Cullen & Cullen - [2011] FMCAfam 375

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CULLEN & CULLEN

[2011] FMCAfam 375

FAMILY LAW – Property – death of a party – s.79(8) Family Law Act 1975 – appointment of legal personal representative of deceased party – executor/administrator acquires title to a chose in action upon a grant of probate of the Will or letters of administration in the estate.

Family Law Act 1975, s.79(8)
Federal Magistrates Court Rules 2001, r.1.05
Family Law Rules 2004, rr.1.12, 6.05, 6.15
Superannuation Industry (Supervision)Act 1993, s.10
Probate and Administration Act 1898 (NSW), ss.44 & 61

Vuletic & Vuletic number PT700 of 1995 (unreported)
Slater & Slater (1985) FLC 91-641
Strelys & Strelys (1987) FLC 91-827
Daily Pty Ltd v White (1946) 63 WN (NSW) 262
Nolan v Nolan & Ors [2004] VSCA 109
In the Marriage of GF & ER Strelys 12 FAMLR 437
Byers v Overton Investments Pty Ltd (2001) 109 FCR 554

Applicant:

MS CULLEN

Respondent:

MR CULLEN

File Number:

DUC 372 of 2009

Judgment of:

Kemp FM

Hearing date:

11 April 2011

Date of Last Submission:

11 April 2011

Delivered at:

Sydney

Delivered on:

27 April 2011

REPRESENTATION

Counsel for the Applicant:

Mr Hodgson

Solicitors for the Applicant:

Booth Brown Samuels Olney

Counsel for the Respondent:

Mr Berry

Solicitors for the Respondent:

M J Duffy & Son

ORDERS

Pursuant to Rule 6.05 of the Family Law Rules 2004, Mr P is granted permission to intervene as a party, becoming the second applicant in the proceedings.
That upon grant of the Probate of the last Will of Ms Cullen dated

1 June 2009 appointing Mr P as an Executor and Trustee of the Estate of the first applicant and within 24 hours of a sealed copy of the said grant being provided to the Court, Mr P be substituted as the legal personal representative of the first applicant, pursuant to s.79(8) of the Family Law Act 1975 and at the same time be removed as the second applicant in the proceedings.
By consent, that leave be granted to the parties’ solicitors to inspect and if required, photocopy the exhibits tendered at the hearing of these proceedings by arrangement with the Associate to Federal Magistrate Kemp.
By consent, that the parties be granted liberty to restore on 7 days notice.

THE COURT NOTES

That a copy of the Death Certificate and Will of the late Ms Cullen have been produced to the Court as part of Exhibit “1” on the application.
The Court will reserve the position as to whether the parties will be required to attend a further conciliation conference.

IT IS NOTED that publication of this judgment under the pseudonym Cullen & Cullen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

DUC 372 of 2009

MS CULLEN

Applicant

And

MR CULLEN

Respondent

REASONS FOR JUDGMENT

Introduction

These are property proceedings which were heard in Dubbo on 26 & 27 October 2010 when the parties’ evidence closed and the proceedings were adjourned for written submissions in accordance with a submission timetable. That timetable contemplated final written submissions by the applicant wife in reply by 20 December 2010.
On 2 November 2010, the applicant wife passed away.
On 22 November 2010, the matter was re-listed for mention on

8 December 2010. On that day, the submission timetable was suspended and the parties were given leave to file a minute of proposed order which contemplated the substitution of the legal personal representative for the deceased wife together with any further procedural directions and for the Court to be provided with a copy of the Death Certificate and a copy of the Probate of the Will of the deceased wife.
On 1 April 2011, the matter was again re-listed for mention on 5 April 2011. On that day, the issue of the appointment of Mr P as legal personal representative for the deceased wife was stood over for determination on 11 April 2011.
Section 79(8) of Family Law Act1975 (“the Act”) states as follows:
(8) Where, before property settlement proceedings are completed, a party to the marriage dies:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b) if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
The term “legal personal representative” is not defined in the Act.
There are no rules of the Federal Magistrates Court directly relevant to the issue now before the Court.
Regulation 1.05 of the Federal Magistrates Court Rules2001 states:
Application
(1)   It is intended that the practice and procedure of the Federal Magistrates Court be governed principally by these Rules.
(2) However, if in a particular case the Rules are insufficient or inappropriate, the Court may apply the Federal Court Rules or the Family Law Rules 2004 or the Family Law Rules 1984 , in whole or in part and modified or dispensed with, as necessary.
(3)   Without limiting subrule (2):
(a)    the provisions of the Family Law Rules set out in Part 1 of Schedule 3 apply, with necessary changes, to family law or child support proceedings; and
(b)     omitted.
Accordingly, applying Rule 6.15 of the Family Law Rules2004 to this matter the Court has had regard to the following:
Death of party
(1)   This rule applies to a property case or an application for the enforcement of a financial obligation.
(2)   If a party dies, the other party or the legal personal representative must ask the court for procedural orders in relation to the future conduct of the case.
(3)   The court may order that the legal personal representative of the deceased person be substituted for the deceased person as a party.
Note 1    The court may make other procedural orders, including that a person has permission to intervene in the case (see rules 1.12 and 6.05).
Note 2 For the effect of the death of a party in certain cases, see subsections 79 (1A), 79 (8), 79A (1C), 90SM (2), 90SM (8), 90SN (5), 90UM (8) and 105 (3) of the Act.
Rule 1.12 of the Family Law Rules2004 states:
Court may dispense with Rules
(1)   These Rules apply unless the court, on application or its own initiative, orders otherwise.
(2)   The court may dispense with compliance with any of these Rules at any time, before or after the occasion for compliance arises.
(3)   In considering whether to make an order under this rule, the court may consider:
(a)    the main purpose of these Rules (see rule 1.04) ;
(b)    the administration of justice;
(c)    whether the application has been promptly made;
(d)    whether non‑compliance was intentional; and
(e)    the effect that granting relief would have on each party and parties to other cases in the court.
Rule 6.05 of the Family Law Rules2004 states:
Intervention by a person seeking to become a party
If a person who is not a party to a case (other than a person to whom rule 6.06 applies) seeks to intervene in the case to become a party, the person must file:
(a)    an Application in a Case; and
(b)    an affidavit:
(i)    setting out the facts relied on to support the application, including a statement of the person's relationship (if any) to the parties; and
(ii)    attaching a schedule setting out any orders that

the person seeks if the court grants permission to intervene.
Note Part IX of the Act deals with intervention in a case. Once a person has, by order or under rule 6.06, intervened in a case, the person becomes a party with all the rights and obligations of a party (see subsections 91 (2) and 91A (4), paragraph 91B (2) (b) and subsections 92 (3) and 92A (3) of the Act).
The Explanatory Guide to the Family Law Rules2004 sets out the following definition:
legal personal representative, for a deceased party - the executor or administrator of the party’s estate.
Similarly, the Superannuation Industry (Supervision) Act 1993 in s.10 provides the following definition:
legal personal representative – means the Executor of the Will or Administrator of the Estate of a deceased person…
An “Executor of the Will” is the person appointed by a Will to administer the property of a Testator who executed the Will and to carry into effect the provisions set out in the Will.
Notwithstanding some substantial delay, it would appear that no application for the Probate of the last Will of the deceased wife has yet been made. The reasons for that are not entirely clear.
A copy of the Will of the deceased wife dated 1 June 2009 (“the subject will”) has now been attached to a draft minute of consent order, which, together with the wife’s Death Certificate forms part of Exhibit “1” on this application.
Mr Hodgson of Counsel, who has previously appeared for the wife now appears and seeks that the Court make orders in accordance with the terms of Exhibit “1”. That minute seeks that Mr P, the son and legal personal representative of the deceased wife be substituted for her as a party to these proceedings. The minute also seeks that leave be granted to the parties to inspect and, if required, photocopy exhibits and further that liberty be granted to the parties to restore the matter upon 7 days notice. Mr Berry, of Counsel, who appears for the respondent husband consents to the orders as set out in that minute.
When the minute of order was first presented to the Court on 5 April 2011 it sought the appointment of Mr P as the sole legal personal representative of the deceased wife. However, the subject will indicated that the wife had appointed both Mr P and his sister, Ms R, as joint executors. In those circumstances, the Court sought some clarification as to the position of Ms R. The proceedings were, accordingly, adjourned to enable that clarification to be provided.
An affidavit has now been received from Ms R confirming her position that she consents to Mr P being the sole appointment as legal personal representative for the purpose of these proceedings.
The issue before the Court is now whether the Court should make that appointment, prior to any formal grant of Probate of the subject will.
Mr Hodgson submits that Mr P, by being named as an executor, is entitled to be appointed legal personal representative in these proceedings, prior to any grant of Probate. He submits that there is supportive authority in the unreported decision of Justice Holden in the Family Court of Western Australia handed down on 14 March 1995 in proceedings Vuletic & Vuletic number PT700 of 1995. His Honour, in that case, was dealing with essentially the same fact scenario as this Court now deals with, save that the application before him was not consented to. His Honour refers to the following extract from Australian Family Law & Practice which stated:
“Where there is an Executor, it seems clear that probate must have been granted before an order for substitution can be made. See Slater & Slater (1985) FLC 91-641 at p76,222; Strelys & Strelys (1987) FLC 91-827 at p76,222”.
His Honour referred to the above quotation as being found at Volume 2, p.32,054 at paragraph 40-085. Relevantly, a more update version of Australian Family Law & Practice states as follows:
“Under s.79(8) a property case can only be continued if an order has been made substituting the deceased’s legal personal representative for the deceased (Fisher v Fisher (No.2)(1986) FLC 91-767…)
There is unreported authority for the proposition that if there is an Executor, a grant of probate is not required for an order for substitution (Vuletic & Vuletic (PT700 of 1995), per Holden J.) The Judge concluded that an executor obtains authority to act as the testator’s personal representative from the Will alone, and not from the grant of probate. Reported cases on the point which leave the matter open are Slater & Slater…; Strelys & Strelys…”
His Honour discusses each of the decisions referred to in the quotation set out in paragraph 21 above and concludes that they do not stand for what the learned authors asserted. In the case of Slater, he says that Justice Ellis did not decide that issue, given that, at the time of the determination of the application, the Probate had been granted, even though the application had been filed prior to the grant being obtained.
Similarly, His Honour considered Strelys and stated, in that case, Justice Frederico had considered the application on the basis that “such a grant of Probate would be readily obtained were this to become necessary”.
His Honour formed the view that a grant of Probate was not a prerequisite to the making of an order substituting the legal personal representative for the deceased. He formed this view on the basis that he said an executor derives “status” namely, the authority to act as the testator’s lawfully constituted representative from the Will alone and not from the grant of Probate. He says that this flows from the executor’s acceptance of the fact of his/her appointment to such office. His Honour found that the lodging of an application for appointment in place of the deceased and the filing of an affidavit in support of that application, constituted “sufficient acceptance”.
However, while the appointment of an executor is contained within the terms of the Will, it is ultimately conditional upon the Will, itself, otherwise, being proved valid. This Court has no jurisdiction to declare a Will valid. An executor’s title, where derived from the Will, is, however, confirmed operational upon the grant of Probate. By force of s.44 of the Probate and Administration Act 1898 (NSW), upon the grant of Probate, the executor’s title relates back to the date of the testator’s death. This is a statutory enactment of the doctrine of relation back. See Daily Pty Ltd v White (1946) 63 WN (NSW) 262.
An executor who has “accepted office” does, however, derive some status. This may flow from an executor taking steps, potentially to preserve estate assets, and thereby intermeddling in estate affairs. By virtue of that, and by virtue of being named in the Will, he is afforded a status, albeit, with limited authority. This, is to be distinguished from title, with full authority.
An executor named in a Will may take steps to administer an estate prior to the formal grant of Probate. He does, however, do so in a personal capacity. Upon the grant of Probate of the Will, the acts done in that personal capacity, prior to the grant, are, in effect, confirmed by virtue of the relation back concept. If, however, his appointment is not confirmed, provided he acted responsibly and within the terms of what a reasonable executor would, otherwise, have done, third parties who dealt with that executor upon the basis of his ostensible authority to act as executor may, otherwise, receive some protection. Similarly, the executor who so acts, may have some protection in seeking an indemnity as against estate assets.
A person who acts as an executor in circumstances where there is no probated Will may by intermeddling with the property of the deceased become an executor de son tort (an executor of his own wrong) who becomes liable to the rightful representative and other interested persons to the extent of the property he has received [emphasis added], less any proper payments he has made out of that property. A useful analysis of the role of an executor de son tort is provided in the Supreme Court of Victoria Court of Appeal (Ormiston, Chernov & Eames JJ.A.) decision in Nolan v Nolan & Ors [2004] VSCA 109. As Justice Ormiston stated:
“…Any action had necessarily to be brought against such a person as ostensible personal representative of the relevant estate who was then liable, but only to the extent of the assets with which he or she had purported to deal. As the authorities demonstrate, even minor acts of dealing with property interests were sufficient to constitute a person an Executor de son tort, but only if it could be inferred that the person was purporting to act in that role…
Moreover, the authorities made clear that if there had been in fact a grant of probate or letters of administration, then a mere attempt later to obtain the property of a deceased and even purporting to act as Executor or Administrator, would not ordinarily clothe that person with the responsibilities of an executor de son tort, because there was then a person who might be sued properly in that role as liable for the debts and other liabilities of the estate.”
Pending the grant of Probate or Letters of Administration in respect of the estate of a deceased person, the real and personal assets of the deceased vest in the New South Wales Trustee; see s.61 of the Probate and Administration Act 1898. The New South Wales Trustee, acts as a formal repository of title.
However, it is a different thing to elevate the status of a named executor, prior to a grant of Probate, to one following a formal grant of Probate.
The doctrine of relation back appears to apply to transactions which give rise to contractual or quasi-contractual claims. The learned authors of LexisNexis, Succession Law & Practice NSW, L Handler & R Neal, state at paragraph 1213.2 as follows:
“The doctrine cannot however be used to render competent court proceedings commenced by a person claiming to be administrator of an estate if at the time of commencement of proceedings a grant to that person had not been made: Ingall v Moran [1944] KB 160; Re Crowhurst Park [1974] 1 All ER 991; Minister of State for the Interior v RT Co Pty Ltd (1962) 107 CLR 1 at 7; [1963] ALR 57; Gertsch v Roberts; Estate of Gertsch (1993) 35 NSWLR 631 at 635. In the lastmentioned case Powell J reserved the position in relation to an executor before grant. Compare also Pekel v Humich (WASC, Sanderson M, No 1801/86, 3 December 1998, unreported, BC9806540). In Byers v Overton Investments Pty Ltd (2001) 109 FCR 554, the Full Court of the Federal Court followed Marshall v D G Sundin Pty Ltd (1989) 16 NSWLR 463 and Darrington v Caldbeck (1990) 20 NSWLR 212 in holding that proceedings commenced by an executor before grant were a nullity.”
In Byers v Overton Investments Pty Ltd (2001) 109 FCR 554 referred to in the above mentioned quote, the Full Court of the Federal Court of Australia (Branson, North & Stone JJ.) drew a clear distinction between the source of the executor’s appointment which, undoubtedly, is the Will (that is status with limited authority) and the vesting of any property in the executor which is effected by statute, upon the grant of Probate (that is status with full authority arising from title). The Court, in that case, quoted with approval the written submissions of Counsel, Mr McInerney, to the following effect:
“After death and before a grant of probate, an executor has a title derived from the Will which grants the executor a status in respect to the estate. The executor’s authority in respect to the estate is limited, however, to situations where the vesting of the property in the executor is not a necessary pre-condition to the exercise of that authority”
The Full Court went on to state that:
“It is trite law that proceedings to vindicate a chose in action can be pursued only by the person who has title to that chose in action or who is entitled to sue in the name of that person…
In our opinion, Ms Byers had no title to the relevant chose in action until grant of probate.”

In conclusion, the Full Court stated:
“When Ms Byers commenced this proceeding… she had not been granted probate. The effect of s.61 of the Wills Probate & Administration Act 1898 is that she did not at that time have title to the relevant property, namely, the chose in action that the estate now seeks to pursue against the respondents. Being without title to the chose in action, she was not competent to commence proceedings to pursue that right. For reasons given above, the statutory relation back under s.44(1) does not cure that defect. The weight of authority and reason leads to the conclusion that this proceeding was incompetently commenced and therefore, it was and remains a nullity.”
Accordingly, the Court is of the view that a named executor can apply to become in his or her own right a party to the proceedings by way of intervener. The Will would provide the basis for that application. Upon a grant of Probate or Letters of Administration in favour of that party, he or she could then formally seek to be substituted for the deceased party and, thereafter, apply to be removed as a party in his or her own right. The Court is of the view that, in the circumstances of this matter, a self-executing order in terms of that referred to at the commencement of these reasons could be made to accommodate that position.
Such a device, contemplated by the rules, allows for the legal personal representative to be substituted when the Will is formally proved. In the interim, before probate is granted, the named executor in his or her own personal capacity may seek directions for the further conduct of the matter.
The Court has had specific regard to the Full Court of the Family Court of Australia’s decision in In the Marriage of GF & ER Strelys 12 FAMLR 437 (Simpson, Nygh & Graham JJ.) and in particular to the decision of His Honour Justice Nygh. His Honour stated:
“…it is clear that in Australia at least… proceedings for property settlement under s.79 abate on the death of one of the parties… The reason for this is that the claim has been regarded as purely personal and incapable of surviving for the benefit of the estate. Section 79(8)(a) allows the proceedings to be continued by the substitution of the legal personal representative of the deceased. In my view, until and unless such a person is appointed, the proceedings are, as it were, suspended and no legally effective step can be taken either to continue or discontinue them.”
His Honour, of course, was dealing in that matter with a purported withdrawal by Mrs Strelys of the proceedings. His Honour’s view can be seen as defined by the actions of the parties, themselves, in the matter before him. That does not include directions by the Court. This can be inferred by His Honours’ reference to the relevant rule (being, at that time, Order 14 Rule 6(1)) which he said gives rise to the “obvious implication” that it is for the Court to give directions for the conduct of the proceedings following death. This is taken up further by His Honour, when he states:
“In my view, upon the death of a party to uncompleted proceedings under s.79, the proceedings are in effect suspended pending the directions of the Court under rule 6(1) as to the future conduct of the proceedings.” [emphasis added]
His Honour contemplated that the directions of the Court could, where no steps had been taken to appoint a personal legal representative, include an order that the proceedings be dismissed.
Mr Hodgson submitted that, until the appointment of the legal personal representative, the proceedings were suspended. The Court is of the view that the proceedings are, otherwise, suspended until either that appointment is made or directions of the Court have been given. In the circumstances, the Court is of the view that directions which provide for the appointment of Mr P as a party and, upon the grant of the Probate, his substitution as a legal personal representative and for the matter to progress by way of procedural orders, are a sufficient compliance with s.79(8) for there to be no further suspension of the proceedings and for the Court now to entertain submissions and/or any other applications.
In light of Mr Hodgson’s submissions, it is likely that a grant of Probate of the subject will, will be available shortly, in any event, an prior to the handing down of any final decision.
The Court is further of the view that, subject to any further applications which the parties may seek to make, future possible costs and expenses may dictate that the parties remaining be offered a further opportunity to resolve the matter by way of a conciliation conference before such costs and expenses are incurred.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Kemp FM

Date: 27 April 2011