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Zevering v Callaghan

 

[2011] QCA 180

Reported at [2012] 1 Qd R 194

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Court of Appeal

PROCEEDINGS:

General Civil Appeal

Application for Dismissal for Want of Prosecution

ORIGINATING COURT:

DELIVERED ON:

29 July 2011

DELIVERED AT:

Brisbane

HEARING DATE:

20 April 2011

JUDGES:

Fraser and White JJA and Peter Lyons J

Separate reasons for judgment of each member of the Court, each concurring as to the order made

ORDER:

The parties are allowed seven days in which to file submissions as to the form of the proposed orders.

CATCHWORDS:

EQUITY – TRUSTS AND TRUSTEES – POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES – REMUNERATION – ALLOWANCE BY THE COURT – PRINCIPLES AND GROUNDS FOR GRANT OR REFUSAL – where a unit trust was engaged in the development and sale of real property – where the unit holders had resolved to remunerate trustees at a specified rate – where the appellant’s claim for remuneration was considered excessive by the current trustees – whether exceptional circumstances must be shown for the Court to exercise discretion under s 101 of the Trusts Act 1973 (Qld) – whether and in what amount the appellant is entitled to remuneration

Acts Interpretation Act 1954 (Qld), s 14B

Trusts Act 1973 (Qld), s 101

FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; [1988] HCA 13, cited

Plomley v Shepherd (1896) 17 LR (NSW) Eq 215, distinguished

Re Application of Sutherland (2004) 50 ACSR 297; [2004] NSWSC 798, cited

Re Postle and Hodsdon’s Application [1991] 1 Qd R 160, cited

COUNSEL:

The appellant/respondent appeared on her own behalf

B J Clarke SC, with B McGlade, for the respondents/applicants

SOLICITORS:

The appellant/respondent appeared on her own behalf

Macrossans Lawyers for the respondents/applicants

[1]  FRASER JA:  I have had the advantage of reading the reasons for judgment of Peter Lyons J.  I agree with those reasons and with the order proposed by his Honour.

[2]  WHITE JA:  I have read the reasons for judgment of Peter Lyons J and agree with the order proposed by his Honour for those reasons.

[3]  PETER LYONS J:  The appellant was for a number of years a trustee of The Outlook Estate Trust.  She made an application invoking the Supreme Court’s inherent jurisdiction as well as pursuant to s 101 of the Trusts Act 1973 (Qld) (Trusts Act) for an order for her remuneration as a trustee, which, in effect was for an increase beyond that which the current trustees are prepared to pay.  She appeals against the dismissal of that application.

Background

[4] In 1999, some 26 persons, including the appellant, became participants in a solicitor’s contributory mortgage scheme (the scheme).  The funds they contributed to the scheme were advanced to a property developer, Clevewood Pty Ltd (Clevewood).  Clevewood was engaged in a project for the development, subdivision and sale of land known as the Outlook Estate (the project).  The amount which the participants in the scheme had contributed was $1,120,000.  Of that amount, the appellant contributed $35,000.

[5] Shortly after the money was advanced, the mortgagor fell into default, and the project stalled.  Subsequently, the participants established the trust, with the intention of taking over the mortgage, and completing the project.  Their purpose was to attempt to recover the funds which they had contributed, and interest.

[6] The trust was established as a unit trust in November 2001.  The unit holders were the participants in the scheme, the number of units held by each being proportional to the amount contributed.

[7] The appellant was one of the original trustees.  There were two other trustees initially, though one (Mr Spooner) retired in July 2003.  The other was replaced by one of the respondents, Ms Callaghan, in September 2002.  The appellant resigned as trustee in September 2007, and was replaced by the other respondent, Ms Raymont.

[8] A meeting of unit holders took place on 18 March 2002.  At that meeting, it was resolved unanimously that the trustees should be remunerated for their work on the project.  It was also resolved, by a majority of ten votes to four, that the remuneration be at the rate of $20 per hour.

[9] When the trust took control of the project in 2002, the development was nearing completion, with some surveying and engineering matters still outstanding.  The trustees completed the development and sold the lots.  By January 2007, all of the lots were sold.  Ultimately, the project was profitable.  In part, this was attributable to the rise in prices for land in the area, with the passage of time.  The unit holders have recovered their original investments, with interest.  The balance sheet of the trust at 30 April 2010 showed net current assets of $221,911.38.  The only asset was a bank deposit of $948,170.08.  Liabilities included provision for disputed claims by the appellant, and for other contingencies, totalling $368,239.70.

[10]  In 2007, the trustees began the process of winding up the trust.  In October 2007, the appellant, through her solicitors, submitted a claim for remuneration to the current trustees.  The claim identified three different bases, with the remuneration ranging between $797,750 and $1,107,813.49.  Legal advice was taken by the trustees about this claim (as well as about claims made by other persons who had acted as trustees).  The effect of that advice was that the appellant’s claim was too high.  The solicitors acting for the trustees recommended the payment of a sum of $86,600 to the appellant, being commission at 2.5 per cent of the total sales revenue, said to be $3,464,000.

[11]  On 14 July 2008, the solicitors for the trustees wrote to the appellant, advising that the trustees considered the appellant’s claim to be excessive.  They made reference to the resolution at the meeting of unit holders held on 18 March 2002.  The trustees invited the appellant to resubmit her claim for compensation, and gave notice that otherwise an application would be made to the Court for directions.  However, that letter was returned to the solicitors.  Subsequent attempts by them to locate the appellant were, for some time, unsuccessful.

[12]  On 23 September 2009, an originating application was filed on behalf of the trustees for directions for payment of remuneration to past and present trustees.  Remuneration, referred to as base remuneration, was proposed to be in accordance with the resolution of the meeting of unit holders in March 2002.  However, a direction was sought that the trustees be authorised to pay a special remuneration at a rate of up to 2.5 per cent of the gross proceeds of sale (including base remuneration).  A separate direction was sought authorising the payment to the appellant of the sum of $86,000 (to include base remuneration).  By this time, the location of the appellant had become known to the trustees, and she was served with the application.  She took part in the hearing in the Trial Division.

Proceedings and judgment in the Trial Division

[13]  On 15 October 2009, orders were made, subject to any cross-application by the appellant, for payment of both base remuneration and special remuneration, in accordance with the application, including the proposed remuneration for the appellant.  A cross-application by the appellant resulted in a contested hearing in May 2010.  This appeal is against the dismissal of her application.

[14]  The appellant gave evidence at the hearing of her cross-application, both orally and by way of affidavit.  She tendered a revised claim, for a total amount of $686,600.  The total was the result of a claim for remuneration at a rate of $100,000 per annum for six years, as project co-ordinator; together with commission of 2.5 per cent of gross revenue (the latter being consistent with the commission proposed by the current trustees).

[15]  The appellant gave evidence that, after the loan went into default in October 1999, she became unhappy with efforts to effect recovery of invested moneys.  She decided to take over the project on behalf of the investors, and to facilitate that, she identified the other investors, and called a meeting on 17 August 2001.  That ultimately led to the formation of a trust, on 23 November 2001, and to the appointment of the appellant, Ms Mary Newton and Mr Warwick Spooner, as trustees.

[16]  The appellant gave evidence of her contact with representatives of the Logan City Council (the Council); and with Mr David Shaw and Mr Des Nelson, who had respectively been appointed the engineering consultant and surveyor for the project.  She also gave evidence of her dealings with Mr David Miller, the real estate agent responsible for the marketing of most of the lots.  Ten of the lots included land with steep slopes, and adjoined or were near a wetland (wetland lots).  The appellant commenced a campaign in 2002 seeking to have the Council acquire these lots.  The appellant is a scientist by profession, with some particular expertise in environmental issues.  The appellant submitted to the Council a proposal for it to purchase the ten wetland lots.

[17]  On 23 April 2003 the Council wrote to the appellant, advising that a resolution had been passed that the Council was not interested in acquiring six of the wetland lots due to their limited ecological value.  The letter also advised that the Council supported further investigation into the purchase of the other four wetland lots.  That led the appellant to prepare an environmental report, dated 20 April 2004, dealing with the values of all ten of the wetland lots.  It was submitted to the Council at about the time of its completion.  Ultimately, on 7 December 2004, the Council resolved to acquire only four of those lots.  The total price paid for the lots was $640,000, plus GST.

[18]  The remaining six wetland lots were sold in the period through to January 2007.

[19]  The appellant gave evidence that she estimated that from the latter part of 2001 until early 2004, she spent on average 25 to 30 hours per week on matters relating to the project.  For the balance of 2004 and 2005, she estimated that her time committed to the project was between 20 and 25 hours per week.  Thereafter, until September 2007 when she retired as a trustee, the appellant gave evidence that she spent on average 20 hours per week, engaged in the remaining sales, accounting matters and the winding up of the trust.  In her evidence, the appellant described generally the nature of the activities she undertook.  However, she did not provide detailed evidence of carrying out her tasks as trustee.  She also gave evidence that, as a consequence of her involvement in performing the trust, she sacrificed the opportunity to pursue fulltime work, and that she had to defer further studies.

[20]  There was some independent support for the appellant’s evidence about the extent of her activities.  Mr Miller gave evidence about the appellant’s initial contact with the real estate agency for which he worked, First National Real Estate, Shailer Park.  He gave evidence that he had extensive and regular dealings with her from about July 2002 until early 2007.  They included lengthy discussions relating to the marketing program, regular telephone and face to face reporting and feedback relating to buyer interest, and discussion of each proposed contract, including various special conditions proposed by individual purchasers.  There was also discussion as to revision of the lot prices on a regular basis.

[21]  Mr David Power was a councillor with the Council.  The land was located in his division.  He gave evidence of the appellant’s initial approach to him, and of the fact that he directed her to relevant officers of the Council.  He also gave evidence that he had regular and lengthy communications with her, both face to face and by telephone, principally in his capacity as Chair of the Council’s Development and Environment Committee.  He noted that, initially, the Council was resistant to the proposals to acquire lots in the development.  He also gave evidence that the decision to acquire four of the wetland lots was the result of a process which he described as “lengthy and challenging”.

[22]  Mr James McDonnell is the manager of Environment and Sustainability with the Council, having held that position under various titles since October 2002.  He gave evidence in an affidavit that from late 2003 he had numerous dealings with the appellant in relation to the acquisition of the wetland lots.  He described her report on those lots as “comprehensive and thoroughly researched” and said that it “provided a sound argument for the acquisition of the lots”.  He also gave evidence that it was “the key document which was instrumental in Council’s decision to acquire the 4 parcels”.  He too gave evidence of the complexity of the process, “as many Councillors needed to be convinced that the wetlands should be acquired for environmental purposes”.

[23]  Mr McDonnell’s oral evidence had a somewhat different flavour.  It was to the effect that he “was going to acquire those lots one way or another”.  However, he referred to “political difficulties internally” and said “it was still a challenge to convince them to acquire that land”.  It was clear from his oral evidence that the decision to buy the four wetland lots ultimately acquired by the Council was based on the appellant’s report, it being regarded by the Council as a sufficient basis for that decision.

[24]  Mr Raymond Shaw was the Development Assessment Manager for the Council in 2001.  He gave evidence of contact with the appellant on numerous occasions in the latter part of 2001 and the earlier part of 2002 in relation to the development.

[25]  In 2001, Mr John Creagan was the Assistant Development Engineer in Development Assessment at the Council.  He held that position until June 2002.  He had the day to day management of development projects.  He gave evidence that the appellant initially contacted him in 2001, and that thereafter she had contact with him, usually by telephone or email, but sometimes they would meet.  His contact with the appellant included several telephone conversations every week until he ceased to work with the Council.

[26]  Mr Peter Sissons has extensive experience in the property development industry.  Companies established by him are engaged in property development on their own account, and by way of joint venture, as well as providing consultancy services to other property developers.  He first looked at the project in 2000, having been approached by a person associated with the lawyers who established the scheme.  He considered the property to be then virtually unsaleable, and that the project could not be resurrected without a significant injection of funds.  He was asked whether he would consider purchasing the property but had no interest in doing so, it being a very unattractive proposition at that time.

[27]  Mr Sissons gave evidence that he considered that no single independent specialist consultant could have undertaken the roles which the appellant undertook; and that if he had himself undertaken the role of project co-ordinator, he would have sought a fee of $120,000 per annum for the duration of the project, together with a success fee of between two and three per cent of gross sales.  He would have also required the assistance of a project co-ordinator, and considered that a sales manager/project marketer was required to oversee and manage the sale process.

[28]  The evidence called on behalf of the respondents included evidence from Mr James Hotchkin, an experienced property developer.  He noted the success of the project.  He considered that inexperienced people like the trustees would have spent more time in achieving the outcome than an experienced and qualified professional would have taken.  He considered that, at the time the trust took over the project, the greater part of a project manager’s tasks had been completed.  He did not consider that a full-time sales manager was required for a subdivision of 33 lots.  The remaining tasks he considered to be administrative, with relatively straightforward decision making.  He thought that if professional consultants had been retained, “the process may have been very different with other courses of action being taken, which may have achieved a more expedient outcome for the investors”.  He did not consider industry standards of remuneration to be relevant to the determination of an appropriate remuneration for the appellant.  He thought that remuneration calculated on an hourly rate would be appropriate, but did not identify a rate.

[29]  Other witnesses who gave evidence in the case for the respondents were either present or past trustees, and an investor in the scheme.

[30]  Ms Callaghan, a trustee since December 2002, acknowledged that the successful outcome of the development was due in substantial part to the entrepreneurial skills of the appellant.  Ms Raymont, a trustee since October 2007, agreed with the evidence of Ms Callaghan.

[31]  In her oral evidence Ms Callaghan described her relationship with the appellant when they were both trustees as “a very strained relationship”.  However, she accepted that the appellant achieved “a very good result” and said “[a]ll unit holders agree it was a job very well done”.

[32]  Ms Callaghan gave evidence of the circumstances in which the appellant ceased to be a trustee.  The appellant’s sister, Olayinka Zevering, was also a unit holder.  At a time when a distribution of some interest was to be made, the appellant arranged to receive a cheque payable to her sister.  The appellant then banked the cheque to her own account.  Not surprisingly, her sister protested.  A meeting of unit holders was called, for the purpose of considering a resolution to remove the appellant as trustee.  The appellant did not attend this meeting, but her solicitor did.  He stated that the appellant did not accept the allegations made against her.  Her resignation was tendered and accepted.

[33]  Ms Newton was a trustee from 21 August 2001 to 18 September 2002.  She had experience in business, having been a partner in a plumbing business and a director in a property development company, as well as a supervisor of a travel agency.  She gave evidence that no one person was responsible for the trust’s achievements.  However her own role was administrative, including arranging and minuting meetings, and maintaining the financial records of the trust.

[34]  Mr Warwick Spooner was a trustee from the commencement of the trust until July 2003.  He gave evidence about his dealings with officers of the Council, a surveyor, an engineer, and the Office of State Revenue in relation to land tax.  The general tenor of his evidence was that the appellant overstated her own contribution, and understated the contribution of the other trustees, to the project.

[35]  After setting out much of the history of the matter, the primary Judge turned to a consideration of the appellant’s claim.  His Honour’s reasons set out a more comprehensive statement of the tasks which the appellant gave evidence of undertaking, than has been set out earlier in these reasons.  His Honour noted that no record of the times spent in the performance of these tasks was produced in evidence.  His Honour also noted the supporting evidence of Mr Creagan, Mr Power, Mr McDonnell, Mr Shaw and Mr Miller.  In view of the evidence of Ms Callaghan, his Honour found that the appellant had significantly overstated her role in relation to her involvement in “complex accounting matters”.  He also noted the evidence of the other trustees of their involvement in the making of decisions in relation to the trust.  He referred to the evidence of Mr Spooner about his involvement at meetings with Council representatives.  In particular, his Honour accepted Mr Spooner’s evidence as to the origin of a covenant drawn up in relation to the steep land on some of the lots, and found that this was one of “numerous examples of (the appellant) significantly overstating her contributions and minimising the work of other trustees in order to advance her case”.  His Honour also rejected the appellant’s evidence in relation to Mr Spooner’s role in arranging the first meeting with Council representatives.  His Honour referred to Mr Spooner’s evidence that “the Council were not influenced by the environmental studies and lobbying” of the appellant, and stated that, “[t]he Council had already resolved to consider the purchase of the four lots … prior to (the appellant’s) involvement”.  His Honour then quoted Mr Spooner’s evidence that the Council, after almost two years, “simply reiterated their resolution made in April 2003 to acquire four lots only.”  Ultimately, his Honour concluded that the appellant consistently sought to diminish the input and efforts of her co-trustees, and to overstate the contributions she made.  He concluded that, without independent corroboration, he would be disinclined to accept her evidence.

[36]  His Honour made reference to the evidence of Mr Sissons.  He noted the evidence of Mr Sissons that it would be “uncommercial” for a project of this size to be completed in the time in fact taken.  He also noted the evidence of Mr Sissons that he had not seen a fee of the order of $700,000 paid to a consultant of the nature he envisaged would be needed for a project of similar size and price.

[37]  His Honour noted Mr Hotchkin’s evidence, including his evidence that a negotiated hourly rate would be an appropriate form of remuneration.

[38]  His Honour then turned to a consideration of s 101 of the Trusts Act.  He stated that s 101(1) permitted the Court to authorise remuneration “as it sees fit where it is justified in all the circumstances”; and referred to a statement from Re Postle and Hodsdon’s Application (Postle),[1] to the effect that the Court may authorise remuneration which is reasonable in the circumstances “having regard to the degree of responsibility exercised, the amount of skill and knowledge required and applied … and the value to the beneficiaries of the work done”.  He also noted, by reference to a statement from In the Will of Sheppard,[2] a case dealing with a statutory provision authorising the Court to allow the payment of commission to an executor, that the relevant consideration is not the size of the estate, but what activities have been carried out in relation to it.

[39]  His Honour then considered a number of cases concerned with the Court’s inherent jurisdiction to authorise remuneration for trustees.  He placed weight on the decision in 2002 to remunerate the trustees at $20 per hour, including the appellant’s support for the resolution.  He again made reference to the absence of proper accounts and records.

[40]  His Honour noted the scheme of remuneration supported by the current trustees.  With reference to both the inherent jurisdiction of the Court and that conferred by s 101(1) of the Trusts Act, his Honour stated that “what is required to exercise that discretion, are ‘exceptional circumstances’”.  His Honour then stated that the appellant had not established the existence of any exceptional circumstance which would warrant the allowance of remuneration over and above that agreed upon between the trustee and the unit holders, and accordingly held that her application failed.

Issues on appeal

[41]  It is convenient to set out the appellant’s grounds of appeal.  They are as follow:

“1.The learned trial Judge wrongly exercised his discretion to authorise remuneration of the Appellant under s 101 of the Trust Act 1973

2.The learned Judge wrongly decided that in the circumstances of this case, remuneration could only be awarded to the Appellant in special circumstances

3.The learned Judge failed to give due weight and regard to the role played by the Appellant in establishing The Outlook Estate Trust, administering the trust and seeing the operation of the trust through to a conclusion

4.The learned Judge failed to pay proper regard to the evidence of independent witnesses, as to the contribution made by the Appellant to the success of the trust.

5.The learned Judge wrongly decided that the Appellant had significantly overstated her contribution and minimized the work of other trustees in the affairs of the trust.

6.The learned Judge failed to take into account that the significant contribution made to the affairs of the trust by the Appellant, was acknowledged by other trustees.”

[42]  Save that no submissions were specifically directed to ground 1, the appellant’s submissions generally reflected her grounds of appeal.  However her written submissions also included allegations of a conflict of interest on the part of the solicitors for the respondent, and an assertion of a prior relationship between the primary Judge and those solicitors.  An affidavit disproved the truth of that assertion.  In any event, these matters were not pursued by the appellant at the hearing.

[43]  The respondents’ submissions acknowledged the significant contribution made to the affairs of the trust by the appellant, said to be reflected in the amount of remuneration proposed by the trustees, which was significantly greater than the remuneration proposed for any of the other trustees.  However, they emphasised the negative findings about the appellant’s overstatement of her own contribution and her minimisation of the actions of the other trustees.  They also placed weight on the appellant’s support for the remuneration proposed in March 2002.  The respondents submitted that an appellate Court would be reluctant to interfere in an exercise of discretion.  They drew attention to the statement of Manning J in Plomley v Shepherd (Plomley)[3] that a Court ought to be “very chary” in allowing a trustee remuneration for past services.  It was submitted that there was no substantial difference between the discretion conferred by s 101 of the Trusts Act, and the exercise of the Court’s inherent jurisdiction.  In this context, reliance was placed on a passage from the report of the Queensland Law Reform Commission which led to the introduction of the Trusts Act, dealing with the provision which became s 101.[4]

[44]  At the hearing, the respondents sought leave to file a notice of contention, seeking to support the decision of the primary Judge on the basis that the appellant did not show that an order should be made awarding her remuneration in excess of $86,600.  No objection was taken to this document by the appellant, on the basis that it raised no new argument; and the appeal proceeded on the assumption that the respondents could rely on it.  It seems appropriate, regardless of the outcome of the appeal, formally to grant the respondents leave to file the notice of contention.

Exercise of discretion under s 101(1) of the Trusts Act

[45]  Section 101 includes the following:

101 Remuneration of trustee

(1)The court may, in any case in which the circumstances appear to it so to justify, authorise any person to charge such remuneration for the person’s services as trustee as the court may think fit.

(2)In the absence of a direction to the contrary in the instrument creating the trust, a trustee, being a person engaged in any profession or business for whom no benefit or remuneration is provided in the instrument, is entitled to charge and be paid out of the trust property all usual professional or business charges for business transacted, time expended, and acts done by the person or the person’s firm in connection with the trust, including acts which a trustee not being in any profession or business could have done personally; and, on any application to the court for remuneration under subsection (1), the court may take into account any charges that have been paid out of the trust property under this subsection.”

[46]  On its face, s 101(1) confers on the Court a discretion to authorise remuneration for a trustee in very broad terms.  The breadth of those terms is apparent from the only stated qualification, namely, that the circumstances appear to the Court to justify the payment of remuneration to a trustee.

[47]  The context provided by the balance of s 101 does not suggest any narrow reading of the conferral of a discretion effected by s 101(1).  Section 101(2) authorises a trustee who is engaged in a profession or business to charge “all usual professional or business charges for business transacted, time expended, and acts done” by the trustee, or the trustee’s firm, in connection with the trust, including acts which the trustee could have done, were the trustee not “in any profession or business”.  Moreover, on an application for remuneration under s 101(1), s 101(2) provides that the Court may take into account any charges paid under it.  This provision may be read as envisaging remuneration to a trustee who is engaged in a profession or business, for an amount greater than the person’s usual professional or business charges; although it could perhaps also be read as permitting reference to those charges for the determination of remuneration for a co-trustee who is not engaged in a profession or business.  Regardless of whether either reading is correct, it is clear that s 101(2) is not intended to be restrictive of the remuneration which might be paid to a trustee.

[48]  The only case identified at the hearing of the appeal in which s 101 has been applied was Postle.[5]There, Byrne J (as his Honour then was) authorised remuneration, as mentioned in the reasons of the primary Judge, by reference to “the degree of responsibility exercised, the amount of skill and knowledge required and applied … and the value to the beneficiaries of the work done”.[6] There are other cases where remuneration has been ordered by the Court under s 101(1), without any statement of principle, or the identification of any limitation on the statutory provision which is not expressed in its language.[7]

[49]  Where a discretion is conferred upon a Court, it is inappropriate that the discretion be treated as subject to limitations not contained in the statute which grants the discretion.[8]  At the hearing, Senior Counsel for the respondents accepted that it would be an error to treat s 101 as requiring the demonstration of exceptional circumstances before the discretion can be exercised.

[50]  It is difficult to read the reasons of the primary Judge as doing other than that.  The reasons treat exceptional circumstances as a requirement to be satisfied for the favourable exercise of the discretion.[9]  His Honour refused relief expressly because the appellant had not established the existence of any exceptional circumstance.

[51]  Indeed, it may be thought that there is an additional difficulty with the reasons of the primary Judge.  It was common ground that an exercise of the discretion conferred by s 101(1) of the Trusts Act was appropriate.  So much is apparent from the fact that the respondents applied for, and obtained (subject to the appellant’s application), orders under that section, including an order for remuneration of the appellant.  In substance, the remaining dispute was the extent to which the discretion should be exercised, not whether an occasion had arisen for its exercise.  Somewhat perceptively, the appellant accepted that this appeal was an appeal against quantum, reflective of the true scope of the dispute, and a description which could be adapted to the proceedings at first instance.  It being common ground that some form of remuneration should be authorised, it is particularly difficult to see why the applicant had to show exceptional circumstances to demonstrate that one level of remuneration was more appropriate than another.

[52]  It is convenient to refer at this point to the respondents’ reliance on the statement of Manning J in Plomley, concerning the authorisation of remuneration for the past services of a trustee.  The reluctance there expressed to authorise remuneration in those circumstances is not of much significance in a case such as the present one, where all parties have recognised that some form of order authorising remuneration for past services is appropriate.

[53]  The respondent sought to support the reasoning of the learned primary Judge by reference, as has been noted, to the report of the Queensland Law Reform Commission.  In view of the concession by the respondents’ Senior Counsel referred to earlier, what support might be derived from this report is not clear.  It may have been intended to suggest that the jurisdiction conferred by s 101(1) of the Trusts Act is identical with the Court’s inherent jurisdiction to allow remuneration to a trustee, said to be exercised in exceptional cases.[10]

[54]  In my view, in the present case there are difficulties with the respondents’ attempt to rely upon this report.  A document of that kind may be relied upon under s 14B of the Acts Interpretation Act 1954 (Qld) where a provision is ambiguous or obscure; or if the ordinary meaning of the provision leads to a result that is manifestly absurd or is unreasonable; or to confirm the interpretation conveyed by the ordinary meaning of the provision.  The ordinary meaning of s 101(1) does not support the existence of a requirement of either special or exceptional circumstances for the exercise of the discretion.  Nor is the provision ambiguous or obscure.  Nor has it been suggested that the ordinary meaning of the provision leads to a result that is manifestly absurd.

[55]  In any event, it may be doubted that the report is of assistance to the respondents.  While it includes a recommendation “that a simple provision be adopted which is declaratory of the existing law”, it identifies that law by stating that the Court “has an inherent jurisdiction to award remuneration to a trustee, and although it exercises this jurisdiction sparingly it has been known to exercise it generously”.[11]  It is difficult to see this as endorsing the view that exceptional circumstances are required to be shown, before the discretion can be exercised.

[56]  It follows that there has been an error in the exercise of the discretion conferred on the Court by s 101(1).  There has been no suggestion that the appellant’s position might be improved by reliance on the Court’s inherent jurisdiction, and accordingly it is unnecessary to refer further to it.

[57]  The other matters relied upon by the appellant, with one exception, are matters relevant to the re-exercise of the Court’s discretion under s 101, and will be considered later.  The exception is the appellant’s submission that the primary Judge wrongly decided that the appellant had significantly overstated her contribution and minimised the work of the other trustees in the affairs of the trust.

Appellant’s overstatement of her contribution

[58]  The primary Judge’s findings have previously been mentioned.  They involved the rejection of some evidence given by the appellant (although in part she retreated from part of that evidence at the hearing at first instance); together with a general rejection of her evidence in the absence of independent corroboration.

[59]  These findings were made after the primary Judge had the opportunity to observe witnesses for both sides while giving evidence, principally in the course of cross-examination.  Ordinarily, findings made in those circumstances will not be overturned on appeal.[12]  The appellant has not established any basis for overturning these findings.

Fresh exercise of discretion

[60]  There is independent evidence to show that the appellant undertook significant work in the calendar years 2002, 2003, and 2004.  The environmental report which she prepared and submitted in April 2004 required professional expertise.  On the evidence, it clearly played a role in the decision of the Council to purchase four of the wetland lots.  There is some limited evidence which provides some basis for appreciating the extent of the appellant’s work in this period.  Mr Creagan gave evidence of contact with the appellant which included emails and meetings, and several telephone conversations every week.  However, his involvement ceased in June 2002.  There are also numerous references to the appellant’s involvement, found in the detailed claims (with time estimates) submitted by Ms Newton, Mr Spooner and Ms Callaghan.  While the evidence of Mr Power, Mr McDonnell, Mr Shaw and Mr Miller is more generalised, it does demonstrate a significant level of activity by the appellant, particularly up to the end of 2004.  Thereafter, only six lots remained to be sold.  While this took slightly longer than two years, it is difficult to think that the same level of activity was required from the appellant.

[61]  By reference to the matters identified in Postle, it can be said that the appellant exercised a significant degree of responsibility; that a substantial part of the work she undertook required the application of skill and knowledge; and that her work was of considerable value to the beneficiaries.  The last point is highlighted by the evidence of Mr Sissons.  These conclusions do not ignore the fact that, at various times, other trustees also made a significant contribution to the work undertaken by the appellant.

[62]  In addition, there are features of this case which deserve attention in determining what remuneration should be authorised.  The trust was established to carry out a commercial purpose, namely, to take over the mortgage and to realise the mortgaged property by bringing to completion its development and subdivision, and by selling the resulting lots.  The purpose of the task was to enable the unit holders to recover funds they had invested in the scheme, itself a commercial exercise.  It was agreed at an early stage that the trustees would be remunerated.  At that time, it was unknown whether the project would enable the recovery by the unit holders of the funds they had invested.  Indeed, it seems that some increase in the appellant’s remuneration will cause no detriment to the unit holders, their entitlement being limited to the recovery of their contribution, together with interest.

[63]  In the circumstances, it seems appropriate to authorise the payment of the sum of $150,000 to the appellant as remuneration for her services as trustee.  This figure represents more than one year’s remuneration for a project coordinator, on the evidence of Mr Sissons.  Alternatively, it may be regarded as one year’s remuneration at that rate; with a reduced success fee (the success fee being reduced by reason of the appellant’s own interest in the project).  However, there is inevitably a degree of arbitrariness both in the identification of evidence by reference to which the remuneration is selected, and the determination of remuneration itself.

Conclusion

[64]  I would make the following orders:

(a)The appeal be allowed;

(b)Order 2 of the orders for costs made on 14 September 2010 be set aside;

(c)Notwithstanding the orders made on 15 October 2009, the appellant be authorised to charge the respondents the sum of $150,000 as remuneration for her services as trustee (inclusive of remuneration which the trustees are authorised by the order of 15 October 2009 to pay the appellant);

(d)The appellant and the respondents are to be paid their costs of the appeal out of The Outlook Estate Trust, on an indemnity basis.

[65]  I would allow the parties seven days in which to file submissions as to the proposed orders.

Footnotes

[1] [1991] 1 Qd R 160 at 163.

[2] [1972] 2 NSWLR 714 at 720.

[3] (1896) 17 LR (NSW) Eq 215 at 217.

[4] Queensland, A report of the Law Reform Commission on the law relating to trusts, trustees, settled land and charities, The Commission, Brisbane, 1971.

[5] [1991] 1 Qd R 160.

[6] See ibid at 163; also 164-165.

[7] Harith & Kanuth v Beale [2003] QSC 411; Re Noosa Waters Pty Ltd [1998] QSC 1 (9 January 1998).

[8] FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 290; Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 205 per Gaudron J; Patton v Buchanan Borehole Collieries Pty Ltd (1993) 178 CLR 14 at 17, 23-24, 28-29.

[9] Callaghan & Anor v Zevering & Ors [2010] QSC 323 at [53].

[10] Re Application of Sutherland (2004) 50 ACSR 297 at [11].

[11] Queensland, A report of the Law Reform Commission on the law relating to trusts, trustees, settled land and charities, The Commission, Brisbane, 1971 at 68.

[12] Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479.

Close

Editorial Notes

  • Published Case Name:

    Zevering v Callaghan & Ors; Callaghan & Anor v Zevering

  • Shortened Case Name:

    Zevering v Callaghan

  • Reported Citation:

    [2012] 1 Qd R 194

  • MNC:

    [2011] QCA 180

  • Court:

    QCA

  • Judge(s):

    Fraser JA, White JA, P Lyons J

  • Date:

    29 Jul 2011

Litigation History

Event Citation or File Date Notes
Primary Judgment [2010] QSC 323 01 Sep 2010 Daubney J.
Appeal Determined (QCA) [2011] QCA 180 [2012] 1 Qd R 194 29 Jul 2011 Appeal allowed: Fraser and White JJA and P Lyons J.
Special Leave Refused [2012] HCASL 3 09 Feb 2012 Hayne and Crennan JJ.

Appeal Status

{solid} Appeal Determined - {hollow-slash} Special Leave Refused (HCA)