PARTIES:				SYRIMI, Andreas and
					SYRIMI, Marianna

						v
			
					HINDS, Colin Wayne and
					HINDS, Susan Jean

TITLE OF COURT:			COURT OF APPEAL

JURISDICTION:	CIVIL

FILE NOS:	No. AP 26 of 1995

DELIVERED:	5 July 1996  

HEARING DATES:	9 and 10 May 1996

JUDGMENT OF:	Martin CJ, Gallop and Angel JJ

CATCHWORDS:

Equity - Fiduciary relationship - Breach of - Inducement to breach by third party - Liability of third party - Question of third party’s knowledge - Knowledge inferred from conduct

Consul Development Pty Ltd v DPC Estates Pty Ltd (9175) 132 CLR 373, applied
Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd (1988) 78 ALR 193, applied
Agip (Africa) Ltd v Jackson [1990] Ch 265, referred

Equity - Fiduciary relationship - Breach of - Third party knowingly procures breach - Third party accountable as fiduciary

Eaves v Hickson (1861) 30 Beav 136, applied
Midgley v Midgley [1893] 3 Ch 282, applied

Equity - Fiduciary relationship - Breach of - Third party accountable for breach - Entitlement to equitable compensation - Nature of compensation - Restitutionary

Re Dawson [1966] 2 NSWR 211, applied
Hill v Rose [1990] VR 129, applied
Heydon’s Note (1994) 110 LQR 328, referred
Rickett’s Note (1996) 112 LQR 27, referred

REPRESENTATION:
Counsel:
Appellants:	T J Riley QC
	J E Reeves
Respondents:	H B Fraser QC
	A Wyvil

Solicitors:
Appellants:	Morgan Buckley
Respondents:	David De Winter

Judgment category classification: 	B
Judgment ID Number: 	ang96009
Number of pages: 	26
Distribution: General

ang96009

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

No. AP 26 OF 1995

	BETWEEN:

	ANDREAS SYRIMI and
	MARIANNA SYRIMI
										Appellants

	AND:

	COLIN WAYNE HINDS and
	SUSAN JEAN HINDS
		Respondents

CORAM:   MARTIN CJ, GALLOP and ANGEL JJ

	REASONS FOR JUDGMENT

	(Delivered 5 July 1996)

MARTIN CJ:		I have had the benefit of the reasons for judgment prepared by Angel J.  I concur.

GALLOP J:		I have read the reasons for judgment prepared by Angel J.  I agree with his reasons and conclusion and have nothing to add.

ANGEL J:		This is an appeal from a judgment of Thomas J dated 22 September 1995 in favour of the respondents against the appellants in the sum of $157,021.05, plus interest at the rate of 8% calculated from 1 July 1994.  The judgment is in an action which concerns a series of transactions between various parties concerning land on the Stuart Highway at Berrimah.

	In January 1989, the plaintiffs, Mr & Mrs Hinds, commenced an action against Mr and Mrs Uellendahl as first defendants and a company Allora Pty Ltd (later called Amphora Pty Ltd) as second defendant.  The present appellants, Mr and Mrs Syrimi, are defendants to an action commenced by the Hinds’ in September 1992.  The trial of those consolidated actions was between the plaintiffs and Syrimis only, the other defendants not appearing at the hearing.  In their consolidated statement of claim dated 22 July 1994, the Hinds claimed against the Syrimis:

”1.	equitable damages for breach of trust;

2.	all necessary and consequential accounts, directions
and inquiries;

3.	further and in the alternative, damages for
interference with contractual relations;

4.	interest, and

5.	costs.”

	The land in question was land comprising an area of approximately 5.375 hectares being the whole of the land comprised and described in Certificate of Title Registered Book Volume 287 Folio 152 known as 35 Lagoon Road, Berrimah.

	The salient facts giving rise to the claim are as follows.  On 17 May 1984, the subject property was owned by the Australia National Railways Commission (‘ANR’), which leased the land to the Uellendahls for a term of ten years.  On 20 July 1988, ANR entered into a written agreement for sale of the land in fee simple to the Uellendahls for the sum of $100,000, the date for completion being 1 September 1988.  By written contract for sale dated 8 August 1988, but executed on 7 August 1988, the Uellendahls agreed to sell to the Hinds an estate in fee simple in the subject land in consideration of the payment by the Hinds to the Uellendahls of $100,000.  The Hinds agreed to pay the stipulated purchase price by paying to the solicitors acting for ANR $5,000, being the deposit due by the Uellendahls to ANR on their contract and the balance of the purchase price of $95,000 upon completion of the ANR contract with the Uellendahls.  The Uellendahls also executed an acknowledgment in the following terms:

“We HORST UELLENDAHL and FROUKJE UELLENDAHL both of Lot 1110 Lagoon Road, Berrimah in Northern territory of Australia, Pensioner and Married Woman respectively hereby acknowledge that COLIN WAYNE HINDS and SUSAN JEAN HINDS both of 2778 Strath Road, Berrimah in the said Territory, Plant Operator and Shop Assistant respectively has paid on our behalf the sum of $5,000.00 to Messrs. Poveys trust account by way of deposit on the purchase by us of Portion 1110 Hundred of Bagot which property is contained in Grant in Fee Simple entered in the Register Book Volume 185 Folio 125 and further acknowledge that Mr. and Mrs. Hinds will pay on our behalf the sum of $95,000.00 to Messrs. Poveys trust account upon completion of that purchase which is scheduled for completion on or before the 1st day of September 1988.

It is further acknowledged that notwithstanding the provisions of an agreement for sale and purchase dated the 8th day of August, 1988 made between ourselves as vendor and Mr. and Mrs. Hinds as purchaser relating to the said Portion 1110 Hundred of Bagot there are no monies owing by the purchaser to ourselves under and upon completion of that agreement and that we will transfer our interest in the title to the said Portion 1110 Hundred of Bagot to Mr. and Mrs. Hinds free from encumbrances in accordance with the said agreement for sale and purchase dated the 8th day of August, 1988 and without receiving the payment of any monies.

It is further acknowledged that until we transfer the property being Portion 1110 Hundred of Bagot to Mr. and Mrs. Hinds pursuant to the agreement for sale and purchase dated the 8th day of August, 1988 we shall hold the said Grant in Fee Simple entered in the Register Book Volume 185 Folio 125 in trust for and on behalf of Mr. and Mrs. Hinds as purchaser.

DATED this 8th day of August, 1988.

SIGNED AND ACKNOWLEDGED	)
by the said HORST		)	(signed)
UELLENDAHL AND FROUKJE	)
UELLENDAHL in the 		)”

	The Hinds had paid $5,000 to the solicitors for ANR, being the deposit payable by the Uellendahls to ANR pursuant to the ANR contract on 20 July 1988.

	On 8 August 1988, Mrs Uellendahl advised Mrs Hinds that the Uellendahls did “not need the Hinds’ money”.  Mr Uellendahl confirmed this on 9 August 1988.  On 12 August 1988, an argument occurred between Mr Hinds and Mr Uellendahl - Mr Uellendahl repudiating the agreement and Mr Hinds saying he would see Mr Uellendahl in court.  The learned trial Judge found that the Uellendahls repudiated the contract of purchase with the Hinds on 12 August 1988.  That repudiation was never accepted by the Hinds and the contract remained on foot.

	On 9 September 1988, unknown to the Hinds, the Uellendahls became the registered proprietors of the estate in fee simple in the subject land upon completion of the ANR contract.  On the same day, the Uellendahls transferred the land to the second defendant, Allora Pty Ltd, a company wholly owned and directed by the Syrimis.  In the interim, and unknown to the Hinds, the Uellendahls had agreed to sell the subject land to Allora Pty Ltd.

	On 23 February 1989, Allora Pty Ltd changed its name to Amphora Pty Ltd.  On 15 December 1992, the land was transferred to Allora Gardens Nursery Pty Ltd, a company owned and controlled by the Syrimis.  On 3 February 1994, that company changed its name to Syrimi Bros Pty Ltd.  On 30 June 1994, Syrimi Bros Pty Ltd sold the land to a bona fide third party purchaser for value, Kooyong Pty Ltd, for $380,000.

	In finding against the Syrimis - who did not to give evidence at the trial - the learned trial Judge found the Syrimis liable as constructive trustees under the first limb of Barnes v Addy (1874) 9 LR Ch App 244, in that they received for their own benefit trust property with notice that it had been transferred to them in breach of a trust relationship which existed between the Uellendahls and the Hinds; that they were also liable under the second limb of Barnes v Addy in that they participated with knowledge in a dishonest and fraudulent design of the Uellendahls as trustees, and furthermore, that they committed the tort of interference with contractual relations, viz, the contractual relationship between the Uellendahls and the Hinds.

	It was argued by the Syrimis that there was no trust relationship between the Uellendahls and the Hinds’ and the learned trial Judge’s finding that the Uellendahls were constructive trustees was contested.  This Court was referred to authorities concerning the relationship between a vendor and purchaser of real estate and it was submitted that if a beneficial interest in land arises at all it could only arise once the purchase price had been paid, the vendor was in a position to make title and the contract is otherwise complete. The Court was referred to chapter 25 of Cope, Constructive Trusts; Lysaght v Edwards  (1876) 2 Ch D 499 at 506-7; McWilliam v McWilliam Wines (1964) 114 CLR 656 at 660 and KLDE Pty Ltd v Commissioner of Stamps (Q) (1984) 155 CLR 288 at 296-297.  It was further argued that at the date that Allora Pty Ltd contracted to purchase the land from the Uellendahls, the relationship which existed between ANR and the Uellendahls and the Hinds was that of vendor/purchaser/sub-purchaser.  It was said that because the Uellendahls did not hold title to the land they could not hold it in trust for the Hinds.  There was, it was argued, no trust.  It was further argued that the transaction between the Uellendahls and the Hinds was of a purely commercial kind which gave rise to no fiduciary duties and reliance was placed on passages in the judgments from Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41.

	As to the first limb of Barnes v Addy, it was said that because the land said to constitute the trust property never came into the hands of the Syrimis, they were never “chargeable” with it.  As to the second limb of Barnes v Addy, the learned Judge’s finding that the appellants “assisted with knowledge in a dishonest and fraudulent design on the part of the trustees” was said not to be open to her because it was not pleaded.  In particular, it was said, there was no allegation of fraud against the Syrimis at issue in the trial. Fraud, it was said, must be specifically pleaded and with detailed particulars and reference was made - not unnaturally - to Order 13.10.3(a) of the Supreme Court Rules.  Had fraud been pleaded, it was said, the Syrimis would have approached the case differently - they might, for example, have condescended to give evidence.

	As to the claim in tort, it was argued that as a matter of fact the Syrimis never interfered with the Hinds’ contract, as it was called, because the Uellendahls had unequivocally repudiated the contract before entering into a contract with the Syrimis.  It was said the Uellendahls needed no inducement and that they had already made up their minds.  Having already determined not to proceed with their contract with the Hinds, the Uellendahls, it was said, acted quite independently of any inducement of the Syrimis.

	It is appropriate at this stage to mention that the appellants sought leave to add two additional grounds of appeal as follows:

“19A	IN FAILING TO CONSIDER AND/OR APPLY THE PROVISIONS 
OF ss69, 70, 71, 72, 186 AND 187 OF THE REAL PROPERTY ACT.

	3.	FURTHER THAT BY REASON OF THE PROVISIONS OF SECTIONS
186 AND 187 OF THE REAL PROPERTY ACT THE APPELLANTS WERE NOT LIABLE TO THE RESPONDENTS AT LAW OR IN EQUITY.”

	The application for leave was opposed by the respondents. The Syrimis argued, inter alia, that indefeasibility of title under the Real Property Act, and in particular s186 of that Act afforded complete protection to the Syrimis from liability under either limb of the rule in Barnes v Addy.  I note in this context para 1333 of Jacobs, Law of Trusts in Australia, Fifth Edition (1986), that Barnes v Addy is not an exclusive statement as to the circumstances in which a third party may become liable as a trustee and that neither limb of Barnes v Addy is concerned with the position of an alleged bona fide purchaser of a legal title to trust property.

	The Syrimis face the obvious difficulty that the provisions of the Real Property Act played no part in the decision of the court below.  The Real Property Act provisions in question were not pleaded.  The Real Property Act principles concerning indefeasibility of title and the exceptions thereto were not argued before the learned trial Judge.  The learned trial Judge in her judgment - understandably - did not mention them.

	Learned counsel for the Syrimis said that notwithstanding these obstacles, having regard to the fact that the case involved Real Property Act transactions, it would be quite unrealistic to ignore Real Property Act issues.  Furthermore, it was said, the statutory provisions applied to the transactions and can not be properly ignored.  Learned counsel for the Hinds submitted that if the Syrimis were to be entitled to rely on the Real Property Act provisions enumerated in the amendments, the Hinds, in turn, ought to be able to rely upon the statutory exceptions to indefeasibility of title, and, in particular, the fraud provisions.  This Court, it was said, if it permits Real Property Act issues to be argued ought to permit all Real Property Act issues to be argued on the material before the learned trial Judge.  In response to this, learned counsel for the Syrimis submitted that fraud had not been pleaded, contrary to the Supreme Court Rules, and that for an allegation so grave and weighty to arise, it should only arise on proper notice and that had the Syrimis been given proper notice they would have conducted their case differently.  In answer to this, learned counsel for the Hinds submitted that although the label of fraud had not been used, the facts pleaded constituted actual dishonesty on the part of the Uellendahls and the Syrimis.

	Ordinarily this Court would not allow the proposed new grounds of appeal and for a number of reasons:  first, what is asserted as a statutory answer to the Hinds’ claims was never pleaded; secondly, Real Property Act issues were not addressed or argued in the court below; thirdly, those issues are not the subject of decision in the court below, and finally, had they been in issue, the evidence might have turned out differently and the parties might have conducted their cases differently. However, as will appear, it is unnecessary to determine these questions in order to dispose of the appeal.  

	In answer to the Syrimis’ submission that the land was never held in trust by the Syrimis for the Hinds, learned counsel for the Hinds submitted it was not necessary to conclude that the Hinds’ contract was specifically enforceable in order to conclude that the Uellendahls held their interest in the railway contract and in the subject land on trust for the respondents.  This, it was said, is not a case of “back to back” contracts, but where the Uellendahls were acting in all respects on behalf of the Hinds, using the monies of the Hinds and not their own monies.  It was submitted that by reason of the execution of the Hinds’ contract, the acknowledgment and the Hinds’ payment of the deposit due under the ANR contract, all rights enjoyed by the Uellendahls pursuant to the ANR contract (including their equitable interest as purchasers pursuant to the ANR contract in the subject land) were held on trust for the Hinds.  It may be necessary, it was said, to consider whether the ANR contract was specifically enforceable at the hands of the Uellendahls in order to conclude that an interest in the subject land moved from ANR to the Uellendahls (and therefore to the Hinds), a matter not addressed to or by the learned trial Judge:  see Stern v McArthur (1988) 165 CLR 489 at 522 per Deane and Dawson JJ.

	The learned trial Judge concluded there was a constructive trust sufficient to attract liability under Barnes v Addy.  Learned counsel for the Hinds submitted that whilst the use of the term “constructive” might be criticised, the finding of a trust was supported by the evidence.  There was the acknowledgment that the Ullendahls signed acknowledging a trust of “the said Grant”.  Even without the express use of the term trust in that document, such was submitted to be the plain intendment of the parties.  It was submitted that a resulting trust arose from the fact that the Uellendahls acquired or maintained their rights under the ANR contract using the Hinds’ money to pay the deposit.

	In the course of these arguments, learned counsel for the parties (neither of whom appeared at the trial) referred to learned articles concerning the rules in Barnes v Addy.  We were referred to, inter alia, Harpum, The Stranger as Constructive Trustee (1986) 102 LQR 114 and 267, Harpum, Liability for Procuring or Assisting a Breach of Trust (1995) 111 LQR 545 and Lodge, Barnes v Addy:  The Requirements of Knowledge (1995) 23 Aust Bus Law Rev 25.

	As may be seen from the arguments before this Court, the Hinds seek to justify the learned trial Judge’s judgment, both on a proprietary and non-proprietary basis.  A proprietary remedy depends upon the existence of trust property in the hands of the Syrimis.  In this regard, the company Allora Pty Ltd was treated by the learned trial Judge as a “device or sham, which [the Syrimis] held before [their] face in an attempt to avoid recognition by the eye of equity”, citing Jones v Lipman [1962] 1 All ER 442 at 445.  On the learned trial Judge’s approach, at general law, unless the Syrimis were bona fide purchasers for value without notice of a trust binding the property, they are liable to restore the trust property or its value to the rightful owner, and regardless of Barnes v Addy.  As is well known, the position under the Real Property Act is different neither trusts nor lis pendens being registrable, and the equitable doctrine of notice having been abolished and replaced by the system of caveats:  see ss70, 71, 186, 187, 162, 191, 250 RPA and Eng Mee Yong v Letchumanan [1980] AC 331 at 335 R and Damodaran v Choe Kuan Him [1980] AC 497 at 502-504.

	However, particularly having regard to the way the case was argued in the Court below, I do not think this Court should entertain the Real Property Act arguments, or the proprietary limb of Barnes v Addy.

	I am of the view that the Hinds do not have to resort to a proprietary basis for the judgment in their favour.  I am of the opinion that it is unnecessary for this Court to decide whether the Uellendahls held the property on trust for the Hinds, or whether Allora Pty Ltd received the property impressed with a trust, or whether Allora Pty Ltd by its actions constituted itself a constructive trustee of the property for the Hinds or whether the Syrimis constituted themselves constructive trustees of the property.  In my view, the Hinds’ success against the Syrimis is not dependent upon having an equitable proprietary right to the property in the hands of the Uellendahls, the Syrimis or Allora Pty Ltd.  In my view questions which might have arisen under the Real Property Act do not arise, questions such as whether Allora Pty Ltd was immune from suit by virtue of the indefeasibility provisions of the Real Property Act, whether Allora Pty Ltd was fraudulent for the purposes of s69 and ss186, 187 RPA, whether Allora Pty Ltd was subjected to a pre-existing trust, because it was not a “registered proprietor taking bona fide for valuable consideration” for the purposes of s71 RPA or a “bona fide subsequent transferee for valuable consideration” for the purposes of s249 RPA and this, notwithstanding s162(3) RPA; see Stuart v Kingston (1923) 32 CLR 309 at 329, 330, per Knox CJ.  Nor is it necessary for this Court to consider the judgment of Asche CJ  in Hinds v Uellendahls & Ors (1992) 107 FLR 254 delivered on a pleading point earlier in the 1989 proceedings to which the Syrimis were not parties, or the correctness of the order of Kearney J on 7 December 1992 (unreported reasons therefor delivered 15 December 1992) for removal of the Hinds’ caveat upon the application of Amphora Pty Ltd.  The question whether Allora Pty Ltd was a fiduciary by reason of the Syrimis’ participation (as agents of Allora Pty Ltd) in the Uellendahls’ breach of fiduciary obligation, thus rendering Allora Pty Ltd’s title defeasible at the suit of the Hinds’ (see Tataurangi Tairuakena and Others v Mua Carr and Others (1927) NZLR 688) apparently was not considered.  It is also unnecessary to resolve “the company law question”, namely whether the Syrimis are to be equated with Allora Pty Ltd, or whether the learned trial Judge correctly described Allora Pty Ltd’s role as “sham”, as to which see Sharrment Pty Ltd v Official Trustee (1988) 18 FCR 449 at 454, Donnelly v Edelsten (1994) 49 FCR 384 at 391 and particularly Rainham Chemical Works Ltd v Belvedere Fish Guano Co [1921] 2 AC 465 at 475-6, per Lord Buckmaster (company as agent of director/shareholder).

	I am also of the opinion that nice questions as to the scope of the second (“the knowing assistance”) limb of the rule in Barnes v Addy do not arise in this case.  Whether that liability rule “can be formulated (conservatively) as one which exposes a third party to the full range of equitable remedy available against a trustee if that person knowingly or recklessly assists in or procures a breach of trust or of fiduciary duty by a trustee”, as Finn J formulated it in Australian Securities Commission v AS Nominees Ltd (1995) 133 ALR 1 at 19, or whether, given Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373, the Privy Council’s statement that “A liability in equity to make good resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation” in Royal Brunei Airlines v Tan [1995] 2 AC 378 at 392 represents the law in Australia are questions which do not arise.  On the significance of the Privy Council decision, see Harpum’s Note (1995) 111 LQR 545, Nolan (1995) CLJ 505 and Gardner:  Knowing Assistance and Knowing Receipt:  Taking Stock (1996) 112 LQR 56.

	The learned trial Judge found the Syrimis tortiously interfered with the contractual relations between the Uellendahls and the Hinds.  Tortious interference with contractual relations has the same underlying rationale as third party intrusion into the trustee-beneficiary or fiduciary relationship:  Royal Brunei Airlines v Tan, supra, at 386G-387C.

	The learned trial Judge, in the course of her reasons, said:

“I find that Mr and Mrs Uellendahl entered into a Unit Trust to disguise their interest in the subject property and to thwart attempts by Mr and Mrs Hinds to register a caveatable interest or enforce the contract.

I consider it reasonable to infer Mr Syrimi saw the contract between Mr and Mrs Hinds and Mr and Mrs Uellendahl.  This contract was collected by Mr Strange [the solicitor for the Uellendahls] on 17 August 1988 and subsequently there were a number of meetings to discuss the whole situation at which Mr Syrimi was present.

I am satisfied on the balance of probabilities that the third defendants played a part in inducing Mr and Mrs Uellendahl to breach the “Hinds” contract.

...

Clearly Mr Syrimi knew the plaintiffs could have an action for breach of contract.  Mr Syrimi assisted Mr and Mrs Uellendahl to structure their affairs in such a way as to disguise Mr and Mrs Uellendahl’s interest in the land.

It would appear on the evidence that Mr and Mrs Uellendahl were not honest in that they were not prepared to state to the plaintiffs the real reason why they did not intend to proceed with the contract for sale at the time they repudiated the contract or subsequently.  It would appear they just hoped the whole ‘Hinds problem’ would either go away or didn’t exist and in this they were assisted by the third defendants.

...

The memoranda of telephone conversations and meetings between Mr and Mrs Uellendahl and their solicitors in August and September 1988 (Exhibit P15) makes it quite clear the first defendants were well aware that there could be a problem if Mr and Mrs Hinds sought to enforce the contract.  This information was imparted to the third defendants.

On 7 September 1988, contract for sale of the subject property was exchanged between Mr and Mrs Uellendahl and Allora Pty Ltd.  The purchase price was $100,000 (Exhibit P1 3.7).  A deed of trust dated 7 September 1988, establishing ‘The Ironstone Unit Trust’ is Exhibit P1 3.6.  Option agreement dated 27 September 1988 is Exhibit P1 3.8.

By letter dated 2 November 1988, from Waters James and O’Neil [solicitors for the Uellendahls] to Mr and Mrs F Uellendahl (Exhibit P15) the second paragraph states:

‘You will remember from our numerous discussions on this matter that Lot 1110 Lagoon Road is now owned by the Trustee company Allora Pty. Ltd. which holds it on trust for ‘the Ironstone Unit Trust’.  At present all one hundred thousand (100,000) units in this Trust Deed are registered in the names of Andreas and Marianna Syrimi.  However, pursuant to the Option Agreements you have a right to purchase from Mr and Mrs Syrimi twenty five thousand (25,000) units at a purchase price of two dollars ($2.00) on or before the 30th of September, 1990.  You will further remember that ownership of the land was structured in this fashion to ensure that Mr Hinds would have no assets to seize should he successfully enforce his contract of sale.’

I find Mr and Mrs Syrimi and Mr and Mrs Uellendahl structured their affairs in such a way as to ensure the plaintiffs could not register an interest or execute in respect of the subject property.

Neither Mr nor Mrs Syrimi gave evidence and there was no explanation forthcoming as to why they did not give evidence.

I apply the principle established in Jones v Dunkel (1959-60) 101 CLR 298 ...

...

It is clear from the correspondence between solicitors for the first and third defendants as outlined that the third defendants were aware prior to 8 September 1988, of the ‘Hinds contract’ and the possible risk of litigation over the ‘Hinds contract’ between the plaintiffs and the first defendants.  I consider it is a reasonable inference to draw from the correspondence between solicitors for the first and third defendants and the documentation prepared for and signed by these parties that the first and third defendants were structuring the transaction between themselves so as to ensure as far as possible, the interests of the first defendants and the third defendants were protected if the Hinds did attempt to enforce their contract.  The third defendants did receive a benefit, they received the whole of the land.  They did know about the ‘Hinds contract’.”

	An issue before the learned trial Judge was whether the Syrimis knew of the contract between the Hinds and the Uellendahls.  The learned trial Judge found the Syrimis did know about the “Hinds’ contract”.  It is unclear whether she included the acknowledgment document in her finding.  The learned trial Judge made no specific mention of the acknowledgment document in reaching her finding.  Neither the original of the sale and purchase contract between the Uellendahls and the Hinds nor the original of the acknowledgment document were in evidence at the trial.  They obviously form part of the one transaction:  cf Amoco v Rocca Bros (1974) 7 SASR 268 at 366, per Walters J.  We do not know whether the original two documents were attached or physically separate.  Photocopies thereof constituted the exhibit.

	Mr Strange, the Uellendahls’ solicitor, gave evidence.  He was examined and cross-examined, counsel somewhat indiscriminately questioning, and Mr Strange answering, in terms of “the Hinds’ contract” and “the Hinds’ contracts”.  The acknowledgment document was never specifically mentioned.  It was never sought to have Mr Strange identify the acknowledgment document.  He was never asked whether he had seen it before.  His file did not contain a copy of either the sale contract or the acknowledgment - however his file had had documents removed therefrom, the number and nature and whereabouts whereof were unknown.  Mr Strange had a poor recollection of events independent of notes in his file, to which he had access in the course of both his examination and cross examination.  There was no note in his file recording receipt of the documents.  In the absence of the Uellendahls, who did not give evidence, Mr Strange was restricted in what he could say because of his inability to waive legal professional privilege.

	Mr Winter, the Hinds’ solicitor, also gave evidence.  He too, had little recollection of pertinent facts to this issue, partly because of the efflux of time, and partly because the matter at the time was primarily being handled in his office by a conveyancing clerk.  The conveyancing clerk was asked to send a copy of the “Hinds’ contract” to Mr Strange.  The conveyancing clerk’s file note in Mr Winter’s file indicates a copy of the contract for sale and purchase was sent to Mr Strange prior to Mr Strange’s lengthy meeting with the Uellendahls and Mr Syrimi on 30 August 1988.  In the circumstances, I am of the view it would be unsafe to reach a conclusion on the balance of probabilities that only the contract of sale and not the acknowledgment document was sent to Mr Strange, because of the terms of the conveyancing clerk’s file note.  There is little to suggest the Uellendahls did not have their own copy or copies of the Hinds’ contract of sale and purchase and the acknowledgment they had signed.  The Syrimis did not call their own solicitor to give evidence.  He was Mr James of Ward Keller & Company, an experienced conveyancing solicitor who advised the Syrimis throughout the transactions.  The Syrimis’ unexplained failure to call their solicitor or to give evidence themselves is telling in this regard.  It is improbable that Mr Syrimi conferred at length with the Uellendahls and Mr Strange concerning the Uellendahls’ legal position with respect to the Hinds’ in the absence or ignorance of the legal documentation which established that position.  In the circumstances this Court can safely infer, and I do infer, that the Syrimis were fully acquainted with both the contract for sale and purchase and the acknowledgment document by the conclusion of the meeting of 30 August 1988.

	The Uellendahls were fiduciaries of the Hinds.  The Uellendahls had undertaken to act on behalf of and in the interests of the Hinds in completing the ANR contract:  cf Hospital Products v United States Surgical Corporation (1984) 156 CLR 41 at 72, 96-7, 101-2.  The Hinds were vulnerable to the extent that the Uellendahls could act otherwise than the Hinds relied upon them to act, viz as registered proprietors to transfer title to them:  Hospital Products, supra, at 142.  The arrangements between the Uellendahls and the Hinds placed the Uellendahls in a position of power to effect the interests of the Hinds adversely:  Mabo v State of Queensland (No 2) (1992) 175 CLR 1 at 200, 201.  The Hinds were entitled to expect that the Uellendahls would act in their interests to the exclusion of their own interests or the interests of third parties (such as the Syrimis and their company).  The scope of the fiduciary relationship between the Uellendahls and the Hinds and of the Uellendahls’ fiduciary obligation was equal to what the Uellendahls had undertaken to do for the Hinds:  to complete the ANR contract using the Hinds’ money, to become registered proprietors of the land and without payment of money to transfer title to the Hinds.

	The Syrimis knew of the contract of purchase between the Uellendahls and ANR.  They knew of the relationship between the Uellendahls and the Hinds.  So much may be inferred from, inter alia, the meeting between Mr Strange (the Uellendahls’ solicitor), the Uellendahls and Mr Syrimi of 30 August 1988 when the Uellendahls’ involvement with Mr Hinds was discussed ‘at great length’ for two and three quarter hours (Exhibit P15) and the unexplained failure of the Syrimis to give evidence.  It may also be inferred, and I would infer, the Syrimis or their solicitor perused the Hinds’ contract of purchase and the acknowledgment document.  The Syrimis knew the Uellendahls had no money of their own to purchase the property.  They knew the Hinds had paid the deposit to ANR and that the Hinds were to pay the balance of the purchase price to ANR.  They knew the Hinds were not paying any money to the Uellendahls.  They knew the Uellendahls were not paying any of their own money to ANR.  They knew the Uellendahls were not to take title on their own behalf but on behalf of the Hinds.  They procured payment by Allora Pty Ltd to ANR for the balance of the purchase price due by the Uellendahls to ANR under the ANR contract.  They procured title in Allora Pty Ltd.  They granted the Uellendahls an option over units held by the Syrimis in a secret unit trust pursuant to which Allora Pty Ltd held the land on behalf of the unit holders and they acted with the Uellendahls in deliberately attempting to avoid the Uellendahls’ obligations to the Hinds.  It is quite apparent on the facts that the Syrimis undermined the fiduciary relationship subsisting between the Uellendahls and the Hinds and prevented the Hinds from receiving the benefit of the discharge by the Uellendahls of their fiduciary obligation.  This they did, inter alia, by offering to grant and granting Mr and Mrs Uellendahl, in consideration for the payment of one dollar each, an option to each acquire a one-quarter interest in the Unit Trust for a total consideration of one dollar.

	The Syrimis, undermining the loyalty of the Uellendahls and directly or indirectly gaining thereby, induced the Uellendahls to breach their fiduciary obligation to the Hinds.

	They knew of the fiduciary relationship between the Ullendahls and the Hinds, or at least the circumstances indicating the fact of that relationship and such as to indicate to honest people that impropriety was involved:  Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 398, 412; Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1988) 78 ALR 193 at 239.  This Court can safely infer the Syrimis knew a transfer to Allora Pty Ltd would constitute a breach of fiduciary obligation and would be dishonest:  cf Agip (Africa) Ltd v Jackson [1990] Ch 265 at 294A-295D; Eagle Trust Pty Ltd v SBC Securities Ltd [1993] 1 WLR 484 at 493H, 506F.

	The Syrimis procured the breach of fiduciary duty on the part of the Uellendahls in transferring the land to Allora Pty Ltd and are accountable as fiduciaries pursuant to such authorities as Eaves v Hickson (1861) 30 Beav 136; 54 ER 840 and Midgley v Midgley [1893] 3 Ch 282 at 301, 304.  Whether these authorities are to be treated separately from Barnes v Addy, as Gummow J treated them in Elders Trustee v Reeves (1988) 78 ALR 193 at 238-239, or - in Australia at least - as part of a yet to be finally formulated larger whole is unnecessary to decide.  I am of the opinion the Syrimis are liable to the Hinds as fiduciaries.

	I turn to quantum of the judgment.  The learned trial Judge said:

“DAMAGES
I consider the plaintiffs are entitled to a claim for damages against the third defendant for the benefit received by the third defendant by reason of their breach of trust.

I accept the submission made by counsel for the plaintiff that the relevant date when the third defendant converted the transaction into a profit occurred on 30 June 1994.  On 30 June 1994 the third defendant concluded a sale of the property to Kooyong Pty Ltd for $380,000.  I agree with the submissions made on behalf of the plaintiffs that the earlier transfer to Allora Garden Nursery Pty Ltd should be ignored.  The third defendants were the shareholders and directors of Allora Garden Nursery Pty Ltd.  The third defendants were effectively the company.  From the $380,000 it is necessary to deduct the purchase price of $100,000 leaving a balance of $280,000.  It is then necessary to deduct an amount to cover an allowance for the improvements made by the third defendant to the nursery.  I accept the evidence given by the valuer Mr Gore that a reasonable assessment of the value of the improvements is $70,000.

...

Accordingly, the sum of $70,000 is deducted from the $280,000 leaving a balance of $210,000.  From this amount should also be deducted the amount the plaintiffs would have paid in interest had they proceeded with the purchase of the property.  A calculation of the interest was prepared by Mr Winter, solicitor for the plaintiff, from the Citibank statements (Ex P5).  The calculation of interest prepared by Mr Winter is annexed to these Reasons for Judgment.  I accept these calculations.  The total amount of interest is calculated as $52,978.95 to be deducted from $210,000, this leaves a balance of $157,021.05.  I allow interest at the rate of 8% from 1 July 1994 on the award of $157,021.05.

The order I make is to award judgment in favour of the plaintiffs against the third defendants in the sum of $157,021.05 plus interest at the rate of 8% calculated from 1 July 1994.”

	The Syrimis written submission on quantum was as follows:

“Damages

25.	It is not clear whether her Honour undertook an 
accounting of profits, awarded equitable compensation or awarded damages at common law (AB 30).  It is most likely that she has awarded damages at common law because she has not assessed the cost to the Syrimis of achieving any profit made eg the actual cost of the improvements and the interest that the Syrimis paid, nor has she fixed a period for the taking of an account of profit.

26.	In assessing damages her Honour did so as at 
June 1994.  The assessment should have been made as at the date of the breach ie 9 September 1988.  That is the normal situation.  It was at that date at which (a) the loss occurred, (b) the Hinds lost any right or prospect of obtaining specific performance, (c) the Hinds were placed in a position to mitigate any loss by purchasing other similar land.

Johnson & Ors v Perez (1989) 166 CLR 351 at 356.
McDermott:  Equitable Damages pp117-121.
McGregor:  McGregor on Damages para 904-907.

27.	Allora paid the same amount for the land as the 
Hinds.  That was full value.  There was nothing unique or special about the land.  The Hinds had a duty to mitigate and could not stand by to see if a profit was made.  If the Hinds suffered damage at all it was a nominal amount.”

	I am unable to accept these contentions.  A third party who procures a breach of trust or breach of fiduciary obligation is liable as a trustee or fiduciary for the breach.  The Syrimis caused the Hinds to lose the land.  The Hinds are entitled to equitable compensation pursuant to the inherent jurisdiction of the court sitting as a court of equity.  Such compensation may be restitutionary, putting the Hinds in the ‘same position as if there had been an actual restoration ...’ Re Dawson [1966] 2 NSWR 211 at 216.  The learned trial Judge awarded as ‘damages’, ‘the benefit received by the (Syrimis) by reason of their breach of trust’.  It is, with respect, not ‘damages’ but equitable compensation to which the Hinds are entitled.  They are entitled, in the circumstances of this breach of this fiduciary obligation (of this scope) to equitable compensation in the form of restitution of that which has been lost, cf Heydon’s Note (1994) 110 LQR 328 at 335, Rickett’s Note (1996) 112 LQR 27 at 31, Re Dawson, supra, at 214, 216, Hill v Rose [1990] VR 129, Meagher Gummow and Lehane, Equity Doctrines and Remedies, Third Edition, para 2304 and Mason & Carter, Restitution Law in Australia, para 1725.  The learned trial Judge deducted from the ‘profit’ she found the Syrimis had received the amount she found the Hinds would have paid in interest had they proceeded with the purchase, even though such sum was irrelevant to the determination of the Syrimis’ profit.  This aspect of the judgment was the subject of a cross-appeal of the Hinds which was withdrawn at the hearing of the appeal.  The Hinds, before us, accepted that the Syrimis were entitled to an allowance for what was termed ‘the opportunity cost’ of the money Allora Pty Ltd had devoted to the purchase of the subject land, and although the Syrimis led no evidence as to what in fact this cost was, the Hinds were content to accept the learned trial Judge’s deduction as having this practical effect.  I see no reason to disagree with this.  In my opinion the Hinds are entitled to an award of compensation representing the value of the land at date of trial - in this case $310,000 - less the purchase price of $100,000, less the agreed interest component of $52,978.95, that is $157,021.05.  This sum, with interest from 6 June 1995 to date of judgment, 22 September 1995, which on my calculation is $3,716.88, would put the Hinds in the position they would have been in had they acquired the land and retained it as was their intention.  The learned trial Judge’s rate of interest was not contested.  In these circumstances the judgment of the learned trial Judge in the sum of $157,021.05 should be altered to $160,737.93.  Supreme Court interest will accrue on that sum from 22 September 1995 until payment.

	Subject to the variation with respect to quantum, I would dismiss the appeal with costs.

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