Harrison v Cox

Case [2024] QSC 311

SUPREME COURT OF QUEENSLAND

CITATION:

Harrison v Cox [2024] QSC 311

PARTIES:

RENEE JOSEPHINE HARRISON

(applicant)
v

STEVEN PAUL COX AND SHARON MAREE TURNER AS PERSONAL REPRESENTATIVES OF THE ESTATE OF RAYMOND PAUNOVIC, DECEASED

(first respondents)

AND

STEVEN PAUL COX

(second respondent)

AND

SHARON MAREE TURNER

(third respondent)

FILE NO:

14021 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

10 December 2024

DELIVERED AT:

Brisbane

HEARING DATE:

7 November 2024

JUDGE:

Davis J

ORDERS:

Orders made on 7 November 2024:

1.    Steven Paul Cox and Sharon Maree Turner shall not transfer, sell, lease, encumber or in any other way create any interest in or dispose of any interest in the property of 209 Lakes Drive, Laidley Heights until further order.

2.    Steven Paul Cox and Sharon Maree Turner pay the applicant’s costs of the application limited to the costs of the appearance today.

3.    Judgment reserved on:

(a)     The final relief sought on the application.

(b)     Save for the costs order made, the question of costs of the application.

Orders made on 10 December 2024:

1. Pursuant to section 8(1) of the Trusts Act 1973 (Qld), it is declared that:

(a)     the Transfer of the real property located at 209 Lakes Drive, Laidley Heights, Queensland (more particularly described as Lot 20 on Registered Plan 854930) (Property) to the Second Respondent and Third Respondent as joint tenants by transfer registered on 13 September 2024 (being dealing number 723533870) (Transfer) was made in breach of trust;

(b)     the Second Respondent and Third Respondent hold their legal and beneficial interest in the Property on constructive trust for the Administrator (as that term is defined below); and

(c)     the First Respondents are not entitled to be indemnified or reimbursed from the estate of Raymond Paunovic (Deceased) in respect of their costs and disbursements of and relating to the Transfer.

2.    The Second Respondent and Third Respondent execute such documents and do all such things as the Administrator reasonably requires to enable the Property to be transferred at their cost to the Administrator within 14 days of order.

3. Pursuant to section 6(1) of the Succession Act 1981 (Qld);

(a)     the grant of probate issued to the First Respondents in Supreme Court of Queensland proceeding number S 2220 of 2024 be revoked;

(b)    the First Respondents be removed as the executors of the estate of the Deceased;

(c)     the First Respondents shall deliver the original grant of probate issued in proceeding number S 2220 of 2024 to the Brisbane Registry of the Supreme Court of Queensland within 7 days of order; and

(d)    subject to the formal requirements of the Registrar, a grant of Letters of Administration with the Will of the Deceased dated 19 September 2023 annexed issue to Prudence Poole, solicitor of Cornford-Scott Solicitors (Administrator).

4. The requirement to give notice under rule 598(4) of the Uniform Civil Procedure Rules 1999 (Qld) be dispensed with.

5. Pursuant to section 80 of the Trusts Act 1973 (Qld),…

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AGLC
Harrison v Cox [2024] QSC 311
Case
[2024] QSC 311
Decision Date

CaseChat Overview and Summary

In the matter of Harrison v Cox, the applicant, Renee Josephine Harrison, sought the removal of Steven Paul Cox and Sharon Maree Turner as executors of the estate of Raymond Paunovic, who had passed away. The primary legal issues addressed in this case were whether the executors and trustees breached their fiduciary duties by transferring the major asset of the estate, a house, to themselves and whether they should be removed from their positions. The executors had been granted probate and were empowered by the will to manage the estate's assets. They were also beneficiaries of the estate, along with the applicant.

The court found that the executors' transfer of the house to themselves without paying the applicant her share constituted a breach of trust. This transfer left the estate unable to meet any potential family provision order that might be made. The court emphasised that the executors had an obligation to preserve the estate until the family provision application was resolved. Furthermore, the transfer occurred despite the executors being aware of the applicant's notice of intention to make a family provision claim. The court concluded that the executors acted in a manner that favoured their own interests over those of the estate and its beneficiaries, thereby breaching their fiduciary duties.

As a result, the court ordered that Steven Paul Cox and Sharon Maree Turner were to be removed as executors of the estate and their grant of probate revoked. A grant of Letters of Administration with the Will annexed was issued to Prudence Poole, solicitor of Cornford-Scott Solicitors, who was appointed as the Administrator. The court also mandated that the executors execute any necessary documents to transfer the house back to the estate within 14 days of the order. Additionally, the court reserved judgment on the final relief sought by the applicant and the question of costs, to be determined on the basis of written submissions and potentially without a further oral hearing.

Orders

Orders of the court

Orders made on 7 November 2024:

1. Steven Paul Cox and Sharon Maree Turner shall not transfer, sell, lease, encumber or in any other way create any interest in or dispose of any interest in the property of 209 Lakes Drive, Laidley Heights until further order.

2. Steven Paul Cox and Sharon Maree Turner pay the applicant’s costs of the application limited to the costs of the appearance today.

3. Judgment reserved on:

(a) The final relief sought on the application.

(b) Save for the costs order made, the question of costs of the application.

Orders made on 10 December 2024:

1. Pursuant to section 8(1) of the Trusts Act 1973 (Qld), it is declared that:

(a) the Transfer of the real property located at 209 Lakes Drive, Laidley Heights, Queensland (more particularly described as Lot 20 on Registered Plan 854930) (Property) to the Second Respondent and Third Respondent as joint tenants by transfer registered on 13 September 2024 (being dealing number 723533870) (Transfer) was made in breach of trust;

(b) the Second Respondent and Third Respondent hold their legal and beneficial interest in the Property on constructive trust for the Administrator (as that term is defined below); and

(c) the First Respondents are not entitled to be indemnified or reimbursed from the estate of Raymond Paunovic (Deceased) in respect of their costs and disbursements of and relating to the Transfer.

2. The Second Respondent and Third Respondent execute such documents and do all such things as the Administrator reasonably requires to enable the Property to be transferred at their cost to the Administrator within 14 days of order.

3. Pursuant to section 6(1) of the Succession Act 1981 (Qld);

(a) the grant of probate issued to the First Respondents in Supreme Court of Queensland proceeding number S 2220 of 2024 be revoked;

(b) the First Respondents be removed as the executors of the estate of the Deceased;

(c) the First Respondents shall deliver the original grant of probate issued in proceeding number S 2220 of 2024 to the Brisbane Registry of the Supreme Court of Queensland within 7 days of order; and

(d) subject to the formal requirements of the Registrar, a grant of Letters of Administration with the Will of the Deceased dated 19 September 2023 annexed issue to Prudence Poole, solicitor of Cornford-Scott Solicitors (Administrator).

4. The requirement to give notice under rule 598(4) of the Uniform Civil Procedure Rules 1999 (Qld) be dispensed with.

5. Pursuant to section 80 of the Trusts Act 1973 (Qld), the Administrator be substituted for the trustee named in clause 5 of the Will of the Deceased dated 19 September 2023 in place of the first Respondent and the Second Respondent.

6. Pursuant to section 82 of the Trusts Act 1973 (Qld) all property of the estate of the Deceased held by the First Respondents vest in the Administrator.

7. The Administrator be registered as the proprietor of any real property of the Deceased pursuant to section 114 of the Land Title Act 1994 (Qld).

8. Pursuant to rule 638(5) of the Uniform Civil Procedure Rules 1999 (Qld), the Court fix the Administrator’s remuneration, such remuneration to be assessed by an independent cost assessor pursuant to the Supreme Court of Queensland scale, as varied from time to time on the indemnity basis with the fees to be assessed at approximately two monthly intervals, since 1 October 2024 and on completion of the administration or the appointment.

9. Pursuant to section 6(1) of the Succession Act 1981 (Qld), the Administrator be at liberty to retain Cornford-Scott Solicitors to act on her behalf in respect of the Estate and to pay them their professional costs and outlays in so acting to be assessed by an independent costs assessor pursuant to the Supreme Court of Queensland scale, as varied from time to time, on the indemnity basis and at approximately two monthly intervals, and on completion of the administration or the appointment.

10. The First Respondents shall deliver up to the Administrator all certificates of title and estate documentation including papers, data, files, and books of account relating to the Estate within 14 days of the date of the order.

11. By 4:00 pm on 16 December 2024 the Applicant file and serve written submissions on the questions of:

(a) costs of the application other than those costs already ordered; and

(b) whether the Respondents should have indemnity from the Estate for their own costs and for any liability they may have for costs they might be ordered to pay.

12. By 4:00 pm on 23 December 2024 the Respondents file any submissions in reply.

13. Each party have liberty to file and serve an application for leave to make oral submissions on costs and the Respondents’ indemnity by 4:00 pm on 13 January 2025 failing which the questions of costs and the Respondents’ indemnity will be determined on any written submissions and without further oral hearing.

Background

Background to the litigation

The applicant, Renee Josephine Harrison, who is the daughter of Raymond Paunovic (deceased), and who is a beneficiary under his will, applies for the removal of the respondents as executors of his estate. She also applies for other orders.Background Mr Paunovic made his last will on 19 September 2023 (the will). By the will, Mr Paunovic:(a) appointed the respondents, Steven Paul Cox and Sharon Maree Turner, as his trustees and executors;(b) empowered the respondents to:(i) convert his estate to money; (ii) pay all expenses; and (iii) hold the rest and residue on trust for each of the two respondents and Ms Harrison in equal one-third shares. Mr Paunovic died on 5 October 2023. The principal asset held by Mr Paunovic at the time of his death was a house at 209 Lakes Drive, Laidley Heights (the house). On 7 June 2024, the value of the house was appraised by a real estate agent in business in Laidley. She opined the house to be worth between $540,000 and $560,000. Probate of the will was granted to the respondents on 12 March 2024. On 11 June 2024, Robbins Watson, solicitors for Ms Harrison, wrote to GLG Legal, solicitors then acting for the respondents. In that letter, Robbins Watson:(a) requested copies of all wills of Mr Paunovic in the possession of GLG Legal;(b) asked for other information about the estate;(c) expressed concerns regarding the validity of the will and indicated Ms Harrison’s instructions to undertake further investigations as to that issue; and(d) placed the respondents on notice of an intention of Ms Harrison to make application for family provision pursuant to Part IV of the Succession Act 1981. On 19 June 2024, GLG Legal responded saying they held instructions limited to providing a copy of the grant of probate. That was provided. They advised that they had no other instructions and invited Robbins Watson to communicate directly with the respondents. Email addresses for the respondents were provided. On 27 June 2024, Robbins Watson wrote to each of the respondents in similar terms as their letter of 11 June 2024 to GLG Legal. On 1 July 2024, Ace Solicitors wrote to Robbins Watson advising that they acted for Ms Turner and asked for information concerning the draft application for family provision which had been provided. A list of assets and liabilities was also provided to Robbins Watson. The application for family provision was filed on Ms Harrison’s behalf in the District Court and served upon Ms Turner by letter of 2 July to Ace Solicitors. In that letter, Robbins Watson also outlined the concerns about the validity of the will and asked whether Mr Cox was represented. On 2 July 2024, the respondents transferred the house to themselves as personal representatives of the deceased’s estate. There was communication between the respective solicitors and on 16 July 2024, Ace Solicitors advised Robbins Watson that:“Unfortunately it is likely that our client will have to withdraw their previous offer to purchase the property at market value, and it is likely that the property will need to go to the open market, if the matter is not sorted out within the next couple of days (perhaps sooner). Please advise us urgently if your client is wanting to ensure the sale proposed goes through.”

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

I heard full argument and then made the following orders:1.Steven Paul Cox and Sharon Maree Turner shall not transfer, sell, lease, encumber or in any other way create any interest in or dispose of any interest in the property of 209 Lakes Drive, Laidley Heights until further order.2.Steven Paul Cox and Sharon Maree Turner pay Ms Harrison’s costs of the application limited to the costs of the appearance today.3.Judgment reserved on:(a) The final relief sought on the application.(b) Save for the costs order made, the question of costs of the application.Consideration of final disposition of the application The transfer of the house is said by Ms Turner to be justified because of clause 10 of the will, in particular, 10(f):“10. My trustees may in their discretion:…(f) Sell, lease, exchange, transfer to a beneficiary or otherwise dispose of property in my estate in the terms they consider expedient as though they were absolute beneficial owners; …” The bestowal of such a power does not negate the obligation of the trustees and executors to act honestly and not to prefer their own interests. Here, there was no sale, lease or exchange. There was a transfer to the respondents beneficially of the only substantial asset of the estate. Although there was a stated consideration, that consideration was not paid upon transfer. The net estate assets were valued at $579,279.98. The value of the house was stated as $550,000. Therefore, the respondents have transferred to themselves the whole estate, less about $30,000. As a result of the transfer, the major estate asset has been appropriated subject to some understanding that the respondents will pay Ms Harrison one-third of the value of the house. That has not materialised apparently because there is now a caveat lodged by Ms Harrison so the respondents cannot raise funds by mortgaging the house. The house was transferred although the respondents were on notice of a potential challenge to the will. Ms Turner says that no proceedings had been brought to set aside the grant of probate. It is obvious though that Ms Harrison was investigating the situation. Ms Harrison received information from GLG Legal and obtained documentation. The respondents have simply dismissed these concerns and proceeded to administer the estate in a way whereby they benefited from transferring the major asset. The respondents knew before transferring the property that Ms Harrison had given notice of an intention to make a claim for family provision. At paragraph [23] of her affidavit, Ms Turner says that she was aware of the claim and “believe[d] there was enough equity in the estate to cover it”. She then states that she thought she might have to “extend my loan from St George Bank if the estate is ordered to make payments to the applicant”. Once the house was transferred, there clearly weren’t assets in the estate to pay any substantial family provision order. The assets in the estate had been reduced to less than $30,000 by the transfer of the house. The estate could only pay such a claim if Ms Turner reimbursed it. That is dependent upon loan arrangements being made by her. The transfer of the major asset of the estate in the face of notification of the family maintenance application is a breach of trust. The obligation upon the respondents was to preserve the estate until the family provision application was resolved.[6][6]Re Faulkner [1999] 2 Qd R 49 at 52-53.