Blackgrove v West
[2012] QSC 169
•29 May 2012
SUPREME COURT OF QUEENSLAND
CITATION:
Blackgrove and Anor v West and Ors [2012] QSC 169
PARTIES:
BETTY JUNE BLACKGROVE
(First Applicant)
And
KEITH WARREN WEST
(Second Applicant)
v
ROBERT JOHN WEST
(First Respondent)
and
JOY LORRAINE WEST
(Second Respondent)
and
THE ESTATE OF THE LATE DORIS JEAN WEST
(Third Respondent)
FILE NO/S:
BS 8861 of 2009
DIVISION:
Trial Division
PROCEEDING:
Trial
ORIGINATING COURT:
Supreme Court
DELIVERED ON:
29 May 2012
DELIVERED AT:
Brisbane
HEARING DATE:
28 and 29 May 2012
JUDGE:
McMurdo J
ORDER:
1. Leave given under rule 470 if the Uniform Civil Procedure Rules to make the application filed on 21 December 2011.
2. A sum of $100,000 be paid by the first respondent to Mr Michael Klatt, solicitor, to be held by him on trust for the second applicant, according to the terms of the will of the late Doris Jean West made on 30 December 2008.
3. The sum of $100,000 be paid by the first respondent to the first applicant, according to the terms of that will.
4. The application filed on 21 December 2011 is otherwise dismissed.
5. The originating application is dismissed.
6. The respondents pay the applicants their costs of the application filed on 21 December 2011 upon the standard basis.
CATCHWORDS:
EQUITY – TRUSTS AND TRUSTEES – EXPRESS TRUSTS CREATED BY WILL - where the will of the testatrix provided for set amounts to be given to, or held upon trust for, each applicant upon her death – where the testatrix used her own money to pay for the purchase of the property she lived in together with the first and second respondents – where the will provided for the remainder of her estate and any profits from the sale of the property to go to the first respondent upon her death – where the first respondent claims that the applicants prevented the sale of this property for a number of years, thus causing a loss to the estate – whether the applicants prevented the respondents from selling the property by some wrongful act
Power of Attorney Act 1998, s106, s122
Uniform Civil Procedure Rules 1999, s470
COUNSEL:
R Cameron for the applicants
Robert West appearing on own behalf and for the second respondent
SOLICITORS:
McCarthy Durie Lawyers for the applicants
Robert West appearing on own behalf and for the second respondent
The late Doris Jean West died on 1 May 2009. She was survived by three children, who are the first and second applicants and the first respondent. The second respondent is the wife of the first respondent. She made a will in 2008 appointing the first respondent as her sole executor. Probate was granted of that will on 16 February 2011.
The will made by her on 30 December 2008 provided as follows: She left $100,000 to her daughter, the first applicant; $100,000 to the second applicant and $100,000 to the first respondent, as well as leaving to him the remainder of her estate. It was further provided that should the second applicant die during her lifetime or before attaining a vested interest under this will, his interest would revert to the first respondent.
The will further provided, in the case of the second applicant, as follows:
"Provided, however, that the portion to which my son, Keith Warren West, is entitled be held in trust by my trustee and at his discretion be applied for his maintenance and support in his lifetime. On his death that portion of his account remaining unused shall revert to Robert John West, my son, trustee, and beneficiary of this estate."
The will made reference to the property which is at the heart of the present dispute, which is a property at Thornlands, purchased in 2007 in the name of the second respondent. The will was premised upon an entitlement of the late Mrs West to an ownership of a share of that real property.
Clause 6 of the will provided as follows:
"The reason for giving my son, Robert John West, the remainder of my estate and any profits from the sale of the Thornlands property are to try and repay him for the sacrifices, help, love, care, and attention he has shown me in the last years of my life. This property was purchased jointly only to help me in my final years because I needed constant supervision, and he is the one who has taken the risk investing his finances in this property to provide some comfort, help, and support for me."
I have not set out the whole of this clause, which contained further references to the gratitude of the late Mrs West for the efforts of the first respondent. But the important point about clause 6, for present purposes, is that the will, which was apparently prepared by the first respondent or at least with his knowledge, plainly recorded a proprietary entitlement in this property, held by the testatrix, notwithstanding that it was purchased in the name of the second respondent.
As I have mentioned, the Thornlands property was purchased in 2007. Until then the testatrix had lived in her own house, that is a house of which she was the proprietor, at Rochedale. That property was sold and the proceeds used as a contribution towards the acquisition of the Thornlands property.
The price paid for the Thornlands property was $568,000, and $300,000 of that amount, together with about $12,000 for stamp duty and other costs of acquisition, came from the funds of the testatrix. The purpose of this sale of Rochedale and acquisition of Thornlands was to provide a house in which the testatrix could live in the care of the respondents. They had their own house, which at all material times they retained.
The reason or reasons for acquiring the Thornlands property, in the name of the second respondent, was explained by the first respondent in his affidavit sworn on 14 October 2010, as follows:
"(54) The new house was purchased in my wife's name so that we would have control over the timing of the future sale of the property. If Mum needed to go into a high care situation urgently the sale of the property would be expedited by not including her name on the title document. I informed my brother and sister that we were purchasing the house together.
(55) I also realise that the applicants, on Mum's death, would be wanting their money as soon as possible. They risked nothing and would not care if the house sold for less than the purchase price, as under the will their inheritance is guaranteed.
(56) The 2007 will that my brother reviewed and signed and the 2008 will both state that my mother had contributed $300,000 to the purchase of this property.
(57) There was never any intention to defraud anyone. My disclosures to both applicants and both will stating Mum's contribution to the purchase of the said property supports this fact."
The 2007 will referred to in that evidence was that signed by the late Mrs West on 8 September 2007. It also made gifts, each of $100,000, to the three children of the testatrix, and it provided, again, that the amount given to the second applicant would be held upon trust during his lifetime, but it provided that upon his death that portion of the fund given to him, which remained, should be revert and be distributed equally to the remaining beneficiaries.
The 2007 will contained this provision:
"(4) The disbursement of said moneys to be made by my trustee (again the first respondent) upon the sale of 6 Tudor Place, Thornlands, this property being jointly owned and $300,000 being my share in total of said property."
That is a clear record of the interest of the testatrix in the Thornlands property. Again, that will, the 2007 will, was either prepared by the first respondent or at least prepared with his knowledge. Accordingly, the evidence of the first respondent that there was no attempt to disguise the ownership of the Thornlands property should be accepted.
Each of these wills contained a clear record of that matter. Of course the ownership of the property was the subject of registration. Overall I am prepared to accept the evidence of the first respondent that there was no intention to either disguise the true beneficial ownership of the Thornlands land or to in any way prejudice the interests of his mother during her lifetime or of those who would take under either the 2007 or 2008 wills.
Within a few months of the death of the late Mrs West, unfortunately there was a dispute which resulted in the originating application by which these proceedings were commenced, as they were on 14 August 2009. The relief claimed by that originating application was, as against the first respondent, compensation pursuant to section 106 of the Powers of Attorney Act 1998, for what was said to be the misuse of an enduring power of attorney granted by the late Mrs West. The gravamen of that complaint seems to have been the acquisition of the Thornlands property with, in part, funds belonging to Mrs West - that is the late Mrs West. It was further claimed against the first respondent that he should file an affidavit pursuant to section 122 of that Act, which contained a summary of receipts and expenditure "commencing with the sale of the property at Rochedale until the date of death."
Against the second respondent, the applicants claimed "a declaration that the second respondent holds the real property situated at Thornlands on trust for the third respondent in such portions as shall be determined." The third respondent was named as “the estate of the late Doris Jean West”.
The remaining claim, apart from costs, was for an order that the Thornlands property be sold and the proceeds distributed to the parties in accordance with the proportions as declared by the Court.
As I have discussed already, in truth there was no dispute as to the entitlement of the late Mrs West to a share in the Thornlands property or in turn the entitlement of the estate to that share. Not only had that been acknowledged in each of the 2007 and 2008 wills, the lack of a dispute of that kind is apparent from correspondence between the applicants' solicitors and solicitors then acting for the respondents.
On 8 October 2009, Murphy Schmidt, acting for the respondents, wrote to the applicants' solicitors saying, amongst other things, "Both our clients agree that the property at 6 Tudor Place, Thornlands be sold and that the proceeds of sale be distributed to Joy Lorraine West and the estate of Doris Jean West in the portions to be determined." On 4 November 2009, Murphy Schmidt sent to the applicants' solicitors a document which had been prepared by the first respondent and which was headed "Accounting of estate of Doris Jean West." Within that document there was shown an application of $300,000 of the funds of the late Mrs West for the purchase of Thornlands, which was described as: "Doris West's portion."
Then on 16 November 2009 the solicitors for the applicants queried the source of the funds used for stamp duty and other purchase costs for the Thornlands property. They asked why the whole of the stamp duty had been borne by the late Mrs West for the purchase of a house which was only partly beneficially owned by her. They inquired whether the second respondent was willing to make a contribution in that respect. Within the same letter they wrote: "As for the sale of the Tudor Place property our clients see little point in the sale until such time as the portions in which the property is held in trust can be agreed or determined by the Court. Our clients will not be in a position to discuss that matter unless and until your client gives a frank and complete accounting under oath or affirmation and our clients have had the opportunity to inspect original documents."
In response Murphy Schmidt wrote, on 17 December 2009, in terms which included the following:
"It is agreed that the deceased's contribution to the Thornlands property should include the stamp duty and associated lodgement fees. This takes the deceased's contribution to $312,225.40. Please confirm that you agree with that calculation."
Accordingly, at least by Christmas 2009, the respondents had made it clear that the estate was beneficially entitled to a share in the Thornlands property, quantified as set out in that last letter. There is no challenge to the accuracy of that apportionment.
The position had been reached then, by the end of 2009, that the issues, or apparent issues, which had given rise to the originating application were no longer issues. There was an acknowledgement of the beneficial ownership of the land and a stated preparedness to give effect to it.
Because of the terms of the 2008 will, other transactions and other items of expenditure of the funds of the testatrix were of no practical relevance. The estate, as of today's date, consists of the proceeds of sale of the Thornlands property and an amount of cash. Clearly there is sufficient within the estate to pay to the applicants the moneys left to them by the 2008 will.
As the balance of the funds would belong to the first respondent, the detail of his expenditures on behalf of his late mother is of no practical relevance. However, the dispute remained ongoing, it would seem, because the applicants did not accept that the 2008 will was valid. As I will discuss, it was not until this hearing that the applicants withdrew any suggestion of invalidity.
The originating application was then the subject of several interlocutory skirmishes, none of which seems to have had any practical benefit for the disposition of the case. As early as September 2009 a Judge had ordered that the case go to the civil list and had made directions including one that it would be given trial dates on the filing of a request for a trial date.
For reasons which need not be canvassed here a request for a trial date was not signed and filed until 22 June 2011. Even then the case was not given trial dates. Within the present hearing there were competing submissions as to why the case as a whole had not been set down for trial by the Registry. It is unnecessary to resolve that conflict.
The case came to Court yesterday via an interlocutory application, which was filed last December. A Judge in the applications list, on 3 February, set that interlocutory application down for a two day hearing. The interlocutory application, which was filed on 21 December 2011, sought relief which included the following:
" (1) The applicants have leave, pursuant to rule 470 of the Uniform Civil Procedure Rules 1999, to make the within application.
(2) That the first respondent Robert John West be removed as executor of the estate of Doris Jean West, deceased.
(3) That the grant of probate made to the first respondent, Robert John West, be revoked.
(4) That Robert John West bring the original grant of probate into the Registry.
(5) That Robert John West be removed as trustee under the will of the late Doris Jean West, made on 30 December 2008."
It also sought an order that a named solicitor or another suitable person be granted letters of administration to administer the estate. On the face of it the application sought to set aside the grant of probate and to have the estate administered in some way, although without recognising the validity of the 2007 will or an earlier will which had been made by the testatrix in 2005.
It is clear from the Court file, particularly with the benefit of the applicants' written submissions which were presented to the Court on that day, that the matter which was adjourned on 3 February for hearing in the civil list was that application filed in December last.
The respondents have been without legal representation since early 2010. They were both present for this hearing and their submissions were made both in writing and orally by the first respondent.
The first respondent told me that they had assumed that the matters for determination this week were effectively all of those within the entire proceedings. That misunderstanding on the part of a non lawyer is easy to accept, especially when the parties had filed a request for a trial date in 2011.
In the discussion of the issues which occurred at the outset of this hearing, it emerged that the principal issue was the complaint by the respondents that they have been delayed for some years in selling the Thornlands property and that this delay has resulted in losses both to the estate and, through her own beneficial interest, to the second respondent.
During the course of yesterday's hearing the applicants agreed with the respondents that the entirety of the proceedings should be disposed of within the present hearing. That involved each side in giving some considerable ground. In particular it involved an abandonment by the applicants of their challenge to the validity of the 2008 will.
As the matter was argued today, it also involved abandonment by the first respondent of some of the matters which were set out in a document which he had caused to be filed on 18 October 2010, which was described as a defence and counter claim. No pleadings had been directed for this case, but it was by this document that the first respondent set out various claims for compensation.
They included claims for relatively small amounts against each of the applicants for alleged breaches of duty by those applicants acting as the attorneys of their late mother. Each of the parties, that is the three children of the late Mrs West, had been appointed as her attorney with power to act separately. The complaints against the applicants were, as I have mentioned, not ultimately pursued.
I turn then to the substantial issue between the parties, which is the complaint that the applicants held up the sale of the Thornlands property occasioning losses to both the estate and to the second respondent. The Thornlands property has been sold only very recently, the settlement occurring about two weeks ago. It sold for a sum of just under $600,000. This is more than was paid for the property in 2007, but the respondents maintain it was less than would have been obtained for the property had it been sold in 2009.
The first respondent has duly caused $200,000 from the proceeds of sale to be paid to accounts which he has opened in the name of the estate to make provision for the gifts to the applicants. The whereabouts of the remaining proceeds, insofar as they belong to the estate, are unknown; but now that there is no issue as to the validity of the 2008 will, that matter need not be explored because the balance of the funds belonging to the estate are to go to the first respondent.
The first of the complaints, as I have mentioned, is that the sale in 2012, rather than in 2009, of the Thornlands property has resulted in a loss of the order of $70,000. The evidence put forward to support that figure of $670,000 was in the form of correspondence from real estate agents. The evidence was not in the form of opinion evidence given by an appropriately qualified valuer. The applicants' objection to it must be upheld. The evidence was not given by an appropriately qualified witness, and cannot be admitted to prove the value of this property at any particular time.
The next component of the respondents' claim for damages was for the loss of interest which could have been earned on the proceeds of sale in the period from 2009 until 2012. The first respondent, as executor of the estate, claimed $52,327 in that respect and the second respondent claimed $46,770. The quantification of those sums was not the subject of any serious challenge. I would be prepared to accept that interest of that order could have been derived on the proceeds of sale, had the property been sold, say, within three months of the death of Mrs West. However, as I will explain, those claims, together with these other claims for compensation, have difficulties at the threshold of the respondents' argument.
Other components of the claim by the estate for a delay of sale of Thornlands were in the nature of holding costs, that is to say for rates of $8,559, insurance of $1,684, maintenance of $1,111, garden care of $1,420 and a telephone of $1,065. Again, none of these sums is seriously challenged. I would accept that they are sufficiently accurate estimates of the costs of holding the house within that period of, say, three months from the death of the testatrix. But, of course, that is not to say that the applicants are obliged to pay them.
It was further claimed that the applicants should compensate the estate for what were described as "legal costs," which were quantified by the first respondent as totalling $69,624. There are two parts to that component.
The first consists of the amounts charged by Murphy Schmidt, who acted for the respondents until early 2010. None of their fees seem to be attributable to some delay in the sale of the Thornlands property; rather they are costs and expenses of responding to the originating application.
The other part of this component for so-called “legals” consists of amounts claimed by the first respondent for his own time and effort in attending to the affairs of his late mother and doing things in the administration of the estate. He suggests that the will entitles him to such amounts by a provision in these terms: "I declare that my trustee being engaged in any profession or business may be so employed to act and while acting as an executor and trustee shall be entitled to charge and be paid for all work done and time expended by him or his firm in relation to his executorship, including acts which an executor and trustee not being in a profession or business could have done personally, and that such charges shall be free from all succession, estate, or other death duty." The short answer to this part of the respondents' claim is that first respondent is not a person engaged in a profession or business which would make this clause relevant.
I have mentioned the second respondent's claim for a loss of income on the proceeds of sale, had they been derived earlier. There was also a claim that she and the first respondent have had to borrow a hundred thousand dollars from her family to meet living expenses because they were unable to sell the Thornlands property and obtain the second respondent's share of the proceeds. On that account they claim an amount of $6,000 in interest. Again, there was no substantial dispute as to the quantification of that sum. But it far from appears that they have had to pay it or are liable for it.
There was a further component of this compensation claim, which was for an amount of $3,976, being the estimated costs of the respondents of having to travel between the Thornlands property and their own house, having to, in effect, maintain two houses. The accuracy of that estimate, again, was not debated, although it was not admitted. The accuracy of the amount need not be determined, given my decision as to the recoverability of any of these sums.
The threshold question here is whether the applicants prevented the respondents from selling the Thornlands property and by some wrongful act.
In late 2009, through their solicitors, the applicants sought an undertaking that the respondents would not sell the Thornlands property, or in particular that the second respondent would not sell the Thornlands property until either the applicants had consented or until the originating application had been heard and determined. No such undertaking was given.
In that same correspondence, seeking the undertaking, the applicants' solicitors wrote that in the event that the undertaking was not received by 9 October 2009, they would seek the applicants' instructions about bringing what was described as a "preservation order protecting our clients' interests." No application for such an order was ever made.
The applicants, on two occasions, sought to prevent a sale by lodging a caveat. The first caveat was lodged on about 14 August 2009. It was rejected by the Registrar and at least by October 2009 it was of no effect. Another caveat was lodged on about 31 May 2011. Again, it was rejected by the Registrar, this time on about 18 July 2011. It could not be said that either of these caveats substantially affected the timing of the sale of the property. Indeed it is not clear that the respondents were aware of the first of those caveats. The second caveat may have delayed, to some extent, the listing of the house for sale; but if so that would have involved a delay of only a few weeks, and given the time which was taken in making a sale after the property was listed, the caveat could not be said to have had any significant effect.
As to the applicants' threat to apply for an interlocutory injunction, I would accept that in the minds' of the respondents, this threat was of some influence. But it was merely a threat and it did not, of itself, prevent the second respondent, the property being in her name, from selling the property.
The respondents maintain that a further problem which they apprehended about selling the property was the applicants' challenge to the validity of the 2008 will. But because the property was legally owned by the second respondent it was unnecessary to obtain any grant of probate to facilitate its sale.
Regardless of whether the 2008 will was valid, this was a property which was owned legally by the second respondent and held by her, as to a part, in trust for the estate of her late mother‑in‑law. The doubts as to the will and the controversy in that respect provided no legal impediment to the sale of the Thornlands house. Similarly, any issue as to the precise accounting which was required of the first respondent in relation to the affairs of the late Mrs West did not prevent a sale of the property.
It was strongly argued by the first respondent that there was no sensible reason for the respondents to delay selling this house, particularly given their financial circumstances, where they were having to maintain two households, this one and their own house, and substantial funds representing the likely proceeds of the sale were being frozen rather than made available to the respondents through the second respondent's beneficial share.
I accept that the respondents came to believe that they were unable to sell the Thornlands property or at least that they should not attempt to do so until a grant of probate of the 2008 will had been made. But as I have discussed, that was a mistaken view on their part and the applicants should not be made to compensate them for that mistake.
Ultimately then I am not persuaded that there was any act by either of the applicants which prevented the earlier sale of the Thornlands property. These claims for compensation from a delay in that sale therefore fail at the threshold.
Consequently there can be no challenge to the entitlement of the applicants to have the estate administered according to the 2008 will which they now accept. There can be no challenge to the first applicant's claim to be paid from the proceeds of sale of Thornlands, the sum of $100,000, or to the second applicant's claim to have $100,000 held on trust for him according to the terms of that will.
The challenge to the 2008 will having been abandoned, all that remains of the interlocutory application, filed on 21 December 2012, is the application to have the first respondent replaced as trustee. Of course that interlocutory application was filed before the Thornlands property had been sold.
In the present circumstances, once amounts are paid to or for the benefit of the applicants, what remains to be done in this estate is entirely for the benefit of the first respondent, and there is no basis for interfering with his efforts in that respect. Therefore, it was sensibly conceded for the applicants that the removal of the first respondent as a trustee should be only in respect of the sum of $100,000 to be held for the second applicant. It is one of the unfortunate consequences of this dispute that the position is reached where it is preferable for the second applicant's fund to be managed by someone other than the first respondent, given the years of acrimony which has accompanied these proceedings.
The first respondent conceded that the sum to be held on trust for his brother should be held by a new trustee. The trustee which is proposed by the applicants, who is a solicitor, sought to be appointed with the benefit of a particular order for the payment of his costs. However the terms of that order were more appropriate for an appointee to administer the whole of the estate, rather than to have the more limited role which this new trustee will now have.
It is to be expected that there will be no controversy involving the entitlement of the new trustee to be properly remunerated for the more limited task which will be involved under these orders.
Because a request for a trial date had been filed it was necessary for the applicants to seek leave under rule 470 of the Uniform Civil Procedure Rules 1999 to make the interlocutory application. To the extent necessary leave will be given.
As to the originating application, no relief can be or should be given, as was claimed, because, as I have discussed, there is a dispute as to the entitlement of the estate to the Thornlands property and its proceeds of sale, and the applicants did not pursue whatever was within their claim for compensation under the Powers of Attorney Act 1998.
The orders will be as follows:
(1) There will be leave given under 470 to make the application filed on 21 December 2011.
(2) It is ordered that a sum of $100,000 be paid by the first respondent to Mr Michael Klatt, solicitor, to be held by him on trust for the second applicant, according to the terms of the will of the late Doris Jean West made on 30 December 2008.
(3) It will be ordered that the sum of $100,000 be paid by the first respondent to the first applicant, according to the terms of that will.
(4) The application filed on 21 December 2011 is otherwise dismissed.
(5) The originating application is dismissed.
The remaining questions are ones of costs. The applicants have had substantial success, ultimately via their application filed on 21 December last. In order to obtain the moneys left to them under this will they have had to meet the respondents' case that the respondents are entitled to substantial offsets for compensation for wrongfully impeding the sale of the Thornlands property. That became the principal issue in this trial, a I discussed in my reasons. The applicants succeeded on that issue.
The applicants also raised, by that same application, a challenge to the validity of the 2008 will. That is a challenge which they ultimately withdrew. That circumstance suggests that they should not have the whole of their costs of the interlocutory application, that is that filed on 21 December.
However, in practical terms, no significants costs would have been occasioned by that challenge. That is because I was told, at the outset of the hearing yesterday, that the applicants would not be arguing, and had not prepared to argue within this hearing, the question of the validity of the 2008 will. In the same way I was told by Mr West at the beginning of the hearing that the respondents had come to Court not expecting that that question would be debated within this hearing. In other words, each side seems to have thought, for one reason or another, that it would not be litigated this week and therefore it is unlikely to have made a substantial difference to the costs.
The applicants, having had to make this interlocutory application, and having had success upon it, the costs of that interlocutory application should follow effectively the event. However, different considerations apply to the costs of the wider proceedings commenced by the originating application. The originating application has been dismissed. That of itself would suggest that the respondents should have their costs of it.
The respondents were legally represented at an early stage of the proceedings and did incur some costs, it would appear of the order of 12 or $13,000. However, before the interlocutory application was filed on 21 December last, the respondents had raised their complaints about the applicants delaying the sale of the Thornlands property, firstly within the document described as a "defence" which was filed on 18 October 2010 and also within affidavit material. In other words, the costs occasioned by the respondents claiming compensation for a delayed sale of Thornlands could not be said to be contained entirely within the costs of the interlocutory application.
The respondents had not, at any stage, endeavoured to disguise a beneficial interest in the Thornlands property, held by the late Mrs West and in turn by the estate; but it must also be observed that it was not until about December 2009 that the precise entitlement of the estate, in that respect, was formally acknowledged.
Further, the property at Thornlands ought not to have been acquired solely in the name of the second respondent without there being in place, at the same time, some document which duly recorded the terms of the trust under which that property was held.
The outcome therefore, in relation to costs, should be that there be no order as to costs on the originating application, save for the costs of the application filed on 21 December 2011, and the respondents will be ordered to pay the applicants their costs of that application, upon the standard basis.
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