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  •   Notable Unreported Decision

Moodie v Public Trustee of Queensland

 

[2019] QSC 181

SUPREME COURT OF QUEENSLAND

CITATION:

Moodie & Anor v The Public Trustee of Queensland as executor of the estate of Warren Stephen Moodie, deceased [2019] QSC 181

PARTIES:

ANTHONY WARREN MOODIE

(first applicant)

MALCOLM STANLEY MOODIE

(second applicant)

v

THE PUBLIC TRUSTEE OF QUEENSLAND AS EXECUTOR OF THE ESTATE OF WARREN STEPHEN MOODIE, DECEASED

(respondent)

FILE NO:

BS No 3811 of 2019

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

25 July 2019

DELIVERED AT:

Brisbane

HEARING DATE:

20 May 2019

JUDGE:

Martin J

ORDERS:

  1. Replace “The Public Trustee of Queensland” with “The Public Trustee of Queensland as executor of the estate of Warren Stephen Moodie, deceased” as the respondent.
  2. The application is dismissed.
  3. I will hear from the parties as to costs.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – where the applicants are the beneficiaries under a will – where the estate was administered by the respondent – where the applicants claim that the respondent neglected to collect a reversionary interest that fell into its possession – where that interest is said to arise under a residence agreement entered into by the applicants’ father, his first wife and the residence provider – where the applicants’ father’s first wife died and the applicant remarried – where a document was later signed by the applicants’ father, his second wife and the residence provider – where the parties dispute as to whether the later document was simply a grant of permission for the second wife to reside or was a new contract that varied the original agreement – where the applicant’s father’s second wife was paid a sum of money by the residence provider on the termination of the licence to reside – whether the later document varied the original agreement – whether the applicant’s father’s estate was in fact entitled to the money paid to his second wife by the residence provider

SUCCESSION – PERSONAL REPRESENTATIVES – RIGHTS, POWERS AND DUTIES – GETTING IN AND REALISING ESTATE – where the applicants are the beneficiaries under a will – where the estate was administered by the respondent – where the applicants claim that the respondent neglected to collect a reversionary interest that fell into its possession – where that interest is said to arise under a residence agreement entered into by the applicants’ father, his first wife and the residence provider – where the applicants’ father’s first wife died and the applicant remarried – where the applicant’s father’s second wife was paid a sum of money by the residence provider on the termination of the licence to reside – where, by the time the money was paid, the applicant’s father’s estate had been administered and no assets remained – where the applicants did not offer to put the respondent in funds – whether the respondent was nevertheless obligated to pursue the interest

Retirement Villages Act 1999, s 9, s 10

Succession Act 1981, s 52

Trusts Act 1973, s 15, s 50

CASES:

In Re Campbell (A Bankrupt) [1997] Ch 14, cited

Jones v The Public Trustee of Qld & Anor [2004] QCA 269, cited

Lewis v Condon (2013) 85 NSWLR 99, cited

Re Burbidge (No 2) (NSWSC, 25 June 1993, unreported), cited

Tudball v Medlicott (1888) 59 LT 370, cited

COUNSEL:

A Collins for the applicants

R Whiteford for the respondent

SOLICITORS:

Lee Turnbull & Co for the applicants

Official Solicitor for the respondent

  1. [1]
    The applicants are the sons of the late Warren Moodie. They claim that the respondent breached its duties under s 52 of the Succession Act 1981, as executor of their father’s estate, by failing to get in the “exit entitlement” from the retirement home in which he had lived.
  2. [2]
    The Public Trustee says that the “exit entitlement” was not an asset of Warren Moodie’s estate but, if it was, then it was under no duty to recover the entitlement because there were no funds in the estate.
  3. [3]
    The respondent should have been sued as “The Public Trustee of Queensland as executor of the estate of Warren Stephen Moodie, deceased.” I will make an order correcting that.

The agreements

  1. [4]
    On 12 April 1990 Warren and Gwendolyn Moodie entered into an agreement (1990 Agreement) with the Uniting Church in Australia Property Trust (Q) (the Organisation).[1] In accordance with the agreement, they were granted a licence to reside in a self-contained accommodation unit at the Pallarenda Garden Settlement retirement village (the Unit). They paid $70,000 for the licence. The $70,000 was made up of a non-refundable ingoing contribution of $10,000 and an interest-free loan of $60,000.
  2. [5]
    On 29 April 1995 Gwendolyn Moodie died.
  3. [6]
    Three years later Warren Moodie married Marion Mills. By an undated agreement entitled “Amendment to Agreement dated 12th April 1990” (the Undated Agreement), executed by the Organisation, Marion Moodie and Warren Moodie, it was agreed that the Organisation recognised Marion Moodie, as “the Resident” in the 1990 Agreement.
  4. [7]
    On 17 March 2008 Warren Moodie died. In his will he left Marion Moodie his “… share and interest in the property known as Unit 4 Garden Settlement Pallerenda Road Pallerenda …”. The residue was to be shared equally between the applicants. The respondent completed administration of his estate in August of that year.
  5. [8]
    Marion Moodie continued to live in the Unit until about 1 July 2016 when the Organisation told her that it was going to close the retirement village. The Organisation decided that, “as a gesture of good will”, it would not enforce its rights under the agreements.  It paid her $72,000 when she left. This was made up of: the $10,000 ingoing contribution (which was non-refundable), the full amount of the interest free loan ($60,000) and $2000 as a relocation allowance. She died in December the following year.

The Undated Agreement

  1. [9]
    The principal issue in dispute is whether, as proposed by the applicants, the Undated Agreement “did no more than provide the organisation’s consent for Marion Rose Mills to reside [in the accommodation]”.
  2. [10]
    The respondent contends that the Undated Agreement varied or amended the 1990 Agreement, with the consequence that Marion Moodie became entitled to the full $72,000 sum paid to her by the Organisation on or about 1 July 2016.
  3. [11]
    The arguments advanced by the parties require a consideration of the clauses of the 1990 Agreement.

The 1990 Agreement

  1. [12]
    The opening paragraph of the 1990 Agreement states:

“The parties to this Agreement are THE UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (Q.) … hereinafter called ‘The Organisation’ and

hereinafter called ‘the resident’ (which expression shall extend to the survivor where this agreement is signed by two or more parties.”

  1. [13]
    The names of “the resident” do not appear in this paragraph. But, as Warren and Gwendolyn Moodie signed the 1990 Agreement, all parties have treated them as “the resident”.
  2. [14]
    The 1990 Agreement then provides:

“1. The resident shall pay to the organisation an amount of TEN THOUSAND DOLLARS ($10,000) …

The payment … as aforesaid shall be refundable by the organisation

  1. (i)
    as to the whole (less an administration charge of not more than FIVE HUNDRED DOLLLARS ($500), if the resident cancels this agreement before the resident has taken up occupancy … , or
  1. (ii)
    in part, if the resident vacates the unit within 2 years after taking up occupancy…
  1. The resident shall also pay … as an interest-free loan the amount of SIXTY THOUSAND DOLLARS ($60,000). This interest free loan shall be refundable to the resident … subject to the following adjustments:
  1. (i)
    a reduction of 2½ % per annum calculated on the period between the residents’ entry into and departure from the complex …
  1. (ii)
    payment to the resident of the sum equivalent to 50% of the amount by which the total entry contribution paid by a new resident occupying the unit exceeds the total entry contribution paid by the resident vacating the unit …
  1. The organization in consideration of these payments will grant the resident a licence to occupy a unit on the following conditions: …
  1. (b)
    The resident’s right to occupy the unit is granted personally to the resident and the resident shall not permit any other person or persons to occupy the unit without permission of the organisation or its delegate previously had and obtained. …
  1. (i)
    Nothing in this agreement shall create any lease or tenancy in favour of the resident.
  1. PAYMENT OF FEES
  1. (a)
    The Resident shall until the Agreement is terminated pay periodically in advance a fee to the organization in the manner directed by the organization. …
  1. (b)
    The fee fixed by the organization shall be determined so that the total fees cover all outgoings, levies, charges and expenses …
  1. TERMINATION OF RESIDENCY

The organization may in addition to other provisions herein contained terminate the resident’s right of occupancy in the event of …

  1. g)
    The unit or the relevant facilities of the complex becoming in the reasonable opinion of the organization unfit for habitation or use …
  1. The interest-free loan as defined in paragraph 2 (or such higher sum where the organization in its absolute discretion may determine to increase the repayment) shall be refundable subject to deduction as herein before referred to within one month following the receipt by the organisation of an entry contribution from a new resident entering the accommodation that has been vacated by the resident …

However, the organisation is obliged in any event to repay the amount to the resident … within 6 months of the termination of the licence … In the event of the death of a resident the money is paid to the deceased estate.”

  1. [15]
    The 1990 Agreement also contains a curious provision for the effect of the death of a resident.  Clause 5 provides:

“The organization may in addition to other provisions herein contained terminate the resident’s right of occupancy in the event of

  1. (a)
    The death of the person (or the survivor of the persons) named as the resident;”
  1. [16]
    While that paragraph allows for the termination of a right of occupancy of a dead person, the more important aspect for these purposes is the recognition that a right of occupancy extends to the survivor of the resident.

What is effect of the Undated Agreement?

  1. [17]
    The Undated Agreement is very brief. It provides:

“Amendment to Agreement dated 12th April 1990.

Between The Uniting Church in Australia Property Trust (Q.) Garden Settlement Pallarenda (hereinafter called ‘The Organisation’ and Warren Stephen Moodie and Gwendoline Joy Moodie (hereinafter called ‘The Resident’.

As Gwendoline Joy Moodie deceased on the 29/4/95, the Organisation now recognises Warren Stephen Moodie’s new partner, Marion Rose Mills, as ‘The Resident’ in this Agreement.”

  1. [18]
    The applicants argue that the Undated Agreement only had the effect of formalising a grant of permission from the Organisation for Marion Moodie to reside in the Unit. They contend that the Undated Agreement is no contract at all. They point to cl 3 of the 1990 Agreement which provides that the resident’s right to occupy the accommodation is granted to them personally as a licence and that permission is required for any other person to so reside. 
  2. [19]
    The applicants also refer to s 9 of the Retirement Villages Act 1999 which defines “resident” as:

“… a person who has a right to reside in the retirement village and a right to receive 1 or more services in relation to the retirement village under a residence contract.”

  1. [20]
    The Undated Agreement refers to itself as an amendment to the 1990 Agreement. It recites the parties to that agreement in its first paragraph. It then refers to the death of Gwendoline Moodie and says that “the Organisation now recognises … Marion Rose Mills as ‘The Resident’”.  As Gwendoline Moodie had been a resident it is reasonable to construe this statement as constituting a substitution of Marion Moodie for Gwendoline Moodie in the 1990 Agreement.
  2. [21]
    There is some further support for this in the relevant legislation. The 1990 Agreement provides that:

“This agreement shall be deemed to have been executed within the State of Queensland, and its operation to be subject to the provisions of the Retirement Villages Act 1988 … and … amendments thereto …”

  1. [22]
    The Retirement Villages Act 1988 was replaced by the Retirement Villages Act 1999. In s 10 it defines a “residence contract” as including:
  1. “(1)
    A residence contract is 1 or more written contracts, other than an excluded contract, about residence in a retirement village entered into between a person and the scheme operator.
  1. (2)
    A residence contract includes any other contract (an ancillary contract) between the person and the scheme operator if the ancillary contract is dependent on, or arises out of, the making of the residence contract or another ancillary contract.”
  1. [23]
    In s 9 it defines a “resident” as “a person who has a right to reside in the retirement village and a right to receive 1 or more services in relation to the retirement village under a residence contract.” Under the 1990 Agreement, a resident was entitled to services (for a fee) which included building maintenance and repairs.
  2. [24]
    The applicants argued that the Undated Agreement did no more than provide the Organisation’s consent for Marion Moodie to reside in the Unit. I disagree, it did more than that. There was no need to amend the 1990 Agreement if all that was sought was to allow Marion Moodie to occupy the Unit. That could be done by simply granting permission under cl 3(b) of the 1990 Agreement. By describing Marion Moodie as “the Resident”, the Undated Agreement varied the 1990 Agreement and substituted her for Gwendoline Moodie.
  3. [25]
    Further, there was consideration for the agreement to amend:
  1. (a)
    from the Organisation, it was the granting to Marion Moodie of a licence to reside in the Unit; and
  1. (b)
    from Marion Moodie, it was becoming bound by the obligations of a licencee under the 1990 Agreement, such as the payment of fees under cl 4.
  1. [26]
    There is no obvious intention to rescind the 1990 Agreement, only to amend or vary it. It follows that the right to occupy vested in Marion Moodie on the death of Warren Moodie pursuant to the terms of the 1990 Agreement as varied.

What are the entitlements of “the resident”?

  1. [27]
    Paragraph 2 of the 1990 Agreement states that the expression “the resident” “shall extend to the survivor where this agreement is signed by two or more parties.” Marion Moodie was the survivor.
  2. [28]
    The question is therefore whether Marion Moodie was entitled to the repayment of the interest-free loan as the surviving resident?
  3. [29]
    The respondent submitted that to read cl 7 of the 1990 Agreement as excluding Marion Moodie would require giving different meanings to “the resident” in cl 7 and, for example, cl 4 which requires the resident to pay fees. No basis was shown for “resident” to have different meanings throughout the contract.
  4. [30]
    This interpretation is galvanised by similarly considering the interaction between cl 5(a) and cl 7 of the 1990 Agreement. The effect of cl 5(a) is that the licence will terminate on the death of the surviving resident. Clause 7 has the effect that the Organisation is obliged to repay the interest-free loan amount within six months of such termination. It then provides that in the event of the death of a resident the money is to be paid to the deceased’s estate.
  5. [31]
    If the refund under cl 7 is not payable to the surviving “resident”, then the Organisation could be put in a position of having to locate the executor (if there was one) of a resident whose estate had long since been administered. That executor might have died, requiring the Organisation to locate the executor of that executor.
  6. [32]
    A common-sense construction of the 1990 Agreement is that if there are two or more residents, then, at the termination of the licence to occupy, the survivor of those residents is owed the interest-free loan repayment.
  7. [33]
    As Marion Moodie was the surviving resident under the 1990 Agreement, the refund under cl 7 was payable to her alone. Accordingly, Marion was entitled to the “exit entitlement” of $45,000 and the $27,000 in ex gratia payments which together composed the $72,000 paid to her on or about 1 July 2016. Neither this amount nor the components said to constitute it passed to the estate of Warren Moodie.

Duty of the respondent

  1. [34]
    If I am wrong and Marion Moodie did not become a “resident” or, if she did, but was not entitled to the repayment of the interest-free loan under cl 7, then it follows that Warren Moodie was the only person entitled to that money.
  2. [35]
    This raises three further questions:
    1. (a)
      What components of the money paid to Marion Moodie were assets to which Warren Moodie’s estate was entitled?
    2. (b)
      Did any of the money nevertheless pass to Marion Moodie?
    3. (c)
      Was the respondent under a duty to get in the money, as an asset of Warren Moodie’s estate, despite the exhaustion of the estate at the time of the distribution of the loan money?

What components of the money paid to Marion Moodie were assets to which Warren Moodie’s estate was entitled?

  1. [36]
    The parties treated the $72,000 amount paid to Marion Moodie on or about 1 July 2016 as consisting of three components:
    1. (a)
      First, she received $10,000 representing the non-refundable ingoing contribution made under cl 1 of the 1990 Agreement;
    2. (b)
      Secondly, she received $60,000 representing the full amount of the unreduced interest-free loan; and
    3. (c)
      Thirdly, she received $2000 as relocation allowance.
  2. [37]
    There is no dispute between the parties that the $2000 relocation allowance was an ex gratia payment and did not form part of Warren Moodie’s estate.
  3. [38]
    In a letter from the Organisation to Marion Moodie, dated 1 July 2016, it is said that the “Exit Entitlement pursuant to [the] residence contract” at the time of termination of the licence was $45,000. That amount was calculated by reducing the interest free loan of $60,000 in accordance with cl 2 of the 1990 Agreement.
  4. [39]
    Despite that amount representing all the money to which the resident was entitled under the 1990 Agreement, the letter continued by stating:

“To assist you with your relocation expenses, and as a gesture of good will, on this occasion Blue Care have taken the decision to refund to you your entire ingoing contribution of $70,000.”

  1. [40]
    The reference to the “entire ingoing contribution” is infelicitously phrased, but the meaning is clear enough that the $70,000 represents the combination of the non-refundable ingoing contribution and the unreduced interest-free loan.
  2. [41]
    That leaves $25,000 that Marion Moodie was paid but which did not form part of the exit entitlement or the relocation allowance. The difference in the positions of the parties is whether part of the $25,000 was paid in accordance with cl 7 of the 1990 Agreement or was an independent ex gratia payment.
  3. [42]
    The applicants contend that only $2000 of the money paid to Marion Moodie was an ex gratia payment. In support of this notion they refer to a chose in action that fell into possession of the respondent on the termination of the 1990 Agreement. That is a mischaracterisation.
  4. [43]
    If the Undated Agreement did not vary, amend or novate the 1990 Agreement, then the right to repayment of the loan debt was a chose in action that formed part of Warren Moodie’s estate and fell into possession of the trustee at the time of its appointment.[2] The discharge of the debt did not become due and payable until termination of the licence. The Organisation purported to discharge the debt by paying the exit entitlement to Marion Moodie. On the applicants’ case, this failed to discharge the debt, since the debt was not owed to Marion. But that does not mean that “the exit entitlement was a chose in action … [that] ‘fell into possession’ on the termination of the residence agreement.” It was already in possession. There is no suggestion in the applicant’s argument that the respondent acquired a chose in action against Marion Moodie at this time.
  5. [44]
    A chose in action is a legally enforceable right, not a hope.[3] No obligation ever existed to refund the interest-free loan at a greater sum than that which is produced by applying the deductions in cl 2 to the original loan amount. No right can be asserted for the full amount because there was never a correlative duty on behalf of the Organisation to pay it. The same can be said of the non-refundable ingoing contribution. If Warren Moodie’s estate had a chose in action for repayment of the loan debt, that right was for the exit entitlement of $45,000 and nothing more.

Did any of the money nevertheless pass to Marion Moodie?

  1. [45]
    In his last will dated 31 January 2007 Warren Moodie left to Marion Moodie “my share and interest in the property known as Unit 4 Garden Settlement Pallarenda Road Pallarenda …”
  2. [46]
    The applicants contend that the meaning of the words “my share and interest” does not include a right to repayment of the loan money. The respondent conceded that if Marion Moodie was not “the resident” then Warren Moodie was the only person entitled to the interest-free loan repayment.
  3. [47]
    Accordingly, this matter does not require further consideration.

Was the respondent under a duty to get in the money, as an asset of Warren Moodie’s estate, despite the exhaustion of the estate at the time of the distribution of the loan money?

  1. [48]
    The Public Trustee as the personal representative of Warren Moodie’s estate had a duty to gather in the assets of the estate. So much is not in dispute.
  2. [49]
    The applicants contend that s 50(3) of the Trusts Act 1973 imposes on a trustee an “… obligation to get in and obtain payment or transfer of the share or interest or other thing in action upon its falling into possession.”
  3. [50]
    This provision, the respondent submits, does not prescribe such an obligation but instead simply preserves that which exists under the general law. That obligation under general law is said to be subject to limitations. Principally, the respondent submits that where there are no funds in the estate available, then a trustee is not bound to institute proceedings at their own expense unless that lack of funds was brought about by the trustee’s own breach of duty.
  4. [51]
    It was not in dispute between the parties that:
  1. (a)
    there were no assets left in Warren Moodie’s estate after it was administered in 2008,
  1. (b)
    this was through no default of the respondent,
  1. (c)
    there was no obligation on the respondent to retain some part of the estate in order to recover the exit entitlement at some indeterminate time in the future, should intervention have been required, and
  1. (d)
    the applicants did not offer to put the respondent in funds to pursue the exit entitlement.
  1. [52]
    The applicants relied upon Jones v The Public Trustee of Qld & Anor.[4] In that case McPherson JA stated that an executor or administrator of an estate does not cease to be a personal representative after the administration of an estate and remains capable of being the subject of an order pursuant to s 52(2) Succession Act 1981. But his Honour said nothing of an obligation to institute proceedings where there are no funds available in the estate.
  2. [53]
    That scenario was considered by Young J in Re Burbidge (No 2),[5] where his Honour said:

“The executor’s problem is that no beneficiary or potential beneficiary is prepared to indemnify him against any of his costs in any of the proceedings … [T]he executor may very well end up with a bill for legal costs which he will have to defray out of his own pocket …

The main authority is the decision of Gillard J in Re Atkinson deceased [1971] VR 612, 616 where his Honour said:

‘Where there are competing claims ... then, in my opinion, the trustee company was and is not bound to use its own funds to vindicate the testator's rights if any ... If it had obtained an indemnity from the beneficiaries, other considerations might well have applied. But in the absence of any such indemnity and no trust estate to fall back upon, then, in my view, the trustee company would not be bound to commence proceedings at its own expense.’

Gillard J quotes as authority for that proposition the judgment of Kekewich J in Tudball v Medlicott (1888) 59 LT 370, 374 and Gillard J was correct in referring to that as an authority. The same matter was also decided in this Court in Erskine v Pettit (1901) 1 SR (NSW) (Eq) 204, 207 to 208.

The law is that any duty of an executor is subject to the executor either having funds or being properly indemnified for his conduct of court proceedings in which he may be involved.”

  1. [54]
    The judgment of Kekewich J in Tudball v Medlicott to which Young J referred is explicit:[6] 

“In the first place, I know of no rule of the court, and I am satisfied that there is no case which establishes any such rule, or even hints at it, that a trustee is bound to bring an action at his own expense to recover the trust property.”

  1. [55]
    Section 50(3) of the Trusts Act 1973 must be read in the context of the sub-sections that precede it. The effect of s 50(2) is to relieve trustees and executors of certain obligations in respect of trust or estate property before it falls into possession. Section 50(3) states that this does not displace the general duty once the property falls into possession.
  2. [56]
    The respondent was not required to pursue the exit entitlement at its own expense. Accordingly, it has not breached the duty to gather in the assets of Warren Moodie’s estate.

Conclusion

  1. [57]
    The application is dismissed. I will hear from the parties as to costs.

Footnotes

[1] The Uniting Church in Queensland Property Trust (Q) is a body corporate under the Uniting Church in Australia Act 1977.

[2] Trusts Act 1973 s 15; Lewis v Condon (2013) 85 NSWLR 99 at [85].

[3] In Re Campbell (A Bankrupt) [1997] Ch 14 at 17.

[4] [2004] QCA 269.

[5] (NSWSC, 25 June 1993, unreported).

[6] Tudball v Medlicott (1888) 59 LT 370, 374.

Close

Editorial Notes

  • Published Case Name:

    Moodie & Anor v The Public Trustee of Queensland as executor of the estate of Warren Stephen Moodie, deceased

  • Shortened Case Name:

    Moodie v Public Trustee of Queensland

  • MNC:

    [2019] QSC 181

  • Court:

    QSC

  • Judge(s):

    Martin J

  • Date:

    25 Jul 2019

  • White Star Case:

    Yes

Litigation History

Event Citation or File Date Notes
Primary Judgment [2019] QSC 181 25 Jul 2019 Application for determination that respondent breached its duties as executor under s 52 of the Succession Act 1981 (Qld) by failing to get in assets; application dismissed: Martin J.

Appeal Status

No Status