In the Estate of DARREN PIKE (DECEASED)

[2015] SASC 166

SUPREME COURT OF SOUTH AUSTRALIA

(Testamentary Causes Jurisdiction: Application)

In the Estate of DARREN PIKE (DECEASED)

[2015] SASC 166

Judgment of The Honourable Justice Stanley

9 October 2015

SUCCESSION - PERSONAL REPRESENTATIVES - RIGHTS, POWERS AND DUTIES - GETTING IN AND REALISING ESTATE

SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - MATTERS RELATING TO BENEFICIARIES - OTHER MATTERS

The deceased died intestate and was survived by his two daughters, both of whom are under 18 years of age.  The applicant is the mother of the deceased and the administrator of the estate.  She has sole parental responsibility for the two daughters. The net estate is worth about $450,000.00 and mainly comprises superannuation entitlements and a property at Ottoway.  The applicant and the deceased’s two daughters occupy the Ottoway property.

The applicant seeks an order pursuant to s 67 of the Administration and Probate Act 1919 (SA) dispensing with the requirement to pay over money to the Public Trustee in accordance with s 65 of the Act. An application is also made pursuant to s 64 of the Act to postpone realisation of the property until the two beneficiaries of the deceased’s estate attain the age of 18 years.

Held (allowing the application):

1. I make an order dispensing with the obligation on the part of the applicant to comply with the requirements of s 65 of the Act (at [28]).

2. I make an order permitting the applicant to postpone the realisation of the Ottoway property pursuant to s 64 of the Act (at [28]).

Administration and Probate Act 1919 (SA) s 64, s 65, s 67, referred to.
IW v City of Perth (1997) 191 CLR 1; In the Estate of Freebairn (deceased) (2005) 93 SASR 415; In the Estate of Richter (deceased) [2011] SASC 124; In the Estate of Estall (deceased) [2011] SASC 188; In the Estate of Marden [2008] SASC 312; In the Estate of Franczak [2011] SASC 70, discussed.

In the Estate of DARREN PIKE (DECEASED)
[2015] SASC 166

Testamentary Causes Jurisdiction

STANLEY J.

1. This is an application pursuant to s 67 of the Administration and Probate Act 1919 (SA) (the Act) by the administrator of a deceased estate for an order dispensing with the requirement to pay over money to the Public Trustee in accordance with s 65 of the Act. An application is also made pursuant to s 64 of the Act to postpone realisation of the property until the two beneficiaries of the deceased’s estate attain the age of 18 years.

2. Darren Pike, the deceased, died intestate on 19 March 2014.  He is survived by two children, Sharon born 10 June 1999 and Tiffany born 25 June 2000.  The applicant, Rosemary Ann Pike, is the mother of the deceased.

3. On 26 February 2015, letters of administration of the deceased’s estate were granted to the applicant.

4. The persons entitled to share in the estate of the deceased are Sharon and Tiffany.  The net proceeds of the estate are to be distributed to them in equal shares. 

5. The statement of assets and liabilities of the deceased discloses a net estate of $447,352.43.  The estate includes real property, being property in the deceased’s name, at Allenby Road, Ottoway (the Ottoway property).  In addition, there is a superannuation entitlement of $370,229 some of which has been used to discharge the mortgage on the Ottoway property.  The Ottoway property has been valued at $275,000.  The estate further includes a 2006 Holden Commodore motor vehicle valued at $6,000 and furniture and household effects valued at $5,000 together with various sums of money. 

6. The Ottoway property is currently occupied by the applicant, Sharon and Tiffany.  The applicant has sole parental responsibility for Sharon and Tiffany, to the exclusion of their mother, pursuant to an order of the Family Court of Australia made on 25 September 2014.

7. The applicant is 71 years old and is a pensioner.  She does not pay rent to the deceased’s estate for occupying the Ottoway property.  She uses her income, which is confined to Centrelink benefits, to pay expenses on behalf of Sharon and Tiffany as well as to meet household expenses.  She also has the exclusive use of the Holden Commodore motor vehicle, which is used to transport Sharon and Tiffany. 

8. The applicant submits that it is in Sharon and Tiffany’s best interests that the sale of the Ottoway property be postponed until they both have reached the age of 18 years.  She submits that Sharon and Tiffany are settled at the high school they attend in Semaphore and at the Ottoway property which they regard as their home.  She submits that Sharon and Tiffany understand the basis of the application and support it.  She submits that Sharon and Tiffany are content with the arrangements as they exist.  Sharon and Tiffany have both expressed an interest in purchasing their own house in due course.

9. Section 65 requires the administrator to deliver property held on behalf of the beneficiary who is not sui juris to the Public Trustee.  Accordingly, the applicant is required to transfer Sharon and Tiffany’s share in the estate to the Public Trustee because they are not sui juris. 

10. The estate does not have cash assets to pay the Public Trustee the share in the estate due to Sharon and Tiffany. In order to comply with the provisions of s 65 the Ottoway property would need to be sold.

11. Accordingly, the applicant applies to the Court pursuant to s 67(1) of the Act to dispense with the requirement of s 65 to transfer Sharon and Tiffany’s share in the estate to the Public Trustee. The applicant also applies pursuant to s 64(1) of the Act to postpone the realisation of the Ottoway property until Sharon and Tiffany have both attained the age of 18 years.

12. Having heard from Mr Maik, counsel for the applicant, and Mr Lawton, counsel for the Public Trustee, I am satisfied that orders should be made to this effect.  These are my reasons for doing so.

    The Legislative Scheme

13. The applicant sought orders pursuant to s 67 and s 64 of the Act. The order sought pursuant to s 67 was that she not be bound by s 65 of the Act, which relates to the duty of the administrator of an estate to pay money and deliver property belonging to a person who is not sui juris to the Public Trustee after a certain period of time. Section 65 provides:

    (1)Every administrator who is possessed of or entitled to any property within this State, whether personal or real, belonging to any person who—

    (a)     is not sui juris, or

    (b)     is not resident in this State, and has no duly authorised agent or attorney therein:

    shall deliver, convey, or transfer such property to the Public Trustee immediately after the expiration of one year from the date of the death of the intestate or testator, or within six months after such sooner time as the same or such portion thereof as is available for that purpose, has been sold, realised, collected, or got in.

    (2)The Public Trustee shall then administer such property according to law, and in accordance with any will affecting such property.

    (2a)The Public Trustee may, in his discretion, (but subject to the provisions of any will or instrument of trust) realise, or postpone the realisation of, any real or personal property delivered, conveyed or transferred to him under subsection (1) of this section.

    (3)This section shall not apply in any case where the administrator is a limited company incorporated or taken to be incorporated under the Corporations Act 2001 of the Commonwealth, and is acting as administrator in pursuance of any powers granted to it by any Act.

    (4)This section shall not apply to an administrator acting under any probate or administration not granted by the Supreme Court but sealed with the seal of the Supreme Court in pursuance of the provisions of section 17 of this Act.

    (5)Subject to the provisions of any will or instrument of trust, the Public Trustee may, if he is satisfied that it will be advantageous to the beneficiaries, authorise the sale of any trust property, not exceeding four thousand dollars in value, to the administrator, or to the administrator conjointly with any other person, notwithstanding that the property has not been offered for sale by public auction or otherwise.

14. Section 67(1) provides a dispensing power and is relevantly in the following terms:

    (1)A Judge may, on being satisfied by affidavit that it is beneficial or expedient so to do, order—

    (a) that any administrator, or proposed administrator, shall not be bound by section 65; or

    (b) that any administrator, or proposed administrator, shall not be bound by the said section 65 until after a certain time to be mentioned in the order.

15. The applicant also sought an order pursuant to s 64 postponing the realisation of the Ottoway property. Section 64 confers a power on the Court to grant permission to an administrator to postpone the realisation of the estate or trust property. Section 64(1) is in the following terms:

    (1)The Court may, where it thinks it beneficial so to do, give permission to an executor, administrator, or trustee of a deceased person, or to the Public Trustee—

    (a)     to postpone for such period as the Court thinks expedient the realisation of the estate or trust property:

    (b)     to carry on, for such period or periods as the Court from time to time thinks expedient, the business or affairs of the testator or intestate, and for that purpose to use his estate, or such portion thereof as the Court directs.

16. As is apparent, s 67 provides that a judge may, being satisfied that it is “beneficial or expedient so to do”, order that an administrator not be bound by s 65. The applicant contended that an order should be made that she not be bound by s 65 of the Act, as the protection afforded by s 65 to a beneficiary who is not sui juris, requiring an administrator to pay the funds to the Public Trustee, was not required in the circumstances of this matter. Likewise, the applicant contended that it would be in the best interests of the beneficiaries to make the order sought pursuant to s 64 postponing the sale of the Ottoway property. These applications were ultimately not opposed by the Public Trustee so long as certain orders were made to adequately safeguard the entitlements of the non sui juris beneficiaries.  Before addressing the merits of the applications, it is appropriate to note some important features of the legislative scheme concerning the relevant provisions of the Act.

17. Section 65 seeks to protect a person where an administrator, not an executor, has been appointed by the Court to administer an estate where a beneficiary is not sui juris. The protection is effected by obligating the administrator to convey the property due to such a beneficiary to the Public Trustee. In enacting s 67 of the Act, Parliament conferred on the Court the power to relieve the administrator from the obligation under s 65 when it is “beneficial or expedient so to do”.

18. Section 64 confers a power on the Court to permit the postponement of the realisation of the estate or trust property on the part of an executor, administrator, trustee of a deceased person, or the Public Trustee, where the Court considers it beneficial to do so. It further permits those persons to carry on the business or affairs of the testator or an intestate as the Court directs.

19. It is clear that s 64, s 65 and s 67 have, at least in part, beneficial and remedial purposes. It is settled that beneficial and remedial legislation is to be interpreted as widely as its terms permit.

20. In IW v City of Perth,[1] Brennan CJ and McHugh J said, in a joint judgment:[2]

    … [it is a] rule of construction that beneficial and remedial legislation ... is to be given a liberal construction.  It is to be given “a fair, large and liberal” interpretation rather than one which is “literal or technical”.  Nevertheless, the task remains one of statutory construction.  Although a provision in the Act must be given a liberal and beneficial construction, a court or tribunal is not at liberty to give a construction which is unreasonable or unnatural…

    (Footnotes omitted)

    [1] [1997] HCA 30, (1997) 191 CLR 1.

    [2] [1997] HCA 30, (1997) 191 CLR 1 at 12.

21. Sections 65 and 67 have been considered in two decisions of this Court in In the Estate of Freebairn[3] and In the Estate of Richter (deceased).[4]

    [3] [2005] SASC 497, (2005) 93 SASR 415.

    [4] [2011] SASC 124.

22. In Richter, Gray J, after analysing the Court’s reasoning in Freebairn, concluded that the key consideration in the determination of an application pursuant to s 65 is whether a beneficiary who is not sui juris is properly protected.  This Court has subsequently followed that same approach in In the Estate of Estall (deceased).[5]

    [5] [2011] SASC 188.

23. Section 64 has been considered in two decisions of this Court in In the Estate of Marden[6] and in In the Estate of Franczak.[7]

    [6] [2008] SASC 312.

    [7] [2011] SASC 70.

24. In Franczak, Gray J followed his earlier decision in Marden. He concluded that in exercising the discretion conferred by s 64 the Court will consider whether the making of an order would be of advantage to the due and proper administration of the estate. Material to the decisions in those cases were such factors as the avoidance of the costs and disruptions involved in selling residential homes, the protection of the interests of the beneficiaries by preserving an appreciable and stable asset in the family home and that the orders were not opposed by the Public Trustee.

    Consideration

25. In determining whether Sharon and Tiffany would be properly protected by making an order pursuant to s 67(1), dispensing with the requirement to transfer the property of the estate being administered to the Public Trustee, I consider the following factors are relevant:

    1The period during which part of the deceased’s estate would need to be administered before the youngest of the children obtains her majority is nearly three years.

    2Holding assets on trust would adequately protect the interests of the children.  I am satisfied that making an order permitting the Public Trustee to register a caveat over the title to the Ottoway property will further protect their position.

    3I am satisfied that the applicant will continue to manage the estate competently and gratuitously.

    4If an order was not made, and the Ottoway property currently under administration was transferred to the Public Trustee for future management and administration, it would be subject to commission charged by the Public Trustee for the performance of this function.

    5The estate is a straightforward one.  The applicant is undertaking to deliver up the duplicate Certificate of Title to the Ottoway property to the Public Trustee until the order is discharged which will not occur until both Sharon and Tiffany have attained the age of 18 years.

    6The Ottoway property will be occupied by the applicant and Sharon and Tiffany as their home until that time.  During that period the applicant shall, out of the estate, insure the contents of the home and maintain the property and its contents in good and substantial repair and condition and meet all household expenses including rates, taxes and other outgoings, including strata title contributions and do all things necessary to ensure that appropriate building insurance is held by the strata corporation.  Further protection for the property will be provided by the applicant depositing with the Public Trustee a copy of those insurance policies.

26. In determining whether to make an order pursuant to s 64(1), permitting the applicant as the administrator to postpone until 25 June 2018 the realisation of the Ottoway property, I consider that the sale of the Ottoway property now would deprive Sharon and Tiffany of the comfort and security of their own home and would disrupt their lives needlessly. Further, I think there is a reasonable likelihood that the value of the Ottoway property would appreciate over the next 32 months or so increasing the net value of the estate available for distribution to the beneficiaries.

27. In all of these circumstances, I am satisfied that the orders sought should be made as Sharon and Tiffany, the beneficiaries of the deceased’s estate, will be properly protected. It will be beneficial to their interests and expedient that the funds due to them be administered by the applicant. I am further satisfied that an order should be made pursuant to s 64 postponing the realisation of the Ottoway property. The postponement of the sale of the property by the estate would be of advantage to the due and proper administration of the estate. It would protect the interests of the beneficiaries by preserving an appreciable and stable asset and avoid the disruption to their lives that would follow from an immediate sale.

    Conclusion

28. For these reasons, I make an order dispensing with the obligation on the part of the applicant to comply with the requirements of s 65 of the Act. Further, I make an order permitting the applicant to postpone the realisation of the Ottoway property pursuant to s 64 of the Act.

29. I make formal orders as sought by consent in terms of the minutes handed up to me on 9 October 2015 as follows:

    1Until the discharge of this order or an order is made for the realisation and administration of the real estate of Darren Pike, late of Allenby Road, Ottoway in the state of South Australia, deceased, the applicant may:

    a.Postpone the realisation of the real estate of the deceased, namely the dwelling comprising in Certificate of Title Register Book Volume 5008 Folio 187, being the strata title unit known as Allenby Road, Ottoway, in the state of South Australia (“the Unit”) until the infant children of the deceased, namely Sharon and Tiffany, shall all have attained the age of 18 year;

    b.Occupy the Unit as a home for herself and the infant children of the deceased.

    2During the continuance of this order the applicant shall out of the estate of the deceased:—

    a.Insure the contents of the Unit to their full insurable value against loss or damage;

    b.Maintain the Unit and its contents in good and substantial repair and condition;

    c.Duly and punctually pay and discharge all rates, taxes and other outgoings accruing due in respect of the Unit, including all strata title contributions;

    d.Do all things necessary to ensure that a policy of appropriate building insurance is held by the strata corporation relevant to the Unit at all times; and

    e.Pay the premiums necessary for keeping and maintaining the contents of the Unit insured in accordance with the provisions of this order.

    3By way of security for the share of the infant children in the estate of the deceased, the applicant do, forthwith upon the making of this order, deposit with Public Trustee the duplicate Certificate of Title in relation to the Unit and the policy of insurance issued in respect of the contents of the Unit.

    4By way of security for the share of the infant children in the estate of the deceased, the applicant do, forthwith upon the making of this order, deposit with Public Trustee a copy of the policy of insurance issued by the strata corporation relevant to the Unit in respect of the entire strata title.

    5The applicant do provide to Public Trustee a copy of any renewal of such insurance, in relation to the contents of the Unit and in relation to insurance held by the strata corporation as a whole, forthwith upon such renewal. 

    6Public Trustee be permitted to register a caveat over the title to the Unit in respect of the interests of the infant children, such caveat not to be warned by the applicant.

    7The costs of the registration of the caveat and of its ultimate discharge are to be paid out of the estate of the deceased.

    8The applicant, as administrator of the estate of the deceased, be not bound by section 65 of the Administration and Probate Act 1919 (SA) as regards the Unit unless and until this order is discharged.

    9Upon the deposit of the duplicate Certificate of Title any surety to the bond given to Public Trustee upon the granting of letters of administration by this Court to Rosemary Ann Pike be discharged.

    10Service of the summons on all persons in existence having any beneficial interest in the estate of the deceased, or the subject matter to which the summons relates, be dispensed with.

    11The costs of the application be paid out of the estate of the deceased.

    12The applicant, Public Trustee and any other person interested may apply for further orders and directions.