Public Trustee v CBA - [2018] SASC 25

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PUBLIC TRUSTEE v CBA & ORS
[2018] SASC 25
Judgment of The Honourable Justice Bampton
9 March 2018
SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION
SUCCESSION - PERSONAL REPRESENTATIVES - EXECUTOR DE SON TORT AND INTERMEDDLER
ESTOPPEL - ESTOPPEL BY CONDUCT - ACT, OMISSION OR ASSUMPTION - REPRESENTATION GENERALLY
GUARANTEE AND INDEMNITY - INDEMNITIES
EQUITY - EQUITABLE REMEDIES - GENERALLY
The plaintiff is a sole executor of the estate of the deceased pursuant to a grant of probate made on 15 May 2013 of the deceased’s last will dated 22 October 2002. Following the deceased’s death, the defendant banks paid the balance of the accounts held in the deceased’s name to the deceased’s son who purported to act as the executor pursuant to a will made 27 April 2008. On 27 September 2012, the Court pronounced for the 22 October 2002 will and against the purported 27 April 2008 will. The plaintiff seeks recovery of the sums paid to the deceased’s son alleging the defendant banks are liable to it in debt and as executors de son tort. The defendant banks plead that they already paid the monies to the deceased’s son who was entitled to give and did give a valid release and discharge to them on behalf of the deceased’s estate and further that the deceased’s two other living children consented to the deceased’s son’s discharge of the debts and the plaintiff is bound by those consents.
Whether the defendant banks are liable in debt and as executors de son tort to the plaintiff – whether the defences of discharge or, alternatively, ratification, consent, estoppel and equitable set off are made out in respect of the debt claim.
Held:
1. The plaintiff has claims in debt against each of the defendant banks.
2. The deceased’s son is an executor de son tort in respect of his transactions with the defendant banks.
3. The defendant banks are not executors de son tort.
4. The first defendant is entitled to set-off its claim in equity pursuant to the indemnity given by the deceased’s son against the plaintiff’s claim to the extent of the amount the deceased’s son would otherwise receive from the residuary estate.
5. The second defendant is entitled to set-off its claim in equity pursuant to the indemnities given by the deceased’s living children against the plaintiff’s claim to the extent of the amount the deceased’s living children would otherwise receive from the residuary estate.
Trustee Act 1936 (SA); Administration and Probate Act 1919 (SA) s 44, s 45, s 46, s 71, s 120; Income Tax Assessment Act 1936 (Cth) s 161; Supreme Court Civil Rules 2006 (SA) r 83, referred to.
Chan Kit San v Ho Fung Hang [1902] AC 257; Maddock v Registrar of Titles (Vic); Miller v Registrar of Titles (Vic) (1915) 19 CLR 681 ; Ryan v Davies Bros Ltd (1921) 29 CLR 527; Whitehead v Taylor (1839) 10 AD & E 210; Ingle v Richards (No 2) (1860) 28 Beav. 366; Meyappa Chetty v Supramanian Chetty [1916] 1 AC 603; Johnson v Warwick (1856) 17 CB 516; Redwood Music Ltd v B Feldman & Co Ltd [1979] RPC 1; Peters v Leeder (1878) LJQB 573; In Re Stevens [1897] 1 Ch 422; Thomson v Harding (1853) 2 E & B 630; Levitt v Illawarra Seafood Pty Ltd (No 2) (1983) 3 BPR 97; Tarn v The Commercial Banking Company of Sydney (1884) 12 QBD 294; Re Crowhurst Park; Sims-Hilditch v Simmons [1974] 1 All ER 991; Sharland v Mildon (1846) 5 Hare 469; The New York Breweries Company Ltd v Attorney-General [1899] AC 62; Inland Revenue Commissioners v Stype Investments (Jersey) Ltd [1982] 1 Ch 456; Leybourne v Permanent Custodians Ltd [2010] NSWCA 78; Hill v Ziymack (1908) 7 CLR 352; Eastern Construction Co Ltd v National Trust Co Ltd (1914) AC 197; Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; Hamilton v Nelson [2012] SASC 219; Livingston v Commissioner of Stamp Duties (1960) 107 CLR 411; Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694; Cairncross v Lorimer (1860) 3 Macq 827; Timbercorp Finance Pty Ltd (in liquidation) v Collins (2016) 259 CLR 212; Ramsay v Pigram (1968) 118 CLR 271; Walton Stores (Interstate) Pty Ltd v Maher (1988) 164 CLR 387; Rawson v Samuel (1841) 41 ER 451; Hawes v Dean [2014] NSWCA 380; Ex parte Morier; in re Wills, Percival and Co (1879) 12 Ch D 491; Williams v MacDonald [1915] VLR 229; Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199; Bankes v Jarvis [1903] 1 KB 549; In Re Dacre [1916] 1 Ch 344; Forsyth v Gibbs [2008] QCA 103; Bremner v Sinclair (2001) ANZ Conv R 29, considered.

PUBLIC TRUSTEE v CBA & ORS
[2018] SASC 25
Civil
BAMPTON J.
Overview
Background
Mary’s Children
Mary’s wills
Will dated 22 October 2002 (“the 2002 will”)
Purported will dated 16 October 2007 (“the purported 2007 will”)
Purported will dated 27 April 2008 (“the purported 2008 will”)

Closure of the CBA and Bank SA accounts
CBA
Bank SA

The probate action brought by Michael in Action No. 935 of 2010
The evidence
The Public Trustee’s administration of Mary’s estate by reference to David Dinning’s evidence, Michel Meegan’s evidence and the documentary evidence
Affidavit of Brendan Joseph Dillon
Affidavit of Philip Charles Young
Observations
Trite law and legal optics
An executor derives his or her title from the will
Payments by third parties without a grant of probate
Does the Public Trustee have an action in debt against each of the Banks?
Michael – An intermeddling executor de son tort
The defence of discharge
Are the Banks also executors de son tort?
The defence of ratification
The Martins’ interest in these proceedings
The defence of consent
The defence of estoppel
The defence of equitable set-off
Conclusion
Overview

Mary Philomena Martin (“Mary”) made three wills following the death of her husband Edward in 1987. Mary died on 3 October 2008, aged 90. In a purported will dated 27 April 2008, Mary’s son Michael Edward Martin (“Michael”) is named the executor. In another purported will dated 16 October 2007, Michael’s estranged wife Alba Martin (“Alba”) is the named executor. It is the will Mary made on 22 October 2002 (“the 2002 will”) appointing the Public Trustee as executor that has been pronounced for. A grant of probate in solemn form was made on 15 May 2013.
At the date of her death Mary had monies on deposit in an account with the Commonwealth Bank of Australia (“CBA”) and two accounts with the Bank of South Australia (“Bank SA”).[1] Before the grant of probate, Michael sought payment to him, as the executor pursuant to the purported 2008 will, of monies from Mary’s bank accounts held by the CBA and Bank SA (“the Banks”). The Banks closed the accounts held in Mary’s name and the balance of the monies in each of the three accounts was paid to Michael. The CBA paid $69,290.33 and Bank SA paid a total of $108,461.67.
[1] Mary also had a Community CPS Credit Union Account. The evidence suggests Michael was not aware of this account.
Following the grant of probate, the Public Trustee demanded that the Banks make repayments to it, as Mary’s lawful executor, of the amount of the accounts held by Mary at the time of her death. The Banks do not dispute that the monies held in Mary’s accounts were debts owed to Mary’s estate by them. However, each Bank has refused to make the repayment sought, asserting that they have already paid the monies to Michael pursuant to a valid release and discharge that he gave to each of them on behalf of Mary’s estate.
The Public Trustee argues that the fact the Banks have paid the monies to the wrong person is not an answer to its demand that the monies be paid to it as the true executor of Mary’s estate.
The Public Trustee brings these proceedings against the CBA and Westpac Banking Corporation trading as Bank SA, alleging that the Banks are indebted to it pursuant to a contract between customer and banker and that are each are liable as an executor de son tort.
The Banks raise the defences of discharge, ratification, consent, estoppel, and equitable set-off to the debt claim. For the reasons that follow, I have found that the Banks are liable in debt to the Public Trustee and that the defence of equitable set-off is made out. I have found that the Banks are not executors de son tort and as such have not considered the defences raised in respect of the claim for liability as executors de son tort.
Background
Mary’s Children
Mary and Edward had eight children. Mary’s death certificate records the names and dates of birth of the children as follows:[2]
[2] Exhibit P19.
·John, 15 January 1947;
·Philomena Maude, 14 February 1948;
·Michael Edward, 4 January 1950;
·Mary Veronica, 6 September 1951;
·Therese Mary, 21 January 1953;
·Francis Joseph, 20 October 1954;
·Brigid Anne, 10 September 1956; and
·Monica Catherine, 21 July 1959.
John died the day after his birth on 16 January 1947.[3] Mary Veronica died approximately 6 weeks after birth on 24 October 1951.[4] Brigid Anne died aged six on 2 March 1963. Monica Catherine died approximately three weeks after birth on 10 August 1959. Therese Mary (“Tracy”) died aged 53 on 20 May 2007. Only three of Mary’s eight children were living at her death, namely Philomena, Michael and Francis.
[3] Exhibit P33.
[4] Exhibit P33.
I introduce Alba into the factual matrix. Alba was married to Michael. It is not known whether they have been divorced. It is agreed that by at least 2007 they had separated and their relationship was acrimonious.
Despite efforts to locate him, neither the Public Trustee nor the Banks know the whereabouts of Michael.
Mary’s wills
Will dated 22 October 2002 (“the 2002 will”)
In October 2002, Mary made the 2002 will through the Public Trustee under which the Public Trustee was designated as sole executor and trustee. The structure of that will was a gift of household furniture and effects to Therese, with the remainder of the estate dealt with by way of pecuniary legacies to Therese, Philomena, Michael, Francis, and Michael’s wife, Alba. The residue of the estate was to be given to three charitable bodies, the Low Vision Centre, the Mary Potter Foundation and the Saint Vincent de Paul Society (“the three charities”). By the bye, I note the 2002 will records that its contents were read over to Mary as she was vision impaired.
This is the will that was ultimately pronounced for and probate granted to the Public Trustee on 15 May 2013.
Purported will dated 16 October 2007 (“the purported 2007 will”)
The purported 2007 will, prepared by a solicitor, appointed Alba as executor of Mary’s estate. This will provided a pecuniary legacy to Alba and the three charities, however it did not benefit any of Mary’s children.
Purported will dated 27 April 2008 (“the purported 2008 will”)
The purported 2008 will was prepared in the form of a will kit. In this will, Michael was named executor, Francis was named as a substitute executor, and Philomena, Michael and Francis received the entirety of the estate in equal shares. None of the charities named in the previous wills were named as beneficiaries. This is the will Michael produced to the Banks when he sought payment to him of the balances of Mary’s accounts.
Closure of the CBA and Bank SA accounts
CBA
On 25 June 2009, Michael notified the CBA of Mary’s death.[5] He provided the Bank with the following documents:
·Deceased Customer Notification – wherein the question “Does anyone intend to apply or has anyone applied for probate of the will?” was checked “Yes”;[6]
·His driver’s licence;[7]
·Mary’s death certificate;[8] and
·A copy of the purported 2008 will.[9]
[5]    Exhibit P17.
[6]    Exhibit P17.
[7]    Exhibit P18.
[8]    Exhibit P19.
[9]    Exhibit P16.
By letter dated 29 June 2009, the CBA wrote to Michael stating:[10]
You have indicated that you intend to apply for a Grant of Probate/Letters of Administration. Therefore, to enable us to release the funds from the above account/s we require:
·A certified copy of the Probate/Letters of Administration document issued or resealed in the following state/s:
· South Australia
(the Registrar’s Certificate needs to be provided with the document)
·The enclosed ‘Authority to Release Assets from a Deceased Estate’ form to be completed and signed by all executors/administrators (care: a separate form needs to be completed by each person). If any accounts had a cheque book facility, please return any unused cheque forms.
[10] Exhibit P20.
Michael then requested, by facsimile to the CBA, that “probate be waived as there is no property in the Estate of my late mother, only cash, and I would like to distribute it to the Beneficiaries”.[11] The CBA replied on 27 July 2009 advising it required a certified copy of Mary’s death certificate and it would forward its decision regarding the request in writing after assessment. Michael forwarded the death certificate as requested. A document titled “Waiver of Probate/Letters of Administration Assessment Sheet” records that a CBA officer approved payment to Michael on 31 July 2009, subject to various matters being fulfilled. This document also records in handwriting under the heading, “Recommendation/ Justification”, the following:[12]
Acc to the will, one of the child is a executor and all three living children are beneficiaries in equal shares. 5 of the children are deceased, therefore we will require their FDC. Risk to bank is minimal and our requirements are not difficult to be met. Probate waived.
[11] Exhibit P21.
[12] Exhibit P24.
The CBA wrote to Michael on 3 August 2009 advising:[13]
[13] Exhibit P25.
On this occasion your request for waiver of our requirement for production of a Grant of Probate/Letters of Administration has been granted upon the condition that all of the following documentary requirements can be met:
·The enclosed ‘Claim for Assets Held on Behalf of Deceased Customer’ form to be completed and signed by Michael Edward Martin ensuring the following areas are completed in full:
Care: a separate form needs to be completed by each person.
·       Deceased Customer details / Particulars of Next-of-Kin
·       Will details
·       Indemnity
·       Order to Release Assets
…
·       Statutory Declaration
·       Signature Verification
·A certified copy of the full Death Certificate of Edward John Claremont Martin, John Martin, Mary Veronica, Therese Mary, Brigid Anne, Monica Catherine.
·The enclosed ‘Consent by a Beneficiary/Executor/Next-of-Kin’ form to be completed and signed by Philomena Maude, Francis Joseph.
·Passbook/s, if the passbook/s cannot be located we require the executors/administrators to complete the enclosed ‘Notice of Lost Passbook/s’ and return it to this office.
Note: Passbooks will be updated, cancelled and returned upon closure.
An internal CBA record of telephone contact records that Michael telephoned the CBA on 12 August 2009 advising that Francis was in prison and he could not sign the Consent by Beneficiary form, and that he was “having a letter signed by Francis witnessed by JP in which Francis is giving a conset (sic) to Michael to deal with this estate”. The document also records that Michael was asked to send the letter signed by Francis to the CBA to be referred to a manager and is endorsed with the following “Approval given for the above documentation to finalise the estate”.[14] A letter addressed “To Whom It May Concern” purportedly signed by Francis before a Justice of the Peace authorising Michael to act on his behalf “in all actions, Only pertaining to” Mary’s estate forms part of the CBA’s records concerning this matter. This letter is endorsed with a CBA Manager’s acceptance and is stamped 14 August 2009.[15]
[14] Exhibit P29.
[15] Exhibit P30.
Michael forwarded the following documents to the CBA Deceased Estates on 13 August 2009:
·“Claim for Assets Held on Behalf of Deceased Customer” signed by Michael on 9 August 2009, whereby he agreed to indemnify the CBA against all action, suits claims or demands in respect of Mary’s account (“the indemnity”);[16]
·“Consent by a Beneficiary/Executor/Next of Kin” in respect of Francis, not completed; [17]
·“Consent by a Beneficiary/Executor/Next of Kin” given by Philomena whereby she requests the CBA to release the monies from Mary’s account to Michael being the person named on the Claim for Assets Held on Behalf of Deceased Customer and that his “receipt shall constitute a full discharge for the said assets”;[18]
·Death Certificates for Mary’s deceased children;[19] and
·Certified Copies Identification Form.[20]
CBA then closed the account held in Mary’s name on 19 August 2009 and paid out the monies to Michael.
[16] Exhibit P27.
[17] Exhibit P32.
[18] Exhibit P35.
[19] Exhibit P33.
[20] Exhibit P34
The CBA relies on the discharge and indemnity given by Michael and the consents given by Philomena and Francis in defence of the claims against it.
Bank SA
By letter dated 4 November 2008, Brian Carpenter of Carpenter & Associates, solicitors for Michael, wrote to the Unley branch of Bank SA advising that the firm acted for Michael who was Mary’s executor seeking “full details” of Mary’s accounts at the branch and the Bank’s requirements to enable collection of the monies in the accounts.[21] Bank SA replied on 14 November 2008 detailing the balance and accrued interest of the two accounts and stating that “due to the balance being over $50,000 as at 03 October 2008, we will require Probate to finalise the accounts”.[22] On 15 July 2009, Michael wrote to an officer of Bank SA requesting that probate be waived “as there is no property” in Mary’s estate, only cash, to be distributed among the beneficiaries.[23] Bank SA appears to have received several documents from Michael, including:
·“Deceased Estates Statutory Declaration”, signed and dated by Michael on 15 July 2009 wherein he declares that he is the executor of Mary’s estates and indemnifies Bank SA “from and against all claims, demands, actions proceedings and losses of whatever kind and extent arising out of or incidental to such instructions, transfer the monies in the account held in Mary’s name into BSB 105116 A/c 006342964;[24]
·A copy of Mary’s death certificate;[25]
·A list of the children of the deceased;[26]
·A copy of the purported 2008 will;[27]
·An Estates Management statutory declaration for beneficiaries, in which Philomena, Michael and Francis each assert that they are the beneficiaries of the estate, direct payment of the proceeds of the estate to the executor and indemnify Bank SA against all claims (“the statutory declarations”).[28]
[21] Exhibit P41.
[22] Exhibit P42. Note that the date on the letter says 5 January 2016, however a handwritten amendment says 14/11/08.
[23] Exhibit P45.
[24] Exhibit P44.
[25] Exhibit P46.
[26] Exhibit P46.
[27] Exhibit P43.
[28] Exhibit P47.
A copy email dated 22 July 2009 indicates that Philip Young of Bank SA’s Legal Department approved the waiver of probate.[29] By letter dated 23 July 2009,[30] Bank SA informed Michael of the closure of the account and that the monies had been transferred into his account.[31]
[29] Exhibit P48.
[30] Exhibit P49. I note that the typed date is 5 January 2016, however this has a handwritten amendment changing the date to 23 July 2009.
[31] Exhibit P49.
Bank SA relies on the discharge and indemnities given by Michael, Philomena, and Francis in defence of the claims against it.
The probate action brought by Michael in Action No. 935 of 2010

On 20 July 2010, Michael commenced a probate action. Initially, Alba was the only defendant to those proceedings (Alba and Michael having separated sometime earlier). Michael sought Court orders pronouncing for the purported 2008 will. Alba, by her defence and counterclaim filed on 24 March 2011, contended that Mary suffered from senile dementia at the time the purported 2008 will was made, was often disorientated as a result of being legally blind, and suffered from several other medical conditions. Alba contended that Mary was estranged from Michael as a result of Michael having made three unauthorised withdrawals from her bank accounts totalling $11,000, and showed great antipathy toward Michael. She further submitted that Mary had made substantial provisions in her previous wills for the three charities and would not have wished to disinherit them.[32] In her counterclaim, Alba sought orders that the Court pronounce for the purported 2007 will and against the purported 2008 will.
[32] Exhibit P70.
Following receipt of the report of the aged care physician Dr Jane Hecker dated 15 November 2011 detailing her opinion regarding Mary’s testamentary capacity from 2007, Michael filed a reply and defence to counterclaim on 18 November 2011. In the reply, Michael sought in the alternative to the pronouncing of either the purported 2007 or 2008 wills, that the 2002 will be pronounced for. In the defence to counterclaim, Michael pleaded that the purported 2007 will was executed when Mary was not of sound mind and lacked testamentary capacity.
On 9 May 2012, Elizabeth Watson (“Ms Watson”), a solicitor acting for the Public Trustee, emailed Michael’s solicitor, Greg Weldon (“Mr Weldon”) at Andersons Solicitors, asking “What assets are left?”. Mr Weldon replied, “As to the other assets it is hard to gauge as Ray Frost at Treloar & Treloar holds the reigns on that”.[33] Mr Ray Frost was Alba’s solicitor.
[33] Exhibit P57.
On 21 June 2012, Michael was granted permission to join the Public Trustee, Francis, Philomena and the three charities to the action.[34] Relevantly, Alba and Michael were also parties to separate proceedings in the District Court concerning the unit Mary owned and was living in prior to her move to a nursing home. The unit had been transferred by Mary on 19 December 2007 to Alba to hold as a joint tenant with Mary. Michael commenced the District Court proceedings on 9 September 2009 seeking to have the transfer set aside.
[34] Exhibit P56 at p 6.
Michael’s second statement of claim seeking probate of either the purported 2008 will or the 2002 will was filed on 21 June 2012.
On 17 July 2012, the Public Trustee filed a notice of acting in the probate action.
The probate action and the District Court proceedings settled on 25 July 2012 following a settlement conference which the Public Trustee did not attend.[35] Mr Weldon emailed Ms Watson on 25 July 2012 notifying her of the settlement in principle.[36]
[35] Exhibit P56 at p 7.
[36] Exhibit P60.
On 26 July 2012, Mr Weldon sent a memorandum to all parties regarding the settlement.[37] There is no evidence as to the identity of who, on behalf of the Public Trustee, approved the settlement.
[37] Exhibit P61.
In accordance with the settlement reached, on 27 September 2012 the Court made an order pronouncing for the 2002 will, pronouncing against the purported 2007 and 2008 wills. The Court also, by consent, ordered that the terms and conditions of the settlement set out in a document titled “Terms of Compromise” (“the Compromise”) annexed to the sealed orders made 27 September 2012 be made a rule of court. The terms of the Compromise provided inter alia, that:[38]
·The transfer of the unit to Alba as a joint tenant was set aside to the effect that the unit comprised an asset of Mary’s estate;
·$11,000 retained and used by Michael not comprise an asset of Mary’s estate;
·The Public Trustee was to stand possessed of Mary’s estate;
·Certain costs and disbursements incurred by the parties were to be paid out of Mary’s estate;
·A pecuniary legacy of $75,000 was to be paid to Alba;
·The three charities were entitled to 40 per cent of Mary’s residuary estate in equal shares; and
·Michael, Francis and Philomena were entitled to 60 per cent of Mary’s residuary estate in equal shares.
[38] Exhibit P3.
The Banks rely on the Compromise in support of their defences alleging that the Public Trustee ratified or acquiesced in what Michael did.
The evidence
The Public Trustee called two of its employees to give evidence, David Simon Dinning and Michel Anne Meegan.
The CBA relied on an affidavit of Brendon Joseph Dillon sworn on 28 November 2016.[39] Bank SA relied on an affidavit of Phillip Charles Young sworn on 28 November 2016.[40]
The Public Trustee’s administration of Mary’s estate by reference to David Dinning’s evidence, Michel Meegan’s evidence and the documentary evidence
[39] Exhibit 1D1.
[40] Exhibit 2D1.
Mr Dinning said he received Mary’s estate in 2012 in his role as Senior Estates Services Officer following the settlement of the legal proceedings. Upon the 2002 will being accepted, he was tasked with administering the estate.
Mr Dinning stated that he was not involved with the decision to approve the Compromise, but assumed that the manager of estate services would have been responsible for that decision.
Mr Dinning confirmed the Public Trustee held a document titled “Indemnity” which is undated and apparently signed by Michael indemnifying the Public Trustee in respect of the administration of Mary’s estate.[41]
[41] Exhibit P54.
Mr Dinning said there was a delay of six months until the grant of probate was obtained. The delay was caused by the process of collecting details of the assets and ascertaining what happened to them. It was Mr Dinning’s task to prepare a statement of assets and liabilities.
Mr Dinning first approached Alba’s solicitors, Treloar & Treloar, who held power of attorney for Mary. The solicitors replied by letter dated 12 November 2012,[42] listing the known assets of the estate, including the account held by the CBA and two accounts held by Bank SA.
[42] Exhibit P66.
Mr Dinning made further enquiries regarding the assets by corresponding with the Banks. The CBA replied by letter dated 20 November 2012[43] detailing the balance of the CBA account, but did not refer to the closure of the account. Mr Dinning was made aware in November 2012 that the Bank SA accounts had been closed and subsequently made enquiries as to where the money had gone. Bank SA could not provide an explanation.
[43] Exhibit P4.
Mr Dinning contacted Alba’s solicitors, Treloar & Treloar, and Michael’s solicitors, Andersons, on 26 November 2012[44] in an attempt to find out what happened to the funds from the Bank SA accounts. Treloar & Treloar replied by letter dated 30 November 2012[45] stating that Alba had no knowledge of any withdrawal since Mary’s death.
[44] Exhibit P67.
[45] Exhibit P78.
Mr Dinning also corresponded with Ms Linda Dodd, an employee of St George Bank, by email between 26 November 2012 and 1 February 2013[46] regarding the Bank SA accounts. Ms Dodd informed Mr Dinning on 1 February 2013 that a sum had been paid to Michael on 23 July 2009. This was when Mr Dinning was first able to identify the recipient of the funds on the closure of the Bank SA accounts.
[46] Exhibit P79; Exhibit P80 and Exhibit P81.
On 15 May 2013, probate was granted to the Public Trustee.[47]
[47] Exhibit P6.
On 29 May 2013, the Public Trustee wrote to the CBA requesting the closure of Mary’s account.[48] On 11 June 2013, the CBA confirmed by letter to the Public Trustee that Mary’s account was closed.[49]
[48] Exhibit P7.
[49] Exhibit P10.
On 31 May 2013, the Public Trustee wrote to Bank SA stating that it had become aware that Mary’s accounts with it had been closed and requesting an explanation as to the closure.[50]
[50] Exhibit P8.
On 26 July 2013, the Public Trustee wrote to Bank SA asserting that the monies had been paid out contrary to the terms of the Supreme Court order pronouncing for the 2002 will.[51] Bank SA responded by letter to the Public Trustee dated 29 July 2013 stating that the monies had been paid to “Mr Michael Martin pursuant to the Will dated 27 April 2008 and the indemnity we received from the executor”.[52] On 29 July 2013, the Crown Solicitor’s Office wrote to Michael’s solicitor Mr Welden,[53] demanding immediate return of the monies, but did not receive a response.
[51] Exhibit P11.
[52] Exhibit P52; Exhibit P5. I note that the typed date on Exhibit P52 is 5 January 2016, however this has a handwritten amendment changing the date to 29 July 2013.
[53] Exhibit P82.
On 13 September 2013, the Public Trustee wrote to the CBA requesting an explanation as to the closure of Mary’s accounts.[54]
[54] Exhibit P12.
Mr Dinning ceased to be the officer in charge of the estate in September 2013.
The CBA responded to the Public Trustee by letter dated 4 October 2013 advising that the monies were paid to Michael.[55]
[55] Exhibit P13.
On 9 May 2014, the Crown Solicitor’s Office wrote to the CBA on behalf of the Public Trustee asserting the CBA paid the monies to Michael in error, without the benefit of the approved will and contrary to its own procedures. Payment of the $69,290.33 was demanded.[56] On 12 February 2015, Lynch Meyer, instructed by the Public Trustee, wrote to the CBA referring to the 9 May 2014 letter of the Crown Solicitor’s Office stating:[57]
You state that the letter 9 May 2014 from the Crown Solicitor’s Office to the Commonwealth Bank of Australia on behalf of our client, fails to identify a legal cause of action against you. No cause of action is required by a lawfully appointed legal personal representative of a deceased estate to withdraw funds from a deceased’s bank account.
You state that you acted in good faith, “without negligence” and had no legal requirement to ask for probate when making payments to a person purporting to be the legal personal representative of the Estate. You are a bank and are obliged to distribute funds only to those persons who have the legal authority to receive them. If you fail in this duty to our client then how you acted or the procedures followed is of no concern to us.
You state that you deny any liability to our client and make no offer of settlement. Are you disputing our client’s claim to the Funds? If so, please explain to us what authority usurps our client’s appointment as legal personal representative of the Estate.
We look forward to receiving the Funds into the Estate or your advice as to any further administrative requirements to secure the release of the Funds, as soon as possible.
[56] Exhibit P36.
[57] Exhibit P37.
On 2 October 2015, the Public Trustee made interim partial distributions of $14,000 to each the Mary Potter Foundation, the St Vincent de Paul Society and the Low Vision Centre, $21,000 to Philomena and $21,000 to Francis.[58]
[58] Exhibit P55.
These proceedings were commenced on 30 October 2015.
Ms Meegan is currently a Team Leader in the Public Trustee’s estates services section. Ms Meegan has the administration of Mary’s estate under her supervision.
The officer in charge of the estate has changed over the years. Three people have held the role since 2012, including Mr Dinning.
By reference to an Interim Client Statement,[59] Ms Meegan stated that the administration of the estate started on 25 July 2012. The statement records the realisation of assets and payments to beneficiaries and of legal costs. Ms Meegan gave evidence that the Public Trustee does not know the whereabouts of Michael or what he did with the money from the Banks. Ms Meegan confirmed the Public Trustee does know the whereabouts of Philomena and Francis and that an interim distribution has been made to them. Ms Meegan also confirmed that it is not known whether Philomena and Francis have received any of the monies Michael obtained from the Banks. Ms Meegan could also not explain why the Public Trustee has not asked Philomena or Francis whether they have received money from Michael.
[59] Exhibit P55.
Ms Meegan said that she was not sure if the police had been contacted regarding the actions of Mr Martin or what steps had been taken to find Mr Martin. She stated that Mr Dinning had instructed the legal section to become involved immediately upon discovering what Michael had done.
Ms Meegan said that if monies were received as a result of these proceedings, the Public Trustee would apportion the money to the beneficiaries in accordance with the terms of the Compromise.
A cost of $1,709 has been debited from the estate account for maintaining the gravesite. Ms Meegan was not able to identify who requested payment of this expense but assumed it to have been a family member.
In cross‑examination, Ms Meegan confirmed that apart from the monies the subject of this proceeding, there are no other assets that are yet to be collected.
Ms Meegan also confirmed that the interim distribution to the beneficiaries on 2 October 2015 was made in the expectation that there was going to be a surplus in the estate to make those distributions as well as pay any further debts that may arise. The interim client statement reflects the Public Trustee’s practice that when income is paid into the estate, commission is immediately paid to the Public Trustee. Ms Meegan confirmed that, as at the date of trial, the Public Trustee had paid itself all commission owing to it and if further income were to be received further commission would be taken. The Interim Client Statement records that at the time of the hearing of this action, the financial status of the estate was as such the Public Trustee:
·had sold Mary’s unit and realised the sum of $286,223.08 in early 2014;
·had paid all of the debts incurred by Mary during her lifetime that were outstanding at the time of her death;
·had paid all costs associated with obtaining probate;
·had paid the legacy of $75,000 to Alba Martin pursuant to the Compromise;
·had paid all of the costs and disbursements required by it to be paid to the beneficiaries;
·had paid itself all commission due to it on the assets of the estate;
·had paid itself all commission due to it in respect of all income received by the estate to that date;
·had paid capital distributions of $84,000 on 2 October 2015;
·had paid all debts of the estate including a staggering $94,340.30 (in an estate with assets of around $350,000 not including the assets the subject of these proceedings) in relation to legal fees (which by reference to the interim statement includes legal fees for the sale of the unit, legal fees for all parties to the probate action and approximately $55,000 in legal fees in respect of this action); and
·had recovered all assets of the estate except the benefit of this action.
Ms Meegan confirmed that all debts, fees and commissions owing as at the date of trial had been paid. In order to complete administration of Mary’s estate, Ms Meegan said the following needed to occur:
·preparation of a tax return to reflect all income received by the Public Trustee since it took over administration;
·the publication of a notice pursuant to the Trustee Act 1936 (SA);
·payment of fees and charges associated with preparation of the tax return;
·payment of legal fees associated with these proceedings (which I note may also need to encompass legal fees associated with seeking advice and directions regarding final distribution); and
·distribution of any monies received as a result of these proceedings.
Ms Meegan said that no tax returns had been filed for the estate as at the date of her evidence.
I accept the Public Trustee’s evidence that it did not know:
·about Mary’s CBA and Bank SA accounts until it received the letter from Treloar & Treloar dated 12 November 2012;
·the CBA account was closed until it received the letter from the CBA dated 11 June 2013;
·the monies in the CBA had been paid to Michael until it received the letter from the CBA dated 4 October 2013;
·that the Bank SA accounts were closed until November 2012; and
·that the monies were paid to Michael from the Bank SA accounts until it received an email from Bank SA dated 1 February 2013.
Affidavit of Brendan Joseph Dillon
Mr Dillon is employed as an Executive Manager in the Group Operations, Account and Exceptions Services department in the Melbourne office of the CBA. He deposes that he has the control of this matter on behalf of the Bank. He says that he is responsible for the administration of matters where the Bank’s customer is deceased and, in particular, dealing with a deceased’s legal personal representative seeking the release of monies held by the deceased with the Bank.
He deposes that the Bank has a usual practice concerning release of funds in a deceased estate without a grant of probate. This practice is invariably followed, although a bank officer may have a personal delegation to vary some requirements in any given case depending on the circumstances.
Mr Dillon explains that, on 24 July 2009, Michael requested that the requirement for probate of his mother’s estate be waived and stated that he was the executor of the will. He completed a deceased customer notification. Mr Dillon says on 31 July 2009, an officer of the Bank assessed Michael’s request and approved it providing that certain conditions were met. The conditions were specified in a letter dated 3 August 2009. The basis of the approval was the fact that Michael was the executor of the last will. Mr Dillon attaches copies of the Waiver of Probate/LOA Assessment Sheet and the 3 August 2009 letter. Mr Dillon explains that based on his experience and knowledge of the CBA’s practices, if the CBA had not been told that the will was the last will of Mary, it would not have approved the release of the money subject to the various conditions.
Mr Dillon says that the conditions stated in the 3 August 2009 letter were subsequently met and on 19 August 2009 the CBA closed its account and paid the $69,290.33 to Michael. Mr Dillon deposes that the CBA followed its usual practice in relation to Michael’s request for waiver of probate. He says that if Michael had not provided any or all of: the death certificate; the last will; the indemnity; the consents of Philomena and Francis; and the death certificates of the deceased siblings, in accordance with the conditions set out in the 3 August 2009 letter, the CBA would not have released the money.
Affidavit of Philip Charles Young
Mr Young is employed as a lawyer in the Westpac Business Banking legal team. He deposes that he is familiar with Westpac’s Estates Management team (“Estates Team”) processes, including its practices with respect to the release of funds held in accounts of deceased customers without notification of probate or letters of administration (“probate waiver”). Mr Young says that the Estates Team would frequently seek his approval in respect of requests for probate waiver. He explains this would typically involve the Estates Team presenting him with the relevant facts and he would indicate whether he approved the probate waiver in the circumstances. He refers to a redacted copy of an email dated 22 July 2009 between Kerry Brown of the Estates Team and him (“the email”) relating to a probate waiver request in respect of Mary’s estate.
He says that the redacted portion of the email pertains to information about a probate waiver request unrelated to this matter. He says that Ms Brown sets out the facts in the email, namely that:
1.Mary was widowed;
2.The will produced provided that the assets were to be divided equally between the three named children that survived her;
3.The probate waiver was signed by the executor and statutory declarations were obtained from the three children;
4.All of the requisite documents were held (Mr Young says this would be the death certificate, will and indemnities signed by the executor and beneficiaries); and
5.The totality of the accounts was $106,000.

Mr Young says that while he does not now have any specific recollection of approving this particular probate waiver, he notes that he responded on the email with the word “Approved”.
Finally, he states that had the information detailed in the email from Ms Brown not been provided, he would not have approved the probate waiver request.
Observations
Before discussing the parties’ submissions and matters of “trite” law, I make the following observations regarding this matter.
Michael, purporting to be Mary’s lawful executor, obtained the proceeds of the CBA and Bank SA accounts. The Public Trustee does not know Michael’s whereabouts or what he did with the money paid to him by the Banks. The evidence allows me to find that Philomena and Francis consented to Michael dealing with the Banks’ accounts. However, it is not known whether Michael retained the money for himself or whether he shared it with Philomena and Francis, or either or both of them and, if so, in what amounts.
The evidence before me is that the Public Trustee knows Philomena’s and Francis’ whereabouts. They were not called to give evidence and they have not been asked whether they received any money from Michael. They both received a distribution from Mary’s estate in 2015 and Ms Meegan assumes it was a family member who asked for payment for Mary’s gravesite. Philomena and Francis appear to be available to be asked, at the very least, the circumstances in which they gave their consent regarding the CBA account and statutory declarations regarding the Bank SA accounts. I have no explanation as to why this has not occurred. There is no evidence of any complaint from Philomena or Francis regarding the monies paid to Michael from the three bank accounts. I infer there was no mention of the monies in the three accounts to the Public Trustee and the three charities during the probate action.
Needless to say, the three charities have had no involvement in this matter other than consenting to the terms of the Compromise.
The Banks are commercial entities. Each has a department or team responsible for the administration of matters pertaining to deceased customers’ accounts. Michael dealt with the CBA’s “Deceased Estates” department.
By reference to Mr Young’s affidavit, at the time of Michael’s dealing with Bank SA in 2009, requests for waiver of probate were made to the Westpac Estates Management Team which in turn sought approval of such requests from lawyers in the Bank’s legal team.
Clearly, the Banks make a risk assessment, being well aware of the legal significance of a grant of probate, when they release funds without requiring the production of a grant of probate to a person such as Michael purporting to be the rightful executor.
Trite law and legal optics
An executor derives his or her title from the will
The common law principle that the title of an executor is derived from the will of the testator and not probate has been described as trite law.[60]
[60] Chan Kit San v Ho Fung Hang [1902] AC 257 at 260; Maddock v Registrar of Titles (Vic); Miller v Registrar of Titles (Vic) (1915) 19 CLR 681 (Issacs J); Ryan v Davies Bros Ltd (1921) 29 CLR 527 at 536.
As an executor’s title is derived from the will, his or her office commences on the testator’s death. Accordingly, all interest in the testator’s property vests immediately in the executor upon the testator’s death. This is because “the law knows no interval between the testator’s death and the vesting of the right in his representative”[61] so that probate is said to relate back to the time of the testator’s death.[62]
[61] Whitehead v Taylor (1839) 10 AD & E 210 at 212.
[62] John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Sweet & Maxwell, 19^th ed, 2008) at [8-02], citing Whitehead v Taylor (1839) 10 AD & E 210 and Ingle v Richards (No 2) (1860) 28 Beav 366.
As stated in the opening paragraph of the chapter “Grants of Representation” in Principles of Australian Succession Law:[63]
Australian property law is premised upon the principle that there cannot be a lapse in the chain of ownership of property. The common law therefore developed principles regarding the devolution of property upon the death of an owner. These principles held that an executor’s title to the assets of the deceased derived from the will. The personalty of the deceased vested in the executor at the time of death, while realty vested in the devisee or heir at the time of death. By contrast, an administrator’s title to the deceased’s assets only derived from the grant of letters of administration. As a result, the assets did not vest in the administrator until the grant of administration.
(Footnotes omitted)
[63] Ken Mackie, Principles of Australian Succession Law (LexisNexis Butterworths, 2^nd ed, 2013) at [13.1].
By contrast, s 45 of the Administration and Probate Act 1919 (“the Act”) provides that all property of intestate estates vests in the Public Trustee until administration is granted.
Other than in the case of intestacy, a deceased’s property vests in the executor pursuant to s 46(1) of the Act in the case of real property and at common law for personality.
The common law regarding an executor’s title is described by Lord Parker in Meyappa Chetty v Supramanian Chetty as follows:[64]
It is quite clear that an executor derives his title and authority from the will of his testator and not from any grant of probate. The personal property of the testator, including all rights of action, vests in him upon the testator’s death, and the consequence is that he can institute an action in the character of an executor before he proves the will. He cannot, it is true, obtain a decree before probate, but this is not because his title depends upon probate but because the production of probate is the only way which by the rules of court, he is allowed to prove his title.
It is clear that prior to a grant of probate, the estate of a testator vests in his lawful executor from the moment of his death.
[64] [1916] 1 AC 603 at 608.
An executor may carry out executorial duties before a grant of probate but may need to prove the will by obtaining a grant of probate in order to prove to those holding assets that he or she has the requisite authority sanctioned by the Court. This is “because only by virtue of such a grant can the will (and therefore the executors’ title) be proved in a court of law. Only by such means, to use the vivid words of Jervis CJ in Johnson v Warwick, has the court ‘the legal optics through which to look at [the will]’”.[65]
[65] Redwood Music Ltd v B Feldman & Co Ltd [1979] RPC 1 at 6 (Goff J), citing Johnson v Warwick (1856) 17 CB 516 at 522 (Jervis CJ).
Payments by third parties without a grant of probate
A third party, for example a bank, takes a risk in transferring an estate asset to someone purporting to administer an estate without a grant of probate. As demonstrated in this matter, third parties will require an informal administrator to provide a release and discharge. It is clear a lawful executor is able to give a discharge.
The Act provides that in limited circumstances the Crown and banks have no liability for payments of certain money in deceased estates without production of grants. Section 71 of the Act provides that no claim will lie against the Crown for the release of monies (limited to $2,000) owed to deceased government employees or deceased patients held by public hospitals to be paid to the surviving spouse or domestic partner of the deceased without a grant of probate.
Further, s 72 provides that banks have no liability for payments not exceeding $2,000 made to the spouse or domestic partner of a deceased customer or depositor without the proof other than the death of the customer.
It is significant that s 120 of the Act mandates that no will is to be registered or admissible in evidence except in criminal proceedings until it is proved.
It is also significant that s 44 of the Act obliges a person who deals with an asset of the estate of a deceased person that is required to be disclosed pursuant to s 121A to satisfy themselves that the asset has been disclosed. If the person fails to do so, they are guilty of a summary offence. Upon application for probate, estate assets must be disclosed to the Court in compliance with s 121A.
It is with these “legal optics” that I turn to consider the submissions.
Does the Public Trustee have an action in debt against each of the Banks?
There is no dispute that the monies on deposit in the Banks’ accounts were debts owed to Mary’s estate. The Public Trustee as the lawful executor of Mary’s will requested the Banks make repayment of the monies. Repayment has not been made.
The Public Trustee has an action in debt against each of the Banks.
The Banks argue that they are not required to make repayment as they have already paid the monies to Michael, who as an executor de son tort can and did give a valid discharge on behalf of Mary’s estate for the payments made to him.
The Public Trustee contends that the fact the Banks have mistakenly paid the wrong person is no answer to their demand as the true executor of Mary’s estate and the fact the Banks will have to pay the monies twice is also no answer to its claim.
The Public Trustee argues the fact that the Banks find themselves in this predicament is merely a function of their commercial approach to legal risk taking in being prepared to pay, in certain circumstances, monies of a deceased customer to a person who claims to be the executor of the customer without taking the precaution of requiring the production of a grant of probate.
Michael – An intermeddling executor de son tort
There can be no question that Michael intermeddled with the assets of Mary’s estate before the grant of probate. In Williams, Mortimer and Sunnucks on Executors, Administrators and Probate,[66] an executor de son tort is defined as:
A person not lawfully appointed executor or administrator and without title to a grant may by reason of his own intrusion upon the affairs of the deceased be treated for some purposes as having assumed the executorship. Such an intermeddler is called a tort executor or an executor de son tort (i.e. of his own wrong).
[66] John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Sweet & Maxwell, 19^th ed, 2008) at [8-16].
Michael is an executor de son tort who took “upon himself the office by intrusion” and dealt with the estate “in such a way as denotes a usurpation of the functions of an executor”.[67]
[67] Peters v Leeder (1878) LJQB 573 at 574 (Lush J).
As such an intermeddler, Michael was not a true executor (even though he is nominated as executor in the purported 2008 will) “as he lacked title to the assets”.[68]
[68] G E Dal Pont and K F Mackie (eds), Law of Succession (LexisNexis Butterworths, 2013) at [10.15].
Michael is therefore liable to account for the assets of Mary’s estate he illegitimately dealt with in his capacity as an executor de son tort.[69]
[69] G E Dal Pont and K F Mackie (eds), Law of Succession (LexisNexis Butterworths, 2013) at [10.16].
The defence of discharge
The Banks contend that Michael, acting as an executor de son tort, was validly entitled to, and did, lawfully discharge the Banks’ debts and as such the Public Trustee is bound by his acts as an executor de son tort.
The Banks argue that Michael was entitled to act as executor of Mary’s estate without a grant of probate, as the person named as executor in a last will becomes, as a matter of law, the executor from the moment the testator dies. The Banks submit that, as Michael was the named executor in the purported 2008 will, at the time of both alleged discharges, he acted as an executor de son tort in discharging the debts. The Banks cite Williams, Mortimer and Sunnucks on Executors, Administrators and Probate[70] and In Re Stevens[71] in support of their submission that an executor, under what is objectively the last true will of the deceased, may validly exercise a range of executorial functions without a grant of probate, including releasing debts owed to the estate. On my reading, the reference in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate and in In Re Stevens is to the acts of executors carrying out executorial tasks/duties “before he proves the will”.[72] That is, they are instances of actions of a rightful executor before a grant of probate, not the actions of an executor de son tort who is not ever granted probate.
[70] John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Sweet & Maxwell, 19^th ed, 2008) at [8-03].
[71] [1897] 1 Ch 422 at 429.
[72] John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Sweet & Maxwell, 19^th ed, 2008) at [8-03].
The Banks argue that they acted in good faith and without negligence in their dealings with Michael. Accordingly, they contend that the closure of the accounts and payments to Michael in his capacity as executor de son tort constituted a valid discharge and release for the amounts owing to Mary’s estate.
The Banks submit that Michael’s acts as an executor de son tort are binding on the Public Trustee. The Banks rely on to the two limb principle in Thomson v Harding (“Thomson”),[73] approved in Levitt v Illawarra Seafood Pty Ltd (No 2) (“Levitt”),[74] that:
…where the executor de son tort is really acting as executor, and the party with whom he deals has fair reason for supposing that he has authority to act as such, his acts shall bind the rightful executor, and shall alter the property.
The acts of Michael as an executor de son tort, then, are said to be binding on the Public Trustee if, firstly, Michael purported to act as executor, and secondly, the Banks had fair reason to suppose that Michael had authority to act as executor.
[73] (1853) 2 E & B 630 (Lord Campbell CJ), cited in John Ross Martyn and Nicholas Caddick (eds) Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Sweet & Maxwell, 19^th ed, 2008) at [8.36].
[74] (1983) 3 BPR 97 at 165.
The Banks say the first limb, that Michael purported to act as executor, is satisfied by the fact that discharging debts is a proper act for an executor of a deceased estate to engage in. Michael was not made an executor de son tort by reason of a “mere solitary act of wrong”.[75] He acted as executor with respect to both of the Banks, obtaining the monies to distribute to the beneficiaries.
[75] Levitt v Illawarra Seafood Pty Ltd (No 2) (1983) 3 BPR 97 at 165.
As regards the second limb, in releasing the funds to Michael, the CBA relied on the purported 2008 will, the Claim for Assets Held on Behalf of Deceased Estates,[76] and the consent of Philomena[77] and Francis[78] as beneficiaries. Bank SA relied on the purported 2008 will, the deceased estates statutory declaration of Michael in his capacity as executor dated 15 July 2009,[79] and the statutory declarations from Philomena, Michael, and Francis as beneficiaries.[80] The Banks submit that the documents relied on gave them sufficient reason to suppose that Michael had authority to act as an executor. Accordingly, it is submitted that Michael’s discharge of the debts should bind the Public Trustee as the subsequent legal personal representative.
[76] Exhibit P27.
[77] Exhibit P35.
[78] Exhibit P30.
[79] Exhibit P44.
[80] Exhibit P47.
The Banks submit that at the time of the closing of the accounts, their conduct was lawful, however by virtue of the retrospective application of the grant of probate, their conduct has now been made unlawful. The grant of probate to the Public Trustee also had, it is submitted, the effect of making Michael an executor de son tort in respect of his previous conduct as a purported executor.
The Public Trustee says the decision in Levitt[81] is distinguishable from the facts of this matter. In Levitt, the deceased’s widow, who did not have lawful authority to act as executor or administrator of the estate, received a notice of exercise of a contractual option, the option having been granted by the deceased. The question raised was whether the widow’s receipt of the option and her failure to act upon it was sufficient to bind the estate. It was held that the conduct of the widow in relation to the exercise of the option constituted her an executor de son tort so as to make the exercise of the option by the third party bind the deceased’s estate. The estate was required to complete the alienation of property to the third party.
[81] (1983) 3 BPR 97.
The Public Trustee argues that Levitt concerns the question of whether an executor de son tort can contractually bind the estate to a third party, rather than the converse issue in this matter of whether an executor de son tort can release or discharge a debt owed to the deceased’s estate.
Similarly, the Public Trustee contends that the case of Thomson[82] is also distinguishable. In Thomson, a person employed by the deceased to collect rents of certain properties owed to the deceased continued to do so after his employer’s death, placing the collected monies into a bank account and using the monies to discharge the deceased’s overdraft with the bank and pay other debts of the deceased. A grant of administration was later made and the administrator brought an action for the monies. It was found that the acts of the executor de son tort were binding upon the true executor of the estate, and as such, the Banks were entitled to the monies received.
[82] (1853) 2 E & B 630.
Whereas Thomson dealt with an executor de son tort who paid off debts owed by the deceased to third parties, the Public Trustee argues that this matter is distinguishable because it concerns debts owed by third parties to the deceased.
While the Public Trustee accepts that there are cases which hold that acts of an executor de son tort can bind an estate, it contends that those cases involve the converse position from that raised on the present facts, dealing only with the alienation of property of the estate to a third party or discharging on behalf of the estate a debt owed by the deceased to a third party. I agree these decisions are not authorities for the proposition that an executor de son tort can discharge and release a third party who/which owes a debt to the estate.
The Public Trustee argues that as Michael did not act under Mary’s last true will he cannot give a valid discharge of the debts of either bank to the Public Trustee as the true legal representative of Mary’s estate.
The Public Trustee submits that the principle that an executor, under what is objectively the last true will of the deceased, may validly exercise a range of executorial functions without a grant of probate, including releasing debts owed to the estate, is not applicable to Michael’s conduct because he did not act as executor under Mary’s last true will. Until such time as he obtained a grant of probate in his favour he could not prove his title to Mary’s assets. The Public Trustee points to s 120 of the Act, highlighting the fact that the will Michael purported to act under could not be registered or admissible in evidence until proved.
The Banks knowingly took a risk in dealing with Michael as a person who purported to be an executor without knowing if that assertion would turn out to be true. As submitted by the Public Trustee, any particular will may or may not be the last true will of the deceased and even if a will is held to be the last true will of the deceased, it will not necessarily be certain that the person purporting to be the executor has such authority, for example where an executor has renounced that title.
In the English decision of Tarn v The Commercial Banking Company of Sydney (“Tarn”),[83] it was noted that the validity of a will could be impugned and pronounced against by the Court for any number of reasons, such as the existence of a later instrument, or a finding the will was made under undue influence.
[83] (1884) 12 QBD 294 at 295, citing Simons v Milman 2 Sim 241 (1828).

The Court in Tarn[84] determined that proceedings in an action by the purported executors of a will against the deceased’s bankers for the return of a bill of exchange delivered by the deceased to her bankers ought to be stayed until the plaintiffs obtained a grant of probate. Lopes J stated that, absent a grant of probate, there was no person who could give a valid release on behalf of the estate of the deceased:[85]
It would be a hardship to call upon the defendants to pay over sums of money, or to hand over securities, to persons who might not have good title and could not give a valid release.
[84] (1884) 12 QBD 294.
[85] (1884) 12 QBD 294 at 296.
I agree with the submission that as an executor cannot give sufficient discharge of a debt until they have obtained a grant of probate, a prudent banker would ensure that, in the words of Stephen J in Tarn, they “be made safe by production of probate”.[86] This judicious position is supported by Goulding J in Re Crowhurst Park; Sims-Hilditch v Simmons, where he said that “a debtor cannot get a finally valid discharge from his creditor’s executor before probate”.[87]
[86] (1884) 12 QBD 294 at 296.
[87] [1974] 1 All ER 991 at 1002.
The purported 2008 will, pronounced against in the Supreme Court order of 27 September 2012, has always been invalid. The grant of probate to the Public Trustee made on 15 May 2013 took effect from the date of Mary’s death on 3 October 2008. Therefore, only the Public Trustee was authorised to discharge debts owing to Mary. Michael had no authority on behalf of Mary’s estate to request the closure of the accounts or to discharge the banks from their debt to the estate. The account closures were not authorised by the Public Trustee as executor under Mary’s last true will.
I am satisfied that Michael, in closing the accounts and receiving the monies whilst purporting to be an executor of Mary’s estate, acted as an executor de son tort. Without a grant of probate, the Banks could not obtain a valid release from their debts to Mary from Michael claiming to be executor of her estate. As probate had not been granted at the time Michael authorised the closure of the accounts and received the funds, Michael could not give a valid discharge and the Banks could not obtain a valid release from him in respect of the debts.
Are the Banks also executors de son tort?
The Public Trustee contends that in closing Mary’s accounts and paying out the balance of the accounts to Michael, the Banks have each constituted themselves as executors de son tort in respect of the monies paid otherwise than to the Public Trustee as the lawful true executor of Mary’s estate.
As executors de son tort, the Public Trustee says that the Banks are liable to it for damages in respect of the loss and damage caused to it in the sum of monies paid to Michael and the further interest the accounts would have accrued had they not been closed.
The Public Trustee referred to the case of Sharland v Mildon (“Sharland”)[88] as authority for the proposition that if one pays a debt to a person who is not the lawful representative of the deceased estate, they do not obtain a discharge of that debt, but are in fact liable to pay the monies again to the rightful representative.
[88] (1846) 5 Hare 469.
In Sharland, the widow of a deceased employed a person to collect debts owed to the deceased’s estate, which the agent then paid to the widow, believing her to be the executor or administrator. In fact, the deceased’s widow was not the lawful representative of the estate. The widow was clearly an executor de son tort; the issue for determination was whether the agent who collected the debts and paid them to the widow was also liable to be sued as an executor de son tort by the true administrator who obtained a grant of the estate of the deceased. It was held that, although it placed a significant hardship on the agent, the agent must also be deemed an executor de son tort. The Public Trustee submits that just as the agent was liable as an executor de son tort to repay the monies again, the Banks are liable as executors de son tort to the Public Trustee to repay the monies in the accounts. I disagree. The agent in Sharland was the executor de son tort’s agent and hence arguably also an executor de son tort. The debtors from whom the agent collected the debts owed to the estate were not found to be executors de son torts. The Banks are in the same position as the Sharland debtors.
In further support of its argument that the Banks are executor de son torts vis-à-vis the Public Trustee, the Public Trustee relies on several cases which are said to be authority for the proposition that where A vests title in property of the deceased in a person who is not the lawful executor then A, by putting that property out of their control and giving it to the third party B, is in relation to the lawful executor C, an executor de son tort.
In The New York Breweries Company Ltd v Attorney-General (“New York Breweries Company”),[89] a so-called “test case”, concerned conduct designed to avoid payment of probate duties. The deceased, who was domiciled in the United States, held numerous shares and debentures in an English company, which passed by his will to his executors in the United States. The executors of the deceased’s estate obtained a grant of probate in the United States only, and did not intend to do so in England, for the apparent reason of avoiding the payment of probate duties. The English company transferred, as a test, two of the deceased’s shares and a debenture into the executors’ names. The issue for determination was whether the English company had taken possession of and administered part of the deceased’s estate without obtaining a grant of probate contrary to revenue legislation.
[89] [1899] AC 62.
The House of Lords determined that the company was an executor de son tort, had taken possession of and administered part of the estate, and was liable to penalty as such. The Lord of Halsbury held that the English company:[90]
…having the control and dominion over the property in question, did an act whereby the title to the property belonging to the deceased person became vested in somebody else … Prima facie, therefore they are executors de son tort, and, prima facie, as it appears to me, they have taken possession of and administered the property in respect of which this question arises.
Lords Shand and Davey similarly agreed that by taking the shares out of the deceased’s name and giving them to the two persons who had no lawful title to the property as executors, having not obtained a grant of probate or letters of administration, the company constituted itself an executor de son tort.[91] Lord Davey said:[92]
If a man who owes money to a deceased person takes upon himself to pay that money to someone who has no authority to receive it, I think he does an act which is an appropriation in his own hands, and asserts a right to exercise control and dominion over the debt.
[90] [1899] AC 62 at 69.
[91] [1899] AC 62 at 75-6 (Lord Shand); 77 (Lord Davey).
[92] [1899] AC 62 at 77 (Lord Davey).
The company in New York Breweries Company paid the dividend to a person with full knowledge that he was not an executor, and moreover, having been given distinct notice that he never intended to become an executor. This decision is distinguishable from the facts of this matter where the Banks paid the monies to Michael whom they accepted, without requiring production of a grant, was the lawful executor.
New York Breweries Company was approved in Inland Revenue Commissioners v Stype Investments (Jersey) Ltd.[93] In that case, Stype Investments, a company in Jersey, sold land in England it held as nominee for the deceased, Charles Clore, who died before settlement of the sale of the land. Stype Investments completed the sale of the land after Mr Clore’s death, and directed the purchaser to pay the money directly into its account in Jersey, which the purchaser did. The English executors of Mr Clore’s estate were liable to pay capital transfer tax on the land. The issue arose whether Stype Investments, by removing the proceeds of the sale of the land out of the jurisdiction in that manner, constituted itself as an executor de son tort in respect of the deceased’s estate.
[93] [1982] 1 Ch 456.
The Court of Appeal held that after Mr Clore’s death, Stype Investments were bound to complete the sale of the land and receive the purchase price from the purchaser, however:[94]
the right in equity to receive the purchase price was property situate in England at the death of Sir Charles and the £20 million therefore belongs to the personal representatives of Sir Charles when constituted in England and to nobody else for the purpose of carrying out and completing administration of the English estate.
[94] [1982] 1 Ch 456 at 474 (Templeman J).
By procuring payment of the monies in Jersey, Stype Investrments transferred the title of the monies from the English personal representatives of the deceased’s estate to the personal representatives in Jersey, which was an intermeddling in the deceased’s estate, constituting Stype Investments an executor de son tort.
This principle is said to be applicable to this matter, in that the Banks, having paid money belonging to Mary’s estate to Michael instead of the Public Trustee as the true executor, intermeddled with the assets of Mary’s estate, constituting themselves as executors de son tort vis-à-vis the Public Trustee. I disagree. The Banks were responsive to requests to pay the monies to a person purporting to be the lawful executor and they, having made an assessment of the requests, paid Michael without requiring production of a grant of probate. In order to be found to have intermeddled the Banks would have to have done more than respond to a request from a purported executor. For example, they would have arguably intermeddled if they paid a credit card debt owed to them by Mary from the monies they owed Mary before they paid Michael. If they had paid a third of the monies from the accounts to each of Michael, Philomena, and Francis rather than paying just Michael, that arguably would constitute them as executors de son tort.
The Banks are not executors de son tort.
The Public Trustee submits that the Banks did not obtain a valid discharge because they acted negligently. Both Banks closed the accounts and paid the balances of the debt to Michael with full knowledge that he did not hold a grant of probate or letters of administration of the estate from the Court. The Public Trustee refers to the protection to a maximum payment of $2,000 provided to banks by s 72 of the Act.
The debt discharged in this matter far exceeded $2,000, and Michael was neither a spouse nor domestic partner of Mary. The Banks chose not to protect themselves by insisting on the production of a grant of probate, and did not obtain a valid discharge having decided to pay someone other than the lawful personal representative of the estate.
The Banks took a risk in circumstances where they could have acted conservatively and prudently by insisting upon the production of a grant of probate. As such, unless they can establish entitlement to any of their other pleaded defences, they are liable to repay the monies.
The defence of ratification
The Banks submit that the Public Trustee ratified Michael’s actions in relation to Mary’s estate. As executor, the Public Trustee may ratify the acts of an executor de son tort in a similar manner to a principal retrospectively ratifying the acts of an agent. The Public Trustee is alleged to have ratified Michael’s conduct by taking no position as to Michael’s conduct and accepting the Compromise made at the settlement conference.
The Public Trustee does not dispute that it is bound by the Compromise. However, because the Banks’ debts and the purported discharge were neither contemplated by the Compromise nor known to the Public Trustee at the time it entered into the Compromise, the Public Trustee contends that agreement to the Compromise cannot constitute ratification of the discharge of the Banks’ debts.
The Compromise merely records the manner in which the estate was to be administered. The Compromise, according to the Public Trustee, was concerned only with the validity of Mary’s wills, not with what had occurred in the administration of the estate thus far, nor the size of the estate or what assets it comprised, other than to include Mary’s unit in the estate and to exclude $11,000 from the estate.[95] Questions regarding the discharge of debts, such as payouts in terms of liabilities like funeral expenses, were to be dealt with in the ordinary administration of the estate. Accordingly, at the time of entering into the Compromise, the Public Trustee did not know what the estate comprised. In particular, it did not have knowledge of the closure of the Banks’ accounts in 2009.
[95] Exhibit P3.
The Banks allege that by not making sufficient inquiries into the estate’s assets and its administration, the Public Trustee intended to ratify Michael’s acts. The Public Trustee argues that it was under no obligation to make inquiries as to the size of the estate, that it nonetheless did make some inquiries, and that regardless, the estate which it was to collect as executor could not be limited to the form it was in at the time of the settlement, subject to any unlawful acts of anyone else.
While it could have made inquiries as to the assets of the estate prior to the Compromise being entered into, as the named executor in only one of the three contested wills, the Public Trustee says it could not assert a right to administer the estate until the other two wills were pronounced against. The Public Trustee says that it was therefore not in a position to achieve anything in a practical sense by conducting inquiries before the purported 2008 will was pronounced for, and had no obligation to do so.
Nonetheless, despite the fact the grant of probate was not made until May 2013, the Public Trustee says it was prudent in making inquiries of the Banks immediately after the terms of the Compromise were settled. In this respect, the Public Trustee points to the email dated 26 November 2012 authored by Simon Dinning to Treloar & Treloar and Andersons Solicitors, outlining what Mr Dinning knew of the estate and inquiring as to what happened to the funds taken from the Bank SA accounts.[96] Mr Dinning also corresponded with Ms Linda Dodd of St George Bank in November 2012,[97] who informed him on 1 February 2013 that the monies had been paid to Michael on 23 July 2009.[98] Similarly, Mr Dinning made inquiries with respect to the CBA account following the settlement of the terms of the Compromise. He was informed of the balance of the CBA account by letter dated 20 November 2012,[99] but did not discover what had happened to the funds in that account until September 2013.
[96] Exhibit P67.
[97] Exhibit P79.
[98] Exhibit P81.
[99] Exhibit P4.
Without knowing the true position of the assets of the estate, the Public Trustee argues that it cannot be said that it intended to ratify unlawful acts concerning the estate. Inaction cannot constitute ratification, rather, ratification requires positive action[100] or “clear adoptive acts”[101] to be taken.
[100] Hill v Ziymack (1908) 7 CLR 352 at 363 (Griffiths CJ).
[101] Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 at [132] citing Eastern Construction Co Ltd v National Trust Co Ltd (1914) AC 197 at 213 (Lord Atkinson).
The Public Trustee submits that the Compromise did not indicate that Michael had performed any acts purportedly as executor of, or performed any purported administration of, Mary’s estate. In support of its submission that it could not ratify acts that it was not aware of, the Public Trustee relies on the decision in Leybourne v Permanent Custodians Ltd (“Leybourne”) in which the New South Wales Court of Appeal said:[102]
There must be full knowledge of all the material circumstances in which the act was done, unless the principal intends to ratify and take the risk whatever the circumstances (for example, Bremner v Sinclair NSWCA, 3 November 1998; (2001) ANZ Conv R 29 at [32] per Campbell J. The extent of knowledge necessary depends on the particular facts. It should be enough knowledge to decide whether or not to adopt the unauthorised act (Bremner v Sinclair at [32]).
[102] [2010] NSWCA 78 at [134].
The Banks do not assert that the Public Trustee had full knowledge of Michael’s transaction with the Banks. Rather, the Banks’ contention is based on the second limb of the principle in Leybourne that the Public Trustee intended to ratify Michael’s actions and “take the risk whatever the circumstances”.[103] It is alleged that the Public Trustee was indifferent to what happened, leaving the beneficiaries to settle the terms of the Compromise, and ratified Michael’s conduct by agreeing to the Compromise regardless.
[103] Leybourne v Permanent Custodians Ltd [2010] NSWCA 78 at [134].
In support of this contention, the Banks say that the Public Trustee was joined as a party to the probate action, but actively chose not to involve itself in the settlement and did not make any detailed enquiries about the estate or its administration. While the Public Trustee attended the settlement conference held on 25 July 2012, it did not attend any further settlement conferences,[104] and did not raise any concerns about the accounts or previous acts of the beneficiaries. The Banks also point out that Michael and Philomena, who knew that the discharges had occurred, both participated in the settlement conference[105] and the Public Trustee obtained an indemnity from Michael with respect to the administration of the estate. The Banks submit the inference gleaned from these facts is that the Public Trustee did not take any position in respect of the Compromise, and thereby intended to ratify Michael’s acts.
[104] Exhibit P56.
[105] Exhibit P56.
The principles of ratification are set out in Dal Pont’s Law of Agency,[106] cited with approval by the Court in Leybourne v Permanent Custodians Ltd:[107]
The positive acts of the alleged principal may, aside from any express words, constitute sufficient evidence of ratification. This may be so where the fair inference to be drawn from a person’s conduct, on an objective basis, is that the person consents to a transaction to which he or she might properly have objected. Put another way, ratification ‘is implied from or involved in acts when you cannot logically analyse the act without imputing such approval to the party whether his mind in fact approved or disapproved or wholly disregarded the question’.
(Citations omitted)
[106] G E Dal Pont, Law of Agency (LexisNexis Butterworths, 2^nd ed, 2008) at [5.28].
[107] [2010] NSWCA 78 at [132].
It cannot be logically said on my assessment of the Public Trustee’s agreement to the Compromise that it consented in circumstances where it “might properly have objected”.
I am satisfied that at the time of entering into the Compromise and consenting to the Court making orders to resolve the probate action, including making the Compromise a rule of court in the action, the Public Trustee was unaware of the extent of Mary’s assets comprising the estate and in particular had no knowledge of the acts done by Michael in 2009 in obtaining payment from the Banks of the monies in Mary’s accounts. Unaware of the unlawful acts, the Public Trustee, by consenting to the Compromise, cannot be taken to have ratified Michael’s conduct in discharging the debts of the Banks.
The Martins’ interest in these proceedings
The Banks’ defences of consent, estoppel and equitable set-off rely on the nature of the relationship between Philomena, Michael, and Francis (“the Martins”) and the Public Trustee.
The Banks plead that any sum recovered by the Public Trustee in these proceedings will be held as part of Mary’s residuary estate and that the Martins will receive 60 per cent of that sum subject to the payment of commissions to the Public Trustee, tax and legal fees.

It is submitted that any rights the Martins possessed under the will were superseded by their acceptance of the Compromise, morphing their rights into contractual ones. Ordinarily such an agreement would be recorded in a deed. Instead, the terms of the Compromise were made into a rule of court, replacing the Martins’ contractual rights with the right, in the event of a breach, to seek to enforce the rule of court.[108]
[108] I expressed my reservations during the hearing of this matter regarding the practice of asking the Court to order that a compromise between parties become a rule of court. Mr Ower SC informed me that other judges have previously expressed concerns about the procedure and I note that in Hamilton v Nelson [2012] SASC 219 Gray J at [20]-[25] refused to adopt it. The procedure has been discontinued in England; see Practice Direction [1972] 3 All ER 319. It is an antiquated practice which, in my view, has no place in contemporary practice and procedure.
The terms of the Compromise have been fulfilled, other than the possible preparation of a taxation return for the final taxation year of the estate, the payment of commission arising from any potential recovery in respect of these proceedings to the Public Trustee and the payment of legal costs and disbursements in respect of these proceedings. As such, the Banks contend that any sum recovered from them in this action will be held as part of Mary’s residuary estate, and the Martins will receive 60 per cent and the three charities 40 per cent of that sum, subject to deductions. Accordingly, the Banks say the Martins have an “interest” in the benefit of the action and the Public Trustee’s role is akin to being their agent. Relying on Official Receiver in Bankruptcy v Schultz (“Schultz”),[109] the Banks submit that the Martins, as residuary beneficiaries, had an equitable “interest” in the entire estate prior to its administration, that being an interest in seeing that the whole of the assets are treated in accordance with the executor’s duties.
[109] (1990) 170 CLR 306 at 313, citing Livingston v Commissioner of Stamp Duties (1960) 107 CLR 411 at 438 (Fullagar J).
The Public Trustee submits that it is not possible to know what the dollar value of any sum recovered from the Banks would be if this action were successful, nor what portion of that total sum would ultimately form part of the residuary estate to be distributed to the three charities and the Martins. The Public Trustee also alleges that it is unknown what Michael did with the money taken from the accounts or the extent to which the Martins have individually or collectively had the benefit of the monies. The Public Trustee says it has no clear basis for making any distribution of the residuary estate once the size of the estate is known, and will likely need to seek further advice and directions from the Court as to what course of action should be taken in the further administration of the estate, which may incur further testamentary expenses. As such, the Public Trustee argues that the Banks’ plea that the sums recovered from them in this action will be held as to 60 per cent of that sum for the Martins is, at best, speculative.
The Public Trustee states that the Martins, comprising three of the six residuary beneficiaries, have no claim to or interest in the specific assets of Mary’s estate which it seeks to recover from the Banks.
The Public Trustee points out that a residuary beneficiary has no equitable interest in the assets of a deceased estate until such time as the executor assents to the holding of the residuary estate upon trust for the residuary beneficiaries. The only right which the residuary beneficiaries may exercise is that to compel the due administration of the deceased estate by the executor.[110] The Public Trustee also refers to Schultz, where the High Court confirmed that a residuary beneficiary has no legal or equitable interest in the assets of the estate during administration:[111]
Not only does the legal ownership of property not vest in the named beneficiary at the time of death of the testator, nor does the equitable ownership. That emerges from the Privy Council’s decision in Commissioner of Stamp Duties (Queensland) v Livingston. The reason for this is that, prior to administration of the deceased estate, there is no specific property capable of constituting the subject property of any trust in favour of the beneficiary. It could not be said at that stage what part or parts of the testator’s property would need to be realized for the purposes of administration. So it was held that the beneficiary does not have a proprietary interest in each of the assets which are the subject of the devise or bequest such that he or she can say “this is mine” or “this belongs to me”.
…
The right which any beneficiary has in an unadministered estate springs from the duty of the executor to administer the estate, to preserve the assets and to deal with them in the proper manner. Each beneficiary has an interest in seeing the whole of the assets are treated in accordance with the executor’s duties. In that sense, the beneficiaries as a class may be said to have an interest in the entire estate. But it does not follow that each piece of property which goes to make up the estate is held on a particular trust for the beneficiary named as its intended recipient upon completion of administration.
(Footnotes omitted)
Accordingly, the Public Trustee says that the Martins have no interest in the benefit of the action.
[110] Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694; Official Receiver in Bankruptcy v Schulz (1990) 170 CLR 306.
[111] (1990) 170 CLR 306 at 312-14
The defence of consent
The Banks argue that as three of the beneficiaries for whom the Public Trustee brings the claim for (the Martins) consented to Michael’s discharge of the debts, the Public Trustee is bound by that consent to the extent of those beneficiaries’ benefit. This constitutes a defence to so much of the claim as may benefit the Martins, being 60 per cent of the residuary estate. The Banks would then be liable to the Public Trustee only in respect of the 40 per cent of the residuary estate to be distributed to the charities.
The consent of Philomena[112], Michael,[113] and Francis[114] to the discharge of the CBA debt was provided to the CBA for the purpose of obtaining a waiver of probate. In respect of the Bank SA debt, consent is evidenced by the Estates Management statutory declaration for beneficiaries, in which each of the Martins indemnified Bank SA against all claims.[115]
[112] Exhibit P28 (Consent of Beneficiary/Executor/Next of Kin 11/08/2009).
[113] Exhibit P27 (Statutory declaration entitled Claim for Assets Held on Behalf of Customer 09/08/2009).
[114] Exhibit P30 (Letter from Francis Martin 13/08/2009).
[115] Exhibit P47.
The Banks argue that the defence of consent, applicable to a breach of trust, applies more broadly. They rely on the principle referred to in Cairncross v Lorimer by Lord Campbell LC that once a person’s consent to an otherwise unlawful act has been obtained, that person cannot then bring an action against the person who has done that act: [116]
…in the laws of all civilised nations, that if a man either by words or by conduct has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have lawfully been done without his consent, and he thereby induces others to do that which they otherwise might have abstained,–he cannot question the legality of the act he had so sanctioned,–to the prejudice of those who have so given faith to his words, or to the fair inference to be drawn from his conduct.
…
I am of the opinion that, generally speaking, if a party having an interest to prevent an act being done, has full notice of its having been done, and acquiesces in it, so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act, to their prejudice, then he would have if it had been done by his previous licence.
[116] (1860) 3 Macq 827 at 829-30.
Having consented to the Banks paying the monies in the accounts to Michael, the Martins cannot in the Banks’ submission, now claim that the payment was unlawful and that the Banks should pay them again. They assert that as the Public Trustee is a privy in interest of the Martins, and the Martins are a privy of the Public Trustee, the Public Trustee is equally bound by the Martins’ consent, and cannot claim against the Banks for payment of the debt.
The Public Trustee does not bring this action on behalf of the Martins; rather it is brought in the Public Trustee’s capacity as executor of the estate, a role which bestows on it full legal and equitable ownership of the administration of the estate, meaning it is the only body entitled to receive monies comprising assets of Mary’s estate from the Banks. The defence of consent does not arise.
The defence of estoppel
The Banks contend that the Martins’ consent to the discharge of the debts and the surrounding circumstances constitute an equitable estoppel by representation. They say that both Banks relied on the representations that Michael was the lawful executor of Mary’s estate, and that the closure of the accounts constituted a lawful discharge and release for the amounts owing to Mary’s estate, to their detriment. Had it not been for those representations, as deposed to in the affidavit of Philip Young,[117] the officer who approved the Probate Waiver request on behalf of Bank SA, and Brendan Dillon,[118] the CBA officer with conduct of this matter, the Banks would not have closed the accounts and paid the monies to Michael.
[117] Exhibit 1D1.
[118] Exhibit 2D1.
The Banks submit that the Martins are permanently bound to the representations and are estopped from seeking payment again from the Banks. The question to be determined is then whether the Public Trustee is also subject to the estoppel.
Estoppel binds both a representor and his or her privies in interest.[119] The Banks contend that for the purposes of the law of equitable estoppel, the Public Trustee is a privy in interest of the Martins, and the Martins are privies of the Public Trustee, meaning that they are bound by each other’s conduct, including their representations. While this issue has not been considered in the context of equitable estoppel, the issue has been considered with respect to res judicata, issue estoppel and Anshun estoppel in the case of Timbercorp Finance Pty Ltd (in liquidation) v Collins,[120] which concerned the question of whether group members of a class action were bound individually by issue estoppels and res judicata from adverse decisions against them. French CJ, Kiefel, Keane and Nettle JJ approved the principle referred to by Barwick CJ in Ramsay v Pigram,[121] stating:[122]
The basic requirement of a privy in interest is that the privy “must claim under or through the person of whom he is said to be a privy”. The principle underlying the concept of privies is that “one who claims through another is, to the extent of his claim, subject to … all estoppels affecting the person through whom he claims”. That principle is in turn informed by the theory that a person who takes a benefit ought also to bear a burden.
(Footnotes omitted)
[119] K R Handley, Estoppel by Conduct and Election (Thomson Reuters, 2^nd ed, 2016) at [6-009].
[120] (2016) 259 CLR 212.
[121] (1968) 118 CLR 271 at 279.
[122] Timbercorp Finance Pty Ltd (in liquidation) v Collins (2016) 259 CLR 212 at [54].
The Banks say that as the Public Trustee claims through the Martins as a privy, the Public Trustee is subject to the equitable estoppel that binds the Martins from seeking payment from the Banks due to the representations they made to the Banks.
The Banks argue that as equitable estoppel is a flexible doctrine,[123] it may prevent the Public Trustee from claiming 60 per cent of the monies in the accounts, while permitting the Public Trustee to claim 40 per cent of the accounts to be distributed to the charities. They further note that there is no requirement that the Martins be a party to the action in order for the estoppel to be enlivened, however even if there was, r 83 of the Supreme Court Civil Rules 2006 (SA) would permit the Court to join the Martins to the action if deemed necessary.
[123] Walton Stores (Interstate) Pty Ltd v Maher (1988) 164 CLR 387 at 419 (Brennan J).
The Public Trustee concedes that in closing the accounts and paying the monies to Michael, the Banks relied upon the consent given by the Martins. However, while the Banks may have relied, to their detriment, on the conduct of the Martins, the Public Trustee says that it is not estopped from claiming against the Banks.
While Michael represented that he was the executor of the estate under the purported 2008 will, he made no specific representation as to the status of that document. At its highest, there was an implied representation buttressed by Philomena and Francis’ consent and statutory declarations that the Banks should pay Michael because the purported 2008 will was the last will.
Moreover, the Martins were not privies of the Public Trustee as executor of Mary’s estate and conversely, the Public Trustee is not the privy of the Martins as representors to the Banks. As such, the Public Trustee cannot be bound by any estoppel founded on representations made by the Martins. The action against the Banks has not been brought through or under the Martins, rather, the Public Trustee claims against the Banks for return of money in its capacity as executor of Mary’s estate. The Public Trustee can only claim against the Bank as a privy of Mary, because Mary was the customer of the Banks, the Public Trustee is executor under Mary’s last true will and entitled to collect debts owed by the Banks to Mary as a customer under the relationship of banker and customer. The Public Trustee’s claims against the Banks are independent of and unrelated to the representations made by the Martins to the Banks and are not subject to an estoppel by virtue of the Martins’ conduct. The defence of estoppel is not available.
The defence of equitable set-off
The CBA maintains that it has a claim for an indemnity against Michael pursuant to the indemnity.[124] Bank SA maintains it has a claim for an indemnity provided by the statutory declarations against the Martins.[125]
[124] Exhibit P27.
[125] Exhibit P44; Exhibit P47.
The Banks argue that the indemnities permit them to set-off in equity the claim by the Public Trustee against their claims in relation to the Martins as beneficiaries.
The Banks submit that equitable set-off does not require mutuality of claims.[126] Although the CBA has not brought proceedings against Michael and Bank SA has not brought proceedings against the Martins, and the Martins are not before the Court, equity permits set-off even where the claim is not between the same parties in the same right.
[126] JD Heydon, MJ Leeming and PG Turner (eds) Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (LexisNexis Butterworths, 5^th ed, 2015) at [39-005].
The Banks submit that in order to establish set-off, the essential requirement is that their claims impeach, or go to the root of, or are essentially bound up with, the title of the Public Trustee.[127] The claims for indemnities are said to impeach the Public Trustee’s claims. Any monies recovered in this action will be distributed to the beneficiaries of Mary’s estate in the course of the administration of the estate. The Martins are three of those beneficiaries. It is submitted that the action is brought on their behalf to the extent of 60 per cent of the quantum sought to be recovered. The Banks say that the indemnities were given to prevent the very claims in this action being brought. This is said to provide sufficient connection between the claims to permit equitable set-off.
[127] Rawson v Samuel (1841) 41 ER 451; Hawes v Dean [2014] NSWCA 380 at [58]-[81].
The Public Trustee submits that the same problems arise in respect of this defence as arises with respect to the defence of consent and estoppel in that it did not bring this action on behalf of the beneficiaries. Even if it was in fact acting on behalf of the beneficiaries, the Public Trustee contends that the defence of equitable set-off would not be available in these circumstances.
In support of this contention, the Public Trustee relies on the decision of the English Court of Appeal in Ex parte Morier; in re Wills, Percival and Co (“Morier”)[128] where two executors, a brother and sister, kept an executorship bank account in their joint names. The brother also kept a personal bank account with the same bank. He was the residuary beneficiary of the estate under the deceased’s will. While the deceased’s debts, funeral and testamentary expenses had been paid, there were some expenses of the administration of the deceased’s estate which had not been paid and which the executors were jointly liable to pay. The bank went into liquidation, and at that time the joint account was in credit, while the brother’s personal account was overdrawn. The question for determination was whether the amount owing by the brother to the bank could be set-off against the credit in the joint account.
[128] (1879) 12 Ch D 491.
The Court held that equitable set-off could not be permitted in the circumstances, because the money was due in one right to the brother and in another to the sister and brother. Morier is said to be authority that in a situation where a number of persons are interested in the residuary estate of the deceased, the Court will not, in order to found an equitable set-off, enquire into the state of interests of the persons interested in the estate in order to determine whether any part of monies in a bank account are to be regarded as belonging in equity to a person against whom the bank has a claim in set-off. Accordingly, the Public Trustee submits that this Court should not engage in an accounting exercise in an attempt to quantify the interests of the residuary beneficiaries in Mary’s estate.
As submitted by the Banks, there is no requirement in any modern Australian authority to the effect that a set-off may only arise in the case of a deceased estate where the estate has been administered. As postulated by the Banks’ counsel, the concept would appear to be a holdover from the pre‑Judicature Act reasoning that an equitable set-off could not arise in respect of an unliquidated claim.[129]
[129] Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199; Bankes v Jarvis [1903] 1 KB 549.
The decision in Morier has been applied in Australia in Williams v MacDonald, where A’Beckett ACJ stated that the entitlement to the action had not been “proved beyond all doubt, but it sufficiently appears to enable me to terminate this litigation in a manner consistent with fair dealing and the extinguishment of liability of the defendant to the plaintiff”.[130]
[130] [1915] VLR 229 at 231.
I agree with the submission that Morier rests on its own particular facts where there were two accounts with a bank, one in surplus and the other in overdraft. A better understanding of its reasoning is that, on the facts, there was an insufficient connection between the liquidator’s claim against the son’s overdraft account and the executors’ claim for payment of the debt account, despite the son being one of the executors and a residual beneficiary.
Conclusion
The Public Trustee, as executor of Mary’s estate has a claim in debt against the CBA and Bank SA pursuant to contracts between customer and banker.
Michael is liable to account for the assets of Mary’s estate that he illegitimately dealt with in his capacity as an executor de son tort.

The Banks are not executors de son tort.
The Banks took a risk in circumstances where they could have acted conservatively and prudently by insisting upon the production of a grant of probate. As the “Waiver of Probate/LOA Assessment Sheet” reveals, the CBA “assessed the risk as minimal and [their] requirements [were] not difficult to be met”.[131] Without a grant of probate, the Banks could not obtain a valid release from their debts to Mary from Michael as a person claiming to be the executor of her estate pursuant to an unproven will.
[131] Exhibit P24.
Unaware of Michael’s unlawful acts, the Public Trustee, by consenting to the Compromise, cannot be taken to have ratified Michael’s conduct in discharging the debts of the Banks. The Public Trustee is not bound by the Martins’ consent and its claim against the Banks is independent of and unrelated to the representations made by the Martins to each of them and is not subject to an estoppel.
The Public Trustee gave no reason for not adducing any evidence regarding Philomena and Francis’ knowledge of and involvement in Michael’s intermeddling. It is evident that the Public Trustee had access to them at least at the time of the interim distribution. I am highly suspicious that Philomena and Francis were, putting it colloquially, in cahoots with Michael.
The Banks took a risk in circumstances where it was within their power to have properly protected themselves as well as the estate assets and they were duped by Michael and ostensibly by Philomena and Francis.
It cannot be that the lawful executor of Mary’s estate is entitled in its administration to collect an asset which has been collected by one of the beneficiaries on behalf of himself and, as the evidence suggests, two of the other five beneficiaries. This is a matter that touches the conscience of the Court. The finalization of the administration of Mary’s estate awaits the determination of these proceedings. Bearing in mind that the interest any beneficiary has in an unadministered estate springs from the duty of the executor to administer the estate, to preserve the assets and to deal with them in the proper manner, each of Mary’s beneficiaries have an interest in seeing the whole of the assets are treated in accordance with the executor’s duties. In that sense, they as a class may be said to have an interest in the entire estate. I also keep in mind that it does not follow that each piece of property which goes to make up the estate is held on a particular trust for a particular beneficiary named as its intended recipient upon completion of administration per Schultz. The beneficiaries have an interest in the collection of the remaining assets of the estate being collected in accordance with fairness and equity. This must result in the Martins being regarded as having received their share of the estate’s assets that were held by the Banks.[132]
[132] In Re Dacre [1916] 1 Ch 344.
In arriving at this conclusion, I have had regard to the Public Trustee’s submissions that the Martins have no interest in the benefit of the action and that it has no clear basis for making any distribution of the residuary estate. I also keep in mind that the Public Trustee may need to seek further advice and directions from the Court as to what course of action should be taken in the further administration of Mary’s estate, which may incur further testamentary expenses. Likewise, I take into account that the Public Trustee saw fit, just before these proceedings were instituted, when there was a surplus of $212,140.06 in Mary’s estate account and all debts and all commission with two exceptions had been paid, to make the interim distribution on 2 October 2015 to all of the beneficiaries with the exception of Michael. Those two exceptions are further administration/legal costs and tax. No tax return has been filed in respect of the estate to date. As s 161 of the Income Tax Assessment Act 1936 (Cth) mandates the filing of a tax return in respect of a deceased estate every year, I infer the Public Trustee has not done so because there has been no assessable income. I accept the Banks’ submission that any tax liability to finalise the administration will not be great. Further, whilst no evidence was adduced regarding commission and legal fees, as an experienced professional executor, I infer the Public Trustee would only have maintained the prosecution of these proceedings if it had made an assessment of what those expenses might be.
I find that the distribution was made in the expectation that there was going to be a surplus in the estate to make those distributions as well as pay any further debts that may arise. As argued by the Public Trustee, this Court should not engage in an accounting exercise in an attempt to determine what any of the beneficiaries’ interest in Mary’s estate is. I do not need to undertake a forensic analysis. I infer that the State’s professional executor would not have embarked upon this Supreme Court litigation, which it knew was contested, without ensuring there were sufficient funds to protect itself and the estate. The Public Trustee’s evidence makes clear that in paying $84,000 in distributions at a time when it was on the cusp of issuing these proceedings that there was a surplus in the estate to make those distributions as well as pay any further debts that may arise. I am satisfied that full administration in the circumstances of this estate does not need to have taken place for equity to be invoked and to find that, for the purposes of permitting equitable set-off, the Public Trustee’s action was brought for the benefit of the Martins.
The unique facts of this matter make it an exceptional case such that, consistent with the inherent flexibility of equitable remedies, a set-off is appropriate in all of the circumstances notwithstanding that the Public Trustee’s claim and the Banks claims are not mutual. As a matter of principle, there is no compelling reason why this Court’s jurisdiction in equity would not have the discretion to permit a set-off despite the absence of mutuality.[133]
[133] Rory Derham, Derham on the Law of Set-Off (Oxford University Press, 4^th ed, 2010) at [4.68].
All that has occurred in relation to Mary’s estate when viewed through the “optics” of equity, “which does not seek to define what an elephant is but knows one when it sees one”, [134] leads me to the fair and equitable conclusion that there is “sufficient connection”[135] between the claims to regard:
·CBA’s claim against Michael impeaching 20 per cent of the Public Trustee’s claim to recover the amount Mary had on deposit with the CBA immediately prior to her death plus accrued interest; and
·Bank SA’s claim against the Martins impeaching 60 per cent of the Public Trustee’s claim to recover the amounts Mary had on deposit in two accounts with Bank SA immediately prior to her death plus accrued interest;
such that equity will permit an equitable set-off.
[134] Forsyth v Gibbs [2008] QCA 103 at [8]–[9] (Keane JA).
[135] Forsyth v Gibbs [2008] QCA 103 at [14] (Keane JA).
The CBA is entitled to set-off in its claim pursuant to the indemnity against the Public Trustee’s claim to the extent of the amount Michael would otherwise receive, namely 20 per cent of the residuary estate in accordance with the Compromise.
Bank SA is entitled to set-off in its claim pursuant to the indemnities given in the statutory declarations against the Public Trustee’s claim to the extent of the amount that Philomena, Michael, and Francis would otherwise receive, namely 60 per cent of the residuary estate in equal shares.
I will hear the parties as to the form of the orders and questions of interest and costs.