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Want to remove an Executor? It is not easy.

Case note: Budulica v Budulica [2017] QSC 60

Facts

Mrs Budulica sadly passed away. In her Will she left the whole of her estate on trust in equal shares to her two children, Stan and Sylvia. Her estate largely comprised of two properties situated at Bulimba and Hawthorne. The Bulimba property was improved by a block of four units. There was a four bedroom house on the Hawthorne property that was built in the 1930s.

Stan was appointed as executor and trustee of Mrs Budulica’s estate. There was considerable animosity between Stan and Sylvia.

Sylvia subsequently brought proceedings to remove Stan as executor and trustee on two main grounds:

  1. There was a delay in the administration of the estate; and
  2. He failed to bank the rent collected from the tenants of the two properties.

Issue

The issue for the Supreme Court to determine was whether or not to remove Stan as executor and trustee.

Judgement

Stan offered two explanations for his in conduct in the administration of the estate. Sylvia had complained that two of the units at the Bulimba property had been left vacant for too long. When the tenants vacated these units, Stan was unable to let either unit because they required extensive maintenance and repairs. He had difficulties in obtaining the relevant tradespeople to carry out the work. He ended up doing the work himself and making no claim against the estate for his labour. An agent was subsequently engaged to let the units. However, it took longer to obtain a new tenant due to an oversupply in the market at the time. The Supreme Court held in this regard that the administration of the estate was advanced. Stan also attributed some of the delay to the continuing requests made by Sylvia for substantial information and documents in respect of the estate. The Court found that Sylvia had contributed to the delay by her demands and conduct.  

Sylvia also sought to have Stan removed on the basis that he failed to bank the rent collected from the tenants of the two properties. His practice had been to collect the rent from tenants in cash and then use the cash to pay expenses relating to the properties and estate. This was consistent with how Mrs Budulica had managed the properties before she died. However, Stan accepted that he erred in not opening and using an estate bank account. He later transferred all rent recovered from the properties into an estate bank account. The Supreme Court said the failure of Stan to open a bank account in the estate’s name could not be justified by the fact that he was continuing the practice of his mother in managing her properties. However, the Court also said that where an executor’s conduct falls short of what is required of them, it is appropriate to consider their willingness to rectify their error.[1] His willingness to address the shortcoming by opening an estate bank account was significant.

The Supreme Court noted that a court will not interfere lightly with the testator’s choice of an executor.[2] It is noted that the testator has chosen that person based on loyalty, respect, necessity, their profession, or some other reason. The assumption is that the testator thought the person chosen was worthy of trust. A court will only remove an executor and trustee where it is necessary for the due and proper administration of the estate. It was the choice of Mrs Budulica to appoint Stan as executor and trustee. The Court found that there were no grounds that made it necessary or desirable to remove Stan as the executor and trustee. Sylvia’s application was dismissed.

Lessons Learned

There are a number of important lessons to be learned from this case:

  1. Where an executor’s conduct falls short of what is required of them, the court may consider their willingness to correct their error in deciding whether or not to remove the executor.
  2. The Court will not interfere with a testator’s choice of executor lightly.
  3. Executors are well served to take some early legal advice about their duties.

If you still have questions on how to remove an Executor

Contact our Brisbane Will making and Estate Litigation lawyers

Our Succession Law team regularly assists with:

  • Simple and complex Will making and Estate Planning (including Enduring Powers of Attorney)
  • Deceased Estate Administration
  • Estate Litigation – including Family Provision Claims, Trust and Will Promise Claims, and claims concerning the proper administration of an estate.

If you would like to make an in person, telephone and video conference appointment with one of our succession lawyers or would simply like to know more about whether we might be able to assist you please contact one of our client engagement officers today. There is no cost in making an enquiry.

End note: Sylvia made a separate application for family provision (see Budulica v Budulica [2016] QSC 184). This application was dismissed. She appealed this decision and the appeal was dismissed (see Budulica v Budulica [2017] QCA 161).

Authors: Kathleen Stonehouse & Brooke Nickerson


Footnotes

[1] Williams v Williams [2005] 1 Qd R 105 at [47].

[2] Baldwin v Greenland [2007] 1 Qd R 117 at [44].

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