New South Wales Supreme Court CITATION : ALCOTT v ALCOTT & 3 ORS [2007] NSWSC 11 HEARING DATE(S) : 2 January 2007 JURISDICTION : Common Law JUDGMENT OF : Adams J at 1 EX TEMPORE JUDGMENT DATE : 2 January 2007 DECISION : The Registrar to execute a transfer of the Sutherland property; the Registrar directed to sign any other documents necessary to effect the transfer, including a transmission application; costs are to be paid out of the estate; leave to apply on 3 days' notice. CATCHWORDS : Will - family law agreement to leave specified property by will to partner - insolvent estate - whether property subject to trust in favour of partner. LEGISLATION CITED : Civil Procedure Act 2005 s94 Family Provision Act 1982 Barns v Barns & Ors (2003) 214 CLR 169 CASES CITED : Birmingham v Renfrew (1957) CLR 666 Central Trust and Safe Deposit Company and Snyder (1916) AC 266 at 271 Ben Jonas ALCOTT (Plaintiff) Shirley Margaret ALCOTT (First defendant) PARTIES : Margaret Wanda GRIFFITHS (Second defendant) Errol Laurence ALCOTT (Third defendant) Yvette Dominique BERNER (Fourth defendant) FILE NUMBER(S) : SC 122347/04 COUNSEL : Ms K Hunter (Solicitor) (Plaintiff) Mr M K Meek (Defendants) SOLICITORS : Conaghan Hunter Solicitors (Plaintiff) O'Neill Marengo (Defendants) Ex tempore - checked THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROBATE LIST ADAMS J TUESDAY 2 JANUARY 2007 122347/04 - BEN JONAS ALCOTT v SHIRLEY MARGARET ALCOTT & 3 ORS ESTATE OF KEVIN MAURICE ALCOTT JUDGMENT 1 HIS HONOUR: By deed dated 11 April 1972, between the deceased Kevin Maurice Alcott and his erstwhile wife Shirley Margaret Alcott, their outstanding mutual financial obligations were resolved following the breakdown of their marriage. 2 By clause 1 of the deed, the deceased covenanted with Ms Alcott that he "will make and keep on foot a will wherein he would give, devise and bequeath to [Ms Alcott] in the event that she has not married at the time of [the deceased's] death, one half share of the property known as 6 Tullimbar Road, Cronulla, free of mortgages and encumbrances and free" from any relevant duties or outgoings. A number of provisos, presently immaterial, were also made. 3 It is not disputed that the pre-conditions (with some variations) for the covenanted obligation were satisfied when, as it happened, the deceased died on 29 July 2004, without having made a will in accordance with the deed. The variations of the property. Ultimately, consent orders were made in this Court that the property referred to in the deed (the Cronulla property) was replaced by a property which I will call the Sutherland property. 4 The consent orders were not concerned with the nature of the obligations created by the deed – and as I understand it this is not controversial – as at the time this was not seen as problematical by the parties, however, it appears that, although Ms Alcott does not admit it, it seems almost certain that the estate is insolvent, and it would be insolvent even if the equity in the Cronulla property is taken into account. One other matter, I notice the deed required the transfer of only one half. 5 The deed provided for the transfer of one half of the property to Ms Alcott, and the other half to go to the children of the marriage. I am informed – and at all events this does not matter for present purposes – that the children have effected a transfer of such interest as they have to their mother, Ms Alcott. 6 The fundamental question is whether the Sutherland property is subject to a mortgage to the Westpac Bank and, as that is a secured debt, it is clear that whatever interest Ms Alcott has, it must be subject to that encumbrance, and she does not dispute this. However, it is clear it seems to me that, if the estate were solvent so the debt to Westpac could be paid out of the other assets of the estate, the executor would be bound to pay that debt and pass the property unencumbered. 7 However that may be, as far as the bank is concerned, it is clear that, until payment of the debt, it is entitled to enforce its mortgage and, to that extent, Ms Alcott must give way, though she may have rights against the estate as a creditor in respect of the obligations of the executor. However, that is not a matter with which I need to concern myself. 8 It is clear from what I have said that, by entering into the deed and therefore adjusting her rights in respect of the marriage dissolution, Ms Alcott has executed her part of the material consideration. This does not mean, of course, that she has a beneficial interest in the Sutherland property, nor did she have a beneficial interest in the Cronulla property. If authority is needed for this proposition, Barns v Barns (2003) 214 CLR 169 is sufficient. 9 Ms Alcott has the right to require the executor to fulfil the obligations created by the deed, subject of course to such other competing claims that might have priority, for example, those that might have existed under the Family Provision Act 1982, as to which see also Barns v Barns. In Birmingham v Renfrew (1957) CLR 666 Dixon JA at 687 adopted as correct what his Honour described as "the general principles" referred to by Lord Parker in Central Trust and Safe Deposit Company v Snider (1916) AC 266 at 271, 272, quoting the following passage – "The learned Chief Justice refers to the case of Freemoult v Dedire (1) as having decided that a covenant to settle lands makes the covenantor but a trustee for the parties who would be interested if the covenant were performed, and to a passage in Lewin on Trusts, 12th ed., pp 160-161, where it is stated that if a person agrees for valuable consideration to settle a specific estate he becomes a trustee of it for the intended objects, and all the consequences of a trust will follow. Freemoult v Dedire (1) was undoubtedly a sound decision, and there is little fault to find in the statement in Lewin on Trusts as to the general equitable principle. But it must be remembered that this principle is but the logical consequence of the power of a Court of Equity to grant, and its practice in granting, specific performance of a contract to convey or settle real estate. It is often said that after a contract for the sale of land the vendor is a trustee for the purchaser, and it may be similarly said that a person who covenants for value to settle land is a trustee for the objects in whose favour the settlement is to be made. But it must not be forgotten that in each case it is tacitly assumed that the contract would in a Court of Equity be enforced specifically." 10 This decision was summarised by Gleeson CJ in Barns at 183 where his Honour characterised "the doctrines of equity affecting the conscience of the survivor in the case of mutual wills" as giving "rise to ... a floating obligation, suspended during the lifetime of the survivor, which descends upon the assets of the survivor, and at the death of the survivor crystallises into a trust". 11 It seems to me that, arising out of the deed and accepting the substitution of the Sutherland property, the estate holds that property on trust for Ms Alcott (in the circumstances) and that she is entitled to a transfer of the property subject to the mortgage to the Westpac bank, although the executor is obliged to defray that and any of the other specified costs out of the remaining assets of the estate. 12 As to the extent to which in respect of those moneys Ms Alcott is a mere creditor, I have not been asked to determine that and I do not do so. The executor has declined to transfer the property pursuant to the consent order as he is troubled about the risk of preferring Ms Alcott as a creditor in circumstances where the estate is insolvent. Ms Alcott therefore asks the Court to make an order in accordance with s94 of the Civil Procedure Act 2005 which is in the following terms: "(1) If any person does not comply with a judgment or order directing the person: (a) to execute any conveyance, contract or other document, or (b) to endorse any negotiable instrument, the court may order that the conveyance, contract or other document be executed, or the negotiable instrument endorsed, by such person as the court may nominate for that purpose. (2) A conveyance, contract, document or instrument that is executed or endorsed pursuant to an order under subsection (1) operates, and is for all purposes available, as if it had been executed or endorsed by the person originally directed to execute or endorse it." 13 It seems to me that she should have her order and accordingly I order the Registrar to execute a transfer of the Sutherland property in accordance with the orders made by Campbell J on 7 September 2005. I note that the relevant order was stayed pending the occurrence of two events. I am informed that those events have occurred and accordingly the stay is no longer effective. 14 The Registrar is also directed to sign any other documents necessary to effect the transfer, including a transmission application if required by the Registrar of Land Titles. 15 I give liberty to apply on three days' notice. ********** 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.