Loading...
Queensland Judgments

beta

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment
  • {solid} Appeal Determined (QCA)

Baldwin v Greenland

 

[2006] QCA 293

Reported at [2007] 1 Qd R 117

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

SC No 9105 of 2005

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

11 August 2006

DELIVERED AT:

Brisbane

HEARING DATE:

22 May 2006

JUDGES:

McMurdo P, Jerrard JA and Helman J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER:

1.Appeal dismissed

2.(By consent) the Public Trustee of Queensland be appointed trustee of the estate of Christopher John Neale

3.Within seven days each party is to file submissions in relation to costs, incorporating any submissions that relate to the issuing of an indemnity certificate.

CATCHWORDS:

SUCCESSION – EXECUTORS AND ADMINISTRATORS – TITLE AND ESTATE – REMOVAL AND DISCHARGE - trial judge ordered that the appellant be removed as executor and trustee of the estate of the respondents’ deceased father – trial judge ordered that a grant of letters of administration to the estate be issued to the Public Trustee – the appellant’s record of mismanagement of the deceased’s affairs during the deceased’s lifetime led trial judge to conclude that removal of the appellant was in the best interests of the deceased’s estate – whether the trial judge needed to find on proper grounds that the appellant was not a fit and proper person to be the executor of the deceased’s estate to make an order under s 6(1) Succession Act 1981 (Qld) for the removal of the executor

Intellectually Disabled Citizens Act 1985 (Qld), s 5, s 32(1A)

Succession Act 1981 (Qld), s 6(1)

Trusts Act 1973 (Qld), s 80

Bates v Messner (1967) 67 SR (NSW) 187, considered

Gowans v Watkins (Unreported, Supreme Court of Victoria, Teague J, 21 February 1996), cited

In the matter of Practitioner X SCT/53, Disciplinary Action Repost, hearing date 9 October 2001, considered

Mavrideros v Mack (1998) 45 NSWLR 80, cited

Williams v Williams [2005] 1 Qd R 105; [2004] QSC 269, cited

COUNSEL:

L A Stephens for the appellant

K T Magee for the respondents

SOLICITORS:

Winchester Young & Maddern for the appellant

Haney Lawyers for the respondent

[1]  McMURDO P:  I agree with Jerrard JA's reasons, subject only to the following brief observations.

[2] Section 6 Succession Act 1981 (Qld) provides:

"6Jurisdiction

(1)Subject to this Act, the court has jurisdiction in every respect as may be convenient to grant and revoke probate of the will or letters of administration of the estate of any deceased person, to hear and determine all testamentary matters and to hear and determine all matters relating to the estate and the administration of the estate of any deceased person; and has jurisdiction to make all such declarations and to make and enforce all such orders as may be necessary or convenient in every such respect.

(2)The court may in its discretion grant probate of the will or letters of administration of the estate of a deceased person notwithstanding that the deceased person left no estate in Queensland or elsewhere or that the person to whom the grant is made is not resident or domiciled in Queensland.

(3)A grant may be made to such person and subject to such provisions, including conditions or limitations, as the court may think fit.

(4)Without restricting the generality of subsections (1) to (3) the court has jurisdiction to make, for the more convenient administration of any property comprised in the estate of a deceased person, any order which it has jurisdiction to make in relation to the administration of trust property under the provisions of the Trusts Act 1973.[[1]]

(5)This section applies whether the death has occurred before or after the commencement of this Act."  (my emphasis)

[3] The discretion conferred upon a judge under s 6 is, by the plain meaning of the emphasized words of the section, in the broadest of terms.  The discretion is a general one:  Noble v State of Victoria.[2]  Whilst the jurisprudence dealing with the court's inherent jurisdiction prior to the enactment of s 6 is relevant to the exercise of the discretion conferred by s 6, I am not persuaded that s 6 is no more than a statutory restatement of the court's inherent jurisdiction.  The proper exercise of the broad discretion conferred on judges by s 6 will always turn on the particular facts of each case.

[4] For the reasons given by Jerrard JA, the primary judge's finding, that the estate would be best served by the appellant's removal as executor and trustee[3] because of his past record of mismanagement of the deceased's affairs during the deceased's lifetime[4] and the judge's implied rejection of the appellant's assurances that he had learnt from his past errors,[5] were well open on the evidence.  Those facts supported the primary judge's exercise of discretion under s 6 to remove the appellant as executor and trustee of the estate and to instead issue a grant of letters of administration of the estate to the Public Trustee of Queensland.  The appeal should be dismissed.

[5] I agree with the orders proposed by Jerrard JA.

[6]  JERRARD JA: This appeal is against an order made on 16 December 2005 (“the second judgment”) removing the appellant Bruce Greenland as executor and trustee of the estate of Christopher John Neale deceased, and ordering that a grant of letters of administration of Mr Neale’s estate be issued to the Public Trustee of Queensland.[6]  The learned judge of this Court, who made those orders (“the second judge”), did so because Mr Greenland’s past record of mismanagement of the deceased’s affairs during the deceased’s lifetime was such as to persuade the judge that in the circumstances Mr Greenland’s removal was in the best interests of the estate.[7]  The issue argued on this appeal is whether that finding and conclusion were sufficient grounds for an order under s 6(1) of the Succession Act 1981 (Qld) for the removal of an executor; or whether it was necessary for the judge to find and have proper grounds to find, that Mr Greenland was not a fit and proper person to be the executor of Mr Neale’s estate.

[7] While the orders made on 16 December 2005 approved a grant of letters of administration to the Public Trustee, they did not appoint the Public Trustee in place of Mr Greenland.  It was common ground between the parties on the hearing of the appeal that that result was an apparent oversight in the drafting of the orders presented to the learned judge, and that if this Court dismissed the appeal, it should order that the Public Trustee replace Mr Greenland as trustee.  By a letter dated 24 November 2005, the Public Trustee consented to being appointed both the executor and trustee of Mr Neale’s estate.[8]  While the Public Trustee did not appear at the hearing of this appeal, it has been supplied with all relevant documents and been kept appropriately informed by the respondents.  It would assist this Court’s administration if, in similar circumstances in which the Public Trustee was content – as here – to abide the order of the Court on the appeal, and anxious to avoid the costs of an appearance, to so inform the Deputy Registrar of Appeals in writing prior to the hearing. 

Mr Greenland’s powers and position

[8] Mr Greenland is a solicitor of this Court who has been in practice since 1965.  He had acted for Mr Neale from February 1994, both for Mr Neale privately and for a company Neale Industries Pty Ltd.  He prepared Mr Neale’s Will executed 12 August 1994, and also an enduring power of attorney which nominated both Mr Greenland and a Mr James Glyn Batstone as Mr Neale’s Attorneys.  Mr Batstone was a friend, advisor, and assistant to Mr Neale in his business interests, as Mr Greenland understood it.  The Will Mr Greenland prepared appointed Mr Batstone and Mr Greenland executors and trustees, and directed that Mr Greenland “shall whether or not he accepts the office of trustee under this my Will be employed as solicitor to my trust estate...”[9]  That Will included specific bequests to each of Mr Neale’s two children Robyn June Neale and Christopher Charles Neale (the respondents to this appeal; Robyn Neale is now Robyn Baldwin), of $150,000, provision for his wife Hazel Neale during her lifetime, and the gift of a unit situated at 1904 Golden Gate, 3422 Gold Coast Highway at Surfers Paradise, to Mr Batstone and his wife.  As to the residue of the estate, the trustees were directed to apply the net income derived from it (after satisfying the provision for Hazel Neale) to the benefit and care of the children being cared for or provided for by the charity known as World Action International Gospel Centre Incorporated for a period of 20 years.  The trustees were directed thereafter to distribute the property and investments still forming part of the deceased’s estate at that time, to organisations of a similar type at the discretion of the trustees. 

[9] The respondents to this appeal, the legatees, foreshadow that they may well challenge the existence of the organisation named as the residuary beneficiary in the Will.  The judgment under appeal records that searches conducted so far have failed to reveal the existence of an entity by that name, although there is an entity “International Gospel Centre Incorporated”, which was represented at the hearing of the application.  That judgment also records that the deceased was a property developer, and that his estate included his shareholding in Neale Industries Pty Ltd, a company which owned land at Coomera of considerable value.

[10]  On 20 August 1995 Mr Neale executed a power of attorney appointing Mr Greenland alone as Mr Neale’s enduring attorney.  On 24 August 1995 Mr Greenland drew up, and the parties executed, an agreement between the legatee Robyn Baldwin (nee Neale), Mr Neale, and other companies within the group controlled by Mr Neale, whereby Robyn (Baldwin) received $450,000 for the sale of her shares in one of those companies, and the settlement of disputes between the parties.  On 24 August 1995 Mr Neale paid his son and daughter (the legatees) the aggregate sum of $800,000 to acquire their small shareholdings in the companies he controlled. That price greatly exceeded the value of the shares; after the purchase he was the sole shareholder in Neale Industries Pty Ltd.

[11]  Mr Neale had been the majority shareholder in the companies Neale Industries Pty Ltd, Neale Holdings Pty Ltd and Neale Properties Pty Ltd.  After purchasing his children’s shares in Neale Industries in August 1995, and becoming the sole shareholder in that company, the only other person with an interest in the other two companies was his wife, who held one share in each.  Mr Neale was the other shareholder.  Mr Neale and a Mr Baker, a chartered accountant, who had provided business and accounting advice to Mr Neale for many years, were the directors of Neale Holdings and Neale Properties between August 1995 and January 1997, and Mr Neale was the only director of Neale Industries until November 1996 when Mr Baker was appointed.  On 15 January 1997 Mr Baker appointed Mr Greenland and Mr Batstone as additional directors of the three companies. 

[12]  By the end of 1995 Mr Neale was incapable of attending to his own business affairs.  It was common ground that Mr Neale had testamentary capacity when the Will was made, but that subsequently he was progressively affected by dementia to the point where he lost that capacity, and the capacity to manage his own affairs.  In November 1995 a Dr Merson, a physician specialising in geriatric medicine, considered that Mr Neale did not then have the capacity to enter into a contract for the sale of real estate.  Mr Neale had been examined in June 1995 by a psychiatrist who considered that Mr Neale did then have testamentary capacity, but that it would deteriorate.  It was shortly after that date that he granted Mr Greenland the enduring power of attorney.

[13]  The psychiatrist who examined Mr Neale in June 1995 and determined that he had sufficient mental capacity to make a Will also concluded that at that time Mr Neale could manage his affairs with the assistance of those upon whom he had placed powers of attorney, and would not be capable of managing those affairs without that assistance.  That position had deteriorated by November 1995, by which time Mr Greenland, Mr Baker, and Mr Batstone between them controlled the three companies and held Mr Neale’s power of attorney.

The first application to remove Mr Greenland

[14]  On 23 April 1998 the respondent Robyn Baldwin applied to the Intellectually Disabled Citizens Council of Queensland (“the IDCC”) for an order that special assistance be provided to Mr Neale pursuant to the provisions of the Intellectually Disabled Citizens Act 1985 (Qld), as then in force.  On 23 June 1998 the IDCC made a determination that Mr Neale be provided with special assistance and that the Public Trustee should manage Mr Neale’s estate.  That was after the legal friend (appointed pursuant to the Public Service Act 1996 (Qld)) notified the Public Trustee, under s 32(1A) of the Intellectually Disabled Citizens Act, that the legal friend was of the opinion that Mr Neale was an intellectually disabled citizen and was (modifying the language of s 32(1A)):

“(a)subject to, or liable to be subjected to, undue influence in respect of [his] estate, or any part thereof, or the disposition thereof; or

(b)otherwise in a position that render[ed] it desirable in [Mr Neale’s] interests or the interests of [Mr Neale’s] dependents that [Mr Neal’s] property should be protected ...”

That notice was given on 21 May 1998, and then on 23 June 1998 the IDCC met and determined that Mr Neale should be provided with the assistance of having his estate managed by the Public Trustee.

[15]  By a process of appeal provided for in the Intellectually Disabled Citizens Act, Mr Greenland and Mr Batstone brought an appeal against that determination by way of hearing de novo before the Trial Division of this court, (“the first appeal”) and the central issue identified was whether a decision maker (the Council, and then in its place on that appeal the learned judge) could properly hold any of those described opinions in s 32(1A), quoted above.  The learned judge hearing the appeal concurred with the decision made by the IDCC, and dismissed the appeal.

The first judgment

[16]  That decision, delivered on 18 April 2000, was not further appealed.  The judgment (“the first judgment”) records that the allegations ultimately heard on that appeal had become a charge that the appellants’ management of Mr Neale’s affairs was imprudent and/or improvident in four respects:

(i) payment of $150,000 to the Australian Tax Office (ATO) on Mr Greenland’s behalf;

(ii)transfer of a home unit owned by Mr Neale to Mr Batstone and his wife;

(iii)the non-development of real estate on the Gold Coast; and

(iv)inadequacy of accounting records.

Payment of tax

[17]  As to the first matter, the judgment records that the ATO had demanded $200,000 from Mr Greenland by way of unpaid income tax, penalties and interest, in late 1996.  Mr Greenland could not pay and judgment was entered against him in the Supreme Court.  Bankruptcy appeared inevitable, and Mr Greenland told Mr Batstone and Mr Baker of his problem.  Mr Greenland’s evidence on that first appeal was that those two men suggested that “the company” would lend Mr Greenland enough money to discharge the ATO debt.  While Mr Greenland had reminded them that the Queensland Law Society disapproved of solicitors borrowing from clients, Mr Baker and Mr Batstone told Mr Greenland shortly after that they had decided to pay the ATO the amount required by it from company funds, apparently those of Neale Industries, and that the amount would be accounted for by outstanding fees due.  These were director’s fees due to Mr Greenland up to that time, and the balance was retainer in advance. 

[18]  Mr Baker managed to negotiate with the ATO on Mr Greenland’s behalf and reduced the amount owing to $150,000, in full satisfaction of the judgment.  That was the sum Neale Industries paid the ATO on Mr Greenland’s behalf.  Mr Greenland prepared a memorandum of fees to reconcile payment of that sum with what he was “owed”.  That document showed that he had performed $74,008 worth of professional work for which he had been paid only $26,722.86.  The payment of $150,000 discharged the balance of that debt, and of a further debt of $56,000 said to be due in respect of director’s fees earned by Mr Greenland between “1995–31.1.97”.[10]  Further, the payment provided an advance of $46,714.86 against fees to be earned. 

[19]  The reasons for the first judgment record what the judgment describes as the following disturbing features of that transaction:

 Mr Greenland did not become a director of any of the companies until 15 January 1997; and if, as asserted, he was a de facto director after 1995, he had been careless regarding the formalities of the appointment and giving appropriate notice to the Australian Securities Commission;

 no record of the transaction had been shown to exist in any of the companies’ accounts;

 the appellant did not produce a directors’ minute of the transaction from the company’s records. The judge described the transaction as effectively concealed in the accounting documents, namely the balance sheets, profit and loss accounts, statement of loan accounts, or notes to the accounts;

 there was the unusual feature of the payment of director’s fees a year in advance; and

 Mr Greenland’s explanation of the payment, which is contained in a letter he wrote on 18 December 1998 to the IDCC, omitted all reference to his impending bankruptcy and dire need for financial rescue, and described the payment of $56,000 as being for “fees due on group matters from 1.9.95–31.1.97”, which the learned judge considered implied that the money was due by way of legal fees, and not from director’s fees.

Transfer of the unit

[20]  The next matter was the transfer of the unit to the Batstones.  They had been living in it, and his Will contained a gift of the unit to them.  In August 1995 the Batstones and the Neales were to leave on an extended trip overseas, and, on Mr Greenland’s evidence in both appeals, shortly before they left Mr Greenland prepared a memorandum of transfer of the unit in favour of the Batstones, which Mr Neale signed.  Nothing further was done at that time to effect a conveyance of that property, which was to be a gift, although the transfer showed that it was for a consideration of $140,000.  Mr Greenland did not witness Mr Neale’s signature at the time Mr Neale signed the transfer.  Some months later, on 20 December 1995, Mr Greenland did sign the transfer as witness to that signature, and inserted that date as the execution date.  According to Mr Greenland, the reality was that it was executed in August 1995, when Mr Neale would have had the mental capacity to make that decision.  The Batstones later sold that unit in or about May 1996.

[21]  The learned judge conducting the first appeal doubted that Mr Neale was capable of spontaneously deciding to make a gift of the unit in August 1995.  Mr Greenland’s evidence by affidavit was that the pressure of business had caused him to overlook the attestation and dating of the transfer when Mr Neale executed it, and that he discovered the mistake after the Batstones went overseas.  When asked later, by a solicitor from the office of the Official Solicitor to the Public Trustee, why the document had not been presented for stamping until December 1995, Mr Greenland made what he later described as an unfortunate “tongue in cheek” answer, to the effect that he was attempting to avoid a late penalty on the stamping.  While he disavowed that explanation as being a joke on the first appeal, the first judgment noted that Mr Greenland did not actually offer any explanation for post-dating the document. 

[22]  The learned judge hearing the appeal was concerned about that transaction too because:

 when the gift to the Batstones was perfected Mr Neale was unable to understand or control his business affairs;

 assuming Mr Neale signed the transfer in August 1995, he would have needed the assistance of Mr Greenland and/or Mr Batstone to know what he was doing and whether he should do it;

 the transaction effected a substantial and immediate benefit upon Mr Batstone and his wife;

 Mr Greenland’s discharge of his professional duties was lax, at the very least, because it was difficult to understand how Mr Greenland could have overlooked the need to date the transfer and witness the transferor’s signature at the time Mr Neale signed the document; and

 it was just as hard to understand why the gift should be made as a matter of urgency shortly before the two couples went overseas.

Slow progress of land development

[23]  The next matter was the lack of progress, or accounting for the progress made, in the development of two blocks of land with a frontage to the Coomera River owned by Neale Industries, and zoned “Waterfront Industries”.  Mr Baker and Mr Greenland had described an intent to carry to fruition Mr Neale’s expressed interest, before his debilitating illness, in developing that land as a site for maritime industries.  The learned judge on the first appeal held that any such development must be, to some extent, speculative, and it appeared to be the only ongoing business transacted by the companies, in which they incurred both Mr Baker’s and Mr Greenland’s not inconsiderable fees.  Neither Mr Batstone nor Mr Greenland seemed willing or able to describe to the learned judge what they intended with respect to that development, and the first judgment records that the only detail to emerge was that a large shed had been bought, transported to the site, and rented out.  The rental income was small, and Mr Hayden Batstone, son of the appellant Mr Batstone, lived rent free in a modest cottage on one of the blocks.  Hayden Batstone was paid over $30,000 a year for the services he provided with respect to the proposed development, although what he did, how long it took him, and what benefit was derived by either Mr Neale or his companies, was not explained to the judge.

Accounting inadequacies

[24]  Then there was the matter of the inadequacy of accounts.  A large number of properties privately owned by Mr Neale had been sold since December 1995, and the proceeds of sale banked to an account conducted by Neale Industries with the National Australia Bank.  The accounts of Neale Industries did not record the fact that this money, which that company received was held on account of, or as a loan from, Mr Neale, and there were no sets of accounts indicating clearly that monies of Mr Neale had been paid to that company.  Further, Mr Neale, as at December 1995, had operated an account of his own with the National Australia Bank, which had had funds in credit exceeding $100,000, and into which that money of his could have been paid.  The judge considered that Mr Baker’s evidence about the accounts was unsatisfactory, and that Mr Baker appeared either unfamiliar with the detail of Mr Neale’s financial affairs or unwilling to be frank about them.  Further, it was clear that neither Mr Greenland nor Mr Batstone had given the slightest attention to what was revealed or not revealed in the accounts Mr Baker prepared, or what should be revealed by those, regarding Mr Neale’s assets, liabilities, income and expenditure.  Finally, Mr Batstone’s daughter was employed by Neale Industries to keep the day to day accounts for the three companies, and the only substantial activity that needed accounting services was the proposed development of the Coomera land.

Conclusions on the first appeal

[25]  The learned judge accepted the submission that s 5 of the Intellectually Disabled Citizens Act expressed an intention that the affairs of intellectually disabled people should be left in the hands of those chosen for that purpose by the person – now intellectually disabled – before the onset of incapacity, and that Mr Neale’s choice of the appellants in that court as his attorneys ought to be respected, with neither the court nor the IDCC interfering unless there was a sufficient reason for doing so.  However, the judge held there was such sufficient reason shown for making the appointment of the Public Trustee as manager.  That was because:

“The appellants have not protected Mr Neale’s interests or estate as jealously as they should, or with reasonable diligence.  The first two transactions discussed [payment of Mr Greenland’s ATO debt and the transfer of the home unit] are in some respects questionable.  Even if the transactions themselves escape criticism the manner in which they were performed was questionable.  Both appellants have obtained substantial financial benefit from their principal’s property.... If the appellants have not benefited themselves from Mr Neale’s property each has conferred a benefit on the other.  Each accepted the benefit knowing the circumstances in which it was conferred.[11]  [My italics].

The judgment went on to record that it was of concern to the judge that the development (at Coomera) meandered on without a budget and with no date contemplated for completion, and that while it continued Mr Greenland’s legal fees and Mr Baker’s accountancy fees were incurred, and employment provided for Mr Batstone’s two children.  No one else appeared to benefit, and both appellants had confused the receipt and application of Mr Neale’s money.  Equally disturbing was the lack of clear and comprehensible accounts.

[26]  In a telling finding, not challenged on this appeal, the learned judge concluded:

“In summary the appellants

(a)have prospered too greatly from their propinquity to Mr Neale’s property;

(b)have not attended with sufficient care to transacting or recording business on Mr Neale’s behalf.”[12]

Treatment of those findings

[27]  It was agreed on this appeal that it was appropriate for the second judge, and this Court, to accept the facts found and described in that first appeal, and this Court was expressly invited by Mr Stephens, counsel for Mr Greenland, not to go behind the reasoning in that judgment, which was not challenged.  Mr Stephens submitted that his client could nevertheless succeed on this appeal, while accepting that description of relevant facts, findings, and reasons.  His submission placed significant weight on the statement in the first judgment that:

“Counsel for the IDCC expressly disavows any submission that the appellants have acted dishonestly, or even improperly, and I make no such finding.”[13]

[28]  Mr Greenland is justified in being reassured by that statement.  But the facts recited and findings that were made show very poor management of Mr Neale’s affairs and property, and also that Mr Greenland either had not understood or had ignored the obligations imposed on him as a solicitor, a director, and a holder of a power of attorney, and, significantly, the obligations derived from the fiduciary nature of each of those relationships.  As a solicitor, he inserted what he said was a false date in a significant transaction of gift without ever providing any sensible explanation, and failed to insert the correct date, or to witness a document on the date it was signed by a client with failing intellectual powers.  As a solicitor, who owed a tax debt, he had at best let it be paid by a client company, which he at least indirectly controlled.  As a director, he charged a company for director’s fees when he was not recorded as a director, and also for fees in advance, and concealed the transaction, or took no steps to record it.  As to the third relationship, as the holder of Mr Neale’s power of attorney, he got the $150,000 from a company whose directors he could dismiss or appoint, and had not ensured that $150,000 transaction was revealed in the accounts of the company in which Mr Neale was the sole shareholder.  He had not ensured that Mr Neale’s money was properly receipted and identified, or that the company’s accounts were properly kept.  Mr Stephens accepted on this appeal that all of those conclusions about Mr Greenland’s imperfect performance of fiduciary obligations were unavoidable.

The Solicitors’ Complaints Tribunal

[29]  In answer to those conclusions, Mr Stephens pointed to the reasons for judgment, and findings, of the Solicitors’ Complaints Tribunal, which on 9 October 2001 heard three charges against Mr Greenland.  The first was that he had inserted a date of execution on a form of transfer which he knew to be false (the insertion of the date 30 November 1995 on the transfer signed by Mr Neale on 24 August 1995); the second was that he submitted the transfer for stamping in December 1995 knowing that it had been executed in August 1995 and that penalty stamp duty was likely to be assessed if the Stamps Office was aware of the actual date of the transfer; and the third was that in or about 1997 he had accepted payment of the sum of $56,000 from his client Neale Industries Pty Ltd in respect of fees for his acting as a director from September 1995 to January 1997, in circumstances in which he was not entitled to that payment. 

[30]  Before that Tribunal Mr Greenland admitted the facts alleged in those charges, and the Tribunal found him guilty of professional misconduct.  It fined him a total of $2,000 and ordered that he pay the costs of the Queensland Law Society Inc.  Mr Stephens pointed to the statement in the Tribunal’s reasons[14], namely that there was no suggestion of fraud in the case, and that the only apparent consequence of inserting the incorrect date in the document was that a late stamping penalty of about $50 was avoided.  Those reasons also record that regarding the third charge, by agreement there was no positive assertion of dishonesty in Mr Greenland, and that it appeared to the Tribunal that the issue was the capacity in which Mr Greenland received the fee, not the quantum of the fee.  The “company” had an expectation that it would pay Mr Greenland for work done, which was done satisfactorily, but Mr Greenland had received money in his role as a company director when he was not entitled to receive it.

[31]  Those reasons, which explain why relatively small penalties were imposed on Mr Greenland, are generally uncritical of him.  Sympathetically expressed reasons by that Tribunal do not affect the conclusion that Mr Greenland had acted in breach of his fiduciary and other obligations in three different relationships in and about the affairs of Mr Neale, during the latter’s lifetime. 

The second application to remove Mr Greenland

[32]  Mr Neale died on 20 July 2005, aged 91.  Mr Batstone renounced his right as a nominated executor and trustee to probate and execution of the Will, but Mr Greenland did apply for probate.  The respondents objected to a grant of probate being made to him, on the ground that he demonstrated unfitness to be the estate’s executor, and applied to the Court for an order that he be removed as executor and trustee, and for an order appointing the Public Trustee as administrator and trustee.  At the hearing on 11 November 2005, the respondent legatees argued that Mr Greenland’s conduct, which had resulted in his removal from the management of Mr Neale’s estate while he was alive, was such that Mr Greenland ought not to be allowed to act as the executor and trustee of the deceased’s estate because:

 the Will was executed before Mr Greenland’s conduct resulting in his removal from the management of Mr Neale’s affairs; and

 that conduct occurred after Mr Neale had lost the capacity to alter his Will to remove Mr Neale as executor and trustee.

Jurisdiction and power

[33]  The statutory power to remove a trustee is in s 80 of the Trusts Act 1973 (Qld).  The section reads:

80 Power of court to appoint new trustees

(1)The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. 

(2)In particular and without prejudice to the generality of subsection (1) the court may make an order appointing a new trustee in substitution for a trustee who desires to be discharged, or who is convicted of a crime or misdemeanour, or is a bankrupt, or is a corporation that is under official management or is in liquidation or has been dissolved, or who for any other reason whatsoever appears to the court to be undesirable as a trustee.”

[34]  That section expresses the power very widely, perhaps concurrent with the inherent jurisdiction of the court.  The same applies to removal of an executor.  Section 6 of the Succession Act 1981 (Qld) provides:

6  Jurisdiction

(1)Subject to this Act, the court has jurisdiction in every respect as may be convenient to grant and revoke probate of the will or letters of administration of the estate of any deceased person, to hear and determine all testamentary matters, and to hear and determine all matters relating to the estate and the administration of the estate of any deceased person; and has jurisdiction to make all such declarations and to make and enforce all such orders as may be necessary or convenient in every such respect.”

The second judgment

[35]  The learned judge hearing the application for Mr Neale’s removal as executor published reasons for judgment on 21 November 2005, expressing the conclusion that the second judge was satisfied that the estate would be best served by Mr Neale’s removal.  Some further reasons, and costs orders, were published on 12 and 16 December 2005.  The reasons first published record the history of Mr Greenland’s removal from management of Mr Neale’s affairs during the latter’s lifetime, and that by mid-January 2001 Mr Batstone, Mr Baker, and Mr Greenland had all resigned as directors of Neale Industries, and that Mr Batstone’s son Hayden, and an officer of the Public Trustee, had been appointed as directors of that company instead.  The Public Trustee had undertaken to provide a full accounting of the assets and current liabilities, to Mr Greenland if remaining executor, on receipt of a certified copy of the probate document. 

[36]  The judgment now appealed repeated the conclusion reached in Williams v Williams [2005] 1 Qd R 105,[15] that the Supreme Court has power under s 6 of the Succession Act to remove an executor who has not taken out probate, as well as power (before probate) to remove a trustee and appoint a substitute trustee under s 80(1) of the Trusts Act.  Those conclusions are not challenged on this appeal.  The second judgment records the fact of the finding in the Solicitors’ Complaints Tribunal that Mr Greenland was guilty of three counts of professional misconduct in relation to Mr Neale’s affairs.  It records what is described therein as three aspects of Mr Greenland’s stewardship of Mr Neale’s affairs which resulted in Mr Greenland being removed from their management, those being the transfer of the unit to Mr and Mrs Batstone, the payment of taxation owing by Mr Greenland by Neale Industries, and the intermingling of funds.  The second judgment also records that dishonesty was not alleged against Mr Greenland, but rather mismanagement and failure to exercise sufficient care in relation to Mr Neale’s affairs.  It then describes the circumstances of the transfer of the unit, the payment of the taxation, and the sale of properties Mr Neale owned, and then the depositing of proceeds of sale to accounts other than that of the entity or person who was the vendor. 

[37]  It records that Mr Greenland’s counsel conceded that Mr Greenland had mismanaged Mr Neale’s affairs during Mr Neale’s lifetime, and that counsel had stressed that there was no allegation or finding of dishonesty against Mr Greenland.  Those same submissions were repeated on appeal.  Counsel submitted below and on appeal that past problems had been rectified and proper accounting procedures put in place, and there was no likelihood of a recurrence of that conduct.

[38]  In a significant passage, the learned second judge held:

“The Court’s overriding concern is the due administration of the estate in the interests of creditors and beneficiaries.  The estate is a large one, and its administration potentially complex. The respondent is a 66 year old man and with 40 years’ experience as a solicitor.  That he was so careless in the management of the deceased’s affairs during his lifetime that he was removed in favour of the Public Trustee does not augur well for his future performance as executor and trustee.  The Court has no more than his assurances that he has seen the error of his ways and that there will be no repetition of past failures.  In any event, given his age, it seems unlikely that in 20 years’ time he would still be the trustee to exercise the power of appointment over the residuary estate.  In the circumstances I am satisfied that the estate would be best served by his removal as executor and trustee.”[16]

[39]  On this appeal Mr Stephens described the first sentence in that paragraph as a “motherhood” statement, and submitted that that was not the test to be applied when deciding whether or not to remove the trustee.  Regarding the sentence beginning “[t]hat he was so careless”, Mr Stephens submitted, in essence, that while Mr Greenland was properly removed as Mr Neale’s attorney, it did not necessarily follow that he had to be removed as executor or trustee.  I agree, but that submission does not adequately respond to what the learned judge said.  Mr Stephens submitted that Mr Greenland should still succeed on appeal, accepting as accurate all of the statements in the quoted paragraph – other than the last – because of the absence of any previous finding of dishonesty, and because of the absence of a finding that Mr Greenland was not a fit and proper person to be executor or trustee.

[40]  In the reasons published on 12 December 2005 the learned judge specified, as Mr Stephens submitted, that Mr Greenland was being removed as executor and trustee not because of misconduct in the administration of the estate or in consequence of any finding of dishonesty, but because his past record of mismanagement of the deceased’s affairs during his lifetime was such as to persuade the judge that his removal was in the best interests of the estate.  As a matter of logic I consider that last conclusion to be inescapable, but Mr Stephens submits that that inescapable conclusion was not enough.

[41]  His submission referred to Mavrideros v Mack (1998) 45 NSWLR 80, and to the citation by Sheller JA at 101-102, giving the judgment of the court, in which His Honour quoted in turn from Asprey JA in Bates v Messner (1967) 67 SR (NSW) 187 at 191-192, where the following appears:

“....that the essential basis of the exercise of the court’s inherent jurisdiction to revoke a grant of probate is that emphasised by     Jeune P, namely, that the real object which the court must always keep in view is the due and proper administration of the estate in the interests of the parties beneficially entitled thereto on the part of the person to whom and by whose oath as to the faithful performance of his duties the court has been induced to entrust the office of executor.  The terms used in some of the previously decided cases with relation to the circumstances which have given rise to the exercise of the jurisdiction of revocation, such as ‘abortive’, ‘inefficient’, ‘useless’ or ‘ineffectual’, are simply descriptive of a situation in which the court has been persuaded to the view that its grant, which was predicated on the oath of the executor named in the will that ‘he will pay all the just debts and legacies of the said deceased so far as the estate of the said deceased will extend and the law shall bind him, and that he will otherwise well and faithfully administer the said estate according to law; and that he will render a just and true account of his administration’ has been circumvented by a breach of that oath which is in effect an undertaking to the court making the grant.  I shall make no attempt to define all circumstances which may attract the exercise of the court’s jurisdiction, but where circumstances clearly appear to have arisen after a grant of probate which impel the court to the firm conclusion that the due and proper administration of an estate has either been put in jeopardy or has been prevented either by reason of acts or omissions on the part of the executor or by virtue of matters personal to him, for example, mental infirmity, ill health, or by virtue of the proof of other matters which establish that the executor is not a fit and proper person to carry out the duties which he has sworn to the court that he will perform, the court may exercise its inherent jurisdiction to revoke the grant.”

[42]  Mr Stephens submitted that that decision, upon which he relied, suggested a threefold or three step test, that the first two could have no application here, and that the third – proof of matters establishing that Mr Greenland was not a fit and proper person to carry out the duties of executor and trustee – had not been found by the learned judge.  Any lesser finding was insufficient.

[43]  Ms K T Magee for the legatees, agreed that the learned judge had not gone so far as to find that Mr Greenland was not a fit and proper person, but submitted that that finding was not necessary.  She argued that it was necessary, and sufficient, for the judge to find that Mr Greenland’s conduct (in relation to his prior management of that same estate which he now sought to administer) fell so significantly short of the appropriate standard as to give a real apprehension that the estate would not be best administered by Mr Greenland, and that it was appropriate that he be removed.   I agree with that submission, because the ultimate basis for the exercise of the statutory restatement in s 6 of the Succession Act of the court’s inherent jurisdiction is the due and proper administration of the estate. 

[44]  The jurisdiction, both statutory and inherent, is a supervisory and a protective one.  It is always appropriate and necessary for a court asked to exercise it to have regard to the testator’s wishes as to the identity of an executor or trustee.  The testator’s choice may be based on loyalty, or on respect, or on necessity, or on the profession of the chosen person, or on other matters the testator knew about the chosen person; the reason for the choice might never be clear to a court.  The overriding assumption must be that the testator thought the person chosen was worthy of trust, even when well aware when making a choice of existing hostility (from family members) toward the chosen executor or trustee, or of other grounds for doubt about the wisdom of the choice.  The decision in Gowans v Watkins,[17] to which Mr Stephens referred, is an example of a court respecting a testator’s wishes, where no great mischief in administering the estate had been done by the person chosen by the testator, and where there were serious family hostilities.  But the overriding object of the power remains the due and proper administration of estates. 

[45]  Where circumstances have clearly arisen before a grant of probate, which impel a court exercising this jurisdiction to a firm conclusion that the due and proper administration of an estate would be put in jeopardy if a particular person were executor or trustee, it can properly exercise the jurisdiction to remove that person as either.  That is particularly so where, as here, the testator’s declining mental capacities prevented knowledge of those circumstances being within the testator’s grasp before the testator could act to remove that person.  There were sufficient grounds for the described firm conclusion in this matter, and therefore proper reasons for making the order appealed, and I would dismiss the appeal.  It is unnecessary to say specifically whether Mr Greenland is not a fit and proper person to carry out the duties of executor, because the Court was not asked to make that finding.

[46]  I would order that:

 the appeal be dismissed;

 (by consent) the Public Trustee be appointed trustee of the estate of Christopher John Neale; and

 the appellant pay the respondents’ costs of the appeal to be assessed on the standard basis. The difference if any between these costs and the respondents’ indemnity costs to be paid from the estate of Christopher John Neale.

[47]  HELMAN J:  I agree with the orders proposed by Jerrard JA and with his reasons.

Footnotes

[1]Relevantly s 80 Trusts Act 1973 (Qld) provides:

"Power of court to appoint new trustees

(1)  The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.

(2)  In particular and without prejudice to the generality of subsection (1) the court may make an order appointing a new trustee in substitution for a trustee who desires to be discharged, or who is convicted of a crime or misdemeanour, or is a bankrupt, or is a corporation that is under official management or is in liquidation or has been dissolved, or who for any other reason whatsoever appears to the court to be undesirable as a trustee.

...".

[2][2000] 2 Qd R 154, McPherson JA, [18] (McMurdo P agreeing).

[3]Baldwin & Neale v Greenland [2005] QSC 386; SC No 9105 of 2005, 21 November, 12 December and 16 December 2005, [21].

[4]Above, [28].

[5]Above, [21].

[6] Baldwin & Neale v Greenland [2005] QSC 386.

[7] AR 513 at [21] of the reasons for judgment published on 21 November 2005 and AR 520, at [28] of the further reasons and costs orders published on 12 December 2005.

[8] Reproduced at AR 488.

[9] The Will is reproduced at AR 454-460.

[10] This description of the facts is taken from the judgment in Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84; Appeal No 3511 of 1999, 18 April 2000.

[11] Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84, at para [33].

[12] Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84, at para [37].

[13] Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84, at para [31].

 

[14] In the matter of Practitioner X SCT/53, Disciplinary Action Report, hearing date 9 October 2001.

[15] [2004] QSC 269; BS No 2396 of 2004, 26 August 2004.

[16] Baldwin & Neale v Greenland [2005] QSC 386 at para [21]; BS No 9105 of 2005, 21 November 2005.

[17] (Unreported, Supreme Court of Victoria, Teague J,BC No 9601257, 21 February 1996).

Close

Editorial Notes

  • Published Case Name:

    Baldwin and Neale v Greenland

  • Shortened Case Name:

    Baldwin v Greenland

  • Reported Citation:

    [2007] 1 Qd R 117

  • MNC:

    [2006] QCA 293

  • Court:

    QCA

  • Judge(s):

    McMurdo P, Jerrard JA, Helman J

  • Date:

    11 Aug 2006

Litigation History

Event Citation or File Date Notes
Primary Judgment [2005] QSC 386 - -
Appeal Determined [2007] 1 Qd R 117 11 Aug 2006 -

Appeal Status

{solid} Appeal Determined (QCA)