IN RE ELLIS; ELLIS -v- ELLIS [2015] WASC 77 (4 March 2015)

3 One of the points which has arisen in this present case is whether the existence of these other or collateral remedies affects the scope of the controversy which may be examined when passing the executor's accounts under s 43 of the Administration Act and, even if not, whether the availability of such alternative remedies are matters to be taken into account by a Registrar when considering the nature and the scope of the account sought under the Administration Act.

4 Victoria Elizabeth Josephine Ellis, late of 43 Strickland Street, Mount Claremont, died on 28 July 2010. She was then aged 69 years and a widow. She was survived by her three adult children, Clive Richard Ellis, born in August 1965, Paul Holden Ellis, born in April 1967, and Spencer Charlton Ellis, born in March 1975. Her last will, made 24 March 2005, appointed her two sons, Clive and Spencer, executors and trustees. It contained a specific bequest of her jewellery to her granddaughter, Jessica Nicole Ellis, followed by one residuary bequest of her entire estate, both real and personal whatsoever and wheresoever situate, including in New Zealand, to her trustee upon trust for the payment of all just debts, funeral, monumental and testamentary expenses, and to hold the balance on trust as to both capital and income for division between her three sons in equal shares as tenants in common.

5 Clive Richard Ellis, one of the executors appointed under the will, applied for probate and was granted probate by this court in the noncontentious jurisdiction on 15 October 2010, with leave reserved to his brother, Spencer Charlton Ellis, the other executor named in the will, to apply.

6 At the time of her death Mrs Ellis had been living in Western Australia for many years, as had been her son, Clive Richard Ellis. The other named executor, Spencer Charlton Ellis, had been and still is living in the United Kingdom. The third brother and equal residuary beneficiary, Paul Holden Ellis, was and is living in New Zealand. The family had originally come from New Zealand and it was in New Zealand where Mrs Ellis' husband had predeceased her.

7 The statement of assets and liabilities filed by the executor (pursuant to r 9B of the Non-Contentious Probate Rules) (the NCR) placed the net value of the estate then at $643,540.38. The principal asset was a house and land at 43 Strickland Street, Mount Claremont, in which the deceased had a one undivided halfinterest as tenant in common. The estimated value of that property was $1,200,000 and the deceased's half-share was therefore $600,000. Mr Clive Ellis and his wife (as joint tenants) together held the remaining undivided half interest in that land as tenants in common with the deceased. The remaining portion of the estate comprised cash balances in three Commonwealth Bank accounts and the value of the deceased's personal effects at her home estimated at $1,000.

8 In a subsequent affidavit sworn 28 May 2013 the executor identified a further bank account of the deceased in New Zealand with a credit balance of AUD$8,827.27 and he also deposed to the existence of the following debts due by his late mother's estate to himself arising from the purchase of his mother's half-share in, and for the costs of renovation and improvement to, the property at 43 Strickland Street, Mount Claremont. These are described as being:

(a) $29,500 payable to Clive Ellis in respect of his mother's half-share of the renovation cost for works, including new carpets and linoleum throughout the house, new kitchen, including hotplates and sink, construction of gazebo, rewiring of the house and paving and liquid limestone for the property performed by him by his firm Swanbourne Electrical and Plumbing Plus;

(b) $5,000 payable to Clive Ellis in respect of his late mother's half-share of the deposit on the initial purchase of the property; and

(c) $7,480 payable to Clive Ellis in respect of his late mother's half-share of the stamp duty paid by him on the initial purchase of the property.

9 Unfortunately, the relationship between the three brothers or, rather, the two named executors on the one hand and the objector on the other, is deeply affected by tragic events in the family history. The submissions before the Registrar when efforts were first made to have the executor's accounts passed, and again on this reference, showed that the deceased's late husband, that is, the father of the three beneficiaries, had been killed in New Zealand by Paul Holden Ellis. Paul Holden Ellis was then charged with the homicide of his father and was tried before a judge and jury for that alleged crime in New Zealand. According to the evidence, he was found not guilty on the grounds of insanity and, as a result, was detained in an institution in New Zealand as a result of the laws then applying to persons found not guilty of homicide on the grounds of insanity. There he remained for many years until, at some date which is not known and the details of which are not material, he was released to live in the community in New Zealand. It is his daughter who is the legatee of the deceased's jewellery under the will - Jessica Nicole Ellis. It seems that she and the objector are estranged and that the objector has news of his daughter only as a result of correspondence with her grandparents in New Zealand.

10 At the time of his father's death Clive Richard Ellis was living with his wife and family in Western Australia, where he had established a business as an electrician, plumber and renovator. As a result of the tragic death of her husband, Mrs Victoria Ellis decided to leave New Zealand permanently and establish a new life for herself in Western Australia to be close to her son, Clive, and his family. She moved here in or about 2002 and remained here until her death.

11 Copies of land transfer documents annexed to an affidavit filed by the objector show that a transfer of the land situate at and known as 43 Strickland Street, Mount Claremont, was registered at the Land Titles Office in March 2002. The land had been sold by a third party, Richard William Bartlett, for a consideration of $410,000 to Victoria Elizabeth Josephine Ellis, then of 43 Strickland Street, Mount Claremont, as to one undivided half-share, to Clive Richard Ellis and Linda Jane Ellis, both of 74 Grant Street, Cottesloe, as joint tenants, as to the remaining one undivided halfshare, as tenants in common. An endorsement on the transfer document shows the WA stamp duty was paid on the consideration of $410,000 on 4 April 2002 and that the amount of stamp duty paid was $14,960 or thereabouts (the legibility of the last three digits of the figure is not entirely clear). A later transfer of the same land dated 8 September 2011 shows that it was sold by Clive Richard Ellis in his capacity as executor of his mother's estate and by himself and Linda Jane Ellis as additional vendors to third parties for a consideration of $1,200,000.

12 Hence, the executor has embarked on the administration of his mother's estate and sold the principal asset. Other evidence establishes that he has collected the proceeds of the various bank accounts and distributed his mother's jewellery to his niece. In the course of administration various liabilities have been identified and accounts incurred relating to electricity, water and other charges associated with the house and various other items of expenditure. After taking these into account, and also bringing to account the debts which the executor claims his mother owed to him in relation to the original purchase of the house and land, stamp duty and subsequent renovation costs, he made distributions to his two brothers and to himself.

13 Solicitors acting for Paul Holden Ellis in New Zealand and their agents in Western Australia have raised queries about the calculation and distribution of the residue and, as it turns out, to many of the claims for expenses incurred in the administration or charged against the estate by the executor. As a result, the solicitors acting for Paul Holden Ellis in Western Australia, by letter dated 18 June 2013, requested the Probate Registrar of this Court to require the executor to pass his accounts. By notice dated 26 June 2013 the Probate Registrar required Clive Richard Ellis to pass the accounts of the estate in accordance with r 37 of the NCR. Rule 37 of the NCR does not itself confer jurisdiction on the court to conduct such an account but that is conferred by s 43(1) of the Administration Act. NCR r 37 simply specifies how that jurisdiction may be exercised by a registrar in certain cases: TK, PB & LS v Australian Red Cross Society (1989) 1 WAR 335, 340.

(a) file his accounts and a plan of distribution verified by affidavit in accordance with form 4 of the schedule to the rules;

(b) serve on Paul Holden Ellis and Spencer Charlton Ellis a copy of the notice requiring the passing of account, the accounts, the plan of distribution and a verifying affidavit.

15 It also required any person wishing to object to the passing of accounts to file a notice of intention to object and supporting affidavit stating his interest and the nature and grounds of his objection as required by r 37(6).

16 The appointment to pass accounts was on 12 August 2013. The executor was required to file his accounts and a plan of distribution, verified by affidavit, and a timetable for this was set. By an affidavit sworn 9 July 2013 Mr Clive Ellis filed his accounts and verified them. The accompanying statement showed:

(b) the portion of the estate that has already been distributed;

(c) the portion of the estate retained or uncollected;

(d) the moneys and securities still held by him as executor; and

17 In money terms, the value of the receipts from the estate for the executor totalled $679,189.12, the major component being $589,750.20, being the net proceeds from the half share of the sale of 43 Strickland Street, Mount Claremont. Disbursements totalled $61,726.69, including:

D1 A debt owed to Clive Richard Ellis pursuant to an agreement between him and the deceased for a half share of the deposit on the initial purchase price of the property at Mount Claremont

D2 A debt owed to Clive Richard Ellis pursuant to an agreement between him and the deceased for a half share of the stamp duty paid initially on the purchase of the property (50% of $14,960)

D3 A debt owed to Clive Richard Ellis pursuant to an agreement between him and the deceased for a half share of the renovations performed on the property prior to the deceased moving in, including new carpets and linoleum, new kitchen, construction of gazebo, rewiring of the house, liquid limestone performed by Clive Ellis, Swanbourne Electrical and Plumbing Plus (50% of $59,100)

18 The statements also showed that a total of $608,103.16 had been distributed in various cash payments to the three beneficiaries as follows:

19 There was then remaining in the estate bank account $6,771.54 and chattels were held to an estimated value of $1,000. The executor's plan of distribution was to distribute the chattels amongst the beneficiaries and the remaining estate funds, after final administration expenses, were to be distributed amongst the beneficiaries to ensure aggregate equal distributions.

20 Further directions were made by the Registrar on 18 July 2013 requiring the executor to file an indexed folder of all the original financial records in his possession relevant to the estate accounts and for any objections to be filed by the remaining two residuary beneficiaries to be cross-referenced to the estate account filed by the executor. A timetable for the filing of objections and submissions was set and the passing of accounts was listed for hearing on 25 October 2013.

21 A notice of intention to object to the executor's accounts was filed on behalf of Mr Paul Ellis on 3 October 2013. This did not specify any grounds of objection nor any particular items in the accounts which were challenged.

22 However, by affidavit sworn 3 October 2013 Mr Paul Holden Ellis deposed that he was one of the three residuary beneficiaries to his mother's estate of which his brother Clive Richard Ellis is the executor. The affidavit goes on to annex correspondence passing between the objector's New Zealand solicitor and the executor involving disputes or queries relating to the administration of the estate, and concludes with an annexure summarising the nature and grounds for his objections to the accounts. The annexure, described as a summary of the nature and grounds of the objections of Mr Paul Ellis addresses all the items listed in the executor's accounts using the numbering system adopted by the executor in those accounts. The objector's position varies as to the various items. In relation to two items (the two CBA accounts) Mr Paul Ellis states that he may or may not object, depending upon the contents of some statements still to be received. (It may be said that this does not comply with the requirements for lodging objections where an objection either has to be made or not and, if made, identify the grounds of the particular objection.) In relation to seven other items, the position of the objector was that he sought to 'put the executor to proof' on the basis that in some, but not all, of the instances there was an alleged lack of documents to support various items of estate expenditure. In two other items there were specific objections to the expenditure, mainly for gardening expenses, on the basis of lack of documents to support the expenditure claimed.

23 There were specific objections to the payments of the debts alleged to be due by the estate to the executor himself which have already been enumerated. As to these, the objector's position was as follows:

Objection: Omissions and/or inconsistent statements. Lack of evidence as to alleged agreement and payment. Veracity issues re invoices. Credibility issues re executor. Potential limitation issues. Self interest.

Objection. Omissions and/or inconsistent statements. Lack of evidence as to alleged agreement and payment. Veracity issues re invoices. Credibility issues re executor. Potential limitation issues. Self interest.

D3 Alleged debt for renovations 2002, 50% share, $29,550

Objection. Omissions and/or inconsistent statements. Veracity issues re invoices, including lack of detailed records. Lack of independent evidence. Credibility issues re executor. Potential limitation issues. Failure to register and obtain licence with the Building Commission. Lack of evidence re value of deceased's interest in the property increased, labour, materials, maintenance and improvements. Self interest.

24 It will be noticed that each of these three objections includes common grounds questioning the credibility or veracity of the executor as to the existence of the alleged obligation; by implication asserts that his debts were barred by the provisions of the Limitation Act; and that, in the case of the claim for renovations, it includes work for which the executor was required to be a registered a builder and, therefore, by implication, that any alleged agreement was illegal and unenforceable, although those grounds were not expressly stated in the objection.

25 This summary of objections concluded with objection to the proposed distribution table raising specifically an objection as to the distributions to Clive Ellis asserting a lack of documents to support his entitlement and asserting that bank statements were inconsistent. This objection also indicated that the objector was 'putting the executor to proof' in relation to distribution of jewellery and then raised the following further objections:

- Potential failure to account for interest on bank balances held in accounts not in deceased's name

- Failure to pay interest to beneficiaries receiving distributions later in time

- Potential failure to pay interest on potential loans by executor in personal capacity and/or wife of estate assets

26 The terms of these objections are rather Delphic but they are certainly capable of implying that:

(a) certain of the estate moneys was held in bank accounts not in the name of the deceased (either before or after death) which either did, or should have, earned interest, which became part of the estate assets available for distribution and which had not been disclosed;

(b) failure by the executor to pay interest on late distributions to beneficiaries (although there are no particulars of the basis for such a claim for interest or the nature and duration of any delay in payment relied upon to give rise to an entitlement to interest);

(c) there were undisclosed loans made by the deceased to the executor or to his wife by the deceased which either did carry, or should have carried, interest payable to the estate, which interest was not disclosed.

27 Despite the lack of particulars in this set of objections, they are nevertheless significant because they allege a breach by the executor of fiduciary obligations to pay or to account for interest earned by the estate; a failure to invest estate moneys so as to earn interest when that should have been done; a failure to pay interest on unidentified loans said to have been made by the deceased to the executor or to his wife (presumably before death). They also include an alleged failure to pay interest on late distributions of the residuary estate to the beneficiaries.

28 The particular significance of these objections, and associated controversies, relates to the question of the basis upon which any account or part of the account should be taken, namely whether it should be conducted on the basis of a common account or whether what is being sought is an account on the basis of wilful default. In the latter case, this gives rise to the question of whether or not there is, indeed, any basis for the account to be taken, either wholly or in part, on a wilful default basis and, if there is, whether or not that can be done in the passing of accounts before a Registrar pursuant to NCR 37 or otherwise.

29 As for the objection relating to the failure to pay interest on late distributions of the residuary estate, this implies that the executor unjustifiably delayed in making these distributions, that the delay amounted to a breach of his fiduciary obligations, and that he is liable to pay compensation in the nature of interest for that breach of duty. The timetable of distributions shown in the executor's accounts gives details of the exact dates of payments to various beneficiaries. There were some small distributions over the period from late November 2010 to early February 2011, but the major distributions (obviously resulting from the receipt of the settlement proceeds from the sale of the house and land at Mount Claremont) were:

8 September 2011 to Clive Ellis - $180,249.77 $203,449.77

18 October 2011 to Spencer Ellis - $180,030.00 $200,093.39

18 November 2011 to Paul Ellis - $ 189,030.00 $204,560.00

revealing that those major distributions were all made over a period of two months. The transfer of the house and land in which the estate had a 50% interest is dated 8 September 2011 and was registered on 13 September 2011, so it is evident that the larger distributions were made then or shortly after.

30 Subject to the express provisions of any particular will, the general rule is that only pecuniary legacies bear interest and then usually only after the expiration of the executor's year, although in certain cases, and subject to express or implied provisions of the will, a legacy may bear interest from the date of death. Common examples of this latter category are legacies payable to infants or to those whom the testator has evinced an intention to support or maintain, in which case the presumption is that the testator would not have intended to leave the infant, or the other beneficiary, without interest during the period before the legacy was payable or until the infant or beneficiary attained the age of 21 years or some other qualifying date. By contrast, there is no general rule that residuary beneficiaries should receive interest on all or any part of their share in the residuary estate. The reason is not hard to find because, of course, the amount of the residuary estate will not be known until the estate assets are collected and realised, and even then not until after the estate debts have been satisfied and administration expenses identified and paid: see generally Williams Mortimer & Sunnucks, 'Executors Administrators & Probate' (20th ed, 2013) 79 - 01 and Commissioner of Stamp Duties (Q) v Livingstone (1964) 112 CLR 12.

31 Consequently, a claim by a residuary beneficiary that an executor must account for interest on late or delayed distributions of his share of the residuary estate connotes an assertion that the executor has unjustifiably delayed in distributing the residue to such a degree as to constitute a breach of trust or a wilful default by failing to invest the funds in the interim, giving rise to a corresponding liability to pay compensation in the way of interest for that default or delay. For such an account to be taken it would be necessary to be done on the basis of wilful default and that will only be done in the event that the alleged wilful default is first established by satisfactory proof - see Re Waterman's Will Trusts; Lloyds Bank Ltd v Sutton [1952] 2 All ER 1054, 1055 (Harman J - Ch D). It will be necessary to return to the wilful default basis of passing accounts in due course.

32 That was the situation which existed when the accounts were to be passed before the Registrar on 25 October 2013. It immediately became apparent that there was both uncertainty and controversy about the basis upon which the account was to be taken, the nature of the objections raised and the extent of the inquiry which could be made on the passing of accounts to determine those objections.

33 In the course of submissions counsel for the objector contended that the accounts, by which she appears to have meant invoices, raised by the executor in relation to the work done in renovating the house at Mount Claremont and the accounts lodged in relation to the executor's claim for one half share of the deposit and the stamp duty associated with the purchase of that property were 'fabricated'. When challenged about the meaning of 'fabricated' in this context, counsel for the objector maintained that this did not mean 'forged' but, even so, the implication must surely be that those invoices were false or produced after the event in an attempt to record some nonexistent prior obligation. The learned Registrar gleaned from the submissions of counsel for the objector that, having regard to the objections which had been filed and in the context of the submissions advanced on behalf of the objector, the objections amounted to allegations that there had been a failure to administer, or properly administer, the estate and that, at least in several respects, what was being sought was an account on the basis of wilful default which was beyond the jurisdiction of the Registrar when conducting the passing of accounts under the Non-Contentious Probate Rules. That particular proposition has since been challenged by the objector and requires more detailed attention later.

34 In the event, the learned Registrar held that a Registrar passing accounts in those circumstances did not have jurisdiction to hear or determine the issues which were being raised by the objections lodged and therefore adjourned the passing of accounts for a period of six months to allow the objector, if so advised, to commence other proceedings alleging a failure to administer or breaches of trust or fiduciary duty by the executor which, once determined, would then allow any remaining account to be conducted once findings of fact and/or breach of duty had been made in suitable proceedings. The learned Registrar gave detailed reasons for her decision and in the course of them said:

Having read the objections of the relevant beneficiary, Paul Holden Ellis, to the passing of accounts which were filed by his counsel on 2 October 2013 it is immediately apparent that the objections raised questions in relation to whether or not there was a family agreement between Mr Ellis and his mother during the course of her lifetime, whether Mr Ellis has fabricated documents and whether he has breached his fiduciary duties as an executor, for example, by using improper means, that is, companies, to benefit himself by doing works on the relevant property.

The court's jurisdiction on the passing of accounts is exactly that, a passing of accounts, an assessment of vouchers and at most whether or not expenses are appropriate or whether vouchers can in fact be produced. The proceeding is not contentious. What is proposed by the objector as objections in relation to this matter are all matters which would normally be dealt with within the contentious jurisdiction of this Court as to, for example, whether or not an agreement exists or whether a document is or is not fabricated or whether there has or has not been a breach of fiduciary duty ...

In my view, those issues go way beyond anything which is contemplated by r 37 under the Non-Contentious Probate Rules and, in my view, the proper course for the objector to take if he wishes to assert those matters is to commence proceedings. Ms Elliott raises an objection that that would put the beneficiary to cost. That is not an unusual situation in a court.

35 The formal order made on that occasion was that the passing of accounts was adjourned for six months, until Monday, 26 May 2014.

36 There can be no doubt that counsel for the objector was seeking to canvass the issues identified by the learned Registrar and more besides. She sought, and has since continued to seek, a right to cross-examine the executor generally in relation to the accounts which he has filed and, in particular, in relation to the reasons for, and the extent of, various outlays such as, as already mentioned: expenditure on garden; repairs and minor maintenance on the Mount Claremont property before it was sold. She has also contended, although subsequently, that there has been a failure by the executor to distribute all the deceased's personal jewellery to his niece in New Zealand, contending that some items of jewellery (earrings of no assigned value) had wrongly been given to the daughter of Spencer Ellis, his other brother. This does not appear to be an objection which would result in the allowance or disallowance of any particular item on the account but, rather, to be an allegation of breach of duty by the executor in the administration amounting to a conversion of estate property which, presumably, if proved would give rise to concurrent liabilities both for breach of fiduciary duty and conversion, resulting in an obligation to pay compensation/damages to his niece, Jessica, although no such claim was formally made nor is the value of the piece of jewellery anywhere alleged.

37 As a result of the Registrar's decision on 25 October 2013 to adjourn the passing of accounts for six months, the solicitors for the objector requested that the Registrar's decision be referred to a Judge for review, it seems pursuant to r 4(3) and r 4(4) of the Non-Contentious Probate Rules, which allow a Registrar to require any application to be brought before a Judge or for the Registrar to refer a matter to a Judge. There was certainly no attempt to invoke a right of appeal from any order, decision or requirement of a Registrar to a Judge in chambers under r 5(1) of the Non-contentious Probate Rules but, as I have recently pointed out in La Russa v Carr [2014] WASC 497, that right of appeal relates only to applications within the non-contentious jurisdiction.

38 As I shall explain a little later, not all matters to which the Non-Contentious Probate Rules apply are themselves noncontentious such as, in the case of La Russa, a dispute over who was entitled to the grant of letters of administration under an intestacy or whether an existing grant of letters of administration should be revoked at the suit of some person other than the administrator. In the present case, the nature of the objections made on behalf of Mr Paul Ellis clearly indicates that there were alleged breaches of duty by the executor, going well beyond simple questions of justification or proof of claims for particular expenses or allowances and, in substance, giving rise to significant contentious issues between the objector and the executor.

39 The result was that the application for passing of accounts was listed for hearing before me on 27 February 2014.

40 Again there was considerable uncertainty about the basis upon which the objector was contending the passing of accounts should be conducted. It also became evident that the objector was seeking far more detailed explanations for transactions on the various estate bank accounts and thereupon raised a series of queries in relation to some of them which were in part answered by the executor in submissions made to the court but without formal verification. Generally speaking, there was a glaring lack of precision or limitation in the nature of the objections which were sought to be advanced, the extent of the transactions to which they related, and the basis upon which the accounting should be conducted.

41 At the commencement of the hearing on 27 February 2014 counsel for the objector eventually sought to confine the areas of objection to three. The first was in relation to whether or not the alleged loan made by the executor to the deceased at about the time the home in Mount Claremont was purchased was a debt due by the estate to the executor which could be deducted from the residue and paid to him. The second was whether or not certain claims made by the executor for the value of improvements or renovations to the same property made over the years and charged by the executor to the estate could be deducted either in whole or in part by him.

42 Submissions raised by counsel for the objector included a contention that if there were any such debts they had become statute barred under the provisions of the Limitation Act and could not be recovered by the executor after his mother's death. There was, however, no evidence to establish whether or not the alleged debts were debts presently payable and when they were incurred or whether they were payable only in the event of a demand and, if so, whether or not the executor's actions in deducting for himself the amount of those debts in the course of administration amounted to such a demand and justified payment.

43 A third area of controversy emerged, namely, whether or not the executor could be required to produce a series of bank statements which had been identified in a document produced for the first time by counsel for the objector at that hearing. The submission was that those additional statements were needed to clarify the accuracy of distributions which had been made because, according to the submission, the details of the distributions which had been provided by the executor did not 'add up'. It was not clear what was meant specifically by this reference to 'not adding up', but it seemed that there was some lack of correspondence in the figures in the existing bank statements and various transactions which had been explained by the executor and that further bank statements were sought by the objector to canvass more widely the executor's dealings in various estate bank accounts.

44 The raising of a Limitation Act issue has added significance because, of course, what has happened in the present case is that the executor has paid to himself the aggregate of the alleged debts which, by the submission, are said to be time barred. However, in acting as executor and paying the debts the executor has confirmed their existence and by doing so rendered any limitation defence ineffective by reason of that acknowledgment: see Limitation Act 2005 s 46(1)(b). Properly analysed, therefore, the nature of the objection amounts to an allegation that the executor has acted in breach of duty by paying either a nonexistent debt or debts or by paying time barred debts in breach of his duty to conserve the estate of the deceased by relying on a potential limitation defence. Unmasked in this way, the submissions concerning limitation defences amount to specific allegations of breach of duty by the executor of converting so much of the estate property as was utilised to pay those claims.

45 There is a special rule which applies in relation to debts statute barred by lapse of time: Re Rownson; Field v White (1885) 29 Ch D 358, 363 and Midgley v Midgley [1893] 3 Ch 282, 284. But the personal representative may pay a statute barred debt of the deceased if under the limitation statute only the remedy and not the claim is extinguished: Midgley v Midgley.

46 At that point, I concluded that the objector should specify in what way, and to what extent, if any, there had been overcharging, improper expenditure, or the diversion or concealment of estate assets. Only once it became clear what the nature of the objections were could a mechanism adequate for the taking of any account by the court or any necessary investigation and resolution of these disputes be designed and directed.

47 At that hearing the impression given by counsel for the objector, despite repeated disavowals of this purpose, was that Mr Paul Ellis was essentially seeking a general detailed scrutiny of the whole of the administration of the estate on the basis that every transaction of the executor is in question and that, at least in a number of respects relating to the loans said to arise in relation to the Mount Claremont property, these were breaches of trust.

48 However, because the objector's position remained uncertain as to the basis upon which the account should be conducted, and because the scope of account would depend upon the basis upon which it was to be taken, and also because there did appear to be some uncertainty about several transactions on the bank accounts, I ordered that further information or particulars be provided. The orders then made were:

1. The executor produce copies of the Commonwealth Bank of Australia bank accounts showing the closure of the pensioner security account and of the term deposit account of the deceased.
2. The executor file an affidavit explaining the amounts of the distribution for the estate, namely, the $822,000, $359,500.43 and $180,249.77.
3. The objector may then file any further or amended objections to the executor's accounts.
4. There be liberty for the executor to file any responses to such further objections.
5. The matter be relisted for a further directions hearing on a date to be fixed and with liberty to apply.

49 As a consequence, the executor filed a further affidavit sworn 9 March 2014 in which he deposed to his treatment of the $820,000 received from Champagne Settlements on 8 September 2011 from the proceeds of the sale of the Mount Claremont property. His explanation was that on 8 September 2011 $820,000 was deposited into NAB, BSB 080 164, account number 118992826, consisting of:

• 50% of house settlement of $1,179,500.43, being $589,750.20
• $180,249.77 distribution from estate to himself
• $50,000 being part payment for 50% each of the deposits, stamp duty and house renovations carried out in 2002 and works carried out in preparation for the house sale in 2011

50 The executor also deposed that on the same date he deposited the balance of the moneys coming from Champagne Settlements, namely $359,500.43, into the estate's CBA account number 06610310282750. The result was that these various payments totalled $820,000.

51 Since then the executor has filed (on 17 March 2014 and 23 March 2014 respectively) two further bank statements as follows:

(a) statement from the Commonwealth Bank of Australia dated 29 October 2010 in the name of the estate of the late Mrs V E Ellis, being a pensioner security account. This shows the following transactions:

(b) Statement from Commonwealth Bank of Australia 31 October 2010

52 In explanation, Mr Clive Ellis wrote that the withdrawal of $324 on 26 October 2011 was for a collection agent's fee corresponding to item D21 in his original accounts, being fees paid for repairs to the TV antenna at the Mount Claremont property on 24 September 2010 while the deceased was living there. Mr Clive Ellis contends that the bank paid the collection agency and that he had mistakenly also claimed it from the estate, with the result that the amount of the distributions recorded as having been paid to him should be increased by the sum of $324 to take account of that double payment. That explanation has not been checked or verified and it is certainly a matter which would be suitable for checking or verification on any passing of accounts in common form which, in the present estate, can readily be done if and when it becomes necessary to complete the passing of these accounts.

53 Similarly, under cover of a letter received on 21 March 2014, the executor produced a copy of a Commonwealth Bank of Australia statement for the estate of his late mother dated 31 October 2010 relating to the closing of a term deposit for the estate on 29 October 2010. This showed that the term deposit was closed on 29 October 2010 by the payment of the whole of the balance of $41,311.23, which included an amount of $1,839.47 interest accrued during the financial year ending 30 June 2011 (for taxation purposes). Again this account has not been formally verified but can readily be checked and the significance of the interest earned for a portion of the period can be identified. The implication, clearly enough, is that accrued interest was aggregated with the capital of the account and included in the estate assets when calculating a net balance for eventual distribution.

54 The objector filed a further affidavit sworn 8 April 2014, again annexing extensive correspondence and other documents passing between the executor and the objector's solicitors, other records relating to business name registers relating to the executor's renovation business, and a hearsay account of information provided by the grandparents of the objector's daughter, Jessica Nicole Ellis, who are her guardians and with whom she has been living for many years. This is to the effect that Jessica received a package of largely costume jewellery about 18 months beforehand, believed to have belonged to the deceased, but that, so far as they were aware, the package did not contain a wedding ring, an engagement ring or significant items of value.

55 This affidavit includes as an annexure a further document entitled Executor's Admissions and Objector's Objections dated 4 April 2014. Despite some very minor corrections, including the adjustment of $324, admitted by the executor as being appropriate to be added to the estate account, the objector admits that (excluding jewellery) the aggregate value of assets of the estate coming into the hands of the executor was $679,189.12. I am satisfied that taking into account the adjustments which the executor agrees should be made, but leaving out of account the question of estate jewellery, there will be no difficulty or undue controversies arising in the passing of accounts of receipts of the estate on a common form basis.

56 When it comes to the liabilities of the estate, there were again objections made in relation to a claim for a debt of $5,000 for the deposit on the house, the stamp duty claim of $7,480 and the claim for a half share of renovations in the amount of $29,550. However, the nature and grounds of the objections were far more detailed and extensive than previously made, and included challenges to the dating and veracity of the accounts raised; the propriety of a claim made by Clive's Home Maintenance; the absence of any proof that the deceased ever acknowledged the existence of any such liability or ever contracted to repay it.

57 A number of subsidiary objections relating to the accuracy of the documents relied upon or the absence of contemporary documents recording indebtedness are also raised, together with allegations that the claims were only made late, after partial distribution of the estate. There is a further objection that charges for services provided after the deceased's death by the executor are not recoverable under s 98(5) of the Trustees Act. There are also objections to claims for gardening expenses; further renovations after death but before the sale of the property; demands for proof of accounts for gas; electricity; telephone; water rates; tip fees; council rates and other items of expenditure.

58 In relation to the objections to the proposed distribution there is again an objection that the executor should account for interest payable with respect to the different distribution amounts on different dates and a demand to enquire into whether the executor mixed estate funds with his own funds and owes the estate interest in respect to any potential loan of estate assets.

59 For reasons already canvassed, these objections in relation to the debts claimed as due to himself by the executor; the charges for gardening and post mortem renovation expenses and other household outgoings assert a lack of correspondence between these alleged liabilities and the extent of the estate liabilities disclosed in the r 9B statement, implying falsity and/or overcharging the estate for more than 50% of the expenditure necessary to maintain the house and put it in a condition fit for sale.

60 It is one thing to seek verification of expenses for rates, taxes, telephone, gas, electricity and gardening expenses by way of production of vouchers for the expenditure or other proof, possibly by affidavit, of the expenditure and the reasons for it, as frequently occurs on the passing of accounts on a common form basis, and it is another to allege that because of earlier non-disclosure of the alleged debts (in the 9B statement) there is a lack of correspondence implying dishonesty which warrants the disallowance of the expenditure claimed by the executor. Those latter contentions amount to an allegation of a fraudulent breach of trust and any person against whom such an allegation is made is entitled to full particulars of the alleged fraud or impropriety and an opportunity to defend any such claim rather than being forced to engage in such a defence as a sideline in a passing of accounts Whether this is possible on a r 37 passing of accounts will depend on the extent and method of account ordered at the directions given.

61 Observations about the implications of a demand that the executor account for interest on delays or differences in the dates of interim distributions of parts of the residuary estate have already been described and amount to allegations of breach of duty.

62 The adjourned hearing of the reference took place on 22 July 2014.

63 By then the executor had complied with all previous directions relating to the filing of affidavits identifying the distributions which he had made from the estate and had provided copies of the bank accounts which had previously been demanded. Mr Paul Ellis had filed a set of further or amended objections to the executor's accounts under cover of his affidavit of 8 April 2014, acknowledged by his counsel to represent her client's final position in relation to the objections.

64 Counsel for the objector submitted that no further affidavits would be demanded or filed but that she wished to cross-examine the executor in relation to his accounts. When asked in relation to what areas or topics cross-examination of the executor would be sought, counsel for the objector indicated that crossexamination was being sought in relation to prior alleged inconsistent statements of the executor and that cross-examination was permissible and available on the passing of accounts as recognised in Gava v Grljusich [1999] WASC 13 and Bassett v Atherley [2011] WASC 117.

65 On further exposition it became apparent that counsel for the objector wished to cross-examine the executor as to whether there was any evidence that he had actually paid the stamp duty and on issues of credibility arising from the assertion that no claims for these debts were advanced by the executor until a large portion of the estate had already been distributed. Counsel submitted 'We're saying it's concoction, that he has taken far more than he should have and then he has subsequently tried to justify it and that's one of the bases on which he's justifying' ... and that 'we say that it's a concoction'. Similar bases were relied upon for the desire to cross-examine the executor in relation to the payment of the deposit and the renovations and improvements to the house.

66 As the submissions went on, it became more and more apparent that counsel was seeking to cross-examine the executor generally about all aspects of expenditure or payments relating to the estate without specifying or restricting the scope of the cross-examination to any specific objection, but treating the occasion as a general right to cross-examination in relation to any aspect of the challenged item. This resulted in a position where counsel for the objector acknowledged that she may need to bring in further amended objections raising specifically the aspects of the disputed items which were challenged and the grounds for such objections.

67 It also became apparent that the objection in relation to the distribution of jewellery to the deceased's granddaughter, the daughter of the objector, was now related specifically to wedding and engagement rings of the deceased and that these matters were handled by the executor's brother, who had been named as co-executor but had not joined in taking the grant. The executor therefore sought and was granted leave to file yet another affidavit relating to his brother's treatment of the deceased's jewellery.

68 The result of this prolonged directions hearing was that the objector would have yet another opportunity to bring in an amended set of objections identifying the grounds of each particular objection without specifying matters of evidence or argument. On the assumption that that would be done, I identified the need to determine whether the passing of accounts would then be conducted by me or by another Judge or be referred to the Registrar once the grounds and scope of the taking of accounts had been better identified.

69 That left the question of whether or not the objector by counsel should be permitted to cross-examine the executor and, if so, the extent of the cross-examination. I reserved my decision on that point pending identification of the final grounds of objection which would allow directions to be given as to whether there should be a right to cross-examine the executor and, if so, in relation to what item or items in the account. Inevitably, but unfortunately, this meant another adjournment of the hearing of the application. Consequently, on 22 July 2014 I ordered and directed that:

(1) the executor or somebody with knowledge of the circumstances should file an affidavit detailing all material matters relating to the disposition of the deceased's wedding and diamond rings;

(2) the objector, Mr Paul Holden Ellis, within a three-week period file an amended set of objections identifying the grounds of each particular objection without specifying matters of evidence or argument; and

(3) the application be adjourned sine die, to be brought on at the earliest opportunity after the amended objections had been filed.

70 In due course, a further affidavit was filed on behalf of the executor, this time by his brother, Spencer Charles Ellis, who is still living in England. After deposing to the fact that he was a son of the deceased and one of the three residuary beneficiaries, he deposed:

At the end of July 2010 in my mother's house, 43 Strickland Street, Mount Claremont, and in the presence of Linda Jane Ellis [the wife of the executor and a joint tenant with her husband of a one undivided half of the share as tenant in common with the deceased in the Mount Claremont property] I found a small sealed cream envelope with 'This is for Ilana with love' written on it in my mother's handwriting. I proceeded to open the envelope and inside there were two rings, two necklaces and a pair of earrings. The envelope was resealed and taken back to England to be given to Ilana at an appropriate time. All other jewellery that was found was packaged into a box and sent to Jessica Ellis including a digital camera that was sent to Benjamin Ellis ...

71 A copy of the envelope with the deceased's handwriting on it dated 14 July 2010 was annexed to Spencer Ellis's affidavit. The date on the envelope is exactly 14 days before the death of Victoria Elizabeth Josephine Ellis and, of course, more than five years after her last will.

72 At the directions hearing on 22 July 2014 (ts 81) the executor, Mr Clive Ellis, had explained that his brother had dealt with their mother's jewellery. The explanation then given by Mr Ellis, although not verified by affidavit, is nonetheless material in dealing with the manner in which the eventual passing of accounts should be conducted and the nature of and extent of any crossexamination permitted) was that their mother had been admitted to hospital about 10 days before her eventual death for a triple coronary bypass but that, unfortunately, the surgery was not successful and it became evident that Mrs Ellis would soon die. In the circumstances, his brother Spencer came immediately from England to Perth, where the family waited until Mrs Ellis did die, after which Spencer and the executor's wife went through the deceased's things. It was then that the envelope containing earrings, a necklace and rings were found. This did not cause undue surprise because Spencer's daughter, Ilana, had been born after Mrs Ellis had made her last will. Accordingly, as explained by Mr Ellis, the two brothers discussed what should be done with the jewellery in the envelope and Mr Clive Ellis was of the opinion that Spencer should keep it and give it to his daughter, Ilana, in due course. Mr Clive Ellis explained that he would telephone the relatives in New Zealand who were looking after Jessica to explain to them what had happened and that they and Jessica agreed that Spencer Ellis should get the rings and jewellery for his daughter, Ilana, and that Jessica should receive all the other jewellery and the envelope and its contents were given to Spencer, who took it back to England for Ilana.

73 This recitation of the explanation of the events relating to the envelope and its contents marked for Ilana as given by Mr Clive Ellis does not amount to any finding that this is what occurred, but it does give guidance to the nature of the issues likely to emerge if it were ever necessary, on the passing of these accounts or otherwise, for the court to determine what are the consequences of the disposition of this jewellery in that way.

74 Without making any findings about the explanation offered, it is evident that if this matter were to be enquired into it is likely that the treatment of the items of jewellery sent to Ilana would be supported by the executor on the basis that this treatment of the jewellery was done with the express authority of Jessica, who is the only person to whom the grandmother's jewellery was disposed of by her will. There is no evidence before the court as to whether or not Jessica is of age and able to authorise this variation in the disposition of those items of jewellery as otherwise provided by her grandmother's will. However, if it was not so authorised and she sought to challenge that disposition, the question may arise as to whether or not the executor should be excused from this apparent breach of trust under the provisions of s 75 of the Trustees Act and, if not, whether compensation should be paid or specific restitution attempted.

75 As already remarked, there is no evidence of the value of these items of jewellery and there is certainly no evidence that Jessica, the only person to whom the jewellery was bequeathed, has any objection to the manner in which the jewellery was distributed. She is the only person who has any interest in that jewellery under the will and it is only she who could maintain any claim or raise any objection to the executor's conduct in allowing those items of jewellery to be given to her cousin, Ilana. Paul Ellis has no interest of any kind in the jewellery and I do not consider that he should be permitted to raise or persist with an objection to the executor's accounts which relates only to the distribution of that jewellery.

76 For these reasons, I do not consider that the objection relating to the distribution of the jewellery should be permitted on the demands of this objector.

77 In due course, a further affidavit of the objector, Mr Paul Ellis, sworn 12 September 2014 was filed. That affidavit specifies the objections finally settled on by Mr Paul Ellis. In short:

(1) There is an objection to the closing balance of one of the Commonwealth Bank of Australia accounts which the executor admits should be $324 greater than it was. This is an adjustment which can readily be made in the taking of accounts on a common account basis. This account also shows the payment of $25,707.64 to the executor, which relates to the debts associated with the purchase of the house, the stamp duty and the renovations.

(2) There is a further objection to the closing balance of a second Commonwealth Bank of Australia account on reasons which could readily be determined on the passing of accounts on a common account basis and without need for cross-examination.

(3) There is an objection to the claim for $5,000 for a 50% share of the deposit originally paid on the purchase of the Mount Claremont property on grounds which include an assertion that there was no payment of the deceased's share of the deposit by the executor but, if there was, it was a gift, that any resulting agreement fails for uncertainty and was not enforceable after the deceased's death, and that any demand for repayment was made after expiration of the limitation period. There are many other grounds asserted in relation to the challenge to the balance of that account which include claims amounting to breach of duty or breach of trust by the executor in various component payments of expenditure associated with the house.

(4) Similar objections were made in relation to the claim for one half of the stamp duty paid.

(5) Again similar claims were made in relation to a claim for one half of the building works and improvements claimed to have been made by the executor to the house, including submissions that the individual charges were excessive, that the outlays have not been vouched for, that the work was done by a co-owner and other cognate objections.

(6) Similar objections are made in relation to the gardening expenses, including a claim that the trustee was not authorised to charge for his own services under the provisions of s 98(5) of the Trustees Act or at all, and that the claims were excessive.

(7) The claims for painting and renovations in 2011 for readying the property for sale are objected to on similar grounds, including alleged inconsistencies in contemporaneous records relating to the expenditures and that the claims are excessive.

(8) There is then a series of objections to claims for gas, irrigation, gardening, council rates, water rates, telephone and electricity charges on various grounds, that they were not in connection with the preservation of the deceased's interest in the property, that they were maintenance and cannot be claimed by a coowner, alternatively that the various charges were incurred while tenants were in occupation of the premises and should have been met by the tenants.

(9) There is an objection to a claim for the receipt of $1,000 for chattels of the deceased on the basis that the executor did not account for whitegoods and personal possessions.

(10) Finally, these objections include an objection to the distribution of certain jewellery to the deceased's granddaughter, Ilana, rather than to her granddaughter, Jessica, which, for reasons just given, I do not consider should be accepted as an objection raised by Mr Paul Ellis.

78 There was a final directions hearing on 28 November 2014 at which all the parties agreed that no further or supplementary evidence (other than the desired crossexamination) was sought to be adduced or supplied, that the objections were in their final form and that it was then appropriate for the court to determine how and by whom the passing of the executor's accounts should be conducted, what would be the basis for the passing of the accounts, whether cross-examination would be permitted and whether, in view of the scope of the objections, it was appropriate to deal with all matters on a passing of accounts under r 37 of the Non-Contentious Probate Rules by a Registrar or otherwise.

79 As those questions involve some matters of importance going beyond this particular estate, it is necessary to revert to the history and principles relating to the remedy of account and to executors' accounts in particular.

80 It has been said that an account is both a remedy and a process: Finnane, Newton and Wood, 'Equity Practice & Precedents' (2008) 171. The purpose of an account is to determine the amount due by an accounting party to the person entitled, whether at law or equity. It involves a process of filing accounts by the accounting party, usually accompanied by an obligation to file vouchers to support the receipts and payments recorded in the account, followed by a review before an officer of the court of the accounts filed at which an interested party can challenge the accuracy of the account through crossexamination and legal argument. Once the account has been taken and the report or certificate of the result is made by the officer taking the accounts, the account will be regarded as settled and the result may require compensation or restitution by the accounting party, if expenses are disallowed to any degree, or if certain other receipts should have been included. Once the account is settled, steps can be taken to require the accounting party to replenish the fund to such degree as may be necessary or, if the accounts are approved, to proceed with the administration including, if appropriate, to distribute to the persons entitled the balance or balances found due when taking the account.

81 There is a constant duty of personal representatives to keep clear and accurate accounts of the estate and always to be ready to render such accounts when called upon to do so: Sutcliffe v Sutcliffe [2005] EWHC 3058 (Ch); [2005] All ER (D) 116 [5] (where both interim and final accounts were ordered) confirmed the variety of methods by which an account may be ordered in saying that a personal representative is liable to be ordered by the court to account either generally in proceedings for general administration of the estate or under the court's jurisdiction to order specific accounts. Instances of the statutory provisions and rules relating to the variety of ways by which this court may order an account have already been mentioned. They include the inherent jurisdiction of the court: Acaster v Anderson [1848] EngR 868; (1848) 1 Rob Eccl 671; 163 ER 1174.

82 An account may be taken or ordered as a remedy in many cases, whether in the exclusive jurisdiction of equity or in aid of common law rights or, for that matter, at law. The nature of the account to be taken and the method of the conduct may well depend on the particular circumstances - Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 and the court will fashion the form of the account to pay regard to the particular circumstances and, consequently, the form of order sought may need to be tailored to the case in hand and constructed with care. The procedure was described by Young CJ in Eq in Old v Hodgkinson [2004] NSWSC 1202 [7]:

There would need to be vouching of the accounts before the Chief Clerk, or more usually these days, informally between the solicitors' clerks. There would then perhaps be cross-examination on the accounts and then surcharges and falsifications, which would throw up discrete issues for the Master to determine.

83 In many cases, there would need to be directions about the nature of the account, the matter or matters to be determined and what evidence is to be led. Similarly, the filing of the accounts verified by affidavit may be sufficient to satisfy the interested parties but in other instances the claimant or beneficiary may wish to test the position by cross-examination. Notice should be given to the accounting party of the areas to be the subject of cross-examination: Lord v Lord (1866) LR 2 Eq 605 and Glover v Ellison (1892) 20 WR 408.

84 If a challenging party seeks to surcharge or falsify the accounts then notice should be given of any challenge with particulars of the surcharge and the grounds for the falsification alleged: Glazier Holdings Pty Ltd v Australian Men's Health Pty Ltd (No 2) [2001] NSWSC 6. For a surcharge the challenging party has the onus of proof: Cavasinni v Cavasinni [2007] NSWSC 619 [24]; but the accounting party has the onus of justifying any item in the account which a challenger seeks to falsify. The taking of the account will not in itself result in a judgment for any sum of money but, rather, in the proceedings leading to the account an order should be sought that the accounting party pay the amount that was found to be owing after the completion of the accounts. That can be done either before or after the account is taken: Meehan v Glazier Holdings Pty Ltd [31] - [32].

85 Sometimes the working out of the rights of a party may involve not merely the taking of accounts but the conduct of an inquiry by the court as to a separate issue which has a bearing on the account.

86 The process of accounting envisaged by s 43 of the Administration Act and the passing of accounts pursuant to r 37 of the NCR do not, at least in express terms, provide for the conduct of any inquiry by the court as ancillary to the process of accounting. However, on an account under RSC O 45 the court may order that an inquiry be made by a master, registrar or other proper officer of the court. It would seem to follow, therefore, that if some inquiry is necessary for the proper taking of accounts under s 43 of the Administration Act and/or NCR r 37 that the course to be followed is for the registrar to refer the matter to a judge under NCR r 4(4) when it would be possible for the court to consider whether an inquiry should be conducted and, if so, of what nature and, further, whether in all the circumstances any special directions need to be given for the further conduct of the passing of accounts whereupon the judge would either conduct that inquiry or take over the passing of the accounts or, more usually, if orders and directions that the inquiry of a particular nature are necessary, then the account, as may be extended or specified by order or direction on that occasion, be returned to a master or registrar for conduct or completion.

87 It is the usual experience that the taking of full accounts and, in particular, judicial involvement in the process of certain charging of falsification is an extremely expensive process - Davey v Lee (1990) 13 Fam LR 688. In practice alternative modes are often adopted such as referring detailed accounting processes or controversies to an accountant in order to have a report prepared for consideration by the court. If there is some legal question over how individual transactions should be treated the ability of the court to order an enquiry into that issue may sometimes involve a referee enquiring into and determining factual points. If that is not possible or practicable, it may necessary to have that issue determined by a judge or the registrar as a special issue and certified in the report of the registrar to the court. The court can then make whatever determination the circumstances may dictate as being necessary.

88 These observations and explanations apply to accounts or the process of account however resulting. The executors or personal representatives of deceased estates are just one species of parties who have an obligation to account and in their case to interested beneficiaries for the administration and distribution of the estate. Conceptually, there are no differences in the principles applying to the obligation of personal representatives to account nor to the availability of various procedures or remedies requiring them to account or the nature of the orders or directions which may be made as to the manner of conducting the account. However, in view of the clear obligation of personal representatives of a deceased estate to account, provisions are available for an account to be taken without proceedings or the need to establish the duty to account or the entitlement of the claimant to payment of whatever may be found due on the account. These provisions have already been mentioned, namely, s 43 of the Administration Act and NCR r 37 and have statutory equivalents in all other jurisdictions in this country.

89 An account of this nature, or this procedure of 'passing accounts', is available on demand or order by a registrar and is not preceded by an originating process or order of a judge as to the nature, extent or manner of conducting the account, although an account of that nature with accompanying orders and directions could occur if the general jurisdiction of the court for such a remedy were to be invoked.

90 The passing of the executor's or administrator's accounts, however, under this common procedure, involves the accounts being approved by the court and is said by Finnane, Newton and Wood, 'Equity Practice and Precedents' at 187:

In this context encapsulates preparing the accounts, vouching them by attaching receipts verifying expenditure, and having the accounts reviewed and adjudicated upon by the court. The function of the court in vouching the accounts is to assess the adequacy of the evidence supporting the individual entries. If the registrar is satisfied on the vouching of the accounts, he or she will issue a certificate. The next step is the adjudication on the accounting items, after which the registrar will make an order passing accounts (that is, allowing the accounts after excessive and inappropriate items have been deleted). Legal expenses or professional fees of any significance may be moderated (that is, reviewed to ensure that they are both reasonable and incurred in relation to the estate) as part of the process of passing accounts. An executor, administrator or trustee of a deceased estate also has an obligation to file an inventory of the estate (usually in verified form) setting out the assets of the estate. If the personal representative fails to comply with his or her obligations, there is a process for obtaining an order that they file accounts (usually also that they are verified and passed).

91 As pointed out in Williams Mortimer & Sunnucks, 'Executors, Administrators & Probate' (20th ed, 2013) 63-23, an action for an account is not based on allegations of breach of trust but arises from the fiduciary relationship of trustee and beneficiary and represents a remedy to enforce or permit the personal representative to discharge his obligation to account to the beneficiaries. As to the usual accounts ordered, the need for distinct proof of a wilful breach of trust causing a loss to the estate before an account is ordered on the basis of wilful default, see Sunnucks et al [63-25]. In those instances in which an account is ordered it will be usual for directions to be given as to the mode of taking the account: compare RSC O 45 r 4 and Meehan v Glazier Holdings Pty Ltd.

92 The passing of an executor's or administrator's accounts of a deceased estate is a common feature of the completion of the process of administration by any person or representative to whom a grant has been made. The passing of the accounts and the implementation of any adjustments to the administration rendered necessary by the passing of accounts, constitutes provisional approval by the court of the actions taken by the personal representative in the administration of the estate. That ratification includes the approval of the collection of the assets and, where required by the will or otherwise, their realisation by conversion into money. Under NCR r 37 the personal representative is also required to submit a plan of final distribution of the estate detailing his or her intentions as to the distribution of final moneys on hand or in other remaining assets. It also constitutes approval by the court of the distribution of specific devises, legacies and bequests and, by extension, the determination of the net balance of the estate available for final distribution. The passing of the personal representative's accounts also constitutes provisional approval by the court of expenditure by the personal representative, including discharging debts or other liabilities of the deceased, the payment of funeral and testamentary expenses and the many other costs incurred in the course of administration such as commission and other fees payable on the sale of real estate or other assets, holding expenses for assets pending sale such as rates, taxes, repairs and maintenance, administration costs including legal, accounting and taxation expenses and many others. The reason for the resulting passing of accounts amounting to provisional approval of the executors' conduct lies in the fact that for a certain period and on certain grounds it may still be challenged and reopened: see Administration Act s 43(2).

93 In some cases, the passing of the accounts may result in the discovery of further assets or income of the estate (as may happen, for example, following the result of disputes or litigation in which the estate was involved concerning the nature and extent of the deceased's interest in a partnership or some other business or the vindication of some claim by the estate which had previously been denied or disputed by a third party). In those instances, the result may be to surcharge the accounts by including or adding to the value of assets or income originally disclosed.

94 The character of the obligation by the accounting party to replenish the fund was identified by James LJ in Re Collie; Ex parte Adamson (1878) 8 Ch D 807, 819 as an equitable debt or liability in the nature of debt. His Lordship described it as 'a suit for the restitution of the actual money or thing, or value of the thing ... ' because 'The Court of Chancery never entertained a suit for damages occasioned by fraudulent conduct or for breach of trust'.

95 Inevitably, there will be some legal and other expenses involved in the passing of the accounts and in implementing the final distribution of the residue of the estate. These will usually include legal, accounting and taxation expenses and for this reason the personal representative will usually retain a sufficient balance of funds from the estate account to meet this expenditure before final distribution. Once the accounts are passed and the plan of distribution is approved, and the personal representative is in a position to do so, he or she will make final distribution of the estate assets, including the discharge of any necessary further expenditure, and by doing so will discharge his liability for the performance of the duties of administration. Should it be the case that further unexpected expenditure is incurred in this final process or it becomes further delayed then, if necessary, a further passing of accounts can be demanded and conducted.

Obligation of executor or administrator to pass accounts

96 It has been said that compared with an administration claim, an application for an inventory and account under s 43 of the Administration Act is a relatively inexpensive procedure but the scope of the remedy is limited. In essence, it enables the applicant to obtain information from a personal representative as to the property comprised in the estate and the manner in which the administration has been carried out: Parry & Kerridge, 'The Law of Succession' (12th ed, 2009) [20-17].

97 The Probate Registrar's direction under NCR 37(1) for an executor or an administrator to attend for the passing of accounts at an appointed time is authorised by s 43 of the Administration Act 1903 which states that every person to whom probate or administration is granted shall be under a duty to:

(a) ...

(b) file an inventory of the estate of the deceased, and pass his accounts relating thereto within such time and from time to time, and in such manner as may be prescribed by the rules or as the court may order.

(c) ...

98 There is this statutory recognition of the need for accounts to be passed at such time as the court may consider fit, without tying the obligation to the period of the executor's year, and also a recognition that there may be a need for accounts to be passed repeatedly, that is, from time to time.

99 The period for the passing of accounts by a personal representative contemplated by NCR r 37(3) is that they should be filed within 12 months after the grant or in such further time as a Judge or Registrar may allow. This is a reflection of the traditional period of an executor's year for the completion of the administration of an estate but both in theory and in practice it is very flexible and often, indeed usually, extended. One situation where the concept of an executor's year will sometimes, not always, have significance is whether or not interest should be paid on legacies after the executor's year: Murdocca v Murdocca (No 2) [2002] NSWSC 505 [22]. Recognition that administration could often take a personal representative longer than one year appears in many places, including Peter Henry Atkins as Executor of the Estate of Robert Charles Godfrey v Godfrey [2006] WASC 83 [64]. This traditional notion of the executor's year for completing administration has been referred to as a 'rule of convenience'. It was never fixed and is only a guide - see Dal Pont & Mackie, Law of Succession (2013) [14.26] - [14.27] to which I referred in Tagliaferri as Administrator of the Estate of Tagliaferri v Tagliaferri and Sawyer [2013] WASC 321 [34].

100 It is widely recognised that the obligation of a personal representative to file accounts imposed by the Administration Act s 44(1) and (2) is not always insisted upon. The practice is that this is only done in exceptional cases upon the demand of an aggrieved party or at the request of the executor: see Dal Pont & Mackie, Law of Succession (2013) [12.42] and West Australian Law Reform Commission, 'The Administration Act 1903 Project No 88' (August 1990) 24.

101 The apparent mandatory language of s 43 of r 37(3) of the NCR can sometimes lead to a view that there is an inflexible obligation on all personal representatives to have their accounts passed by the court within that time. But the time for performing the obligation is at the discretion of the Court: Administration Act s43(1)(6) and Davis v Davis [2014] WASC 395 (Jenkins J), Hons v Hons [2010] NSWSC 247; (2010) 3 ASTLR 278 (Ward J). As Jenkins J made plain, the obligation of any personal representative to account for his or her administration of an estate need not necessarily result in an order for the passing of accounts to be made by a Registrar under the Administration Act s 44 and such an order, even if made and not complied with by an executor, may instead lead to the removal of the executor and appointment of another trustee, such as occurred in The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358. As I said in that case, the court's power to require an executor to file and pass accounts is an important part of the court's armoury of powers to enforce the due administration of estates which may be exercised whenever and as often as the requirements of due administration dictate: [33] - [40]. The result in Rogers' case was to revoke the grant of probate to the executor appointed, require him to appear before the court to give an account of his partial administration of the estate, and to give liberty to another beneficiary to apply for a grant of letters of administration of the unadministered estate.

102 It has been said that executors do not complete their duties until accounts are passed: In the Estate of Just [No 2] (1974) 7 SASR 515 (Jacobs J) and Von Nida v Eady [2000] QSC 383.

103 As to the statutory remedy of demanding the passing of accounts under NCR r 37, it has been observed in Queensland - Re Will of Ruthenberg (Unreported, QSC, 27 October 1993) (Ryan J) that before taking such action the interested person should demand an account in writing from the executor.

104 Furthermore, the general experience of the probate registry and registrars in this court reaching back over more than 40 years, and the experience of judges and practitioners in this field, is that while passing of accounts by an executor or administrator under s 43 and/or NCR r 37 is a common feature of this jurisdiction, it is far from universal and occurs only in a relatively small proportion of estates. To give this observation some sense of scale, it is possible to say that the grants of probate or administration in this court have been running at the rate of approximately 6,000 or more per annum for the past 10 years or so. However, the occasions when registrars are asked to require the passing of accounts, either by a personal representative or by some other person interested, would, on average, be less than 100 per year, although in recent times this frequency has been increasing. It would require an unprecedented increase in the judicial resources of the court, including registrars, if a passing of accounts were to occur with every grant of representation or even in a large proportion of them.

105 This does not mean that the obligation of personal representatives to account under s 43 of the Administration Act, or generally, is not readily enforceable. Nor does it mean the power of a registrar to require the passing of accounts under NCR r 37 is not, or has not been, a powerful and important remedy available to secure the due administration of an estate. It does not even imply that executors or administrators have over the years been lax in the performance of their accounting obligations. Rather, it signifies that the availability of this procedure is a potent power for the supervision of estate administration which, in the preponderance of cases, ensures that due administration and accounting is provided by personal representatives and provided to the satisfaction of beneficiaries without the need for formal passing of accounts.

106 This private accounting between an executor or administrator and beneficiaries will usually involve full disclosure of the personal representative's accounts and if the beneficiaries are satisfied they may be asked to execute a deed of discharge for the executor. They are not obliged to do so and may either allow the administration to be completed without giving any formal discharge to the personal representative or they may request that the executor's accounts be passed by the court. In that situation the executor himself or herself may choose to submit his accounts to the court for them to be passed in order to obtain the security of a discharge for his administration which would eventually come from those accounts being passed and settled. Earlier I observed that an advantage in having the accounts of an estate passed for an executor or administrator is the process will effect a provisional discharge for the personal representative of personal liability for so much of the administration of the office as was the subject of the accounting. However, that does not amount to an immediate or an unqualified discharge of the personal representative. Section 43(2) of the Administration Act provides that the order of the court allowing the account shall be prima facie evidence of the correctness of the account and shall, after the expiration of three years, operate as a release to the person filing the account except so far as it is shown by some person interested therein that a wilful or fraudulent error, omission or entry has been made in such account. This recognises that, as with any settled account, the account may be reopened upon proof that some error in the account has occurred and that even a settled account can be reopened at any time in the event of proof, by a person interested, of fraud.

107 There are very many instances where the administration of an estate will take longer, sometimes far longer, than 12 months. Even with an estate which, by will or law, is to be distributed to beneficiaries immediately entitled and of full age and capacity, there may often be delays in collecting the assets of the estate and, in particular, realising them to advantage. The winding up of a partnership in which the deceased had an interest may take some time; the realisation of particular investments may, for commercial reasons, be better postponed because of transient commercial reasons (see Trustees Act s 27(1)(c)). There may be disputes with third parties over the assets and liabilities of the estate, or unexpected claims made against the estate including, of course, a claim or claims by applicants under the Family Provision Act. All of these provide good reason and justification for the process of administration to take longer than the nominal period of one year.

108 Similarly, there will be estates in which the process of administration is likely to last for many years. Common examples are where a widow or other surviving family member is given a life estate, or a right of residence in the family home, with attendant obligations upon the personal representative/trustee to meet associated expenses for the upkeep and maintenance of the household. Then there are estates in which there are children under age where the testator has provided that a substantial legacy or share of the residue should be paid to the child or children on attaining a particular age or satisfying some other condition such as graduation or marriage and where there is a gift over of that disposition in the event of a failure of the condition. Then there are cases where a widow may be left the income of a large investment fund or other asset for life and upon her death the asset should pass to a charity or charities or to other family members. It is not uncommon to find that in estates of this kind the process of administration can last for many years and such administrations taking 25 years or longer are known to almost all judges and practitioners in this field.

109 This does not mean that the passing of a personal representative's accounts can or should be delayed until the final point of administration in an estate. In many of these cases the process of administration, by which the deceased's assets are identified, collected, and where appropriate realised, and the deceased's debts and the expenses of administration are identified and paid can be performed and thus the administration completed even though the estate is not full distributed. This accounts for the distinction between the personal representative's role as an executor or administrator on the one hand and his or her role of trustee in holding the estate after it has been realised and the debts discharged on the trusts of the will for a much longer period. This distinction between administration and trusteeship is well established on the authorities, eg, Commissioner of Stamp Duties (Q) v Livingston, although in this State, as in many other places, the role of the personal representative, whether executor or administrator, is from the very first treated by statute as including that of trustee: see Trustees Act s 6 by which 'trust' is specifically defined to include the duties incidental to the office of a personal representative.

110 Consequently, the ability to demand that the personal representative pass his or her accounts or otherwise account for the discharge of those obligations can be made repeatedly or progressively during the course of an extended administration, and the passing of those accounts, or the performance of an accounting obligation by the personal representative under some other procedure will, in those instances, relate to the performance of the administration or the trust up to that point. It may result in the accounts up to that point becoming settled and, therefore, binding on all interested parties (in the absence of fraud) but leave the opportunity open for a further passing of accounts or other accounting later in the case of an administration or trusteeship continuing over many years.

Persons having an interest in the passing of accounts

111 As with any process of accounting, the passing of the accounts of a personal representative under NCR r 37 must have regard to the interests of any beneficiary or beneficiaries having a claim to the fund or account which is being passed. So it is that under NCR r 37(4), (5), (6), (7) and (8) there is a requirement, which can be dispensed with, that notice for the accounts to be passed be advertised in a local daily newspaper; any person wishing to object to the accounts shall file a notice of intention to object, stating his interest and the nature of the grounds of objection; that upon the taking of the accounts the registrar may make such order as to service upon of the parties interested as thought fit; and that any person interested may attend before the registrar upon the taking of the accounts.

112 There may be a number of beneficiaries with different interests in the fund which is being administered. Among the interested beneficiaries there may be legatees, devisees, persons who have been granted a specific bequest of certain personal property, furniture, art, jewellery, a motor vehicle or the like, residuary beneficiaries and life tenants of estate property. On the assumption that the estate is solvent and that sufficient funds are available to satisfy, without abatement, all devises, legacies and bequests after the payment of all debts and administration expenses it will be obvious that the interests of different classes of beneficiaries will not be the same. For example, a beneficiary who is granted a specific legacy or bequest will have no interest in the residuary estate. A life tenant will not, at least not generally, have any interest or concern with pecuniary legacies or bequests of personalty and a residuary beneficiary will not be concerned in individual legacies or bequests - in the absence of any condition or limitation which may cause that distribution to fail and fall into residue.

113 So a beneficiary of one part of the estate is not entitled to an account of the dealings of the executor relating to beneficiaries who derive interests of a different kind or source from the estate: Re Tillott; Lee v Wilson [1892] 1 Ch 86, 89 (Chitty J).

114 It follows from this that on the passing of accounts a person who lodges an objection to the accounts as lodged will be concerned only in the administration of so much of the estate as may have been left to him or to her and will not have an interest in the estate accounts relating to the entitlement of beneficiaries with a different interest which does not coincide with or overlap his or her own. Consequently, on the passing of accounts there may be several objectors with different interests in the estate whose objections may require the court to canvass the actions and conduct of the personal representative which affects the interests of those objectors but will not require closer examination of transactions which do not affect the interests of beneficiaries who have not lodged objections.

115 The implication is that, in the absence of an objection to some or all of the accounts, an individual beneficiary is satisfied with the administration and accounts of the personal representative so far as his or her personal interests are concerned. Of course, they may be non-objecting or unrepresented interests in the estate or the fund who, nevertheless, deserve protection of the court by scrutiny of the accounts being passed such as, for example, infants, charities or the class of members of unborn beneficiaries who may be eligible to participate in distribution if born within the perpetuity period. There may also be beneficiaries with only contingent interests. There may also be other examples, but the extent and identity of persons with an interest in the estate, and entitled to notice of the proposed passing of the accounts or to the protection of the court by the scrutiny of the accounts will depend on the nature and extent of the estate and the particular entitlements in distribution whether under the will or a total or partial intestacy.

116 It will be an important consideration for the judicial officer taking the account to determine who the interested parties are, the nature and extent of their individual interests, and hence the scope of their permitted audience in the procedure, and the need for any special protective scrutiny when determining the nature and procedure of the conduct of the account. That these requirements are usually self-evident and easily ascertained in the great majority of instances when an account is being conducted does not in any way diminish their importance or the need to have regard to them in more complicated or obscure cases. The proper design and scope of the account to be taken is a necessary part of the process.

117 In the present case several issues arose both before the registrar and on this reference over whether the nature and scope of the account may be affected by or be dependent upon whether or not the process was within the non-contentious jurisdiction. The reason for this question appears to lie in the position of NCR r 37 as part of the Non-Contentious Probate Rules. Further reference has been made to NCR r 4 which confers on a registrar the powers of a judge in chambers in relation to probate and administration and the power to transact all such business and exercise all such powers and authorities in respect of 'voluntary or non-contentious probate jurisdiction' as may be transacted by a judge in chambers except in relation to certain procedures there defined which are not presently relevant.

118 Issues about the limited scope of matters which may arise on an appeal from a registrar under r 5 of the NCR were addressed by me recently in La Russa v Carr (supra) where I held that an appeal from a grant of representation made in the noncontentious jurisdiction by a person who was not a party to the application but who, indeed, was seeking the revocation of a grant in order to obtain a grant himself, was not competent under r 5 because r 5 applied only to decisions made by registrars in the non-contentious jurisdiction. Nevertheless, it is evident that the NonContentious Probate Rules, in several respects, deal with matters which go beyond the noncontentious jurisdiction. The rules relating to citations and caveats and applications for leave to swear to death are some examples of how the NCR apply not only to non-contentious proceedings but to proceedings which are or which may become contentious.

119 The obligation of a personal representative to account for administration of the estate including, when required, to pass accounts is stated in s 43 of the Administration Act, although it also has other and older sources: Clarke v Earl of Ormonde [1821] EngR 359; (1821) Jac 108; (1821) 37 ER 791, 795. Those obligations do not depend upon whether the grant to the executor or administrator was made in the noncontentious jurisdiction or whether it resulted from a grant in solemn form of law in the contentious jurisdiction. Once appointed, regardless of the procedure of appointment, the personal representative is obliged to account and one of the processes of accounting available is the procedure laid down in s 43 of the Administration Act and r 37 of the NCR. As earlier mentioned, that is not the only way in which the obligation to account may be supervised and enforced. Section 44(3) of the Administration Act provides that no proceedings under that section (to order the executor to file an inventory and/or account) shall affect the liability of the personal representative to be proceeded against for an account and administration which can be done in many ways. They include commencing an action for general administration, or by taking out an originating summons for relief without administration under RSC O 58 r 2 or r 3, or by seeking an order to settle questions arising in respect of an administration or distribution under s 45(1) of the Administration Act or by a review of the trustee's actions under s 94 of the Trustees Act 1962. The amplitude of the powers of the court to review or control the actions of a trustee are very broad. The court has jurisdiction under s 16(1)(d)(i) of the Supreme Court Act 1935 (WA) as a court of equity with the power and authority to do, exercise and perform all acts, matters or things necessary for the due execution of such equitable jurisdiction as possessed by the Lord Chancellor of England: see my observations in Tsaknis v Lilburne [2010] WASC 152 [35].

120 Possessed of this breadth and flexibility of procedures and remedies for ensuring the due administration of any trust, including the obligations of a personal representative of a deceased estate, one question which may arise in any given circumstances is whether a particular procedure, whether chosen by the parties or otherwise, is suitable or adaptable to the demands of the investigation which taking the particular account require. There may, for example, be situations in which the passing of an executor's accounts before a registrar pursuant to NCR 37 is not an adequate procedure for taking the particular account and that some other and more versatile or flexible procedure needs to be adopted. For example, in a case where it is alleged by beneficiaries that the personal representative/trustee had systematically failed to administer the estate and misappropriated trust property by a series of serious defalcations over a lengthy period, it is unlikely that the passing of accounts would be a suitable procedure to determine such controversies. In such a case, the preferable course may well be to require the aggrieved beneficiary or beneficiaries to commence an action seeking an account, and/or compensation and other remedies against the alleged defaulting trustee in which specific allegations of fraud, misappropriation, conversion or wilful breach of trust could be pleaded and require the trustee/personal representative to defend that action and, in doing so, to disclose all records related to the impugned transactions resulting in a trial with oral evidence and cross-examination.

121 In the present case, it was submitted on behalf of the objector that the procedure of passing accounts under NCR r 37 is sufficient and preferable because it places the onus of proof to satisfy due administration or the legitimacy of the executor's conduct upon him without casting any burden of proof on the objector. That may not always be the case in passing accounts pursuant to r 37 (see [84] above - page 31) but it is true that by this procedure the executor has the onus of producing his accounts, of vouching or otherwise justifying them and that if he fails to do so corresponding adjustments would be made.

122 However, on any major controversy in such taking of accounts it may be necessary for an individual issue to be defined and tried whether within the taking of accounts or by reference to a judge for the purpose pursuant to r 4(4). In the event that either course became necessary, it would be essential to have regard to where the onus of proof lay. If there were an allegation of fraud or misappropriation, the onus of establishing such wrong would, in most cases, rest upon the party making the allegation. It is enough to say that generally such an approach, although potentially available in simple cases under the r 37 procedure, is unlikely to be easily adapted to that process because of the potentiality for the area of investigation to expand, giving rise to a much broader and more complicated inquiry than contemplated by the r 37 procedure.

Basis of accounting - common account or wilful default

123 Whenever an account is ordered or conducted, it is necessary to specify the basis upon which the account will be taken. Usually there are two alternatives. However, a third basis of accounting for profits is also recognised: see Edelman J in Agricultural Land Management Ltd v Jackson [No 2] [2014] WASC 102 [334].

124 The first which is usually made against the executor or administrator is an order for 'a common account'. In such an instance, the accounting party, the personal representative, must disclose all of the assets of the estate which he has received or realised and all of the expenses or distributions which he has made by payments from the estate. The process of account will examine whether all estate assets have been properly accounted for and at full value and whether all the claimed expenditure is justified both in relation to its nature and quantum. It will be necessary for the accounting party to produce vouchers to show the realisation of estate assets, for example, proceeds of bank or other deposit accounts, the sale of realty or personalty (not specifically distributable under the will), rents and profits received and interest, dividend or other estate income. Similarly, the personal representative will list all expenditure and produce vouchers or other evidence as to payment and justify the incurring of such expenditure both as to its nature and quantum. Obviously, administration expenses, accounting and taxation costs, commissions on sale, expenses for the maintenance or preservation of estate property and the like are all included.

125 Such an account will not extend to a loss to the estate due to a breach of duty by omission such as failing to invest trust property in order to obtain a suitable return or, where there is power to do so, to lease or relet estate property which is intended to be retained in the long term.

126 However, if it is proved that there has been any wilful breach of trust - Re Tebbs; Redfern v Tebbs [1976] 1 WLR 924; [1976] 2 All ER 1054 and Bartlett v Barclays Bank Trust Co Ltd (No 2) [1980] Ch 515, 546 - it is open for the court to order that the account be conducted on the basis of wilful default. This need not be conscious wrongdoing by the executor or administrator as it is sufficient for the account to be based on a wilful default footing if there is any breach of trust by omission proved which has caused loss to the estate. In such a case, the accounting party will be made liable not merely for any receipts or payments actually received or made but in respect of the value of property or income which should have been derived by the estate but for the wilful breach and to make reparation, often with interest, for opportunities so incurred.

127 If an order is made for an account to be taken on the basis of wilful default it may specify that the whole of the accounts for the estate be conducted on that basis or that some of the accounts be conducted on a wilful default basis and others on a common account basis. Re Tebbs; Redfern v Tebbs [1976] 1 WLR 924; [1976] 2 All ER 858 is an example where the breaches of trust by the executor were restricted to his dealing with only one asset of the estate, certain freehold land, and there was no evidence of any further instances of breach of trust in relation to the administration of other assets of the deceased. The court ordered that the accounts of the executor be taken on a wilful default basis insofar as they related to the dealings with the freehold land but on a common account basis in relation to the other assets of the deceased.

128 I will return to the issue, controversial in the present case, over whether an accounting on a wilful default basis can be ordered before a proof of wilful default is established or admitted and, further, whether an account on a wilful default basis can be conducted in the passing of accounts under s 43 of the Administration Act and/or NCR 37.

129 For present purposes it must also be appreciated that a trustee potentially liable for a breach of trust may have a defence to such a claim, including the consent or acquiescence of a beneficiary of full capacity to the departure from specific compliance with the will so far as it concerns him or her: Dowse v Gorton [1891] AC 190, 204 - 205 (Lord Macnaghten). There is also the statutory power for the court to relieve against a particular breach in circumstances where the trustee has acted honestly and reasonably and where it is considered that the trustee ought fairly be excused for the breach: Trustees Act s 75. In such cases, there may be a perceptible greater leniency towards a lay executor acting reasonably and in good faith than for a professional executor: Sproule v Sproule [2009] NSWSC 152; (2009) 2 ASTLR 80.

130 It is well accepted that before the taking of an account will be ordered on the basis of wilful default it must be proved that there is at least one instance of wilful default which has caused loss to the estate, which means that not every breach of duty by an executor or administrator will justify such a basis for accounting if there has been no loss suffered as a consequence: Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22 [46].

131 The choice of an order for an account to be taken on a wilful default basis will be made only in the course of proceedings seeking an order for total or partial administration or similar relief against a trustee where such an allegation of a breach is distinctly alleged and proved, rather than being an option available when a demand for an account is made without it first being proved that any such breach was committed. In Re Wrightson; Wrightson v Cooke [1908] 1 Ch 789, which was an administration action where the plaintiff had alleged one distinct breach of trust but later sought to rely on other breaches of trust which had not been pleaded, Warrington J refused permission to do so and at 799 - 780 wrote:

Is it the practice of the Court where one breach is proved to direct some roving enquiry with a view of ascertaining whether there are any other breaches of trust? I think plainly not ...

It is well known of course, that in a case of wilful default, which is quite distinct from an active breach of trust, if wilful default is pleaded and if a case is established, then the accounts are directed on that footing. But why is that? It is because there are two perfectly distinct classes of accounts which are directed in cases of this kind - one is the common account, and the other is the account on a footing of wilful default; if it is shewn that a trustee has been guilty of wilful default, then the second of those forms of account is adopted, and not the first. That is all. If I may put it shortly, what I mean is that there is a kind of character attaching to a trustee which is referred to by the expression 'wilful default'; and, if it is proved that he is a trustee coming under that character, then that particular form of account is directed, and not the other. But in the case of a breach of trust there is no general form of account which is substituted for the common account. In cases of breach of trust relief is given in respect of those specific breaches of trust which are proved, and in respect of those only; and it seems to me that is the true distinction between the line of authorities which have been cited with regard to wilful default and those which apply to the present case. As to the former class of cases, there is no question that the rule is that, if wilful default is alleged and if an instance is proved, then the trustees are not in a position to claim to have against them the ordinary account only, for the account must be directed on the footing of wilful default. In my judgment that rule does not apply to cases of breach of trust.

132 These principles and authorities combine to lead to certain conclusions. Before the taking of an account is ordered or embarked upon, it is necessary for the court to determine the basis upon which the account is to be conducted, namely either on the basis of a common account or on the basis of a wilful default. That determination will affect the scope of the account to be taken and the matters in respect of which the accounting party may be found liable. This determination must, as a matter of practical convenience for the conduct of the account and out of fairness to the accounting party, be determined before the commencement of the account rather than arise in the course of or as a consequence of some investigations or allegations made in the process of accounting.

133 Consequently, for an order to be made for an account to be taken on a basis of wilful default, it must first be distinctly alleged and proved that there has been at least one instance of wilful default, in the proper sense, before the account will be ordered on that basis for, otherwise, even if it be necessary to take an account, it will proceed as a common account and in the course of the taking of that common account allegations of wilful default will not be permitted. In the present proceedings this requirement for proof of an act of wilful default must occur in some anterior proceeding rather than in the course of an account requested under s 43 or NCR 37.

134 That might occur in the course of an administration action or in another species of relief on an originating summons or otherwise or in an action against a trustee under the Trustees Act where one or more acts of wilful default by the trustee occasioning loss to the estate is alleged and proved. If that occurs and it is not possible to determine in those proceedings what compensation or other relief should be ordered against the defaulting trustee, then an account may be ordered and at that point a decision will be taken, on this hypothesis, that the account be conducted on a wilful default basis.

135 The learned authors of Halsbury's Laws of Australia, vol 24 [395-5925] write that where an account is ordered on the basis of wilful default in relation to the whole estate the order opens up an onerous and wideranging enquiry - Re Stevens; Cooke v Stevens [1897] 1 Ch 422, 432 - 3 - entitling the plaintiff to a roving commission - Re Tebbs; Redford v Tebbs and Bartlett v Barclays Bank Trust Co Ltd (No 2) [1980] Ch 515, 546 and consequently an order to account on the basis of wilful default in relation to the entire estate is rare: Re Wood (dec); Ebert v Union Trustee Co of Australia Ltd [1961] Qd R 375, 380 (High Court of Australia).

136 In an early edition of Tristram & Coote, Probate Practice (15th ed, 1915), when dealing with a personal representative's obligation when called upon to file in a court an inventory and account the learned authors observed (page 265):

If the inventory and account are unsatisfactory, application can be made, on summons, for an order directing an inquiry into the account.

137 That passage is not reproduced in more recent editions of Tristram & Coote, eg, the 22nd edition (1964) or 29th edition (2002) Ch 19, but there does not appear to be any reason to doubt the observation. So, should it emerge that on the taking of a common account before a registrar under NCR r 37 that there has been or may have been a breach of trust (amounting to wilful default) then, although that account cannot be pursued or converted into an account to be taken on the basis of wilful default (as that has not been alleged, proved or admitted) it would be open to the aggrieved party to have the taking of the account adjourned (rather than be faced with the account being completed and settled with the significance that that would have) and then to pursue by other means, if so inclined, investigation of the apparent wilful breach of trust.

138 In any such suit, it would be open for the claimant to allege distinctly those omissions amounting to wilful default by the personal representative. If they are denied by the personal representative or admitted in whole or in part, but relief pursuant to s 75 of the Trustees Act is sought by the personal representative, or even if the defaulting trustee seeks an indemnity from a beneficiary at whose instigation, request or consent the breach of trust was committed, then that claim for an indemnity under s 76 of the Trustees Act could, consistently with case management principles, be joined in that proceeding. This would ensure that all disputes arising out of the same matter should, so far as possible, be dealt with together and finally settled: Supreme Court Act s 24(7), so that all matters in controversy between the parties may be completely and finally determined and all multiplicity of legal proceedings concerning any such matters avoided.

139 In that ensuing proceeding, the court would determine whether or not a wilful breach of trust had been committed and, if so, what relief should be granted to the claimant or others who, after having been given notice because of similarity of interests, may join in the proceedings. That relief may or may not include an order for account to quantify the liability of the defaulting trustee or accounting party. An account would only be necessary if it were not possible in those proceedings to quantify the defendant's liability to compensate the estate because if that were possible specific relief in that regard would, presumably, be there and then ordered. However, if an account were to be ordered it could be ordered, to some degree at least, on the basis of wilful default. Unless there were reason to suspect other serious undisclosed breaches of trust, the account on the basis of wilful default could be expected to be confined to the area of areas of administration associated with the proved wilful breaches of trust. Directions would then need to be given as to how to combine, if appropriate, the accounting then ordered with the adjourned incomplete account before the registrar or, as may well be the case, the new account would completely supplant the former.

140 If a registrar is taking the account pursuant to an order of the court, the mode of taking the account will be specified by the order of the court or judge and cannot be departed from even by consent unless application is made to the trial judge to vary the original order: Wyndham v Jackson [1938] WN 117; [1938] 2 All ER 109, 118 and Gava v Grljusich (Unreported, WASC, Library No 970492, 18 September 1997).

141 The principle emerging from these authorities and related commentaries is that the taking of accounts before a registrar pursuant to NCR r 37 will proceed as a common account. It cannot and will not be converted into an account on the basis of wilful default, even in relation to part of the administration. For the account to be conducted on a wilful default basis there must be an order of a Judge first made in proceedings commenced in which allegations of wilful default are specifically made and proved. This is so even if a serious default is uncovered in the process of the common account: Re Waterman's Will Trusts. Lloyds Bank Ltd v Sutton (1055) (Harman J). That was a case where an investigation had been ordered of the investment by a bank, appointed executor of the deceased's estate, about the manner of investment of estate funds over a period of three years from which it emerged that a significant portion of the funds had simply been deposited by the bank in one of its accounts without interest. Of this, Harman J said at 1055:

In those circumstances the bank, through its manager at Brighton, who was in charge of this administration, filed an affidavit explaining, or seeking to explain, why, over this long period, no investment had been made. In the upshot no beneficiary before me desired to attack the bank on the basis that there was a breach of trust in failing so to invest, and it seems to me impossible, on an administration suit started, not by writ, but by summons, to charge these trustees with wilful default as would have been necessary to raise the question of breach of trust. I must, therefore, assume, in spite of all appearances, that there was nothing more than such a want of judgment shown as the court would excuse ...

142 Much confusion and mistaken analysis can follow unless the meaning of the concept of 'wilful default' as a basis for taking an account is strictly observed in its technical meaning. In 'Wilful Default' by J E Stannard (1999) 43 The Conveyancer and Property Lawyer at 345 the learned author wrote:

The meaning of the words 'wilful default' has long been an embarrassment to judges and a stumbling block for students of equity.

143 As his article demonstrates, authorities in the past have given a great variety of meanings to that term with widely disparate content according to the particular area of the law or doctrine in which it is employed. A common meaning attributed to the phrase is the definition given by Romer J in Re City Equitable Fire Insurance Co [1925] Ch 407, 430 which held that wilful default could not be established unless a person 'was conscious that in doing the act which is complained of, or omitting to do the act which is said he ought to have done, he is committing a breach of his duty, or is recklessly careless whether it is a breach of his duty or not'. That definition is accepted as correct in many statutory and contractual contexts and even with regard to deeds of settlement dealing with the potential liability of trustees as well as others occupying fiduciary duties such as directors of companies, which Re City Equitable Fire Insurance Co addressed.

144 However, this is certainly not the meaning of the phrase as a technical term in courts of equity or when describing the obligation of an accounting party to account on the basis of wilful default. Nor is it applicable to an executor, a trustee, a partner or former partner after dissolution, or a mortgagee in possession (see Stannard, (346), (359) in situations examining the basis for the obligation to account by such persons.

145 Wilful default in this context focuses upon negligence or an omission to do something which ought to have been done. It is clear that specific knowledge, intention, or appreciation of the breach of duty are not requisite). As Stannard said (348):

It is not really possible to express a single test of what will amount to 'wilful default' by a party liable to account. All that can be said is that they have a number of duties to perform, failure to discharge which will make them liable to 'wilful default'. Thus the mortgagee in possession, for example, has a duty to keep the property in repair, a duty to refrain from using it for unprofitable ventures, and a duty not to demise the property under unduly restrictive covenants. 'Wilful default' is simply failure to carry out one of these many duties. As such like 'negligence' it is a purely relative term and means no more than simple 'default' (citations omitted).

146 A full examination of the conceptual differences between these two bases for taking an account was conducted by Edelman J in Agricultural Land Management Ltd v Jackson [No 2] [324] - [325] and, in essence, at [347] - [349] where his Honour said:

1. In contrast with orders sought following a common account, the account which was taken on the basis of wilful default was substantially different. Those orders were dependent upon proof of a loss. An account taken on the basis of wilful default required the plaintiff to show that the custodial fiduciary, in breach of duty, failed to obtain a benefit for the fund. On the taking of the account the plaintiff could then 'surcharge' the account by the value of the rights that the custodial fiduciary would have obtained had the duty not been breached.
2. As Dr Elliott and Professor Mitchell have observed, the historic difference between a claim based upon falsification of a common account and a claim based on surcharge of an account on the basis of wilful default has been concealed in modern cases which generally refer to both as 'equitable compensation': Mitchell C, 'Equitable Compensation for breach of fiduciary duty' (2013) 66 CLP 307, 322. See also Elliott S and Mitchell C, 'Remedies for Dishonest Assistance' (2004) 67 MLR 16 and the summary of Dr Elliott's thesis in Rickett C, 'Equitable Compensation: Towards a Blueprint?' [2003] SydLawRw 3; (2003) 25 Sydney L Rev 31 ...
3. Dr Elliott, whose writing has shone light and brought much clarity to this area of law, has suggested the use of the labels 'substitutive compensation' and 'reparative compensation' to differentiate the two types of claim. The former, based on the common account, describes a claim for the substituted value of the asset dissipated without authority: it demands that the trustee perform his or her duty to maintain the assets or fund. The latter, based on the account on the basis of wilful default, describes a claim for reparation for the loss suffered by breach of duty: Partington v Reynolds (1858) Drew 253, 255 - 256; [1858] EngR 461; 62 ER 98, 98 - 99 (Kindersley VC).

147 Some further insight into the scope of an order that a trustee should account on the basis of wilful default is provided by the observations of Brightman LJ in Bartlett v Barclays Bank Trust Co Ltd (No 2) (546) where his Lordship said:

Wilful default by a trustee in this context means a passive breach of trust, an omission by a trustee to do something which, as a prudent trustee, he ought to have done - as distinct from an active breach of trust, that is to say, doing something which the trustee ought not to have done.

148 The nature of an account on the basis of wilful default was considered fully by Kennedy J in Gava v Grljusich [1999] WASC 13, which was a subsequent step in the long-running litigation concerning that estate. It was after the decision of the Full Court to be mentioned later. At [24] - [33] his Honour undertook an examination of many authorities, leading to the conclusion that an account on the basis of wilful default is only ordered where at least one act of wilful default had been pleaded and proved. The distinctive characteristic is a breach by the accounting party by an omission rather than one of commission of some positive breach of trust. Reference was made to Re Symons (1882) 21 Ch D 757 where Fry J dealt with a case of alleged wilful default in the executors' failure to receive some personal estate which they ought to have got in plus a positive allegation of a breach of trust in accepting interest on the balance of purchase moneys of real estate sold at a lower rate than should have been paid. His Lordship concluded that an account could be ordered on a wilful default basis if those allegations were proved or admitted.

149 Again, these are authorities dealing with actions for administration or other relief against trustees where distinct allegations of breach of trust or wilful default had been made and either proved or assumed to have been proved, before the order for an account on a wilful default basis was made. Even in cases where an active or positive breach of trust is alleged that is conventionally the subject of a prior allegation specifically to that effect, leading to an order for account to be taken in respect of that proven breach. Although, if the breach is of a positive nature rather than an omission or lost opportunity, the account will only be ordered on a common basis.

150 Furthermore, as appears from Bartlett v Barclays Bank Trust Co (No 2) 546 (Brightman LJ):

The distinction between a wilful default, in the sense of a wrongful omission entitling the plaintiffs in appropriate circumstances to an account on the footing of wilful default, and an active breach of trust not so entitling the plaintiffs, can be seen by comparing the judgments in In re Stevens [1898] 1 Ch 162 and In re Wrightson [1908] 1 Ch 789.

151 Russell v Russell [1891] VicLawRp 139; (1891) 17 VLR 729 is another example of the distinction between a wilful default by a trustee and positive breaches of trust. As Webb J observed at 732:

Breach of trust is not wilful default. A trustee living in occupation of the trust property is not wilful default. He is in occupation and will have to pay a fair occupation rent.

152 His Honour then went on, at 732, to deal with allegations of breaches of trust amounting to a neglect to keep property in repair; the trustee improperly paying himself out of the trust estate for effecting repairs; wrongful retention of moneys by way of commission on insurance being premiums paid and goods purchased. As to all of these matters, Webb J observed that those results would come out in the ordinary accounts. Or, as has been said, 'wilful default is not coextensive with breach of trust. There may be a breach of trust that is not wilful default': G E Dal Pont, 'Equity and Trusts of Australia' (5th ed, 2011) 24.105.

153 This concept of wrongful omission by a trustee as constituting wilful default also appears in Tucker, Le Poidevin and Brightwell, 'Lewin On Trusts' (19th ed, 2014) where the learned authors observe that on an account on the footing of wilful default the trustees are charged not only with what they have actually received but are also surcharged with what they might have received apart from the wilful default or neglect, resulting in the claimant being given a roving commission to charge the trustees on taking the account with further capital or income which they should have obtained, for example, on the case of a sale or lease at an under value.

154 Dealing with the remedy of account by a trustee generally, Underhill & Heyton, 'Law of Trusts and Trustees' (Butterworths - 16th ed, 2003) 853 - 854 write:

Where it transpires that the trustees have acted beyond their powers by doing something they are not authorised to do (eg, distributing trust money by way of gift to themselves or to someone else who is not a beneficiary or purchasing an unauthorised asset) the accounts will be falsified, deleting unauthorised entries of disbursements or transfers or acquisitions of assets, so that the appropriate sums or assets remain in the trust fund and the trustees must reconstitute the trust fund as it would have been but for the breach of trust, it being 'well recognised that the basis on which a trustee is liable to make good a misapplication of trust money is strict and harsh, especially where there has been a huge depreciation in the value of the asset acquired' as where there is a dramatic fall in the property market or the stock market. Where the trustees have not exceeded their powers, but have failed to act as they should have acted to comply with their equitable or statutory duties, their accounts will be surcharged to add the value that the trust fund would have had but for such failure.

...

The order for an account of administration in common form is available without any allegation of wrongdoing and requires the defendant to account only for what has actually been received, what has been disbursed in management expenses and what has been distributed. It is then open to the beneficiaries to falsify or surcharge items in those accounts, amending (or commencing) proceedings to seek the remedy of an account on a footing of wilful default as a response to at least one particularised breach of trust.

155 See also 'Snell's Equity' (Sweet & Maxwell, 32nd ed, 2010) at [30-012] and [20-015].

156 There are three decisions in this court to which attention has specifically been drawn. They are Gava v Grljusich (Unreported, Full Court, Library No 970492, 18 September 1997); Lindon v Stanton (Unreported, WASC, Library No 8922, 18 June 1991) (Master Adams); and Bassett v Atherley [2001] WASC 117 (Registrar C Boyle). It will be necessary to deal with them in turn.

157 In Gava v Grljusich (Library No 970492) there had been an action resulting in the removal of trustees followed by an order for the taking of accounts before a registrar pursuant to RSC O 43 r 16. The appeal was from certain preliminary directions and determinations made by the registrar as to the mode of taking accounts before commencing on that exercise. A number of questions had arisen, including whether or not the account should be taken on the basis of wilful default on the part of the trustees. No order in that regard had been made by the judge when removing the trustees and ordering the account. The Full Court held that no such basis of accounting could be directed by the registrar conducting the account but, if it were to be sought, it could only be achieved by an application to the trial judge to consider whether or not the account which had been ordered should be conducted on that footing. In regard to the procedure to be followed in taking such accounts by a registrar ordered under powers conferred by s 51(1) of the Supreme Court Act Ipp J (with whom Wallwork and Steytler JJ agreed) observed:

The procedure involved in the taking of accounts is well-known and is described in detail in Atkin's Court Forms vol 1 at 612 to 613. Where a Registrar (or Master) is appointed to take accounts she will hear evidence generally, and, in particular, will allow cross-examination of witnesses in regard to disputed items. When the evidence is concluded, and submissions have been completed, she will make decisions as to the merits of the items claimed to form part of the accounts and come to a conclusion as to the overall amount found to be owing.

158 (For further descriptions of the procedure to be followed see 'Atkin's Court Forms' (2nd ed, vol 1) at pages 186 - 207.)

159 Clearly, this decision recognises that a party appearing on the taking of the account may cross-examine the accounting party or other witnesses but I do not consider that that permits crossexamination on matters not relevant to the passing of the accounts on the basis upon which the account is to proceed. Even then when crossexamination is sought notice of the items to which crossexamination will be directed must be given: (Wormsley v Sturt [1856] EngR 650; (1856) 22 Beav 398; 52 ER 1161 and Daniels Chancery Practice 5th ed, page 919). In other words, on the passing of accounts on a common account basis I do not consider that crossexamination of the accounting party or any other witness may be permitted if the focus of the cross-examination is to establish a breach of trust amounting to a wilful default. Further examples including the ability of the registrar to hear evidence on an issue before him or her, are provided by Holborow v Macdonald Rudder [2001] WASCA 91 and McLauchlan v Prince [2001] WASC 43.

160 In Lindon v Stanton an order for an account had first been made in proceedings for account and inquiries in relation to the administration of the estates of two deceased persons. An order was made by a Commissioner of the court, by consent, directing the defendant executors to account in respect of the estate of one of those deceased in accordance with directions to be given by a Master. Later directions were given by a Master directing the filing of accounts and the filing of objections specifying the nature and grounds of the objections advanced. A further application was made to the Master to strike out portions of the notice of objection on various grounds but largely claiming embarrassment, prejudice or delay. In dealing with that application and striking out some, but not all, of the objections Acting Master Adams identified a series of applicable principles including:

(1) ... an account or inquiry is conducted within the scope of the order directing it so that matters not covered by the order cannot be raised - Sanguinetti v Stuckey's Banking Co (No 2) [1896] 1 Ch 502 (Chitty J);

(2) In taking an account, items which do not fall within the scope, and ambit of the order, must be disallowed and a failure to do so will vitiate the entire proceedings - Bennicourt v Le Gendre [1900] AC 173;

...

(5) an account on a basis of wilful default is not taken unless it is specified in the order. Otherwise the account must be taken on the basis of what the accounting party did receive - Cairns Australian Civil Procedure' (2nd ed) 571.

(6) It is not the law, however, that breach of trust cannot be charged on a common account. An executor or trustee can be found liable on a common account for moneys coming into his hands for such executor or trustee unless he can discharge himself. Thus he will be liable if moneys were found to come to him which he put into his own pocket and spent, or paid to a person who was not a creditor, or invested in unauthorised securities. Re Stuart; Smith v Stuart (1896) 74 LT 546; Re Newland, Bush v Summers (1904) WM 181; In Re Wrightson [1908] 1 Ch 789.

161 As to the learned Master's observations that certain breaches of trust can be raised on a common account, it is necessary to examine the authorities cited in support of that observation.

162 The first of these, Re Stuart; Smith v Stuart [1897] 2 Ch 583, concerned an inquiry conducted by a master which had been ordered in an administration suit taken out by beneficiaries under a will against the trustees. The master certified that the estate had suffered a loss owing to improper investments for which the trustees were liable and upon that certificate the matter came before Stirling J for further consideration, whereupon the trustees sought relief under s 3 of the Judicial Trustees Act 1896 (UK) (to excuse them from liability). One issue was whether or not it was, by then, too late for the trustees to seek the statutory relief. The decision of the court was that it was still open to the trustees to seek to be excused from the consequences of their breach of trust, but on the facts that relief should not be granted to them. The decision was almost entirely confined to a consideration of whether, in what circumstances and upon what grounds, statutory relief from breaches of trust might be granted and why, in the circumstances of that particular case, relief was not appropriate.

163 Nevertheless, the procedural history of that litigation has some bearing on the present controversy. In the administration action commenced by the beneficiaries, an order had been made directing that certain inquiries should be conducted by the master. The details and nature of the inquiries were very specific and included inquiries to be conducted as to whether the values of certain mortgage securities for loans made by the executor, were insufficient; to whom and in what circumstances the moneys were advanced; what valuations were taken by the persons advancing such moneys; and whether the investments were proper investments. As a result of the inquiry, the master certified that all but four of the mortgages represented sufficient security for the loans made but in respect of these four, the security was inadequate and had been accepted without sufficient valuation. Thereupon the master fixed the amount for which the trustees were liable namely, the aggregate losses arising from the inadequacy of the security of those four mortgages.

164 When that certificate came back for further determination by the court, the trustees, for the first time, contended that no relief in respect of breach of trust could be granted against them upon an originating summons. Stirling J was of the opinion that the inquiry directed by those specific orders had gone too far but held that it was then too late for the defendant to object to the certificate so far as it was within the scope of the inquiry. Certain findings were nevertheless struck out which led to a further inquiry reporting losses occasioned by the insufficient security of the four mortgages. It was in those circumstances that the application for relief by the trustees against their liability was then heard.

165 Against that background, it is difficult to see how Re Stuart; Smith v Stuart [1897] 2 Ch 583 supports any general proposition about the nature and extent of matters which can be examined when on a common account under NCR 37. The first reason for that reserve is that the inquiries which were ordered in Stuart's case were detailed and specific relating to the adequacy of the securities granted in support of a series of loans made by the executor, the circumstances under which those loans were made and the securities accepted including whether or not losses resulted from want of adequate security. That is a far more detailed and precise order than any order to account under NCR 37. It is hardly surprising that the master conducted the inquiry as he did and reported specifically in response to the directions made by the court ordering the inquiry. The second reason for reserve is that although the inquiries in Stuart's case were ordered on an originating summons rather than in a suit which alleged a breach of trust, no objection to that procedure had been raised by the trustees when it came on for hearing or in the course of the inquiry. That led Stirling J to conclude that it was, too late, at the report stage of the inquiry, to raise that objection. If anything, the decision suggests that the scope of the inquiry ordered went too far for the procedure adopted but, in the particular circumstances, objection had been taken too late.

166 The third case cited by Master Adams is Re Newland (dec); Bushby v Summers, a decision of Kekewich J in 1904. That followed and applied the approach taken in Re Stuart with which Kekewich J expressed his concurrence. The background was that an action had been commenced by originating summons asking for administration of the estate of the deceased Newland. As a result an order was made for an account to be taken of the capital of certain parts of the deceased's estate, and of the proceeds of sale of real estate received by the executors. When taking the account, the master found that part of the estate proceeds (£500) had been invested by the trustees on security of a second mortgage and that when the first mortgagee realised the secured property there was nothing left to satisfy the second secured debt. His Lordship held that the executors had invested the £500 on insufficient security and in an investment not authorised by the will and, for that reason, disallowed the £500 which the executors had reported as being lost on that investment. Thereupon, the executors applied by summons to disallow part of the master's certificate by restoring the £500 as authorised expenditure which the master had disallowed and upon other grounds which need not be mentioned.

167 On that application to vary the master's certificate, the executors submitted that there was no jurisdiction to try questions involving a breach of trust upon originating summons or in the common account directed by the decree made. The reasons of Kekewich J are only briefly summarised in a note in the journal which appears to be the only report of this case. They go no further than recording that, on the authority of Re Stuart, Kekewich J concluded that there was jurisdiction to disallow the item as upon a common account directed upon originating summons and that the application to vary the summons must be dismissed.

168 Again it would appear that the delay in objecting to the procedure adopted or the directions for inquiring after what amounted to a breach of trust, had been raised too late in the proceedings. Nor does there appear to have been any attempt by the executors to deny the breach of trust alleged or to justify it on the grounds of consent or acquiescence or to oppose redress because of laches. Objections to the procedure adopted made at a late stage after the inquiries had been conducted and in circumstances where no substantial defence to the allegations and findings of breach of trust were offered, provide very insubstantial grounds to set aside or vary the relief to be granted for uncontested findings.

169 The relevant passage in the judgment of Warrington J in Re Wrightson have already been set out (see [131] above). At 799 and 800 his Lordship said:

But in the case of a breach of trust there is no general form of account which is substituted for the common account. In cases of breach of trust relief is given in respect of those specific breaches of trust which are proved, and in respect of those only; it seems to me that this is the true distinction between the lines of authorities which have been cited with regard to wilful default and those which apply to the present case.

170 His Lordship's observations need to be read in the context in which they appear, in which an administration action had been commenced and in which breaches of trust had been alleged in the pleadings, resulting in an order for common account and inquiries, but after judgment and in that account it was sought to take an account for other breaches of trust as part of a roaming enquiry such as would be conducted if the account were to be taken on a wilful default basis. His Lordship declined to permit this. A reading of his Lordship's reasons suggests, I think beyond doubt, that the reason for doing so was that any such breach of trust would need to be specifically alleged and proved, in the originating action for an account, where it would be expected to result in a specific remedy, such as an order for compensation or restitution, perhaps with interest, which would be a satisfactory and complete remedy for that breach and thus render unnecessary the kind of roaming inquiry which would result from conducting accounts in relation to the entire administration of the estate on a wilful default basis.

171 Bassett v Atherley is a decision dealing with whether or not an account on the basis of wilful default is available on the passing of accounts under NCR r 37 and the basis of such an account. In the accounts of that estate very substantial charges had been raised by the executor and paid to himself or his firm for professional accounting services. Whether an executor paying himself excessive amounts for his own services amounts to wilful default rather than a serious breach of trust should not be assumed. However, on the important question of whether or not accounts to be taken under s 43(1)(b) of the Administration Act and/or r 37 of the NCR can be conducted on a wilful default basis, Registrar C Boyle concluded that that was not possible. The learned Registrar observed in his reasons at [30] - [31] as follows:

The question is what kind of taking of accounts s 43(1)(b) of the Administration Act contemplates. That has to be understood in the historical context of the practice of the probate courts from which the jurisdiction presently being exercised is descended. Reference to the classical texts suggests that an accounting on the basis of wilful default was only available where it had been specifically sought in a statement of claim (which suggests contentious proceedings) and where specifically ordered. See, for example, Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (16th ed) 767, where it is said that an accounting on the basis of wilful default may be ordered if pleaded in a contentious action, and not under the (English) O 43. In Re Waterman; Lloyds Bank Ltd v Sutton [1952] 2 All ER 1054, it was held that an executor could not be charged with wilful default where the objectors had not commenced proceedings by writ alleging such a breach of trust. Because the genesis of our rules is in older forms of the English statutes and rules, such authorities are to me persuasive. See also Glazier v Australian Men's Health (No 2) [2001] NSWSC 6.

172 With respect, I consider that the learned Registrar's decision in this regard is correct and is, indeed, supported by the other authorities already examined. The taking of accounts by a registrar pursuant to r 37 of the NPR must be taken to proceed as a common account because there are no anterior proceedings in which an allegation of wilful default could be alleged or proved, which would justify the taking of an account on a wilful default basis.

173 That means that if an objector or claimant seeks to allege that an executor or administrator has committed a wilful breach of trust, or advances reasons for objecting to the personal representative's account on bases which amount to allegations of wilful default, then he or she must bring proceedings to allege and prove that first before any such account will be ordered.

174 The flexibility and adaptability of the process of accounting whether before a registrar under the process just mentioned or by a judge in an action or on an originating summons where wider responses are possible have seldom been fully examined. Consequently, it is useful to examine how the leading writers in this field have treated the process and then to look more closely at the authorities, both old and recent, addressing the area.

175 For an historical analysis of the background of this ancient remedy of accounts both at law and in equity see Heydon Leeming & Turner, Equity: Doctrines & Remedies (5th ed, 2015) 26 and, significantly for the present case, the treatment of wilful default [26-95] and Settled Accounts [26100] - [26120]. Significantly, the learned authors at [26085] relying on Doss v Doss [1843] EngR 404; (1843) 3 Moo Ind App 175; (1843) 18 ER 464, 196 - 197 explain an essential requirement for the remedy as follows:

Where a plaintiff seeks the remedy of an account, the plaintiff must generally prove, inter alia, that the defendant has undertaken to be an accounting party, and that in performance of the defendant's accounting obligations the plaintiff is entitled to some sum from the defendant, although the plaintiff is uncertain what is the quantum of that sum. The plaintiff must do more than demonstrate that the plaintiff might be owed some money, or that the plaintiff wants, as it were, to have a kind of general discovery ...

176 The questions in issue when taking an account on a common account basis are whether certain assets or their proceeds, including income, have been received by the executor or administrator and accounted for and whether items of claimed expenditure are proper expenses for the estate and have been vouched in amounts determined to be reasonable.

The scope of the ability to falsify when taking a common account

177 This still leaves the question, which, with respect, I consider to have been latent in much of these examinations of doctrine and in the submissions made in the present case, of how far it is possible to seek to falsify a personal representative's accounts when taking a common account. That the ability to falsify exists on such a process of accounting cannot be doubted. In Bassett v Atherley Registrar C Boyle referred to the decision of Glazier v Australian Men's Health (No 2) (supra) which includes a passage at [38]:

A falsification is the showing of a charge which has been wrongly inserted, the falsifying party alleging that money shown in the account as paid was either not paid or improperly paid: Parker's Practice in Equity (NSW) (second edition by GP Stuckings ed Erwin 1945) page 269

178 whereupon the registrar went on to observe that there could be various reasons why an account is falsified including a breach by the executor of trust or of fiduciary duty and that disbursements made in breach of a fiduciary duty will be disallowed: Lindon v Cameron [1999] WASC 37 [50].

179 There are degrees of scale and gravity when it comes to considering the propriety of payments actually made which are, in my view, matters which can conveniently be addressed and determined when taking a common account. However, by parity of reasoning, there are certain objections or claims which, having regard to the quantum or nature of them raise issues of propriety, credit and personal liability of such a magnitude that, if established, would unquestionably constitute breaches of trust or fiduciary duty. In those cases if they are not admitted or are sought to be justified or excused or relieved against, the magnitude of the task of determining the issues arising may often be beyond the scope of any judicial officer conducting a common account under NCR 37 and, for reasons of natural justice, should not be embarked upon unless a breach of trust is distinctly alleged and proved as a precursor to the taking of account.

Application of principles to this passing of accounts

180 I consider that the objections which have been raised on behalf of Mr Paul Ellis relating to the payment by the executor to himself for 50% of the deposit and stamp duty paid at the time of the purchase of the house at 43 Strickland Street, Mount Claremont, adjudged in the instruments recording that purchase and the claim for 50% of costs of the renovations both shortly after the purchase and later after the death of the deceased in readying the property for sale, amount to allegations of serious impropriety and distinct breaches of trust which it is obvious that the executor denies and which he claims were the subject of an agreement which he had earlier reached with his deceased mother. Furthermore, subsidiary objections raised in relation to those items of expenditure relating to whether or not the alleged agreements were documented, whether or not the payments amounted to gifts, whether or not any debts were repaid by the deceased during her lifetime, and whether or not the ensuing debts were illegal or enforceable for want of compliance with the building registration legislation and/or because of limitation defences, give rise to issues which I consider can only be properly determined on an account which specifically directs inquiry into these issues.

181 I have already concluded, for reasons given, that Mr Paul Ellis does not have any sufficient interest to maintain or pursue his objection to the executors' accounts relating to the distribution of the deceased's items of personal jewellery because, by specific legacy in the will, they were left to his daughter whom he has no authority to represent.

182 The objections raised to expenditure for outgoings including gas, irrigation, lawn culture, water and council rates and requiring proof of the receipt by the executor of $1,000 for the deceased's chattels (excluding jewellery) are all matter which I consider can be taken on a common account, including the account presently incomplete which is being conducted under NCR r 37.

183 However, there appears to be little point in proceeding with the taking of the account under r 37 in relation only to objections which I consider are permitted to be raised upon it if Mr Paul Ellis wishes to persist in his objections to the items which I have identified.

184 Accordingly I consider that the registrar was fully justified and acting entirely in accordance with the law when on 25 October 2013 she declined to continue to take the account on the basis then demanded by the objector and adjourned the proceedings for six months to allow the objector to commence other proceedings to allege, and if successful to establish, what then amounted to allegations of wilful default by the executor.

185 This analysis is sufficient to demonstrate that none of the remaining objections raised by Mr Paul Ellis to the accounts which have been filed by the executor of the estate of the deceased amounts to an allegation of wilful default. No complaint is now any longer made by the objector about any omission or failure to invest the trust property or to avail of an opportunity which would have rendered greater benefit or income to the estate. Rather, the objections are to specific items of expenditure contending that they were not justified or that the amounts outlaid were excessive. As such, they amount to claims for falsifications of the executor's accounts, each of which is undoubtedly within the scope of a common account as is being sought of this administration.

186 The difficulty, however, is with the objections which go to the payments made by the executor to himself for refunds of past expenditure made, which he asserts were incurred at his mother's request, namely: half of the expenditure for the deposit on the house; the stamp duty on the ensuing transfer; and for the renovations and expenditure of the property both before and after his mother's death. The objections go to whether or not there ever was an agreement or a liability by the deceased to pay one-half of that expenditure to her son. Although not expressly mentioned, they also give rise to the question whether such a liability arose on the eventual sale of the property from nothing more than the fact of co-ownership (as to which see Silvester v Sands [2004] WASC 266 [41], [119] and [139] - [141]). Associated with those objections are assertions that the payments had been made by the son to his mother as a gift; or later repaid by her; or if based on some anterior contract had become statute barred by the time payment was made by the executor to himself.

187 Those allegations raise controversies going beyond the scope of what may conveniently be undertaken in the passing of accounts pursuant to NCR r 37. That does not mean that they are beyond the scope of the obligation by the executor to account but, rather, that the r 37 procedure is not apt or sufficient by itself to allow them to be dealt with because of the large area of factual and legal controversy inevitably arising from them.

188 If a suit for an account had been commenced by the objectors, or a claim made under the Trustees Act, or in any other way, including under the inherent jurisdiction of the court, and such a situation were to arise, it would be obvious that the executor was an accounting party, that the objector as a residuary beneficiary had an entitlement in distribution which would, as to quantum, be affected by the taking and determination of the account, and that controversies had arisen which required investigation. In view of the nature of the issues arising, it would have been necessary or appropriate for those controversies relating to the existence and nature of any obligation by the deceased to pay her son, either during her lifetime or on death, the moneys which he had advanced for the purchase and improvement of the house at Mount Claremont to have been the subject of issues of fact and questions of law which would have been tried and determined in that action. Alternatively, it would have been open to the court in proceedings of that nature to order that a specific account directed to those issues, defining them, accompanied by an inquiry into specific controversies, should be conducted by a master or registrar under directions designed to ensure that the relevant issues, and only the relevant issues, were the subject of investigation and report. That has not been done in the present case and the limitations on the NCR r 37 procedure, particularly the absence of any provisions for an inquiry, render that inadequate.

189 As a consequence, the matter having been referred to me pursuant to r 4 of the NCR, I consider that I should exercise the ample jurisdiction of the court, not merely under s 43 of the Administration Act but the court's plenary jurisdiction in equity, to order a specific inquiry and an account into the matters relating to the money claimed to have been expended by the executor in the three various ways on the property and house at Mount Claremont and to direct that that inquiry and account be conducted by the registrar as a specific inquiry and account before completing the passing of accounts under r 37 which at present stands adjourned. That specific account and inquiry can be reported to the court, whereupon it can be decided, if still necessary, for the adjourned account under r 37 to proceed.

190 The final version of the objections made to the executor's account is contained in the affidavit of Mr Paul Holden Ellis of 14 September 2014. From these it is apparent that previous objections amounting to allegations of wilful default by the executor have been omitted and, presumably, abandoned. Hence there are no longer any objections to the effect that:

(a) the executor failed to invest trust moneys on deposit pending the administration of his mother's estate, giving rise to any liability to pay interest as a result of that alleged omission;

(b) the executor or his wife were indebted to the deceased at the time of her death, or to the estate during the course of administration, giving rise to a suggestion that any such debt or debts had not been collected by the executor in the course of the administration and/or that there was some liability on the debtors to pay interest on those loans or debts;

(c) the executor delayed in making distributions of any part of his share in the residuary estate due to Paul Holden Ellis nor is there any claim for interest for such alleged delay in distribution.

191 Each of those contentions amounts, in effect, to an allegation of wilful default by the executor constituting omissions depriving the estate of a return had the alleged obligation of the executor been properly fulfilled. Consequently, such claims could not be agitated in the course of taking an account on a common account basis as, in the present case, under NCR r 37. Consequently, even if the objector were still to attempt to renew any of those objections or objections to similar effect, none could be addressed on the passing of accounts before the Registrar under r 37. Should the objector wish to pursue any such objection, it will be necessary for him to commence appropriate proceedings by writ or originating summons alleging distinctly the wilful default or defaults relied upon which can then be defended and a decision given by a Judge after trial so that, if any act of wilful default is proved, the executor account for that or any others on the basis of wilful default. If no such action is commenced and pursued by the objector, but the existing account under NCR r 37 proceeds to its final determination and report, it would then be too late for the objector to raise any allegation of wilful default arising from the administration of the estate to date.

192 For reasons given, this objector does not have any sufficient standing to maintain or pursue the objection relating to the distribution of the deceased's personal jewellery or any part of it.

193 The remaining objections, being all others itemised in the objector's affidavit of 14 September 2014, amount to claims for falsification of some or all of parts of the expenses incurred or payments made by the executor. As such, they may be raised and determined in the course of passing the executor's account on a common account footing, subject only to the discretion of the court to determine that an r 37 passing of accounts is not, because of the particular circumstances, an adequate procedure for determining the issues which arise from these objections and the executors' responses.

194 I am satisfied that all but three of those objections can conveniently and adequately be determined by the Registrar continuing with the passing of the executors' accounts under the r 37 procedure as those involve examining the various vouchers and accounts which have been lodged and considering the appropriateness both in nature and quantum of the expenditure incurred or payments made by the executor. Those particular objections are of a kind which are conventionally and readily dealt with by the r 37 procedure.

195 The three objections in the exceptional category are those related to the executors' claim for the payments of moneys to himself for one-half of the initial deposit, onehalf of the stamp duty paid at the time of the purchase of the Mount Claremont property, and his claim for one-half of the expenses or the value of effort outlaid in renovating, improving, restoring and repairing those premises after the purchase during his mother's life and, later, in readying the property for sale after his mother's death. The nature of the issues which have arisen from the objections filed in relation to these claims for expenditure give rise, in my opinion, to issues of law and fact of a magnitude and complexity which render it undesirable and inappropriate that they be agitated or resolved simply in the process of passing accounts under r 37. Rather, I consider that the issues arising need to be identified with greater precision and formulated in a way so that they can be determined upon an inquiry which the court can order under s 51 of the Supreme Court Act and/or RSC O 45 or otherwise within its jurisdiction to determine the procedure to be conducted to achieve an expeditious and just outcome of any particular controversy: see RSC O 1 r 4B.

196 To that end, I therefore propose to direct that the Registrar should, before determining those three objections, conduct an inquiry to determine the following questions:

1. Was there an agreement between the deceased and her son, Clive Richard Ellis, that he pay onehalf share, and did he pay her one half-share of:

(a) the deposit payable on the purchase of the property at Mount Claremont?

(b) the stamp duty payable on the instruments recording the purchase of the property?

(c) the expenditure for necessary repairs, renovations, restorations and improvements at the house and property at Mount Claremont to render it more suitable for accommodation?

1. If there were any such payments by Clive Richard Ellis as referred to in any of the respects in par 1 then, in relation to each of those three payments:

(a) did the deceased expressly or by implication agree to pay to her son at any future time one half-share or any and, if so, what share, of the expenditure which he outlaid in that behalf?

(b) if so, was there any agreement, express or implied, as to when payment or payments by the deceased to her son would be made or might be demanded?

(c) if there were any such agreement and, in relation to each such payment, when did the agreement occur and when was each payment due?

1. Were the payments made by Clive Richard Ellis in respect of each of these three outlays associated with the purchase and improvement of the house and land at Mount Claremont:

(a) gifts, as to the extent of one-half, to his mother made at the time?

(b) to the extent to which they each created obligations for repayment by the deceased, obligations which were forgiven or released by Clive Richard Ellis at any time?

(c) the source of obligations for repayment which, by reason of any applicable provision of the Limitation Act 1935 or the Limitation Act 2005 became time barred before payments were made by the executor to himself in satisfaction of those alleged obligations and, if so, to what extent?

1. If there was any agreement express or implied between the deceased and Clive Richard Ellis that she would at any future time pay one-half or any part of his expenditure for necessary repairs, etc, at the house and property at Mount Claremont, is recovery of such payment unenforceable and, if so, to what extent, by reason of any of the provisions of s 4 of the Builders Registration Act 1939 (WA)?
2. Is the said Clive Richard Ellis entitled to recoup for himself one-half or any other part and, if so, what amount, of expenditure which it may be found he outlaid in respect of the house and land at Mount Claremont for:

(ii) stamp duty paid on the instruments evidencing the purchase of the property;

(iii) improvements, renovations, restorations or other work or the value of such work performed on the property either during the lifetime of the deceased or subsequently in readying the property for sale

by reason of the termination of the tenancy in common previously existing between the deceased and her estate, on the one hand, and the executor and his wife (as joint tenants) on the other as tenants in common in equal shares which occurred when the property was sold in the course of the administration of the estate.

1. In the event that the result of the inquiry determines that Clive Richard Ellis was entitled to pay himself (either alone or on behalf of himself and his wife) any part of the expenditure which he has claimed in the administration, and it is not possible on this inquiry to determine the precise amount or amounts which were properly payable to Clive Richard Ellis then to the extent, if any, that those amounts remain to be quantified that quantification should be determined in the passing of the executor's accounts pursuant to NCR r 37 which remains to be completed.
2. At this inquiry and on any subsequent passing of accounts pursuant to NCR 37 the objector may cross-examine the executor, subject to directions of the Registrar, but only upon issues of fact of which prior notice is given to the executor and to the Court.
3. There be liberty to apply.