LS v the Public Trustee of Queensland as Administrator of the Estate of MS

[2013] QDC 50

[2013] QDC 50

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 1440 of 2012

LS	Applicant
and
THE PUBLIC TRUSTEE OF QUEENSLAND AS ADMINISTRATOR OF THE ESTATE OF MS	Respondent

BRISBANE

..DATE 28/02/2013

ORDER

CATCHWORDS

Succession Act 1981 -s41 - Compromise of application by Public Trustee as litigation guardian against itself as trustee under the applicant’s father’s will - Applicant in clear need her 25 % share would likely never amount to any actual benefit, as the estate consisted essentially of a house which the testator’s partner was to be permitted to occupy indefinitely - partner failed to meet stipulation in will to pay for outgoings - partner participated in mediation converting applicants interest to a money payment - signed compromise agreement- partner not permitted to become a party with a view to challenging the compromise which provided for early sale of the house.

HIS HONOUR: This is a difficult matter in which the court is asked to sanction a compromise that has been reached in an application under section 41 of the Succession Act 1981.

The Public Trustee has two roles, one as litigation guardian for the applicant, a daughter of the testator, who has Down Syndrome and requires full-time support.  That was provided by her father in his home which constitutes the bulk of the modest estate.

For the last decade or so, it was done with the assistance of his partner, Ms M.  She and her daughters became residents of the household and, indeed, she may have been effectively the carer of the applicant.

The testator died on 30 September 2009, leaving a last will.   It left Ms M a motor vehicle with a stipulation that any money that might be owing on it should be paid from the estate.  The home, together with all household furniture and effects, was left to the trustee who happens to be the respondent, Public Trustee of Queensland, which thus finds itself on both sides of the record, as to the house "on trust to permit my partner if she is residing in the property at my death to reside in the property during her lifetime or until in the opinion of my trustee she is not residing permanently in the property, whichever is the first event to occur."

There was a stipulation that during the period of the "right of residence" Ms M was responsible for keeping the property in a state of repair satisfactory to the trustee, to insure it and pay all rates, taxes and insurance premiums and other periodical outgoings.

The court was told that Ms M has been unable to attend to those financial obligations.  The estate is being depleted, and now to dangerously low levels, to allow it to bear those costs.

Twenty-five per cent went to Ms M, a brother received 30 per cent, a sister 20 per cent, and the last 25 per cent went to establish a trust fund for the applicant.  The estate being as modest as it is, the applicant will effectively receive nothing.  The material indicates that the life expectancy of Ms M is close to another 50 years from now.

The evidence presented to the Court indicates that the property simply has to be sold.  It is not feasible for the trustee to continue to hold it.  There are, of course, other ways in which it might have been lost, such as resumption by public authority or being sold up because of non-payment of rates or indebtedness secured on it and the like.

The proposition that the house had to be sold appears to have been accepted by Ms M when she participated in mediation which resolved this application.  I have inspected the original of the mediation agreement which the mediator, Mr Otto, had placed in a sealed envelope in the usual way.  It bears what appears to be the original signature of Ms M and, effectively, the mediator, Mr Otto, has vouched for that.

The terms of settlement contemplate the sale of the property and, indeed, Ms M vacating it within two months.

The Public Trustee in its two capacities, so far as its attitude is made known to the court, exhibits only modest or no sympathy for Ms M who is paying what seems to me a very large price in the compromise.  By the compromise, when the house is converted into money and becomes part of the residuary estate, a cash payment will be made for the applicant in a nominated sum which the evidence is adequate to support as meeting a need.

The balance of the estate, now to be significantly depleted, by the payment but of the  nominated sum is to in different proportions .  The applicant no longer participates to the original 25 per cent share to Ms M   Mr Whiteford reminds me, increases to 60 per cent.  This is made possible by the brother's foregoing his interest under the will.

The losses which the compromise and other events involve for Ms M are considerable.  Not only does she become homeless,  she has lost her role as carer of the applicant which persisted for some considerable time after the testator's death on 30 September 2009.  The Public Trustee came in as the manager of the applicant's property matters on 13 December 2010.
Without implying any criticism of the Public Trustee, I record that I can understand Ms M's dissatisfaction at the way, in its double capacity, it has managed matters.

As executor, of course, its duty is to uphold the will but that principle requires qualification.  Once an application under the Act is made, the executor also comes under an obligation to so manage things that the overall interest, including that of the beneficiaries, is met as efficiently and inexpensively as possible.  It is not possible for the court to dispute the appropriateness of the resolution that has been reached here.

An overriding circumstance, of course, is that Ms M has agreed with it.

...

HIS HONOUR:  She has just interrupted my statement of these reasons to indicate that she signed under compulsion.

Once again, I can sympathise with her situation in that the communications sent to her advising her of the making of the application , her right to become a party and the like were in general terms and did not spell out what the cost to be borne by her might turn out to be.  However, she has made a statement to the court today which indicates that all along she has been aware of the likelihood that the house may have to be sold.

...

HIS HONOUR: Mr Nevison's researches have identified a recent decision in New South Wales which indicates the way in which the court might and I think has no alternative but to proceed today. It is Morrison v. Abbott [2012] NSWSC 320. The same judge has made use of that same decision in the later one of Keep v. Packham [2012] NSWSC 782.

Those were situations in which a compromise of an application like the present one was reached without any participation of the beneficiary who wished the challenge the compromise.

In Morrison, that beneficiary was let in by the court to argue against the compromise and, in the event, did so unsuccessfully and was ordered to pay costs.

Ms M never chose before now to become a party in this proceeding, although she might have done so.  Effectively, what she was seeking today was that she become a party.  In my view, that simply occurs too late and the New South Wales approach has to be adopted.

The court ought to record Mr Nevison's advice that a named practitioner communicated with him in the last day or so, indicating that he would appear in Ms M's interest.  In the event, he has not done that.  She sought an adjournment of today's hearing with a view to having a lawyer's services on a future occasion.

The costs involved in that would very likely be considerable and, although she made a kind of offer to be responsible for them, that is one in which I had no confidence at all.  The adjournment, I think, would be pointless.  The practitioner named or any other is unlikely to have been able to get a better outcome for Ms M.

I feel there is no option in the circumstances, if matters are to be run in a way that is not wasteful, but to refuse Ms M's application for adjournment and any application to become a party.  She has been allowed full opportunity to make the representations to the court that she wanted to.

I will make an order in terms of the initialled draft.

...

HIS HONOUR:  The opinions of Mr Whiteford show that the compromise is in the interests of his client.  Indeed, it is as much as can be achieved for all of those involved.  I would have been comforted if any precedent had been unearthed which involved a compromise like the present with the fairly extreme consequences for a person given a right of residence like the one here.

The blow to Ms M comes on top of others.  She says that she feels deeply the loss of her relationship with the applicant and the opportunity to continue to care for her and to the extent it might be relevant enjoy the emoluments that the previous caring role produced.

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