Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell

BATHURST CJ: I have had the advantage of reading the judgment of White JA in draft.

I agree with the conclusion of White JA that on its true construction cl 33.2 of the agreement between the late Mr Lockrey (the deceased) and Mr Fussell permitted rescission of that contract on behalf of the deceased’s estate following his death.

I also agree with his conclusion that the appellant was not precluded by virtue of any breach of contract by or on behalf of the estate of the deceased from exercising any right of rescission she may have had on either 18 May 2017, the date the first notice of rescission was served, or on 16 October 2017, the date of service of the second notice of rescission.

I also agree with White JA that for the reasons which he has given that irrespective of the position prior to the grant of probate, Ms Deigan was entitled to rescind the contract on 16 October 2017 in her capacity as executor of the deceased’s estate.

In those circumstances, it is not necessary for me to express an opinion on the question of whether Ms Deigan, although named as executrix in the will, could not before the grant of probate exercise the right of rescission on behalf of and for the benefit of the estate, or on the question of whether if she did her action was retrospectively validated. The issues involved in the latter question are of considerable complexity and as White JA with respect correctly points out the conclusion which he has reached is contrary to at least that of Emmett J in Byers v Overton Investments Pty Ltd (2000) 106 FCR 268; [2000] FCA 1761 and the same conclusion reached by the Full Court of the Federal Court in that case, (2001) 109 FCR 554; [2001] FCA 760 at [24]-[28]. Although there is great force in the reasoning of White JA, it does not seem to me appropriate to decide that the decision of the Full Court of the Federal Court was plainly wrong in circumstances where it is unnecessary to do so.

In the result, I agree with White JA that the appeal should be allowed and the consequential orders proposed by him with the exception of paragraph (4) of those orders be made. In relation to paragraph (4), in my view the appropriate order is to declare that the contract was rescinded no later than 16 October 2017.

MACFARLAN JA: I agree with White JA’s judgment save that I refrain from expressing a final view on the questions referred to in paragraph 5 of the Chief Justice’s judgment.

WHITE JA: This is an appeal from orders of the Equity Division (Parker J) for specific performance of a contract for the sale of land (Fussell v Deigan [2018] NSWSC 1419). The appeal raises an important question concerning the powers of an executor between the testator’s death and the grant of probate.

The question arises in the following way. On 10 May 2012 contracts were exchanged for the sale of a property in Camellia between Mr James Lockrey as vendor and Mr Bernard Fussell as purchaser. The purchase price was $1,700,000. The deposit payable was $50,000. The completion date was five years after the contract date. The contract included a special condition 33.2 that provided that:

Clause 19 provided that if the contract were rescinded the deposit and any other money paid by the purchaser was to be refunded.

There were other contractual terms to which it will be necessary to turn in due course.

The contract also provided that the purchaser would grant Mr Lockrey a life estate for a home built on top of six garages on the property in terms set out in a deed, a copy of which was said to be annexed to the contract. (Clause 49.1). Clause 49.5 provided that the purchaser’s solicitor should prepare a transfer substantially in a form said to be annexed to the contract. The property was a large industrial site.

The vendor’s solicitor was named as CLS Legal.

Also on 10 May 2012 Mr Lockrey signed a form of lease with Blue Star Trading Corporation Pty Ltd for part of the land for a term of six years. The contract for sale contained an acknowledgment that Blue Star Trading Corporation Pty Ltd was an associated entity of the purchaser.

On 1 October 2013 Mr Lockrey made his last will. The will was prepared by CLS Legal. He appointed his solicitor, Ms Carolyn Deigan, to be the sole executrix of his will. He left his residuary estate to his wife, or if she did not survive him for 30 days, then to his daughters in equal shares.

Completion was due to take place on 10 May 2017. Neither Mr Lockrey nor Mr Fussell sought to make arrangements to enable completion to take place on that day.

Mr Lockrey died on 12 May 2017.

On 16 May 2017 the solicitors acting for Mr Fussell, Etienne Lawyers, wrote to Ms Deigan of CLS Legal asking when settlement could be booked. They noted that they had acquired the file from Mr Fussell’s previous solicitors and were holding a signed form of transfer by Mr Lockrey that had been provided to Mr Fussell’s previous solicitors. That form of transfer was for a transfer by Mr Lockrey to himself of a life estate and to Mr Fussell of an estate in remainder. Etienne Lawyers did not submit a revised form of transfer to take account of Mr Lockrey’s death.

On 18 May 2017 CLS Legal served on Etienne Lawyers a notice of rescission and enclosed a trust account cheque in the amount of $50,000, being the refund of the deposit. The notice of rescission was as follows:

It is common ground that the reference to CLS Legal being solicitors for the purchaser was an obvious mistake and should be and was understood as CLS Legal being solicitors for the vendor.

Mr Fussell did not accept the validity of the notice of rescission. On 1 June 2017 Etienne Lawyers served on Ms Deigan a notice to complete. Etienne Lawyers contended that special condition 33.2 of the contract only allowed rescission by the surviving party and did not permit the “vendor’s successor” to rescind the contract in the event of the vendor’s death. Etienne Lawyers also submitted that the vendor’s successor had no right to rescind because it was too late to do so. This was because Mr Fussell had an accrued right to complete the contract that had crystallised prior to Mr Lockrey’s death and was entitled to enforce that right. On 16 May 2017 they had called for completion. They said that Mr Fussell was ready, willing and able to complete.

The purpose of service of a notice to complete was to make time for completion essential. The notice to complete required completion on or before 16 June 2017. Whether the notice to complete was effective to make time essential is a red herring. Mr Fussell has not sought to terminate the contract. There is an issue whether Ms Deigan as Mr Lockrey’s executor, or the NSW Trustee that held the legal title to his assets prior to the grant of probate, were in breach of contract by not completing the contract on or any time after 16 June 2017.

On 2 June 2017 CLS Legal advised Etienne Lawyers that Ms Deigan was executrix of Mr Lockrey’s estate.

On 16 June 2017 Etienne Lawyers wrote to CLS Legal:

On 22 June 2017 Etienne Lawyers repeated that request.

On 29 June 2017 Etienne Lawyers wrote to CLS Legal noting that a notice of intention to apply for probate was filed on 19 June 2017. They stated that Mr Fussell remained ready, willing and able to complete the contract and advised he would be seeking specific performance of the contract and damages from the estate. They asked to be kept advised of the progress of the probate proceedings, and when any probate was granted.

On 10 July 2017 CLS Legal replied to Etienne Lawyers’ letter of 22 June stating simply that “our client’s [sic] stand by the fact that the contract was terminated.”

On 24 July 2017 CLS Legal conveyed complaints of their client or clients (Ms Deigan or Mrs Lockrey) in relation to alleged breaches of the lease.

On 22 August 2017 Ms Deigan of CLS Legal advised that she was still waiting to be in a position to “lodge the Probate”, and that the estate would be looking to enforce the terms of the lease as soon as probate was granted.

On 25 August Etienne Lawyers asked to be advised when Ms Deigan would be applying for a grant of probate, and advised that their client intended to commence proceedings for specific performance.

On 21 September 2017 probate of Mr Lockrey’s will was granted to Ms Deigan. She received the original of the grant (without all attachments) on 29 September 2017.

On 4 October 2017 CLS Legal forwarded to Mr Brown of Etienne Lawyers a copy of the grant of probate. Ms Deigan said “We therefore reiterate the issues set out in our letters of 10 July, 2017 and 24 July, 2017. Copies of which are also attached.”

On 16 October 2017 CLS Legal served a second notice of rescission. In its covering letter CLS Legal stated that “This notice is served on your client to the extent of any invalidity or claim of invalidity in respect of the notice served on your client on 18 May 2017.” The notice of rescission of 16 October 2017 stated:

On 17 October 2017 Mr Fussell filed a summons. The substantive relief claimed in the summons was:

The issues before the primary judge were somewhat wider than the issues ultimately pressed on appeal. The primary judge rejected Mr Fussell’s claim for rectification of cl 33.2 and the appeal against that finding was not pressed.

The issues arising on appeal and the way in which they were dealt with by the primary judge were as follows:

The primary judge summarised his conclusions as follows (Judgment [328]):

For the reasons which follow I differ from the primary judge’s fourth and fifth conclusions. The fourth conclusion raises an important issue concerning the operation of ss 44 and 61 of the Probate and Administration Act 1898 (NSW). The primary judge’s reasons were thorough and learned. Although I have reached a different conclusion, the primary judge cannot be criticised for following the authorities on which he relied.

The directly relevant parts of clause 33.2 are set out at [1] above. The context of those parts is also relevant. Clause 33 provides:

In the structure of these provisions there is a clear difference between clause 33.2 on the one hand, and clauses 33.1 and 33.3 on the other. In clauses 33.1 and 33.3 specific provision is made as to when either the vendor or the purchaser can rescind if the other party is declared bankrupt or is subject to statutory administration. In contrast, the rights of the vendor and purchaser under cl 33.2 arise if either the vendor or purchaser dies or becomes mentally ill, in which case the right of rescission is granted to “either party”. In the case of the vendor dying or becoming mentally ill “either party” may rescind and in the case of the purchaser dying or becoming mentally ill “either party” may rescind. There is no contextual basis for Mr Fussell’s submission that the right of rescission was only available to the surviving party. The primary judge correctly concluded (Judgment [170]) that the right to rescind under special condition 33.2 extended upon Mr Lockrey’s death to his legal personal representative.

Mr Fussell submitted that it was a fundamental background circumstance known to both parties that Mr Lockrey was in ill health and unlikely to survive to the date set for completion under the contract.

The evidence established that Mr Lockrey was in ill health at the time of the contract. It did not establish that he was likely to die before 10 May 2017. In any event, even if both parties anticipated Mr Lockrey’s not surviving until 10 May 2017, it would not be nonsensical (as Mr Fussell submitted) for the parties to have intended that the contract could be rescinded by the representative of his estate if he died. To the contrary, both parties could reasonably have anticipated that over five years the value of the property contracted to be sold would increase. If Mr Lockrey survived for the five years up to completion, then Mr Fussell would be entitled to complete the contract at the price agreed upon in 2012 after paying a deposit of only $50,000. If it were thought likely, or even very likely, that Mr Lockrey would not survive the five-year period to completion, there is no obvious reason that Mr Fussell, whose company was entitled to occupy most of the property under a lease in the meantime, rather than the beneficiaries of Mr Lockrey’s estate, should benefit from an increase in the capital value of the land. As Ms Deigan submitted, the parties agreed to an extended five-year settlement and both parties took the risk that the contract might fall over in that period if one of them died. I agree with the primary judge’s reasons (at [149]-[170]) for rejecting Mr Fussell’s contended construction of clause 33.

Mr Cook SC who appeared for Ms Deigan submitted that irrespective of whether or not CLS Legal could have authority from Ms Deigan as executrix of Mr Lockrey’s estate prior to the grant of probate (and accepting that CLS Legal had no authority from the NSW Trustee in whom legal title to the estate was then vested) the notice of rescission of 18 May 2017 was effective because it was served by the vendor’s solicitor. In clause 1 of the contract for sale of land “solicitor” was defined to mean “in relation to a party the party’s solicitor or licensed conveyancer named in this contract or in a notice served by the party”.

“Party” was defined to mean “each of the vendor and the purchaser”. “Serve” was defined to mean “serve in writing on the other party”.

Clause 20.6 relevantly provides:

Mr Cook submitted that the combined effect of clause 20.6.2 and 20.6.3 was that the contract operated on the basis that if a party’s solicitor served a notice it had the same effect as if the party himself had served the notice. It did not matter that Mr Lockrey had died. Accepting for the purposes of the submission the correctness of the primary judge’s finding that Ms Deigan did not have authority prior to the grant of probate to give instructions to herself as solicitor, it did not matter that she had no authority from the NSW Trustee.

Mr Cook relied upon Alex Paul Pty Ltd v Schembri [1975] 2 NSWLR 769. There, a special condition gave the purchaser a right to rescind if the vendors did not become registered proprietors of the land the subject of the contract of sale within six months. Clause 22(b) provided relevantly that “a notice given or document signed and served on behalf of any party hereto by his solicitor shall be deemed to have been given or served by that party personally.” Street CJ said (at 771):

Glass JA agreed. His Honour said that:

Samuels JA agreed with both judgments.

In reliance upon this decision Mr Cook submitted that it did not matter if Ms Deigan in her capacity as solicitor had neither actual nor ostensible authority to give the notice. The notice of rescission was nonetheless effective because it was given by the named solicitor on the contract.

The High Court dismissed the appeal (Schembri v Alex Paul Pty Ltd (1976) 13 ALR 511). In doing so the High Court neither endorsed nor rejected the reasoning of the Court of Appeal in Alex Paul Pty Ltd v Schembri. Barwick CJ (with whom Gibbs, Mason, Jacobs and Murphy JJ agreed) said (at 513):

Both judgments were given ex tempore. The ratio of the Court of Appeal’s decision as identified by the High Court was that clause 22(b) conferred actual authority on the solicitor to give the notice of rescission. What was not addressed was what would happen if, to the notice of the other party, that authority were withdrawn. If, for example, the purchasers had changed solicitors to the knowledge of the vendor could the solicitor named on the contract as the purchaser’s solicitor give a notice of rescission although without any authority, actual or ostensible, to do so? That issue was not addressed. The hypothesis postulated by Glass JA assumed that the solicitor giving the notice was at the time of giving the notice the solicitor for the party on whose behalf it was given.

Mr Cotman SC who appeared with Mr Kennedy for Mr Fussell, submitted that the construction issue raised for Ms Deigan did not arise because CLS Legal who gave the notice of rescission was not the same entity that was named as the solicitor on the contract. CLS Legal is not the name of a partnership. It is the business name of a company called Commercial Legal Solutions Pty Ltd. The primary judge found (Judgment [48]) that Ms Deigan and a Mr John Tomko were the directors of that company. In 2015 the business name was transferred to another company called Commercial Legal Solutions Pty Ltd and the former company was renamed (Judgment [48]). Ms Deigan was the director of a new company called Commercial Legal Solutions Pty Ltd, but it was not the same entity as the solicitor that was named on the contract. Thus, when Ms Deigan gave the notice of rescission of 18 May 2017 by “Commercial Legal Solutions Pty Ltd ACN 604 467 905 t/as CLS Legal” that was not the same entity as the solicitor named on the contract.

This is itself a sufficient ground for rejecting Ms Deigan’s submission. “CLS Legal” that gave the notice of rescission was not “CLS Legal” named as solicitor in the contract (Coplin v Al Maha Pty Ltd [2019] NSWCA 159 at [92]-[95]).

This was not the ground upon which the primary judge rejected the validity of the notice of rescission. Instead, his Honour relied upon cl 20.6.3. His Honour said:

The primary judge was not referred to the decisions of the Court of Appeal and the High Court in Alex Paul Pty Ltd v Schembri.

Clause 22(b) that was at issue in Alex Paul Pty Ltd v Schembri provided that a notice given on behalf of a party by his solicitor should be deemed to have been given by that party personally. The same language is not used in clause 20.6, but the effect of the provision is the same. The standard contract for sale provides for various things to be done either by the vendor or the purchaser or by a “party”, and clause 20.6 provides for the mode by which things to be done on behalf of the party can be done. But the thing has to be done by or on behalf of the party to the contract. Clause 33.2, upon which Ms Deigan relies, requires that “either party may rescind this contract by notice in writing etc”. I agree with the primary judge that it is significant that cl 20.6.3 provides that service on a party’s solicitor is effective even if the party has died, but does not deal with the case of service by the solicitor for the party who has died.

Mr Cook submitted that this was not to the point because the matter was covered by cl 20.6.2 and it was enough if it was served by the solicitor who had been acting for the party prior to the party’s death, whether or not that solicitor had authority or ostensible authority to do so. But if the “party” could not give the notice, then a notice given by the solicitor who had been acting for the vendor prior to his death could not be a notice of rescission given by a “party” under cl 33.2.

Mr Lockrey was dead. According to the primary judge Ms Deigan had neither title to the deceased’s property, nor authority to rescind the contract prior to obtaining a grant of probate. For the reasons below, the NSW Trustee, in whom legal title to Mr Lockrey’s estate had vested, also did not have any obligation and did not have authority to exercise the contractual right of rescission. If there were no “party” who could exercise the right of rescission, then the solicitor could not do so.

For these reasons I would reject the first ground raised on appeal. However, it is apparent that this leads to a consideration of the correctness of the primary judge’s conclusion that Ms Deigan, although named as executrix in the will, could not, before grant of probate, exercise the right of rescission on behalf of and for the benefit of the estate, and if she did so, her action was not retrospectively validated on the grant of probate.

Sections 44 and 61 of the Probate and Administration Act 1898 (NSW) relevantly provide:

Whether Ms Deigan as executrix of Mr Lockrey’s will could exercise the right of rescission in cl 33.2 before she obtained a grant of probate depends upon the effect of the words in s 44(1) “... as from the death of such person”, and on s 61, which deems that between death and the grant of probate or administration or an order to collect, the real and personal estate of the deceased is vested in the NSW Trustee “in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England”.

The primary judge extensively reviewed the authorities on the effect of these or like provisions. His Honour applied the reasoning of Emmett J (as his Honour then was) in Byers v Overton Investments Pty Ltd (2000) 106 FCR 268; [2000] FCA 1761 (affirmed on appeal in Byers v Overton Investments Pty Ltd (2001) 109 FCR 554; [2001] FCA 760) in concluding that ss 44 and 61 “... were intended to assimilate the position of executor with respect to the vesting of property in the interval between the testator’s death and the grant of probate to that of an administrator.” (Judgment [228]).

The primary judge identified the relevant issue as follows (Judgment [289]):

His Honour concluded that for it to be implied that the right of rescission could be exercised by Mr Lockrey’s executrix before a grant of probate was obtained, the implication had to satisfy the five conditions in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283; [1977] UK PC HCA 1. His Honour was not satisfied that an implication was necessary to give business efficacy to the contract, nor was it reasonable and equitable (Judgment [291]-[292]).

The primary judge also concluded that s 44 would not have the effect of retrospectively authorising Ms Deigan’s notice of rescission (Judgment [297]-[302]). His Honour considered and rejected a submission made for Ms Deigan based on observations of Gibbs J in Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 at 77-78; [1974] HCA 49 as interpreted by the Full Court of the Federal Court in Byers v Overton Investments Pty Ltd that Ms Deigan as the nominated executrix could validly give the notice under cl 33.2 before the grant of probate (Judgment [303]-[318]).

Whether Ms Deigan as executrix could give notice of rescission before the grant of probate and whether s 44 operates retrospectively so as to validate Ms Deigan’s purported rescission are anterior questions to whether the contract contemplated that a notice of rescission could be given by the personal representative of a party before the grant of probate or letters of administration. If Ms Deigan as executrix did not have the power to give notice of rescission before probate was granted, and if her giving of notice was not retrospectively validated, then the question whether the contract contemplated that action taken by a nominated executor before grant was retrospectively to be treated as valid would not arise. On the other hand, if Ms Deigan as executrix of Mr Lockrey’s estate had authority to give notice of rescission, or is retrospectively to be taken as having such authority through s 44 of the Probate and Administration Act, then there is no reason to think that the contract, on its proper construction, would preclude the exercise of that power. No question of an implication of terms would arise.

At general law, a testator’s personal property, including choses in action, vested in the executor upon the testator’s death. The executor’s title to personal property did not depend upon a grant of probate, although a grant of probate would often be required as authentication of that title and was so required if the executor commenced legal proceedings to enforce a claim of the deceased’s (Chetty v Chetty [1916] 1 AC 603 at 608). Only personal estate vested in the executor. Prior to 1540 in England real estate passed directly to the heir at law there being no general freedom of testation in respect to real estate. After 1540 real estate passed directly to the devisee under the will, or to the heir at law if there were an intestacy as to the real estate.

By contrast, an administrator’s title to the personal property of a person dying intestate was derived from the grant of letters of administration. In some but not all cases that title was taken to relate back to the date of the intestate’s death. This was so, notwithstanding that prior to the grant of letters of administration the legal title to an intestate’s personal property was vested in the Ordinary. Thus, after a grant of letters of administration, an administrator could sue for the conversion of the deceased’s goods made after death and before grant (Tharpe v Stallwood (1843) 5 Man & G 760; 134 ER 766) or maintain an action for trespass to the deceased’s goods occurring between death and grant (In the Goods of Pryse [1904] P 301). An administrator could ratify and enforce a contract made by a person purporting to act as agent for the deceased prior to the grant of letters of administration (Foster v Bates (1843) 12 M & W 226; 152 ER 1180). The estate was liable for services that were for the benefit of the estate that were rendered under a contract with the person who subsequently became administrator and ratified the contract (Re Watson; ex parte Phillips (1886) 18 QBD 116; Re Watson; ex parte Phillips (1887) 19 QBD 234). The grant of administration had the effect of vesting leasehold property in the administrator by relation back to the date of death so as to enable the administrator to bring actions in respect of leasehold property for matters occurring between death and grant, such as obtaining an account for rents and profits after death (R v Horsley (1807) 8 East 405 at 410; 103 ER 398 at 400; R Williams and A Ingpen, Williams’ Law of Executors & Administrators (10th ed, 1905) at 470).

In Chancery it was held that although administration was not taken out until after the filing of the bill, it was sufficient that administration was obtained before hearing (Fell v Lutwidge (1740) 2 Atk 120; 26 ER 475; (1740) Barn. Ch. 319; 27 ER 662). In answer to the objection that the bill was brought before administration had been taken out Lord Hardwicke LC said that although this would have been a good “Exception in an Action of Law, but that it was not so to a Bill brought in this Court; accordingly the exception was over-ruled.” (at 320).

In Chetty v Chetty Lord Parker, in delivering the advice of the Judicial Committee, said that because an administrator derives title solely under his grant, he could not institute an action before he obtained his grant. That position was taken to have been well settled by 1916 and was affirmed in Ingall v Moran [1944] KB 160 and subsequent cases. The only qualification (which is acknowledged in Ingall v Moran per Goddard LJ, with whom the other members of the Court of Appeal agreed) was that a suit for administration of an estate brought by persons who would be beneficiaries in the administration is not defeated by the absence of a grant of letters of administration, if the person entitled to obtain the grant is plaintiff or is made a defendant. Goddard LJ observed that the modern practice would be to issue a writ asking for appointment of a receiver pending a grant of letters of administration. His Lordship said that Lord Hardwicke did not intend to say in Fell v Lutwidge that in any Chancery suit it was open to a person to file a bill as administrator before he obtained a grant. Later authority was to the contrary (at 172).

Closer to the present case is Holland v King (1848) 6 CB 727; 136 ER 1433. There, a partnership agreement provided that the executor or administrator of a deceased partner should have the option of succeeding to the share of the deceased partner in the partnership business if he or she gave notice of his or her intention to do so within three months of the former partner’s death. The deceased partner died intestate. His widow gave notice within three months of his death of her intention to succeed to his share of the partnership business. She had not then obtained letters of administration but subsequently did so. The Vice-Chancellor (Knight Bruce VC) sought the opinion of the judges of the Court of Common Pleas as to whether the notice under the partnership agreement had been duly given. The Court advised that notice had not been duly given. Although no reasons for the opinion were given, it is clear from the report of the judges’ comments during argument that the Court was of the view that notice could only be given by a person to whom administration had already been granted and the subsequent grant of letters of administration did not relate back to validate the notice. The administratrix could not be a partner until administration had been granted and the limit of time for giving of notice was to enable the surviving partners to know whether they were to carry on the business alone or with a third partner (at 740-741).

If the deceased had not died intestate but had left a will appointing his widow his executrix, the decision would have been different. The executrix would have had title derived from the deceased’s will from the date of his death to give notice of exercise of the option to assume the rights and obligations of a partner.

In Laybutt v Amoco Australia Pty Ltd Gibbs J explained Holland v King on the basis that when notice was given it was invalid because the widow was not then the administratrix and it could not be ratified by her after the time allowed for the exercise of the option had expired (at 78).

Although, historically, the title of an administrator had always dated only from the date of grant, the express provision in what is now s 44 of the Probate and Administration Act, that the title of an administrator should date from the death of the deceased, was comparatively new. It was introduced in New South Wales only in 1890.

Although for some purposes an administrator’s title to intestate personal estate had related back to the date of death, that was not because of any statutory provision to that effect. Rather, it was the result of judicial decision to protect intestate estates from wrongs done between the intestate’s death and the grant of letters of administration where no remedy would otherwise be available, and to allow for the enforcement of rights arising after death but before grant, where that was for the benefit of the estate.

It might be thought that where it is provided that following the grant of probate or administration, title to the deceased’s estate would pass to the executor or administrator as from the death of the deceased, the position of the administrator would be assimilated (retrospectively) to what had been the position of the executor, rather than vice versa. That is because at general law the executor derived title from the will and could deal with the estate assets from death. Probate was only an authentication of title. The administrator derived title only from the grant of letters of administration but the general law provided for some circumstances in which the administrator’s title would be taken to relate to the time of death. An express and unqualified statutory provision that the estate of the deceased should vest in the executor or administrator as from death should not be confined by qualifications applicable only to the relation back of an administrator’s title that were the result of the amelioration of the consequences that at general law would otherwise flow from the fact that an administrator’s title did not take effect as from the intestate’s death. Rather, prima facie, s 44 was a confirmation of the executor’s power to deal with the estate after death and an enlargement of the administrator’s power.

This prima facie position could yield to any contrary implication from s 61. It is therefore important to understand the purpose and scope of s 61. If, and to the extent, s 61 conferred power on the NSW Trustee to deal with the estate assets prior to grant, then the prima facie position under s 44 would be qualified.

Section 61 addresses only the vesting of title to the deceased person’s estate. It says nothing, unless it be by way of inference, as to power to deal with the estate. Because title is vested “in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England”, the question is what was the nature of the title that “aforetime” was vested in the Ordinary in England and what power did the Ordinary have to deal with an intestate’s personal estate?

The word “aforetime” in s 61 refers to the time before the enactment in England of the Court of Probate Act 1858 (Imp) (21 and 22 Vic C 95) (Ex parte Public Trustee; Re Birch (1951) 51 SR (NSW) 345 at 348-9). In the previous year the Court of Probate Act 1857 (20 and 21 Vic C 77) abolished the testamentary jurisdiction of the ecclesiastical courts and gave what had been the Ordinary’s role of granting probate and letters of administration to the Court of Probate (s 4). By the next session of Parliament, defects were found in the 1857 Act. One such defect was that although it was the Judge of the Court of Probate that was responsible for the grant of probate or letters of administration, in the case of intestacy, personalty still vested in the Ordinary. In the words of Coote, the flaw was that the 1857 Act had “failed to transfer the custody of and legal succession to the personal estate of persons deceased, which had theretofore vested in the ordinaries loci” (H C Coote, The Practice of the Court of Probate in Common Form Business (4th ed 1863, Butterworths) at 2).

To remedy this, the Court of Probate Act 1858 (Imp) (21 and 22 Vic C 95) introduced in s 19 what was to become the precursor to s 61 of the Probate and Administration Act. Section 19 provided:

The Ordinary’s jurisdiction related only to the deceased’s intestate personal estate.

The Administration on Intestacy Act 1357 (31 Ed. III C.11) took away from the Ordinary the duties of administering the intestate’s goods and required the Ordinary to depute the “next and more lawful friends of the dead person intestate to administer his goods”. That Act provided:

These deputies were the original administrators. They were officers of the Ordinary and their title and authority was derived exclusively from the Ordinary, being the ecclesiastical judge, by grants which were called letters of administration (H C Mortimer, The Law and Practice of the Probate Division of the High Court of Justice (1911, Sweet & Maxwell) at 311).

In Hensloe’s Case (1599) 9 Co. Rep. 36b; 77 ER 784 the Court of King’s Bench said that after the Statute of Edward III of 1357 the Ordinary had no power “to sell or give the goods or dispose of any of them to his own use, or any other ... [and] had no authority to sell any of the goods of the intestate, although they are in danger of perishing” (at 789-790). The Ordinary could not recover any debt, or take advantage of any covenant or any thing in action (at 790).

In Fotherby’s Case (1626) Croke, Car. 62; 79 ER 657 and Levanne’s Case (1630) Croke, Car. 201; 79 ER 777 it was held that the Ordinary did not have power to compel an administrator as to how the surplus was to be distributed “because he being obliged by the statute 31 Ed 3 to grant administration, and that being done, he had executed his power, and from that time the property of the goods was vested in the administrator”.

In I J Hardingham, M A Neave and H A J Ford, Wills and Intestacy in Australia and New Zealand (1983, Law Book Co Ltd) at 329 the authors say:

Hence, in Chan Kit Sun v Ho Fung Hang (1902) AC 257 the Privy Council held that the limitation period for recovering debts owed to the intestate ran only from the grant of letters of administration (at 261).

Sir William Holdsworth described the Ordinary’s role in early times (from the 14th century) and later as follows:

And speaking of the Ordinary’s position in later times, Holdsworth said:

Nor did the Ordinary have any beneficial interest in a deceased’s intestate personal estate even if the deceased had no relative who could take on an intestacy. This was established in Dyke v Walford (1846) 5 Moo PC 434; 13 ER 557. There the Privy Council speaking of the position before 1357 said:

In Dyke v Walford the Privy Council held that where an intestate deceased’s goods passed to the Crown in bona vacantia they did so pursuant to the general royal prerogative and not pursuant to the Queen’s accession to the rights of an Ordinary in the Duchy of Lancaster.

In 1857 the Ordinary’s role was not to administer an intestate’s personal estate, but to appoint an administrator to do so. Until the grant of letters of administration title to the intestate’s personal estate vested in the Ordinary, but the Ordinary had no administrative function. He could not deal with the estate.

In re Deans [1954] 1 WLR 332 concerned s 9 of the Administration of Estates Act 1925 (UK). It provided that where a person died intestate, his real and personal estate, until administration was granted in respect thereof, should vest in the Probate Judge in the same manner and to the same extent as formerly, in the case of personal estate, it vested in the Ordinary. In that case the deceased had given a guarantee of the account of a customer of the bank and had deposited shares, stock and bonds as security for the guarantee. The customer absconded and the bank wished to realise its securities. It was reluctant itself to take out a grant of letters of administration of the deceased’s estate. The bank filed a summons seeking an order appointing the Official Solicitor to represent the estate, relying on s 51(1)(v) of the Trustee Act 1925 (NSW) which conferred power on the Court to order transfer of shares, stock or defence bonds to the Official Solicitor where such property was “vested in a trustee within the meaning of s 51(1)(v) of the Trustee Act.” Wynn-Parry J dismissed the application saying that the Probate judge could not be said to be a trustee within the meaning of the Trustee Act. Wynn-Parry J said (at 334-335):

It should follow, as has sometimes been held, that although under s 61 of the Probate and Administration Act title to the deceased’s estate was vested in the NSW Trustee until the grant of probate, the NSW Trustee did not have any power or authority to deal with the estate. That power had been removed in 1357. It should follow that it cannot be implied from the vesting of title to a deceased’s property in the NSW Trustee between the date of death and the grant of probate or administration that the NSW Trustee has powers of administration that would ordinarily enure to the holder of the legal title, or that could qualify the operation of the relation back provision in s 44.

The office of Ordinary was never an office in New South Wales. The Letters Patent (commonly called the First Charter of Justice) issued to Captain Phillip on 2 April 1787 provided for the appointment of a court to be called the Court of Civil Jurisdiction to consist of a Judge-Advocate which could grant probates of wills and administrations of the personal estates of intestates dying within the place or settlement (Act 27 Geo III C 2 (1787); J M Bennett, A Source book of Australian legal history: source materials from the eighteenth to the twentieth centuries (1979, LawBook Co) at 20). (See also B Debelle (ed), Victor Windeyer’s Legacy: Legal and Military Papers (2019, The Federation Press) at 92-94).

By the Third Charter of Justice (s 14) the Supreme Court was given the same power as the English Ecclesiastical Courts to grant probate or letters of administration.

In New South Wales the personal estate of intestates was not administered by an Ordinary. Instead, by the Intestate Estates Act 1838 and the Intestates Estate Act 1847, the power to administer the personal estates of intestates was given to a Curator of Intestate Estates, who, in practice, was a Registrar of the Supreme Court. (An unpublished paper of Dr J M Bennett “A Research Project on the Ecclesiastical Jurisdiction Exercised in the Supreme Court of New South Wales 1824-1890” records details of misappropriations by the Curator. The Intestate’s Estates Claims Act 1849 (13 Vic 44) (NSW) shows that the then-Curator of intestate estates was insolvent and had failed to pay over £11,271.19 which had come into his hands by virtue of his office as Curator to the parties entitled to receive it.)

Prior to 1862 in New South Wales and 1898 in England real property of an intestate deceased went directly to his or her heir-at-law. The Real Estate of Intestates Distribution Act 1862 (NSW) (26 Vic No. 20) (“Dr Lang’s Act”) provided that real property of an intestate passed to the legal personal representative of the deceased. Prior to then the real property of an intestate deceased passed directly to the heir-at-law. Section 1 of Dr Lang’s Act provided:

Chattel real property of an intestate vested in an administrator on the grant of letters of administration.

In Norman and Wife v Peck (1882) 3 NSWR 42 an intestate, who had mortgaged land in 1857, died in 1863. Letters of administration were granted in 1865 to his widow. The mortgage was discharged in 1876. The deceased’s son had taken possession as heir-at-law. The Full Court held that the administratrix’s title related back to the time of death and the son was not entitled to possession.

In 1890 the New South Wales Parliament passed the Probate Act 1890 (NSW) (54 Vic 25). Section 15 of that Act provided:

Section 32 provided:

Section 39 provided for the vesting of intestate realty and personalty in the Chief Justice of New South Wales as follows:

Section 39 was clearly derived from s 19 of the 1858 Court of Probate Act (UK). At this point in time, the vesting related only to a person’s intestate estate.

As Emmett J explained in Byers v Overton Investments Pty Ltd (2000) 106 FCR 268; [2000] FCA 1761 at [36]-[40], in 1893 the Probate Act of 1890 was amended by the Probate Act of 1890 Amendment Act 1893. Section 23 of that Act provided:

Emmett J observed that observations made by the Honourable R E O’Connor in the Legislative Council moving for the inclusion of s 23 of the Amendment Act may have been ill-informed (at [39]-[40]). Mr O’Connor said:

Emmett J observed that there was no need to provide a depositary for testate personal estate pending the grant of probate.

The felt necessity was probably doubt as to the operation of s 15 of the 1890 Act that provided, in substance, that upon the grant of probate real estate vested in the executor to whom such probate should be granted as from the testator’s death. If real estate were to vest in the executor only from the grant of probate, then it would presumably vest in the devisee after death and until the grant of probate, without any abeyance of seisin. Section 15 provided that upon grant real estate would vest in the executor as from death. But what was the position when considered after death but before grant? The same question arose under s 32 in the case of intestacy. The Full Court had held Norman and Wife v Peck that the administrator’s title related back to death. Did that mean that the heir-at-law never obtained title or was it divested on the grant of letters of administration? That question was not addressed in Norman and Wife v Peck.

The doubt expressed by Mr O’Connor was probably as to the effectiveness of the retrospectivity of s 15 and s 32 because of the possibility of an abeyance of seisin between death and the grant of probate or administration. It was impossible at common law to create an estate of freehold which would spring up in the future by itself (Goodtitle on the demise of Dodwell v Gibbs (1826) 5 B & C 709 at 716; 108 ER 264 at 266; Bonnington v Robinson (1875) LR 10 Ex 270 at 273). The Statute of Wills 1540 (UK), s 2 permitted the devise of land by will, but it was not until 1890 in New South Wales that it was provided that land devised by will should not pass directly to the devisee, but to the executor on trust for the devisee. The likelihood is that the doubts to which Mr O’Connor referred did not concern the vesting of testate personal estate, but the retrospective vesting of real estate in the executor, and further uncertainties if land were devised by will without the appointment of an executor, or if the executor pre-deceased the testator without appointing an executor, or the executor renounced probate.

In In re Beavis; Beavis v Beavis (1907) 7 SR (NSW) 66; 23 WN (NSW) 245 it was held that the effect of s 44 of the 1898 Act was to vest the statutory legal estate in the executors sufficient to support contingent remainders created by the will which would otherwise have failed for want of a freehold estate to support them. The devise of the life estate failed because the life tenant witnessed the will. If no grant of probate had been obtained s 61 would have achieved the same result.

At least one evident purpose of s 23 of the Probate Act of 1890 Amendment Act was to ensure the continuation of ownership between the testator’s death and the grant of probate or letters of administration to preclude any argument that the assets of the deceased were for any period bona vacantia (Oxford Meat Co. Pty Ltd v McDonald (1963) 63 SR (NSW) 423 at 425; Re Cameron; Cameron v Public Trustee [1982] WAR 55 at 58 per Wallace J; N Crago “Executors of Unproved Wills: Status and Devolution of Title in Australia” (1993) 23 UWAL Rev 235 at 245).

This raises for consideration decisions under post-war landlord and tenant legislation, culminating in the decision of the High Court in Andrews v Hogan (1952) 86 CLR 223; [1952] HCA 37, and later authorities applying those decisions, that were influential in the primary judge’s assessment of the executor’s powers before grant of probate.

In Foy v Public Trustee (1942) 42 SR (NSW) 209 a mortgagee sought foreclosure of mortgaged properties. The mortgagor had died intestate and no administration had been granted in respect of the estate. At the time of the mortgagor’s death, s 61 of the Wills, Probate and Administration Act provided for the vesting of the estate in the Chief Justice for the time being. (In 1932 the Act was amended to substitute the Public Trustee for the Chief Justice.) The mortgagee joined the Public Trustee as the defendant to the suit. Roper J observed that the effect of the 1932 amendment was not to transfer from the Chief Justice to the Public Trustee the estate vested in the Chief Justice by s 61. His Honour continued (at 211):

In The Daily Pty Ltd v White (1946) 63 WN (NSW) 262 the deceased was a tenant under a weekly lease. She died leaving a will that appointed an executor. The executor assigned the tenancy to a Mr White. On an application for summary judgment Herron J held that:

Herron J held that the purported assignment was inoperative. It was not a nullity because of its possible validation on a grant of probate (263-264). The owner contended that although inoperative as an assignment the deed was effective as a determination of the tenancy when it was given to the landlord and impliedly assented to by him. Herron J, without deciding, said that the correct view probably was that:

This decision was criticised shortly after it was given. In a note published in (1946) 20 ALJ 310 at 311 the commentator said that the decision was:

That comment is cited with apparent approval in R Geddes, C Rowland and P Studdert, Wills, Probate and Administration Law in New South Wales (1996, LBC Information Services) at [40.26]. The view of the learned authors is that:

In Public Trustee, Ex parte; Re Birch (1951) 51 SR (NSW) 345 the question was whether in the case of an owner of premises dying intestate and before the grant of letters of administration the Public Trustee could be made a party to proceedings instituted under s 5 of the Landlord and Tenant (War Service) Amendment Act 1949 (NSW) by reason of s 61. Section 5 of the Landlord and Tenant (War Service) Amendment Act provided that protected persons could apply to the Court of Petty Sessions for a warrant requiring delivery of possession of the dwelling house to the applicant. A copy of the application was required to be served upon the owner of the dwelling house or that person’s ordinary letting agent. A notice was served on the Public Trustee. After full consideration of the role of the Ordinary, the Full Court (Street CJ, Maxwell and Owen JJ) held that the Public Trustee was not the “owner” of the premises within the meaning of s 5. Street CJ said (at 350):

Maxwell J said (at 357-358):

This suit was stood over with liberty to the plaintiff to amend (presumably by obtaining a limited grant of administration ad litem (R Geddes, C Rowland and P Studdert, Wills, Probate and Administration Law in New South Wales (1996, LBC Information Services) at [40.82]).

Neither Re Birch nor Foy v Public Trustee was overruled in Andrews v Hogan. There, a lessee of residential premises had sublet parts of the premises. She died leaving a will under which her two sons were the executors (and sole beneficiaries) of her estate (at 228). The owner of the premises served a notice to quit on the Public Trustee and brought proceedings for possession in the Supreme Court against the sublessees. The principal issues in the case concerned provisions of the Landlord and Tenant (Amendment) Act 1948-1949 (NSW) that are not presently material. The High Court held that the weekly tenancy of the deceased vested in the Public Trustee and that the notice to quit served on the Public Trustee would be effective to terminate that tenancy if the ground for termination relied upon under the Landlord and Tenant (Amendment) Act were made good (per Dixon CJ at 231-232, per McTiernan J at 237, per Fullagar J at 245, per Kitto J at 255). Both Dixon CJ and Fullagar J contemplated that the Public Trustee might have some rights and powers. Dixon CJ (at 234) cited with approval the following statement of Bucknill LJ in Fred Long & Son Ltd v Burgess [1950] KB 115 at 119:

Bucknill LJ did not cite authority for his view that in a case of necessity the President could give directions about the property. He did not refer to Hensloe’s Case.

Fullagar J said (at 250-251):

Fullagar J (in obiter) also accepted that the Public Trustee would have power to surrender the lease (at 251).

None of the Justices addressed the purpose of s 61, nor the powers of the Ordinary before 1858.

In Fred Long & Son Ltd v Burgess the Court of Appeal held that service of the notice to quit on the President of the Probate, Divorce and Admiralty Division of the High Court terminated the tenancy and that the subsequent grant of letters of administration to the deceased’s sons did not relate back to the deceased’s death so as to negate the efficacy of the notice to quit. Bucknill LJ said (at 121):

Asquith LJ said “The doctrine of ‘relation back’ cannot breathe new life into a corpse ...”. His Lordship said that the cases in which it was held that an administrator’s title related back to the date of grant were all connected with the protection or preservation of the estate from wrongful injury in the interval. In that case the doctrine was invoked not for the purpose of protecting the estate, but to enlarge it (at 121).

There was no statutory relation back provision to be construed in Fred Long & Son Ltd v Burgess.

In Perpetual Trustee Co Ltd v Public Trustee (1956) 73 WN (NSW) 546 Owen J (with whom Herron and Ferguson JJ agreed) held that after the decision of the High Court in Andrews v Hogan the Public Trustee could be joined as a defendant to a proceeding for possession.

In Holloway v Public Trustee [1959] SR (NSW) 308 Walsh J said that after Andrews v Hogan it was then no longer correct to speak of the Public Trustee as being for all purposes a mere formal repository of the legal estate or to say that he had no functions and no powers in respect of the estate. But Walsh J confirmed that there was no authority that the Public Trustee had any obligations or duties and, in particular, he had no obligation or duty to pay rent under a lease (at 311).

In Oxford Meat Co Pty Ltd v McDonald Brereton J, speaking for the Full Court said (at 425) that following Andrews v Hogan the Public Trustee, “in the case of a periodic tenancy may be given a notice to quit and may perhaps himself as tenant give one, or surrender, thus terminating the tenancy vested in him. I would doubt whether he has any other function.”

In none of these 20th century tenancy cases decided in England or in New South Wales after Re Birch was there any identification of what power the Ordinary had to deal with estate assets, as distinct from appointing an administrator to deal with assets. After Andrews v Hogan, service of a notice determining a legal estate would be effective if served on the Public Trustee that was then the holder of the legal estate. But except to that extent neither Foy v Public Trustee nor Re Birch was disturbed.

Nonetheless, in Ex parte Callan; re Smith (1968) 87 WN (Pt. 1) (NSW) 595; (1968) 1 NSWR 443 Isaacs J held that a notice to quit given by the executor of a deceased landlord before the grant of probate was ineffective because at the time the notice was issued the legal estate was vested in the Public Trustee. His Honour held that the subsequent grant of probate did not retrospectively validate the grant. His Honour said (at 447-448):

This assumed that before 1858 the Ordinary (not an administrator) could have served a notice to quit. Section 61 provides for real estate as well as personal estate to vest in the Public Trustee in the same manner and to the same extent as aforetime intestate personal estate vested in the Ordinary. If, contrary to the view I have expressed above, the purpose of that provision was more than to prevent an abeyance of seisin, the question that would have to be asked and answered is whether the Ordinary had a power of dealing with an intestate’s personal estate that was analogous to terminating a lease. The Ordinary had no such power (Hensloe’s Case).

Isaacs J addressed s 44. His Honour said (at 449):

Accordingly, Isaacs J’s view as to the width of the powers conferred on the Public Trustee by s 61, informed his narrow construction of the relation back provided for by s 44. One might have thought that the giving of a notice to quit was for the benefit of the estate so as to attract the doctrine of relation back, assuming that the doctrine of relation back, as it applied to grants of administration, also applied to s 44.

Issacs J then went on to hold that the notice to quit was, in any event, invalid because its operation was uncertain. The reasons given in this part of his Honour’s reasons would provide an additional reason for the inapplicability of the doctrine of relation back if the principles applicable at general law to grants of letters of administration were equally applicable to s 44. His Honour said (at 603-604):

Those reasons echo the sentiments in Holland v King (see [72] above).

In GEL Custodians Pty Ltd v The Estate of the Late Geoffrey Francis Wells [2013] NSWSC 973 Davies J reviewed the authorities concerning proceedings commenced against the Public Trustee and concluded:

That is not to say that the Public Trustee (now the NSW Trustee) would have power to bring proceedings to enforce a deceased’s chose in action in reliance on s 61 (Scallan v Scallan [2001] NSWSC 1129 at [12] per Windeyer J). In Byers v Overton Investments Pty Ltd Emmett J envisaged that the Public Trustee could have brought a personal action on behalf of a deceased estate relying upon s 61 (at [55]). That statement was doubted by Davies J in GEL Custodians as being irreconcilable with Scallan, Foy and Atsas v Gertsch [1998] NSWSC 522 (Hodgson CJ in Eq).

In Cash v The Nominal Defendant (1969) 90 WN (Pt 1) (NSW) 77, Brereton J held that a person who intermeddled with estate assets in the jurisdiction could be sued as executor de son tort without a grant of probate or administration having been obtained. His Honour also said that an executor named in the will could sue before grant (at 79) although he could not be sued until a grant was made to him unless he had intermeddled (at 79).

In Marshall v DG Sundin & Co Ltd (1989) 16 NSWLR 463 and Darrington v Caldbeck (1990) 20 NSWLR 212, Yeldham J and Young J held that an executor could not sue before grant, but without reference to Cash v The Nominal Defendant.

In Byers v Overton Investments Pty Ltd Emmett J summarily dismissed a claim brought by an executor against the operator of a retirement village with whom the deceased had been in dispute. The application was filed before the grant of probate. Emmett J held that the proceedings should be summarily dismissed because the executor had no title to the deceased’s cause of action when the proceeding was brought. An appeal to the Full Federal Court was dismissed (Byers v Overton Investments Pty Ltd (2001) 109 FCR 554; [2001] FCA 760). Emmett J followed the decisions of Yeldham J in Marshall v DG Sundin & Co Ltd and Young J in Darrington v Caldbeck in concluding that proceedings commenced by the executor before grant were incompetent in the same way that before 1890 proceedings brought by an administrator were incompetent and could not be validated by the grant of letters of administration. Emmett J concluded:

On appeal the Full Court of the Federal Court accepted a submission of counsel for the respondent that:

The submission accepted by the Full Court quoted above was of course subject to the operation of s 44.

The Full Court held that because title to the chose in action on which the applicant sought to sue had not vested in the executor when the proceedings were brought, the proceeding was incompetent.

The Full Court saw no reason to depart from the decisions of Yeldham J in Marshall v DG Sundin & Co Ltd and Young J in Darrington v Caldbeck that proceedings commenced by an executor before grant were to be treated in the same way as at general law proceedings commenced by an administrator before the grant of letters of administration were treated.

The Full Court applied the statement of Stephen J in Bone v Commissioner of Stamp Duties (NSW) (1974) 132 CLR 38 at 46; [1974] HCA 29 that in New South Wales the executor does not, at the moment of death, become the person entitled to sue for debts due to the deceased because by s 61 the real and personal estate of the deceased, whether testate or intestate, is, until grant of probate or administration, deemed to be vested not in the executor named in the will, but in the Public Trustee.

The issue in Bone v Commissioner of Stamp Duties (NSW) was whether debts owed by members of the deceased’s family who were appointed as executors of his will formed part of the deceased’s dutiable estate for the purposes of calculating death duty. The deceased had lent moneys to her children on terms that the loan debts would be payable on 90 days’ written notice given by the lender under her own hand. By her will the deceased appointed her children as her executors, and also forgave and released the debts.

One of the arguments was that irrespective of the forgiveness and release in the will, the appointment of the debtors as executors extinguished the indebtedness from the moment of death. This part of the appellant’s submissions was rejected by Stephen J. Stephen J held that because the testator’s choses in action did not vest in the executor upon death, the executor did not, at the moment of death, become the person entitled to sue for the debts owed by the executors to the deceased. This excluded the principle of English law that subject to the claims of creditors or persons entitled under the will or upon a partial intestacy, the appointment of a debtor as executor extinguished the chose in action for recovery of the debt (at 44-46).

Mason J said (at 54):

Mason J gave no reason for why the title of the executor was assimilated to that of an administrator at common law, rather than vice versa. The question was evidently not argued.

All of the Justices held that the releases contained in the will operated as such and not as legacies for the amounts of the debts.

An appeal to the Privy Council was upheld (Commissioner of Stamp Duties (NSW) v Bone (1976) 135 CLR 223). The Judicial Committee held that the releases in the will did not extinguish the debts as assets of the estate, but amounted to legacies in the amounts of the debts. In relation to the respondent’s submission that the debts were released by the appointment of the debtors as executors, the Judicial Committee said (at 227):

However, the submission was rejected on the basis that although at law the debts would be released, equity fastened on the executor an exactly equivalent obligation to account to those interested in the estate, whether creditors, legatees, residuary legatees or next of kin, for the amount of the debts (at 228).

Bone v Commissioner of Stamp Duties (NSW) does not support the proposition that by reason of ss 44 and 61 an executor could not sue for debts owed to the estate, let alone that the Public Trustee could do so. To the contrary, the reasons of the Privy Council, although not elaborated, suggest that in their Lordships’ view an executor before grant could sue for debts owed to the estate (so that at law the appointment of a debtor as executor would extinguish the debt because the executor could not sue himself).

In Marshall v D G Sundin & Co Ltd Yeldham J said (at 472) that the Privy Council’s reversal of the High Court’s decision in Bone did not affect what Stephen J said (summarised at [151] above). With respect, that is not so. It is surprising that the Judicial Committee’s statement quoted at [155] above was not considered in Marshall v DG Sundin & Co Ltd, Darrington v Caldbeck or Byers v Overton Investments Pty Ltd.

Reference should also be made to Re Cameron; Cameron v Public Trustee [1982] WAR 55. In Western Australia, like New South Wales, an executor derives title from the grant and not from the will. Section 9 of the Public Trustee Act 1941 (WA) provided that upon the death of any person and until probate or administration was granted in respect of his estate, the real and personal estate of such deceased person should be deemed to vest in the Public Trustee. The Public Trustee was joined as a defendant to proceedings for administration of a number of deceased estates in respect of which either no grant of administration or probate had been made or an executor had died before proceedings were commenced. Wallace J held that the proceedings against the Public Trustee should be summarily dismissed. After reviewing authorities, including Re Birch, Andrews v Hogan and Holloway v Public Trustee, Wallace J said (at 58):

In reaching that conclusion Wallace J said of Andrews v Hogan (at 57):

In Hyde v Carter (1922) 23 SR (NSW) 125 the deceased was given the option (for consideration) to purchase the lease, licence, furniture and goodwill of hotel premises for £1,500, the grantor of the option agreeing that the offer should not be revoked for three months. The option was granted on 1 February 1921. The grantee of the option died on 15 March 1921 having appointed the plaintiffs his executrices. On 22 April 1921 the plaintiffs purported to exercise the option. Probate of the will was granted on 20 September 1921 (at 128, 140). One of the issues was whether the option was personal to the deceased or whether it could be exercised by his executrices. Neither before Owen J at first instance, nor on appeal to the High Court (Carter v Hyde (1923) 33 CLR 115; [1923] HCA 36) was any issue raised about the executrices’ ability to exercise the option if (as was found to be the case) the option was not personal to the deceased, but could be exercised by his personal representative after his death. This is so notwithstanding that the option was a species of property. It gave the optionee an interest in the property to which it related, as Owen J held (at 132).

The right of the executrices to exercise the option before the grant of probate was a matter of assumption rather than decision, and hence is not a binding precedent. Nonetheless, it is noteworthy that none of the judges who heard the matter considered that the deemed vesting of the deceased’s real and personal estate in (then) the Chief Justice by s 61 of the Wills, Probate and Administration Act precluded the executrices, prior to the grant of probate, from exercising the contractual rights that passed to them on the grant of probate, but as from the date of death.

In Laybutt v Amoco Australia Pty Ltd the deceased was the grantor of an option to purchase land. The grantee purportedly exercised the option by notice to the deceased’s widow, who was appointed executrix by his will. The notice was given before the grant of probate. Menzies and Mason JJ expressed no opinion on whether the option could be exercised by giving notice and paying a stipulated deposit to the Public Trustee or to the executrix “on the footing that she was an executor de son tort and that her title by virtue of the subsequent grant related back to the date of death of the grantor.” They also expressed no opinion as to whether the executrix could authorise solicitors to whom the payment of a deposit was made to receive the payment (at 65). The exercise of the option was ineffective for other reasons.

Gibbs J held that the burden of the option to purchase devolved upon the deceased’s personal representative and could be exercised by the grantee, notwithstanding the grantor’s death (at 76). His Honour then addressed a submission that the option could not be exercised by notice given to the executrix by reason of s 61 of the Wills, Probate and Administration Act. As to this submission Gibbs J said (at 77-78):

Two reasons were given for this conclusion. The first was that s 44 had taken effect so that the estate vested in the executrix related back to the time of death. The second reason (introduced with the word “Moreover”) was that s 61 does not alter the rule that an executor derives his title from the will and that the probate is merely authentication of that title and not the source of it. Notwithstanding Powell J’s statement to the same effect in Gertsch v Roberts (1993) 35 NSWLR 631 at 635, that statement has been doubted (see cases cited in GEL Custodians at [35]; Byers v Overton Investments Pty Ltd quoted at [144] above).

Such doubts do not qualify Gibbs J’s first reason based on s 44.

As noted above (at [74]), Gibbs J explained Holland v King as depending on the need for the putative administratrix’s exercise of the option to be ratified after (or by) her appointment as administratrix, by which time it was too late to ratify. In the present case, if ratification of the notice of rescission were required, it was given after probate had been granted.

I do not consider that ratification was required. The better view is that the executor’s authority to deal with the estate can be exercised before grant by virtue of the authority derived from the will, and that the vesting of the legal estate in the NSW Trustee is only for the purpose of avoiding a feared hiatus in the vesting of the legal estate. An executor may require a grant of probate to authenticate the holding of the legal estate, but that should not affect his ability to deal with the assets of the estate. On the grant of probate, s 44 would retrospectively validate a purported disposition of the legal estate.

Understandably, in Byers v Overton Investments Pty Ltd Emmett J and the Full Court of the Federal Court followed the reasoning of Isaacs J in Ex parte Callan; Re Smith which is of long standing and was influential in the opinion of Yeldham J in Marshall v DG Sundin & Co Ltd (at 471) and Young J in Darrington v Caldback (at 219) that the position of an executor before grant was assimilated to that of an administrator in England.

For the reasons I have given, I do not agree. The question then is whether, because of the length of time for which those decisions have stood, the principle on which they are based should be departed from in a case which raises a different issue.

In Darrington v Caldback Young J said (at 218) that:

Those problems continue. Many estates are administered without a grant of probate. A grant is required to register a transmission application for real property under the Real Property Act 1900 (NSW) and would be required for a legal conveyance of land under old system title to authenticate title. But in many cases, estates are administered without a grant. Crago, in his article “Executors of Unproved Wills: Status and Devolution of Title in Australia (1993) 23 WALR 235 said (at 236-237):

In my view, the nettle should be grasped. Is it the case that before a grant of probate a bank cannot transfer moneys standing to the credit of a deceased’s account into an estate account in the name of the executor? Can an executor, before or without the grant of probate, not use those moneys to pay debts, funeral or testamentary expenses? Can an executor, before or without grant of probate, not transfer chattels to those entitled under the will? In my view on a purposive construction of ss 44 and 61 of the Probate and Administration Act, considering the background of those provisions, the executor does have such powers.

First, the title of the NSW Trustee under s 61 is a bare legal title carrying no active duties and no powers of management or administration because the Ordinary in England in 1858 had no such duties or powers. This is so notwithstanding that in Andrews v Hogan Fullagar J contemplated that the Public Trustee had the capacity to surrender a lease vested in him. That statement was obiter and unsupported by reference to the position of the Ordinary.

Secondly, as by definition the estate is unadministered, the executor will be the beneficial owner of the real and personal estate on the principles in Commissioner of Stamp Duties (Qld) v Livingstone (1964) 112 CLR 12 at 17-18 (applied by analogy to the position between death and grant). As such, the executor is entitled to possession of the trust assets and their indicia of title (J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [23-02]; Turner v Noyes (1903) 20 WN (NSW) 266).

Thirdly, an executor has authority derived from the will to collect assets, pay debts, manage the estate for the benefit of the beneficiaries, and make distributions. That authority is removed only to the extent that such removal is necessarily implied by the provisions of ss 44 and 61. Section 61 is concerned only with the vesting of legal title in the NSW Trustee for the limited purpose of preventing a possible gap in legal ownership of the estate. Section 44 provides for the estate of the deceased to pass to and become vested in the executor or administrator upon the grant of probate or administration, but that vesting operates as from death. In the interim there is no restriction on the executor’s authority to deal with the assets, except as arises by necessary implication from the fact that legal title is outstanding in the NSW Trustee. The NSW Trustee could not assert title against a person acquiring assets from the executor before grant, even if no grant was ever forthcoming.

Fourthly, the retrospective vesting of title under s 44 is not limited by the limitations that at general law were applicable to the relation back of the title of an administrator. Nor is s 44 limited by implication from s 61 having regard to the limited role of s 61.

These conclusions are not inconsistent with the decision in Andrews v Hogan. If correct, they indicate a need for reconsideration of the rule that in New South Wales neither an executor nor an administrator can bring proceedings to enforce a debt or other liability owed to the deceased prior to the grant of probate or administration.

Ms Deigan’s giving notice of rescission was an exercise of the rights arising under the contract of sale, not a divestment of the NSW Trustee’s title to the contractual chose in action. Rescission was an inherent contractual right. The validity of its exercise is supported by the actual decision in Carter v Hyde and the reasoning of Gibbs J in Laybutt v Amoco Australia Pty Ltd.

For these reasons I conclude that the notice of rescission was validly given.

In any event, even if it were not valid when given, by s 44, upon the grant of probate to Ms Deigan, the contractual rights are to be taken to have been vested in her as from the deceased’s death and the rescission is taken to have been validly exercised.

In this respect, for the reasons given above, I do not accept that the limitations imposed upon the relation back of an administrator’s powers under the general law can be simply transported into the express relation back provided for by s 44.

Even if they were, the rescission was for the benefit of the estate, and would fall within the general law principles of relation back applicable to administrators. In the present case, subject to the other issues on which the respondents dispute the validity of the notice of rescission, there was no particular time by which notice of rescission had to be effected such that it could not be later ratified (or retrospectively validated). There was no intervention of third party rights or change of position.

The respondent relied on the reasons of Isaacs J in Ex parte Callan; Re Smith to demonstrate the uncertainties to which he would be exposed if the notice of rescission of 18 May 2017 were effective either when it was given, or retrospectively through the operation of s 44. The will might be invalid. The executor might renounce probate or never apply for probate. The executor might be passed over and probate given to another.

These considerations arise equally in the United Kingdom and in other Australian States (Victoria, Queensland, South Australia and Tasmania) where the executor’s title is derived from the will rather than from grant. They arose in NSW prior to 1890. If due attention is given to the limited respects in which New South Wales departed from the United Kingdom and Victoria in 1893, those considerations should not pose substantial difficulties. A person dealing with an executor before grant may require a grant of probate as an authentication of title. In C H Sherrin, R F D Barlow, R A Wallington, Williams on Wills (8th ed, 2002, Butterworths), the authors say (at 25.14) that:

A grant of probate in common form does not conclusively establish an executor’s title. A grant of probate in common form may be revoked. An executor, or person dealing with an executor, may wish to obtain a grant to obtain the benefit of s 40D(3) of the Probate and Administration Act but that does not affect the power of an executor to deal with the estate assets before grant.

For these reasons I consider that the notice of rescission of 18 May 2017 was valid when given, but if not, was retrospectively validated on the grant of probate.

By his notice of contention Mr Fussell argued that the primary judge ought to have concluded that:

The primary judge rejected this argument. Clause 37.2 of the contract provided that:

That date was five years after the contract date. Completion was required on 10 May 2017. However neither party took steps to complete the contract on that date. The primary judge observed (Judgment [199]) that the obligation to complete required co-operation from both parties to organise settlement. He said that where Mr Fussell made no attempt to fix the date and proceed to completion it would be unreal to see Mr Lockrey as being in breach of the contract by taking no action in the face of Mr Fussell’s inaction (Judgment [200]).

This conclusion was clearly correct. Usual conveyancing procedures and the implied duty of co-operation to bring about completion of a contract for the sale of land require the purchaser to contact the vendor to make arrangements for settlement (Amaya v Everest Property Holdings Pty Ltd; Firmstone v Everest Property Holdings Pty Ltd; Sarkar and Islam v Everest Property Holdings Pty Ltd [2010] NSWCA 315 at [134]).

Accordingly, this ground fails. In relation to this ground, it is unnecessary to decide whether the executor would be precluded from rescinding the contract pursuant to special condition 33.2 after Mr Lockrey’s death if Mr Lockrey had breached the contract by failing to complete when required to do so.

Mr Fussell contended that from 10 May 2017 he had an equitable interest in the property commensurate with his entitlement to seek specific performance. He contended that that interest could not be defeated by Mr Lockrey’s subsequent death and the executor’s exercise of a contractual right to rescind by reason of that death. He contended that the right of rescission was a form of security. The rescinding party could obtain the benefit of what was secured without forfeiting his rights. He contended that he was entitled to relief against forfeiture. He contended that the exercise of the right of rescission was unconscientious.

Mr Fussell said that the present case was in all material respects analogous to Stern v McArthur (1988) 165 CLR 489; [1988] HCA 51 per Deane and Dawson JJ at 528-529.

I have difficulty in understanding how Mr Fussell could be entitled to relief against forfeiture of his interest in the property (which is commensurate with his entitlement to specific performance) when, if Ms Deigan were entitled to rescind, he had no entitlement to specific performance following exercise of the right (Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [47]-[57]).

In Stern v McArthur, upon which Mr Fussell relied, the contract was for the sale of land with the purchase price to be payable by instalments. Deane and Dawson JJ, upon whose reasons Mr Fussell relied, noted that there was a parallel with a purchase with the aid of a vendor mortgage and that had there been a mortgage, equity could have granted relief against forfeiture of the equity of redemption without regard to any stipulation as to time (at 529). Their Honours added (at 529):

In Stern v McArthur the vendors exercised a contractual right of termination for breach after the purchaser had defaulted in the payment of instalments. Mr Fussell relied upon the passage from the reasons of Deane and Dawson JJ quoted above and submitted that he was in a comparable position in that he had a reasonable expectation of benefiting from the increase in value of the land with the passage of five years after entry into the contract and the exercise of the contractual right of rescission would result in a windfall to the beneficiary of Mr Lockrey’s estate (Mrs Lockrey). He submitted that the right of rescission was included as a form of security and that Mr Lockrey’s estate could obtain the benefit of the contract without forfeiting Mr Fussell’s rights.

But the right of rescission was not a form of security. The case is not analogous to Stern v McArthur. Mr Fussell stood to benefit from the likely increase in value of the property over the five years between contract and anticipated completion, but only if Mr Lockrey did not die before completion.

Mr Fussell argued that the exercise of the right of rescission was unconscientious because Mr Fussell had undertaken improvements to the property. The primary judge dealt with that submission in the course of dealing with an argument advanced at trial that Ms Deigan was estopped from giving the notice of rescission. (Estoppel against giving the notice of rescission was not an issue raised on appeal.)

The primary judge said:

These reasons were not challenged. They are equally applicable to Mr Fussell’s contention that it was unconscientious for Ms Deigan to exercise the right of rescission.

This ground of the notice of contention fails.

The validity of the October rescission (after the grant of probate) arises if I am wrong in my conclusion that the rescission of 18 May 2017 was effective when given, or, if not, was retrospectively validated on the grant of probate.

The primary judge held that although there was no breach of contract on Mr Lockrey’s part when the May notice of rescission was issued, by October Mr Lockrey’s estate was in breach of the contract. Etienne Lawyers issued a notice to complete on 1 June 2017 that required completion on or before 16 June 2017. The primary judge said that this notice allowed sufficient time to obtain an urgent grant of representation (Judgment [320]). On 16 May Mr Brown of Etienne Lawyers had sought to book a settlement. The primary judge said that “the obligation then passed to Mr Lockrey’s estate to co-operate towards the effectuation of settlement, in the first instance, by nominating a date for settlement within a reasonable time” (Judgment [321]). His Honour doubted that a reasonable date for settlement would have extended beyond the 14-day period and held that the “estate” was in breach in failing to settle from 30 May (Judgment [321]).

His Honour observed that there was an issue between the parties as to whether Mr Fussell had sufficient funds to complete the purchase at any relevant time, but said that the response from Mr Lockrey’s side of the transaction dispensed with the need for him to do so or to prove that he could have paid the necessary funds on the settlement date (Judgment [322]). The primary judge did not decide whether Mr Fussell could have completed the purchase if required to do so. That was a contested issue at trial. The primary judge held that in issuing a fresh notice of rescission after the date on which the estate was obliged to complete, Ms Deigan was taking advantage of the estate’s own wrong and for that reason the October notice of rescission was invalid (Judgment [323]).

By an amended notice of appeal filed with leave, Ms Deigan contended that:

That contention should be accepted. Although by the letter of 16 May 2017 Mr Fussell sought to book a settlement and by the notice to complete of 1 June 2017 he served a notice to complete purportedly requiring completion on or before 16 June 2017, Mr Fussell did not take steps that were required on his part that would be necessary for completion either by Ms Deigan as executrix of Mr Lockrey’s estate or by Ms Deigan or any other person who might obtain a limited grant of administration to complete the sale.

The contract required the purchaser to serve a form of transfer at least 14 days before the completion date (clause 4.1). As noted at [18] above, on 16 May 2017 Etienne Lawyers advised that they were holding a signed form of transfer by Mr Lockrey that had been provided to Mr Fussell’s previous solicitors. That form of transfer was from Mr Lockrey to himself with respect to the life estate and to Mr Fussell with respect to the remainder of the estate. The consideration for the transfer was expressed as follows:

The estate transferred was described as a “Life Estate in the transferor and the Estate in Remainder to the transferee”.

The evidence did not reveal the circumstances in which that instrument of transfer had apparently been provided by Mr Lockrey to Mr Fussell’s previous solicitor, notwithstanding that the consideration had not been paid. (The transfer was undated.)

Mr Brown of Etienne Lawyers deposed that in early August 2016 he had a conversation with a Ms Pierce of CLS Legal regarding early completion of the contract. On 11 August 2016 he sent a letter to Ms Pierce explaining issues with regard to the proposed life estate to be granted following completion of the contract of sale with a view to those issues being resolved prior to an early completion. In that letter Mr Brown stated that Mr Fussell’s instructions were that he was buying the property subject to allowing Mr Lockrey, during his life, the right to occupy some, but not all, of the land within the lot. He said that he understood that Mr Fussell’s instructions were also those of Mr Lockrey. He noted that a deed of life estate entered into at the same time as the contract for sale provided for Mr Lockrey to have a life estate in a property described as the “House”. It was only part of the land.

These and other issues in relation to the underlying agreement between the parties were never resolved. On 2 September 2016 Ms Deigan advised that she was instructed not to consider any “drafting issues” until other outstanding issues between the parties had been resolved.

Special condition 49.1 of the contract of sale provided that Mr Fussell agreed that in consideration of Mr Lockrey’s entering into the contract of sale, that on completion Mr Fussell would grant a life estate to Mr Lockrey for “the home built on top of the six garages on the property” in the terms of a deed of life estate, a copy of which was said to be annexed to the contract.

On 25 July 2012 CLS Legal forwarded to Mr Fussell’s former solicitors, Dignan and Hanrahan, a “counterpart Deed of Life Estate and the Transfer executed by our client.”

The Deed of Life Estate provided that in consideration of Mr Lockrey’s entering into the contract and for no further consideration than the purchase price, Mr Fussell granted to Mr Lockrey a life estate in the House. The House was defined to mean the house constructed on top of six garages on the property as at the date of the contract, together with all inclusions in the house.

The transfer was stamped but never registered. Etienne Lawyers’ objection that it provided for the grant of a life estate over more property than was the subject of the Deed was well-founded. Nor was the transfer given in accordance with the terms of the contract of sale. The contract of sale contemplated that Mr Fussell would grant a life estate over the House following completion of the contract, not that Mr Lockrey would transfer an estate in remainder. The grant of a life estate over part of the property would require the registration of a plan of subdivision. The contract provided that the purchaser’s solicitor should prepare a transfer substantially in the form annexed “B”, but so far as appears from the contract as reproduced in the appeal book, there was no such annexure.

On 16 May 2017 Mr Brown of Etienne Lawyers said that he was seeking to arrange settlement of the matter and that “as there is a signed transfer we presume the death of the vendor last Friday will not delay settlement.” Ms Deigan asked for a copy of the transfer and it was provided.

Mr Fussell argued that Mr Lockrey’s death did not “necessarily” require any new form of transfer to be prepared. He submitted that the transfer as executed could have been registered if the estate authorised the purchaser to do so. In support of this submission he cited Corin v Patton (1990) 169 CLR 540 at 566; [1990] HCA 12 (per Brennan J) and Watt v Lord (2005) 62 NSWLR 495; [2005] NSWSC 53 (Gzell J).

Apart from the reference to these authorities in written submissions, there was no argument on this issue. In Corin v Patton Brennan J said (at 566) that “the weight of authority supports the view that a transfer executed by a registered proprietor in registrable form and delivered to a proposed transferee may be registered after the death of the transferor”, although his Honour noted that in Cope v Keene (1968) 118 CLR 1 at 7; [1968] HCA 53 Kitto J (with whom McTiernan J agreed) thought that a memorandum of transfer executed by the registered proprietor ceased to be a registrable instrument on the death of the registered proprietor. Brennan J did not find it necessary to determine the question.

Gzell J did decide the question but without reference to what Kitto J said in Cope v Keene. Professor Edgeworth, the current author of Butt’s Land Law, (7th ed, 2017, Thomson Reuters) states that (at [12.1300]:

Professor Edgeworth notes that it is otherwise if, amongst other things, the transaction is subject to a condition that has not been fulfilled. He notes that the matter is not without doubt. In Wang v Copko [2008] NSWSC 736 Young CJ in Eq in an extempore judgment said:

It is unnecessary to decide this question, which is of general importance and was not fully argued. But I have difficulty in seeing how an instrument signed by the registered proprietor creating a life estate in himself could be effective if he were dead when the instrument took effect, whether on completion or registration. Moreover, it is not clear that the form of transfer was in accordance with the contract. The form may have been in accordance with annexure B to the contract (if there were an annexure B), but that is not apparent from the appeal book. Prima facie the contract required Mr Fussell to execute a transfer granting a life estate to Mr Lockrey of the House.

The reason it is unnecessary to decide these questions is that if it be assumed that Ms Deigan as executrix was not able to complete the sale prior to the grant of probate, then “the estate” was not in breach of the contract by not completing it either on 16 June 2017 as called for by the notice to complete, or later.

Mr Fussell argued that the vendor ought to have taken steps to be in a position to complete and advise the purchaser of the date by which completion could occur. If that required the obtaining of a limited grant of administration, there was no evidence that that could not have been done by 16 June 2017. But in any event no steps were taken to complete for over four months.

The submission that by relying on the October 2017 notice of rescission, Ms Deigan was relying on her own wrong assumes that Ms Deigan ought to have obtained a limited grant of administration for the purposes of her completing the contract, rather than for the purpose of her exercising her right of rescission. There is no warrant for that assumption. A limited grant of administration would have to be made for the benefit of the estate. It is not disputed that the estate would be benefited by rescission rather than completion. As noted above, the right of rescission was available prior to completion, not prior to the date for completion stipulated in the contract.

Similarly, if it be the case (which I do not accept) that the NSW Trustee could have exercised Mr Lockrey’s contractual rights, then the NSW Trustee’s obligation would have been to do so for the benefit of the estate. The NSW Trustee (if it had the power to do so) would have been required to rescind the contract rather than complete it.

For this reason I do not accept that Ms Deigan was taking advantage of her (or the estate’s) own wrong in giving the October notice of rescission, if the May notice of rescission were ineffective.

It follows that it is unnecessary to decide whether Mr Fussell could only rely on the ground on which the primary judge found that the October rescission was invalid, if he were able to complete between June and October 2017.

The primary judge did not make a costs order. On 23 November 2018 he made an order merely noting an agreement between the parties. No submissions were made as to the costs of the proceedings below if the appeal succeeded. Ms Deigan simply submitted that the appeal should be allowed with costs. Accordingly, I do not propose any order with respect to the costs below. If any order as to those costs is sought an application can be made by notice of motion to be filed within 14 days.

For these reasons I propose the following orders: