Pratten v Pratten [2005] QCA 213

EQUITY - FIDUCIARY OBLIGATIONS - CONFLICT OF INTEREST AND DUTY - where respondent had power of attorney with respect to appellant's affairs - where respondent sold appellant's cattle on appellant's instructions and claimed entitlement to sale proceeds - where such entitlement disputed - where sale proceeds delivered to appellant after some delay - whether fiduciary obligation owed by respondent to appellant ceased upon revocation of respondent's power of attorney - whether interest payable on sale proceeds for the period withheld

TORTS - TROVER AND DETINUE - WHAT CONSTITUTES CONVERSION - DEMAND AND REFUSAL - where respondent in possession of chattels belonging to appellant - where appellant's solicitors demand delivery of chattels - where respondent's silence in the face of demand amounts to implicit refusal to comply - whether respondent having dealt with chattels so as to protect and preserve them a relevant consideration - whether sufficient evidence to find respondent unlawfully converted or detained chattels

Bankruptcy Act 1966 (Cth), s 116(2)(a)

Alicia Hosiery Ltd v Brown Shipley & Co [1970] 1 QB 195, cited

Australian Protective Electronics Pty Ltd v Pabflon Pty Ltd (1996) 35 IPR 327, cited

Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, followed

Clayton v Le Roy [1911] 2 KB 1031, cited

Edgell v Day (1865) LR 1 CP 80, cited

General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 1 WLR 644, cited

Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1, applied

Miller v Dell [1891] 1 QB 468, cited

Parker v McKenna (1874) LR 10 Ch App 96, cited

Schmidt v Argent & Ors [2003] QCA 507; CA No 11541 of 2002, 14 November 2003, cited

Seabrook v Allianz Australia Insurance Limited & Ors [2005] QCA 58; CA No 5548 of 2004, 11 March 2005, cited

Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497, cited

[1] WILLIAMS JA: I have had the advantage of reading the reasons for judgment of Muir J. I agree with all that he has said therein and with the orders proposed.

[2] JERRARD JA: In this application I have read Muir J's reasons and proposed orders, and respectfully agree with them. I add the following remarks. Mr Pratten claimed $2,287.52 damages for breach of fiduciary duty by Ms Smith (as the former Mrs Pratten prefers to be addressed) in the District Court proceedings, relating to the proceeds of sale of Mr Pratten's cattle, and $30,300 for detention or conversion by Ms Smith of the various items of his personal property. The learned judge dismissed Ms Smith's counterclaim for $8,000, claimed as damages for breaches of the terms of a lease. Those terms were that he would keep fences and improvements on Lot 161, and the dwelling house, in the same repair and condition as it was when Mr Pratten leased the property on 1 July 1996 from Ms Smith.

[3] The learned judge also made costs orders, namely:

• That Mr Pratten pay the costs of a solicitor, Mr Roderick, in relation to a subpoena issued by Mr Pratten to Mr Roderick commanding him to produce all of his files in relation to any dealings which he had had with Ms Smith. There were a number of such files, and the learned judge set aside that subpoena on the ground that it was too wide and went beyond what could reasonably be sought. After hearing submissions the judge ordered, in a reserved judgment, that Mr Pratten pay Mr Roderick's costs of responding to that subpoena. Mr Roderick had appeared by counsel, and the learned judge had ruled that Ms Smith had not waived her legal professional privilege in respect of the matters in issue in the proceedings, in addition to setting aside the subpoena. This Court was told the appellant was not pursuing an appeal against the order to pay Mr Roderick's costs, and there were no oral submissions on that.

• That Mr Pratten pay Ms Smith's costs on his claim, to be assessed on the standard basis (on the District Court scale).

• That Ms Smith pay Mr Pratten's costs on the counterclaim, to be assessed on the Magistrates Court scale in which the sum claimed is $8,000.

• That Ms Smith pay Mr Pratten's costs of an application determined by Noud DCJ on 24 January 2002, to be assessed on the standard basis on the District Court scale in which the sum claimed is more than $50,000.

Waynne Pratten sought leave to appeal the order dismissing his claim and the associated order for costs, and the order that Ms Smith pay his counterclaim costs assessed on the Magistrates Court scale, rather than on the District Court scale.

[4] His claim sought a declaration that he was beneficially entitled to the whole of the proceeds of the cheque, and orders for the return of items of personal property identified in that claim, including, for example, a tractor, a slasher, a tractor blade, a posthole digger, and the like. He also sought damages, including exemplary and aggravated damages for conversion, and equitable damages, including exemplary and aggravated damages, for breach of trust and breach of fiduciary duty. He also asked for an account of Ms Smith's receipts and expenditures from 1 August 2001 to 14 November 2001 (presumably those made pursuant to the enduring power of attorney).

[5] The interim order made on 24 January 2002 commanded Ms Smith to authorise the Kilcoy Pastoral Company Ltd to deliver the cheque to the plaintiff's solicitors, upon the undertaking by those solicitors to hold the sum of $8,000 from the proceeds thereof in their trust account until further order or the joint direction of the parties. That was done, and on 18 December 2002 Ms Smith entered a defence and counterclaim, in which she admitted receiving Mr Pratten's power of attorney and selling the cattle belonging to him, and pleading a right of counterclaim (or set off) against Mr Pratten for $8,000. She pleaded that that arose from his breach of the lease referred to, pleading she had been required to replace, or repair damage to, the house and its contents, locks and gates on sheds and one garden shed, and to repair boundary fences.

[6] Mr Pratten had sworn an affidavit on 16 January 2002, presumably read on the interim application, and read as his evidence on the trial. By then the Public Trustee had been appointed administrator of his financial affairs by an order of the Guardianship and Administration Tribunal made on 8 March 2004. The learned trial judge accepted that Mr Pratten was no longer capable of giving evidence. That affidavit contended that Ms Smith's refusal to allow Mr Pratten "access to my money" was causing Mr Pratten substantial distress and prejudice, and placing him in the position of having to choose between going into default under mortgages owing over the real property, or being in breach of arrangements entitling him to nursing home care within the Kilcoy hospital. That care cost him $30.25 per day monthly in advance, and his only source of income was an invalid pension of $429.13 per fortnight, applied to meet mortgage payments in the amount of $644 per month for which he was liable in consequence of the orders made in the Family Court on 31 May 1996.

[7] On 11 February 2004 the parties had agreed to the release of the $8,000 from Mr Pratten's solicitor's trust account, and that sum was paid to the mortgagee of the three lots. Ms Smith swore in her evidence in chief that her intention had been to apply the proceeds of the cheque to pay out the mortgage, and that that had been Mr Pratten's instructions to her prior to his revoking the power of attorney. She also swore that when the $8,000 was paid out of the solicitor's trust account, the mortgagee bank had been ready to foreclose on "the property", and that she had had to "make up the difference". The evidence did not establish what the mortgage debt had been at any particular time.

[8] At the trial, Mr Pratten's claim pursued by his litigation guardian, the Public Trustee, was for $2,287.52, that sum being calculated as the interest claimed by the plaintiff on the sum of $31,239.92 withheld from him for the 77 days from 13 November 2001, the date of issue of the cheque in both names, until 29 January 2002, the date funds were released to him pursuant to the order of Noud DCJ; and interest on the $8,000 withheld for the 743 days from 13 November 2001 until 11 February 2004. The learned trial judge characterised that sum as claimed for breach of fiduciary duty relating to the proceeds of sale of the plaintiff's cattle, which was certainly one of the bases of the claims for equitable damages in the statement of claim. However, the judge dismissed that claim so characterised on the ground that the sale of the cattle had concluded on 5 November 2001 and Ms Smith's power of attorney had ceased on 14 November 2001, with the correspondence between the solicitors about the proceeds of sale not commencing until 28 November 2001. In those circumstances, the judge held, Ms Smith did not owe Mr Pratten a fiduciary duty when the correspondence took place, and that in the period in which she did owe that duty she had not breached it by reason of the cheque being made out in both names. That had occurred because an Australian Business Number was required for the sale of the cattle, and one had been issued in joint names.

[9] Accepting the learned judge's finding that Ms Smith did not continue in a fiduciary relationship with Mr Pratten after 14 November 2001, and assuming that that was a finding no partnership existed between them after that date - whether one had existed before that or not - Ms Smith was nevertheless obliged to account to Mr Pratten for the proceeds of his property sold by her under the power of attorney. Ms Smith did not contest in her pleadings, or evidence at the trial, or on this appeal in her argument, that the cattle she sold were Mr Pratten's sole property. The fiduciary duty she owed when exercising the power with which he had entrusted her required her to deal with those proceeds of sale honestly, in accordance with his directions, and not as her private property. She was not entitled unilaterally to deduct from the proceeds of sale, and thereby set off, whatever amount she claimed he owed her for breach of the lease. That is because he had a proprietary right as against her to the proceeds of sale of his cattle, not just a personal remedy, and that right derived from her agency, his incapacity, his ownership, and the obligations she had as holder of his power of attorney.[1]

[10] One can test this by considering whether, if she had managed to put the cheque in her name only and had banked it into an account of hers, the proceeds of the cheque would be her property or "money held on trust" and protected from her creditors by s 116(2)(a) of the Bankruptcy Act 1966 (Cth). I am satisfied it would have been protected, both because of the fiduciary relationship which existed when she got possession of the cattle for sale, and, independently of that, the specific instructions she swore he gave her that the sale proceeds were to be paid only to a particular creditor, the mortgagee of the land. That circumstance alone would make the proceeds of sale money held on trust to apply it as she had agreed to do, on the principle described in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 at 580.

[11] Mr Pratten swore in his affidavit that he intended using what, by inference, was the bulk of the funds to pay to the mortgagee, consistently with his solicitor's letter of 6 December 2001, and that is how the $8,000 was applied by agreement in early 2004. The proper inference therefore appears to be that Mr Pratten intended that all those proceeds be applied to that purpose, and accordingly the damage he suffered from being withheld from his money was the increased interest burden in the debt owed to the Commonwealth Bank and resulting from payment being delayed by Ms Smith's conduct. The evidence did not establish any lawful grounds on which she could retain any part of those proceeds of sale. As it happened, she was entirely unsuccessful in her counterclaim for $8,000, which the learned judge dismissed. She had been unable to substantiate the claimed $8,000 expenditure by reference to receipts and the like, and had been contradicted by other witnesses on her claims about the condition of the leased premises. She has not applied for leave to appeal from the dismissal of her counterclaim. Even had she succeeded on it, although the judge would have been entitled to set off the sum she was awarded against any sum awarded to Mr Pratten in his claim, that did not mean she was justified in November 2001 and thereafter in withholding any of the proceeds of sale.

[12] It follows that Mr Pratten should have had judgment entered for a small sum, either that claimed in exhibit 4 or, had it been established by appropriate evidence (and amendment of the statement of claim), the increased mortgage liability earlier described. That may have exceeded $2,287.52.

[13] She agreed that the request for return of his chattels, or their delivery to Mr Pratten, had been made after her own power of attorney had been revoked, but claimed in her evidence both that she was still a partner with Mr Pratten and a half owner of those chattels[2], and also that she had instructed her solicitors to advise his solicitors or him that the objects were available for collection. That evidence was disputed by Mr Pratten's legal representatives.

[14] Those two defences apart (a claim of equal part ownership and an offer to re-deliver the property) she also led evidence from their son, Laurie Pratten, 16 years old at the time of the trial, that since he and his mother had returned to live on the farm in mid-2003 most of the items of property which had been moved off the farm had been brought back there again. This was simply because "we have had to use a lot of the items".[3]

[15] Mr Pratten's counsel on his appeal (not counsel at the trial) submitted that simply bringing the items back onto the farm for the convenience of Ms Smith and their son was not a delivery to Mr Pratten. On 6 December 2001, his solicitors had listed the property which subsequently appeared in the statement of claim, asking for urgent advice as to when that property was removed, by whom, where it was, and for what purpose it had been removed, and had received no answer. On 13 December 2001, the solicitors had requested that Ms Smith (and any other people holding Mr Pratten's assets) deliver those to Mrs Enid Pratten as soon as possible. Ms Smith simply did not respond to that letter in any way, and the defence she filed pleaded that some items had been repaired, some she had never possessed, some had been stored in sheds on the property, and some placed into storage off the property. Those pleadings admitted that she had "neglected, omitted or refused to return or account for the whereabouts of the chattels".

[16] There was no pleading or evidence that the items described as being stored in sheds on the farm property had been shown to Mrs Enid Pratten or any other person or in any way effectively returned to the beneficial possession of Waynne Pratten. I respectfully agree with counsel's submission on the appeal that she has actually continued to detain the personal property listed in the statement of claim. She is using some of it. None of it has been made beneficially available for Mr Pratten's use or possession. He has been unable to dispose of any of it.

[17] The learned trial judge did not make any findings contrary to the conclusions in the preceding paragraph. Nevertheless, Mr Pratten's claim for the return of his property or its value and for damages was dismissed, because the judge accepted Ms Smith's evidence that her actions with respect to the farm equipment had been taken to preserve and protect it, and that she had dealt with it consistently with Mr Pratten's rights rather than inconsistently. The judge also accepted that Mr Pratten had expressed the wish that his son have the use and benefit of the farm equipment, with the intention that his son one day inherit the farm. Accordingly, the judge found that any possession of the farm equipment by Ms Smith was justified.

[18] Ms Treston, for Mr Pratten, submitted on the appeal that even accepting both the finding that Ms Smith acted to preserve and protect the farm equipment in the period in which she possessed the power of attorney and thereafter, and also that Mr Pratten wanted his son to have the use and benefit of it, Ms Smith nevertheless in law continued unlawfully to detain Mr Pratten's property. The originally praiseworthy motive of having some repaired, some placed in sheds for safe keeping on the property, and some in safe storage off the property, could not survive his demand for its delivery to the person now holding his power of attorney. That person upon receipt could then have given effect to Mr Pratten's wishes regarding its disposal. Ms Smith was required to deliver it to Mrs Enid Pratten and had not done so by the trial. Ms Treston readily conceded that Mr Pratten would have been obliged to make a fair allowance for the reasonable repairs done to the property.

[19] In the absence of any of the demanded property being delivered, and Ms Smith having led no evidence of its value, Mr Pratten was entitled - as he did - to call evidence as to its value, on the assumption that the property was of the best quality and condition of goods of that kind.[4] The evidence called was somewhat vague, but established that the absolute maximum sum capable of being established was $30,000.

[20] The learned trial judge did not resolve what appeared to be Ms Smith's claim to an equal beneficial interest in the detained chattels. She did not plead any such interest, but produced taxation returns which unequivocally recorded that for a number of financial years, including the year in which the Family Court ordered on 31 May 1996 that the partnership known as "W.P. & S.M. Pratten" be dissolved on and from 28 February 1994, Mr Pratten and Ms Smith had filed taxation returns (up to and including the year ending 30 June 2000) which recorded their having an equal ownership or contribution to the capital and current accounts of a partnership filing taxation returns in the name of "WP & SM Pratten".[5] Mr Pratten did not challenge the accuracy of those returns, which in their terms do contradict the careful submission made by Mr Conrick, representing Mr Pratten at the trial, that the orders of the Family Court had dissolved the existing partnership, which had then been reconstituted.

[21] In Mr Conrick's submission, the terms of that reconstitution included that Mr Pratten was allocated the proceeds of sales of what had formerly been partnership assets and were now solely his, and Ms Smith was entitled to a share of the losses, that being beneficial to her because of her employment elsewhere. It was, in his submission, a trading partnership in which all of the equity in the plant and equipment and two particular lots had vested in Mr Pratten, and the equity in the other lot in her, with her benefit deriving from her entitlement to be indemnified in relation to taxation liabilities. I respectfully observe that that was an attempt at a sensible resolution of the orders of the Family Court and the fact of the parties continuing to trade and file returns as a partnership, but the submission overlooks the representations in the year 1996 and year 2000 tax returns, describing Mr Pratten and Ms Smith as having equal opening balances and having introduced an equal capital. Accordingly, the issue of the claimed equal ownership of the assets had to be determined when judging Mr Pratten's claim in detinue.

[22] The appellant plaintiff asked for orders for a new trial on that claim, and I consider that order should be made. The defendant did not plead the defence of part ownership of that detained property, and the plaintiff may have been able to lead more evidence about that. It is fundamental to the issue on detinue but arose only in the defendant's evidence in chief. The limited cross-examination challenging the claim[6] was diverted by comments by the learned trial judge into a discussion between Mr Pratten's counsel and the judge, and ended with Mr Conrick's submission to the judge about the nature of the reconstituted partnership. That submission was not put in terms to the unrepresented witness.

[23] What then became relevant was evidence about the instructions given for the preparation of those returns. A letter from the accountant who prepared them became exhibit 19[7], but the learned judge admitted that document without requiring that its author be called for cross-examination. The judge overruled the objection from Mr Conrick that the letter said nothing about the source of the instructions to the accountant, and Mr Conrick plainly wished to cross-examine about that. That would be relevant to a determination of the partnership contention.

[24] Ms Smith's evidence did not provide any defence to Mr Pratten's very modest claim for damages arising from the withholding of his funds. Although a better quantified sum could have been proven, the sum claimed is relatively so small that it is better simply to order that Mr Pratten have judgment on that portion of his claim for the sum of $2,287.52, rather than order a retrial limited to damages.

[25] The learned trial judge did not make any of the findings which might have justified an award of the aggravated damages Mr Pratten sought, namely, that his injury had been aggravated by a lack of bona fides in Ms Smith's conduct in the proceedings, or that conduct being improper or unjustifiable.[8] Nor would the learned judge's findings justify aggravated damages on the basis of the whole of Ms Smith's conduct to the time of verdict, as conduct increasing the injury caused to Mr Pratten.[9] Even if a court made findings of fact adverse to Ms Smith on a retrial of Mr Pratten's claim for damages arising from withholding the sale proceeds, those findings being that she had at first attempted improperly to obtain for herself one-half of those proceeds by instructing the purchaser to issue two cheques - in equal amounts for herself and Mr Pratten - and had subsequently attempted to justify her claim to $8,000 by a spurious claim to a set off, those findings would not go far enough in my opinion to justify an award of aggravated damages. If they did, almost any unsuccessful defendant whose evidence was disbelieved would be at risk of those damages. It follows from that that there should not be a retrial of the claim for either aggravated or exemplary damages, and in my opinion nor should there be for the equitable damages claimed.

[26] Mr Pratten is entitled to a trial on his claim for damages for detinue and conversion, but that should be held in the Magistrates Court, should the Public Trustee consider the expense justified. Laurie Pratten's evidence that Mr Pratten wanted Laurie Pratten to run cattle on the property, use the machinery "and stuff" to get the property in order, and keep the farm going, was not challenged in cross-examination. The Public Trustee is probably not in a position to challenge that evidence, and might consider that meant further prosecution of that claim was unjustified.

[27] Mr Pratten's grounds of appeal claimed that the learned trial judge had erred in law in his interlocutory order setting aside the subpoena issued to Mr Roderick. That subpoena was too wide, requiring as it did the production of all of Mr Roderick's files in relation to any dealing with Ms Smith. I respectfully consider the learned trial judge was justified in setting aside a subpoena in those terms. Counsel for Mr Roderick informed the learned trial judge that a file existed which related to the proceedings before the learned judge, brought into existence exclusively for the purpose of the conduct of that litigation; and a subpoena seeking that file, or expressed in terms which would require its production and not other irrelevant files held by the solicitor, would have been valid. This is because it was Mr Roderick's evidence that to answer the questions Mr Conrick wanted to ask, it would be necessary for Mr Roderick to refer to that file.

[28] The learned trial judge effectively forbade those questions being asked, holding that Ms Smith had not waived her privilege regarding instructions given by her to Mr Roderick. Ms Smith had asserted in her oral evidence that she had instructed Mr Roderick to notify the Public Trustee that the disputed chattels were "there" (apparently meaning back on the farm property, once she had moved back there in mid-2003)[10] and that she had told Mr Roderick early in the piece of the basis of her counterclaim for $8,000 (although his correspondence with Mr Pratten's solicitors had not advanced that explanation). Mr Conrick put to Ms Smith in cross-examination that Mr Roderick, her solicitor, had not told her, as she claimed in her evidence, that he had informed Mr Norman of the Public Trustee that Mr Norman could retrieve the property claimed by Mr Pratten as his and assertedly removed by Ms Smith. Ms Smith insisted in cross-examination that Mr Roderick had told her of such a conversation with Mr Norman, held on her instructions.

[29] Mr Conrick plainly intended to challenge that evidence, if he could, by evidence from Mr Roderick contradicting Ms Smith. Mr Conrick did call Mr Norman, the client services manager with the Public Trust Office in Toowoomba, who swore that on a perusal of the file held on the administration of Mr Pratten's affairs, he could find no record of any suggestion having been made to him that the disputed machinery was available for collection.

[30] Ms Smith's evidence of having given those instructions to Mr Roderick was given by her both in evidence in chief and in cross-examination. She clearly did so to establish that she had done all she could to offer a return of the claimed property, and to imply that if the solicitor had not written as instructed, then that was not her fault but his. She implied the same about the apparent failure of the solicitor to act on her asserted instructions about her counterclaim, which only appeared in her pleadings. In those circumstances, there was an inconsistency between, on the one hand, her conduct in the witness box, and, on the other hand, maintaining confidentiality as to what she told her solicitor, which inconsistency affected a waiver of any legal professional privilege existing to protect disclosure by the solicitor of what she told him to do. In Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1, the joint majority judgment of the High Court records at CLR 13 that:

"It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication ..."; and

"Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. ... What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large."

"Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client's actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency."

[31] Here the issue is the instruction Ms Smith gave to the solicitor, not the advice the solicitor gave. She asserted specific instructions were given, and Mr Conrick was not seeking to learn what advice the solicitor gave her; only whether the instructions were given as claimed. Assuming legal professional privilege originally existed with respect to the issue of whether she had given the instructions, she waived it in the sense described in Mann v Carnell by her own inconsistent conduct in asserting that she had. Considerations of fairness required that that matter, important to her credit generally and in her defence to the claim in detinue, be tested by cross-examination of the solicitor. Mr Pratten's subpoena was too wide and was set aside, but Mr Roderick was legitimately called as a witness and could give admissible evidence.

[32] I would order that Ms Smith pay Mr Pratten's costs on that portion of the claim for which judgment will be entered for Mr Pratten, but that those costs be assessed on the Magistrates Court scale appropriate to the sum claimed. Ms Treston submitted that Mr Pratten was correct to bring his original proceeding in the District Court since he was seeking an injunctive order, which was given by Noud DCJ in January 2002; but once that order was made there was no reason for maintaining the proceeding in the District Court. Mr Pratten obtained an order for costs of that application in his favour, from the learned trial judge in the costs orders made on 20 December 2004, and I consider Mr Pratten's costs should be assessed on the scale appropriate to his claim. For that reason, I would not disturb the discretionary order by the learned trial judge that Ms Smith pay Mr Pratten's costs on the counterclaim assessed on the appropriate Magistrates Court scale.

[34] MUIR J: The plaintiff appellant appeals against the judgment of a judge of the District Court dismissing his claims in the proceeding. The defendant respondent, who was not legally represented on the trial of the proceedings, or on the hearing of the appeal, had a counterclaim which was also dismissed. She does not appeal against that order.

[35] The appellant's claims in the proceedings are in respect of two discrete matters. One claim is for the proceeds of sale of his cattle sold by the respondent on his behalf. It was alleged, inter alia, that the respondent, in breach of trust and/or breach of a fiduciary duty, had asserted an interest in the proceeds of sale and failed to account to the appellant for them. The other claims were in respect of the alleged wrongful conversion or detention of a tractor and other items of plant and equipment. Before giving further details of these claims, the evidence relating to them and the findings of the primary judge, it is useful to set out some matters to enable the issues in dispute to be clearly understood.

[36] The appellant and respondent were formerly husband and wife. As part of a matrimonial settlement, they consented to an order made on 31 May 1996 in the Family Court of Australia under which:

(a) the appellant was ordered to transfer to the respondent his right title and interest in the parties' former matrimonial home situated on lot 161 on Plan C31664 in the Parish of Kilcoy;

(b) the respondent was ordered to transfer to the appellant the two other lots which, together with lot 161, had constituted a jointly owned farm at Kilcoy on which the parties had conducted a farming business in partnership under the name "WP & SM Pratten";

(c) the partnership was dissolved as from 28 February 1994 and the appellant became entitled to all partnership assets, including cattle, machinery, vehicles and farm equipment;

(d) it was ordered that the appellant lease from the respondent lot 161 for a period of five years, with an option to extend the term for a further period of five years, for a rental of $20 per annum and with an obligation to maintain the leased property in good repair and pay all rates and outgoings thereon; and

(e) it was ordered that the appellant indemnify the respondent in respect of any mortgage over the properties and cause the mortgage over lot 161 to be released.

[37] At the commencement of proceedings, the transfers required by the orders had not been registered and the mortgage over lot 161 had not been released as the mortgagee's consent to the release could not be obtained.

[38] In about 1991 the appellant was diagnosed as suffering from Huntington's Chorea, a physically debilitating disease which leads ultimately to dementia. He gave a power of attorney to the respondent on or about 1 August 2001 so that she could manage his affairs. He was admitted to the Kilcoy Hospital on 26 October 2001 and has remained there as a patient. The power of attorney was revoked on 14 November 2001 when the appellant executed an enduring power of attorney in favour of Mrs Enid Pratten. That power of attorney was revoked to the extent of any inconsistency between it and an order of the Guardianship and Administration Tribunal made on 8 March 2004, appointing the Public Trustee the appellant's administrator "for all financial matters".

Facts relevant to the claim in relation to the proceeds of sale of the appellant's cattle

[39] On 5 November 2001 the respondent, pursuant to the power of attorney, sold 34 head of the appellant's cattle for a price of $31,239.92. A cheque in that sum was made payable by the purchaser of the cattle to WP & SM Pratten but was held by the purchaser as a result of a dispute between the parties as to entitlement to the fund.

[40] The former solicitors for the respondent ("the respondent's solicitors") in a letter to the appellant's solicitors dated 28 November 2001 asserted, by necessary implication, that the parties were jointly entitled to the proceeds of sale. In a letter dated 6 December 2001 from the appellant's solicitors to the respondent's solicitors, the appellant's solicitors said that they inferred that the respondent contended that the appellant was entitled to only half of the proceeds of sale of the cattle. They sought an authority from the respondent directed to the purchaser of the cattle to pay half the proceeds of sale to the appellant and suggested that the balance of the funds be held in a solicitor's trust account pending resolution of the dispute.

[41] The respondent's solicitors in a letter of 7 December 2001 conveyed a request by the respondent that $8,000 be released to her and that the balance of the moneys be paid to the appellant. Those solicitors, in a letter of 14 December, reaffirmed their client's demand but the basis upon which she claimed an entitlement to the $8,000 remained unstated.

[42] The parties did not reach agreement and on 21 January 2002 it was ordered, on the hearing of an application brought by the appellant in the District Court, that the respondent authorise the purchaser of the cattle to deliver its cheque to the appellant's solicitors upon their undertaking to hold $8,000 of the proceeds of sale in their trust account until further order or until directed otherwise by the parties.

[43] In her evidence the respondent conceded that she sold the cattle on the appellant's behalf, acting in her capacity as the appellant's attorney. When questioned by police in January 2002 about the sale of the cattle, she acknowledged that the cattle were the property of the appellant and that was also her pleaded case.

Evidence relevant to the conversion and detinue claims

[44] Mrs Enid Pratten gave evidence that she visited the property within about a week of 14 November 2001 and noticed that the plant and equipment owned by the appellant and previously kept on the property ("the chattels") appeared to have been taken. She then prepared a list of the chattels which she recalled seeing on the property when she had visited it in October 2001. The list became exhibit 5. She gave evidence that the chattels were "in perfect condition ... well kept and well maintained". The accuracy of the list was verified, in a general way, by Mr Fredricksen, a neighbour who had assisted the appellant on the property from time to time. He also gave evidence that the respondent and her son were back residing on the property and that the tractor, which was listed in exhibit 5, was "back on the property not long ago".

[45] In a letter of 6 December 2001, the appellant's solicitors requested that the respondent's solicitors advise urgently "as to what has happened with certain items of plant and equipment from the house". The letter noted that "our client's tractor, slasher blade chainsaw and borer, blue water drum, drums of Tordon, post hole digger, washing machine and barbed wire as well as numerous other items are no longer present." The author alleged that the respondent had arranged for "a lot of these items to be removed" and sought information as to the location of the items and the circumstances of their removal.

[46] The respondent's solicitors replied by letter the next day, stating that the respondent retained the keys to the house but would deliver any "personal belongings" required by the appellant "to his agent or designated destination". There was no response to the request relating to the chattels. The appellant's solicitors pressed for a response in a letter of 13 December 2001, to the respondent's solicitors, which contained the following request:

"Please have your client or any persons holding assets on behalf of your client to (sic) deliver those to our client's agent, Enid Pratten at 83 William Street, Kilcoy as soon as possible."

[47] The respondent's solicitors replied to that letter by a letter dated 14 December 2001 which addressed only the dispute over the proceeds of sale of the cattle. The respondent gave no written statement or explanation of her dealings with the chattels before that contained in her defence and counterclaim delivered in February 2002. She did however assert that she had given oral instructions, after the appointment of the Public Trustee as the appellant's guardian, to inform the Public Trustee of the whereabouts of the chattels and of their availability for collection. The Public Trustee's records contain no evidence of any such communication.

The claims in respect of the proceeds of sale of the cattle

[48] The proceeds of sale of the cattle, subject to the undertaking to hold $8,000 in trust, were paid to the appellant's solicitors on or about 24 January 2002. The balance of $8,000 was paid out on 11 February 2004. Consequently, by the time of trial the appellant's claim in respect of these moneys could relate only to the losses arising from the delayed receipt by the appellant of his moneys.

[49] The pleadings claimed damages, including equitable damages or equitable compensation, for breach of trust and/or breach of fiduciary duty. The respondent was alleged to have sold the cattle as the appellant's agent and, for that reason, to be a fiduciary with a duty to account to the appellant. There were other allegations such as an allegation that the respondent held her interest in the cheque on trust for the appellant.

[50] No particulars of loss and damage were given with regard to these claims. There was some brief exploration in cross-examination of the appellant's need for the money to pay out the mortgage, but no evidence was led as to the interest payable under the mortgage. In consequence, the only relief realistically available to the appellant on this aspect of his claim was an order for the payment of interest under s 47 of the Supreme Court Act 1995.

The findings at first instance with respect to the claims relating to the proceeds of sale of the cattle

[51] The learned primary judge dismissed the claim. His reasoning appears to have been that, although the respondent sold the cattle as the appellant's agent, the agency ceased on 14 November 2001 when her power of attorney was revoked and this extinguished any fiduciary duty.

Conclusions on the claims concerning the sale of cattle

[52] His Honour's conclusions are plainly wrong. The respondent, having sold the cattle as the appellant's agent, had a duty to account to the appellant for the net proceeds of sale. The proceeds belonged to the appellant, not the respondent. The manner in which the cheque was made out by the purchaser is immaterial. The respondent, as the appellant's agent, owed him fiduciary obligations,[11] including the duty to account for moneys received by her on his behalf.[12] The duty encompassed a duty not to impede, prevent or delay the payment to the appellant of the moneys to which he was entitled. The appellant's conduct, in breach of her fiduciary duty, was directed initially to depriving the appellant of some of his moneys but, ultimately, resulted only in the delayed receipt of those moneys. She is liable for the loss occasioned as a result of that delay.

[53] As a matter of general principle, interest is payable by an agent in respect of money received by him on his principal's behalf in the event of failure to pay at the principal's request.[13] The evidence does not disclose any reason why the claim for interest pursuant to s 47 of the Supreme Court Act 1995 should not have been allowed. The appeal should be allowed in this respect and the respondent ordered to pay the appellant interest.

The claims for conversion and/or detinue and the allegations and admissions in the defence

[54] The allegations in respect of chattels may be summarised as follows:

(a) The plaintiff was the owner of the chattels at all relevant times;

(b) The respondent has "removed dealt with or converted the chattels to her own use";

(c) The appellant has sought an account from the respondent of the chattels "dealt with by the [respondent] pursuant to [her] power of attorney" and information as to the respondent's dealing with the chattels;

(d) The respondent has neglected, omitted or refused to return the chattels or to account for their whereabouts.

[55] The defence does not admit the allegations in paragraph (a) above on the grounds that: the respondent is uncertain as to the truth or falsity of the allegations, the allegations have not been particularised and proof of ownership of the chattels has not been provided. The allegations referred to in paragraphs (c) and (d) are admitted. The response to the allegations in paragraph (b) is that the allegations are untrue because the tractor, slasher, tractor blade and post hole digger were taken to one John Powell for repair, cleaning and/or painting with the knowledge and acquiescence of the appellant. It is further alleged that the respondent has not had possession of some of the chattels claimed, that some items have been stored in sheds on the property to secure them from theft and that other items have been stored off the property for the same reason.

The findings at first instance with regard to the claim for conversion and detinue

[56] The primary judge dismissed the appellant's claim for return of the plant and equipment or their value and for damages for their detention.

[57] His Honour concluded that the respondent acted in relation to the chattels "to preserve and protect" them and that consequently, she had dealt with the chattels consistently with the appellant's rights. He found also that possession of the equipment by the respondent was justified by the fact that the appellant had, in the past, expressed a wish that his son have the use and benefit of the equipment.

Consideration of the conversion and detinue claims

[58] Except to the extent set out above, it was not pleaded by the respondent that her actions were justified by the carrying out of the alleged wishes of the appellant. If there had been such an issue on the pleadings, it could not have justified the failure to return chattels, the property of the appellant, once demand had been made for them. No facts are pleaded which are capable of transforming any such expressions of desire into a legally enforceable promise.

[59] Even if the primary judge's finding that the respondent had dealt with the chattels so as to protect and preserve them were to stand, that of itself, would not provide a defence to the appellant's claims.

[60] The mere retention of goods which lawfully came into possession of the defendant is insufficient to amount to conversion[14] but conversion is established where the goods are unjustifiably detained after demand for their return.[15] Conversion may be constituted also by a positive wrongful act of dealing with chattels in a manner inconsistent with the owner's rights, with an intention in so doing to deny the owner's rights or to assert a right inconsistent with them.[16]

[61] Wrongful detention is the essence of the tort of detinue and both torts are commonly proved by inference from proof of demand of chattels by the plaintiff, followed by a refusal to deliver them up by a defendant having power to deliver up the goods at the time of demand.[17] Before a cause of action can arise in detinue or conversion by detention there must be demand for return of the chattel by the rightful owner.[18] The normal measure of damages in conversion is the value of the goods converted at the date of their conversion together with any consequential change flowing from the conversion.[19] In the case of a judgment in detinue damages are assessed at the date of judgment.[20]

[62] The exchange of correspondence between solicitors in December 2001 contained demands for delivery up of chattels taken from the property by the respondent. Her silence in the face of the demands amounted to an implicit refusal to comply.

[63] If, as the respondent asserts, she removed chattels from the property to preserve them from theft, that would not entitle her to resist a demand for possession made on behalf of the person entitled to possession. Nor would the return of chattels to the property, in the circumstances asserted by the respondent and her son, constitute compliance with the appellant's demand. What this evidence, if it is accepted, reveals is that the respondent, probably long after demand on behalf of the appellant, brought some chattels, including the tractor, back onto the property so that she and her son could use them. Despite an assertion by the respondent to the contrary, it is probable that the appellant was not informed of the return of the chattels to the property. Additionally, the respondent appears to have been the occupant of the property and to have been exerting control over the chattels on it.

[64] There is, however, a difficulty in finding that the respondent unlawfully converted or detained the chattels, or, at least, all of them.

[65] The respondent gave the following evidence in chief. The appellant told her that the tractor was not going properly and needed work on it and that certain related equipment needed servicing. The tractor and unspecified other items were taken to a property at Woodford for repair but before the repairs were completed the appellant changed his power of attorney and the respondent was ordered to return the items of equipment. "The plaintiff [appellant] was made aware of where the items were and where they were stored and if he were to have the tractor returned to him, that payment for the repairs would need to be made and that was a directive of Mr Powell, he would not release the tractor until the payment was made."

[66] The correspondence between the parties' solicitors does not sit comfortably with these assertions.

[67] In cross-examination the respondent spoke of "the tractor and implements" but her evidence about an account which had to be paid related only to the tractor. In other oral evidence she denied ever having taken possession of some other chattels listed in exhibit 5.

[68] The primary judge made no express findings in relation to any of these matters but it is implicit from paragraph 24 of his reasons that he accepted the appellant's evidence generally concerning her dealings with the chattels.

"Therefore, regarding the farm equipment I accept the defendant's evidence that her actions with respect to it have been to preserve and protect the farm equipment and that she has dealt with the farm equipment consistent with rather than inconsistent with the plaintiff's rights. I accept the plaintiff has expressed the wish that his son have the use and benefit of the farm equipment with the intention that he one day inherit the farm."

[70] The remaining findings and discussion with regard to this aspect of the case are contained in these two paragraphs:

"[23] I was favourably impressed by the defendant notwithstanding the disclosure at T.5/40 and that she was contradicted by the witness Debra Krause about the state of the house which was relevant to the defendant's counterclaim."

"[25] I am satisfied any possession of any part of the farm equipment by the defendant has been justified in all the circumstances."

[71] The respondent's son, Laurie, who was 16 at the time of trial, gave evidence that the respondent had taken the tractor to John Powell for repair, and that, seemingly, those repairs were effected with the help of the respondent, himself and another person and paid for by the respondent. He said that after the tractor was fixed "... we got it back out there ... with all the implements and everything". "There" would seem to be a reference to the property. His evidence offers no direct support for a case that, after demand for the chattels, the appellant was informed of their whereabouts and there was no implicit refusal to deliver them up.

[72] Other evidence given by this witness included the following. He commenced a business under the name S & L Mowing Services and issued a number of invoices in that name in late 2001 and early 2002 for services such as poisoning, burning, mowing and racking grass about the property. He and the respondent cleaned up the property, took items to a dump and placed others items of plant and equipment in storage. He was somewhat vague about the locations in which items were stored, revealing: "There are a couple of different locations where we put different things ...". Later in his evidence he said that he and his mother had had to use a lot of the items on the property so they moved them back there. He denied ever having seen some of the chattels the subject of the appellant's claim and said that he was unaware of the location of other items.

[73] The inference to be drawn from the latter part of his evidence is that, to his knowledge, the items had not been taken by his mother or himself.

[74] The primary judge's finding that the respondent was a credible witness is challenged by the appellant and it is sufficient to refer only to some of the matters relied on by the appellant to demonstrate that the primary judge, in accepting the respondent as a witness of credit, misused his advantage of seeing and hearing the witnesses.

[75] In finding in favour of the respondent's credibility, the primary judge took into account the respondent's disclosure at an early stage of the proceedings that she had been charged with stealing cattle, namely two heifers belonging to a neighbour. She said that "it went through the court system and ... a conviction was not laid against me". It emerged in cross-examination that she had pleaded guilty to the charge but that no conviction had been recorded.

[76] Her evidence as to the state of the dwelling house on the premises was contradicted by a health care worker, whose evidence was inferentially accepted. It was also contradicted by others whose evidence was not the subject of any criticism by his Honour.

[77] There is undisputed evidence that the respondent attempted, without any justification, to obtain for herself half the proceeds of sale of the cattle. She sold timber from the property for which she received $22,000. She claimed that she had given notification of her actions in that regard to the Public Trustee by fax but she was unable to produce a copy of the fax and there was evidence that no such fax had been received by the Public Trustee. Invited to look for the fax on the Public Trustee's file she declined on the grounds that it was against her "moral principle" to look at the file because it related to her former husband's affairs: this from a person who had harvested timber off the property, not accounted to the appellant for it and, without an attempt at legal justification, had tried to misappropriate half the proceeds of sale of the cattle.

[78] One of the more telling points against the respondent's credit was her failure to call her solicitor to give evidence, despite numerous assertions on her part that she had given him documents which had not been disclosed and instructions to do things which the evidence revealed had not been done. The solicitor was subpoenaed by the appellant with a view, primarily, to questioning him concerning such instructions and dealings. The appellant's counsel at first instance submitted to the primary judge that the respondent, by her evidence concerning such matters, had waived any legal professional privilege which may have existed.

[79] The primary judge rejected the submission and refused to permit the solicitor to be called to give evidence. His Honour erred. The giving of instructions by a client to the client's solicitor to act in a particular way or to communicate a matter to the other side of litigation would not normally be regarded as attracting legal professional privilege. It is not a communication for the purposes of giving or receiving legal advice. But even if such a communication were privileged, it is difficult to see why the respondent, having asserted that a particular instruction had been given, had not waived any privilege which may have existed in the fact of the instruction. Generally, similar considerations apply to the documents which the respondent alleged she had given her solicitor.

[80] The subpoena issued to the solicitor was a subpoena duces tecum and ad testificandum. It required the production of all the solicitor's files in relation to any of his dealings with the respondent. The primary judge considered it to be unduly wide and set it aside. By the time the solicitor was called, and submissions were made in relation to the subpoena, the solicitor and his counsel had been advised by counsel for the appellant that the only file required to be produced was the file relating to the subject matter. That file was in the possession of the solicitor and could have been referred to by him had he been permitted to be called to give evidence by the appellant's counsel. The fact that the subpoena covered too many files should not have resulted in its being set aside completely so as to effectively prevent the calling of the solicitor.

[81] The primary judge ordered the appellant to pay the solicitor's costs in relation to the subpoena. That order was the subject of the notice of appeal but no argument was advanced on behalf of the appellant in respect of the costs order and the court was advised that the appellant would not be seeking any orders in that regard. The solicitor did not appear on the hearing of the appeal.

Conclusion in relation to the plaintiff's claims in respect of the chattels

[82] The evidence which the solicitor could have given was potentially important to the determination of the respondent's credibility and his Honour's ruling resulted in the denial of natural justice to the appellant. Also, the primary judge, in accepting the respondent as a witness of credit, misused his advantage of seeing and hearing the witnesses.

[83] The primary judge made no findings about Mr Laurie Pratten's credibility, or, for that matter, about the credibility of any witness other than the respondent. The consequence of this and of the lack of findings concerning the respondent's dealings with the chattels and their disposition at relevant times is that it is impossible for this court to award damages for conversion or detinue or to make orders in respect of the delivery up of chattels.

[84] By far the most valuable of the chattels are the tractor slasher and other pieces of equipment related to the tractor and its use. There is evidence, which if accepted, could lead to the conclusion that at the time demand was made the respondent did not have it in her power to deliver up those chattels. Although the respondent's subsequent conduct in respect of those and the other chattels points to a conclusion that the respondent converted the chattels, the allegations in the statement of claim do not identify, with any clarity, the case the respondent is called on to meet. It is not alleged that the appellant demanded the return of the chattels, let alone that she did things in relation to them (other than by failing to supply information as to their whereabouts) inconsistent with the appellant's rights and with an intention to assert a right inconsistent with that of the appellant.

[85] For these reasons, the orders below on the appellant's claims must be set aside and the following orders substituted for them:

(a) The respondent pay the appellant the sum of $2,287 (being interest on moneys withheld from the appellant calculated in accordance with exhibit 4).

(b) The appellant's claims for detinue and/or detention of the chattels be remitted to the District Court for re-hearing.

(c) The respondent pay the appellant's costs of the appeal to be assessed on the standard basis.

(d) The respondent pay the appellant's costs of and incidental to the trial of the appellant's claims and the respondent's counterclaims to be assessed on the relevant Magistrates Court scale.

[86] Having regard to the evidence of the value of the chattels, it is difficult to escape the conclusion that the Magistrates Court is the appropriate forum for the future conduct of proceedings. The parties should consider the desirability of transferring the matter into that jurisdiction. The pleadings are also in an unsatisfactory state and need amendment to state the parties' respective cases in accordance with the Uniform Civil Procedure Rules.

[1] A useful discussion of when an agent holds money as trustee is found in Bowstead & Reynolds On Agency (18th ed., London, Sweet and Maxwell) at 6-039; 6-040.

[4] See Halsbury's Laws of Australia at para 135-1125.

[5] The capital returns appear at AR 370 (1996 year), AR 309 (30 June 2000 year).

[7] AR 95; it was not included in the appeal record.

[8] Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497 at 514.

[9] Schmidt v Argent & Ors [2003] QCA 507, discussed in Seabrook v Allianz Australia Insurance Limited & Ors [2005] QCA 58.

[11] Parker v McKenna (1874) LR 10 Ch App 96 at 119.

[12] 1 (2) Halsbury's Laws of England 4th ed paras 87, 96 and 99.

[13] Edgell v Day (1865) LR 1 CP 80 and 1 (2) Halsbury's Laws of England 4th ed para 102.

[14] Miller v Dell [1891] 1 QB 468.

[15] Alicia Hosiery Ltd v Brown Shipley & Co [1970] 1 QB 195. 45 Halsbury's Laws of England 4th ed, para 1430.

[16] 45 Halsbury's Law of England 4th ed para 1422 and the cases there cited.

[17] See eg Bullen, Leake and Jacob's Precedents of Pleadings 12th ed pp 352, 356. 45 Halsbury's Laws of England 4th ed, para 1422 and 1427.

[18] Clayton v Le Roy [1911] 2 KB 1031; Australian Protective Electronics Pty Ltd v Pabflon Pty Ltd (1996) 35 IPR 327 at 353.

[19] General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 1 WLR 644 at 649 per Diplock LJ.

[20] General and Finance Facilities Ltd at 650, 651 per Diplock LJ.