Neuendorf & anor v the Public Trustee of QLD as executor of the estate of J R Dickfos (deceased)  QSC 156
The Supreme Court of Queensland was asked to consider whether the beneficiaries under a Will were entitled to compensation from the estate in accordance with section 107 of the
Powers of Attorney Act 1998 (Qld) (the Act) for the loss they suffered as a result of the actions of the attorney of the deceased.
Section 107 of the Act is unique to Queensland. It gives the beneficiaries of a Will the ability to apply to the Court
for compensation from the estate for the loss of a benefit if such loss is due to the sale or other dealings with the deceased’s property by an attorney during the deceased’s lifetime. Notably, the provision applies even if the beneficiary whose benefit is lost is the attorney who caused the loss to occur; as was the circumstance in this case.
Ms Neuendorf, the attorney of both Ms Dickfos and Ms Shaw, sold a property owned jointly by Ms Dickfos and Ms Shaw for their mutual benefit in May 2010. Ms Shaw died in June 2011. Upon Ms Dickfos’ subsequent death in August 2012 it was discovered that the same property had been bequeathed to Ms Neuendorf and Ms Shaw’s niece, Ms Brandon by Ms Dickfos in her Will executed in September 2004. However, as the property had already been sold there was no benefit to Ms Neuendorf and Ms Brandon under the will as they did not receive a share of the residuary estate.
As the executor of Ms Dickfos’ Will, the Public Trustee of Queensland, was granted administration of her estate in November 2012 and promptly notified both Ms Neuendorf and Ms Brandon that their benefit under the Will had been lost. The Public Trustee suggested that they consider making an application under section 107 of the Act for compensation from the estate.
The Court found that the sale of the property by Ms Neuendorf was consistent with her duty as an attorney as it was for the benefit of Ms Shaw and Ms Dickfos. However as this resulted in the failure of the gift in the Will to her and Ms Brandon, the Court held that this was a case where actions properly taken by an attorney resulted in a loss to them both and that section 107 of the Act should apply in their favour with an award of appropriate compensation.
Section 107 of the Act gives little guidance upon how compensation should be calculated apart from giving the Court the discretionary power to compensate for the loss from the estate.
The Court considered the following factors when calculating the amount of compensation payable to Ms Neuendorf and Ms Brandon:
- The size of Ms Dickfos’ estate, being a mere $183,378.
- The value of the property had it not been sold, determined to be approximately $310,000. Ms Dickfos’ share was assessed at $155,000, being the maximum that could have been received had the property not been sold.
- The conduct of Ms Neuendorf which was deemed to have been consistent with her duty as attorney and therefore did not bar her from receiving compensation.
- The residuary beneficiary was a charity.
- The legal costs to be paid out of the estate would significantly reduce the charity’s benefit under the Will.
After consideration of these factors and mindful not to significantly diminish the charity’s benefit under the Will, to adequately compensate the applicants for their loss of benefit the Court determined that the amount of compensation payable to Ms Neuendorf and Ms Brandon should be 84.5% of the estate, with the remaining 15.5% to be gifted to the charity.
Comment: In Queensland, due to the application of section 107 of the Act beneficiaries that lose their benefit under a Will due to the actions of an attorney may receive compensation. However, such compensation may not fully compensate the beneficiaries if the estate is small or to do so would disadvantage other beneficiaries’ benefits under the terms of the Will.
To avoid the costs of an application under section 107 consideration should be given to providing an alternative gift to a beneficiary if the initial gift should fail. Likewise, the same consideration should be given by Willmakers residing in other States and Territories as this remedy is only available in Queensland. If alternate gifts are not contemplated then the Will should be reviewed if the particular asset is disposed of during the Willmaker’s lifetime however, this can be particularly problematic if the attorney sells such assets in circumstances where another Will cannot be executed by the Willmaker due to a lack of mental incapacity.