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[2009] QCA 147
Court of Appeal (Qld)
2009-05-29
Keane and Fraser JJA and Applegarth J, Judgment of, the Court
Original judgment source is linked above.
Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Otto v Redhead & Ors [2009] QCA 147
PARTIES: GLENN LAWRENCE OTTO (applicant/appellant) v GRAHAM REGINALD REDHEAD and PETER CHRISTIAN THOMPSON (as executors and trustees of the will of BERYL MAY OTTO, deceased) (first respondents/first respondents) BRETT ADRIAN OTTO (second respondent/second respondent)
FILE NO/S: Appeal No 13220 of 2008 / SC No 3010 of 2007
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING COURT: Supreme Court at Brisbane
DELIVERED ON: 29 May 2009
DELIVERED AT: Brisbane
HEARING DATE: 21 May 2009
JUDGES: Keane and Fraser JJA and Applegarth J / Judgment of the Court
ORDERS: Appeal dismissed****The appellant to pay the costs of each set of respondents of and incidental to the appeal to be assessed on the indemnity basis
CATCHWORDS: SUCCESSION – EXECUTORS AND ADMINISTRATORS – TITLE AND ESTATE OF – REMOVAL AND DISCHARGE – where appellant applied for the summary removal of executors of deceased estate – where appellant and second respondent brothers and beneficiaries of the estate – where appellant alleged misconduct by executors – where alleged misconduct involved advantaging second respondent over appellant – where final distribution from estate imminent – whether executors should be removed / Baldwin v Greenland [2007] 1 Qd R 117; [2006] QCA 293, cited / Bates v Messner (1967) 67 SR (NSW) 187, applied / Otto v Redhead & Anor [2008] QSC 280, affirmed
COUNSEL: D R M Murphy SC for the appellant / R I M Lilley SC, with D J Morgan, for the first respondents / D G Mullins SC for the second respondent
SOLICITORS: McCullough Robertson for the appellant / O'Reilly Lillicrap for the first respondents / HopgoodGanim Lawyers for the second respondent
THE COURT: The appellant, Mr Glenn Lawrence Otto ("GLO"), applied for the summary removal of the first respondents, Messrs Redhead and Thompson ("the executors"), as executors of the estate of his mother, Beryl Otto ("the deceased"). The other respondent to the appeal is GLO's brother, Mr Brett Adrian Otto ("BAO"). Both GLO and BAO are beneficiaries of the estate. GLO also sought other orders, including an order that the executors confer with his valuers and the valuers retained by the executors for the purpose of revising if necessary the valuation of the assets of the estate. He also sought an order for an interim distribution from the estate of $500,000 to each of himself and BAO.
The application for the removal of the executors was based upon a number of assertions of misconduct on the part of the executors including advantaging BAO at the expense of GLO. The concerns which led to the application relate principally to the shareholding of the deceased in Otto Developments Pty Ltd ("the company") which owns land in Bundaberg. Some of the company's land is used by a company of which BAO is a director. The shareholding in the company is only one of the assets of the estate being administered by the executors.
The deceased died on 20 September 2005. In October 2005 GLO commenced a correspondence with the executors dealing with his worries about the collection of his equipment from premises owned by the company. Thus began a series of complaints from GLO about the conduct of the executors. BAO also made complaints about aspects of the administration of the estate.
The application
"By the time this application was heard, the allegations made against the executors by GLO were summarised in his counsel’s written submissions as follows:
They –
'(a)failed to accede to a request of one of two beneficiaries to investigate the issues concerning the valuations of the assets of Otto Developments Pty Ltd and the refusal or failure to undertake a proper stocktake;
(b) failed to recognise the clear conflict of interest by virtue of the position that Mr Thompson holds as accountant to the company and his duties as an executor where he not only has to, but has to be seen to, act impartially as far as the two beneficiaries are concerned;
(c) allowed the beneficiary entitled to the assets of the company to have total control over its administration prior to having any equitable proprietary interest vested in him without exercising control over that administration or been even seen to control that administration;
(d) allowed [BAO] to pay his legal expenses from the company’s funds at the expense of [GLO's] interest in the income to be attached to the equalisation process between the date of death and the date of distribution;
(e) allowed [BAO], as a director the company and its manager, to treat the company funds as his own in a manner that directly affects the outcome of the distributable income of the company, for example, the purchasing of a new motor vehicle, the increases in wages and superannuation and a complete lack of explanation of a reduction of the cash held by the company as is clear on the face of the accounts. Indeed, the first accounting received from the executors some 13 months following the death of the deceased contained no reference to the value of the shares in the company and failed to disclose the cash accounts of the company until after correspondence had occurred between the respective solicitors;
(f) one or both have contradicted advices concerning important aspects of the administration.' "
The learned primary judge, applying the test stated by Asprey J in Bates v Messner,2 concluded that he could not draw "'the firm conclusion that the due and proper administration of an estate has either been put in jeopardy' or that the executors are not fit and proper persons to carry out the duties required of them."3 Accordingly, his Honour declined to order the removal of the executors.
His Honour went on to say:4
"The material supports the conclusion that a final distribution can be made in the very near future. The construction of the will has been settled; valuations have been obtained, exchanged and critiqued.
If I was otherwise disposed to accede to the application, it would inevitably result in further delay to the finalisation of the estate. I think it is also open to me to infer that, in the light of the almost poisonous relationship between the brothers and the criticism by GLO of the valuation which GLO arranged, that any executor would be the subject of criticism."
His Honour declined to order an interim distribution as a result of this refusal of the application to remove the executors and the imminence of the final distribution of the estate.5
As to the application for an order that the executors and their valuers confer with GLO's valuers, the learned primary judge said:6
"The applicant also sought an order that the executors or, if they were removed, the administrator confer with the valuers retained by the applicant and the respondents for the 'purpose of revising if necessary the valuation of the assets of the estate.'
Counsel for both GLO and BAO each submitted further written submissions on this part of the application and referred to the power available under s 6 of the Succession Act. I do not need to decide whether such a power is available as I am convinced that, even if it was available, it would not be appropriate to make such an order. Competing valuations have been obtained. The executors have considered them and the valuer retained by them has reviewed the other valuation and provided a considered response. A conference would only further delay the matter and increase, for no good purpose, the already substantial amount of costs which must have been expended in the contest over the administration of this estate."
The challenge to the decision below
In this Court GLO argues that the learned primary judge erred in the exercise of his discretion. The principal argument put in that regard is that his Honour failed to find that the estate had been put in jeopardy because the executors had been culpably dilatory in their administration of the estate of the deceased and had demonstrated partiality in favour of BAO. We shall discuss the particular bases for that submission in due course; but at this point it is necessary to focus upon the learned primary judge's finding that the evidence before him established that "a final distribution can be made in the very near future."7 As has been seen, his Honour concluded that if he were "otherwise disposed to accede to the application, it would inevitably result in further delay to the finalisation of the estate."8
It is important to note that there is no challenge to this aspect of his Honour's decision. The assertions made by GLO, while serious, are not such as to suggest that GLO is likely to suffer irreparable loss given that the imminent completion of the administration of the estate is undisputed. That is because a failure to replace the executors would not now be likely to cause harm to the interests of the appellant that could not be remedied by orders made after the distribution of the estate. This conclusion of the learned primary judge was, we think, a sufficient basis for his Honour's decision to refuse the relief sought by GLO. It is also a sufficient reason to hold that the appeal must fail. If GLO's assertions are justified, and he has suffered actual loss as a result of any misconduct, he will be able to bring proceedings for recovery of that loss after the executors have distributed the assets of the estate.
It is clearly more desirable to proceed in that way than to allow the distribution of the estate to be further delayed as would inevitably occur if the Court were to accede to the application for removal of the executors and the appointment of new personal representatives of the deceased. This Court should not prolong an administration which all parties are anxious to bring to an end. It is also undesirable that this Court should attempt a determination of serious allegations when it is unnecessary to do so to protect GLO.
In light of the imminence of a final distribution and the absence of any suggestion of hardship to GLO in the meantime, we would also uphold the learned primary judge's discretion to refuse an order for an interim distribution as sound.9
And as to the application for an order for a conference, it is clear that the learned primary judge was entitled to decline to make such an order on the basis that such an order would be most unlikely to achieve any benefit for the parties.
Conclusion
The appeal should be dismissed.
This is certainly not a case where the estate should bear the costs of the appeal to this Court. The pursuit of the appeal was quite unreasonable. It had no real prospect of success.
GLO should pay the costs of each set of respondents of and incidental to the appeal to be assessed on the indemnity basis.
Otto v Redhead & Anor [2008] QSC 280 at [15]. ↩
(1967) 67 SR (NSW) 187 at 192. See also Baldwin v Greenland [2007] 1 Qd R 117. ↩
[2008] QSC 280 at [23]. ↩
[2008] QSC 280 at [24] – [25]. ↩
[2008] QSC 280 at [26]. ↩
[2008] QSC 280 at [27] – [28]. ↩
[2008] QSC 280 at [24]. ↩
[2008] QSC 280 at [25]. ↩
[2008] QSC 280 at [26]. ↩
Otto
Redhead & Ors [2009] QCA 147
We are confirmed in these views by a consideration of GLO's complaints against the executors which suggests that these complaints are without substance.
As to the valuation issue, GLO disagreed with the valuations obtained by the executors in relation to the land owned by the company at Bundaberg. He was given the opportunity to put valuations obtained by him to the executors for comment and the executors sought and obtained advice from the valuers they had commissioned. The executors considered that advice and decided to accept it. These circumstances do not suggest that any breach of duty has occurred.
As to the complaint that Mr Thompson is in a position of conflict of interest because he is the company's accountant, it is not apparent why it is said Mr Thompson's duties and interest as the company's accountant put him in a situation of conflict with his duties and interest as an executor. It is tolerably clear that the deceased knew that Mr Thompson was the company's accountant for years before her death, and yet it was her evident wish that he should be an executor of her estate. There is no reason why the Court should override the deceased's intention unless some misconduct on Mr Thompson's part is apparent.
GLO complains that the executors have failed to preserve the company by failing to remove BAO as manager and director of the company. But BAO was the manager and director of the company for some years before the deceased died, and she gave no indication of any intention on her part that this situation should change pending the finalisation of her estate. To the extent that GLO complains that BAO has caused the company to increase wages and superannuation and other benefits to employees, GLO does not suggest that these increases have occurred otherwise than in the ordinary course of business. Further, GLO does not explain by whom and at what expense the duties performed for the company by BAO could have been performed if he were to have been removed by the executors.
As to GLO's complaint that BAO was allowed to pay some of his legal expenses from the company's funds, it is true that BAO did arrange for the company to pay some of his legal fees. But the position was corrected as soon as the matter was brought to the attention of the executors, and there is no reason to apprehend that this was other than a mistake which will not be repeated.
As to the complaint that BAO has been allowed to misappropriate company funds, these assertions – effectively of fraud by BAO in which the executors have participated – were made by GLO without any evidentiary support.
GLO's complaint that the executors have "contradicted advices concerning important aspects of the administration" was not pressed on appeal.