SITES 1 AND 2 AND THE TRUSTS
11At the date of acquisition, Council held Sites 1 and 2 on trust for public purposes. They were charitable purposes because they were beneficial to the community: Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 583.
12RMS submits that the interest in each of Sites 1 and 2 that it acquired from Council was only Council's bare legal title as trustee, which was worthless; and therefore no compensation is payable to Council for the market value of the beneficial interest in Sites 1 and 2 even though RMS acquired them freed from the trusts pursuant to s 20(1)(b) of the Just Terms Act. RMS submits that under the Just Terms Act where acquired land was held on trust for a charitable purpose, only the Attorney-General is entitled to bring proceedings and be paid compensation for the compulsory acquisition of the beneficial interest.
13RMS' submissions may be considered against the background of the acquisition procedures that it invoked under the Just Terms Act. RMS made a s 42 offer of compensation to Council for the whole fee simple interest in Sites 1 and 2, not just for the legal interest of Council as trustee. Council made a statutory objection to that offer by commencing these proceedings. RMS first raised its Site 1 trust contention shortly before the hearing. RMS first raised its Site 2 trust contention at a late stage of the hearing upon late production by Council of documents evidencing the trust relating to Site 2.
14During the hearing (as a result of discussion between bench and bar) RMS wrote to the Attorney-General, giving notice of its trust contentions and urgently seeking advice regarding the Attorney-General's position. The Attorney-General (by an officer) wrote a reply during the hearing advising that he disagreed that Council was not the appropriate party to claim compensation, and stating that Council had been notified of its obligation to apply the compensation to the beneficiaries of the trust and otherwise perform its obligations with respect to the trust. The letter also indicated that when the Court's decision is handed down, the Attorney-General would consider whether a cy-pres scheme or some other action will be required.
15As regards Site 1, on 18 February 1959 Council executed a declaration of trust in which it declared that it held the Site 1 parent parcel:
(which is to be transferred to it pursuant to the provisions of Clause 18(1) of the County of Cumberland Planning Scheme Ordinance) UPON TRUST for the following purposes and subject to the following conditions, namely:-
1. AS TO PART of the said land that is as to so much thereof as is required for a County road under the County of Cumberland Planning Scheme the Council will hold the same for that purpose AND will make the same available without cost to the Commissioner of Main Roads or any other body that may be the constructing authority for the County Road when required so to do by the said Commissioner or other body as aforesaid AND pending its requirement for a County road the Council shall not use or permit to be used such part of the said land for any purpose other than the purpose of a public park, public reserve or public recreation area.
2. AS TO THE RESIDUE of the said land the Council will hold the same for the purposes of a public park, public reserve or public recreation area and the Council will not use or permit to be used such residue of the land for any purpose other than the purpose of a public park, public reserve or public recreation area.
3. THE COUNCIL will not erect or permit to be erected on the said land or any part thereof any building without first obtaining the approval of The Cumberland County Council and will observe and comply with all conditions which The Cumberland County Council may impose in connection with any such approval.
16About a week later, on 26 February 1959, the owner, Eliza Foster, as well as Cumberland County Council and Willoughby Council, executed a transfer of the Site 1 parent parcel to Willoughby Council for a consideration of 4,500 pounds paid by Cumberland County Council to the owner. The transfer stated that it was at the request and direction of Cumberland County Council pursuant to cl 18(1) of the CCPSO "for park and recreation purposes".
17At the date of acquisition in 2011, the Site 2 parent parcel comprised Lot 32 in DP711190 and Lot 189 in DP1098977. In relation to Lot 32, on 14 April 1960 Council executed a Declaration of Trust in which it declared that it would hold what later became Lot 32 for the following purposes and subject to the following conditions.
1. THE COUNCIL will hold the said land for the purposes of a public park public reserve and public recreation area and the Council will not use or permit to be used the said land for any purpose other than the purpose of a public park public reserve or public recreation area.
2. THE COUNCIL will not erect or permit to be erected on the said land or on any part thereof any building without first obtaining the approval of The Cumberland County Council and will observe and comply with all conditions which The Cumberland County Council may impose in connection with any such approval.
18On 9 August 1960 the owners of what later became Lot 32, together with Council and Cumberland County Council, executed a transfer of Lot 32 whereby in consideration of 5,500 pounds paid to the owners by Cumberland County Council, the owners of Site 2, at the direction of Cumberland County Council pursuant to cl 18(1) of the CCPSO, transferred Lot 32 to Willoughby Council "for park and recreation purposes".
19In relation to Lot 189, on 17 August 1960 the owners of old system land that later became Lot 189, together with the Council and Cumberland County Council, executed a deed of conveyance which recited that the owners had agreed to sell that land to Cumberland County Council for five thousand five hundred pounds and that Cumberland County Council and Willoughby Council had agreed that the land (which was reserved under the CCPSO for the purposes of parks and recreation areas) was to be conveyed to Willoughby Council pursuant to cl 18(1) of the CCPSO to be held by the "County [sic Willoughby] Council" upon the trusts and subject to the conditions thereafter expressed. Later in the deed, Willoughby Council declared that it would hold the land on the following conditions:
(a) That the said Council will hold the said land for the purposes of a public park public reserve and public recreation area and that the said Council will not use or permit to be used the said land for any purpose other than the purpose of a public park, public reserve or public recreation area.
(b) That the said Council will not erect or permit to be erected on the said land or any part thereof any building without first obtaining the approval of the County Council and will observe and comply with all conditions which the County Council may impose in connection with any such approval.
20As noted, these documents record that the Sites 1 and 2 parent parcels were transferred to Council pursuant to cl 18(1) of the CCPSO. At that time Sites 1 and 2 were designated "County Road" under the CCPSO. Clauses 17 and 18(1) of the CCPSO provided:
17. The owner of any land reserved under Division 2 of this Part upon which the erection of any building or the carrying out of any work of a permanent character or the making of any permanent excavation is prohibited or the owner of any land so reserved on which the responsible authority has refused to approve of the erection of a building or the carrying out of any work of a permanent character or the making of any permanent excavation may, by notice in writing, require the responsible authority to acquire such land.
Upon receipt of any such notice the responsible authority shall acquire the land to which the notice relates.
18.(1) The responsible authority may and upon such terms and conditions as may be agreed upon transfer any land which has been acquired by it in pursuance of clause 17 to the council or the statutory body concerned.
21At the date of acquisition, Sites 1 and 2 were zoned 5(c) under the Willoughby Local Environmental Plan 1995 and occurred within substantially the same corridor as the county road identified in the CCPSO.
22Land such as Sites 1 and 2 vested in a council as at 1 July 1993 and "subject to a trust for a public purpose" are taken to be classified as "community land", which a council has no power to sell or otherwise dispose of: ss 26, 45(1) and cl 6(2)(b) Schedule 7 Local Government Act 1993; Save Little Manly Beach Foreshore Inc v Manly Council (No 2) [2013] NSWLEC 156 at [73] - [81] per Biscoe J. Land subject to a trust for a public purpose may include land transferred to a council pursuant to a condition of a development consent: Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59, (1998) 195 CLR 566 at [44], [48], [66]-[67]. Land compulsorily acquired for a public purpose under the Just Terms Act is subject to a trust for that public purpose: Save Little Manly Beach (No 2) at [79]. The declarations of trust relating to Sites 1 and 2 contain no power of sale or of other disposition. At general law, a trustee of land for a charitable purpose with no power of sale is obliged to use the land for the charitable purpose in perpetuity unless, in appropriate circumstances, the trustee can obtain the approval of the Court to sell the land and apply the proceeds to some new charitable scheme cy-près; Sydney Sailors' Home v Sydney Cove Redevelopment Authority (1977) 36 LGRA 106 at 114 (NSWCA).
23If RMS' submission at [12] above is correct, then it has acquired the valuable Sites 1 and 2, freed of the trusts by virtue of s 20(1)(b) of the Just Terms Act, for nothing unless the Attorney-General makes a claim for compensation.
24In a statute whose overriding object is just compensation (as its very title indicates), it would be wrong to impute to the legislature an intention that no one is to be compensated for the market value of land held on trust for a public purpose (whether or not that result comes about by the application of s 20(1)(b)). RMS is careful to say that it makes no such submission. The entitlement to compensation for compulsory acquisition of property is an important right and hence provisions conferring such a right, like those in the Just Terms Act, are to be construed with all the generality that their words permit: Marshall v Director- General Department of Transport [2001] HCA 37, (2001) 205 CLR 603 at [38]; Roads and Traffic Authority of New South Wales v Heywood [2002] NSWCA 99, (2002) 54 NSWLR 289 at [20], [21]; George D Angus Pty Limited v Health Administration Corporation [2013] NSWLEC 212 at [100] per Preston CJ of LEC; Tempe Recreation Reserve Trust v Sydney Water Corporation [2013] NSWLEC 221 per Biscoe J. The specific compensation provisions of the Just Terms Act are subject to the general just terms override required by ss 3(1)(b) and 54(1).
25Initially, RMS submitted that as s 56(1) defines market value for all interests in land and not just freeholds (AMP Capital Investors Ltd v Transport Infrastructure Development Corp [2008] NSWCA 325, (2008) 163 LGERA 245 at [84]), then in the case of a claim by a trustee it is only the trustee's bare legal interest that is relevant in the hypothetical transaction to which s 56(1) refers. On that approach, the beneficiaries of an ordinary trust must be the claimants for compensation, which would present large practical difficulties where there are numerous beneficiaries. It cannot work in the case of a discretionary trust where no one owns the beneficial interest until the trustee exercises its discretion: claims by potential discretionary beneficiaries, who may be numerous, for the loss of their spes are not within the contemplation of the Just Terms Act.
26Ultimately, however, RMS accepts that under the Just Terms Act the trustee of an ordinary trust can claim compensation for the acquired beneficial interest in trust land and would hold the compensation on trust for the beneficiaries. I agree. In most circumstances trustees are the proper plaintiffs in any claim involving rights or property of the trust: Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 at 436. In the Just Terms Act, "land" is defined to include an "interest" in land, and "interest" is defined to include not only a legal or equitable estate in the land but also a right or power over, or in connection with, the land: s 4. A trustee of land has an "interest" in the land in that not only does it have an estate but it also has a right or power in connection with the land. An acquiring authority may know nothing of the existence of a trust: indeed, it is only obliged to give a proposed acquisition notice to a beneficiary with an unregistered interest who is not in possession if it has "actual knowledge" of the beneficiary's interest: s 12.
27Nevertheless, RMS submits that the trustee of a charitable trust is in a different position from a trustee of an ordinary trust in that only the Attorney-General can bring proceedings relating to a charitable trust, including proceedings under the Just Terms Act. I do not accept the submission.
28The rules relating to joinder of the Attorney-General are a procedural requirement peculiar to charitable trust proceedings.
29A trust of land for a public purpose binds the land and controls what otherwise would have been the freedom of disposition enjoyed by the registered proprietor of an estate in fee simple. There are no beneficial owners of land held on trust for a public purpose. An analogy may be drawn with an executor of a testator's estate who, so long as the estate is unadministered, has full ownership of the testator's property, without distinction between legal and equitable interests. What matters is that the court will enforce the executor's duties of administration on application made for that purpose: Commissioner of Stamp Duties (Qld) v Livingston (1965) AC 696 (PC) at 707, 712. Similarly, in my opinion, in the case of a trust for a public purpose, the full ownership is vested in the trustee and there is no need to distinguish between legal and equitable interests, any more than there is for the property of a full beneficial owner. What matters is that the Supreme Court will control the trustee's use of property that comes to the trustee in that capacity, in a suit to enforce the trust or its due administration brought by the Attorney-General. In the case of an ordinary trust, the beneficiaries have standing to bring proceedings to enforce observance and due administration of the trust. In the case of a trust for a charitable purpose where there are no beneficiaries, that task falls to the Attorney-General (with or without a relator) on behalf of the Crown as parens patriae (parent of the country) and protector of all charitable trusts.
30Importantly, no rule requires joinder of the Attorney-General in all proceedings involving a charity. It depends on the nature of the proceedings. At general law, the Attorney-General is not a necessary party in proceedings by a trustee of a charity to recover property to which the charity claims to be entitled or to protect property in which the charity claims to have an interest: Heydon and Leeming, Jacobs' Law of Trusts in Australia, 7th ed (2006) Lexis Nexis Butterworths, [1067]; Dal Pont, Law of Charity, [14.25]. In my opinion, proceedings for compensation under the Just Terms Act fall within that description. In the leading case of Uniting Church in Australia Property Trust (NSW) v Monsen [1978] 1 NSWLR 575, the plaintiff as trustee of a charitable trust brought proceedings claiming that the trust was entitled to property in certain names. The defendant unsuccessfully moved to set aside the summons, submitting that it was an action for the administration of a charitable trust which could only be brought by the Attorney-General as parens patriae of charitable trusts. The plaintiff successfully submitted that that was not the nature of the action, rather it was brought for the protection of trust property by persons with an interest in it: at 587. After an illuminating review of the authorities, Rath J concluded, at 591:
It seems to me that the Attorney-General is not a necessary party in proceedings in which an existing charity, whether incorporated or not, is seeking to recover property to which it claims to be entitled, or to protect property in which it claims an actual or contingent interest. The plaintiffs in this case are asking the Court to make an order declaring their interest in certain names, and an order restraining the defendants from dealing with those names contrary to the interest so declared. In my opinion, such proceedings are plainly distinguishable from proceedings against trustees for the administration of a charitable trust, and it is not necessary that the Attorney-General should be a party, either as plaintiff or defendant. The Court has before it the parties who have an interest in litigating the issues involved. The Attorney-General would also have an interest, because as parens patriae he also is concerned that property the subject of a charitable trust is used for its proper purposes, but this is not a case in which his presence is required.
31Monsen was followed in Metropolitan Petar v Mitreski [2001] NSWSC 976. Hamilton J said at [5] that it was always the case that a trustee of a charitable trust "might sue to enforce rights at law or recover property of the trust without the Attorney-General being party to the suit. This was made clear in the New South Wales context [in Monsen]". Monsen was approved by the NSW Court of Appeal in Yeshiva Properties No 1 Pty Ltd v Marshall [2005] NSWCA 23, (2005) 219 ALR 112. The plaintiffs included companies said to be trustees of a charitable trust. They brought proceedings to protect trust property, the cause of action being accessory liability of the respondent for breaches of fiduciary duty by directors of the plaintiffs. The Attorney-General had not authorised the proceedings. Bryson JA (Mason P and Beazley JA agreeing) said: "There was, before the enactment of the Charitable Trusts Act 1993, no difficulty about the standing of the trustee of a charitable trust to bring proceedings for the protection of the trust property: see for example observations in Uniting Church Australia Property Trust (NSW) v Monsen...at 588-9...it is doubtful whether the proceedings are charitable trust proceedings as defined in s 5(1)...the operation of s 6(1) does not appear to me to have any real importance".
32In NSW, s 6 of the Charitable Trusts Act 1993 - on which RMS places no reliance -provides that "charitable trust proceedings" are not be commenced in the Supreme Court unless the Attorney-General has authorised the bringing of the proceedings or leave to do so is obtained from the Supreme Court. The expression "charitable trust proceedings" is defined in s 5(1) to mean "proceedings in the Court brought, whether by any trustee of a charitable trust or by any other person, under the Court's statutory or general jurisdiction with respect to any breach or supposed breach of a charitable trust, or with respect to the administration of a charitable trust". These provisions were noted without comment in Bathurst City Council v PWC Properties Pty Ltd [1998] HCA 59, (1998) 195 CLR 566 at [39], [67]. In my opinion, the present proceedings are for the protection of trust property, they are not "charitable trust proceedings" as defined and, as Yeshiva indicates, proceedings for the protection of trust property do not require the authorisation of the Attorney-General under s 6.
33Monsen was followed in Tomasevic v Jovetic [2011] VSC 131 at [10]. Pagone J observed that the necessity for the Attorney-General to be a party depends on the nature of the dispute and that one instance where the Attorney-General is required as a party is where there is a dispute between trustees, which was the situation in that case: at [6]. His Honour noted at [10] that that was a type of proceeding that Rath J in Monsen at 591 expressly said required the Attorney-General to be a party.
34Two cases cited by RMS are distinguishable. One is Attorney-General v Bishop of Worcester (1851) 9 Hare 328, (1851) 68 ER 530. It concerned an issue between the trustees and the objects of a charitable scheme. It was in that context that the court said that the Attorney-General should be the plaintiff because he acted in such cases on behalf of the Crown as parens patriae, representing the objects of the charity: 68 ER at 546-7. The other case is Chief Executive, Department of Transport and Main Roads v The Young Men's Christian Association [2012] QCA 311, (2012) 191 LGERA 255. RMS cites it for the proposition that as the beneficial interest in charitable trust property is not owned by anyone, the trustee is only entitled to compensation for loss it suffered and not loss suffered by the charity. This case was decided under a different statutory scheme in Queensland. It was not concerned with assessment of market value but with whether the trustee could claim the cost of relocating or reinstating its operations to another site. It did not address the role of the Attorney General.
35In the present case, I conclude that the Attorney-General is not a necessary party and that the trustee Council is competent to bring these proceedings for compensation for the full market value of Sites 1 and 2.
36Any compensation awarded to Council will be impressed with the trust. Council and the Attorney-General should then consider whether there should be a cy-pres scheme. In that regard, s 11 of the Charitable Trusts Act provides: "A charitable trust places a trustee under a duty, if the case permits and requires the trust property or any part of it to be applied cy-pres, to secure its effective use for charitable purposes by taking steps to enable it to be so applied". Sections 12 and 13 empower the Attorney-General to establish a scheme for the administration of any charitable trust.
37A further reason, in my opinion, why the trustee Council is entitled to claim and receive compensation for the full market value of Sites 1 and 2 is that, in assessing compensation under the Just Terms Act, there should be no discount for a restriction that is peculiar to the owner, such as the legislative prohibition on the sale by a council of "community land", as distinct from restrictions that are of general application such as zoning restrictions; Leichhardt Council v Roads and Traffic Authority (NSW) [2006] NSWCA 353, (2006) 149 LGERA 439 at [32], [43], [44] per Spigelman CJ (Beazley, Bryson and Basten JJA and Campbell J agreeing); applied to a trust in Sutherland Shire Council v Sydney Water Corporation [2008] NSWLEC 303 at [68] per Sheahan J. In Leichhardt the Court of Appeal held that the contrary principle in Corrie v MacDermott [1914] HCA 38, (1914) 18 CLR 511 (Privy Council, affirming the decision of the High Court in MacDermott v Corrie [1913] HCA 27, (1913) 17 CLR 223), had no application under the Just Terms Act because it was decided under a different and earlier statutory resumption compensation scheme concerning "value to the owner", which does not exist under the Just Terms Act: at [23] - [32], [88]. Spigelman CJ held at [32]:
In my opinion, once the idea of "value to the owner" is taken away as a unifying concept, as it has been, the foundation of the reasoning in Corrie v MacDermott has also been removed. There are, of course, restrictions on use, e.g. zoning, which affect all vendors and purchasers in the hypothetical sale. Where, however, a restriction affects only the person whose land has been acquired, in my opinion, the restriction is not a matter that must be applied when determining the market value.
38The reasoning in Leichhardt may be summarised as follows. First, the context in which the statutory definition of market value in s 56(1) falls to be determined is: (a) the just compensation override in s 54; (b) the basic entitlement to "compensation" in s 37, which prima facie means recompense for loss; (c) the indication that one of the objects of the Just Terms Act is to ensure proper conduct on the part of acquiring authorities; and (d) the statutory guarantee in s 3(1)(a) (and, I would add, s 10(1)(a)) that compensation will not be less than the market value of the acquired land. Given the context, the Court would be slow to interpret the definition of market value in s 56(1) as permitting regard to be had to a matter which necessarily means that the owner will not receive market value - as would be the case if a restraint applicable only to the particular owner were to be taken into account: at [37] - [43]. Secondly, the critical textual indication is the express words of the s 56(1) definition of market value: "if it had been sold". Those words necessarily assume that the owner is legally entitled to sell the land: at [44]. Thirdly, in the view of Bryson JA, it would be very poor policy if a restriction on the power to sell land imposed for the purpose of keeping the land available to use in a particular way worked to the advantage of a resuming authority by making it cheaper to acquire the land: at [89].
39In MacDermott v Corrie, the High Court and, on further appeal, the Privy Council were concerned with the principles upon which compensation was to be assessed for land compulsorily acquired from trustees to whom it had been granted by the Crown by deed upon trust for a specified charitable purpose. The trustees had restricted powers of sale and lease: 17 CLR at 229. It was held that in ascertaining this value any restriction or other circumstance which diminishes the value of land in the hands of the trustee must be allowed for in arriving at the value because the value to be assessed is the value to the owner: 17 CLR at 235, 237. The idea of "value to the owner", as the Court of Appeal held in Leichhardt, is inapplicable under the Just Terms Act and, consequently, a restriction that affects only the person from whom land has been acquired does not affect market value. Such a restriction may be taken to include, for example, a restriction on alienation as well as a restriction on the power of lease since both those restrictions were present in Macdermott.
40Leichhardt at [22] also considered Sydney Sailors' Home v Sydney Cove Redevelopment Authority (1977) 36 LGRA 106, where the NSW Court of Appeal, under an earlier "value to owner" statutory compensation regime, applied Corrie v MacDermott. In Sydney Sailors' Home the appellant had executed a declaration of trust to the effect that the land could only be sold with the consent of the Governor. It was held that the restriction affected the value of the land. That decision does not apply under the Just Terms Act.
41In Sutherland, which is squarely in point, a declaration of trust required a council whose land had been compulsorily acquired to hold the land for a public park, public reserve or public recreation use only. Applying Leichhardt at [32], Sheahan J held that the trust restriction should not be taken into account when determining market value: at [68]. RMS submits that the decision in Sutherland is clearly wrong and should not be followed. RMS submits that the better analysis is that: (a) a trust does not relevantly restrict the owner's use of the land but rather defines the interest that the owner has in the land, and thus the interest that is acquired; (b) it is thus not a question of ignoring a personal restriction (as in Leichhardt) but rather identifying what has been acquired; and (c) the land for which compensation is determined is the interest in land held by the Council, which was a bare legal interest. I do not accept the submission. Section 56(1) defines market value for an interest in land as well as for the freehold in land: AMP Capital Investors Ltd v Transport Infrastructure Development Corp [2008] NSWCA 325, (2008) 163 LGERA 245 at [84] per Hodgson JA. The interest of a trustee of land held under a declaration of trust is "an estate in fee simple, but one which is subject to the trusts set out in the declaration of trust": Sydney Sailors Home at 115. in my opinion, the restriction arising from the existence of a trust, whether an ordinary trust or a trust for a public purpose, is a species of restriction that applies only to the trustee owner, as referred to in Leichhardt at [32], and Sheahan J was right to so hold in Sutherland.
42It is unnecessary to consider Council's submission that any effect of the trusts on market value should be disregarded under s 56(1)(a) of the Just Terms Act.