Hillman v Box and Others as Executors of the will of Box

Hillman v Box and Others as Executors of the will of Box - [2011] ACTSC 10 - ACTSC 2011 case summary — Zoe

[58]

That is to say, when a joint tenant dies, his, her, or its interest devolves by operation of law, exclusive of the laws of testamentary devolution, upon the other joint tenant or joint tenants.
When, sometime before his death, the deceased and the plaintiff ceased to live together in a domestic relationship, they sought to separate their property interests. This led to the execution of a "Termination Agreement". In this Agreement, the plaintiff is purported to have transferred "all her rights, title and interest in the Spence property" to the deceased. Further, she executed a transfer, being a Memorandum of Transfer under s 73 of the Land Titles Act 1925 (ACT) (the Land Titles Act), which, on registration, would have the effect of severing the joint tenancy and transferring the whole of the title to the Spence property to the deceased.
The execution of the Agreement and the signing of the transfer, without its registration, may have been sufficient to sever the joint tenancy: see Abela v Public Trustee [1983] 1 NSWLR 308 (at 314). It may, however, only have been an agreement to do so: Wright v Gibbons.
Given that the court has power, in an appropriate case, to restrain a joint tenant from severing a joint tenancy, as provided for in Goyal v Chandra [2006] NSWSC 239; (2006) 68 NSWLR 313 (and see Barham v Barham [2010] NSWSC 503), it may be that these proceedings have intervened before the tenancy is severed.
Nevertheless, the plaintiff has sought, amongst the remedies in her Amended Originating Application, a declaration that the Termination Agreement and Memorandum of Transfer are null and void. The effect of that on the joint tenancy is by no means clear, but if made, such an order may revive the joint tenancy if it has been severed by the execution of the Termination Agreement and Memorandum of Transfer. It may not: see Burgess v Rawnsley [1975] Ch 429 (at 444); Calabrese v Miuccio [No 2] [1985] 1 QdR 17.
If, however, the Memorandum of Transfer that the plaintiff signed were to be registered, and which could now be done, that would certainly sever the joint tenancy and, because of the indefeasibility of title that registration gives (Breskvar v Wall (1971) 126 CLR 376; Frazer v Walker [1967] 1 AC 569), that may deprive the plaintiff of an effective remedy or otherwise prejudice the entitlements she is claiming in the proceedings.
When a registered proprietor of registered land dies, there is need for registration of a new registered proprietor for only that person can effect dealings in the land. While, of course, a person can execute documents for another, this does not resolve the issue, for a Power of Attorney lapses on the death of the donor: s 60 of the Powers of Attorney Act 2006 (ACT).
Section 135 of the Land Titles Act provides for the registration of the person who claims to be entitled to be registered as proprietor. Thus, Approved Form 015-ND is prescribed for a Surviving Proprietor to give Notice of Death. This is the form that would be used by the plaintiff to secure the registration of her interest as a result of survivorship.
If, on the other hand, the defendants, as executors of the deceased's estate, wished to be registered so as to deal with the property pending distribution of the estate, they would use Approved Form 032-TA, by which they would become registered proprietors but, of course, the will and s 136 of the Land Titles Act would bind them as to the dealings into which they could properly enter.
To lodge either of these documents, however, would potentially prejudice the interests of the defendants for the lodgement of the former would give effect to the right of survivorship. The lodging of the latter would not permit the defendants as executors to be registered, for the death of the deceased would cause the right of survivorship (of which the form would give notice to the Registrar-General that it had come into operation) to end any interest that the deceased (and, therefore, his executors) had to the property. I do not know whether the Registrar-General would or could, on receipt of an application by the defendants as executors, give notice to the plaintiff or require her to make application under s 135 of the Land Titles Act.
As noted above, however, the lodgement of the Memorandum of Transfer signed by the plaintiff would give full title to the deceased and the defendants could then file the Approved Form 032-TA seeking to be registered as executors. As also noted above, the plaintiffs' interests may thereby be prejudiced.
The problem for the conveyance of the Spence property in accordance with the orders I made (as set out in [6] above) is that neither party can actually give effect to them without possibly prejudicing their interests. The reason is simply because, while the deceased's name appears on the title to the property, no Memorandum of Transfer of his interest can be executed, for neither he nor any attorney can sign it. In order to execute a transfer, either the plaintiff will have to be removed from the title (by registration of the challenged Memorandum of Transfer) followed, no doubt by registration of the defendants as executors, or, alternatively, the plaintiff will have to become registered as the proprietor of the whole property through the registration of the right of survivorship.
Understandably, neither of those alternatives commend themselves to the parties.

[59]

Following the making of my orders, the matter was adjourned to 1 December 2010 to confirm the orders. On that date, some issues arose about the orders I had pronounced because of the matters referred to above. I opined that this might require a sale by the court. I adjourned the proceedings to 8 December 2010 and urged the parties to consult and attempt to bring back redrafted orders, if at all possible by consent, to give effect to my order that the Spence property be sold.
Regrettably on 8 December 2010, the parties reported to me that they could not agree on the appropriate orders and I was presented with two alternative proposals.
The competing proposals are annexed as appendices to these reasons for judgment (see Appendix A and B) so that what is said below can be understood.
The proposals by the defendants are the simplest. They rely on what is said to be a power under r 782 of the Court Procedures Rules 2006 (ACT) (the Rules) and s 170 of the Land Titles Act.
They give the defendant the carriage of the sale and authorise the Registrar to execute relevant documents and for that execution to be recognised by the Registrar-General. They provide for the setting of a reserve price, appropriate disclosure, and an option should sale by private treaty not be effected in a reasonable time. Neither party is required to lodge documents with the Registrar-General that could prejudice their position in the proceedings.
The proposals by the plaintiff present a variation to the proposals in relation to the Queanbeyan property and three options in relation to the Spence property.
Two of the latter options require the lodging with the Registrar General of what is described as a "Notice of Death", which I assume is an Approved Form 015-ND. These then give the conduct of the sale of the Spence property to the plaintiff with the opportunity to seek the court's aid as to price (somewhat along the lines of the orders I made). They also make provision for the plaintiff to withdraw $50,000 from the proceeds of sale for payment in respect of the proceedings. There is no need for the Registrar to sign documents because the plaintiff will be registered as proprietor.
The other option does not require lodgement of the above form and provides for joint sale. It seems to me I do not need to deal with this option further for it will not achieve the necessary objective since, in conveyancing terms, it still does not give any resolution to the question about the execution of the relevant documents for the interests of the deceased.

[60]

In my view, the options proposed by the plaintiff are not acceptable for they risk the prejudice to the defendants of a kind that the plaintiff herself seeks to avoid by having the defendants restrained from seeking to have the Memorandum of Transfer registered.
In addition, the plaintiff renews her application for the sum of $50,000 to be paid out to her. I ordered that the sum of $50,000 be paid out to the defendants but did not make an order for payment to the plaintiff of a similar sum.
It is not clear to me the basis on which the claim for a payment of that sum would be made by the plaintiff. None was suggested in argument.
The defendants, as executors and defendants to the claim, are in a different position to the plaintiff. As a general rule, the legal personal representatives of a testator are entitled to their costs in a matter under the Family Provisions Act 1969 (ACT), see: De Groot, J K and Nickel, B W, Family Provisions in Austalia (LexisNexis Butterworths: Sydney, 2007) 3rd ed at p 250 ([10.9]) and the cases there cited. Insofar as the proceedings are not family provision proceedings, the ordinary rules apply and a trustee will, even if unsuccessful in the proceedings, be indemnified out of the estate where the conduct in defending the proceedings was reasonable: National Trustees, Executors and Agency Company of Australia Ltd v Barnes [1941] HCA 3; (1941) 64 CLR 268 (at 279).
Further, though I do not have details of the estate, it is clear that the plaintiff is only claiming a portion of it and there is no reason why the whole estate should be frozen so long as the plaintiff's entitlement, if proved, is protected.
So far as the plaintiff is concerned, the likelihood of her recovering costs is entirely dependent upon her being successful in the proceedings. There is no rule that applicants in Family Provisions Act claims ordinarily receive their costs whether successful or not. The plaintiff's likelihood of success cannot be ascertained with any certainty at this stage, and there is nothing in the materials which I have seen that shows the plaintiff's case is such a strong one that an advance on costs should be made. That is not to say I have formed a view about the case, only that there is nothing so far which shows the case to be stronger than any disputed case which the courts see all the time.
Accordingly, I see no basis for an order paying out any funds from the estate to the plaintiff.
It seems to me that, as the defendant's submit, the only way to overcome the impasse that preservation of possible rights (and they are only possible rights that each party asserts) has created, is for the court to order a sale.
Under rr 781 and 782 of the Rules the court is permitted to do so and r 783 gives the court power to direct the conduct of the sale. These rules are in the following terms:

[72]

More recently, in Farrow Mortgage Services Pty Ltd (In Liq) v Centre Line Corporation Pty Ltd & Ors (VSC, Beach J, 5101 of 1993, 31 May 1995, unreported) Beach J utilised the equivalent rule in Victoria to order the sale of units in proceedings where the plaintiff sought orders for payment to them of the rents and profits of those units, the appointment of a receiver over them or, alternatively, their sale.
It seems to me, whether one takes a broader or narrower view of the scope of these rules, they give the power of sale by the court in these proceedings, which seem to me to be an administration suit in any event.
Since both parties desire it, I should do so. It clearly is "unoccupied and unproductive" land and the loan secured by the mortgage is an ongoing outgoing of the plaintiff or the estate.
The only issue then is what orders I should make for the conduct of the sale.
It appears that ordinarily the plaintiff is given conduct of the sale: Murray v Geoffroy (1918) 18 SR (NSW) 259. That case, however, was a partition suit, though this case has some similarities to such a proceeding.
In Davies v Wright (1886) 32 Ch D 220, North J was influenced by the question of which party's interest was it that the best price be obtained. In Brewer v Square [1892] 2 Ch 11, Kekewich J (at 114-5) gave the conduct of the sale to the party his Honour thought would be more likely to be successful.
In this case, it seems to me that the defendants are the appropriate party to have conduct of the sale. They will be selling the Queanbeyan property as well. There is prima facie documentary evidence that the Spence property is part of the estate, though this is strongly challenged by the plaintiff. As executors, the defendants have trustee obligations to the estate.
Usually such sales are ordered to be by auction, but the court's discretion as to the method by which a sale is to be effected is not constrained. The defendants in their orders suggest initially a sale by private treaty. There is no contrary submission from the plaintiff. I shall authorise sale by private treaty.
Despite this, the defendant's suggest that, in default of agreement between the parties, the court set a "minimum price" below which the property should not be sold by private treaty. Initially, I was not attracted to this and preferred the method suggested in my orders and adopted by the plaintiff. On further reflection, however, I consider that my proposal may disrupt the sale for it risks an application to the court at the time when a prospective purchaser has made an offer which the defendants wish to accept. This has the real potential to put the sale at risk. I shall, therefore, adopt the approach of the defendants.
I consider that the form of the contract should also be generally agreed, being aware that ss 9 and 10 of the Civil Law (Sale of Residential Property) Act 2003 (ACT) require a copy of the proposed contract to be available for inspection by a prospective buyer at all times when an offer to buy is made. This will, however, require appropriate provisions for agreement on varied or additional terms that the buyer may wish to negotiate for inclusion in the contract, and I shall make such provision.
I agree that a copy of the court order should be annexed to the contract and that a copy should be registered on the title under s 170 of the Land Titles Act.
I also agree that to resolve the difficulties with execution of the contract for sale and the Memorandum of Transfer, a person needs to be appointed for that purpose. I had made provision in the order for the Registrar to do so in the event that the plaintiff did not. This default provision, where a party refuses to execute a document, is a not an uncommon provision and there is jurisdiction under legislative remit such as s 237 of the Civil Law (Property) Act 2006 (ACT).
Here, however, it is necessary to appoint someone without such a default, as the deceased cannot sign and neither party wishes to risk prejudicing their position by taking such steps as may be necessary to give one of them power to execute the relevant documents.
Regrettably, neither party identified the relevant provisions enabling this to be done. I am, for example, not satisfied that r 783 of the Rules gives the court that power and, even if it did, I am unable to see any provision in the Land Titles Act that requires or, indeed, enables, the Registrar-General to register a Memorandum of Transfer that was signed in this way.
The defendants' draft minutes of orders suggested s 68 of the Land Titles Act was such a provision, but I do not accept that; it requires a "law or Act" to give the transfer validity and I do not accept that, for this purpose, a court order, even under a power given by the Rules, is either a law or an Act.
Having given this matter some thought, it seems to me that I can proceed under s 79 of the Trustee Act 1925 (ACT) (the Trustee Act). That provides:

[74]

This power is conditional upon the court having power to make a vesting order and the circumstances in which this can be done are set out in s 71 of the Trustee Act. Subsection (2) lists a number of circumstances where a court may make a vesting order. The relevant one appears to be "(n) if the court might have made a vesting order and if this Act had not been passed".
I am not sure whether that refers to the position as at 1925 (when the Trustee Act - then an Ordinance) was made or whether it refers to the present.
In the case of 1925, the court had power to make a vesting order in these circumstances in respect of the Spence property under the Partition Act 1900 of the State of NSW in its application to the ACT. In a partition suit, and in relation to the Spence property, there is sufficient similarity to such a suit in what is here being sought, the court could order a sale instead of a division of the property. If it did so, s 35 of the Trustee Act 1898 of the State of NSW in its application to the ACT (the 1898 Act) permitted the court to make a vesting order in favour of a party.
Indeed, in Re Hurley's Settled Estate (1920) 37 WN (NSW) 88, Street CJ in Eq made an order of that kind, requiring the Chief Clerk in Equity to convey land in circumstances very analogous to this situation.
If s 71(n) of the Trustee Act refers, instead, to the date of the application, it seems to me the same result is achieved.
Section 244 of the Civil Law (Property) Act 2006 (ACT) permits the court in a partition suit to appoint trustees for the receipt and application of the proceeds of the sale. Given the wide definition of "proceedings for partition of property" (see s 242) this would apply.
That power, however, is not sufficient, in my view, to give jurisdiction to make a vesting order.
If, however, the Trustee Act had not been passed, then s 34 of the 1898 Act would apply and permit the court to make a vesting order.
Accordingly, I am satisfied that I have power to make a vesting order and that, accordingly, s 79 of the Trustee Act applies. I can, therefore, order that the Registrar sign the relevant documents and be satisfied that they will be registrable by the Registrar-General.
It would seem to me that the Registrar-General is then obliged to recognise a Memorandum of Transfer executed by the person appointed to convey under the order because "the order shall have the same effect as an order under the appropriate provision" and this means that the person so appointed can effectively transfer the estate. In addition, s 170(2) of the Land Titles Act gives the person power to "execute such instruments as under [the Land Titles] Act are necessary to transfer... the interest".
The advantage of proceeding in this way is to avoid the need for a vesting order and the associated cost and delay.
The defendants further proposed that if the contracts for the sale of the Spence property are not exchanged within 3 months of the date of the order, either of the parties have liberty to apply to the court for a variation of the order to authorise a sale by auction. That seems a sensible idea.
Finally, the plaintiff proposed a variation to the orders relating to the sale of the Queanbeyan property. These variations were mainly cosmetic, and did not include much substantive change except to require disclosure of the prospective purchaser. I do think that this is reasonable in the circumstances.
They also included a requirement that the encumbrance on the Spence property be discharged. That may have been implied in present order 4(f)(i). As the loan secured by the mortgage over the Spence property was raised in order to pay for the Queanbeyan property, this does not seem unreasonable.

[82]

A separate order be made in the following terms:
- (a) under r 782 of the Civil Procedures Rules 2006 (ACT) (the Rules) the land being all the land at Block 44 Section 19 Division of Spence contained in Volume 1410 Folio 59 and known as 10 Horan Place Spence ACT (the Spence property) be sold subject to order by private treaty;
- (b) the defendants have the conduct of the sale and, subject to this order, bear the costs of the sale;
- (c) the plaintiff and defendants immediately confer on the minimum price for which the Spence property is to be sold and if the parties cannot agree within 7 days from the date of this order, the defendants have leave to apply to the Court for a direction about that matter under r 782 (3) of the Rules, such an application to be supported by affidavit made by a licensed real estate agent, or appropriate expert, and include an opinion as to the appropriate or recommended minimum price, and the reasons for that opinion;
- (d) the plaintiff and the defendants confer within 14 days on the terms of the contract for the sale of the Spence property and if they cannot agree on the terms of such a contract within a reasonable time thereafter, the defendants have leave to apply to the court for an order approving the contract for sale of the Spence property, provided that such contract must include a statement in it that the sale is made pursuant to this order and a copy of this order be attached to the contract;
- (e) the Registrar of the ACT Supreme Court be appointed under s 79 of the Trustee Act 1925 (ACT) to convey the Spence property and she is authorised and directed to sign the contract agreed or approved under (d) above, the Memorandum of Transfer for registration of the sale and any other documents reasonably required by the defendants for the purposes of the sale;
- (f) the defendants file a copy of this order with the Registrar-General with a view to it being noted on the title of the Spence property;
- (g) where a prospective purchaser seeks to have any term in the contract as agreed or approved under (d) above, varied or to add any term, then, if the variation or added term is agreed by both the defendants and the plaintiff, or failing agreement, is approved by the court on application by either party, then the contract amended to include such variations or additions shall be deemed to be the contract as agreed or approved under (d);
- (h) On completion of the sale, the defendants shall deduct from the gross proceeds of the sale:
  1. Payment of all moneys necessary to discharge any encumbrances on the Spence property;
  2. All proper agent's commission and disbursement payable in respect of the sale;
  3. All proper costs and disbursements payable to any solicitor acting for the defendants on the sale; and
  4. The payment of any money necessary to enable an adjustment of rates or alter proper outgoings to be made to the date of settlement;
- (i) The balance of the gross proceeds of the sale, after the deductions referred to in (h) above have been made, shall be paid to the defendants' solicitors' trust account to be held on an interest bearing deposit pending further order; and
- (j) In the event that contracts for the sale of the Spence property have not been exchanged within three months of the date of this order, the parties have liberty to apply to the court to lay the orders to authorise a sale by public auction.
Order 5 made on 8 December 2010 be varied by omitting "4(f)" and substituting "4(e)".
Liberty be reserved to the parties and each of them to apply on two days notice.

At a glance

Court

Decision date

Before

Source

Judgment (133 paragraphs)

Hillman v Box and Others as Executors of the will of Box (No 2) [2011] ACTSC 10 (31 January 2011)

Parties

Legislation Cited (11)

Cases Cited (5)