Dawson v Fitch

Case [2002] SASC 12

[2002] SASC 12

DAWSON & ORS V FITCH & ORS

Full Court: Lander, Williams & Wicks JJ

  1. 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).

  2. 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.

  3. Frank Thomas Fitch died on 14 March 1998.  Probate of his will dated 20 June 1996 was granted on 17 September 1998.

  4. 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.

  5. 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. 

  6. 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.

  7. 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.

  8. Mr McFarlane was not a party to the proceedings before the Master…

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Dawson v Fitch [2002] SASC 12
Case
[2002] SASC 12
Decision Date

CaseChat Overview and Summary

The case of Dawson v Fitch involves a dispute over the appointment and resignation of trustees and executors in relation to a testamentary trust. The matter was heard in the Supreme Court of New South Wales. The key legal issues before the court were whether the appointment of a new trustee and the resignation of an existing trustee were valid and whether these actions had any impact on the executors' ability to administer the trust fund.

The court found that the appointment of Mr Kennedy as a trustee under Part 5 of the Trustee Act was not valid until it was registered. The court held that registration of such appointments does not have a retrospective effect, and thus Mr Kennedy’s appointment remained invalid until registered. The resignation of Mr McFarlane as a trustee did not affect his role as an executor, as the court determined that an executor cannot renounce their office after taking probate. Consequently, the court ruled that the appointment of Mr Kennedy was invalid and the executors were still amendable to the court under the Act. Given these findings, the court concluded that there had not been a "distribution" within the meaning of the Act and dismissed the appeal and cross-appeal.

The court's reasoning was grounded in the statutory provisions of the Trustee Act and established legal principles regarding the roles and responsibilities of executors and trustees. The court emphasised that the Trustee Act does not apply to the appointment of executors or administrators of a deceased estate, and an executor cannot retire once they have taken probate. The deeds in question did not contain the necessary vesting declarations and did not affect the executors' office or responsibilities. The court further noted that the original grant of probate remained valid, and Mr McFarlane continued as an executor. Therefore, the appointment of Mr Kennedy as a trustee was invalid and could not be used to resist the executors' actions to recover trust assets.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

LANDER J WILLIAMS J WICKS J
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.

Ratio Decidendi

Legal Principle Established

Established by: LANDER J, WILLIAMS J, WICKS J

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(14th 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 2nd 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.