Abu-Arab v NSW Trustee & Guardian

(1) Obligation to apply for letters of administration 18The Plaintiff submitted that it is clear from Andrews v Hogan that, in the first place, the Trustee is the appropriate defendant. That is because that case affirms that the estate is vested in the Public Trustee. 19The Plaintiff points to the following passages in that judgment to suggest that any vesting of the estate is not limited in any way (cf: Byers v Overton Investments Pty Ltd [2000] FCA 1761 at [45]; Byers v Overton [2001] FCA 760; (2001) 109 FCR 554 at [11] and [19]): Bucknill LJ in Fred Long and Son Ltd v Burgess [1950] I KB at 119 ... says, "I think that, on principle, and historically, the vesting of the estate in the President is a positive act with some legal substance". (at p. 234 per Dixon CJ) The Public Trustee was no less competent to be served with a statutory Notice to Quit given in pursuance of the Act than with the process which the Act requires a lessor to serve upon a lessee in order to bring proceedings for the recovery of possession. It is not necessary to decide whether the Public Trustee would be bound to defend the possession. Obviously there might be cases in which it would be in the interest of the beneficiaries of the estate that he should do so (at p. 240 per McTiernan J). The "lease" of the premises being vested in the Public Trustee, and he being the lessee of the premises within the meaning of the Landlord and Tenant (Amendment) Act, it would seem to follow that he must be the proper person to be served with a Notice to Quit under the Act (at p. 245 per Fullagar J). It could not, one would think, be correct to say that the Public Trustee was properly served with a Notice to Quit because he was the "lessee" of the claimant within the meaning of the Act, and to say at the same time that he was not the "lessee" against whom proceedings under the Act must be taken and to whom the protection of the Act was accorded (at p. 246 per Fullagar J). A surrender of a lease can only be effected by the owner of the term to the owner of the reversion. Here the Public Trustee was the owner of the term. ... It is unnecessary to attempt to define generally the position of the Public Trustee under s 61. That he has some rights and powers would seem almost necessarily to follow, though it may very well be that he has no active duties (at p 250 per Fullagar J). In my opinion, the Public Trustee ... is legally capable of surrendering a lease vested in him (at pp. 251-252 per Fullagar J). 20The Plaintiff argued that the Trustee has active duties in the form of obligations, and that those obligations include the obligation to take out letters of administration in the estate. The Plaintiff put forward a number of policy considerations which he said support the active duty for which he contends: (a) The law encourages debtors to pay creditors and that cannot be achieved until the estate is administered; (b) The ANZ Bank cannot obtain a discharge on the surplus bank funds of $97,000 unless it pays it to the estate's administrator; (c) Because none of the next of kin intend to apply for letters of administration the Defendant is the most practical applicant; (d) Although the estate appears to be insolvent, there are sufficient funds to pay for the costs of the Defendant's application for letters of administration; (e) The Defendant has the expertise to investigate the Plaintiff's claim for debt and to decide if it should be paid; (f) It is unnecessary for the Plaintiff to commence bankruptcy proceedings in relation to the estate. 21A number of matters suggest that there is no duty or obligation on the Trustee to seek letters of administration in the estate. First, although s 11 of the NSW Trustee and Guardian Act 2009 (NSW) enables the Trustee to be appointed to and act in the capacity of executor or administrator, s 13(1) of the Act provides: (1) The NSW Trustee may refuse to act in a trust capacity or may accept subject to conditions. However, the NSW Trustee must not refuse merely on the ground of the small value of the trust property or estate concerned. 22Trust capacity is defined in s 3 as meaning any of the capacities specified in section 11 (1). The capacities specified in that sub-section are as follows: (1) The NSW Trustee may be appointed to and act in any of the following capacities: (a) trustee, (b) executor or administrator, (c) collector of estates under an order to collect, (d) agent or attorney, (e) guardian or receiver of the estate of a minor, (f) receiver of any other property. 23Whatever may have been the position prior to this Act, s 13 makes it clear that there is no obligation on the Trustee to seek Letters of Administration. However, the position at common law is the same for the reasons which follow. 24Secondly, subject to one exception, no person is obliged to obtain probate even when named as an executor of a will, or to seek letters of administration. The one exception is where an executor named in a will or some other person has intermeddled in the estate. In such circumstance, an executor may not be permitted to renounce, and any other intermeddler may also become an executor de son tort. It is not suggested here that the Trustee has intermeddled. 25Thirdly, assuming, as I concluded in Gel Custodians, that the law is correctly stated in the judgments of Fullagar and McTiernan JJ in Andrews v Hogan, (the other judges in that case reached the same result for different reasons), there is, nevertheless, no support found in those judgments for the Trustee having positive obligations to do anything, let alone an obligation to take out administration in an intestate estate. 26Fullagar J, having approved what was said in Anderson v Bowles (1951) 84 CLR 310 at 320, said (at p. 246): The position stated in Anderson v. Bowles [1951] HCA 61; (1951) 84 CLR 310 most probably needs qualification in a case in which the "lessee" for the purposes of the Act is the Public Trustee, because it may very well be that the Public Trustee is not personally liable for rent or for performance of the obligations placed on the lessee by the lease. 27He also said (at p. 250): It is unnecessary to attempt to define generally the position of the Public Trustee under s. 61. That he has some rights and powers would seem almost necessarily to follow, though it may very well be that he has no active duties. 28A little later he said (at p. 251): It does, however, seem necessary in this case to consider the more limited question whether the Public Trustee could effectively surrender a lease which was vested in him under s. 61. This question was answered in the negative by Herron J. in Triggs v. Byron (1950) 67 WN (NSW) 183. I can only say that I am, with respect, unable to see any reason for denying to the Public Trustee the legal capacity to surrender a lease vested in him. I am well able to understand that he would be most unwilling to do any positive act which would amount to a surrender, or to do anything which might affect the rights of persons really interested in an estate vested in him. 29McTiernan J found that, although the Public Trustee was in law competent to be served with the statutory Notice to Quit, he was under no duty to notify any of the respondents as sub-lessees of the receipt of the Notice to Quit. This was despite the fact that each of the sub-lessees would have, had the right to be heard under the statutory regime which applied. That conclusion of McTiernan J and what was contained in the last passage from Fullagar J ([28] above) both highlight the lack of an obligation or duty, notwithstanding that the Trustee has a power or capacity. 30In Holloway v The Public Trustee (1959) 59 SR (NSW) 308 Walsh J followed Andrews v Hogan and said that he considered that Ex parte Public Trustee; Re Birch (1951) 51 SR (NSW) 345 had been superseded by Andrews v Hogan and Perpetual Trustee Co. Ltd v Public Trustee (1956) 73 WN (NSW) 546. In Re Birch Street CJ had said (at p. 350) that no action could be brought against the Public Trustee and he was not a proper party to be joined to legal proceedings merely because of the terms of s 61. 31I discussed the authority of Re Birch in Gel Custodians at [41] ff. Its authority is unclear because, despite what was said in Andrews v Hogan that appeared to be inconsistent with what Street CJ had said, the Full Court in Perpetual Trustee Co. Ltd v Public Trustee disagreed with the assertion that Re Birch could no longer be regarded as laying down the law correctly. 32In any event, Walsh J went on to say in Holloway (at p. 311): I am concerned here with the obligations and duties of the Public Trustee, rather than with his capacity and powers. I have found no case in which it is asserted that he has any obligations or duties, and in particular in which it is asserted that he has any obligation or duty to pay rent under a lease. On the other hand, there are weighty observations in support of the opposite view. 33His Honour then went on to discuss what had been said by Fullagar J in Andrews v Hogan in the passage I have quoted at [26] above. He also made reference to what was said by the Full Court of the Supreme Court in Ex parte Newlands Brothers Pty Ltd; Re Kenniff (1956) 56 SR (NSW) 35 at 38: In Andrews v Hogan, it was held that a lease or weekly tenancy having just become vested in the Public Trustee on the death of a tenant, he was the proper person to be served with a Notice to Quit under the Act, and this was so even though he was under no duty in regard to the estate and had no liability imposed upon him for the payment of rent, or the performance of any obligations placed upon the lessee by the lease. Although he had some rights and powers, he would appear to have no active duties. 34Walsh J then went on to make reference to what McTiernan J had said in Andrews v Hogan, that in Smith v Mather (1948) 2 KB 212 the Court said that the President (i.e. the Public Trustee) incurred no financial responsibility. A similar statement was made by Cassels J in Harrowby v Snelson [1951] 1 All ER 140 at 145. Walsh J then concluded (at p. 312): In view of the foregoing authorities, I must conclude that there is no liability or obligation upon the Public Trustee to pay rent. 35In Byers v Overton [2001] FCA 760; (2001) 109 FCR 554 the Full Court of the Federal Court said: Following Andrews v Hogan (supra), it cannot be said that there is any definitive exposition of the power and capacity of the Public Trustee to deal with property deemed to be vested in him by s 61. It is clear, however, that while the Public Trustee is no mere empty vessel, there are limits to the Trustee's power and responsibility for such property; see Holloway v Public Trustee (1959) 59 SR (NSW) 308 (no obligation to pay rent), Re Hart [1963] NSWR 627 and Re Cameron; Cameron v Public Trustee [1982] WAR 55 (the Public Trustee should not be joined to litigious proceedings). ... 36In no case has it been suggested that the Trustee is under an obligation to take out administration in an intestate estate because nobody else does so. It must follow that if the Trustee is not under an obligation to pay the rent, although a lease becomes vested in him, he cannot be under an obligation to take out Letters of Administration, which might put in him the position of obligation to pay such rent. 37The matters of policy put forward by the Plaintiff cannot result in an outcome inconsistent with the authorities to which I have referred and to the provision of s 13 NSW Trustee and Guardian Act. 38There is simply no basis, therefore, for the making of the declaration and orders in paragraphs 1 to 4 of the Plaintiff's Notice of Motion. (2) Is the Trustee the proper Defendant? 39The fact that the Trustee has no duties or obligations as discussed in the previous paragraphs is a relevant consideration in determining whether the Trustee is the appropriate defendant in a claim such as the present. In Andrews v Hogan, and some earlier cases, it was held that where a lease vested in the Public Trustee at the death of a deceased, it was appropriate for a notice to quit to be served upon him. Fullagar and McTiernan JJ appeared to take the view that it was the natural corollary from that proposition that it was appropriate for the Public Trustee to be named as a defendant in the possession proceedings, which would follow the service of a valid notice to quit. 40An order for possession, as I have noted, is an order in rem. It was for that reason that I took the view in Gel Custodians that a mortgagee stood in the same position as a lessor with regard to taking proceedings for possession where an estate had not been administered. It was necessary for some person to be the defendant so that an order could be made that bound every person who might be affected. 41The position is entirely different where the claim sought to be brought is a claim in personam. It may be that all of the assets and liabilities of the deceased vest in the Trustee pursuant to section 61. However, because the Trustee has no particular duties or obligations arising from that vesting, it cannot be said that the Trustee has a liability for the debt that has vested in him. He has no obligation to pay the debt. Further, were administration to be taken out, the administrator would only be liable for the debt to the extent of the net assets in the estate. Until the estate is got in by the administrator the extent of the administrator's liability to a creditor would not be able to be ascertained. 42As was made clear in Holloway, the Public Trustee was under no liability or obligation to pay rent under a lease that vested in him on a deceased's death. A fortiori, the Trustee cannot have any liability for a debt of the Deceased's prior to administration being obtained by him. 43In Atsas v Gertsch [1998] NSWSC 522 the Plaintiff brought proceedings against an estate seeking damages based on contract or estoppel. The Deceased died on 19 October 1990. The Executor named in the will obtained probate on 11 January 1991, but when it was ascertained that the will was a forgery an order was made revoking probate on 16 December 1994. On 26 September 1995 Letters of Administration were granted to the Deceased's brother. The Plaintiff's proceedings were not commenced until 25 June 1997. An issue was raised about whether the Plaintiff was statute-barred in that the proceedings were commenced more than six years after the date of the death of the Deceased. 44Hodgson CJ in Eq (as his Honour then was) said: Turning to the position in relation to actions against the estate, based upon causes of action arising upon or after the death of the Deceased, I accept Mr Lovas' submission that the effect of the cases cited by him is that the Public Trustee does not represent the estate for the purposes of proceedings brought against the estate; It is true that Andrews v Hogan and Perpetual Trustee Co v Public Trustee established that a Notice to Quit could be served on the Public Trustee, but that concerned providing the landlord with a remedy in rem to recover possession of land subject to a tenancy held by the Deceased. 45The Plaintiff submitted that Atsas v Gertsch should be distinguished but how that should be done was not explained. Nor was it explained what basis there would be for doing so when the statement sits comfortably with what was said in Andrews v Hogan. 46If the Trustee does not have any obligation to repay the Deceased's debt to the Plaintiff, it is difficult to see how it can be said that the Defendant is the proper defendant to the proceedings. A judgment could never be given against the Trustee because he has no liability to the Plaintiff, nor an obligation to pay the debt. 47Mr Bates of counsel for the Plaintiff submitted that simply because a judgment could not be enforced against a defendant, that was not a basis for concluding that the person was not an appropriate defendant. He drew an analogy with obtaining a judgment against a person where such judgment could not be executed because the person had no means of paying it. The analogy is a false one. A person may have a liability for a debt or a liability to pay damages but not be able to meet any judgment given. In the present case the Defendant, the Trustee, has no liability or obligation for the debt. 48If the Plaintiff's submission that the Trustee is the appropriate Defendant is correct, the result would be that a judgment could be obtained against the Trustee if the Trustee did not defend or successfully defend the claim. Indeed, the Plaintiff made it clear that he wishes to obtain a default judgment against the Trustee, presumably because the Plaintiff assumes that the Trustee will not defend the proceedings. 49The Plaintiff submitted that s 21 of the NSW Trustee and Guardian Act supported his position in this regard. Section 21 provides: NSW Trustee may sue itself in another capacity (1) The NSW Trustee, acting in one capacity, may maintain proceedings against itself acting in another capacity. (2) However, in any such case the NSW Trustee may apply to the Supreme Court for direction as to the manner in which the opposing interests are to be represented and must comply with the Court's directions. The Plaintiff submitted that this section would enable a judgment to be given against the Trustee only in its capacity as an administrator with the result that the only judgment that could be enforced would be enforced against the estate and not against the Trustee's general assets. This was because the Trustee represents the estate. 50I do not think s 21 says anything at all about enforcement of judgments nor anything about whether the Trustee is a proper defendant in proceedings such as the present. It is a section which makes clear, for example, that the Trustee may be able to sue itself to the extent that it has different capacities, such as being administrator or executor of two estates that have rights or obligations against the other. 51Since s 13 permits the Trustee to refuse to act as executor or administrator, or even as the collector of estates under an order to collect, or as a receiver of any other property, a determination that the Trustee was the appropriate Defendant in claims such as the present would be a circumvention of s 13. It would have the result that the Trustee would be the appropriate defendant in every case where a plaintiff sought relief against a deceased, and administration was not taken out in an estate. 52The Plaintiff submitted that s 13 must be read in the light of, and consistent with, s 61. I do not consider the sections are in any way inconsistent that necessitates a reading down of s 13. They are not concerned with the same subject matter. 53The cases say that the Trustee does not have the right to bring proceedings in reliance on the vesting derived from s 61: Ex parte Newlands Brothers at 40; Bone v Commissioner of Stamp Duties (1974) 132 CLR 38 at 46 per Stephen J; Foy v Public Trustee (1942) 42 SR 209 at 211; Scallan v Scallan [2001] NSWSC 1129 at [12]. It would be anomalous in those circumstances if the Trustee could be sued by virtue of s 61 but could not, for example, cross-claim against a plaintiff or any other person arising out of the same cause of action. This is a further indication that the proceedings cannot be brought against the Trustee. 54The Plaintiff submitted further, that although Andrews v Hogan did not provide support for the Trustee being the appropriate defendant, the case was not against the Plaintiff's proposition. However, the Plaintiff was unable to point to any case or principle which would justify a finding that the Trustee was the appropriate defendant. 55In my opinion, the Trustee is not the appropriate defendant to the claim made. Conclusion 56The Plaintiff is not without remedy. As Mr Meek SC for the Trustee pointed out in his very thorough submissions, the Plaintiff could himself seek Letters of Administration as a creditor of the estate. Alternatively, the estate could be administered in bankruptcy pursuant to an application under s 244 Bankruptcy Act 1966 (Cth). 57I would add also that the Plaintiff could seek to have an administrator ad litem appointed or an order could be made under r 7.10 (2)(b) UCPR. I note what Hodgson CJ in Eq said of the equivalent rule (R 8.16 Supreme Court Rules) in Atsas v Gertsch, that he knew of no authority which suggested that the rule could be used where there is no defendant to proceedings unless and until an order is made under the rule. Even if that statement is correct, that is not the position in the present proceedings. 58The Trustee is not a proper defendant in the proceedings. The claim pleaded against the Trustee discloses no reasonable cause of action. On the face of it, the Defendant is entitled to an order under r 13.4 dismissing the proceedings. 59At the end of his submissions, the Plaintiff's counsel sought, in the alternative if he otherwise failed on his Amended Motion, an order under r 7.10 (2)(a) UCPR. I do not consider that it would be appropriate to order that the proceedings continue in the absence of a representative of the estate. This is not a claim where the estate has an interest incidental to relief being sought against other parties. It is a claim against the estate. There are known to be next of kin. 60However, in the light of s 56 of the Civil Procedure Act 2005 (NSW), I think the better course is either to remove the Defendant pursuant to rule 6.29 UCPR notwithstanding that this will leave no defendant to the proceedings (Electronic Industries Imports Pty Ltd v Public Curator of Queensland [1960] VR 10) and/or stay the proceedings under s 67 Civil Procedure Act to enable the Plaintiff to decide if he wishes to proceed and, if so, on what basis. 61The parties should bring in Short Minutes accordingly. If the proceedings are not to be dismissed entirely, the Short Minutes should seek leave to amend the relief claimed in the Statement of Claim. The Short Minutes should provide that the Plaintiff pays the Defendant's costs of the proceedings because the Plaintiff has been entirely unsuccessful in the motions and the Defendant should have never been joined to the proceedings.

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