Prettejohn v Prettejohn
[2014] QSC 250
•22 August 2014
SUPREME COURT OF QUEENSLAND
CITATION:
Prettejohn & Anor v Prettejohn & Anor [2014] QSC 250
PARTIES:
ROBERT HUGH PRETTEJOHN and
CATRIONA ANN ALDRIDGE
(applicant)v
JOANNA MARY PRETTEJOHN andCHRISTOPHER JOHN MILLAR
(respondent)FILE NO/S:
326 of 2014
DIVISION:
Trial
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court at Cairns
DELIVERED EX-TEMPOREON:
22 August 2014
DELIVERED AT:
Cairns
HEARING DATE:
22 August 2014
JUDGE:
Henry J
ORDERS:
1. The grant of probate of the last Will of the late Hugh Maitland Prettejohn dated 7 February 2012 issued jointly to the applicants and the respondents in Cairns proceeding no S26 of 2014 be revoked;
2. Subject to any formal requirements of the Registrar, probate of the last Will of the late Hugh Maitland Prettejohn dated 7 February 2012 be granted solely to the applicants;
3. The applicants be authorised to pay to the second respondent out of the estate of the late Hugh Maitland Prettejohn commission or, as the case may be, trustees’ remuneration fixed in the sum of $10,000;
4. Upon the true construction of the last Will of the late Hugh Maitland Prettejohn dated 7 February 2012, income received from the residuary estate of the late Hugh Maitland Prettejohn (including income received from any ‘ready monies’ within the meaning of clauses 5.1 or 5.11 of the said Will) between the date of death of the said Hugh Maitland Prettejohn and the date of assent, being the date of acknowledgment by the executors for the time being of the late Hugh Maitland Prettejohn that the assets that comprise the residuary estate are no longer required for payment of debts or expenses of the estate, is hereby declared to be:
(a) Not ‘ready monies’ within the meaning and for the purpose of clauses 5.1 or 5.11 of the said Will;
(b) Not income divisible under and in accordance with clause 7 of the said Will;
(c) Part of the capital sum in due course divisible under and in accordance with clause 7.10 of the said Will.
5. The applicants’ and respondents’ costs of and incidental to this application be paid out of the estate of the late Hugh Maitland Prettejohn as assessed on the indemnity basis.
CATCHWORDS:
SUCCESSION – ADMINISTRATION OF ESTATE – CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS – CONSTRUCTION GENERALLY – ASCERTAINMENT OF TESTATOR’S INTENTION – GENERALLY – where the trustees seek the court’s guidance as to proper construction and effect of an instrument under the will that establishes a trust – whether the court is empowered to intervene – whether income generated by the assets of the estate since death ought be regarded as falling within the terms “ready monies” as used in the will, or as falling within the residual capital of the estate
Trusts Act 1973 (Qld) s 14, s 15(2), s 96(1)
Uniform Civil Procedure Rules 1999 (Qld) s 642(1)(B), s 657C(2)(d)Goods of Veiga [1863] 32 LJPM&A 9, applied
In The Will of Short (1885) 11 VLR 634, appliedCOUNSEL:
MA Jonsson for the applicants
No appearance for the respondentsSOLICITORS:
Williams Graham Carman Lawyers for the applicants
No appearance for the respondents
HIS HONOUR: The practical effect of the application before me is to seek orders allowing the first and second respondents to withdraw from their roles as executors and trustees of the estate of the late Hugh Maitland Prettejohn and allow for the continuation of the applicants in those roles. The application also seeks an order in relation to the appropriate payment of commission or remuneration to the second respondent for the performance of his role to date. Further, it seeks a declaration providing certainty as to the proper construction of a feature of the will relating to the issue of whether income generated by the assets of the estate since death ought be regarded as falling within the terms “ready monies” as used in the will, or as falling within the residual capital of the estate.
As to the first issue, a grant of probate issued to the applicants and respondents collectively in their capacity as the named executors and trustees under the will on 17 January 2014. The respondents have elected to resign from those roles and the remaining grantees, the applicants, consent to the resignations. Probate having already issued, the respondents in their roles as executors cannot under general law renounce that office; see, for example, in The Goods of Veiga [1863] 32 LJPM&A 9; although, such a person may retire in the exercise of the statutory prerogative allowed for under section 14 of the Trusts Act 1973 (Qld).
In the circumstances of such a retirement, rule 642(1)(b)of the Uniform Civil Procedure Rules facilitates a revocation in effect through a subsequent issue of grant of probate so as to reflect the devolution contemplated by sections 14 and 15(2) of the Trusts Act. The outcome here sought then can conveniently be affected by revoking the grant of probate previously issued and permitting a fresh grant of probate, but in the names of the applicants alone, thus relieving the first and second respondents of continuing obligations in their former roles. The draft order before me gives effect to that process and I will order accordingly in due course.
As to the second issue, the second respondent seeks a modest (relative to the size of the estate) monetary allowance for his time and trouble, involvement and performance of his responsibilities as executor and trustee. The testator contemplated it might be thought general remuneration for the performance of such a role. Clause 7.3 of the will provides, inter alia:
My trustee is to be paid an annual fee equal to 12.5 per cent of the pre-income tax income of the trust (including income from capital gains) to be divided equally between them.
Rule 657C(2)(d) provides that in circumstances where a trustee applies to the Court for permission, as has here occurred, the application must be supported by an affidavit of the trustee setting out, inter alia, an inventory of the estate. It is submitted I ought dispense with compliance with the requirement and, given the state of the evidence about what has been done to date and the overall general inference that the estate is substantial, no serious issue arises as to the appropriateness of the commission sought. Indeed, it is submitted that the amount is relevantly modest, the inference being that were an inventory done and were more evidence laid on, a case could probably be made for an entitlement to a higher amount than that which is presently sought. No issue is taken by any interested party as to the quantum sought, which is an amount fixed in the sum of $10,000.
I am satisfied, on the state of the materials, that the extent of work performed to date by the second respondent appropriately attracts remuneration at least in the sum he has sought. In reaching that conclusion, I appreciate assistance has been rendered for the performance of the executor trustee roles by legal representatives, however, that assistance is separate and distinct from the undoubted investment of personal time and trouble on the part of the second respondent which, in its own right, is estimated to have taken 82 hours of his time. The distinction in the roles as between the second respondent and his solicitor is well summarised by Molesworth J In The Will of Short (1885) 11 VLR 634 at 637:
If the solicitor is executor I allow him to charge commission as executor as well for professional business. The two duties are quite distinct. Nor does the fact that he is both solicitor and executor to the state diminish his right to commission.
Also see In The Will of Shepherd (1972) 2 NSWLR 714 at 720. In all of the circumstances, then, I am satisfied that the second respondent’s remuneration ought be fixed in the sum of $10,000. The proposed draft order reflects such an outcome.
The third and final issue to which the application gives rise is a matter of construction of the will. As the trustees harbour some doubt as to the proper construction and effect of an instrument that establishes a trust, as this will does, the Court is empowered to intervene and provide judicial guidance to the applicants in their representative capacity in the exercise of the supervisory power conferred under section 96(1) of the Trusts Act. It is well established it is proper for trustees harbouring any doubt as to the providence of some proposed course of action associated with the management or administration of a trust to seek a direction of the Court to remove doubt, see by parity of reasoning, Macedonian Orthodox Community Church St Petka, Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 82 ALJR 1425, paragraph 36.
The will gifts the testator’s estate to his trustees on trust to give effect to the gifts and directions contained in it. Clause 5.1 provides, inter alia:
The following gifts are to be paid firstly from those parts of my estate which consist of ready monies including monies in bank or financial institution accounts at the date of my death. If insufficient, my trustees shall sell the whole or part (as the case shall require) of my share portfolio. If that is insufficient to pay the gift referred to in clause 5.2, my trustee shall have whatsoever time they consider appropriate to realise other assets in my estate to enable them to pay the gift referred to in clause 5.2. I direct that each of these gifts and money will be paid to the beneficiary free of all duties but without interest. (emphasis added)
Further subclauses to clause 5 of the will then stipulate the quantum of various distributions to various persons. It thereafter provides at 5.11 and 5.12:
5.11The bequests referred to in clauses 5.3 to 5.10 (inclusive) are only to be paid from those parts of my estate which consist of ready monies, including monies in bank or financial institution accounts (inclusive of monies on term or fixed deposit) at the date of my death and the proceeds from the sale of my share portfolio remaining after the payment of the bequest referred to in clause 5.2 (“the available funds”).
5.12If the available funds are insufficient to pay the bequests referred to in clauses 5.3 to 5.10 (inclusive), then the amount of each bequest will reduce proportionately. (emphasis added)
So much then for the provision as to ready monies. What, though of the residue of the estate? Clause 7 of the will provides for the residue. Relevantly, at clauses 7.1 and 7.2 it provides:
7.1My trustee is to hold the residue of my estate on trust in accordance with the following provisions:
7.2My trustee is to invest the residue (or so much as is practicable) as authorised by law or by this will.
Clause 7 then goes on in further subclauses to refer to how income is to be distributed under the trust created. It then culminates, particularly at clause 7.10, with a subclause that makes provision for distribution of the capital of the trust after the death of the testator’s wife and children and after the youngest of the surviving grandchildren turns 35.
Income has been generated by the assets of the estate since the death of the testator. The question arises as to what the status of that income will be regarded as, as between the date of death and the point in time when the executors have completed administration and assent to the residuary estate being distributed to be held on trust (“the interim period”). Does the income generated in the interim period fall within the description “ready monies” as contemplated in clause 5 of the will? Is it income available and to be applied for the purposes and to the benefit of the income beneficiaries stipulated under clause 7 of the will? Is it part of the capital sum in due course divisible under and in accordance with clause 7.10 of the will?
As to the first question, income generated from estate agents is not, in my view, ready monies within the meaning of that term as described in clause 5 of the will. Clause 5.1 speaks of “ready monies, including monies in bank or financial institution accounts at the date of my death” (emphasis added). The “book ending” of what constitute ready monies by reference to the date of death, in my view, makes it inevitable that interest earned thereon thereafter by such monies or, indeed other assets, was plainly not intended by the words of the testator to come within the term “ready monies” as contemplated by clause 5. I am fortified in reaching that conclusion by the testator’s further language at the end of clause 5.1, where he directed that each of the gifts of money be paid to the beneficiary “free of all duties, but without interest”. The fact that no interest would be payable thereon is, of course, consistent with the interpretation I have already arrived at.
As to the second question, whether it is income available and to be applied for the purposes and to the benefit of the income beneficiaries stipulated under clause 7, the question again must be answered in the negative. Clause 7, which deals with the details of the operation of the trust, plainly enough contemplates that the trustee will hold the residue of the estate on trust, which residue would obviously not include ready monies and miscellaneous expenses associated with the death and administration of the will. The point is essentially a matter of timing. Income earned in the interim period is not income that is earned from the capital of the residue of the estate. It is only income which is earned after that point in time when administration is complete and, more particularly, when there is assent to the residuary estate being distributed to be held on trust, that the point in time is reached when income earned by the residue of the estate falls for distribution under clause 7 as income of the trust. as to the pivotal significance of that point in time see Re Donkin (Deceased) [1966] Qd R 96 at 117; Re Burgess [1984] 2 Qd R 379 at 384; and Re McPherson [1987] 2 Qd R 394, at 397-399.
It must follow, then, that any income generated by the assets of the estate in the interim period itself has contributed to that which constitutes within the meaning of the will, the residue of the estate. That is, it accumulates as part of the overall capital which will in due course generate income in the operation of the trust and ultimately fall for distribution at the point in time contemplated by clause 7.10. It follows, then, that the assets generated in the interim period will become part of the capital sum in due course divisible in accordance with clause 7.10 and are not ready monies within the meaning of clause 5 or income divisible under and in accordance with clause 7.
The draft order formulates a declaration giving effect to that conclusion.
The ordinary approach in matters of this kind is that costs of and incidental to the application of the applicants and respondents would be paid out of the estate on the indemnity basis and there is no reason to depart from that ordinary practice in this case, and, again, the draft order reflects that course.
My orders are:
1. The grant of probate of the last Will of the late Hugh Maitland Prettejohn dated 7 February 2012 issued jointly to the applicants and the respondents in Cairns proceeding no S26 of 2014 be revoked;
2. Subject to any formal requirements of the Registrar, probate of the last Will of the late Hugh Maitland Prettejohn dated 7 February 2012 be granted solely to the applicants;
3. The applicants be authorised to pay to the second respondent out of the estate of the late Hugh Maitland Prettejohn commission or, as the case may be, trustees’ remuneration fixed in the sum of $10,000;
4. Upon the true construction of the last Will of the late Hugh Maitland Prettejohn dated 7 February 2012, income received from the residuary estate of the late Hugh Maitland Prettejohn (including income received from any ‘ready monies’ within the meaning of clauses 5.1 or 5.11 of the said Will) between the date of death of the said Hugh Maitland Prettejohn and the date of assent, being the date of acknowledgment by the executors for the time being of the late Hugh Maitland Prettejohn that the assets that comprise the residuary estate are no longer required for payment of debts or expenses of the estate, is hereby declared to be:
(a) Not ‘ready monies’ within the meaning and for the purpose of clauses 5.1 or 5.11 of the said Will;
(b) Not income divisible under and in accordance with clause 7 of the said Will;
(c) Part of the capital sum in due course divisible under and in accordance with clause 7.10 of the said Will.
5. The applicants’ and respondents’ costs of and incidental to this application be paid out of the estate of the late Hugh Maitland Prettejohn as assessed on the indemnity basis.
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