Dawson v Fitch

[2002] SASC 12
DAWSON & ORS V FITCH & ORS
Full Court: Lander, Williams & Wicks JJ

LANDER J. This is an appeal and a cross appeal from a decision of a Master of this Court in proceedings brought under the Inheritance (Family Provision) Act 1972 (SA).
This appeal was heard on two separate occasions. After reserving judgment a majority of the court were of the opinion that the court needed to be apprised of further facts and to hear further submissions on those facts. The executors’ and trustees’ solicitors tendered a further affidavit deposing to matters not before the Master. All parties agreed that this court should receive those facts and all parties made submissions on those matters. It is therefore not necessary to identify those matters which were proved on this appeal The following recitation of the facts includes the evidence that the parties agreed could be before this Court on appeal.
Frank Thomas Fitch died on 14 March 1998. Probate of his will dated 20 June 1996 was granted on 17 September 1998.
The deceased was married, later lived in a de facto relationship and even later married again. The first defendant is his second wife. The fourth defendant, who was born on 22 October 1971, is a child of the deceased’s marriage to his first wife. The fifth defendant, who is a minor, is a child of the deceased’s marriage to his second wife, the first defendant. Her actual age is not disclosed in the appeal papers, but she is a minor. In fact it was agreed on the appeal that she was born on 31 March 1988.
The three plaintiffs are the children of his de facto relationship into which he entered between his marriages. The first plaintiff was born on 29 January 1974 and the second and third plaintiffs, who are twins, were born on 18 May 1976.
The deceased made provision for his second wife and the fourth and the fifth defendant in his will. He made no provision for the plaintiffs.
Probate of the deceased’s will was granted to the first and second defendants and to Ian Allan McFarlane, an accountant on 17 September 1998. Mr McFarlane retired as a trustee on 12 February 1999. Mr McFarlane is a partner in the firm of Cleland McFarlane Selth, chartered accountants. By Deed dated 16 February 1989 the first and second defendants appointed the third defendant, Mr Robert Kennedy, as a co-trustee of the trusts of the will of the deceased. Mr Kennedy is a partner in the firm of Kennedy & Co, chartered accountants. The will did not provide any power for the trustees to appoint further trustees. The fifth defendant relied upon the retirement of Mr McFarlane as a trustee and the third defendant’s appointment in submitting that there had been a distribution of some of the assets. It was put that the executors were different persons to the trustees.
Mr McFarlane was not a party to the proceedings before the Master nor on the appeal. During argument on the second occasion all parties agreed however that he should be joined. After judgment was reserved for the second time the plaintiffs applied to join Mr McFarlane as a party to these proceedings. Mr McFarlane did not object and so on 10 September 2002 I made an order joining Mr McFarlane as a party to these proceedings.
The sixth defendant is the Public Trustee.
The deceased left his real estate in the Onkaparinga Hills to the first defendant. The real estate was transferred to the first defendant on 1 October 1998. That asset is not relevant to the issues raised by these proceedings and can be ignored.
The deceased provided for the disposition of the remainder of his estate in the following terms:
“4.I DIRECT my executors to set aside the sum of $250,000.00 to be held upon the following terms and conditions namely:
(i)     I APPOINT my executors to be the trustees of such fund.
(ii)    I DIRECT my trustees to stand possessed of such sum;
(a)as to the sum of One hundred thousand dollars ($100,000.00) for my daughter MARY LOUISE FITCH subject to her attaining the age of twenty five years.
(b)as to the balance of One hundred and fifty thousand dollars ($150,000.00) in trust for my said daughter MARY LOUISE FITCH subject to her attaining the age of thirty five years.
5.I DIRECT my executors to set aside the sum of $250,000.00 to be held upon the following terms and conditions namely:
(i)     I APPOINT my executors to be the trustees of such fund.
(ii)    I DIRECT my trustees to stand possessed of such sum;
(a)as to the sum of One hundred thousand dollars ($100,000.00) for my daughter LENEVE ANN FITCH subject to her attaining the age of twenty five years.
(b)as to the balance of One hundred and fifty thousand dollars ($150,000.00) in trust for my said daughter LENEVE ANN FITCH subject to her attaining the age of thirty five years.
6.AS to the rest and residue of my real and personal estate of whatsoever nature and wheresoever situate to my executors upon trust to pay therefrom my funeral and testamentary expenses and lawful debts (including any capital gains tax payable in my estate) and to divide the balance then remaining into two equal parts and stand possessed of such parts as follows:
(i)As to one such part for my wife the said CORAL MAUDE FITCH absolutely.
(ii)As to the remaining such part I appoint my said wife CORAL MAUDE FITCH and PUBLIC TRUSTEE to be the trustees thereof and I direct them to stand possessed of such equal part during the lifetime of my said wife to pay the Income therefrom to her during her lifetime and upon her death to stand possessed of such part for such of them my daughters the said MARY LOUISE FITCH and LENEVE ANN FITCH as survive me and if more than one in equal shares.”
At the deceased’s death his daughter, Mary, was 25 and became immediately entitled to the sum of $100,000 provided for in Clause 4 (ii) (a) of the will. She was paid that sum on 30 September 1998. That asset can also be ignored.
She had not, and still has not, attained the age of 35 years and is therefore not presently entitled to the legacy provided for in Clause 4 (ii) (b).
The deceased’s daughter, Leneve, had not turned 25 at the date of the deceased’s death and still has not. She has not yet become immediately entitled to the legacies referred to in Clause 5 (ii) of the will.
The legacy referred to in Clause 4 (ii) (b) and the legacies referred to in Clause 5(ii) of the will were invested with the Adelaide Bank in its money market facility on or about 12 October 1998 in accounts described, in the case of the fourth defendant “Estate of the late F T Fitch A/C Mary L Fitch c/- Cleland McFarlane Selth” and, in the case of the fifth defendant “Estate of the late F T Fitch A/C Leneve A Fitch C/- Cleland McFarlane Selth”.
Cleland McFarlane Selth were and are ‘brokers’ to the Adelaide Bank. A broker is entitled to obtain a higher rate of interest on moneys deposited with the Adelaide Bank than other depositors. There is no written agreement between Cleland McFarlane Selth and the Adelaide Bank recording the terms of the brokers’ agreement but nothing turns on that.
Victoria Taylor, an employee of Cleland McFarlane Selth, signed the money market applications which opened the Adelaide Bank accounts. She gave the accounts the description to which I have referred.
The terms and conditions of the money market accounts are unremarkable. Effectively Cleland McFarlane Selth is treated as the customer.
The money invested in those accounts came from the trust account of Lynch & Meyer, solicitors for the executors and trustees. In the trust account of Lynch & Meyer the cheques were described:
Cheque No. 35012 - Adelaide Bank Limited for account of Mary Louise Fitch - Short term investment for balance of legacy - $150,000.
Cheque No. 35013 - Adelaide Bank Limited for account of Leneve Ann Fitch - Short term investment for balance of legacy - $250,000.
Most of the residue of the estate has been dealt with in accordance with the directions given in Clause 6 of the will. In particular, most of the residue has been divided and the first defendant has received most of her entitlements under Clause 6(i). The residue consisted mostly of shares. The shares which fell into residue and to which the first defendant was entitled were transferred to the first defendant during the period February/June 1999. It is not necessary to be more precise than that. Those entitlements also can be ignored for the purpose of this matter.
Shares have been transferred to the first defendant and the sixth defendant in accordance with Clause 6 (ii). Those shares were transferred to the first and sixth defendants again sometime between February and June 1999. The transfers were evidenced in standard share transfer forms executed by the executors’ agents as transferors and accepted by the trustees. Specific documentation was created to effect those transfers. Again it is not necessary to be more precise about the date of transfer of the shares. The first defendant and the sixth defendant are presently holding those assets in accordance with the trust erected in that clause.
The first defendant was unable to maintain herself and the fifth defendant after the death of the deceased. Monies were advanced to her out of those assets of the estate which formed the residue of the estate. The first defendant became indebted to the estate in the sum of $38,453.03 which she repaid on 9 February 2000.
The estate’s solicitors received income from time to time which they banked to the credit of the estate in their trust account. Monies were also invested by the estate in Tower Trust.
The plaintiffs, being children of the deceased, are persons entitled to claim benefits under the Inheritance (Family Provision) Act 1972 (SA) (the Act): s 6.
The Court is empowered to make provision, under the Act, out of the estate of the deceased person for the maintenance, education or advancement of a person so entitled: s 7. Section 10 provides that any provision made by a Court under the Act operates and takes effect as if it had been made by the deceased person leaving a will, by a codicil to that will, executed immediately before the deceased person’s death.
Section 8 of the Act provides that an application under the Act shall not be heard by the Court unless the application has been made within six months from the date of grant of probate of the will of the deceased person. If an application is brought and served within time the Court may order that provision under the Act be made out of the estate or any part after it has been distributed: s 14(3).
This application was brought and served on 14 January 2000, more than six months after the date of grant of probate.
Section 8, however, provides that the Court may extend the time for making an application for benefits under the Act. In this case on 9 April 2001 an order was made, pursuant to s 8(3) of the Act, extending the time for the bringing of the application until 14 February 2000.
A Court is not entitled to extend time for the bringing of an application unless the application for the extension of time is made before the final distribution of an estate. If the order extending time was within power, and nobody has suggested otherwise, the estate could not have been finally distributed at that time.
Where an application is brought outside the time provided for in s 8 of the Act but where an extension of time has been granted, the Court cannot order provision in favour of the applicant from that part of the estate which was distributed before the extension of time was granted.
In the latter case the Court’s power to make provision out of the estate is limited by s 8(5) which provides:
“(5)Any distribution of any part of the estate made before the application for extension of time shall not be disturbed by reason of that application or any order made thereon.”
In construing this legislation it has to be remembered that it is remedial in character and “must be construed as to give the most complete remedy which the phraseology will permit”: Holmes v Permanent Trading Co Of New South Wales Ltd (1932) 47 CLR 113 at 119.
The legislation has a public purpose and public interest. The public purpose is to provide for the maintenance of indigent dependents of the testator who should have otherwise have been provided for in the testator’s will. It is in the public interest to provide such a right to make an application: Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494 at 513.
The purpose of the legislation was explained by the High Court in Easterbrook v Young (1977) 136 CLR 308 at 320:
“The dominant purpose of this legislation is to enable the court, in a sense, to prevent the operation of the will according to its terms in an appropriate case. It is because the will is operating unduly or unjustly in relation to the testator’s family that the court is empowered to order maintenance, its order operating as a codicil to change the terms of the will and have them operate in a way different to that expressed by the testator.”
The parties to this action were not able to agree whether there had been a distribution of assets of the estate. The assets which were the subject of the disagreement were the two bank accounts at the Adelaide Bank, the shares which had been transferred to the first and sixth defendants, the debt owed by the first defendant to the estate, and monies held in the estate’s solicitor’s trust account and Tower Trust. By way of interlocutory application the plaintiffs sought a declaration in the following term:
“1.That there was no distribution of the following assets out of the estate of Frank Thomas Fitch deceased (‘the deceased’) for the purposes of Section 8 of the Inheritance (Family Provision) Act before the summons in this action was served upon the executors of the will of the deceased on the 14^th day of January 2000 (‘the said date’).
1.1The shares referred to in paragraph 10 of the affidavit of Alfio Macolino sworn on the 2^nd day of March 2001 (or the shares and other investments representing the same on the said date) and all dividends which had accrued thereon on the said date but which had not been paid to any beneficiaries.
1.2The deposited amount of $150,000.00 held pursuant to clause 4(ii)(b) of the will of the deceased in respect of Mary Louise Fitch at Adelaide Bank Limited and all interest which had accrued thereon on the said date.
1.3The deposited amount of $250,000.00 held pursuant to clause 5(ii)(a) and (b) of the will of the deceased in respect of Leneve Ann Fitch at Adelaide Bank Limited and all income which had accrued thereon on the said date.
1.4The debt of $38,453.03 owed by Coral Maude Fitch and paid by her into the estate of the deceased on the 9^th February 2000.
1.5All moneys held by Lynch & Meyer in their solicitors Trust Account and at Tower Trust on the said date.”
The plaintiffs, of course, contended before the Master that there had not been any distribution of any of the assets referred to in the application. The defendants, on the other hand, contended, at least in the first instance, that there had been a distribution of all of those assets. During the hearing before the Master all parties agreed that there had not been a distribution of the assets referred to in paragraphs 1.4 and 1.5 and no more need be said about those assets.
If the plaintiffs’ contentions or any part of them are correct then those assets which have not been distributed are available for any provision which might be ordered by the Court in their favour. If the defendants’ contentions are correct, and there has been a distribution of the assets referred to in 1.1, 1.2 and 1.3, then that would only leave the assets referred to in paragraphs 1.4 and 1.5 available for any provision for the plaintiffs. That is the consequence of the plaintiffs not commencing their proceedings within the time prescribed by s 8 of the Act and the effect of s 8(5) of the Act.
The Master found that the assets referred to in paragraph 1.1 had been distributed. He found that the assets referred to in paragraphs 1.2 and 1.3 had not been distributed.
The plaintiffs have appealed against his decision refusing the declaration in paragraph 1.1 and his making a declaration that there had been such a distribution.
The fifth defendant, Leneve, has appealed against the declaration referred to in paragraph 1.3 declaring that there had not been a distribution of the deposited amount of $250,000 held pursuant to Clause 5.5 (ii) (a) and (b) of the will of the deceased.
No party has appealed against the declaration made in paragraph 1.2.
The starting point in considering whether or not the assets in paragraphs 1.1 and 1.3 have been distributed is the decision of the High Court in Easterbrook v Young (1977) 136 CLR 308.
I should mention immediately that counsel for the first defendant submitted that Easterbrook v Young (supra) was wrongly decided. The New Zealand Court of Appeal and subsequently the Privy Council did not apply the reasoning in that case to the equivalent New Zealand legislation in Lilley v Public Trustee Of Dominion Of New Zealand [1978] 2 NZLR 605; (1981) AC 839. The reason for rejecting Easterbrook v Young was that the history of the New Zealand legislation evinced a different intention on the part of the Parliament.
However in the Court of Appeal in New Zealand it was not suggested the reasoning was wrong. Indeed it was said at 607:
“If the present case fell to be determined solely upon the present wording of s 6 of the 1949 Act, the reasoning in Easterbrook v Young, although related to testator’s family maintenance legislation, might be thought to have persuasive if not compelling force.”
Notwithstanding the dictum in Easterbrook v Young (supra) at 315, where the Court observed that Testator’s Family Maintenance legislation throughout Australia is in a relevantly common form and that the New South Wales legislation then before the Court was typical of the legislation, Easterbrook v Young (supra) has not been followed in decisions of single judges of the Supreme Court in Queensland. In each case it has been distinguished because of differences in legislation in New South Wales and Queensland: Re Burgess [1984] 2 Qd R 379; Re Oakley [1986] 2 Qd R 269; Re McPherson [1987] 2 Qd R 394. (A summary of these differences appears in an article “The Spectre of Easterbrook v Young in Queensland” Ross Barber (1984) 14 Qld Law Society Journal 15).
However there is no legislative history which would impact upon a construction of the South Australian legislation. Nor are there any differences in the legislation which would allow this Court to distinguish Easterbrook v Young.
This Court must follow a decision of the High Court: Jacob v Utah Construction and Engineering Pty Ltd (1966) 116 CLR 200 at 207. It is for the High Court to determine whether that decision should be departed from or overruled: Garcia v National Australia Bank Limited (1994) 194 CLR 395 per Gaudron, McHugh, Gummow and Hayne JJ at 403; Jacobs v Utah Construction and Engineering Pty Ltd (supra). The first defendant’s counsel recognised that his contention cannot succeed in this Court but was made in case the matter needed to be considered by the High Court itself.
The question in Easterbrook v Young was whether the applicant under the Testator’s Family Maintenance And Guardianship Of Infants Act 1916 (NSW) should be entitled to an extension of time within which to bring her application. Like the South Australian Act that legislation empowered a court to extend time provided that such application “shall be made before the final distribution of the estate, and no distribution of any part of the estate made before the application shall be disturbed by reason of the application or an order made thereon”: s 5(2A)(a).
In that case, the deceased died intestate leaving an estate of which the only asset of any consequence was a cottage which had been used during his lifetime as the family home. He was survived by his wife and two sons. One of the sons applied for and was granted letters of administration.

The laws of intestacy in New South Wales then provided that the widow and her two sons were each entitled to one third of the estate. The question in the case was whether the transmogrification of an executor to a trustee necessarily meant that the estate assets had been finally distributed.
About a year after the deceased’s death the title to the cottage was transmitted to the name of the respondent as administrator of the estate.
The appellant, the widow of the deceased, continued to live in the cottage paying all outgoings.
About 12 years after the deceased’s death the appellant made an application under the Testators Family Maintenance And Guardianship Of Infants Act 1916 (NSW). At the time of the application the cottage was still registered in the name of the respondent as the administrator of the estate.
The appellant contended that the transmission to the respondent did not amount to a distribution. The respondent argued that after transmission of the cottage to his name as administrator his executorial duties had completed and he thereafter held as trustee on behalf of the appellant, his brother and himself. He contended, in those circumstances, there had been a final distribution of the estate. The real question in the case was whether the transmogrification of an executor to a trustee necessarily meant that the estate assets had been fully distributed.
The High Court determined that there had not been a final distribution of the estate.
The High Court said in a joint judgment (Barwick CJ, Mason J and Murphy J) at 314/315:
“It may be conceded at the outset that the reference to ‘the estate of’ the deceased in section 3 constitutes a limitation on the power of the court to make an order. At the same time, that estate is nominated as the source of any provision which may be made. It may also be conceded that the reference in section 5(2a) to a ‘final distribution of the estate’ limits the court’s jurisdiction to extend the time for making an application for an order for maintenance. But the question in the case is the meaning to be attributed to these expressions in the context in which they are found. The interpretation which they are to be given depends on the terms of the Act read in accordance with the purpose and policy of the Act as evidenced by its provisions. Testator’s family maintenance legislation throughout Australia is in relevant respects in common form, the New South Wales Act being a typical example, with the consequence that the decision in this case will determine the meaning and effect of comparable provisions elsewhere in Australia.”
The High Court then discussed the legislation and the purposes of the legislation and said at 316:
“Bearing in mind the nature and purposes of such legislation, it is our opinion that the disabling circumstance in s 5(2a) is the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the testamentary or statutory beneficiary. There is nothing in the language or policy of the Act to suggest that the change in the capacity in which the personal representative holds assets he has received on the grant of probate or letters of administration constitutes either a removal of those assets from the power of the court under section 3 or a relevant distribution of the estate.”
Then at 318 the Court said:
“In our opinion, the expression “out of the estate of the testator” refers to the assets of which the testator might at his death dispose and which have come or could come to the hands of the personal representative by reason of the grant of probate or letters of administration. When an application is made in time, it is out of these assets that provision may be made by an order operating as a codicil made by the deceased in his lifetime, even if, at the time the order is made, those assets have been distributed to the intended beneficiaries. In such a case, the limitation appearing in s 5(2A) is not operative. Section 11 denies operative effect to the distribution. But, of course, by reason of its terms, it is otherwise, and quite understandably so, when an extension of time is sought under that section. In that case, only a complete removal of the whole of the assets of the deceased from the hands or name of the personal representative will prevent the court extending the time for making an application for an order of maintenance. An order made in consequence of an extension of time shall not disturb an actual distribution made before with the extension of time was applied for.”
The High Court said at 320:
“The dominant purpose of this legislation is to enable the court, in a sense, to prevent the operation of the will according to its terms in an appropriate case. It is because the will is operating unduly or unjustly in relation to the testator’s family that the court is empowered to order maintenance, its order operating as a codicil to change the terms of the will and have them operate in a way different to that expressed by the testator. In relation to the exercise of executorial duties and with the assent of the executor, the property devolving by the grant of probate on the executor has ceased for those purposes to be the estate of the testator. It has become the property of those to whom it is destined by the will of the testator. But, in our opinion, the Act in using the expression “out of the estate of the testator” is not concerned with these settled doctrines. The words are used to indicate both the financial limits to which the court may go in making provision for those having unsatisfied claims on the testator and the source from which any provision so made shall be satisfied. It is, as we have said, that which the testator had to dispose of which is relevantly his estate. The court’s power to make an order operative as a codicil extends to all that property, notwithstanding that in the case of an application made within the statutory twelvemonth it has been physically handed over or transferred to the intended beneficiary or beneficiaries. Of course, whether a court should disturb a distribution rests in the court’s discretion, influenced no doubt by all the circumstances of the particular case. As indicated, the situation is different in the case of an application made out of time.”
The Court went on to say at 321:
“We do not understand why in Public Trustee v Kidd [1931] NZLR 1 the court could not have made some provision out of the amount set aside to satisfy the annuity, if it thought that rather than an annuity a capital sum was presently required by the daughters situation. For reasons already given the fact that the money was technically held on trust on the terms of the will did not preclude the Court from altering those very terms by an order operating as a codicil. The testator could by codicil have done so; and the order will operate as if he had done so.”
In Re Lago [1984] VR 706 at 708 Brooking J, speaking of the Court’s decision in Easterbrook v Young, said:
“The decision of Holland J, was reversed by the High Court, where the view prevailed that, having regard to the nature and purposes of family provision legislation, the disabling circumstance was ‘the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the testamentary or statutory beneficiary’ (136 CLR at pp. 316-317). Elsewhere the Court referred to a ‘physical parting with the asset, i.e. by delivery or by transfer of title’, ‘a physical parting with that asset and its placing in the hands or name of an intended beneficiary’, ‘a complete removal of the whole of the assets of the deceased from the hands or name of the personal representative’ (the Court being at this point concerned with final distribution) and to property’s being ‘physically handed over or transferred to the intended beneficiary’:(136 CLR) pp. 317, 318 and 321.”
There is no final distribution of the estate or any distribution of a particular asset of the estate unless there has been a complete delivery to the beneficiaries or beneficiary. In Young v IOOF Australia Trustees Ltd& Peterson & Young (1995) 180 LSJS 302 I said at 323-324:
“It seems to me that whether distribution has or has not occurred is simply a matter of fact (In Re Anderson (deceased), Anderson v Williams [1957] NZLR 401 at p.402) and the facts that have to be determined are whether there has been a removal from the hands of the personal representatives and a placement in the hands of the beneficiary.”
It was submitted by the appellants’ counsel, Mr Quick QC, that in respect of the assets forming the subject matter of the bequest in clause 6(ii) there has been no placement of the assets in the hands of beneficiary, in as much that the Court could make an order under the Act which would operate as a codicil requiring the trustees, in the case of the assets in paragraph 1.1, to re-transfer the assets to the executors. In my opinion, that argument assumes the question to be decided. Whilst an order under the Act does operate as a codicil no order can be made which will disturb a distribution already made. Indeed, if that argument was right, then there has also not been a distribution of the assets which comprise the bequest in clause 6(i) of the will, because an order operating as a codicil could revoke or vary that clause. If a distribution has already taken place, i.e. if there has been a physical parting with the asset by delivery or by transfer of the title it is not to the point that any order of the Court could operate as a codicil, because the Court is specifically precluded from making any order.
The question is whether the distribution has been made. If it has then it is not to the point, in my opinion, that an order could be made which would have the effect of re-transferring the assets to the executors. No such order can be made if there has been a distribution.
In my opinion, there has been a distribution of the assets referred to in paragraph 1.1. There has been a complete removal from the hands of the personal representatives of those assets and a complete placement of those assets in the hands of the beneficiaries who must hold those assets upon the trusts erected in the will. All of the documentation necessary to transfer the assets from the executors to the trustees of the trust created in clause 6(ii) of the will was completed. There has therefore been a physical transfer of the assets.
If the answer were otherwise and there has been no distribution of the assets in clause 6(ii), it is only because the distribution in clause 6(ii) is to trustees rather than to the beneficiary herself. That cannot be the point of distinction. If it was, it would mean that there could never be a distribution of an asset where the distribution is to a trustee who then holds, in accordance with trusts erected under the will, until such time as the assets vest in the ultimate beneficiary.
That would mean that where, as in this case, there has been a physical distribution of most of the residue in accordance with the obligations imposed upon the trustees under clause 6(i) to the ultimate beneficiary and under clause 6(ii) to the trustees who hold on behalf of the ultimate beneficiary, that in the latter case there has not been a distribution in law but in the former case there has.
I agree with the Master’s reasoning.
I also agree with the Master that there has not been a distribution of the $250,000 which has been deposited with the Adelaide Bank. The deposit is held in the name of the estate. While the account has been designated “A/C Leneve A. Fitch”, there has not been a removal from the hands of the personal representative and a placement of that asset in the name of the beneficiary. There has not been a complete delivery of that asset to the deceased’s daughter.
No documentation has been created to effect a transfer from the executors to the legatee’s trustees. This asset has not been dealt with in the same manner as the assets comprising the residue. There has been no physical transfer of the asset from executors to trustees.
In my opinion, it is not relevant that one of the executors has retired as a trustee and another person been appointed by the surviving trustees as a trustee. Mr McFarlane retired as a trustee on 12 February 1999. On that day he executed a Deed which included a declaration:
“3The retiring trustee and the continuing trustees hereby declare that the estate and interest of them in the property of the testator remaining subject to the trusts of the said will deal shall vest in the continuing trustees and any new trustee appointed for the purposes of the trusts of the said property.”
His retirement was effected by that deed and s 16 of the Trustee Act 1936 (SA). Because the deed included the declaration to which I have referred the trust property became vested in the continuing trustees as joint tenants: s 16(2) Trustee Act.
Mr Kennedy was appointed a trustee by the continuing trustees by a deed executed by them and Mr Kennedy on 16 February 1999. At the same time as they executed the deed they also executed a memorandum of appointment of new trustee “Pursuant to Part V of the Trustee Act 1936 as amended and all other enabling powers …”
Part 5 of the Trustee Act provides a procedure for the appointment of new trustees. The Part is entitled “Special Provisions as to Appointment of New Trustees.”
Part 5 is not an exclusive code. Section 70 of the Trustee Act recognises that the procedure is permissive only and persons can be appointed as trustees to trust property as if Part V had not been enacted.
Section 73 provides:
“Any appointment of new trustees, if signed by the persons entitled to exercise the power of appointment and by the new trustees, and attested in the manner prescribed by the Real Property Act 1886 for the attestation of instruments, and made in the form or to the effect contained in schedule 1 hereto, or as near thereto as circumstances will permit, shall be sufficient and valid and effective to all intents and purposes, so far as regards the form and mode of execution and attestation thereof.”
The deed of appointment of Mr Kennedy is in the form of schedule 1 to the Act. It does not, however, carry the attestation clause prescribed by the Real Property Act 1886 (SA). Notwithstanding the absence of that attestation clause it seems to me that the deed is effective to appoint Mr Kennedy a trustee of the trusts created by the will of the deceased jointly with the surviving trustees, Carol Fitch and Richard Manuel. Mr Kennedy does not need to rely on s 73 because, as I have already said, Part 5 is permissive only. The deed in its terms provides for his appointment. Section 14B of the Trustee Act permits trustees to appoint additional trustees and does not require that the appointment be in any particular form. I am therefore of the opinion that notwithstanding the deed of appointment of Mr Kennedy does not have the attestation clause prescribed by the Real Property Act the deed is effective to appoint him as an additional trustee.
Section 75 of the Trustee Act provides that on the appointment of a new trustee a memorandum of that appointment may be registered in the General Registry Office or in the Lands Titles Registration Office. As I have already indicated a memorandum of appointment of a new trustee was executed at the same time as the deed of appointment of Mr Kennedy.
That memorandum of appointment is in the form contained in Schedule 2 to the Trustee Act and contains the particulars referred to in that Schedule. That being the case the Memorandum of Appointment complies with s 79 of the Trustee Act.
Section 76 of the Trustee Act provides:
“76On the registration of any memorandum of the appointment of new trustees, those trustees shall be deemed to be duly appointed, and the trust estates held upon the trusts to which such new trustees are appointed shall, without any conveyance, transfer, or assignment, vest in the new trustees, either solely or jointly with the old trustees, as the case may require, for all the estate and interest to the old trustees therein, subject to the trust affecting such trust estates then subsisting, and capable of taking effect: Provided that -
(a) in order to affect any land not held under the provisions of The Real Property Act 1886, the memorandum shall be registered in the General Registry Office:
(b) in order to affect any land held under the provisions of The Real Property Act 1886, the memorandum shall be registered in the Lands Title Registration Office, and the Registrar-General shall enter in the register book a memorial of such memorandum.”
Section 76 of the Trustee Act has no application until registration of the memorandum of appointment occurs and that will occur when, pursuant to s 75, the memorandum of appointment is registered in the General Registry Office or in the Lands Titles Registration Office.
In this case it was agreed that there had been no registration of the memorandum of appointment of a new trustee.
In those circumstances s 76 has no application. The parties could not argue that s 76 operated to vest in the continuing trustees and Mr Kennedy the estate and interest previously vested in the continuing trustees after the retirement of Mr McFarlane.
Section 16(1) of the Trustee Act provides:
“Where a deed by which a new trustee is appointed to perform any trust contains a declaration by the appointor to the effect that any estate or interest in any land, subject to the trust, or in any chattel so subject, or the right to recover and receive any debt or other thing in action so subject, shall vest in the person or persons who, by virtue of the deed, become and are the trustee or trustees for performing the trust, that declaration shall, without any conveyance or assignment, operate to vest in that person or those persons, as joint tenants if more than one, and for the purposes of the trust, that estate, interest, or right.”
In my opinion, s 16(1) has no application in this matter. The deed of appointment of Mr Kennedy did not contain a declaration of the kind referred to in that subsection.
Therefore s 16(1) did not operate to vest any trust property under the will in the continuing trustees and Mr Kennedy.
Any property held on trust by the continuing trustees, after the retirement of Mr McFarlane, has not vested in the continuing trustees and Mr Kennedy by virtue of any deeming section in the Trustee Act. The trust property can only have vested in Mr Kennedy if there has been a transfer from the continuing trustees to themselves and Mr Kennedy: s 14B(3), Trustee Act.
In the case of this account there has not been any such transfer.
True it is that sometime subsequent to the appointment of Mr Kennedy Adelaide Bank began sending its bank statements to Mr Kennedy’s firm rather than Mr McFarlane’s firm. However there is no evidence of how that came about or what notice was given to the bank in that regard. It is accepted that the bank has not been given notice of the appointment of Mr Kennedy as a trustee.
In my opinion, there is no evidence that there has been any conveyance or transfer of the trust property which became vested in the continuing trustees after the retirement of Mr McFarlane by virtue of s 16(2) of the Trustee Act to the continuing trustees and Mr Kennedy except as I have already said in so far as there has been a particular conveyance. In the case of this bank account standing in the Adelaide Bank there has been no such conveyance or transfer.
In those circumstances the appointment of Mr Kennedy is irrelevant in a consideration of this matter.
In my opinion, the retirement of Mr McFarlane is also irrelevant and not a reason for distinguishing Easterbrook v Young. His retirement only had the effect of vesting any trust property previously held jointly with Mrs Fitch and Mr Manuel in Mrs Fitch and Mr Manuel. It did not change the character of the holding.

A complete distribution requires both a removal and a placement. Assuming that there has been a removal from the hands of the executors, which in fact I doubt, there has been no placement in the hands of the beneficiary in the sense of the asset being placed in the hands of the trustees. I think it is arguable that the asset is presently held by the executors in their executorial capacity. Mr McFarlane’s resignation as a trustee does not relieve him from his duties as an executor. There has been no revocation of the grant of probate to the three executors appointed by the will.
Paragraph 1.3 also refers to the interest which has accrued on the sum invested. The will provides that the executors were to set aside the sum mentioned in clause 5 of the will but did not direct how any interest which accrued on that sum should be distributed. However, it does not matter how the interest is to be dealt with. If the interest accrued to the benefit of the legatee mentioned in the clause, then the interest could not have been distributed if the principal has not been distributed. If the interest falls into the residue of the estate and is to be dealt with in accordance with clause 6, again it has not been distributed.
It does not matter who in the terms of the will is entitled to the interest. If the principal has not been distributed, nor has the interest on that principal.
It follows that I also agree with the Master’s reasons in respect of the legacy in clause 4 ii (b) of the will and the declaration he made in respect to paragraph 1.2 of the application. The fourth defendant was right not to appeal.
In my opinion, both the appeal and cross-appeal should be dismissed.
WILLIAMS J. The question at issue is whether before service of these proceedings on the executors certain property forming part of the estate of the deceased has been “distributed” within the meaning of s 8(5) of the Inheritance (Family Provision) Act 1972 (SA) (the “Inheritance Act”). The appeal and cross appeal concern only the assets referred to in par 1.1 and par 1.3 of the application.
For the reasons given by Lander J I agree that the assets referred to in par 1.1 of the application (namely certain shares, other investments and dividends) have been distributed. However, in my opinion the sum of $250,000 and accrued income referred to in par 1.3 of the application (which is now held upon trust pursuant to cl 5 of the will of the deceased) has also been distributed (both for the purposes of the general law and for the purposes of the Inheritance Act). In this latter respect my decision differs from the conclusion reached by the Master and by Lander J respectively. Accordingly I will give my reasons as to this aspect of the matter.
On 17 September 1998 probate of the will of the late Mr Fitch (who died on 14 March 1998) was granted by this court in common form to Coral Maude Fitch, Ian Allan McFarlane and Richard William Manuel the executors therein named. The will directs the appropriation by the executors of a fund to satisfy two contingent pecuniary legacies totalling $250,000 in favour of the deceased’s daughter Levene (born 31 March 1988); $100,000 is payable to her upon her attaining the age of 25 years and a further $150,000 upon attaining the age of 35 years. The will directs the executors to set aside a trust fund on account of these legacies; the will appoints the executors to be trustees of the fund. A sum to satisfy Levene’s legacies was appropriated by the executors and separately invested on about 12 October 1998 by placing the fund on the money market in terms of a cheque drawn on the trust account of the estate’s solicitors in favour of the Adelaide Bank. By proving the will the three executors accepted responsibility as trustees of the testamentary trust; they are not entitled to say that they are not clothed with the trusts; (see Williams on Executors 14^th ed at 1081 par 1786).
By deed dated 12 February 1999 Mr McFarlane (with the consent of his co-trustees) retired as trustee; the deed satisfies the requirements of s 15(1) of the Trustee Act 1936 (SA) which reads as follows:
“Where there are more than two trustees, if one of them by deed declares that he is desirous of being discharged from the trust, and if his co-trustees and any other person who is empowered to appoint trustees, by deed consent to the discharge of the trustee, and to the vesting in the co-trustees alone of the trust property, then the trustee desirous of being discharged shall be deemed to have retired from the trust, and shall, by the deed, be discharged therefrom under this Act, without any new trustee being appointed in his place.”
The criticism might be made that the vesting declaration in the deed does not exactly follow the language of s 15(1) which contemplates a consent to the “vesting in the co-trustees alone.” The vesting declaration anticipates a further appointment and is expressed as follows:
“…
3.The retiring trustee and the continuing trustees hereby declare that the estate and interest of them in the property of the testator remaining subject to the trusts of the said will shall vest in the continuing trustees and any new trustee appointed for the purposes of the trusts of the said property.”
(emphasis added).
This departure from the literal requirement of the Act is not unhelpful in establishing what the parties intended should happen.
By deed dated 16 February 1999 the two continuing trustees appointed Mr Robert Michael Kennedy as an additional trustee jointly with themselves. This deed is in the form of Schedule 1 to the Trustee Act (except that it does not contain the opening recitation of the statutory form “Pursuant to Part 5 of the Trustee Act 1936”). It does not appear that the appointment was registered in accordance with part 5 of the Trustee Act (and in particular s 75) although a memorandum of appointment and declaration adopting the forms respectively prescribed in Schedule 2 and Schedule 3 in accordance with pt 5 of the Trustee Act were executed. Part 5 of the Trustee Act “is permissive only and trustees may be appointed and trust estates may be transferred, conveyed and assigned as if this part had not been passed” - see s 70 of the Trustee Act. Accordingly until the memorandum of appointment is registered, the trust property is not automatically vested in the new trustee jointly with the continuing trustees pursuant to s 76 of the Trustee Act.
In my opinion the deed of appointment dated 16 February 1999 (standing alone) obtains efficacy from s 14B of the Trustee Act which includes the following:
“(1)The person or persons nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust, or if there is no such person, or no such person able and willing to act, then the trustees for the time being or the representatives of the last surviving or continuing trustee, may by writing appoint one or more additional trustees.
(2)Every additional trustee so appointed, as well before as after all the trust property becomes by law or by assurance or otherwise vested in him, shall have the same powers authorities and discretions, and may in all respects act as if he had been originally appointed a trustee by the instrument (if any) creating the trust.
(3)On the appointment of an additional trustee any assurance or thing requisite for the vesting of the trust property or any part thereof jointly in the trustees shall be executed or done.”
I conclude that Mr Kennedy has been properly appointed as an additional trustee although it does not appear what steps may have been taken to vest the trust property in Mr Kennedy jointly with his co-trustees apart from the execution of documents in the form prescribed in Schedule 2 and Schedule 3 of the Trustee Act as abovementioned.
The monthly money market bank statements issued by the Adelaide Bank to its customer in respect of the investment show that from 13 October 1998 until 15 June 1999 these statements were addressed “c/- Cleland McFarlane and Selth”; thereafter the statements issued “c/- Kennedy & Co 140 Greenhill Road Unley.” In other words the bank statements initially went to Mr McFarlane’s firm but more recently to Mr Kennedy’s firm. It appears therefore that Mr Kennedy has placed himself in a position to oversee the account. [It is the duty of a trustee upon appointment to ensure that all the trust property is placed in the joint names of himself and his co-trustees; he is immediately responsible with his co-trustees for whatever happens to the trust property (see Parker & Mellows -Modern Law of Trusts 7^th ed at 482).]
The deed dated 12 February 1999 contains declarations by the retiring trustee and continuing trustees as follows:
“1The retiring trustee declares that he is desirous of retiring from and being discharged from the trusts of the will of the testator.
2The continuing trustees hereby consent to the retirement and discharge of the retiring trustee from the trusts relating to the assets remaining in the estate of the testator.
3The retiring trustee and the continuing trustees hereby declare that the estate and interest of them in the property of the testator remaining subject to the trusts of the said will shall vest in the continuing trustees and any new trustee appointed for the purposes of the trusts of the said property.”
In my opinion by the combined operation of s 15(1) and s 16(2) of the Trustee Act these declarations had the effect of (i) discharging Mr McFarlane from his trusteeship and (ii) vesting in the continuing trustees (as joint tenants and for the purposes of the trust) the estate and interest to which the declaration relates.
As now relevant s 16 of the Trustee Act includes the following:
“16(1)Where a deed by which a new trustee is appointed to perform any trust contains a declaration by the appointor to the effect that any estate or interest in any land, subject to the trust, or any chattel so subject, or the right to recover and receive any debt or other thing in action so subject, shall vest in the person or persons who, by virtue of the deed, become and are the trustee or trustees for performing the trust, that declaration shall, without any conveyance or assignment, operate to vest in that person or those persons, as joint tenants if more than one, and for the purposes of the trust, that estate, interest, or right.
(2)Where a deed under the last preceding section, by which a retiring trustee is discharged under this Act, contains such a declaration as is in this section mentioned by the retiring and continuing trustees and by the other person (if any) empowered to appoint trustees, that declaration shall, without any conveyance or assignment, operate to vest in the continuing trustees alone, as joint tenants and for the purposes of the trust, the estate, interest, or right to which the declaration relates.”
(Emphasis added).
By virtue of s 14B(2) of the Trustee Act the additional trustee, upon appointment immediately assumed the same powers, authorities and discretions and became entitled in all respects to act as if he had been originally appointed by the will as a trustee of the testamentary trust. However, there is an absence of evidence before the court that the trust property has re-vested following the appointment of the new trustee but there is evidence of divestiture from Mr McFarlane. The deed of 16 February 1999 (unlike the deed of 12 February 1999) does not contain a vesting declaration as described in s 16(1) of the Trustee Act although taking effect in accordance with s 14B to make an appointment.
It is now well established that the Trustee Act is not intended to apply to the appointment of executors or administrators of a deceased estate (see Williams on Executors(14^th ed at 9 (and see re Willey [1890] WN 1 and Eaton v Daines [1894] WN 32). The deeds dated 12 and 16 February 1999 did not affect (nor purport to affect) the office of the executors nor the continuing responsibility of the three executors named in the will to complete their administration (see Attenborough v Solomon [1913] AC 76). Mr McFarlane in particular has not been discharged from that responsibility although he and his co-executors have fully discharged their executorial responsibilities with respect to the trust fund representing Levene’s contingent legacies.
The general rule is that an executor after embarking upon his administration cannot renounce his office and the court has no power to authorise the retirement of an executor who has obtained a grant of probate. In special circumstances - for example where an executor has become incapable of acting - the court will exercise power to revoke a grant of probate and to make a fresh grant to the remaining executors or to grant administration to an administrator with the will annexed. (see Mortimer on Probate 2^nd ed Ch 17 and Ford and Lee Principles of the Law of Trusts par 1740). An executor who has taken probate can only be discharged by administering the assets or putting the administration in the hands of the court (Doyle v Blake (1804) 2 Sch & Lef 231 at 245). An executor otherwise cannot retire and exonerate himself by putting the administration in the hands of his co-executors. In the present case the original grant of probate (which is unlimited) remains on foot; Mr McFarlane continues as one of the executors of the will of the deceased although the trust fund created in accordance with cl 5 of the will has been fully administered by the executors in that capacity.
In the absence of any contrary intention appearing in the will, the contingent legacies (being payable from a fund segregated from the general estate and vested in trustees without any prior interest) will carry the intermediate income when the contingency occurs. (see Theobold on Wills 16^th ed at 283 par 22.07 and re Clements [1894] 1 Ch 665). Moreover, as Levine was only aged 9 at her father’s death upon the construction of the will it may be inferred that it was the intention of the testator that the contingent legacies should carry the intermediate income even although the contingencies will occur after the daughter attains majority (see Williams on Executors (14^th ed) at 809 and re Jones [1932] 1 Ch 642). In my opinion upon a construction of the will there was no impediment to the immediate appropriation of a fund (as has occurred) to answer the contingency. Indeed, the executors had a duty to act. That fund is now properly under the joint control of Mr Kennedy together with his co-trustees who have the authority to apply the capital and income in accordance with (inter alia) s 33 and 35A of the Trustee Act. There is no intermediate interest under the will and no impediment to immediate appropriation as has occurred.
The memorandum of appointment which accompanies the deed of appointment dated 16 February 1999 reveals that the relevant trust property comprises the Money Market account with Adelaide Bank Account No. 0032942195 TTO1 containing $250,000.00. That account has been identified by affidavit as representing an amount which was deposited by the solicitors for the executors on or about 12 October 1998 on account of the contingent legacies payable to Levene Ann Fitch pursuant to cl 5 of the will. (Later in these reasons for judgment I have outlined in some detail the steps which were taken to make this bank deposit).
There are two features of this administration upon which I place emphasis:
(i)the executors in that capacity completed their administration (as now relevant) when (in accordance with the directions of the will) they appropriated monies on account of the contingent legacies and thereby by operation of law constituted themselves as trustees of the monies which were set apart.
(ii) there has been a change in the trustees of the testamentary trust although the executors have not been discharged.
For present purposes, it is important to recognise the point at which an executor ceases to discharge that function in the administration of a deceased estate. It is also important to recognise the essential differences in function between a personal representative of a deceased person and a trustee of estate assets.
Williams on Executors (14^th ed at 796) says:
“...when an executor, who happens also to be named a trustee of a legacy to be laid out in stock, has fully administered the estate, and assented to the legacy, and retains the legacy in his hands, not as assets of the testator, but as trustee of the legacy, then the principles which would apply to another trustee must apply to him. He is no longer clothed with the character of executor, but is, as to the legacy, a mere trustee”.
The differences between the legal position of personal representative and trustee are summarised in Geddes, Rowland and Studdert - Wills, Probate and Administration Law in New South Wales at 401-403:
“While the estate is still being administered, the legal and beneficial rights in the estate assets vest in the personal representative, and estate beneficiaries have only a chose in action - a personal right - against the personal representative. The beneficiaries have no interest, legal or equitable, in the assets themselves.
The task of the personal representative is to administer the estate according to law. Once he or she has completed her or his duties of administration (apart from finally transferring the assets to those beneficially entitled to them) the personal representative holds the assets concerned as constructive trustee for the beneficiaries, and, depending on the terms of the will, the equitable interests in the assets themselves vest in the beneficiaries.”
It can be important to fix the moment of completion of the executorial duties, when the executor becomes trustee and the beneficiaries can obtain an interest in the assets themselves, rather than having no more than a personal claim against the executor. The moment has been stated to be when the assets have been set aside for the beneficiary by the personal representative, or when the personal representative has assented to the trusts of the will, or when the personal representative has become trustee of the estate assets.
...
at 403
Once the personal representative has become trustee, her or his task, as trustee, is to carry out the trusts of the will. These trusts will be either to transfer the assets to the beneficiaries entitled, or to the trustees named in the will, or, if the personal representative is the named trustee, that person will carry out those trusts as trustee. It follows that a personal representative who has become trustee of a particular asset in the estate cannot exercise the powers of a personal representative in relation to that asset: he or she has only the powers of a trustee in that regard.”
I will now deal with the operation of the Inheritance Act against the background of these general principles.
Pursuant to s 8 of the Inheritance Act an application for the benefit of that Act is required to be made within six months from the date of grant of probate in South Australia but subject to the power of the court to extend that time.
Section 8 of the Inheritance Act includes the following:
“(5)Any distribution of any part of the estate made before the application for extension of time shall not be disturbed by reason of that application or any order made thereon.
(6)An application for the benefit of this Act shall be deemed to be made on the day when the summons by which it is instituted is served on the administrator of the estate.”
“Distribution” in this context is not defined in the Act but for the purposes of the Inheritance Act “distribution” of an estate does not coincide with the moment (as above discussed) when in the particular case the executor upon completion of his administration becomes a trustee. As a matter of statutory construction “distribution” is given a special meaning for the purposes of applying the Inheritance Act. Easterbrook v Young (1976-77) 136 CLR 308 establishes that although there may have been a change in capacity in which a personal representative continues to hold an asset (so as to amount to a distribution to those who may be entitled under the testamentary instrument or by virtue of the operation of the laws of intestacy) nevertheless, for the purposes of the Inheritance Act distribution occurs only when the property in question leaves the hands and control of the persons to whom “administration” has been granted and vests in other persons (whether as trustees for the purposes of the trusts of the will or as the persons beneficially entitled).

In accordance with s 4 of the Inheritance Act (unless the contrary intention appears):
“Administration” means probate of a will of a deceased person or letters of administration of the estate of a deceased person whether with or without the will annexed and whether granted for general, special or limited purposes:
‘Administrator’ means any person to whom administration has been granted:”
In discussing the comparable New South Wales legislation the High Court of Australia in Easterbrook v Young (1976-77) 136 CLR 308 said at 316-317:
“Bearing in mind the nature and purposes of such legislation, it is our opinion that the disabling circumstance in s 5(2A) is the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the testamentary or statutory beneficiary. There is nothing in the language or policy of the Act to suggest that the change in the capacity in which the personal representative holds assets he has received on the grant of probate or letters of administration constitutes either a removal of those assets from the power of the court under s 3 or a relevant distribution of the estate.
It is not without significance that the Wills, Probate and Administration Act, 1898 (NSW) as amended, uses the word “distribute” in the sense of a physical parting with the asset, ie by delivery or by transfer of title....”
And at 317:
“Further, the words “distribute” and “distribution” are used in the Act itself, not in the sense of a change in the capacity in which the personal representative held the asset, but clearly in the sense of a physical parting with that asset and its placing in the hands or name of an intended beneficiary: see ss 11 and 12 of the Act. It is, in our opinion, only when the personal representative has parted with all the assets which came to his hands by the grant of probate or letters of administration that there has been a final distribution of the estate of the testator or intestate.”
In re Lago deceased [1984] VR 706 Brooking J (by way of commentary when dealing with the comparable Victorian Administration and Probate Act) summarised the effect of the High Court’s decision in Easterbrook in the following terms at 708-709:
“...the view prevailed that, having regard to the nature and purposes of family provision legislation, the disabling circumstance was “the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the testamentary or statutory beneficiary” (136 CLR at pp 316-17). Elsewhere the Court referred to “a physical parting with the asset, ie by delivery or by transfer of title”, “a physical parting with that asset and its placing in the hands or name of an intended beneficiary”, “a complete removal of the whole of the assets of the deceased from the hands or name of the personal representative” (the Court being at this point concerned with final distribution) and to property’s being “physically handed over or transferred to the intended beneficiary”: (136 CLR pp 317, 318 and 321).”
And:
“...Easterbrook’s Case itself makes it plain that in ss 99 and 99A of the Administration and Probate Act “distribution” is an act of delivery or transfer, not something that may result from the transmogrification of the personal representative.”
Upon these authorities it would appear that a sum set apart by executors in their own hands in accordance with the direction of a testator to provide (for example) an annuity, would not by reason of that fact constitute a distribution for the purposes of the Act although the executors had completed their executorial duties with respect to the asset. The High Court in Easterbrook therefore disapproved the conclusion reached in Public Trustee v Kidd (1931) 50 NZLR 1 where executors had appropriated and retained monies to meet an annuity (see Easterbrook (1976-1977) 136 CLR 308 at 318-321).
In his reasons the Master in the present case said:
“...I do not consider the fact that Mr McFarlane retired as a trustee and Mr Kennedy was appointed in his place makes any difference or is a valid point of distinction. All the trustees have done is replaced a retired trustee with a new trustee in respect of a primary trust set up under the Will. It is not a case, as with the shares, where a secondary trust was set up in the Will with the accompanying transfer of the property the subject of the trust from the trustees under the Will to the trustees appointed by Clause 6(ii) of the Will. It is not a matter of the original trustees regaining control of the property the subject of the trust. They have never lost control of it.”
I disagree with the Master in that as now relevant I attach a legal significance to the fact of the retirement of Mr McFarlane from office as a trustee whilst required to continue his administration as an executor.
In my opinion the relevant consideration is whether the “administrators” have parted with the property in question. In the present case this has necessarily occurred as a result of the retirement of one executor from his trusteeship coupled with the new appointment as a result whereof “the assets have been removed from the hands or name of the personal representatives.” Trustees act jointly and the new trustee is not an “administrator”. Upon the special facts of this case “distribution” for the purposes of the Inheritance Act has occurred so as to place the relevant fund beyond the power of the personal representatives of the deceased and so as to vest the trust fund in the hands of persons who may only exercise the powers of a trustee. This situation has been brought about by (i) the act of the executors in appropriating a fund to which they necessarily became the trustees and (ii) the change in trustee of Levene’s fund so as to place the asset beyond the executors’ control and subject to the control of Mr Kennedy and his co-trustees. This has come about by the combined operation of s 16 and s 14B(2) of the Trustee Act.
Part 2 of the Trustee Act (in ss 14, 14A, 14B and 15) deals generally with the appointment of new trustees and retirement of trustees in various circumstances. In each instance the Act deals with permutations in the manner and circumstances in which a change of trustee may be effected; the Act in each instance then gives a consequential direction for “any assurance or thing requisite for vesting of the trust property” to be executed or done (see s 14(2)(d), 14A(4), 14B(3) and 15(2)). However it is clear that the power of a new or additional trustees does not depend upon formal divestiture or investiture. There is a further feature of Part 2 which also deserves to be mentioned. I have already quoted s 14B(2); that form of words (mutatis mutandis) also appears in s 14(3) and s 14A(5). The new trustee “as well before as after all the trust property becomes …vested in him” shall have the same powers …and may act as if he had been originally appointed a trustee by the instrument creating the trust”. (In my opinion this provision is critical to my decision in the present case).
In addition to these enabling provisions, Part 2 of the Trustee Act makes separate provision to facilitate vesting by virtue of a declaration made in compliance with s 16 to which I have already referred. The efficacy of the appointment and exercise of Trustee’s power does not depend upon the execution of an assurance. The operation of Part 2 in this respect is to be distinguished from the operation of Part 5 whereby upon the registration of a memorandum in the form of schedule 2 at the GRO or the LTO the new trustee is deemed to be duly appointed and investiture accomplished.
As now relevant “vesting” (or investiture) is the process whereby by conveyance or other assurance or operation of law a trustee completes or obtains legal title to the trust assets so as to entitle that person (in case of a chose in action) to sue for its recovery and to receive the income to be derived therefrom. The history of the Trustee Act in South Australia discloses an intention (by the successive amendments) to further simplify the appointment of new trustees and the consequential vesting of trust property without curial intervention. (Compare s 43 with respect to trustees appointed by the Court). Nevertheless, there remains the power of the Court under s 41 of the Trustee Act to make orders “vesting the right to sue for or recover a chose in action”. All else failing, it seems to me that the substituted trustees in the present case could call in aid this relief.
In my opinion the bundle of rights which Mr Kennedy and his co-trustees have enjoyed since 16 February 1999 with respect to the trust assets is such that “distribution” occurred before the present proceedings were commenced and served on 14 January 2000.
An affidavit was filed by the estate’s solicitor based upon his own knowledge and upon his enquiries from a number of people including Mr McFarlane, Mr Kennedy and an officer of the Adelaide Bank. The evidence discloses that Mr McFarlane and Mr PDH Hill are principals of the firm of Cleland McFarlane and Selth. On 12 October 1998 the estate’s solicitors (as already mentioned) drew a cheque no 35013 on their trust account for $250,000 in favour of “Adelaide Bank Ltd estate late FT Fitch a/c Leneve A Fitch.” The cheque was forwarded that day to Cleland McFarlane Selth who had a standing facility with Adelaide Bank for the investment of trust monies. The effect of this arrangement is such that any deposits made with the Bank through Cleland McFarlane and Selth attract a higher interest rate than investors would otherwise receive by dealing direct with the Bank.
On 13 October 1998 the abovementioned cheque was deposited by Cleland, McFarlane, Selth with the Adelaide Bank. The cheque was accompanied by a money market application in the name of an account identified as “ estate FT Fitch a/c Leneve A Fitch, c/- Cleland, McFarlane, Selth GPO Box 1300 Adelaide - Telephone 8407 1300 - Vicki”. The application was on a standard form provided by the Adelaide Bank. In a designated box on the form under the heading “broker stamp” there is impressed a circular stamp of Cleland, McFarlane, Selth (apparently by way of that firm’s authentication of the transaction). The form shows that the funds were lodged for investment on the money market for an initial period of 30 days with interest at the rate of 4.9 per cent per annum to be compounded. The application form provides a line for an “authorised signature.” In this instance the application carries the signature - V Taylor - (the evidence shows that Victoria Taylor is employed by Cleland, McFarlane, Selth.)
A money market confirmation certificate dated 14 October 1998 is in evidence. It shows the customer as being “estate of the late FT Fitch a/c Leneve A Fitch” c/- Cleland, McFarlane, Selth at the abovementioned address. The certificate does not appear to have any particular significance; there is nothing to suggest that it constitutes indicia of title. The Bank does not hold a copy and Cleland McFarlane Selth to whom the same was sent do not have the original. An imperfect Photostat has been located.
The Bank’s terms and conditions relating to the money market account is before the court. The conditions include the following definitions:
“Account” means Your account with Adelaide Bank to which these Conditions relate (as evidenced by Your completion of an application form) and any account in substitution therefore.”
“ “You”, “Your” or “Account Holder” shall mean a Person who holds an Account and that Person’s executors, administrators or permitted assigns (in the case of a natural person) and its successors and assigns (in the case of other Persons) and where two or more Persons hold such account then each of such Persons and their respective executors, administrators and permitted assigns (in the case of natural persons) and their successors and assigns (in the case of other Persons) severally.”
The conditions include the following:
“Your Liability
12You are liable to Adelaide Bank for each transaction effected by any Person authorised or purporting to be authorised by You to operate an Account as if such transaction had been effected by You personally.
13Any Person authorised by You to operate Your Account shall be deemed to have accepted these Conditions or if such Person were the Account Holder.”
There is no specific direction in the terms and conditions as to reinvestment of monies upon the expiration of the initial 30 day term but the established practice is that the Bank “rolls over” the principal and accrued interest into a new investment every 30 days or thereabouts. (On one occasion the re-investment was for 120 days but I do not know how this came about). Monthly bank statements are issued. In this instance the statements in the name of the account were issued c/- Cleland, McFarlane and Selth, until July 1999 and thereafter the statements have been issued c/- Kennedy & Co., 140 Greenhill Road, Unley 5061”. The accounts show that as at 16 November 2000 the balance in the account had grown to $275,981.54.
The solicitor’s affidavit discloses that the Adelaide Bank has not yet been formally advised of the appointment of new trustees. Nevertheless the form of the bank statements show that the Bank has redirected the monthly statements to Mr Kennedy’s office some months after his appointment. Clearly steps have been taken to ensure that Mr Kennedy is able to supervise the account and to monitor the bank’s roll over of funds.
In my opinion Mr Kennedy and his co-trustees have in their hands documents which provide them with title to sue for the recovery of the deposited funds and to receive the income and to give directions to their agents (Cleland McFarlane and Selth). Mr Kennedy will need to undertake the formality of registration at the General Registry Office in order to take advantage of Part 5 of the Trustee Act but he is entitled to act in any event by virtue of s 16(2). His co-trustees are not entitled to act without him. Mr Kennedy’s title (with his co-trustees) is such that together they will be entitled to injunct any dealing with the bank account abovementioned. A court exercising jurisdiction under the Inheritance Act is not entitled to ignore him. As I see the position the money is held by the Bank upon the authority of Victoria Taylor on behalf of her employees Messrs Hill and McFarlane. The knowledge of Mr McFarlane as to his retirement from the trust will be imputed to Mr Hill. The operators of the bank account are bare trustees for those who are entitled to exercise control. They must refer to the remaining trustees for direction who of course may only act with the concurrence of Mr Kennedy. If the directions of Mr Kennedy and his co-trustees are not obeyed they are entitled to approach the Court for injunctive relief and to obtain a vesting order. These steps are purely mechanical and in aid of the enjoyment by the trustees of their rights. Despite the way in which the funds are currently invested everyone other than Mr Kennedy and his co-trustees are without power to make any decision with respect to the application of the funds which (subject to the 30 day roll over) are at the disposal and under the control of the three present trustees (including Mr Kennedy).
The present case is different from Easterbrook; in that case legal title to a house property had been allowed to remain in the name of an administrator and within his formal power after the administration had been completed. In the present case the power lies with Mr Kennedy (and his co-trustees). Mr Kennedy is not by law amenable to any order being made against his interests under the Inheritance Act with respect to the trust assets; his presence and joint power is only consistent with “distribution” having been effected by the executors.
Easterbrook v Young requires there to be a “physical parting with the asset” by the executors and its placing in the hands of another in order that “distribution” occur as now relevant. In the circumstances of the present case the executors no longer have control of the trust fund. In my view the language of Easterbrook and the test there laid down is not apt to deal with a chose in action invested as in this case in the hands of agents (Messrs Hill and McFarlane) who are bare trustees. There is no formal “title” to the asset and the immediate ability to control the disposition or application of the fund must be the relevant test as to whether “distribution” has taken place. Whether the money remains where it is or whether it be carried away in cash by Mr Kennedy and his co-trustees seems to me not to matter. Easterbrook was concerned with real estate in circumstances where the title was allowed to remain in the names of an administrator although the administration had been completed. In the present case there is no title to the chose in action which stands in the name of agents for Mr Kennedy and his co-trustees. Messrs Hill and McFarlane hold the chose as nominees or agents for their principals. Messrs Hill and McFarlane are bare trustees and their relationship with their principals gives rise to an equitable chose on the part of Messrs Kennedy and his co-trustees. Nothing further is required in the circumstances to perfect the title of Mr Kennedy with his co-trustees. Equity will look to the intentions of the parties and those intentions seem clear.
In my opinion the contingent legacy payable to Levene Ann Fitch pursuant to cl 5 of the will has been distributed and the cross appeal of Levene Ann Fitch should be allowed.
Counsel for the appellants (the plaintiffs in the action) addressed an argument to the situation which would arise if a sole or surviving executor died during the course of his administration. In my opinion that situation is not analogous to that with which the Court is now concerned. The executor of the last surviving executor (or as the case may require an administrator de bonis non) will (as now relevant) succeed to all the legal rights which belonged to the executor originally appointed by will (or original administrator in the case of an intestacy). In such a situation no distribution will have occurred by reason of the devolution during the course of the administration. The topic is comprehensively discussed in Williams Mortimer and Sunnucks-Executors Administration and Probate (18^th ed) pars 4.14-4.26 citing Catherwood v Chabaud (1823) 1 B & C 150 (107 ER 56).
Mr Kennedy together with Ms Fitch and Mr Manuel as his co-trustees are defendants to these proceedings which were served on them on 14 January 2000. Mr McFarlane who still remains an executor of the will has not been joined as a party. As the next step an application should be made to include him as a defendant.
In my opinion the parties should be heard as to the orders which should now be made.
WICKS J This is an appeal and cross appeal from a decision of a Master of this Court in proceedings brought under the Inheritance (Family Provision) Act, 1972 (“the Act”).
The deceased, Frank Thomas Fitch, died on 14 March 1998. Probate of his last will and testament was granted on 17 September 1998 and administration of his estate was granted to his widow Coral Maud Fitch, the first defendant, Ian Allan McFarlane, the third defendant and Richard William Manuel, the second defendant.
The will
Under cl 3 of the will, certain real estate was devised to the widow of the deceased Coral Maud Fitch absolutely.
Clauses 4, 5 and 6 of the will provided for the payment of certain legacies and the distribution of the residue of the estate. The clauses in question are in the following form:
"4.I DIRECT my executors to set aside the sum of $250,000.00 to be held upon the following terms and conditions namely:
(i)     I APPOINT my executors to be the trustees of such fund.
(ii)    I DIRECT my trustees to stand possessed of such sum;
(a)as to the sum of One hundred thousand dollars ($100,000.00) for my daughter MARY LOUISE FITCH subject to her attaining the age of twenty five years.
(b)as to the balance of One hundred and fifty thousand dollars ($150,000.00) in trust for my said daughter MARY LOUISE FITCH subject to her attaining the age of thirty five years.
5.I DIRECT my executors to set aside the sum of $250,000.00 to be held upon the following terms and conditions namely:
(i)     I APPOINT my executors to be the trustees of such fund.
(ii)     I DIRECT my trustees to stand possessed of such sum;
(a)as to the sum of One hundred thousand dollars ($100,000.00) for my daughter LENEVE ANN FITCH subject to her attaining the age of twenty five years.
(b)as to the balance of One hundred and fifty thousand dollars ($150,000.00) in trust for my said daughter LENEVE ANN FITCH subject to her attaining the age of thirty five years.
6.AS to the rest and residue of my real and personal estate of whatsoever nature and wheresoever situate to my executors upon trust to pay therefrom my funeral and testamentary expenses and lawful debts (including any capital gains tax payable in my estate) and to divide the balance then remaining into two equal parts and stand possessed of such parts as follows:
(i)     As to one such part for my wife the said CORAL MAUDE FITCH absolutely.
(ii)     As to the remaining such part I appoint my said wife CORAL MAUDE FITCH and PUBLIC TRUSTEE to be the trustees thereof and I direct them to stand possessed of such equal part during the lifetime of my said wife to pay the Income therefrom to her during her lifetime and upon her death to stand possessed of such part for such of them my daughters the said MARY LOUISE FITCH and LENEVE ANN FITCH as survive me and if more than one in equal shares."

The deceased was married twice. The fourth defendant, Mary Louise Fitch, was a child of the deceased’s first marriage and the fifth defendant Leneve Ann Fitch was a child of his second marriage to the first defendant.
Public Trustee is named in the will as a co-trustee of a trust fund established by the will. Ms Coral Fitch is the other trustee. Public Trustee was joined as a defendant in the course of the proceedings and will be referred to as the sixth defendant.
The three plaintiffs, Krystina Lee Dawson, Ryan Aaron Fitch and Clint Nelson Fitch are the children of a de-facto relationship to which the deceased was a party. This relationship arose between the deceased’s first and second marriages.
Proceedings commenced out of time
The proceedings in this matter were commenced out of time. They should have commenced by 17 March 1999. The plaintiffs provided a satisfactory reason for obtaining an order for an extension of time on 9 April 2001 and such extension of time was granted up to and including 14 February 2000. As appears from s 8(6) the application for the benefit of the Act is treated as having been made when the summons under the Act by which the application is instituted is served on the executors. The summons in these proceedings was taken out on 14 January 2000. There is no evidence in the material before the Court whether the executors were served personally or whether the plaintiffs proved that the summons although not personally served has actually been received by the executors. I do not know whether there was an endorsement acceptance of service made on the summons. An appearance on the part of the executors was entered on 14 February 2000 and under r 12.01 the entry of an appearance is sufficient evidence of service. The proceedings can be taken to have been commenced on 14 February 2000.
Section 8 of the Act is of importance in this matter. So far as is material it provides as follows:
Time within which application to be made
"         8.(1) Subject to this section, an application shall not be heard by the Court at the instance of a person claiming the benefit of this Act unless the application is made within six months from the date of the grant in this State of probate of the will, or letters of administration of the estate, of the deceased person.
(2) The Court may, after hearing such of the persons affected as the Court thinks necessary, extend the time for making an application for the benefit of this Act.
(3)    An extension of time granted pursuant to this section may be granted -
(a)     upon such conditions as the Court thinks fit;
and
(b)whether or not the time for making an application pursuant to subsection (1) of this section has expired.
(4) An application for extension of time pursuant to this section shall be made before the final distribution of the estate.
(5) Any distribution of any part of the estate made before the application for extension of time shall not be disturbed by reason of that application or any order made thereon.
(6) An application for the benefit of this Act shall be deemed to be made on the day when the summons by which it is instituted is served on the administrator of the estate.
(7)    ..."
Easterbrook v Young
In Easterbrook v Young (1976-1977) 136 CLR 308, the High Court considered the provisions of s 5(2A) of the Testator’s Family Maintenance and Guardianship of Infants Act 1916 NSW, part of s 5(2A) of which contains provisions similar to s 8(4) and s 8(5) of the South Australian Inheritance (Family Provision) Act 1972. The relevant passage in the New South Wales Act at p 312 is:
"... but every application for extension shall be made before the final distribution of the estate and no distribution of any part of the estate made before the application shall be disturbed by reason of the application or of an order made thereon."
I set out the following statement of facts in Easterbrook v Young taken from p 309 of the relevant volume of the Commonwealth Law Reports as follows:
" John Robert Easterbrook died on 11^th July 1959, intestate, leaving a small estate of which the only asset of any consequence was a cottage which in his lifetime had been the family home. He was survived by his widow and two sons. Letters of administration were granted to one of the sons on 9^th September 1959. The administrator paid the debts and expenses and in 1959 published a notice of his intention to distribute the estate among the persons entitled thereto, viz the widow and the two sons in equal shares. In 1960 the title to the cottage was transmitted into the name of the administrator. After her husband’s death the widow, with the concurrence of her two sons, continued to live in the cottage, paying the outgoings thereon. On 13^th July 1973 the widow applied to the Supreme Court of New South Wales under the Testator’s Family Maintenance and Guardianship of Infants Act, 1916 (NSW) for an order, under s 5(2A) of the Act, extending the time within which an application might be made for her maintenance out of the estate of her husband and for an order providing for such maintenance. Holland J dismissed both applications on the ground that at the date of the application there was no estate of the deceased remaining out of which provision could be ordered, the cottage being held on trust for those entitled in the intestacy. His Honour said that but for the fact that the administration of the estate had been completed, he would have extended the time for making an application and have made an order in favour of the widow: Easterbrook v Young [1974] 1 NSWLR 676. The widow appealed to the High Court from the judgment of Holland J."
Letters of administration were granted to one of the sons. The assets were got in and any debts paid leaving the estate essentially with one asset only, namely the cottage in which the deceased lived. It was agreed between the widow and her two sons that she should remain in occupation of the cottage. She remained in occupation for about twelve years.
In these circumstances, the duty of an administrator is to administer the estate. The cottage would have to have been sold and the net proceeds treated as an asset in the estate to be distributed amongst the beneficiaries entitled. Until that happens, there can be no final distribution of the estate because executorial duties have not been completed.
At p 316 of the report, the High Court said:
"Bearing in mind the nature and purposes of such legislation [legislation corresponding to South Australian Inheritance (Family Provision) Act 1972], it is our opinion that the disabling circumstance in s 5(2A) is the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the testamentary or statutory beneficiary. There is nothing in the language or policy of the Act to suggest that the change in the capacity in which the personal representative holds assets he has received on the grant of probate or letters of administration constitutes either a removal of those assets from the power of the court under s 3 [s 9 of the South Australian Act] or a relevant distribution of the estate."
The Court found it not to be without significance that the legislation in New South Wales as amended used the word “distribute” in the sense of a physical parting with the asset, ie by delivery or by transfer of title.
The Court continued (at p 317):
"Further the words ‘distribute’ and “distribution” are used in the Act itself, not in the sense of a change in the capacity in which the personal representative held the asset, but clearly in the sense of a physical parting with that asset and its placing in the hands or name of an intended beneficiary ..."
Change in capacity of executor to trustee
Section 8(4) of the Inheritance (Family Provision) Act provides that an application for extension of time must be made before the final distribution of the estate. It seems clear from Easterbrook v Young that so long as any asset remains in the hands of a personal representative, even though he may have become a trustee in respect of such asset, an application for an extension of time under the Act can be made. The following passage appears in Jacobs’ Law of Trusts in Australia 6 Ed par 241:
"If a testator appoints the same person his executor and his trustee, which is usual nowadays, then that person acts as executor when he performs executorial duties, and thereafter while he continues to hold the property he is a trustee thereof. However, even though he thus becomes a trustee, his capacity as executor still remains, in so far as he may be called upon at any future time to deal in his capacity as executor with any assets which may subsequently be discovered in the estate. He may thus be executor in respect of certain assets of the testator and trustee in respect of others. If the executor, while still performing his executorial duties, carries out an instruction in his testator’s will to set aside a fund and to hold it on trust for certain beneficiaries, he will, upon his setting aside that fund, become a trustee thereof and in respect of that property his executorial duties will be at an end."
A similar situation occurs where there is a change in the capacity under which several persons hold estate assets as is the case here where the executors became trustees of certain property devised or bequeathed on trust under the will.
Physical parting with assets by delivery or transfer
In contrast is the situation where a will provides for one or more sets of trustees to administer the trusts of the will where the trustees are different persons from the executors. The creation of such a trust would require a physical parting with assets of the estate to constitute the trust fund by transfer of title. From the date of creation, a trust fund established pursuant to the will in this manner, would be entirely separate from the general estate of the deceased. The assets comprising the trust fund would have been “distributed” within the meaning ascribed to that expression by Easterbrook v Young.
There is a further situation where a will names persons or at least one person other than the executors to be a trustee or trustees along with one or more of the executors in respect of particular assets of the estate on the setting up of a trust fund in respect of those assets. If the trustees include at least one person who is not an executor, then on the appointment of such trustees taking effect and on the vesting of assets in the trustees, there will have been a “distribution” for the purposes of the Act. Also, a similar situation arises on a change of trustees where a new trustee who is not an executor is appointed. For a partial “distribution” of any part of the estate to be protected from an order under the Act, that partial “distribution” must have occurred before 14 February 2000.
Trusts in relation to the physical parting with assets
In Young v IOOF Australia Trustees Limited and Peterson and Young (1995) 180 LSJS 302, Lander J had to consider whether property had been distributed within the meaning of s 8(5) of the Act. Having considered a number of cases His Honour said at p 323:
" It seems to me that whether distribution has or has not occurred is simply a matter of fact (In Re Anderson (deceased), Anderson v Williams [1957] NZLR 401 at p 402) and the facts that have to be determined are whether there has been a removal from the hands of the personal representatives and a placement in the hands of the beneficiary [pp 316-317]."
In his reasons for judgment, the learned Master pointed out (at p 7) that Easterbrook v Young was not a case where the will the subject of the action created a trust the trustees of which were not the personal representatives of the testator. He said:
" In my opinion, where, as was held by Lander J, the question of distribution is one of fact, the fact to be established is whether or not there has been a removal of the property from the hands of the personal representatives and a placement of it in the hands of the beneficiary. The question that must be answered on the facts of this case, in relation to the shares [and other property], is whether a transfer by executors, who hold on trust on behalf of the testator, when they transfer to trustees in order to implement a trust created under the Will, have distributed the property within the meaning of Section 8(5) of the Act. Lander J referred to the property as being placed “in the hands of the beneficiary”. But his Honour was not there dealing with a case where an additional trust was created under the Will. In my opinion, in such a case, the principles enunciated by the High Court in Easterbrook v Young require the conclusion that the property transferred to the trustees of the new trust constitutes a distribution for the purposes of the Act. It seems to me that the appropriate test to be applied in such circumstances is to ask whether the executors could regain control of the property without the co-operation of the trustees. Clearly, they could not. Nor could the co-operation of the trustees, Coral and Public Trustee, be sought to regain control of the trust property by the executors because those trustees must hold the property on the trust created in Clause 6(ii) of the Will. They have no authority to retransfer the property to the executors. They would be in breach of their obligations as trustees if they did so."
The Master’s declaratory order
The parties to this action were not able to agree whether there had been a “distribution” of assets to the estate. In interlocutory proceedings, the plaintiffs sought a declaration to the effect that there was no “distribution” for the purposes of s 8 if the Inheritance (Family Provision) Act out of the assets of the estate before the summons in this action was served on 14 January 2000. [In fact, the summons was served by the entry of an appearance on 14 February 2000.] On the hearing of the matter a Master of this Court made a declaratory order as follows:
"1.The Court declares that for the purposes of the application of Section 8 of the Inheritance (Family Provision) Act 1972 to the plaintiffs’ claim:
(a) there had been no distribution of the following parts of the estate of Frank Thomas Fitch deceased (‘the deceased’) before the summons in this action was served upon the executors of the will of the deceased on the 14th day of January 2000 (‘the said date’) [NB the correct date should be 14 February 2000]:
(i)The deposited amount of $150,000.00 held pursuant to clause 4(ii)(b) of the will of the deceased in respect of Mary Louise Fitch at Adelaide Bank Limited and all interest which had accrued thereon on the said date;
(ii)The deposited amount of $250,000.00 held pursuant to clause 5(ii)(a) and (b) of the will of the deceased in respect of Leneve Ann Fitch at Adelaide Bank Limited and all income which had accrued thereon on the said date;
(iii)The debt of $38,453.03 owed by Coral Maude Fitch and paid by her into the estate of the deceased on the 9^th February 2000;
(iv)All moneys held by Lynch & Meyer in their solicitors Trust Account and at Tower Trust on the said date; and
(b) there had been a distribution of the shares referred to in paragraph 10 of the affidavit of Alfio Macolino sworn on the 2^nd day of March 2001 and filed herein (or the shares and other investments representing the same on the said date) and all dividends which had accrued thereon on the said date but which had not been paid to any beneficiaries before the summons in this action was served upon the executors of the will of the deceased on the said date."
Grounds of appeal of the plaintiffs
The plaintiffs appealed to the Full Court from the Master’s declaratory order. The appeal was limited to par 1(b) of the declaratory order.
Paragraph 1(b) of the Master’s declaratory order
As appears from an affidavit of Alfio Macolino sworn 2 March 2001, shares and other securities to be transferred from the executors to Ms Coral Fitch and Public Trustee have been duly transferred by the execution in each case of a transfer contained in a standard transfer form, a form used for transactions other than those which are carried out on the stock market. The transfers concerned were executed in or about February 1999. In a letter dated 24 June 1999, Public Trustee confirmed that the share portfolio relating to the trust referred to in cl 6 of the will of the deceased had been transferred into the names of Public Trustee and Ms Coral Fitch. Such vesting amounted to a “distribution” of the property concerned within the meaning given to that expression by the High Court in Easterbrook v Young. The vesting could be effected by conventional means such as the transfer of land or shares or an assignment of book debts etc. Alternatively, s 16 of the Trustee Act could be employed and a vesting made under s 16 of that Act. The vesting took place before 14 February 2000. Such vesting was not to be disturbed by an application for extension of time under the Act or an order made thereon.
The only obligation of Public Trustee in this matter was to carry out properly and in the interest of the beneficiaries of the trust its duties as trustee of the trust to which I have just referred. Public Trustee does not suffer from any conflict of duty in relation to the estate of the testator and should not, therefore, have any difficulty in representing the trust’s beneficiaries. The right to extend time under s 8 of the Act is at the discretion of the Court.
I agree with the learned Master when he said that none of the provisions of the Act enabled the executors to regain possession of the trust property. It is out of their hands and it is not open to the Court to make an order for provision out of the estate in respect of that property.
In my opinion there has been a “distribution” within the meaning of the Act in relation to the property the subject of the notice of appeal being the shares and other property referred to in par 1(b) of the Master’s declaratory order. The appeal in relation to this matter should be dismissed.
Grounds of cross-appeal of Ms Leneve Fitch
The fifth defendant, Miss Leneve Fitch, cross-appealed to the Full Court from the Master’s declaratory order. The cross-appeal was limited to par 1(a)(ii) of the declaratory order. Leneve was born on 31 March 1988 and she was under 25 years at the date of the deceased’s death.
Paragraph 1(a)(ii) of the Master’s declaratory order
It appears that in accordance with the terms of the will, a separate trust was established for the benefit of Miss Leneve Fitch. The monies concerned were appropriated from the general estate in order to comply with the direction contained in the will that a separate trust fund should be established.
In relation to the trust fund for the benefit of Ms Leneve Fitch, the solicitors for the estate arranged for the payment of $250,000 to be paid from their solicitors’ trust account into a Money Market account with Adelaide Bank Limited. The payment was made by cheque as follows:

Cheque No 35013

Adelaide Bank Limited for account of Leneve Ann Fitch short term investment for balance of legacy - $250,000

The investments in the Money Market account took place on or about 12 October 1998 in an account described, “Estate of the late F T Fitch A/c Leneve A Fitch c/- Cleland McFarlane Selth”. Messrs Cleland McFarlane Selth were merely agents on behalf of the trustees of Miss Leneve’s trust fund to place the funds of the trust with a recognised depository who would pay interest at the best rate available – in this case, the Adelaide Bank Limited.
There was no parting with the assets of the trust fund for Ms Leneve Fitch on the three executors becoming trustees of the trust property. No “distribution” occurred at that time. This is so on the authority of Easterbrook v Young where it was held at p 317:
"... that there is nothing in the language or policy of the Act to suggest that the change in the capacity in which the personal representative holds assets he has received on the grant of probate … constitutes either a removal of those assets from the power of the Court under s 3 [equivalent to s 9 of the South Australian Act] or a relevant distribution of the estate."

Trustees must hold property jointly. From the outset, the original trustees in the present case held the trust property in that manner.
Mr McFarlane retired as a trustee in February 1999. On his retirement, he and Mrs Coral Fitch and Mr Richard Manuel as continuing trustees, executed a Deed of Retirement in which they declared pursuant to s 15 of the Trustee Act that Mr McFarlane had retired from the trust and pursuant to s 16 of that Act that the property of the trust would be vested in the continuing trustees alone. Sections 15 and 16 of the Trustee Act are contained in Part 2 of that Act.
For reasons which I have already given, such vesting did not amount to a “distribution” of the property concerned within the meaning given to that expression by the High Court in Easterbrook v Young. All that has been achieved by Mr McFarlane’s retirement is a reduction in the number of trustees.
On the occasion of the retirement of Mr McFarlane, the parties had resort to the enabling provisions in Part 2 of the Trustee Act in order to ensure a vesting of trust assets in Mrs Coral Fitch and Mr Richard Manuel as continuing trustees. It is not, however, essential to have resort to these provisions. If all of the trust assets can be transferred to the continuing trustees without the need to resort to s 16 of the Trustee Act, then there can be no objection to proceeding in that manner.
A few days after the retirement of Mr McFarlane, Mr Kennedy purported to be appointed a trustee of the trust assets pursuant to Part 5 of the Trustee Act, such assets to be held for the benefit of Ms Leneve Fitch.
Part 5 of the Trustee Act contains an alternative means whereby a person can be appointed a trustee. The requirements of this part are permissive only. They are not mandatory. An appointment under Part 5 is made up of three parts, the first described as “appointment of new trustees”, the second described as “memorandum of appointment of new trustees” and the third, is a statutory declaration.
It seems to me that, the parties intended to appoint Mr Kennedy a trustee of the trust fund held for the benefit of Ms Leneve Fitch, that such appointment would stand along with the appointments of Ms Coral Fitch and Mr Richard Manuel as co-trustee and would be made under Part 5 of the Trustee Act. The document prepared and executed is clearly in Part 5 form which is quite different in content from any other form of appointment of new trustee: see the reference to Part 5 in the memorandum of appointment of new trustee. The documents in this case were executed as deeds. They were not, however, attested in the manner prescribed in the Real Property Act 1886.
The appointment in Schedule 1 must be attested in the manner that documents for registration under the Real Property Act are attested. For the purposes of registration by or on behalf of a party to the instrument must be witnessed by a person who either knows the executing party personally or is satisfied as to his or her identity. That was not done in this case. The text of Schedule 1 commenced with the words “Pursuant to Part 5 of the Trustee Act”. Reference to Part 5 was omitted in the present case.
An appointment of new trustees under Part 5 may be registered in the General Registry Office: s 75. On the registration of a memorandum of appointment of new trustees under Part 5 the trustees, the subject of the appointment, are deemed to have been duly appointed and the trust estate to which such new trustees were appointed is vested in the new trustees either solely or jointly with the continuing trustees: s 76. An appointment of new trustees, on the registration of the documents under s 76 of the Trustee Act takes effect as does the transfer of title of the trust estate to the new and continuing trustees.
An appointment of new trustees under Part 5, if it affects land under the Real Property Act, may be registered in the Lands Titles Registration Office. If it affects any other property, it may be registered in the General Registry Office. A memorandum of appointment of new trustees under Part 5 of the Trustee Act is not required to be registered within any particular period of time. It is simply ineffective until registered but once registered it is effective for all purposes. I do not think registration would have a retrospective affect.
Conclusion
It appears that Mr Kennedy’s appointment as a trustee is only valid on registration of the documents under Part 5 of the Trustee Act and remains invalid for all purposes until that time. Up to the present time it has not been registered.
In my opinion, the resignation of Mr McFarlane as a trustee achieved nothing so far as these present proceedings are concerned. Two of the original three executors remained trustees. As such, they remained amendable to the Court under the Act.
The appointment of Mr Kennedy was not valid. If it had been valid, proceedings by the executors to recover trust assets could be resisted lawfully by him. However, that is not so in this case. His appointment was invalid although it could be validated readily.
In the circumstances, there has not been a “distribution” within the meaning of the Act in relation to the deposit referred to in par 1(a)(ii) of the learned Master’s declaratory order.
For these reasons, the appeal and cross-appeal should be dismissed.

[2002] SASC 12

23 September 2002