Plaintiffs v Defendants

PROBATE - Residual estate comprising or including family farming property - Relief sought by plaintiffs included order for distribution in specie - Where executors and trustees sought alternative order that they pay the amount of a market valuation of the property - Where it was submitted that the executors and trustees proposed to exercise their duties and powers under the will to sell the family farming property and distribute the residual estate to the beneficiaries in cash - Judicial advice and direction in probate and trust matters - Orders for in specie distribution - Supreme Court (General Civil Procedure) Rules 2025, ord 54.

PRACTICE AND PROCEDURE - Further evidence and submissions as to final orders (save as to costs) following publication of primary reasons for judgment.

1 In my primary reasons for judgment[1] I found that the first and second defendants breached the fair-dealing rule of equity in bringing about the plaintiffs' entry into an assignment deed made in November 1984, and I concluded that the assignment deed should be set aside as regards each of plaintiffs.

2 By the assignment deed, the reversionary interests of the plaintiffs in the residue of their father's estate were purportedly assigned to the family farming company (the third defendant, RLF), of which the executors and trustees (the first and second defendants) were directors and significant shareholders.

3 As regards some of the plaintiffs, I also concluded that the assignment deed was liable to be set aside on the additional grounds of undue influence and unconscionability. I further found that it was ineffective against one of the plaintiffs on the additional ground that she was a minor when she was made to sign it, and had repudiated it within a reasonable time of gaining an adequate understanding of the matter.

4 At the conclusion of the primary reasons I said I would hear the parties on the question of the plaintiffs' claim for consequential equitable damages having regard to my conclusions on the assignment deed, including as to the proper criteria for an assessment of such damages, and that I would hear the parties more generally on the orders otherwise appropriate to carry the primary reasons into effect. I also said I would hear the parties on the question of costs.

5 In their submissions, the first and second defendant pointed to a passage of my primary reasons suggesting that I may have already decided on the final orders I would make. In considering how I would exercise any residual discretion as to setting aside the assignment deed for breach of the fair-dealing rule, I said that I was 'affirmatively satisfied that it is in the interests of justice the plaintiffs should have the orders they seek'.[2] That sentence should be understood as having been confined to the plaintiffs' being entitled to a declaration or order as to setting aside the assignment deed, leaving the first and second defendants holding the Carranballac land as trustees for the plaintiffs as beneficiaries under Eric Snr's will. As I told counsel during the hearing on 14 October 2025, I had not yet otherwise decided on final orders, and I approached the parties' submissions on final orders, including the controversial issue of whether the residue of Eric Snr's estate should be distributed in specie or in monetary form, with an open mind.[3]

6 Following delivery of the primary reasons, the parties agreed on a timetable for material and submissions relating to final orders, except as to costs. In accordance with that timetable, they filed further material[4] and submissions.[5]

7 On 14 October 2025, I conducted a further half-day's hearing of the trial in the proceeding, directed to the issues raised by the parties as to final orders. The third defendant did not seek to be heard and was excused from attendance at that hearing.

8 At the further hearing on 14 October 2025, I received all the newly filed material into evidence, without objection. The plaintiffs also relied on two previously tendered expert reports,[6] and on two documents that had been included in the court book (and referred to in an affidavit of the first defendant) but not tendered during the main trial fixture in July and August 2024. They were leases granted by the first and second defendants in relation to the Carranballac land, initially to Luke Fay from March 2018[7] and later to RLF from March 2021.[8] The first defendant considered the lease to RLF to be a 'standard farm lease'.[9] These leases were in very similar terms.

9 Neither of these leases was formally and expressly tendered during the hearing on 14 October 2025, but they were clearly and quite extensively referred to in written submissions and in oral submissions on 14 October 2025.

10 The defendants took no issue with the plaintiffs referring to the leases during the hearing on 14 October 2025. Further, both leases had been included in the court book in the first place by reason of them being included in the exhibit bundle accompanying and forming part of one of the first defendant's affidavits, and that affidavit had been read and tendered by the defendants and received into evidence at the main trial fixture.

11 In all these circumstances, I have treated the leases as tendered by the plaintiffs without objection by the defendants and I have received them into evidence.

12 Adopting a suggestion made by senior counsel for the plaintiffs at the hearing on 14 October 2025, in the interests of efficiency I produced short-form conclusions on the issues raised as to final orders (except costs) and on 15 October 2025 I caused those conclusions and directions as to the preparation of final orders to be emailed to the parties.

13 The plaintiffs then drafted proposed final orders in accordance with those conclusions and directions, and circulated them on 16 October 2025, providing a day for them to be considered by the first and second defendants and seeking to have the orders made in chambers on 17 October 2025. Upon the application of the first and second defendants, I granted more time for them to consider whether they would oppose the form of the orders circulated on 16 October 2025 - including the calculations of equitable compensation and interest in them - setting a deadline for Monday morning, 20 October 2024. I foreshadowed that (unless opposed by the defendants, or any one of them) I intended to make the orders on 20 October 2025. I asked the plaintiffs to re‑calculate the figures in the proposed final orders accordingly, and they did so. The first and second defendants did not oppose the proposed final orders by the deadline on the morning of 20 October 2025. Later that day I made final substantive orders (except as to costs) substantially in the form prepared by the plaintiffs.

14 The question of the costs of the proceeding was considered and determined separately following a timetable I directed for the exchange of further material and submissions.

15 These reasons now explain, in brief terms, the conclusions I reached on the issues the parties had raised concerning final orders, save as to costs. These reasons adopt the same defined terms that appeared in the primary reasons.

Consideration of the plaintiffs' prayer for relief

Proposed item 1 - Order or declaration setting aside the assignment deed

16 The first item in the plaintiffs' prayer for relief[10] was:

1. A declaration that Assignment Deed is void, alternatively that it is voidable and be set aside. [sic]

17 I was not satisfied that I should make an order in precisely these terms. I turned my mind to whether a directly operative order, rather than a declaration, might be clearer.

18 The joint statement of issues submitted by the parties sought answers to the following relevant questions concerning the consequences of breach of the fair-dealing rule (if established):

1. In the premises, should the Assignment Deed be set aside at the behest of any of the plaintiffs because the trustees of Mr EP Fay's estate breached the fair-dealing rule?
2. If "yes" to the previous question, in respect of which plaintiffs should the Assignment Deed be set aside?

19 In the primary reasons, having upheld the plaintiffs' claim that the defendants breached the fair-dealing rule, I reached the conclusion that the appropriate form of order was that the assignment deed be set aside.[11]

20 The applicable authorities indicated that, unlike cases of breach of the self-dealing rule, an instrument giving effect to a transaction infringing the fair-dealing rule was not to be treated as being necessarily void or voidable ex debito justiciae (as of right).[12] In Tito v Waddell (No 2), Sir Robert Megarry V-C spoke of the affected beneficiaries being able to 'set aside' a transaction that was in breach of the fair-dealing rule:[13]

The self-dealing rule is (to put it very shortly) that if a trustee sells the trust property to himself, the sale is voidable by any beneficiary ex debito justitiae, however fair the transaction. The fair-dealing rule is (again putting it very shortly) that if a trustee purchases the beneficial interest of any of his beneficiaries, the transaction is not voidable ex debito justitiae, but can be set aside by the beneficiary unless the trustee can show that he has taken no advantage of his position and has made full disclosure to the beneficiary, and that the transaction is fair and honest.

21 This suggests that it may be sufficient for a court hearing a relevant case to declare that the transaction is voidable by the beneficiaries, and that it has been set aside (by them). The drafting of the first item of the prayer for relief in this case perhaps reflects this view of Megarry V-C's words. However, another interpretation of these words is available - that the relevant court will itself set aside such a transaction upon the application of the affected beneficiaries. Perhaps nothing turns on the difference, but out of abundant caution I turned my mind to the point.

22 In Clay v Clay, the plurality in the High Court said that a transaction governed by the fair-dealing rule 'may be set aside' (without identifying the actor) 'unless the trustee can show ...' that the transaction complied with the requirements of the rule.[14] Presumably the trustee is required to show this in a court proceeding. This passage implies that it is the relevant court's role to evaluate whether the applicable criteria for fair dealing have been met by the trustees' evidence in the proceeding in that court and, unless so satisfied, to set aside the relevant transaction.

23 In this way, the plurality in Clay v Clay seem to have had in mind an operative order of the relevant court setting aside the transaction.

24 In addition, it seemed to me that questions 4 and 5 in the parties' joint statement of issues in this case framed the issue in the same way.

25 Further and in any event, I considered it to be clearer and more prudent to make an operative order setting aside the relevant instrument, and not (merely) to declare that the beneficiaries were entitled to do so, or had done so.

26 It was for these reasons that, in paragraph 1 of my orders on 20 October 2025, I made an operative order setting aside the assignment deed.

Proposed item 2 - Declaration as to the Carranballac land

27 The second item in the plaintiffs' prayer for relief was:

1. A declaration that the first and second defendants hold the following properties on trust for the plaintiffs:

(a) lot 20 on plan of subdivision 005215 and being the whole of the land described in certificate of title volume 03413 folio 579;

(b) lot 1 on title plan 854441R and being the whole of the land described in certificate of title volume 04947 folio 263.

28 Eric Snr's will appointed Zilla, Bill and Rick as executors and trustees, defined them to be 'Trustees', and relevantly provided:

AFTER payment of all my just debts funeral and testamentary expenses and the Probate and Estate duties payable upon the whole of my Estate I GIVE DEVISE AND BEQUEATH the balance then remaining to be held ON TRUST for my said wife Zillah Fay during her lifetime and after her death the residue then remaining to be divided equally amongst my following children:

Jane

Mary

Desmond

Josephine

Simon ...

29 There was no dispute that the Carranballac land, defined in the orders of 20 October 2025 as 'the Properties', was part of Eric Snr's estate upon his death, and remains registered to Zilla, Bill and Rick in their capacities as executors and trustees of his estate.

30 In these circumstances, the effect of order 1, setting aside the assignment deed, is that the first and second defendants hold the Properties on trust for the plaintiffs as beneficiaries of the testamentary trust created by the clause of Eric Snr's will, extracted above. None of the defendants made any submission to the contrary.

31 For these reasons I was satisfied that I should make the declaration sought in the second item of the prayer for relief, without any alteration.

Proposed items 3, 4 and 5 - Orders as to the transfer of the Carranballac land

32 The third, fourth and fifth items in the prayer for relief fell to be considered together. Incorporating (in underlined text, below) some text added by the plaintiffs, without objection, in the course of their submissions,[15] those items were:

1. Within 30 days the first and second defendants shall prepare and complete all matters and attendances relating to the State Revenue Office's duties on line assessment of each of the Properties.
2. Within 60 days the first and second defendants shall:

(a) execute and provide to the plaintiffs' solicitors any other documents required, and do anything required, in order for the plaintiffs to be registered as the proprietors of the Properties as tenants in common at the defendants' cost including registration fees, except for the plaintiffs' own legal costs at settlement;

(b) transfer the Properties to the plaintiffs.

1. Settlement and lodgement of the instruments necessary to record the plaintiffs as registered proprietors of the Properties shall as far as reasonably possible be conducted in accordance with the Electronic Conveyancing National Law (Victoria).

33 The fourth and fifth items of the prayer for relief were opposed by the first and second defendants at the hearing on 14 October 2025. They contended that the Court should not make orders that would have the effect of requiring a distribution of the Properties in specie. In lieu of this, they submitted that a current market valuation of the Carranballac land should be obtained, and all three defendants,[16] or the first and second defendant,[17] should pay one-fifth of that value to each of the plaintiffs.

34 Counsel for the plaintiffs submitted that, once the assignment deed was set aside, the handling of the Carranballac land had to conform to Eric Snr's will. As well as providing for distribution of any residue of the estate (remaining after the death of Zilla) to the plaintiffs, Eric Snr's will[18] relevantly provided:

I DIRECT that my Trustees shall have the following powers:

1. To postpone the conversion of any part of my real or personal estate for such period as they shall in their absolute discretion deem fit

...

3. I empower my Trustees to carry on any farming business in which I may be engaged at the time of my death and to use therein any part of my real or personal estate

...

35 During oral submissions, in opposing the fourth and fifth items in the prayer for relief, counsel for the first and second defendants argued that they had a discretionary power as executors and trustees under Eric Snr's will to sell the Properties and distribute the proceeds to the plaintiffs in cash. This was a more nuanced submission than the submission that the Court should simply order a valuation and monetary compensation in lieu of transfer of the land in specie.

36 So much may be accepted, but it does not follow that - in all the circumstances of this case - the Court should forbear from directing the first and second defendants as to the exercise of that power.

37 The Court has undoubted power - as part of its probate and trusts jurisdiction, recognised by the Supreme Court (General Civil Procedure) Rules 2025, ord 54 - to advise and direct executors and trustees as to the exercise of their discretions. The third to fifth items of the prayer for relief are orders of the kind that can be made under ord 54. Should the Court exercise that power by making the orders sought by the plaintiffs? Or should the Court leave the first and second defendants to their own devices, to discharge their duties under Eric Snr's will in the manner of their own choosing?

38 Generally speaking, the Court would not direct executors and trustees as to the manner of exercise of their powers and performance of their duties under a will, in the absence of the executors and trustees themselves applying for judicial advice or direction. However, in a case that warrants unusual intervention, judicial advice and direction may be provided on the application of an interested party under ord 54, or on the Court's own motion.[19]

39 This is such a case. I was positively satisfied that I should not leave the first and second defendants to themselves in exercising their discretionary powers, and that I should exercise my power under ord 54 to make the orders for in specie distribution of the Carranballac land, as has in effect been sought by the plaintiffs from the commencement of this proceeding.

40 Under the powers conferred on the executors and trustees by Eric Snr's will, for over 33 years, from December 1983 until Zilla's death in September 2017, they continued to hold the Properties and to postpone their sale, and to use the Properties or allow them to be used for farming operations. After Zilla's death, the first and second defendants continued to hold the Properties, and leased them first to Luke (March 2018-February 2021) and then to RLF in (from March 2021), again for farming operations.

41 In the events that have occurred, the Properties have been retained for more than 40 years since Eric Snr's death. The Properties remain intact and unencumbered. They comprise the residue (or at least part of the residue) of Eric Snr's estate.

42 From the inception of this litigation, the plaintiffs have sought relief in the form of the fourth and fifth items of the prayer for relief - that is, for in specie distribution. The first and second defendants' argument that they now wish to exercise their powers under the will to sell the Properties and then to discharge their duty to distribute the residue of the estate in cash is a position they have only very recently adopted. Nothing to this effect was said to the Court during the main trial fixture in 2024.

43 The argument was first made in the first and second defendants' written submissions dated 7 October 2025. Those written submissions suggested that the first and second defendants, as trustees, were concerned that a transfer in specie to the plaintiffs would not be in the plaintiffs' own interests because they might be differences between them about their future use of the land, and this might lead to disputation. However, neither of the new affidavits made by Bill, received into evidence at the hearing on 14 October 2025, addressed this issue. Those affidavits do not explain the purported concerns referred to in the submissions about the plaintiffs potentially falling into dispute amongst themselves about the future use of the land. I give the purported concerns recorded in submissions on behalf of the first and second defendants no weight whatsoever.

44 Counsel for the plaintiffs submitted that the first and second defendants' argument against an in specie transfer was a reaction to losing the case. In my view, this submission was correct. The late timing of the submission strongly supported that conclusion.

45 During oral submissions on 14 October 2025, counsel for the first and second defendants explained the new argument a little further, saying:[20]

The trustees' position is, they would prefer there to be a buyout. That is definitely their position. ... our position would be that rather than a transfer in specie, pursuant to the will, the transfer of funds in lieu of the land in specie.

[The Court asked about a sale of the land.]

... Valuations are something are something the court does every day. If it has to go to sale, well, I guess, it has to go to sale. But our primary position is that the trustees are content to pay them out, if that would be an appropriate order. And that paying-out ultimately would be done through RLF - so the original assignee. That was the intent. But either way, they would pay them out, rather than transferring the land.

46 In short, it appeared that the first and second defendants' proposal was that RLF, the assignee under the 1984 assignment deed set aside by the Court, would pay a market price to become the registered proprietor of the Carranballac land. I assumed that, as was the case at trial, Bill and Rick still remained significant shareholders in that company, and were still directors.

47 The most obvious available inference, and the inference I drew, was that the first and second defendants wished to retain ownership of the Carranballac land in an entity they could control or influence, and to keep it out of the hands of the plaintiffs.

48 Their proposal led me to conclude that, if left to their own devices, the first and second defendants would not exercise their discretionary powers under the will of Eric Snr for the benefit, or in the best interests, of the beneficiaries. I was satisfied that the proposal was motivated by their own desire to gain control of the land or at least influence over its future use. In short, their proposal entailed exercising their powers under Eric Snr's will principally for their own benefit, or in their own interests.

49 Counsel for the plaintiffs submitted that the first and second defendants' proposal showed they had learned nothing from the litigation. This is not precisely correct. I was conscious that there was an important difference between what they had done to bring about the assignment in 1984 and their current proposal. The current proposal would involve consideration based on an independent market valuation of the Carranballac land and timely payment of that consideration. These features were absent from the transaction in 1984. Nevertheless, as regards ownership of the Carranballac land, the proposed outcome would be the same as was contemplated by the 1984 assignment deed. I inferred that this was an objective formulated by Bill and Rick in pursuit of their own interests and without due regard to the interests of the plaintiffs.

50 In all these circumstances, I was satisfied that this was one of those relatively rare cases where the Court should intervene and, effectively at the behest of beneficiaries, direct executors and trustees as to the manner in which their duty to distribute the estate must occur. I was satisfied that I should direct in specie distribution, and that I should do so in the manner described in items 3, 4 and 5 of the prayer for relief (as amended during submissions). I made orders 3, 4 and 5 accordingly.

Proposed item 6 - Alternative order for transfer

1. If the first and second defendants have not transferred the Properties to the plaintiffs within 60 days, the Prothonotary of the Supreme Court shall execute any documents required to effect the transfer of the Properties to the plaintiffs, pursuant to sub-section 22(1) of the Supreme Court Act 1986 (Vic).

52 I was not satisfied that I should make an order in these terms, at least at this time. If the first and second defendants comply with orders 3, 4 and 5, it will never be necessary for an order directed to the Prothonotary in these terms to be made. I was satisfied that the most appropriate course would be to allow the plaintiffs liberty to apply in case any unexpected impediments to transfer of the Properties were to occur. I made provision for this in my orders on 20 October 2025, at paragraph 11(a).

53 If the plaintiffs see fit to do so, they may renew their application for an order in the form of the sixth item of their prayer for relief pursuant to liberty.

Proposed items 7 and 8 - Account and order as to personal estate

54 The seventh and eighth items in the prayer for relief were:

1. Within 14 days the first and second defendants transfer to the plaintiffs the personal estate of the estate of Eric Parrington Fay as listed in the inventory of assets marked "B" to the affidavit of Zillah Fay, William Luke Fay and Eric James Fay made 13 April 1984 in support of the application for a grant of probate in respect to the will of Eric Parrington Fay dated 16 September 1977.
2. Within 14 days the first and second defendants furnish and verify accounts of the estate of Eric Parrington Fay for the period 21 September 1983 to the present.

55 I viewed the seventh item as premature and inappropriate, and as therefore falling within a similar category to the sixth item, albeit for different reasons.

56 Apart from the Carranballac land, the evidence did not disclose what other property may remain within the residue of Eric Snr's estate. If no personal estate remains, it may never be appropriate for an order along the lines of the seventh item to be made. The determination of the plaintiffs' application for such an order should, at the very least, await the first and second defendants' account of their administration of Eric Snr's estate - a matter addressed by the eighth item of the prayer for relief.

57 As to the eighth item, I was positively satisfied that I should make an order along those lines. The first and second defendants did not oppose any such order, or dispute the appropriateness of the time allowed for them to prepare their account (14 days). I therefore made such an order, and it is set out in paragraph 6 of my orders of 20 October 2025.

58 But, in short, I was not satisfied that I should make an order along the lines of the seventh item, on the current evidence before me. Depending on the contents of the account that will be furnished by the first and second defendants of their administration of Eric Snr's estate in compliance with paragraph 6 of my orders on 20 October 2025, it might be appropriate for the plaintiffs to renew their application for an order along those lines pursuant to liberty to apply. I made provision for this eventuality in my orders at paragraph 11(b).

1. There be liberty to apply generally and, in particular:

(a) as to any further steps required to complete the transfer of the Properties to the plaintiffs;

(b) as to any further orders to be sought or made after the first and second defendants' compliance or purported compliance with the orders in paragraphs 7 and 8 hereof.

60 I was satisfied that I should reserve liberty to apply, and I did so in substantially the form sought by the plaintiffs (in paragraph 11 of my orders). This was not opposed by the first and second defendants.

Proposed item 10 - Quantification of equitable compensation

61 Item 10 of the prayer for relief was 'Equitable compensation'. Equitable compensation is aimed at restoring the innocent parties, as nearly as possible, to the position in which they would have been had the breach of fiduciary duty not occurred.[21] The plaintiffs relevantly relied on the potential use of the Carranballac land as farming land, and claimed loss due to the first and second defendants' refusal to transfer the Carranballac land to the plaintiffs after the death of Zilla by reason of deprivation of the opportunity to use the land 'for any purposes, including sale and leasing'.[22]

62 As I said in the primary reasons at [606]-[608] (some references omitted):

1. The plaintiffs ... submitted that they are entitled to equitable compensation in the form of the loss they have suffered as a consequence of Bill and Rick's conduct in preventing them from enjoying the benefit of the Carranballac land since Zilla's death. They submitted that their loss is the rent they would have received.
2. The plaintiffs bear the onus of establishing the quantum of their claim for equitable compensation.[23] Here, they submitted that the lost rent should be calculated in accordance with the joint statement of Alan Hives and Graeme Linke dated 31 July 2024, which establishes the market rent of the Carranballac land to be:

(a) for the three-year period starting 29 September 2017 - $82,000 per annum;

(b) for the three-year period starting 29 September 2020 - $127,000 per annum; and

(c) for the three-year period starting 29 September 2023 - $114,000 per annum.

1. The Court can assess equitable compensation with respect to deprivation of a property on a broad-brush basis, taking into account relevant factors.[24] In Grant v Grant, the Court granted equitable compensation for an estate being deprived of the use of a property, taking into the nature of the property, rental income, expenses incurred, and the impact of the Covid-19 pandemic on earnings.[25]
2. Further, while equitable compensation is often computed by reference to the loss suffered by the innocent party, compensation may also be achieved by requiring a fiduciary to disgorge the equivalent of the advantage that has been taken.[26] The evidence at trial was that Bill and Luke (but not Rick) have farmed the farming land component of the Carranballac land since about 1996. Luke was not a fiduciary and is not a defendant. ...

63 The first and second defendants did not, given my decision that the assignment deed would be set aside, dispute the availability of equitable compensation arising from their refusal to distribute the residue of Eric Snr's estate. However, they disputed the method of quantification proposed by the plaintiffs. They relied on evidence in Bill's two new affidavits of the actual earnings that were derived from the Carranballac land after Zilla's death, and of the actual expenditure associated with the land in the same period. They submitted that the appropriate method of quantification should be based on those actual earnings and costs. In this regard, they submitted:[27]

Given the plaintiffs do not seek an account of profits, their claim is limited to the loss they suffered.

That is, the plaintiffs are limited to disgorging the defendants' gain.

64 The first potential question relating to the assessment of equitable compensation was the time at which such an assessment should take place. The first and second defendants submitted that the date in question was the date of trial. I was referred to cases in which it had been said that compensation is assessed at the date of trial.[28] However, it appears that the purposes of such observations has typically been to make the point that the assessment is not conducted prospectively as at the date of breach, but as an exercise in hindsight that can take into account subsequent events and circumstances.[29] Relying on academic writing, the plaintiffs submitted that the appropriate date was the date of restoration or judgment, and that there is no fixed rule.[30]

65 In any event, the first and second defendants' submission that the compensation is to be assessed 'at trial' could be understood, as the plaintiffs' outline in reply remarked,[31] as encompassing the continued trial on 14 October 2025. The time between that part of the trial and the final orders was less than a week and was virtually immaterial.

66 In any event, I agree with the plaintiffs' contentions that they are to be compensated because of the loss they have suffered by being deprived of the benefit of the Carranballac land since 29 September 2017, and that that deprivation did not cease at the time of trial in 2024, or on 14 October 2025: it continued until I made my orders.

67 I was therefore satisfied that I should adopt a method of compensation providing for assessment of loss up to and including the date of my orders: 20 October 2025.

68 The next issue was whether I should adopt the first and second defendants' contention that the appropriate measure of compensation was to require them to disgorge their net earnings from the Carranballac land in that period or, as the plaintiffs' contended, a market rent-based method should be adopted.

69 The first and second defendants were correct in pointing out that the plaintiffs did not seek an account of profits and were limited to recovering their loss. However, it did not follow that (as the first and second defendants then submitted) the plaintiffs were 'limited to disgorging the defendants' gain'. This was, in my view, a non-sequitur. On the contrary, it would only be if the plaintiffs were seeking an account of profits that they would be limited to seeking disgorgement of 'the defendants' gain'. With respect, I found this submission, and the related passages of the first and second defendants' outline,[32] difficult to follow. Further, I was unpersuaded of the first and second defendants' contention in these passages that, in the absence of any evidence as to what the plaintiffs would have intended or agreed with respect to their use of the land had it been transferred to them in the period September 2017 to October 2025, I was compelled to quantify compensation by reference to any gains made by the first and second defendants. I consider a market rent-based assessment to be the most appropriate available method of quantifying the plaintiffs' loss. It was not necessary that the plaintiffs should prove that they intended to, or would have, leased out the Carranballac land before I could adopt this method of quantification. In my view, it stood as an appropriate proxy for the value of the lost opportunity of possessing the land regardless of the absence of any such evidence from the plaintiffs. I was also unpersuaded that the plaintiffs were attempting to argue that this was a case of 'wilful default' on the part of Bill and Rick, or that anything of relevance flowed from this. In short, I rejected all elements of the first and second defendants' arguments in these passages.

70 For these reasons, I was satisfied that I was not compelled by law to accept that the first and second defendants' proposed method was the only available method for assessing the equitable compensation in this case. Nor, however, did I regard myself as compelled to accept every element of the plaintiffs' submissions on quantification. Rather, I saw my task as one of weighing the various submissions made by the parties, and their supporting evidence, and formulating from them the most appropriate assessment of the plaintiffs' loss that I could achieve.

71 In Bill's affidavit dated 7 October 2025, he deposed that the Carranballac land was leased to Luke Fay for three years from March 2018 at monthly rent of $2,200. He referred to the lease as set out in the court book, which (as mentioned above) I accepted into evidence. Monthly rent at that rate equates to annual rent of $26,400.

72 The joint expert report as to rental of the Carranballac land tendered at the trial (exhibit P2) established to my satisfaction that the market rental of the Carranballac land in the period from September 2017 to September 2020 was $82,000 per annum. Exhibit P2 also established that, from 29 September 2020 to 29 September 2023, the annual market rental for the Carranballac land was $127,000 per annum, and I accepted this.

73 This means that the Carranballac land was let to Luke at only about 30% of its market rental value at the time. For this reason alone I could not possibly rely on the rent agreed by Bill and Rick as trustees of the estate of Eric Snr with Luke in 2018 as a measure of the plaintiffs' loss. In addition to the agreed rent being only a fraction of the true market rent for the land at the time, I have no way of knowing what other considerations or potential side agreements might have applied in the course of striking that rate of rent.

74 In Bill's affidavit of 7 October 2025, he went on to depose that in February 2021 a new lease was granted, this time to the third defendant, RLF. Again, that lease was received into evidence. It was a lease for five years commencing at annual rent of $68,300, with an annual CPI-based rent review provision. Bill deposed that the rent charged and received under this lease was as follows: $68,292 (2021), $62,292 (2022), $136,600.08 (2023), $68,300 (2024) and $39,841.69 (2025, up to 7 October 2025).

75 As already mentioned, exhibit P2 established to my satisfaction that the market rent of the Carranballac land in 2021, 2022 and to September 2023, was $127,000 per annum. Exhibit P2 also established that, from September 2023, the market rent was $114,000 per annum, and I accepted this also.

76 In short, exhibit P2 demonstrated that the lease to RLF was also at substantially below market rental value. Rent under that lease was in the order of about two thirds of market value. For similar reasons as those expressed in relation to the rental agreed with Luke, I cannot rely on the rental struck between the trustees and RLF either. Clearly, in no sense was this an arm's length transaction. For one thing, Bill and Rick remained the directors of RLF. They may have benefitted from the low level of rent in the lease to RLF in ways that are not identified in the material before me.

77 Bill's affidavit deposed to a number of expenses and alleged costs of improvements to the Carranballac land in the period from 29 September 2017 to October 2025. The first and second defendants' principal contention was that equitable compensation should be assessed as the rent received by the estate from Luke (March 2018 to February 2021) and RLF (February 2021 onward) less those expenses and costs.

78 For the reasons already given, I rejected the first and second defendants' contention that equitable compensation be assessed by reference to the actual earnings of the estate from the Carranballac land comprising the rent received from Luke and RLF. I instead relied on the joint expert opinions as to market rental values established in P2. It did not follow, however, that I should ignore the actual expenses and improvement costs identified in Bill's affidavit. In my view, items of that kind could be relevant as offsetting elements in the calculation of equitable compensation. Not all such expenses and costs would necessarily be deducted in this way. Whether a particular item would have an offsetting effect required further analysis.

79 A threshold point arises that may be easily disposed of. The plaintiffs submitted that there was insufficient evidence that the relevant expenses and improvement costs related to the Carranballac land. I rejected this submission. Bill deposed that they did, and the plaintiffs did not cross-examine him.

80 In my view, because I was basing my assessment of the plaintiffs' losses by being deprived of the Carranballac land from an expert estimate of market rent, the touchstone for whether a particular cost item should have an offsetting effect would be whether that item was to be borne by the tenant or the lessor under the terms of the notional standard lease on which the valuations were apparently or presumably based.

81 At this point in the analysis a difficult challenge intruded. The experts who submitted exhibit P2 did not jointly specify the terms of the notional standard lease underpinning their report. However, one of them, Mr Linke, did include a section in his underlying standalone report (exhibit 192) on 'Lease Terms'. For want of any evidence on this topic that is more cogent, I rely on this aspect of Mr Linke's report as illustrating some of the provisions of the notional standard lease on which the valuations were based. He said, 'for guidance in these valuations, I have listed key covenants in the following table, which I have relied on for guidance in assessing rental value for the subject property'. Relevantly, these included the following:[33]

Lessor - Responsible for statutory outgoings and insurance for capital items.

Lessee - For grazing property usually required to supply and spread fertiliser at a prescribed rate and frequency, maintain improvements in functional order, apply best practice management in controlling weeds and vermin, not to overstock the property and maintain a Public indemnity insurance policy to a nominated/agreed value. Lessee may be required to reinstate pasture should cropping be allowed during the term of the lease.

82 Importantly, this shows that Mr Linke made an assumption that the standard form lease on which he based his valuation would place the cost of statutory outgoings on the owner, not the tenant. On the other hand, he assumed that the costs of fertilizer and such ongoing matters as the maintenance of the improvements on the land would be borne by the tenant.

83 The plaintiffs also relied on certain provisions of the actual leases to Luke and RLF in respect of the Carranballac land. The plaintiffs pointed to the fact that, when Bill first identified these leases, he had referred to his solicitor being instructed to 'prepare a standard farm lease' prior to entry into the lease with RLF in 2021. He deposed that to the best of his knowledge 'it is a standard farm lease at market rent'.[34]

84 I am sceptical about whether the leases with Luke and RLF were standard farm leases in all respects. As already noted, I reject any suggestion that the lease with RLF was at market rent. I also note that Mr Linke assumed that statutory outgoings would be borne by the owner, which is materially inconsistent with the terms of the leases made with Luke and RLF. Apart from that, however, there is no reason to doubt that the terms of the lease to RLF were otherwise the terms of a standard farm lease, as Bill asserted. Further, the terms of the lease to Luke Fay were very similar to the terms of lease to RLF. The plaintiffs relied on the following provisions of those leases:

(a) Clause 3.2(a), which provided that the tenant must:[35]

Pay or reimburse the Landlord for all other amounts [i.e. other than rent], which are set out in Item 9 when those amounts are due.

(b) Item 9, which identified the amounts payable by the tenant as:[36]

Municipal rates, water rates, insurance and maintenance costs.

(c) Various clauses which imposed obligations on the tenant to maintain the land, as follows:

(i) clause 3.5, which provided that the tenant must do all things reasonably necessary (at the tenant's cost) to prevent, among other things, fires, soil erosion and 'exhaustion of the land';[37]

(ii) clause 3.7(a)(iv), which provided that the tenant must not allow 'any rubbish to accumulate on the land';[38]

(iii) clause 3.8, which provided that the tenant must '[k]eep and maintain (at the Tenant's cost) all buildings and improvements on the Land in the same condition as at the Commencement Date, except for fair wear and tear';[39]

(iv) clause 19.1, which defined 'buildings and improvements' to mean:[40]

...the buildings and improvements on the Land that are owned by the Landlord, including without limitation: buildings, structures, yards, drains, bores, bore drains, wells, ground tanks, reservoirs, dams, levee banks, pumps, windmills, fences, gates, grids, ramps, roads, private telephone lines, private power lines, wiring, water pipes, gas pipes, sheds, dips, mailboxes, huts, cottages, homesteads, outbuildings, swimming pools, tennis courts and plant and equipment on the Land;

(v) item 3 of Schedule 2, which provided that the tenant must 'apply fertiliser to the Land at rates and frequency which accords with prudent farming practice in the district'.[41]

(d) Clause 5.4, which provided that:[42]

If the Landlord carries out any works on the Land that should have been carried out by the Tenant, the Tenant must pay the Landlord on demand the costs that the Landlord incurs in doing so.

85 In addition, the leases to Luke and RLF contained (at cl 3.8(b)) a prohibition against the tenant (amongst other things) erecting or modifying any improvement on the land without written consent.[43]

86 Bill deposed to payments of various council rates and charges in the relevant period I relation to the Carranballac land.

87 In the leases to Luke and RLF, item 9 of the reference table at the end of the lease required the tenant to bear 'Municipal rates, water rates, insurance and maintenance costs'.

88 However, because Mr Linke assumed that the standard lease terms on which he based his valuation would provide for statutory outgoings to be borne by the owner, in my view all council rates and charges identified by Bill in his affidavit should be treated as offsetting elements (that is, deductions against notional rental income) in the course of the assessment of equitable compensation. I have reached this conclusion notwithstanding the provision in the leases with Luke and RLF to the contrary.

89 Further, I considered that three invoiced costs attributable to improvement works in 2023-2025 by a contractor, Grist Earthworks, were for improvements that were not required to be performed by the tenant (and indeed were probably prohibited without consent, at least under the terms of the leases with Luke and RLF). I therefore concluded that they should be treated in the same manner: as offsetting deductions against notional rental income. Mr Linke's report was silent about any such items being borne by the owner, but his references to the tenant having to bear the costs of maintenance of improvements suggested that he did not assume that tenants would bear the costs of modifying improvements, or creating or installing new improvements. The descriptions of work in the invoices from Grist Earthworks read to me like new improvements, not maintenance of existing improvements. Assuming the relevant provisions of the leases with Luke and RLF were to be treated as standard lease terms on this topic, I was satisfied that costs of this kind were to be borne by the owner, not the tenant. For all these reasons, I allowed these as deductions.

90 Similarly, the purchase and installation of a new water tank, invoiced in April 2024, appeared to be the installation of a new improvement, rather than maintenance, and I was satisfied that it too should be deducted.

91 On the other hand, under the above provisions and the relevant assumptions made by Mr Linke, I disallowed the first and second defendants' claims to deduct the costs evidenced by invoices for repairs to existing structures and fencing, and for the provision of agricultural lime. Under the standard terms of farm leases that appeared (or were to be presumed) to have been relied upon in exhibit P2, and under the terms of the actual leases in evidence, these were the kinds of costs that were to be borne by the tenant.

92 There was a significant dispute about the lime. Bill deposed that its function was as a 'soil treatment that is used to neutralise acidic soil'. He deposed that he had spoken to an agronomist who said that generally it is the land owner who pays for the lime because it takes one to two years to activate and then lasts for around 10 years. Bill deposed that he had been informed by the agronomist that the land needed it and that without it the land would not grow the best yield. In my view, the lime was squarely within the scope of the provisions assumed by Mr Linke and set out in the leases with Luke and RLF which imposed on the tenant the cost of fertiliser and prevention of exhaustion of the land. On this basis, I disallowed it from being treated as an offsetting deduction against notional rental income in my assessment of equitable compensation.

93 For these reasons, I was satisfied that paragraph 7 of my orders should be generated from the following conclusions and directions, which I conveyed to the parties by email on 15 October 2025:

Equitable compensation as sought in [10] of the prayer for relief is to be calculated as the sum of the following amounts:

1. 29 September 2017 to 28 September 2018: ($82,000 minus $6,722 in statutory outgoings =) $75,278
2. 29 September 2018 to 28 September 2019: ($82,000 minus $8,252 in statutory outgoings =) $73,748
3. 29 September 2019 to 28 September 2020: ($82,000 minus $8,518 in statutory outgoings =) $73,482
4. 29 September 2020 to 28 September 2021: ($127,000 minus $8,752 in statutory outgoings =) $118,248
5. 29 September 2021 to 28 September 2022: ($127,000 minus $9,015 in statutory outgoings =) $117,985
6. 29 September 2022 to 28 September 2023: ($127,000 minus $9,962 in statutory outgoings and minus $16,879 in improvements not required to be performed by a lessee under a standard lease =) $100,159
7. 29 September 2023 to 28 September 2024: ($114,000 minus $11,632 in statutory outgoings and minus ($20,163+$4,537) in improvements not required to be performed by a lessee under a standard lease =) $77,668
8. 29 September 2024 to 28 September 2025: ($114,000 minus $11,795 in statutory outgoings and minus $12,525 in further statutory outgoings paid in advance for the next 12-month period and minus $37,735 in improvements not required to be performed by a lessee under a standard lease =) $51,934
9. 29 September 2025 to date of orders: pro rata based on annual amount of $114,000.

94 The plaintiffs then calculated equitable compensation as being $695,072. The first and second defendants did not oppose this calculation.

Proposed item 11 - Interest on equitable compensation

95 Item 11 of the prayer for relief was 'Interest on any award of equitable compensation calculated on a compound basis, alternatively simple interest'.

96 The plaintiffs sought compound interest, based on annual rests, at a rate of 6% per annum. The plaintiffs submitted in this regard that Bill and Rick's conduct was 'sufficiently serious misconduct to justify the award of compound interest'.[44] As a separate point, the plaintiffs submitted that appropriate compensation is now commonly regarded as entailing compound interest.[45] The plaintiffs placed emphasis on Beach J's decision in Directed Electronics (No 9) in this regard.[46] As to the figure of 6%, the plaintiffs submitted that this was a 'reasonable, broad-brush estimate of actual lending rates for the relevant period' and referred to Mr Linke's report dated 6 May 2025, where he stated that borrowing rates for agribusinesses were at around this level 'at early 2024'.[47]

97 In their submissions, the first and second defendants identified the following issues for determination relating to interest: whether interest should be ordered; if so, the appropriate rate; and whether simple or compounding interest should be awarded.[48] As to the first of these issues, the first and second defendants did not make any substantive submissions disputing the availability of interest; but as to the remaining issues, they forcefully contested the plaintiffs' proposed method of quantifying interest as to both the applicable rate and the compounding of interest.

98 I am satisfied that I should order interest; without an order for interest on the net market rent-based amount of equitable compensation due to them, the plaintiffs will not be properly compensated for not having had the use of the Carranballac land since September 2017. That is because, in addition to being compensated for the net income they are presumed to have lost by being deprived of the possession of the land, they are also entitled to be compensated for the lost opportunity of using that income from the time it should have been received.

99 The first and second defendants adduced evidence of deposit (not borrowing) rates in the relevant period and an expert report of Mr Shah calculating the average of those deposit rates as being 2.3% over the period.[49]

100 The first and second defendants' primary submission was that the interest calculation should be based on this average deposit rate.

101 In the alternative, they submitted that - in contrast to the plaintiffs' proposed use of an estimated borrowing rate of 6% per annum over the period, a better estimate of the average borrowing rates over the relevant period would be 4% per annum.

102 Further, they submitted that any such rate should be used to calculate applicable interest on a simple basis, not a compounding basis.

103 The plaintiffs' reliance on Mr Linke's report (exhibit 192) to support an interest rate of 6% was misplaced.

104 There was no particular dispute about Mr Linke's reliance on a rate referable to agribusinesses. This choice was reasonable given that the land in question was farming land. Further, it is true that Mr Linke gave an estimate that would support such a rate for agribusinesses 'at early 2024'.

105 However, the rate at that point in time was not the interest rate for the entire period in question, which was an eight-year period from September 2017. Nor was it fairly representative of the average rate during that period. During much of that period interest rates were at historic lows. The recent reports of Mr Plover tendered by the plaintiffs set out the various changes in cash rates reported by the RBA in the relevant period. As at early 2024 the cash rate was 4.35%. I infer from Mr Linke's report as to the range of effective borrowing rates for agribusinesses that the effective interest rates for borrowings by agribusinesses were generally (taking the median of the range) about 1.65% above the RBA cash rate. The RBA cash rates across the periods from September 2017 to date were generally far lower than 4.35%. In fact, 4.35% was the peak, and it only remained in place for 15 months. The more prevalent cash rates over the first few years of the period were interest rates between virtually zero and about 2%. The cash rate was 1.5% at the commencement of the period and then began a sharp reduction in mid-2019, reaching a nadir of 0.1% in November 2020. The cash rate remained at that historic low point for 18 months. From May 2022 the cash rate climbed sharply and reached 3.1% by the end of 2022. The cash rate then climbed further in 2023 to reach 4.35% by November. It has since receded somewhat in 2025. The time-weighted average was a little below 2% for the period.

106 For these reasons, even accepting that there was a premium of around 1.65% over the RBA's cash rate for the effective interest rate for borrowings by agribusinesses, the plaintiffs' proposal to use 6% across the period in question was insupportable.

107 On the other hand, the first and second defendants' reliance on the average interest rate of 2.3% per annum derived by Mr Shah was also unpersuasive.[50] It was based on 12-month term deposit rates (for a relatively small deposit amount of $10,000) offered by the five major Australian banks. I asked counsel for the first and second defendants whether they could point to precedential authority for adopting deposit rates for the purpose of calculating interest on awards of compensation. Counsel said they had only located one such authority and they did not draw it to my attention.[51]

108 In terms of pure logic, it might perhaps be arguable that a deposit rate could stand as a proxy for the opportunity cost of being deprived of the use of money over a particular period. However, in the modern economy, in my view a working assumption applies to the effect that most people and other entities should be assumed to have borrowings incurring interest which they could pay down or discharge to the extent they are able to deploy cash to which they are entitled. That said, it is not generally necessary to delve into the financial affairs of every plaintiff to test whether and to what extent this assumption is valid for each individual. For these reasons, in my view, a borrowing rate is a safer and more appropriate proxy for estimating the loss a person is likely to bear as a result of having been deprived of the use of money to which they were entitled over a particular period. This seems consistent with the practice of the courts in awarding interest most typically based on borrowing rates.

109 For all these reasons, I rejected the first and second defendants' submission that I should calculate interest based on deposit rates. Further and in any event, deposit rates for small ($10,000) term deposits would most likely have been materially lower than deposit rates on offer for sums more closely approximating the amount of equitable compensation that has been assessed in this case. I rejected the first and second defendants' primary reliance on a rate of 2.3%.

110 The first and second defendants made an alternative submission that, if I was against them on the use of deposit rates and the figure of 2.3% per annum, a more appropriate estimate of average interest rates over the period since September 2017 would be 4%, rather than the plaintiffs' figure of 6%. They submitted that a figure of 4% would better reflect Mr Linke's evidence about the effective borrowing rates faced by agribusinesses over the relevant period (not limited to his remarks concerning the range of interest rates faced by such businesses only in 'early 2024').[52]

111 In appendix A to Mr Plover's report dated October 2025, he provided the RBA cash rates since 1 January 1985, covering the relevant period of 29 September 2017 to 20 October 2025.[53] From these figures, as already noted, it can be seen that the time-weighted average RBA cash rate from 29 September 2017 to 20 October 2025 was a little below 2% per annum.

112 I adopted a broad-brush approach having regard to the average RBA cash rate over the entire period 29 September 2017 to 20 October 2025 (a little below 2%), combined with the assumption (based on implications from Mr Linke's evidence) that a premium of about 1.15-2.15% (midpoint 1.65%) would apply over and above the RBA cash rates to borrowings by agribusinesses. I considered the borrowing rates for agribusinesses an appropriate proxy given that the land is farming land.

113 Taking this approach, I regarded the first and second defendants' alternative estimate of 4% per annum as appropriate. In fact, if anything, it probably represented an overestimate of the average interest rate applicable to agribusinesses in that period, and slightly advantaged the plaintiffs.

114 For all these reasons I adopted an interest rate of 4% as the average interest rate over the relevant period.

115 I now turn to the plaintiffs' submissions in support of imposing compound interest, and the first and second defendants' submission that simple interest should be preferred.

116 I respectfully acknowledge the force of the reasoning of Beach J on the question of compound interest in Directed Electronics (No 9). However, I have not reached the conclusion here that his Honour reached in that case. I will now explain why.

117 In reasons delivered on 12 May 2023 in Directed Electronics (No 9), Beach J identified two issues that had arisen out of his earlier, principal judgment in that proceeding, delivered in 2022.[54] In the principal reasons Beach J had found that a former employee of Directed Electronics (Mr Meneses), and a company controlled by Mr Meneses (OE Solutions), received secret commissions from entities his Honour referred to as the Hanhwa parties to divert business away from Directed Electronics. Beach J said they were:[55]

... involved in conduct that could only be described as reprehensible in terms of appropriating the confidential information and customers of Directed, ultimately to the benefit of the Hanhwa parties. Moreover, Meneses' behaviour was in part encouraged by the payment of secret commissions from Hanhwa Korea or its predecessor to Meneses and/or OE Solutions. Hanhwa Korea or its predecessor from at least 21 July 2009 to 20 November 2017 regularly paid secret commissions to Meneses or OE Solutions. This was over the period of Meneses' employment at Directed.

118 The parties made submissions on appropriate orders arising from the principal reasons. Beach J found that Mr Meneses was to pay an amount of about $1.3 million to Directed Electronics, and that certain of the Hanhwa parties were liable to pay certain amounts to Directed Electronics also. He characterised the amounts as equitable compensation. Directed Electronics sought an order that Mr Meneses and the Hanhwa parties pay compound interest on the secret commission amounts for which they were liable, at a rate envisaged in a Federal Court practice note on the subject.

119 Beach J said that an award of compound interest may be made in equity against a trustee or other fiduciary for breach of an equitable obligation.[56] He said that such an award is designed to make good what the innocent party may have lost by reason of the breach of an equitable obligation.[57] In a passage relied upon by the plaintiffs, Beach J then said:

29 It is not necessary to demonstrate fraud, dishonesty or other serious misconduct to justify an award of compound interest, although such a finding is not unhelpful as it may justify a more robust approach to drawing inferences in favour of the innocent party and against the miscreant fiduciary concerning use by the latter or loss by the former.

30 Further, for such an award, it is not strictly necessary to demonstrate that the recalcitrant or defaulting fiduciary has made a gain whether by the use of the innocent party's money or in some other way, but of course if that is the case or it can reasonably be inferred, then any claim for compound interest would be fortified.

31 Further, in a modern mercantile setting, an award of compound interest is more likely to be consistent with commercial reality. Simple interest usually under-compensates, and the longer the period of the calculation, the greater the magnitude and magnification of such under-compensation. Is there any such thing as a lender or borrower who does not expect to receive or be charged respectively interest utilising periodic rests and thereby permitting or envisaging some level of compounding? I doubt it. Of course, setting a higher rate with simple interest may give you nearly arithmetic equivalence with otherwise setting a lower rate with compound interest. But assuming that the setting of the rate has not been massaged to achieve that end or to implicitly so reflect such an allowance, one would expect that some level of compounding should be the norm.

120 Typically, at least in the past, compound interest appears to have been more readily imposed in equity cases involving fraud, dishonesty or some other form of corresponding serious misconduct by the fiduciary, or where it was demonstrated that compound interest better reflected a gain the defaulting fiduciary should be required to disgorge.

121 Approving and following a decision of Kyrou J in Talacko v Talacko,[58] the Court of Appeal identified the principles applicable to awarding interest in Bullhead Pty Ltd v Brickmakers Place Pty Ltd (No 2), as follows (references omitted):[59]

(1) There is an equitable jurisdiction to award interest where money has been withheld or misappropriated by a fiduciary, and that right is independent of statute.

(2) Traditionally, at a time when interest rates were stable, a fiduciary whose liability was based on misconduct (as here) was ordered to pay interest at an annual 'mercantile rate' of 5%.

(3) During times of interest rate volatility, however, awards of interest at higher rates were made in a number of cases, so that 'the mercantile rate should reflect the reality of the market place' at the relevant times.

(4) The purpose of awarding interest in equity is not to punish the defaulting fiduciary but, rather, 'to restore to the innocent party the benefit derived by the defaulting fiduciary from his or her use of the property'.

(5) In some circumstances, compound interest with yearly rests may be awarded. For example, where the defaulting fiduciary has used the money for commercial purposes, or where the defaulting fiduciary 'has been guilty of fraud or serious misconduct'.

(6) It may be that the right to award compound interest is limited to 'cases where the defaulting fiduciary is being compelled to disgorge a gain' - as here.

(7) In order to justify an award of compound interest, there must be 'some evidentiary foundation' for an assumption that the defaulting fiduciary has made a gain from use of the profit which must be disgorged.

(8) In the case of defaulting fiduciaries, there is a discretion to award the statutory rate in times of interest rate volatility.

122 The plaintiffs submitted that I should not treat these principles (in particular, principles (5), (6) and (7)) as limiting my discretion to impose compound interest here, even though they were not proposing a quantification based on the trustees having made a 'gain' from use of the land, or the use of any identifiable money derived from it. They submitted that Beach J's decision in Directed Electronics (No 9) would support a broader approach.

123 Some aspects of Beach J's reasoning in Directed Electronics (No 9) would support such an approach. However, the facts of Directed Electronics (No 9) involved both illegitimate gain by the fiduciary, and fraud and dishonesty,[60] and so fell squarely within the scope of an award of compound interest in any event. In other words, the case involved the kind of conduct which traditionally attracts a robust approach to drawing inferences in favour of the plaintiffs about the quantum of their loss, tending to lead to an award of compound interest.

124 Here, as the first and second defendant pointed out, the plaintiffs conducted their case on the express basis that no dishonesty was alleged against Bill and Rick. Although I have found that Bill and Rick breached their fiduciary duties (in that the assignment deed was brought about in breach of the fair-dealing rule) I am not satisfied that their conduct was of a sufficiently serious character to lead me to take a particularly robust approach to drawing inferences about the plaintiffs' losses, in the sense explained by Beach J.[61] In this sense, this case is not an obvious candidate for an award of compound interest.

125 Further and in any event, even accepting that the development of the principles have now reached the point where compound interest will usually be a feature in assessing fair compensation in the manner explained by Beach J in Directed Electronics (No 9), I was still unpersuaded that I should award compound interest here. That was because I regarded the alternative interest figure proffered by the first and second defendants as a proxy for the average agribusiness's borrowing rate over the period from September 2017 (4% per annum) as being somewhat on the generous side, in favour of the plaintiffs. I have already explained this point, in paragraph 113, above. I was therefore concerned that an award of compound interest based on that figure would lead to overcompensation.

126 For all these reasons I was satisfied that interest should be calculated as simple interest at 4% per annum.

127 Of course, that interest rate could not be directly applied to the entirety of the equitable compensation amount for the entirety of the relevant period in one calculation. It was necessary to make provision for timing differences. Interest should only accrue on the equitable compensation at the time each accretion to the total would (had the Carranballac land been leased at market rent) have been received. For expedience, I decided that interest should be based on the periodic accretions of equitable compensation described in my conclusions and directions for the calculation of equitable compensation, and I directed that an annual midpoint be used for the accrual of interest on each of 12-month accretions.

128 For these reasons, I was satisfied that paragraph 8 of my orders of 20 October 2025 should reflect 'simple interest on the amounts payable in the preceding paragraph[62] at 4% per annum treating each amount in subparagraphs [a-h] as becoming due and payable at the mid-point of each 12-month period'.

129 The plaintiffs calculated interest on this basis to be $113,027 as at 20 October 2025. The first and second defendants did not dispute that calculation.

Further or other orders - Counter-restitution

130 The parties were in agreement that Jane and Mary should be ordered to repay the $2000 paid to them in 1985, and on the quantification of the amount best representing the present-day value of those sums. The plaintiffs obtained and proffered calculations of these figures which were agreed by the defendants, in the amount of $18,076 each.[63] I made orders to that effect in paragraphs 9 and 10 of my orders of 20 October 2025.

131 I noted that the plaintiffs' calculations were based on compound interest at the RBA cash rates.[64] I did not regard the parties' agreement on this aspect of the case as in any way constraining my approach to the appropriate calculation of interest on equitable compensation arising from the defendants' withholding of the Carranballac land from the plaintiffs in the period from September 2017. The fact that the parties agreed on using compound interest for this part of the case did not mean that they agreed on using it for any other part of the case.

132 The orders I made on 20 October 2025 were made for the reasons set out above. Those orders included figures that were calculated in accordance with conclusions and directions I expressed in an email to the parties on 15 October 2025. I reached those conclusions and made those directions for the reasons set out above.

WILLIAM LUKE FAY in his capacity as Trustee and Administrator of the Estate of EP Fay, Deceased and in his Personal Capacity

ERIC JAMES FAY in his capacity as Trustee and Administrator of the Estate of EP Fay, Deceased and in his personal capacity

RIPON LEA FARMING COMPANY PROPRIETARY LIMITED (ACN 004 568 245)

[1] Fay v Fay [2025] VSC 455 (29 July 2025, revised 5 August 2025) (primary reasons).

[3] Transcript of proceedings, Fay v Fay (Supreme Court of Victoria, S ECI 2019 05939, Gray J, 14 October 2025) 21 and 58-59.

[4] The plaintiffs provided an expert report of Corey Plover dated 1 September 2025 and filed 5 September 2025, and an additional report of Mr Plover (following the hearing) dated 17 October 2025. The first and second defendants provided an expert report of Neekhil Shah dated and filed 7 October 2025, an affidavit of William Luke Fay sworn and filed 7 October 2025, and a further affidavit of William Luke Fay sworn and filed 13 October 2025. All were received into evidence without objection.

[5] Plaintiffs' outline of submissions on relief dated and filed 5 September 2025 (plaintiffs' outline), first and second defendants' outline of submissions as to remedies filed 7 October 2025 (first and second defendants' outline), and plaintiffs' outline of submissions in reply dated 13 October 2025 (plaintiffs' outline in reply).

[6] Joint statement of Alan Hives and Graeme D Linke dated 31 July 2024 and filed 2 August 2024 (exhibit P2), and expert report of Graeme David Linke dated 6 May 2024 (exhibit 192).

[7] New exhibit 174, court book pp 877-895.

[8] New exhibit 181, court book pp 929-947.

[9] Exhibit 17, court book p 152, affidavit of William Luke Fay sworn 13 September 2022, [14]-[15].

[10] Third further amended statement of claim filed 1 August 2025 (Third FASOC).

[11] Primary reasons, [24]-[26], [613] and [626]-[629].

[12] Tito v Waddell (No 2) [1977] Ch 106, 240-241 (Megarry V-C); Clay v Clay (2001) 202 CLR 410, 434 [50] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ). See also Harris v Jenkins [1922] HCA 54; (1922) 31 CLR 341, 355-356 (Higgins J): 'When a trustee sells trust property to himself, the transaction is absolutely void: but when he buys from his beneficiary, the sale will not be upheld unless the trustee proves conclusively that the beneficiary and himself were "at arm's length", and that no confidence was reposed in him; that the transaction was for the benefit of the beneficiary; and that full information was given to the beneficiary of the value of the property, and of the nature of his interest, and of all the circumstances'.

[13] Tito v Waddell (No 2) [1977] Ch 106, 241 (Megarry V-C).

[14] Clay v Clay (2001) 202 CLR 410, 434 [50] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ).

[16] First and second defendants' outline, [50].

[17] First and second defendants' outline, [53(v)].

[19] See Supreme Court (General Civil Procedure) Rules 2025, r 1.14(2)(a).

[20] Transcript of proceedings, Fay v Fay (Supreme Court of Victoria, S ECI 2019 05939, Gray J, 14 October 2025) 63-64 (Mr Carlile).

[21] Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193, [182] (Kyrou, Hargrave and Emerton JJA).

[22] Third FASOC, [10]-[12], [31].

[23] Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193, [186] (Kyrou, Hargrave and Emerton JJA).

[24] Grant v Grant [2022] NSWSC 714, [27] (Slattery J).

[26] Talacko v Talacko [2009] VSC 533, [124]-[125] (Kyrou J), citing Hill v Rose [1990] VicRp 13; [1990] VR 129, 143 (Tadgell J) and Ferrari Investment (Townsville) Pty Ltd (in liq) v Ferrari [1999] QCA 230; [2000] 2 Qd R 359, 370 [39] (Thomas JA).

[27] First and second defendants' outline, [10]-[11].

[28] Eg, Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484, 499 [35] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).

[29] Ibid. See also Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193, [184] (Kyrou, Hargrave and Emerton JJA).

[30] Plaintiffs outline, [12], citing Tilbury and Davis, 'Equitable Compensation' in Parkinson (ed) The Principles of Equity (2nd ed 2003) 797, 822-823; McNally v Harris No 3 [2008] NSWSC 861, [13] (White J).

[31] Plaintiffs' outline in reply, [14].

[32] First and second defendants' outline, [8]-[11] ('no evidence as to actual loss'), on which the passages at [12]-[16] ('first and second defendants' gain and carve out'), [17]-[24] ('Plaintiffs' submissions as to gain'), and [25]-[26] ('unjust enrichment') depended.

[33] Exhibit 192, court book pp 1039-1040. The equivalent provision relating to cropping was different. However, exhibit 192 showed that the bulk of the Carranballac land was suitable for both cropping and grazing: court book p 1034.

[34] Exhibit 17, court book p 152 [14]-[15].

[35] New exhibit 174, court book p 882; new exhibit 181, court book p 934.

[36] New exhibit 174, court book p 892; new exhibit 181, court book p 944.

[37] New exhibit 174, court book p 883; new exhibit 181, court book p 935.

[38] New exhibit 174, court book p 883; new exhibit 181, court book p 935.

[39] New exhibit 174, court book p 883; new exhibit 181, court book p 935.

[40] New exhibit 174, court book p 889; new exhibit 181, court book p 941.

[41] New exhibit 174, court book p 895; new exhibit 181, court book p 947.

[42] New exhibit 174, court book p 885; new exhibit 181, court book p 937.

[43] New exhibit 174, court book p 883; new exhibit 181, court book p 935.

[44] Plaintiffs' outline, [19(a)] citing by analogy Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (no 2) [2019] VSCA 7; (2019) 58 VR 129, [55]-[56] (Kyrou, McLeish and Hargrave JJA).

[45] Ibid, citing Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285, 316 [74] (McHugh and Gummow JJ), referring to Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125, 148 (Mason CJ and Wilson J); and also referring to Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 9) [2023] FCA 462, [27] (Directed Electronics (No 9)), where Beach J stated that, in determining whether simple or compound interest should be paid, '[t]he over-arching consideration is what justice demands in the particular circumstances'.

[47] Plaintiffs' outline, [19(b)]; referring to exhibit 192, court book p 1038.

[48] First and second defendants' outline, [3(iii), (iv) and (v)].

[49] Expert report of N Shah dated and filed 7 October 2025.

[51] Transcript of proceedings, Fay v Fay (Supreme Court of Victoria, S ECI 2019 05939, Gray J, 14 October 2025) 67.28-68.3 (Mr Carlile).

[52] Exhibit 192, court book pp 1037-1038; first and second defendants' outline, [39]-[40].

[53] The annexure setting these out omitted the two most recent changes in the cash rate, 20 May 2025 (a reduction from 4.10% per annum to 3.85%) and 12 August 2025 (3.60%). I will ignore these reductions and only rely on Mr Plover's annexure.

[54] Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404.

[56] Directed Electronics (No 9), [27].

[58] Talacko v Talacko [2009] VSC 579 (Kyrou J).

[59] Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (no 2) [2019] VSCA 7; (2019) 58 VR 129, [53] (Kyrou, McLeish and Hargrave JJA). See also Porter v Mulcahy & Co Accounting Services Pty Ltd (No 6) (2024) 73 VR 348, 361-362 [53]-‍[55], 370-371 [97]-[100] (Delany J).

[60] See Directed Electronics (No 9), [49]; see also [59] as to the Hanhwa parties.

[61] Directed Electronics (No 9), [29].

[62] That is, the text reproduced in paragraph 93 of these reasons, above.

[63] Report of Corey Plover dated 17 October 2025, [2.3] and appendix A.