In the Estate of MOUSSA ADAM (DECEASED) - [2013] SASC 70

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
In the Estate of MOUSSA ADAM (DECEASED)
[2013] SASC 70
Judgment of The Honourable Justice Gray
16 May 2013
SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - GENERALLY
SUCCESSION - PERSONAL REPRESENTATIVES - RIGHTS, POWERS AND DUTIES - OTHER MATTERS
SUCCESSION - ADMINISTRATION OF ESTATE - OTHER MATTERS
Three applications pursuant to the Administration and Probate Act 1919 (SA) brought by the spouse of a deceased and administrator of the deceased's intestate estate - application pursuant to section 72L(2) of the Administration and Probate Act for an order to extend the time available to the applicant to exercise her right to elect to purchase the dwellinghouse of the deceased - application pursuant to section 67 of the Administration and Probate Act for an order dispensing with the requirement to pay over money to the Public Trustee in accordance with section 65 of the Act - where applicant obtained grant of administration of the intestate estate of the deceased - where deceased's infant children were entitled to an interest in the deceased's estate - whether infant beneficiaries appropriately protected by making of dispensing order - application under sections 31(8) and 67(5) of the Administration and Probate Act to discharge a surety from any further liability under a surety's guarantee provided in relation to the administration of a deceased's estate.
Held: Applications granted - order for the extension of time available to the applicant to elect to purchase the dwellinghouse of the deceased - the beneficiaries of the estate are appropriately protected by a dispensing order under section 67 of the Administration and Probate Act - applicant is capable of managing funds due to her children - beneficial to the interests of the beneficiaries of the estate and expedient that dispensing order be made - surety to be discharged from further responsibility once the Registrar of Probates is satisfied that the property the subject of the section 67 order has been transferred to a trust established for the benefit of the children and administered by the trustees.
Administration and Probate Act 1919 (SA) s 31(8), s 65, s 67, s 72G, s 72H and s72L, referred to.
Public Trustee v O’Donnell (2008) 101 SASR 228; In the Estate of Richter [2011] SASC 124; In the Estate of Loy [2012] SASC 140, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"beneficial or expedient so to do"

In the Estate of MOUSSA ADAM (DECEASED)
[2013] SASC 70
Testamentary Causes Jurisdiction
GRAY J.
Introduction

This matter concerns three applications brought by the administrator of a deceased’s estate.
The first is an application for an order extending the time within which the applicant may elect to exercise her right as the spouse of the deceased to acquire the dwellinghouse[1] of the deceased under section 72L of the Administration and Probate Act 1919 (SA). Next, the applicant seeks an order pursuant to section 67 of the Administration and Probate Act dispensing with the requirement to pay over money to the Public Trustee in accordance with section 65 of the Act. Finally, the applicant seeks an order discharging her mother from any further responsibility under a surety’s guarantee provided in relation to the administration of the deceased’s estate.
[1] The term “dwellinghouse” is taken from the wording of section 72L of the Administration and Probate Act 1919 (SA).
Background
Moussa Adam, the deceased, died intestate on 27 May 2012. He was survived by his wife, Melanie Adam, who is the applicant, and their two children, aged eight and four years.
The applicant received in her favour an order for letters of administration of the deceased’s estate on 14 November 2012. The net estate of the deceased disclosed in the statement of assets and liabilities records a value of $296,801.73.
Section 72L of the Administration and Probate Act
The major asset of the deceased’s estate is the family home at Woodcroft, South Australia. The deceased was the sole registered proprietor of the property. The Valuer-General’s valuation of this property as at the date of the death of the deceased was $455,000.00. The property is subject to a registered mortgage taken out by the deceased in favour of Australia and New Zealand Banking Group Limited.
The applicant seeks to exercise her right of election under section 72L of the Administration and Probate Act to purchase the Woodcroft property at its value. Section 72L operates as a statutory exception to the general rule that a trustee may not purchase trust property.
Section 72L relevantly provides:
(1)Subject to this Part, where the intestate estate of an intestate who is survived by a spouse or domestic partner includes an interest in a dwellinghouse in which the spouse or domestic partner of the intestate was residing at the date of the intestate's death, the spouse or domestic partner may elect to acquire that interest at its value as at the date of the death of the intestate.
(2)     An election under this section must be made—
(a)     where the spouse or domestic partner is an administrator of the intestate estate—within three months after the date on which administration of the intestate estate was granted by the Court; …
...
or within such extended period as the Court may allow.
(3)     An election by a spouse or domestic partner shall be furnished in writing—
...
(b)     if the spouse or domestic partner is an administrator of the intestate estate—to the Public Trustee.
On 18 February 2013, the applicant’s solicitors wrote to the Public Trustee on behalf of the applicant purporting to make an election to purchase the property at its value. This occurred four days after the three month period prescribed under section 72L(2)(a) of the Administration and Probate Act had expired. The applicant therefore requested that the Court allow an extension of the time within which she may make this election. Having regard to the conclusions I reach on the remaining applications, I see no difficulty in making an order to extend the time available to the applicant under section 72L to exercise her right to elect to purchase the land.
On 16 January 2013, the Public Trustee advised the applicant’s solicitors that the Public Trustee’s understanding was that if the applicant elected to acquire the dwellinghouse under section 72L, the value of the house would need to be assessed by a licensed valuer, and that a valuation by the Valuer-General would not suffice for this purpose.
In the course of oral submissions, counsel for the applicant advised that the Public Trustee had indicated that it had read this requirement of a valuation by a licensed valuer into the reasons I gave in Public Trustee v O’Donnell.[2] In that case, an expert valuation had been obtained for a property that was subject to an application under section 72L. Nowhere in my reasons did I suggest that a valuation by a licensed valuer would be necessary. Where a property has already been subject to a recent and relevant valuation by the Valuer-General, it would appear unnecessary to require the spouse or domestic partner of the deceased to incur the additional expense of obtaining a valuation from a licensed valuer.
[2] Public Trustee v O’Donnell (2008) 101 SASR 228.
In any event, the applicant has filed a retrospective valuation report prepared by WBP Property Group. This report estimates a market value of $470,000.00 of the Woodcroft property at the time of the deceased’s death.
Section 67 of the Administration and Probate Act
The intestate estate of the deceased is to be distributed in accordance with the rules set out in sections 72G and 72H of the Administration and Probate Act. Under section 72H, the applicant is entitled to the personal chattels of the deceased. With regard to the remainder of the intestate estate, section 72G relevantly provides:
(1)Subject to this Part, an intestate estate shall be distributed according to the following rules:
...
(b)     where the intestate is survived by a spouse or domestic partner and by issue—
(i)     the spouse or domestic partner is entitled—
(A)if the value of the intestate estate does not exceed the prescribed amount, to the whole of the intestate estate; or
(B)if the value of the intestate estate exceeds the prescribed amount, to the prescribed amount and to one-half of the balance of the intestate estate; and
(ii)the issue of the intestate is entitled to the balance (if any) of the intestate estate;
...
(2)     In this section—
prescribed amount means—
(a)     $100 000; or
(b)     if an amount greater than $100 000 is prescribed by regulation for the purposes of this section—that amount.
The applicant estimates the value of the deceased’s estate, less the value of the personal chattels and legal fees, to be about $259,000.00. In accordance with section 72G, the applicant is entitled to the first $100,000.00 of this amount, and to one half of the balance of the deceased’s estate. The two children are therefore each entitled to an interest of approximately $40,000.00.
As the children have not yet attained the age of 18 years, the applicant is required by section 65 of the Administration and Probate Act to transfer their interests in the deceased’s estate to the Public Trustee. Section 65 requires an administrator to deliver property to the Public Trustee where that property is held on behalf of a beneficiary who is not sui juris. In particular, 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.
Section 67(1) of the Administration and Probate Act provides a dispensing power and is in the following terms:
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.
I recently had cause to consider these provisions in In the Estate of Richter,[3] where I made the following observations regarding the scheme of the provisions:
Section 65 seeks to protect a person where an administrator, not an executor, has been appointed by the Court to administer an estate and 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 section 67 of the Act, Parliament conferred on the Court the power to relieve the administrator from the obligation under section 65 when it is “beneficial or expedient to do so”.
...
It is clear that section 65 has, at least in part, a beneficial and remedial purpose[4]. It is settled that beneficial and remedial legislation is to be interpreted as widely as its terms permit.[5]
[3]    In the Estate of Richter [2011] SASC 124.
[4]    In In the Estate of Marden [2008] SASC 312 at [14] with respect to this type of statutory provision, I observed: “A beneficial or remedial statutory provision is one that gives some benefit to a person and thereby remedies some injustice [Re McComb [1993] 3 VR 485, [22]].”
[5]    In this respect, Brennan CJ and McHugh J in IW v City of Perth (1997) 191 CLR 1 at 12 outlined the approach to be taken on the construction of beneficial or remedial statutory provisions:
“[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 of the Act must be given a liberal and beneficial construction, a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural.” [Footnotes omitted.]
After discussing the relevant authorities, I concluded that the key consideration in an application under section 67 is whether a beneficiary who is not sui juris would be properly protected by the proposed dispensing order sought. I also concluded that the broadness of the word “expedient” as it appears in section 67 permits the court to contemplate considerations other than the due administration of the estate.[6]
[6] In the Estate of Richter [2011] SASC 124, [16]-[18].
In this case, the applicant deposed that, if the Court grants the order sought under section 67, she will hold the shares of the children in the deceased’s estate on trust for them until they attain 18 years of age. The applicant also proposes that her mother, Lynette Ogilvie, act as a joint trustee in relation to the children’s interests in the deceased’s estate. Mrs Ogilvie has agreed to this arrangement.
The applicant is aged 34 years. She is currently a full time parent to her children, although she has previously been employed as an administration manager with several companies. Through this employment, the applicant has had some experience with financial matters, receiving training in bookkeeping and basic accountancy.
Mrs Ogilvie is aged 58 years. She also deposed that she has some financial experience through her previous employment as a cash office clerk and, more recently, as a senior staff member at a pharmacy.
The applicant deposed that it is her intention, if the Court makes the orders sought pursuant to sections 67 and 72L of the Administration and Probate Act, to re-borrow upon the security of the Woodcroft property. This would mean that upon transfer of the Woodcroft property to the applicant as purchaser under section 72L of the Act, the Australia and New Zealand Banking Group Limited mortgage taken out by the deceased will be discharged and the liability of the deceased to the Australia and New Zealand Banking Group Limited repaid. The applicant will seek to borrow sufficient funds by way of a re-mortgage of the Woodcroft property in order enable the shares that the children hold in the deceased’s estate to be paid into separate interest bearing deposit accounts in a financial institution in the name of the applicant and her mother as trustees. The applicant will also seek to borrow sufficient funds to pay the remaining liabilities of the deceased’s estate.
I am of the opinion that the interests of the children in the deceased’s estate will be appropriately protected by the making of a dispensing order. I consider that it would be beneficial to the children to have the funds received from the deceased’s estate administered by the applicant, without charges being incurred by the Public Trustee. I am satisfied that it is beneficial to order that the applicant not be bound by section 65 of the Administration and Probate Act.
The Surety’s Guarantee
Mrs Ogilvie provided a surety’s guarantee in relation to the deceased’s estate. The maximum potential liability under the guarantee is $489,397.18. The applicant seeks to have the liability of Mrs Ogilvie under the surety’s guarantee discharged.
Section 67(5) of the Administration and Probate Act provides:
If the Court so directs, an order under this section has the effect of discharging the administrator and any surety from further responsibility in respect of the property to which the order relates.
In In the Estate of Loy,[7] Stanley J noted that there has been some question as to the proper interpretation of section 67(5), there observing:
The issue is whether the operation of the subsection requires the Court to give an express direction in terms of the subsection or whether the subsection operates of its own force once the Court has made an order in terms of s 67(1).
I have been unable to find any authority directly on point. However, in In The Estate of Sopru (Deceased)[8] Legoe J referred to the provision as follows:
By subsection (5), if the Court so directs, the making of an order under this section shall have the effect of discharging from further responsibility all parties to the bond, if any, that has been given to the Public Trustee upon the granting of administration.
This passage suggests that a specific direction is required from the Court before the terms of s 67(5) operate. I intend to proceed on that basis
I agree with his Honour’s interpretation of section 67(5).
[7] In the Estate of Loy [2012] SASC 140, [33]-[35].
[8] (1992) 165 LSJS 132.
In this case, I am satisfied that the interests of the children in the deceased’s estate will be adequately protected in the absence of a surety’s guarantee. As a trustee of the children’s interests in the deceased estate, Mrs Ogilvie will be under obligations that exceed those that she is currently under pursuant to the surety’s guarantee. I am therefore satisfied that it is appropriate to make an order under section 67(5) of the Administration and Probate Act discharging Mrs Ogilvie’s liability under the surety’s guarantee insofar as it relates to the applicant’s administration of the Woodcroft property. However, I do not consider that Mrs Ogilvie should be discharged from the responsibility imposed by the surety’s guarantee until the children’s interests in the deceased’s estate have been placed into trust. Accordingly, I direct that once the Registrar of Probates is satisfied that the children’s interests in the deceased’s estate have been transferred to the applicant and Mrs Ogilvie as trustees for the children, Mrs Ogilvie is to be discharged from any further responsibility under her surety’s guarantee in relation to the Woodcroft property.
With regard to the other assets of the deceased’s estate, section 31(8) of the Administration and Probate Act relevantly provides:
If, on the application of a surety, it appears to the Court that—
...
(c) a surety desires to be relieved from further liability,
the Court may grant such relief as it thinks fit.
Rather than requiring Mrs Ogilvie to commence a separate application in her own name, I proceed on the basis that she has made an informal application to have her liability as a guarantor discharged.

For the reasons I have given in relation to the application under section 67(5), I am satisfied that it is appropriate to make an order under section 31(8) of the Administration and Probate Act discharging Mrs Ogilvie from further liability under the surety’s guarantee. Again, this discharge should occur only after the Registrar of Probates is satisfied that the children’s interests in the deceased’s estate have been transferred to the applicant and Mrs Ogilvie as trustees for the children.
Conclusion
I order that the time available to the applicant under section 72L of the Administration and Probate Act to exercise her right to elect to purchase the dwellinghouse of the deceased be extended. I make an order dispensing with the obligation on the part of the applicant to comply with the requirements of section 65 of the Administration and Probate Act. I direct that, pursuant to section 67(5) of the Administration and Probate Act, Mrs Ogilvie be discharged from any further liability under her surety’s guarantee in relation to the Woodcroft property. I also direct that, pursuant to section 31(8) of the Administration and Probate Act, Mrs Ogilvie be discharged from any further liability under her surety’s guarantee in relation to the other assets of the deceased’s estate. Mrs Ogilvie’s liability under the surety’s guarantee is to be discharged only after the Registrar of Probates is satisfied that the interests of the deceased’s children in the deceased’s estate have been placed into trust. I direct the applicant to prepare draft minutes of order to give effect to the orders proposed in these reasons.