PETER FRANCIS BROWN (DECEASED) - [2013] SASC 62

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
In the Estate of PETER FRANCIS BROWN (DECEASED)
[2013] SASC 62
Reasons for Decision of The Honourable Justice Gray
26 April 2013
SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF ADMINISTRATION GENERALLY - TO WHOM GRANTED AND WHEN NECESSARY GENERALLY - SOUTH AUSTRALIA
SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF PROBATE AND LETTERS OF ADMINISTRATION - TO WHOM PROBATE GRANTED - PASSING OVER OF EXECUTOR AND OTHER MATTERS
Joint application for a grant of letters of administration with the will annexed - the will was professionally drawn and validly executed - however, a number of issues arose from the terms of the will - whether the appointment of the executors failed for uncertainty - whether the applicants were entitled to the grant claimed - whether a guarantee was required - whether the estate should bear the costs of and incidental to the application.
Held: Application granted - the clause appointing the executors failed for uncertainty - the applicants were entitled to a grant of letters of administration with the will annexed without requiring the provision of a surety - no order as to the costs of and incidental to the application was made.
Administration and Probate Act 1919 (SA) s 23 and s 31; Administration and Probate (Administration Guarantees) Amendment Act 2003 (SA); Probate Rules 2004 (SA) r 31, r 35, r 49 and r 77, referred to.
In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613; In the Goods of Blackwell (1877) 2 PD 72; In the Estate of Varley, deceased (2007) 251 LSJS 461; In the Estate of Frame (deceased) (2007) 248 LSJS 341; In the Estate of Freebairn (deceased) (2005) 93 SASR 415, considered.

In the Estate of PETER FRANCIS BROWN (DECEASED)
[2013] SASC 62
Testamentary Causes Jurisdiction
GRAY J.

This is an application for a grant of letters of administration with a will annexed. On 2 November 2012, I made an order granting the application. These are my reasons for making that order.
On 27 August 2009, the deceased made a will. The will was professionally drawn and validly executed. On 14 March 2012, Peter Francis Brown, the deceased, died aged 87 years. The deceased’s estate has a net value of $722,425.47. The deceased was survived by his six adult sons.
Justin Peter Brown, one of the sons of the deceased, made an application to this Court seeking a grant of letters of administration with the deceased’s will of 27 August 2009 annexed. Later, Gregory John Arthur, a legal practitioner, joined in the application.
The deceased’s will is of considerable length and some of its provisions caused concern to the Registrar of Probates, resulting in him referring the matter to me pursuant to rule 77 of the Probate Rules 2004 (SA).
There are four issues which arise in the present proceeding. They relate to the appointment clause in the will, the entitlement of the applicants to the grant claimed, whether a surety is required and costs.
Appointment of Executors
The will contains the following clause in respect of the appointment of executors:
I APPOINT any two (2) and only two (2) of the partners or directors (as the case may be) at the date of my death of the firm or company carrying on practice under the firm name of MELLOR OLSSON, Solicitors of Level 5, 80 King William Street, Adelaide South Australia or of the firm or company which at that date has succeeded to and carries on such practice to be the Executors and Trustees of this my Will …
The issue to be resolved is whether the appointment of the executors fails for uncertainty.
A convenient starting point is In the Goods of Baylis (deceased).[1]In that matter, the appointment clause was in the following terms:[2]
I hereby appoint Lewis Alford, Esq., merchant, of Cape Town, to whom I bequeath ten pounds, as my executor, with any two of my sons
Sir C Cresswell decided that there was “uncertainty about the clause which [prevented him] treating it as an appointment”.[3]
[1]    In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613.
[2]    In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613, 613.
[3]    In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613, 614.
The subsequent decision of In the Goods of Blackwell[4] applied the decision of In the Goods of Baylis (deceased).[5]The appointment clause which was in question is emboldened in the following passage:[6]
… This is the last will and testament of me, Benjamin Blackwell, of Chertsey, in the county of Surrey, grocer and cheesemonger. I devise and bequeath all my real and personal estate, of whatsoever nature or quality, and wheresoever situate, of which I may be possessed or entitled unto at the time of my death, unto my three sisters, viz., Jane, Mary Ann, and Ann Blackwell, or to which of them as are alive at the time of my decease. And I do hereby appoint one of my sisters my sole executrix of this my last will, hereby revoking all other wills or testamentary bequests by me at any time heretofore made."
[Emphasis added.]
At the time of the testator’s death, only one of his sisters survived him. Despite that fact, Hannen P decided that the appointment clause was void for uncertainty:[7]
The question is, which sister did the testator appoint as executrix. I cannot infer from the words of the will that the testator intended to appoint any particular sister executrix. I may conjecture that he would have given directions to appoint the surviving sister if he had foreseen the events that have happened; but he has not done so. I cannot distinguish this case from that of In the Goods of Baylis, and I reject the motion.
[Footnote omitted.]
[4]    In the Goods of Blackwell (1877) 2 PD 72.
[5]    In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613.
[6]    In the Goods of Blackwell (1877) 2 PD 72, 72.
[7]    In the Goods of Blackwell (1877) 2 PD 72, 72.
In the Goods of Baylis (deceased)[8] has also been cited with approval in South Australia. In In the Estate of Varley deceased,[9] the clause appointing the executor was in the following terms:[10]
I APPOINT my solicitor ROBERT LEMPENS of Camatta Lempens 391 Torrens Road Kilkenny solicitor or a partner of the firm with which Robert Lempens practices [sic] to be the sole Executor and Trustee of this my Will.
[Emphasis omitted.]
In respect of this clause, Debelle J relevantly observed:[11]
The uncertainty arises because the appointment of the executor is expressed in the alternative. An appointment of “A or B” as executor with no additional words indicating the circumstances in which B is to be executor is void. Similarly, the appointment of “any two of my sons”: re Baylis’ Goods (1862) 2 Sw&Tr 613, or “one of my sisters”: re Blackwell’s Goods (1877) 2 PD 72 is void for uncertainty. See generally Tristram & Coote Probate Practice (29th ed) at 119 and re Estate of Yearwood (1982) 30 SASR 169.
In In the Estate of Frame (deceased),[12] I cited In the Estate of Baylis (deceased)[13] as an example of a decision in which the appointment of executors failed for uncertainty.[14]
[8] In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613.
[9] In the Estate of Varley, deceased (2007) 251 LSJS 461.
[10] In the Estate of Varley, deceased (2007) 251 LSJS 461, [17].
[11] In the Estate of Varley, deceased (2007) 251 LSJS 461, [19].
[12] In the Estate of Frame (deceased) (2007) 248 LSJS 341.
[13] In the Goods of Baylis (deceased) (1862) 2 Sw & Tr 613.
[14] See footnote 4 in In the Estate of Frame (deceased) (2007) 248 LSJS 341.
In the present proceeding, uncertainty arises due to the use of the phrase “any two (2) and only two (2) of the partners or directors”. The identity of the two partners or directors is uncertain. It is not possible to infer from the wording of the will that the deceased intended to appoint any particular partner or director as his executor. In my view, the appointment of executors in the present proceeding fails for uncertainty.
A more conventional method of achieving the outcome that the draftsman appears to have desired would be to appoint all of the partners or directors as at the date of death but express a desire that not more than two of them prove the will. The grant can then be made to any two, with leave reserved to the others to apply.
The applicants accepted that the clause appointing the executors failed for uncertainty. Accordingly, an application for a grant of letters of administration with the will annexed was pursued. The next issue to be addressed is whether the applicants are entitled to that grant.
Entitlement to a Grant
Where a person dies leaving a will, the order of priority for taking a grant is that set out in rule 31 of the Probate Rules. Rule 31 provides:
The person or persons entitled to a grant of probate or administration with the will annexed shall be determined in accordance with the following order of priority, namely -
(i)    The executor;
(ii)    Any residuary devisee and/or legatee in trust for any other person;
(iii)     Any residuary devisee and/or legatee for life;
(iv)The universal or residuary devisee and/or legatee (including one entitled on the happening of any contingency), or, where the residue is not wholly disposed of by the will, any person entitled to share in the residue not so disposed of or, subject to Rule 35.03, the personal representative of any such person:
Provided that -
(a)     unless the Registrar otherwise directs a residuary devisee or legatee whose devise or legacy is vested in interest shall be preferred to one entitled on the happening of a contingency; and
(b)     where the residue is not in terms wholly disposed of, the Registrar may, if the Registrar is satisfied that the testator has nevertheless disposed of the whole, or substantially the whole of the estate as ascertained at the time of the application for the grant, allow a grant to be made to any devisee or legatee entitled to, or to a share in, the estate so disposed of or, subject to Rule 35.03, the personal representative of any such person without regard to the persons entitled to share in any residue not disposed of;
(v)Any specific devisee or legatee or any creditor or, subject to Rule 35.03, the personal representative of any such person or, where the estate is not wholly disposed of by the will, any person who, notwithstanding that the value of the estate is such that he or she has no immediate beneficial interest in the estate, may have a beneficial interest in the event of an accretion thereto;
(vi)Any specific devisee or legatee entitled on the happening of any contingency, or any person having no interest under the will of the deceased who would have been entitled to a grant if the deceased had died wholly intestate.
Justin claims that he, in equal priority with five other persons, is entitled to a grant under rule 31(ii). It was said that pursuant to rule 35.01 of the Probate Rules, a grant could be made to Justin without notice to the five other persons entitled in the same order of priority.[15] Accordingly, the question is whether Justin can properly be described as a “residuary devisee and/or legatee in trust for any other person”.
[15] Rule 35.01 of the Probate Rules 2004 (SA) provides:
A grant may be made to any person entitled to a grant without notice to other persons entitled in the same order of priority.
Clause 4 of the will deals with the residuary estate and provides:
SUBJECT TO my directions contained in Clauses 3, 5, 6 and 11 of this my Will, I DIRECT my Trustees TO DIVIDE my residuary estate then remaining after the payment of my funeral and testamentary expenses such of debts as my Trustees shall (in the absolute discretion of my trustee) decide to pay following my death and which is not otherwise disposed of by this my Will INTO the Prescribed Number (as that term is defined in sub-clause 9(b) of this my Will) of equal parts and my Trustees must hold each equal part on the following trusts:
(a)    each equal part shall be held on trust with each of my sons (viz, PHILLIP ANDREW BROWN (“PHILLIP”), GEOFFREY DAVEY BROWN (“GEOFFREY”), JUSTIN PETER BROWN (“JUSTIN”), SIMON NAPIER BROWN (“SIMON”), NICHOLAS and JASON), who survive me by thirty (30) days, being the Primary Beneficiary of a trust for the part applicable to each of them respectively;
(b)    if any of my said sons do not survive to become the Primary Beneficiary of a trust under sub-clause 4(a) of this my Will, but he leaves a child or children who survive me by thirty (30) days or who may be born subsequently and who shall have attained or shall attain the age of twenty one (21) years (each of whom in this sub-clause 4(b) of this my Will is/are hereinafter referred to as a “Surviving Grandchild”, then the part that would otherwise have been held on trust with his her or their deceased father as the Primary Beneficiary will be divided into equal sections and each section will be held on trust with each Surviving Grandchild being the Primary Beneficiary of a trust for one such section; and
(c)    if a trust created under sub-clauses 4(a) or 4(b) hereof where a person needs to survive me by thirty (30) days or be born subsequently and attain the age of twenty one (21) years in order to become the Primary Beneficiary thereof (as applicable) and that person fails so to survive me or dies without attaining that age, as applicable, (i.e. in circumstances where there is no substituted trust that is then applicable) THEN the trust fails and all of the undistributed income of the trust that has not been allocated and all of the capital of the trust is to be divided between and added to the other parts or sections (as the case may be) under sub-clauses 4(a) and 4(b) hereof (as applicable) the trusts of which have not failed in the proportions of my estate that they bear to one another upon the trusts of that parts or those sections (as the case may be).
[Emphasis added.]
All of the deceased’s six sons survived him by 30 days. Justin contended that the trustees are to hold the six equal parts of the residuary estate on the six separate trusts declared in clause 4 of the will. It was said that Justin is the “Primary Beneficiary” of a trust for the one equal part applicable to him. As he is a “Primary Beneficiary” of one of those parts, it was said that Justin is, by virtue of clauses 6(a) and 6(b), trustee of that part. Clauses 6(a) and 6(b) provide:
THE TERMS contained in the Trust Provisions will apply to each trust created under this my Will in respect of which a person is nominated to be the Primary Beneficiary, and in relation to each such trust:
(a) my Trustees will be the trustees of that trust until such time (if any) as a Primary Beneficiary for that trust is determined pursuant to this my Will;
(b) once a Primary Beneficiary for that trust is determined pursuant to this my Will, the relevant Primary Beneficiary will be the Trustee and Appointor of the trust;
[Emphasis added.]
It was submitted that a Primary Beneficiary for the relevant trust of the part of the residuary estate of the deceased is determined pursuant to the will by the fact of the named son of the deceased surviving the deceased by 30 days. It was said that, therefore, in Justin’s case, it has been determined that he is the “Primary Beneficiary” of the trust, declared under clause 4 of the will, of an equal one sixth share in the deceased’s residuary estate. By virtue of the operation of clauses 6(a) and 6(b) of the will, upon Justin surviving the deceased by 30 days, he became the “Trustee and Appointor of the trust”. It was said that Justin has an entitlement to receive a one sixth share of the residuary estate of the deceased and that he holds that entitlement as trustee.
Justin’s contentions are supported by clauses within the Schedule to the will. The Schedule is entitled “TRUST PROVISIONS” and, as is evident from clause 6 of the will, the Schedule applies to each trust of a share of the residuary estate of the deceased created under clause 4 of the will. Clause 3 of the Schedule provides:
The Trust Fund and its administration are vested in the Primary Beneficiary as the first Trustee of the Trust Fund. ...
...
Accordingly, Justin holds the “Trust Fund” as trustee. “Trust Fund” is defined in the Schedule to mean:
(i)      the part of the Testator’s estate which is to be held on trust for the Primary Beneficiary in accordance with the Will (“Initial Amount”);
(ii)     any money and other property having the nature of either capital or income acquired or accepted by the Trustee as an addition to the Initial Amount (“Additional Amounts”); and
(iii)    the investments and property for the time being representing the Initial Amount and the Additional Amounts or any part of them.
[Emphasis added.]
The emboldened words are expressed in the future tense. It can therefore be concluded that the Trust Provisions constitute a trust which at the time that it arises is constituted by the chose in action in favour of the Primary Beneficiary as trustee. This arises under the trusts declared by clause 4 of the will. It is to be accepted that Justin becomes trustee of a fund which is equal to a one sixth share of the deceased’s residuary estate, which is yet to be ascertained and which is not then payable to Justin as trustee. It will not be payable until administration of the deceased’s estate in accordance with the will is completed. It can be further accepted, however, that the trust of a share of the deceased’s residuary estate of which Justin is a trustee is nonetheless fully constituted.
The Court’s attention was drawn to the following extracts from Tristram & Coote’s Probate Practice which address the equivalent provision to rule 31(ii) of the Probate Rules:[16]
On clearing off executors, … administration (with will) may be granted to any residuary legatee or devisee holding in trust for any other person.
It must be apparent from the will that the residuary estate is given to such person to hold on trusts declared by the will.
These observations are applicable to the present proceeding. In clause 4 of the will, Justin as trustee is given a share of the residuary estate of the deceased to hold on the trust declared by the will relating to that share of the residuary estate.
[16] R B Rowe & Ors (eds), Tristram & Coote’s Probate Practice (Butterworths, 25^th ed, 1978) 158.
Ultimately, in my view, it can be concluded that Justin meets the requirements in rule 31(ii) as follows:
-he is a “residuary devisee and/or legatee” as he receives a share of the residuary estate of the deceased and receives such share on an absolute basis, rather than for life;
-he is a “residuary devisee and/or legatee” in trust because he receives such a share in the residuary estate of the deceased not personally, but in his capacity as trustee; and
-he receives such share “in trust for any other person” as he holds it on the trusts declared in the Schedule to the will for the class of persons defined as ‘Beneficiaries” therein.
Accordingly, the applicants are entitled to apply for a grant of letters of administration with the will annexed.
The Registrar in his memorandum of referral drew attention to a possible tension between the expression “my Trustees” as appearing in clauses 4 and 5 of the will.
It is to be recalled that clause 4 relevantly provides:
SUBJECT TO my directions contained in Clauses 3, 5, 6 and 11 of this my Will, I DIRECT my Trustees TO DIVIDE my residuary estate then remaining after the payment of my funeral and testamentary expenses such of debts as my Trustees shall (in the absolute discretion of my trustee) decide to pay following my death and which is not otherwise disposed of by this my Will INTO the Prescribed Number (as that term is defined in sub-clause 9(b) of this my Will) of equal parts and my Trustees must hold each equal part on the following trusts:
…
Clause 5 is in the following terms:
MY TRUSTEES may with the consent of a Primary Beneficiary who has survived me by thirty (30) days (or a potential Primary Beneficiary who has survived me by thirty (30) days and has attained or shall have attained the age specified in sub-clause 4(b) of this my Will (as applicable)) and not being a person who:
(i)is declared or becomes bankrupt or is an undischarged bankrupt; or
(ii)is subject (as debtor) to the provisions of a Deed of Assignment or a Deed of Arrangement entered into or subsisting under Part X of the Bankruptcy Act 1966;
or
(iii)signs an authority under Section 188 of the Bankruptcy Act 1966; or
(iv)gives a debt agreement proposal to the Official Trustee under Part IX of the Bankruptcy Act 1966 and that debt agreement proposal is accepted by that person’s creditors; or
(v)becomes subject to an order directing the Official Trustee or a specified registered trustee to take control of his or her property before sequestration; or
(vi)is otherwise the subject of any order or arrangement entered into or made under any law of Australia or any of its States or Territories relating to insolvency,
DISTRIBUTE all or any part of the share of my estate which would otherwise have been held on trust with that person as the Primary Beneficiary to:
(a)    any other trust, the potential beneficiaries of which include all or some of the beneficiaries that would otherwise have been potential beneficiaries of the first mentioned trust; and/or
(b)    the Primary Beneficiary personally.
It is also relevant to note the terms of clause 9(a) defines the expression “my Trustees” in terms that are not identical to the definition in clause 4. Clause 9(a) is in the following terms:
IN the construction and interpretation of this Will, but not in the construction and interpretation of the Trust Provisions, the following rules apply:
(a)    A reference to “my Trustees” or “my Executors” is a reference to those who, at the time to which the reference relates, are my legal personal representatives and are trustees of my estate.
The will of the deceased may be described as a will of some complexity. There is possible tension between clauses 4 and 5.

It is clear that the trustees of the deceased’s estate have an obligation to divide the residuary estate into the prescribed number of equal parts. The trustees of the deceased’s estate are then to hold each equal part on trust for a Primary Beneficiary who, in turn, is the trustee of a trust. Later provisions of the will set out the terms of the trust of which the Primary Beneficiary is the trustee. It is not necessary at this time to anticipate or consider the further difficulties that may arise as a result of the complex provisions of the will. When further questions arise, they are best addressed having regard to the facts and circumstances that then exist.
Mr Arthur
As mentioned earlier, the application for a grant was made jointly by Justin and Mr Arthur. Historically, applicants for joint grants of administration relied on the Court’s inherent jurisdiction to bring the application. However, in 2005, section 23 of the Administration and Probate Act 1919 (SA) came into effect. Section 23 provides:
The Court has the power to grant administration to more than one person.
In the Estate of Freebairn deceased, Besanko J discussed the question of the provision of a surety:[17]
The guarantee is in effect a guarantee against the maladministration of the estate in South Australia. It is a guarantee against a breach by the administrator of his or her duties in administering the estate. The cases in which a guarantee is required are cases where the estate is vulnerable in the sense that there is an increased risk of maladministration or an increased difficulty in recovery should there be maladministration. The guarantee provides an additional assurance of the due and proper administration of the estate and an additional remedy should there be maladministration. ...
The court is given the power to reduce the maximum liability of a surety under a guarantee pursuant to s 31(3). It is also given the power to dispense with the requirement to provide a surety if it is beneficial or expedient to do so (s 31(10), and see also r 49.08 of the Probate Rules) and, without limiting that power, it may, if administration is granted to two or more persons and the court is satisfied that it is beneficial or expedient to do so, dispense with the requirement to provide a surety (s 31(12)). Under s 23 of the APA, which formed part of amendments made in 2003, the court has the power to grant administration to more than one person. Presumably, the fact of two or more administrators lessens the risk of maladministration and increases the chances of recovery should there be maladministration. It is but one circumstance in which the court may dispense with the requirement to provide a surety. It is expressly said in s 31(12) that it in no way limits the general power of the court to dispense with the requirement to provide a surety if it is beneficial or expedient to do so.
[17] In the Estate of Freebairn (deceased) (2005) 93 SASR 415, [22]-[23].
The purpose of seeking to join Mr Arthur was to lay a foundation for the Court to dispense with the requirement that Justin should provide a surety to secure his performance as executor and trustee. Mr Arthur is a partner of the firm of solicitors representing Justin. In my view, it is appropriate that Mr Arthur be joined as an applicant with Justin in seeking a grant of letters of administration with the will annexed.
Surety
I now turn to consider whether a surety should be provided in the present proceeding. This requires consideration of section 31 of the Administration and Probate Act and rule 49 of the Probate Rules. Section 31(1) of the Administration and Probate Act provides:
A person to whom administration is granted must provide a surety in accordance with this section if—
(a)     the person is not resident in this State; or
(b)     the person has any legal or equitable claim against, or interest in, the estate of the deceased arising from a liability incurred by the deceased before his or her death; or
(c)     any person who is not sui juris is entitled to participate in the distribution of the estate; or
(d)     the Court is of the opinion that in the circumstances of the case a surety is required.
Subsections (a) and (b) are not applicable. The remaining two subsections require further consideration.
In relation to section 31(1)(c), the applicants contended that there is no one who is not sui juris and who is entitled to participate in the distribution of the estate. It was submitted that the will creates six separate trusts of an equal share of the residuary estate. Each of the deceased’s six sons who survived the deceased by 30 days is designated as a Primary Beneficiary and has become a trustee of one of the six trusts. Each of the sons then holds an equal share of the residuary estate on trust. The terms of the trust are further regulated by the Trust Provisions in the Schedule to the will. The applicants accepted that the class of potential beneficiaries of each trust, as defined in the Trust Provisions, is defined in a way that is capable of referring to persons who are not sui juris or have not yet been born. However, the applicants contended that the members of the class of beneficiaries who are not sui juris are not entitled to participate in the distribution of the estate within the meaning of the statutory provision.
To support this submission, the applicants contended that the class of beneficiaries are merely objects of a discretionary trust created under the will. A person falling within that class has no greater right than to compel the trustee to duly administer the trust in accordance with law. Emphasis was placed on clause 3(a) of the Trust Provisions which provides:
The Trust Fund and its administration are vested in the Primary Beneficiary as the first Trustee of the Trust Fund. The Trustee is subject to the following rules:
(a) The Trustee has an absolute and uncontrolled discretion in the exercise of the authorities and powers vested in the Trustee by these Trust Provisions and may at any time exercise or refrain from exercising all or any of those authorities and powers.
[Emphasis added.]
It was said that a beneficiary has no interest in the Trust Fund held by the trustee. It was further noted that the clauses of the Trust Provisions relating to superannuation proceeds on the termination of the trust do not apply as there are no superannuation proceeds within the deceased’s statement of assets and liabilities. It was argued that during the period of operation of the trust, no particular beneficiary has any entitlement other than to be considered by the trustee when exercising his powers. In particular, the applicants referred to clauses 4.1(a), 6 and 7.1(c) of the Trust Provisions which respectively provide that the trustee has a discretion whether to pay or apply distributable income for any one or more of the beneficiaries, that the trustee may pay or apply capital for the benefit of any one or more of the beneficiaries before the date of distribution and that the trustee holds the Trust Fund to pay, transfer or apply it to or for the benefit of any one or more of the beneficiaries as the trustee thinks fit. In light of these provisions, it was contended that any particular beneficiary, whether sui juris or not, has no entitlement to receive or participate in the distribution of any part of the residuary estate of the deceased either absolutely or contingently. A beneficiary cannot compel the trustee to distribute any part of the Trust Fund to that beneficiary.
The applicants further submitted that Parliament intended for the concept of a “person who … is entitled to participate in the distribution of the estate” to be a beneficiary of the estate. This contention is supported by the following extract from the second reading speech for the Administration and Probate (Administration Guarantees) Amendment Act 2003 (SA):[18]
… Such a guarantee will be required where the administrator is not resident in South Australia or has a claim against or interest in the deceased’s estate or where a beneficiary is not legally competent or where the court decides that the circumstances are such that a guarantee is required.
The applicants submitted that where an interest in an estate is left to a trustee to hold on the terms of a discretionary trust, the range of objects of a discretionary trust should not be regarded as falling within section 31(1)(c) of the Administration and Probate Act. It was contended that “[a]ll persons entitled to participate in the distribution of the estate are sui juris” and that section 31(1)(c) of the Administration and Probate Act does not apply.
[18] South Australia, Parliamentary Debates, House of Assembly, 26 June 2003, 3556 (The Hon. M J Atkinson).
In my view, the applicants’ contentions in respect of section 31(1)(c) should be accepted. However, it still remains necessary to consider whether section 31(1)(d) of the Administration and Probate Act should be invoked.[19]
[19] It is to be recalled that section 31(1)(d) of the Administration and Probate Act 1919 (SA) is in the following terms:
A person to whom administration is granted must provide a surety in accordance with this section if—
…
(d) the Court is of the opinion that in the circumstances of the case a surety is required.
In the referral of the matter from the Registrar of Probates, the Registrar took the view that there may be an analogy between a beneficiary who is not competent and a person who is a potential object of discretion but has no entitlement. The Registrar suggested that if such an analogy exists, it is a relevant consideration when the Court considers its discretions under section 31(1)(d) or rule 49.01(c) of the Probate Rules.[20] In my view, section 31(1)(d) could have application in the present proceeding but it is not necessary to resolve this question. There is an alternative procedure available.
[20] Rule 49.01(c) of the Probate Rules 2004 (SA) provides:
Subject to these Rules a guarantee must be provided as a condition of granting administration where –
…
(c) the Registrar considers that there are special circumstances making it desirable to require a guarantee.
The Court has a discretion pursuant to section 31(12) of the Administration and Probate Act to dispense with the requirement of a surety. Relevantly, section 31(12) provides:
Without limiting the effect of subsection (10), the Court may, if administration is granted to two or more persons and the Court is satisfied that it is beneficial or expedient to do so, dispense with the requirement to provide a surety.
Section 31(10) of the Administration and Probate Act, which is referred to in section 31(12), is in the following terms:
The Court may, if satisfied that it is beneficial or expedient to do so, dispense with the requirement to provide a surety.
In the present proceeding, administration has been sought by both Justin and Mr Arthur. There is evidence before the Court that there is no entity in South Australia that will provide a guarantee and that none of Justin’s brothers have sufficient assets for an amount equal to the gross value of the deceased’s South Australian estate. There is also evidence that Justin does not know any other person or persons who would be prepared to provide a guarantee. Further, Mr Arthur, one of the co-administrators, is an experienced legal practitioner and a partner of a law firm. In these circumstances, in my view, it is beneficial and expedient to dispense with the requirement to provide a surety. Accordingly, I exercise my discretion under section 31(12) of the Administration and Probate Act to dispense with that requirement.
Costs
The applicants conceded that the estate should not bear any additional costs caused by the failure of the clause appointing the executors of the estate. This submission should be accepted. The estate is not to bear the costs. I made no order as to the costs of and incidental to the application.
In light of the above reasons, I ordered that letters of administration with the will annexed be granted to Justin Peter Brown and Gregory John Arthur without the need for the provision of a surety.