Equity - Fiduciary obligations - Conflict of interest with duty.

Equity - Fiduciary obligations - Guardianship - Wards residuary beneficiaries of an estate - Guardian acquiring estate asset from trustee of estate - Acquisition for value - Conflict of guardian's interest with duty to wards.

Equity - Fiduciary obligations - Breach by guardian - Relief - Constructive trust - Express trust - Occupation rent - Allowance for value of improvements to property - Interest.

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 applied.

Limitation of actions - Trusts and Deceased Estates - Express trust - Constructive trust - Constructive trust.

Limitation Act 1935 (WA) s47(1); Supreme Court Act 1935 (WA) s25(2)

Taylor v Davies [1920] AC 636, considered.

Personal property - Alienation - Gifts of chattels - Proof - Delivery.

In re Cole [1964] 1 Ch 175, considered.

Succession - Executor and trustee - Legal and equitable title to estate - Whether residuary beneficiaries have legal or equitable interest during administration of estate.

Commissioner of Stamp Duties (Q) v Livingstone [1965] HCA 7; (1964) 112 CLR 1, applied.

Succession - Executor de son tort - Intermeddling.

Succession - Trustee - Disclaimer of appointment - Implied from inaction.

Succession - Wills - Construction - "Advancements".

Limitation Act 1935 (WA), s47(1)

Supreme Court Act 1935 (WA), s25(2)

Trustees Act 1962 (WA), s7(1), s7(2) and s50

First Respondent (Defendant) : Mr C J L Pullin QC & Mr M H Zilko

Second Respondents (First Plaintiff) : Mr D H Solomon

Second Respondents (First Plaintiff) : Solomon Brothers

Australian Securities Commission v Schreuder [1994] TASSC 127; (1994) 14 ACSR 614

Banque Bruxelles Lambert SA v Eagle Star Insurance [1952] 2 All ER 769

Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105

Blyth v Fladgate [1891] 1 Ch 337

Burdick v Garrick (1870) LR 5 Ch 233

Cameron v Murdoch (1986) 60 ALJR 280

Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321

De Vries v Australian National Railways Commission (1993) 177 CLR 472

Federal Commissioner of Taxation v McDonald (1987) 18 ATR 957

Harrison v Manson (1988) 29 SE 420

In Re De Sommery [1912] 2 Ch 622

In Re Smith (1889) 42 Ch D 302

In Re Timmis [1902] 1 Ch 176

In the Estate of Wardle (1979) 22 SASR 139

Karger v Paul [1984] VicRp 13; [1984] VR 161

Klug v Klug [1918] 2 Ch 67

Knox v MacKinnon (1888) 13 App Cas 753

Laxy v IBM Australia Pty Ltd [1992] FCA 139; (1992) 35 FCR 79

Lord v Spinelly (1991) 4 WAR 158

Lutheran Church of Australia (South Aust District) Inc v Farmers Co-operative Executors and Trustees Ltd [1970] HCA 12; (1970) 121 CLR 628

Luxton v Vines [1952] HCA 19; (1952) 85 CLR 352

Mara v Browne [1896] 1 Ch 199

McLean Bros & Rigg Ltd v Grice [1906] HCA 1; (1906) 4 CLR 835

Payne v Parker [1976] 1 NSWLR 191

Peacock v Colling (1885) 54 LJ Ch 748

Pettitt v Dunkley [1971] 1 NSWLR 376

Piwinski v Corporate Trustee of The Diocese of Armidale [1977] 1 NSWLR 266

Re Barney [1892] 2 Ch 265

Re Hay's Settlement Trusts [1982] 1 WLR 202

Re Jordison [1922] 1 Ch 440

Re Montagu's Settlement Trusts [1987] Ch 264

Reid - Newfoundland Company v Anglo-American Telegraph Company Ltd [1912] AC 555

Spence v Federal Commissioner of Taxation [1967] HCA 32; (1967) 121 CLR 273

State of Western Australia v Wardley Australia Ltd [1991] FCA 314; (1991) 102 ALR 213

Sun Alliance Insurance Ltd v Massaud [1989] VicRp 2; [1989] VR 8

Talbot v Marsfield (1868) LR 3 Ch App 622

Tanti v Carlson [1948] VicLawRp 70; [1948] VLR 401

The Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 599; (1992) 39 FCR 225

Turner v Turner [1984] 1 Ch 100

Ward v Interaf Pty Ltd [1985] 2 Qd R 552

Williams-Ashman v Price [1942] 1 Ch 219

Witson v Turner (1883) 11 Ch D 521

Wright v Australian Broadcasting Corporation [1977] 1 NSWLR 697

1 JUDGMENT OF THE COURT: This is an appeal from a decision of White J in which his Honour dismissed claims by the second respondents (first plaintiffs) as the present executors of the estate of the late James Edward Carter Clay and by the appellants (second plaintiffs) which sought the delivery up to them of property and moneys (and other or alternative relief) which, it was claimed, the first respondent (defendant) wrongfully derived from the estate. The second respondents (first plaintiffs) did not appeal from the decision of the trial judge.

2 Mr Clay had married twice. The appellants are the children of the first marriage. Paul James Clay was born in 1954, Moira Helen Clay in 1956 and Mark Gregory Clay in 1957. Their mother having died Mr Clay later remarried. The first respondent was his second wife. There was one child of the second marriage, Jeanette Simone Clay, born in 1964. Jeanette Simone Clay was not a party to the action or this appeal.

3 In these reasons it will be convenient to refer to the late James Edward Carter Clay as "Mr Clay" and to his widow, the first respondent, as "Mrs Clay". Mr Clay was a businessman who had established a group of companies which conducted a number of businesses. He died testate on 20 November 1970. While the date of his death can now be given with some certainty that was not clear at the time. He disappeared while flying a light aeroplane in northern New South Wales. The wreckage was not discovered for several years after his death. For a time after his death there was uncertainty, even an element of mystery and speculation, as to his whereabouts or fate. Until October 1972 Mr Clay's affairs were managed by trustees. It was only after leave was granted to prove death that there was a grant of probate of his estate in October 1972 and the executor and trustee commenced the administration of the estate.

4 Immediately before his death the four children were living with Mr and Mrs Clay as members of the one family. They were living in a residential property known as 24 Queenslea Drive, Claremont in Western Australia which was owned by Mr Clay. It had been his family home during at least the latter years of his first marriage and was the family home during the second marriage until his death. This property featured significantly in the trial and the appeal. In these reasons it will be referred to as "Queenslea Drive".

5 Shortly before Mr Clay died a company of which he was governing director commenced construction of another home in Jutland Parade, Dalkeith. This was intended to be the new family home. It appears the home was to be far more substantial and elaborate than Queenslea Drive. Following the disappearance and death of Mr Clay the company completed the construction of the Jutland Parade residence, despite financial difficulties which the company was encountering. While the building itself was completed the company was without funds to complete the grounds and the fencing. Mrs Clay with the four children moved into the new home in Jutland Parade in August 1971, but on 1 February 1973 they returned to Queenslea Drive to make it the family home again. It had become necessary to sell the Jutland Parade home because of the financial difficulties of the company. Between November 1971 and January 1973 Queenslea Drive was let. It should be noted that at times in 1972 and 1973 the two eldest children, who were pursuing university studies, lived in rented accommodation closer to the university. Nevertheless, it was not until late in 1973 that Paul James Clay became the first of the four children permanently to leave the family home at Queenslea Drive. Queenslea Drive is still the home of Mrs Clay.

6 By his will dated 17 October 1969 Mr Clay appointed David Merritt Speed ("Speed") and Norfolk Estates Limited ("Norfolk") as executors and trustees. In the event, however, the grant of probate in October 1972 was to Speed alone. Speed was then a legal practitioner and a partner of a leading law firm. He had been both legal adviser to and personal friend of Mr Clay. Speed has been dead for many years. While it is necessary to mention Norfolk later in these reasons, for the present it is convenient to proceed on the basis that Speed was the sole executor and trustee. By the terms of the will the entire estate vested in Speed as executor and trustee, with a power of sale and conversion, subject to a power of postponement, to be held until it vested in Mr Clay's children, ie the appellants and Jeanette Simone Clay, on their attaining the age of 25 years. In the will there was also a discretionary power of advancement in favour of Mrs Clay during her life by which up to $20,000 a year might be paid to Mrs Clay out of either income or corpus. Such were Mr Clay's circumstances that his estate eventually came to be administered in bankruptcy.

7 On 7 March 1973 Speed, as executor and trustee, executed a transfer of Queenslea Drive to Mrs Clay for the consideration of $45,000. The instrument of transfer was registered at the Land Titles Office on 21 May 1973. Subject to an issue concerning insurance policies which will be considered later in these reasons, Mrs Clay paid to Speed the $45,000 from her own moneys to acquire Queenslea Drive.

8 At trial the appellants pursued as their primary pleaded case that, at the date of transfer of Queenslea Drive to Mrs Clay, the true market value of Queenslea Drive was in the range of $60,000-$65,000. It was their case that the sale was in breach of Speed's duty as trustee and that Mrs Clay was a party to the breach by Speed as she "knew or was recklessly indifferent" to this true market value. It was also the case for the appellants that Mrs Clay was their legal guardian, and so stood in a fiduciary relationship to them and to Jeanette Simone Clay, and that the acquisition by Mrs Clay, in the circumstances, was in breach of her duty as guardian. Alternatively, it was alleged that she intermeddled in the administration of the estate, thereby constituting herself a trustee and executor de son tort of the estate, in which capacity it was alleged she owed fiduciary obligations to the appellants and Jeanette Simone Clay as residuary beneficiaries. As originally pleaded the appellants sought rescission of the purchase of Queenslea Drive by Mrs Clay in 1973 with ancillary relief, but on appeal it was submitted that as only three of the four children sought relief the appropriate remedy was by way of constructive, alternatively express, trust as to a quarter share in Queenslea Drive in respect of each of them.

9 The grounds of appeal are both numerous and extensive and raise again a substantial majority of the very many issues which faced the learned trial Judge in this case. As will be mentioned they also seek to raise on appeal issues which were not part of the appellants case at trial. It is unnecessary to set out the grounds in detail in these reasons and it will be convenient to deal with them out of the order in which they are formulated.

10 The appellants' case at trial with respect to Queenslea Drive was interlinked with other issues which will be considered later in these reasons. Much of the reasons of the learned trial Judge are directed to those issues. They having been dealt with in his reasons, the learned trial Judge then identified the remaining issue in relation to Queenslea Drive as "whether it was sold to (Mrs Clay) at an undervalue in breach of trust and that (Mrs Clay) knew of such a breach". This would indicate that his Honour understood the case for the appellants in this respect as being based upon the allegation in par 9 of the amended statement of claim that the sale of Queenslea Drive was for a price which was below the true market value, and that Mrs Clay knew of this or was recklessly indifferent to it. The way in which the allegation is pleaded encourages this view, in that having pleaded in the preceding paragraphs the fiduciary relationship, its incidents in par 6, and the sale by Speed to Mrs Clay, the statement of claim continues in these terms:

"9. At the date of transfer the true market value of the Property was in the range of $60,000-$65,000 of which matter the defendant knew or was recklessly indifferent. In the premises the defendant breached the duties pleaded at par 6 and in the premises holds the Property on constructive trust for the Estate, alternatively for the beneficiaries, alternatively as express trustee as guardian for the beneficiaries."

Indeed, before us senior counsel for Mrs Clay submitted that the only pleaded allegation against her of breach of fiduciary duty was the knowing acquisition of Queenslea Drive at an undervalue.

11 Understandable as that view may be given the form of par 9 of the statement of claim, it is contended for the appellants that the reference to "in the premises" in par 9 should be construed as adequate to raise a plea for relief if there was any breach of the alleged incidents of the fiduciary relationship pleaded in par 6, whether or not that breach involved the acquisition of Queenslea Drive at undervalue. If this was the original intention, par 9 could have been better worded. Nevertheless, given the ambiguity of the phrase "in the premises" in the context of par 9, and some references in written submissions for the present appellants before the learned trial Judge, it appears that there was reliance, in the alternative, on a breach of fiduciary duty, even if the acquisition was not at an undervalue. It appears that his Honour overlooked this alternative. As a consequence the otherwise extensive reasons do not deal with it. To this extent, there may be seen to be some substance in the first ground of appeal that there was a failure to give reasons for decision.

12 This alternative basis of claim is now an issue of significance in this appeal. Nevertheless, it remains the ultimate fall-back position of the appellants. Before dealing with it, it is first necessary to deal with a number of other issues which are at the forefront of the case for the appellants, both at trial and on appeal, and which bear upon the question of the acquisition of Queenslea Drive by Mrs Clay in 1973.

13 There can be no doubt that Mrs Clay became the guardian of the four children at the time of the death of Mr Clay, ie her husband and their father. That was so both at common law and by statute. At all times following her marriage to Mr Clay she had accepted and treated her three stepchildren, the appellants, as members of her family in all respects as if she were their natural parent. And by virtue of s10 of The Guardianship of Children Act 1972, as the sole surviving parent, she was declared to be their guardian. It should be noted, however, that the oldest child Paul James Clay achieved his majority when he turned 18 years on 7 December 1972. That brought an end to the guardianship of him.

14 One contention for the appellants was that, despite this, Mrs Clay should be regarded as still subject to the responsibilities of guardian to Paul James Clay because she had not, on his turning 18, disclosed to him the terms of the will and the nature of his entitlement to share in the residuary estate. Reliance was placed on Hawkesley v May [1956] 1 QB 305, 323, Bennett v Minister for Community Welfare [1992] HCA 27; (1992) 176 CLR 408, 431 per McHugh J and Carter v Palmer (1842) 8 ER 256, 277-8. This issue arises because the acquisition of Queenslea Drive by Mrs Clay occurred essentially between March and May of 1973, some months after Paul James Clay acquired his majority. Hawkesley was concerned with the duty of trustees of trust funds when an infant beneficiary became entitled to an interest on attaining the age of 21. This decision speaks to Speed rather than to Mrs Clay. Carter v Palmer concerned the use by counsel, who had been a confidential legal adviser, of information confidential within the retainer, after the retainer had terminated. This information was then used by counsel to purchase charges on his former client's estates without permission from that client. The court proceeded on the basis that so long as the reason continued for refusing to allow counsel to use the confidential information so obtained to his own benefit, the disability against the use of that information should continue. In Bennett v Minister for Community Welfare, McHugh J was concerned that the duty that lay on a guardian to avoid economic loss to the appellant as the result of an injury occurring during the guardianship, should continue to bind the guardian until that duty was performed or discharged, despite the infant coming of age. While some of these authorities might have application to the responsibilities of Speed as trustee they do not appear to assist the appellants in respect of events arising for the first time some months after Mrs Clay's guardianship of Paul James Clay came to an end. As will appear, however, this issue does not appear material for the purposes of the resolution of this appeal. At all times material to the issues of this appeal, Mrs Clay was clearly guardian in respect of two of the appellants. The learned trial Judge expressly accepted that Mrs Clay was at all material times guardian of the appellants and his reasons proceeded accordingly. Subject to a need to return to the position of Paul James Clay, especially when dealing with trustee de son tort, with respect to a contention that Mrs Clay and Speed withheld information from him in breach of fiduciary obligations, it is convenient to proceed as though Mrs Clay was guardian of each of the appellants at the material times.

15 At trial and on this appeal it is also the case for the appellants that Mrs Clay became a trustee de son tort of the estate in particular by reason of her participation in some meetings with Speed, the letting of Queenslea Drive between November 1971 and January 1973 and her retention of the rent, her taking and retaining of estate chattels, and her participation in what is described in the grounds of appeal as the "wilful non-disclosure to the appellants of their entitlement under the will".

16 No objection was raised to his Honour's general appreciation of the relevant law. The appeal in this respect instead concentrates on the very same factual matters that were urged on his Honour at trial and in substance amounts to an attempt to have a fresh evaluation of his Honour's factual findings. With respect to Mrs Clay's presence at a few meetings at which the affairs of the estate were discussed, his Honour concluded that there was no evidence that she took part in the decision making or in any way purported to act as executor or trustee of the estate. The issue is whether Mrs Clay intermeddled with the assets of the estate in such a way as to denote an assumption of the authority, or an intention to exercise the functions, of the executor and trustee. Her mere presence at meetings, but not participating in the decision making of the meetings, can hardly be sufficient for this purpose, no matter what the subject matter being considered at the meetings. His Honour found that Mrs Clay did let Queenslea Drive and receive the rent, but he expressly found that she did so with the authority of Speed. That finding was clearly open on the evidence. As his Honour noted, acts done with the authority of the trustee do not constitute "intermeddling"; Halsbury's Laws of England, 4th ed, Vol 48, par 595. Insofar as the appellants seek to rely on Mrs Clay "taking and retaining" chattels of the estate, that too was the subject of adverse factual findings of the learned trial Judge and will be the subject of more detailed consideration later in these reasons. For present purposes it is sufficient to say that there is no reason to question the propriety of his Honour's rejection of the factual basis for these contentions. The learned trial Judge was not persuaded that any failure to disclose information to the appellants and in particular Paul James Clay, as to their interest in the estate as alleged in the ground, could amount to intermeddling so as to constitute Mrs Clay a trustee de son tort. At the most the evidence would indicate that, by her presence when this matter was discussed, Mrs Clay was aware that Speed had not to that time informed the appellants and Jeanette Simone Clay of their residuary interests under Mr Clay's will, and that Speed intended deferring doing so for a time. It was not the effect of the evidence that Speed did not intend to inform them. A number of considerations would provide reason why he as trustee may have thought it better to defer this for a time, including the considerable uncertainty which appears to have beset the affairs of the estate at that time, and their ages especially as their entitlement to share in the residuary estate arose on their attaining 25 years of age. Insofar as the appellants contend that Mrs Clay participated in this decision of Speed that is against a specific finding of the learned trial Judge that she did not participate in decision making. Nor can it be said that the evidence demonstrated any "wilful" non-disclosure whether on the part of Speed or Mrs Clay. Submissions sought to take the matter further than the ground of appeal by seeking also to rely on what was contended to be a breach of the first respondent's duty to inform her wards of their interests. Notwithstanding this objection, even if the duties of Mrs Clay as guardian extended to informing Paul James Clay on his attaining his majority, the evidence and the factual findings do not warrant the conclusion that any such failure was for the purpose of or constituted "wilful" non-disclosure to the appellants, or that it was directed to the defrauding of the appellants of their entitlements; Halsbury, 4th ed, op cit, vol 17, par 753. As it has not been shown Mrs Clay participated in "wilful non-disclosure" to the appellants of their entitlements under the will, cases such as Life Association of Scotland v Siddal [1861] EngR 300; (1861) 45 ER 800 relied on by the appellants are not in point.

17 For these reasons there is no reason to disturb the finding of the learned trial Judge that the appellants had not established that Mrs Clay was a trustee de son tort of the estate.

18 An issue which was emphatically pressed for the appellants on this appeal, as it was at trial, is that the purchase of Queenslea Drive by Mrs Clay was at less than its true value, considerably so. It was the appellants' case that it was worth appreciably more than the $45,000 which Mrs Clay paid to Speed as executor of the estate. The statement of claim alleged it to be then valued at between $60,000 and $65,000 and the appellants maintained their case in this respect on this appeal on the basis that Queenslea Drive should be found to have been valued at $60,000 or higher on a proper evaluation of the evidence at trial.

19 There was a substantial body of evidence directed to this issue at trial, including expert valuation evidence. The submissions before us for the appellants have been extensive indeed on this issue, as they appear to have been at trial. The matter received detailed consideration in the reasons for decision of the learned trial Judge. He canvassed the salient factual issues with care reaching the conclusion that "that the plaintiffs have not satisfied me on a balance of probabilities that the value of the property in mid-1973 was in fact appreciably greater than $45,000".

20 One contention for the appellants is that this expression of conclusion by his Honour should be understood as a finding that the property was in fact valued at greater than $45,000,but not appreciably so. The context and the reasoning of his Honour which led to this passage would indicate the contrary. That view is clearly confirmed by the sentence which immediately follows the passage being considered. In this his Honour specifically notes that as a consequence of that finding "no loss arose" to the estate. This is consistent only with a finding that the property was valued at the figure paid for it, ie $45,000. Clearly enough, the reference to the property not being valued at appreciably greater than $45,000 was merely a shorthand reference to the pleaded allegation and case of the plaintiff that the property was in fact valued at $60,000-$65,0000. The appellants set out to show that the property was in fact valued at appreciably greater than $45,000 and his Honour concluded that they had failed to do so. It was clearly the finding of his Honour that in mid-1973 the property was valued at $45,000 and that no loss accrued to the estate from its sale to Mrs Clay at that price.

21 In particular, the evidence at trial indicated and his Honour found that in 1973 the Valuer General had assessed the market value of the property for the purpose of stamp duty on the transfer at $45,000. While all records had been lost because of the passage of time, such a conclusion was clearly indicated by the evidence. It was the finding made by his Honour that this assessment was arrived at by means of a valuation of the property conducted to determine market value. That was the only evidence of a valuation which was contemporaneous with the events. For the appellants there were renewed before us criticisms of this valuation. They had been urged on the learned trial Judge as well. They included the evidence that it was not normal for the Valuer-General's professional staff to evaluate the nature and quality of the internal fixtures when assessing value for duty purposes, evidence that the internal fixtures were worth some $35,000, that a conservative approach was usually taken, and that there were sales of two properties in the vicinity, in April and May 1993 respectively, which it was submitted were capable of being viewed on a comparative basis as justifying a value higher than $45,000. There was also an attempt to discredit valuations of the Valuer General on the basis that cadet valuers as well as professionally qualified valuers were employed. It was submitted, as a consequence, that it might have been the case that this valuation was undertaken in part or entirely by a cadet. That is no more than speculation and may be put aside. It was open to his Honour on the evidence to accept, as he did, that this was a competent, professional valuation.

22 The other criticisms were matters of fact which were fully ventilated before his Honour. They had to be evaluated as to their possible substance and effect in light of all of the evidence. That was the approach adopted by his Honour. There were also two recent valuations placed before his Honour, one on behalf of the appellants which supported a value of $60,000 at March 1973 and the other on behalf of Mrs Clay which valued the property in March 1973 at $45,000. His Honour carefully assessed, in his reasons, the nature and strength and weaknesses of the two different approaches to valuation, a matter which had been exhaustively aired before him as it was again before us. In light of the evidence and its careful evaluation by his Honour, it is not surprising that he should have accepted that Queenslea Drive was valued at $45,000 in mid-1973, and that the present appellants had failed to satisfy him that it was in truth valued at an appreciably greater figure. That view was clearly open to his Honour on the evidence. While a great deal has been said about the strengths and weaknesses of the valuations, his Honour's appreciation of them and of the other evidence relevant to this issue and the conclusion that he reached may not properly be criticised.

23 Other issues concerning valuation should be mentioned. Each of the two recent valuations included references to a number of sales of properties in the vicinity of Queenslea Drive between April 1973 and October 1975. His Honour observed in his reasons that it had not been shown that the prices realised on any of these sales would have been known before the transfer of Queenslea Drive. The appellants object that two sales, one in April 1973 and the other in May 1973, would have occurred before the actual date of lodgement of the transfer of Queenslea Drive which was 21 May 1973. While it is true that at least one of these sales had reached the point of lodgement of the transfer before 21 May 1973, the appellants contention is grounded more in conjecture than actual evidence. It cannot be said that the evidence demonstrated that the consideration for that other sale would have been "known" to other valuers at 21 May 1973. The conclusion reached by his Honour was open to him on the evidence. There is, however, reason to question that 21 May 1973 is the appropriate date. That too was the subject of dispute. Three possibilities are apparent; the date the transfer was signed 7 March 1973, the date on which both parties clearly accepted the Valuer General's valuation of $45,000 by Mrs Clay paying to Speed the amount of the Stamp Duty assessed on $45,000 and Speed then stamping the Transfer and lodging a caveat to protect Mrs Clay's interest as purchaser, which was 12 April 1973, or the date of lodgement of the transfer 21 May 1973. As will appear later there is reason to regard 12 April 1973 as the latest possible date, if not 7 March 1993, rather than 21 May 1973. The view is not open on the evidence that these sales were "known" to other valuers on 12 April 1973. In any event it should be noted that the recent valuation of $45,000 which was before his Honour was made in knowledge of those April and May 1973 sales, indeed regard was had to sales up to October 1975 by that valuer, so that the knowledge by a valuer of the price paid for the April and May 1973 sales is not by any means necessarily determinative or material, as contended for the appellants. The degree of comparability of the properties with Queenslea Drive is also critical. The expert opinions and other evidence varied about that, as his Honour was well conscious.

24 Section 50 of the Trustees Act 1962 provides:

"50(1) A trustee may, for the purpose of giving effect to the trust, or any of the provisions of the instrument (if any) creating the trust or of this Act or any other Act, from time to time ascertain and fix the value of any trust property ... and where the trustee is not personally qualified to ascertain the value of any property he shall consult a duly qualified person (whether employed by him or not) as to that value; but the trustee shall not be bound to accept any valuation made by any person whom the trustee may consult.

(2) Any valuation made by the trustee in good faith under this section is binding on all persons beneficially interested under the trust."

25 It is submitted for Mrs Clay at trial, and renewed on appeal by way or cross-contention, that the course followed by Speed of selling at the value set by the Valuer General should be accepted as satisfying subs(1), so that all other considerations aside, by virtue of subs(2) the issue of the value of Queenslea Drive should be taken to be determined at $45,000 for the purposes of this action; reliance was placed on Carr v Carr (1987) 8 NSWLR 492 at 496. This was rejected by the learned trial Judge. Drawing on the limited indirect evidence, in the absence of direct evidence because Speed has been dead for many years, his Honour was persuaded as a matter of probability that Speed did not obtain a further valuation from any duly qualified valuer. It appears to be too tenuous to say that Speed "consulted" a valuer by selling at the value at which Queenslea Drive was assessed for stamp duty, even though he knew that the assessment process would involve a valuation by the Valuer General. In this respect the NSW provision considered in Carr v Carr appears to be distinguishable from s50(1). Although the evidence was scant, the finding that Speed did not consult any other valuer was open to his Honour. There is no sufficient reason shown, therefore, to disturb the finding of his Honour that Speed's actions were not in compliance with s50. The consequence is that s50(2) is not available to determine the question of value. The learned trial Judge was not in error in any respect with regard to this point. His factual finding that Queenslea Drive was valued at $45,000 and that the estate incurred no loss from the sale did not depend on s50(2), but was reached from an assessment of the evidence as to value.

26 It was further contended that circumstances following the signing of the transfer and before lodgement of the transfer, connected with what was said to be a writ of fi fa that had issued in respect of the property by a creditor of the estate, indicated that the value of Queenslea Drive was greater than $45,000 at the material time, and that both Speed and Mrs Clay were aware of this. The evidence suggests, that rather than a writ of fi fa, there were in fact two warrants of execution issued out of a Local Court in June 1972 and these were lodged against the title to Queenslea Drive. The sum of $2,308.40 was required for the discharge of the warrants. There are minutes of a meeting in early April 1973 at which Speed and Mrs Clay were present in which this was raised. It appears from the minutes that Mrs Clay was given to understand that the estate could not pay the $2,308.40 so that to obtain a transfer of Queenslea Drive it would be necessary for her to pay that sum. A letter sent on 11 April 1973 by Speed's firm to her sought payment by her of $47,958.50 which comprised the $45,000, stamp duty of $650.10 (assessed on $45,000), and $2,308.40 in respect of the writ of fi fa (the warrants). In fact Mrs Clay did not pay the $2,308.40 or any part of it. On 12 April 1973 the transfer was stamped at a value of $45,000 and a caveat was lodged that day protecting Mrs Clay's interest as purchaser. In the event, the warrants had expired well before 12 April 1973, so that it was the effect of s133 of the Land Titles Act that the transfer of Queenslea Drive to Mrs Clay was effected without payment by anyone of the $2,308.40. She did pay $45,000 to Speed as the purchase price for the property. The transfer could not be registered immediately as Speed was not yet shown on the title as executor of the deceased's estate, but as soon as this was attended to the transfer was registered on 21 May 1973.

27 The learned trial Judge accepted that following agreement for sale on 7 March 1973 there was a conveyance of the property on the stamping of the instrument of transfer on 12 April 1973, the purchase price being $45,000. This was given full legal effect by the registration of the transfer on 21 May 1973. The circumstances confirm the correctness of the trial judges findings that on 7 March 1973 the parties agreed that the property be sold. That agreement had binding effect between the parties, if not on 7 March 1973, at least by 12 April 1973 by which time the transaction had been assessed for duty at $45,000, the second respondent had paid the necessary duty to Speed calculated on $45,000, Speed had had the transfer stamped and a caveat protecting Mrs Clay's interest as purchaser had been lodged. As his Honour found, both parties had accepted the valuation of $45,000 and acted upon it. There was, at least by 12 April 1973, a sufficient documentary record of the agreement to satisfy the Statute of Frauds.

28 It was argued for the appellants that the circumstances surrounding the warrants should have led his Honour to the view that there never was a firm agreed price of $45,000, and that Speed and Mrs Clay reached agreement evidenced by the letter of Speed's firm dated 11 April 1973 that the sale price should be for a consideration of $47,308.40. That, in turn it is contended, revealed that the true value (or the best price) was higher than $45,000. While such a construction could be placed on the facts it was not the only one open, nor is it the more probable. For the reasons given $45,000 was the purchase price actually agreed and acted upon by Mrs Clay and Speed. The facts more naturally admit the view that the $2,308.40 was raised, not as an additional component of the agreed price, but rather in the nature of a charge on the title which would have to be discharged before effect could be given to the agreed sale and purchase. While Mrs Clay might well have insisted that it was the estate's responsibility to discharge the warrants so as to give a clear title, the evidence could well be taken to show that if in fact she did agree to pay the $2,308.40, she did so because she was prepared to accept and act on Speed's indication in effect that she would need to pay these additional monies to enable the estate to transfer Queenslea Drive to her.

29 The circumstances suggest a number of factors, other than the true value of the property, which could have influenced her to take this course. The financial circumstances of the estate which precluded it from discharging the warrants, by then she could well have adjusted mentally and emotionally to the position that she had purchased Queenslea Drive and that it would therefore continue to be the family home for herself and the children despite all the uncertainty and turmoil she had been through, and her trust in and reliance on Speed. The evidence, though less readily, could also admit the view for which the appellants contend that it should be concluded that Speed and Mrs Clay renegotiated the purchase price, so revealing the lack of a firm and binding agreement at $45,000, and confirmation that Speed had not secured the best price at $45,000, so that the estate had suffered loss by the sale at that price. The learned trial Judge did not accept this line of reasoning. It has not been shown that he should have done so, or that this Court on appeal should now do so.

30 For these reasons the appellants have not shown that the findings of the learned trial Judge to the effect that Queenslea Drive was not sold at an undervalue and that the estate did not suffer any loss by virtue of the sale by Speed to Mrs Clay in 1973 should be disturbed. It was open to his Honour to be satisfied, as he was, that the price paid of $45,000 represented the market value.

31 In addition to the appellants' primary contention that the sale by Speed of Queenslea Drive was at a substantial undervalue, to the knowledge of both Speed and Mrs Clay, other breaches of duty by Speed were also raised.

32 The proof of such allegations of fraudulent disloyalty to his duty as trustee by Speed, with knowing participation in such conduct by Mrs Clay, would involve conduct by Speed which was forbidden by his fiduciary duty to the estate and which would give rise to an equity for rescission at the instance of the estate without proof of actual loss to the estate flowing from the breach; see the discussion in Maguire v Makaronis [1997] HCA 23; (1996-1997) 188 CLR 449 cf 465-467, 472. But not all of the other alleged breaches of duty by Speed, in his administration of the estate, involve breaches of the same nature or with the same consequences as would fraudulent disloyalty by him in the performance of the trust constituted by the will. Failures by Speed in the observance of one or other of the duties which attend trust administration, such as failure to use due diligence and care in the administration of the estate, or a failure to observe a statutory requirement such as that arising from s50(1) of the Trustees Act were it to be relied on by the trustee, will give rise to an obligation to make good any loss caused by the breach of duty rather than giving rise ipso facto to an equity for rescission of the sale; see in particular Maguire v Makaronis (supra) at 473 and the cases there cited. In this case, for reasons already canvassed, there has not been any loss to the estate from the sale. This distinction about the nature of the breaches and the appropriate remedies was lost sight of in some of the submissions for the appellants. With that distinction in mind it is appropriate, nevertheless, to deal with the submissions raising allegations of other breaches of duty by Speed.

33 As the learned trial Judge correctly directed himself, it was the duty of Speed as trustee of the estate, he having an express power of sale, to obtain the best price for the property. A failure to do so would have exposed Speed to personal liability for any loss sustained by the estate; Jacobs' Law of Trusts in Australia, 6th ed, par 2012; Oliver v Court (1820) 8 Price 127, 146 ER 1152.

34 As a consequence, and subject to statutory modifications discussed shortly, as is noted in Jacobs', it is usual for trustees to invite competition for the sale of trust property and even though they do so, to fix a reserve price after properly informing themselves of the value of the property through a competent valuer; see Re Cooper and Allen's Contract for sale to Harlech (1876) 4 Ch D 802 at 816. The appellants contend that Speed was in breach of his duty as trustee by failing to secure the advice of a competent valuer and by treating only with Mrs Clay and not offering Queenslea Drive for competitive sale.

35 The submissions for the appellants placed much emphasis on Jacobs' formulation of the duty as being to obtain the best price, although it should be noted that different formulations of this duty are to be found in the decided cases, including to sell for value or full value or not to sell at an undervalue. It is not at all clear that any distinction in meaning is intended between the various formulations, especially as the usual remedy is for the errant trustee to be required to restore the estate or fund by making good any loss. The sense of the matter seems to be that in exercising a power of sale a trustee must conscientiously seek to achieve the best price and he or she will be liable to the estate or fund for loss sustained should the sale be at an undervalue. Nevertheless, it is said that the way to achieve the best price is to sell competitively, and that market value may not necessarily be the best price achievable. In this regard s31 of the Trustees Act is material. It permits sale by a trustee to be by public auction, public tender or private contract. It can no longer be contended, therefore, that it is necessary for a trustee to sell competitively to secure the best price.

36 Further, the distinction which is sought to be drawn between market value and best price appears to be founded in a narrow appreciation of the notion of market value and seeks to draw on quite exceptional possible factual situations as a reason to formulate an impractical rule applicable to all situations. There is no justification for seeking to distinguish best price from market value. Even if there were, it would be quite unrealistic to seek to give effect to any such a distinction in a case such as this where the ordinary difficulties, uncertainties and variables which attend the task of determining the value of land are compounded by the grave complexity of having to do so with retrospectivity of about a quarter of a century.

37 It is to be accepted that a trustee on sale should apply his or her mind to the task of determining value on sale; Smith v Cock [1911] AC 326. An informed view is required; Partridge v The Equity Trustees and Agency Co Ltd [1947] HCA 42; (1947) 75 CLR 149, 164. As indicated earlier, however, a failure in this respect will normally give rise only to an obligation in the trustee to make good any loss to the trust fund or estate from the breach.

38 The transfer executed by Speed on 7 March 1973 in favour of the second respondent stipulated the consideration for the sale of Queenslea Drive to be "$40,000 or such sum as may be finally determined by the Commissioner of State Taxation for the purpose of assessing stamp duty under the Stamp Act 1921 whichever is the greater". It was Mrs Clay's evidence that Speed had told her that the value of Queenslea Drive was about $40,000, which she accepted. On this basis, the figure of $40,000 was fixed. She was not told, however, and there is no evidence to reveal, on what basis Speed formed that view of the value of Queenslea Drive. While the evidence would indicate that this was the view Speed held, the finding of the learned trial Judge is that this view was not formed after obtaining expert valuation advice. In this Speed left himself exposed to the estate should the sale prove to have been at undervalue. He would have been liable for any loss sustained by the estate. On the evidence, it was to ensure that the correct value of Queenslea Drive was paid to the estate that Speed proposed and Mrs Clay accepted that the consideration fixed by the transfer allow for any higher valuation placed on the property by the Valuer General, whose role it was to provide the Commissioner of State Taxation with a valuation of Queenslea Drive for the purpose of assessing stamp duty. In the event that valuation was $45,000. That was the figure paid by Mrs Clay. It is to be noted, however, that whatever was the basis upon which Speed had fixed in his own mind the value at $40,000, he was not prepared to sell Queenslea Drive to Mrs Clay at a figure less than $40,000, even were the Valuer General to value it at a figure lower than $40.000. Thus while Speed, on his Honour's finding, had not taken expert advice, it appears he was determined that a sale should not occur at a figure lower than the value he ascribed to Queenslea Drive.

39 In accordance with his Honour's finding that Speed failed to secure expert advice with respect to the value of Queenslea Drive, it follows that Speed failed to duly administer the trust constituted by the will. That is in accordance with the view of the matter taken by his Honour. It could not be said, however, that the evidence required the conclusion that Speed had failed personally to apply his mind to the question of value. The contrary view is well open.

40 In this context there was also much submission about s50 of the Trustees Act, the terms of which have been set out earlier. For the appellants it was contended that Speed was in breach of statutory duties created by s50(1), first, to "consult" a qualified valuer and, secondly, an implied duty said to arise from the last words of the subsection to personally consider the advice received from the valuer who is consulted. These submissions proceed on the basis that s50 is to be read as creating duties applicable to all trustees in the situations to which the section can apply. It is not at all clear that is correct. Rather s50 would appear from its terms to be a permissive and facilitative provision which a trustee may call in aid in the performance of a trust. If the trustee does rely on s50, and does observe its terms, then the trustee secures the advantage and protection of s50(2) by which the value of property is determined and the beneficiaries are bound to that value. But if the trustee does not rely on s50, or fails to observe the terms of s50(1), the trustee looses the advantage and protection of s50(2), and if the trustee's administration is challenged by a beneficiary the issue whether the trustee has duly administered the estate in the sale of assets falls to be determined according to the ordinary rules for administration and without the intervention of s50. As indicated these ordinary rules require that the trustee apply his or her mind to value on sale and should the trustee fail to secure the best price there is an obligation to make good any loss. In this case Speed was found not to have complied with s50(1) and that finding is not to be disturbed. Reliance cannot be had on s50(2) as a consequence, and therefore Speed's administration comes to be evaluated according to the ordinary rules for administration. A failure to comply in some respect with s50(1) does not provide a separate and additional basis on which it can be held that Speed breached his duty duly to administer the estate.

41 The reasons already given have dealt with Speed's administration for present purposes. He failed to obtain expert advice. On this basis he was liable to make good to the estate any loss it suffered on the sale. There was none.

42 At the time of his death Mr Clay held two policies on his life with NML. A live factual issue at trial, which was the subject of extensive evidence, is whether Mrs Clay was the named beneficiary of the policies. It was the case for the appellants at trial and on appeal that there was no named beneficiary in each of these policies, and that the learned trial Judge should have found that the two policies were in all respects the property of the estate. Its particular materiality is that Mrs Clay paid the $45,000 to purchase Queenslea Drive from the proceeds of those two policies. This issue occupied a good deal of attention in the reasons of the learned trial Judge who, in the end, reached the express finding that the two policies were expressed to be in favour of Mrs Clay as the named beneficiary.

43 Once again, this Court is asked on appeal to re-assess the substantial body of secondary evidence relevant to this issue with a view to reversing the factual finding of the learned trial Judge. It is submitted that a complete review of the facts should persuade this Court that it was more probable than not that Mrs Clay was not the named beneficiary in the policies. The issue fell to be determined on the basis of extensive, but at times rather tenuous, secondary evidence because the policies themselves had been destroyed years ago and no copies have been found. Factual difficulties of this nature must be expected when there is a trial something like a quarter of a century after the relevant events.

44 There was a body of evidence that supported the trial Judge's finding that Mrs Clay was the named beneficiary. This included minutes of the estate, an affidavit sworn by Speed in support of an application for leave to swear death, an affidavit by Speed as to the assets and liabilities of the estate and the estate duty return which listed other insurance polices but omitted reference to the two policies in question. There was also the evidence of Mrs Clay that she was the named beneficiary, although so far as she could remember, her knowledge of this was founded on what she had been told by Speed rather than on an actual sighting of the policies. Evidence such as this, alone, provides a sufficient foundation for the factual finding reached by his Honour. It is not the case, therefore, that the finding which is challenged was not one which was open on the evidence. Rather, it is the appellants' contention that there are other circumstances revealed by the evidence which ought to have persuaded the learned trial Judge on the balance of probabilities to the opposite view. Such a contention is obviously one which presents great difficulty to the appellants, especially as the factual matters upon which their submissions are founded were extensively canvassed before the learned trial Judge and are set forth in his reasons for decision.

45 The primary contention for the appellants, both on this appeal and before the learned trial Judge, is that his Honour should have found that Speed had been shown on the evidence to be dishonest as a person and in his dealings with respect to the estate and that, with Mrs Clay, he deliberately set out to defraud the revenue, the creditors and the beneficiaries of the estate, for the benefit of Mrs Clay. On that foundation it is the further contention for the appellants that the affidavits and correspondence of Speed and anything that depended on his word should not have been accepted by the learned trial Judge.

46 It should be made clear that it is not the case for the appellants that Speed was dishonest for his own gain. It is their case that his actions throughout were directed to avoiding the claims of creditors on the estate and what should have been the true liability of the estate to the Federal and State revenue authorities, in part for the purpose and with the effect that Mrs Clay was able to secure Queenslea Drive as her own to the loss of the estate and, thereby, of the appellants. In this last respect, even were the appellants' contentions well founded, it is not at all clear that there would have been any different financial outcome for the appellants from the estate. But that is beside the point.

47 The precise factual issue in the trial to which this subject relates is the allegation in par 27.4 of the statement of claim that "there was no beneficiary named in the Insurance Policies". Mrs Clay's pleaded case denied this allegation and countered that Mrs Clay was named as the beneficiary in each of the policies. Issue was joined on this basis. The learned trial Judge correctly perceived that the appellants carried the onus of establishing that there was no beneficiary named in the policies.

48 The appellants' case sought to reason from a number of bases to the conclusion, as a matter of inference on the balance of probabilities, that no-one, in particular not the second respondent, was named as beneficiary; the consequence of this being that the policies belonged to the estate. Their submissions, which his Honour described as "very full and detailed" and "lengthy and closely-reasoned", are set out in the reasons for decision. They do not directly establish that there was no named beneficiary in the policies. That inference could be drawn, however, from at least some of them, especially so if they were taken in combination. Others of them involve what is nearer to conjecture than inference.

49 In particular, it was contended that the learned trial Judge fell into error in describing as "direct" those aspects of the evidence which were in the form of direct assertions that Mrs Clay was the named beneficiary. I am unable to read his Honour's reasons as evidencing any confusion as to the true nature of this evidence. He expressly adverted to the destruction long ago of the policies themselves, and the course of his reasoning indicates he was well conscious of the secondary nature of all the evidence before him relating to this issue. A reading of the reasons as a whole indicates that his reference, twice made, to direct evidence is properly to be understood as no more than an observation that it was evidence which directly asserted Mrs Clay's status as named beneficiary, in contrast to other evidence from which either that same proposition, or the contrary, might be inferred. There is no reason to think that his Honour misled himself as to the nature and weight of this evidence.

50 In his reasons for decision the learned trial Judge also observed that the appellants' submissions required the conclusion that Speed, and perhaps the defendant, deliberately set out to defraud the revenue, the creditors and the beneficiaries, of assets of the estate for the benefit of Mrs Clay. He saw that as involving a heavy onus on the appellants, especially as Speed is long dead and could no longer offer any explanation in answer to any of the attacks upon his veracity. He also observed that the appellants' contentions needed to overcome the presumption against fraud and a presumption expressed in "the maxim omnia rite esse acta praesumuntur".

51 Insofar as the case for the appellants at trial sought to implicate Mrs Clay as a knowing party to fraudulent conduct by Speed, that case was founded in the allegation of her knowing purchase of Queenslea Drive at undervalue. There was no other specific pleading of fraudulent conduct on her part, or of her knowing participation in fraudulent conduct by Speed, concerning Queenslea Drive. In light of the failure at trial and on appeal of the case for the appellants with respect to the allegation of undervalue on the sale of Queenslea Drive, and in view of the express findings by the trial Judge as to the honesty of Mrs Clay, and that she acted in the purchase of Queenslea Drive in reliance on advice received by her from Speed, and that she acted reasonably in so doing, and that she did so in the belief that he was acting properly in the best interests of the estate and the beneficiaries, there is no basis revealed in the evidence on which it should be concluded on this appeal that in respect of the ownership of the policies and the use of the proceeds of those policies by Mrs Clay to acquire Queenslea Drive, she acted fraudulently, or with knowledge of fraudulent conduct by Speed as trustee.

52 A finding made by the learned trial Judge was that Speed had erroneously said in a letter to the Commissioner of State Taxation dated 17 August 1973 that Mrs Clay had paid the premiums on the policies. For the appellants it is contended that this was to understate the case. The inference that should have been drawn, it was submitted, is that this assertion by Speed was false and deliberately so. Similar submissions are advanced with regard to other statements by Speed, some of which were on oath. In this and like respects the appellants contend the learned trial Judge failed to appreciate the strength of the evidence which it was said, as a matter of inference, supported the factual finding for which they contended. It is also contended that if one considers the totality of the sworn and other statements of Speed about these insurance policies the conclusion should be drawn, as a matter of inference, that Speed was lying at some point or other. In other words, it is contended that the conclusion should be drawn that there was dishonesty by Speed at some point or other in his conduct of the affairs of the estate relevant to this issue.

53 The learned trial Judge came to the view that the case for the appellants had established grounds "for some suspicion on their part in relation to the Policies" but he was not able to be satisfied on the preponderance of probabilities that the appellants had established what they set out to prove, namely, that there was no beneficiary named in the policies.

54 It may fairly be said that the evidence disclosed significant issues which, were he alive, called for explanation by Speed. In the absence of explanation at least error, if not conscious dishonesty by Speed, was open as a finding. That is not to say, however, that the true position has been established to be that there was no named beneficiary in the policies. In a trial conducted nearly a quarter of a century after the material events, the raising as a matter of circumstantial evidence of serious questions which called for answers by Speed, and by this means opening up as one possibility that there was a fraudulent element in Speed's conduct, does not, without more, necessarily establish that there was fraud by Speed. Nor does it demonstrate that the fraud was to falsely say and swear that Mrs Clay was named as beneficiary. While it may have been shown that Speed's evidence should be approached with caution, it had not necessarily been established either that his conduct was fraudulent in any respect, or that if it was, the fraudulent conduct involved the false assertion by Speed that Mrs Clay was the named beneficiary. Albeit that his statements should be approached with caution, as his Honour appreciated, they remain the most direct evidence available and he remained the person who was then in the best position to know whether the second respondent was named as beneficiary.

55 In approaching this issue of fact, it was for the appellants to establish by way of a reasonable and definite inference founded in the circumstances appearing in the evidence, on the balance of probabilities, that there was no beneficiary nominated on the policies. In approaching the evidence for this purpose it is appropriate not only to evaluate each of the factual contentions separately but also to form an appreciation of the overall effect of the whole of the evidence to see whether the appellants had discharged this onus; Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, 141-2 per Tadgell JA (Winneke P and Phillips JA concurring). In this case the path chosen by the appellants required the rejection of statements on oath and otherwise made by Speed in the course of the relevant events as being wrong, dishonestly so, and made for the purposes of fraud. While the standard of proof applicable in that process or reasoning was the civil standard, what that involves where the allegation is one of fraud was illuminated by the reasoning of Dixon J in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-362 where it was said:

"The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences. ... It is often said that such an issue as fraud must be proved 'strictly' or 'with certainty'."

"This does not mean that some standard of persuasion is fixed intermediate between the satisfaction beyond reasonable doubt required upon a criminal inquest and the reasonable satisfaction which in a civil issue may, not must, be based on a preponderance of probability. It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained. When, in a civil proceeding, a question arises whether a crime has been committed, the standard of persuasion is, according to the better opinion, the same as upon other civil issues ... But, consistently with this opinion, weight is given to the presumption of innocence and exactness of proof is expected."

This passage confirms the correctness of the learned trial Judge's observation that there was a heavy onus on the appellants to establish that Speed deliberately set out to defraud the revenue, creditors and beneficiaries and whether it should be accepted as a matter of inference that this was so, with the consequence that in pursuit of this fraudulent objective he lied on oath and otherwise set out to mislead.

56 The need for strict proof of fraud, ie certainty in the sense indicated by Dixon J in Briginshaw, existed whether or not regard is had to the presumptions identified by his Honour. While it is true that what is often referred as the presumption of regularity is concerned with acts performed by public officials or persons acting in an official capacity, that is not the full breadth of that collection of presumptions which are expressed in the maxim omnia rite esse acta praesumuntur or, more usually, omnia praesumuntur rite et solemniter esse acta, see generally Gillies, Law of Evidence in Australia, 2nd ed, pp89-93. These include a presumption that an act done in the course of business was duly performed and the presumption against fraud. It is not the case, therefore, that these presumptions could have no application to the present facts as was contended. Nor are the facts such that on any view it should have been concluded by the learned trial Judge that Speed had acted fraudulently, as was contended at some length. No such finding was made by the learned trial Judge and it has not been shown on this appeal that the state of the evidence was such that his Honour should have been persuaded of that fact. Whether the issue is approached as a matter of presumption, or merely by having due regard to the level of persuasion necessary to establish such an allegation on the balance of probabilities, this is a case where the evidence may properly be viewed as falling short of establishing such a significant allegation. It is not shown that the learned trial Judge erred in his assessment of the overall effect of the evidence as falling short of establishing to his satisfaction that Speed's conduct was fraudulent.

57 That being so, it was open to the learned trial Judge to act upon the sworn and unsworn statements of Speed which were the most direct evidence as to the question whether there was a named beneficiary in the policies.

58 Mention should specifically be made of the reliance for the appellants on conduct of Speed which was unrelated to the present events and which occurred more than a decade after these events. Speed was struck-off the role of practitioners in 1985 as a consequence of theft by him in 1984 of moneys totalling $4,468.65 from the trust account of legal firm for which he was then temporarily acting as caretaker. This conduct led to his conviction, on his plea of guilty, of stealing. In its decision, which is in evidence, the Full Court noted that Speed at one stage had obtained eminence in the profession but had reached this position in 1985 as a victim of alcohol. There was support in the evidence in this trial for the view that Speed's decline under the influence of alcohol was attributable to the death of a friend in 1973 which led to his leaving his then partnership in 1974 and to his condition worsening considerably from 1979, although the appellants sought to put the commencement of his decline at an earlier time, relying essentially on a conviction for a drink driving offence some years before 1973. Notwithstanding that conviction, the circumstances of and leading to his striking-off are not such as to be persuasive as to his honesty, standing and credibility in the early months of 1973. His conduct at that time is to be judged in light of the evidence which relates to that. This has been the subject of extensive review in the reasons for decision of the learned trial Judge and also, to some extent, in these reasons for decision.

59 For these reasons it has not been shown that the finding of the learned trial Judge that the second respondent was the named beneficiary of the two insurance policies was affected by error such that, on appeal, this Court should displace it and substitute positive findings that the policies had no named beneficiary and were owned by the estate.

60 It is now possible to turn to what has emerged as the most significant issue raised by this appeal.

61 For reasons given much earlier in this decision, in addition to the pleaded allegation that Mrs Clay knowingly participated in Speed's sale of Queenslea Drive at a substantial undervalue, it was also an allegation open on the statement of claim that Mrs Clay was in breach of her duty as guardian of her wards in purchasing Queenslea Drive from Speed. The appellants' case in this respect in advanced on two distinct bases. First, that as guardian Mrs Clay acquired Queenslea Drive which was the property of her wards as they were the residuary beneficiaries of the estate. Alternatively, even if the allegation that the acquisition was knowingly at undervalue is not made out it is contended that they may succeed if the acquisition was in any other respect in breach of any of the fiduciary duties of Mrs Clay which were pleaded, namely, duties to act fairly, honestly, not to subordinate the interests of her wards to her own, and not to place herself in a position where her self interest and duty to her wards conflicted. Of these the last, ie conflict of interest with duty, is the most pertinent. The others do not take the case any further and need not be separately considered. The appellants contend that by purchasing Queenslea Drive from the estate in which her wards were residuary beneficiaries Mrs Clay had placed herself in a position where her own self interest and her duty to her wards was in conflict, or at least potentially so, to the point where there was a failure to observe the duty she owed as guardian.

62 Because of the wide range of factual issues raised by the appellants in this appeal but rejected, it is convenient to summarise the factual basis on which this aspect of the appellants' case falls to be decided. Mrs Clay having been tragically widowed, more accurately at the time still not knowing whether she had been widowed or whether her husband was 'missing', found herself with the responsibility of sole surviving parent of four children and had inter alia need to secure a home for herself and her family. The business affairs of the deceased were complex and proved to be subject to much financial difficulty, such that the new home being built at the time of Mr Clay's death or disappearance had in the end to be disposed of to satisfy the demands of creditors. Mrs Clay, who had not been an active participant in the financial and business affairs of Mr Clay preferring the role of housewife and mother, relied upon and acted in accordance with the advice of Speed whom she knew to be a friend of and legal adviser to the deceased and a senior and respected partner in a leading law firm. As found by the learned trial Judge, this was her honest position and one which she reasonably took. Despite contrary submissions for the appellants, the evidence reveals she recognised that she would need to pay the true value of Queenslea Drive to acquire it from the estate, even though her own interest had been to acquire it as cheaply as possible, and in due course she did not question the value of $45,000 which was placed on it by the Valuer General for the Commissioner of Stamps and which in fact was its market value at that time. This price the respondent paid to Speed as executor and trustee of the estate to acquire Queenslea Drive. The acquisition of Queenslea Drive satisfied the immediate need for a family home for herself and the children. It also had a greater significance as it had been her family home throughout her marriage to Mr Clay and for many years, both before and after her marriage, it had been the family home of the appellants. As his Honour noted there were excellent reasons for Queenslea Drive to be offered to Mrs Clay. It offered a source of some continuing emotional comfort and stability, as his Honour described it - security, during a period which must have involved very great emotional disturbance for Mrs Clay and the children. In all of this Mrs Clay acted without knowledge of any failure by Speed to duly perform his functions as executor and trustee of the estate and without reason to suspect otherwise, honestly believing as his Honour found that Speed was acting in the best interests of the estate and the beneficiaries

63 The appellants' primary submission in this respect is that as guardian of the infant beneficiaries the first respondent was in the role of a trustee and, therefore, prohibited from purchasing property beneficially owned by her wards without leave of the Court. The appellants relied in particular on Larnach v Alleyne (1862) 1 W&W 342 on appeal 2WW & A'B 39. See also the propositions and supporting authorities in Jacobs' (supra), par 1743 that, except with consent of the court or pursuant to express power or with the assent of all beneficiaries, a trustee must not purchase trust property. If he does, the transaction may be set aside without evidence that the transaction was unfair or that he took any improper advantage of his position as trustee and even if the terms were fair and generous. That the court will not permit a trustee to have an interest adverse to or inconsistent with his duty to his beneficiaries is offered in Jacobs' as the underlying principle. In this case there was, of course, no attempt to secure leave of the Court and there could be no question of informed consent by the children. The appellants further and alternatively contended that Mrs Clay acquired the property in circumstances in which there was a conflict of her personal interest in acquiring Queenslea Drive with her duty to the appellants to protect their interests in the estate. It followed, in the submission of the appellants, that Mrs Clay was in breach of the trust arising from her statutory role as guardian.

64 These propositions require detailed consideration.

65 It can be readily accepted that a guardian is in a fiduciary relationship with a ward; Plowright v Lambert (1885) 52 LT 646, 652. It has been said that guardianship is an office of trust; Duke and Beaufort v Betty [1721] EngR 306; (1721) 1 P Wms 703, Mathew v Brise [1851] EngR 735; (1851) 14 Beav 341. What precise duties that involved relevant to the issues in this case will require further consideration in these reasons. - In Bennett v Minister for Community Welfare (1988) A Tort Rep 80 - 210 at 68,089 Nicholson J reasoned that:

"It will not be permitted that a person occupying a fiduciary relationship of any nature whatsoever towards an infant shall place himself, or be placed, in a position in which his interest can possibly conflict with his duty: Larnach v Alleyne (supra)."

"... It has been recognised that guardianship denotes 'duties concerning the child ab-extra; that is, a warding of, the defence protection and guarding of the child, or his property from danger, harm or loss that may enure from without': Wedd v Wedd (1948) SASR 104 at pp 106-107 per Mayo J. ..."

66 In that case his Honour was considering the duty as guardian to pursue on behalf of a ward a claim in negligence for personal injuries against the guardian and related interests. The nature of that cause of action being clearly property in the hands of the ward. As appears from the decision of the High Court on appeal from that decision [1992] HCA 27; (1992) 176 CLR 408 cf 411-412, that case turned on a common law duty of care and the observations with respect to a fiduciary duty owed as guardian were strictly obiter. Nevertheless, the reasons of Nicholson J are helpful for the purpose of the present decision.

67 Insofar as it is the appellants' case that the first respondent as guardian was prohibited from purchasing Queenslea Drive as it was beneficially owned by her wards it is necessary, in particular, to examine the nature of the interest of the appellants in the residuary estate of which Queenslea Drive then formed part. Subject to other just demands and the power of the executor and trustee to make advancements out of income and corpus to Mrs Clay of up to $20,000 a year, the appellants with their stepsister Jeanette Simone Clay each had an equal share as tenants in common in the residuary estate on their attaining the age of 25 years. That estate was still in the early stages of administration. This issue was considered by the Privy Council in Commissioner of Stamp Duties (Q) v Livingstone [1964] UKPCHCA 2; (1964) 112 CLR 12. At 17 in the reasons for the advice in that case their Lordships said:

"When Mrs Coulson died she had the interest of a residuary legatee in his testator's unadministered estate. The nature of that interest has been conclusively defined by decisions of long established authority, and its definition no doubt depends upon the peculiar status which the law accorded to an executor for the purposes of carrying out his duties of administration. There were special rules which long prevailed about the devolution of freehold land and its liability for the debts of a deceased, but subject to the working of these rules whatever property came to the executor virtute officii came to him in full ownership, without a distinction between legal and equitable interests. The whole property was his. He held it for the purpose of carrying out the functions and duties of administration, not for his own benefit; and these duties would be enforced upon him by the Court of Chancery, if application had to be made for that purpose by a creditor or beneficiary interested in the estate. Certainly, therefore, he was in a fiduciary position with regard to the assets that came to him in the right of his office, and for some for certain purposes and in some aspects he was treated by the Courts as a trustee. 'An executor', said Kay J in In Re Marsden (1884) 26 Ch D 783 at 789 'is personally liable in equity for all breaches of the ordinary trusts which in Courts of Equity are considered to arise from his office'. He is a trustee 'in this sense'.

It may not be possible to state exhaustively what those trusts are at any one moment. Essentially, they are trusts to preserve the assets, to deal properly with them, and to apply them in due course of administration for the benefit of those interested according to that course, creditors, the death duty authorities, legatees of various sorts, and the residuary beneficiaries. They might just as well have been termed 'duties in respect of the assets' as trusts. What equity did not do was to recognise or create for residuary legatees a beneficial interest in the assets in the executor's hands during the course of administration. ... The assets as a whole were in the hands of the executor, his property; and until administration was complete no one was in a position to say what items of property would need to be realised for the purposes of that administration or of what the residue, when ascertained, would consist or what its value would be."

At 21 their Lordships continued, quoting with approval from Barnardo's Homes National Inc Association v Special Income Tax Commissioners [1921] 2 AC 1:

"Viscount Finlay said: 'the legatee of a share in a residue has no interest in any of the property of the testator until the residue has been ascertained. His right is to have the estate properly administered and applied for his benefit when the administration is complete."

"What matters is that the Court will control the executor in the use of his rights over assets that come to him in that capacity; but it will do it by the enforcement of remedies which do not involve the admission or recognition of equitable rights of property in those assets."

After drawing attention to the confusion which arises from the circumstance that the terminology of our legal system has not produced a sufficient variety of words to represent the various meanings which can be conveyed by the words "interest" and "property" and illustrating this by critical analysis of passages from McCaughey v The Commissioner of Stamp Duties (1945) 46 SR (NSW) 192 which suggested that residuary beneficiaries in an unadministered or partially administered estate had a beneficial or an equitable interest in assets comprised in the estate, their Lordships said at 22-23:

"If 'by beneficial interest in the items' it is intended to suggest that such beneficiaries have any property right at all in any of those items, the proposition cannot be accepted as either elementary or fundamental. It is, as has been shown, contrary to the principles of equity. But, on the other hand, if the meaning is only that such beneficiaries are not without legal remedy during the course of administration to secure that the assets are properly dealt with and the rights that they hope will accrue to them in the future are safe guarded, the proposition is no doubt correct. They can be said therefore to have an interest in respect of the assets, or even a beneficial interest in the asset, so long as it is understood in what sense the word 'interest' is used in such a context."

With respect to the proposition to be found in Smith v Layh [1953] HCA 16; (1953) 90 CLR 102 at 108-109 that: "The right of the next-of-kin or residuary legatee to have the estate properly administered and to receive payment of the net balance gives them an equitable interest in the totality and therefore in the assets of which it is composed", their Lordships observed at 23:

"With all respect, that cannot be taken as an exact statement of the law without some further definition of terms. For its expressions would have to be reconciled with the authorities that deny to the residuary legatee any property at all in any specific asset while administration proceeds and with the fact that 'residue' cannot come into existence in the eyes of the law until administration is completed. Therefore, while it may well be said in a general way that a residuary legatee has an interest in the totality of the assets ... it is in their Lordships opinion inadmissible to proceed from that to the statement that such a person has an equitable interest in any particular one of the assets...

Nor can the solution of the difficulty be advanced by referring to those cases in Equity Courts in which a creditor or a pecuniary or residuary legatee has been allowed to follow and recover assets which have been improperly abstracted from an estate. The basis of such proceedings is that they are taken on behalf of the estate and, if they are successful, they can only result in the lost property being restored to the estate for use in the due course of administration. Thus, while they assert the beneficiaries right of remedy, they assert the estate's right of property, not the property right of creditor or legatee; indeed the usual situation in which such an action has to be launched is that in which the executor himself, the proper guardian of the estate, is in default, and thus his rights have to be put into motion by some other person on behalf of the estate."

68 It is clear from these observations that the appellant's proposition cannot be sustained that as residuary beneficiaries in the unadministered estate of their father they beneficially owned or had a beneficial interest in Queenslea Drive when it was purchased by Mrs Clay from the trustee of the estate. They had a right of remedy to enforce the estate's right of property should the sale be in breach of Speed's duty to the estate as trustee. Their right of remedy is to ensure that the estate is properly administered and in due course when the administration is complete that the residue as then ascertained is applied for their benefit according to the terms of the trust constituted by the will.

69 For this reason alone Lanarch v Alleyne (supra) at first instance and the authorities relied on in Jacobs (supra) are to be distinguished as, in each case, they concern a trustee dealing for self-interest in trust property. With respect to Lanarch v Alleyne it should also be noted that it was upheld on a different basis on appeal. In this case Queenslea Drive, while subject to the trust administered by Speed, was not itself the subject of Mrs Clay's fiduciary duty. Her duty as guardian extended to the exercise on behalf of her wards, in appropriate circumstances, of their right to bring proceedings against Speed to protect the property interest of the estate. Mrs Clay's acquisition of Queenslea Drive did not adversely affect or destroy that right of action of the wards. And on the findings of fact no occasion arose for its exercise, as Speed sold for value.

70 There remains, therefore, the alternative contention for the appellants that the acquisition of the property from the estate by Mrs Clay involved a conflict of her personal interest and her duty as guardian to the appellants.

71 The submission for the appellants is that it constitutes a breach of the duty of loyalty required of her as guardian to acquire any part of the estate in which her wards have a residuary interest from the trustee, as her own interest in acquiring that property for her own benefit, whether or not she sought to do so on as favourable terms as possible or acted with complete fairness and honesty to her wards, may conflict with her duty as guardian to ensure for her wards that Speed duly administered the estate. The force of this proposition can be readily accepted, in light of the authorities, in a case where the wards have a legal or equitable interest in the asset of the estate acquired by the guardian. That would be so because the guardian would then be buying property of the ward and the conflict of interest with duty is immediately apparent. Similarly, were Mrs Clay as guardian also the trustee of the estate, she would be incapacitated from purchasing for herself property comprised in the estate (subject to limited exceptions which are not presently relevant). The reasoning in the cases cited in Maguire v Makaronis (supra) at 465 confirm these propositions and explore the considerations which underlie the principles they reflect. In that case solicitors were acting for clients on the purchase of a business and freehold of a poultry farm and in relation to the obtaining of finance to support that purchase. The solicitors failed to disclose their identity and interest as mortgagee. The solicitors were in breach of fiduciary duty when they entered into the mortgage with their clients in the absence of the informed consent of those clients to the solicitor's interest in the transaction. There was a direct transaction between solicitor and client which was entered into by the fiduciary in breach of duty. At 464-465 in the reasons of Brennan CJ, Gaudron, McHugh, Gummow JJ the following appears:

"In Clark Boyce v Mouat [1994] 1 AC 428 at 437 the Privy Council referred to the judgment of Lord St Leonards LC in Lewis v Hillman [1852] EngR 392; (1852) 3 HLC 607 at 630 as authority for the proposition:

'The classic case of the [fiduciary] duty arising is where a solicitor acts for a client in a matter in which he has a personal interest. In such a case there is an obligation on the solicitor to disclose his interest and, if he fails so to do, the transaction, however favourable it may be to the client, may be set aside at his instance.'

To this several points may be added in elaboration. First, the situation here is to be distinguished from an action in tort to recover damages for a pecuniary loss caused, for example, by fraudulent misrepresentation. Equity intervenes, particularly where the fiduciary is a solicitor, not so much to recoup a loss suffered by the plaintiff as to hold the fiduciary to, and vindicate, the high duty owed the plaintiff. Thus, whilst significant, inadequacy of the consideration or other improvidence of the transaction is not determinative. The approach taken by the Judicial Committee in the passage set out above is consistent with the reasoning underlying a number of decisions of this Court. In CIBC Mortgages Plc v Pitt, Lord Browne-Wilkinson referred to the considerations of general public policy which found what he identified as the long-standing principle whereby those in a fiduciary position who enter into transactions with those to whom they owe fiduciary duties labour under a heavy duty to show the righteousness of the transaction. Similar considerations are evident in the formulation by Lord St Leonards LC in Lewis v Hillman that, if a transaction between a solicitor and client is to stand, it must be 'open and fair, and free from all objection', not merely 'fair'." (Some references to authority deleted).

After a review of many other decisions their Honours said of the case they were considering at 472:

"As indicated earlier in these reasons, their fiduciary duty forbade the appellants, in the circumstances of this case, to enter into the transaction and the equity for rescission was immediately generated by breach of that fiduciary duty."

The authorities considered in that decision identifying the breach of fiduciary or trustee duty and with respect to the availability of the equitable remedy of rescission are cases in which the fiduciary was involved in a dealing directly with those to whom the fiduciary duty was owed, or in dealing in the property of those persons or using his position as fiduciary to the disadvantage of the beneficiary. Plowright v Lambert (supra) and Taylor v Davies (supra) on which the appellants also rely, are also cases of that nature. The present is not, as Mrs Clay did not deal in the wards' property and allegations that she used her position as fiduciary to disadvantage the beneficiaries were not made out.

72 As was said in Maguire v Makaronis at 464:

"... To say that the appellants stood as fiduciaries to the respondents calls for the ascertainment of the particular obligations owed to the respondents and consideration of what acts and omissions amounted to failure to discharge those obligations."

73 The appellants' case in this respect relies on a rule of equity which is the subject of some variety of formulation. One commonly referred to is that of Lord Herschell in Bray v Ford [1986] AC 44 at 51 which is in these terms:

"It is an inflexible rule of a Court of Equity that a person in a fiduciary position ... is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict."

In New Zealand Netherlands Society v Kuys [1973] 1 WLR 1126 the advice of the Judicial Committee was formulated by Lord Wilberforce in terms of an obligation:

"... Not to profit from a position of trust, or, as it is sometimes relevant to put it, not to allow a conflict to arise between duty and interest."

In Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178, speaking in the context of the liability to account, Deane J said at 198:

"There is a wide variety of formulations, of the general principle of equity requiring a person in a fiduciary relationship to account for personal benefit or gain. The doctrine is often expressed in the form that a person 'is not allowed to put himself in a position where his interest and duty conflict' ... or 'may conflict' or that person is 'not to allow a conflict to arise between duty and interest' ... As Sir Frederick Jordan pointed out, however, ... this, read literally, represents 'rather a counsel of prudence than a rule of equity': indeed, even as an unqualified counsel of prudence, it may, in some circumstances, be inappropriate ... The equitable principle governing the liability to account is concerned not so much with the mere existence of a conflict between personal interest and fiduciary duty as with the pursuit of personal interest by, for example, actually entering into a transaction or engagement 'in which he has, or can have a personal interest conflicting ... with the interests of those whom he is bound to protect ... or the actual receipt of personal benefit or gain in circumstances where such conflict exists or has existed'."

74 We have been reminded by Lord Upjohn in Phipps v Boardman [1966] UKHL 2; [1967] 2 AC 46 at 123 that the rules of equity are stated in the most general terms because of the diversity of circumstances to which they must be applied, with the consequence that in their application particular attention must be paid to the exact circumstances of each case. This echoes the warning he gave in Boulting v Association of Cinematograph Television & Allied Technicians [1963] 2 QB 606 at 637-638 that the conflict of duty and interest rule:

"... must be applied with commonsense ... it must be applied realistically ..."

75 A number of these decisions were considered by Mason J in Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 102-104. In the course of this consideration his Honour said at 102-103:

"In accordance with these comments it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case ... The often repeated statement that the rule in Kuch v Sandford applies to fiduciaries generally tends to obscure the variable nature of the duties which they owe. The rigorous standards appropriate to a trustee will not apply to a fiduciary who is permitted by contract to pursue his own interests in some respects. Thus, in the present case the so-called rule that the fiduciary cannot allow a conflict to arise between duty and interest cannot be usefully applied in the absolute terms in which it has been stated."

"... the fiduciary's duty may be more accurately expressed by saying that he is under an obligation not to promote his personal interest by making or pursuing a gain in circumstances in which there is a conflict or a real or substantial possibility of a conflict between his personal interests and those of the persons whom he is bound to protect ... By linking the obligation not to make a profit or take a benefit to a situation of conflict or possible conflict of interest the proposition, in accordance with the authorities (a) excludes the relevance of an inquiry into the actual motives of the fiduciary; and (b) excludes restitutionary relief when the interest of the fiduciary is remote or insubstantial..."

The passage which his Honour then cited at 104 from a decision of Judge Learned Hand is also instructive. In it the Judge, while recognising that the rule in this context precludes inquiry whether personal interest had any part in actually influencing the fiduciary's actions, nevertheless noted that the rule is not applied inflexibly and has not been applied where the fiduciary's interest though strong was too remote, and also where, though not too remote, it was too feeble to be a determining motive.

It is the case that the doctrines of equity must develop and be applied according to recognised principles rather than to "idiosyncratic notions of fairness and justice"; see Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 615 in relation to the development of the constructive trust as a remedy. On the other hand, equity would recoil at the idea that it is an instrument of oppression. The contrary is the case. This makes it all the more important to look at the circumstances of the individual case and to assess the nature and scope of fiduciary obligations in the light of those circumstances. Generally speaking, equity intervenes only, and to the extent necessary, to remedy an injustice. It is far better placed to do so if there is some flexibility in the way that its principles are to be applied.

76 It is clear Mrs Clay owed to her wards no specific duty in respect of Queenslea Drive. It was not their property. Her responsibility as guardian, however, included acting if necessary to ensure that Speed duly administered the estate so that the residuary expectations of her wards were adequately safeguarded. The issue is whether by herself purchasing for value from the estate, property which formed part of the estate, she had placed herself in a position where her self-interest and her duty to her wards conflicted in such a way as to infringe the rule.

77 No decided case appears to have applied the conflict of interest and duty rule to a guardian and ward relationship in circumstances comparable to these. A number of factors in the circumstances of this case could provide reason for viewing the conduct of Mrs Clay as not involving a breach of the duty she owed as guardian. She dealt with the trustee who had a power of sale, not with her wards. She did not deal in property of her wards. She dealt in good faith. She paid market value and no loss accrued to the estate. The acquisition was not in breach of any duty she owed with respect to the property acquired. She was guardian by virtue of her capacity as sole surviving natural and step-parent of the wards, a very particular type of fiduciary role albeit that it may have some of the indicia of a trustee role. She may be seen to be acting at once in her ward's interest and her own by providing a home for her wards as well as herself, especially as Queenslea Drive offered particular emotional support for her wards, as well as herself, which would be lost to all of them if she did not acquire it.

78 In terms of Mason J's formulation in the Hospital Products case, a number of these circumstances could suggest that Mrs Clay was not pursing a gain by purchasing for value, and that there was not a sufficient prospect of conflict of interest especially given their parent and child relationship. It might be considered that in a case such as this, in the absence of actual loss there was no need to extend the reach of the decided cases to embrace a situation where no duty was owed in respect of the property acquired, to vindicate the higher duty equity demanded of a fiduciary.

79 On the other hand it must be acknowledged that in dealing in her own interest with Speed to acquire a significant asset of the estate, the interest of Mrs Clay might be expected to incline naturally enough toward acquiring the asset at the lowest possible price. Further, having acquired it, it could be against her own interest in retaining it to question the propriety of Speed's conduct as trustee of the estate. In this way there could be identified the prospect that her personal interest as purchaser might conflict with her duty as guardian to watch out for and protect her wards' residuary interests in the estate.

80 It is difficult indeed to be satisfied where the line should be drawn in the particular circumstances of this case. While this is significantly less obviously a case of a breach of the fidelity owed as fiduciary than if Mrs Clay had acquired property of which she herself was a trustee, the potential for there to arise a real conflict between interest and duty cannot easily be described as unreal or insubstantial. While this may be seen as borderline case in many respects, it is difficult to see that Mrs Clay's own interest may properly be seen to be remote or insubstantial.

81 With some hesitation, in the end it appears that the preferable view is to recognise in this case that by acquiring Queenslea Drive from Speed Mrs Clay had placed herself in a position that there was a sufficient risk that her personal interest in acquiring and retaining Queenslea Drive might impede the faithful performance of her duty as guardian to watch out that Speed duly administered the estate, as to constitute the acquisition of Queenslea Drive a breach of her fiduciary duty as guardian.

82 It is necessary, therefore, to consider whether relief may be granted to the appellants for the breach of duty thus identified, despite the passage of time, ie whether the limitation provisions may be called in aid by Mrs Clay.

83 By par 9 of the statement of claim the case for the appellants in this respect is put on three bases. It is alleged that Mrs Clay holds Queenslea Drive (a) on constructive trust for the estate, (b) on constructive trust for her four children (although only three bring this action), and (c) as express trustee as guardian.

84 The trustees of the estate have not appealed from the decision below. However, as residuary beneficiaries of the estate, the appellants seek to enforce the proprietary rights of the estate; see Maguire v Makaronis (supra). In the action below the trustees could not have secured the rescission of the sale to Mrs Clay (had that been sought) as the sale was not in breach of Speed's duty to the estate and the estate received market value for the sale. Mrs Clay stood in the position of a bona fide purchaser for value from the estate. The trusts of the will attached to the $45,000 instead of to Queenslea Drive once the sale was effected. Mrs Clay's breach of fiduciary duty which has been identified was qua her wards, not the estate, and the breach was not in respect of property of her wards. While the wards could bring proceedings to ensure the due administration of the estate, this was to enforce the proprietary rights of the estate, not their own. The wards, therefore, could not secure for the estate an order for rescission of the purchase by Mrs Clay. For the same reasons Queenslea Drive is not now held by Mrs Clay as constructive trustee for the estate.

85 It was contended that a constructive trust in favour of the four children, her wards, arose on the basis that her wards had an equitable proprietary interest in Queenslea Drive when Mrs Clay acquired it, with the consequence it was submitted that this was an acquisition by a guardian of her infant wards' property. For reasons already given that must be rejected.

86 It is a rule of equity, however, that a gain or benefit obtained by a fiduciary in breach of a duty owed as fiduciary is appropriated for the benefit of those to whom the fiduciary duty is owed; this statement of the rule is an adoption of the formulation by Deane J in Chan v Zacharia (supra) at 198. It is on this basis that Mrs Clay may now be seen to hold Queenslea Drive as constructive trustee for her four children.

87 It is further submitted that the relationship of guardian and ward being a trustee relationship, the trust which was breached by Mrs Clay's acquisition of Queenslea Drive arises directly from the provisions of s 10 of the Guardianship of Children Act. It is conceded for Mrs Clay that the trust constituted by s 10 and which was breached is an express trust as it is constituted by the statute; in this regard see Sands v Thompson (1883) 22 Ch D 614 at 617.

88 It is contended for Mrs Clay that no relief may be granted in respect of such a trust by virtue of s 47(1) of the Limitation Act 1935. It is an exception to that provision, however, where the suit is to recover property which is subject to a trust and the property is still retained by the trustee. Where the trustee is a constructive trustee the rule in Taylor v Davies [1920] AC 636 applies. By this rule the time for bringing an action is limited, notwithstanding that the claim is one to recover trust property that is still in the trustee's hands, unless the trustee became a constructive trustee through some transaction antecedent to the transaction impeached, and not the latter transaction alone. (The appellants in their submissions misconstrued the rule so that it was said not apply where the trustee became trustee before the transaction impeached). In the present case the guardianship itself gave rise to no trust relationship in respect of Queenslea Drive. The constructive trust in respect of Queenslea Drive arose solely by virtue of Mrs Clay's acquisition of the property as by that acquisition the identified conflict of interest and duty arose. Hence, by virtue of the rule in Taylor v Davies, the claim of the appellants to an interest in Queenslea Drive, insofar as the appellants rely on the constructive trust which has been identified, is statute barred.

89 Insofar as the appellant's claim can now be seen to be founded in the breach of the express trust constituted by s10 of the Guardianship of Children Act, the rule in Taylor v Davies has no operation, so that the claim is within the exception mentioned to s 47(1). Hence it is not statute barred. Even if it were precluded by s 47(1), the claim might nevertheless be pursued and relief granted by virtue of s 25(2) of the Supreme Court Act 1935. The Limitation Act, including s 47(1), was enacted by Act No 35 of 1935 which received Assent on 7 January 1936 and came into force on its proclamation on 14 April 1936. The Supreme Court Act was enacted by Act No 36 of 1935, received Assent on 3 April 1936 and came into operation on 1 May 1936. Notwithstanding what had just been enacted by s 47(1) of the Limitation Act, s 25(2) of the Supreme Court Act provided:

"Except as provided by the Trustees Act 1900, no claim of a cestui que trust against his trustee for any property held on an express trust, or in respect of any breach of such trust, shall be held to be barred by any statute of limitations."

90 The exception is not relevant for these purposes (although an interesting issue was raised whether today the reference to the Trustees Act should be to the 1900 or the 1962 Act). The Supreme Court Act is clearly the later enactment and the subject matter of s 47(1) and s 25(2) is clearly in part the same. The consequence is that the operation of s 47(1) is necessarily modified or suspended where a case is also within s 25(2); and see The Western Australian Trustee Executor and Agency Co Ltd v Tate (1949) 51 WALR 45 at 55-6. The present appears to be such a case. Section 25(2) has been recognised as generally reflecting and preserving the general rule of equity which was, statutory provisions aside, that as between beneficiaries and express trustees lapse of time was not a bar; Beckford v Wade (1805) 17 Vex 87 at 97[1805] EngR 116; , 34 ER 34 at 38. Before s 47(1) and the statutes elsewhere on which it was based, express trusts were not within the Statutes of Limitation.

91 In this context it has been held that an express trust means a trust expressed by writing or by word of mouth but does not include a trust arising from act of the parties or operation of law; Sands v Thompson (supra), Jacobs' (supra), par 2225. It appears that it extends also to a trustee whom equity has come to regard as standing in the same position as an express trustee; see Soar v Ashwell (supra) cf 393-394 and 397-398 and Cohen v Cohen [1929] HCA 15; (1929) 42 CLR 91 at 99-101 per Dixon J.

92 The trust arising from s10 of the Guardianship of Children Act is accepted by the parties to be a trust expressed by writing for these purposes and therefore is within the reach of s 25(2). As this is a claim by a cestui que trust against the trustee "in respect of any breach of" an express trust, it appears to be within the operation of s 25(2) so that it is not "barred by any statute of limitations".

93 While s 47(1) of the Limitation Act, which by s 47(3) applies to express as well as other trusts, was directed to modifying this position, the legislative history of s 47(1) and s 25(2) has denied to s 47(1) its full potential effect.

94 The remaining issue of remedy in respect of this breach will be considered later in the reasons.

95 By cl 5(a) of Mr Clay's will the trustee was empowered:

"To make out of the income and/or corpus of my estate such if any advancements of my dear wife JEANETTE RAMONA CLAY up to Twenty thousand dollars ($20,000) in each year from my death as my trustees shall in their absolute discretion determine."

96 It is contended for the appellants that "advancements" should be read as limited to well settled meanings applicable to contexts such as wills and trust instruments, such as being limited to the purpose of advancing or establishing Mrs Clay in life, to use the language of Re Gosset's Settlement [1854] EngR 802; (1854) 19 Beav 529, 52 ER 456, or for setting up or advancing Mrs Clay for life or for conferring a special benefit of a permanent kind, as opposed to a mere casual payment, to adopt the language of Taylor v Taylor (1875) LR 20 Eq 155, 157 (where it was used with specific reference to children not adults), or the like. The idea is caught succinctly in the words of Viscount Radcliffe (Lords Reid, Jenkin, Hodson and Devlin concurring) in Pilkington v Inland Revenue Commissioners [1964] AC 612 in these words:

"Advancement had, however, to some extent a limited range of meaning since it was thought to convey the idea of some step in life of permanent significance ..."

97 Viscount Radcliffe went on to observe that this limited understanding led often to the addition of other words such as "or otherwise for his or her benefit" to prevent uncertainty about the range of object. Conferrals of power in such terms were construed widely but as his Lordship noted this:

"... evidently did not stand on niceties of distinction provided that the proposed application could fairly be regarded as for the benefit of the beneficiary who was the object of the power..."

98 The notion of advancement clearly was one affected by context. Thus where out of a concern to ensure the effectiveness of a trust instrument both advancement and benefit were used, the context may be seen to have encouraged a more limited meaning of advancement than might otherwise have commended itself, and encouraged an emphasis on maintenance as denoting a periodical payment whereas advancement denoted a definite unique outlay for a specific purpose. In the context of the presumption of advancement, however, the word means no more than "benefit". In McCosker v McCosker [1957] HCA 82; (1957) 97 CLR 566 Dixon CJ and Williams J observed at 575:

"'Advancement' is a word of wide import. If found in a trust instrument it can often be confined by the context to the early period of life of a beneficiary. But in the Testators Family Maintenance and Guardianship of Infants Act no such limitation can be implied because the Act applies to children of any age."

99 The learned trial Judge was persuaded that, in the context of the will, and especially in cl 5(a) where advancements is used with express reference to an adult widowed woman, with children, and to empower annual payments to her during her lifetime (when read with cl 5(b)), a wider rather than limited meaning was intended by the testator, one which did not involve any fine distinction between advancements and benefits. The meaning applied in Re Pilkington's Will Trusts, although there in respect of a statutory expression "advancement and benefit", commended itself to his Honour.

100 In the will there is also in cl 5(c) a power to make advancements of any child or remoter issue of Mr Clay, and by cl 6 every distribution and advancement "in accordance with this my Will" is to be affected only on Norfolk Island.

101 The appellants rely in particular on the distinctive language used in cl 5(d) which empowers applications of up to one-half of the corpus of the expectant entitlement of a child of Mr Clay "for the education, maintenance or other benefit or advancement in life of such child ...". It is submitted that his use of language, so familiar in this context, indicates and requires the conclusion that accepted technical meanings of and distinctions between these various concepts were intended by the testator. Hence, it is submitted, "advancements" should have been read by his Honour in its narrow and technical sense and in distinction from "benefit".

102 The purpose of cl 5(d) in the Will is, however, quite confined. It might be used by a trustee in a situation where the trustee would not be persuaded that it would be appropriate to use the power in cl 5(c), especially where there were competing demands. Clause 5(d) is confined in its operation to Mr Clay's children and in that context the "advancement in life" of a child is used as well as "benefit" etc. Clause 5(a) however deals only with "my dear wife", Mrs Clay and empowers "advancements" on an annual basis (and with cl 5(b)) during her life.

103 The learned trial Judge expressly considered by reference to authorities the limited meaning or meanings contended for by the appellants but was persuaded for the reasons summarised above that a wider construction was intended. The reasoning of his Honour as to the intention of the testator as revealed by the terms of the will is persuasive. For the reasons indicated cl 5(d) is properly to be regarded as dealing with a subject matter different from cl 5(a). Hence a distinction in intended meaning between "advancements of" his wife and the "advancement in life" of his children may properly be seen.

104 It is not shown that the learned trial Judge erred in this respect.

105 A further argument was advanced that his Honour had wrongly relied on evidence that was not before him in reaching his decision in this respect in that he referred to the decision of the Full Court in Clay v Clay and Others, unreported; FCt SCt of WA; Library No 960168; 27 March 1996 in which reference was made in the decision to submissions for two of the present appellants which were to the opposite effect of the submissions before his Honour, and this Court, on this point.

106 It is enough to make two observations. This reference by his Honour followed his decision on this point and were not part of his reasoning. Secondly, this reference was not a use of evidence but to a decision of this Court involving an issue of some relevance. It was a reference to submissions considered and the decision made in respect of them. No criticism may properly be made of this reference.

107 The issue of the meaning of advancements arises particularly in a number of ways in this appeal. For Mrs Clay it is contended that if the trial Judge's finding that the proceeds of the NML insurance policies were Mrs Clay's had been reversed on this appeal, the payment of those monies to Mrs Clay by Speed might nevertheless be seen to be advancements by Speed pursuant to cl 5(a). As that finding has not been reversed, strictly the issue does not arise. It should be observed however that there is no basis for concluding on the evidence that this payment was in exercise of that power, as there was but one payment totalling some $63,000, whereas the power was for "up to $20,000" in each year. This alternative view must be rejected. It is also contended for Mrs Clay, again as an alternative submission, that in respect of some of the chattels in dispute their receipt by Mrs Clay from Speed was authorised by cl 5(a), read in conjunction with cl 5(e) which authorised the trustee to divide in specie any assets of the estate among persons entitled, and cl 7 which provided that every determination of the trustee pursuant to powers or discretions conferred by the Will are final and binding upon all parties.

108 It is convenient at this point, therefore, to consider the question of the chattels but first it should also be observed that a provision in specie of household furniture to a widow establishing a family home would appear to be within narrower understandings of advancements than that adopted by the learned trial Judge.

109 By par 10.2 of the Statement of Claim it was alleged that from on or about the middle of 1971 Mrs Clay retained and continued to hold for her own benefit chattels which formed part of Mr Clay's estate. In the alternative it was claimed she received the chattels as guardian of her children pursuant to s 73 of the Trustees Act. The chattels were listed. They include a variety of household furniture and effects, a watch, a pen set, and a set of golf clubs. His Honour dismissed those claims accepting that many of the chattels had been Mrs Clay's property, not part of the estate, and that the claim in respect of the remainder was statute barred. His Honour accepted the evidence of Mrs Clay that most of these chattels, which she enumerated, had belonged to her before Mr Clay's death. Some she had purchased herself and others were given to her during the marriage, in most cases being purchased for her as a gift. It was also Mrs Clay's evidence with respect to other identified items of the chattels, that they were in the family home when Mr Clay disappeared and at a later time Speed told her she could keep them.

110 The appellants contend that as Mrs Clay admitted receiving some chattels from Mr Clay by way of gift, and as she was the guardian of the children, the onus fell on her to prove the gifts, Van Rassel v Kroon [1953] HCA 3; (1952-53) 87 CLR 298, and that in the case of chattels this required more than mere words of gift, there must be a delivery involving an actual parting of possession; in Re Cole [1964] 1 Ch 175. Mrs Clay's evidence, it was contended, did not go so far as to establish this. Hence, it was contended his Honour erred in failing to find that the chattel's were part of the estate.

111 Van Rassel v Kroon was a case where Van Rassel agreed to share a lottery ticket with Kroon and undertook to buy it for them. In fact he bought more than one ticket. One of these won first prize. The dispute was whether the winning ticket was the ticket in which Kroon had an equal interest, which was denied by Van Rassel. As Dixon J pointed out at 302 ff, Van Rassel became the legal owner of the chose in action represented by the jointly owned ticket when he acquired it, but Kroon had an equitable interest in it. In the circumstances Van Rassel became a fiduciary agent or trustee. His duty as such was to do nothing to impair the rights of Kroon for whom he held the ticket. His Honour continued at 302-303:

"But one of the duties of a person acquiring any piece of property, whether chose in action or corporeal thing, for the benefit of others as a fiduciary is to distinguish the piece of property he so acquires from other similar things which he may obtain for himself or in which he may be interested. This duty has a particular application to the acquisition of a lottery ticket ... no one of which is distinguishable from another except by the numerals they bear ... The fiduciary is at perfect liberty before the drawing to acquire for himself beneficially any number of tickets in the same lottery ... It is evident that before the drawing the identity of the ticket which is held for others ... ought ... to be ascertained so that it is clearly distinguished from those he holds for himself. If there is any confusion, the burden must be upon him of showing which is his property. It could not be otherwise where the duty rests upon him as fiduciary not to confuse his own beneficial property with that which is subject to his fiduciary obligations ...

... Where a joint contributor relies upon the terms of the arrangement in support of his title to a share or interest in the winning ticket which he asserts was brought on the joint account, the burden is on him of establishing the terms in question ... The duty of the fiduciary not to confuse the property he holds in that character with his own beneficial property gives rise to the consequence that the burden of identifying by proof what is his own property rests on him."

112 It is not apparent that this case supports the appellants' contention that Mrs Clay carried the onus in this case. As is made clear by the concluding sentence quoted above, the onus of proving what was the fiduciary's own property arose in Van Rassel v Kroon as a consequence of the duty not to confuse property the subject of the fiduciary duty with his own. In the present case the chattels in question, whether they are the items of furniture, ornament, jewellery or whatever, are each distinctive in character and appearance and there is no risk of confusing one with another such as existed when the two categories of property were both lottery tickets.

113 In this case Mrs Clay could readily identify which chattels she said she received as gifts during her husband's lifetime. Her evidence in this respect was accepted by the learned trial Judge. It is not the effect of Van Rassel v Kroon that she carried any further onus. It was for the appellants to establish that the chattels or some of them were part of the estate.

114 In the case of Re Cole a husband furnished a large mansion in 1945 mainly with articles purchased by himself. Some six months later he took his new wife to the home, showed her around and then said "It is all yours". Husband and wife thereafter lived together in the home. On the bankruptcy of the husband in 1961, the wife claimed most of the furniture as her property. In that context the facts were seen to be equivocal and not adequate to establish a change of possession by delivery of the furniture to the wife as a gift transferring the property to her.

115 At 192 Pearson LJ saw the effect of the authoritative decision of Bashall v Bashall (1894) 11 TLR 152 in these words:

"... an act to constitute delivery must be one which in itself shows an intention of the donor to transfer the chattel to the donee. If the act in itself is equivocal - consistent equally with an intention of the husband to transfer the chattels to his wife or with an intention on his part to retain possession but give to her the use and enjoyment of the chattels as his wife - the act does not constitute delivery."

116 The learned trial Judge was well alert to Re Cole and its application to cases where a husband, by words alone, purports to transfer his property housed in the family home to his wife, and he directed himself that mere words of gift were never enough to perfect a gift of chattels. He contrasted, however, the conduct of a husband who, as a gift, purchases a chattel from a third party and the chattel is delivered pursuant to the gift. This appears to be a valid distinction.

117 As indicated, and for reasons already given, the appellants carried the onus of establishing that the items said to have been Mrs Clay's property before Mr Clay's death were part of his estate. Mrs Clay's evidence that she purchased a number of the chattels for herself was not refuted. The evidence as to the gift of others of the chattels was never explored or tested at trial so as to demonstrate that the circumstances of the giving to Mrs Clay were not such as to constitute a perfected gift. Despite the contrary contentions for the appellants, evidence by way of a receipt evidencing Mr Clay's purchase of just one of the very many chattels claimed is entirely consistent with Mrs Clay's evidence and his Honour's finding. And it is not surprising, or determinative to the contrary of the finding, that insurance cover taken out on the contents of the family home should be in the name of Mr Clay even though some of the contents were the property of Mrs Clay and, no doubt, of the children. Further, one policy was apparently in the names of Mr and Mrs Clay, and there is no itemisation of the contents in any of the policies. The learned trial Judge was entitled in the circumstances to take the view that it had not been established that these chattels formed part of his estate on the death of Mr Clay.

118 With respect to those assets in the house when Mr Clay died and which Speed later advised Mrs Clay she could have, the appellants contend the learned Judge should have held that they had been received by Mrs Clay with knowledge that they were assets of the estate and that she had not paid for them, thereby, it was contended, becoming a trustee of them for the estate.

119 The case for the appellants as pleaded and presented at trial was that the assets given to her by Speed were given in breach of the will, unless given to her as guardian pursuant to s 73 of the Trustees Act, and as such trust property: Re Diplock [1948] Ch 465. As a volunteer she was obliged therefore to return those still in her possession and to account for the value of those disposed of as she could have no bona fide belief in her entitlement to them in light of the terms of the will.

120 The facts at trial did not support the alternative possibility that the chattels were given to her as guardian pursuant to s 73 of the Trustees Act, nor could they have been so given as that provision applies only to chattels "absolutely vested in" an infant, which these chattels clearly were not. That alternative, therefore, may be put aside.

121 Further contentions were advanced during the argument on this appeal seeking to raise a breach of Mrs Clay's duty as guardian to her wards in respect of these chattels, much in the same way as the case for the appellants concerning Queenslea Drive. This was not the appellant's pleaded case at trial and their case seems not to have been advanced before the learned trial Judge on that basis. In these circumstances it is inappropriate to entertain this fresh basis of claim in respect of the chattels on appeal. Before leaving the point, however, it should be noted that there may be a basis for material distinction between the chattels and Queenslea Drive for these purposes by virtue of the power of the trustee to make advancements to Mrs Clay which, on the facts, could not have applied and did not apply to her purchase of Queenslea Drive.

122 Of the chattels which were in the house and which Speed said she could have, there remain in Mrs Clay's possession a bedroom suite but not including the dressing table, six kitchen chairs, a nest of tables, two coffee tables, a set of Encyclopaedia Britannica, items of crockery and cutlery and a print called "The Hunt". Others had broken down with age and were thrown away or were sold for a few dollars over the years.

123 His Honour's reasons reveal that he did not make a finding that these chattels formed part of the estate and were given to Mrs Clay in breach of Speed's duty as Trustee. He went on, however, to point out that in his view, even if they were, the limitation provisions would preclude recovery at this stage. For Mrs Clay two matters are advanced in support of the absence of a finding by his Honour that these chattels formed part of the estate. First, the only direct evidence was that of Mrs Clay which, it is submitted, does not contain or constitute an admission of Mr Clay's ownership of these chattels. Secondly, reliance is placed on Mrs Clay's entitlement under the will to receive advancements up to $20,000 in each year at the discretion of the trustee, and by the provisions of cl 5(e) to do so in specie from assets of the estate. The matter of advancements has already been considered. The appellants also contend that cl 5(e) should be read in a manner which limited "persons entitled" to the residuary beneficiaries. They also pointed to a statement by Speed later in 1974 that no property had been distributed to beneficiaries. It is difficult to see that the limited construction of cl 5(e) contended for the appellants is justified. While the statement of Speed might well have persuaded his Honour that Speed had not relied on cl 5(e), in view of his Honour's full consideration of the actions of Speed which included acceptance by his Honour of at least one material statement by Speed as being in error, it should not now be concluded on appeal that his Honour should have been persuaded by this statement to find that Speed had not utilised cl 5(e) in this respect. For Mrs Clay emphasis is placed on the sense of him doing so, given the situation of Mrs Clay and the children. The onus of establishing at trial that these chattels had formed part of the estate on Mrs Clay's death and further, if they had, that they had been given to Mrs Clay in breach of Speed's duty, rested with the appellants. It has not been demonstrated that his Honour erred by failing to make those findings.

124 It should be remembered that the evidence only goes so far as to indicate that Mrs Clay's knowledge extended to the objective facts, viz Speed as executor and trustee authorising her to keep these chattels, and that she knew of the contents of the will. This evidence does not establish that she knew of any breach of trust by Speed in authorising her to keep these chattels. Indeed, his Honour's finding was that she acted honestly and without knowledge of or reason to suspect any breach of trust by Speed. Thus Mrs Clay was not in any sense a party or privy to any breach of duty Speed may have committed so that for reasons given earlier a suit against her to recover the chattels is not within s 25(2) of the Supreme Court Act, nor is it within the exceptions to s 47(1) of the Limitation Act. The claim in respect of the chattels was not founded in fraud. Mrs Clay is not, of course, a trustee in respect of the estate and the claim against her in this respect is not founded in any breach of her duty as guardian. Thus, it appears that any right of recovery of these chattels would have been statute barred.

125 For these reasons the appeal so far as it concerns the chattels has not been made out.

126 By the will both Speed and Norfolk were appointed executors and trustees. The grant of Probate was only to Speed as Norfolk, a corporation, was not carrying on business in Western Australia so that its appointment as executor was not permitted. It is contended for the appellants that, nevertheless, Norfolk was a trustee of the estate.

127 The learned trial Judge held that Norfolk never became a trustee of the estate, having in the circumstances of this case impliedly disclaimed the trust by its inaction. He reasoned that a trustee does not assume office until he accepts the trust, expressly or impliedly, that acceptance is to be implied from acts inconsistent with disclaimer, and that disclaimer may be shown in the particular circumstances by implication as the result of inaction. While the position is not necessarily clear on the authorities, his Honour saw in this case that the implication of disclaimer was strengthened by each year of inaction; Jacobs' (supra) par 1572, Re Clout & Frewer's Contract [1924] 2 Ch 230.

128 The evidence disclosed that the only relevant acts of Norfolk were to apply in 1972 with Speed for a grant of Probate, when that was refused it asked Speed to reserve to it the right to apply for probate and to keep it informed of developments in respect of the estate, and on 1 July 1993 it executed a deed of appointment of new trustees of the estate. Otherwise what evidence there was indicated that Speed acted as trustee without any participation by Norfolk throughout the period until Speed's death in 1992. Given this evidence the finding of his Honour was open on the evidence.

129 His Honour observed in his reasons that there was no direct evidence whether or not Norfolk expressly accepted or renounced trusteeship. That was a correct assessment of the evidence. It is contended, however, that this involved his Honour erring by drawing adverse inferences from the failure to call witnesses from Norfolk, it being contended that adverse inferences are not permitted where the absence is explained that, it is said, being the present case, as Norfolk was outside of Australia and not within the reach of a subpoena, and such evidence could only be produced at significant cost. This contention appears to read too much into the observation of his Honour. What he said was correct. There was no such evidence. He did not go on, however, to draw an adverse inference from the absence of a witness from Norfolk. The finding he made was based on the evidence before him of the actual acts of Norfolk and the way in which the trust was in fact administered. There is no substance revealed in this contention.

130 Having reached his finding, his Honour added that it was supported by the presumption of regularity in relation to Speed's administration of the Estate. It is objected that this was in error as for Speed to act as sole trustee was a breach of trust by virtue of s 7(1) and (2) of the Trustees Act 1962. It is the effect of s 7(1) and (2), however, that if Speed were a sole continuing trustee by virtue of Norfolk's disclaimer, he was empowered to appoint another. Failure to do so by Speed or his acting alone, is not by s 7(1) and (2) constituted a breach of trust by Speed. It is to be noted that the effect of cl 2 of the Will is that, failing Norfolk and Speed taking up the appointment as trustees, one other person was appointed executor and trustee. As the will contemplates the possibility of there being a sole trustee, it appears that a sole surviving trustee need not appoint another; Peacock v Colling (1885) 54 LJ Ch 748. It is not shown therefore that the presumption of regularity would not have applied in relation to Speed's administration of the estate.

131 Of course, even if this were not the case, Speed by acting alone took upon himself the custody and administration of the estate and became an actual trustee subject to all the liabilities of an express trustee; Soar v Ashwell [1893] 2 QB 390, Perpetual Trustee Co Ltd v Thomas (1903) 3 SR (NSW) 277.

132 The point of the appellants' submissions was to impeach Speed's acts as sole trustee on the basis that they were not authorised by the second trustee Norfolk. For the reasons given it has not been shown that his Honour was in error in concluding that Norfolk impliedly disclaimed the trust and that Speed was the only trustee of the estate at any material time.

133 At trial it was the case for the appellants that when Mr Clay died he was in partnership with Mrs Clay under the style J E and J R Clay and that some property at 234 Stirling Street in Perth ("Stirling Street") was owned by the partnership. Stirling Street was registered in the names of Mr and Mrs Clay as joint tenants and, after the death of Mr Clay, Mrs Clay became registered as the sole proprietor by virtue of her right of survivorship derived from the joint tenancy. In 1980 Mrs Clay sold part of Stirling Street. The appellants had claimed that Mrs Clay held Stirling Street as to a one half interest on trust for the estate. His Honour dismissed this claim holding that the appellants had failed to satisfy him on a balance of probabilities that Stirling Street was the property of a partnership as alleged.

134 The appellants challenge this conclusion, contending that it should have been held that Stirling Street was held by Mr and Mrs Clay in joint tenancy on trust for this partnership. The contentions advanced in support of this are a reagitation of the matters canvassed before his Honour at trial. The appreciation of the relevant general legal principles by his Honour is not challenged.

135 No partnership agreement was ever produced at trial. Mrs Clay denied there had been a partnership. The appellants contend her evidence in this respect should be disregarded because of evidence as to her limited knowledge and involvement at the time but these are self-evidently matters for the learned trial Judge to best assess. Despite these significant evidentiary difficulties the appellants on appeal, as they did at trial, seek to rely on a range of factual matters, variously capable of evidencing a partnership or consistent with the existence of a partnership, as sufficient to carry the day factually to establish the existence of a partnership.

136 The appellants rely heavily on the existence of partnership accounts for at least the years 1969/1970 and 1970/1971 disclosing Stirling Street as partnership property and that the net income from Stirling Street was shared equally. The apparent force of that evidence was, however, blunted by evidence, which was accepted by his Honour, of the chartered accountant who had prepared the accounts of Mr Clay and his interests, as to the practice insisted on at the time of those accounts by the Commissioner for Taxation. The opinion at the time being that the Commissioner would only accept a partnership tax return "to wrap around a joint property", which in turn required partnership accounts. In part this derived from the wider definition of "partnership" in the Income Tax Assessment Act 1936, which as his Honour correctly perceived was beyond the meaning for the purposes of the Partnership Act 1895. In part, however, it was attributed, by the evidence accepted by his Honour, to the position then adopted by the Commissioner, a position which it was said has since been modified and the resultant accounting practice has since modified.

137 The appellants resist the force of this evidence by the contention that even so, the so called partnership accounts prepared for that purpose should not have included the non-income producing assets of loans to two companies and reliance in this respect is placed on Note 10 on the then income tax return, which did not require balance sheets if the joint recipients were not carrying on business. Again the evidence of the accountant dealt expressly with this. It was his evidence that at the time this was regarded as a grey area, although it is no longer so. Because of this, it was at the time in his view "just the simplest way" to "wrap" a partnership tax return around it and for this purpose to prepare and submit to the Commissioner partnership accounts, which included a balance sheet as a means of dealing with the apparent partnership profit, even though the taxpayers who jointly owned the property were not in partnership for the purpose of partnership law. The appellants also contend that his Honour was in error in this respect by relying on Mangraviti v Mangraviti, unreported; SCt (NSW) (Hodgson J); 19 November 1992 because Hodgson J failed to refer inter alia to Note 10, and also because the facts are to be distinguished from the present. Reference to his Honour's reasons, however, does not indicate that his Honour was misled by these matters. In fact, he expressly considered the submissions for the present appellants concerning Note 10 and the Regulation on which it was based as he dealt with Mangraviti. Rather than relying on that decision his Honour turned to the evidence of the accountant and from this was persuaded that the partnership accounts did not establish that a partnership within the meaning of the Partnership Act existed. The evidence clearly was capable of supporting this finding and no material error has been demonstrated in his Honour's consideration of this issue.

138 Next it is said that his Honour erred by failing to hold that loans by Mr Clay and by Mrs Clay to J E and J R Clay as shown on the "partnership accounts" were inconsistent with a mere joint ownership of land. It is contended that loan accounts owing to each is consistent only with joint liabilities owed to each. Reasoning such as this has some persuasive force, but the fictional basis underlying the accounts in question detracts from that. Even so, the treatment of these loans in these accounts does not establish a partnership; at most it provides one of many factual matters which, in a case such as this, must be weighed in their combination. It cannot be said that this circumstance required a finding of a partnership.

139 The appellants sought to rely on evidence of Mrs Clay that Mr Clay had said to her, when the initial properties in Stirling Street were purchased, words to the effect would you "like to go into a joint venture" with me. It was submitted that this should be understood as a reference to a joint venture in the nature of a partnership. This submission depends on a gloss on the evidence but, more fundamentally, it fails to recognise the distinction between a joint venture and a partnership. If anything, this evidence tells in favour of his Honour's finding.

140 The appellants seek to draw from evidence of Mrs Clay that she took little or no part in the management of the joint property as persuasive in favour of a partnership. It is not essential for both partners to take an active part in the direction and management of a partnership. The same though is true of other arrangements including a joint venture. This is manifestly but one consideration to be weighed in light of all the evidence as to the circumstances surrounding the dealings between the two. Further, the same evidence could well, of course, indicate a lack of the type of decision making which would be usual in a partnership. In the end the issue is not whether one or both are active in the management, but whether the business is carried on by or on behalf of both Mr and Mrs Clay.

141 It is also contended that his Honour erred in excluding evidence as to the treatment of loans in two companies which were there recorded as loans from J E and J R Clay. These were companies over which Mrs Clay had no control. The two entries each recorded a debt due to J E & J R Clay. His Honour noted that there was no evidence of the circumstances surrounding the debts and, further, that in themselves the entries were equivocal as they could record an indebtedness to the two individuals named with or without any implication of a partnership. His Honour saw the entries as evidence respectively against the two companies in whose books the entries appear, but not probative or admissible for the purpose of establishing in these proceedings the existence of a partnership. With respect that appears to be a proper view. The evidence is not made any more admissible because of entries in the "partnership" accounts of J E & J R Clay. Those accounts were in evidence. The recording of the loans to the companies in those accounts was well appreciated by his Honour and was considered by him. Thus, even if the accounts of the companies were admissible, they would not have added any material fact to the evidence before his Honour.

142 The written submissions for the appellants sought to rely on further matters which were not raised by the grounds of appeal. These will not be considered in detail in these reasons although none of them was of any apparent force.

143 143. For the reasons indicated, the appellants have not demonstrated that his Honour's appreciation of the evidence and its force, separately considered and in its combined effect, was in error or that he should have been persuaded that there was a partnership as alleged. The finding made by his Honour was properly open on the evidence. The appeal in this respect fails.

144 The submissions for the appellants sought to advance a number of issues not founded in the grounds of appeal, and ground 8 of the grounds of appeal sought to raise an issue which was not part of their pleaded case at trial nor was it a basis on which their case was pursued at trial. These issues have not been dealt with in these reasons.

145 As a consequence of these reasons it becomes necessary to consider the precise form of the remedy. Its primary nature is clear. There should be a declaration that Mrs Clay holds a one undivided fourth share in Queenslea Drive on trust for each of the three appellants (second plaintiffs).

146 For the appellants it was accepted that Mrs Clay should be reimbursed for her original outlay, to the extent of three-fourths of it, viz $33,750, together with simple interest on that sum from 1 May 1973 calculated at the judgment rate from time to time, on the basis that this was usual practice in rescission cases which might be seen as analogous. On that same basis it was submitted that Mrs Clay should also pay a notional occupation rent for the years of her occupation, with interest on the basis just indicated, payable it would appear as to a quarter to each of the three appellants. They relied for this purpose on evidence of the ordinary commercial rentals year by year which might have been expected had Queenslea Drive been let out. These ranged from $2,340 a year in 1973 to $18,200 a year in 1996.

147 There are reasons to question the analogy drawn in these submissions, which will be discussed shortly. Even so, where a purchase of trust property by a trustee is set aside and a reconveyance is ordered, while the trustee who was in breach of his duty is usually held to account for any rents and profits since the date of sale, it is not the practice to charge the trustee with interest on the rents and profits; Silkstone and Haigh Moor Coal Co v Edey [1900] 1 Ch 167. In such a case the practice is that the beneficiary of the trust may elect either to have the property reconveyed at the price for which the trustee purchased, with interest added and the trustee accounting for profits, or an occupation rent, or to have the property resold with an upset price being that paid by the trustee plus the value of any improvements made by the trustee**; Silkstone and Haigh Moor Coal Co v Edey** (supra); the trustee being held to the purchase if the upset price is not reached. On the other hand, if the property is taken back at the price paid with interest, an allowance is made to the trustee for money spent in effecting permanent improvements, while the trustee is charged with any loss in value due to him; Ex parte Bennett [1805] EngR 71; (1805) 10 Ves 381, 32 ER 893. And see Jacobs' (supra) par 1742.

148 Where a constructive trust is declared by the court, the constructive trustee will, in certain circumstances, be entitled to reimbursement of expenses or remuneration for time and trouble; Jacobs' (supra) par 1342. If money has been expended on permanent improvements, the constructive trustee is, prima facie, entitled to be recouped his expenditure to the extent of the improved value, even where the trustee is entitled as tenant for life; Rowley v Ginnever [1987] 2 Ch 503.

149 With respect to interest, for the appellants reliance was also placed on the words of McHugh and Gummow JJ in Commonwealth v SC1 Operations Pty Ltd [1998] HCA 20; (1997) 152 ALR 624 at 645 that:-

"... equity followed a different path to the common law with respect to the award of interest. In cases of money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary, the decree might require payment of compound interest ...

In other circumstances, equitable relief might involve the payment of simple interest ... Conversely, a party seeking equitable relief may be obliged to do equity by the payment or repayment of moneys with interest."

150 With respect to these words, the submissions for the appellants had a tendency to treat the statement that equitable relief might involve simple interest as though 'might' should be read as 'should'.

151 Reference might also be made to the words of Mason CJ and Wilson J in Hungerfords v Walker [1989] HCA 8; (1988) 171 CLR 125 at 148:-

"Equity has long adopted a broad approach to the award of interest. It has long been accepted that the equitable right to interest exists independently of statute ... Equity courts have regularly awarded interest, including not only simple interest but also compound interest, when justice so demanded, eg money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary."

At 149-150 their Honours made the following observations with respect to simple and compound interest:

"Simple interest would not reflect accurately the extent of the respondents' loss. Simple interest almost always under compensates the injured party's true loss."

152 So much as the decided cases which have been placed before us reveal, there is no settled practice directly applicable to a situation such as the present. It is necessary therefore to seek to shape relief which will best be fair and do justice between the parties, and satisfy the concerns of equity, while being consistent, so far as settled practice is sufficiently analogous, with that practice.

153 Because equity requires that Mrs Clay should be declared to hold, and in effect to have held, since May 1973 a share in Queenslea Drive for each of the three appellants, there would normally arise reason to hold her accountable for rents and profits actually received. An extension of that notion is that as she has enjoyed the benefit of living in Queenslea Drive since 1973, she should also be required to pay an occupation rent. As has been seen that has been the decision where rescission is ordered of a sale by a trustee to himself.

154 There are, however, a number of factors in this case which, in their combination, appear to offer valid reasons to distinguish this case from those in which an occupation rent would be appropriate, either to do justice between the parties or to satisfy the concerns of equity. On the established facts, this is not a case where Mrs Clay acted fraudulently or with knowledge of any wrongdoing by the trustee. She was in the role of a bona fide purchaser for value. The appellants have not suffered any financial loss as a consequence of her acquisition of Queenslea Drive in 1973. Were either of those the case it would be appropriate to ensure to the appellants some measure of reimbursement of the benefits which had accrued to Mrs Clay in virtue of her use of Queenslea Drive over some quarter of a century. In particular, in the case of actual fraud, it would be appropriate to ensure that Mrs Clay was deprived of the value of all benefits that accrued to her from the fraud. However, as was pointed out by the NSW Court of Appeal in United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 241-3, in a passage not affected by the reversal of that decision in the High Court, a fiduciary who has made an honest error will be more generously treated than one who has been a cheat and trickster.

155 In this case the objective of affording a remedy to the appellants is to vindicate the concern of equity that a guardian should, in all matters, be faithful to the fiduciary responsibility that attaches to guardianship. It is for that purpose, and not to make good any loss suffered by the appellants - there was none - that the declaration of trust is appropriate. For Mrs Clay this decision is likely to mean the loss of her home of over 30 years and a very substantial financial set-back. For the appellants the result is in a real sense a windfall, especially as they will gain the benefit of the significant improvement in the value of the property that has taken place over the intervening years, a change that has far outstripped prevailing interest returns on the original capital of $45,000, as the evidence in this case discloses.

156 Mrs Clay has also borne the full burden of upkeep and maintenance of the house and gardens over the intervening years, and has met all outgoings such as rates and taxes. She has not had any income from the property.

157 It should also be borne in mind that for a number of years after its acquisition in 1973, Queenslea Drive was the family home not only of Mrs Clay but also of her wards. Each of the appellants had use of Queenslea Drive as their home after the acquisition, the period varying with the circumstances of each of them. The youngest ward was only 9 years of age at the time of the acquisition.

158 These matters, especially in their combination, are sufficient to differentiate this case from those in which an occupation rent has been held to be appropriate. They render such a rent unnecessary to do justice between the parties or to satisfy the concerns of equity.

159 The evidence reveals that Mrs Clay has effected substantial structural improvements to Queenslea Drive since 1973. An allowance in respect of these is appropriate.

160 Having regard to these matters, the appeal should be allowed in part, the judgment and Orders at trial should be set aside, and in lieu there should be a declaration that Mrs Clay holds a one undivided fourth share of Queenslea Drive on trust for each of the three appellants (second plaintiffs), subject to an allowance to her for three-fourths of her original outlay with simple interest on that allowance from 1 May 1973 at the judgment rate from time to time, and an allowance to her of three-fourths of any increase in value of Queenslea Drive by virtue of permanent improvements she has effected to it.

161 It will be necessary to make detailed orders to give effect to this decision. In particular consideration will need to be given to whether orders with respect to the sale of Queenslea Drive will be necessary or whether some alternative arrangement will be effective. Attention will also be required to the calculation of interest and the determination of the allowance for permanent improvements. In the absence of agreement it may even prove appropriate to hear further evidence relating to one or more of these matters. For this purpose it may prove convenient to delegate to one member of the Court the task of settling the final form of the Orders necessary to give effect to this decision.

162 We will hear counsel at a convenient time on these matters and the question of costs, both of the appeal and the trial.