Paton v Reck[1998] QDC 375

BETWEEN:

AND:

REASONS FOR JUDGMENT - McGILL D.C.J.

Delivered the 17th day of December 1998

The two male defendants were the owners of a farm on the bank of Littabella Creek, a little to the north of Bundaberg, until that property was sold to Queensland Prawn Farms Pty Ltd (‘the purchaser”) pursuant to a contract dated 31 January 1993: Exhibit 11. Part of the farm had, between 1988 and 1991, been used as a prawn farm, operated by a partnership consisting of the plaintiffs and the defendants, pursuant to a Deed of Partnership dated 27 February 1989: Exhibit 3. By this action the plaintiffs claim that they are entitled to be paid by the defendants part of the proceeds of sale of the farm, as damages for breach of fiduciary duty, or pursuant to a constructive trust, or pursuant to an obligation to make restitution in respect of work done, materials supplied and other benefits obtained by the plaintiffs for the benefit of the defendants in respect of the land. There is also an alternative claim for an account of the proceeds of sale of partnership assets, and other relief in respect of the Deed of Partnership. By way of counterclaim the defendants seek an order that an account of the partnership be taken.

The male defendants (who are for convenience referred to hereafter as “the defendants”) have been small crop farmers on the land for many years, it having previously belonged to their father: p. 110. They also owned another farm nearby: p. 113. The male plaintiff (“the plaintiff”) had been a truck driver, and subsequently began purchasing fruit for agents in the Melbourne markets, which led to business dealings with the defendants: p. 16. He became interested in prawn farming as a result of a conversation with a friend, and went to see a prawn farm somewhere up north, and subsequently told the defendants about it. They also became interested, and considered operating a prawn farm themselves, and this led to the partnership being formed. Three ponds were constructed on part of the property close to the creek, and a channel was dug to give access to the water: p. 114. It was necessary to install pumps to pump water from the creek into the ponds, and aerators to maintain suitable conditions for the prawns. The aerators were powered by diesel generators, and were run from the early hours of the morning until daylight: p. 136. The prawns had to be fed, manually, several times a day: p. 135. The prawns took 4-6 months to grow after which the crop could be harvested and sold: p. 136. Once things settled down the plaintiff was responsible for marketing the prawns, although he did also help to run the farm to some extent p. 31, p. 136. Otherwise operating the farm was the responsibility of the defendants: p. 31, and see Exhibit 3, Clause 5(a)(ii). The farm was operated until March 1991 when the parties decided they could no longer finance it, and operations ceased: p. 26. The affairs of the partnership have never been wound up.

The partnership deed is, in some respects, not a very helpful document; for example it does not deal with the circumstance that the partnership business was carried on on land owned by two of the partners. I infer from the terms of Clause 3 of the partnership deed that the capital contemplated by the deed was to be contributed in money. There is also no provision in the deed dealing with the circumstance that the partnership would be constructing works on that land, which might be either a benefit, in facilitating its use as a prawn farm, or a detriment, in impairing its use for growing crops. There is one somewhat curious provision in Clause 7(d)(vii) referring to the Central Sugar Cane Prices Board, but not in a way that justifies any particular conclusion. I suspect that it is a drafting error.

One matter which is dealt with in the partnership deed is the partnership's obligations in respect of a sum of $35,000 borrowed from Westpac Banking Corporation: Clause 4(j). This was borrowed in the name of the plaintiffs in June 1988 (Exhibit 16) and was secured on their residence: p. 17. It seems to me clear from the terms of the clause that this money was to be treated as between the partners as a borrowing by the partnership, so that the partnership had an obligation to repay the loan. In the event it was never repaid by the partnership (p. 25) being repaid by the plaintiffs by the sale of their house: p. 30. Although so far as Westpac were concerned the money was lent to the plaintiffs, as between the partners this money in my opinion is properly characterised as a debt of the partnership, so that the plaintiffs are entitled to have it brought to account as a partnership debt discharged on its behalf by them.

Sale of the land

The contract for sale was negotiated on behalf of the purchaser, at least in the early stages (p. 156) by Mr. Donovan who was a consultant retained to locate potential sites for a prawn farm: p. 152. He said that he found out about the subject property, and all of the others that he considered, from a file maintained by the Department of Primary Industries of properties which had aquaculture licences and were not operating, or properties where the owners had expressed some interest in aquaculture or in selling their properties for the purposes of aquaculture: p. 165. He examined the various sites, and concluded that the defendants' property was the most suitable: p. 155. In addition Mr Donovan spoke at some stage to Mr Lobegeiger (p. 225), a technical officer with the Department of Primary Industries, who was responsible for performing assessments of the technical suitability for prawn farming of sites when applications were made for licences (at least in some areas): p. 219. Mr Lobegeiger knew the property was there and had visited it in the previous six months (p. 227), and he recommended this site as ideal for the particular type of prawn, penaeus japonicus, which the purchaser company was interested in farming: p. 226. This relates particularly to the availability of suitable water. Relatively large quantities of salt water are required for farming this particular species of prawn and this requires a creek with a relatively large tidal estuary, well flushed by the sea (p. 155) but with a relatively small catchment so that there was less risk of the salt water being swamped by fresh water after heavy rain, and where there were no polluting industries upstream which could interfere with the purity of the water. These considerations were all present at this particular location, but were not confined to the defendants' land: p. 237. Mr Lobegeiger said that he had seen another site on the same creek further upstream, where the water would be too fresh and was therefore unsuitable for farming penaeus japonicus. The land immediately upstream from the defendants' land became hillier, but there were a number of parcels downstream on the northern side which, so far as he could tell without actually inspecting them, he would assume would have been suitable, although the land on the southern side may have been unsuitable: p. 238.

When Mr Donovan initially raised the question of purchasing the defendants land, he made an offer of $750,000 which was discussed and rejected: p. 156. In view of Mr Donovan's understanding as to the value of land in the area ($1,000 - $5,000 per hectare: p. 156), this was a fairly generous offer, the top of the range. The area of the property was 144 hectares: Ex. 11. Yet after this rejection, Mr Donovan apparently did nothing with a view to acquiring land on Littabella Creek for his clients apart from waiting until there were further negotiations with the defendants which ultimately led to a sale at a price of $1.1 million (Ex. 11), which was well outside the range of which Mr Donovan was aware. There were also incidental benefits provided under that contract to the defendants: two one hectare house blocks were transferred back to them, and about half the land was leased back for 5 years, with an option for another 5, at a rental of $10 per annum. It does not appear that Mr Donovan made any attempt to see whether he could obtain one of the other pieces of land nearby, which ought to have been as suitable, at a better price. When asked why, when the first offer had been rejected, he did not see if the defendants' neighbour would sell for that amount, he was unable to give a reasonable explanation: p. 172. At one stage he seemed to be saying, in effect, that he did not speak to the neighbour as they had not been introduced: p. 173.

The difference between this property and the other properties downstream on the northern side of the creek was essentially that this property had previously been used for prawn farming, had some structures in place for that purpose, and had the benefit of a current permit for aquaculture. Mr Donovan said that the existing structures were of no use to his clients (p. 159), and it is clear that what was subsequently built on the land after the sale was quite different from the prawn farming operation carried on earlier by the partnership. Aerial photographs of the land before and after are in evidence, and they support the conclusion that no part of the early works has been reused: Ex. 27. The application by the purchaser to the Queensland Fish Management Authority (Ex. 32) refers on p. 2 item 2 to the proposed farm including “3 nursery ponds - existing - 9 m³ in total” which suggests that it was at one time the intention of the purchaser to use the existing ponds, but this was not put to Mr. Donovan so I do not think I should have regard to it. Any such intention may not have lasted long: Ex. 40.

It may be that at the time Mr Donovan thought that the aquaculture licence could be assigned to his client: p. 158. At one stage the sale was to be subject to such a transfer (Ex. 13), and there was an attempt subsequently to obtain an assignment, which was unsuccessful as such a licence is not able to be transferred. The contract (Ex. 11) was then executed without reduction of the purchase price, which suggests that the purchaser did not attribute any value to the licence as such, so long as it could obtain its own licence.

The Plaintiffs' Claim

It is alleged in the Further Amended Statement of Claim (Clause 5) that prior to signing the deed it was the express intention of the parties that the defendants hold the partners' interest in any partnership improvements constructed on the property on trust for the partners, but there was no evidence in support of that allegation, which is put in issue by the defence: Clause 2. Obviously the defendants' land was in fact used to carry on the partnership business, and I think I can safely infer that they agreed to allow this, but I do not think I can safely infer anything else from the evidence. There is no evidence that any payment was made to the defendants for the use of their land, (none is recorded in Ex. 8, 9, 10) and from the fact that a claim for such payment was made on their behalf after the dispute arose (Exhibit 23) I infer that no such payment was made during the time when the partnership was carrying on business. There is no evidence of any agreement to make such a payment.

In my opinion it is clear that the land was not a partnership asset. The property of a partner can be used for the purposes of the partnership without becoming partnership property: O'Brien v. Komesaroff (1982) 150 CLR 310 at 322; Kelly v. Kelly (1990) 64 ALJR 234 at 237. Indeed, the plaintiffs do not allege that the land itself was a partnership asset, although if Clauses 13, 16 and 17 of the Further Amended Statement of Claim are read together it is alleged that a number of improvements to the land were partnership assets. With regard to those listed in Clause 13 (a)-(e), most are earthworks or fixtures, and therefore necessarily part of the land and the property of the owners of the land. Whether the snap freezer was a fixture is not clear, but it was subsequently sold by the defendants (p. 121)^[1] and they have been willing to treat the proceeds as partnership moneys (Exhibit 23) so I will assume it was not a fixture. The same applies to the diesel generator. The aerators may or may not have been fixtures, but if they were not I am in any event not persuaded that they had any value. I suspect that they were constructed specially for the partnership operation; after it came to an end they were simply discarded, and remain on the property as junk: p. 120. The plaintiff's valuer attributed the value of $300 each to them (p. 106). However, this was done without seeing the aerators (p. 181) and with no knowledge as to their state at the relevant date, and I am not prepared to accept this evidence.

There was evidence that all of these were constructed at partnership expense (p. 30), the contrary was not argued and the undoubted fact that large amounts of money were spent by the partnership supports a finding that that was the case. I am satisfied therefore that all of these works were constructed at the expense of the partnership, although apparently the open earth drain was never paid for: p. 121. Mr Reck's evidence in relation to this at p. 122 indicates that this would have been treated as a partnership expense if an account had come in.

Insofar as the partnership by doing these works and by installing these fixtures added value to the defendant's property, in the absence of any agreement (and none may be found in Exhibit 3 or elsewhere in the evidence) the partnership has, without more, no claim on the defendants in respect of the improvements: Harvey v. Harvey (1970) 120 CLR 529 at 544, 567.

Paragraph 13(f) of the Further Amended Statement of Claim refers to the obtaining of appropriate consents from government and local authorities. One of these was a Permit for Aquaculture Purposes numbered Q200 pursuant to s. 35A(2) of the Fishing Industry Organisation & Marketing Act: Exhibit 4. That permit was for a term of 5 years, from 24 August 1989, and was therefore still current when the land was sold. When the contract to sell the land was negotiated, it was subject to the transfer of the permit (Ex. 13), and the purchaser's solicitor wrote to the Department of Primary Industries on 12 January 1993 enquiring as to how the permit could be transferred: Exhibit 28. The Department in response pointed out, as is common ground, that such a permit is not transferrable: Exhibit 14. An application form for a new permit was lodged on 8 February 1993 (Exhibit 32) and permit Q349 was issued in respect of the land on 3 June 1993 in favour of Queensland Prawn Farm Pty Ltd: Exhibit 37.

Other consents obtained by the partnership included a Processor's Licence No. P00191K under the Fishing Industry Organisation & Marketing Act (Ex. 5), Licence No. W828 under the Clean Waters Act which permitted the discharge of effluent into Littabella Creek (Ex. 6), and a Certificate of Registration No. G04351 under the Fishing Industry Organisation & Marketing Act (Ex. 7). These all expired on 31 March 1992 (Exhibit 2) being allowed to expire because the partnership had ceased operations in March 1991, as it was losing money and neither the plaintiff nor the defendants were prepared to put more money into it: p. 135. These various consents were obtained by the plaintiff for the partnership (p. 19) and insofar as they can constitute property I think it clear that they were the property of the partnership.

The judgments in Harvey v. Harvey (1970) 120 CLR 529 contain a discussion of a number of issues which have arisen in this matter. In that case there was a partnership between the owner of a farm and a firm consisting of the owner's brother and the brother's sons, for the farm to be worked and the profits divided. The agreement operated for some twenty-one years, during which time substantial improvements were constructed on the property, some at the expense of the partnership but some at the expense of the firm. After the partnership was terminated and the parties had fallen out there was litigation, and one issue which arose was whether the land was partnership property in equity. The trial Judge (Burbury CJ of the Supreme Court of Tasmania) treated the land as partnership property, but credited the owner of the land with a fluctuating capital contribution according to the value of the land at any given time assessed apart from the effect of any works constructed on it by the partnership: p. 542. Barwick CJ considered that the very nature of the business required that the land should become the property of the partnership (p. 549) arising from the fact that substantial changes were to be effected to the land as a partnership activity, so that it was reasonable to treat the improvements as being a partnership asset, something which His Honour seems to have regarded as virtually requiring that the land itself be brought into the partnership: p. 550. His Honour however was obviously influenced by the fact that the firm was supplying the skill and labour to operate the business, so that, if the owner of the land did not contribute the land to the partnership, there was really not much that he was contributing at all: p. 549. In the end His Honour declined to disturb the provision adjusting the value of the owner's contribution from time to time: p. 551.

However the other two members of the High Court came to a different view, influenced particularly by the fact that this partnership was entered into as an alternative to the owner's selling the land, he being prevented by illness from working it himself, so that it might be kept available for use in time by his son, who was at that time only six years old: p. 553. They regarded the proposition that it was not part of the partnership property as consistent with the evidence of the oral agreement by which the partnership was formed, and the way in which the property was treated in the accounts of the partnership, and by the fact that the partnership was intended to last for many years, as it did, so that there was ample opportunity for the partnership to obtain a return through profits for any expenditure incurred on improvements. Menzies J was not prepared to conclude that an officious bystander would not have been told that it was unnecessary for allowance to be made for the value of any such improvements if the partnership was wound up: p. 557. Walsh J at page 563 agreed that the fact that it was contemplated that the land would be improved and its improvement was one of the purposes of the partnership, could be regarded, if there were no other relevant circumstances, as justifying the conclusion that the land itself was an asset of the partnership, but there were other circumstances and agreed with the analysis of Menzies.J. He also agreed with the comment of Menzies J at page 555 that allowing the owner's interest to fluctuate according to the fluctuating value of the land apart from any such improvement was really inconsistent with treating it as an asset of the partnership. If the land became a partnership asset the partners as a whole were entitled to any increase in the value of it. He expressed the view that the only way in which improvements could be regarded as profits divisible among the partners would be upon a sale of the improved property: p. 556. That had not occurred in that case.

Their Honours also dealt with the question of whether there was any continuing claim by the firm on the owner of the property in respect of the improvements. Barwick CJ said that the partnership had no claim on the owner of the premises on which the partnership business was carried on for improvements brought about at the partnership's expense, in circumstances where the partnership business did not include the betterment of that property itself: pp. 545-6. But he took the view that improving the property was part of the purposes of the partnership, since such improvement was necessary to enable the partnership business properly to be carried on there: p. 545. Since the making of the improvements was “necessary” to carry on the partnership business, even if the land had not become in equity the property of the partnership, the owner of the land was accountable to the partnership for any benefit which came to him as owner as a consequence of a partnership expenditure of money or effort: p. 551. His Honour's explanation for this conclusion at that page was as follows:

There are two difficulties which stand in the way of the application of this analysis to the advantage of the plaintiffs in the present case. The first is that it appears to have been rejected by both the other members of the Court, at least when stated in such broad terms. Menzies J said that in the absence of an express agreement the only way in which the improvements could be regarded as a profit would be if the property was sold, and the profit thereby realized, as the extent to which the sale price was higher than it would otherwise have been because of the improvements effected by the partnership: p. 556. This seems to me to be broadly consistent with the idea that the foundation for the obligation to account lies in the obtaining of a private advantage from the carry on of the partnership business, by retaining the benefit of improvements effected at the expense of the partnership, which is the basis put forward by Sir Garfield Barwick, although Menzies J would treat the owner of the land as obtaining an advantage for which he must account only if he had actually realized the profit. This does not allow for the possibility that the advantage could be obtained in using the improvements on the land to operate a business, but was based on the existence of a common intention that the improved property be retained by the owner after the determination of the partnership. In effect, there had been consent to this benefit being retained in this form by the owner, in the circumstances of that case.

Walsh J at page 567 said that the statutory prohibition on retaining a private advantage at the expense of the firm, which in Queensland is in s. 32 of Partnership Act 1891, did not create an obligation to account for a benefit consisting of the increase in value of property resulting from work which, as was intended, was carried out by the partnership and that no term that it would do so should be implied. There was no general principle that there was (or was not) such a liability to account unless there was an agreement to the contrary. There could be circumstances where a partner would become liable to account for a share in an increase in the value of his property produced by the partnership effort, but that case was not one of them. Some discussion of the circumstances where such an obligation could arise at page 564 indicates that His Honour was thinking in terms which might these days be characterized as cases of unjust enrichment; for example, where the partnership was deliberately terminated by the owner of the property after the expenditure had been incurred on the improvement but before the partnership had obtained a reasonable return for such expenditure by way of increased profits. In other words, there could be an obligation to account if the timing of the termination of the partnership (or perhaps the withdrawal of the licence of the partnership to use the premises) produced a premature advantage to the owner of the land and unreasonably truncated the benefit expected to have accrued to the partnership from the expenditure. Such analysis provides no comfort to the plaintiffs in this case. It also appears to assume that the obligation to account for a benefit depends on whether the benefit obtained was one that ought to have been obtained by the partnership, a limitation which is, I think, contrary to other authority.

Perhaps the significance of Harvey for present purposes is that the point on which their Honours appear to have divided is really the question of what intention should be attributed to the parties given that it was plain they must have contemplated that there would be improvements effected to the land, but no express provision had been made to deal with those improvements on termination. For the majority the proposition that ultimately the owner of the land would have obtained the benefit of the improvements, after the partnership had had a reasonable opportunity to extract profit from the working of the improved land, was consistent with the reasonable expectations of intelligent men so no agreement to the contrary should be implied; the approach of the Chief Justice, that there was a liability to account in the absence of some agreement to the contrary, involves a presumption that there is a liability to account, one imposed by equity in the absence of an agreement to the contrary between the parties.

The land in the present case having being sold, it would appear that the approach of Menzies J is applicable, to the extent that a profit was realised. That brings me to the second difficulty in applying the approach of Barwick CJ: in the present case it appears that the defendants did not in fact obtain any benefit from the physical improvements to the land when it was sold. It is clear from the aerial photographs (Ex. 27) that the purchaser, although using part of the land as a prawn farm, constructed entirely different works to enable that activity to be carried on, and no part of the works constructed by the partnership were in fact reused. Mr Donovan, a consultant to the purchaser, who was called by the defendants gave evidence that the existing works on the property were unsuitable to the type of prawn farming contemplated by the purchaser, because the purchaser was going to farm, on a much larger scale, a different species of prawn, which required conditions which could not be produced by the facilities constructed by the partnership. Notwithstanding some reservations about this witness, to which I shall return, I am prepared to accept this evidence. I am satisfied that no part of the purchase price was paid for the physical works on the property, and therefore the defendants did not obtain any benefit from the fact that these works were constructed on their land. In these circumstances, if the approach adopted by Menzies J applies, there is no profit which he would regard the defendants as liable to bring to account for distribution in accordance with the partnership agreement.

The same would seem to apply to any restitutionary claim. Consider a case where A mistakenly constructs a house on land belonging to B, B being aware of this and standing by, allowing A to do so. In such circumstances A is entitled to maintain a restitutionary claim, but the measure of relief is the extent to which the value of B's land has been increased by the construction of the house, not the cost to A of constructing it. It follows that if, as soon as the house is constructed, B sells the land to C who is purchasing it as part of the car park for a new shopping centre and pays B no more than B would have obtained for the land had the house not been there, as the highest and best use of the land is as part of a shopping centre site, B will not have obtained any benefit from the construction of the house on the land so A will not be able to recover anything. B's actions will not be unconscionable.

The Significance to the Purchaser of the Prior Approvals

I think the fact that Mr Donovan made no attempt to purchase any of the other properties, but concentrated his attention on the defendants' land, is of significance. In view of the approach adopted by Mr Donovan to finding suitable land for his client, as set out earlier, the defendants sold their land to that purchaser because their land was identified by Mr Donovan by means of the Department's file, that is because there was an aquaculture licence in respect of their land and it was not currently being used. It was this circumstance which caused their property to be in that file, and therefore on Mr Donovan's list of properties for potential purchase, and hence to be identified as the best on that list. Mr Donovan's evidence was to the effect that the properties he looked at were the properties on that list, and it follows that, had the prawn farming partnership never operated, the defendants' land would not have been on that list and would not have been sold to this purchaser on this occasion.

There is however evidence to suggest that the connection was of more significance than this. There was evidence of two kinds to suggest that the fact that the partnership business had been carried on on this land previously was a circumstance which would make it more attractive to a purchaser interested in using it for aquaculture, because such a purchaser could reasonably foresee less difficulty in obtaining the necessary approvals to enable the land to be used for that purpose in circumstances where that land had previously obtained approvals for such a use (although on a smaller scale), and indeed one of those approvals was still current. The evidence falls into two categories: evidence of persons having experience in general in the process of obtaining government approvals for various activities on land, who gave evidence to the effect that they would expect that this circumstance would make it more likely that the relevant approvals would be obtained, and evidence dealing with the actual process by which Mr Donovan's client did obtain the approval it sought.

As to the former, there was evidence from Mr. Vickery, the solicitor who acted for the purchasing company when the land was sold. He had been in practice for 28 years, and much of the time he had been involved in agricultural conveyances (p. 49), and in the circumstances he would appear to be an independent witness. He expressed the opinion based on his experience that it would clearly be of some benefit when dealing with a Government department to obtain a permit, if the department already knew about the property in question and had previously granted a non-transferable permit in respect of that property: p. 52. One tangible benefit was the knowledge that that activity could be carried on on that site. I accept this evidence.

There was evidence from Mr. Haylock, who had had many years experience as an environmental officer with various Government and non-Government agencies, and who is now an environmental consultant: p. 86. His report, Ex. 44, says in effect that the fact that there had been previously a permit granted and an environmental impact statement prepared, provided a proposed project with some advantage compared with a site where particular activity had not previously been carried on, and gave some evidence seeking to quantify the cost of a proper environmental impact statement. I accept this evidence. I think that this evidence is consistent with the evidence of the town planner called on behalf of the defendants, Mr. Craven (Ex. 50), subject to the qualification discussed at pp. 141-142. It was also consistent with the evidence of Mr. Elmer, an officer of the Queensland Fisheries Authority, that if a similar proposal had been approved before he would be confident that the decision would come out the same: p. 81. The evidence of Mr. Gillespie, an officer of the Department of Primary Industries, was to the same effect: p. 67.

As to the latter, there was evidence that (notwithstanding what appears to be the clear requirement to the relevant regulation^[2] that an environmental impact statement is mandatory in the case of an application of this nature) a decision was taken by the Department to waive the requirement of an environmental impact statement in respect of the application for this licence (Ex. 34), at least unless and until the project extended beyond what was initially constructed (Ex. 36, 37). The evidence from Mr Gillespie, the General Manager Agriculture Industry Development in the Fisheries Group of the Department of Primary Industries (p. 63) was to the effect that this decision was taken on the basis that there had been an environment impact statement of a kind performed in relation to the previous licence application (Ex. 20), and what was proposed on this occasion was thought to be not sufficiently different from what was then undertaken to justify a further statement: p. 70. That evidence is supported to some extent by contemporaneous documents in the files of the Department which refer to the existing permit and prior use: Ex. 34, 36. There was evidence from Mr. Elmer, an officer of the Queensland Fisheries Authority, that the fact of the prior permit would have been an important ingredient for the decision to grant the new permit: p. 80. On the other hand there was evidence that there was some political support for this proposal (p. 69, Ex. 39), and I think it is reasonable to conclude that the progress of the application was assisted by a government policy of encouraging investment of this kind.

Nevertheless at some level at least the application was independently and objectively assessed. It was assessed by Mr Lobegeiger on this basis, and he said that his assessment was not affected by the fact that there was previously a licence issued to the partnership: p. 222, 225. Mr Lobegeiger was concerned with the technical assessment of the suitability of the site, rather than environmental considerations (p. 223, 235), and I was quite impressed by him as a witness, although the fact that Mr Lobegeiger had already recommended to Mr Donovan the suitability of this site would have indicated to the purchaser that any assessment Mr Lobegeiger would undertake for the purposes of a licence would be unlikely to be unfavourable.

Mr Lobegeiger was not directly concerned with questions of environmental assessment, a circumstance which I think explains his assertion that the regulation requiring environmental impact statement had in fact been complied with in this case by the information contained in the application: p. 230. I do not think that the information obtained in the application is what is required by that regulation, and the contemporaneous documents indicated that there was a specific decision taken to waive the requirement of such a statement. This both saved the purchaser the cost of preparing one, which could have been substantial (see Ex. 44) and more importantly, avoided the risk of approval being refused on environmental grounds. It appears that, notwithstanding the regulation, it was the practice of the Department to waive this requirement unless the subsequent application was seen as substantially different from the activities that had previously been carried on on the land pursuant to an earlier licence: see the evidence of Mr Craven at p. 147, in relation to paragraph 4.3 and 4.4 of his report Exhibit 50. Note the qualification to paragraph 4.3 of Exhibit 50 during Mr Craven's oral evidence, that this applies only if an application is substantially different from anything that was previously carried on on the land: p. 141-2.

For present purposes it does not matter whether such an approach by the Department is consistent with the Act and regulation. No doubt a cautious purchaser would be influenced to some extent by the actual wording of the regulation, but a purchaser who is reasonably well informed about the practices of the relevant Department would I think have been more concerned about those practices and what they indicated in terms of the prospect of obtaining approvals. Mr Donovan had a good deal to do with the Department, as is apparent from the matters to which I have referred, and from the fact that he had a certain amount of experience in prawn farming prior to this commission: p. 151-2.

In view of this evidence I think that the fact that prawn farming had been previously carried on on this land (and the various approvals required for this had been obtained) would have been a factor tending to make the property more attractive to a purchaser interested in carrying on that activity in the future, and made it therefore more attractive than, for example, the neighbouring properties along Littabella Creek, which shared the natural advantages of this land. So far as Mr Donovan's evidence is to the contrary, I reject it. I have already noted one feature of his evidence which I thought was unsatisfactory, and there are other matters in his evidence which concern me.

His account of the negotiations with the defendants (p. 156-7) is different in some respects from the account given by Mr Reck (p. 111-112), who did generally impress me as an honest straight-forward witness. In addition Mr Donovan appeared to be somewhat partisan; at a very early stage in the dispute he provided a document (Ex. 12) to the defendants at their request (p. 134) to assist them to defeat the plaintiff's claims, which I think rather overstates the position in the defendants' favour as some partnership equipment was purchased: p. 126. His evidence was that the people with whom he was negotiating in the Department of Primary Industries regarded the project he was proposing as very different from the partnership prawn farm (p. 173), yet the evidence of Mr Gillespie (p. 70), supported by the contemporaneous documents, was that the Department was regarding it as really not so very different. That approach by the Department was somewhat artificial, as is readily apparent from a comparison of the aerial photographs, and from the circumstance that a different species of prawn was involved, but from the Department's point of view, if it were keen, for policy reasons, to see the project go forward expeditiously it would have been keen to find an excuse for waiving the requirement of an environmental impact statement, and that was most easily done by characterizing the new project as not very different from what had been carried on previously. Overall I was not impressed by Mr Donovan as a witness.

I think it is probable that part of the attraction of this property to the purchaser was that it had previously been used in part for a prawn farm with the necessary approvals, and was currently covered by a permit allowing use as a prawn farm. This benefit was not a specific improvement or a particular asset, but rather an attribute of the land, or perhaps a circumstance in connection with the land. It is whatever it was that made this land more attractive to the purchaser than the parcel of land next door. That land was not unsuitable for use as a prawn farm, as appears from Mr Lobegeiger's evidence, and Mr Donovan said that at a later stage the land next door was looked at for such a development: p. 172.^[3] What distinguished this land from the land next door was that this land had previously been used as a prawn farm and had been approved for that purpose, part of which involved the existence of the current licence. I think that this could reasonably have been seen by the purchaser as a circumstance indicating that it would probably be able to obtain the necessary approvals in order to carry on prawn farming on the land, and more readily on this land than on adjoining land which was also technically suitable, and find that this in fact represented an attraction of this land which was one of the features reflected in the purchase price.

The Value of the Attribute

On the subject of the analysis of the purchase price, I had evidence from two valuers, neither of whom I found particularly helpful. The plaintiff's valuer approached the matter by looking at the value of the land simply as farm land, attributing some value to the physical improvements, including the remains of the previous prawn farming venture, and then attributing the balance of the sale price to the value of the licence: Ex. 46. I think this approach is quite unrealistic. Apart from the fact that the licence was not transferred, it ignores the fact that part of the value of the land was that it was physically suitable for use as a prawn farm; this is an attribute of the land and in no way the function of any activity of the partnership. But there is a difference between land which is physically suitable for use as a prawn farm and land which has the benefit of the necessary consents so that it can actually be used as a prawn farm. There are a host of restrictions under a range of legislation on the use of land for this purpose, and no doubt all sorts of reasons why particular land which is technically suitable might not be permitted to be used in this way. I do not think any more detailed analysis is necessary for the purposes of this action, but reference may be made to one matter in the evidence of the defendant's valuer, Mr Slater, who spoke of the significance of two sales of a parcel of land near Cairns which was suitable for prawn farming which was sold, in September 1994 for about $ 1 million, and in November 1995 for $2.57 million: Exhibit 46 p. 16, Exhibit 53 Annexure C. The first sale was an unconditional cash contract, whereas the second was subject to approvals being obtained by the purchaser: p. 212. Mr Slater regarded this as significant, and its significance must reflect the fact there is a difference between land which is physically suitable for prawn farming and land which obtains the necessary approvals so that prawn farming can actually be carried out on that land. The evidence about these two sales suggests the difference is substantial, even allowing for the other factors which tend to differentiate the two sales as discussed by Mr Slater (p. 214), and obviously reflects more than simply the time and trouble involved in obtaining the approvals; there is clearly a significant premium associated with the removal of the uncertainty as to whether the approvals will be forthcoming. In circumstances where land is sold subject to the purchaser's obtaining those approvals, the sale price is likely to reflect, in part, (on that property by about $1 million: p. 215) the enhanced value of the land provided by the granting of those approvals; as Mr Slater put it, the vendor wants a piece of the action: p. 212.^[4] I have some reservations about Mr Slater's evidence, to which I shall return, but I am prepared to accept this analysis.

I think therefore that one could look at this land as having a value simply as farm land, then as having a greater value as farm land which is physically suitable for prawn farming (particularly to farm the species penaeus japonicus), and then as having a greater value still if that land has the benefit of the necessary consents to enable the owner actually to use the land for that purpose. Since the consents are not transferable that can only be of a value in the hands of a purchaser who is going to use the land for that purpose. The sale price under a contract conditional upon obtaining such consents is, for the reason given by Mr Slater, going to be somewhere between the second and third of those values. The vendor will want a piece of the action, but the purchaser will want some allowance made for the fact that the consents will be sought at his expense and that money may be thrown away if they are not obtained. There must therefore be something in it for the purchaser as well. But the more confident a purchaser can be that money spent on seeking consents will not be wasted and the consents will be obtained, the less this risk will be, and therefore more of the difference between the second and third valuations can be paid to the vendor in order to secure the land.

I think therefore that it is unrealistic to treat the advantage arising from the prior obtaining of the necessary permits that I have identified earlier as being properly valued by the difference between the second and third valuation just referred to; rather it represents a part of that difference.

The matter is further complicated by the fact that talk about market price is in a sense quite unrealistic, since there was no real market for this land as anything other than farmland. Mr Slater said (p. 217) that the highest and best use of this land was as a prawn farm and that dictated the market price, and that there were purchasers around interested in acquiring land for this purpose sufficient to make this contract price a realistic measure of the actual market. This is inconsistent with the evidence Mr Lobegeiger, that there were only one or two licence applications a year, and he was in a position to know because every application for a prawn farming licence came over his desk: p. 236 and see Ex 46, p. 12. Mr. Gillespie said that the 1990's were early times for acquaculture in Queensland: p. 65. Even today there are only six prawn farms producing penaeus japonicus prawns for export: p. 238. In the light of this evidence there were obviously not large numbers of people actively seeking to purchase land for prawn farms at the relevant time, even allowing for the relatively limited supply of such land which was suitable for penaeus japonicus, and I think it is unrealistic to treat them as constituting a market. The position is rather that it was largely fortuitous that a particular purchaser wanting to use the land for that purpose happened upon a particular parcel of land.

Evidence about market prices is therefore even more unrealistic than usual. The defendants had something which Mr Donovan's client wanted and it could afford to pay enough to overcome the defendants' reluctance to sell. It was willing to do this because it was keen to obtain this particular parcel of land. The main reason for this desire was the technical suitability of the land for the purpose intended, but I think that a subsidiary reason was the fact that the land had been used for a prawn farm in the past, and still had the benefit of a permit for that use, so that it possessed the special advantage identified earlier.

Breach of Fiduciary Duty

The question which now arises however is whether that matters. Is it inherent in the principal in Harvey (supra) that, if the land remains beneficially the property of the defendants, they are entitled to realize it to their own advantage notwithstanding enhancements conferred by the previous activities of the partnership?

I think that such a proposition must be too widely stated, in view of the decision of the full Federal Court in Ravinder Rohini Pty Ltd v. Kriziac (1991) 30 FCR 300. In that case the first defendant company owned a hotel which it proposed to extend. The plaintiff had some experience in the redevelopment of hotels and suggested to the person who controlled the company that the hotel be demolished and the site redeveloped. The individuals agreed to discuss a joint venture for that purpose, and steps were taken to carry the project forward, plans were prepared and approval by the relevant authorities for the redevelopment was obtained at their joint expense. However, before there was a final agreement as to the terms of the joint venture, the parties fell out and no such agreement was ever made. The company subsequently sold the land with the benefit of the approval for redevelopment which had been granted; it was held that the benefit of this approval enhanced the value of the property by a net $440,000, because the approval brought certainty to what had previously been a prospective use: p. 302. This benefit having been realised by the sale, it was held that the company was liable to reimburse the plaintiff for half of the realised value of this enhancement.

There was no question of the land in that case having become partnership property because it was held that there had never been a partnership or joint venture, but the majority of the Court held that the parties were in a fiduciary relationship and that because of that relationship it was necessary for the benefit which had been obtained as a result of the efforts and expense of both parties to be shared between them. Wilcox J, at p. 316, referred to a passage quoted by the trial judge from the judgment of Menzies J in Harvey (supra) at p. 553, so there is no question of this decision being per incuriam. In the present case there was clearly a fiduciary relationship arising because there was a partnership: Birtchnell v. Equity Trustees Executors and Agencies Co Ltd (1929) 42 CLR 384 at 407 per Dixon J.

Wilcox J first considered whether there was a fiduciary relationship between the parties in that case, and having concluded that there was, continued at p. 312:

After noting that counsel for the appellants had not really contested that proposition he went on to consider whether the fact that the benefit was realised by the company rather than the individual who had entered into the agreement with the defendant was an obstacle to recovery, and held that it was not. His Honour's analysis of the quantification of this advantage from p. 316 is interesting, because relief was sustained on the basis that the plaintiff was entitled to one half of the increased value attributed to the land by obtaining the approval, together with the value of the architectural work which had been done. That approach is, I think, significant in the present case, although there is no analogy to the value of the architectural work. The other interesting feature is that the valuation evidence which was given in that case was more useful than that in the present case because it was more specifically related to the factors which I have referred to earlier as being relevant to be considered for this purpose, although even then it was described as “scanty” and “merely estimates, precision being impossible”.

Davies J, the other member of the majority, said (p. 303) that a valuable benefit arose from the activity of the:

Although his Honour does not say so expressly, it appears that he is also distinguishing the view of the majority in Harvey (supra) on the basis that in that case the land had not been sold.

There are, I think, two possible bases upon which this case could be distinguished from the present. There was a finding at the trial that the agreement between the parties did not proceed because, in effect, the individual behind the corporate owner of the hotel declined to proceed further with the project; in effect there was a finding that it was his fault rather than the fault of the plaintiff that the project did not proceed. There is no basis upon which I could make a finding in the present case that it was the fault of the defendants rather than the plaintiff that the partnership prawn farming operation did not proceed. It was clear that their prawn farm was abandoned because the parties ran out of money, and it was not suggested that one side rather than the other was responsible for that. In my opinion, that is not a requirement additional to the requirement also mentioned at p. 311 that he had appropriated for the company the benefit of the work done. Wilcox J, at p. 312, put the breach of duty on the basis of appropriating personally an advantage which occurs to him or her by reason of the fiduciary relationship without the consent of the other party involved.

A fiduciary obligation to act in the interests of another is enforced by preventing the fiduciary from acting in his own interests in circumstances where that interest does or may conflict with that of the beneficiary. That this extends to a situation where there is no actual conflict is illustrated by the decision in Keech v. Sandford (1726) Sel. Cas. t King 61, 25 ER 223. In that case a trustee obtained beneficially a renewal of a lease which he had previously held as trustee, which renewal he had previously sought unsuccessfully to obtain for the benefit of the beneficiary, and was found to hold the renewal on trust for the beneficiary. This has led to the general proposition that it is not an answer to a claim that a fiduciary account for profits that the beneficiary could not itself have made that gain: Birtchnell (supra) at p. 409. The absence of this and other restrictions on the liability of a fiduciary to account for a private profit appears in a passage in the judgment of Lord Russell in Regal (Hastings) Ltd v. Gulliver [1942] 1 All E.R. 378 at 386:

There is a statement to the same effect in the judgment of the court in Warman International Ltd v. Dwyer (1995) 182 CLR 544 at 557.

If the benefit of the redevelopment approval were property belonging to the joint venture, it would be easily seen as wrongful for one of the joint venturers to appropriate to himself the benefit of that property. The Federal Court has treated the benefit of the approval obtained at the expense of the joint venture as being analogous to partnership property, so that there was the same duty not to appropriate it for the private benefit of one of the partners. In these circumstances it is, in my opinion, unnecessary for the plaintiff to show that the joint venturers were prevented from obtaining that benefit by the wrongful act of the defendant, because it was wrongful for the defendant to appropriate to himself (or rather his company) a benefit which had been obtained by the purposes of and at the expense of the joint venture. The only relevance of the circumstance under which the joint venture had been prevented from itself obtaining the benefit of this expenditure is that it serves to demonstrate that this is not a case, like Hervey (supra), where the contemplated benefit for the partnership has already been achieved, in that the partnership had obtained the benefit that it was intended to obtain from the improvements, so that it was not a wrong on the other partners for the partner who owned the land to keep them (as must have been contemplated) when the partnership eventually came to an end. Hence the proposition that it would have been different if the use of the assets by the partnership had been truncated. In my opinion, therefore, the fact that it cannot be said in the present case that the partnership business was terminated because of any wrongful act on the part of the defendants is not an obstacle to the application of the decision in Ravinder Rohini Pty Ltd v. Kriziac (supra).

The other possible distinction is that in that case the approval which had been obtained was one which would enure for the benefit of whoever purchased the land, whereas in the present case there was no transferrable approval. Here, most of the approvals had lapsed, and the one that was continuing was not transferable. However, in that case the significance of the approval was that it did enhance the value of the land; there is no analysis of any aspect of the approval other than it had that effect. In the present case what the plaintiffs allege is that the value of the land had been enhanced, not by any continuing transferable approval or permission, but by the circumstance that these activities had been approved in the past, which made it more likely that they would be approved again with respect to the same land if the appropriate applications were made in the future. For reasons that I have discussed earlier, I think that that was the case, and I think that the difference between that situation and the situation where there is a transferable approval is not one that makes a difference for the purpose of determining whether there has been a breach of fiduciary duty. That depends on whether the fiduciary has realised a private profit, and by the use of his fiduciary position, because of expenditure incurred by the partnership for the purpose of benefiting the partnership. The money that was spent on developing the prawn farm and obtaining the necessary approvals was spent to enable the prawn farming venture to be carried on on the land by and for the partnership; it was not spent for the purpose of enabling the defendants to realise the land at a higher price to their own advantage. The defendants obtained this benefit because of their involvement in the partnership, and hence by the use of their fiduciary position. They must therefore account to the partnership for it.

Ravinder Rohini v. Krizaic (supra) has been applied or approved on a number of occasions subsequently in various courts, including by the Court of Appeal in Queensland in Tsan v. Chiu (Appeal 47/95, 8.9.95, unreported). The decision also appears to me to be an application of the principle laid down in the High Court in Chan v. Zacharia (1984) 154 CLR 178. In that case, Deane J (with whom Brennan and Dawson JJ agreed), said at p. 199:

The case also establishes that the fiduciary duties continue after the dissolution of a partnership, but before it has been wound up. Whether or not the partnership in the present case was formally dissolved, it has not been wound up.

The facts in Chan are somewhat different from those in the present case; one of two former partners negotiated a new lease for premises in which the partnership had previously been carried on, and in the process refused to take advantage of an option for renewal which was held by the partnership and was therefore partnership property. As Gibbs CJ pointed out (p. 183): “A refusal by one partner to enable the option to be exercised meant that an asset of value was lost to the partnership.” It is apparent however that the statement by Deane J was intended to be more general than the facts of that particular case. There was a similar statement by the whole court in Warman International v. Dwyer (supra) at p. 557. The decision in Harvey (supra) is not referred to in either Chan or Warman, and its continuing authority may be doubtful. The analysis of Barwick CJ, which I quoted earlier, seems to me to be consistent with these more recent decisions of the High Court, and I suspect that the decision of the majority should be seen as turning to the particular facts of that case.

In these circumstances it is, I think, strictly unnecessary for me to consider the further issue which I raised during the trial, of whether it was sufficient to make the defendants accountable that they made a favourable sale of their land as a consequence of the purchaser's having found out about it because of the activity of the partnership, which led to its presence on the departmental file. For practical purposes, this raises the question of whether the defendants would still be accountable for some part of the sale proceeds of the land, even if it were not the case that the land had been made more valuable, at least to this purchaser, because of the previous activities of the partnership. It is difficult to see that there is any actual conflict of interest, in circumstances where the partnership business had failed, but there may have been a theoretical conflict in the sense that the sale of the land made it impossible for the partnership to be carried on in the future. As to the second limb of the test in Chan, it may be possible to characterise the benefit in such circumstances as one obtained by reason of an opportunity resulting from the fiduciary position; that really depends on the limits of that principle.

One example of its application would seem to be the decision in Russell v. Austwick (1826) 1 Sim 52, 57 ER 498, where the members of a joint venture had a contract with the Mint for the carriage of coin along a particular route. One member subsequently negotiated another contract with the Mint for the carriage of coin along a different route (outside the scope of the joint venture) and an issue arose as to whether he was entitled to the benefit of that contract for himself. It was found that he was not, although to some extent this was on the basis that the officers of the Mint may have given him the second contract because they thought he was acting on behalf of the partnership, so that he could have been exploiting to his own advantage the goodwill of the partnership with the Mint. The decision is characterised by Finn “Fiduciary Obligations” (1977) p. 249, as being an example of a partner deriving a benefit from the use by him of partnership business connections, so that it falls within s. 32(1) of the Partnership Act 1891. Professor Finn (as he then was) at p. 231, sought to characterise the cases dealing with the benefits derived to the exclusion of the beneficiary as establishing two principles:

It is difficult to see that what occurred in the present case comes within either of those propositions, although that may well depend on the extent of the concept of misuse of fiduciary position. However, they appear to be expressed more narrowly than the statement of principle by Deane J in Chan (supra).

I have not been able to find any authorities which go so far as to hold that the mere fact of the opportunity to make an advantageous sale arose because of the person's fiduciary activities, but not coming to him in a fiduciary capacity, was enough to make that person accountable for the benefit. Professor Finn referred at p. 250 to a decision, City of London Corporation v. Appleyard [1963] 1 WLR 982, where McNair J said at p. 988 that:

Professor Finn was critical of this decision, but it was referred to with approval by the Court of Appeal in Parker v. British Airways Board [1992] QB 1004, where Donaldson LJ said that it was clear law that a servant or agent who finds something, in the course of his employment or agency, is obliged to account to his employer or principal. This decision was in turn confirmed by the Court of Appeal in Waverley Borough Council v. Fletcher [1996] QB 334.

In the present case it is, I think, strictly speaking unnecessary for me to decide whether there would be a breach of fiduciary duty in such circumstances. In circumstances where there is no breach of duty on the part of the defendants in the partnership business coming to an end, and where the defendants were not actively seeking to realise the land for their benefit, the fact that they get a favourable offer to purchase the land from a purchaser who finds out about it as a result of the partnership activities, is not, I think, sufficient to give rise to a liability to account all or part of the profits. None of the statements of principle go so far as to say that a partner is liable to account for any benefit which would not have been received but for the existence of the partnership, and the various formulations do require something more, even if it is sometimes difficult to be sure just what more is required. If that had been all that the plaintiffs could show, the plaintiffs would not, I think, have been able to make a good claim for breach of fiduciary duty. It is therefore unnecessary to determine whether it is open to the plaintiffs, on the existing pleading, to pursue such a claim, although I suspect that any deficiency in pleading this case is rather that the pleading says too much rather than too little. That is not an obstacle: Ravinder Rohini (supra) at p. 302 per Davies J. In any case, I raised the issue during the trial and invited the defendants to call any further evidence they required to deal with it.

On the basis of my earlier finding however, I am satisfied that the defendants have obtained a benefit from the realization of the land, being the benefit of the advantage of prior approvals was conferred upon it by the previous activities of the partnership, at the expense of and for the purposes of the partnership, and that by seeking to retain the benefit of the realization of that advantage they are in breach of their fiduciary duty to their partners. The remedy must be fashioned to fit the nature of the case and the particular facts: Warman International Pty Ltd v. Dwyer (1995) 182 CLR 544 at 559. In the present case, to the extent that the proceeds of sale I of the land reflect the advantage conferred by the partnership activities, the defendants should hold them on a constructive trust to account for the partnership to those proceeds. That involves some analysis of how those proceeds are made up, along the lines of that by Wilcox J in Ravinder Rohini (supra) from p. 316.

The land in the present case had a value simply as farm land apart from any potential use as a prawn farm. Mr. Roffey valued the farm on this basis at $450,000: Ex. 46, p. 17. Mr. Slater disagreed with this approach, but on the basis that the potential for prawn farming added value to the land; there was not much argument about the accuracy as a valuation of farm land in the area^[5], and I accept it. As I said earlier, the physical suitability of the land for prawn farming justified a premium on this value, and once all appropriate permits and consents were in place, land which could actually be used as a prawn farm would have been even more valuable, although that was not a realizable value since the various permits and consents were generally not transferrable. The price in the present case would have been a figure part of the way between those two amounts, and would have been higher because the prior activities of the partnership and the permits previously obtained would have increased the prospect of obtaining the necessary permits in respect of this land for the purchaser's operation.

Unfortunately, the valuation evidence does not assist much in determining either premium. Mr. Slater attributed the balance of the purchase price to the former premium, and indeed at one point of Ex. 53, he was suggesting that some of the comparable sales in the other valuation suggested that the land was sold at below its market value. Annexure C to Ex. 53 contains a reference to two unconditional sales. One was to the owner of adjoining land on which a prawn farm was already being operated and who purchased the site for expansion. In those circumstances that operator had the benefit of his experience in obtaining permits for the adjoining land, and the fact that permits were obtained for that land would, I think, have given it comfort in an expectation that if the relevant permits and consents were applied for for the new land, they would be forthcoming. That land sold for a little under $250,000 per hectare, which I suppose gives some indication of the value of such land to the operator. The other unconditional sale was of land on the Logan River where (so far as I know) there was no particular reason to be confident about success in obtaining the relevant permits, and the land was sold for a little over $28,000 per hectare. That figure may be misleading, however, since physical suitability for prawn farming may not confer much of a premium on the value of land in that area: p. 216. In the present case, there was clear and persuasive evidence from Mr. Lobegeiger that this land had particular physical advantages, and because of this I think that it is probable that most of the premium in fact paid for this land over its value as farm land was attributable to the physical advantages. I think it is also relevant to bear in mind that the purchaser could also obtain comfort from the support at a political level enjoyed by the project, which factor would tend to diminish the significance of the comfort obtained from the prior approvals for prawn farming, although I do not think that it means that that factor was of no significance. Accordingly, I reject Mr. Slater's evidence to that effect on p. 6 of Ex. 53.

Other relevant factors are that, apart from the price of $1.1 million, the purchaser also obtained some collateral benefits in the form of the excision and retention of two house blocks, and the right to use about half the land for up to 10 years for farming purposes at $10 per annum. There is no evidence of the value of these benefits, but they were plainly of some value to the defendants. I think a further consideration is that, although the onus is on the plaintiffs to prove their right to relief, when relief is being granted to prevent a fiduciary from obtaining a private advantage from the fiduciary obligation, it is not appropriate to resolve difficulties caused by any deficiency in the evidence simply by moderating the amount awarded. The court should to some extent try to be astute to ensure that the remedy does prevent the fiduciary from retaining any inappropriate profit. The lack of helpful valuation evidence does not mean that I do not make an assessment; I just have to do the best I can in the circumstances.

In view of these considerations, and doing the best I can, I think the appropriate course is to attribute 20% of the premium above the value of the property as farm land and improvements to the advantage conferred by the prior obtaining of approvals and use of the land as a prawn farm by the partnership. This produces a figure of $130,000 for which, in my judgment, the defendants must account to the partnership.

The appropriate course, therefore, is to make a declaration in the action that the male defendants hold the sum of $130,000, being part of the proceeds of sale of the land referred to in the plaint, on a constructive trust to account to the same for the partnership established pursuant to the deed, Ex. 3.

The defendants, by their counterclaims, sought a declaration that the partnership had been dissolved, which I am prepared to make (see p. 10), and an order that an account be taken of the partnership. It is apparent that there has been no final accounting of the partnership and it is desirable that the matter be finalised. The appropriate course is to order that an account be taken, and then list the matter for further consideration for the purpose of resolving any remaining disputes of fact or law which have to be resolved before the account can be finalised. Once that has been done, the accounting exercise as such will, I suspect, be quite straightforward. Apart from the money held pursuant to the constructive trust, there are a number of other matters referred to earlier, or mentioned in the evidence, which will have to be brought to account.