Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Waddell v Waddell [2012] NSWCA 214
• Hearing dates: 27 June 2012
• Decision date: 19 July 2012
• Before: Allsop P at [1]; Campbell JA at [2]; Sackville AJA at [72]

Decision

1. Appeal dismissed.

2. The Appellant to pay the costs of the Respondent and in that regard to have an indemnity out of the estate of the deceased.

3. The Appellant's costs on the indemnity basis be paid out of the estate of the deceased.

4. The Respondent's share of residue should not bear any part of the estate's liability in respect of the Respondent's costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: ESTOPPEL - equitable estoppel - creation or encouragement of assumption - respondent left school at age of 15 to work in father's orchard business - business conducted partly on land owned by respondent's grandfather - representation made by grandfather that his land would pass to respondent, but would first pass to the respondent's father so property could be worked as a whole - respondent continued to work in business after grandfather's death - representation that will had been made leaving land to respondent, or that respondent would inherit the land confirmed by father over a course of years to numerous persons in family and community who interacted regularly with respondent - respondent continued to work on farm - evidence given that this deliberate choice of a hard career was at least in part motivated by his assumption of the specific devise - the father's will was at a much later date changed so as to no longer specifically devise portion of property to respondent - action in estoppel brought against estate after death of father to enforce reliance on representations made during lifetime - representations and reliance established and estate estopped - appeal against decision below dismissed; ESTOPPEL - equitable estoppel - detriment - establishing detriment does not require the person relying on the representation to establish that he or she is "worse off" as a result of that reliance - the relevant detriment is that which is brought about by the failure to fulfil a representation where the person has made a choice that would not have been made had it not been for the representation; ESTOPPEL - equitable estoppel - representations - no error in finding representation was conditional on continuance of circumstances that representor and representee both knew of; ESTOPPEL - equitable estoppel - representations - evidence that testamentary intention was not seen as a proper subject of discussion between father and respondent - deceased made much more direct representations to third parties and other members of family over a number of years that property would be left to respondent - no error by trial judge in finding that deceased was aware respondent knew of those representations and did nothing to dissuade the respondent from believing them to be the truth - evidence of oblique assurance of intention to leave specific portion of property to respondent
• Cases Cited: Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483; Evans v Evans [2011] NSWCA 92; Kenneth Walter Waddell v Allan William Waddell as executor of the Estate of the late Ronald John Waddell [2011] NSWSC 1174; Thorner v Major [2009] UKHL 18; (2009) 1 WLR 776; Walton v Walton [1994] (Court of Appeal of England and Wales, 14 April 1994, unreported); Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387
• Category: Principal judgment
• Parties: Allan William Waddell (Appellant); Kenneth Walter Waddell (Respondent)
• Representation: Counsel: M Willmott SC; A Hill (Appellant); L Ellison SC; H Bennett (Respondent); Solicitors: Messrs Anderson Boemi (Appellant); J Francis Lawyers Pty Ltd (Respondent)
• File Number(s): 2012/35890

Decision under appeal

• Citation: Kenneth Walter Waddell v Allan William Waddell as executor of the Estate of the late Ronald John Waddell [2011] NSWSC 1174
• Date of Decision: 2011-11-03 00:00:00
• Before: Slattery J
• File Number(s): 2010/158898

Judgment

1 ALLSOP P: I agree with Campbell JA.

2 CAMPBELL JA:

Nature of the Case

3 The Appellant, Allan William Waddell, is the eldest son of the late Ronald John Waddell ("Ron"), and executor of his estate. Ron made his last Will on 11 November 2005. In the events that happened, it left a pecuniary legacy to a Ms Tinkler, a foster child who Ron and his wife had brought up, and divided the residue equally between Ron's four children.

4 One of the assets of Ron's estate was a 10 acre block of land at Galston.

5 The Respondent to the appeal is Ron's second son, Kenneth Waddell ("Ken"). He brought proceedings in the Equity Division of the Supreme Court contending that he was entitled to the 10 acre block by reason of an estoppel based upon representations to that effect made by Ron during his lifetime. Slattery J upheld that contention: Kenneth Walter Waddell v Allan William Waddell as executor of the Estate of the late Ronald John Waddell [2011] NSWSC 1174. The Appellant appeals against that decision. The hearing of the appeal was expedited.

Background Facts

6 The Notice of Appeal does not challenge any of the primary facts that were found by the primary judge.

7 For simplicity, I shall refer to the various members of the Waddell family by their first names, without intending any disrespect in doing so.

8 Ron and his wife Vera had four children. They were the Appellant, known as Bill, born in 1942, Ken, who was born in 1944, Len, born in 1946, and Diane, born in 1953.

9 Ron's father, William Waddell ("William"), had owned the 10 acre block until his death in January 1981. This piece of land was sometimes referred to as "Grandpa's Block". For many years prior to William's death, Ron had owned a block of 46 acres that was immediately adjacent to the 10 acre block. Ron conducted an orchard on the properties, working the two blocks together as though there were a single property.

10 Ken left school in November 1959 at the age of 15, to work on his father's farm. He has worked there ever since. Upon leaving school, the other three of Ron's children pursued careers other than full-time work on the farm, though from time to time various of them assisted with work there until their early adulthood.

11 William came to live on the 10 acre block in 1963. From that time, Ken had close contact with his grandfather. The judge found:

"During his lifetime William Waddell encouraged Ken to stay on the farm. It was William's direct encouragement along with Ken's sense of duty that kept Ken on the farm until William's death in 1981. About 10 years before William's death I accept Ken's evidence that William said to him words to the effect 'Ken, I really want you to have my property but I think we should leave it to Ron first so that he can continue to farm the property as a whole.' William's statements kept Ken interested in staying on the farm in the long term but Ron did not repeat or reinforce them before William died in 1981."

12 When William died in January 1981, his last Will left his entire estate to Ron.

Ron's 1981 Will and his Statements About It

13 On 16 July 1981, Ron made a Will that remained unchanged until 11 November 2005. He appointed Vera as sole executrix, and gave her all his property. If she predeceased him or failed to survive him by 30 days, he appointed Bill and Ken as executors, there was a specific gift of the 10 acre block to Ken, and the residue was to be divided between Ron's four children and Ms Tinkler in unequal shares. In particular, Ken was to receive one-third of the residue. As it happened, Vera predeceased Ron.

14 In 1981, after Ron had made the 1981 Will, Bill said to Ken:

"Dad got the solicitor to come out to the farm and Dad asked me to be present so I was. You're definitely getting grandpa's 10 acres and you're getting one-third of the rest of the property."

15 The judge found:

"This seems to have been quite a solemn statement. Bill had been present when the 1981 will was made. By saying this to Ken, Bill was deliberately conveying Ron's 1981 testamentary intentions to Ken. It is unclear on the evidence whether Ron specifically asked Bill to convey this information to Ken. But the evidence of later statements made in Ron's presence and that he conveyed to third parties who he (Ron) knew had contact with Ken, means in my view that he must have expected this information to be conveyed to Ken and he must have known soon after it was conveyed that it had been conveyed."

16 The judge found that Ron "was a man with an open and friendly nature ... when Ron found himself with a person ready to talk he enjoyed what would be commonly called 'a good yarn'." Consistent with his character, Ron spoke about his testamentary intentions with various people outside the family. Four of them gave evidence and were cross-examined. The judge accepted their evidence. He found:

"The number of persons with whom I find that he shared such information is an indication, in my view that he had strong and well-formed testamentary intentions."

17 Mrs Iris Black knew the Waddell family from 1966. In about 1976, William said to her:

"I would like my property to go to Ron after I pass away but then my property to go [to] Ken."

18 In about 1980, Ron said to her:

"Grandpa's property will be left to me but I will eventually leave grandpa's property to Ken, because that's what grandpa wanted."

19 Mrs Black, and various friends including Ron, would go to the Dural Country Club "every Friday night" in the early 1990s. Her evidence was that at those occasions:

"... Ron would always say, 'I've got no problems with what I want to do because Ken is entitled to 10 acres of grandpa's and part of the farm because that was always grandpa's wish that Ken have that 10 acres after I passed away."

20 On numerous occasions, Ron said to her:

"Ken is entitled to more than the other family because he came to the farm at the age of 15 and I think he should get more than the rest of family."

21 Mr John Millauro is a fruit salesman who was involved in the selling of the Waddell family's fruit at Flemington Markets. He visited the Waddell family about five times a week between 1975 and when Ron and Vera passed away in 2009. In about 1983 he had a conversation with Ron:

"Ron Waddell: I have a bloke who's interested, wants to buy the place. He's got 9 kids, loves the farm, wants to buy it.

Mr Millauro: Ron, at the end of the day, you've got 5 kids, you love the farm, where are you going to go? Not only that, Ken knows the farm and he'll look after it for you.

Ron Waddell: I promised Ken the 10 acres up the top for staying on the farm with me."

22 In mid-1985, Ron said to him:

"I promised that 10 acres to Ken because he stayed on with me."

23 In about 1988, Ron said to him:

"I've promised that 10 acres to Ken for being on the farm with me and staying on the farm and working."

24 Mr Gerard Hill was a plumber who regularly did plumbing and drainage work at the Waddell's orchard. In 1995, Mr Hill was requested to do some plumbing work on the fibro house situated on the 10 acre lot. In the course of Ron and Mr Hill inspecting a pipe that was leaking and needed repair, the following conversation occurred:

"Ron Waddell: What do we do about this?

Mr Hill: You'll have to renew the whole lot.

Ron Waddell: Bloody Ken should be paying for this one.

Mr Hill: Why?

Ron Waddell: Because when I die, this is his joint,

Mr Hill: How come it's his.

Ron Waddell: Because I promised it to him as he's been with me from the beginning and without Ken I would have had to shut shop years earlier because I can't do this work any more."

25 Later in 1995, Mr Hill, Ron and Ken were on the 10 acre lot, inspecting a blocked sewer. The following conversation occurred:

"Mr Hill: Well, it's going to cost you more money mate.

Ron Waddell: Yeah, I know that.

Mr Hill: Well, do you want me to bill Ken?

Ken Waddell: No, it's not mine yet, he's [referring to Ron] not dead yet.

Mr Hill: To make it cheaper, let's get Ronnie Keel up to dig the trench that way you can get some of the rent he owes you.

Ron Waddell: Beauty"

26 Mr Harold Cranston was an old friend of Ron, in regular contact with him. He recalled a conversation with Ron in the mid-1980s. Upon asking Ron how Ron's family were going, he received the following reply:

"Ron Waddell: It's hard times, well, they're very hard times, but you've got to work through them.

Mr Cranston: Well, how are all your lot going?

Ron Waddell: They're all doing pretty well, Len's with Qantas, he's doing extremely well, Billy is with Johnny Allan, [he's] liking that and doing well, Ken is helping Vera and me on the farm, we couldn't do without him. As far as we're concerned, we're doing well but the old man took a particular interest in Ken and wants Ken to have the block on the hill."

27 The "block on the hill" was the 10 acre block. Mr Cranston and Ron had conversations to similar effect on a further five or six occasions from the mid-1980s to the year 2000.

28 Affidavits were read from two witnesses who were not cross-examined because one had died and the other was ill. The primary judge accepted their evidence, though he accorded it less weight than that of witnesses who had been cross-examined. One of them, Mr Robert Tunks, gave evidence of conversations with Ron in the early 1990s, about 1995 and about 1997, in each of which Ron said that Ken was going to get the 10 acre block. In the 1997 conversation, Ron said that Ken was going to get the 10 acres "for his loyalty and the work that he's done for many years."

29 Mrs Dorothy Keel rented a property on the Waddell family farm in about 1980, and worked on the farm periodically. She gave evidence of an occasion in 1995 when she asked Bill what would happen after Ron's death. Bill told her:

"He's covered all bases and made out a will and I'm a witness to the will...and Ken gets Grandpa's 10 acres and the rest of us are well looked after. For all that Ken's put into the farm, he gets the majority of the estate."

Ken's Knowledge of Ron's 1981 Testamentary Dispositions

30 Ken's information about Ron's testamentary dispositions did not only come from the conversation he had with Bill soon after the July 1981 Will was made ([14] above). Over the years that Ken and Bill were working on the property together, they often had conversations in which Bill would say "you'll get grandpa's block plus a third of the balance". On several occasions in the 1990s, Mr Millauro told Ken:

"Your dad said to me that he's going to leave you the 10 acres for your loyalty and service and all the work that you've done."

31 In the 1990s Mr Tunks said to him: "Your father said to me you'll get grandpa's block." He also heard the information from other people who he could not specifically identify. The 1995 conversation between Ken, Ron and Mr Hill ([25] above) is explicable only if Ken knew of Ron's intended testamentary dispositions and had them in mind at the time of the conversation.

Work on the Farm

32 When Ken first worked on the farm he was paid no wage at all. Instead, he took small amounts of money to meet particular needs such as fuel and food. He married in April 1967, after which "income became more regular but still wasn't enough to get by". He made extra money by running a roadside stall with his mother. Even by 1981, the farm was not generating a sufficient income to employ someone to work the hours that Ken worked.

33 There is no dispute that Ken worked hard on the farm. The judge found that he "was working on the farm approximately a 60 hour week (7am - 5pm six days a week) plus other duties which became especially intense during the picking season." There is undisputed evidence that Ron realised the amount of work that Ken was doing, regarded the work as useful and effective, and approved of the way Ken worked. He made remarks to that effect to various friends.

34 Vera's brother, Dave Johnson, had for many years carried out work on the orchard for wages and the right to occupy a cottage. However, he became ill, and in 1986 he retired. The judge found:

"When Mr Johnson retired the family needed to restructure the working arrangements. They could not afford to employ someone else full time. So Bill was approached to assist in running the farm."

35 Though Bill had not been involved in regular daily work at the orchard prior to 1986, on 1 November 1986 a partnership agreement was entered between Ron, Bill and Ken concerning the running of the orchard business. In 1987, Bill started working on the farm on a regular basis. The partnership agreement had provision for the partners being paid a weekly salary. Initially a salary of $1,000 per month was paid to each partner. It was incrementally adjusted upwards thereafter, until by the time Ron died in 2009 a salary of $2,400 per month was being paid to each partner. The judgment says that these salaries were respectively $1000 per week and $2400 per week, but that does not accord with the evidence and must be a slip.

2005 Events Re Ron's Will

36 The only time there was a direct conversation between Ron and Ken about Ron's testamentary intentions was in April 2005. The following conversation occurred:

"Ken Waddell: Dad, I feel as if maybe Bill has not been properly looked after as he's given up his career to assist us on the farm.

Ron Waddell: In what way?

Ken Wadell: I know that you have left him in the same position as Lenard I know that you've left me Grandpa's Block and one-third of the balance. I would be prepared to give up part of my share to assist Bill.

Ron Waddell: Whatever you reckon.

Ken Waddell: That will be fine with me."

37 Mr Joseph Francis is a solicitor who had acted for members of the Waddell family for many years. He saw Ron and Vera together on 29 June 2005. (The judgment at [80] puts that conversation as occurring in January 2005, but that is a clear typographical error.) The following conversation occurred:

"Joe: Ron, what do you want to do in your Will?

Ron: I want to leave the 10 acres to Ken.

Joe: When you say the 10 acres, do you mean [the 10 acre block]?

Ron: Yes.

Joe: I'm concerned because the provision in the old Will leaves [the 10 acre block] to Vera in the first instance and not Ken.

Vera: I don't want that property, I just want 391 Galston Road.

Ron: [The 10 acre block] is for Ken because he's always worked on the farm."

38 In that conversation Ron said at least twice 'the 10 acres is for Ken because he has always worked the farm". Immediately after the meeting Mr Francis made a typed file note that summarised the addresses and title references of various parcels of real estate that Ron owned. Concerning one address and title reference it said:

"XXX-XXX Galston Road - Volume XXXX Folio XXX, Lot 1 in DP XXXXXX - 10 Acres (This is the property that has always been promised by Ron to Ken) in appreciation for Ken's loyalty and efforts in working the farm for so many years."

39 Ron did not have any further discussion with Mr Francis about making a Will. He made the Will dated 11 November 2005 with the assistance of a different solicitor. Despite the communication recorded by Mr Francis, the Will did not specifically devise the 10 acre block to Ken.

The Primary Judge's Reasons

40 The judge adopted the enumeration of the requirements for an equitable estoppel that paraphrases the requirements that Brennan J articulated in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428-29. The judge's paraphrase is:

"(1) the plaintiff assumed or expected that a particular legal relationship would exist with the defendant and the defendant would not be free to withdraw from that relationship, (2) the defendant induced the plaintiff to adopt the assumption or expectation, (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation, (4) the defendant knew or intended him to do so, (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled, and (6) the defendant has failed to act to avoid that detriment:"

There is no dispute on the appeal about the correctness of this statement of the law.

41 The judge made the following findings:

"I accept Ken's evidence that whatever be the situation before William's death in 1981 the reason that he stayed on the farm was what Bill said to him about the 1981 will. He says and I accept that he felt that for the family farm to survive that he had to stay on the property. This was because the farm was not generating enough income to employ someone. So Ken was required to work in order to maintain the farm's productivity. Ken says, and I accept, that he 'was not happy working such long hours' but that he felt an obligation to see the family farm survive. He also had the tangible incentive that Bill had communicated to him that the 10 acre block had been promised to him and that he would be looked after in Ron's will, among other things in relation to that block being transferred to him. I accept that Ken was also motivated by the Waddell family tradition to maintain the family farm. But in my view, Bill's communication to Ken about the 1981 will was and remained a powerful, though a not much articulated, influence on Ken's career choice to stay on the farm and work there for his father and then after 1986 to join and stay in partnership with Bill and his father."

42 In discussing the circumstances in which the partnership was entered in 1986, the judge found:

"On the evidence there does not seem to have ever been a question about whether or not Ken would enter into the partnership. It seemed to have just been assumed among all the partners that that is what Ken would do, because it involved staying on the property and adjusting himself to the new legal arrangements that were necessary after Mr Johnston's retirement. The absence of any discussion about alternatives for Ken at the time the partnership was entered reinforces the inference that Ken had already made a choice to stay on the farm to assist his father when he was aware of the 1981 will. Although there was no clear evidence before the Court as to the comparative financial advantages or disadvantages for Ken of employment versus partnership, his involvement in the partnership entrenched from 1986 onwards, longstanding arrangements by which he had never, in the time he had worked on the farm, been paid ordinary employee benefits such as overtime, long service leave, annual leave or superannuation. The partnership was the new legal structure under which he could stay on the property and do without these benefits. Len says that he benefited financially from higher wages. But even if this is right, (and the evidence does not allow me to decide it either way), the loss of the enforced tax effective savings from superannuation through the way [he] worked and was paid [was] a significant detriment.

This structure had other long term financial negative effects upon him. For example Ken's evidence, which I accept, was that he had greater difficulty in demonstrating to financial institutions that he had a reliable source of income from the partnership, than he otherwise would have had as an employee. This limited his capacity to borrow money for investment purposes because of his difficulty in demonstrating serviceability of his financial obligations. This in turn limited his capacity to generate wealth in the longer term."

43 After recounting Mr Millauro's evidence of Ron saying in 1985 "I promised that 10 acres to Ken because he stayed on with me", the judge found that that evidence was:

"... an important basis to infer that Ron was conscious that by staying and working on the farm Ken was relying upon and acting to his (Ken's) detriment upon Ron's promise of the 10 acres."

44 Concerning the first of the conversations between Ron and Mr Hill in 1995 ([24] above) the judge found that it:

"... does not on its own go so far as to confirm that Ron felt under an obligation not to change his will but that inference may be drawn from other evidence as is explained later in these reasons, including the evidence that follows of another conversation between Ron, Ken and Mr Hill a few months later."

45 Concerning the subsequent conversation between Ron, Ken and Mr Hill in 1995 ([25] above) the judge observed that Ken's reply showed that he was conscious that Ron had already made promises of giving him the 10 acres, and Ron's absence of dissent shows that he "must have appreciated what it implied about Ken's state of mind about his [Ron's] testamentary intentions". The judge inferred from it that as at about mid-1995:

"(1) that Ken had for some time expected to receive the 10 acre property under Ron's will after Ron's death; that (2) Ron had become aware of Ken's existing expectation, however it had been formed; that (3) Ron did not see fit to correct any part of Ken's articulated expectations; and that (4) Ken's expectations and Ron's acknowledgment of them were of a sufficiently well formed character that they could be shared outside the family."

46 As mentioned earlier ([15] above) the judge found that in 1981 Ron must have expected that information about his Will would be conveyed to Ken, and must have known soon after it was conveyed that it had been conveyed.

47 Concerning information about Ron's intention to leave Ken the 10 acre block that came to Ken from sources other than Bill the judge found:

"Ron's willingness to have such a conversation outside the family with friends such as Mr Cranston shows that his intentions were sufficiently firm that they could be made semi-public without any concern on his part about the embarrassment that might follow from going back on them. If Ron was at all tentative about the idea of Ken acting on the assumption that he (Ken) would receive the 10 acre block, then it is difficult to see why Ron would share this information so widely." [69]

"... the range and number of the witnesses to whom he stated his testamentary intentions is a basis, to infer that Ron must have anticipated that at least some of them would pass the information on to Ken." [73]

48 The judge made some specific findings about reliance. Two of them have been set out at [41] and [43] above. He also made other findings:

"One of the reasons in my view that kept Ken working these long hours was what Bill had told him about the 1981 will." [39]

"The level of Ken's commitment is partly to be explained by his own natural inclination to farming. But I accept his evidence that the level of his time commitment on the property was also the result of his relying upon his assumption about inheriting the 10 acre block." [65]

49 The judge's ultimate findings (at [99]) were:

"The pleaded representation here is that if Ken continued to attend at the property and devote himself to the maintenance and improvement of it that Ron would structure his affairs, including by the making of a will such that upon his death the 10 acre block would pass to Ken absolutely. In my view on the findings that I have made this estoppel is made out. The plaintiff did hold that assumption or expectation. It was induced by Ron by a combination of the direct and indirect methods that the Court has found, by making statements to third parties that he anticipated would come to Ken's attention and when he was made aware that the information had come to Ken's attention he did not correct it, especially as late as 2005 when it was discussed directly between Ken and Ron. In my view Ken did act in reliance upon that assumption or expectation and I infer that Ron intended him to do so. It seems to me that the detriment suffered by Ken is irreversible unless the expectation is fulfilled. A continued career choice since 1981 has resulted from Ken's adoption of the assumption or expectation. The detriment in this case is the failure to convey the 10 acre block to Ken. This can only be avoided by ordering that to occur. It does not matter that the 1981 will gave Ron's estate to Vera as she pre-deceased him."

The Appellant's Submissions

Pleaded Representation Not Made Out?

50 Mr Willmott SC, counsel for the Appellant, reminded us that the pleaded representation, that the judge found had been made out, is a conditional one. It is that if Ken continued to attend at the property and devote himself to its maintenance and improvement, Ron would cause the 10 acre block to pass to Ken upon Ron's death. Mr Willmott submits, correctly, that all the statements about his testamentary intentions that Ron made took a different form. Some of them were, in substance, that Ken was going to get the property under Ron's Will (with no mention of a condition, or a reason for making the gift). Some of them were, in substance, that Ken would get the property under Ron's Will because of work that Ken had done in the past. He submits that the judge was not justified in finding that the pleaded representation was made out.

51 I do not accept that submission. No submission had been made to the judge below that the conditionality of the pleaded representation was of any significance. That may explain why no part of the judgment below specifically considers what, if any, significance attaches to the pleaded representation being a conditional one. However, the judge at [99] of the judgment ([49] above) made a finding that the plaintiff held an assumption or expectation that was conditional upon him continuing to attend to the property and devote himself to its maintenance and improvement.

52 In my view, it was open to the judge to come to that view. By 1981, Ken had been working on the property for 21 years, without significant reward. There was uncontested evidence that at that time the farm was not generating a sufficient income to employ someone to work the hours that Ken worked. It appears from a note made by Mr Frances that Ron was 85 in 2005, so in 1981 he would have been 61. In 1981 the years in which he would be able to do the heavy work associated with being an orchardist were limited. In 1995, Ron said to Mr Hill "without Ken I would have had to shut shop years earlier because I can't do this work any more". The 1981 Will was made, and Bill told Ken about its provisions, in a context where Ron, Ken and Bill would all have been assuming that Ken would remain working on the farm. It was open to the judge to find that any representation that Ron made about Ken getting the farm could not be taken as continuing to apply if there was the fundamental change of circumstances that would be involved in Ken ceasing to work diligently at maintaining and improving the property.

53 It is no novelty that a representation upon which an estoppel case is founded is subject to limitations or conditions that arise by implication from the circumstances in which the representation is made. For example, Thorner v Major [2009] UKHL 18; (2009) 1 WLR 776 concerned a farmer who had represented that his younger relative would be left his farm. They both knew that the identity of the fields that made up the farm had fluctuated over the years. Lord Scott of Foscote at [20] was of the view that the farmer would not have been acting in a way that was contrary to his equitable obligations if it was necessary for all or part of the farm to be sold in his lifetime to meet his own medical expenses or to fund his needs in old age. Lord Walker of Gestingthorpe at [62] and Lord Neuberger of Abbotsbury at [95] regarded the subject matter of the representation as concerning whatever the farm consisted of at the time of the farmer's death.

54 In any event, whether the representation was a conditional one is of no practical importance for the outcome of the case. There is the authority of Lord Walker in Thorner v Major at [57], Lord Neuberger in Thorner at [101], Hoffmann LJ in Walton v Walton [1994] (Court of Appeal of England and Wales, 14 April 1994, unreported) and this Court in Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 at [81] and Evans v Evans [2011] NSWCA 92 at [108] for the proposition that:

"... equitable estoppel [by contrast with contract] ... does not look forward into the future [it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept."

55 In fact, Ken did keep on working on the farm. Thus, whether or not the representation was conditional upon Ken keeping on working there, the assumption or expectation that it generated was not fulfilled by Ron's 2005 Will.

Erroneous Finding of Reliance?

56 Mr Willmott submits that the judge was mistaken in finding that Ken relied on his knowledge of Ron's testamentary intentions concerning the 10 acre block. As I understand the submission, it is that Ken was aware, from conversations with his William, that William wanted him to have the block, that Ken had already worked on the farm for many years with no promise of eventually receiving the block, and that his knowledge of Ron's planned gift to him of the block did not alter his conduct. Mr Willmott points to a passage of cross-examination dealing with the situation as at 1981:

"Q. You had been there for 22 years?

A. That's right.

Q. You say that when you were told that in the Will your father had left you the 10-acre block that changed your mind about staying on the farm?

A. Yes.

Q. When did you intend to leave?

A. I didn't have any intention, definite intentions to leave but I guess the pressure would have came on that I just would have been forced off the land.

Q. But you had no intention of leaving the property when you were told about what was in your father's Will, did you?

A. Not to my recollection, I didn't, no, not at that time.

57 However, there was also affidavit evidence from Ken about his state of mind after being told of the gift in Ron's Will:

"Although I was not happy working such long hours, I felt an obligation to see the family farm survive. I also felt a strong incentive knowing that Grandpa's Block was promised to me and that I would be looked after in my father's Will. I also felt obliged to continue the family farm tradition for many years."

58 As well, Ken's cross-examination included:

"Q. When you say in your first affidavit that in 1981 when you first heard ... in about July 1981, you remained on the farm, as I understand your evidence, because you were promised the 10-acre block?

A. That's right.

Q. You were going to remain on the farm anyway, weren't you?

A. Not without the 10-acre block, not without some sort of incentive. It was-

...

Q. Sir, I am going to suggest to you that when you talk about wanting to remain on the farm, as it were, because of what was said to you in 1981, that is just a recent invention. You never intended to rely upon that at all?

A. Incorrect. I did intend to rely on that.

Q. When?

A. When I found out that it was available to me and that was in 1981.

Q. But nothing changed. You were remaining on the farm and you continued to remain on the farm?

A. Knowing that I was going to get the 10 acres."

59 The judge was in no way critical of Ken's credibility as a witness. In light of that evidence, this Court cannot find that the judge was mistaken in holding that Ken relied on his assumption or expectation that he would receive the 10 acre block.

Incorrect Finding of Ron Inducing Ken's Assumption?

60 Mr Willmott accepts that Ken had the belief that he would receive the 10 acre block, but submits that Ron's words or action did not induce Ken to have that belief. One basis for this submission is that Ken already understood from his grandfather, long before 1981, that he was to get the block, and nothing that Ron said or did changed that belief.

61 I do not accept that interpretation of the facts. Ken was aware, for years before William's death, of William's wish that Ken ultimately have the property, but when William left the property to Ron (as Ken was aware he planned to) that wish would become reality only if Ron carried it through. Bill's communication to Ken in 1981 of the terms of the Will that Ron had made provided a basis, that otherwise would have been lacking, for Ken to assume or expect that Ron would leave him the 10 acre block by Will.

62 There is a second basis upon which Mr Willmott submits the judge's finding of inducement is erroneous. He submits, correctly, that it was not until 2005 that there was any conversation or other direct communication between Ron and Ken about Ron's testamentary intentions. Mr Willmott submits that the evidence does not support a finding that Ron anticipated that his statements made to Bill and other third parties would come to Ken's attention. Thus, he submits, there was no indirect representation by Ron to Ken. Putting it in language more appropriate to the test for estoppel as formulated by Brennan J, Ron did not induce Ken to adopt the assumption or expectation.

63 I do not accept that submission. There was uncontested evidence from Ken that, as at 1981:

"... Bill, my older brother, was the head of the family. We are an old, traditional family. If my father was to make any important decisions he would also ask Bill to be present.

...

My father was not the sort of person to sit down and expressly say to me what he was doing. He would normally discuss these matters with the oldest son, Bill."

64 A trial judge who sits through a case such as the present frequently obtains a picture of the personalities and interpersonal dynamics in a family that an appellate court cannot recapture. The hearing occupied three days, with evidence being taken on two of those days. I am not satisfied that the judge was in error in inferring that Ron must have expected, in 1981, that Bill would convey information about his Will to Ken, and must have known soon after it was conveyed that it had been conveyed. Similarly, the evidence of Ron's garrulousness about his testamentary intentions, to people likely to come into fairly regular contact with Ken, has the effect that I do not conclude that the judge was mistaken in inferring that Ron must have anticipated that at least some of the people outside the family to whom he disclosed his testamentary intentions would pass the information on to Ken. The incident with Mr Hill in 1995, when Ron showed no sign of surprise of Ken knowing his testamentary intentions, confirms this. The number of instances when Ron made reference to having "promised" Ken the 10 acre block is eloquent confirmation that Ron was aware that Ken knew the provision in his Will concerning the 10 acre block, and that he regarded Ken as being justified in regarding himself as having been promised that he would receive the 10 acre block.

Insufficient Evidence of Detriment?

65 Mr Willmott also submits that the Respondent led no credible evidence of detriment. I do not accept that submission. Ken made no attempt to demonstrate that in some fashion he was worse off as a result of staying working on the farm than he would have been if he had stopped working on the farm in 1981. However, that is not the type of detriment that is relevant. As Allsop P said in Delaforce v Simpson-Cook at [5]:

"That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position."

66 In accordance with the judge's enumeration of factors derived from those that Brennan J gave in Walton's Stores ([40] above), the relevant detriment is one that the plaintiff's action or inaction (ie, what the plaintiff has done or not done in reliance on the assumption or expectation) will bring about if the assumption or expectation is not fulfilled. I have earlier referred to how equitable estoppel looks backwards from the moment when a promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.

67 There was ample evidence of the detriment that the judge found, namely a "continued career choice since 1981". That career choice has brought with it the consequences of being without the superannuation and other benefits that an employee would have, and being inhibited in his borrowing capacity ([44] above). It has set the course of Ken's life over decades, in a way that cannot now be unscrambled. The judge was justified in taking the view that for Ken to have followed his career choice for the 28 years between his becoming aware of Ron's testamentary intention and Ron's eventual death, in the expectation induced by Ron that he would receive the 10 acre block, and for him not to then receive the 10 acre block, would occasion him detriment of a kind and to an extent that calls for equity's intervention.

68 The judge made the order in Ken's favour subject to Ken giving credit for the value of certain benefits Ron had given him in his lifetime. There is no appeal or cross-appeal concerning that aspect of the decision below.

Orders

69 The appeal should be dismissed. In the court below, the judge ordered the costs of defence of the proceedings to be paid from the residue. He ordered that Bill should pay Ken's costs, but with Bill to have a right of indemnity for those costs from that part of the residue that did not include Ken's share of the residue. The rationale for that order was that the costs of defence of the proceedings was a testamentary expense, and thus payable from the residue, but if the costs that Bill was ordered to pay Ken were payable from the residue as a whole Ken would in substance be paying part of his own costs.

70 Concerning the costs of the appeal Mr Ellison SC, counsel for Ken, did not put any submission that if the appeal failed Bill should be denied the usual executor's indemnity for the cost of action properly taken in administering the estate. He submits that costs orders should be made consistent with the costs orders that were made below. He submits that the way of making orders consistent with the costs order made below is as follows:

"1. Appeal dismissed.

2. The Appellant to pay the costs of the Respondent and in that regard to have an indemnity out of the estate of the deceased.

3. The Appellant's costs on the indemnity basis be paid out of the estate of the deceased.

4. The Respondent's share of residue should not bear any part of the estate's liability in respect of the Appellant's costs and the Respondent's costs."

71 I do not agree that Mr Ellison's draft order 4 gives effect to the same principle as was adopted in the court below. Rather, if the bringing of an appeal is (as seems to be conceded) an appropriate exercise by Bill of his role as executor, Bill's own costs would be a testamentary expense, and payable from the residue as a whole. To achieve that objective, the words "the Appellant's costs and" should be deleted from his draft order 4. I propose the following orders:

1. Appeal dismissed.

2. The Appellant to pay the costs of the Respondent and in that regard to have an indemnity out of the estate of the deceased.

3. The Appellant's costs on the indemnity basis be paid out of the estate of the deceased.

4. The Respondent's share of residue should not bear any part of the estate's liability in respect of the Respondent's costs.

72 SACKVILLE AJA: I agree with Campbell JA.

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Decision last updated: 19 July 2012