Carolyn Deigan as Executrix for the Estate of the Late James Boyd Lockrey v Barnard James Fussell

[2019] NSWCA 299

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299

Hearing dates:

Tuesday, 5 February 2019

Decision date:

10 December 2019

Before:

Bathurst CJ at [1]
Macfarlan JA at [7]
White JA at [8]

Decision:

(1)   Appeal allowed.
(2)   Set aside the orders made on 19 September 2018.
(3)   Order that the summons be dismissed.
(4)   Declare that the contract for sale of land between the late James Boyd Lockrey and the respondent dated 10 May 2012 relating to Lot F in Deposited Plan 33553 was rescinded no later than 16 October 2017.
(5)   Reserve the proceedings for further consideration before the primary judge and grant liberty to apply to the primary judge for any consequential orders that might be required consequent upon the declaration at (4).
(6)   Order that the respondent pay the appellant’s costs of the appeal.

Catchwords:

SUCCESSION — executors and administrators — rights, powers and duties — executrix exercised deceased’s right to rescind contract for sale of land before obtaining probate — consideration of ss 44 and 61 of the Probate and Administration Act 1898 (NSW) — whether rescission valid when given — whether rescission retrospectively validated on obtaining probate

 

LAND LAW — conveyancing — contract for sale — rescission — construction of clause providing right to rescind — whether right available only to surviving party to contract — whether solicitor named in contract able to exercise right notwithstanding vendor’s death

  LAND LAW — conveyancing — contract for sale — breach — five-year completion period — where neither party took steps to complete — whether contract breached — where purchaser subsequently attempted to bring about completion — whether estate took advantage of its own wrong in serving second rescission notice

Legislation Cited:

Administration of Estates Act 1925 (UK), s 9
Administration on Intestacy Act 1357 (31 Ed. III C.11)
Court of Probate Act 1857 (20 and 21 Vic C 77)
Court of Probate Act 1858 (Imp) (21 and 22 Vic C 95), s 19
Court of Probate Act 1858 (UK), s 19
Intestate Estates Act 1838
Intestate’s Estates Claims Act 1849 (13 Vic 44) (NSW)
Intestates Estate Act 1847
Landlord and Tenant (Amendment) Act 1948-1949 (NSW)
Landlord and Tenant (War Service) Amendment Act 1949 (NSW), s 5
Probate Act 1890 (NSW) (54 Vic 25), ss 15, 32, 39
Probate Act of 1890 Amendment Act 1893, s 23
Probate and Administration Act 1898 (NSW), ss 40D, 44, 61
Probate Fees, Inventories, etc. Act 1529 (21 Henry VIII C 5)
Public Trustee Act 1941 (WA), s 9
Real Estate of Intestates Distribution Act 1862 (NSW) (26 Vic No. 20), s 1
Real Property Act 1900 (NSW)
Statute of Distributions (22 and 23 CAR 2 C 10)
Statute of Wills 1540 (UK), s 2
Third Charter of Justice, s 14
Trustee Act 1925 (NSW), s 51

Cases Cited:

Alex Paul Pty Ltd v Schembri [1975] 2 NSWLR 769
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
Andrews v Hogan (1952) 86 CLR 223; [1952] HCA 37
Atsas v Gertsch [1998] NSWSC 522
Bone v Commissioner of Stamp Duties (NSW) (1974) 132 CLR 38; [1974] HCA 29
Bonnington v Robinson (1875) LR 10 Ex 270
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; [1977] UK PC HCA 1
Byers v Overton Investments Pty Ltd (2000) 106 FCR 268; [2000] FCA 1761
Byers v Overton Investments Pty Ltd (2001) 109 FCR 554; [2001] FCA 760
Carter v Hyde (1923) 33 CLR 115; [1923] HCA 36
Cash v The Nominal Defendant (1969) 90 WN (Pt 1) (NSW) 77
Chan Kit Sun v Ho Fung Hang (1902) AC 257
Chetty v Chetty [1916] 1 AC 603
Commissioner of Stamp Duties (NSW) v Bone (1976) 135 CLR 223
Commissioner of Stamp Duties (Qld) v Livingstone (1964) 112 CLR 12
Cope v Keene (1968) 118 CLR 1; [1968] HCA 53
Coplin v Al Maha Pty Ltd [2019] NSWCA 159
Corin v Patton (1990) 169 CLR 540; [1990] HCA 12
Darrington v Caldbeck (1990) 20 NSWLR 212
Dyke v Walford (1846) 5 Moo PC 434; 13 ER 557
Ex parte Callan; re Smith (1968) 87 WN (Pt. 1) (NSW) 595; (1968) 1 NSWR 443
Ex parte Public Trustee; Re Birch (1951) 51 SR (NSW) 345
Fell v Lutwidge (1740) 2 Atk 120; 26 ER 475; (1740) Barn. Ch. 319; 27 ER 662
Foster v Bates (1843) 12 M & W 226; 152 ER 1180
Fotherby’s case (1626) Croke, Car. 62; 79 ER 657 Foy v Public Trustee (1942) 42 SR (NSW) 209
Fred Long & Son Ltd v Burgess [1950] KB 115
Fussell v Deigan [2018] NSWSC 1419
GEL Custodians Pty Ltd v The Estate of the Late Geoffrey Francis Wells [2013] NSWSC 973
Gertsch v Roberts (1993) 35 NSWLR 631
Goodtitle on the demise of Dodwell v Gibbs (1826) 5 B & C 709 at 716; 108 ER 264
Hensloe’s case (1599) 9 Co. Rep. 36b; 77 ER 784
Holland v King (1848) 6 CB 727; 136 ER 1433
Holloway v Public Trustee [1959] SR (NSW) 308
Hyde v Carter (1922) 23 SR (NSW) 125
In re Beavis; Beavis v Beavis (1907) 7 SR (NSW) 66; 23 WN (NSW) 245
In re Deans [1954] 1 WLR 332
In the Goods of Pryse [1904] P 301
Ingall v Moran [1944] KB 160
Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57; [1974] HCA 49
Levanne’s Case (1630) Croke, Car. 201; 79 ER 777 Marshall v DG Sundin & Co Ltd (1989) 16 NSWLR 463
Norman and Wife v Peck (1882) 3 NSWR 42
Oxford Meat Co. Pty Ltd v McDonald (1963) 63 SR (NSW) 423
Perpetual Trustee Co Ltd v Public Trustee (1956) 73 WN (NSW) 546
Public Trustee, Ex parte; Re Birch (1951) 51 SR (NSW) 345
R v Horsley (1807) 8 East 405 at 410; 103 ER 398
Re Cameron; Cameron v Public Trustee [1982] WAR 55
Re Watson; ex parte Phillips (1886) 18 QBD 116; (1887) 19 QBD 234
Scallan v Scallan [2001] NSWSC 1129
Schembri v Alex Paul Pty Ltd (1976) 13 ALR 511
Stern v McArthur (1988) 165 CLR 489; [1988] HCA 51
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57
Tharpe v Stallwood (1843) 5 Man & G 760; 134 ER 766
The Daily Pty Ltd v White (1946) 63 WN (NSW) 262
Turner v Noyes (1903) 20 WN (NSW) 266
Wang v Copko [2008] NSWSC 736
Watt v Lord (2005) 62 NSWLR 495; [2005] NSWSC 53

Texts Cited:

B Debelle (ed), Victor Windeyer’s Legacy: Legal and Military Papers (2019, The Federation Press)
B Edgeworth, Butt’s Land Law, (7th ed, 2017, Thomson Reuters)
C H Sherrin, R F D Barlow, R A Wallington, Williams on Wills (8th ed, 2002, Butterworths)
H C Coote, The Practice of the Court of Probate in Common Form Business (4th ed 1863, Butterworths)
H C Mortimer, The Law and Practice of the Probate Division of the High Court of Justice (1911, Sweet & Maxwell)
I J Hardingham, M A Neave and H A J Ford, Wills and Intestacy in Australia and New Zealand (1983, Law Book Co Ltd)
J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)
J M Bennett, “A Research Project on the Ecclesiastical Jurisdiction Exercised in the Supreme Court of New South Wales 1824-1890”
J M Bennett, A Source book of Australian legal history: source materials from the eighteenth to the twentieth centuries (1979, LawBook Co)
N Crago “Executors of Unproved Wills: Status and Devolution of Title in Australia” (1993) 23 UWAL Rev 235
R Geddes, C Rowland and P Studdert, Wills, Probate and Administration Law in New South Wales (1996, LBC Information Services)
R Williams and A Ingpen, Williams’ Law of Executors & Administrators (10th ed, 1905)
W S Holdsworth, A History of English Law, (4th ed, 1935, Metheun & Co), Vol 3

Category:

Principal judgment

Parties:

Carolyn Deigan (as executrix for the estate of the late James Boyd Lockrey) (Appellant)
Bernard James Fussell (Respondent)

Representation:

Counsel:
D L Cook SC (Appellant)
N Cotman SC with J Kennedy (Respondent)

  Solicitors:
CLS Legal (Appellant)
Etienne Legal (Respondent)

File Number(s):

2018/302102

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity Division

Citation:

[2018] NSWSC 1419

Date of Decision:

19 September 2018

Before:

Parker J

File Number(s):

2017/313325

HEADNOTE

[This headnote is not to be read as part of the decision]

The testator, a Mr Lockrey, entered into a contract to sell land to the respondent. Completion was to take place five years after the contract date. The testator died two days after the completion date. The appellant, Ms Deigan, was the testator’s solicitor and was named as his sole executrix in the will. Eight days after the date for completion, a notice of rescission (“the first rescission”) was served on the respondent by the appellant. At the time of the purported exercise of the right of rescission, the appellant had not obtained probate of the will. The right of rescission was contained in special condition 33.2 (“cl 33.2”), which relevantly provided:

“... should either party prior to completion ... die ... then in the case of the vendor or the purchaser, either party may rescind this contract by notice in writing forwarded to the solicitor for the other party and this contract shall be at an end and the provisions of clause 19 shall apply.”

Section 44 of the Probate and Administration Act 1898 (NSW) (“the Act”) relevantly provides that on the grant of probate of the will of any person, that person’s estate shall vest as from the death of such person in the executor to whom probate is granted.

Section 61 of the Act relevantly provides that from and after the death of any person (whether dying testate or intestate) and until probate is granted, the deceased’s estate shall be deemed to be 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.

On 16 October 2017, some four months after the first rescission, a second notice of rescission (“the second rescission”) was served on the respondent. The appellant had by this time obtained probate of Mr Lockrey’s will. In the period between the first and second rescissions, the purchaser had issued a notice to complete (which went unanswered) and attempted to book a settlement.

The primary issues before the Court of Appeal were whether:

(i)   on its proper construction, cl 33.2 could be invoked (a) only by the surviving party to the contract or (b) by either party or their legal personal representatives, and if the latter, whether the notice served by the vendor’s solicitor named in the contract was effective notwithstanding the solicitor’s lack of authority, or whether the notice could only be given by the legal personal representative (“the construction ground”);

(ii)   the vendor was in breach at the moment it failed to complete by the date for completion or alternatively by the time notice of the second rescission was given and if so whether this precluded Ms Deigan from relying on the second rescission (“the breach ground”); and

(iii) ss 44 and 61 of the Probate and Administration Act rendered invalid the first rescission because the appellant, although named in the will as executrix, had not obtained probate at the time of her exercising the right to rescind, and if so, whether the subsequent grant of probate “related back” so as to retrospectively validate the rescission (“the Probate and Administration Act ground”).

The Court of Appeal (Bathurst CJ, Macfarlan and White JJA), allowing the appeal, held:

As to the construction ground:

(Per White JA, Bathurst CJ and Macfarlan JA agreeing at [2] and [7] respectively)

i. Clause 33.2 expressly provides that in the case of the vendor dying, “either party” (i.e. including the vendor) may rescind: [39]-[40].

ii. There is no contextual basis for the argument that the right of rescission was only available to the surviving party to the contract. The right extended, on Mr Lockrey’s death, to his legal personal representative: [40].

iii. Owing to the death of Mr Lockrey and on the assumption that Ms Deigan’s failure to obtained probate at the time precluded her from rescinding, there was no “party” (as defined in the contract) capable of giving a notice of rescission. It must follow that 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 or on behalf of a “party” under cl 33.2: [57]-[59].

Alex Paul Pty Ltd v Schembri [1975] 2 NSWLR 769, Schembri v Alex Paul Pty Ltd (1976) 13 ALR 511, referred to. Coplin v Al Maha Pty Ltd [2019] NSWCA 159, cited.

iv. In any event, the firm of solicitors which in fact gave the notice of rescission was not the same entity named as the solicitor on the contract: [53]-[54].

v. The real question, insofar as the first rescission is concerned, is therefore whether Ms Deigan in her capacity as executrix had authority to rescind notwithstanding her not having obtained probate: [60].

As to the breach ground:

(Per White JA, Bathurst CJ and Marfarlan JA agreeing at [3]-[4] and [7] respectively)

vi. Neither party took steps to complete the contract on the date for completion. The primary judge was correct in deciding that in circumstances where the appellant made no attempt to proceed to completion, the vendor was not in breach by his reciprocal inaction: [190]-[192].

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, cited.

vii. Although the respondent took steps to book a settlement and served a notice to complete, he did not take the all steps required on his part that were necessary for completion either by Ms Deigan as executrix or by anyone who obtained a limited grant of administration. Ms Deigan did not take advantage of her own wrong in not obtaining an earlier limited grant of administration, as such a grant would have been made for the purpose of her rescinding the contract, not completing it: [207], [222], [225]-[227].

As to the Probate and Administration Act ground:

(Per White JA, Bathurst CJ not deciding at [5], Macfarlan JA not expressing a final view at [7])

viii. The title of the NSW Trustee is a bare legal title that carries with it no active duties or powers of management or administration. The executor is the beneficial owner of the assets of the estate and is entitled to possession of the trust assets. The executor has authority, derived from the will, to deal with the trust assets before the grant of probate: [79]-[95], [168], [174]-[176].

ix. The above authority is restricted only by necessary implication of legal title being outstanding in the NSW Trustee by operation of s 61. Such vesting is only for the purpose of avoiding a hiatus in the legal estate. The first rescission was not restricted by the interim vesting of legal title in the NSW Trustee and was valid at the time notice was given: [109]-[171], [176], [179]-[180].

Andrews v Hogan (1952) 86 CLR 223; [1952] HCA 37; Bone v Commissioner of Stamp Duties(NSW) (1974) 132 CLR 38; [1974] HCA 29; Byers v Overton Investments Pty Ltd (2000) 106 FCR 268; [2000] FCA 1761; Byers v Overton Investments Pty Ltd (2001) 109 FCR 554; [2001] FCA 760; Foy v Public Trustee (1942) 42 SR (NSW) 209; Holloway v Public Trustee [1959] SR (NSW) 308; Perpetual Trustee Co Ltd v Public Trustee (1956) 73 WN (NSW) 546; Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57; [1974] HCA 49; Marshall v DG Sundin & Co Ltd (1989) 16 NSWLR 463; Darrington v Caldbeck (1990) 20 NSWLR 212; Public Trustee, Ex parte; Re Birch (1951) 51 SR (NSW) 345; Re Cameron; Cameron v Public Trustee [1982] WAR 55; The Daily Pty Ltd v White (1946) 63 WN (NSW) 262; Fred Long & Son Ltd v Burgess [1950] KB 115; Ex parte Callan; re Smith (1968) 87 WN (Pt. 1) (NSW) 595; (1968) 1 NSWR 443, referred to. Commissioner of Stamp Duties (Qld) v Livingstone (1964) 112 CLR 12, cited.

x. Even if it were not valid when notice was given, the first rescission would have been retrospectively validated on the grant of probate. The retrospective vesting under s 44 is not limited by the same limitations that applied at general law to the doctrine of relation back to an administration, nor is it limited by implication from s 61: [69]-[79], [164]-[168], [177], [187].

Chetty v Chetty [1916] 1 AC 603; Fell v Lutwidge (1740) 2 Atk 120; 26 ER 475; (1740) Barn. Ch. 319; 27 ER 662; Foster v Bates (1843) 12 M & W 226; 152 ER 1180; Holland v King (1848) 6 CB 727; 136 ER 1433; In the Goods of Pryse [1904] P 301; Ingall v Moran [1944] KB 160; Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57; [1974] HCA 49; R v Horsley (1807) 8 East 405 at 410; 103 ER 398; Re Watson; ex parte Phillips (1886) 18 QBD 116; Re Watson; ex parte Phillips (1887) 19 QBD 234; Tharpe v Stallwood (1843) 5 Man & G 760; 134 ER 766, referred to.

xi. The appeal should be allowed on the basis that the contract was rescinded on the date of the first rescission: [187].

(Per Bathurst CJ at [5]-[6], Macfarlan JA at [7])

xii. In the circumstances it is not necessary to address the issue raised by this ground. Doing so would mean concluding that the decisions of the Federal Court in Byers v Overton Investments Pty Ltd (2000) 106 FCR 268; [2000] FCA 1761 and the Full Court of the Federal Court in Byers v Overton Investments Pty Ltd (2001) 109 FCR 554; [2001] FCA 760 are plainly wrong, where it is unnecessary to do so: [5].

xiii. The appeal should be allowed but on the basis that the contract was rescinded no later than 16 October 2017, the date of the second rescission: [6].

Judgment

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

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

1. 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:

“... should either party prior to completion ... die ... then in the case of the vendor or the purchaser, either party may rescind this contract by notice in writing forwarded to the solicitor for the other party and this contract shall be at an end and the provisions of clause 19 shall apply.”

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

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

12. 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.

13. The vendor’s solicitor was named as CLS Legal.

14. 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.

15. 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.

16. 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.

17. Mr Lockrey died on 12 May 2017.

18. 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.

19. 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:

“Commercial Legal Solutions Pty Limited ACN 604 467 905 t/as CLS Legal, as solicitors for the Estate of the Late James Boyd Lockrey, gives you notice that:-

1.   By the contract for sale of land between the James Boyd Lockrey as vendor (Vendor) and You as purchaser dated 10 May, 2012 (Contract) the Vendor agreed to sell you the property known as 19 Grand Avenue, Camellia (Property).

2.   On 12 May, 2017 the Vendor died.

3.   Pursuant to clause 33.2 of the Contract, his estate gives You notice that the Contract is now rescinded and at an end and the provisions of clause 19 of the Contract apply.

DATED: 18 May, 2017

.....................................

Carolyn Patricia Deigan

CLS Legal

Solicitors for the Purchaser”

20. 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.

21. 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.

22. 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.

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

24. On 16 June 2017 Etienne Lawyers wrote to CLS Legal:

“We also note your representation that you have instructions to accept service of any process in this matter and that Ms. Deigan is the executrix of the estate of James Lockrey. In order for our clients to confirm to whom further payments of rent under the Lease are to be paid, and who ought to be joined in any proceedings in this matter, please confirm:

a Whether Mr. Lockrey had a will;

b If Mr. Lockrey had a will, whether probate has been granted;

c If probate has been granted, please provide a copy of the grant of probate;

d If probate has not been granted, please:

i.   Advise whether you will be applying for probate and, if so, when you will be making an application;

ii.   Provide a copy of any and all wills and codicils of Mr. Lockrey; and

iii.   Confirm under whose instructions you are presently acting.”

25. On 22 June 2017 Etienne Lawyers repeated that request.

26. 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.

27. 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.”

28. 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.

29. 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.

30. 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.

31. 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.

32. 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.”

33. 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:

“Commercial Legal Solutions Pty Limited ACN 604 467 905 t/as CLS Legal, as solicitors for the Carolyn Patricia Deigan the Executrix of the Estate of the Late James Boyd, Lockrey, give You notice that:-

1.   By the contract for sale of land between James Boyd Lockrey as vendor and You as purchaser dated 10 May, 2012 (Contract) the Vendor agreed to sell You the property known as 19 Grand Avenue, Camellia (Property).

2.   On 12 May, 2017 James Boyd Lockrey died.

3.   Pursuant to clause 33.2 of [sic] the Contract is now rescinded and at an end and the provisions of clause 19 of the Contract apply.”

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

1. a declaration that the notices of rescission of 18 May and 16 October 2017 were invalid and of no effect;

2. alternatively an order rectifying the contract for the sale of land by either striking out or amending the wording of clause 33.2;

3. a declaration that the contract be specifically performed and an order for specific performance;

4. alternatively a declaration that Ms Deigan held the property on trust for the benefit of Mr Fussell and an order that she transfer the property into his name; and

5. damages or equitable compensation.

The issues on appeal

35. 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.

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

1. Mr Fussell contended that on its proper construction cl 33.2 could only be availed of by the surviving party and not by the representative of the party who had died (Notice of Contention para 1). The primary judge rejected this contention (Judgment [149]-[170]);

2. Ms Deigan submitted that the contract for sale permitted a notice of rescission to be given by the solicitor for the vendor, irrespective of whether the solicitor had authority from anyone able to give authority for the rescission (Notice of Appeal grounds 1-4 and 6). The appellant complains that the primary judge failed to address this question;

3. Ms Deigan contended that as executrix named in the will who later obtained a grant of probate she had authority to exercise the right of rescission conferred by cl 33.2 and did so by the notice of rescission that she gave on 18 May 2017 as solicitor on behalf of the estate. The primary judge rejected this contention (Judgment [213]-[318]);

4. Mr Fussell contended that Mr Lockrey was in breach of the contract for sale by failing to complete on 10 May 2017 and being in breach from that date, Ms Deigan could not later rescind the contract due to his subsequent death (Notice of Contention para 3). The primary judge rejected that contention (Judgment [194]-[205]);

5. Mr Fussell contended that from 10 May 2017 and at all times thereafter he was entitled to an order for specific performance and had an equitable interest in the property commensurate with that of a registered proprietor which could not be defeated by the vendor’s subsequent death and the exercise of any contractual rights to rescind by reason of that death, but would be entitled to relief against forfeiture of his estate. The primary judge rejected that contention (Judgment [207]-[211]);

6. If the contract remained on foot and Mr Fussell were not entitled to relief against forfeiture, Ms Deigan relied upon her notice of rescission of 16 October 2017, after she had obtained probate. The primary judge rejected that contention finding that Ms Deigan could not rely upon the October notice because to do so would be to take advantage of the estate’s own wrong in not having completed earlier (Judgment [323]). By an amended ground of appeal Ms Deigan disputes that “the estate” (meaning either she as executrix before obtaining a grant of probate, or by her seeking a grant of administration ad colligenda bone defuncti to complete the sale, or the NSW Trustee as owner of the legal estate) was required to complete the contract. Ms Deigan contends that “the estate” was not required to complete the contract. The contractual time for completion had passed. Thereafter, completion was due within a reasonable time. The time purportedly fixed by the notice to complete was not reasonable. Thereafter, no new reasonable time for completion was fixed by Mr Fussell. Ms Deigan submitted that Mr Fussell did not give notice requiring completion at the place required by the contract, and that no appropriate form of transfer was submitted by him that would be required for completion;

7. Although not raised as a ground of appeal, Ms Deigan also submitted that the primary judge’s conclusion that she was prevented from relying upon the October notice of rescission because to do so would be to take advantage of the estate’s own wrong could only be reached if a finding were made that Mr Fussell would have been able to complete the purchase had “the estate” proffered performance. She submitted that whether or not Mr Fussell would have been able to raise the funds to complete the contract was a hotly contested issue at trial. No findings on that question were made.

Summary of primary judge’s conclusions

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

“(1)    on its true construction, cl 33.2 permitted rescission of the contract on behalf of Mr Lockrey’s estate following his death;

(2)    Mr Fussell’s claim to rectify the contract so as to avoid this result fails;

(3)    so too do Mr Fussell’s contentions that there was no entitlement to issue the May notice of rescission because of estoppel, prior breach of contract on the part of Mr Lockrey or his estate, an accrued right to specific performance and relief against forfeiture;

(4)    but Ms Deigan, not having obtained probate, had no authority to issue the May notice of rescission on behalf of Mr Lockrey’s estate and the subsequent grant of probate did not retrospectively confer such authority on her;

(5)    and Mr Fussell is entitled to specific performance of the contract despite the issue of the second notice of rescission because in issuing the notice Ms Deigan was taking advantage of a breach of the contract on the part of Mr Lockrey’s estate.”

38. 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.

Construction of clause 33.2

39. 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:

“33.   Without in any manner negating limiting or restricting the rights or remedies which would have been available to the parties at law or in equity had this special condition not been included, should either party prior to completion:

33.1   being a natural person be declared bankrupt, then

33.1.1   in the case of the vendor, the purchaser may rescind this contract by notice in writing forwarded to the solicitor for the vendor and this contract shall be at an end and the provisions of clause 19 shall apply; or

33.1.2   in the case of the purchaser, the purchaser shall be deemed not to have complied with this contract in an essential respect;

33.2   die or become mentally ill, then in the case of the vendor or the purchaser either party may rescind this contract by notice in writing forwarded to the solicitor for the other party and this contract shall be at an end and the provisions of clause 19 shall apply;

33.3 being a company, resolve to go into liquidation or have a petition for its winding up presented or entered into any scheme of arrangement with its creditors under the Corporations Act 2001 or should any provisional liquidator, liquidator, receiver and manager, receiver, controller, administrator or official manager be appointed in respect of either party or any asset of either party then:

33.3.1   in the case of the vendor, the purchaser may rescind this contract by notice in writing forwarded to the solicitor for the vendor and this contract shall be at an end and the provisions of clause 19 will apply; or

33.3.2   in the case of the purchaser, the purchaser shall be deemed not to have complied with this contract in an essential respect.”

40. 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.

41. 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.

42. 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.

Whether notice of rescission by solicitor was effective irrespective of actual or ostensible authority

43. 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”.

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

44. Clause 20.6 relevantly provides:

“20.6.   A document under or relating to this contract is –

20.6.1   signed by a party if it is signed by the party or the party’s solicitor (apart from a direction under clause 4.3);

20.6.2   served if it is served by the party or the party’s solicitor;

20.6.3   served if it is served on the party’s solicitor, even if the party has died or any of them has died.”

46. 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.

47. 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):

“Clause 22 (b) is a clear and specific contractual provision. Its intention and its operation are to my mind tolerably plain: neither party is to be at liberty to quibble or temporize in connection with some alleged doubt as to the authority of the solicitors to sign any notice having contractual significance; both the party whose solicitor signs such a notice and the party who receives it are required by cl. 22 (b) to be bound by it.

Differing contentions have been canvassed during the course of theargument, but none of these, in my view, casts any real doubt on what Idescribe as the plain intention and operation of the clause. In a contract ofthis nature there would be a variety of situations in which a notice might beappropriate to be given by one party to the other. The obvious intention ofthe draftsman of this common form of contract was to prescribe for suchnotices a means of execution free from any possible disputation which couldeither delay the parties in the pursuit of their rights and liabilities devolvingupon them under the contract, or which could give room for argument, suchas indeed arose in the present case.

The learned judge at first instance took the view that cl. 22 (b): ‘…operates as a present grant of actual authority to the solicitors for the partiesto the contract.’ I agree. The execution of a notice pursuant to the terms ofcl. 22 (b) is, in my view, operative, effective and binding upon both theparty giving it and the party receiving it. Both are caught by the deeming requirement of cl. 22 (b); it is open to neither to go behind this deeming requirement.”

48. Glass JA agreed. His Honour said that:

“... it is unnecessary to resort to the doctrine of ostensible authority in order to elucidate the meaning of the subclause. That should be yielded in the appropriate manner by an examination of its language and the context in which it operates.

... To my mind, the parties to the agreement have, by that clause, mutually agreed that, if their respective solicitors give notices on their behalf, those notices shall take legal effect in the same way as if they had been given by the clients themselves.” (at 772)

49. Samuels JA agreed with both judgments.

50. 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.

51. 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):

“...the clause at the lowest provides that, prima facie, a notice given by the solicitor is to be treated as if given by the party itself.

Put another way, the clause at least raises a rebuttable presumption that the notice is an authorized notice. There is in this case no evidence that the solicitor was not in fact authorized to write the letter thus, the presumption arising from the terms of the clause is not displaced.”

52. 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.

53. 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.

54. 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]).

55. 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:

“282   In the present case, there is no dispute that the general ‘rule’ applies, in the sense that the contract was enforceable notwithstanding the death of one or other of the parties. As has been seen, cl 1 of the contract did not define a ‘party’ as including that party’s legal personal representative. But, as has been accepted since Hyde v Skinner, it was not necessary to do so. There was nothing in the contract to exclude the usual implication to that effect. Indeed, the provision in cl 20.6, referring to service of documents on a party’s solicitor if that party has died, implicitly contemplated that in such a situation the contract continued to be enforceable. The present debate concerns a separate issue, namely the way in which the power of rescission could be exercised in the period after the deceased’s death.

283   In the case of service on the party who had died or become mentally ill, the contract in fact did make express provision. ...

284   But the contract made no express provision for service of notices on behalf of someone who had died, by that person’s solicitor or anyone else. Of course, the usual implication, flowing from Hyde v Skinner, would be that the party’s duly appointed legal personal representative could do so. But at the time Ms Deigan had not obtained probate.

285 The argument for Ms Deigan is that, having later obtained probate, she had a right to issue the notices which related back under s 44. But I think it is important to note that s 44 is concerned, in its terms, only with the title to property. It does not expressly deal with the exercise of contractual rights at all.”

56. 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.

57. 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.

58. 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.

59. 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.

60. 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.

Powers of named executor before grant of probate

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

“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 NSW 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 NSW Trustee in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England.”

62. 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”.

63. 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]).

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

“It follows, I think, that the question before me is not whether s 44 in some way conferred on Ms Deigan, retrospectively, authority to exercise rights of rescission which Mr Lockrey had under the contract. The question is whether the contract, having provided (implicitly) for the right of rescission arising on Mr Lockrey’s death to be exercised by his duly appointed legal personal representative, also went on to provide that upon the grant of probate actions taken by the nominated executor before the grant were retrospectively to be treated as valid. Ultimately this is a question of interpretation of the contract and specifically it is a question of implication.”

65. 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]).

66. 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]).

67. 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.

68. 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.

69. 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).

70. 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).

71. 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).

65. 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).

66. 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.

67. 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).

68. 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.

69. 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.

70. 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.

71. 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.

72. 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?

73. 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).

74. 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:

"From and after the Decease of any Person dying intestate, and until Letters of Administration shall be granted in respect of his Estate and Effects, the Personal Estate and Effects of such deceased Person shall be 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."

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

83. 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:

“To whom the Ordinary may commit the Administration of the Goods of him that dieth intestate. The Benefit and Charge of an Administrator.

ITEM [ALSO] it is accorded and assented, That in case where a Man dieth intestate, the Ordinaries shall depute the next and most lawful Friends of the dead Person intestate to administer his Goods; (2) which Deputies shall have an Action to demand and recover as Executors the Debts due to the said Person intestate in the King’s Court, for to administer and dispend for the Soul of the Dead; (3) and shall answer also in the King’s Court to other to whom the said dead Person was holden and bound, in the same Manner as Executors shall answer. (4) And they shall be accountable to the Ordinaries, as Executors be in the Case of Testament, as well of the Time past as the Time to come.”

84. 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).

85. 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).

86. 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”.

87. 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:

“The ecclesiastical courts proved powerless to control administrators and their position was not assisted by the courts of common law which acted throughout this period to prevent the development of the ecclesiastical jurisdiction in this respect. Indeed, in the early 17th century it was laid down by common law courts that the Ordinary, having delegated the administration, as he was required to do, was powerless to supervise the administrator or to compel him to act.”

88. 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).

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

“The ecclesiastical courts kept the whole administration of the estate under their eye from the probate of the will or the grant of letters of administration. They compelled the representative to produce an inventory by treating him much as the common law courts treated the executor de son tort; and in a suitable case they could compel him to give security. For the conduct of the administration they laid down rules not unlike some of those which the court of Chancery laid down in later days for the conduct of trustees. ... But though the ordinary tried to safeguard the estate by treating the representative as a trustee, he was careful also to preserve intact his powers. It was admitted that it was not the ordinary who administered the estate, but the representative; and the ecclesiastical law followed the common law in allowing him great freedom in the mode in which he executed any discretionary powers entrusted to him. In the same way the ecclesiastical law followed and seconded the common law in giving the representative facilities for collecting the estate so far as was necessary for carrying out the wishes of the deceased, and in holding all the representatives liable in solidum for acts done in their representative capacity. Finally, at the close of the administration, the ordinary compelled the representative to account.”

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

“The common law courts made it almost impossible for them to act at all. They would not allow them to enquire into the truth of the inventory, or to examine the executor’s accounts; and they issued writs of prohibition against actions on the bonds taken to secure the production of a proper account. It is not surprising that their consequent decline in power, coupled with the narrow severity of the common law rules, enabled dishonest executors to commit such frauds that Perkins actually advised testators to give their property away in their lifetime rather than leave it by way of legacy, and that the administrator became in practice the intestate successor to the deceased. A court was wanted with power to survey the whole conduct of the administration, and to restrain those who made an unconscientious use of the narrow rules of the common law. This want was eventually supplied by the court of Chancery.”

(W S Holdsworth, A History of English Law, (4th ed, 1935, Metheun & Co), Vol 3 at 591-594)

91. 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:

“...the clergy had never, at any time, in this country, by law, any beneficial interest in the property of intestates, but merely the right or duty of jurisdiction and administration, and the right of possession, for the latter purpose.” (at [488] 577),

and speaking of the Administration on Intestacy Act:

“This Statute was passed in 1357 ... and it is clear, that the Church, at this time, 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” (at [494], 577) (Emphasis added.)

92. 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.

93. 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.

94. 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):

“He has no duties whatsoever to perform. No obligations fall upon him. It is a mere matter of necessary convenience and protection which has led to the introduction of section 9 in the Administration of Estates Act; and, although reference is made to the ordinary, the position of the senior judge of the Probate Division appears to me to be different from the position of the ordinary, in that, whereas the ordinary had, at any rate in later times [viz. after 1285], thrown upon him the obligation to discharge debts before holding the balance to pious uses, no such obligation is thrown on the senior judge of the Probate Division.”

95. 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.

96. 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).

97. 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.

98. 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.)

99. 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:

“From and after the passing of this Act all land which by the operation of the law relating to real property now in force would upon the death of the owner intestate in respect of such land pass to his heir-at-law shall instead thereof pass to and become vested in his personal representatives in like manner as is now the case with chattel real property.”

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

101. 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.

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

“Upon the grant of probate of the will of any deceased person after the commencement of this Act, all the real estate whether held by him beneficially or in trust shall vest as from the death of such person in the executor to whom such probate shall be granted for all the estate therein of such person, and if there shall be more than one such executor shall vest in them as joint tenants in the same way as personal estate now vests.”

161. 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.

162. 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):

“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: cf Holloway v Public Trustee [1959] SR (NSW) 308 at 311. 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.”

165. 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).

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

167. 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.

168. 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.

169. 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.

170. 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.

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

“Section 61 has caused a tremendous amount of problem to persons affected by it over the years.”

172. 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 some cases … it may be perfectly possible for the executor fully, and properly, to administer the estate without a grant of probate. Whether this can be done depends not so much upon the size of the estate as upon the nature of its assets. If, for example, the executor is required to obtain title by transmission to Torrens system land, to large cash deposits, or to become a member of a company, then a grant will almost certainly have to be produced by the executor to the relevant authority or institution. On the other hand, if the estate consists only of tangible chattels, and, say, various small cash deposits, then the executor may well be able to administer them without a grant and regardless of their total value, which could be considerable. [The reason being that various statutory provisions in force throughout Australia apply to small cash deposits, shares, and life insurance proceeds. Current examples include: ss 211 and 212 of the Life Insurance Act 1995 (Cth) and s 1071B of the Corporations Act 2001 (Cth)].”

173. 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.

174. 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.

175. 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).

176. 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.

177. 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.

178. 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.

179. 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.

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

181. 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.

182. 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.

183. 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.

184. 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.

185. 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:

“... in practice no-one will deal with an executor as such unless he produces a grant and the matter is of little more than theoretical interest except as to matters which must be done before probate, when, in any proper case, acts may be done and agreements entered into upon an undertaking to obtain a grant without delay.”

186. 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.

187. 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.

Ms Deigan not precluded from giving notice of rescission

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

“The vendor was in breach of the contract of sale by failing to complete on 10 May 2017 and, being in breach from that date, the vendor’s estate could not later rescind the contract due to his subsequent death.”

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

“The vendor and the purchaser must complete this contract by 3.00pm on the date shown as the completion date (‘Completion Date’) shown on the front page of this contract.”

190. 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]).

191. 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]).

192. 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.

Relief against forfeiture

193. 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.

194. 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.

195. 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]).

196. 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):

“If, however, further justification is required for the exercise of the jurisdiction to grant relief, it is to our minds provided by the circumstance that it is the respondents who had a reasonable expectation of benefiting from any increase in the value of the land with the passage of time. Under the contract the appellants could, in the absence of default, look for no more than the purchase price together with the interest provided. The land has in fact increased considerably in value so that it forms much more than adequate security for the balance of the purchase moneys owing. The forfeiture of the respondents' interest in the land would truly result in a windfall to the appellants whereas relief against forfeiture would not result in a gain to the respondents properly describable as a windfall.”

197. 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.

198. 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.

199. 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.)

200. The primary judge said:

“190   Mr Fussell also claimed that he would not have undertaken the ‘improvements’ to the property if he had not thought that ultimately he would reap the benefit of those ‘improvements’ by proceeding to purchase. Mr Fussell presented his dealings with Mr Lockrey as being based on friendship and a shared plan for the future of the property rather than a business relationship based on the terms of the contract and the lease. But I think it is clear that, however friendly Mr Fussell was with Mr Lockrey, he appreciated that the relationship so far as the property was concerned was one of vendor and purchaser and lessor and (in BSTC’s case) lessee. ...

191   Furthermore, Mr Fussell must have understood in August 2016 from the solicitors’ correspondence that Mr Lockrey (or Mrs Lockrey, if by that stage she was directing his affairs) could require him and BSTC to comply strictly with their obligations and they were at risk of the contract being terminated if they did not. No doubt that is why Mr Fussell made efforts to reduce the rental arrears between August 2016 and May 2017. For his part, Mr Fussell took the position in the solicitors’ correspondence that he was standing on his rights under the contract and would not pay Mr Lockrey more than he was contractually obliged to pay. In my view, Mr Fussell must have appreciated when he undertook the ‘improvements’ that he (or more accurately BSTC) was taking the risk that he might not ultimately proceed to purchase if he or BSTC were unable to comply with their contractual obligations.

192 Moreover, I doubt that the works in question could truly be said to have constituted improvements to the property, in the sense of appreciably increasing its value. In any event, the expenses associated with the improvements were paid by BSTC (see at [97] above). It may be that Mr Fussell provided some of his own labour, but as the expenses were paid by BSTC, presumably on the basis that the works were associated with BSTC’s business, that labour must be seen as provided by Mr Fussell on behalf of BSTC. I am therefore not satisfied that any substantial detriment was incurred by Mr Fussell personally in his capacity as purchaser.

193   For these reasons, I am not satisfied there was any conventional basis of dealing as alleged, or that Mr Fussell suffered any relevant detriment. The estoppel claim fails.”

201. 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.

202. This ground of the notice of contention fails.

Validity of the October rescission

203. 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.

204. 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]).

205. 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]).

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

“the estate was not in breach in failing to complete at any time in that:

(a)   the notice to complete was invalid and

(b)   [Mr Fussell] did not make arrangements for nor attend any settlement.”

207. 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.

208. 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 transferor acknowledges receipt of the consideration of $1,700,000 as regards to the Estate in Remainder and the transferee acknowledges receipt of the consideration of $10 as regards to the Life Estate.”

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

210. 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.)

211. 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.

212. 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.

213. 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.

214. 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.”

215. 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.

216. 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.

217. 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.

218. 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).

219. 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.

220. 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]:

“If an executed dealing is in a form appropriate for registration and is accompanied by the certificate of title, the death of a party to the dealing before registration does not, of itself, make the dealing any less registrable.”

221. 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:

“4    The situation appears to be that when a registered proprietor dies, any transfer that he or she may have signed before death ceases to be an operative document so far as the Registrar General is concerned so that the Registrar General can no longer use it to alter the title. This flows from the decision of the Court of Appeal in McVey v Denis (1984) 55 ALR 201, which was applied by me in J A Westaway & Son Pty Ltd v Registrar General (6 September 1996 unreported) and again by me as a member of the Court of Appeal in Davis v Williams (2003) 11 BPR 21,313 at 21,340 [209]. The matter was recently considered by Gzell J in Watt v Lord [2005] NSWSC 53.

5    Of course, if the Registrar General does register the document, then the transferee will get an indefeasible title, but solicitors could not conscientiously present documents to the Registrar General knowing that the transferor was now dead.”

222. 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.

223. 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.

224. 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.

225. 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.

226. 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.

227. 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.

228. 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.

Costs

229. 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.

Orders

230. For these reasons I propose the following orders:

1. Appeal allowed.

2. Set aside the orders made on 19 September 2018.

3. Order that the summons be dismissed.

4. Declare that the contract for sale of land between the late James Boyd Lockrey and the respondent dated 10 May 2012 relating to Lot F in Deposited Plan 33553 was rescinded as and from 18 May 2017.

5. Reserve the proceedings for further consideration before the primary judge and grant liberty to apply to the primary judge for any consequential orders that might be required consequent upon the declaration at (4).

6. Order that the respondent pay the appellant’s costs of the appeal.

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Amendments

10 December 2019 - Coversheet amendment.

Decision last updated: 10 December 2019