Byrnes v Kendle

[2011] HCA 26

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(Judgment by: Gummow J, Hayne J)

Byrnes
vKendle

Court:

Judges: French CJ

Gummow J
Hayne JHeydon J
Crennan J

Subject References:
Acquiescence
bare trust
consent
estoppel
express trust
in-tention
upon trust

Legislative References:
Law of Property Act 1936 (SA) - s 29(1)(b); s 41
Trustee Act 1936 (SA) - s 6; s 7; s 8; s 25A; s 25C

Hearing date:
Judgment date: 3 August 2011

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Judgment by:
Gummow J
Hayne J

[32] The second appellant (Mrs Byrnes) and the respondent (Mr Kendle) married in 1980. She was then aged 60 and he about 57. Each had adult children by previous marriages. The first appellant (Mr Martin Byrnes) is the son of Mrs Byrnes and Mr Kym Kendle is the son of Mr Kendle. Mr Martin Byrnes is a solicitor and his mother took advice from him.

[33] Mrs Byrnes and Mr Kendle separated early in 2007 after some 26 years of marriage. They have not divorced and there has been no settlement of property under the Family Law Act 1975 (Cth).

[34] In 1984 Mr Kendle purchased a home unit at Brighton in South Australia being the property comprised and described in Certificate of Title Register Book Vol 4063 Folio 848, with finance provided under the scheme established by the Defence Service Homes Act 1918 (Cth). ^[58] Mr Kendle became the sole registered proprietor. In 1989, at the instigation of Mr Martin Byrnes, Mrs Byrnes and Mr Kendle executed an instrument with respect to the Brighton property ("the 1989 Deed"). The operative provisions were as follows:

1.

Subject to clause 2, [Mr Kendle] stands possessed of and holds one undivided half interest in the Property as tenant in common upon trust for [Mrs Byrnes] absolutely ("the [Byrnes] Interest").

2.

If [Mrs Byrnes] shall predecease [Mr Kendle], then during his lifetime and while he continues to own the remaining undivided half share in the Property as tenant in common ("the [Kendle] Interest") [Mr Kendle] shall be entitled to the use and enjoyment of the [Byrnes] Interest. This clause shall entitle [Mr Kendle] to a life interest in the [Byrnes] Interest subject to early termination upon disposal of the [Kendle] Interest.

3.

If [Mr Kendle] shall predecease [Mrs Byrnes], then during her lifetime and while she continues to own the [Byrnes] Interest [Mrs Byrnes] shall be entitled to the use and enjoyment of the [Kendle] Interest. This clause shall entitle [Mrs Byrnes] to a life interest in the [Kendle] Interest subject to early termination upon disposal of the [Byrnes] Interest.

This instrument was so framed and executed as to be a deed pursuant to s 41 of the Law of Property Act 1936 (SA) ("the Law of Property Act"). Section 41(2) required attestation by at least one witness who was not a party, subs (3) provided that delivery was not necessary, and subs (5)(b) provided that an instrument so signed by an individual and attested was a deed if, as was the case here, the instrument was expressed to be sealed.

[35] The Brighton property was sold and the proceeds applied in the purchase in 1994 of a house in Rachel Street, Murray Bridge in South Australia. The purchase price was $47,500. Again, Mr Kendle became the sole registered proprietor. The Defence Service Homes mortgage scheme was "transferred" to Rachel Street and Westpac Banking Corporation ("Westpac") appeared on the title as mortgagee.

[36] In 1997, again at the instigation of Mr Martin Byrnes, Mrs Byrnes and Mr Kendle executed a deed ("the 1997 Deed"). They were identified therein as residing at Rachel Street and the recitals were as follows:

A.

By [the 1989 Deed], the parties acknowledged that each of them was entitled to a half interest as tenant in common of the property known as Unit 19, Strata Plan 2527, 120 The Esplanade, Brighton, South Australia ("the Original Property"), and that [Mr Kendle], who was the registered proprietor of the Original Property, stood possessed of an undivided half interest in the Original Property upon trust for [Mrs Byrnes] absolutely.

B.

The Original Property was sold in 1994 and the proceeds applied to the purchase or further development of the property situated at 10 Rachel Street, Murray Bridge, South Australia ("the New Property"), of which [Mr Kendle] is now the sole registered proprietor.

C.

In addition to the proceeds from the Original Property, the Parties have both contributed other monies to the purchase or further refurbishment of the New Property.

D.

The Parties by this deed acknowledge that their respective entitlements to interests in the Original Property are transposed into interests in the New Property.

Clause 1 stated that Mr Kendle "stands possessed of and holds one undivided half interest in the New Property as tenant in common upon trust for [Mrs Byrnes] absolutely". Clauses 2 and 3 of the 1997 Deed adopted cll 2 and 3 of the 1989 Deed.

[37] However, in about December 2001, Mrs Byrnes and Mr Kendle moved out of Rachel Street and into a property in Graetz Street, Murray Bridge which had been purchased by Mr Martin Byrnes.

[38] Thereafter, the Rachel Street property, the subject of the 1997 Deed, was let by Mr Kendle to his son Kym. He lived there until early 2007, and paid rent only for the first two weeks, whereas it is now accepted that in total he should have paid $36,150. Mr Kendle's daughter Cathy persuaded her father in January 2007 to remove Kym from Rachel Street. Since about March 2007 Mrs Byrnes and Mr Kendle have lived apart. Mr Kendle moved in with his daughter. His grandson Mr Reece Smith moved into Rachel Street in July 2007 and paid $100 per week. This was applied by Mr Kendle's daughter to off-set her expenses in caring for her father.

[39] On or about 23 March 2007 Mrs Byrnes assigned by deed to Mr Martin Byrnes her interest in Rachel Street, including her rights in connection with the 1997 Deed, in consideration of $40,000. Upon removal of a caveat, the sale of Rachel Street was completed on 12 September 2008. By consent, the District Court of South Australia ordered that the net proceeds of $124,681.99 be held in the trust account of Mr Kendle's solicitor, pending the outcome of the litigation instituted by Mrs Byrnes and her son in that court. The net proceeds were computed after deduction from the sale price of $145,000 of various costs and disbursements, including $13,107.53 to pay out the Westpac mortgage.

The litigation

[40] The relief sought against Mr Kendle in the District Court litigation was variously described in the pleadings. It included an order for payment to the plaintiffs of one half of the net proceeds, an order that Mr Kendle provide a full accounting in connection with Rachel Street and an order that moneys found to be due as a result of the account be deducted from his share of the net proceeds.

[41] There were many issues in the litigation, but as it has reached this court on appeal from the Full Court of the Supreme Court of South Australia (Doyle CJ, Nyland and Vanstone JJ) ^[59] the live issues centre upon the liability of Mr Kendle as trustee in respect of the failure to recover from his son rent in respect of Rachel Street.

[42] The references to accounting by Mr Kendle as trustee indicate the several senses in which the term "duty to account" may be used, namely, (i) a duty to keep records, (ii) a duty to report to the beneficiaries or to the court concerning the administration of the trust, and (iii) a duty to pay amounts the trustee is obliged to pay to the beneficiaries. ^[60]

[43] With respect to (i) and (ii), and as a matter of first principle, a trustee should gain no advantage by failure to keep proper records and the court will resolve doubts against a trustee who fails to do so. ^[61] The nature of the principal complaint against Mr Kendle, of failure to obtain any rent in respect of Rachel Street over a long period, is such as to posit the taking of accounts on the basis of wilful neglect and default, in the sense described in Meehan v Glazier Holdings Pty Ltd . ^[62]

[44] For his part, Mr Kendle claims to "set-off", in any taking of accounts for the period from January 2002 to the completion of the sale of Rachel Street on 12 September 2008, the amounts he paid for rates, and mortgage and other payments in respect of that property. (The claim from 1994 and the period while Rachel Street was the matrimonial home appears no longer to be pressed by Mr Kendle.) This aspect of the dispute was not considered by the trial judge and he made a declaration that Mr Kendle held one half of the net proceeds of sale in trust for Mr Martin Byrnes. In the Full Court, Doyle CJ (with whom Nyland and Vanstone JJ agreed) did not enter upon the question of "set-off", the matter not having been raised by Mr Kendle either in his Notice of Cross-Appeal to the Full Court or in his Notice of Contention. In this court, by his Notice of Contention Mr Kendle seeks to agitate the question and it will be necessary to return to it when considering the question of remedies.

[45] On the appeal to this court there are five principal issues: (i) was there a trust created by the 1997 Deed; (ii) if so, what were the duties of Mr Kendle with respect to the renting out of the Rachel Street property after he and his wife moved out in December 2001; (iii) was there a breach of those duties; (iv) if so, did Mrs Byrnes (and thus her son, who takes as her assignee) consent to or acquiesce in the breach; (v) if she did not, what is the appropriate form of relief to the appellants for the breach of trust by the respondent?

Was there a trust?

[46] The first issue should be decided in favour of Mrs Byrnes. The 1997 Deed was effective in its terms to vest in Mrs Byrnes as beneficiary a one undivided half interest as tenant in common in Rachel Street.

[47] Rachel Street is land under the provisions of the Torrens system provided by the Real Property Act 1886 (SA) and s 162 thereof requires that no particulars of a trust shall be entered upon the Register Book. However, as Higgins J indicated in the early years of the court, ^[63] and Griffith CJ explained in Barry v Heider , ^[64] and as has been long accepted, the title by registration under the Torrens system, such as that of Mr Kendle, is subjected to the enforcement by a court of equity of a trust, such as that created by the 1997 Deed.

[48] Section 29(1)(b) of the Law of Property Act required that a declaration of trust respecting "any land or any interest therein", such as that in Rachel Street, "be manifested and proved by some writing signed by some person who is able to declare such trust". The words quoted have a legislative history beginning with s 7 of the Statute of Frauds 1677. ^[65] As explained in Kauter v Hilton , ^[66] s 7 did not require that a trust of land be created by writing, but that, however created, the trust "be manifested and proved by writing".

[49] In Bahr v Nicolay (No 2 ) ^[67] Mason CJ and Dawson J approved of the expression of the "traditional attitude" by du Parcq LJ ^[68] that "unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention". In the present case there was no degree of informality, the trust being manifested and proved by deed using the technical term "upon trust". Accordingly, to adopt what was said in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq ) : ^[69]

This is not one of those cases where the language employed by the parties for the transaction is inexplicit so that the court is left to infer the relevant intention from other language used by them, from the nature of the transaction and from the circumstances attending the relationship between the parties. (footnote omitted)

[50] However, by his Notice of Contention in this Court, Mr Kendle relies upon the statement by the trial judge (Judge Boylan): ^[70]

In my view, this case turns upon Mr Kendle's intention. In determining whether or not an express trust has been created the court may look at evidence outside the Trust Deed to determine the intention of the alleged settlor. The Acknowledgement of Trust signed in 1997 did not create an express trust of which Mrs Byrnes was a beneficiary. When Mr Kendle signed that document he intended only to acknowledge that, upon eventual sale of the property, half of the net proceeds would belong to his wife. That view is consistent with the way he viewed the arrangement and with the way in which he dealt with the property. (footnote omitted)

[51] The Notice of Contention is necessary because Doyle CJ, who gave the leading judgment in the Full Court, disagreed with the trial judge, and indicated that an inquiry into the subjective state of mind and understanding of Mr Kendle could not displace the effect of the 1997 Deed. ^[71]

[52] Counsel for the appellants emphasised the exiguous and equivocal oral evidence given by Mr Kendle as to his intention upon which the trial judge relied. In addition, and more fundamentally, evidence of this nature was inadmissible. In that regard, it is important to observe that the trust asserted against Mr Kendle was not said to further or be associated with an illegal purpose. ^[72] Nor was the 1997 Deed said to be a "sham" in the sense explained in Raftland Pty Ltd v FCT , ^[73] and there was no plea of non est factum as described in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd . ^[74] Nor was there any claim to rescission of the 1997 Deed upon any of the grounds upon which that remedy is available in equity. Finally, the maxim that "equity looks to the substance rather than the form" would be misapplied and misunderstood if used to warrant "the substitution of a different transaction for the one into which the parties [to the 1997 Deed] have entered". ^[75]

[53] The fundamental rule of interpretation of the 1997 Deed is that the expressed intention of the parties is to be found in the answer to the question, "What is the meaning of what the parties have said?", not to the question, "What did the parties mean to say?" The point is made as follows, with reference to several decisions of Lord Wensleydale, ^[76] in Norton on Deeds : ^[77]

The word "intention" may be understood in two senses, as descriptive either (1) of that which the parties intended to do, or (2) of the meaning of the words that they have employed; here it is used in the latter sense.

Dixon J ^[78] and Starke J ^[79] spoke to similar effect when construing the terms of wills creating testamentary trusts.

[54] Where an express inter vivos trust respecting land or any interest in land is manifested and proved by some informal writing, or an express inter vivos trust of personalty is said to have been created by informal writing or orally, then a dispute as to the presence of the necessary intention, despite inexplicit language, is resolved by evidence of what the court in Kauter v Hilton ^[80] identified as "[a]ll the relevant circumstances".

[55] But the object of this evidentiary odyssey does not change, and the nature of the intention of the alleged settlor does not differ. The question, as Megarry J put it, ^[81] "is whether in substance a sufficient intention to create a trust has been manifested". The point was made by Lord Millett in Twinsectra Ltd v Yardley : ^[82]

A settlor must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant. If he enters into arrangements which have the effect of creating a trust, it is not necessary that he should appreciate that they do so; it is sufficient that he intends to enter into them.

[56] There is good sense in such a rule. Issues of the construction to be placed upon the words or actions of alleged settlors are apt to arise long after the event. For example, the dispute in Kauter v Hilton ^[83] arose between the executors of the will of Mr Hickey (who had died in 1950) and his niece, and concerned the construction to be placed upon his words and acts respecting certain bank accounts in the last five years of his life. Further, trusts give rise to proprietary interests, dealings which may engage third parties who are strangers to the original actors.

[57] In the first edition of his treatise, published in 1939, Professor Austin Wakeman Scott wrote under the heading "Requirement of manifestation of intention" in these terms: ^[84]

An express trust, unlike a constructive trust, is created only if the settlor properly manifests an intention to create a trust. It is not enough that he secretly intends to create a trust; there must be an outward expression of his intention. There are situations where the legal effect is dependent upon a person's actual intention; thus, for example, if he is charged with the crime of larceny, his actual intention is of importance. Ordinarily, however, the legal effect of a transaction does not depend upon the secret intention of a party to the transaction but upon the outward manifestation of intention. For practical reasons his undisclosed state of mind is regarded as immaterial. In the interest of accuracy, therefore, it is necessary in dealing with the creation of a trust and the terms of the trust to speak not of the settlor's intention but of his manifestation of intention. Although the latter phrase may ring harshly in the ears of lawyers, one who wishes to write accurately can hardly avoid the use of it. (footnote omitted)

[58] The substance of this passage is now expressed in the current edition of Scott and Ascher on Trusts as follows: ^[85]

In some situations, legal consequences do turn on actual intentions, as in the case of those charged with certain crimes. Ordinarily, however, the legal effect of a transaction does not depend on the parties' secret intentions, but on the outward manifestations of their intentions. For practical reasons, we disregard the parties' undisclosed states of mind. To be accurate, therefore, it is necessary, when dealing with the creation of a trust and its terms, to speak not of the settlor's intention but of the settlor's manifestation of intention.

[59] Likewise, the "objective theory" of contract formation, which, as Mason ACJ, Murphy and Deane JJ put it in Taylor v Johnson , ^[86] stands "in command of the field", is concerned not with "the real intentions of the parties, but with the outward manifestations of those intentions". ^[87] While the origins and nature of contract and trust are quite different, there is, as Mason and Deane JJ observed in Gosper v Sawyer , ^[88] no dichotomy between the two. For example, a common form of express trust is that created by covenant between settlor and trustee. Hence the significance of consistency between trust and contract with respect to matters of intention in contract formation and trust declaration.

[60] In the 11th edition of Lewin on Trusts , published in 1904, it was said: ^[89]

It is obviously essential to the creation of a trust, that there should be the intention of creating a trust, and therefore if upon a consideration of all the circumstances the Court is of opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated. (emphasis in original; footnote omitted)

The difficulty with this passage lies in the cryptic phrase "the settlor did not mean ...". The authorities cited for that passage, Gaskell v Gaskell , ^[90] Hughes v Stubbs , ^[91] Smith v Warde , ^[92] and Re Pitt Rivers , ^[93] all shared a particular characteristic. This was that the alleged trust was created informally by a deceased settlor, and upon consideration of his correspondence and other relevant circumstances the court held that no trust had been created.

[61] In Commissioner of Stamp Duties (Q) v Jolliffe , ^[94] the primary judge (Lukin J) had admitted evidence given by Mr Jolliffe that he had opened a savings bank account as trustee for his wife (now deceased) not to make a gift to her but for the sole purpose of procuring interest not payable by the bank if the account stood in his name alone. The issue identified on the grant of special leave to appeal had been whether the effect of the Queensland Government Savings Bank Act 1916 (Q) ("the 1916 Act") and the written evidence precluded Mr Jolliffe from averring that he was not trustee of the money in the account at the death of his wife.

[62] In Jolliffe the passage from Lewin on Trusts which has been set out above was relied upon by the majority (Knox CJ and Gavan Duffy J), ^[95] in the absence of citation of any other authority, as denying the proposition that "by using any form of words a trust can be created contrary to the real intention of the person alleged to have created it". This statement was applied by Napier J in Starr v Starr , ^[96] and in further decisions concerning bank accounts which were collected by Williams J in Teasdale v Webb ^[97] and by Bray CJ in Re Lamshed . ^[98] In Hyhonie Holdings Pty Ltd v Leroy , ^[99] Young CJ in Eq referred to the 17th edition of Lewin on Trusts , ^[100] where it was said that today the dissenting reasons of Isaacs J in Jolliffe would be preferred in England to those of the majority.

[63] There were some indications in 19th century cases that the effect of legislation might be to deny, for evasion of a statutory regime, what otherwise might have been an effective declaration of trust. ^[101] The issue presented in Jolliffe was rather different. The terms of the 1916 Act at stake provided that, save as trustee for another, no person was to have more than one account with the bank, and also imposed a limit on the amount on which interest might be paid. Was the effect of the 1916 Act to impose a "statutory trust" upon an account holder depositing money ostensibly as trustee for another person, and to preclude any averment by the account holder that there was no trust? ^[102] This appears to have been the submission by the appellant, ^[103] and was rejected by Knox CJ and Gavan Duffy J. ^[104]

[64] What the court did not have before it in Jolliffe was a submission which was distinct from reliance upon any "statutory trust" or upon any express or implied statutory prohibitions upon denial of a trust. In particular, there was no application of the reasoning seen in Nelson v Nelson ^[105] and most recently applied in Miller v Miller . ^[106] Anticipating those decisions, the inquiry in Jolliffe would have been whether the legislative purpose of the 1916 Act would not be fulfilled unless there were disregarded any further circumstances which tended to deny the terms on which the trust account was opened and conducted. The answer "yes" would mean that even if evidence of the "real intention" of Mr Jolliffe had been admissible, that intention would have had to yield to the policy of the statute, and the appeal by the Commissioner should have been allowed.

[65] There are indications in the dissenting reasons of Isaacs J in Jolliffe ^[107] that his Honour foresaw such an argument, but it is unnecessary here to pursue the matter. What is important for the present case is that Jolliffe should not be regarded as retaining any authority it otherwise may have had for the proposition that where the creation of an express trust is in issue, regard may be had to all the relevant circumstances not merely to show the intention manifested by the words and actions comprising those circumstances, but to show what the relevant actor meant to convey as a matter of "real intention".

[66] It follows that Doyle CJ correctly disagreed with the primary judge on the first issue. The second and third issues may be taken together.

What were the duties of Mr Kendle to rent out Rachel Street? Did he breach those duties?

[67] As a general proposition, where the trust estate includes land, it is the duty of the trustee to render the land productive by leasing it, and this is so even if the trust instrument does not expressly so provide. ^[108] The benefit of the obligation of the tenant to pay the rent reserved, the performance of which is the means by which the trust property is rendered productive, will be held by the trustee for the trust.

[68] In the present case, the 1997 Deed identified the parties, Mr Kendle and Mrs Byrnes, as residing at Rachel Street, and made no express provision for the renting out of the property if, as occurred in 2001, they moved elsewhere. However, upon ordinary principles, Mr Kendle then was obliged to render Rachel Street productive by leasing it during the remainder of their joint lives. Thereafter, cll 2 and 3, respectively, of the 1997 Deed (which adopted those clauses in the 1989 Deed) made special provision for the survivor to enjoy a life interest in the tenancy in common of the deceased, terminable upon the disposal of the survivor's interest. It is unnecessary here further to consider the operation of cll 2 and 3.

[69] The trial judge found that the parties agreed not to use a real estate agent to find a tenant for Rachel Street, and that they had agreed that Mr Kendle would find a tenant and collect the rent; with Mrs Byrnes's knowledge Mr Kendle then rented the property to his son Kym.

[70] In the Full Court, Doyle CJ disposed of the trust case presented by Mrs Byrnes and her son on the footing that (a) if the parties had simply been co-owners, there would have been no fiduciary relationship between them and no obligations on either of them to ensure that the property was tenanted, and (b) this putative state of affairs was a guide to the answer to the question of duties owed by Mr Kendle as a trustee, the trust having been a "device" used by the parties. ^[109] No other reason was given for the conclusion of the Chief Justice that there had been "no affirmative duty on Mr Kendle to let out the property" when the move was made to Graetz Street. ^[110]

[71] In the 1997 Deed, as previously in the 1989 Deed, the co-owners chose in a formal fashion to create a particular trust relationship. This operated upon what would have otherwise been the legal incidents of their co-ownership. It is to reverse the relationship between law and equity, and is without logic, to base considerations as to the obligations assumed by Mr Kendle as trustee from the position which would have obtained at common law had there been no trust.

[72] Doyle CJ did go on ^[111] to posit the letting of Rachel Street to a tenant "on an ordinary commercial basis" and asked whether Mr Kendle would have been liable to make up unpaid rent. The answer must be that he would be obliged to take steps to protect and preserve the trust property, including, if necessary, to protect against the defaulting tenant.

[73] The question then becomes whether there was a breach of duty by Mr Kendle in failing to take steps to recover rent due but unpaid by the tenant of Rachel Street. This must be answered in the affirmative.

Was there consent or acquiescence in the breach?

[74] Paragraph 19 of the defence pleaded in the District Court relied without distinction on consent, acquiescence, waiver and estoppel. The ambiguities in the term "waiver" in various areas of legal discourse were considered by Gummow, Hayne and Kiefel JJ, with the agreement of Heydon J, in Agricultural and Rural Finance Pty Ltd v Gardiner . ^[112] In the present case "waiver" is best understood as a genus comprising consent, estoppel and acquiescence.

[75] The primary judge held that Mrs Byrnes had "co-operated" in the breach of trust, stating: ^[113]

She was well aware of her need to protect what she saw as her proprietary rights . Kym lived in the house for a little over six years. For all of that time, or nearly all of it, she was fully aware that he was not paying rent. Further, during those [six] years, she was present at numerous discussions with her son and her husband at which Martin Byrnes spelled out his view that Mr Kendle owed a duty to Mrs Byrnes to collect rent from Kym . She was well aware of the rights her son claimed for her but, for the sake of matrimonial harmony, she took no action . I find that, although unwillingly , she consented to her husband's decision not to press for rent. Equity should not hear her complaints now, only after the marriage has broken down. (emphasis added)

In the Full Court, Doyle CJ stated his agreement with these findings, ^[114] although he preferred the terms "acquiescence" and "consent" to "co-operation".

[76] In this Court, counsel for the appellants made several criticisms of the above passage in the reasons of the primary judge. While she may have been able to seek an accounting by the trustee, Mrs Byrnes, as beneficiary, had no standing to sue to recover the rent. ^[115] If she was, through her son, protesting the situation, how was she consenting or acquiescing in it?

[77] The term "consent", when used with respect to breach of trust, expresses the principle that "[t]here is no reason for a court of Equity to enforce an equitable obligation in favour of a party who consented to its breach against a party who acted with knowledge of that consent". The words are those of Handley JA in Spellson v George . ^[116] His Honour added that while consent may take various forms, and while consent may operate as an estoppel, it means "something more than a state of mind", and that "[t]he trustee must know of the consent prior to the breach". ^[117]

[78] The findings by the primary judge in the above passage fell short of providing sufficient basis for defences of consent and estoppel.

[79] There remains the defence of acquiescence by Mrs Byrnes in the breach of trust. This, as explained by Deane J in Orr v Ford , ^[118] is best understood as requiring calculated (that is, deliberate and informed) inaction by her or standing by, which encouraged Mr Kendle reasonably to believe that his omissions were accepted or not opposed by her. Counsel for the appellants correctly emphasised the absence of evidence by Mr Kendle that there was no need for him to take steps to recover arrears of rent or to evict Kym because Mrs Byrnes accepted the actions and did not oppose their continuation.

[80] There was no pleading of a defence of laches. In any event, where presented in answer to a claim of breach of an express trust such as that manifested in the 1997 Deed, the defence would require aggravating circumstances such that the granting of the relief sought by the beneficiary would "give rise to serious and unfair prejudice to the defendant or a third party". ^[119] No such case was presented by the defendant in this litigation.

Remedies

[81] To what remedies are the appellants entitled in this court?

[82] Counsel submitted to the Full Court a joint memorandum which contains a detailed summary of payments by Mr Kendle on account of council rates, insurance premiums, mortgage payments to Westpac and payments to SA Water.

[83] Mr Kendle had several relevant capacities. As the mortgagor and registered proprietor he was liable to Westpac and the other relevant third parties to meet these outgoings. Before the determination of any accrual in favour of the interests of himself and Mrs Byrnes, and the fixing of sums payable from the net proceeds in the trust account of his solicitors, as trustee Mr Kendle is entitled to deduct (or, on a loose use of the term, to "set-off") the amount of these outgoings. The balance then is to be accounted for equally between the two sides to the litigation.

[84] For the period January 2002 to January 2007, $36,150 should have been received as rent, but Mr Kendle as trustee should be allowed the outgoings in total of $17,707.69.

[85] With respect to the occupancy of Mr Kendle's grandson between July 2007 and September 2008 the respondent accepts attribution of a rent of $140 per week for 60 weeks, giving a total of $8,400. Kym left Rachel Street early in 2007 and there was an interval before the grandson moved in. In all the circumstances there should be no accounting on the basis of a failure to let Rachel Street in that period. The outgoings for the period of the grandson's occupation total $4,454.91.

[86] If the appropriate additions of these amounts be made, from the total rental sum of $44,550 there should be allowed $22,162.60. This leaves $22,387.40 as the rent for which an allowance of one half ($11,193.70) should be made in favour of the appellants. This should be added to the half share ($62,341.00) otherwise payable to the appellants from the net proceeds of sale of Rachel Street, a total of $73,534.70. By reason of the assignment between the appellants, payment should be made to and a sufficient discharge received from Mr Martin Byrnes alone.

[87] The appellants should have the costs in the District Court and of the appeal and cross-appeal to the Full Court. No costs order appears to have been made by the Full Court on the re-opening application by the appellants which was dismissed on 25 March 2010 and this situation should not be disturbed.

[88] The respondent refers to provisions in the District Court statute and Rules which are said to have the effect that no costs order in the present case should be made in favour of the appellants unless it is just to do so in the circumstances. However, the salient feature of the litigation has been the refusal of the respondent to acknowledge his position as trustee under the 1997 Deed. There should be costs orders against the respondent with respect to the whole of the litigation.

Orders

[89] The following orders should be made:

(1) Appeal allowed with costs.

(2) Orders 1 and 3 of the orders of the Full Court sealed 20 January 2010 be set aside and in place thereof it be ordered that:

(a)

the appeal to the Full Court be allowed with costs; and

(b)

the orders of the District Court made on 31 March 2009 and order 1 of the orders made on 22 June 2009 be set aside and in place thereof:

(i)

declare that the solicitors for the respondent, Clifford Frank Kendle, be at liberty to account for the moneys held by them in trust pursuant to O 4 of the orders of the District Court made on 11 September 2008 by paying thereout to the first appellant, Martin Francis Byrnes, or as he may direct in writing, the sum of $73,534.70 and by paying the balance to Mr Kendle, or as he may direct in writing;

(ii)

order that:

(A)

Mr Kendle pay the costs of the appellants on a party and party basis of the trial and all applications filed in the District Court action; and

(B)

the action otherwise be dismissed.