Barns v Barns

Barns v Barns - [2003] HCA 9 - HCA 2003 case summary — Zoe

[10]

In his dissenting judgment in Schaefer v Schuhmann[1], a decision of the Privy Council on an appeal concerning the Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW), Lord Simon of Glaisdale referred to the history of legislation of the kind presently in question[2]. Such legislation was enacted in order to subject freedom of testamentary disposition to discretionary curial intervention in certain classes of case, where moral rights and obligations of support were disregarded. It took as its focus of attention the family, which his Lordship described as "the social and legal institution within which these ... rights and obligations are worked out"[3]. Its purpose was "to prevent family dependants being thrown on the world with inadequate provision, when the person on whom they were dependent dies possessed of sufficient estate to provide for or contribute towards their maintenance"[4]. The first such legislation was enacted in New Zealand: the Family Protection Act 1908 (NZ). It was followed in New South Wales by the Act of 1916 mentioned above, in other Australian States, and in the United Kingdom by the Inheritance (Family Provision) Act 1938 (UK). The present South Australian Act repealed and replaced the Testator's Family Maintenance Act 1918 (SA).
The general scheme of the original legislation, which is replicated in the Act, but which has since been altered in later legislation in the United Kingdom, and some Australian jurisdictions, was relatively simple. It identified certain classes of person, typically a spouse, parent, child, or sibling, who might have a moral claim upon the bounty of a deceased. Where a deceased who was subject to such a moral claim failed to make adequate testamentary provision for the maintenance, education or advancement of such a person, then the court was empowered, in its discretion, to order that provision for such person be made out of the estate of the deceased.
Such legislation was necessarily limited in its effect by the testamentary setting in which it operated. The capacity of a court to give effect to the moral claims of a person was limited by the extent of the deceased's estate, as well as by other competing claims on the deceased's bounty. The legislation had no practical effect in relation to property of which the deceased was not the beneficial owner at the time of death. Thus, a legally effective disposition of property prior to death placed such property beyond the reach of the legislation. This inherent limitation in the legislative scheme was emphasised by a statutory provision that an order made in favour of a successful claimant should take effect as a codicil to the deceased's will executed immediately before death.
In recent years, in some jurisdictions, amendments have been made to the legislative scheme. In New South Wales, for example, the Family Provision Act 1982 introduced a concept of a "notional estate"[5]. However, the Act with which we are concerned follows the original scheme.
Section 6 of the Act identifies the classes of person who are entitled to claim a benefit. Relevantly, they include a child of a deceased person. Section 7 provides that where a person has died domiciled in South Australia owning real or personal property in the State, and, by reason of his testamentary dispositions, or intestacy, a person entitled to claim a benefit is left without adequate provision for proper maintenance, education or advancement in life, the court may, in its discretion, "order that such provision as the Court thinks fit be made out of the estate of the deceased person for the maintenance, education or advancement of the person so entitled". There is a time limit on making applications (s 8). The order for provision may specify what part of the estate of the deceased person will bear the burden of the provision (s 9). Every provision made by an order is to operate and take effect as if it had been made by codicil to the deceased's will executed immediately before death or, if the deceased was intestate, by a will executed immediately before death (s 10).
Three matters may be noted. First, provision may be made, and can only be made, out of a deceased's estate; that is to say, out of property which is beneficially owned by the deceased at the time of death and which passes to the deceased's legal personal representative[6]. Secondly, contractual obligations undertaken by a deceased during his lifetime, which bind an estate, may affect the property available to meet an order under the Act. For example, if, during his lifetime, a testator contracted to sell Blackacre, and the contract remained on foot at the time of death, although full beneficial ownership of Blackacre had not passed to the purchaser at the time of death[7], Blackacre would not be an available asset for the purposes of an order for provision, although the purchase price payable under the contract would be. And, of course, if the contract were subsequently rescinded, the position would change. Thirdly, the estate out of which an order for provision may be made is the available estate after meeting the liabilities of the deceased. Obligations incurred by a deceased, and binding upon a legal personal representative, must be taken into account in determining the extent of the estate out of which provision may be made.

[11]

Because of the procedural background to these appeals, it is neither necessary nor possible to explain in full the family circumstances that gave rise to the appellant's application. The substantial merits of the case have never been litigated. The only facts proved in evidence are those that were regarded by the parties as material to certain legal issues raised for preliminary decision.
The deceased and the second respondent carried on business together as farmers near Wudinna in South Australia. The net value of the deceased's estate at the time of his death was about $1.8 million. There is no information before the Court as to the value of the assets of either the first or the second respondent. The first respondent had worked on the family farm for the whole of his working life. The appellant, who had two children, had been married and divorced. She and her husband had embarked upon a failed business venture. She had been made bankrupt.
Although the evidence on the topic is thin, it appears that the deceased and the second respondent had made some financial provision for the appellant. Subject to that provision, they wished their son, the first respondent, to inherit their assets. The evidence did not deal with the history of their financial relationship with their son, or the arrangements under which he worked on the farm. Those were matters that may have become relevant if the appellant's claim had not failed in limine.
The deceased and the second respondent took legal advice. A solicitor described that advice as relating to "the steps ... Lyle and Alice Barns should take should they wish to effectively exclude their [daughter] from participating in the estate of the survivor of them" (emphasis added). This was said to be on the assumption that the first of them to die would leave his or her entire estate to the survivor. The present proceedings do not concern the estate of the survivor. They concern the estate of the first to die.
Pursuant to that advice, on 2 May 1996, a deed was entered into between the deceased and the first and second respondents. The deed recited that the first respondent was the natural son of the deceased and the second respondent, that the deceased had agreed with the other parties to make a will in a certain form, that the second respondent had agreed with the other parties to make a will in a certain form, that the deceased had agreed to act so as to ensure that all property owned by him at his death devolved in accordance with the will unless the other parties consented to the contrary, and that the second respondent had made an agreement to the like effect. By cl 3 of the deed, the deceased and the second respondent agreed to make wills in the form annexed, and not to revoke those wills without the written consent of the other parties to the deed. By cl 6, it was agreed that failure to perform the terms of the deed would give a right to specific performance. It is to be noted that there was nothing in the deed to prevent the deceased from disposing of assets during his lifetime. He agreed to act so as to ensure that all property owned by him at his death devolved in accordance with the agreed form of will[8]. The second respondent accepted a like obligation.
In accordance with the deed, the deceased executed a will. By his will, the deceased appointed the first respondent his executor. He gave the whole of his estate to the second respondent on condition that she survived him for 30 days (as she did). If she did not survive him, the whole estate was to go to the first respondent. Similarly, the second respondent executed a will. She appointed the first respondent her executor. She gave the whole of her estate to the deceased on condition that he survived her for 30 days. If he did not survive her, the whole estate was to go to the first respondent. Thus, if the wills remained unaltered, the first respondent would inherit the whole estate of whichever of his father or mother survived the other. It was that estate which the solicitor had set out to protect from claims of the appellant. The essence of the arrangement was that the estate of the first to die of Lyle and Alice Barns would devolve by will upon the survivor of them, and the estate of the survivor would devolve by will upon their son. It is the first of those steps that is presently in question.

[13]

The proceedings were assigned to a Master of the Supreme Court, Judge Burley. The parties evidently considered that the effect of the deed and the mutual wills could have a decisive bearing on the outcome of the appellant's claim under the Act. The appellant, anticipating reliance on the deed and the wills by the first and second respondents, made a pre-emptive strike. She pleaded, in her Statement of Claim, that the deed was void as being contrary to public policy. Judge Burley ordered that the issue relating to the validity of the deed be heard and determined as a preliminary issue. He heard argument on the point, ruled in favour of the appellant, and declared that the deed of 2 May 1996 was void as being contrary to public policy. The argument was conducted on the agreed basis that the subjective intention of the parties to the deed was irrelevant. The Master found that the objective purpose of the deed was to preclude a claim under the Act that might otherwise be made by the appellant. He regarded the deed as a contract made "with a view to excluding the jurisdiction of the court under the Act", of the kind referred to in Schaefer v Schuhmann[9].
There was an appeal to the Full Court of the Supreme Court[10]. The appeal was successful. Lander J, with whom Prior J and Wicks J agreed, noted that the sole contention advanced "was that [the deed] was void because its effect precluded the [appellant and her children] seeking and obtaining provision under the Act". He held, following Schaefer v Schuhmann, that the deed, and the wills made pursuant to the deed, had that effect. This, however, was not contrary to public policy. He said that this was a legal consequence of the scheme of the Act, and that, although the legislatures in New South Wales and the United Kingdom had taken steps to deal with the matter, no similar steps had been taken in South Australia. If there was a problem, it was for the legislature, not the courts, to address. The appeal was allowed and the deed was declared valid.
The proceedings then came before Nyland J who, consistently with the reasoning of the Full Court, dismissed the appellant's claim. The appellant now appeals against the decision of the Full Court and that of Nyland J.
It will be necessary to deal with the appellant's argument based on public policy. However, since that argument depends upon a contention as to the effect of the deed, and the wills made pursuant to the deed, it seems logical first to form a conclusion as to that effect.

[15]

Reference has already been made to an inherent weakness in the scheme of the Act, and its earlier legislative counterparts, as an instrument to deal with the mischief at which it is aimed. Provision under the Act can only be made out of the assets of which a person dies possessed. If property is not beneficially owned by a deceased, then (subject to later legislative amendments in some jurisdictions) it does not form part of the deceased's estate, and cannot be made a source of provision for a claimant under the Act. Furthermore, contractual obligations undertaken by a person prior to death, which bind the legal personal representative in the administration of the estate, may diminish the available estate out of which provision may be made. These considerations give rise to an issue which has divided judicial opinion from the earliest days of such legislation. It has never been the subject of authoritative decision by this Court, but it has been the subject of inconsistent decisions of other courts, including inconsistent decisions of the Privy Council. The issue is this: when a testamentary provision is made pursuant to a legal obligation on the part of the testator, is the property the subject of that provision available as part of the estate which may be redistributed under the Act? The cases to which reference will be made below illustrate the variety of circumstances in which such an issue might arise.
One possible solution to such a problem is to conclude that the obligation undertaken by the testator is to be given effect in the same way as any other obligation binding on the estate, and that the subject property is not part of the estate available to meet an order for provision under the Act. Another possible solution is to treat an obligation to make a will in a certain form as subject to the operation of the statute. The Act restricts freedom of testamentary disposition, and an agreement to make such a disposition is subject to the potential effect of that restriction.
The issue first arose in Tasmania in 1934. Re Richardson's Estate[11] concerned a testator who had long separated from his wife and who, for many years prior to his death, lived with a housekeeper. The testator and the housekeeper were business partners in a small business undertaking, and pooled their assets. They agreed to make mutual wills by which each was to leave the other all his or her property. Such wills were made. The testator died, leaving his whole estate to the housekeeper. The widow claimed provision under the Testator's Family Maintenance Act 1912 (Tas). At the time, there were only three permanent members of the Tasmanian Supreme Court. The case was heard at first instance by Nicholls CJ. He dismissed the widow's claim, noting that the Tasmanian legislation required the court to have regard to the net value of the estate, which was to be calculated taking account of all lawful liabilities to which the estate was subject. He held that the housekeeper had a claim to the estate which was such a liability, and that there was no available net estate. In that regard, he pointed out that the agreement for mutual wills was for valuable consideration, that the housekeeper had agreed to work without pay because of the agreement, and that, if the testator had broken his agreement, the housekeeper could have sued the testator's legal personal representatives for damages. The widow appealed. Nicholls CJ sat on the appeal, together with Crisp and Clark JJ. Nicholls CJ confirmed his earlier opinion and added[12]:

[24]

As will appear, the reasoning of Nicholls CJ was later to be approved by the Privy Council. However, at the level of purely textual analysis of the statute, Clark J may have had the better of the argument. Nicholls CJ founded his decision primarily on the statutory reference to "net estate", and the requirement to take account of all lawful liabilities. But, in the events that occurred, because the testator performed his promise, the estate was under no liability to the housekeeper. This gives rise to a possible anomaly. If the testator had broken his promise, there would have been a liability to the housekeeper. She could have sued the estate for damages, and the measure of damages would have been the value of the estate. Was the housekeeper to be worse off because the testator performed his contract than she would have been if he had broken it? That anomaly may disappear if the contract itself was subject to the potential operation of the statute.
A similar problem came before the Privy Council, on appeal from New Zealand, in Dillon v Public Trustee of New Zealand[14]. As part of a family arrangement between a testator and his children, at a time when the testator was a widower, involving undertakings as to the conduct of a farming business, the testator agreed to devise his farming lands upon certain trusts for the benefit of his children. He fulfilled that agreement. By the time of his death the testator had remarried. His widow claimed under the Family Protection Act 1908 (NZ). The question was whether the land the subject of the specific devise was, relevantly, part of the estate out of which provision could be made for the widow. The New Zealand judges were divided on the point. The case went to the Privy Council. Their Lordships were informed that there was no authority on the point either in New Zealand or Australia[15]. Evidently, the Tasmanian Law Reports were not available. Their Lordships decided in favour of the widow, holding that the circumstance that the provisions in a will are in fulfilment of a contract inter vivos does not restrict the power of the court to redistribute the estate of a testator. Viscount Simon, dealing with a contention that the statute was not to be construed as defeating obligations incurred by a testator, or rights or equities acquired by third parties by contract in good faith and for valuable consideration, said[16]:

[26]

His Lordship said that the existence of such a contract might be taken into account in considering what, if any, redistribution of the estate was just; but it could not override the court's discretionary power to make such a redistribution. He went on to consider the supposed anomaly mentioned above. He said that, if a person in New Zealand made and then broke a contract to make a testamentary gift, the measure of damages for breach would be affected by the possibility of redistribution due to the operation of the Family Protection Act. In principle, he said, the Family Protection Act affected the unqualified operation of the contract, whether the contract was fulfilled or whether it was broken. In other words, the contract took effect subject to the potential operation of the Family Protection Act.
The decision in Dillon was followed, and explained, by Street J in the Supreme Court of New South Wales in Re Seery and the Testator's Family Maintenance Act[17]. In that case, a testator agreed with his housekeeper that, if she worked for him for the rest of his life on certain terms, he would leave his house and contents to her by will. He did so. After he died, his children made a claim for provision. The question was whether it was open to the court to throw any part of the burden of an order for provision on the property given to the housekeeper. Street J held that it was, explaining that the effect of Dillon was that a promisee's rights under a contract to leave property by will may be subject to an inroad made by an order under the statute without thereby giving any consequential right, either to damages or otherwise, to the promisee. The contract was subject to the potential operation of the statute.
That case went on appeal to the Privy Council under the name of Schaefer v Schuhmann[18]. The Privy Council, by majority, reversed the decision of Street J, and declined to follow Dillon. Lord Cross of Chelsea, for the majority, examined the rights of a person on whom a testator has agreed for valuable consideration under a bona fide contract to confer a benefit by will[19]. He said:

[29]

His Lordship answered the contention that any damages for breach of such a promise would be assessed in the light of the possibility of the exercise by the court of its statutory jurisdiction by saying that, at the date of action, it would be uncertain whether or not the occasion for the exercise of the court's powers would arise[20]. It may be remarked that it would also be uncertain whether the promisee would survive the promisor, but that was a contingency for which his Lordship would allow.
His Lordship rejected the notion that the mere fact that an estate is solvent and the contract performed turns the other party to the contract from a creditor into a mere beneficiary[21]. He quoted with approval the reasoning of Nicholls CJ in Richardson. He concluded that Dillon should not be followed.
Lord Simon of Glaisdale dissented. He thought that Dillon was correctly decided, and that it gave effect to the legislative purpose. He said that, in a case such as Dillon, the "promisee's contractual or equitable rights fall to be considered along with the dependant's statutory rights"[22]. Even on a narrowly technical approach, the property promised to the housekeeper in Schaefer remained the deceased's up to the moment of his death, and became part of the estate of the deceased. As a result, the interest of the housekeeper under the contract had to compete with that of the deceased's dependants under the statute[23].
In argument in the present case, an attempt was made to demonstrate that the effect of the deed and the mutual wills was that, upon his death, the deceased was not the beneficial owner of any property; for that reason there was no estate of the deceased within the meaning of the Act; and therefore the Act was incapable of having any effect. That argument, which appeared in some respects to confuse the position of the deceased with that of the second respondent as survivor, fails. The relevant principles are set out in the judgment of Dixon J in Birmingham v Renfrew[24]. He spoke of the doctrines of equity affecting the conscience of the survivor in a case of mutual wills. They give rise to what he called a floating obligation, suspended during the lifetime of the survivor, which descends upon the assets of the survivor at the death of the survivor and then crystallizes into a trust[25]. This may have been what the solicitors had in mind when referring to a course of action that would protect the estate of the survivor from a claim under the Act. But we are presently concerned with the estate of the deceased; the first to die.
In Nowell v Palmer[26], Mahoney JA spoke cautiously of the difficulty in defining the exact nature of the "interest ... of a special kind" which the promisee has in the assets of the promisor in a case such as the present. Up to and at the time of his death the deceased was the legal and beneficial owner of his assets; those assets passed to the first respondent, as executor; and the second respondent will in due course of administration become entitled to them under the deceased's will. That was the very method by which, in the deed, it was contemplated that the second respondent would acquire them. The deed provided for devolution by will. The deceased did not transfer his assets to the second respondent during his lifetime. No doubt there were a number of good reasons for that, perhaps including stamp duty. The arrangement embodied in the deed was that, if the deceased died before his wife, then she would inherit his assets by will. It was in her capacity as sole beneficiary under the deceased's will that the second respondent would acquire the assets that had belonged to him at the time of his death. That, however, is not her only capacity; and it is at this point that the conflict of judicial authority discussed above becomes critical. The second respondent is not only the sole beneficiary under the will of the deceased; she has rights under the deed. It is the consequence of the interaction between her rights as beneficiary, her rights under the deed, and the provisions of the Act, that must be determined.
The problem is not covered by any previous decision of this Court, or by any decision of the Privy Council on appeal from South Australia. The Full Court of the Supreme Court of South Australia, being confronted by two inconsistent decisions of the Privy Council on appeal from other jurisdictions, understandably followed the decision that was later in time. This Court, however, on an appeal from South Australia, should make up its own mind on the question of principle involved, giving due weight to the consideration that such an eminent authority as the Privy Council, upon re-examination, declined to follow its earlier decision, and also to the consideration that the South Australian legislature did not amend its legislation to meet the consequences of Schaefer v Schuhmann.
Ultimately, it is the meaning and effect of the Act that must determine the outcome. Whether the question is approached on a purely textual basis, or by reference to a purposive construction, the result appears to me to be the same. In terms of s 7 of the Act, there is no justification for a conclusion that the deceased left no estate out of which provision could be made for the appellant if a court saw fit. At the time of his death the deceased was the legal and beneficial owner of his assets. They passed to his legal personal representative, the first respondent, and in the course of due administration of the estate they will, in accordance with the intention expressed in the deed, devolve by will upon the second respondent. Furthermore, the estate is under no liability to the second respondent; the deceased performed his obligations under the deed and, in consequence of that performance, his estate devolves upon the second respondent.
The answer to the argument that this takes no account of the rights of the second respondent under the deed, and treats her as a mere beneficiary, is that the nature of the rights she obtained under the deed was such that they were always liable to be affected by the potential operation of the Act. Because the Act imposed a restriction on freedom of testamentary disposition, a promise to make a testamentary disposition was subject to the potential operation of that legislative restriction. The effect of the legislation could have been avoided by a disposition inter vivos so that the deceased died with no estate; that is inherent in the scheme of the legislation. But the effect of the legislative restriction on freedom of testamentary disposition cannot be avoided by a promise to make a certain disposition.
For the reasons given by Lord Simon of Glaisdale in Schaefer v Schuhmann, this conclusion also gives effect to the manifest purpose of the Act. The general principle of public policy on which the Act was based was described by Jordan CJ in In re Jacob Morris (Deceased)[27], in a passage adopted on appeal in this Court by Latham CJ[28], as "the making of provision for the maintenance of members of a family who are found to be in need of such maintenance when the family tie has been broken by death". That policy is of public, as well as private, importance. To implement that policy, the legislature has conferred upon courts a discretionary jurisdiction to make provision out of a deceased person's estate in a manner that, to a greater or lesser extent, may override testamentary intention. A construction of the Act that permits a testator to nullify its operation by agreeing in advance to dispose of his or her estate in a certain fashion tends to defeat the purpose of the legislation. Such a construction is not required by the language of the Act.
The deed and the wills did not have the effect for which the first and second respondents contend. The assets of the deceased at the time of his death form his estate within the meaning of s 7 of the Act, and, subject to the liabilities of the deceased (which are relatively small), are available to meet an order under the Act in favour of the appellant if, in the exercise of the court's discretion, such an order is considered appropriate.

[30]

On the conclusion reached above as to the effect of the deed, the question whether the deed is invalid for reasons of public policy does not arise. However, some brief observations may be made.
The appellant relied upon the decision of this Court in Lieberman v Morris[29], in which it was held that a covenant by a potential claimant not to make a claim under the corresponding New South Wales legislation was ineffective. The Court held that, on the true construction of the statute, such a covenant could not deprive a court of the discretionary jurisdiction conferred upon it. The meaning and effect of the statute was that the power of the court was unaltered and undiminished by such a covenant.
In the present case, there has been no attempt by an eligible claimant to contract out of the rights given by the Act. If, upon the true construction of the Act, the consequence of the deed was that there was no estate within the meaning of s 7, then a court would be obliged to give effect to that consequence. If the deceased had divested himself of all his assets before he died, then there would have been no estate within the meaning of s 7. In a colloquial sense, that might be described as defeating the operation of the Act; but in a legal sense that would simply produce a state of affairs upon which the Act would operate according to its terms. Unlike some corresponding legislation, the Act does not provide for a notional estate. The legislative purpose does not extend beyond dealing with a deceased's estate. A transaction which produces the consequence that a deceased person has no estate means that there is nothing that falls within the legislative scheme. If the Act and the deed had been found to have the legal consequences for which the first and second respondents contended, there would have been nothing to justify a refusal to give effect to those consequences.
The appellant also relied upon a qualification expressed in the reasons of Lord Cross of Chelsea, speaking for the majority in Schaefer v Schuhmann. His Lordship stated that he was considering "the rights of a person on whom a testator has agreed for valuable consideration under a bona fide contract to confer a benefit by will" (emphasis added)[30]. The meaning of the expression "bona fide" in this context is a little obscure. No doubt his Lordship was concerned with the obvious possibility that, if his general conclusions were correct, then it would be very easy for a person, who was not willing to divest himself or herself of all assets prior to death, to make, by deed or for nominal consideration, a binding contract to make a certain form of testamentary disposition and thereby leave the legislation with no work to do. But why could not a person, in good faith, set out to do that? In this case, the Court knows very little of the reasons behind the actions of the parties. It may be inferred that at least one of the purposes of the deed and the mutual wills was to make it impossible for the appellant to claim under the Act against the estate of the survivor of the deceased and the second respondent. Unless that, of itself, is sufficient to justify a conclusion that the legal arrangements were not bona fide, then the qualification expressed by Lord Cross would not be relevant. However, for the reasons already given, if the deed and the wills had that effect, it was only because of the scheme of the Act. There is no reason to describe conduct intended to produce a state of affairs that falls outside the scheme of the Act as, on that account, lacking good faith. If the deceased, during his lifetime, had given all his assets to charity, that would have left the appellant without a claim under the Act; but it would have been a bona fide gift, even if one of the reasons for making the gift was to deprive the appellant of a claim.

[38]

Mrs Barns was born in 1930, the appellant in 1957 and Mr Malcolm Barns in 1951. Mr and Mrs Barns carried on business together as farmers at Wudinna and elsewhere in South Australia from about 1950. By his last will, Mr Barns left the whole of his estate to his widow; he made no provision for his daughter or his son. However, on 2 May 1996, the date of the execution of his will, Mr Barns, with his wife and son, also executed a deed ("the Deed"). This stated that Mr Barns had agreed with his wife and son to make a will in the form set out in the First Schedule to the Deed and that his wife had agreed with him and their son to make a will in the form set out in the Second Schedule to the Deed. The Deed also recited agreements by the two testators to act in such a manner as to ensure that all property they owned at death devolved in the manner set out in the respective wills unless the other parties consented in writing to the testator acting otherwise.
Section 22 of the Wills Act conferred rights or powers of revocation upon Mr Barns, for example, by another will executed in the manner required by that statute. However, Mr Barns accepted a contractual fetter upon those statutory rights or powers. He did so by undertaking in cl 3.3 of the Deed not to revoke his will without the written consent of his wife and their son. He also agreed in cl 6.1 that, if he failed "to perform the terms of this deed", Mrs Barns and Mr Malcolm Barns "shall be entitled to specific performance of the terms of this deed".
The will of Mr Barns, executed in accordance with the First Schedule, appointed Mr Malcolm Barns executor and trustee and devised and bequeathed the whole of his estate to the executor upon trust to pay all just debts and, if his widow survived him for the period of 30 days, then to her. Mrs Barns did so survive the testator.
The will executed by Mrs Barns was in like form, save that the whole of the residuary estate was devised and bequeathed to her husband if he survived her for 30 days; if, as has proved to be the fact, that gift fails, Mrs Barns gives the whole of her estate to her son, Mr Malcolm Barns. Mrs Barns has covenanted in the Deed not to revoke that will without the written consent of Mr Malcolm Barns or his legal personal representative. There is also a provision that, in the event of her failure to perform the terms of the Deed after the death of her husband, Mr Malcolm Barns "shall be entitled to specific performance of this deed".

[51]

The present application was made within six months of the grant of probate to Mr Malcolm Barns on 14 January 1999. The appellant instituted her application by a Statement of Claim filed in the Supreme Court of South Australia on 22 March 1999.
In the Statement of Claim, the appellant not only claimed an order under the Inheritance Act, but also sought a declaration that the Deed "is void and of no effect as against the claim of the [appellant]". There was a trial before a Master (Judge Burley) of a separate issue upon agreed facts and in advance of a Statement of Defence. The Court made a declaration that the Deed was "void as being contrary to public policy". In respect of that declaration, there was an appeal by Mrs Barns and what was identified as a "cross appeal" by Mr Malcolm Barns. The Full Court (Prior, Lander and Wicks JJ) set aside the declaration and made a declaration that the Deed "is valid"[49]. Thereafter, the claim under the Inheritance Act was dismissed by Nyland J. The appellant obtained grants of special leave to appeal to this Court in respect of the orders made by the Full Court and by Nyland J. The first respondent, as executor of the will, is the effective opponent to the appeals.
The dispute in the Full Court had turned upon the question whether the Deed was void as being "contrary to public policy" because what was identified as "the mutual wills" arrangement had the effect of creating circumstances whereby the appellant could not make any claim under the Inheritance Act against the estate of the deceased. In Lieberman v Morris[50], this Court decided that a widow was not precluded from making an application under the New South Wales equivalent of the Inheritance Act by reason of her having covenanted with the testator not to do so. Later, in the course of their joint judgment in Smith v Smith[51], Mason, Brennan and Deane JJ referred to the statutory policy, discovered though not expressed in the legislation, which prohibited a person from contracting out of the benefits conferred by the legislation.
In the Full Court, the appellant relied, but unsuccessfully, upon analogous reasoning as rendering the Deed ineffective to achieve what otherwise was its apprehended operation to withdraw from the reach of the Inheritance Act the subject-matter out of which provision might be made by order in her favour.
However, assuming at this stage the validity of the Deed according to its terms, the anterior and essential question is one of construction of the Inheritance Act. It is whether there is by reason of the Deed and its implementation no "estate of the deceased" answering the description required by s 7(1) of the Inheritance Act for the provision thereout by order in favour of the appellant.
If that question be answered adversely to the appellant, then her application under the statute must fail. If the answer is that the Deed has not brought about a state of affairs in which there is no "estate of the deceased", two consequences will follow. First, the appellant's application will go ahead for determination on the merits. Secondly, to the extent that an order is made in favour of the appellant, there will be an inroad upon the residue passing to Mrs Barns under the will of her husband. That in turn will diminish the estate to which the will she made in implementation of the Deed may apply.

[52]

By operation of the law respecting testamentary succession in South Australia, a substantial estate passed under the will of which Mr Malcolm Barns has obtained a grant of probate. The submission put against the appellant by the first respondent is that nevertheless (i) the phrase "the estate of the deceased person" has a different meaning in s 7(1) of the Inheritance Act and (ii) there is, for the purposes of s 7(1), no property in the estate of Mr Barns and therefore nothing to which an order made upon the appellant's application could attach.
Proposition (i) is the necessary first step. The textual revision which would be required to the ordinary meaning of the phrase "the estate of the deceased person" was never clearly explained in submissions. What appears to be propounded is an added stipulation to s 7(1). This would exclude from what otherwise would be "the estate of the deceased" that property which passed under the will but did so otherwise than purely as a manifestation in the will of the testator's donative wishes and the continuation of those wishes until death and without revocation of the will; so much of the estate of the deceased, awaiting administration as described in Easterbrook, as had an additional provenance in contractual arrangements dehors the will could not be the subject of an order under s 7(1).
Here, the testator had covenanted in the Deed, with his wife and son, "not to revoke" his will which devised and bequeathed to his executor the whole of his real and personal estate. The testator did not revoke that will and, with the grant of probate, this determines the transmission of his estate. The residue is taken subject to the liabilities to be discharged in the course of administration.
In Jervis v Wolferstan[52], Sir George Jessel MR rejected the submission by Fry QC[53] that where a covenant to bequeath a share of residue had been fulfilled, the residuary legatees took not under the will but "as creditors under the covenant", whose interest was not part of the estate for the purpose of bearing its debts and liabilities. The Master of the Rolls said[54]:

[57]

No such question arose on the facts of this case; there was no suggestion of breach of the negative covenant. In accordance with its terms, the restraint imposed by that covenant was spent upon the death of Mr Barns and thereafter it could impose no continuing obligation respecting the assets owned by the testator at his death.
A further example of the importance of construction of the relevant undertaking is provided by the decision of Turner and Knight Bruce LJJ in Graham v Wickham[61]. There, questions arose in the course of the administration in Chancery of the insolvent estate of the deceased James Wickham. He had covenanted by deed to give and bequeath by will the sum of £2,500 to be held on the trusts of his son's marriage settlement. Was (as the simple contract creditors of the estate submitted) the covenant performed by a testamentary provision for legacy, without regard to any deficiency of assets to meet the legacy? If so, the legacy would be met only out of anything that remained after payment of debts. Or (as the assignees of the trustees of the marriage settlement submitted) was the covenant performed only if there were assets in the estate sufficient upon due administration to answer the sum covenanted? The Court preferred the latter construction[62]. The assets being insufficient for that purpose, the covenant was unperformed and the assignees accordingly had a claim under the covenant for its breach. This was a claim on a specialty[63] and at that time specialty creditors ranked ahead of simple or contract creditors[64].
Reference also should be made to the decision of Page Wood V‑C in Eyre v Monro[65]. The testator devised and bequeathed his residuary real and personal estate upon trust to pay, among other sums, £3,000 in purported satisfaction of a covenant by the testator in his son's marriage settlement. The testator died owing a judgment debt which at that time ranked for payment by the executor ahead of the debts of several simple contract creditors[66]. The assets were sufficient for payment of the judgment debt and the £3,000. But if the latter were paid in priority to the simple contract creditors there would be nothing left for any of them. It was held that testamentary provision for the legacy of £3,000 did not satisfy the stipulations of the covenant on its proper construction. Therefore, the Vice‑Chancellor concluded[67]:

[74]

Extensive reference was made in the Full Court[88] and in submissions to this Court to authorities concerning "mutual wills". But, upon examination, those decisions do not directly bear upon the issues in this case.
It may be accepted that were Mrs Barns, having taken the benefit of her interest in the unadministered estate of Mr Barns, thereafter to depart from her obligations owed to Mr Malcolm Barns in accordance with the Deed not to revoke her will without his written consent, such unconscientious conduct would attract equitable intervention. Birmingham v Renfrew[89] was such a case. The survivor had died leaving a new will and the case, as Latham CJ put it[90], concerned "a trust which is declared by the law to affect the conscience of his executor and of the volunteers who are devisees or legatees under his will". In the Supreme Court of Victoria[91], Gavan Duffy J had declared that the contract in question bound the executors of the will of the survivor and stood over all questions as to the form of further relief. Thereafter, the High Court dismissed the appeal, leaving it to the Supreme Court to formulate the terms of the constructive trust which bound the executors in their administration.
That outcome in Birmingham does not support the proposition for which the first respondent contends on this appeal. The contention (rejected in most academic writing on the subject[92]) is that, in these cases, a beneficial interest of the survivor in the assets of the first testator to die arises before the death of the first testator and the due administration of that first estate; the consequence is the withdrawal of the subject-matter from that estate. What is particularly significant for present purposes are the points emphasised in Birmingham[93] and in other decisions[94]. The propositions are: (i) it is the disposition of the property by the first party under a will in the agreed form and upon the faith of the survivor carrying out the obligation of the contract which attracts the intervention of equity in favour of the survivor; (ii) that intervention is by the imposition of a trust of a particular character; (iii) the subject-matter is "the property passing [to the survivor] under the will of the party first dying"[95]; (iv) that which passes to the survivor is identified after due administration by the legal personal representative[96] whereupon "the dispositions of the will become operative"[97]; (v) there is "a floating obligation" over that property which has passed to the survivor; it is suspended during the lifetime of the survivor and "crystallises" into a trust upon the assets of the survivor at death[98].
Proposition (i) indicates that what follows in succeeding propositions is not directed to the situation where the first party dies having revoked the "mutual will" without notice to the survivor during their joint lifetime. The first respondent relied upon Bigg v Queensland Trustees Ltd[99]. The facts in that case concerned the breach of an agreement not to revoke "mutual wills"; the first party to die (Mrs Bigg) had secretly revoked her will and the survivor (Mr Bigg) in the meantime had acted to his detriment on the footing that the mutual wills still existed. A declaration was made by McPherson J that the executor of the second will of Mrs Bigg, after discharging liabilities, held the estate on trust for Mr Bigg[100]. His Honour recognised that there were decisions, in particular Stone v Hoskins[101], which suggested an outcome to the contrary. Bigg has been criticised for finding a ground of equitable intervention by declaration of constructive trust where the appropriate action was no more than for damages for breach of the agreement[102]. On the other hand, McPherson J did refer to In re Basham, decd[103], in which principles of proprietary estoppel were applied where the plaintiff had continued to provide benefits to the deceased in the belief, encouraged by the deceased, that property would be left to the plaintiff by the deceased on that person's death.
It is unnecessary to undertake further consideration of Bigg. On no footing does the present case present facts which would attract the reasoning which McPherson J applied. Further, Bigg does not deal with the situation which would arise if, on the facts of that case, a dependant of the deceased by application under the Inheritance Act sought to intercept by order thereunder the making of a declaration of trust in favour of the survivor.

[84]

Further reference now should be made to this decision. The reasoning of the majority of their Lordships, if accepted and if applicable to the present circumstances, provides the strongest support for the first respondent.
The appeal in that case was taken directly to the Privy Council from the decision of Street J in Re Seery and the Testator's Family Maintenance Act[114]. His Honour had considered the effect of a devise to Mrs Schaefer of a cottage and its contents by codicil on the condition that she still be employed by the testator as his housekeeper at the date of his death. The communication to Mrs Schaefer of the terms of the codicil before its execution was construed as a contractual offer which she converted into a binding contract by continuing to serve as housekeeper until the death of the testator[115]. An alternative construction of the facts, later considered by the Privy Council[116], was that at the time of the execution of the codicil, a contract had been made obliging the testator not to revoke the gift provided Mrs Schaefer continued to serve him until his death.
Street J rejected the submission for Mrs Schaefer that (i) at the instant of his death the testator became a bare trustee of the cottage for Mrs Schaefer; (ii) the property therefore did not pass under the codicil; and (iii) therefore it could not be affected by the jurisdiction conferred upon the Supreme Court by the NSW Act. Street J considered those submissions as inconsistent with the reasoning respecting the New Zealand legislation in Dillon v Public Trustee of New Zealand[117]. An appeal by Mrs Schaefer taken directly to the Privy Council was upheld by majority and Dillon was not followed[118].
On various occasions, this Court has given consideration to the principles governing the departure by it from its own earlier decisions. The leading authority is provided by the joint judgment of five members of the Court in John v Federal Commissioner of Taxation[119]. However, the Court was not referred to authority considering the circumstances in which, since the abolition of all appeals to the Privy Council from Australian courts, the High Court will not follow a previous decision of the Privy Council in an appeal on a matter of State law which was taken not from the High Court but directly from a primary judge of a State Supreme Court. Nor from Schaefer does there appear any particular identification of the principles by which at that time the Judicial Committee itself would depart from one of its previous decisions, such as Dillon.
Legislation enacted between 1968 and 1986 placed this Court at the apex of the legal system in Australia[120]. The treatment of precedent in Viro v The Queen[121] was directed to what proved to be an interim situation after the commencement of the Privy Council (Appeals from the High Court) Act 1975 (Cth), in which this Court and the Privy Council, federal jurisdiction aside, shared side by side the function of declaring the law for Australia. Viro[122] supports the proposition that, after the 1975 statute, the High Court was not bound by any decisions of the Privy Council, whether given before or after that statute became effective. What does not clearly appear from Viro are criteria which, since the Australia Act 1986 (Cth) and the ending of all Australian appeals to the Privy Council, indicate when a decision such as Schaefer should not be followed by this Court.
In Viro[123], Gibbs J expressed the view that this Court "will not differ from a decision of the Privy Council any more readily than we will depart from one of our own decisions". That proposition is too wide. It does not allow for cases like Schaefer in which relevant decisions of this Court were not considered by the Privy Council[124]. Oteri v The Queen[125] is another and significant example.
Probably the best that can be said is, as Aickin J put it in Viro[126], that this Court will depart from a decision such as Schaefer "if in the proper performance of its duty it feels that it should do so".
Where, as in Schaefer, an appeal was taken directly from a primary judge, the Judicial Committee was deprived of the advantages that might have flowed from a consideration of the matter by this Court. That deprivation is particularly acute where the matter is one in which relevant considerations were stressed in earlier decisions of this Court to which the Judicial Committee apparently was not referred. Other considerations must include the existence, after the Judicial Committee (Dissenting Opinions) Order 1966, of any division between the members of the Board, and the extent to which subsequent decisions of this Court impaired one or more of the steps in the reasoning upon which the Judicial Committee proceeded.
In Schaefer there was a strong dissenting opinion tendered by Lord Simon of Glaisdale; the majority decision did not rest upon the principle carefully worked out in an earlier significant succession of cases, there being a departure from Dillon. Earlier and later decisions of this Court bear significantly upon the matter; reference has been made above to the significant subsequent decisions in Easterbrook and Schultz. The remedial nature of the legislation, stressed in the earlier decisions of this Court to which reference has been made above, received no particular attention in the judgment of the majority of the Judicial Committee.
In the end, the justification for not following an earlier decision construing a statute must be that the view taken of the statute in the earlier decision was wrong in a significant respect[127]. With respect to the majority judgment in Schaefer, it may be said, to adapt a statement in Easterbrook[128]:

[89]

However that may be, there is no reason to confine the South Australian statutory expression "estate" in this way. The detailed provisions in the legislation respecting the nature and extent of the orders which may be made and the effect given to such orders, as explained in the subsequent decisions in Easterbrook and Schultz, suggest the contrary.
Secondly, their Lordships emphasised that (i) the statute gave the court power "to make such provision for members of the testator's family as the testator ought to have made, and could have made, but failed to make"[130]; (ii) the notion of "could have made" means "could … effectually have done himself"; (iii) if the making of a testamentary provision was in performance of an anterior contractual obligation, the testator was not doing something that could have been done by the testator "effectually" in the necessary sense[131]; and (iv) the statute operated to the prejudice of "volunteers" taking duly under the will but did not "reduce contractual rights to the level of gifts under a will"[132].
A difficulty with this approach to the matter is that where, as in the present case, the contract by Mr Barns was one not to revoke his will in favour of Mrs Barns, she cannot claim rights greater than she would have had immediately after the moment of the execution of the will. Those rights were subject to the court's jurisdiction under the legislation to make an appropriate order having effect as a codicil. A related point was made by McLelland J in Lim with respect to trust interests which bind property in the estate of the deceased, but with the occasion for equitable intervention to produce that result and the necessary condition for that outcome being the death of the testator. A treatment of an order made under the Inheritance Act as a codicil executed immediately before the death of the testator has a significant consequence. This is that any such order which diverts property away from the operation of such a trust operates at a logically antecedent stage to the constitution of that trust.
Reference then was made by their Lordships[133] to the prospect that an action for damages might arise in favour of the promisee under an arrangement such as that under consideration in this case by the promisor before death breaking the contractual stipulation. Synge v Synge[134] is authority for the proposition that an action for damages for anticipatory breach may lie in respect of a covenant to leave particular property by will. That cause of action would found a liability to be provided for in the administration of the estate. Such a possibility had been considered in Dillon. Their Lordships had observed[135]:

[97]

Each appeal should be allowed. The orders made by the Full Court on 12 October 2001 and 6 March 2002 should be set aside. In place thereof it should be ordered that the declaration in order 1 made by the Master be set aside and in place thereof it be declared that the Deed of 2 May 1996 does not operate to render incompetent an application by the appellant or the third respondents for an order for provision out of the estate of Mr Lyle Barns pursuant to the Inheritance (Family Provision) Act 1972 (SA). Otherwise the appeal to the Full Court should be dismissed.
The appeal from the order of Nyland J made on 24 April 2002 should be allowed. The order dismissing the appellant's claim should be set aside. That claim should be remitted for hearing by the Supreme Court.
Nyland J made no order respecting costs. Nor did the Full Court. The Master ordered that the costs of the present appellant and all respondents as taxed or agreed on an indemnity basis be paid out of the estate to their respective solicitors.
The matter of costs in the proceeding before Nyland J and upon what will now be the subsequent disposition of the appellant's application should be for the Supreme Court. The costs of the appeal to the Full Court and of each appeal in this Court should be in the same form as that provided by the Master in respect of the proceeding before him. That order is undisturbed.
KIRBY J. The facts relevant to these appeals are described in the reasons of Gleeson CJ[145]. I adopt his Honour's statement of the background to the litigation, and his discussion of the provisions of the Inheritance (Family Provision) Act 1972 (SA) ("the Act")[146] and of the history of the decisions of Australian and Commonwealth courts upon the controversy that now falls for resolution[147].
As that history demonstrates, there have been two streams of judicial opinion. They came to a head in the Judicial Committee of the Privy Council in Dillon v Public Trustee of New Zealand[148] (concerning the operation of the New Zealand Act which was the original model for the legislation that followed[149]) and Schaefer v Schuhmann[150], an appeal from Australia[151] (concerning the operation of the New South Wales Act, as then in force[152]).
The latter decision of the Privy Council was unusual in that, within a relatively brief interval, their Lordships reversed the holding in Dillon and, within a short time of the introduction of the facility of dissent within the Privy Council, their Lordships divided. Lord Simon of Glaisdale delivered dissenting reasons, maintaining that the approach in Dillon was correct[153].
In my opinion, for the reasons given by Gleeson CJ, Dillon was correctly decided. Lord Simon's dissent in Schaefer is to be preferred. Although this Court continues to pay respect to the judicial reasons of the Privy Council, especially in respect of Australian appeals at a time when the Privy Council was a court within the Australian judicial hierarchy, we are not bound by such reasons[154]. As the final court of the Australian judicature, in a proceeding brought before it for disposition, this Court is obliged to state its own conclusions. Not least is this so where the issue in such proceeding is (as here) the meaning and application of legislation enacted by a Parliament of a State of the Commonwealth.
The joint reasons of Gummow and Hayne JJ call attention to an early decision concerning the applicable Northern Territory law[155] where Rich J[156] in this Court stressed the remedial character of such legislation. Williams and Fullagar JJ elaborated on Rich J's observations in emphasising the wide jurisdiction conferred upon courts to disturb testamentary dispositions and the need to give the statute's "very wide terms" full effect in accordance with its language[157]. The passage of the years that have intervened since those words were written has reinforced that approach to the construction of statutes of such a kind[158]. It is the construction that this Court should apply in the resolution of the present appeals.
There is another principle that assists in deciding the approach that this Court should take to the point of principle upon which the Privy Council and other courts have divided.
Where conduct is affected by the terms of the written law, for example by a statute made by a legislature within the Commonwealth, it is the duty of judges, indeed of all persons, to obey, and give full effect to, that written law[159]. They must do so even when such effect involves a departure, indeed a significant departure, from obligations otherwise derived from the pre-existing unwritten law made by the judges.
In many recent decisions this Court has emphasised the primacy of the statutory text and the necessity to find legal rights and duties according to any applicable statutory prescription, rather than by reference to pre-existing rules of the common law or of equity[160]. Those authorities teach the lesson that the starting point for resolving the respective rights and obligations of the parties in the present appeals is an ascertainment of the true operation of the Act. Private contractual arrangements, otherwise valid and binding between the parties and their successors, must, once valid legislation impinges on the conduct of parties, be understood and applied subject to the operation of that legislation, construed so as to achieve its purposes as expressed in the chosen language.
I agree with Callinan J[161] that legislatures, rather than courts, are normally better placed to give effect to large aspects of public policy[162]. However, with respect, that proposition merely states, and does not solve, the issue presented for decision in these appeals. That issue concerns what the Parliament of South Australia enacted as law by the terms of the Act that is under consideration. It is true that such a Parliament might, like others, have put the subject of these appeals beyond doubt (and, in the course of doing so, enlarged the operation of the Act and solved various other problems) by providing for a regime of notional estates. So much has been done elsewhere. But the Parliament of South Australia has not done this. That fact leaves it for this Court to declare the meaning and effect of the statutory provisions that are in question. No authority of this Court resolves that controversy. It is now our duty to do so in these appeals. Doing so is the proper function of the Court. It does not involve intruding into the law-making province of the legislature. On the contrary, this Court is giving effect to the law as made by the South Australian Parliament in terms of the proper construction of that law.
Approaching the issue in this way, I agree with Gleeson CJ[163] that the rights obtained by the deceased's widow (the second respondent) under the deed she executed with the deceased, were such that they were always liable to be affected by the potential operation of the Act. The mutual promises of the deceased and the second respondent to make a specified testamentary disposition, however otherwise enforceable according to the unwritten law, were subject to the potential impact of the restriction on testamentary disposition for which the Act provided. Only this construction gives effect to the purpose of the Act according to its terms. That purpose could not be defeated by an agreement, in advance, to dispose of the estate in a way that would tend to defeat the achievement of the Act's objectives. Any authority that would give primacy to the unwritten law over the statutory text is not part of the law of Australia.
Having arrived at this conclusion it is unnecessary for me to reach a decision upon the arguments of public policy concerning the legal effects of the deed entered into by the deceased and the first and second respondents in May 1996[164]. I prefer not to do this and will therefore resist the temptation, offered by the appellant, that we should ride that unruly horse in this case[165].

[99]

"This area of law is peculiarly the creature of statute. A wave of legislation, beginning in New Zealand in 1900 and extending State by State and Province by Province throughout Australia and most of Canada until finally reaching England in 1935, has restricted testators' former freedom of testamentary disposition by enacting varying versions of testators' family maintenance legislation. From time to time the enactments have been amended, almost always in the direction of wider access to the relief which the legislation affords. This has no doubt occurred in response to the pressures created by social change. Thus, in most Australian jurisdictions a divorced wife, if entitled to alimony or maintenance from her deceased former husband, has become an eligible applicant for relief. In Western Australia a 'de facto' widow may now obtain relief and so, in a number of States, may illegitimate children. This is, then, an area of the law created by statute and in which legislatures appear to have been relatively responsive to the social changes which this century has seen. In New South Wales, from whence the present appeal comes, that State's Law Reform Commission reported as recently as 1977 on the Testator's Family Maintenance and Guardianship of Infants Act, 1916. In its Working Paper of 1974 the effect of a widow's remarriage upon her entitlement to apply for provision under the Act was discussed at length - pars 6, 18-6, 23. Incidentally, neither that Working Paper nor the Commission's final Report, LRC 28 (1977), proposes positive changes concerning income provisions limited to widowhood. In this jurisdiction such systematic investigation and reporting upon the adequacy of the existing law to meet the changing needs of the community, if coupled with willingness of legislatures to enact appropriate reforms, appears to me to offer a sounder basis for general rule-making, and for the changing of those rules from time to time, than will any reliance by appellate courts upon their own appreciation of those needs." (emphasis added)

[142]

The reference by Dixon J to a floating obligation which crystallises invites comparison with a floating charge. It is well established that effect can readily be given to the latter. Until the occurrence of certain defined events the owner of [the charged] assets may deploy them generally as it deems fit, subject to the covenants in the instrument of charge, and not deliberately in such a way as to destroy or diminish the value or utility of the rights and interests of the person in whose favour the charge is created. In the same way, a "floating obligation" or a "constructive trust" of the kind contemplated by Dixon J may, and should be given concrete effect by crystallisation to, and for the benefit of the promisees under the agreement for the mutual wills on the death of the surviving mutual contractor. The fact that the surviving contracting party, who is the beneficiary under the will of the first of the two to die, may use, and indeed even ultimately use up in their entirety the assets passing under the first will, provides a reminder that in human affairs, even in legal affairs, perfection, and the complete effectuation of intention are sometimes not possible. That is not a reason for a court not to give as much effect as possible to the intentions of the parties. What the second testator may not do, as Dixon J points out, is diminish or devalue the first testator's estate by acts calculated to produce that result.
It is against that background and having regard to two cases in the Privy Council that these appeals fall to be considered. The longstanding understandings to which I referred at the beginning of this judgment are based upon the reasoning and decision of the Privy Council in Schaefer v Schuhmann[190] which expressly overruled the decision of the Privy Council in Dillon v Public Trustee of New Zealand[191], upon which the appellant relies although neither case involved mutual wills. In Dillon, decided in wartime by the Privy Council, a testator, who had two sons and three daughters, after the death of his first wife, entered into an agreement with his two sons pursuant to which the latter were to devote their whole time to work on, or in respect of the testator's farms. In consideration of the sons' agreement, the testator undertook to devise and bequeath his farmlands to trustees upon trust for one of the sons and two of the daughters subject to an annuity in favour of the third. The testator remarried. Subsequently, he made a will in terms of his undertaking but leaving the residue of his estate to his second wife, the appellant. The appellant then made application under the Family Protection Act 1908 (NZ) for adequate provision for her proper maintenance and support out of the estate of the testator. The primary judge found for her and ordered that some of the property the subject of the testator's undertaking be transferred to her. On appeal, the Court of Appeal of New Zealand held that as the provision in the will for the children was made in fulfilment of a contract for valuable consideration, the court had no jurisdiction to make an order under the Family Protection Act which would cut down what the testator had, in fulfilment of his promise, left to his children. The appellant appealed to the Privy Council.
Viscount Simon LC delivered the judgment of their Lordships. He said this[192]:

[154]

Secondly, a decision to dismiss the appeals is in my opinion consistent with the reasoning of Dixon J in Birmingham v Renfrew[214]. His Honour's reasoning demonstrates that mutual wills are capable of creating, and do in fact create useful and enforceable equitable obligations even though the available estate may be diminished by inter vivos transactions not having as their object the defeat of the equitable interests created by the mutual wills.
Thirdly, Schaefer is the later of the two decisions of the Privy Council. There, the Privy Council expressly overruled Dillon and carefully examined other relevant authority. Schaefer had therefore better regard to previous authority. It has been generally accepted as stating the law in this country, as appears from the Law Reform Commission reports to which I have referred and the legislative responses to which it has given rise. I do not doubt that mutual wills have been executed on the assumption that Schaefer correctly stated the law, and that some testators have died believing that promisees under the mutual arrangements would succeed to their property. Furthermore, its reasoning is, I think, persuasive and applicable to this case.
Fourthly, presently in South Australia there is nothing at all to prevent the complete diminution of a testator's estate by gifts inter vivos or a transfer for full or no consideration. The only penalty might be the attraction of substantial stamp duty. Contracts for mutual wills also attract stamp duty[215]. This Court should not treat arrangements for mutual wills as being different from other inter vivos dispositions because the latter might attract more stamp duty.
Fifthly, the fact that the estate of a deceased vests in his or her executor or administrator on death does not, in my opinion, require any different result. The estate that vests is the estate as it was held by the testator, with all of its current liabilities and obligations. Nor does the fact that any entitlement might, under the wills in this case, be postponed for thirty days after the date of death, make any difference. The obligations continue to exist during this period.
It was suggested during argument that the decision of this Court (Barwick CJ, Mason and Murphy JJ) in Easterbrook v Young[216] was determinative of the appeals in favour of the first and second respondents. There their Honours held[217] that the statutory expression "out of the estate of the testator" referred "to the assets of which the testator might at his death dispose and which have come or could come to the hands of the personal representative by reason of the grant of probate or letters of administration." (emphasis added)
It is necessary to bear in mind however the principal issue with which that case was concerned. This was whether completion of the administration of the estate of a deceased dying intestate so that his administrator was then holding the estate on trust for the persons entitled to take in their respective shares, barred an extension of time for and the making of a claim under, the relevant New South Wales Act. The case was concerned with a statutory intrusion upon rights and interests arising after and as a result of the deceased's death. It has nothing to say about any right or interest arising under a contract made before death. The Court[218] accepted that the reference to the estate of a deceased in s 3 of the Act under consideration there "constitutes a limitation on the power of the court to make an order." The words of the judgment in Easterbrook which I have earlier emphasised are important. By his contract the testator here, and the second respondent, for valuable consideration (mutual promises) agreed to limit their rights of disposition, any departure from which would constitute a fraud upon the other. Their actions created, as Dixon J puts it, "a floating obligation" coming into existence immediately on the death of the testator. In my opinion the decision in Easterbrook is not determinative of these appeals.
It was also suggested in argument that because s 10 of the Act provides that any provision made by the court is to operate and take effect as if it were a will or a codicil executed immediately before death, it should be inferred that the Act was intended to operate as if the testator had, in effect, resolved, and was entitled to resolve, to renounce his contractual obligations at the moment before death. To that I would give the answer that the majority of their Lordships did in Schaefer in respect of the similar provision under consideration there, that the presence of such a section is instead, a contrary indication. Of it, their Lordships said[219]:

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