/

/

Bruce v Bruce [2025] NSWSC 1466 | Case summary | Zoe

NSWNSWSC

Bruce v Bruce

[2025] NSWSC 1466

Supreme Court of NSW|2025-12-05|Before: Kunc J

View on NSW Caselaw

General information, not legal advice.

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2025-12-05

Before

Kunc J

Catchwords

EQUITY — Equitable interests in property — Priority disputes
— Competing with other interests — Self-dealing
executor holds
property on institutional constructive trust for estate beneficiaries from

Source

Original judgment source is linked above.

Email me a plain-English brief of this case

Zoe will write a short plain-English brief of this judgment and email it to you: what it was about, what the court decided and why. It can take up to a minute.

General information, not legal advice.

Or create a free account to save it and ask Zoe follow-up questions.

Catchwords

EQUITY — Equitable interests in property — Priority disputes— Competing with other interests — Self-dealingexecutor holdsproperty on institutional constructive trust for estate beneficiaries frommoment of breach of fiduciary dutyEQUITY — Fiduciary duties —Breach — Self-dealing by executorEQUITY — Trusts and trustees— Breaches of trust — Court’s power to excuse

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: Bruce v Bruce [2025] NSWSC 1466

Hearing dates: 21-23 October; 12 December 2024; 29 April 2025

Decision date: 05 December 2025

Jurisdiction: Equity

Before: Kunc J

Decision: Parties to bring in short minutes

Catchwords: EQUITY — Equitable interests in property — Priority disputes — Competing with other interests — Self-dealing executor holds property on institutional constructive trust for estate beneficiaries from moment of breach of fiduciary duty
EQUITY — Fiduciary duties — Breach — Self-dealing by executor
EQUITY — Trusts and trustees — Breaches of trust — Court’s power to excuse

Legislation Cited: Civil Procedure Act 2005 (NSW)
Trustee Act 1925 (NSW) Uniform Civil Procedure Rules 2005 (NSW)

These proceedings are the result of a consolidation of two proceedings in which various parties claim an interest in a residential property at Connells Point in Sydney. Without intending any disrespect, I shall refer to some of the parties by their given names.
The property was held as a tenancy in common in two shares. One share was held by the Estate of the late Mr James Harvey Bruce (Father’s Estate) and the other share by the Estate of the late Mrs Colleen Marie Bruce-Ryland (Mother’s Estate) (together the E****states). The Executors of the Estates are the plaintiff, Licia Bruce, the first defendant, Jayleen Bruce (also known as Kayde and sued both in her personal capacity and as one of the Executors), and the third defendant, Colleen Bruce (sued in her capacity as one of the Executors). They are the daughters of Mr Bruce and Mrs Bruce-Ryland. Licia is an executor of both Estates. Jayleen is only an executor of the Father’s Estate and Colleen is only an executor of the Mother’s Estate. However, they are not the only beneficiaries of the Estates. The fourth defendant, Mr Alan Mitchell, is Jayleen’s estranged partner.
The origin of the present dispute is the sale of the property to Jayleen by the Executors without the informed consent of all of the beneficiaries of the Estates. The Executors were advised by Owen Hodge solicitors. It is now common ground that the sale was a breach of fiduciary duty by the Executors. A receiver and manager has been appointed to sell the property and each of the Estates will receive half of the net proceeds of sale.
The result of consolidating two sets of proceedings, one commenced by Licia and the other by Mr Mitchell, is:
By a Second Further Amended Statement of Claim filed 14 October 2024 (Licia’s 2****FASC), Licia (asserting representative capacity as an executor of the Estates and in her own right as a beneficiary of the Estates) seeks orders against Jayleen (personally and as an executor of the Father’s Estate) and against Colleen (as an executor of the Mother’s Estate) as to the beneficial ownership of the property (including that Mr Mitchell has no proprietary interest in it), that Jayleen and Mr Mitchell pay an occupation rent as equitable compensation for their occupation of the property, and that she be indemnified for her costs out of the estate;
A First Cross-Claim was brought by Jayleen and Colleen against Owen Hodge, which was settled with that firm paying $110,000 to the Estates;
Mr Mitchell’s claim in his proceedings became the Second Cross-Claim in the consolidated proceedings. It was constituted by an Amended Statement of Claim filed on 14 June 2022 (Mitchell Claim) against Jayleen for orders that he had a share in the ownership of the property or was entitled to compensation for payments he had made towards Jayleen’s mortgage of the property; and
By a Third Cross-Claim filed 10 October 2024 with Licia as cross-defendant, Jayleen and Colleen as executors of the respective Estates seek to be relieved from personal liability for the breach pursuant to s 85 of the Trustee Act 1925 (NSW) and rely upon the matters set out in their defence to Licia’s 2FASC (Exoneration Claim). They also seek orders that their respective costs be paid out of the estate of which they are executor. In her defence to the Exoneration Claim, Licia denies her sisters’ entitlement to exoneration (which was not quite the position she finally advanced) but contended that if they were exonerated, then she should also be exonerated. The Executors all contended that they acted on the advice of counsel and Owen Hodge, and submitted they should be exonerated from the consequences of the breach.
The issues actually presented for determination and the Court’s resolution of those issues may be summarised as:
The representation of the Estate, in particular the capacity in which Licia sues.

On 20 June 2017, Mr Joe Karam of MVS Valuers, on behalf of ANZ Bank, inspected the property and valued it at $950,000 (MVS Valuation). The borrower was recorded as Jayleen alone. The land was valued at $750,000, the improvements valued at $200,000 and unfurnished rental value was stated to be $600 per week. The internal and external condition of the main building was stated to be “fair”. Jayleen accepted that Mr Karam had inspected the interior of the building. The entry on the valuation form for “Essential Repairs/Allowances” was answered “No”.
On 1 August 2017, Jayleen and Mr Mitchell signed and submitted a joint loan application to ANZ Bank. It described Jayleen as the “Primary Applicant” and Mr Mitchell as the “Co-Applicant”. The application stated the value of the property was $950,000. Jayleen accepted that when she signed the document the mortgage broker told her that this was the ANZ Bank’s valuation of the property.
The loan application records that a variable rate loan had been selected: “Client’s [sic] have chosen VR as they have funds in savings which they wish to place in an offset account and reduce interest”. Under assets, a motor vehicle valued at $45,000 and savings of $220,000 were listed as being owned 50% by Jayleen and 50% by Mr Mitchell. Jayleen was stated to have a total monthly income of $4,658.08 and Mr Mitchell was stated to have a total monthly income of $8,017.08. Under living expenses, Jayleen’s total monthly expenses were stated to be $4,176 while Mr Mitchell’s were $0.
On 22 August 2017, ANZ Bank informed Jayleen and Mr Mitchell by letter of that date that they had an approved loan of $760,000.
On 25 August 2017, Mr Butler executed a valuation of the property at $850,000. The valuation report stated: “THIS REPORT MAY BE USED FOR TRANSFER/STAMP DUTY PURPOSES” and also that the improvements were in poor order (Second Butler Valuation). Colleen saw this valuation at Owen Hodge before signing the transfer for the property to Jayleen. There was no separate contract of sale.
On 28 August 2017, Jayleen and Mr Mitchell attended the office of Owen Hodge. Mr Mitchell completed an identity verification form. However, during the course of that attendance it was Jayleen who executed a mortgage over the property in favour of ANZ Bank as the sole mortgagor in the presence of Mr Mitchell. That Mr Mitchell was there is demonstrated by the email in [24] below.
Also on 28 August 2017, Owen Hodge sent this letter to the Executors:

The constitution of the proceedings insofar as it involves the Executors is not regular, given that Licia is one of the Executors who has committed a breach of duty. One outcome of this lack of regularity was that as to some permutations of the way the Executors put their cases on exoneration, there was no contradictor whose sole interest was to advance the position of the Estates against the Exoneration Claim. However, as the case developed, this was more a theoretical rather than real issue.
By the time of the hearing, the question of formal representation was moot on the central question of the property, it being accepted that the property should be sold and the proceeds returned in equal shares to each of the Estates. Insofar as Mr Mitchell’s claim was concerned, it was resisted by Jayleen in her personal interest and, to the extent necessary, by Licia insofar as it might impinge on the Estates’ right to the property (or its proceeds of sale).
Mr Hill foreshadowed, correctly in my respectful view, that the only real relevance of the argument about Licia’s capacity was likely to be on the question of costs and any claim Licia might make for indemnification from the Estates for those costs. However, how that is to be put will not be known until after delivery of these reasons. The question of exoneration (dealt with at [70] and following below) may also be relevant, not least because on one available analysis the Estates’ costs of these proceedings (or some part of them) would form part of the damages to the Estates for which the Executors would be liable as defaulting fiduciaries.
In reality (and despite their assertions otherwise) Licia and her sisters sue in their personal capacity as beneficiaries. Because, in shifting ways, the Estates’ interests have been substantially, if not completely, represented by the Executors in their personal capacities, the Court has concluded that there should be an order nunc pro tunc under UCPR Part 7 r 7.10(2)(a) that the proceedings continue in the absence of a representative of the Estates. The Estates will nevertheless be bound by these proceedings (see UCPR Part 7 r 7.10(3)).
The Court will hear the parties as to costs. Insofar as those arguments will impinge upon the Estates, practical steps can be taken to ensure the interests of the Estates are protected at that stage if there is a want of a contradictor. The Court will direct that these reasons be provided to all beneficiaries who are not the Executors and that those beneficiaries will have an opportunity to be heard insofar as any costs order is sought by any party for indemnity from or costs against the Estates unless it is clear that an existing party will be opposing that outcome. There is a real question as to whether any of the Executors (exonerated or not) should be indemnified for any of their costs from the Estates and thereby visit the cost consequences of their breach on the innocent beneficiaries.

Licia submits that she should be completely exonerated under s 85 of the Act for her breach committed as an executor in selling the property to Jayleen. The Executors all relied on the advice of Owen Hodge, which firm has admitted if failed to advise the Executors of the rule against self-dealing. It is submitted that while she is a solicitor, Licia had worked in personal injury law before working at her partner’s medical practice and that she deferred to the advice of the Estates’ solicitors and counsel. Licia did not have specialised experience in equity and the rule against self-dealing is not one that would be widely known to all lawyers. She was also living in Coffs Harbour and engaged in Family Court proceedings at the time. This had led her to disengage from the administration of the Estates, a fact about which Colleen and Jayleen complained.
The MVS Valuation was not provided to the Executors, and there was no reason for Licia to believe the property had been undervalued, until the Kohler Bird Valuation on 29 November 2017.
Upon learning of the breach, it was submitted that Licia took steps to remedy the breach, and her lawyers sent a letter on 23 May 2018 (see [31] above) informing Owen Hodge, as the Estates’ lawyers, of the breach.
Licia accepted that Jayleen and Colleen should be exonerated for the period up until they were advised of the breach, plus a two week period to account for time to obtain legal advice. From this time onwards, it was submitted that Jayleen and Colleen denied any breach of duty, refused to take steps to return the property to the Estates, failed to concede the property was held on trust for the Estates until 26 March 2024, and failed to make any formal admission until they filed their Defence on 10 October 2024. This is despite their lawyers stating on 25 October 2022 (see [47] above) that they were aware of the rule against self-dealing.
Licia lodged a caveat over the property on 2 October 2021 and commenced these proceedings on 4 January 2022. The fact that Jayleen and Colleen had failed to seek judicial advice was submitted to be a factor against exonerating them for defending the proceedings. In circumstances where Jayleen and Colleen ultimately conceded the property remained trust property, it was submitted the judicial advice would not have been in favour of defending at least the proceedings for extension of Licia’s caveat. Failing to seek judicial advice was submitted to be unreasonable.
It was therefore submitted that any exoneration should not extend to acts done during the period of 7 June 2022 and 26 March 2024, which is when the property was ordered to be sold.
In the alternative, it was submitted that the period in which Jayleen and Colleen should not be exonerated should be 7 June 2022 until 21 September 2023, being the date Robb J noted an agreement between the Executors to sell the property.

Jayleen and Colleen contended that they should be completely exonerated due to their actions being both honest and reasonable.
It was submitted the actions were honest and reasonable, based on:
The 28 August 2017 letter from Owen Hodge which stated, “We note that you have been previously advised by Counsel in conference that as Executors you do not need to seek the approval of the remaining beneficiaries” (see [22] above); and
The 22 November 2017 email from Licia that stated, “Our decision to sell the property… is a decision the executors are entitled to make”, which added weight to the communication from Owen Hodge because she is a solicitor (see [28] above).
It was submitted that the Executors reasonably relied upon the advice of both Owen Hodge and Licia, regardless of whether Licia understood her advice was being relied on. It was submitted she was a solicitor and was willing to assert the position advised by Owen Hodge in her email of 22 November 2017. The submission that Licia is not an expert in the requisite area of law and therefore not aware of the rule against self-dealing was challenged. It was submitted that all legal practitioners should have a finely tuned sense of what is or may constitute a conflict of interest.
It was submitted that the excuse of Licia being distracted by family court proceedings was not reasonable, when the Estates’ solicitors were writing to her in her capacity as the common executor of both Estates.
With respect to defending the proceedings, it was submitted that the letter of 23 May 2018 (see [31] above) which Licia submits would have put them on notice, was in answer to a request that Licia resign as an executor. Further, the letter did not mention a breach of the rule against self-dealing, only that an institutional trust had been impressed upon the property due to it being sold at an undervalue. The letter also alleged a fraud by Jayleen on Licia and Colleen, which Jayleen and Colleen had a right to defend due to it being a very serious claim. It was submitted Jayleen and Colleen were not required to seek judicial advice pursuant to s 63 of the Act because the claim against them raised fraud.
While it was conceded that the first formal admission of the breach of self-dealing was 21 September 2023, it was submitted that Licia was on notice of the admission in a cross-claim filed on 8 March 2022.
Considering Licia knew of the breach from May 2018, it was submitted that Licia should not be exonerated from then, because it took her until 2 January 2022, a period of four years, before she commenced the proceedings. She also took no legal action until filing her caveat on 2 October 2021. It was submitted an explanation for the delay is required if Licia seeks to be exonerated for this period.
It was submitted that Licia has not ratified the 21 December 2023 Deed of Settlement and Release between Jayleen, Colleen and Owen Hodge, nor explained this failure or joined Owen Hodge in the proceedings.

Section 85 is available to the Executors because s 5 of the Act defines “trust” to include “duties incidental to the office of legal representative of a deceased person”. The requirements under s 85(2) are cumulative and the fact that the defaulting fiduciary has acted in accordance with legal advice will be a strong (but not of itself determinative) factor in favour of exoneration.
The parties placed a great deal of emphasis on what they did or did not do once it became apparent to them that the breach had occurred, especially in relation to the conduct of these proceedings. However, what a fiduciary does after discovering their wrongdoing is of little or no relevance to the question of exoneration for the actual breach. It may (and in this case will almost certainly) be relevant to arguments about costs and the extent to which these might be visited on the Estates (as to which I refer to my observations in [69] above). In my respectful opinion, the Court must look at the circumstances which attended the breach because the section provides the possibility of relief against personal liability for the breach.
Jayleen is an accounts manager and Colleen is a medical doctor. There is no suggestion that they acted dishonestly. The Court finds they acted honestly. The Court is also satisfied that they acted reasonably in relying on Owen Hodge’s advice (which apparently also involved the advice of counsel), being advice that they did not have to seek the consent of all of the beneficiaries of the Estates to the sale of assets of the Estates (see [22] above) and unqualified by any reference to limitations on the capacity of executors to purchase such assets.
Furthermore, they ought fairly be excused because:
Having retained Owen Hodge to advise them in relation to the administration of the Estates, they were entitled to rely on Owen Hodge to advise them if there was a legal impediment to anything they proposed to do in the course of administration;
Owen Hodge failed to advise that the proposed transfer to Jayleen offended the rule against self-dealing or how the transfer might have been effected in way which did not offend the rule;
Owen Hodge reinforced the advice they had given by, in effect, saying that they could write to the other beneficiaries if so instructed (see [22] above) giving the impression that it was no more than an option for the Executors to consider; and
Jayleen and Colleen did and were entitled, at least in a general way, to rely on Licia, who was a solicitor, at least insofar as it might be expected she would be astute to potential adverse issues (especially something as basic as a conflict of interest or self-dealing by a fiduciary) and suggest that advice should be sought. However, in this context, I do not accept the submission that Licia’s email of 22 November 2017 (see [28] above) is relevant to the question of exoneration because it was well after the breach occurred.
In the case of Licia, there is also no suggestion of dishonest conduct and the Court finds that she acted honestly in relation to the transfer to Jayleen. However, she is otherwise in a quite different position to her sisters in relation to the issue of exoneration. The Court finds that Licia did not act reasonably and ought not fairly be excused because:
As a solicitor, she should have been aware of the seriousness of her obligations as an executor, such that her reliance on lack of attention to her duties as a result of her location or distraction by family law proceedings does her no credit;
While not formally responsible for advising the Executors, she could not behave as though the retainer of Owen Hodge absolved her from bringing her own professional knowledge to bear, even if only at the basic level of being alert to potential problems; and
Insofar as what might be described as a potential problem is concerned, even if her area of practice was not succession, the Court would expect that any solicitor would be aware of the possibility of conflicts of interest. For example, the risk of conflicts is a well known incident of personal injuries law, especially in relation to insurers and insureds, which was her area of practice. In any event, the rule against self-dealing by a trustee or fiduciary is fundamental. The Court would expect any solicitor at least to be conscious of a potential problem with such self-dealing, even if the passage of time since law school might mean that exactly why it was a problem may have faded from present consciousness.

The Mitchell Claim sought a declaration that Jayleen held an 87.5% share (“or other proportion as found by the Court”) of the property on trust for Mr Mitchel or that Mr Mitchell has a legal interest in 87.5% of the property as a tenant in common. Further, it was pleaded that Mr Mitchell’s interest in the property was held on constructive trust for him by Jayleen. This interest was alleged to arise under an agreement between himself and Jayleen to purchase the property together, “with the view that they would hold the property as tenants in common in equal shares”. A common intention and joint endeavour were pleaded as alternatives. Given that alleged intention, the basis for the figure of 87.5% remained elusive. There were also claims for various kinds of estoppel and negligent misrepresentation, but these were not the subject of submissions by Mr Mitchell.
Mr Mitchell submitted the ANZ loan application (see [17] above) was made based on his earning capacity and assets, rather than Jayleen’s. Despite what he said was their agreement, Mr Mitchell submitted that no interest in the property was ever transferred to him.
Further, it was submitted that he had made all of the mortgage repayments and financed all of the renovations, repairs and improvements to the property: Jayleen did not make any mortgage repayments or contribute financially to works done on the property. While Jayleen gave evidence that her wages as an employee of Mr Mitchell’s company, Iramhi Services Pty Ltd, were paid directly into the mortgage, Mr Mitchell submitted Jayleen had never been a genuine employee of Iramhi and he had no knowledge of her paying any money towards the mortgage.
Mr Mitchell further submitted that his equity in the property of 87.5% should be compensated as a result of there being a resulting trust. It is unclear if Mr Mitchell was using constructive trust and resulting trust interchangeably.
In his final submissions, Mr Mitchell submitted that as a result of securing and servicing the mortgage, he was the bona fide purchaser of the property.

In circumstances where it is clear Mr Mitchell made no contribution to the purchase price for the property, no question of a purchase resulting trust arises.
Insofar as any of the bases alleged by Mr Mitchell for an interest in the property are concerned, the evidence is far from satisfactory. There is no evidence from anyone of a specific conversation between Jayleen and Mr Mitchell as to what he would receive in return for his contribution to the mortgage payments. Mr Mitchell’s affidavit evidence of 15 July 2022 (at paragraph 42) was “I believed and relied on Jayleen’s various statements and representations [the Court interpolates, all unspecified] to me that we would both purchase the property”. Jayleen’s evidence was equally vague, including not having any real explanation as to why she was the sole purchaser other than that was the paperwork Owen Hodge presented her to sign, which she assumed was because she was the executor purchasing the property (Tcpt, 22 October 2024, p 110(1)).
Both Mr Mitchell and Jayleen were argumentative witnesses. There was no love lost between them, and I formed the view that Jayleen, in particular, was unprepared to make any concession that she thought might be to Mr Mitchell’s advantage. I am not prepared to accept the contentious evidence of either of them unless it is inherently probable or corroborated by independent documentary or other reliable, contemporaneous testimony.
The Court is left with the objective facts:
Despite having both been applicants for the ANZ loan, the loan and corresponding mortgage were with Jayleen alone;
Jayleen took her share of the Estates in relation to the property which was otherwise purchased with the ANZ loan;
The property was conveyed to Jayleen alone; and
As I find in [135] below, Mr Mitchell provided the funds for the mortgage payments through his company, Iramhi.
Mr Mitchell’s attempted explanation as to why he did not press the issue of his name not being on the transfer (see [110] above) was incredible. Mr Mitchell did not strike me as unintelligent. If he genuinely believed that he was entitled to be on the transfer as a purchaser, I have no doubt he would have been quite capable of taking that issue up with Owen Hodge when he and Jayleen attended their offices. On the other hand, it would be completely unrealistic to conclude that he was paying the mortgage without any expectation of obtaining an interest in the property.
Mr Mitchell bears the onus on this aspect of the matter. The evidence does not permit me to find (directly or by inference) an agreement of the kind alleged in the Mitchell Claim or a common intention to the effect pleaded. However, based upon an inference drawn from the objective facts, such as they are, the Court is satisfied that Mr Mitchell and Jayleen were parties to a joint endeavour (being to acquire the property for their mutual benefit as their home) which has failed without attributable blame. It is not possible to conceive that what they were doing in relation to the property did not have the requisite joint character.
As between Jayleen and Mr Mitchell, it would be unconscionable conduct by Jayleen to have the benefit of the property (or its proceeds) without giving Mr Mitchell the benefit of the contribution he has made. Jayleen holds the property on constructive trust for Mr Mitchell to the extent of his contribution, secured by an equitable charge. This conclusion (even if incorrect) makes no difference to the actual outcome as between Jayleen and Mr Mitchell. Because the Court has determined (see [142] below) that by reason of priority, the Estates take the property free of any interest Mr Mitchell may have, Mr Mitchell is only entitled to a judgment against Jayleen personally as equitable compensation or damages for the amount he has paid towards the mortgage over the property.

Beyond the Court being provided with various bank statements, the parties did not descend into the detail of what they showed other than Mr Mitchell providing a marked up set of Iramhi’s bank statements.
A convenient starting point is that Jayleen provided no documentary evidence in support of her contentions that she made any contributions to the mortgage repayments. Further, no one produced the mortgage offset account statements. The Court has been left to do the best it can.
Mr Mitchell produced the Iramhi bank statements which he had marked up to show expenses he attributed to Jayleen and, more relevantly, regular payments (generally of $1,250) to an account ending in 404 described as “home offset loan”. Jayleen’s ANZ Home Loan statement identifies the account ending in 404 as the relevant offset account. I have been able to trace the earliest repayments to the home loan account to payments made by Iramhi on the same day into the offset account.
Jayleen has provided no evidence as to how much (if anything) of what may have been in the offset account came from her rather than Mr Mitchell or Iramhi. As a basic cross-check, I have reviewed the ANZ Home Loan statement for 13 March to 13 September 2018. This records regular credits of $1,250 with the entry “LOAN PAYMENT JAYLEEN AND ALAN”. The total payment in for the period is recorded as $32,500. The Iramhi bank statements show corresponding payments to the offset account of $1,250 for that period totalling $31,250. I am prepared to assume the difference is a timing issue and a reflection of there being a credit balance in the offset account of an amount I cannot determine.
Based on the analysis referred to in the preceding paragraphs, the Court accepts that Mr Mitchell, through Iramhi, made all repayments on the mortgage from its inception. Mr Mitchell produced a summary of the home loan statements which showed total payments up to 11 September 2024 of $295,443.03. This figure can be updated to the extent necessary. Mr Mitchell is entitled to judgment against Jayleen in that amount. Subject to any further submissions, the costs of the Mitchell claim should follow the event such that Jayleen should pay Mr Mitchell’s costs of his claim in relation to the property (noting that he was originally legally represented).

The Estates were submitted to have the better equity due to Mr Mitchell’s conduct being unconscionable. The basis of the unconscionability was the victim of the breach were the beneficiaries who are innocent volunteers, Mr Mitchell being on notice that the property formed part of the Estates, and Mr Mitchell taking advantage of a “special deal” obtained by his de facto partner, Jayleen, by virtue of her being an executor of the Father’s Estate. Mr Mitchell was submitted to have been aware that:
There were nine beneficiaries of the Estates;
The consent of all of these beneficiaries had not been obtained and even if it had been, it would not have been informed consent due to Owen Hodge failing to advise about the rule against self-dealing;
Some of the beneficiaries were not even aware of the transfer of the property until after completion;
Jayleen was receiving an interest free advance distribution of her inheritance from the Estates which the other beneficiaries were not; and
No other beneficiary, as far as Mr Mitchell knew, had been offered this option.
In the light of this knowledge, it was submitted Mr Mitchell was either indifferent or wilfully blind to any detriment or potential detriment to the beneficiaries.
The unconscionability of Mr Mitchell’s conduct was said to be compounded if the Court found Mr Mitchell knew or suspected the property had been purchased for an undervalued amount. It was submitted that knowledge could be found on the basis of the loan application signed by Mr Mitchell (see [17] above) which represented the value of the property to be $950,000. In cross-examination, Mr Mitchell denied reading the loan application before signing it, and it was put to him that this was a lie (Tcpt, 23 October 2024, p 208(48)). Mr Mitchell also denied seeing the MVS Valuation (Tcpt, 23 October 2024, p 211(50)).
In the alternative, it was submitted that even if the equities are equal, the Estates’ interest was first in time. This is due to the institutional constructive trust being impressed upon the property from the breach, namely the Executors consenting to the transfer. If this position was not accepted by the Court, it was submitted that the institutional constructive trust arose upon the signing of the transfer which, according to the letter of Owen Hodge dated 9 June 2017 (see [15] above), occurred prior to the settlement of the property. Both of these were submitted to have taken place prior to Mr Mitchell gaining an interest in the property, and therefore his interest is later in time than that of the Estates.
The final alternative position was that if the interests arose simultaneously upon completion, the Estates have a better equity.

I accept Licia’s submission that the Estates (strictly their beneficiaries) have the prior and better interest in the property when compared to Mr Mitchell’s interest. However, I do so on a basis that does not require an examination of any alleged unconscionability on the part of Mr Mitchell. The Court’s primary conclusion is that the beneficiaries of the Estates have the better and prior equity in the property, prevailing over Mr Mitchell’s later equitable interest.
The Court’s reasoning may be summarised as:
But for the impact of the Torrens legislation, because the transfer of the property involved self-dealing by a fiduciary in an unadministered estate asset, it was ineffective to convey the Executors’ interest as full beneficial owners of the property (subject only to their obligation to deal with the property as part of the Estates in accordance with the respective wills). For the purposes of priority, the Executors continued to hold the legal estate.
Jayleen’s acquisition of indefeasible statutory title upon settlement of the sale makes it necessary to look to equity. Because the sale involved impermissible self-dealing by a fiduciary, Jayleen held the property on an institutional constructive trust for the beneficiaries of the Estates from the moment the sale was completed;
On any view, Mr Mitchell’s interest (howsoever categorised) in the property is subsequent to the beneficiaries’ interest because his interest would be declared to have arisen no earlier than his first payment of the mortgage (which necessarily post-dated the sale) or, more probably, even later when Jayleen first unconscientiously denied that he had any interest in the property; and
Mr Mitchell’s equitable interest (howsoever categorised) could not be better than the institutional constructive trust in favour of the beneficiaries that came into existence upon the breach of duty by Jayleen and the other Executors.
In these reasons, I have referred to the “Estates” as a convenient shorthand. Greater precision is required in relation to this part of the analysis. An estate is not a legal person, but is property controlled by a legal person (in this case an executor) who has obligations to deal with that property in accordance with a will (assuming testate succession), which includes obligations to the beneficiaries of the will.
Beneficiaries only have a right to a due administration of the estate until such time as the legal personal representative of the deceased (an executor or administrator) completes executorial duties and, thereafter, holds estate property on trust for the beneficiaries: Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694. In the present case, the property was part of the residue of the Estates, which were unadministered. The property had been transmitted to the Executors, who (in non-Torrens terms) held it as the absolute owners of the fee simple, but subject to their fiduciary obligations as executors to the beneficiaries.
There can be no doubt that the Executors owed fiduciary duties to all of the beneficiaries of the Estates. Those duties included the no conflict duty. That duty underpins the rule against self-dealing by trustees and executors, which has historically been one of the most fundamental rules of equity. Absent very limited exceptions including express authority in the will, the informed consent of all beneficiaries or the permission of the Court, a transfer by an executor to themselves of an interest from the estate is voidable by a beneficiary ex debito justitiae, no matter how apparently advantageous the transaction may have been to the estate: see the summary of principles set out by Ward P (sitting at first instance) in Carrington at [191] – [197].
A less explored question, but central to the present case, is what is the interest of the estate (or, more precisely, the beneficiaries) in what has been transferred to the self-dealing executor pending an application for the transfer to be set aside. In the case of an unadministered estate and Torrens title land, the answer is that in equity the defaulting executor continues to hold the property upon an institutional constructive trust in favour of the beneficiaries and still subject to the executor’s fiduciary obligations to administer the estate. An analogy is available with trustees (although it can only be an analogy because in an unadministered estate the property is held absolutely by the executors). The position in relation to trustees is aptly summarised by McPherson J of the Supreme Court of Queensland writing extrajudicially in Trends in Contemporary Trust Law (1996, Clarendon Press) 142:

Licia seeks an order for equitable compensation against Jayleen and Mr Mitchell for an occupation fee, because they lived at the property rent free. The claim was made on the basis that the Estates lost the opportunity to rent out the property and collect rent, which was to the detriment of the beneficiaries.
For Jayleen, the period she occupied the property on the evidence was from April or May 2010 until 26 May 2019. For Mr Mitchell, the period was July 2010 until 16 or 17 September 2024. Both Jayleen and Mr Mitchell admit to not paying rent to the Estates for their occupation of the property (Tcpt, 22 October 2024, p 76(8); Tcpt, 23 October 2024, p 196(19)). Licia submits the calculations should be from the period of 1 May 2010 until 17 September 2024, being a period of 14 years and 140 days.
The MVS Valuation provided an unfurnished rental value of $600 in June 2017 (see [16] above). It was submitted this figure is the best evidence for an averaged occupation fee because this time point is roughly in the middle of the occupation period.
While it was accepted that the property was in a state of disrepair, the fact that Jayleen, Mr Mitchell and their children did inhabit the property was the best evidence that it was habitable. It was further submitted that even if parts of the property were uninhabitable, they were capable of being used for storage.
The amount claimed for the occupation fee is $448,767.12. It was submitted Mr Mitchell’s portion of the occupation fee should be set off against his claim.
In the alternative, Licia submits the occupation fee should be claimed from the date of the settlement, being 13 September 2017. It was noted it may be argued that prior to the settlement, Jayleen, Mr Mitchell and their children occupied the property with the consent of the Executors. However, the Executors’ acquiescence becomes irrelevant from the date of the breach of the rule against self-dealing. The figure claimed for the occupation fee if assessed from the date of settlement is $216,858.08.

An occupation fee is a form of equitable compensation or damages from the defaulting fiduciary. There is no doubt Jayleen was a defaulting fiduciary. She has no liability to the Estates prior to her default, which occurred on 13 September 2017. No basis for liability before that date has been pleaded against her, with prayer 3 of Licia’s 2FASC being for an order (underlining showing amendments): “…that [Jayleen] and [Mr Mitchell] pay equitable compensation to each of the said estates…including but not limited to an occupation fee of [the property]”.
As Mr Hill ultimately conceded (see [160] above), objection to an occupation fee based on the alleged condition of the property was unsustainable when Jayleen had actually occupied the property. Furthermore, it was ultimately accepted that the MVS Valuation had been based on an internal inspection. Based on that valuation, the Court finds that a fair market rent for the property was $600 per week. Jayleen is liable to the Estates for an occupation fee calculated at that rate from 13 September 2017 until she vacated the property in May 2019. Because the Court does not know enough about the detail of the Estates, I have not taken into account (but do not exclude, if all beneficiaries agree) the possibility of a reduction in the amount to reflect Jayleen’s interest as a beneficiary to avoid in practical terms her paying to the Estates a sum to which she is in part entitled.
There is merit in Mr Mitchell’s submission about the lateness of the claim for an occupation fee against him, being raised for the first time in an amended pleading filed the month before the hearing (23 September 2024 in the predecessor to Licia’s 2FASC – see [55] above). A symptom of that lateness is that the basis for the claim against Mr Mitchell does not appear to have been the subject of much attention by those propounding it.
Mr Mitchell is not a defaulting fiduciary. Some alternative liability to the Estates in equity would need to be established. Licia’s 2FASC against Mr Mitchell is primarily directed to challenging Mr Mitchell’s claim to an interest in the property. The pleading also included a non-disclosure and unconscionable conduct claim against Mr Mitchell that was not pressed at the hearing beyond the submissions in [137] to [139] above. However, paragraph 50 of her claim contains the somewhat opaque averment “As the de-facto husband of [Jayleen], [Mr Mitchell’s] knowledge of the matters pleaded in paragraphs 1 to 25 is to be inferred”. Paragraphs 1 to 25 are a mixture of factual and legal assertions, many of which it is not obvious how Mr Mitchell would have had actual knowledge, let alone knowledge that the Court would infer he had because of his relationship to Jayleen.
As the case was run, the only way Mr Mitchell might have had a liability to the Estates in equity for an occupation fee was as an accessory to Jayleen’s admitted breach of fiduciary duty. No such accessorial claim was pleaded. The first limb of Barnes v Addy (1874) LR 9 CH App 244 would in any event not be available because he did not receive the property: Jayleen did. The second limb would have required a proper pleading of a dishonest and fraudulent design on the part of Jayleen (which is a description far removed from the case anyone advanced) and his knowledge of such a design.
Returning to Mr Mitchells’ submission, the Court accepts that it would be quite unfair to fix him with liability for an occupation fee as equitable compensation to the Estates. That is because while the claim was asserted against him in submissions, no legally recognisable basis for such a claim was either pleaded or advanced in argument at the hearing. This part of Licia’s claim against Mr Mitchell fails accordingly.