Riddle v Riddle

The appellants, trustees of the will of Sir Ernest Cooper Riddle, sought an order from the Supreme Court of New South Wales to authorise them to retain certain existing share investments and to reinvest proceeds in shares of selected public companies, as well as to vary and transpose such investments. The respondents were infant beneficiaries. The testator's will did not contain specific investment powers, leaving the trustees bound by the limited investments authorised by the Trustee Act 1925-1942 (N.S.W.).

The primary legal issue before the High Court was whether Section 81 of the Trustee Act 1925-1942 (N.S.W.) empowered the Court to grant trustees authority to invest in shares of public companies, even when such investments were not permitted by the trust instrument or the Act itself. This involved determining the scope of the Court's discretion under Section 81 and whether the prevailing economic conditions, particularly inflation, constituted sufficient grounds for authorising such investments. A further issue was whether the decision in *In re Strang* (1941) 41 S.R. (N.S.W.) 114, which suggested a stricter test for authorising such investments, was correctly applied by the lower court.

The High Court, by majority, held that Section 81 of the Trustee Act was intended to grant the Court broad powers to authorise trustees to make investments beyond those permitted by the trust instrument or general law, provided it was deemed "expedient" in the interests of the trust property as a whole. The Court reasoned that the concept of expediency was flexible and encompassed financial and business considerations, and that the prevailing inflationary conditions presented a compelling case for authorising investments in shares of reputable public companies to preserve the real value of the trust capital and income. The Court disapproved of the restrictive interpretation in *In re Strang*, finding that the section did not require proof of special advantages or disadvantages peculiar to a specific estate, nor did it preclude authorising investments that might be beneficial to multiple estates.

The appeal was allowed, and the matter was remitted for rehearing. The Court found that the Supreme Court had erred in refusing to consider authorising investments in shares based on the reasoning in *In re Strang*. While the High Court indicated that the specific terms of any order would be a matter of discretion for the Supreme Court, it affirmed that the power to authorise such investments under Section 81 was available if expediency was demonstrated.