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Johnston v Herrod QSC 98
SUPREME COURT OF QUEENSLAND
Johnston & Anor v Herrod & Ors  QSC 98
Harella Caroline Johnston
No 501 of 2007
Supreme Court, Townsville
18 April 2012
21 February 2012-24 February 2012; 10 April 2012
There will be declarations and orders as follows:
a.to an account of the profits which have accrued to the respective defendants by reason of their breach of duty; or
b.to equitable compensation, assessed in the amount of $433,709.67 for the payment of which the defendants are jointly and severally liable, to the intent that the aggregate amount receivable by each plaintiff does not exceed $433,709.67.
a.for an order for the taking of an account of profits which have accrued to the respective defendants by reason of their breach of duty, with liberty to apply for directions as to the manner in which that account will be taken; or
b.against each defendant, in favour of the plaintiff, for equitable compensation in the amount of $433,709.67;
Contracts – General contractual principles – Formation of contractual relations – Matters not giving rise to binding contract – Agreements not intended to create legal relations – Domestic, social and other agreements – where all parties are siblings and members of the Jehovah’s Witness faith – where the deceased, the parties’ father, was in partnership in a cattle property with the first and second defendants – where deceased’s interest in cattle partnership and residue was left to the first plaintiff, second plaintiff, and third defendant in equal shares – where discussions took place regarding the plaintiff and second plaintiff assigning their interest in the partnership to the first and second defendants for $55,000 – where the first plaintiff signed an agreement to that effect but the second plaintiff did not – whether the plaintiffs entered binding agreements with the first and second defendants
Equity – General principles – Generally – where the first and second defendants represented the partnership as having a certain value – where the first and third defendants are executors of the deceased’s estate – where insurance policies were not treated as part of the estate – whether any such agreements are unenforceable on the basis of misrepresentation, unconscionablility or breach of duty
Blomley v Ryan (1956) 99 CLR 362, cited
Maguire v Makaronis (1997) 188 CLR 449, cited
Masters v Cameron (1954) 91 CLR 353, cited
Serisier Investments Pty Ltd v English (1989) 1 Qd R 678, cited
Westdeutsche Landesbank Girozentrale v Islington London Borough Council  AC 669, cited
C Heyworth-Smith for the plaintiffs
A Moon for the defendants
de Groots for the plaintiffs
Wilson Ryan & Grose for the defendants
- This proceeding, commenced on 30 July 2007, arises out of events following the death on 14 February 1999 of Harel Robert Herrod. The deceased then lived with his wife Edith on a cattle property called Moonoomoo Station. They had five children, the parties to this proceeding. Of course without affecting undue familiarity, I will in these reasons refer to the children by their first names, daughters Harella and Leah who are the plaintiffs, sons Harel and Robert, the first and second defendants, and daughter Rachael who is the third defendant. Their present ages are, respectively, 54 years, 56 years, 51 years, 55 years and 59 years.
- The deceased owned a leasehold interest in the property, and ran the cattle business on the land in partnership with Harel and Robert. The property of the partnership comprised the cattle, plant and equipment.
- The partnership agreement dated 7 December 1983 provided that the death of a partner would not dissolve the partnership, but that the partnership would in that event continue to be carried on by the surviving partners and the executor of the deceased partner. The surviving partners were in that situation accorded a right to purchase the share of the deceased partner, by giving notice in writing within three months of the death (that is the proper construction of clauses 18 and 19). That date was 14 May 1999. The purchase price would be a net amount agreed upon, or failing agreement, as determined by a stock and station agent.
- It is convenient to set out those provisions here:
“18.If the partnership be determined by notice pursuant to Clause 12 of those presents or be dissolved by the bankruptcy of a partner or by reason of his having suffered his share to be charged under ‘The Partnership Act 1891-1976’ for his separate debts or be dissolved by the court under Section 38 of the said Act on account of the incapacity or misconduct of a partner the other partners may purchase the share of the partner who so determines the partnership as aforesaid or whose bankruptcy, insanity or misconduct or the charging of whose share has caused such dissolution (hereinafter referred to as ‘the retiring partner’) in the partnership property upon giving to the retiring partner notice in writing of his intention in that behalf at any time within THREE (3) calendar months from the date of the dissolution such purchase to take effect from the date of dissolution. A notice left at the usual or last known place of abode or business of the person for whom it is intended shall be deemed to be given to him for the purpose of this paragraph.
- The death of a partner shall not dissolve the partnership but it shall thereafter be carried on between the surviving partners and a personal representative of the deceased partner and the surviving partners may purchase the share of such deceased partner in equal shares or as otherwise agreed upon giving notice of their desire to purchase the same to such personal representative in the same way as is provided for in Clause 18 hereof and then the provisions of Clause 18 and 19 hereof shall apply to such purchase as if it were a purchase pursuant to a determination of the partnership as set forth in Clause 18 hereof.”
- By his will dated 4 September 1989, the deceased appointed Rachael and Harel as his executors. The deceased’s widow Edith was to receive “ready monies and cash investments”, motor vehicles, an annuity in the amount of $7,200, and the right to reside in the homestead at Moonoomoo. The deceased’s partners, his sons Harel and Robert, were to receive the land (subject to a charge to secure the annuity), including all machinery and equipment, as tenants in common in equal shares. The deceased’s daughters, Rachael, Leah and Harella, were to receive the deceased’s interest in the partnership together with the rest and residue of the estate, as tenants in common in equal shares.
- Harella and Leah claim that shortly after their father’s death, their brothers told them that their one-ninth share in the partnership was worth $50,000, and not more than $55,000, based on there being approximately 2,400 head of cattle on Moonoomoo, worth between $200 and $220 per head, and that their brothers pressed them to enter into agreements surrendering their respective interests for $55,000, in Leah’s case not to be payable until she reached 60 years of age. Harella signed a document on 24 March 1999 said to evidence that agreement, although Leah did not. Harella and Leah challenge on various bases the enforceability of any such agreement.
- Harella and Leah have not received any distribution from the estate. Indeed, the proceeds of insurance policies which should have been treated as residue, in which they were therefore entitled to share, were paid out to the widow Edith in May and June 1999. On 11 May 1999, the executors paid Edith the sum of $13,316, in respect of AXA National Mutual policy 655,935/5, and on 9 June 1999, they paid her $10,173.66, the proceeds of Colonial/Prudential policy number 1094277. Those amounts total $23,489.66 which should be taken into account in calculating the value of the residue in which the plaintiffs were entitled to share.
- Harella and Leah commenced a family provision application on 25 October 1999 (number 805/1999), which was within the statutorily prescribed limitation period. That proceeding has been stayed pending the completion of the instant proceeding. The executors, Harel and Rachael, claim that the estate has been distributed.
- Harel and Robert transferred the deceased’s share in the partnership to themselves as from 18 October 1999, and thereafter carried on the partnership business in their own names, as sole partners, under the name Moonoomoo Cattle Company. Notice was not given for the purchase of the deceased’s share within three months of the death of the deceased (although Harel and Robert claim to have given notice to the executors on 17 July 1999). As I have said, properly construed, cl 18 and cl 19 of the partnership agreement required notice in writing within three months of death. The deceased’s executors did not get in any sum reflecting the market value of the deceased’s interest in the partnership.
- On 30 June 2002, Harel and Robert dissolved their new partnership. The year before, they had purchased the neighbouring property Carmichael. On 11 October 2002, Harel transferred his one-half interest in Moonoomoo to Robert for $722,500, and Robert transferred his interest in Carmichael to Harel for $557,500. They split the herd between them. On 5 November 2004, Robert sold Moonoomoo to a third party for $2,710,000.
- The plaintiffs claim equitable compensation, or at their election, an account, with any election to be exercised following the delivery of judgment.
- The claim is premised on findings that the defendants acted in breach of trust, and breach of fiduciary duty, by engaging in self-dealing and conflicted transactions; engaging in those transactions in order to benefit themselves to the detriment of the plaintiffs; misleading the plaintiffs by failing to account properly to them, as trustees or fiduciaries; receiving trust property in breach of trust; and profiting from that property.
- By way of equitable compensation, the plaintiffs claim the value of the interest in the estate lost to them, together with compound interest, reflecting the circumstance that they would have used those monies in ways which would have improved their financial positions.
- The plaintiffs alternatively claim damages at common law for devastavit, misrepresentation and deceit.
- The issues which arise on the plaintiffs’ approach may be summarized broadly as follows:
- Did the executors and trustees fail properly to administer the estate and breach their duties as trustees?
- Did Robert and Harel, with Rachael’s concurrence, misrepresent to the plaintiffs the value of the deceased’s interest in the partnership as at the date of death?
- Did Harella and Leah enter into agreements to surrender their interests in the estate? If so, were they then in a situation of “special disadvantage”? If so, did Robert and Harel take advantage of that disability and act unconscionably?
- Did Robert and Harel as partners, and Robert and Rachael as trustees, breach duties owed to the plaintiffs, for example by placing themselves in situations of conflict, deriving personal profit, acting in bad faith etc?
- Did Robert and Rachael, as trustees, breach their duty to administer the estate according to law?
The defendants’ position
- The defendants contend that the plaintiffs are bound by the agreements into which they entered, and that those agreements are not vitiated or rendered unenforceable by any misrepresentation, undue influence or unconscionability.
- The defendants contend that the agreements amounted to no more than a convenient way of administering the estate: they did not involve self-dealing on the part of Robert and Harel.
- In any event, the defendants assert, the plaintiffs are estopped from denying the enforceability of the agreements because of their own conduct vis-à-vis the other parties.
The first section of these reasons
- It is convenient first to deal with the extent and value of the herd on Moonoomoo as at the date of death, and the value of the plant and equipment. That will provide the basis for the calculation of the value of the one-ninth share in the partnership given to each of the daughters under the will. It will remain, then, to add in the values of the insurance policies and some shares to determine the value of their shares in the estate.
Extent of Moonoomoo herd as at death
- On 18 February 1999, four days after the death of the deceased, Harel, in the presence of Robert, told his sisters, apparently referring to a notebook, that there were approximately 2,400 head of cattle on the property, valued at between $200 and $220 per head. That number of 2,400 is consistent with the financial statements of the partnership: the financial statements for each of 1998 and 1999 record cattle numbers of 2,425.
- But the figure of 2,400 is inconsistent with loan applications lodged by Robert and Harel, reasonably close in time to the death, for funds for the purchase of the property Carmichael and a herd of 1,000 cattle. A QIDC loan/credit application dated 31 March 1999 lists 3,213 head of cattle as an asset in the statement of financial position as at that date. On page 5 that figure is broken up into specific categories: 1,563 cows, 54 speyed cows, 420 heifers etc., suggesting reference to an existing herd. The Suncorp credit approval request of 14 April 1999, filled out by Mr Nowland of Suncorp on the basis of information given by the brothers, records “3,268 cattle depastured on Moonoomoo Station”. That request contains a declaration by Robert and Harel that the information included in it was correct.
- I was asked to draw an inference adversely to the defendants (Jones v Dunkel) because of their not having called evidence from Mr Nowland. It has not been necessary for me to determine whether that course, which was opposed, should be followed.
- I did not accept the explanation given by Robert and Harel to the effect that the figures included in those documents included cattle yet to be purchased, cattle owned by them or other family members but not the partnership, and cattle to be given to them by their cousin Kevin Herrod. They gave evidence that they provided accurate information to the financial institutions, as obviously one would expect. The inclusion of cattle not on the property would have been inconsistent with the clear language and purport of the applications. Obviously a “statement of financial position” as at a particular date would not include proposed assets not yet purchased or acquired.
- The figures in the applications are consistent with the property’s having reached its carrying capacity. The applicants reported the property as being “fully stocked” (for example, pages 39, 41 Suncorp request). The carrying capacity of the property ranged up to 3,300 head. I accepted the evidence of the joint expert Mr Kevin Currie (to which I will come in more detail later) that as at February 1999, notwithstanding periods of drought, the property would have been in good condition and therefore able to support that carrying capacity. I did not accept Rachael’s evidence to the effect that Moonoomoo could not at that time have sustained more than approximately 2,400 head.
- There is an additional consideration. On Robert’s evidence, the figures in the QIDC loan application (3,213 head, on page 4, and 3,327 on page 5) included the 2,400 head then on Moonoomoo, together with 1,000 to be purchased for Carmichael, 500 from the cousin and 250 head personally owned, which would bring the total to 4,150, which is substantially more than the figures in the applications. Also inconsistently, Harel’s evidence was that the figure in the QIDC application included the 1,000 head to be purchased (which would have taken the total to 3,400) but he made no mention of the cousin’s 500 head or cattle personally owned.
- For all of these reasons, the explanation put forward lacked credibility and I rejected it.
- I also did not accept as accurate, in relation to cattle numbers, the partnership financial statements for the years ended 30 June 1998 and 1999, on which the defendants relied. Each of those statements recorded cattle numbers of 2,425.
- Serious doubt as to the reliability of those financial statements emerges from the circumstance that each of them records precisely the same information: that 366 cattle were sold in the particular year; that 13 cattle were used for rations in that year; that in that year 101 cattle were lost or died; that 460 calves dropped; that two cattle were purchased. That Robert and Harel refused when cross-examined to accept that apparent coincidence as being extraordinary, did them no credit. This feature caused me to reject the accuracy of the accounts, which I note were completed after Leah and Harella had challenged the accuracy of the figure of 2,400 given by Harel in February 1999, and after they had commenced their family provision proceeding.
- I was asked to reject the evidence from Robert and Harel that they carried out a muster for the purpose of preparing the 1999 accounts, a muster revealing the number of cattle at 2,405, because of the content of a crime report based on their report on 18 August 1999 of the theft of cattle. In that report Sergeant Guteridge of the Charters Towers Police says:
“The routine muster to brand and mark calves normally conducted in March each year was not conducted due to matters associated with the death of the informants’ father ...”
The theft was reported as having taken place between 1 November 1998 and 1 August 1999. Ms Heyworth-Smith (for the plaintiffs) submitted that had a muster taken place within that period (say in March), the theft would have been determined and in all probability reported then, not so much later. Mr Moon (for the defendants) objected to the admission of that report on the basis it constituted hearsay. Had the author been called the position would have been different. But since it was advanced only through the evidence of the second plaintiff, it is rightly characterised as hearsay. It was inadmissible notwithstanding it was among the documents provided to the joint expert Mr Kevin Currie. I have no regard to it.
- In the end, the plaintiffs advanced their case on the basis that the herd, as at the date of death, totalled 2,908 head, drawn from the evidence. My contemporaneous note, having heard the oral evidence of Mr Currie, was that he exhibited considerable knowledge of pastoral conditions in the area over the relevant years, and that his answers to questions, given without hesitation, were apparently based on considerable experience and expertise. I considered his evidence to have been completely reliable.
- Mr Currie adopted a generally conservative approach to his determination of the likely numbers on the property as at the date of death. He worked from the figure of 2,405 provided in a notebook dated 30th June 1999 (which was mentioned in evidence), on the basis that a muster had been carried out. Mr Currie considered that figure would represent 80 per cent of the actual herd, with the musterers trying harder than normal (a normal muster might reveal only 60 per cent of the herd). Adding 20 per cent led him to a herd of 2,883, to which he added calves sold after 14 February 1999 (194) and subtracted the calves which would not have dropped by that date (169). His total of 2,908 sits comfortably, if conservatively, with a report from Pickard & Associates of 29 June 2001, obtained for the purpose of the family provision proceeding, which put the likely figure as at the date of death at 3,190 head.
- I find that as at 14 February 1999 there were 2,908 head of cattle on Moonoomoo Station.
Value of herd as at the date of death
- The most useful source of information about the value of the herd rests in the sales records of Wesfarmers Dalgety, the company responsible for selling the cattle of the partnership before and after the date of death. Those records show the following average sale prices per head: as at 10 February 1999, $363.86; as at 10 June 1999, $413.25; as at 12 August 1999, $289.41; as at 30 September 1999, $371.85; and as at 7 October 1999, $318.
- Robert gave evidence, which I did not accept, that the cattle sold by Wesfarmers Dalgety represented the best of the herd. Mr Currie proceeded on the basis that the cattle sold would have included culled or lesser quality cattle. While the partnership business generated very modest returns (according to the accounts, a loss of $6,174 in 1998, for example), selling off the best quality beasts would not have amounted to a long term solution. It is obvious, for example, that some of the bulls, which were comparatively valuable (for example, two were purchased in 1998 for $8,000), would be retained for breeding purposes.
- Mr Currie gave evidence that in all probability the cattle which were sold were the “common herd”, not the stud cattle: Moonoomoo was a stud Brahman station. Mr Currie said that Moonoomoo had a very good stock of breeders and that the cattle sold would not necessarily have been the best, as the defendants claimed. He said that the quality of the herd was much higher than those sold; those sold, going on body weight and price achieved, would probably not have been the best cattle there. The cattle, he said, would have been in “excellent” condition by January and February 1999 when they fell to be valued.
- Mr Currie gave this explanation:
“If you have a hundred heifer calves you retain – well in the case of Moonoomoo you would probably retain 50 per cent of those heifer calves as breeders and they breed for another 10 years but ... they don’t get sold off until they’re 12 year old, and by the time they’re 12 year old they’re not near as valuable as they are as a 6 year old cow that’s having a calf.”
- Consistently with that, in her letter to Mr Nowland of Suncorp dated 17 April 2000, Ms Sarah Fysh, farm financial counsellor of the Department of Primary Industries, provided a cashflow projection and referred to the sales in August and October 1999. She recorded that Robert and Harel had advised her that the bulls were normally sold at 24 months, and that the cows sold were “old cows”, that is, not the young breeding cows.
- Mr Currie had regard to the sales figures from Wesfarmers Dalgety, to the descriptions provided by both parties, and to his knowledge of the cattle and the industry, and provided the following assessment:
approx 400 cows stud Brahman @ $600 per head; balance commercial breeders values @ $400 per head.
including approx 100 stud heifers
mixed sex weaners
including approx 200 stud males and females
including 53 head bulls @ $750/head
67 stud bulls for sale @ $1250/head
- Challenged about those values, Mr Currie confirmed that they represented net on-farm values, that is, after allowing for costs associated with such things as mustering, transportation and the sales. While his written report was rather cryptically expressed, Mr Currie responded convincingly and credibly to the cross-examination by Mr Moon who appeared for the defendants. I am satisfied that Mr Currie took all relevant matters properly into account.
- It follows that I would reject a mechanistic adoption of the values put forward in the note dated 2 February 2000 signed on behalf of Westfarmers Dalgety’s manager, figures to which Mr Currie did nevertheless have some regard.
- I find that the value of the herd of 2,908 cattle, as at the date of death 14 February 1999, was $1,214,370.
Value of plant and equipment as at the date of death
- Attached to the letter from Ms Fysh of the Department of Primary Industries to Mr Nowland of Suncorp, which she says was based on “technical input from the Herrod family”, a “statement of assets and liabilities” as at 16 March 2000 specifies $140,250 as the “current market value” of “machinery, plant and implements”. There is no suggestion of any substantial purchase of equipment over the preceding year. Ms Heyworth-Smith submitted that this figure should be accepted as the value of the plant and equipment as at the date of death.
- On the other hand, Mr Moon submitted that the amount of $14,049 should be adopted, being the figure in the partnership accounts as at 14 February 1999. (In the following section of these reasons, I express reservation as to the reliability of those accounts.)
- The other evidence includes varying estimates of the value of plant and equipment. For example, the balance sheet in the 1998 financial statements put the value of non-current assets at cost of $107,654 less depreciation, yielding $49,895. The balance sheet for the following year specified the same cost amount, but continuing depreciation had reduced the net value to $44,696. A depreciation schedule for the period 1 July 1998 to 28 February 1999, prepared for the defendants and provided to Mr Currie, showed plant and equipment and motor vehicles at cost of $86,623. The QIDC loan application specified a value of $80,000, as did the Suncorp credit approval request. An application for commercial credit to the Commonwealth Bank dated 2 December 1999 specified unencumbered plant at a value of $100,000.
- Mr Currie’s evidence in this area is not helpful to the determination to be made and he did not pretend it would be. Mr Currie halved the $86,623 amount provided to him in the depreciation schedule. But he stressed that he had not “even” seen the equipment, and characterised his assessment as “absolutely” a “guess”.
- Mr Currie was a patently candid witness, and that has influenced my acceptance of his evidence in other areas. There was not even a hint of partiality. His contribution illustrated the potential worth of the “sole expert” regime.
- One would expect a not insubstantial quantity of plant and equipment of reasonable value would be required for the operation of an enterprise of this magnitude. I regard the figure specified in the Department of Primary Industry’s letter to Suncorp as providing the most reliable evidence of the market value of the plant and equipment as at the date of death, which I therefore find was $140,250.
Value of partnership as at date of death
- The assets of the partnership, as at the date of death, therefore bear these values: cattle - $1,214,370; plant and equipment - $140,250.
- Mr Moon submitted that in calculating the net value of the partnership, the following amounts should be deducted because they are liabilities: bank overdraft - $15,460; loan to deceased - $62,000; “deceased general loan account” - $7,906; “first defendant’s loan account” - $32,637; “second defendant’s loan account” - $25,675. Established liabilities should be deducted from the assets of the partnership.
- I deal first with the alleged loan to the deceased in the amount of $62,000. Exhibit LDF54, an exhibit to the affidavit of Leah filed 25 July 2011, is an acknowledgement of debt by the three partners, in favour of the deceased, in that amount, but it is dated 25 September 1989, long before the relevant events.
- Following the death of the deceased, and after the dispute had arisen, two sets of financial statements were produced, purporting to deal with the financial position of the partnership as at the date of death, 14 February 1999. The first, LDF41.5, is dated 14 January 2000, and the second, LDF41.6, is dated 21 January 2000. There is no adequate explanation of their provenance.
- The first set of those statements contains no reference to a debt in the amount of $62,000 owed to the deceased, although that amount may have been aggregated with other amounts under the heading “proprietor’s funds”: that would however be a matter of mere speculation. In the second set, the amount of $62,000 is referred to as an “unsecured liability”, “loan – Harel R Herrod”.
- A debt in that amount is not referred to in the financial statements for the years ended 30 June 1997 or 30 June 1998. One could only, again, speculate whether such an amount may have been included in the amounts against the deceased’s name under the heading “partners’ current accounts”. Neither was the alleged debt referred to in the applications for finance made following the date of death.
- Harel gave an account in paragraph 112 of his affidavit filed on 10 August 2010 as to how the alleged debt of $62,000 arose. Accepting for argument that that is a correct account, what is missing is acceptable evidence that a debt which accrued as long ago as in 1989 was subsisting as at the date of the death of the deceased a decade later. That the debt was not included in the applications for finance tells against its having subsisted to that point.
- In this state of uncertainty, noting the time when the matter was first clearly referred to as a liability of the partnership, noting the absence of reference to it in the applications for finance, and allowing for my general findings as to the creditworthiness of Harel and Robert, I am not satisfied on the balance of probabilities that as at the date of death, the partnership was truly indebted to the deceased in the amount of $62,000.
- I refer now to the alleged other liabilities to the deceased, Harel and Robert. They are variously presented. In the 1997 accounts, they are not listed as liabilities, but in the balance sheet section under the heading “partners’ current accounts”, and as “partners’ funds”. In the 1998 accounts, they are presented differently: they are termed “proprietors’ funds” represented by various assets less various liabilities. As to the accounts prepared after the dispute had arisen, the first in time calls them “Proprietors’ funds”, and the second calls them “partners’ current accounts”, with slightly differing amounts. The amounts were not specified as liabilities of the partnership in the applications for finance made following the death. Again, I am not satisfied on the balance of probabilities that these amounts were in truth debts owed as at the date of death.
- I deal finally with the alleged bank overdraft in the amount of $15,460. The accounts prepared following the death and after the dispute had arisen refer to such an amount as “cash at bank”, being an unsecured liability. The 1997 accounts refer specifically, as a liability, to a “bank overdraft” in the amount of $28,528. The 1997 accounts do not use the term bank overdraft, but as with the 1999 statements, refer to “cash at bank”, as being a liability, in the amount of $15,750.
- My conclusion about whether it has been established on the balance of probabilities that this overdraft was in fact outstanding at the date of death is strongly influenced by the content of the finance applications.
- The QIDC application dated 31 March 1999 refers to the overdraft, but indicates there was nil owing. (No reference, as I have said, is made there to any liability owing to the partners.)
- The Suncorp application dated 14 April 1999 again refers to the overdraft, but suggests (through lack of an entry) there was nil owing. See p 48 of the exhibits to Leah’s affidavit filed 22 June 2010. (Again, no reference was made to any liability to the partners.)
- The application for commercial credit made to the Commonwealth Bank dated 2 December 1999 recorded the overdraft facility as in use to the extent of $20,336 on 22 November 1999. But on page 60 there is a summary of the finances as provided to the Commonwealth Bank in respect of the years 1997, 1998 and 1999. That summary records a liability in 1998 which aligns with the financial statement for that year, a liability in the amount of $15,750, but records there being nil “liability” for 1999, consistently with the details of financial matters provided to the other financial institutions earlier in the year. (Again, no reference is made there to any liability to the partners.)
- In these circumstances, I am not satisfied on the balance of probabilities that an overdraft account in the amount of $15,460 was in fact outstanding as at the date of death.
- The value of the partnership at that date was therefore $1,354,620, being the sum of the values of the cattle and the plant and equipment.
Overall value of entitlements of daughters in estate as at the date of death
- The deceased owned a one third share in the partnership. His three daughters were to be entitled to that share as tenants in common in equal shares. Accordingly, each was entitled to one ninth, valued at $150,513.33.
- In calculating the overall amount to which each would otherwise be entitled, one should also take account of the residue, to which they were similarly entitled.
- Reference has already been made to a sum of $23,489.66, the proceeds of two insurance policies.
- Included in the residue is a small parcel of 605 National Mutual shares. A merger led to their becoming AXA shares worth $1,615.35 as at the date of death. They subsequently, on 16 March 2011, became 442 AMP shares: for each AXA share the estate received .73 of an AMP share, together with $2.5464. The cash component equals $1,540.57 (605 multiplied by $2.5464). The 442 AMP shares as at 16 March 2012 were worth $1,856.40 (from a closing price of $4.2). The share value to be taken into account in computing the value of the residue is therefore $3,396.97 ($1,540.57 plus $1,856.40).
- The value of the residuary estate is therefore $26,886.63 ($23,489.66 plus $3,396.97). Each defendant was entitled to one third of that amount, which is $8,962.21, leading to an overall value, of the share of each in the estate, of $159,475.54.
The alleged agreements
- The defendants contend that on 17 and 18 February 1999 Harella orally agreed to surrender her interest in the estate in exchange for the sum of $55,000. She signed an agreement in writing on 4 March 1999 (prepared by the solicitor Ms Linda Leong). It confined the subject matter to her share of the interest in the partnership.
- The defendants contend that on 17 and 18 February 1999 Leah orally agreed to forego her interest in the estate for $55,000, to be paid when she reached 60 years of age. (She was then 43.)
- There was substantial difference between the evidence given by the plaintiffs on the one hand, and the evidence given by the defendants on the other, about the events over those two days and thereafter. It is appropriate therefore that I begin this part of the judgment with some observations on the credibility of the witnesses.
- All of the children of the deceased gave oral evidence. Their evidence in chief was presented by means of extensive affidavit material. Each member of the family was subjected to robust and wide ranging cross-examination.
- Each of plaintiffs gave detailed, cogent oral evidence about the relevant events. Cross-examination did not throw up any major inconsistency such as would have caused me to doubt their evidence. They were apparently answering questions on the basis of their actual recollections. I considered their evidence honest and reliable.
- On the other hand, the oral evidence of the defendants, particularly that of Harel and Robert, was marked by evasiveness and defensiveness. I formed the distinct impression that the defendants gave the answers they believed would advance their case, or do it the least damage. A direct example occurred during the evidence of Rachael who, when equivocating about whether she trusted her brothers, said that she was trying to work out in her head where the questioner was going.
- The evidence of the brothers Harel and Robert was unsatisfactory in many other respects. I have referred already to their intransigent refusal to accept that the 1999 livestock accounts had simply been copied from the 1998 accounts. Another concerned the authorship of a Watchtower Society document: Robert accepted its authenticity after reading it during an adjournment allowed just for that purpose, yet the following day Harel, who had been present during Robert’s evidence, refused to accept that it was a Watchtower document because “they could change words in it between now and yesterday”.
- There were considerable inconsistencies within the body of the evidence presented by the defendants. The circumstances of the reading of the will at the hall on 17 February 1999 illustrated the point. A theme permeating the interchange between the plaintiffs and the defendants following the death and up until comparatively recent times, was the apparent reluctance of the defendants to provide Harella and Leah with information about the estate. It began with the will.
- Leah gave evidence that at the meeting at the hall, she secured a copy of the will, but that Harel took it from her before she had had a chance to read it. Harella’s evidence was that Harel did not read out the will, and denied her request for a copy. On the other hand, Rachael’s evidence was that Harel read out the will, and it was passed around; Robert’s similarly was that the will was read out and passed around; yet Harel’s evidence was that he read it out in full twice, and then it was passed to Leah who “read it to everyone openly and plainly”.
- There were inconsistencies in other areas. One concerned the exerting of pressure upon the plaintiffs to have the position finalized so shortly after their father’s death. The effect of their evidence was that they were subjected to considerable pressure by Harel and Robert. Rachael recalled that her brothers were apparently keen to have the estate matters sorted out, so that they could return to the partnership affairs. Yet Robert’s evidence was that he was not thinking about business affairs at that early stage. Another issue was Harella’s state of mind at that early time. The plaintiffs’ evidence was that they were both very upset over their father’s very recent death. Rachael said that she recalled that Harella was quite upset at the meeting at the hall. Yet Robert gave evidence that Harella was not particularly upset, and Harel went so far as to say “definitely not”.
- The defendants tended to blame others for the withholding of information which was the subject of complaint in documentation. For example, Harel and Robert blamed the solicitor Linda Leong for acting without instructions in denying Leah and Harella access to the partnership agreement; the solicitor John Hill was blamed for not providing relevant financial statements which were requested; and the bankers were blamed for inserting information into the applications for finance which they claimed was inaccurate.
- There were countless differences between the evidence advanced by the plaintiff, and the evidence advanced by the defendants. Many were ultimately of little moment, but there were differences which were significant. It suffices at this stage that I record that in cases of divergence, I preferred the evidence given by the plaintiffs over the evidence given by the defendants.
Findings of fact
- I accepted Harella’s account of the events of 17 and 18 February 1999 (paras 137-166 of her first affidavit, and her oral evidence), and also Leah’s (paras 84-110 first affidavit and oral evidence).
- Harella and Leah each agreed orally to forego the interest in the estate for $55,000, and Leah agreed to wait for payment until she reached 60 years of age. Harella subsequently signed the written document prepared by Ms Leong, at the request of the executors, but Leah did not sign any agreement despite considerable pressure from Robert and Harel that she should do so.
- It was in the course of these dealings that Harel said that there were approximately 2,400 head of cattle on Moonoomoo, worth on average $200 to $220 per head. The brothers said that they wanted to preserve the herd, so they would pay money to their sisters rather than transfer cattle. Harella checked that sale price with a stock and station agent Jim Geaney, who said that the cattle were worth $360 per head. That led to an increase in the previously nominated amount of $50,000 to $55,000 – although that went nowhere near reflecting an increase per head from $220 to $360.
- Mr Moon submitted that I should draw an inference adverse to the plaintiffs from their failure to call Kylie as a witness, in relation to the circumstances of the preparation of the document prepared early-on as to the terms of the oral agreement. I accepted Harella’s explanation, that Kylie had been unwell for the six months preceding the trial, and was undergoing tests. The relevant circumstances were comprehensively explored through the evidence of the siblings. I do not consider it an appropriate situation in which to draw such an inference, notwithstanding Mr Moon’s characterization of Kylie as a “lynchpin” in relation to credibility.
- At the time the plaintiffs entered into these oral agreements, they were in a state of considerable grief, with their father’s death and funeral having occurred so recently. They were subject to contentions that they should get nothing because unlike their brothers they had not worked on the estate. They were pressured with claims that the estate must be sorted out without delay so that their brothers could get back to running the partnership business. The brothers were asserting that they would have to go into debt to pay their sisters for their entitlement in the partnership in circumstances where having built up the herd over the last two to three years, they did not want to part with the cattle. At that stage, the plaintiffs did not have a copy of the will or the partnership agreement, and were not adequately equipped to comprehend or protect their own interests.
- The terms upon which the plaintiffs agreed were disadvantageous to them. As emerges from my earlier findings, a figure of 2,400 head substantially understated the actual extent of the herd on Moonoomoo at that time. Further, the delay in payment of the amount agreed upon substantially diminished its worth. Leah was to have to wait 17 years, without accruing interest. Harella was to be paid her $55,000 by annual instalments of $3,666.67, again without interest. (None of those instalments was ever paid.)
- The executors retained the solicitor Linda Leong to prepare a draft contract. Harella signed that, but Leah did not.
- The plaintiffs contend that in entering into the precedent oral agreements following the death, they and the other parties did not intend to create legal relationships among themselves. I do not accept that contention. Reference was made to Riches v Hogben  1 Qd R 315, 317, 330 and other cases as to whether family members should ordinarily be taken to intend that their intra-family agreements be legally enforceable. It is the subject matter of these agreements which supports the inference that these family members intended that their agreement should give rise to legal relations.
- In the case of Leah, however, the oral agreement should not be regarded as itself binding, because the parties should be taken to have intended “not to make a concluded bargain…unless and until they execute a formal contract” (Masters v Cameron (1954) 91 CLR 353, 360), a situation sufficiently achieved in the case of Harella, but not in the case of Leah.
- I turn to the various bases on which that agreement is said to have been rendered unenforceable.
Undue influence, unconscionability
- In Blomley v Ryan (1956) 99 CLR 362, 405, Fullager J said:
“The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other. It does not appear to be essential in all cases that the party at a disadvantage should suffer loss or detriment by the bargain. … But inadequacy of consideration, while never of itself a ground for resisting enforcement, will often be a specially important element in cases of this type. It may be important in either or both of two ways – firstly as supporting the inference that a position of disadvantage existed, and secondly as tending to show that an unfair use was made of the occasion.”
- I have reached the conclusion that the following collection of circumstances means that each of the plaintiffs should be regarded as having been in a position of special disadvantage vis-à-vis the defendants throughout the dealings which preceded the making of the agreements.
- As the brothers acknowledged before me, the plaintiffs had no means, independently of their brothers, to know the number and value of cattle on Moonoomoo.
- The brothers stood to benefit financially from the agreements. In light of the consideration in (a), their failure to counsel the plaintiffs to seek independent advice is significant (Linderstam v Barnett (1915) 19 CLR 528, 530).
- The parties were raised in the Jehovah’s Witness faith and were devout adherents to it. In this family, consistently with the precepts of that faith, the men were at least the primary if not exclusive major decision-makers and were in a position of dominance over their sisters.
- At the time of these dealings, the plaintiffs were in a state of considerable grief.
- Also, there was reason to question Harella’s emotional stability. Rachael’s evidence was that her father told her in the months prior to his death that Harella was under “severe stress”, and that in February 1999 he told her that “Harella was losing her stability”.
- The plaintiffs reposed great faith in the position as presented by their brothers. As Harella said, they agreed “based on what we were told”, and even though they were not even given copies of the will or the partnership agreement.
- The brothers’ pressure that the matter had to be resolved urgently, and so shortly following upon the death and funeral, was unreasonable. Taken with claims that the property would be lost and that the children would go without, the approach involved the exertion of very substantial pressure on the plaintiffs where other circumstances combined to render them vulnerable.
- That pressure continued after 18 February 1999. When the plaintiffs commenced the proceeding in court for family provision, their brothers reminded them of scriptural admonitions against recourse to courts of law. This was not done in a friendly or avuncular way, but in an admonitory fashion. Also, when Leah persisted in failing to sign the draft agreement prepared by the solicitor Linda Leong at the instance of the executors, Harel and Robert, who were elders of the Jehovah’s Witnesses (although the plaintiffs were not in their particular congregations) threatened to “disfellowship” Leah, which was a matter of deep concern to Leah who was serious in her devotion to the tenets of the Jehovah’s Witness faith. There was also a threat to “disfellowship” Harella. Although those events occurred after 18 February 1999, they tended to confirm the likely intensity of the pressure exerted by Harel and Robert at the earlier time – as claimed by the plaintiffs in their evidence, and illustrate the supervening significance, at that earlier time, of the dominant role of Harel and Robert vis-à-vis the plaintiffs, in that religious context.
- Mr Moon referred, on the other hand, to the plaintiffs’ participation in the “negotiations” about the amount they would be prepared to accept. On my findings, that was substantially confined to Harella’s enquiring of Jim Geaney as to the value per head of stock. Otherwise, the matter was substantially presented to them as something which they had to accept. Mr Moon referred also to the involvement of Kylie in the typing up of the document. That did not involve substantial participation on the part of the plaintiffs.
- I conclude that the plaintiffs were in a position of special disadvantage in the days following the funeral, and that the defendants acted unconscionably in pressuring them to enter into these agreements as they did. The plaintiffs were overborne, and I reject the defendants’ contention to the contrary.
- While the amended statement of claim alleges a range of misrepresentations (paras 28, 29), only one was pressed in the end, and it concerns the extent and value of the herd.
- I find that the plaintiffs entered into the agreements on the basis of Harel’s representation that the herd comprised 2,400 head of cattle worth between $200 and $220 per head. That explains a share valuation of between $50,000 and $55,000.
- It was a misrepresentation, and I am satisfied that each of Harel and Robert knew it to be false, for apart from anything else, each of them knew that the property was running at or near full capacity, meaning a herd of 3,000 or more. (I note that the herd of 2,908 the subject of my earlier finding is a lesser number than that of the fully stocked property , but that number of 2,908 is the number contended for by the plaintiffs, which I am content to accept.)
- While it is true that Harella made enquiries of Jim Geaney about the value per head, so that it may be said that the plaintiffs did not rely exclusively at least on Harel’s statement about value, the plaintiffs were completely reliant on Harel’s statement as to the extent of the herd.
- The inference is clear that the representation was intended to induce the plaintiffs to enter into this agreement. The plaintiffs had no other source of information as to the extent of the herd. A rescission was communicated by means of a letter of 5 December 2002, to which I will shortly refer.
- On both these grounds – unconscionability and misrepresentation – the agreements are unenforceable.
- The defendants contend that the plaintiffs are estopped from denying the validity or enforceability of the agreements entered into in February 1999 because the plaintiffs did “nothing to challenge them for about eight years”, so that it was reasonable for the defendants to proceed on the basis of those agreements “in the conduct of their affairs thereafter”.
- This contention is sufficiently answered by reference to correspondence from the plaintiffs’ solicitors to the defendants’ solicitors in late 2002 and early 2003.
- On 5 December 2002 the plaintiffs’ solicitors wrote to the defendants’ solicitors as follows:
“…there were some discussions very early in the piece which resulted in Harella Johnston signing what purported to be an agreement. For a number of reasons, our clients’ position is that that agreement is unenforceable.
Our clients instruct us that a meeting in July 2002, at which various issues were canvassed and which was attended by two non-family members as independent witnesses, in addition to our respective clients, your clients acknowledged that the agreement was not enforceable and that they would not be contending to the contrary.
Would you please confirm this to be the case.”
There was no response from the defendants or their solicitors.
- Then on 4 February 2003 the plaintiffs’ solicitors wrote to the defendants’ solicitors as follows:
“As to the issue raised in previous correspondence, about the purported agreement allegedly entered into by Harella shortly after her father’s death, we have now been instructed that a meeting took place some time ago between our respective clients and representatives of their church; and at that meeting your clients acknowledged that the agreement was unenforceable and they would not be arguing to the contrary.
On the basis of that advice we will proceed to prepare the matter for trial on the basis that it will not be contended by your clients that the agreement is enforceable unless we hear from you to the contrary within fourteen days from the date of this letter.”
(The proceeding referred to was the family provision application.)
- Then on 25 February 2003 the plaintiffs’ solicitors wrote to the defendants’ solicitors in these terms:
“We note that we received no reply from you to our letter of 4 February 2003 and are therefore proceeding on the basis that your clients are not going to contend that the ‘agreement’ involving Harella is enforceable.”
There was no response to that correspondence either.
- I accept the contention that the defendants’ silence, in that situation where they were obliged to speak were they to advance a contrary position, amounted to a representation that they did not consider the agreement to be binding, and that they would not be asserting that the agreements were binding.
- The issue of delay is also sufficiently answered by the particulars of para 13 of the statement of claim (court document 2), substantiated by evidence, to which I refer again in the section of these reasons for judgment headed “Relief”.
Breach of duty
- I turn to the question of breach of duty and the claim for equitable relief.
- Harel and Rachael owed the plaintiffs fiduciary duties in their capacity as executors of the estate. As partners with the deceased as at the time of his death, Harel and Robert owed the estate, and their sisters as beneficiaries with interests in the partnership share owned by the estate, the fiduciary duty which is owed by partners.
- In paras 8 and 9 of these reasons for judgment, I set out the circumstances in which the share in the partnership was lost to the estate.
- In summary, Harel and Robert purported to acquire the interest in the estate of the partnership by notice of 17 July 1999, operative from 18 October 1999. As previously observed, the notice required by the partnership agreement had to be given within three months of the death of the deceased partner. As already previously noted, Robert and Harel affected to assume the deceased estate’s interest, for no payment of consideration, running their new partnership until the year 2002 when Robert acquired Moonoomoo in its entirety, and Harel took over Carmichael on which he continues to live.
- Mr Moon submitted that Harel and Robert’s obligation to pay the estate the value of a one-third interest in the partnership disappeared when the plaintiffs entered into the agreements to forego their interest in return for the payment of an amount of $55,000. The latter agreements are, as I have found, unenforceable. The consequence is that Harel has purported to transfer trust property to himself, in the absence of the fully informed consent of the beneficiaries.
- It fell to Harel in those circumstances to demonstrate the “righteousness” of the transaction (CIBC Mortgages Plc v Pitt  1 AC 200, 209; Maguire v Makaronis (1997) 188 CLR 449, 465). Plainly in light of my earlier findings, Harella and Leah did not, in entering into those agreements, signify their fully informed consent to Harel’s acquisition of an interest in the deceased estate’s share of the partnership. That is because of the following circumstances: they were not informed of and did not know the value of the herd or the plant and equipment; they were not given a copy of the partnership agreement, a copy of the will, or copies of the financial statements of the partnership; they did not know the content of the partnership agreement; they were not counselled to seek, nor did they have, independent legal advice. In relation to the last matter, they were of the belief, reasonably held, that Linda Leong and the barrister Patrick Lafferty were acting for “the family”, including themselves. That was not so.
- Harel also breached his duty as executor in the respect about to be covered in relation to Rachel (para 116(a)).
- Rachael failed in many respects to discharge her duty as executor.
- Perhaps most glaringly, she joined with Harel in paying the proceeds of the insurance policies, which belonged within the residue, to the widow Edith. Rachael did that without consulting with the plaintiffs, who she knew considered themselves, quite rightly, to be the beneficiaries of those proceeds, and she did not tell them what she had done.
- Rachael at the least acquiesced in her brothers’ taking over the estate’s interests in the partnership, without the notice required under the partnership agreement, without the executors’ commissioning a valuation, and without the payment of any consideration.
- Insofar as Rachael might claim that that was legitimatised by the plaintiffs’ having entered into the agreements for the surrender of their interest, it is significant to note that as executor, she would have been aware that no payment was at any stage made to Harella under the agreement into which she had entered.
- Rachael failed to ensure the reasonable requests for information and documentation made on behalf of the plaintiffs as beneficiaries to the estate were met.
- Robert breached his fiduciary duty as partner, owed to the deceased estate and the plaintiffs as beneficiaries in it, by joining with Harel in misrepresenting the extent and value of the herd. Additionally, he knowingly received trust property in the same way as did Harel.
- There should be a declaration that the agreement entered into by each plaintiff on or about 18 February 1999, to forego her interest in the estate of her deceased father and or his interests in the Moonoomoo cattle partnership, is unenforceable and is set aside.
- There should be a further declaration that each defendant has breached his or her fiduciary duty owed to each plaintiff, as executor of the estate of the deceased or as partner in the Moonoomoo cattle partnership.
- The plaintiffs are entitled to an award of equitable compensation, or at their election, an account of the profits which have accrued to the defendants by reason of their default. Each plaintiff should communicate her election to the solicitors for the defendants within 21 days, and file an affidavit in the proceeding confirming which election has been made, whereupon the requisite order – for the taking of accounts or for the payment of compensation – will take effect, though the Registrar should be authorised to enter a formal judgment for protection of the parties. There should be liberty to apply.
- The making of the orders for the payment of compensation in equity is justified by the defaults committed by the defendants, essentially receiving and dealing with trust property for their own financial benefit and to the financial detriment of the plaintiffs, and failing properly to discharge their fiduciary duty to account to the plaintiffs, whether as executors or trustees. The failure of the executors to make proper account to the plaintiffs of their administration of the estate is alleged and particularized in para 13 of the amended statement of claim, and those allegations were substantiated by the documentary and oral evidence.
- It is unnecessary to consider the plaintiffs’ alternative common law claims.
- Each of the plaintiffs has sworn to the use she would have made of the monies had they been distributed to her properly from the estate by the executors. I find that each of the plaintiffs would have put those monies to the best profitable use. Each had led a particularly frugal life with no inclination to waste financial resources when they became available. The intended uses were not advanced by the plaintiffs to found a claim for a loss of profits in particular ventures which were intended but not pursued, but as the basis for a computation of compensation in equity on a basis which surpasses the nominal.
- In Maguire v Makaronis, supra, after considering the judgment of Browne-Wilkinson LJ in Target Holding Ltd v Redferns  1 AC 421 at 434, Brennan CJ, Gaudron, McHugh and Gummow JJ considered the effect of a trustee’s failure to make restitution for what had been lost to the trust and said (p 470):
“Until restitution is made, it is presumed that the default continues. In Guerin v The Queen (1984) 2 SCR 335, the Crown, in what was held to be a breach of a fiduciary duty to the plaintiffs, leased certain land for a term of seventy-five years and on other unsatisfactory terms. The Supreme Court of Canada evaluated the loss to the plaintiffs by presuming against the Crown that the plaintiffs would have made the most profitable use of the land by letting it for residential development not, as had the Crown, for use by a golf club. Thus, the presumption assisted in indicating the extent of the loss by relieving the plaintiffs from the need to prove that they would have led the land for such development.
In all these instances, presumptions, some elevated to rules, operate in aid of the underlying policy of the law in holding trustees to their duties and thereby protecting the interests of beneficiary.”
- Westdeutsche Landesbank Girozentrale v Islington London Borough Council  AC 669 confirms that in a case like this, the court has a discretion in computing equitable compensation to allow compound interest on the primary loss. That is because of the default of the defendants as fiduciaries in improperly generating profits utilizing trust property to the detriment of the plaintiffs as beneficiaries. See for example pages 684 and 701.
- This case is a prime candidate for an award of compound interest: where the defendants invoke, as justification for their failure to discharge their fiduciary duties as executors or trustees, an agreement induced by fraudulent misrepresentation and tainted by unconscionability. Even if they ever believed that agreement was truly binding, they ignored it: no payment was ever tendered to Harella, for example. The brothers arrogated the deceased’s interest in the partnership to themselves, without return to the estate, and Rachael at the very least acquiesced in that, as she did in the diversion to Edith of monies (albeit not of substantial amount) to which she knew the plaintiffs were entitled. The brothers effectively took the benefits intended by the testator for his daughters and used them as a springboard for the acquisition of assets now of substantial worth, fulfilling, if for a time and subject to the judgment of this court, the forecast often expressed by Robert that the daughters would get nothing from the estate – notwithstanding the clear testamentary intention of their father.
- The formula for calculation of compound interest is:
M = P (1 + I)n
M = the final amount including principal.
P = the amount of the principal ($159,475.54)
I = the rate of interest (claimed and allowed at 8%)
n = the number of years (13 years from 1999 to 2012)
- It was not disputed that if compound interest should be granted, this would be the applicable formula. The eight percent rate was that pleaded. Evidence to justify that relatively conservative rate was not necessary. See Serisier Investments Pty Ltd v English (1989) 1 Qd R 678, 681.
- The principal amount of $159,475.54 is multiplied by (1 + 0.08)13, which is 2.7196, yielding $433,709.67. That amount comprises principal of $159,475.54 and interest of $274,234.13.
- There will be declarations and orders as follows:
- a declaration that the agreement entered into by each plaintiff to forego her interest in the estate of her deceased father or the Moonoomoo cattle partnership, in return for payment of a sum of money, on or about 18 February 1999, is unenforceable and is set aside;
- a declaration that each of the defendants has breached his or her fiduciary duty owed to each plaintiff, whether as executor of the deceased estate or as partner in the Moonoomoo cattle partnership;
- a declaration that each plaintiff is entitled, at that plaintiff’s election:
- to an account of the profits which have accrued to the respective defendants by reason of their breach of duty; or
- to equitable compensation, assessed in the amount of $433,709.67 for the payment of which the defendants are jointly and severally liable, to the intent that the aggregate amount receivable by each plaintiff does not exceed $433,709.67.
- that within 21 days, each plaintiff inform the defendants (by their solicitors) of the election she makes and file an affidavit in this proceeding (personally or by her solicitor) confirming which election has been made;
- that upon the filing of that affidavit, it will be taken, without further application, that consistently with the election, there is judgment as follows:
- for an order for the taking of an account of profits which have accrued to the respective defendants by reason of their breach of duty, with liberty to apply for directions as to the manner in which that account will be taken; or
- against each defendant, in favour of the plaintiff, for equitable compensation in the amount of $433,709.67;
- that the Registrar is authorised to enter formal judgment accordingly;
- that there be liberty to apply;
- that costs be reserved.
- Submissions in writing in relation to the disposition of costs should be furnished within 48 hours.
- Published Case Name:
Johnston & Anor v Herrod & Ors
- Shortened Case Name:
Johnston v Herrod
 QSC 98
de Jersey CJ
18 Apr 2012