Thanks for the feedback guys, much apprecated, I didn't realise (know) that if you used a privately owned aircraft and only had to pay for the pilot's wages then it was classed only as a private flight. ie. I thought as soon as a pilot was being paid for reward in a flight situation then it effectively became a commercial flight.
I guess in the example stated then, the question is, did the passengers pay for the use of the aircraft as well as the pilot's wages(ie. hire the aircraft/pilot from a company) or was it an aircraft they owned and just paid a pilot to fly them around?
Can you suggest a publication/book that clearly explains all of the current regs on this topic in a fairly simple and easy to follow way?