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Bauer v Hussey[2010] QSC 269

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Bauer & Ors v Hussey & Anor [2010] QSC 269

PARTIES:

BREN OWEN BAUER, ROD ANDREW BAUER AND GAY ANN O'NEILE
(plaintiffs)

v

CAROLEANN HUSSEY AND HELEN RAE GERDEI
(defendants)

FILE NO:

BS 6029 of 2008

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

30 July 2010

DELIVERED AT:

Brisbane 

HEARING DATE:

22 March 2010; 23 March 2010

JUDGE:

Daubney J

ORDER:

  1. It is declared that the defendants hold the proceeds of the sale of the land described as Lots 5 and 6 on RP 89031, County Canning, Parish Mooloolah, Title References 13551029 and 13551030 (Buderim property) on a constructive trust for the plaintiffs and the defendants as tenants in common in equal shares.
  1. It is declared that the plaintiffs, as the surviving trustees of the estate of Walter Ernest Bauer hold the right, title and interest to Lot 44 on Building Units Plan 5473, Title Reference 64202000 (Mooloolaba unit) for the plaintiffs and defendants as tenants in common in equal shares, not only pursuant to the provisions of the will dated 22 August 1984 of the late Walter Ernest Bauer, but also on a constructive trust for the plaintiffs and the defendants as tenants in common in equal shares.
  1. Title to the Mooloolaba unit shall be conveyed to the plaintiffs and defendants as tenants in common in equal shares, absolutely.
  1. The defendants shall pay the plaintiffs three fifths of the net proceeds of sale of the Buderim property together with any interest earned by the investment of that portion of the sale proceeds.
  1. The counterclaim is dismissed.
  1. I will hear the parties as to costs.

CATCHWORDS:

SUCCESSION – WILLS, PROBATE AND ADMINISTRATION – THE MAKING OF A WILL – TESTAMENTARY INSTRUMENTS – JOINT AND MUTUAL WILLS – where the testators made wills in corresponding terms – where the first testator died without revoking his will – where the second testator revoked their original will – whether there was an agreement not to revoke the wills – whether the second testator held the property on constructive trust for the beneficiaries of the mutual wills

Succession Act 1981 (Qld), s 52

Aslan v Kopf [1995] NSWCA 26, cited

Bigg v Queensland Trustees Limited [1990] 2 Qd R 11, applied

Birmingham v Renfrew (1937) 57 CLR 666, applied

Dufour v Pereira (1769) 21 ER 332, applied

Gray v Perpetual Trustee Co Ltd [1928] 40 CLR 558, applied

McLauchlan v Prince [2001] WASC 43, cited

Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146, cited

Re Cleaver [1981] 1 WLR 939, cited

Re Wood deceased. Ebert v Union Trustee Company of Australia Limited [1961] Qd R 375, cited

COUNSEL:

M Willmott SC and R Whiteford for the plaintiffs

DR Cooper SC and J Nevison for the defendants

SOLICITORS:

McCullough Robertson as town agents for Dunstan Legal for the plaintiffs

Kilmurray Solicitors for the defendants

Background facts

  1. Walter Ernest Bauer (“Walter”) and Thelma May Bauer (“Thelma”) were married in 1967, this being the second marriage for each. The plaintiffs (Bren Owen Bauer (“Bren”), Rod Andrew Bauer (“Rod”) and Gay Ann O'Neile (“Gay”)) are Walter’s only children from his first marriage and the defendants (Caroleann Hussey (“Caroleann”) and Helen Rae Gerdei (“Helen”)) are the only children of Thelma’s first marriage.
  1. On 17 December 1973, Thelma became the sole registered proprietor of Lots 5 and 6 on Registered Plan 89031, County Canning, Parish Mooloolah, Title References 13551029 and 13551030, which were adjacent blocks of vacant land at Gilbert Street, Buderim (“the Buderim property”).  In about 1984, a house was built on the Buderim property.  This became Walter and Thelma’s principal place of residence.
  1. On 27 June 1984, Walter was registered as the sole proprietor of Lot 44 in Building Unit Plan No. 5473 Title Reference 64202000 which was a unit in a complex situated at Mooloolaba Esplanade, Mooloolaba (“the Mooloolaba unit”).  Until the time of his death in 1992, Walter leased the Mooloolaba unit to tenants and received rents from the property.  The Mooloolaba unit was still registered in his name when he died.
  1. As at 1984, when Walter and Thelma signed the wills to which I will shortly refer, they had no assets of substantial value other than the Buderim property registered in Thelma’s name and the Mooloolaba unit registered in Walter’s name.
  1. On 22 August 1984, Walter executed a will in which he revoked all prior wills and appointed Thelma and his children (Bren, Rod and Gay) as his executors and trustees. The will then relevantly provided:
  1. I GIVE DEVISE BEQUEATH AND APPOINT all property both real and personal in my ownership or disposition or over which I have power of appointment unto and to the use of my Trustees upon and with and subject to the following trusts powers and provisions namely: UPON TRUST with power to sell call in and convert into money the same, but so that my Trustees shall have power to postpone such sale calling in and conversion for such period as they, without being liable to account, may think proper but only so far as advisable for the more advantageous realisation thereof.
  1. My Trustees shall after payment of all my just debts and funeral and testamentary expenses (and the Duties upon all successions under this Will) hold the residue of my estate UPON THE FOLLOWING TRUSTS:

(a) To pay the income thereof to my wife THELMA MAY BAUER,

(b) After the death of my said wife to divide the capital and income of my residuary estate equally between the children of my said wife and myself, namely BREN OWEN BAUER, ROD ANDREW BAUER, GAY ANN BAUER, CAROLEANN HUSSEY and HELEN RAE GERDEI share and share alike but if any child of my said wife or of mine dies before attaining a vested interest leaving children then those children shall on attaining their majority or marry under that age take equally the share which his her or their parent would have otherwise taken.

  1. My Trustees shall have the following powers and be under the following obligations:

(a) To accept the instructions of my said wife as to the handling of my estate during her lifetime or to prior surrender in her absolute discretion.

(b) To agree and settle accounts and make and accept compromises with all persons liable to account to my estate and for that purpose to execute effectual receipts releases and discharges.

(c) To determine in all cases of doubt whether any moneys coming into their hands are capital or income and to apportion blended funds and every such determination or appointment shall be final and binding on all persons beneficially interest in this my Will.

(d) To retain subject to the trusts of this my Will all or any of my assets in the form in which they shall find the same at the date of my death and such assets shall be deemed for all purposes to be authorised trustee investments and to accept or take up any bonus shares or other rights or benefits issued by any Company in which my estate may be interest or concerned and to determine whether such bonus shares or other rights are capital or income notwithstanding the decision of the company in such matter.

(e) Subject to the trusts in respect of specific parts of my estate to sell (either for cash or on terms) mortgage transfer manage repair maintain lease (for terms of lease not more than five years at a time) or otherwise deal with the whole or any part or parts of my real or personal estate and to do all acts and execute all documents necessary or expedient to carry every such transaction into full effect.

(f) To apply the whole or any part of the capital or income of the expectant or contingent share of any beneficiary under this my Will for or towards the maintenance education benefit or advancement in life for the time being of such infant beneficiary, and for such purposes either to pay the same direct or to pay the same or any part thereof to the Guardian or Guardians for the time being of such infant beneficiary without being bound to see to the application thereof.”

  1. On the same day, Thelma executed a will in which she revoked her previous wills, appointed Walter and her children (Caroleann and Helen) as her executors and trustees and gave her estate to her executors and trustees on trust for Walter for life with the remainder to the plaintiffs and the defendants in equal shares. The terms of this will were identical to Walter’s and were prepared by the same firm of solicitors.
  1. The plaintiffs allege[1] that these corresponding wills were entered into in accordance with an oral contract, understanding or arrangement under which Walter and Thelma each agreed that:
  1. Thelma would not in her lifetime sell, encumber or otherwise dispose of the legal or beneficial title to the Buderim property;
  1. Walter would not in his lifetime sell, encumber or otherwise dispose of the legal or beneficial title to the Mooloolaba unit;
  1. each would make a will in which they would appoint the other and their respective children their executors and trustees, settle their entire net distributable estate on their executors and trustees for the other for life with remainder to the plaintiffs and the defendants in equal shares;  and
  1. neither would revoke that will.
  1. Walter died on 3 December 1992 without having revoked his 1984 will, or having sold, encumbered or otherwise dealt with the Mooloolaba property.
  1. Thelma executed a will on 31 March 1995 in which she revoked all prior wills, appointed Caroleann and a friend, George Henry Paul, as her executors and trustees and left her estate to the plaintiffs and defendants in equal shares.
  1. On 30 September 1996, Thelma executed a memorandum of transfer by which she transferred title in the Buderim property to Caroleann and Helen as tenants in common in equal shares for the stated consideration of “natural love and affection”. The transfer was lodged for registration in the Department of Natural Resources and Water on 9 April 1997 and registered on 15 April 1997.
  1. On 31 January 1997, Thelma executed a further will in which she revoked all former wills, appointed Caroleann and George Henry Paul as her joint executors and gave her share in the Mooloolaba property to the plaintiffs and the residue of her estate to the defendants. Thelma died on 22 April 2007.
  1. The defendants sold the Buderim property on 24 December 2009 for $840,000.00. The sum of $494,847.96, representing a three fifths share of the net sale proceeds, is being held in trust by the defendants’ solicitors pending the outcome of this proceeding.
  1. The plaintiffs claim the following relief:
  1. A declaration that the defendants hold the proceeds of the sale of the land described as the Buderim property on a constructive trust for the plaintiffs and defendants as tenants in common in equal shares.
  1. A declaration that plaintiffs, as the surviving trustees of the estate of Walter, hold the right, title and interest to the Mooloolaba unit for the plaintiffs and defendants as tenants in common in equal shares, not only pursuant to the provisions of Walter’s will dated 22 August 1984, but also on a constructive trust for the plaintiffs and defendants as tenants in common in equal shares.
  1. An order that the title to the Mooloolaba unit be conveyed to the plaintiffs and defendants as tenants in common in equal shares, absolutely.
  1. An order that the defendants pay the plaintiffs three fifths of the net proceeds of sale of the Buderim property together with any interest earned by the investment of that portion of the sale proceeds.
  1. The defendants have counterclaimed, asserting that the plaintiffs have neglected to perform their duties in administering Walter’s estate by failing to sell the Mooloolaba property as soon as possible, failing to distribute the proceeds of income from the estate to the defendants, failing to pay electricity bills, council rates and body corporate bills in respect of the unit, incurring late payment penalties, interest costs and loss of discounts and failing to account to the defendants as beneficiaries under the will for administration of Walter’s estate. The defendants further allege that the plaintiffs have breached their fiduciary duties to the defendants in their administration of Walter’s estate.

Mutual wills

  1. The plaintiff’s case is founded on the doctrine of mutual wills, which operates to provide that where one party to a mutual wills agreement dies leaving his or her will unrevoked, relying on the other party to observe the terms of the agreement, equity will treat the agreement as irrevocable and will not permit the surviving party to deal with the subject property in a way contrary to the agreement or understanding.[2]
  1. The doctrine of mutual wills was first articulated by Lord Camden in Dufour v Pereira[3] in the following terms:

“The parties by mutual will do each of them devise, upon the engagement of the other, that he will likewise devise in manner therein mentioned. The instrument itself is evidence of the agreement: and he that dies first does by his death carry the agreement on his part into execution.  If the other then refuses, he is guilty of a fraud, can never unbind himself, and becomes a trustee of course. For no man shall deceive another to his prejudice.”

  1. The High Court of Australia followed Dufour v Pereira in Birmingham v Renfrew[4] in which Dixon J observed:

“It has long been established that a contract between persons to make corresponding wills gives rise to equitable obligations when one acts on the faith of such an agreement and dies leaving his will unrevoked so that the other takes property under its dispositions.  It operates to impose upon the survivor an obligation regarded as specifically enforceable.  It is true that he cannot be compelled to make and leave unrevoked a testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement it is nevertheless valid as a testamentary act.  But the doctrines of equity attach the obligation to the property.  The effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will which he undertook would be his last will.

The purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner with the property passing under the will of the party first dying.  That is to say, the object of the transaction is to put the survivor in a position to enjoy for his own benefit the full ownership so that, for instance, he may convert it and expend the proceeds if he choose.  But when he dies he is to bequeath what is left in the manner agreed upon.  It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallize into a trust.  No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is, therefore, not unqualified.  But, substantially, the purpose of the arrangement will often be to allow full enjoyment for the survivor’s own benefit and advantage upon condition that at his death the residue shall pass as arranged.”

  1. His Honour, after considering some previous cases which had questioned the soundness of the doctrine, continued:

“But I do not see any difficulty in modern equity in attaching to the assets a constructive trust which allowed the survivor to enjoy the property subject to a fiduciary duty which, so to speak, crystallized on his death and disabled him only from voluntary dispositions inter vivos.  On the contrary, as I have said, it seems rather to provide a reason for the intervention of equity.  The objection that the intended beneficiaries could not enforce a contract is met by the fact that a constructive trust arises from the contract and the fact that testamentary dispositions made upon the faith of it have taken effect.  It is the constructive trust and not the contract that they are entitled to enforce.” [5]

  1. It is necessary for plaintiffs, when claiming to be beneficiaries under a mutual will, to prove an agreement to make mutual wills was in fact made by the testators, including an agreement not to revoke their wills. There is no requirement for a formal or written contract; equity requires an agreement, understanding or intention to execute, and not to revoke, mutual wills.[6]   The requirement of this agreement not to revoke the mutual wills has been the subject of much judicial consideration.
  1. The agreement not to revoke may be express or implied by the terms of the agreement, or implied from the circumstances surrounding the making of the wills.[7]
  1. Courts have held that oral evidence, even evidence of interested parties, may be given in support of an agreement to make mutual wills.[8]  In Birmingham v Renfrew,[9] it was said that:

“Witnesses deposed to a circumstantial account of discussions between the wife and one or other of the intended beneficiaries.  They narrated how the wife definitely stated in his presence the terms of the arrangement made with the husband and how he assented to her statement.”

  1. However, Latham CJ cautioned that “those who undertake to establish an agreement assume a heavy burden of proof. It is easy to allege such an agreement after the parties to it have both died, and any court should be careful in accepting the evidence of interested parties upon such a question.”[10] Notwithstanding this statement, however, his Honour found that such an oral agreement had been made in the circumstances of that case.
  1. Similarly, Dixon J accepted that “such an agreement can be established only by clear and satisfactory evidence. It is obvious that there is great need for caution in accepting proofs advanced in support of an agreement affecting and possibly defeating testamentary dispositions of valuable property.”[11]
  1. Dixon J discussed the agreement found by the trial judge in that case:

“Gavan Duffy J. found that an agreement had been made, and I do not think that his finding can be set aside. He found, too that the arrangement was not of a character leaving legal relations unaffected.  So far as this is a question of fact, I think he was fully justified in taking the view that the wife meant to obtain from her husband a promise and meant that it should be communicated to the intended beneficiaries in order the better to ensure its fulfilment.  I think the legal result was a contract between husband and wife. The contract bound him, I think, during her lifetime not to revoke his will without notice to her.  If she died without altering her will, then he was bound after her death not to revoke his will at all.  She on her part afforded the consideration for his promise by making her will.  His obligation not to revoke his will during her life without notice to her is to be implied.  For I think the express promise should be understood as meaning that if she died leaving her will unrevoked then he would not revoke his. But the agreement really assumes that neither party will alter his or her will without the knowledge of the other.”[12]

  1. In Re Cleaver,[13] Nourse J said there must be “clear and satisfactory” evidence that the wills were executed pursuant to an “agreement or understanding” that the property was to be “dealt with in a particular way for the benefit of a third person”. The court must be satisfied on the balance of probabilities that the alleged agreement was made.
  1. In Gray v Perpetual Trustee Co Ltd, the Privy Council, in affirming a decision of the High Court of Australia, held that the mere making of the wills simultaneously and the similarity of their terms are not enough taken by themselves to establish the necessary agreement”.[14]  However, these are relevant factors which can be taken into account when examining the whole circumstances surrounding the agreement. McPherson J (as he then was) in Bigg v Queensland Trustees Limited[15] gave considerable weight to the idea that where parties execute mutual or corresponding wills, the contract to revoke can be implied, stating:

“For my part I do not see how it can be otherwise. There is no point in agreeing to make corresponding wills if the parties to such an agreement are free to revoke immediately after executing them, by which I mean “free” in the sense of immune from the ordinary remedies available for breach of contract.”

  1. In the present case, it is clear that Walter and Thelma had an agreement to make mutual wills. So much is apparent from the fact that they executed the corresponding wills on 22 August 1984. The central question to be determined is whether they also agreed not to revoke those wills.
  1. Each of the plaintiffs, and the wife of the first plaintiff, gave evidence of conversations they had had with Walter, in the presence of Thelma, during separate visits to each of their homes in or around 1989. The substance of each of the conversations was similar; that Walter advised each of his children that he and Thelma had made wills which provided for the testator who died first to live in the Buderim property and receive income from the Mooloolaba unit, and that when they died both the unit and the house would be left to the five children (the plaintiffs and the defendants) in equal shares. Each of these witnesses was quite positive that the meaning of the statements made to them was that it was the properties (as opposed to the estate) which would be divided in equal shares between the five children. Each of them gave evidence that Thelma was present when these statements were made and agreed with or affirmed Walter’s explanation.
  1. Counsel for the defendants submitted that the evidence of the plaintiffs was “rehearsed” and therefore, unreliable. However, the accounts given by each of the witnesses, while substantially similar, did contain differences. Each of the witnesses was appropriately firm in their own recollection, and was not able to be swayed under searching cross-examination. The slight differences in recollection of events which occurred more than 20 years ago is to be expected and reflects each having an independent recollection of the events, rather than having a rehearsed version. I do not think the differences were sufficient to detract significantly from the consistent evidence of the gist of the conversations.
  1. Evidence was given by each of the defendants that no such conversation took place between the testators and them. But this of itself does not impact on the evidence of the plaintiffs; the only conclusion is that Walter and Thelma had these conversations with the plaintiffs but not the defendants.
  1. Given all the circumstances, in particular the weight which should be given to the making of mutual wills, in circumstances where there is evidence of the making of wills in corresponding terms where less than an absolute interest was given to the surviving party, and that the intention of the agreement was communicated to at least some of the beneficiaries, I am satisfied on the evidence that there was an agreement between Walter and Thelma not to revoke the wills without notice to the other party. As Walter died in 1992 without having revoked his will, or having sold, encumbered or otherwise dealt with the Mooloolaba property, Thelma cannot be permitted, in equity, to deal with the property in a way contrary to the agreement or understanding.
  1. The transfer by Thelma of the Buderim property to the defendants was an inter vivos transaction, the effect of which was clearly to defeat the intention of the agreement between Thelma and Walter.  Evidence was given by the defendants that Thelma continued to live in the house and pay rates and outgoings after the transfer. Transactions of this kind, intended to defeat the agreement of the testators, are not able to be made by a surviving party to a mutual wills agreement.[16]
  1. Accordingly, I am satisfied that the plaintiffs should have the relief they seek.

Counterclaim

  1. The defendants contend that, in breach of s 52 of the Succession Act 1981 (Qld), the plaintiffs have failed in the performance of their executorial duties in relation to Walter’s estate and claim that they have suffered loss as beneficiaries of that estate.
  1. Section 52 of the Succession Act 1981 (Qld) provides:

52The duties of personal representatives

(1)  The personal representative of a deceased person shall be under a duty to-

(a)collect and get in the real and personal estate of the deceased and administer it according to law; and

  1. when required to do so by the court, exhibit on oath in the court a full inventory of the estate and when so required render an account of the administration of the estate to the court; and
  2. when required to do so by the court, deliver up the grant of probate or letters of administration to the court; and
  3. distribute the estate of the deceased, subject to the administration thereof, as soon as may be; and
  4. pay interest upon any general legacy-

(i)from the first anniversary of the death of the testator until payment of the legacy; or

  1. in the case of a legacy that is, pursuant to a provision of the will, payable at a future date– from that date until payment of the legacy;

at the rate of 8% per annum or at such other rate as the court may either generally or in a specific case determine, unless any contrary intention respecting the payment of the interest appears by the will.

(1A)Nothing in subsection (1) abrogates any rule or practice deriving from the principle of the executor’s year or any rule or practice under which a beneficiary is entitled to receive interest upon any legacy from the date of the testator’s death.

  1. If the personal representative neglects to perform his or her duties as aforesaid the court may, upon the application of any person aggrieved by such neglect, make such order as it thinks fit including an order for damages and an order requiring the personal representative to pay interest on such sums of money as have been in the personal representative’s hands and the costs of the application.”
  1. The defendants also assert breaches of the fiduciary duties to ‘collect and get in’ the real and personal estate of the deceased and administer it according to law, to distribute the estate as soon as may be, and to act in the best interests of the beneficiaries in the administration of the estate. The defendants seek an order that the estate be administered, with all necessary accounts and enquiries to be taken.
  1. In McLauchlan v Prince[17] the phrase ‘wilful default’ was considered:

“Meagher, Gummow and Lehane:  "Equity Doctrines and Remedies" define the phrase as follows:

"(Wilful default) means that the defendant must account not only for all receipts and payments actually made by him but also for all moneys which he would have received if he had managed the property prudently". This may be contrasted with what is referred to as a common account.  Generally speaking a common account is a procedure to ascertain the monetary dealings of the parties in respect of the subject property and to determine with precision the balance due between them.  After the balance is ascertained orders are made as to the rights of the parties to that balance.  Thus a common account generally involves a two-step process.  But an account on the basis of wilful default involves ascertaining the status of the corpus, determining the extent to which it has been depleted, ascertaining what would have been earned had the estate been properly administered and ordering payment to the plaintiff of that amount.”

  1. In order to establish wilful default, the defendants must prove loss to the estate due to the mismanagement or neglect of the plaintiffs.[18]
  1. The defendants allege that the plaintiffs have neglected to perform their duties of administering the estate and particularise the neglect as follows:

“(a) failing to sell the Mooloolaba property and distribute the net proceeds of sale as soon as may be;

(b) failure to distribute to the Defendants their share of net proceeds of income from the estate, in particular from the rental of the Mooloolaba unit;

(c) failure to pay on time electricity bills, council rates and body corporate bills in respect of the unit, thereby incurring late payment penalties, interest costs and loss of discounts;

(d) failure to account to the Defendants as beneficiaries under the will for the administration of the estate;”

  1. In relation to (a) above, the Mooloolaba unit could not have been sold prior to Thelma’s death on 20 April 2007. The plaintiffs submitted that the sale of the unit was delayed because the original certificate of title had been sent to Thelma but was not forthcoming after her death. An application to dispense with its production was required and made on 29 July 2009; the plaintiffs were registered as trustees on 4 September 2009.  The defendants point to a delay between 29 September 2008 and 31 March 2009, during which it appears no further steps were taken to procure the certificate of title.  The plaintiffs’ current solicitor was not able to clearly explain this delay as the administration of the estate was apparently being handled by another firm of solicitors during that time.
  1. Valuation evidence was led by both the plaintiffs (R&R Valuations) and defendants (CB Richard Ellis) and the market value estimates of each expert can be summarised as follows:

DateR&R ValuationsCB Richard Ellis

30 July 2007$840,000$975,000

30 Jan 2008$840,000$925,000

30 July 2008$790,000$850,000

March 2010$820,000$800,000

  1. While there appears to be some difference in valuation figures, a downwards trend can be seen in both expert reports, attributable to the deterioration in market conditions following the onset of the global financial crisis. Putting aside the benefit of hindsight, it was not established that the plaintiffs should have foreseen the fall in the market which was to occur after 2007. Therefore the plaintiffs cannot reasonably be held responsible for any loss to the estate resulting from this. Given the fall in property values consequent on the global financial crisis and the likely expectation that the market will rise again as the property market stabilises, it does not seem unreasonable for the plaintiffs to have refrained from listing the property for sale during the 2008-2010 period.
  1. In relation to (b), the plaintiffs submit that this “misconceives the basis for an accounting on the footing of wilful default, which requires loss to the estate, not to the beneficiaries, because of the personal representative’s action or inaction.”  In Meehan v Glazier Holdings Pty Ltd,[19] Giles JA said of this concept:

“In an accounting by a trustee, the underlying concept is that through breach of trust the trustee has failed to obtain for the trust that which would have been obtained if the trustee’s duties had been discharged.” (emphasis added)

  1. Whilst it appears from the evidence that no income has, in fact, been paid to the defendants from the rents of the Mooloolaba unit, there is no evidence that this has caused a loss to the estate. An account of this income, on the basis of wilful default, would not be appropriate in the circumstances.
  1. In respect of (c), the defendants have not pointed to any specific evidence to substantiate this allegation, but submit that they could rely on a number of documents which are in evidence before the Court including a number of bills and invoices. Upon examination of these bills, an arrears notice fee of $33.00 in respect of outstanding body corporate levies was the only late payment fee clearly evident on the face of the documents. It appears that all accounts were forwarded to the property managers responsible for the Mooloolaba unit and were attended to upon receipt. Bren gave evidence that there had been some difficulty in obtaining bills as they were not able to be transferred into his name. There is no evidence to support this allegation of neglect.
  1. Finally, in light of my findings in (a), (b) and (c), the allegation in (d) is not proved as an instance of loss to the estate due to the mismanagement or neglect of the plaintiffs.
  1. Accordingly, the defendants have failed to establish any wilful neglect by the plaintiffs in the administration of Walter’s estate.

Conclusion

  1. There will be the following orders:
  1. It is declared that the defendants hold the proceeds of the sale of the land described as Lots 5 and 6 on RP 89031 County Canning Parish Mooloolah, Title References 13551029 and 13551030 (Buderim property) on a constructive trust for the plaintiffs and the defendants as tenants in common in equal shares.
  1. It is declared that the plaintiffs, as the surviving trustees of the estate of Walter Ernest Bauer hold the right, title and interest to Lot 44 on Building Units Plan 5473, Title Reference 64202000 (Mooloolaba unit) for the plaintiffs and defendants as tenants in common in equal shares, not only pursuant to the provisions of the will dated 22 August 1984 of the late Walter Ernest Bauer, but also on a constructive trust for the plaintiffs and the defendants as tenants in common in equal shares.
  1. Title to the Mooloolaba unit shall be conveyed to the plaintiffs and defendants as tenants in common in equal shares, absolutely.
  1. The defendants shall pay the plaintiffs three fifths of the net proceeds of sale of the Buderim property together with any interest earned by the investment of that portion of the sale proceeds.
  1. The counterclaim is dismissed.
  1. I will hear the parties as to costs.

Footnotes

[1]          At paragraph 10 of their statement of claim.

[2]         Dufour v Pereira (1769) 21 ER 332 at 333; Birmingham v Renfrew (1937) 57 CLR 666 at 689.

[3]         2 Hargr. Jurid. Arg. 304; Re Green [1951] 1 Ch 148 at 153.

[4]         (1937) 57 CLR 666 at 683;  689.

[5]          (1937) 57 CLR 666 at 690.

[6]          Dufour v Pereira (1769) 21 ER 332; Birmingham v Renfrew (1937) 57 CLR 666; Re Cleaver [1981] 1 WLR 939 at 947.

[7]          Birmingham v Renfrew (1937) 57 CLR 666; Aslan v Kopf [1995] NSWCA 26.

[8]          Birmingham v Renfrew (1937) 57 CLR 666; Re Cleaver [1981] 1 WLR 939 at 947.

[9]          (1937) 57 CLR 666 at 682 per Dixon J.

[10]        Birmingham v Renfrew (1937) 57 CLR 666 at 674.

[11]        (1937) 57 CLR 666 at 681-682.

[12]        Birmingham v Renfrew (1937) 57 CLR 666 at 682-683.

[13]        [1981] 1 WLR 939 at 947.

[14]        [1928] 40 CLR 558 at 564-5; see also Bigg v Queensland Trustees Limited [1990] 2 Qd R 11.

[15]        [1990] 2 Qd R 11 at 14.

[16]        Birmingham v Renfrew (1937) 57 CLR 666; quoted above at [17].

[17]         [2001] WASC 43 per Sanderson M.

[18]        Re Wood deceased. Ebert v Union Trustee Company of Australia Limited [1961] Qd R 375.

[19]         (2002) 54 NSWLR 146 at 163.

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Editorial Notes

  • Published Case Name:

    Bauer & Ors v Hussey & Anor

  • Shortened Case Name:

    Bauer v Hussey

  • MNC:

    [2010] QSC 269

  • Court:

    QSC

  • Judge(s):

    Daubney J

  • Date:

    30 Jul 2010

  • White Star Case:

    Yes

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2010] QSC 26930 Jul 2010Plaintiffs applied for declarations that their father and stepmother had agreed to execute mutual wills, not dispose of certain property and not revoke either of their wills; defendants counterclaimed that plaintiffs failed to perform their duties in administering estates; counterclaim dismissed and declarations made in favour of plaintiffs: Daubney J
Primary Judgment[2010] QSC 31930 Aug 2010On the question of costs of [2010] QSC 269, defendants ordered to pay plaintiffs' costs on the standard basis: Daubney J
Appeal Determined (QCA)[2011] QCA 9110 May 2011Defendants appealed against [2010] QSC 269; appeal dismissed with costs: Fraser and Chesterman JJA and Martin J

Appeal Status

Appeal Determined (QCA)

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