Wayne Terry Kerr v JP & M Kerr (Billabidgee) Pty Limited & Ors [2006] NSWSC 1044

New South Wales Supreme Court

CITATION : Wayne Terry Kerr v JP & M Kerr (Billabidgee) Pty Limited & Ors [2006] NSWSC 1044 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 24.07.06; 25.07.06; 26.07.06; 27.07.06; 28.07.06

JUDGMENT DATE : 6 October 2006

JURISDICTION : Equity Division

JUDGMENT OF : Nicholas J

DECISION : Para 77

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

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

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

FILE NUMBER(S) : SC 2802/05

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

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

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Nicholas J

6 October 2006

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