Ryan v Public Trustee of Queensland

[1997] QCA 101

IN THE COURT OF APPEAL	[1997] QCA 101
SUPREME COURT OF QUEENSLAND

Appeal No. 5404 of 1996

Brisbane

[Ryan v. Public Trustee of Queensland]

BETWEEN:

EILEEN RYAN

(Plaintiff) Appellant

AND:

THE PUBLIC TRUSTEE OF QUEENSLAND
as Trustee of the Will Trusts of LAWRENCE

DOYLE RYAN (Deceased)

(Defendant)	Respondent
Fitzgerald P Williams J Mackenzie J

Judgment delivered 2 May 1997

Separate reasons for judgment of each member of the Court each concurring as to the orders made.

1.          APPEAL ALLOWED TO THE FOLLOWING EXTENT:

(A)

VARY THE DECLARATION SO THAT IT READS AS FOLLOWS: THE TRUSTEE SHOULD PROCEED TO SELL THE LAND THE SUBJECT OF CL.5.01 OF THE WILL BY AUCTION AS SOON AS POSSIBLE AT NOT LESS THAN A RESERVE AGREED UPON BY THE APPELLANT EILEEN RYAN AND THE CHILDREN BENEFICIARIES AND FAILING AGREEMENT AT NOT LESS THAN A RESERVE WHICH IS THE AVERAGE OF TWO INDEPENDENT VALUATIONS BEING FROM ONE VALUER SELECTED BY EILEEN RYAN AND ONE VALUER SELECTED BY THE CHILDREN BENEFICIARIES.

(B)

VARY THE ORDER FOR COSTS BELOW BY ADDING THERETO AFTER THE WORD "PARTIES" THE WORDS "TAXED ON A SOLICITOR AND CLIENT BASIS".

2.          ORDER THAT THE TRUSTEE'S COSTS OF AND INCIDENTAL TO THE APPEAL, TAXED ON A SOLICITOR AND CLIENT BASIS, BE PAID OUT OF THE APPELLANT'S PORTION OF THE PROCEEDS OF THE SALE OF THE LAND THE SUBJECT OF CL.5.01 OF THE DECEASED'S WILL.

CATCHWORDS:	TRUSTS - trustees - powers - whether trustee has power to make rezoning application - meaning of "development" - Trusts Act 1973 (Qld) s.33(1)(b). TRUSTS - whether proposed rezoning should be sanctioned by court.
Marley v. Mutual Security Merchant Bank and Trust Company Ltd [1991] 3 All ER 198
Counsel:	Mr D Mullins for the appellant Mr J Douglas QC with him Mr G Koppenol for the respondent
Solicitors:	Anderssen & Co town agents for Barry Atkins & Co for the appellant Official Solicitor to the Public Trustee for the respondent
Hearing Date:	10 April 1997

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 5404 of 1996

Brisbane

Before Fitzgerald P.
Williams J.
Mackenzie J.

[Ryan v. Public Trustee of Queensland]

BETWEEN:

EILEEN RYAN

(Plaintiff) Appellant

AND:

THE PUBLIC TRUSTEE OF QUEENSLAND
as Trustee of the Will Trusts of LAWRENCE

DOYLE RYAN (Deceased)

(Defendant) Respondent

REASONS FOR JUDGMENT - FITZGERALD P.

Judgment delivered 2 May 1997

I agree with the reasons for judgment of Williams J. and with the orders which his Honour proposes.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 5404 of 1996

Brisbane

Before Fitzgerald P

Williams J

Mackenzie J

[Ryan v. Public Trustee of Queensland]

BETWEEN:

EILEEN RYAN

(Plaintiff) Appellant

AND:

THE PUBLIC TRUSTEE OF QUEENSLAND
as Trustee of the Will Trusts of LAWRENCE

DOYLE RYAN (Deceased)

(Defendant) Respondent

REASONS FOR JUDGMENT - WILLIAMS J

Judgment delivered 2 May 1997

Lawrence Doyle Ryan died on 11 March 1994 leaving a Will dated 3 November 1993

appointing The Public Trustee of Queensland as the Executor and Trustee thereof. Certain real estate,

in the will described as the "farm property", was devised to the trustee "to sell it and to hold the

proceeds on trust" as to one-half thereof for his wife, Eileen Ryan, the appellant, and as to the other

half-share to his four adult children. Originally there was some dispute between the beneficiaries as to

what lands constituted the "farm property" but that has now been resolved. It is agreed that the area of land in question is approximately 120 hectares. The land is variously zoned as "Rural Residential A",

"Rural B", and "Rural Residential B". The respondent-trustee proposed to sell all of that estate land by

auction on 3 April 1996, but the appellant made representations to the effect that the proposed auction

should be abandoned until an application for the rezoning of the land not currently zoned Rural

Residential A was made. The trustee acceded to the request that the auction be postponed, but the

adult children would not consent to the lodging of a rezoning application; the adult children apparently

want the property to be sold as quickly as possible with its current zoning.

Against that background the trustee applied to the court under the provisions of s.134 of the

Public Trustee Act 1978 seeking directions as to which of the four options set out in the accompanying

Statement of Facts should be implemented. The four options set out in that Statement were in

summary:-

1.          Sell the land by auction at a reserve set by the trustee as soon as possible;

2.          Sell all the land by auction as soon as possible at a reserve which is the average of two

independent valuations being from a valuer selected by the appellant and a valuer

selected by the adult children;

3.          Sell the land already zoned Rural Residential A as soon as possible and apply to rezone

the balance of the land to Rural Residential A and then auction that balance at a reserve

set by the trustee within two months of the decision on the rezoning application;

4.          Appropriate the estate land between the appellant and the adult children.

The appellant by affidavit placed before the court a further proposal which was in essence a

variation of option 3. Her proposal was that the trustee apply to have the relevant land rezoned "Special

Facilities Golf Course - Rural Residential A".

That gives the necessary background to the matter which was heard by the learned primary
judge. Essentially he was asked to give the trustee directions and various options were put to him by

the trustee and the appellant. The adult children did not appear on the hearing of that application and

they did not advance any reasons for the stance which they had adopted, namely that the trustee should

sell the property as expeditiously as possible.

In his reasons for judgment the learned primary judge noted that according to its present zoning

the land in question was valued at approximately $3 million. He then recorded that the evidence from

the appellant was that rezoning of approximately 94 hectares of the land would result in an increase of

about $400,000 in value and that the balance area (approximately 26 hectares) would be enhanced in

value by proximity. He then went on to make certain findings which he expressed as follows:- "The evidence led, uncontradicted but also untested, provides the view of relevant experts, mostly without much explanation and totally without reference to contrary factors. The following facts and considerations emerge:

*	An application for rezoning of the relevant land as suggested would have a more than 70% chance of success.
*	At best it would cause delay of about four months. No estimate of delay is given at worst, but in the event of the intervention of objectors, carried through to the Planning and Environment Court, it is obvious that the delay would enlarge by several more months to more than a year.
*	Both a present sale and sale after rezoning would involve delay in marketing the land and finding a buyer. As to the latter, the more specialised development associated with a golf-course estate might attract fewer buyers and take longer to sell, particularly at the higher price. Moreover, in that case the speculative profit margin of a developer would be reduced.
*	Actual rezoning would increase the value of the lands by more than $400,000. The potential for rezoning might be thought to add to the expected sale price of the land in its present zoning.
*	If it were to be invested at interest of 7% per annum, the capital value of the land in its present state would yield $17,500 per month which would be lost by any extension of delay.
*	There is no evidence of any anticipated movement of the market for development land of this kind.
*	The town planning costs and expenses associated with the rezoning application would be in excess of $15,500 and it would be considerably more if there were litigation involved. There is no evidence of the availability of that amount from the balance of the estate, but its existence should not be assumed. However the widow would undertake to meet these costs from her own resources subject to reimbursement from the proceeds of the sale of the land if the rezoning is successful. This offer is made only if the decision were determined upon this point."

Those findings were accepted by each side on the hearing of the appeal.

The learned primary judge then went on to consider "the comparative objective financial benefits

to the estate from each of the proposed courses or some intermediate one, on the assumption that the

trustee is suitably empowered." In that regard he concluded that the "largest area", that is a 94 hectare

parcel, had "the large chance of success of any rezoning" and there would be a "very substantial capital

gain to be achieved in that event". He went on to say that following such a course "would clearly be

preferable if delay could be controlled." But having said that he went on:

"If however it emerged that the delay could enlarge substantially, then having regard to the risk, the loss of use of the capital sum flowing from a sale, and the wishes of the children who between them have a moiety of the beneficial interest under the trust, the position would change. On the evidence this would mean that any sale should be delayed while an application is made but the position should be constantly reviewed for delay; and if there were then to be a serious danger of substantial delay, immediate steps should be taken towards a sale."

It is significant that such statement was made on 31 May 1996, a little more than two years after the

testator's death, and a further ten months has elapsed before the hearing of the appeal.

The learned primary judge recorded that the appellant was prepared to forgo recovery of the

costs advanced to make the necessary application if delay were to force a sale prior to rezoning

approval.

The judgment goes on:
"The case for rezoning is only very marginally better on the evidence, than the contrary
case, for it involves risk arising out of the loss of use of substantial moneys for a period,
and the success of the rezoning application and the consequential benefits of a gain
greater than the benefits of immediate sale are far from assured. These are risks that
the children do not wish to take. This is very significant for the authorities recognise the
weight of the wishes of beneficiaries who are presently entitled that they have their
entitlement as soon as conveniently possible; but if it had the power the financial
advantage that the evidence suggests and the substantial chance of success deposed to
would justify the trustee's pursuit of it to the point of assessing the magnitude of further
delay and adjusting its further action to the exigencies of time. If it were clear that the
delay would be brief, then its further pursuit would be justified."

Counsel for the appellant relied on that last passage as amounting to a clear finding by the

learned primary judge that he would have favoured the appellant's proposal if the trustee had the power

to make a rezoning application. I am by no means convinced that such is the correct interpretation. The

view of the learned trial judge was heavily circumscribed by the speculative nature of the proposal and,

in particular, the possible attendant delays. Immediately after that quoted passage he again referred to

the necessary expenditure from the estate if the proposal was to be implemented and queried the "net

benefit that this course of conduct would have over early sale and investment, by the beneficiaries, of

the proceeds."

Next the judgment dealt with the possible impact of a rezoning of the 94 hectares on the balance

area totalling approximately 27 hectares. In that regard he said:

"As for the other areas, which already have a suitable zoning, the suggested difference in their value according to whether the rezoning of the golf-course land is approved or only potential, is too vague and unsubstantiated to support any argument in favour of delay. There is not even sufficient detail to know whether any such benefit would exceed the anticipated loss in the use of the sale proceeds arising from the delay."

The learned primary judge then dealt with the applicable law. He correctly pointed out that the

trustee's prima facie duty is to sell within a reasonable time, but the sale may be postponed when

economic circumstances justify that course being taken even though it may disadvantage some of the

beneficiaries.

That raised the critical question in the eyes of the learned primary judge; was there power in the

trustee to apply for rezoning or to commit estate moneys to that end. There was no express power

conferred by the trust instrument, the will, on the trustee to apply for a rezoning of the land. His

Honour's attention was directed to s.33(1)(b) and s.33(1)(e) of the Trusts Act 1973 and he dealt with

the submissions made with respect thereto in his reasons.

Those statutory provisions are in these terms:

"33(1) Every trustee, in respect of any trust property, may -

...

(b)        Expend money (including capital money) subject to the same trusts, but not, except with the sanction of the court, exceeding $10,000 in the improvement or development of the property; and

...
(e)	Where the property is land - subdivide or apply for approval to subdivide the land into blocks and for that purpose construct and dedicate all such road, streets, access ways, service lanes and footpaths and make all such reserves, and do all such things and pay all such money (including capital money), as the trustee thinks necessary or are as required by, or under, any Act or local law relating to subdivisions; and
..."

After referring to those provisions the learned primary judge said "there is no similar power

granted by the Act to apply for rezoning, though that would seem to be generally analogous." He

rejected the contention advanced for the appellant in this way:

"It is argued that the power to subdivide includes rezoning because in this case the latter is a precursor to the former in the ultimate development of the property. This has two major flaws. The first is that the proposal is not that the trustee would also undertake the subdivision of the land but that it should be sold after the rezoning. The second flaw is that powers ancillary to subdivision do not include rezoning even though in some cases it may be beneficial to have both forms of development. It must therefore be concluded that there is no power derived from this source."

That then led his Honour to conclude that in "the absence of a power provided by the trust

instrument or statute or in equity, the trustee is not authorised to do the things proposed by the widow."

In consequence a declaration was made that the trustee had no power to apply for rezoning and should

proceed to sell the lands in question subject to postponement only for such time as may be necessary

to achieve the best financial result reasonably obtainable.

It is from that decision that this appeal is brought. The appellant challenges the conclusion that

the trustee had no power to make a rezoning application and submits that upon the other findings made

by the learned primary judge the rezoning application proposed by the appellant should be approved.

There are no authorities directly in point. It is true, as submitted by senior counsel for the

trustee, that historically courts strictly construed the powers conferred upon a trustee. But, as is

evidenced by statutes such as the Trusts Act 1973, that has now changed to a significant extent. Courts

now have power in appropriate cases to confer additional powers on trustees and to vary the terms of

a trust. Statutes, such as the one in question here, must generally be regarded as enabling Acts and

should be given, where appropriate, a liberal construction.

Section 33(1)(b) speaks of "improvement or development" of the property and in context that

must mean that there can be some "development" of the property which is not an "improvement". There

is certainly a deal of overlap in the use of the two terms, but there is no justification for regarding the

terms as co-extensive. Counsel for the trustee referred to the Macquarie Dictionary definition of

"development" but that is not all that helpful given the context in which the term is used in the statute.

The learned primary judge appears to have been significantly influenced by the fact that

subdivision was made the subject of a specific provision - s.33(1)(e) - and there was no specific

reference to rezoning. In my view that reasoning is not appropriate here. A reading of the Local

Government (Planning and Environment) Act 1990, decisions of local authorities, and decisions of the Planning and Environment Court suggests that the subdivision of a particular parcel of land may well

necessitate the construction of roads and other services, and the provision of money for headworks, on

land other than the subject land. Subsection (1)(e) appears to have been inserted out of an abundance

of caution to make it clear that in the case of subdivision the trustee has the power to expend trust

moneys for the purposes therein specified. In other words, subdivision of land would probably be

within the power conferred by s.33(1)(b), but the matter is put beyond doubt by the inclusion of

subsection (1)(e).

These days many steps which would result in the improvement or development of real estate

requires an application to a local authority or other statutory authority for consent. In that regard

s.33(1)(n) should not be overlooked; it provides that the trustee may "do or omit all things, and execute

all instruments necessary to carry into effect the powers and authorities given by this Act or by or under

the instrument creating the trust". Clearly the trustee would have power to make all necessary

applications for consent prerequisite to the proposed development of the property. Where it was a

necessary prerequisite of the proposed development that the land be rezoned then the trustee would

have, as incidental to the power to develop the property, the power to apply for rezoning.

As a matter of practicality any proposed development involving an application for rezoning of

land would involve the expenditure of trust moneys exceeding $10,000, and therefore the sanction of

the court would be required. It should not be assumed that the court would as a general practice

sanction the expenditure of trust money on a speculative development proposal which involved a

rezoning application. The power is there and it may be exercised, with the sanction of the court, in an

appropriate case. If all the beneficiaries were sui juris and consented, the trustee could more readily

obtain the sanction of the court to expend trust moneys where the development proposal was

speculative - assuming sanction was required in such a case.

It follows, in my opinion, that the learned primary judge was wrong in concluding that there was

no power conferred by the statute on the trustee pursuant to which, in appropriate circumstances and

with the sanction of the court, the trustee could make the rezoning application sought by the appellant.

It is now necessary to consider whether, in light of the findings made by the learned primary

judge, he should have sanctioned the exercise of the power here.

Counsel for the appellant drew the court's attention to the observation by the learned primary

judge that there was not sufficient detail before him, for example, to allow for a determination as to

whether the benefit from a sale after rezoning would exceed the loss in the use of sale proceeds arising

from the necessary delay. In that regard he referred to the observations of the Privy Council in Marley

v. Mutual Security Merchant Bank and Trust Co Ltd (1991) 3 All E. R. 198 especially at 201. That

is clear authority for the proposition that when a trustee asks the court for directions, there is an

obligation to obtain and place before the court, for example, evidence of expert advice or valuation

which is necessary to enable the court to give its decision on the directions with the benefit of full

information. Whilst it is true to say that such information was wanting here, it seems to me that that was

not the consequence of any fault on the part of the trustee; rather it was a consequence of the

speculative nature of the appellant's proposal. It is impossible to estimate with any degree of accuracy

the time required for obtaining a final decision on such a rezoning application. All that is needed is that

one person (perhaps a rival developer, perhaps a disaffected neighbour) object to the local authority

and the initial decision of the local authority could be significantly delayed. Even without the possibility

of an appeal to the Planning and Environment Court a contested rezoning application could take many

months to finalise. One does not know what the market price for land will be at that indeterminate time

in the future when the property is auctioned. It may well be, as foreshadowed by the learned primary

judge, that market factors would mean that the property as rezoned would take longer to sell; it may well be that whoever was interested in developing the property as a golf course and associated

residential subdivision would need significant time to finalise his proposal before making a firm offer.

Then, it may well be, that any contract would be conditional upon some particular subdivisional

approval being forthcoming; such considerations could further substantially delay settlement of any sale.

It is true, as the material reveals, that in his lifetime the testator was rezoning and subdividing

land in which he had a proprietary interest. It may well be that if he remained alive he would have

preferred a development along the lines of that now proposed by the appellant. But such considerations

are in no way binding on the trustee or the beneficiaries of the estate.

The adult children who are interested to the same extent as the appellant in the subject property

are desirous that the property be sold, as presently zoned, as soon as possible for the best available

price. It is now over three years since the death of the testator and in my view, this being in essence a

bare trust for sale, the disposal of the property should no longer be delayed.

It should also be noted that counsel for the appellant sought leave to amend the notice of appeal

to place reliance on s.94 of the Trusts Act, though it was not drawn to the attention of the learned

primary judge. There are a number of obstacles which the appellant would have to overcome if she

were to succeed because of s.94. It may well be that notice would have to be given to the other

beneficiaries because the section refers to "the best interests of the persons, or the majority of persons,

beneficially interested under the trust". Further, there is at least real doubt as to whether the words of

the section can be made to apply to the facts here. But such matters need not be further considered.

Recourse to s.94 is only necessary in order to ask the court to confer a power on the trustee to make

a rezoning application. That power is rightly an incident of the power to develop conferred on the

trustee by s.33(1)(b), and in consequence no order pursuant to s.94 is required or would advance the

appellant's position.

It follows that the learned primary judge erred in concluding that the trustee had no power to

make an application for rezoning, but he was correct in directing that the proper course for the trustee

to take was to sell all the land subject to postponement only for such time or times as may be necessary

to achieve the best financial result reasonably obtainable.

Once it is accepted that the court had the power to sanction the exercise of a power in the

trustee to apply for rezoning the involvement of the appellant at first instance was clearly proper and

reasonable. She had taken an active interest in the disposal of the assets in the estate and put forward

a proposal which the trustee could not properly ignore. It was for the court to determine whether or

not in all the circumstances the proposal she reasonably advanced should be sanctioned notwithstanding

the wishes of the other beneficiaries. For those reasons the order made by the learned primary judge

that the costs of all parties be paid out of the estate was the appropriate order at that stage. Such costs

should be taxed on a solicitor and client basis.

On the appeal the appellant has succeeded in reversing a critical part of the judgment of the

learned primary judge. It was part of his formal order that the trustee had no power to apply for

rezoning and he has been held to be incorrect in that regard. However, the substantive effect of the

directions given by the learned judge at first instance remains unaltered. In those circumstances it is not

appropriate to require the beneficiaries of the estate other than the appellant to bear any of the burden

of the costs of the appeal. That can best be achieved by simply ordering that the trustee's costs of and

incidental to the appeal, taxed on a solicitor and client basis, be paid out of the appellant's portion of

the proceeds of the sale of the land the subject of cl.5.01 of the deceased's will.

There should be no other order with respect to costs of the appeal. In written submissions

counsel for the appellant raised other questions as to costs associated with the administration of the

estate. It is not appropriate to determine those issues here. If there remain any outstanding issues then
they should be the subject of an application to the court.

To give effect to what has been said above the formal orders of the court will be:

1.          Appeal allowed to the following extent:

(a)  Vary the declaration so that it reads as follows:

The Trustee should proceed to sell the land the subject of cl.5.01 of the

will by auction as soon as possible at not less than a reserve agreed

upon by the appellant Eileen Ryan and the children beneficiaries and

failing agreement at not less than a reserve which is the average of two

independent valuations being from one valuer selected by Eileen Ryan

and one valuer selected by the children beneficiaries.

(b)        Vary the order for costs below by adding thereto after the word "parties" the words

"taxed on a solicitor and client basis".

2.          Order that the trustee's costs of and incidental to the appeal, taxed on a solicitor and client

basis, be paid out of the appellant's portion of the proceeds of the sale of the land the subject

of cl.5.01 of the deceased's will.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 5404 of 1996

Brisbane

Before Fitzgerald P

Williams J

Mackenzie J

[Ryan v. Public Trustee of Queensland]

BETWEEN:

EILEEN RYAN

(Plaintiff) Appellant

AND:

THE PUBLIC TRUSTEE OF QUEENSLAND
as Trustee of the Will Trusts of LAWRENCE

DOYLE RYAN (Deceased)

(Defendant) Respondent

REASONS FOR JUDGMENT - MACKENZIE J

Judgment delivered 2 May 1997

I agree that the appeal should be allowed and the declaration varied in the manner and for the

reasons set out in Williams J's judgment, and with the order for costs.