Horn v GA & RG Horn Pty Ltd [2022] NSWSC 1519

Supreme Court New South Wales

Medium Neutral Citation: Horn v GA & RG Horn Pty Ltd [2022] NSWSC 1519 Hearing dates: 12 – 16, 19 – 23 September 2022; 4 – 6 October 2022; submissions 18 and 26 October 2022 Decision date: 10 November 2022 Jurisdiction: Equity Before: Meek J Decision: Estoppel claim made out. Parties to bring in short minutes. Catchwords: ESTOPPEL — Estoppel by encouragement — estoppel by acquiescence — Farming properties held through a company — Company incorporated and initial management shares held by plaintiff's father and paternal grandfather – Plaintiff claims his father gave encouragement for plaintiff and his wife to move onto one of the properties and subsequently also farm the other property and made promises to leave the shares in the company (or the properties) to the plaintiff upon his father's death — Father makes various Wills leaving shares to plaintiff but 5 days prior to his death makes a Will leaving his estate to his wife (plaintiff's mother) — Plaintiff claims father estopped from doing so and shares held on trust for plaintiff — Mother claims plaintiff did not abide by terms of promises by failing to make payments to father and failing to continue farms as "working farms" — Estoppel case made out ESTOPPEL — Consideration of alleged conditionality of promises — Whether promises of testamentary inheritance of shares conditional upon plaintiff(s) making payments for benefit of the deceased albeit payments made to corporate entity — Whether promises conditional upon plaintiff(s) continuing to work farms for the remainder of deceased's life — Effect of deceased's post promise intervention suggesting alternative use of property for members of plaintiffs' family ESTOPPEL — Estoppel by encouragement — estoppel by acquiescence — Requirements — deceased aware of intended reliance — Life-changing decisions with practically irreversible consequences of a profoundly personal nature beyond the measure of money — Application of principle in Donis v Donis (2017) 19 VR 577; [2007] VSCA 89 — Substantial detrimental reliance established TRUSTS — Time from which a constructive trust arises — Time of the conduct which gives rise to the trust occurred is generally when a plaintiff acts in reliance on the promise or expectation such that it later becomes unconscionable for the promisor to resile EQUITY — Equitable remedies — Defences to specific performance — Unclean hands — consideration of onus of proof — Consideration of operation of maxim used as a defence against a party seeking equitable relief based on estoppel PAYMENT — Consideration of payment obligation being waived or not pressed LOANS — Onus of proof — Absence of evidence bearing directly on gifting of monies — Whether loan can be inferred from book entries without movement of money — Requirement for underlying agreement — Consideration of Manzi v Smith (1975) 132 CLR 671; [1975] HCA 35 — Whether inference of agreement open — Whether within the scope of authority of accountant to characterise payment as a loan and prepare company financial statements and tax returns accordingly GIFTS — Absence of evidence bearing directly on gifting of monies — Assessment of evidence — Gift established — In any event arguably a presumption of advancement arises PRACTICE — Pleadings — Pleading of estoppel claims — Test of pleading is not greatest fidelity to facts but materiality of facts — Pleading events or contingencies need not be stated if they are not alleged to affect a plaintiff's right or title or claim to relief CIVIL PROCEDURE — Subpoenas — Privacy and access issues — If parties have concerns regarding privacy but do not have technical capacity to address that they should actively seek the assistance of their legal representatives or other appropriate professionals who can assist them to resolve production issues in a way that fairly enables production of relevant material but otherwise preserves the integrity of matters that are properly the subject of privacy concerns EVIDENCE — Photographic evidence — Admissibility — No requirement to prove who took the photograph — Photograph admissible where a witness is able to state the photograph accurately depicts what is shown of the relevant scene, item or facts — Nonetheless distortion of appearance may be ground to make a photograph inadmissible or use unfair EVIDENCE — Self-incrimination — Informing witnesses of rights — Obligation under s 132 Evidence Act 1995 (NSW) regarding objections pursuant to s 132 Evidence Act to answering questions DECLARATORY RELIEF — Conditioning relief on plaintiffs not being permitted to enforce claim against the estate in respect of a "director's loan" recorded in company accounts — Further nunc pro tunc declaration sought — Declined on the facts TAXES AND DUTIES — NSW company shares — whether dutiable property — Marketable securities not dutiable property — Court otherwise will not pre-empt what duty or tax liability may flow from findings regarding loan and gift transactions ANCILLARY RELIEF — Order sought empowering Registrar to execute transfer documents — Court may condition orders with an "alternative execution" provision if circumstances demonstrate probable futility of signing request — Probable futility not demonstrated ORDERS — Application for referral of matters to Regulator — Basis on which referral is made discussed — Whether appropriate in the circumstances — Papers not referred Legislation Cited: Civil Procedure Act 2005 (NSW) Crimes Act 1900 (NSW) Corporations Act 2001 (Cth) Duties Act 1997 (NSW) Evidence Act 1995 (NSW) Income Tax Assessment Act 1936 (Cth) Income Tax Assessment Act 1997 (Cth) Succession Act 2006 (NSW) Supreme Court Act 1970 (NSW) Taxation Administration Act 1953 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 AG Australia Holdings Ltd v Burton (2002) 58 NSWLR 464; [2002] NSWSC 170 Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 Ancient Order of Foresters in Victoria Friendly Society Ltd v Life Plan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Associated Food v Baxter [1999] NSWSC 236 Aviani v Loh (No 2) [2022] NSWSC 1148 Ballenden v Bryant (No 2) [2013] NSWSC 454 Ballenden v Bryant [2012] NSWSC 1471 Bassett v Cameron [2021] NSWSC 207 Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 Boone v Mitchell (1822) 1 B&C 18 Brown v Barber [2020] WASC 84 BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd [2022] NSWCA 82 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344; [1956] HCA 77 Commonwealth Bank of Australia v Gaszewski [2006] NSWSC 772 Commonwealth of Australia v Verwayen (1990) 170 CLR 394; [1990] HCA 39 Coshott v Sakic (1998) 44 NSWLR 667 Currie v Dempsey [1967] 2 NSWR 532 D Capital 2 Pty Ltd v Western (No 2) [2022] NSWSC 1283 Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70 De Vries v Timbercorp Finance Pty Ltd (in liq) [2021] VSCA 265 Delaforce v Simpson–Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 Di Lorenzo Ceramics Pty Ltd v Federal Commissioner of Taxation (2007) 161 FCR 198; [2007] FCA 1006 Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 E Co [a pseudonym] v Q [a pseudonym] (No 4) [2019] NSWSC 429 Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599 Ermogenous v Greek Orthodox Community (2002) 209 CLR 95; [2002] HCA 8 Eyles v Ellis (1827) 4 Bing 112; 130 ER 710 Federal Commissioner of Taxation v Dixon (1952) 86 CLR 540; [1952] HCA 65 Federal Commissioner of Taxation v Snowden & Wilson Pty Ltd (1958) 99 CLR 431; [1958] HCA 23 Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Gillett v Holt [2001] Ch 210 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Grant v Roberts [2019] NSWSC 843 Griffiths atf the Griffiths HWL Practice Trust v Martinez atf the Martinez HWL Practice Trust as representative of the partners trading as HWL Ebsworth Lawyers [2019] NSWSC 664 Guest v Guest [2022] UKSC 27 Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634; [1946] HCA 34 Hendersons Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539; [2011] VSCA 167 Heydon v Perpetual Executors Trustees & Agency Co (WA) Ltd (1930) 45 CLR 111; [1930] HCA 26 Hill v Dunn [2019] NSWSC 419 Hypec v Mead [2004] NSWCA 221 In the Marriage of Malpass & Mayson [2000] FamCA 1253; (2000) 27 Fam LR 288 In the matter of GA and RG Horn Pty Ltd [2021] NSWSC 210 In the matter of Hillsea Pty Ltd [2019] NSWSC 1152 In the matter of Hoju Jobs Pty Ltd [2021] NSWSC 302 In the matter of Opal Producers Australia Limited (ACN 112 322 442) [2011] NSWSC 689 In the matter of York Street Mezzanine Pty Ltd (in liq) (2007) 162 FCR 358; [2007] FCA 922 ING Bank Australia Ltd v Bucknell [2016] NSWSC 1049 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kemi v Wood [2013] NSWSC 180 Keskin v Keskin [2019] FamCA 384 Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666 Manzi v Smith (1975) 132 CLR 671; [1975] HCA 35 McNab v Graham (2017) 53 VR 311; [2017] VSCA 352 Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWSC 285 Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587; (2012) 16 BPR 31,011 Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 Ogilvie v Littleboy (1897) 13 TLR 399 P'Auer AG v Polybuild Technologies International Pty Ltd [2015] VSCA 42 Page v Vanker [1990] NSWCA 42 Papas v Co [2018] NSWSC 1404 Parsons v Bain (2001) 109 FCR 120; [2001] FCA 376 Paycorp Payment Solutions Pty Ltd v Chai (No 3) [2011] NSWSC 1632 Paycorp Payment Solutions Pty Ltd v Chai [2011] NSWSC 1290 Potter v Potter [2003] 3 NZLR 145 Priestley v Priestley [2017] NSWCA 155 R v Ahmed [2001] NSWCCA 450 Rafidi v Commonwealth Bank of Australia Ltd [2017] NSWCA 96 Rafidi v Commonwealth Bank of Australia Ltd [2017] NSWCA 96 Re Harmony and Montague Tin and Copper Mining Company (Spargo's Case) (1873) 8 Ch App 407 RHG Mortgage Ltd v Rosario Ianni [2015] NSWCA 56 Ronpibon Tin NL v Federal Commissioner of Taxation (1949) 78 CLR 47; [1949] HCA 15 Savage v Norton [1908] 1 Ch 290 Schmierer v Taouk [2004] NSWSC 345; (2004) 207 ALR 301 Shymko v Lach [2022] NSWSC 1096 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Steiner v Strang [2016] NSWSC 395 Stone v Stone [2019] NSWSC 233 Taylor v Chief Constable of Cheshire [1986] 1 WLR 1479 Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242 Voce v Deloraine [2012] NSWSC 1187 Vukic v Grbin [2006] NSWSC 41 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Wantagong Farms Pty Ltd as Trustee for the Bulle Family Trust v Bulle [2015] NSWSC 1603 Watson v Foxman (1995) 49 NSWLR 315 Wheatley v Salmon [2022] NSWSC 395 Ying v Song [2010] NSWSC 1500 Texts Cited: D B Casson and I H Dennis, Odgers' Principles of Pleading and Practice in Civil Actions in the High Court of Justice (22nd ed, 1981, Stevens & Sons) Halsbury's Laws of Australia (online) J D Heydon, M J Leeming and P G Turner Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014, LexisNexis) Category: Principal judgment Parties: Michael George Horn (First Plaintiff) Adele Ruth Horn (Second Plaintiff) GA & RG Horn Pty Ltd (First Defendant) Barbara Constance Horn (Second Defendant) Representation: Counsel: C Mantziaris / I S Young (6 October 2022) / A K Flecknoe-Brown (12 September 2022) (Plaintiffs) N Simpson / D Yazdani / M Bennett (26 October 2022) (Defendants) Solicitors: Arnold Lawyers (Plaintiffs) Tranter Lawyers (Defendants) File Number(s): 2021/75707