Clay v Clay [2001] HCA 9 15 February 2001 P52/2000
ORDER
1.Appeal allowed.
2.First respondents to pay the costs of the appellant.
3.Set aside paragraphs 1, 2 and 4 of the orders of the Full Court of the Supreme Court of Western Australia made on 28 July 1999 and in lieu of paragraph 2 order that the appeal be and is hereby dismissed.
4.Questions of costs of the proceedings in the Full Court of the Supreme Court of Western Australia remitted to the Full Court of the Supreme Court of Western Australia to be determined in a manner consistent with the reasons for judgment of this Court.
On appeal from the Supreme Court of Western Australia
Representation:
C J L Pullin QC with M H Zilko for the appellant (instructed by Durack & Zilko)
M G Clay for the first-named first respondent and first-named second respondent (appeared in person) and appeared for the second and third-named first respondents
No appearance for the second and third-named second respondents
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Clay v Clay
Equity – Fiduciary duty – Guardian of infant children purchased asset at market value from unadministered estate of infants' deceased father – Children were residuary beneficiaries of that unadministered estate – Children sought rescission of sale 21 years later – Whether claim barred by Limitation Act 1935 (WA) – Whether guardian a trustee of an "express trust" – Whether guardian in breach of fiduciary duty in making purchase.
Equity – Express trust – Whether fiduciary in whom title is not vested is an "express trustee" of property.
GLEESON CJ, McHUGH, GUMMOW, HAYNE AND CALLINAN JJ. This is an appeal from the Full Court of the Supreme Court of Western Australia (Wallwork, Owen and Parker JJ)[1]. The Full Court allowed in part an appeal against the dismissal by White J of an action against the present appellant, and granted relief which the appellant disputes in this Court. The appellant seeks the restoration of the orders of White J and an order that the appeal to the Full Court be dismissed.
The litigation has arisen from disputes between members of the Clay family and it is necessary to outline some matters of family history.
The estate of Mr James Clay
James Edward Carter Clay, whom we shall identify as Mr James Clay, was twice married. The children of the first marriage were Paul James Clay, born in 1954; Moira Helen Clay, born in 1956; and Mark Gregory Clay,…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Clay v Clay [2001] HCA 9
Case
[2001] HCA 9
Decision Date
CaseChat Overview and Summary
The High Court of Australia considered an appeal by Mrs Clay concerning her purchase of an asset from the unadministered estate of her deceased husband, of which their infant children were the residuary beneficiaries. The children, having reached adulthood, sought to rescind the sale approximately 21 years later, alleging a breach of fiduciary duty by Mrs Clay in her capacity as guardian. The central dispute revolved around whether Mrs Clay's actions constituted a breach of her fiduciary obligations and whether the claim was barred by the relevant Limitation Act.
The legal issues before the High Court included whether Mrs Clay, as guardian, held an "express trust" over the property in question, and consequently, whether she was an "express trustee" for the purposes of the Limitation Act 1935 (WA). The court also had to determine whether Mrs Clay had breached her fiduciary duty by purchasing the asset at market value from the unadministered estate. Further issues debated included the construction of s 50(1) of the relevant Act concerning valuations made by a trustee and whether a conflict of duty and interest could arise in relation to one of the beneficiaries who had reached majority before the transaction.
The High Court found that Mrs Clay had not acted in breach of her fiduciary duties as guardian when she purchased the property. Her success on this ground, and on the submissions regarding the statutory bar, rendered it unnecessary to determine the other debated issues. The Court allowed the appeal, setting aside certain orders of the Full Court of the Supreme Court of Western Australia and amending another to dismiss the appeal to that court. The costs of the appeal in the High Court were awarded to Mrs Clay, and the questions of costs in the Full Court were remitted to that court for determination.
Orders
Orders of the court
1. Appeal allowed.
2. First respondents to pay the costs of the appellant.
3. Set aside paragraphs 1, 2 and 4 of the orders of the Full Court of the Supreme Court of Western Australia made on 28 July 1999 and in lieu of paragraph 2 order that the appeal be and is hereby dismissed.
4. Questions of costs of the proceedings in the Full Court of the Supreme Court of Western Australia remitted to the Full Court of the Supreme Court of Western Australia to be determined in a manner consistent with the reasons for judgment of this Court.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
HUGH, GUMMOW, HAYNE AND CALLINAN JJ
Mrs Clay has made out her case in this Court that, in purchasing Queenslea Drive, she did not act in breach of her fiduciary duties as guardian.Conclusions Mrs Clay's success in this Court with her submissions respecting the statutory bar and, in any event, the absence of breach of fiduciary duty, make it unnecessary to determine further issues which were debated on the appeal. The first concerned the construction of s 50(1) of the 1962 Act. In certain circumstances this operates to make valuations made by a trustee in good faith binding on all persons beneficially interested under the trust. The second matter concerns the proposed further ground of appeal that, in any event, there could have been no conflict of duty and interest respecting Mr Paul Clay because he achieved his majority at a time before the transaction respecting Queenslea Drive was implemented. The appeal should be allowed with costs. As with the unsuccessful special leave applications which were dismissed on the day of the hearing of the appeal, the first respondents to the appeal should pay the costs of the appellant in this Court. We would not visit a costs order upon the second respondents, the present trustees of the estate. One of these is Mr Mark Clay, who sought to appear on behalf of all the trustees, but, whilst the other trustees were served, it is not evident that there has been the necessary concurrence between them as joint trustees. Order 1 of the orders of the Full Court made on 28 July 1999 should be set aside and order 2 thereof should be amended to read:"The appeal be and is hereby dismissed."The present second respondents did not appeal from the decision at trial and were joined as respondents in the Full Court appeal. Order 4 of the orders of the Full Court obliged Mrs Clay to pay 50 per cent of the costs in that Court of the appellants, the present first respondents. Order 4 also applied to the costs of what appears to have been a cross‑appeal by Mrs Clay respecting reliance upon s 50 of the 1962 Act. Mrs Clay seeks an order from this Court dealing with the costs orders of the Full Court but remitting to the Full Court the matter of an application by her for a special order for costs of the Full Court proceedings. In the circumstances, we would make no order in this Court respecting the costs of the proceedings in the Full Court save to remit questions of costs in that Court to that Court for its determination in a manner consistent with the outcome in this Court.
Ratio Decidendi
Legal Principle Established
Established by:
HUGH, GUMMOW, HAYNE AND CALLINAN JJ