Von Nida v Eady [2000] QSC 383

[1] JONES J: Frederick Charles Von Nida died on 17 August 1995 leaving a Will, whereby he appointed Arthur Eady and his son, Edward Charles Von Nida, executors of his estate. The beneficiaries of the estate, which had a value in excess of $700,000.00, were his two children who took the following proportions -

[2] Jennifer Boag died in 1994 and her estate is now entitled to that 10% interest.

[3] The administration of the testators' estate has been marred by conflict between the two executors, which has now led to open mutual distrust. This has resulted in two proceedings being instituted - a Notice of Motion seeking certain declarations as well as an order for the removal of Mr. Eady as an executor; and, an Originating Summons seeking an order for the distribution of a certain part of the estate and an order for the payment of professional fees owed to solicitors and accountants. By consent the two proceedings were ordered to be heard together as a trial held on 25 July, 2000. Mr. Von Nida, (who I shall hereinafter refer to as "the plaintiff") represented himself and Mr. Philp of Counsel appeared for Arthur Eady (whom I shall hereinafter refer to as the "defendant"). Since the hearing, the plaintiff improperly sent to me a letter dated 26 July, 2000. Apart from directing that a copy of this letter be sent to the legal advisers of the defendant, I have ignored the contents of that letter.

[4] The defendant is a principal of the accounting firm of Arthur Eady & Co. ("the accountants") which had been retained by the testator from 1985 until his death. That retainer was continued by the executors.

[5] The plaintiff agitated a number of issues in his affidavits, but particularly the following:-

(i) An allegation that between 1989 and 1996 there was an incorrect diversion of BHP Limited dividend cheques from the testators' account to an account FVM Pty Ltd at a bank in Orange. It was alleged this account was operated by the plaintiff's late sister, Jennifer Boag, and her husband; [1]

(ii) an allegation that advances were made to the plaintiff's late sister of varying amounts such that her estate was indebted to the testators' estate in the sum of $122,109.78; [2]

(iii) as a consequence, monies held in the trust account of MacDonnells, Solicitors, in purported distribution to the estate of Jennifer Boag should be paid to the plaintiff; and

(iv) the claim that the defendant should be removed as an executor.

The resolution of these allegations will be dealt with in the context of the executors' behaviour in the administration of the estate.

[6] An historical record will help explain the way in which the disagreement between the executors has arisen.

[7] On 25 September, 1996 the defendant wrote setting out an expected timetable for the finalisation of the estate, i.e., concluding in December, 1996 to early 1997 (ex. "ECV 8").

[9] On 7 April, 1997 the plaintiff wrote requesting partial distribution of the estate to him. This letter went unanswered as did his reminder letters on 1 May, 1997, 28 October, 1997 and 7 January, 1998.

[10] On 12 January, 1998 a somewhat dismissive letter from the accountants made reference to the winding up of the company FVN Bowral Pty Ltd which resulted in a further request for information dated 19 January, 1998. This request was ignored.

[11] On 27 March, 1998 a firm of accountants, Mill & Partners, sought information on behalf of the plaintiff. This request for particulars was answered on 1 April, 1998 but suggested that the accountants' costs in providing the information were to be specifically authorised.

[12] On 14 April, 1999 a further request by Mill & Partners, which on its face was a reasonable request made on behalf of an executor to the estate's accountants, was refused because there was no additional authority to charge fees.

[13] The dispute about the supply of information and the charging of fees then deepened with the demand (incorrectly sent to the accountants) that the defendant resign as an executor.

[14] Finally, accounting details which were previously sought were provided on 3 July, 1998 in a summary of dividends document (ex. "ECV28"), in which some of the BHP dividends were recorded as being received into an ANZ account at Orange.

[15] On 18 September, 1998 the defendant, in his affidavit (para. 6), details the dividends being paid into an account in the name of Bowral Motel Pty Ltd. held at the A.N.Z. Bank at Bowral. This reference did not clarify the confusion that arose from the dividends being recorded as having been received in a bank account at Orange referred to above. This confusion continued until the hearing when it was explained that reference to "Orange" in the summary of dividends was simply an error (transcript pp.22-3).

[16] With that explanation having been given, and the deposits of dividends properly identified, the plaintiff did not raise the issue in cross-examination. Consequently, I should find that there is in fact no substance to the allegation of misappropriation of BHP Ltd. dividends.

[17] The amounts advanced to the plaintiff's late sister, both by the testator himself and the New South Wales Protective Commission, from the testator's assets totalling $46,000.00 were identified by Mr. Eady in paras. 9-12 of his affidavit. A further advance to the late Jennifer Boag of $70,000.00 for the purchase of property was identified as having been repaid on 21 March, 1991 prior to the testator's death.

[18] Though the plaintiff raised questions about the fate of this sum, I accept that the amount was in fact paid when the mortgage over the property in question was released. The plaintiff adduced no evidence to suggest that there is any error in the accountants' examination of the testator's accounts prior to his death or subsequently.

[19] The amounts of which the plaintiff complains totalling $46,000.00 are referred to in the account details which were provided to him on 6 October, 1998 (ex. 4). The explanation given by Mr. Eady in his evidence makes clear that all advances to, or on behalf of, the late Jennifer Boag have been fully accounted for in the final distribution figures.

[20] I am satisfied that full and proper accounting has been given to all debts due to the testator and the companies he controlled at the time of his death. What is to be regretted is that the plaintiff was unable to obtain explanations from the accountants to assist his understanding of those accounts without having to resort to these proceedings.

(iii) Monies held in trust on behalf of estate of J. Boag

[21] As a consequence of my findings on the first two issues, there is no basis for concluding that there was any error in the calculation of the amounts distributed to the beneficiaries. The monies held in the trust account of MacDonnells on behalf of the estate of J. Boag was correctly determined and there is no reason why it should be withheld from those entitled to it. No further involvement of the executors is required to achieve that.

[22] The removal of the defendant as executor sought by the plaintiff was persisted in throughout the hearing.

[23] The essential basis relied on by the plaintiff for this relief was the alleged failure by the defendant to give a proper account of the actions to the plaintiff as co-executor.

[24] With these accounting matters cleared up one turns to consider what remains for the executors to do in order to complete their administration of this estate. The answer is very little. There is the question of the quantum of the accountants' fees to be determined and then paid and there is the finalisation of these proceedings.

[25] With these few matters to be attended to and no controversial issues to be resolved there is no basis for any change in the executorship. From what appears on the material no change was warranted in any event. The inherent jurisdiction of the court to remove a trustee is exercised only when the circumstances are compelling. It is ancilliary to the court's obligation to see that trusts are properly executed and is exercised when the court is satisfied that the continuance of the trustee would prevent this being done. [3] The difficulty here was brought about by the parties inability to communicate or to find others who could do it for them. There is no evidence of misconduct. The problems which have arisen are not matters for which blame can, or ought to be, attached at this stage.

[26] I will therefore dismiss each of the plaintiff's applications set out in the Notice of Motion.

[27] The remaining issues which is raised in the Originating Summons, to which special attention must be given, is the quantum of fees claimed by the accountants.

[28] The accountants had presented accounts (ex. 3) which supersede the details set out in Mr. Eady's original affidavit. The accounts detail professional fees and disbursement in connection with the following matters:

(ii) The liquidation of FVN Bowral Pty Ltd $ 1,577.00

(iii) Preparation of shareholders and beneficiaries

[29] The plaintiff sought to challenge these fees by calling Mr. Morgan, an accountant practising in Cairns, to give evidence of what are appropriate accountancy fees on the administration of a deceased person's estate. He was asked to assume certain facts from which he concluded that the work would involve between 30 and 40 transactions. His estimate of the level of fees was approximately $10,000.

[30] In cross-examination Mr. Morgan contended that he had no actual knowledge of the work done by the accountants in this administration, that he had not reviewed the files and that he had not even seen the memorandum of fees submitted. He agreed that the charge out rate of $150.00 per hour for the principal accountant's work was reasonable and in fact was less than what would be normally charged.

[31] Mr. Morgan appears not to have taken into account the fact that the company went into liquidation and was wound up, nor the fact of the disputation between the executors. The total amount of the work undertaken by the accountants here greatly exceeded the 30 or 40 transactions to which Mr. Morgan made reference in arriving at his estimate. As a consequence, the evidence of Mr. Morgan is not at all helpful in determining whether the work claimed to have been done by the accountants was necessary or productive. I am therefore left with the evidence of Mr. Eady as to the hours of work performed by various persons in the accountant's firm and the charge-out rate applying.

[32] Whilst I have an uneasy feeling that some of the work done, and charged for, by the accountants was made necessary by a failure on their part, or on the part of the defendant, to make an accurate, detailed and timely response to the plaintiff's query there is no evidence which suggests what, if any, adjustment should be made to the fees. There appears also to have been a blurring of the defendant's responsibility as co-executor and his role as principal in the accountants firm. In either capacity, Mr. Eady had a duty to account to the plaintiff in his dual capacity of co-executor and beneficiary. This has now been done and was, in the main, complete before the institution of these proceedings. The situation in which the court is left is that the work, detailed by the accountants, has been done and that such work was necessary in the administration of the estate. I find that the charge-out rates applied by the accountants were reasonable.

[33] Accordingly, I direct that the executors pay all outstanding fees and charges payable to Arthur Eady & Co.

[34] No specific attack was made on the fees of $3,250.00 owing to MacDonnells, Solicitors. The quantum of these fees are referred to in the affidavit of Mr. Eady sworn on 17 September, 1998. It may well be that further fees have been incurred by the executors since that date. In the circumstances I will simply direct that the executors pay the fees of MacDonnells Solicitors, in accordance with the memorandum of fees as presented.

[35] On the question of costs it was argued on behalf of the defendant that the costs of and incidental to these proceedings should be paid by the estate. No contrary submissions were made on behalf of the plaintiff. In circumstances where no finding of actual fault can be made on the part of either executor, it seems to me that the estate ought to bear the costs of the proceedings.

2. I direct the executors to pay the outstanding fees of Arthur Eady & Co. and MacDonnells Solicitors incurred in relation to the administration of this estate.

3. I order that the costs of both parties of and incidental to these proceedings be paid by the estate on an indemnity basis.

[1] Paras 14-17 Affidavit of plaintiff 27 July, 1998

[3] Letterstedt v Broers (1884) 9 App. Cas 371 per Lord Blackburn @ p.386