Colyton Investments Pty Ltd v McSorley [1962] HCA 44; (1962) 107 CLR 177 (29 August 1962)

HIGH COURT OF AUSTRALIA

COLYTON INVESTMENTS PTY. LTD. v. McSORLEY [1962] HCA 44; (1962) 107 CLR 177

Executors

High Court of Australia
Dixon C.J.(1), Kitto(1) and Windeyer(1) JJ.

CATCHWORDS

Executors - Specific performance - Contract for sale of real property, part of estate of deceased testatrix - Contract signed by one only of two executors - Power of one of several executors acting alone to sell - Contract objectionable to other executor - Exercise of court's discretion in granting specific performance - Wills, Probate and Administration Act, 1898 (N.S.W.), s. 46 (2) - Conveyancing Act, 1919-1954 (N.S.W.), s. 153 (1), (4).

HEARING

Sydney, 1962, July 31; August 29. 29:8:1962
APPEAL from the Supreme Court of New South Wales.

DECISION

August 29.
THE COURT delivered the following written judgment:-
This is an appeal from a judgment of the Supreme Court of New South Wales in performance of an alleged contract for the sale of an hotel property situated at the corner of William and Durham Streets, Bathurst. (at p179)

2. The appellant relied, in order to prove the contract, upon a document which consisted of the well-known printed form of conditions of sale approved by the Real Estate Institute of New South Wales, with certain additions and deletions. The heading described it as conditions and terms of sale for the hotel property "sold . . . by (a named firm of hotel brokers) on account of the estate of the late Frances Mary McSorley". At the end there appeared, under the caption "Contract For Sale", a statement that subject to and upon the conditions and terms of sale previously set forth the appellant purchased the property for the sum of 35,000 pounds; and it proceeded "and . . . for the Vendor sells the same", the name of the agent being left blank. There was provision for inserting the date both at this point and at the head of the document, but no date was filled in. The purchase money, the deposit and the balance were set out - they were 35,000 pounds, 3,500 pounds, and 31,500 pounds respectively - and against the printed words "Signature of Purchaser" there appeared the common seal of the appellant attested as having been affixed in the presence of the secretary and a director of the appellant. Then there appeared the printed words "Signature of Vendor", followed by the signature of one of the respondents, J.G. McSorley. There was no signature by the other respondent, D.R. McSorley. (at p180)

3. The statement of claim as originally framed alleged a contract between the appellant and the two respondents, made on or about 20th May 1960. There was no reference to the respondents' possessing a representative capacity, and no mention of the estate of Frances Mary McSorley. The document which has been described would not support the appellant's case as thus pleaded: cf. Turner v. Hardey [1842] EngR 515; (1842) 9 M & W 770 (152 ER 326) , and at the hearing no evidence was offered of any contract other than that which was said to appear from that document. But at the commencement of the hearing leave was given to make an amendment alleging in the alternative that the respondents were the executors to whom probate had been granted of the will of Frances Mary McSorley deceased and that it had been agreed on or about 20th May 1960 between the respondent J.G. McSorley "as such executor as aforesaid" and the appellant that the appellant should purchase the property "from the estate of the said Frances Mary McSorley" for the sum of 35,000 pounds. The only issue that was fought was whether the document abovementioned constituted or evidenced a contract of which specific performance should be granted. (at p180)

4. It was established that the respondents, who are sons of Frances Mary McSorley, were the executors of her will and beneficiaries under it, that she died on 5th February 1945, and that the respondents took probate on 28th May 1945. The dates suggest the probability that long before 20th May 1960, when J.G. McSorley in fact signed the document, the executorial duties had been fully performed. The probability is strengthened by several considerations. The hotel property was the only remaining asset in the estate; J.G. McSorley, when asked in the witness-box whether there was any outstanding liability of the estate, could not think of any; in a letter of 6th April 1959 J.G. McSorley's solicitor, writing to D.R. McSorley and a third brother, gave as his client's reason for wanting the property sold that he wished to obtain the amount of his interest in the estate; and in letters of 12th November 1959 and 14th November 1959, which were in evidence but need not be further described, both the solicitor and D.R. McSorley wrote as if the beneficiaries alone were concerned with the administration of the estate. If in fact the executorial duties were complete, the respondents had no power to sell in May 1960 save as trustees of the will; and since the will did not authorize one trustee to sell without the concurrence of the other it is obvious that the document relied upon as a contract, even assuming it to be in truth a contract by which J.G. McSorley purported to sell on behalf of the estate, could not be made the subject of a decree for specific performance: Neill v. Hewens [1953] HCA 92; (1953) 89 CLR 1, at p 12 , Naylor v. Goodall (1877) 47 LJ Ch 53 . At the hearing, the question whether in May 1960 any executorial duties remained still unperformed was touched upon, but it seems to have been dropped. The appeal, as it happens, may be decided without further attention to this aspect of the case. (at p181)

5. There was nothing in the evidence to suggest that J.G. McSorley, when he signed the document which is relied upon as a contract, had any such antecedent authority from his co-executor as would enable him to sign on behalf of them both. D.R. McSorley, though not averse to a sale, had expressed the opinion a year before that the property was worth 40,000 pounds, and had described an offer of 32,000 pounds as disappointing and much below what he would accept. He made it quite clear that he was standing out against a sale at any price which did not meet with his approval. J.G. McSorley was fully alive to this, and on the evidence there is no room for a conclusion that in signing the document he was acting or purporting to act under any authority from D.R. McSorley. This being so, the appellant, in order to establish a sale enforceable as against the estate, put its case in alternative ways, each commencing with the proposition that under the law of New South Wales one of several executors may sell land of the estate for purposes of administration, even without the concurrence of the other or others. Its case was, primarily, that J.G. McSorley exercised this power by signing the document unconditionally; but it led evidence directed to establishing alternatively that if in fact J.G. McSorley signed the document conditionally, that is to say upon the condition that D.R. McSorley should either sign it or concur in it without signing it, at a later stage the solicitor acting for the estate waived the condition and agreed to his signature being treated as an unconditional exercise of the power of sale. (at p182)

6. The learned judge decided the case on the ground that the initial proposition of law was ill-founded. In conformity with dicta in the judgments of Roper C.J. in Eq. and this Court in the case of Neill v. Hewens (1952) 53 SR (NSW) 113, at p 118; 70 WN 11, at p 13; [1953] HCA 92; (1953) 89 CLR 1, at p 12 , and in accordance also with his own opinion, his Honour held that in New South Wales, by reason of a provision contained in s. 153(4) of the Conveyancing Act, 1919-1954 (N.S.W.), one of several executors acting alone has no power to sell the testator's land without leave of the Supreme Court in its probate jurisdiction, and that since the Court had not granted leave to J.G. McSorley to sell the estate's hotel property a contract entered into by him alone to sell it, even assuming the executorial functions to be uncompleted, could not be made the subject of a decree for specific performance. (at p182)

7. The appellant challenged the construction of s. 153(4) which produces this result, but it must be upheld. The leading provision in s. 153 is that subject as thereinafter mentioned executors may without the consent of any person or the order of a court deal with the real estate of the deceased person in a variety of specified ways, including sale for purposes of administration. Upon this provision sub-s. (4) places the qualification that some or one only of several executors shall be entitled to exercise the powers mentioned in the section with the leave of the Supreme Court in its probate jurisdiction "and not otherwise". The appellant's contention is that the limitation of power resulting from the last three words should not have been held fatal to its claim for specific performance, because it is a limitation which applies only to the power of sale conferred by sub-s. (1) of s. 153 and there is nothing in the Conveyancing Act or elsewhere to place a similar limitation upon the power of sale which is conferred upon an executor by sub-s. (2) of s. 46 of the Wills, Probate and Administration Act, 1898-1954 (N.S.W.). By the latter enactment an executor is authorized to sell his testator's real estate for purposes of administration and to convey it to a purchaser in as full and effectual a manner in law as the deceased could have done in his lifetime. The judgments delivered in this Court in the case of Union Bank of Australia v. Harrison, Jones & Devlin Ltd. [1910] HCA 44; (1910) 11 CLR 492 , which was decided under identical provisions in the Probate Act of 1890 (N.S.W.), are relied upon as showing that the power of sale thus conferred is exercisable by one of several executors acting without the other. A short answer, which is in effect the answer given by Jacobs J., is that sub-s. (1) of s. 153 of the Conveyancing Act, in so far as it relates to the power of sale for purposes of administration, should be understood, notwithstanding that s. 46 (2) of the earlier Act remains unrepealed, not as conferring a second power to exist side by side with the power under s. 46(2), but as confirming the existence of the same power, and that the operation of sub-s. (4) is therefore to govern the exercise of the authority which the law as a whole reposes in executors to sell real estate for purposes of administration. The words "and not otherwise" in sub-s. (4) thus have a result similar to that which the legislature of the United Kingdom produced by the qualification which it enacted at the end of s. 2(2) of the Land Transfer Act, 1897 (60 & 61 Vict. c. 65). It is not possible to sustain the contention that the course of legislation has resulted in executors having two powers of sale, existing side by side, one qualified but the other not qualified by a prohibition against exercise by less than the full number of executors. The decision of Harvey J. in Estate of Corrigan (1925) 42 WN (NSW) 28 , from which the appellant claimed support for the contention, contains nothing to the point. It was there held that on the repeal by the Conveyancing Act, 1919 of s. 56 of the Wills, Probate and Administration Act, 1898 and of s. 4 of the Administration (Validating) Act, 1900 the power of leasing which apart from those provisions belonged to an administrator virtute officii was "revived", and that the Court might give directions under s. 57 of the Wills, Probate and Administration Act as to the exercise of that power. This was not a decision that before the repeals administrators had had two concurrent powers of leasing, or that the Probate Court had had two concurrent powers of conferring authority to lease. Apart from the repealed sections, the situation was that an administrator might lease real estate, as he could always have leased chattels real vested in him, but leasing was an exceptional mode of dealing with the assets, and a lessee always took subject to the question whether the grant of the lease was the best way of administering the assets: Oceanic Steam Navigation Co. v. Sutherberry (1880) 16 Ch D236, at p 243 . Section 56, while it was in force, limited to three years the period for which a lease might be granted under this power, and s. 4, while it was in force, enabled the Probate Court to sanction a lease by an administrator for any period. The judgment of Harvey J. falls into two parts. In the first, his Honour held that by the repeal of s. 56 the power of leasing which an administrator had under the general law was restored to its former condition, and that upon the repeal of s. 4 the Probate Court ceased to have jurisdiction to authorize an administrator to grant leases. Secondly his Honour held that a jurisdiction which the Court had under s. 57 of the Wills, Probate and Administration Act, 1898, to direct an administrator as to the course of proceedings to be taken in regard to the letting of real estate until sale, might still be exercised in respect of a proposed letting, and that the giving of directions under that section, relating as it must to a power of leasing already possessed by the administrator, was a different thing from the conferring of a power to lease. (at p184)

8. The decision of Jacobs J. was therefore correct, for the reason which he gave. But it seems desirable to add that if s. 153(4) of the Conveyancing Act had not stood in the appellant's way the claim for specific performance must yet have failed. Let it be assumed on the authority of Union Bank of Australia v. Harrison, Jones & Devlin Ltd. [1910] HCA 44; (1910) 11 CLR 492 (in respect at least of land which, like the land in question here, is not under the Torrens system of registered title) that, since in New South Wales, under the Wills, Probate and Administration Act, 1898, a testator's real estate vests in his executors upon grant of probate (s. 44), and forms assets in the executors' hands for the payment of duties and fees and of debts in the ordinary course of administration (s. 46(1), and is the subject of the same rights and duties of executors as exist with reference to personal assets (s. 48), any one of several executors, while executorial administration is uncompleted, could (apart from s. 153(4) of the Conveyancing Act) convey such real estate without the concurrence of the other or others, just as he could at common law transfer or assign personalty including chattels real. It does not necessarily follow - and we have not here to decide whether it is so or not - that one only of several executors can bind the estate by a contract (as distinguished from a conveyance or assignment) with respect to assets of the estate. It is unnecessary to consider the point, however, because the question which would remain in this case if s. 153(4) were to be treated as out of the way is the narrower question whether, in such circumstances as are here proved, a contract by one only of two executors for the sale of land of the estate will be enforced in a court of equity. (at p184)

9. The case of Lepard v. Vernon [1813] EngR 211; (1813) 2 V & B 51 (35 ER 237) shows that, where one only of several executors has dealt with property of the estate, even though by an actual assignment, a court of equity will not as of course lend its aid for the effectuation of the transaction: it will insist upon being satisfied as to the propriety of the terms, and especially the price, before granting relief as against the estate and thus depriving the beneficiaries of the property. As regards a contract of sale made by one executor alone, it would be hard to find a more apposite illustration of this than is afforded by Sneesby v. Thorne (1855) 7 De GM & G 399(44 ER 156) . In that case the trial judge, Wood V.C., dismissed a suit for specific performance in respect of a contract entered into by one of two executors for the sale of a leasehold property belonging to the estate, on the ground that as against a person selling in a fiduciary character specific performance will not be decreed of a contract of which the beneficiaries may be entitled to complain. He is reported in the Law Times as saying: ". . . unless the court sees clearly that the contract is necessary and beneficial there is great difficulty in enforcing it against a person holding such a position as, independently of his character of executor, his conduct is likely to be called in question by his cestuis que trust. The principle of the court is that the cestuis que trust must not be injured, and that the party contracting must be left to his remedy at law" (1855) 25 LT (OS) 125, at p126 . On appeal, the refusal of specific performance was affirmed on two grounds. One ground, taken by both the Lords Justices, was that the executor who signed the agreement had never intended to exercise the power of sale by contracting independently of his co-executor: he had signed the document under the erroneous impression that his co-executor concurred in his doing so, and since he would not have signed it if he had believed that the co-executor would disapprove of the sale, as in fact he did, to grant specific performance would be to enforce a contract different from that which he had intended to make. The other ground was stated only by Turner L.J. It accorded with the ground upon which Wood V.C. had proceeded: the price not having been proved sufficient, it was not clear that if specific performance were decreed the executor who signed the contract would not be liable for a devastavit. The similarity with the present case is sufficiently close. First, it must be taken as established by the trial judge's findings that J.G. McSorley signed the contract document, not indeed under any mistake as to D.R. McSorley's attitude, but with the intention that the operation of the contract to bind the estate should depend upon its being concurred in by D.R. McSorley. "The matter was never regarded", his Honour said in his judgment, "as one in which an executor was dealing with the matter by any right to act alone". And, secondly, the evidence left completely open the possibility that D.R. McSorley's objection to a sale for 35,000 pounds may have been justified. A sale by J.G. McSorley for that price might, for all that appeared, inflict upon the beneficiaries, including D.R. McSorley, a loss for which the only remedy would be a claim against J.G. McSorley as for a devastavit. To grant specific performance in these circumstances would be contrary to principle. (at p186)

10. Finally, it should be mentioned that on the facts found by the trial judge the appellant failed in its endeavour to prove that the condition of D.R. McSorley's concurring in the sale was waived by the solicitor acting for the estate. There was a conflict of evidence as to whether the solicitor ever told the appellant's solicitors that the one executor's signature could be treated as binding the estate by the contract; but his Honour found it unnecessary to resolve the conflict, being of opinion that the solicitor had no authority, actual or ostensible, to waive the requirement of D.R. McSorley's concurrence. The correctness of this conclusion is not open to doubt. (at p186)

11. For all these reasons, the appeal fails and should be dismissed. (at p186)

ORDER

Appeal dismissed with costs including the costs of and incidental to the application of 3rd March 1962 to the Full Court.