Burke v Dawes [1938] HCA 6

Burke v Dawes [1938] HCA 6 - HCA 1938 case summary — Zoe

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also all furniture and effects for her lifetime only." The land mentioned in this provision is the land included in the mortgage. The defendant Cummins was thus entitled to an interest in the land as tenant for life. It is contended on her behalf that, as she was a tenant in possession at the time when the mortgage was given, the mortgagees take subject to her interest by virtue of the provisions of sec. 72 of the Transfer of Land Act 1928. The plaintifis, on the other hand, rely upon the Administration and Probate Act 1928, secs. 8, 9 and 39, and sec. 10 of the Administration and Probate Act 1915 (kept in operation in relation to the estate of this testator by sec. 68 (2) of the 1928 Act). They contend that the executor had power to mortgage the real estate of the testator for the purpose of paying debts and that persons dealing with him were not bound to inquire whether debts had been paid, certainly when a period of twenty years had not elapsed since the death of the testator in 1918. See In re Tanqueray-Willaume and Landau (1). They also rely upon the Transfer of Land Act, sec. 232, which provides that, upon entry of a memorandum of the appointment of an executor upon a certifi- cate of title. the executor becomes the transferee and shall be deemed to be the proprietor of the estate or interest of the deceased in the land and that he shall hold the same subject to the equities upon which the deceased held it, " but for the purpose of any dealings with such land under the provisions of this Act every such executor administrator or curator shall be deemed to be the absolute proprietor thereof." It is therefore contended that the executor was in the same position as if he were the absolute proprietor and that in accordance with general principles of law which have not been affected but have, on the contrary, been recognized by the Adminis- tration and Probate Act, the plaintiffs have obtained an interest which prevails over any claim or interest of the defendant Cummins. In my opinion the provisions of the Transfer of Land Act provide an immediate answer to the question which comes before the court in this case. Sec. 232 of the Act places the executor, for the purpose of dealings with the land, in the same position as an absolute pro- prietor. A person dealing with an executor is' therefore in the same

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at least every tenant who is in actual occupation and holds under some landlord, and every interest in the land of such a tenant which grows out of, and is not disseverable from, his right to continue in occupation as a tenant, is protected by the terms of this provision against the claim of a person registered as the proprietor of any land or interest under the Act. In my opinion the section affords no protection to Emily Cummins. She takes and is in possession as a beneficiary under the will, and her interests rise no higher. They are and must be subject to the rights and duties of the executor for the general purposes of the will and the administration of the testa- tor's estate. It was said that the mortgages given by the executor were not given in a due course of administration. But that is nothing to the point, for the mortgagees were dealing with an executor and with a person who as such executor was registered as the pro- prietor of the land. The mortgagees were entitled to assume that the executor was acting in discharge of the duties imposed upon him, and in any case did not know that he was not so acting. Indeed, the certificate of title itself disclosed a mortgage of the land from the executor to Closter which was apparently due and fell to be repaid. Secondly, Emily Cummins contended that the executor had long before the mortgages discharged his executorial functions and had assented to the gift to her and stood in the position of a trustee for her and those otherwise entitled under the will (Solomon v. Alten- borough (1); In re Timmis ; Nixon v. Smath (2); In re De Sommery ; Coelenbier v. De Sommery (3); In re Grosvenor ; Grosvenor v. Gros- venor (4) ). It is true that the executor had, before the end of 1919, discharged the debts, funeral and testamentary expenses of the testator and also the pecuniary legacies given by him. It follows that the moneys raised on mortgage were not raised in a due course of administration, and most of it appears to have been converted by the executor to his own use. But still the executor was not {unctus officio. He never ceased to be executor, and he was registered as such executor as the proprietor of the land, and he still had duties to perform. The life interest given to Emily Cummins had not been transferred to her, and she had only been let into or allowed to remain.

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applies (See sec. 10), the executor has the same rights and is subject to the same duties with respect to the real estate as formerly he had or was subject to with respect to personal estate. The executor has, therefore, a power of alienation of realty analogous to that which belonged to him in respect of chattels real. These he 'could sell or mortgage for any purpose of administration, not- withstanding that they were specifically devised (Thorne v. Thorne (1); In re Morgan; Pillgrem v. Pillgrem (2)). Administration includes much else besides payment of the debts contracted by the testator and the expense of obtaining probate. "It is not merely the debts of the testator which the executor has to pay; he may have incurred expenses of administration and he may have to raise money by pledge or mortgage of the personal property of the testator, and these are matters for which it is essential that he should retain the power of dealing with the assets of the testator" (per Kay J. in In re Whistler (3)). This power remains until the executor has divested himself of the property in the chattel real, or has effectually changed the capacity in which it is vested in him. By assenting to a specific bequest of a pure chattel or a specific devise of a chattel real he may vest it in a legatee or devisee. If the chattel or chattel real is bequeathed or devised to him as a trustee, he may do some act showing an unequivocal intention to separate it from the assets he has been administering as executor and thereafter to hold it as trustee upon the trusts specifically declared by the provisions of the will relating thereto. If so, he ceases to hold it as executor. If the legatee or devisee is a stranger, then after assent the executor cannot alienate the chattel or chattel real, for the simple reason that the property is no longer vested in him. If it is devised or bequeathed to him as trustee, and he makes the chattels over to himself as trustee, the validity of his attempted alienation must be tested by the terms of his trust and the ordinary rules of law affecting purchasers with notice and putting them upon inquiry. But an executor in whom property remains vested in that capacity stands in a different position from that of an ordinary trustee. Alienation by an executor in the

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In the present case the mortgage to the appellants took place sixteen years after the testator's death; but, apart from lapse of time, there were no circumstances of suspicion. If matters stopped there, I should think that no answer appeared to the claim of the appellants to take priority. But it is said that the respondent had been let into possession on the footing that she was absolutely entitled to the enjoyment of her life estate and that Dawes as reposi- tory of the legal title was nothing but a dry trustee for her, and he was, of course, acting in truth not in the intended exercise of a power for the administration of the estate but in fraud of her rights. It is said that, because of her position as equitable tenant for life in occupation and entitled to call for a transfer of the legal estate for life, the mortgagees cannot rely upon the executorial powers of their mortgagor. The answer, in my opinion, lies in the fact that Dawes held the title as executor and was bound to hold the title to the fee simple until the respondent's death. Upon her death Dawes' prima facie duty was to sell the land and furniture and distribute the net balance among the next of kin. In letting the respondent into possession, he acted in conformity with his duties as executor and he did not end them. If an estate or interest in land under the Transfer of Land Act is devised, the assent of the executor can be given effectively only by a transfer under that Act (See sec. 36 (10) of the Administration and Probate Act 1928). It is by that means alone that the legal title can be divested from the executor and invested in the devisee. The case, therefore, bears no resemblance to those in which, although the office and the powers and duties of an executor continue to belong to the vendor, the property in, for instance, a chattel real has passed from him to the devisee or to himself in the capacity of devisee-trustee. This class of case is illustrated by Solomon vy. Attenborough (2). Lord Haldane there acknowledges the truth of the "bare proposition" "that persons dealing with executors have not got to inquire whether the debts

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instrument is deemed to be subject notwithstanding that such interests respectively are not notified on the certificate or instrument, The relevant part of the proviso is as follows: ' Provided always that the land which is included in any certificate of title or registered instrument shall be deemed to be subject . . . where the possession is not adverse to the interest of any tenant of the land, notwithstanding the same respectively are not specially notified as encumbrances on such certificate or instrument." The section makes it unnecessary to notify any interest that is within its terms on the certificate of title or a registered instrument trans- ferring any estate or interest in the land, as a condition of its existence and continuance. The respondent was entitled to a life estate in the land under the will, but she derived her right to the possession of the land from the executor, not from the testator. Nothing was done to vest the land in her under sec. 36 of the Administration and Probate Act 1928. Sec. 72 of the Transfer of Land Act operated to protect only such interest as she had as a tenant in possession of the land with the executor's consent. It did not operate to convert a defeasable interest into an indestructible interest. The respon- dent's interest was not absolute. She was let into possession by the executor of land which was part of the assets in his hands for the payment of the debts of the testator and which the executor had a statutory power to mortgage for purposes of administration. It would be inconsistent with the assumption which must be made in fayour of the mortgagees that the executor's power to mortgage was exercised for purposes of administration, to say that at the time the mortgage was given the mortgagor had ceased to be an executor and held the land as trustee for the respondent. Her interest as a tenant in possession was at the time of the mortgage subject to the statutory power of the executor to mortgage the land for any purpose of administration and was liable to be set aside by the exercise of that power. It follows that the interest which the respondent sets up against the mortgagees ceased when the land was mortgaged. Sec. 72 cannot be called in aid to keep it alive after that time. Her interest as the devisee of a life estate which is derived from the will is of course to be distinguished from her possession of the land with

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Judgment (138 paragraphs)