not, in these proceedings, make any claim because the Collaroy property had been transferred in 1981. At that time, the Companies (New South Wales) Code (1981) applied to Mount Mill. Section 229(7) of the Companies Code provided a statutory cause of action for a company to recover from a director any profit made by that director as a result of a breach of duty. The Companies Code was replaced in 1992 by the Corporations Law found in the Corporations Act 1989 (Cth). Section 232(8) of the Corporations Law provided the same statutory cause of action. See now s 1317H of the Corporations Act.

Any proceedings relying upon the statutory cause of action needed to be commenced no later than 6 years after the contravention alleged: see s 1317K of the Corporations Act; and s 1317HD of the Corporations Law. The Companies Code did not contain any limitation period, but s 14(1)(d) of the Limitation Act applied a 6-year limitation period to "a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture". Therefore, the statutory cause of action has been subject to a 6-year limitation period.

Even if it were found that Timothy did not find out about the transfer of the Collaroy property to Robert and Sheelagh until 1983, this would not assist, as Mount Mill’s claim was not adverted to until the filing of the amended Statement of Claim on 12 February 2014.

Reliance was placed upon Gerace v Auzhair Supplies Pty Ltd. (An application for special leave to appeal to the High Court was dismissed on 10 December 2014: Auzhair Supplies Pty Ltd v Gerace [2014] HCASL 231).

At [70], Meagher JA (Beazley P and Emmett JA agreeing) wrote:

(The two classes of cases, referred to by Meagher JA, at [35], in which courts of equity have declined to apply limitation periods by analogy, namely, claims by a beneficiary against a trustee for breaches of trust, and claims involving fraud or fraudulent concealment, are not relevant.)

It followed, so it was submitted, any cause of action that Mount Mill may have had for breach of duty by Robert or Sheelagh was time-barred.

In addition to relying upon the expiration of the limitation period, the Defendants relied upon laches and acquiescence. It was submitted that, even if the court accepted Timothy’s evidence about when he first found out that Mount Mill had transferred the Collaroy property to Robert and Sheelagh, some 29 years had passed before the proceedings were commenced against the Defendants. Despite Timothy being the Governing Director and the controlling shareholder, Mount Mill was not, initially, a party to the proceeding, and no allegations had been made concerning unpaid loans or breaches of directors’ duties until 2014 when Mount Mill was joined to the proceeding.

(A similar submission could have been, but was not expressly, made, for the period after 1995, since it was then that each of Robert and Sheelagh had stated that each would not devise the Collaroy property to Timothy, but would leave all of their off farm assets to Gae and Kerry.)

The prejudice to the Defendants, it was submitted, was “prejudice …resulting from the loss of potentially relevant evidence [which] has been held to be sufficient prejudice to establish laches, such as to disentitle a plaintiff from the equitable relief that he or she seeks”. The loss of evidence was from both Robert (had the proceedings been commenced after 1983 and before his death in 2001) and from Sheelagh, after 2001 and before her death in 2011. The Defendants also submitted that there was written evidence which may have been lost and memories which may have faded.

The Defendants relied upon Timothy’s and Mount Mill’s acquiescence in standing by whilst Robert and Sheelagh treated the Collaroy property as their own, and then, after Robert’s death, in Sheelagh treating it as her own.

In relation to the Plaintiffs’ claim of equitable estoppel, the Defendants submitted that the Plaintiffs failed to establish the requisite elements.

Firstly, it is submitted that the conversation that allegedly took place in 1983 did not create a legal relationship between Timothy and his parents as there was no sufficiently clear promise or assurance in that:

The Defendants submitted that the promise or assurance was simply too “vague and uncertain” to found their claim as it did not clearly and precisely set out what is the particular state of affairs presently existing or that would arise in this future.

The Defendants further submitted that no evidence has been led to establish that Robert and Sheelagh induced Timothy to adopt the assumption or expectation as Robert and Sheelagh never requested anything from Timothy in return for the promise being made. Furthermore, it was submitted that a statement of testamentary intention was a class of statement which ordinarily would not induce any person to adopt an assumption of expectation as it is ordinarily revocable at any time before the person died. As such, the representation of Robert did not suggest that the promise was in any sense binding; rather it was a declaration of intention with respect to his testamentary disposition, which he was free to change at any time before his death.

Finally, the Defendants submitted that the Plaintiffs’ equitable estoppel claim must fail for want of detrimental reliance on any “promise” for two reasons.

Firstly, Timothy did not rely on any assumption or expectation to his detriment through allegedly giving up a valuable right to commence derivative proceedings on behalf of Mount Mill against his parents. As neither Robert nor Sheelagh breached any director’s duties, any derivative proceedings commenced would have been unsuccessful. And even if the derivative proceedings had some value to Timothy, the Plaintiffs did not establish that Timothy’s inaction was made in reliance on the promise of a one third share of Collaroy.

Secondly, Timothy did not rely on any assumption or expectation to his detriment through Mount Mill continuing to pay all outgoings on the Collaroy property, as well as the costs of maintaining and improving the property. The Plaintiffs did not prove that these payments were made in reliance on the promise, as Robert was the “controlling mind” of Mount Mill, with the result that it was Robert who caused payments to be made by Mount Mill. Clearly, he did not do so in reliance on any alleged promise made to Timothy.

The Defendants also submitted that the Plaintiffs’ claim for the imposition of a constructive trust over one third of the proceeds of sale of Collaroy was misconceived and doomed to fail.

It was submitted that the Plaintiffs adduced no evidence of any “agreement, arrangement or understanding” between Timothy, Robert and Sheelagh, which could constitute a joint relationship or endeavour. Even if there were any such agreement, arrangement or understanding, it would have been entirely unnecessary because one of Mount Mill’s objects was to benefit the members of the Evans family. In addition, it is highly unlikely that Robert would have entered into such an agreement, arrangement or understanding with Mount Mill as he was the “controlling mind” behind Mount Mill and would essentially be entering into an agreement, arrangement or understanding with himself.

Secondly, the Defendants submitted that Timothy is not entitled to any equitable relief as it is apparent that he only paid small contributions to Collaroy in 2002 which were repaid by Sheelagh.

Mount Mill, on the other hand, made some contributions to Collaroy between 1965 and 1990. However, as Mount Mill was the sole registered proprietor of Collaroy between 1965 and 1981, the company would not be entitled to an equitable interest for any contributions made during this period. After the transfer of Collaroy in 1981, there was no evidence to enable a finding that Mount Mill intended that Robert and Sheelagh should not be beneficially entitled to the payments made by Mount Mill to Collaroy or that it was the common intention of the parties that Mount Mill would be entitled to an equitable interest in Collaroy in return for money advanced. They put, again, that it was artificial to describe Mount Mill as having any such intention, given that Robert was the “controlling mind” of the company.

There was also nothing in the evidence to suggest that any of the parties intended Mount Mill to have any interest in Collaroy after it had been transferred to Robert and Sheelagh. Whatever payments were made by Mount Mill in 1981 were made in accordance with Mount Mill’s objects. The whole family continued to enjoy the Collaroy property as they had always done until about 2002.

Next, the Defendants submitted that the Plaintiffs failed to prove when and in what circumstances the joint relationship or endeavour failed. They also had not established that the joint relationship or endeavour ended without attributable blame to either party. Thus the foundation for the Court’s intervention, preventing the unconscionable exercise of legal rights, is missing.

An executory promise, unsupported by consideration, is, prima facie, revocable. However, some subsequent conduct of the intending donor, encouraging or inducing the intended donee to act to his prejudice on the footing that property, or some interest in it, will become his, may make it unconscionable for the donor to withhold the property or the interest in it from the donee, and equity, on that ground, may hold the donee to be entitled to the property: Olsson v Dyson (1969) 120 CLR 365, per Kitto J, at 376.

Promissory estoppel, as its name indicates, is based on a non-contractual promise or assurance which, in its orthodox form, becomes binding in equity, so as to restrain the promisor from enforcing his strict legal rights: Equititrust Ltd v Franks [2009] NSWCA 128; (2009) 258 ALR 388, per Handley AJA, at [70].

(I have not, and shall not, use the word “representation” which, it has been suggested, should be used to refer to statements about an existing or past fact. I shall refer to “promise or assurance” to describe the statements of future conduct which can give rise to an estoppel: Equititrust Ltd v Franks, per Handley AJA, at [73].)

In this case, the Plaintiffs plead an active form of estoppel referred to as estoppel by encouragement, the essence of which type of estoppel is that the person seeking to assert it has been led to alter his, her, or its, position, detrimentally, in the belief that he, she or it would have an interest in the property of the promisee: Ashton v Pratt [2015] NSWCA 12, at [108].

In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Mason CJ and Wilson J, stated at 404, “a person whose conduct creates or lends force to an assumption by another that he will obtain an interest in the first person’s land and on the basis of that expectation the other person alters his position or acts to his detriment, may bring into existence an equity in favour of that other person, the nature and extent of the equity depending on the circumstances”. Their Honours added, at 406, that a departure from the basic assumptions underlying the transactions must be unconscionable. That element was fulfilled by the party encouraging the opposite party in the assumption that a promise would be performed with knowledge that the other party was relying on that assumption to his, or her, detriment.

Brennan J wrote, at 419, that:

His Honour added, at 423 - 424, that:

At 428 - 429, his Honour summarised the elements to be established as follows:

The fifth element was expanded upon by Priestley JA in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, at 472, that:

Equitable estoppel was described by Mason CJ in Commonwealth of Australia v Verwayen (1990) 170 CLR 394, at 409, as “a label which covers a complex array of rules spanning various categories”. His Honour saw the various categories as having the same fundamental purpose, namely “protection against the detriment which would flow from a party’s change of position if the assumption (or expectation) that led to it were deserted” (cited in Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505, at [1]).

In Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, at [6], it was said that the category of equitable estoppel that is usually traced back to the decisions in Dillwyn v Llewelyn (1862) 4 De GF & J 517; (1862) 45 ER 1285, and Ramsden v Dyson (1866) LR 1 HL 129, is now a "well recognised variety of estoppel as understood in equity", which affords relief "found in an assumption as to the future acquisition of ownership of property … induced by representations upon which there had been detrimental reliance by the plaintiff".

The joint judgment of Gleeson CJ, McHugh, Gummow and Callinan JJ, at [35], endorsed the explanation given by McPherson J in Riches v Hogben [1985] 2 Qd R 292, at 301, of the distinction between equitable principles and the enforcement of contractual obligations:

To these references may be added the not inconsistent fourth requirement of an estoppel by encouragement, stated by Fry J in Willmott v Barber (1880) 15 Ch D 96, at 105 - 106, and recently referred to by Macfarlan JA in Milling v Hardie [2014] NSWCA 163, at [50] - [52], that “the defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights”. Fry J’s description of the elements of the estoppel was approved by the High Court in Svenson v Payne (1945) 71 CLR 531, at 542.

In Barnes v Alderton [2008] NSWSC 107; (2008) 13 BPR 25,281, Young CJ in Eq dealt with whether one could get relief in a proprietary estoppel case of a promise to leave money by will. His Honour wrote, at [51] - [54]:

His Honour added, at [58]:

(I should also mention that his Honour stated, at [42]):

His Honour returned to the topic in Weeks v Hrubala, in which he wrote, at [34]:

In Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483, at [21], Handley JA stated that an estoppel by encouragement "comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part."

His Honour, at [36], also reached the same conclusion as Young CJ in Eq had in Barnes v Alderton:

His Honour also quoted, with approval, at [81], the comment by Hoffmann LJ in an unreported judgment of Walton v Walton (Court of Appeal of England and Wales, 14 April 1994, unrep), that was adopted in Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18, by Lord Walker, at [57] and Lord Neuberger, at [101]:

Allsop P (with whom Giles JA agreed) said, at [5]:

The question was also considered in Evans v Evans [2011] NSWCA 92, at [107] - [110], in which Campbell JA (with whom Giles JA and Sackville AJA agreed) wrote:

In Thorner v Major, Lord Scott, at 783 - 784, wrote:

Lord Neuberger, at 802, also allowed for the possibility of a change of mind if this “… could be justified by, a change of circumstances.”

In Sullivan v Sullivan [2006] NSWCA 312; (2006) 13 BPR 24,755, at [25], Handley JA also noted that, “[r]elief may be refused or reduced if the plaintiff’s equity has been diminished by later events. In Sledmore v Dalby (1996) 72 P & CR 196 CA the Court held that the plaintiff’s equity based on his improvements had been fully amortised over 18 years of rent free occupation.”

The events that occurred in 1996 and 1997 relating to the applications to the Rural Assistance Authority involving Robert, Sheelagh, Timothy, Stephen and Mount Mill, make the question whether equity would permit Robert and Sheelagh to change their minds and renege on any promise, should it be found that a promise had been made, of some significance in the present case.

It is often said that a promise or assurance must be "clear" or "clear and unambiguous" before it can found an equitable estoppel (see Foran v Wight (1989) 168 CLR 385, per Mason CJ, at 410 - 411). The promise may, however, lack sufficient certainty or specificity to satisfy the requirements of an enforceable contract at law. In this regard, one assesses the question of clarity and certainty practically and sensibly as well as contextually.

As was written by Dodds-Streeton JA in Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; (2008) 66 ACSR 325, at [135]:

Generally, a promise will support an estoppel if it was reasonable for the promisee (in this case, Timothy) to interpret the words used in the way contended for and to act in reliance on that interpretation: per Hodgson JA (McColl JA agreeing) in Sullivan v Sullivan, at [85].

When addressing whether conduct is reasonably capable of giving rise to a particular representation or promise it is necessary to have regard to the context in which it occurred and to consider what it would have conveyed to a person in the position of the recipient: Hammond v JP Morgan Trust Australia Ltd [2012] NSWCA 295; (2012) 16 BPR 30,901, at [53]. There can be no doubt that the meaning to be ascribed to words passing between parties will depend, often, very much, on their factual context.

The first question involves a consideration of the conduct engaged in by the promisor, and the impression it would have on a reasonable person, being the promisee. The second question involves a consideration of the action taken by the promisee, and whether it was reasonable for him or her, to have adopted the relevant assumption and to have taken the (ultimately detrimental) action which was taken. If it was unreasonable for the promisee to rely on the meaning he or she attributes to the promise or assurance, then it cannot be unconscionable for the promisor to deny responsibility for the detriment that the promisee sustains because of that unreasonable reliance.

In Galaxidis v Galaxidis [2004] NSWCA 111, a dispute involving family members, Tobias JA (with whom Giles and Hodgson JJA agreed), at [95], wrote that, in considering the intention of the person alleged to have made a promise or an assurance and its effect on the person to whom it was made:

In the case of Sheelagh, there is no evidence that she said anything during the conversation said to have taken place in 1983, between Robert and Timothy. However, conduct, including silence, may give rise to an implied assurance. Where silence is relied upon, normally it would be necessary to show that the silence was maintained in circumstances where the court considers that the party in question ought to have spoken: Thompson v Palmer (1933) 49 CLR 507, per Rich J, at 520; Waltons Stores (Interstate) Ltd v Maher, at 427 - 428. Yet, the court must consider all of the circumstances to determine whether there has been a promise or assurance by silence.

The action or abstaining from action in reliance upon the assumption or expectation encouraged is what invites the intervention of equity: Giumelli v Giumelli, at [35] - [36]; and the detriment that makes the estoppel enforceable is that which "would flow from the change of position if the assumption were deserted that led to it": per Dixon J in Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641, at 674. Although that statement was made in relation to common law estoppel, it has been held to apply equally to promissory and proprietary estoppels: Delaforce v Simpson-Cook, at [1], [6], [43], [44].

In Sidhu v Van Dyke, the High Court (French CJ, Kiefel J, Bell J, Keane J (Gageler J agreeing)), observed, at [77]:

The plurality, at [61], also made clear that the legal burden of proof borne by a plaintiff did not shift and that it was the plaintiff who “at all times bore the legal burden of proving that she had been induced to rely upon the appellant's promises”. Gageler J, at [90], stated, “[p]araphrasing Dixon J in Thompson v Palmer… the respondent bore the onus of establishing that she believed the appellant's representations and that, on the faith of that belief, she took a course of action or inaction which would turn out to be to her detriment were the appellant to be permitted to depart from those representations”.

It can be seen from these formulations, that in the present case, the Plaintiffs bear the onus of establishing that a promise was made, or an assurance was given, by Robert and Sheelagh; that Timothy believed the promise or assurance; and that, on the faith of that belief, he took a course of action or inaction which would turn out to be to his, or Mount Mill’s, detriment, were the Defendants, as the executors of Sheelagh’s estate, to be permitted to depart from the promise or assurance. In so doing, he must also establish a sufficient causal link between the promise relied upon and the detriment asserted.

However, it must also be remembered, as was written by Robert Walker LJ (with whom both Waller and Beldam LJJ agreed) (now Lord Walker SCJ) in Gillett v Holt [2001] Ch 210, at 225, that:

This passage has since been approved by the House of Lords (see especially the speech of Lord Neuberger, with which the rest of the House agreed, in Fisher v Brooker [2009] 1 WLR 1764; [2009] UKHL 41, at [63]). Also see, Pitt v Holt; Futter v Futter [2013] 2 AC 108; [2013] UKSC 26, at [128].

As was put by Macfarlan JA in Milling v Hardie, at [55](2):

Also, as Deane J held in Commonwealth of Australia v Verwayen, at 445, and approved by the High Court in Giumelli v Giumelli, at [42]:

I note what was said by Corboy J in Como v Helmers [2011] WASC 179, at [78]:

It is clear that the elements required to be established to found this claim overlap with the elements required to be established for equitable estoppel. Each is concerned with equity's intervention to provide relief against unconscionable conduct. The constructive trust in this context is based on a common intention that the other party is to have an interest in the property, which is acted upon to the detriment of the alleged beneficiary. There is an intention that the other party is to have an equitable interest in the land. In equitable estoppel, the main emphasis is that the landowner has to have acted in an unconscionable manner taking the entire set of circumstances into account. There is no clear intention that the other party is to have an equitable interest in the land. The other important difference lies in the remedies.

In Grant v Edwards [1986] Ch 638, Browne-Wilkinson V-C said, at 656:

A common intention trust is based on actual intention, which is either expressly stated by, or is to be inferred from the conduct of, the parties. The elements to be established are that:

The legal principles in relation to a constructive trust were set out by Deane J in Muschinski v Dodds (1985) 160 CLR 583, at 619 - 620:

In Rasmussen v Rasmussen (1995) VR 613, Coldrey J, at 615, wrote:

The real question is the question of unconscionability and in this regard the Court is guided by equitable principles.

The principles were considered by the High Court in Baumgartner v Baumgartner (1987) 164 CLR 137, per Mason, Wilson & Deane JJ, at 148:

Campbell J put the matter succinctly in West v Mead [2003] NSWSC 161; (2003) 13 BPR 24,431, at [58] - [59], and [62]:

Since I do not accept the evidence of the conversations relied upon by Timothy, it is not necessary to discuss the principles relating to the Limitation Act, laches or acquiescence.

I have earlier referred to the allegation of breaches of duty by Robert and Sheelagh. It seems to me that the following principles are relevant:

As stated, the Defendants relied upon Gerace v Auzhair Supplies Pty Ltd, at [70], submitting that the Plaintiffs had not pleaded any facts that might constitute concealed fraud or any other unconscionable conduct on the part of the Defendants with the result that the Defendants were not precluded from relying on the 6-year limitation period set by the Limitation Act and s 1317K of the Corporations Act, which applies by analogy to equitable claims.

In the recent decision of Issa v Issa [2015] NSWSC 112, White J commented on Gerace v Auzhair Supplies Pty Ltd, including paragraph 70 upon which the Defendants have relied. His Honour stated, at [56]:

His Honour concluded, at [79], that:

Because of the conclusion to which I have come in regard to the alleged breach of directors’ duties, it is unnecessary to further consider this aspect of the defence raised

I have dealt with the family and the creation of Mount Mill earlier in these reasons. It is within the context described that the Plaintiffs’ case must be determined.

The Plaintiffs' claim is not a "typical" equitable estoppel claim which sometimes arises amongst members of rural families, such as in Giumelli v Giumelli, Flinn v Flinn [1999] VSCA 109; [1999] 3 VR 712, and Thorner v Major, in which a family member, or other person, works on a family farm for reduced wages for many years in reliance on a promise that the farm will be given to him at some time or left to him by will. Nor is it a claim in which a person expends money, effort and other resources on improving another’s property in reliance on a promise from the property-owner that the person expending the money, effort or other resources will obtain a proprietary interest in the property. Nor is it a claim made by family members to reflect care arrangements for the care and accommodation of an elderly relative. Like many of those cases, however, this is a case where what is alleged as having been a promise or a common intention has not been recorded in writing.

In relation to the equitable estoppel claim, I am not satisfied that the words attributed to Robert, and said to have been heard by Sheelagh, identified by Timothy in his affidavit in chief read in the proceedings, were, in fact, said. The different versions of the conversation, as well as other contradictory evidence, lead me to doubt that the words stated in Timothy’s affidavit were said by Robert. Accordingly, I am not satisfied that there was a clearly articulated promise, or assurance, as alleged by Timothy.

The suggestion of a “promise” made by Robert and/or Sheelagh did not find its way into any pre-litigation correspondence written by Timothy. One would have expected him to put the allegation of a promise at the forefront of his explanation of the events surrounding the transfer of the Collaroy property. His allegations are also inconsistent with the correspondence and other documents written, and relied upon, in about 1996 and 1997. In this regard, “subsequent events throw retrospective light upon the meaning of past events”: Thorner v Major, per Lord Hoffman, at [8].

However, even if the words alleged were said in the precise terms stated, isolated from any context as they were in the affidavit, and not explained otherwise, the question is what would objectively have been conveyed by the terms of the conversation. I am not satisfied that Timothy could reasonably have taken it to be a promise, or an assurance, that he would receive a one third share of the Collaroy property on the death of the survivor of Robert and Sheelagh. Accordingly, the words, if said, could not, have reasonably, given rise to the expectation that Timothy said he held following the conversation.

To my mind, any assumption held by Timothy that Robert was communicating, and Sheelagh (assuming she heard it and did not say anything), was implicitly agreeing with, by way of promise or assurance, that one third of the Collaroy property would pass to Timothy, was unreasonable and unjustified. The words, if spoken, appear to have been no more than a statement of Robert’s, and Sheelagh’s (assuming she heard it and did not say anything), then intention. What was being spoken of was an intention to leave property by a will, an intention that Timothy must have appreciated could change over time.

There are no circumstances revealed by Timothy that, in my view, could reasonably lead to the conclusion that the words, if spoken, were tantamount to an irrevocable promise or assurance.

There is no evidence that after 1983 (assuming that to be the date of the conversation relied upon by Timothy), Robert told Timothy that he had, in fact, made a Will in which the Collaroy property had been left to Timothy, Gae and Kerry. There is no evidence that Robert or Sheelagh showed any Will to Timothy, at that, or at any other, time. I have earlier concluded that I am not satisfied that the other conversations to which reference was made in Timothy’s affidavit in reply occurred.

The subsequent conversation, alleged to have occurred with Robert in 1995, followed a discussion between Timothy and his wife, Helen. The terms of that conversation, or what preceded it was not explained. Again, there is no context.

In relation to Sheelagh, there is no acceptable evidence of any conversation in which she told Timothy that she had made a Will in which the Collaroy property had been left to Timothy, Gae and Kerry. Thus, this is not a case in which it could be said that, in accordance with an alleged promise relied upon, Robert or Sheelagh made a Will to fulfil that promise and that either told Timothy that he and she had done so.

To the contrary, there are examples in the evidence of Robert and Sheelagh changing their testamentary intentions and disclosing that change to one, or other, of their children. The events of 1996 and 1997 relating to the applications to the Rural Assistance Authority, well known to Timothy, demonstrate that clearly so far as he is concerned.

Furthermore, Timothy’s evidence about what he “hoped” is noteworthy. I am unaware of any particular event that could have marked the transition from such a hope to an expectation. In any event, I am not even sure that it was a reasonable hope, bearing in mind the existence of Gae and Kerry, at least one of whom might require assistance from her parents, in circumstances where Robert’s long held testamentary intention was that Timothy would inherit all of Robert’s and Sheelagh’s shares in Mount Mill. This would provide him with significant property.

Even if I am wrong about this, the equity involved in a claim of estoppel operates by considering whether it would be contrary to good conscience (measured according to the standards of equity) for the promisors to disappoint the expectation that the promisees have. The relevant time for the consideration is the time that the promisors (accepting Sheelagh’s involvement) seeks to disappoint that expectation. As stated above, this allows the court to consider, and take into account, all the conduct up to the time of Robert and Sheelagh disappointing the expectation. What is required is that Timothy and Mount Mill point to, and the court accepts, the reason why the impugned conduct is said to be unconscionable: Tory v Tory [2007] NSWSC 1078, at [58].

Any expectation (as opposed to a hope) that Timothy showed that he held from time to time, and the extent to which Robert and Sheelagh knew about it, or induced or encouraged it, are relevant to deciding whether it would be contrary to good conscience for Robert and/or Sheelagh to disappoint the expectation said to be held by Timothy. In this regard, the events of 1996 and 1997 are telling, and the established facts satisfy me that Timothy, in truth, held no expectation that he would come to receive a one third share of the Collaroy property at the death of the survivor of Robert and Sheelagh.

Thus, looking backwards from the moment when the alleged promise fell due to be performed, and asking whether, in the circumstances which have actually happened, it would be unconscionable for the alleged promise not to be kept, the answer must be in the negative.

This also gives rise to another problem. If Robert and Sheelagh made a promise, or gave an assurance, that the Collaroy property would be devised equally to their three children, the question would still arise whether the Plaintiffs needed to establish that they assumed that each of Robert and/or Sheelagh was, or were, not free to withdraw that promise or assurance: EK Nominees Pty Ltd v Woolworths Limited [2006] NSWSC 1172, per White J, at [231] - [267]. Because of other evidence, I am unable to infer that Timothy assumed that Robert and Sheelagh would not change his or her mind as to how the Collaroy property should be devised.

Timothy did not give any evidence that he had assumed that Robert and/or Sheelagh was, or were, not free to withdraw any promise, or assurance, given. To the contrary, the evidence reveals that Timothy accepted that each could do so, as all seemed to have done in Robert’s conversations identified in the correspondence to the Rural Assistance Authority and as evidenced in Robert’s and Sheelagh’s Statutory Declarations.

In any event, I do not consider that Timothy or Mount Mill could reasonably have made any such assumption based upon the conversations on which he has relied. One might think that Robert and/or Sheelagh might change his and her mind, because their circumstances, or the circumstances of others involved (Timothy, Gae and/or Kerry), and that change of mind might bring about a change of testamentary intentions.

If that were not enough, I am not satisfied that there were any acts of detrimental reliance by either Timothy or Mount Mill. Each ought to be able to point to an alternative course, or courses, which might have been open to him, or to Mount Mill. All that is put forward is that there might have been a challenge to the transfer of the Collaroy property out of Mount Mill.

I do not accept that Timothy or Mount Mill did not challenge the transfer of the Collaroy property from Mount Mill because of any alleged promise made, or assurance given, by Robert, acquiesced in by Sheelagh, to Timothy. It was not challenged because there was no need to challenge it and because any challenge would, in all probability, have been futile. The objects of Mount Mill and the powers of its Governing Director permitted such a course to be taken, particularly in circumstances where the consideration paid to Mount Mill was proper consideration.

Next, in case I am wrong, I must consider Robert’s and Sheelagh’s knowledge of the reliance by Timothy on what is said to be the promise about which he gave evidence. I cannot be satisfied that either had such knowledge. To the contrary, I am of the view that Robert did not consider, for one moment, that Timothy, or Mount Mill, could challenge the decision to transfer the Collaroy property to himself and Sheelagh, for proper consideration or that Timothy might consider doing so. This is evidenced by what he wrote on Ex. D3, including that “the company was mine and formed by me”. In relation to Sheelagh, there is simply no evidence that she knew of any such reliance.

There is yet another reason for the Plaintiffs’ estoppel claim to fail. The thrust of Timothy’s submissions in relation to the transfer of the Collaroy property out of Mount Mill, seems to proceed upon the basis that Mount Mill transferred the Collaroy property for no consideration, when the evidence is clearly to the contrary. The contemporaneous evidence reveals that a valuation of the Collaroy property was obtained and that the purchase by Robert and Sheelagh of the Collaroy property was for the amount identified in that valuation. There was no submission that the amount was not at least equal to the market value of the Collaroy property.

Whether the repayment of the loan could, or could not, be required because of the expiration of six years from its creation is not important for the simple fact is that Robert, and Mount Mill, effectively, received what each was owed, since together he and it did not have to repay an equivalent total amount owed to Robert’s estate.

It follows that I am not satisfied that Timothy or Mount Mill suffered any detriment. Even if I were wrong in reaching this conclusion, I am not satisfied that any detriment suffered was as a consequence of reliance on the specific promise or assurance alleged by Timothy.

That Mount Mill paid, until about 1990 amounts totalling slightly more than $22,000, does not alter the position, since it is accepted that all of the shareholders of Mount Mill received the benefit of that expenditure by the continued use of the Collaroy property until about 2002. There is no suggestion that Timothy, as a director of Mount Mill, at any time, made a word of complaint about the expenditure. Again, to do so would have been futile bearing in mind the objects of Mount Mill.

The statement made by Gageler J in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 88 ALJR 552, at [150], that the detriment or harm required to ground an estoppel can be any material disadvantage but such material disadvantage must be substantial, although it need not be quantifiable in the same way as an order of damages, was repeated in Ashton v Pratt, per Bathurst CJ, at [147].

All things being considered in the present case, any expenditure by Mount Mill in the period after 1981 was not substantial and does not establish the detriment required to ground a proprietary estoppel.

In my view, Timothy and/or Mount Mill have failed to establish that he and/or it suffered any substantial detriment as a result of Robert and Sheelagh resiling from any promise or assurance said to have been given by Robert and accepted by Sheelagh, such as to give rise to the relief claimed.

Finally, when one considers all of the events, including the continued use of the Collaroy property by members of the family, including Timothy, after 1981, the events of 1996 and 1997 relating to the applications to the Rural Assistance Authority, and the transfer of Robert’s shares in Mount Mill to Timothy, it is not unconscientious for the Defendants, as executors of Sheelagh’s Will, to deny any assumption by Timothy that he would have a one third beneficial interest in the Collaroy property on the death of Sheelagh.

In summary then, I am satisfied that:

Accordingly, I do not consider the elements of equitable estoppel are established. This aspect of the Plaintiffs’ claim fails.

In the Plaintiffs’ submissions in reply, junior counsel submitted that the “constructive trust which arose in 1983 is defined by a promise”. I have earlier concluded that there was no such promise.

Also, I cannot be satisfied that the requirements of a common intention, or a common assumption as to a state of affairs, and reliance upon that intention or assumption, to Timothy’s, or Mount Mill’s, detriment has been established. It is difficult to conclude that there was any “joint relationship or endeavour” as alleged by Timothy “to use the income and profits from the farming operation they conducted to benefit themselves as well as [Gae and Kerry]”.

No evidence of any discussion involving Timothy appears in his evidence. The Memorandum and Articles of Association of Mount Mill provided for the purposes for which the income and assets of the company could be used. There is no suggestion, otherwise, of any joint relationship or endeavour.

Even if there were a joint relationship or endeavour, it is difficult to ascertain when it failed. There is no allegation of fact in the pleadings as to when, or in what circumstances, the failure of the joint relationship or endeavour is said to have occurred.

Nor am I satisfied that Mount Mill, the claimant, to the knowledge of the legal owners, Robert or Sheelagh, acted in the belief that Mount Mill would obtain an interest in the Collaroy property. After all, the promise, as alleged, did not mention Mount Mill, but only mentioned the three children of Robert and Sheelagh.

Next, it is difficult to see what property was contributed by Mount Mill on the basis and for the purposes of the relationship or endeavour that would otherwise be enjoyed by Robert and Sheelagh in circumstances in which it was not specifically intended, or provided, that they should so enjoy it. In this regard, it cannot be forgotten that Robert gave proper consideration (based upon a valuation) to Mount Mill. Any contribution to the purchase of the Collaroy property by Mount Mill (and there is no evidence that the amount advanced by Robert to enable this to occur was repaid to him) was met by the payment of the proper consideration identified in the Transfer.

In the circumstances, I am not satisfied that there was any unconscionable conduct by Robert and/or Sheelagh which would justify the imposition of a constructive trust in favour of Mount Mill.

It follows that the Plaintiffs’ claim based upon a common intention constructive trust also fails.

In these circumstances, it is unnecessary to deal with the Limitation Act defences or the defence of laches, acquiescence and delay.

For the same reasons set out above, the claim of breach of duty by Robert and Sheelagh as directors of Mount Mill fails. In particular, the transfer, by sale of the Collaroy property to Robert and Sheelagh, for market value, was not an uncommercial transaction, but one into which Mount Mill was entitled to enter. What was done was clearly within the scope of the objects of Mount Mill and within the power of Robert as its Governing Director. The unlimited extent of the powers, authorities and discretions vested in Robert as the permanent Governing Director of Mount Mill by the Articles made clear that he bore the responsibility for the total control and direction of every aspect of Mount Mill’s operations.

In addition, there was simply no evidence that it was not in Mount Mill’s best interests to sell the Collaroy property to Robert and Sheelagh. Nor was there any evidence of any advantage gained by them or any loss suffered by Mount Mill.

There was no depletion of Mount Mill’s assets since the whole of the consideration was recorded in the books and records of Mount Mill as a debt owed by Robert. That consideration was at least equal to the then market value of the Collaroy property. In those circumstances, it could hardly be found that Robert had exercised any such powers that he had for an ulterior, or impermissible, purpose.

Finally, there is nothing in the evidence which would support a finding that the sale of the Collaroy property by Mount Mill was made clandestinely. I have found that the sale was not kept concealed from Timothy. He, himself, stated in correspondence that he had been informed of it by Robert.

All of the claims by Timothy and by Mount Mill fail.

The Court orders that the further amended Statement of Claim is dismissed. The argument on the issue of costs is stood over to a suitable date unless the parties are able to reach agreement on how the costs of the proceedings are to be borne.