FEDERAL COURT OF AUSTRALIA

Byers v Overton Investments Pty Limited [2001] FCA 760

SUCCESSION – proceedings by executors – where proceedings commenced by executor prior to the grant of probate – whether proceedings are a nullity – whether defect in the commencement of proceedings is cured upon granting of probate

Judiciary Act 1903 (Cth) s 79

Law Reform (Miscellaneous Provisions) Act 1944 (NSW) s 2

Wills, Probate and Administration Act 1898 (NSW) ss 44(1), 61

Pritchard v Pacecage Pty Ltd (1997) 72 FCR 203 referred to

Ex parte the Public Trustee; re Birch (1951) 51 SR (NSW) 345 referred to

In re Broughton (1902) 19 WN (NSW) 69 referred to

Foy v Public Trustee (1942) 42 SR (NSW) 209 referred to

Andrews v Hogan (1952) 86 CLR 223 followed

Holloway v Public Trustee (1959) 59 SR (NSW) 308 referred to

Re Hart [1963] NSWR 627 referred to

Re Cameron; Cameron v Public Trustee [1982] WAR 55 referred to

Fred Long & Son Ltd v Burgess [1950] 1 KB 115 referred to

Laybutt v Amoco (Australia) Pty Ltd (1974) 132 CLR 57 referred to

Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 followed

Bone v Commissioner of Stamp Duties (NSW) (1974) 132 CLR 38 followed

The Daily Proprietary Limited v White (1946) 63 WN (NSW) 262 referred to

Ex parte Callan; Re Smith [1968] 1 NSWR 443 referred to

Morgan v Thomas (1853) 8 Exch 302; 155 ER 1362 referred to

Baker v Blaker (1886) 55 LT 723 referred to

Marshall v DG Sundin & Co Ltd (1989) 16 NSWLR 463 followed

Ingall v Moran [1944] 1 KB 160 followed

Darrington v Caldbeck (1990) 20 NSWLR 212 referred to

Gertsch v Roberts; Estate of Gertsch (1993) 35 NSWLR 631 referred to

LOWANA LEE BYERS V OVERTON INVESTMENTS PTY LIMITED

N 1337 of 2000

BRANSON, NORTH AND STONE JJ

SYDNEY

22 JUNE 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  the appeal be dismissed;

2.                  the appellant pay the respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT:

1                     The appellant, Lowana Byers, is the executrix of the will of the late Albert Henry Desmond Scott who died on 23 November 1998 domiciled in New South Wales. This proceeding was commenced by application filed on 30 August 1999.  With leave of the Court, an amended application and amended statement of claim were filed on 3 December 1999.  In the original application the applicant was shown as “Estate of Desmond Scott”.  In the amended application and statement of claim the applicant is shown as “Lowana Byers”, and described as “the Executor of the Estate of Desmond Scott”. On 19 October 2000, the Supreme Court of New South Wales granted probate of Mr Scott’s will to Ms Byers.

2                     By lease dated 21 December 1987, the respondent, Overton Investments Pty Limited (“Overton”), granted a lease of a unit in a retirement village to Mr Scott and his wife, Mary, who predeceased him.  It is alleged, among other things, that Mr and Mrs Scott were induced to enter into this lease by Overton’s misleading and deceptive conduct that was in breach of the Trade Practices Act 1974 (Cth). It would seem that the parties have proceeded on the assumption that by s 2 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW), any relevant cause of action that was vested in Mr Scott survived for the benefit of his estate.  So far as any cause of action created by a law of the Commonwealth is concerned, the validity of this assumption will depend upon the operation of s 79 of the Judiciary Act 1903 (Cth).  Section 79 of the Judiciary Act 1903 relevantly provides that

“the laws of each State … shall, except as otherwise provided by … the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State … in all cases to which they are applicable” [emphasis added]

3                     We did not hear argument as to the extent to which s 79 of the Judiciary Act 1903 would have an operation in this case having regard to the causes of action pleaded.  We note, however, that in Pritchard v Pacecage Pty Ltd (1997) 72 FCR 203 at 218, Branson J, with whom Spender and Olney JJ agreed, took the view that the estate of a deceased person does not satisfy the statutory requirement of s 82 of the Trade Practices Act 1974 (Cth)of being a “person” who suffered loss or damage or the statutory requirements of s 87 of the same Act of “being a person who is a party to the proceeding” or “a person who has suffered, or is likely to suffer, loss or damage”.

4                     On 6 December 2000, pursuant to an application by notice of motion filed on behalf of Overton, the learned primary judge dismissed the proceeding on the ground that the proceeding had not been validly commenced and was therefore a nullity. The appellant appeals from the whole of that judgment.

Legislative background

5                     This case ultimately turns on the interpretation of ss 44(1) and 61 of the Wills, Probate and Administration Act 1898 (NSW) (“WPA Act”), which are set out below.

“44      Real and personal estate to vest in executor or administrator

(1)     Upon the grant of probate of the will or administration of the estate of any person dying after the passing of this Act, all real and personal estate which any such person dies seised or possessed of or entitled to in New South Wales, shall as from the death of such person pass to and become vested in the executor to whom probate has been granted or administrator for all the person’s estate and interest therein in the manner following, that is to say:

(a)     On testacy in the executor or administrator with the will annexed.

(b)     On intestacy in the administrator.

(c) On partial intestacy in the executor or administrator with the will annexed.”

61        Property of deceased to vest in Public Trustee

From and after the decease of any person dying testate or intestate, and until probate, or administration, or an order to collect is granted in respect of the deceased person’s estate, the real and personal estate of such deceased person shall be deemed to be vested in the Public Trustee in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England.”

6                     It is beyond contention that on the grant of probate to Ms Byers, by the operation of s 44(1), the whole of Mr Scott’s estate vested in her “as from” the death of Mr Scott.  After probate was granted, Ms Byers was undoubtedly competent to commence a proceeding to the benefit of the estate . The question here, however, is whether this proceeding was properly commenced given that probate had not been granted at the time the original application or the amended application was filed.

the primary decision

7                     The learned primary judge gave a detailed account of the general law and legislative history relating to probate and letters of administration in New South Wales. He pointed out that the general law distinguished between devolution of the personal estate of a deceased person who died testate and one who died intestate:

“An executor took his title to the personal estate from the will of his testator, not from the probate of the will.  The personal estate including all rights of action vested in the executor immediately on the death of the testator.

The consequence was that the executor could institute an action in the character of the executor before probate.  Nevertheless, an executor could not assert his title without production of probate as evidence of the title.  The probate was operative as the authenticated evidence of the executor’s title, but not as the foundation of it.

On the other hand, an administrator derived title to personal estate wholly from the grant of letters of administration.  No cause of action could accrue to an administrator until the grant of letters of administration.  The office of administrator is a statutory creation. An administrator derived his powers from the appointment by an ecclesiastical tribunal.” [citations omitted.]

8                     His Honour accepted at [25] that if the effect of ss 44(1) and s 61 of the WPA Act is to “assimilate the situation of an executor to that of an administrator, after the date of grant” then this proceeding was not properly commenced. If, however, in relation to an executor, the position in New South Wales is the same as under the general law, the filing of the amended application and amended statement of claim on 3 December 1999 would have validated the proceeding.

9                     Having reviewed the legislative history and relevant authorities, his Honour concluded that Ms Byers was not competent to commence the proceeding.  Not only did she not have title to the relevant causes of action at the critical times but, despite now having been granted probate, is not assisted by s 44(1). In his Honour’s view (expressed at [55]):

“Subject to the possibility of an administrator ad litem, the only legal persona who had title to commence a proceeding such as that presently before me was the Public Trustee.” [emphasis in original]

consideration

10                  There are two issues. The first issue concerns the nature of the vesting effected by s 61 of the WPA and, in particular, the meaning of the phrase “deemed to be vested” in that section.  The second issue concerns the effect of the statutory relation back under s 44(1) and, in particular, whether once probate has been granted any defect in an executor’s title to commence proceedings is cured by the retrospective operation of s 44(1).

Section 61 WPA

11                  As the learned primary judge noted at [45], “Section 61 adopts the language of a legal fiction”. It does not provide that the property of the deceased is “to vest” in the Public Trustee. The section uses the phrase, “deemed to be vested”, which seems to indicate a more limited interest. The key to the limited operation of the vesting is to be found in the reference to the vesting being “in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England”. It is therefore necessary to consider the extent of the jurisdiction exercised over the deceased’s personal property by the Ordinary in England.

12                  In Ex parte the Public Trustee; re Birch (1951) 51 SR (NSW) 345, Street CJ commented that the early history of the Ordinary’s jurisdiction is somewhat obscure. Nevertheless,  the Chief Justice gave (at 347-8) a most useful summary of the jurisdiction:

“It would seem to be reasonably clear that in early times, when a man died intestate, the King, as parens patriae, having the supreme care to provide for all his subjects, took the goods of the intestate and used them for the payment of his debts, of his burial expenses, and for the advancement of his wife and children, or if he had none, then for his blood relations. The functions of the Crown in this regard were later committed to the Bishop of the Diocese in which the goods of the intestate were found, he being described when acting in this capacity as the Ordinary. Prior to the reign of Edward I the Ordinary had a limited power to administer the estates of intestates, but he could only deal with such goods as came into his possession, and, in such case, he was bound to use them for the purposes above described. He had no right to sue for debts due to the intestate nor could he institute any legal proceedings to recover possession of goods not taken by him, nor was he under any liability to be sued by creditors of the deceased intestate. In 1285, by the Statute of Westminister II (13 Ed. I. St. I, c. 19), it was provided that if goods came to the Ordinary to be disposed of and the intestate was liable in debt to some other person, then from and after the passing of this Act the Ordinary was to be bound to pay those debts, so far as the goods of the deceased would extend, in the same fashion as the executors of such a debtor would have been bound if he had died testate. At this stage the Ordinary still continued to take possession of the goods where he could find them and to administer the estate to the extent already described, but in 1357 a further change in his functions was made by the Administration Upon Intestacy Act (31 Ed. III. St. I, c. II). The effect of this legislation was to take away from the Ordinary the duties of administering the intestate’s goods. Instead, he was required to depute “the next and most lawful friends of the dead person intestate to administer his goods” and such deputy when appointed was to have the same right to demand and recover debts due to the estate of the deceased as an executor would have had. He was bound also to pay the debts and charges properly payable by the deceased and in respect of his administration the deputy was accountable to the Ordinary as if he were an executor properly appointed by will.

This position remained unchanged for nearly two hundred years until, in 1529, the Probate and Administration Act (21 Hen. VIII c. 5) was passed. Section 2 of this Act put an end to the system of appointing a deputy of the Ordinary to administer the estate of the deceased intestate and provided that in all cases of intestacy the Ordinary was bound to grant the administration of the goods of the deceased to the widow or to his next-of-kin, or to both, as by the discretion of the Ordinary should be thought good. From that time onwards the Ordinary’s function seems to have been to grant probate or letters of administration and to supervise the accounts of executors and administrators, but he took no part in the control or disposition, either himself or by the hand of his deputy, of the goods of the intestate. The administrator, when appointed, was entitled to sue for and recover any debts due to the deceased and was liable, to the extent of his personal assets, to answer any creditors, but all these functions were committed to the administrator and not to the Ordinary. In the judgement of the Court in Dyke v. Walford [(1848) 5 Moo. P.C. at 494] and referring to the period after the Statute of Edw. III, it was said that the Church “had no right or interest, of any kind in the property of deceased persons, beyond the right of jurisdiction, and of granting administration and the right of possession for that purpose.”

13                  The Chief Justice then described how in 1857 the powers of the Ordinary were transferred to the Judge of the Court of Probate and, for the period from the death of an intestate person to the grant of letters of administration, the personal estate and effects of such a person were “vested in the Judge of the Court of Probate for the time being, in the same manner and to the same extent as heretofore they vested in the Ordinary”. In considering s 61, the Chief Justice at 348-349 held that:

“The word ‘aforetime’ was obviously used as equivalent to ‘formerly,’ meaning to the extent to which the goods were vested in the Ordinary when this function was last exercised by him in England. In my opinion, the word refers to the period immediately prior to the English Acts of 1857 and 1858, and it is in this way that the section of [the] New South Wales Act must be construed.”

14                  In view of this analysis, it is not surprising that the Chief Justice took a very narrow view of the position of the Public Trustee. He held, at 350, that it was never intended that the Public Trustee should be put in the position of being joined as a party to litigious proceedings and that no action can be maintained in respect of the estate of the deceased person other than by a duly constituted administrator or executor. He concluded:

“In my view the Public Trustee is ‘a mere formal repository of the legal estate.’ Beyond that he has no functions, no powers and no duties in respect of the estate of the deceased person, and cannot be made a party to litigious proceedings merely by virtue of s. 61 of the Wills Probate and Administration Act.”

15                  Similar views were expressed in In re Broughton (1902) 19 WN (NSW) 69 at 70 and Foy v Public Trustee (1942) 42 SR (NSW) 209.

16                  In Andrews v Hogan (1952) 86 CLR 223 the High Court adopted a somewhat more expansive approach.  The issue before the Courtwas whether a notice to quit was properly served on the Public Trustee in circumstances where the deceased tenant had appointed her sons as executors and sole beneficiaries but where probate had not yet been granted. The Public Trustee’s response to the notice was to send a standard letter to the claimant’s solicitors informing them that he had no interest in the premises to assert.  The letter, as summarised by Dixon CJ at 229, pointed out that the WPA Act,

“did not vest the estate in him but merely declared that it should be deemed to be vested, that it was merely held during ‘the hiatus of possession’, that he was ‘merely the repository of the estate’, that he would not be a proper party in any contemplated proceedings and that he had no powers to exercise and no active duties to perform in connection with the estate.”

17                  Despite the views of the Public Trustee, all of the members of the High Court held that the notice might properly be served upon him as the repository of the title to the estate; Dixon CJ at 232, McTiernan J at 237, Webb J at 241, Fullagar J at 245 and Kitto J at 255. Although it was not necessary for the Court to canvass in detail the obligations and duties of the Public Trustee under s 61,  Fullagar J commented at 250,

“That he has some rights and powers would seem almost necessarily to follow, though it may very well be that he has no active duties.” [emphasis omitted]

18                  One issue in Andrews v Hogan (supra)was whether the Public Trustee’s letter effected a surrender of the lease. Fullagar J at 251, held that the letter did not amount to a surrender but made it clear that, in his opinion, this was not because the Public Trustee lacked capacity:

“I can only say that I am, with respect, unable to see any reason for denying to the Public Trustee the legal capacity to surrender a lease vested in him. I am well able to understand that he would be most unwilling to do any positive act which would amount to a surrender, or to do anything which might affect the rights of persons really interested in an estate vested in him. It is very unlikely that, without some very special reason, he would do any such thing. In the normal case his position is only temporary and provisional. But his position, while it subsists, is the position of a legal owner, and I can see no reason for saying that, while occupying that position, he is devoid of legal capacity.”

19                  Following Andrews v Hogan (supra),it cannot be said that there is any definitive exposition of the power and capacity of the Public Trustee to deal with property deemed to be vested in him by s 61. It is clear, however, that while the Public Trustee is no mere empty vessel, there are limits to the Trustee’s power and responsibility for such property; see Holloway v Public Trustee (1959) 59 SR (NSW) 308 (no obligation to pay rent), Re Hart [1963] NSWR 627 and Re Cameron; Cameron v Public Trustee [1982] WAR 55 (the Public Trustee should not be joined to litigious proceedings). It does not follow, however, that prior to probate the executor has the powers and capacity denied to the Public Trustee. In Andrews v Hogan (supra), the Chief Justice (at 234) quoted with approval the words of Bucknill LJ in Fred Long & Son Ltd v Burgess [1950] 1 KB 115 at 119 that there was no reason why the English equivalent of the Public Trustee, “should not have legal power to give directions about the property. If he cannot do so, no one can.”

20                  Although in considering the powers of the Public Trustee the courts have drawn no distinction between testate and intestate estates, Mr Moore, counsel for the appellant, argued for such a distinction. He submitted that s 61 does not alter the common law position in respect of executors and that the position is still the same as that as outlined by the learned primary judge (see par [7] above), namely that the property of the deceased vests in the executor by virtue of the will.  He referred to Laybutt v Amoco (Australia) Pty Ltd (1974) 132 CLR 57 which concerned a notice of exercise of option that had been served on the widow of the grantor at a time when probate had not yet been granted. Section 61 was considered only by Gibbs J who made (at 77) the following comment on which Mr Moore  relied:

“There is no doubt that at the time when the notice was given the estate of the deceased had by virtue of the operation of s. 61 become formally vested in the Public Trustee, although it is not altogether clear what capacity and powers the Public Trustee had as a result …  At the date of the hearing, however, probate had been granted and s. 44 had taken effect; the estate of the deceased was then vested in the appellant whose title had related back to the time of death.  Moreover, although s 61 provides for the vesting of the deceased’s property pending probate, it does not alter the rule that an executor derives his title from the will and that the probate merely authenticates his title and is not the source of it.  At the time when the notice was given the appellant was therefore the executrix of the deceased’s estate and in that capacity was competent to receive the notice exercising the option; the fact that the property of the deceased was not then vested in her provides no reason why she could not do so.”

21                  In our opinion, Mr Moore’s submission is misconceived. In the above passage, Gibbs J is not referring to the vesting of the deceased’s property but to the source of the executor’s appointment as executor which undoubtedly is the will. His Honour’s position is quite consistent with the proposition that the vesting of the property is effected by statute. At common law a grant of probate was purely evidentiary albeit the only acceptable evidence of an executor’s appointment. As explained above, title to the property of a testate estate vested in the executor at the death of the testator. Section 61 alters that position in relation to the vesting of property only. It does not alter the fact that the title to the position of executor stems from the will. As such it makes a distinction between the powers of the executor before and after probate that does not exist at the common law. As Mr McInerney, counsel for the respondent pointed out in his written submissions:

“After death and before a grant of probate, an executor has a title derived from the will which grants the executor a status in respect to the estate. The executor’s authority in respect to the estate is limited, however, to situations where the vesting of the property in the executor is not a necessary pre-condition to the exercise of that authority.”

22                  It is trite law that proceedings to vindicate a chose in action can be pursued only by the person who has title to that chose in action or who is entitled to sue in name of that person; Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 27. In Bone v Commissioner of Stamp Duties (NSW) (1974) 132 CLR 38, Stephen J (at 46) stated that:

“…under the succession law of New South Wales the testator’s choses in action do not vest in his executor upon death; the executor does not, at the moment of death become the person entitled to sue for debts due to the deceased; instead by s. 61 of the Wills Probate and Administration Act (N.S.W.), the real and personal estate of a 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.”

23                  In our opinion Ms Byers had no title to the relevant chose in action until grant of probate. It therefore follows that at the time this proceeding was commenced and at the time the application was amended she had no standing to commence proceedings such as this and the proceedings were therefore a nullity. It then only remains to consider whether the statutory relation back in s 44 is able to cure the defect.

Section 44(1) WPA

24                  This section operates retrospectively so that on the grant of probate to an executor, the deceased’s property vests in the executor “as from the death of such person”. It is established that on grant of probate the retrospective effect of the section validates dealings with the property by the executor before that grant; The Daily Proprietary Limited v White (1946) 63 WN (NSW) 262 at 263. Before the grant of probate, such an assignment would not be void but merely inoperative “because of its possible validation on a grant of probate”; The Daily Proprietary Limited v White (supra) at 263-264. It would also seem that formal requirements necessary to convey legal title, such as the execution of a deed of conveyance, would still need to be met by the executor after the grant;  Ex parte Callan; Re Smith [1968] 1 NSWR 443 at 448. It is also necessary that such transactions be for the benefit of the estate or be made in the due course of administration; Morgan v Thomas (1853) 8 Exch 302; 155 ER 1362.  The doctrine also applies to contractual and quasi-contractual undertakings; Baker v Blaker (1886) 55 LT 723.

25                  It is, however, a separate question whether statutory relation back can validate proceedings incompetently commenced. In Marshall v DG Sundin & Co Ltd (1989) 16 NSWLR 463 (“Sundin”), Yeldham J held that proceedings commenced by the named executor before the grant of probate were a nullity and that the deficiency was not cured by the statutory relation back provided in s 44(1). His Honour accepted that in New South Wales, prior to probate, an executor is in the same position as an administrator at common law. The executor is therefore incompetent to bring proceedings in a representative capacity. In relation to the effect of statutory relation back, his Honour quoted (at 469) the words of Luxmoore LJ in Ingall v Moran [1944] 1 KB 160:

“…I have no doubt that the plaintiff’s action was incompetent at the date when the writ was issued, and that the doctrine of the relation back of an administrator’s title to his intestate’s property to the date of the intestate’s death when the grant has been obtained cannot be invoked so as to render an action competent which was incompetent when the writ was issued.”

26                  Sundin was followed in Darrington v Caldbeck (1990) 20 NSWLR 212 by Young J who referred (at 219) to the decision as “undoubtedly correct”. In Gertsch v Roberts; Estate of Gertsch (1993) 35 NSWLR 631 at 635, Powell J referred to both Sundin and to Darrington v Caldbeck (supra),but as it was not necessary for him to express a view, he expressly refrained from doing so. We would not regard Powell J’s approach as involving a tacit doubt as to the correctness of the earlier cases. As the learned primary judge commented, it is curious that the common law position of an executor has been so altered. The issue is not easy and there is every reason for a judge to decline to express an unnecessary opinion where the issue has not been fully argued.

27                  In Ex parte Callan; Re Smith  (supra) at 448, Isaacs J expressed the view that the statutory relation back did not validate all intervening invalid acts of the executor named in the will. His Honour at 448, referring to Ingall v Moran (supra), Hilton v Sutton Steam Laundry [1946] KB 65 and Finnegan v Cementation Co Ltd [1953] 1 QB 688, stated that “the doctrine of relation back in the case of an administrator does not validate as competent an action which was incompetent when the writ was issued”. His Honour clearly accepted that, under the WPA Act, an executor was in the same position as an administrator as he held that a notice to a tenant to quit the demised premises so as to terminate the tenancy could not validly be given by an executor prior to the grant of probate:

“If it was to be operative at all it could only have been given on behalf of the Public Trustee had he authorized the executor-elect to issue it.”

28                  Similarly the executor, prior to probate, could only commence proceedings with the authority, and in the name of, the Public Trustee. Section 44(1) retrospectively vests the property of the deceased in the executor. However, it does not, either in its own words or by implication, retrospectively give the executor standing in relation to proceedings commenced when the executor-elect had no title to the property. The authorities are against such an interpretation and it would need a very clear statement of legislative intention to justify this Court departing from the position supported by Norman v Federal Commission of Taxation (supra) and Bone v Commissioner of Stamp Duties (supra) concerning standing to sue.

summary and conclusion

29                  When Ms Byers commenced this proceeding (and when the application was amended) she had not been granted probate. The effect of s 61 of the WPA Act is that she did not at that time have title to the relevant property, namely the chose in action that the estate now seeks to pursue against the respondents. Being without title to the chose in action, she was not competent to commence proceedings to pursue that right. For reasons given above, the statutory relation back under s 44(1) does not cure that defect. The weight of authority and reason leads to the conclusion that this proceeding was incompetently commenced and therefore it was and remains a nullity.

30                  Accordingly, the appeal must be dismissed with costs.

Associate:

Dated:              22 June 2001