Valverde v Inch

Supreme Court of NSW|2017-10-20|Before: Lindsay J

Solicitors: Plaintiff: JP Capsanis and Co. Defendant(s): Symons Phillips Lawyers File Number(s): 2015/00270342

INTRODUCTION

Before the Court for determination as a separate question (defined by an order made under rule 28.2 of the Uniform Civil Procedure Rules 2005 NSW) are competing claims to the net proceeds of sale of a property ("the Bondi Junction property") known as 48 Botany Street, Bondi Junction, in the eastern suburbs of Sydney.

PROCEDURAL HISTORY

The principal proceedings were commenced by a summons filed on 11 September 2015, met by a cross summons filed on 29 October 2015.
The proceedings were thus commenced four years and two months after the plaintiff (on 12 July 2011) obtained a grant of probate entitling her to administer Maud junior's deceased estate; nearly (but not quite) six years after completion of the sale of the Bondi Junction property; about 45 years nine months after Cecil and Maud junior were (on 8 December 1969) registered on the title to Lot 2 as joint tenants; and about 32 years 11 months after the death of their brother Richard (on 26 October 1982), when they each became entitled to a one half (rather than a third) share of their mother's estate.
On 17 March 2016 the Registrar ordered that the proceedings proceed by way of pleadings.
At the time of the hearing of the separate question, the pleadings in the principal proceedings comprised: 1. a statement of claim filed 21 April 2016. 2. a defence filed 21 July 2016. 3. a statement of cross claim filed 15 August 2016. 4. a defence to cross claim filed 22 September 2016.
On 19 February 2016 the then Applications List Judge made an order in the following terms (adding, as implicit in the separate question, the words "[part of]"): "Order under Part 28 of the Uniform Civil Procedure Rules that the following question be determined separately from, and prior to, the balance of the proceedings: Whether, or not, any portion of the proceeds of sale of property described as Lot 2 in Deposited Plan 355126, otherwise known as [part of] 48 Botany Street, Bondi Junction, falls into, and comprises part of, the estate of the late Maud Inch (who passed away on 23 October 2009)".
In the course of hearing that question I made procedural orders to the following effect: 1. ORDER, pursuant to rule 7.10 of the Uniform Civil Procedure Rules, that Jocelyn Patricia Anne Inch (the defendant) be appointed to represent the estate of Cecil Inch for the purposes of these proceedings, noting her consent to that appointment. 2. ORDER that Jocelyn Patricia Anne Inch (now a defendant in her personal as well as in a representative capacity) be designated as the first defendant insofar as she represents the estate of the late Cecil Inch and as the second defendant insofar as she is a party to the proceedings in her personal capacity. 3. ORDER that, in consequence of the joinder of Jocelyn Patricia Inch in the proceedings as a representative of the estate of Cecil Inch as well as in her personal capacity, she is granted such leave as may be necessary: 1. to rely upon her Defence filed 21 July 2016 as an answer to the statement of claim generally; and 2. to amend paragraph 18 of that Defence so that it reads: With respect to the plaintiff's claim generally, the allegation that some part of the sale proceeds of 48 Botany Street, Bondi Junction fell into, or should have fallen into, the estate of [Maud junior] inasmuch as the plaintiff asserts a claim in equity that attempts to impugn the conduct of the late Cecil Inch, all such claims and assertions may not be maintained by reason of the equitable doctrine of laches. 1. ORDER that the defendant file and serve an amended defence, pursuant to that grant of leave, no later than 26 October 2017. 2. ORDER that the defendant be granted leave to amend her cross claim consequentially upon her appointment as representative of the estate of Cecil Inch, any amended statement of cross claim to be filed and served no later than 26 October 2017.
For ease of reference I refer simply to "the defendant" notwithstanding her joinder in the proceedings in two separate capacities.
Although the defendant has not filed an amended defence or an amended statement of cross claim, I proceed to determine the separate question on the basis (expressly agreed by the parties) that a determination of that question should extend to a determination of the question whether the defendant has a defence of laches to the plaintiff's claim (implicit in the separate question) that the defendant should account for so much of the sale proceeds of the Bondi Junction property as fell, or should have fallen, into the estate of Maud junior.
The parties agree that, if any portion of the sale proceeds is held to have fallen into, and to comprise part of, the estate of Maud junior, then, apart from a determination of the laches question, all consequential questions are reserved for determination in the principal proceedings at a later time.
During the hearing of the separate question I made a formal notation to the effect that it is agreed between the parties that: a) the property known as 48 Botany Street, Bondi Junction, comprised at the time of its sale: (i) a residential property by that name known constructed on Lot 2 deposited plan 355126; and (ii) four parcels of land (respectively numbered as Lot 1 in deposited plan 714797 and Lots 5, 6 and 7 in deposited plan 260124) at the rear of Lot 2 DP 355126 b) Lot 2 DP 355126 was originally part of the estate of Maud Maria Inch [Maud senior] who died on 2 September 1968 leaving a Will dated 4 February 1963, probate of which was granted to Cecil Inch (who died on 23 November 2009) and Maud Inch [Maud junior] who died on 23 October 2009). c) at the time the property known as 48 Botany Street Bondi Junction was sold (by a contract for sale dated 12 September 2009 and completed on 9 November 2009) the title to Lot 2 DP 355126 was registered in the names of Cecil Inch and [Maud junior] as joint tenants pursuant to a transmission application registered number L664082 made by them as executors of the estate of [Maud senior]. d) at the time the property known as 48 Botany Street Bondi Junction was sold (by that contract dated 12 September 2009 and completed on 9 November 2009) the parcels of land respectively numbered as Lot 1 in deposited plan 714797 and Lots 5, 6, and 7 in deposited plan 260124 were registered in the name of Cecil Inch as registered proprietor and as the person beneficially entitled to those lots in his own right. e) Cecil Inch caused the property 48 Botany Street Bondi Junction to be sold (by the contract dated 12 September and completed on 9 November 2009) by acting on his own behalf insofar as he had a personal interest in the property sold and by acting as attorney for [Maud junior] (pursuant to an enduring power of attorney dated 11 November 2003 and registered on 30 January 2009 as Book 4561 Number 165) insofar as he represented any interest that [Maud junior] had in the property. f) the proceeds of sale of the property 48 Botany Street Bondi Junction (net of the deposit of $220,000, the sum of $204,285.77 paid to Westpac Bank, and adjustments on sale), being a sum of $1,776,131.43 were paid to Symons Phillips lawyers and subsequently disbursed by them to or at the direction of Jocelyn Patricia Anne Inch [the defendant]. g) nothing in the contract for sale of 48 Botany Street Bondi Junction (dated 12 September 2009) expressly apportioned the sale price of $2.2 million between the property in the joint names of Cecil and [Maud junior] (Lot 2 DP 355126) and the property in the sole name of Cecil Inch (Lot 1 in deposited plan 714797 and Lots 5, 6 and 7 DP260124)."

Maud Senior's Title

At the time of her death Maud senior was registered as the proprietor of an estate in fee simple in Lot 2 DP 355126 ("Lot 2").
The bundle of rights to which Maud senior was entitled as registered proprietor of an estate in fee simple was that her estate in the land would continue to exist and, as confirmed by sections 44 and 61 of the Wills Probate and Administration Act 1898 NSW (as the Probate and Administration Act 1898 was then called), devolve upon the beneficiaries of her probated will (via her executors): Spark v Meers [1971] 2 NSWLR 1 at 14E-F.
Section 61 provided (and, in substance, still provides) for title to vest in the Public Trustee (now the NSW Trustee) from the date of death until a grant of probate. Section 44 provided (and, in substance, still provides) that upon a grant of probate being made, a deceased person's property is taken to have vested in his or her executor as from the death of the deceased.

The terms of Maud Senior's Will

Probate of Maud senior's will dated 4 February 1963 was granted to Cecil and Maud junior (as the executors and trustees named in the will) on 5 June 1969.
Omitting formal parts, the will was in the following terms (with emphasis added): "THIS IS THE LAST WILL AND TESTAMENT of me MAUD MARIA INCH of No 48 Botany Street, Bondi Junction near Sydney in the State of New South Wales Widow I APPOINT my son CECIL INCH and my daughter MAUD INCH (hereinafter referred to as "my Trustees") to be Executors and Trustees of this my Will I GIVE AND BEQUEATH all clothing jewellery and personal effects belonging to me at the time of my decease to my daughter MAUD INCH absolutely I GIVE DEVISE BEQUEATH AND APPOINT the rest and residue of my real and personal estate whatsoever and wheresoever situate or over or in relation to which I may at the time of my decease hold any power of appointment UNTO my Trustees UPON TRUST to sell call in and convert the same or such part thereof as shall not consist of money into money at such time or times and in such manner whether by public auction or private contract and subject to such terms and conditions as to amount of deposit payment by instalments or otherwise as my said Trustees may in their absolute discretion think fit AND I DIRECT my said Trustees to stand possessed of the proceeds of such sale calling in and conversion including any ready money belonging to me at the time of my decease and including property for the time being unconverted UPON TRUST after paying thereout all my just debts funeral and testamentary expenses including State and Federal Death Probate Estate and Succession Duties or other like charges or imposts TO DIVIDE the same into three equal shares and:- (a) as to one of such equal one-third shares to pay the same to my son the said CECIL INCH for his own absolute use and benefit, (b) as to another of such equal one-third shares to pay the same to my daughter the said MAUD INCH for her own absolute use and [benefit, and] (c) as to the remaining equal one-third share I DIRECT my said Trustees to invest the same in investments of such kind and nature as my said Trustees may in their absolute discretion think fit and whether authorised by law or not and with power to vary the nature of such investments from time to time AND I FURTHER DIRECT my said Trustees to pay the nett income arising from such investments and including property representing the said share and for the time being unconverted to my son RICHARD TALBOT INCH during his lifetime and from and after the decease of the said Richard Talbot Inch I DIRECT my said Trustees to stand possessed of the said equal one-third share UPON TRUST to divide the same equally between my son the said CECIL INCH and my daughter the said MAUD INCH. AND I EMPOWER my said Trustees to postpone the sale calling in and conversion of all or any part or parts of my said estate during such time or times as my said Trustees may in their absolute discretion think fit AND REVOKING all former Wills and testamentary dispositions at any time heretofore made by me I DECLARE this only to be my last Will and testament".
Upon the death of their brother Richard on 26 October 1982 (aged 74 years), each of Cecil and Maud junior added to their respective one third shares in the estate of Maud senior an equal one half share of the one third share formerly given to Richard as a life estate. In short, they each became entitled, under Maud senior's will, to a one half share of her residuary estate.

The Grant of Probate of Maud Senior's Will

As earlier noted, probate of Maud senior's will was granted to Cecil and Maud junior on 5 June 1969.
In support of their application for probate, on 26 May 1969 Cecil and Maud junior swore an affidavit verifying an inventory of Maud senior's property.
For present purposes, it is sufficient to record that Maud senior died with property other than the Bondi Junction property, details of administration of which are not the subject of more than passing evidence. Whether administration of that other property might bear upon the character in which Cecil and Maud junior held Lot 2 in September - October 2009 was not explored by the parties in any depth.

Cecil and Maud junior's Transmission Application

On 8 December 1969 the Registrar General registered, as dealing number L664082, an "APPLICATION TO BE REGISTERED UNDER THE REAL PROPERTY ACT 1900 (SECTION 94), AS PROPRIETOR OR BY TRANSMISSION".
The Application took the form of a statutory declaration in the following terms: "WE CECIL INCH of 48 Botany Street, Bondi Junction, Civil Engineer and MAUD INCH of the same place, Spinster as Joint Tenants do solemnly and sincerely declare that WE believe ourselves to be entitled for an estate in fee simple in the land described in the following Certificates of Title and Crown Grants held by MAUD MARIA INCH late of Bondi Junction, Widow deceased: Volume 3510 Folio 247 Volume 5664 Folio 135 lodged herewith We having become so entitled as Executors of the Will of the said deceased who died on the Second day of December 1968, and Probate (No 670879) of whose Will dated 4th February 1963 was granted to us, CECIL INCH and MAUD INCH on the Fifth day of June 1969. In further verification whereof We have deposited the abovementioned deeds and also the documents mentioned in the schedule hereunder - SCHEDULE 1. Probate of the will of the said deceased. 2. Federal Commissioner's Receipt for payment of estate duty. We also declare that - (i) No other person is within our knowledge entitled to any estate or interest in the said land; (ii) We have never been bankrupt or insolvent and have not assigned our interests under the said will and that there are no unsatisfied writs, orders, judgments or executions outstanding against us; (iii) No proceedings have been instituted pursuant to the Testators' Family Maintenance and Guardianship of Infants Act 1916, in respect of the will/estate of the said MAUD MARIA INCH; (iv) The deceased left no assets outside New South Wales. AND WE make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths Act 1900. AND WE also certify that this application is correct for the purposes of the Real Property Act 1900".
With one exception, the application comprises typescript on a printed form. The exception is that the words "as Joint Tenants" in the introductory paragraph of the Application are handwritten. A later search of the title (on 13 August 2009) recorded them, in print, as joint tenants. The handwritten words cannot be taken to have been an unauthorised, late addition to the dealing.
The Application bears a stamp dated 1 December 1969 which reads "NSW Stamp Duty: registration not opposed". It was evidently lodged with the Registrar General on that same date, by Carruthers Hunter & Co, Solicitors of Sydney.
The land contained in Certificate of Title Volume 5664 Folio 135 is Lot 2 in Deposited Plan 255126.
The evidence does not detail the conveyancing history of the land contained in Certificate of Title Volume 3510 Folio 247.

The Registered Title of Cecil and Maud Junior

The evidence does not extend to a copy of Certificate of Title Volume 5664 Folio 135 after registration of Transmission Application registered number L664082.
However, an historical title search records that the land was converted to a computer folio on 26 July 1989, with a consequence that the Certificate of Title reference became instead a reference to Folio 2/355126.
A search of that title reference on 13 August 2009 records Cecil and Maud junior as registered proprietors of an estate in fee simply "as joint tenants" by virtue of the Transmission Application.
The evidence also records that a mortgage (dealing No. AE576446) was registered in favour of Westpac Banking Corporation on 20 April 2009, with a discharge of mortgage (dealing No. AF142430) registered on 24 November 2009. The evidence does not extend to an explanation of that mortgage transaction beyond an indication that the mortgage secured a debt incurred on Cecil's account.
Also registered on 24 November 2009 was memorandum of transfer AF142431, the memorandum of transfer in favour of the purchaser of the Bondi Junction property.

The Contract for Sale

The Bondi Junction property was sold by auction pursuant to arrangements made by Cecil.
By a contract dated 12 September 2009, (entry into which was authorised by Cecil personally and as attorney for Maud junior) Cecil and Maud junior sold the Bondi Junction property for $2.2 million, with eight weeks allowed for completion of the contract.
A full copy of the contract is not in evidence. However, such a copy having been produced at the hearing, the Court formally recorded the parties' agreement that the contract contained no provision apportioning the sale price of $2.2 million between Lot 2 DP 355126 and the balance of the Bondi Junction property.
The contract was completed on 9 November 2009.
Upon completion, the purchaser paid to the solicitors for the defendant the balance of the sale price of $2.2 million, after contractual adjustments, and deductions for the deposit paid on the contract date ($220,000) and a payment to Westpac ($204,285.77), presumably in discharge of registered mortgage AE576446.
Read together, the solicitors' Settlement Statement dated 9 November 2009 and a Trust Account Statement of the defendant's solicitors (Exhibit C11) record that the payment to Westpac was made on the account of Cecil.
The Trust Account Statement (Exhibit C11) supports an inference that the deposit on sale (less the selling agent's commission) was released to "the vendor" in advance of completion of the contract, on 22 September 2009.
The evidence does not permit there to be a precise accounting for the whole of the proceeds of sale of the Bondi Junction property, net of reasonable selling costs. Nevertheless: 1. the Trust Account Statement supports a finding consistent with the parties' formal agreement, noted by the Court, that: 1. acting as solicitors for Cecil and Maud junior on the sale of the Bondi Junction property (both of whom died in the course of effecting a sale and accounting for sale proceeds), the defendant's solicitors accounted for the whole of the net proceeds of sale to the defendant; and 2. those solicitors did so without any allowance being made, and without any funds being set aside, for the estate of Maud junior, represented in these proceedings by the plaintiff; and 1. the Statement contains an entry (for 16 October 2009) which supports an inference that part of the deposit on sale, released by the purchaser of the Bondi Junction property before completion, was paid out to Cecil on terms that may reflect an agreement between him and Maud junior about apportionment of the proceeds of sale of the Bondi Junction property between them. The stated "reason" for the payment to Cecil is recorded as "Cecil's share of Deposit (60%)". This entry was recorded a week before Maud junior's death (on 23 October 2009) at a time when, on the face of the contract for sale, the solicitors were acting for both Cecil and Maud junior as vendors of the Bondi Junction property.

Memoranda of Transfer

Upon completion of the sale of the Bondi Junction property the purchaser received: 1. a memorandum of transfer (subsequently registered as dealing AF142431), ostensibly executed by Cecil as transferor, in both a personal and representative capacity, in respect of Folio Identifier 2/355126 (formerly registered in the names of Cecil and Maud junior); and 2. a memorandum of transfer (subsequently registered as dealing AF142432), signed by Cecil as transferor, uncontroversially in his own right, in respect of the balance of the Bondi Junction property.
The first of these memoranda was ostensibly signed by Cecil on his own behalf and, as her attorney (pursuant to power of attorney Book 4561 No. 165), for Maud junior.
Against printed marginal notes "consideration" and "estate", each memorandum of transfer contained the following statement: "The transferor acknowledges receipt of the consideration of $2,200,000 (being the same consideration as contained in Transfer of even date) and as regards the land specified above transfers to the transferee an estate in fee simple".
The memoranda did not apportion the $2.2 million sale price for the Bondi Junction property between Lot 2 DP 355126 and the balance of the property.
Transfer AF142431 was registered on the title of Folio Identifier 2/355126, in favour of the purchaser, on 24 November 2009.

Introduction

Engagement with the question stated for separate determination requires, inter alia, consideration of: 1. the nature of the office of an executor of a deceased estate, the title and powers of an executor, the course of administration of a deceased estate and the interests of a beneficiary named in a will; and 2. the nature of co-ownership of property and (by severance or merger) termination of a joint tenancy.
Ultimately, the question stated for separate determination can be determined largely by reference to the particular facts of the case, focussing upon an inferred agreement between Cecil and Maud junior about their respective shares in the net proceeds of sale of the Bondi Junction property.

Concepts of Co-Ownership

The present proceedings highlight the need to understand legal expressions in the particular context in which they are used. In these proceedings, that caveat applies to the expression "joint tenancy" and its derivatives.
For the most part, the expression "joint tenancy" can be understood as a form of co-ownership of property contrasted with a "tenancy in common".
The principal, material difference between a "joint tenancy" and a "tenancy in common" is that, in most cases, a right of survivorship is an integral feature of a joint tenancy but absent from a tenancy in common. Ordinarily, a joint tenant's right of survivorship, contingent upon surviving a joint tenant, is accompanied by a right to sever the joint tenancy during the lives of the joint tenants, and thereby to convert the relationship between co-owners from one of joint tenancy to one of tenants in common.
On the death of one joint tenant, his or her interest passes to the surviving joint tenant or tenants automatically notwithstanding any disposition of his or her interest which the deceased may have attempted to make by his or her will: BA Helmore, The Law of Real Property in New South Wales (Law Book Co, Australia, 2nd edition, 1966), page 268.
A tenancy in common is a form of co-ownership under which each tenant has a distinct share or interest in property which, owing to the absence of survivorship, may be disposed of by will and, if not disposed of by will, passes on the death of the tenant to his or her executor or administrator for the benefit of persons entitled on intestacy: op cit, page 275. Tenants in common can hold property in unequal shares; joint tenants cannot.
Helmore instructs us that, though joint tenants, as between themselves, have separate rights, as against the world at large they are in the position of a single person: ibid, 267-268. With that introduction, he explains the characteristics of a joint tenancy in the following terms: "The essential features of joint tenancy are what are ordinarily called the four unities, viz, unity of possession (…which is common to all forms of co-ownership), unity of title, unity of time, and unity of commenced interest. Unity of title means that the co-ownership must be created by the same deed, will, or other instrument, or by simultaneous adverse possession. Unity of time means that the interests of the tenants must vest in them all at one and the same time. This does not necessarily follow from unity of title, because by one deed an interest may be given to A and the eldest son of B who is not yet born - here there is unity of title but not of time. .. The fourth unity is unity of interest. This means: (i) that the tenants must have the same kind of estate, so one cannot have an estate in possession whilst the other has an estate in remainder, and one cannot have an estate for life and another an estate in fee simple, (ii) they cannot hold in different proportions, since they are not holders of distinct shares, that each one is entitled to the whole. …, (iii) they must all concur in any legal act affecting the subject matter, eg. a lease. One joint-tenant cannot lease the land without the concurrence of his co-owners…. From the unity of interest springs the most characteristic quality of joint tenancy, survivorship or the jus accrescendi…."
The expression "joint tenancy" takes on a different meaning when used in the context of several holders of the office of executor of a deceased estate.
In the case of several executors, in order to enable them to perform their executorial duties, the law gives them a joint interest in all estate assets; that joint interest differs from an ordinary joint tenancy because, not only are all the executors seized of the entire interest, but so is each one; it is a joint tenancy, but of a special kind: Union Bank of Australia v Harrison, Jones & Devlin Limited (1910) 11 CLR 492 at 520-521.
Although executors might be declared to be "joint tenants", they are also and primarily executors; and the nature of their office does not, for example, permit them to sever their joint interest and to create a tenancy in common: op cit, 521.

The Office of Executor

The office of executor is one and indivisible, no matter whether it is executable by one or several. When it is said that co-executors are to be regarded as an individual person, it is not meant that all must unite in the performance of each act, but that their official personality is not divisible or distinguishable and that they have individually and collectively all the rights and duties of the office they undertake: ibid 516.
Death, while removing an individual, leaves the property, debts, and claims of the deceased still remaining. His or her nomination of an executor is a request to represent him or her for certain purposes, including the payment of debts, and to do what he or she can no longer do for himself: ibid 515. If a person nominated complies with the request in the manner required by law, he or she thereby becomes an executor, and undertakes the office: ibid 516. Whether an official act be done by one, or some, or all of several executors, it is (generally) equally binding upon all, because in each case the office is discharged, and the testator is fully represented: ibid 518; RS Geddes, CJ Rowland and P Studdert, Wills, Probate and Administration in New South Wales (Law Book Co, Sydney, 1996), pages 405-410.
The special character of an executor, executorial duties and the corresponding entitlements of a beneficiary in an unadministered estate were confirmed by the Privy Council, in Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694 at 707-708 and 717, in the following terms (with emphasis added): "When Mrs Coulson died she had the interest of a residuary legatee in the testator's unadministered estate. The nature of that interest has been conclusively defined by decisions of long-established authority, and its definition no doubt depends upon the peculiar status which the law accorded to an executor for the purposes of carrying out his duties of administration. There were special rules which long prevailed about the devolution of freehold land and its liability for the debts of a deceased, but subject to the working of these rules whatever property came to the executor virtute officii came to him in full ownership without distinction between legal and equitable interest. The whole property was his. He held it for the purpose of carrying out the functions and duties of administration, not for his own benefit; these duties would be enforced upon him by the Court of Chancery, if application had to be made for that purpose, by a creditor or beneficiary interested in the estate. Certainly, therefore, he was in a fiduciary position with regard to the assets that came to him in the right of his office, and for certain purposes and in some aspects he was treated by the Court as a trustee. 'An executor,' said Kay J in In re Marsden (1884) 26 ChD 783 at 780, 'is personally liable in equity for all breaches of the ordinary trust which in Courts of Equity are considered to arise from his office.' He is a trustee 'in this sense'. It may not be possible to state exhaustively what those trusts are at any one moment. Essentially, they are trusts to preserve the assets, to deal properly with them, and to apply them in a due course of administration for the benefit of those interested according to that course, creditors, the death duty authorities, legatees of various sorts, and the residuary beneficiaries. They might as well as been termed 'duties in respect of the assets' as trusts. What equity did not do was to recognise or create for residuary legatees a beneficial interest in the assets in the executor's hands during the course of administration. Conceivably, this could have been done, in the sense that the assets, whatever they might be from time to time, could have been treated as a present, though fluctuating trust fund held for the benefit of all those interested in the estate according to the measure of their respective interests. But it never was done. It would have been a clumsy and unsatisfactory device from a practical point of view; and, indeed, it would have been in plain conflict with the basic conception of equity that to impose the fetters of a trust upon property, with the resulting creation of equitable interest in that property, there had to be specific subjects identifiable as the trust fund. An unadministered estate was incapable of satisfying this requirement. The assets as a whole were in the hands of the executor, his property; and until administration was complete no one was in a position to say what items of property would need to be released for the purposes of that administration or of what the residue, when ascertained, would consist or what its value would be…. At the date of Mrs Coulson's death, therefore, there was no trust fund consisting of Mr Livingstone's residuary estate in which she could be said to have any beneficial interest, because no trust had yet come into existence to affect the assets of his estate… [707-708] What she was entitled to in respect of her rights under her deceased husband's will was a chose in action, capable of being invoked for any purpose connected with the proper administration of his estate…[717]"
Upon the death of one of several executors, the office, with its incidents, duties and powers, and the estate and interest in all the property vested in the executors by virtue of their office, devolves upon the survivors or the survivor: Joliffe v Fera [1973] 2 NSWLR 702 at 703.
As to when, and how, the office of an executor may evolve into that of a trustee, the following observations of Latham CJ in Pagels v Macdonald (1936) 54 CLR 519 at 526 provide general guidance consistent with that of the Privy Council in Livingston's Case: "When the executor has performed all his executorial functions he may become a trustee in various ways (Halsbury, Laws of England, 1st ed, volume 28, pages 60, 61): he may become a trustee by merely continuing to hold property after his functions as executor have been performed (In re Timmis; Nixon v Smith [1902] 1 Ch 176). When the executor becomes a trustee of ascertained property, the beneficiaries then become owners of equitable interests in that property. Thus a beneficiary under a will does not, by reason of the will alone, obtain any title, legal or equitable, to any asset forming part of the testator's estate. When he does obtain such a title, he obtains it as a result of the administration of the estate of the testator according to law and in accordance with the dispositions of the will."
A question presented by the parties for determination in these proceedings (but, in my assessment, unnecessary to decide) is whether, in relation to land registered under the Real Property Act, an executor of a deceased estate, registered as proprietor of an estate in fee simple, can transform into a trustee (or hold the land for his, her or its own benefit absolutely as a beneficiary) "by merely continuing to hold property" after executorial functions have been performed.
Whether a person appointed as "executor and trustee", acts in one capacity or the other is generally a question of fact: GE Dal Pont and KF Mackie, Law of Succession (2nd ed, Lexis Nexis Butterworths, Australia, 2017), paragraph [10.46]. At least in relation to personalty (as distinct from realty), the completion of administration of an estate by an executor, and with this the moment at which the executor assumes the role of trustee of undistributed property, has been treated as evidenced by an "assent" on the part of the executor that the particular property is not required for administration purposes and therefore may pass as the will directs: op cit, paragraphs [10.47]-[10.49].
Where the property concerned is land registered under the Real Property Act 1900 (a legislative embodiment of a system of registered land title) controversy attends whether "assent" must be attended by a document registered under the Act: eg, Ford v Simes [2009] NSWCA 351 at [36]-[51]; Consolidated Development Pty Limited v Holt (1986) 6 NSWLR 607 at 615.
Although not, in my view, determinative of the parties' rights and obligations, that controversy cannot but be noticed in these proceedings because the defendant contends that, by one means or another, without registration of any instrument marking completion of executorial duties or the death of Maud junior, Cecil became beneficially entitled to the whole of the proceeds of sale of Lot 2 as a surviving joint tenant.

On the Record : The State of the Title

To the extent that Cecil and Maud junior were registered as joint proprietors of Lot 2, section 100(1) of the Real Property Act deemed them to be entitled (at law) to the land as joint tenants. On the death of Maud junior, Cecil could have lodged with the Registrar General (pursuant to section 101 of the Real Property Act) a notice of death, upon the registration of which he would have been recorded on the title to Lot 2 as the sole registered proprietor. The title to the land did not bear the endorsement "no survivorship" so as to attract the operation of section 84 of the Real Property Act, requiring (as explained in In re Robertson (1943) 44 SR (NSW) 103) an order of the Supreme Court to effect registration.
Even if he did secure registration of Lot 2 in his own name, the death of his co-executor and his registration as a single proprietor of the land would not, of itself, have freed him of the office and duties of an executor.
Section 27 of the Conveyancing Act 1919 confirms, if confirmation is necessary, that the fact that Cecil and Maud junior were registered on the title to Lot 2 as "joint tenants" did not (as In re Selous; Thomson v Selous [1901] 1 Ch 921 might have suggested) lead to the consequence that (if they had completed their executorial duties) their equitable estate in the land as tenants in common merged with their legal estate as "joint tenants".
Absent an agreement between them to the contrary, the respective beneficial entitlements of Cecil and Maud junior to, or in respect of, Lot 2 were to be determined by reference to the will of Maud senior. Section 26(1) of the Conveyancing Act 1919 operated to confirm - if confirmation is necessary - that those beneficial entitlements were held as tenants in common in equal shares.
Section 26(2) of the Conveyancing Act did not displace that construction of the will merely because Cecil and Maud junior were named in Maud senior's will as executors as well as beneficiaries. It simply confirmed - if confirmation is necessary - the general law principle that, in the special sense described in Union Bank of Australia v Harrison, Jones and Devlin Limited (1910) 11 CLR 492, several holders of the office of executor may be described as "joint tenants".
As was held in Hircock v Windsor Homes (Development No. 3) Pty Ltd [1979] 1 NSWLR 501 at 505-506, there is no inconsistency between section 26 of the Conveyancing Act and section 100 of the Real Property Act. Section 100(1) can be read as applying the incidents of "joint tenancy" to a "joint proprietorship". The words "who may be registered" do not relate to their state prior to registration, but as a description of their position on registration. The sub-section means: "If two or more persons are registered as joint proprietors of an estate or interest in land under the provisions of [the Real Property Act], they shall have the same rights as if they were joint tenants of a similar estate or interest a common law".
An executor who, by completion of executorial duties, becomes a trustee of property for a beneficiary does not, by that transformation, cease to be a "fiduciary", bound in conscience to perform (fiduciary) duties enforceable in equity. Each of an executor and a trustee is a fiduciary because each of them, in his, her or its particular character is a person who is obliged to act for or on behalf of another (a beneficiary) in some particular matter: Paul Finn, Fiduciary Obligations (Law Book Co, 1977; Federation Press, 2016), paragraph [467]. The nature of fiduciary duties might evolve, or vary from case to case; but, as a general proposition, a fiduciary is obliged to act in the interests of the beneficiary, and not otherwise.
Because the Real Property Act (Torrens) system of registered title is not a system of registration of title but a system of title by registration (Breskvar v Wall (1971) 126 CLR 376 at 385-386), where a person, in the character of an executor, secures registration on the title to land under the Act, unless there is an entry on the title that the land is held in a fiduciary capacity (such as may be authorised by section 12(1)(f) of the Act as an exception to the principle, embodied in section 82 of the Act, that trusts are not recorded in the Register), for the purposes of any dealing with the land the executor, as registered proprietor, is deemed to be absolute proprietor of the land: Real Property Act, sections 42 and 96.
Nevertheless, as section 96 of the Real Property Act confirms, the Act is consistent with a beneficiary's entitlement to enforce equitable rights against a registered proprietor who acquired registration (and, accordingly, via sections 41 and 42 of the Real Property Act, legal title) as an executor and who - whether in the character of an executor or in the character of a trustee- continues to hold that title.
Prima facie, at the time Lot 2 was sold by entry into the contract dated 12 September 2009, Cecil and Maud junior held the legal title to that land (as joint tenants) on behalf of themselves as beneficiaries under the will of Maud senior, as tenants in common in equal shares. With the passage of time, and in the absence of evidence about ongoing administration of the estate of Maud senior, it is more probable than not that, but for the controversial question whether "assent" requires the formality of registration under the Real Property Act, they held legal title as trustees for themselves rather than as executors of Maud senior's estate. Nothing of significance turns on this.

The Manner of Sale of the Bondi Junction Property

At the time the contract was entered into, and ostensibly performed, in September - October 2009 no consideration appears to have been given to whether an executor or trustee could act through the donee of a power of attorney. An assumption might have been made by the parties' solicitors, from the form of the folio identifier relating to Lot 2, without full inquiry, that Cecil and Maud junior held that land at law and in equity, as joint tenants, not as executors or trustees. Just as likely, the power of attorney held by Cecil was assumed, without contemporaneous challenge, to clothe him with plenary authority to act on behalf of Maud junior, whatever may have been the true character of their co-ownership of the land. Such speculation aside, Cecil's deployment of his power of attorney (irregular or not) added a layer of fiduciary obligations to any he may have otherwise have owed to Maud junior arising from the nature of their co-ownership of Lot 2.
Given the adaptability of fiduciary relationships, nothing of substance turns upon whether, as a matter of form, completion of their executorial duties required that, on the face of the title, Cecil and Maud junior either secured registration of a memorandum of transfer in their favour or registration of a declaration under section 11 of the Trustee Act. Equity looks to substance over form. If an application had been made by or on behalf of Maud junior for equitable relief against Cecil at the time of entry into the contract, it would have been open to the Court to hold that the two registered proprietors held Lot 2 as trustees for themselves as testamentary beneficiaries, tenants in common, despite the fact that there remained outstanding a formal, final step in administration of Maud senior's deceased estate.
Subject to registration of notice of her death (under the Real Property Act, section 101), Maud junior's role as an executor or trustee of Lot 2 ended with her death. As between Cecil and Maud junior's estate, her death did not, of itself, extinguish any beneficial entitlement attaching to her identity. If, at the time of her death, she was entitled to a half share of the property as a tenant in common in equity, that entitlement continued to subsist despite her death, enforceable by her legal personal representative, subject to a grant of representation.
An agreement by joint tenants to sell property does not, of itself and in the absence of evidence of intention, operate as a severance of the joint tenancy; but an agreement to sell and to divide the proceeds of sale may do so: Scott v Scott [2009] NSWSC 567 at [59]-[61]. If Cecil and Maud junior held Lot 2 beneficially as joint tenants rather than as tenants in common pursuant to their mother's will, it was open to them to sever their joint tenancy by an agreement to sell the property and divide the proceeds of sale.
More to the point, perhaps, in these proceedings, the fact that Cecil delivered to the purchaser a memorandum of transfer signed by him on behalf of Maud junior (a dead principal) is not without significance.
Cecil allowed settlement of the sale of the Bondi Junction property to take place, vis a vis the purchaser, on the basis that he was entitled to join in execution of the memorandum of transfer as attorney on behalf of Maud junior. He did not assert that, by reason of the death of Maud junior, he was beneficially entitled to the whole of Lot 2 in his own right. Although, strictly, his authority as Maud junior's attorney came to an end with her death, his completion of the sale, ostensibly on her behalf as well as on behalf of himself, is consistent with recognition in him that Maud junior's beneficial interest in Lot 2 was that of a tenant in common, not that of a joint tenant.
It is not necessary in these proceedings, to consider whether (if Maud junior's interest as a co-owner of Lot 2 was that of a joint tenant to which a right of survivorship attached) Cecil's entry into the contract for sale on her behalf, pursuant to an enduring power of attorney, was sufficient, in equity, to sever any joint tenancy. This is not, as was Smith v Smith [2017] NSWSC 408 at [299]-[318], a case in which a joint tenant of property (holding an enduring power of attorney, on behalf of another, mentally incompetent joint tenant) effected a sale of the property for his or her own benefit in breach of fiduciary obligations owed to the joint tenant in need of protection. By his manner of completion of the contract for the sale of the Bondi Junction property, Cecil implicitly acknowledged a subsisting interest of Maud junior (more accurately, the estate of Maud junior) in the sale proceeds.

An Agreement as to Beneficial Entitlements

In my assessment, the correct inference to be drawn from the facts is that, on and after 16 October 2009, if not throughout their period of co-ownership of Lot 2 (in whatever capacity) following the death of Richard, Maud junior and Cecil were in agreement that (pursuant to their mother's will) they each held a beneficial entitlement to that land as tenants in common in equal shares.
By inference, confirmatory evidence of that agreement, and of an agreed apportionment of the sale price of the Bondi Junction property between Lot 2 and the back lots owned by Cecil, can be found in the entry for 16 October 2009 recorded in the Trust Account Statement (Exhibit C11) of the solicitors (the defendant's solicitors in these proceedings) who acted for both Maud junior and Cecil on the sale. That entry cannot be discounted, as the defendant would have it, as an inconsequential administrative record of the solicitors. It must be taken as evidence of instructions given to the solicitors by Cecil and Maud junior, or by Cecil on behalf of Maud junior and himself. So read, it is evidence of an agreement between Cecil and Maud junior.
At a time when Maud junior was alive (and represented by Cecil as her attorney, and by the same solicitors as Cecil on the sale of the Bondi Junction property), Cecil received a payment from the solicitors' trust account, funded by the deposit paid by the purchaser of the property, described as "Cecil's share of deposit (60%)".
That payment, so described, speaks at two levels.
First, it acknowledges that Maud junior had an identifiable, separate "share" of the deposit and (I infer) the proceeds of sale of the Bondi Junction property generally.
In the context of a contract for the sale of the Bondi Junction property as a whole (five months after Maud junior had moved into a nursing home; and five weeks after Cecil, also at a separate address, had married) this use of language speaks more naturally of co-ownership as tenants in common than it does of co-ownership as joint tenants to which a right of survivorship attaches. Cecil and his sister were parting ways, each with a separate share of family property.
Secondly, apportionment of an "unequal" share of the deposit (that is, 60% rather than 50%) in circumstances in which the main lot of the Bondi Junction property (Lot 2) was in co-ownership but the smaller back lots were owned by Cecil alone, supports an inference (which, in the absence of any plausible alternative explanation, I draw) that it was agreed between Cecil and Maud junior that their beneficial entitlements to the sale proceeds as a whole were to be apportioned, as to 60%, for Cecil and, as to 40%, for Maud junior.
In the decades during which they lived together as siblings following the death of their mother, and their registration on the title of Lot 2 pursuant to a transmission application consequent upon their mother's will, it was open to Maud junior and Cecil to remain registered on the title as "joint tenants" on a common understanding (which I infer they had by at least 16 October 2009) that, as between themselves, they were beneficially entitled to the land, under their mother's will, as tenants in common in equal shares.

No Laches

The current edition of Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2015, by JD Heydon, MJ Leeming, and PG Turner), at paragraph [38-005], describes "laches" in the following terms (omitting footnotes): "… Laches is an equitable defence to an equitable claim. It is no answer to a claim at law. In its primary sense, laches requires a defendant to establish that a plaintiff has so delayed the institution or prosecution of an equitable claim that the defendant has altered his or her position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb. Mere delay, of itself, is not sufficient to establish the defence".
A principal authority for this treatment of the topic is the statement of Lord Selborne in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239-240: "Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which would otherwise be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy".
Although mere delay, of itself, is insufficient to establish a defence of laches, in a particular factual setting: (a) evidence of delay may support an inference of fact that a plaintiff has waived or released rights belatedly sought to be asserted; (b) delay, coupled with prejudice to the defendant or a third party, may also amount to a defence of laches; or (c) delay may amount to a defence under, or by analogy with, a limitation statute. None of that can be found here.
The defendant's allegation of laches depends essentially upon characterisation of the period of about 45 years 9 months, between the time Cecil and Maud junior were (on 8 December 1969) registered on the title to Lot 2 as joint tenants and the time when these proceedings were commenced (on 11 September 2015), or the period of nearly 33 years between the death of their brother Richard (on 26 October 1982) and the commencement of the proceedings, as "delay", passing over: (a) any agreement in the interim between Maud junior and Cecil about the character of their co-ownership of their common residence; and (b) delays in administration of Maud junior's deceased estate not beyond any limitation period for which the Limitation Act 1969 NSW provides.
In effecting a sale of the Bondi Junction property (and, more particularly, appropriating deposit moneys and effecting a settlement on behalf of "Maude junior" and himself) Cecil proceeded, I find, on the basis that their beneficial entitlements to Lot 2 were governed by their mother's will, implicitly acknowledging Maud junior's share of Lot 2 and the personalty into which, by its sale, it was converted.
There is no factual foundation for an application of the doctrine of laches against a claim, on behalf of Maud junior's estate, to her share (as I have found, 40%) of the net proceeds of sale of the Bondi Junction property.

CONCLUSION

Accordingly, I answer as follows the question stated for separate determination: "The estate of Maud Inch (who died on 23 October 2009) was, upon completion of the sale of the property known as 48 Botany Street, Bondi Junction, by the contract of sale dated 12 September 2009 completed on 9 November 2009, beneficially entitled to 40% of the net proceeds of sale."
Bringing the deposit into account, the expression "net proceeds of sale" here used is a reference to the sale price of $2.2 million after contractual adjustments, less agent's commission and any other costs of effecting the sale (not including the payment to Westpac in discharge of its mortgage).
The separate question having been determined in favour of the plaintiff, in the absence of an application for a different form of order, costs should follow the event, with an order that the defendant (in both her capacities) pay the plaintiff's costs of proceedings on the separate question, to be assessed on the ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 April 2019

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