Collins v Marinovich

Case [2021] QSC 141

SUPREME COURT OF QUEENSLAND

CITATION:

Collins v Marinovich & Ors [2021] QSC 141

PARTIES:

ANGELIQUE ANNE COLLINS
(Plaintiff)

v

JOSIP MARINOVICH, SUSAN WHITEHAND, THERESA BROOK, CHRISTINE WALKER
(AS EXECUTORS AND TRUSTEES OF THE WILL OF PHYLLIS POWER-NEMETH DECEASED)
(First Defendants)

AND

CHRISTINE WALKER

(Second Defendant)

FILE NO:

BS 6150 of 2019

DIVISION:

Trial Division

PROCEEDING:

Amended Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

14 June 2021

DELIVERED AT:

Brisbane

HEARING DATE:

15 and 16 March 2021

JUDGE:

Ryan J

ORDER:

I will grant the plaintiff declaratory relief against the second defendant and make the order she seeks against the second defendant.

I will hear further from the plaintiff as to whether she seeks declaratory relief against the first defendants.

I will hear from the parties as to the wording of the declaration and order, and as to costs.

CATCHWORDS:

SUCCESSION – MAKING OF A WILL – TESTAMENTARY INSTRUMENTS – TESTAMENTARY CHARACTER – PARTICULAR DOCUMENTS – where plaintiff was mortgagor and deceased was mortgagee – where mortgage included a term which provided that the debt would be forgiven upon the death of the deceased – whether term was testamentary – whether term depended on deceased’s death for its “vigour and effect” – whether term to take effect immediately – whether severable from balance of mortgage terms – whether revocable

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – MATTERS NOT GIVING RISE TO BINDING CONTRACTS – STATEMENTS OF INTENTION, NEGOTIATIONS AND INVITATIONS TO TREAT – where agreement said to be “a declaration of a new agreement being negotiated”; “temporary … until the legal one can be drawn up … [and] reviewed”; and subject to the “approval” of the parties’ solicitors – whether binding – Masters v Cameron

Baypoint Pty Ltd v Baker (1994) 6 BPR 13,687, cited
Bird v Perpetual Executors and Trustees Association of Australia Limited [1946] 73 CLR 140, applied
Cock v Cooke (1866) LR 1 P & D 241, considered
Cross (Doe D) v Cross [(1846) 8 QB 714, cited
Fletcher vFletcher (1844) 4 Hare 67, applied
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, considered
In re Carlile [1920] VLR 427, applied
In re Fenton [1919] VLR 740, considered
In the Estate of Beech (deceased) [1923] P 46, considered
In the Estate of Knibbs [1962] 2 All ER 829, cited
In the Estate of Masters (1994) 33 NSWLR 446, cited
In the Goods of Robinson (1867) 1 P & D 384, applied
Lennon v Scarlett and Co (1921) 29 CLR 499, considered
Masters v Cameron (1954) 91 CLR 353, considered
Moffat Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60, considered
Peacock v Monk (1748) 1 VS 127, considered
Re Anziani [1930] 1 Ch 407, applied
Re Bubnich; Marian v Bubnich [1965] WAR 138, applied
Re Leung Wai Jing [2004] 1 HKC 453, considered
Re Stable (deceased) [1919] P 7,…

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AGLC
Collins v Marinovich [2021] QSC 141
Case
[2021] QSC 141
Decision Date

CaseChat Overview and Summary

The case of Collins v Marinovich was heard in the Supreme Court of Queensland, where the plaintiff, Angelique Collins, sought to establish the nature of a mortgage agreement between herself and the deceased, Phyllis Power-Nemeth. The central issue was whether a clause in the mortgage, which provided for the forgiveness of the debt upon Power-Nemeth's death, constituted a testamentary disposition. The court needed to determine if this clause was testamentary, depended on the death of Power-Nemeth for its "vigour and effect," and if it was immediately effective or severable from the rest of the mortgage terms.

The court examined the nature of the clause in question, focusing on whether it was testamentary. The court considered the principle that a testamentary instrument is revocable unless it explicitly states otherwise, and that a non-testamentary instrument takes effect immediately upon execution. The court also looked at whether the clause was severable from the other terms of the mortgage and whether it could be revoked. The court found that the clause was indeed testamentary because it depended on Power-Nemeth’s death for its effect and was intended to take effect upon her death. Furthermore, the clause was revocable and thus testamentary in nature. The court also considered whether the clause could be separated from the rest of the mortgage terms, concluding that it was not severable.

The court granted the plaintiff declaratory relief against the second defendant and will hear further from the plaintiff as to whether she seeks declaratory relief against the first defendants. The court will also hear from the parties as to the wording of the declaration and order, and as to costs.

Orders

Orders of the court

I will grant the plaintiff declaratory relief against the second defendant and make the order she seeks against the second defendant.

I will hear further from the plaintiff as to whether she seeks declaratory relief against the first defendants.

I will hear from the parties as to the wording of the declaration and order, and as to costs.

Background

Background to the litigation

My reasons follow.Background Phyllis Power-Nemeth, now deceased, had been a very successful real estate agent since the 1950s – then, a rare achievement for a woman. In 2006/2007, she lent one million dollars to one of her nieces, the plaintiff, Angelique Collins. Ms Collins’ debt to Ms Power-Nemeth was secured by a mortgage over Ms Collins’ property. The mortgage was registered. The terms of the mortgage were to the effect that Ms Collins’ repayments would not reduce the amount of the debt. But the debt, which would “endure” for Ms Power-Nemeth’s natural life, would be forgiven upon Ms Power-Nemeth’s death – leaving Ms Collins with “an inheritance”. Ms Power-Nemeth and Ms Collins fell into dispute over the loan. By 2010, Ms Power-Nemeth wanted her one million dollars back. She asserted that Ms Collins was behind in her repayments and, on 30 August 2010, threatened to exercise her power of sale as mortgagee over Ms Collins’ property. On 22 October 2010, Ms Collins filed an originating application seeking a declaration that she was not in default and an injunction restraining Ms Power-Nemeth from selling the property. She also applied for an interlocutory injunction to prevent Ms Power-Nemeth from selling the property before the resolution of the originating application. The interlocutory application was listed for hearing on 28 October 2010. The originating application was listed for hearing on 22 November 2010. On 28 October 2010, at the hearing of the interlocutory application, the court (Daubney J) received undertakings from Ms Collins (the usual undertaking as to damages) and Ms Power-Nemeth (not to take any steps in the exercise of a power of sale over the mortgaged property) and adjourned the application to 13 December 2010. On 22 November 2010, Martin J adjourned the originating application to a date to be fixed. On 13 December 2010, by consent, the court (Boddice J) ordered that Ms Power-Nemeth be restrained “pending determination of these proceedings at trial or until such further order of this Court” from exercising any right of sale or foreclosure over the mortgaged property. Thereafter, Ms Power-Nemeth and Ms Collins engaged in discussions, including via email, about the mortgage and the repayment of the one million dollars. On 20 July 2012, they signed an agreement at a Chinese restaurant. The agreement described itself as “temporary” and stated that it was subject to the approval of Ms Power-Nemeth’s solicitor “and Angeliques” (sic). No solicitors’ “approval” was obtained. On 17 November 2015, Ms Power-Nemeth wrote to Ms Collins, and enclosed an “Amendment to Mortgage” document which she had signed. Her letter said (errors as per original) – Due to the circumstance that have arisen between us I no longer wish to make you a beneficiary in my ‘WILL & TESTAMENT’ therefore in accordance with the Succession Act 1981 the said debt and mortgage given under the Lanas Titles Act 1994 dealing number 709701630 will form part of my estate upon my death.Find enclosed an Amendment to Mortgage Form 13 whereas clauses 6 & 7 shall no longer provide a forgiveness of debt to you as mortgagor. Please have this document signed and witnessed in front of a qualified person and returned in the enclosed registered mail envelope for my purpose of lodging and I will appreciate a return of this no later than 7 days from the date of this letter.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Last year, the first defendants applied to be removed as a party to these proceedings by way of an application to strike out the plaintiff’s statement of claim insofar as it concerned them. Their application was not successful. On 17 August 2020, Brown J dismissed it ([2020] QSC 250). In her reasons for doing so, her Honour said (footnotes omitted) – [60]The Executors’ arguments fail to recognise that facts have been pleaded in relation to a dispute between Ms Collins and the Executors and Ms Walker in relation to whether the debt secured by the Mortgage was forgiven or not upon Ms Power-Nemeth’s death, giving a basis for the declaration sought against both parties in circumstances where the declaration cannot be regarded as inutile against the estate.[61]It may well be that there is, in fact, no legal redress against the Executors in relation to the transfer of the Mortgage to Ms Walker and by the estate against Ms Collins, however the possibility that it may be pursued by a non-party to the present proceedings cannot be dismissed …Conclusion[62]While the Executors’ counsel presents compelling arguments as to why there could be no action successfully brought against the Executors arising out of the transfer of the Mortgage to Ms Walker, there is a proper basis for the Executors, as representatives of the estate, to be a party to these proceedings. There is an arguable basis, in the circumstances, for Ms Collins to seek a declaration that the debt was forgiven upon Ms Power-Nemeth’s death not only against Ms Walker but against the estate through the Executors. Whether or not the debt was ever part of the estate of Ms Power-Nemeth is a matter which directly affects the rights and obligations of the Executors and Trustees of Ms Power-Nemeth’s estate and for such a declaration to be sought, the Executors must be a party as representatives of the estate. [63]While the Executors have sought to bring the application in order to minimise costs and finalise the estate, it is still open to the Executors to take steps so that the Executors do not have to take any active part in these proceedings and abide by the order of the court if they consider that is the appropriate course. The Executors may also, if necessary, seek the advice of the court under s 96 of the Trusts Act in that regard. Although at one point in time, the first defendants disputed that the debt was forgiven upon Ms Power-Nemeth’s death, they took a neutral position before Brown J. They took a neutral position before me also and made no submissions about the mortgage. However, they went into evidence at the hearing. In opening their evidence, counsel for the first defendants described the “predicament” his clients found themselves in. He explained that, insofar as the first defendants were concerned, the definition of “secured monies” in the mortgage’s standard terms raised the prospect of the mortgage securing something other than the advances of $300,000 and $700,000.

Ratio Decidendi

Legal Principle Established

The plaintiff relied particularly on the first statement in bold in the following extract from Theobald (some footnotes omitted, my emphasis).[4] The second statement in bold is, on its face, consistent with the second defendant’s position but, as will emerge, the authorities refine the point – [4]Theobold on Wills, Chapter 2 “General Characteristics of Testamentary Instruments” at 2.02. DeedsA deed attested by two witnesses and not intended to have any effect till the settlor’s death is testamentary. On the other hand, a voluntary settlement, though reserving to the settlor a life interest and containing a power of revocation, is not testamentary. Similarly, an instrument coming into operation immediately, and of which no part is revocable, more especially if it involves anything in the nature of consideration, cannot take effect as a will. [In the Goods of Robinson (1867) 1 P & D 384; Thorncroft v Lashmar (1862) 10 WR 783; Re Bubnich; Marian v Bubnich [1965] WAR 138 (Supreme Court of W Australia).] But if a deed is severable and in part clearly testamentary, such part may take effect as a will, though other parts are not testamentary. [Doe d Cross v Cross [(1846) 8 QB 714; see Peacock v Monk (1748) 1 VS 127; Belt 82, Re Anziani [1930] 1 Ch 407 of 424).]The distinction between testamentary and non-testamentary instruments is important for two reasons: first, a non-testamentary instrument takes effect from the date of its execution, a testamentary instrument from the date of the testator’s death with the result that subject to certain exceptions, a beneficiary under a will must survive the testator in order to take his benefit; and, secondly, whereas a testamentary instrument is always revocable, a non-testamentary instrument cannot be revoked unless the instrument contains an express power of revocation or all the parties agree to it. The plaintiff submitted that this text made it plain that the focus was on the immediate (or not) effect of the instrument itself – not on the immediacy of the act covenanted under the instrument.Authorities referred to in Theobald on Wills I included in the extract from Theobald above the authorities cited for the statements in bold.[5] The parties referred me to some of those decisions. I read them all. I have discussed them below in the order in which they appear in the extract. I have emphasised those parts of the judgments which particularly assisted me in reaching my conclusion on this issue. [5]Which had been footnotes in the text.In the Goods of Robinson In the Goods of Robinson concerned an agreement for a lease, which contained a provision governing the payment of rent upon the lessor’s death before the expiration of the lease. The question was whether the agreement ought to be admitted to probate as a codicil to the deceased’s will. It was held that it was not testamentary: no part of it was revocable and it came into operation immediately upon its execution. It is worth setting out the short judgment of Sir J P Wilde almost in full – The question in this case is whether a certain instrument, or a portion of it, is testamentary and entitled to probate. The instrument is not in testamentary form. It may be shortly described as an agreement between the testator and his grandson for a lease for seven years of certain property. But after the common agreement for a tenancy there follows a provision that, if during the seven years the testator should die, then the rent due from the tenant should be paid to … his executors, to be by them deposited into a bank for the benefit of all his grandchildren, and at the termination of the tenancy the property shall be sold by the executors, and the proceeds of the sale, and the dividends, shall be divided equally between his grandchildren. It is that portion of the document which is supposed to be of a testamentary nature.… But is the document in substance testamentary? …There are some tests which are applied in every case when a question is raised as to the testamentary character of a paper. One of these invariable tests is, whether the paper is revocable. Apply that test, and I think this applicant must fail, on the ground that the instrument in question was irrevocable in all its parts, not only as to the tenancy, but also as to the other provisions which were relied on as testamentary. The testator and his grandson entered into an agreement, and a court of law would hold that a portion of the consideration for the payment of the rent by the grandson was the provision as to the application of the rent if the grandfather died. The grandson had an interest in that application, for if the agreement were carried out he would be entitled to get back a part of what he had paid in the shape of rent. He had taken possession of the land and it was impossible for the grandfather to revoke the agreement. On that ground alone I hold that the instrument is not of a testamentary character.Further, the agreement was intended to take effect immediately upon its execution, and its effect was not to be postponed until after the grandfather’s death. It does not require the death of the alleged testator for its consummation; on the contrary, it is a living active instrument, taking effect from the moment when the grandson took possession of the land. For these reasons probate of the document must be refused. Thorncroft v Lashmar