In the Estate of TREVOR IAN BANNON (DECEASED) - [2014] SASC 12

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction: Application)
In the Estate of TREVOR IAN BANNON (DECEASED)
[2014] SASC 12
Judgment of The Honourable Justice Stanley
29 January 2014
SUCCESSION - ADMINISTRATION OF ESTATE - ASSETS
SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION
SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - MATTERS RELATING TO BENEFICIARIES - OTHER MATTERS
The deceased died intestate and was survived by his three sons. The eldest son is the Administrator of the estate. The two younger sons are yet to reach their majority. The deceased’s estate includes a house property at Wallaroo. All other assets of the estate have been realised and used to pay testamentary and other expenses of the estate. The persons entitled to share in the estate are the deceased’s three sons. The net proceeds of the estate are to be distributed to them in equal shares.
Pursuant to section 65 of the Administration and Probate Act 1919, the Administrator is obliged to transfer the share of the estate belonging to the two sons who have not yet reached their majority to the Public Trustee. There are insufficient cash assets to pay the Public Trustee the share in the estate due to the two sons who have not yet reached their majority. The Administrator sought orders pursuant to section 64 and section 67 of the Administration and Probate Act postponing the realisation of the Wallaroo property and dispensing with the requirement to pay over money to the Public Trustee in accordance with section 65 of the Act.
Held: Application granted – The orders pursuant to section 64 and section 67 are meritorious. The beneficiaries of the estate are appropriately protected. It is beneficial to the interests of the beneficiaries and expedient that the dispensation order be made.
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.

WORDS AND PHRASES CONSIDERED/DEFINED
"beneficial and expedient"

In the Estate of TREVOR IAN BANNON (DECEASED)
[2014] SASC 12

STANLEY J: In this matter the applicant, the Administrator of a deceased’s estate, sought orders pursuant to s 64 and s 67 of the Administration and Probate Act 1919 (SA) (“the Act”) postponing the realisation of real property of the estate and dispensing with the requirement to pay over money to the Public Trustee in accordance with s 65 of the Act.
Trevor Ian Bannon (“the deceased”) died on 9 November 2011. He was survived by his three children Samuel D’Arcy Bannon (“Samuel”), Jack Finn Bannon (“Jack”) and Hunter Saxon Bannon (“Hunter”). Neither Jack nor Hunter have attained their majority. Jack is 17 years old. Hunter is 13 years old. Hunter will not attain his majority until 18 April 2018.
The deceased died intestate. On 29 May 2012 Letters of Administration of the deceased’s estate were granted to Samuel.
The persons entitled to share in the estate of the deceased are Samuel, Jack and Hunter. The net proceeds of the estate are to be distributed to them in equal shares.
The statement of assets and liabilities of the deceased discloses a net estate of $150,865.48. The estate includes real property being property in the deceased’s name at 7 Elder Street, Wallaroo (“the Wallaroo property”). All other assets of the estate have been realised and used to pay testamentary and other expenses of the estate. There is a current liability owed to Julianne Frances Gibbs in the amount of $47,118.78. Julianne Gibbs is the mother of Samuel, Jack and Hunter. The liability relates to monies which Ms Gibbs has paid on behalf of the estate to discharge the mortgage over the Wallaroo property and for rectification works to the property to make it suitable for letting and living purposes. Since 5 May 2013 the Wallaroo property has been let.
Jack and Hunter live with their mother.
The only realisable asset of the estate is the Wallaroo property.
Section 65 requires the administrator to deliver property held on behalf of a beneficiary who is not sui juris to the Public Trustee. Accordingly, Samuel is required to transfer Jack and Hunter’s share in the estate to the Public Trustee because they are not sui juris.
The estate does not have cash assets to pay the Public Trustee the share in the estate due to Jack and Hunter. In order to comply with the provisions of s 65 the Wallaroo property would need to be sold.
Samuel considers that sale of the Wallaroo property now is not in the interests of the beneficiaries. The Wallaroo property has been a regular income producing asset of the estate since 5 May 2013. The real estate market in Wallaroo, however, is currently depressed, meaning now is not an optimal time to sell. Instead it is Samuel’s intention to retain the property for some years on the basis that in the future the value of the property will have appreciated to the benefit of the three beneficiaries.
Accordingly Samuel applied to the Court pursuant to s 67(1) of the Act to dispense with the requirement of s 65 to transfer Jack and Hunter’s share in the estate to the Public Trustee. Samuel also applied pursuant to s 64(1) of the Act to postpone the realisation of the Wallaroo property until 18 April 2018 by which time Hunter, the youngest beneficiary, will have attained his majority.
Having heard from Mr D R Idema, counsel for the applicant and Ms J Hill, counsel for the Public Trustee, I made orders to this effect on 23 December 2013. These are my reasons for doing so.
The Legislative Scheme
The applicant sought orders pursuant to s 67 and s 64 of the Act. The order sought pursuant to s 67 was that he not be bound by s 65 of the Act, which section 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.
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.
The applicant also sought an order pursuant to s 64 postponing the realisation of the Wallaroo 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.
As is apparent, s 67 provides that a judge may, being satisfied that it is “beneficial and expedient so to do”, order that an administrator not be bound by s 65. The applicant contended that an order should be made that he 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 advantageous to the due and proper administration of the estate to make the order sought pursuant to s 64 postponing the sale of the Wallaroo property. These applications were not opposed by the Public Trustee. 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.
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 and expedient so to do”.
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.
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.
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.
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.
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.
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.
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
In determining whether Jack and Hunter 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 considered the following factors were relevant:
(1)The period during which part of the deceased’s estate would need to be administered before the youngest of the children obtained his majority is more than four years.
(2)Holding the assets on trust would adequately protect the interests of the children. I was satisfied that making an order requiring their interests to be caveated will further protect that position.
(3)I was satisfied that Samuel, in consultation with his mother, would continue to manage the estate competently and gratuitously.
(4)If an order was not made and the property of the estate 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 together with the commission taken by the Public Trustee on the income received from the rental of the Wallaroo property.
(5)The estate is a straightforward one. The administration of the estate is largely complete. Save as to the liability to Julianne Gibbs, all other testamentary expenses and liabilities have been paid. The sole remaining asset which Samuel holds on trust for the beneficiaries, including himself, is the Wallaroo property. Samuel has undertaken to deliver up the Certificate of Title to the property to Public Trustee, until the house is sold or Hunter turns 18, whichever is first, ensuring that the asset will be preserved;
(6)The Wallaroo property has been tenanted since 5 May 2013. The rental proceeds, less fees charged by the letting agent, are paid into a bank account in the names of Samuel and his mother and are applied exclusively towards house expenses associated with the Wallaroo property. The proceeds will be used to reduce the liability to Julianne Gibbs over time. Once that liability is discharged the property will be a valuable asset for the benefit of the beneficiaries. Jack and Hunter do not have a current need for the income from the estate as their mother provides for all their needs.
In determining whether to make an order pursuant to s 64(1), permitting Samuel as the administrator to postpone until 18 April 2018 the realisation of the Wallaroo property I considered the following factors were relevant:
(1)A sale of the Wallaroo property now or in the near future will diminish the net value of the estate available for distribution to the beneficiaries given the current market climate.
(2)Conversely I thought there was a reasonable likelihood that the value of the property would appreciate over the next four years or so increasing the net value of the estate available for distribution to the beneficiaries.
In all of these circumstances, I was satisfied that the orders sought should be made as Jack and Hunter, the beneficiaries of the deceased estate, would be properly protected. It would be beneficial to their interests and expedient that the funds due to them be administered by Samuel in consultation with his mother. I was further satisfied that an order should be made pursuant to s 64 postponing the realisation of the Wallaroo 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 risks of a fire sale.
Conclusion
For these reasons I made 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 made an order permitting the applicant to postpone the realisation of the Wallaroo property pursuant to s 64 of the Act.
The formal orders of the Court made on 23 December 2013 were:
“UPON the application by Summons dated 20 September 2013 of Samuel D’Arcy Bannon of 17 Surrey Road, Keswick in the State of South Australia, Student, upon reading the affidavits filed in this matter and upon hearing Mr D Idema, Solicitor for the applicant and Ms J Hill for the Public Trustee, IT IS ORDERED THAT:
1Until the determination of this order or an order is made for the realisation and administration of the real estate of Trevor Ian Bannon, late of 7 Elder Street, Wallaroo in the State of South Australia, no occupation, deceased, the administrator of the estate of the deceased, Samuel D’Arcy Bannon may postpone the realisation of the real estate of the deceased namely the land comprised in Certificate of Title Volume 5485 Folio 42 (“the land”) until the youngest infant child of the deceased, Hunter Saxon Bannon, shall have attained the age of 18 years.
2.     During the continuance of this order, Samuel D’Arcy Bannon shall:
a.     insure the premises presently erected upon the land to their full insurance value against loss or damage by fire, storm and tempest;
b.     maintain the premises in good and substantial repair and condition;
c.     duly and punctually pay and discharge all rates, taxes, charges and other outgoings accruing due in respect of the land; and
d.     pay the premiums necessary for keeping and maintaining the improvement insured in accordance with the provisions of this order.
3.By way of security for the share of the infant children in the estate of the deceased, namely, Jack Finn Bannon and Hunter Saxon Bannon Samuel D’Arcy Bannon do deposit with Public Trustee the duplicate Certificate of Title in relation to the land and the policy or policies of insurance issued in respect of the premises within 14 days of the said land being transferred into the name of Samuel D’Arcy Bannon as administrator of the estate of the deceased and being provided by the Lands Titles Office with the duplicate Certificate of Title.
4.Until 18 April 2018 or the land is sold, whichever shall occur first, Public Trustee be permitted to register a caveat over the title to the land in respect of the interests of the infant children (but not before the transfer referred to at paragraph 3 herein), such caveat not to be warned by Samuel D’Arcy Bannon.
5.The cost of the caveat and its ultimate discharge is to be paid out of the estate of the deceased.
6.Samuel D’Arcy Bannon be not bound by Section 65 of the Administration and Probate Act 1919 (SA) as regards the land unless and until this order is determined.
7.The costs of the application be paid out of the estate of the deceased.
8.Samuel D’Arcy Bannon, Public Trustee and any other person interested may apply for further orders and directions.
9.D’Angelo Kavanagh is entitled to collect from the Registry of this Court the original grant of Letter of Administration.”