15.1 The law in relation to the administration of assets deals with the manner in which the assets of a deceased estate are distributed. This aspect of the law is significant in two respects:

• In relation to an insolvent estate – that is, where there are insufficient assets in the estate to pay all the debts – it determines whether some debts have priority over others.
• In relation to a solvent estate – where there are obviously sufficient assets to pay all the debts – the law in relation to the administration of estates may determine how an estate is distributed between a number of beneficiaries. This will be so where there are insufficient assets in the estate – after paying all the debts – to pay all the beneficiaries according to the terms of the will. Lee gives this brief explanation of how the assets in a solvent estate are distributed:¹
  Where the estate is solvent, ... the question is not what creditors will be paid, since, the estate being solvent, they all will be. The question is, out of which benefits left to beneficiaries must the debts be paid? The law answers this question by defining classes of assets applicable for the payment of debts in order. Assets in class 1 should first be applied, then assets in class 2 etc.
  There is a designated order in all Australian jurisdictions for the application of different classes of property towards the payment of debts. Depending on the nature of the property comprising the estate and the terms of the will, the effect of the designated order may be that some beneficiaries receive in full what is left to them by the will, while others receive part only, or – in some cases – nothing.

15.3 This litigation tends to result in the court analysing the detailed wording of the legislative provisions, and of the wills that bring those provisions into operation. Almost always, the testator has not provided for the precise problem that has arisen, because the testator did not foresee the events that occurred. The courts are then asked to determine how the legislative provisions would impact on those events. Simplification of the provisions may reduce the uncertainty involved in, and the opportunities for, such litigation.

2. AGREED PRINCIPLES

15.4 The National Committee, in consultation with the Registrars of Probate, agreed on a set of principles to provide for the administration of assets. Some of these principles simply restate the existing law. Other principles, however, involve quite a significant change in the law.⁴

15.5 The agreed principles are as follows:

(1) The duties of personal representatives are:

(a) to get in the assets of the estate;

(b) to pay the debts of the deceased; and

(c) to distribute what remains among the beneficiaries entitled to those assets.

(3) If the estate is insolvent, the estate is administered as if in bankruptcy.

(4) Where the estate is solvent, the debts are payable out of the assets of the estate.

(5) The assets of the estate are either specific or are part of the residuary estate –

(a) specific assets are assets specifically referred to in a will of the deceased and the subject of a disposition that has effect;

(b) residuary assets are assets that form part of the residuary estate – that is, they are not specific and include assets specifically referred to in a will of the deceased the subject of a disposition that fails to have effect.

(7) (a) Specific assets are next applicable towards the discharge of the debts of the deceased.

(b) Where specific assets are applicable towards the discharge of the debts, specific assets remaining after the payment of debts must be distributed rateably among all the beneficiaries entitled under a disposition of specific assets.

(9) Pecuniary legacies⁶

(a) Pecuniary legacies are payable from residuary assets after the payment of debts, although the National Committee seeks submissions on whether this should be the case.

(b) Where residuary assets, after the payment of debts, are insufficient to pay all pecuniary legacies in full, the pecuniary legacies abate rateably.

These provisions should be subject to an admissible expression of a contrary intention, whether contained in the will or elsewhere.

Subject to the expression of a contrary intention, where more than one specific asset is made subject in the will to a charge, trust or direction for the payment of any debt or debts of the deceased, all such specific assets must be applied rateably to the payment of the debts.

15.6 The main principles and a number or subsidiary issues that arise from these principles are discussed in detail below.

3. DECEASED’S PROPERTY IS ASSETS FOR THE PAYMENT OF DEBTS

QLD	56	WA	10
ACT	41, 41A(1)	NT	54, 55
VIC	37	TAS	32
NSW	46, 46A	UK	32
SA	51	NZ	26

(a) Queensland provision

15.7 Section 56 of the Succession Act 1981 (Qld) reads:

Property of the deceased assets for the payment of debts

(1) The property of a deceased person which on his or her death devolves to and vests in his or her executor or the public trustee is assets for the payment of his or her debts and any disposition by will inconsistent with this enactment is void as against creditors, and the court shall, if necessary, administer the property for the purposes of the payment of the debts.

(2) This section shall take effect without prejudice to the rights of mortgagees or other encumbrancees.

(b) Issue considered by the National Committee

15.8 The National Committee considered whether a provision to the effect of section 56 of the Succession Act 1981 (Qld) should be included in the model legislation.

(c) The National Committee’s preliminary view

15.9 The National Committee was of the view that a provision to the effect of section 56(1) of the Succession Act 1981 (Qld) should be included in the model legislation. It was of the view, however, that section 56(2)⁹ – which deals with the rights of mortgagees and other encumbrancees – was declaratory only, and could therefore be omitted.

15.10 The Registrars of Probate agreed with this approach.

Proposal 71

A provision to the effect of section 56(1) of the Succession Act 1981 (Qld) should be included in the model legislation.

QLD	57	WA	10A, Sch 5
ACT	41C, Sch 4 Pt 2	NT	57(2), Sch 4, Pt 2
VIC	39(1), Sch 2 Pt 1	TAS	34, Sch 2 Pt 1
NSW	46C(1), Sch 3 Pt 1	UK
SA	60, 61	NZ	31, 37

(a) Introduction

15.11 Ordinarily, the administration of a deceased estate is undertaken by the personal representative. However, where a person dies while insolvent or a deceased estate becomes insolvent, there is an alternative regime for the administration of the estate.¹⁰ Part 11 of the Bankruptcy Act 1966 (Cth) deals with the administration of estates of deceased persons in bankruptcy. Both the Bankruptcy Act 1966 (Cth) and the various jurisdictions’ administration legislation contain provisions giving priority to the payment of different types of debts.

(b) Administration under Part 11 of the Bankruptcy Act 1966 (Cth)

15.12 A petition may be presented for the administration of a deceased estate by either a creditor or creditors of the deceased person¹¹ or the person administering the estate of the deceased person.¹² In both cases, a relevant connection between the deceased and the jurisdiction must be established.¹³ Further, for a petition to be presented by a creditor or creditors:

• there must be a debt of not less than $2,000 or debts totalling not less than that amount –
  – owing to the creditor or creditors by the deceased person at the time or his or her death,¹⁴ or by the personal representative of the deceased person;¹⁵ or

  – which becomes or become owing after the deceased person’s death, being a debt or debts that the deceased person would have been liable to pay to the petitioning creditor or creditors if he or she had not died;¹⁶ and

• the debt or debts must be for a liquidated sum and payable immediately or at a certain future time.¹⁷

15.14 The list of priority payments is, however, itself subject to certain other Commonwealth legislation dealing with the order of payment of debts.²⁰ Consequently, it will not always be the case that, in the absence of any costs pertaining to the first three classes of priority debts, the proper funeral and testamentary expenses of the estate will be the next debts due for payment.

(c) Administration under State or Territory law

15.15 Even though an estate may be insolvent, it may not necessarily be administered under the provisions of the Bankruptcy Act 1966 (Cth). One of the grounds for bringing a petition may not be present, or there may simply be no creditor who wishes to bring a petition.

15.16 Section 57 of the Succession Act 1981 (Qld) reads:

Payment of debts in the case of insolvent estates

Where the estate of a deceased person is insolvent –

(a) the funeral, testamentary and administration expenses have priority; and

(b) subject as aforesaid and to this Act, the same rules shall prevail and be observed as to the respective rights of secured and unsecured creditors and as to debts and liabilities provable and as to the valuation of annuities and future and contingent liabilities, respectively, and as to the priorities of debts and liabilities as may be in force for the time being under the law of bankruptcy with respect to the administration of estates of deceased persons in bankruptcy.

... as in practice a personal representative cannot afford to follow the State rules in any case where a creditor may have power to insist that the estate be administered under the Commonwealth Act.

15.18 The National Committee considered whether:

(1) the State and Territory rules for the payment of debts in insolvent estates should be the same as the rules under the Bankruptcy Act 1966 (Cth);

(2) a provision to the effect of section 57 of the Succession Act 1981 (Qld) should be included in the model legislation.

(e) The National Committee’s preliminary view

15.19 The National Committee noted that the order for the payment of funeral, administration and testamentary expenses differs depending on whether an insolvent estate is being administered under the Bankruptcy Act 1966 (Cth) or under the relevant State or Territory provisions relating to the distribution of insolvent estates.²³

15.20 The National Committee was of the view that it was necessary to retain the State and Territory provisions in some form, as the Bankruptcy Act 1966 (Cth) will not always cover the field.²⁴ The National Committee was of the view, however, that the same priority rules should apply regardless of whether an estate was the subject of proceedings under the Bankruptcy Act 1966 (Cth) or was being administered under the relevant State or Territory provision. This view was shared by the Registrars of Probate.

15.21 One suggestion for assimilating the priorities created by the two schemes was that the model provision should be made “subject to the Bankruptcy Act 1966 (Cth)”.

15.22 The National Committee did not form a preliminary view about this issue, but decided to seek submissions on how the issue might be resolved.

Questions for discussion

15.1 In relation to the payment of debts in an insolvent estate, should the same priorities apply regardless of whether the estate is being administered under Part 11 of the Bankruptcy Act 1966 (Cth) or under the relevant provision of a State or Territory?

15.2 If yes to 15.1, how should the priorities of the two regimes be assimilated? For example, should the model provision be expressed to be “subject to the provisions of the Bankruptcy Act 1966 (Cth)” or should the model provision incorporate by reference the relevant order of the Bankruptcy Act 1966 (Cth)?

15.3 If no to 15.1, should the payment of “funeral, testamentary and administration expenses” have priority when an insolvent estate is being administered other than under Part 11 of the Bankruptcy Act 1966 (Cth)?

QLD	58(1)	WA	10(2), (4)
ACT	55	NT	87(2)
VIC	36	TAS
NSW	82(2)	UK25	10(1)
SA	62	NZ	40

QLD	58(2)	WA	10(5)
ACT		NT
VIC		TAS
NSW		UK25	10(2)
SA		NZ

(a) The right of retainer

15.23 The right of retainer – “a personal privilege of the personal representative”²⁶ – has been described in the following terms:²⁷

At common law, an executor or administrator of a deceased estate is entitled to retain from the estate an amount sufficient to cover any debts owing to him or her by the deceased in priority to the costs of the administration and also in priority to the claims of creditors of an equal or lower degree.²⁸

The right was one originally recognised by the law on the ground that the representative cannot sue himself, and would, therefore, have been in a worse position than any other creditor, who, by suing and recovering judgment, could obtain priority over the representative. [note omitted]

15.25 The personal representative’s right to prefer creditors has been described in the following terms:³⁰

A personal representative was entitled to pay creditors of the same class in such order as he pleased although there might not be enough to pay all.

15.26 The personal representative’s rights of retainer and preference have been abolished by statute in all Australian jurisdictions except Tasmania.³¹

15.27 When recommending the abolition of these rights, the Queensland Law Reform Commission observed that the English Law Commission was of the view that the old rules of retainer and preference “stem from former distinctions made by the law relative to the ability of a personal representative-creditor to sue himself in a common law court and so convert his debt into a judgment debt”.³²

(d) Safeguards for personal representatives

15.28 In Queensland and Western Australia, certain safeguards have been provided to protect a personal representative who pays creditors while believing the estate to be solvent. Section 58 of the Succession Act 1981 (Qld) reads:³³

Retainer, preference and the payment of debts by personal representatives

(1) The right of retainer of a personal representative and the personal representative’s right to prefer creditors are hereby abolished.

(2) Nevertheless a personal representative –


(a) other than one mentioned in paragraph (b), who, in good faith and at a time when the personal representative has no reason to believe that the deceased’s estate is insolvent, pays the debt of any person (including himself or herself) who is a creditor of the estate; or

(b) to whom letters of administration have been granted solely by reason of the personal representative being a creditor and who, in good faith and at such a time pays the debt of another person who is a creditor of the estate;

shall not, if it subsequently appears that the estate is insolvent, be liable to account to a creditor of the same degree as the paid creditor for the sum so paid.

15.30 The Queensland Law Reform Commission recognised in its 1978 Report that a personal representative might pay debts in good faith, and without reason to suspect the impending insolvency of the testator’s estate.³⁴ The Commission recommended that the English provision that protects a personal representative who so acts be adopted.³⁵ This recommendation was implemented by section 58(2) of the Succession Act 1981 (Qld). The provision frees the personal representative, in that capacity, from liability to other creditors who have not been paid in full to account for the debts so paid if it subsequently appears that the estate is insolvent.

(e) Issues considered by the National Committee

15.31 The National Committee considered whether:

(1) the personal representative’s rights of retainer and preference should be abolished by a provision in the model legislation;

(2) a personal representative who pays debts in good faith and without suspecting the impending insolvency of the deceased’s estate should be protected from liability to other creditors;

(3) if yes to (1) and (2), a provision to the effect of section 58 of the Succession Act 1981 (Qld) should be included in the model legislation.

(f) The National Committee’s preliminary view

15.32 The National Committee observed that the effect of section 58 of the Succession Act 1981 (Qld) was to absolve the personal representative from liability in his or her capacity as a personal representative, not in his or her capacity as a creditor. The National Committee was of the view that the rights of retainer and preference should not be retained. A provision in the terms of section 58(1) of the Succession Act 1981 (Qld) should be included in the model legislation, but the provision should also state the effect of the principles that are being abolished.

15.33 The Registrars of Probate agreed with this view.

Proposal 72

A provision to the effect of section 58(1) of the Succession Act 1981 (Qld) should be included in the model legislation. However, instead of referring simply by name to the doctrines of retainer and preference, the model legislation should state the effect of the principles that are being abolished.

QLD	59(1)	WA
ACT	41C, Sch 4 Pt 1	NT	57, Sch 4 Pt 1
VIC	39, Sch 2 Pt 2	TAS	34(3), Sch 2 Pt 2
NSW	46C(2), Sch 3 Pt 2	UK	34, Sch 1 Pt 2
SA		NZ

QLD	59(2)	WA
ACT	Sch 4 Pt 1 Class 6	NT	Sch 4 Pt 1 Class 6
VIC	Sch 2 Pt 2	TAS
NSW	Sch 3 Pt 2	UK
SA		NZ

QLD	59(3)	WA
ACT		NT
VIC	Sch 2 Pt 2 Class 8	TAS	Sch 2 Pt 2 Class 8
NSW		UK	34(3), Sch 1 Pt 2 Class 8
SA		NZ

(a) Introduction

15.34 The traditional, case law derived, rules for the order of payment of debts are still in force in South Australia and Western Australia. With the exception of Queensland – which has enacted its own rules – the other States and Territories have adopted the English precedent contained in the Administration of Estates Act 1925 (UK). Victoria has departed in a significant respect from the other States and Territories.

15.35 When the Queensland Law Reform Commission was considering this matter prior to the publication of its 1978 Report, it had the assistance of Professor Charles Ryder of University College London, the editor of Hawkins on the Construction of Wills. Professor Ryder pointed out some of the problems that the English precedent was causing, and helped the Commission in its adoption of a less cluttered order of application of assets.³⁶ The Commission’s recommendations were carried into legislation in sections 59 and 60 of the Succession Act 1981 (Qld).

(b) The historical development of classes of assets

15.36 The courts have held in the past that there were eight classes of assets, which were applied in descending order, to the payment of debts. Those classes were summarised as follows by Hoare J in Calcino v Fletcher:³⁷

• Class 1. Residuary personalty, the executor reserving a fund sufficient for the payment of general legacies.³⁸
• Class 2. Realty devised on trust for (and not merely charged with) the payment of debts.
• Class 3. Realty undisposed of by the will (which descended to the heir).
• Class 4. Realty devised, whether specifically or by way of residue and charged with the payment of debts and personalty specifically bequeathed and charged with the payment of debts.
• Class 5. The fund, if any, retained to meet general pecuniary legacies.
• Class 6. Devises of land and specific, including secured demonstrative, legacies.³⁹
• Class 7. Property (realty and personalty) the subject of a general power of appointment exercised expressly by the testator.
• Class 8. Donationes mortis causa.

15.37 The above list grew in a piecemeal fashion. It enshrined attempts by the equity courts to ensure that realty could be used to pay debts, the old law being that it could not be used for that purpose. The policy of the old law was to preserve the rights of the heir at law. In all States and Territories the distinction formerly made between realty and personalty has been abolished for the purpose of paying the deceased’s debts.⁴⁰

(c) Development of classes – statutory lists

15.38 In England, the Administration of Estates Act 1925 (UK) introduced a new order, which was followed by most Australian jurisdictions that enacted a statutory list. These statutory lists did not make a complete break with the old rules.

(i) English statutory list

15.39 The English statutory list has eight classes:⁴¹

• Class 1. Property of the deceased, undisposed of by will,⁴² subject to the retention thereout of a fund sufficient to meet any pecuniary legacies.⁴³
• Class 2. Property of the deceased, not specifically devised or bequeathed but included (either by a specific or general description) in a residuary gift,⁴⁴ subject to the retention out of such property of a fund sufficient to meet any pecuniary legacies, so far as not provided for as aforesaid.
• Class 3. Property of the deceased specifically appropriated or devised or bequeathed (either by a specific or general description) for the payment of debts.
• Class 4. Property of the deceased charged with, or devised or bequeathed (either by a specific or general description) subject to a charge for the payment of debts.
• Class 5. The fund, if any, retained to meet pecuniary legacies.
• Class 6. Property specifically devised or bequeathed, rateably according to value.
• Class 7. Property appointed by will under a general power, including the statutory power to dispose of entailed interests, rateably according to value.
• Class 8. The following provisions shall also apply –
  (a) the order of application may be varied by the will of the deceased.

  (b) ...

(ii) Victorian statutory list

15.41 The Victorian statutory list⁴⁹ differs from the other Australian statutory lists based on the English statutory list in an important respect (as does the Queensland list). Class 2 in the other States and Territories has been moved to Class 4 in Victoria, so that in Victoria property specifically appropriated or devised or bequeathed for, or charged with, the payment of debts (Classes 2 and 3) is applied towards the payment of debts ahead of property comprising the residuary estate (Class 4). The Victorian order is as follows:

• Class 1. Property of the deceased undisposed of by will, subject to the retention thereout of a fund sufficient to meet any pecuniary legacies.
• Class 2. Property of the deceased specifically appropriated or devised or bequeathed or directed to be sold (either by a specific or general description), for the payment of debts.
• Class 3. Property of the deceased charged with, or devised or bequeathed (either by a specific or general description) subject to a charge for, the payment of debts.
• Class 4. Property of the deceased not specifically devised or bequeathed but included (either by a specific or general description) in a residuary gift, subject to the retention out of such property of a fund sufficient to meet any pecuniary legacies, so far as not provided for as aforesaid.
• Class 5. The fund, if any, retained to meet pecuniary legacies.
• Class 6. Property specifically devised or bequeathed, rateably according to value.
• Class 7. Property appointed by will under a general power, including the statutory power to dispose of entailed interests, rateably according to value.

15.42 When the Succession Act 1981 (Qld) was enacted, Queensland made a significant departure from the English statutory list, reducing the number of classes to four. Section 59(1) of the Succession Act 1981 (Qld) provides for the following classes:⁵⁰

• Class 1. Property specifically appropriated devised or bequeathed (either by a specific or general description) for the payment of debts; and property charged with, or devised or bequeathed (either by a specific or general description) subject to a charge for the payment of debts.
• Class 2. Property comprising the residuary estate⁵¹ of the deceased including property in respect of which any residuary disposition operates as the execution of a general power of appointment.
• Class 3. Property specifically devised or bequeathed including property specifically appointed under a general power of appointment and any legacy charged on property so devised bequeathed or appointed.
• Class 4. Donationes mortis causa.

15.44 Class 2 comprises the residuary estate of the testator, which includes, by virtue of section 55 of the Succession Act 1981 (Qld),⁵⁴ property the subject of a disposition that has failed.

15.45 The list does not include as a class the fund retained for the payment of pecuniary legacies. The Queensland Law Reform Commission noted in its 1978 Report that the fund for the payment of pecuniary legacies is in most legislation inserted as a class before what is Class 3 in the Queensland list – that is, property specifically devised or bequeathed.⁵⁵ In Queensland, pecuniary legacies are dealt with in section 60 of the Succession Act 1981 (Qld). The effect of section 60 is that, in Queensland, the fund for the payment of pecuniary legacies is drawn from the residue after the payment of debts out of the residue, and the fund is still available for the payment of debts immediately before Class 3 property. It is therefore unnecessary to include this fund as a separate class.

(d) Criticisms of the existing statutory classes

15.46 The English legislation – which has been substantially followed in Australia – has proved difficult to comprehend and apply.⁵⁶ Further, all the existing statutory lists can be criticised on three grounds:

• they mix questions of law with questions of fact;
• they make assumptions, which arguably cannot be justified, about the testator’s intention; and
• with the exception of Queensland, preference is given to residuary dispositions over property not disposed of by will.

15.47 The legislation is seriously deficient in principle because it fails to distinguish between questions of law and questions of fact. The order in which debts should be paid from assets is a question of law. The intention of the testator is a question of fact.

15.48 In the Australian Capital Territory, New South Wales, the Northern Territory and Tasmania, Classes 1, 2, 5 and 6 are questions of law; on the other hand, Classes 3 and 4 refer to expressions of the testator’s intention. In Victoria, Classes 1, 4,

5, 6 and 7 are questions of law, whereas Classes 2 and 4 refer to expressions of the testator’s intention. In Queensland, although the number of classes was significantly reduced, the same defect is present: Classes 2, 3 and 4 are questions of law, but Class 1, which refers to expressions of the testator’s intention, is a question of fact.

(ii) Assumptions about the testator’s intention

15.49 The various statutory lists make questionable assumptions about a testator’s intention. In jurisdictions other than Queensland, the lists of classes assume that the testator intends that property specifically appropriated or devised for the payment of debts is to be used before property charged or devised or bequeathed subject to a charge for the payment of debts. In Queensland, the list assumes that they should be used rateably.

(iii) The preference given to residuary dispositions over property not disposed of by will

15.50 With the exception of Queensland, all Australian jurisdictions distinguish in their statutory lists between the residuary estate and assets undisposed of by will. This distinction was not made in early case law. It was introduced in England by the Administration of Estates Act 1925 and copied in the various Australian statutes. The distinction has been criticised on a number of grounds:

• Under the intestacy rules, property undisposed of by will goes to the next of kin of the deceased, very often the spouse or issue of the deceased. Consequently, if the residue of the estate is left between two persons who are not next of kin and one predeceases the testator, so that the gift of residue fails as to half, the next of kin of the testator, who take the failed gift under the intestacy rules, will pay the debts ahead of the beneficiaries who are not next of kin.
  
  Such an approach might have been justifiable in the old days to ensure that, as against an heir at law, creditors were paid; but that is an insufficient reason, now, to require next of kin to pay debts ahead of beneficiaries who are not next of kin. An old rule about protecting creditors has become a legal presumption about a testator’s intention.

  In its 1978 Report, the Queensland Law Reform Commission did not consider that an intestacy beneficiary should necessarily have to pay debts ahead of a residuary beneficiary who would be more remote from the testator, in terms of relationship, than the intestacy beneficiary. (This follows from the fact that, if the beneficiaries of the residue were closer to the testator or of the same remoteness, they would take the failed gift of residue under the intestacy rules anyway.) The Commission suggested that distinguishing between assets undisposed of by will and residue has the effect of driving a wedge between the next of kin and the residuary beneficiaries by placing them in competition, as far as payment of debts is concerned, with each other.⁵⁷

• The modern law recognises that a partial intestacy of residue is rarely if ever intended by a testator. In recent reforms in Queensland and Victoria, if a gift of part of the residuary estate fails, that part is shared amongst the surviving beneficiaries of the residue.⁵⁸ Provisions of this kind seek to reduce the incidence of partial intestacies of residue. As provisions of this kind have already been recommended by the National Committee,⁵⁹ there is little point in maintaining the difficult distinction between assets undisposed of by the will and assets forming part of a residuary gift.
• The shorter the list of classes of assets for the payment of debts, the easier it will be to understand the effect of a direction contained in a will to pay debts. This is because the statutory order for application of assets to the payment of debts is subject to any expression in the will of contrary intention on the part of the testator. Consequently, if there is a direction in the will to pay debts, difficulties are likely to arise in determining whether such a direction should displace Class 1 assets, that is, assets undisposed of by the will.⁶⁰
  
  Distinguishing between residue and assets undisposed of by will creates conflicting pressures on the interpretation of testamentary clauses that designate property as in trust for the payment of debts or as being charged with the payment of debts.⁶¹

  If there are no assets undisposed of by a will that contains a direction in relation to the use of property for the payment of debts, then it is easy to interpret such a direction as varying a statutory order that would require undisposed of assets to be applied to the payment of debts before the property designated by the will for that purpose. The effect of such an interpretation would be that property designated by a testamentary clause as being in trust for the payment of debts or charged for the payment of debts would be used first, which would generally accord with the natural interpretation of the will.

  On the other hand, if the estate includes assets that are undisposed of by the will, the court will tend to assume that the testator’s intention would have been to use those assets before the assets in trust for or charged with the payment of debts. For that reason, the court will not readily infer that the testator intended by such a clause to change the statutory order so as to make the affected assets the first to be used for the payment of debts. So the conflicting pressures produced irreconcilable decisions.

Definition for div 2

In this division –

“residuary estate” means –

(a) property of the deceased that is not effectively disposed of by his or her will; and

(b) property of the deceased not specifically devised or bequeathed but included (either by a specific or general description) in a residuary disposition.

• it abolishes the distinction, as far as the payment of debts is concerned, between property comprised in a residuary gift and property not disposed of by the will at all.⁶²
• by referring to property generally, it ensures that the same rules apply as between real and personal property.

15.53 The National Committee considered whether:

(1) there is a need to distinguish between assets undisposed of by will and assets in a gift of residue;

(2) if no to (1), the Queensland approach in section 55 of the Succession Act 1981 (Qld) of defining “residuary estate” to mean both types of assets is an appropriate one.

(v) The National Committee’s preliminary view

15.54 The National Committee was of the view that there is no need to distinguish between assets undisposed of by will and assets forming part of the residuary estate. Consequently, the National Committee was of the view that a provision to the effect of section 55 of the Succession Act 1981 (Qld) should be included in the model legislation.

15.55 The Registrars of Probate agreed with this approach.

Proposal 73

The term “residuary estate” should have the same meaning as is given to that term by section 55 of the Succession Act 1981 (Qld), so that it includes property not effectively disposed of by will.

15.56 The National Committee considered the proposition that there is no justification for retaining in the list of classes references to property left on trust to pay debts or property left charged with the payment of debts for the following reasons:

(1) The list should be a matter of law and references to particular expressions of the testator’s intention should not appear in it. Nor should the law make assumptions about how those expressions should be construed. That should be a matter for the ordinary process of the construction of wills.

(2) It is highly unlikely that a testator would in the same will leave some property on trust to pay debts and other property charged with the payment of debts; and even more unlikely that the testator would consciously intend that the property left on trust to pay debts should be used before the property left charged with the payment of debts.

(3) Current provisions are made subject to any contrary intention disclosed by the will. It is clear that this should be so; but the presence in the legislation of references to the testator’s intention and the making of assumptions about how those references should be construed constitute an impediment to the ordinary process of construction. For instance, could the testator impliedly reverse them or would a reversal have to be expressed in clear and convincing terms? There is no reason to encumber construction of the testator’s intention by statutory assumptions of intention based on completely obsolete law.

(4) Even if such assumptions about the testator’s intentions can reliably be made, it is unlikely that there can be any existing public policy reason for giving them legislative status. Such matters should be settled by the ordinary principles of the construction of wills, which should not be compromised by legislative assumptions.

15.57 The National Committee then considered the possibility of constructing a set of simple rules concerning the payment of debts out of assets freed from the strictures of the past. In principle there are only three issues that require consideration. These are:

• settling a rule about the order of application of assets for the payment of debts;⁶³
• determining whether there should be any exception to that rule;⁶⁴ and
• clarifying the effect of an admissible expression of contrary intention on the part of the testator.⁶⁵

• Assets referred to in the will. A testator refers to assets in a will for one of two reasons. One is to devise or bequeath a specific asset to a beneficiary. This is the common reason for referring to a specific asset in a will. The other is to point to a specific asset out of which debts should be paid. This is rarely found.
• Assets not referred to in the will. These assets are referred to as the residuary estate of the deceased.

The policy of the law is to allow comparative immunity from the creditors to the beneficiaries of specific devises and legacies, as against beneficiaries of residue and general legatees.

(i) Issues considered by the National Committee

15.61 The National Committee considered whether:

(1) the order in which classes of property are to be applied in the payment of debts should be a matter of law only, without initial reference to the testator’s intention (and without assumptions about how references to the testator’s intentions should be construed);

(2) the list should consist of two classes only, namely:

• residuary assets (including assets specifically referred to in a will of the deceased the subject of a disposition that fails to have effect); and
• specific assets (assets specifically referred to in a will the subject of a disposition that has effect).

15.62 The National Committee was of the view that, in relation to the order in which property in a solvent estate is applied towards the discharge of debts, there should be only two classes of property, namely:

• Class 1. Assets forming part of the residuary estate (including assets that have been specifically referred to in a will of the deceased and are the subject of a disposition that fails to have effect); and
• Class 2. Specific assets (that is, assets specifically referred to in a will and the subject of a disposition that has effect).

Proposal 74

Assets should be applied towards the payment of debts in the following order:

Class 1 Assets forming part of the residuary estate (which includes assets specifically referred to in a will and which are the subject of a disposition that fails to have effect).

Class 2 Specific assets.

(i) Donationes mortis causa⁶⁷

15.64 These gifts were referred to in the case law derived list,⁶⁸ but seem to have escaped the attention of the English and Australian statutes with the exception of the Queensland legislation, which defines them as Class 4 assets.⁶⁹ Using donationes mortis causa to pay debts involves recovering those gifts from the donees.

15.65 As the Queensland Law Reform Commission pointed out in its 1978 Report, property the subject of a donatio mortis causa has always been available for the payment of debts after all other assets have been exhausted.⁷⁰ Class 4 reflects the general law in that respect. Consequently, donationes mortis causa may be used to pay debts only if the estate is insufficient.

15.66 The legal title to the chattel the subject of a donatio mortis causa passes to the donee and does not vest in the personal representatives of the deceased. The gift has the appearance of one that is, and it is probably the intention of the testator for it to be, special and specially protected.

15.67 These gifts are not, however, a phenomenon so common that they should create special difficulty.

15.68 A. Issue considered by the National Committee. The National Committee considered whether it is appropriate to call in a donatio mortis causa to pay the debts of a solvent estate.

15.69 B. The National Committee’s preliminary view. The National Committee was of the view that it is inappropriate to call in a donatio mortis causa to pay the debts of a solvent estate. It considered that, if the debts of an estate could not be paid without resort to a donatio mortis causa, the estate was really insolvent, and the rules in relation to the payment of debts of an insolvent estate should apply.

15.70 The Registrars of Probate agreed with this view.

Proposal 75

A donatio mortis causa should not be called in to pay the debts of a solvent estate.

(ii) Rateability

15.71 The principle of rateability means that, if some of the assets in a particular class must be applied to pay debts, all the beneficiaries with an interest in that class of assets bear that loss in proportion to their respective interests.

15.72 For example, suppose that, after applying all the residuary estate towards the payment of debts, there was still a shortfall of $10,000 to be met from assets subject to specific bequests, and that the value of those assets was $40,000. The personal representative has to sell some of the assets the subject of specific bequests to pay the debts. As between specific legatees, their benefits abate proportionately.

15.73 The principle of rateability has always been accepted and is enshrined in section 59(2) of the Succession Act 1981 (Qld), which reads:

Property within each class as aforesaid shall be applied in the discharge of the debts and, where applicable, the payment of pecuniary legacies rateably according to value; and where a legacy is charged on a specific property the legacy and the property shall be applied rateably.

15.74 A. Issue considered by the National Committee. The National Committee considered whether the principle of rateability should be incorporated in relation to all assets within a given class.

15.75 B. The National Committee’s preliminary view. The National Committee was of the view that the principle of rateability should apply in relation to all property within a given class. For example, where specific assets are applicable towards the discharge of the debts, specific assets remaining after the payment of debts must be distributed rateably among all the beneficiaries entitled under a disposition of specific assets.

15.76 The Registrars of Probate agreed with this view.

Proposal 76

The principle of rateability should apply to all property within a given class.

(iii) Property the subject of a general power of appointment

15.77 In all Australian jurisdictions other than Queensland, property the subject of a general power of appointment is applied towards the payment of debts only after property the subject of specific dispositions has been exhausted. There is no clear reason why property the subject of a general power of appointment should be so privileged.

15.78 In its 1978 Report, the Queensland Law Reform Commission made the following recommendation to remove the special privilege that was given at the time to property the subject of a general power of appointment:⁷¹

[I]f property the subject of a general power of appointment is appointed by the residuary clause, it should be available for the payment of debts with other property the subject of the same clause; and that if a general power is exercised by specific gift then the fund should be available for the payment of debts with other property the subject of the specific gift. In this way we reduce the number of classes and the possibility of litigation even further.

15.80 A. Issue considered by the National Committee. The National Committee considered whether it is desirable to give a special class or position to property the subject of a general power of appointment.

15.81 B. The National Committee’s preliminary view. The National Committee was of the view that there was no reason to depart from the existing Queensland rules in this respect.

Question for discussion

15.4 Should property the subject of a general power of appointment continue to be preferred over property the subject of a specific disposition or should such property be included in the class within which it is impliedly or expressly exercised?

15.82 Section 59(3) of the Succession Act 1981 (Qld) provides for the variation by a testator of both the order of the discharge of debts and the operation of the principle of rateability. The section reads:

The order in which the estate is applicable towards the discharge of debts and the incidence of rateability as between different properties within each class may be varied by a contrary or other intention signified by the will, but a contrary or other intention is not signified by a general direction, charge or trust for the payment of debts or of all the debts of the testator out of the testator’s estate or out of the testator’s residuary estate or by a gift of any such estate after or subject to the payment of debts. [emphasis added]

Such directions occur in many precedent books and they should be regarded as being merely administrative. In the past disproportionate significance has been attached to general directions to pay debts, for historical reasons now irrelevant ...

[I]t is important to ensure that a general direction to pay debts out of residue cannot be used as an argument to drive a wedge of litigation between residuary beneficiaries taking under the will and the next of kin entitled on a partial intestacy, although, as a result of the change in the law proposed by section 29, this will not happen often in practice.⁷⁴

15.84 It goes without saying that a simplified rule should still be subject to an expression of contrary intention on the part of the testator. The question that arises is what is sufficient to constitute such an expression.

15.85 One of the purposes of the present Queensland provision was to ensure that a general direction in a will to pay debts would not displace Class 1 assets, that is, briefly, property devised upon trust to pay debts and property charged with the payment of debts, rateably. If the list is reduced to only two classes, there may be no need to include this provision in its present form. In the context of two classes of assets, it could be argued that a testamentary clause appropriating property for the payment of debts or charging property with the payment of debts would, in fact, amount to an expression of intention contrary to the application of the rule that residuary assets should be applied to the payment of debts before any other assets of the estate. In that case, further consideration would need to be given to the issue of how legislation should attempt to define a permissible expression of contrary intention.

15.86 A. Issues considered by the National Committee. The National Committee considered whether:

(1) the classes listing the order in which property is to be applied, and the principle of rateability should be subject to an expression of a contrary intention by the testator;

(2) if yes to (1), there is an acceptable expression of a contrary intention.

15.87 B. The National Committee’s preliminary view. The National Committee was of the view that both the classes listing the order in which property is to be applied, and the principle of rateability, should be subject to an expression of a contrary intention by the testator.

15.88 The expression of the contrary intention should not be confined to the will.⁷⁵

15.89 The Registrars of Probate agreed with these views.

Proposal 77

The provisions in the model legislation that are based on proposals made in this Chapter should be subject to an admissible expression of a contrary intention by the testator (whether or not it is contained in the will).

Question for discussion

15.5 Should the model legislation stipulate what should or should not constitute an expression of a contrary intention (see, for example, section 59(3) of the Succession Act 1981 (Qld))?

(v) The need to refer to property given on trust to pay debts and property given charged with the payment of debts

15.90 If the classes of assets to be applied for the payment of debts are to be subject to a contrary intention expressed by the testator, this raises the question of whether there is a continuing need to distinguish between property given on trust to pay debts and property given charged with the payment of debts.

15.91 The case law derived classes of assets distinguished between property given on trust to pay debts and property given charged with the payment of debts. All the statutes retain this distinction, although they differ as to where they come within the list.

15.92 Even if the simplified classes of assets are expressed to be subject to a contrary intention, there may still be an argument for making express reference to property given on trust to pay debts and property given charged with the payment of debts. Suppose a testator, in clause 3 of a will, gives property charged with the payment of debts generally, and then in clause 18, or in a later codicil, gives property on trust to pay debts generally. Any court would find it difficult to come to a conclusion that the property given charged with the payment of debts should be used for that purpose ahead of the property, given later, on trust to pay debts. No doubt it would be argued that directions of this sort contained in a will should be complied with in the order in which they appear in the will. On the other hand, it might be argued that the pre-1925 English rules should be applied, and that realty devised on trust for (and not merely charged with) the payment of debts should be applied first.⁷⁶

15.93 Perhaps there should be a provision in the model legislation to resolve doubt, since without a provision litigation could almost always be expected if a testator happened to insert two provisions for the payment of debts out of particular assets in the will. The question is whether the provision should follow the old law, by providing that, in the absence of a contrary intention, property given upon trust to pay debts should be used for that purpose ahead of property given charged with the payment of debts. Alternatively, the precedent in Class 1 of the Queensland list – in which property given upon trust and property given charged with the payment of debts are applied rateably – could be followed.

15.94 The advantage of the Queensland precedent is twofold:

• It does not make an assumption about the testator’s intention as to order, as the old rules and other statutes do. There is no cogent reason to suppose that, if a testator were to include both kinds of direction in a will, the intention is that property given on trust to pay debts should be used ahead of property given charged with the payment of debts. An ordinary person would be unlikely to think of the difference.
• If the old law and the non-Queensland statutes are followed, there could always be a dispute as to whether one direction created a trust and the other a charge, or vice versa; and whether, when that issue is settled, a contrary intention can be discerned from admissible evidence.

15.96 A. Issues considered by the National Committee. The National Committee considered whether:

(1) if the classes are to be subject to a contrary intention, there would still be a need to refer to dispositions of property on trust to pay debts and property charged with the payment of debts;

(2) if yes to (1), in the absence of a contrary intention, property given upon trust to pay debts should be used for that purpose ahead of property given charged with the payment of debts, or whether property given upon trust and property given charged with the payment of debts should be applied rateably.

Question for discussion

15.6 If the model legislation refers only to two classes of property to be applied for the payment of debts – with that order being subject to the expression of a contrary intention – is there any need for the model legislation to provide for the situation where a will refers both to dispositions of property on trust to pay debts and property charged with the payment of debts?

QLD	59(2), 60	WA
ACT	Sch 4	NT	Sch 4
VIC	Sch 2 Pt 2	TAS	Sch 2
NSW	Sch 3 Pt 2	UK	Sch 1
SA		NZ

(a) Types of legacies

15.97 There are five types of legacies: specific, residuary, general, pecuniary and demonstrative.⁷⁷ The National Committee has already made a proposal that the list prescribing the order in which assets are used to pay debts should consist of two classes – first, residuary assets and then specific assets.⁷⁸ That recommendation addresses the question of the payment of the first two types of legacies mentioned: the residuary assets will be used first, and specific legacies will be used only if the residuary estate is insufficient to pay all the debts. Consequently, if all the residuary estate is required to pay the debts, the residuary legatee will receive nothing.

15.98 However, the question of which parts of an estate are to bear the payment of the other types of legacies – general, pecuniary and demonstrative legacies – remains to be considered.

(b) General legacies

15.99 Unlike a specific legacy, a general legacy “does not earmark any particular property or fund as the subject of the legacy”.⁷⁹ A gift of “my horse Dobbin” is a specific legacy,⁸⁰ whereas a gift of “a horse” is a general legacy:⁸¹

[I]t will be the duty of the representative to purchase a horse, or, if there are horses in the testator’s estate, to allow the beneficiary to select one ... The representative may, instead, pay direct to the legatee the sum of money which would be required to make the purchase.

(c) Pecuniary legacies

(i) What is a pecuniary legacy?

15.101 A pecuniary legacy is not an asset of the estate. It is a charge on the estate that is payable after all debts have been paid.⁸⁴ It amounts to “a direction to the representative to pay an ascertainable sum of money”.⁸⁵

15.102 The term “pecuniary legacy” is used in the statutory lists that apply in the Australian Capital Territory, New South Wales, the Northern Territory, Tasmania and Victoria⁸⁶ and in the Queensland provision that deals with the payment of pecuniary legacies.⁸⁷

15.103 Significantly, the term “pecuniary legacy” is defined in the Queensland, Victorian, Tasmanian and United Kingdom legislation to include a general legacy and a demonstrative legacy to the extent to which it is not secured.⁸⁸ The following definition is contained in the Succession Act 1981 (Qld):⁸⁹

“pecuniary legacy” includes an annuity, a general legacy, a demonstrative legacy, so far as it is not discharged out of the designated property, and any other general direction by the testator for the payment of money including all duties relating to the estate or property of a deceased person free from which any devise, bequest or payment is made to take effect.

In the [above jurisdictions] there is no definition of this expression. The question raised therefore is whether it is meant to be a description of general legacies or only those legacies having a monetary (pecuniary) component. Not all gifts involving money are general legacies. Similarly, not all general legacies are ‘pecuniary’.

Certoma suggests in relation to the New South Wales provisions that ‘it is probable that a court would give the expression the same meaning as it has been statutorily given in England from where the expression was originally borrowed’.

15.106 This expanded meaning of “pecuniary legacy” should be borne in mind in the following discussion about the payment of “pecuniary legacies”.

(ii) Payment of pecuniary legacies

15.107 As discussed earlier, where a will makes a disposition of specific property, whether it is realty or personalty, that property has a privileged position as far as the payment of debts is concerned.⁹³ Property the subject of a specific devise or legacy is usually the last property to be used to pay the debts.

15.108 Historically, pecuniary legacies have been distinguished from property specifically devised or bequeathed.

15.109 In the non-statutory list for the order of payment of debts and in the statutory lists that refer to pecuniary legacies, the fund reserved for the payment of pecuniary legacies is in a class prior to the class comprised of property the subject of a specific devise or legacy. Similarly, in the statutory lists in the Australian Capital Territory, New South Wales, the Northern Territory, Tasmania and Victoria,⁹⁴ the fund reserved to meet pecuniary legacies is also exhausted before assets specifically disposed of by will are used to pay debts. Consequently, if that fund has been exhausted by the payment of debts, the pecuniary legatees receive nothing. Property specifically devised or bequeathed abates only if it has been necessary to draw on such property to pay debts. It does not abate to enable pecuniary legacies to be paid.

15.110 In Queensland, Lee notes that pecuniary legacies “do not appear within the classes defined by s 59(1) because they do not consist of specific property”.⁹⁵ They are dealt with by section 60 of the Succession Act 1981 (Qld), which reads:

Payment of pecuniary legacies

Subject to a contrary or other intention signified by the will –

(a) pecuniary legacies shall be paid out of the property comprised in class 2 referred to in section 59⁹⁶ after the discharge of the debts or such part thereof as are payable out of that property; and

(b) to the extent to which the property comprised in class 2 referred to in section 59 is insufficient the pecuniary legacies shall abate proportionately. [notes added]

15.112 When the Queensland Law Reform Commission considered the question of pecuniary legacies in its 1978 Report, it recommended the retention of this distinction, although it conceded that the distinction was perhaps difficult to justify:⁹⁷

It is clearly arguable that if a testator leaves $10,000 to A and “Blackacre” to B, there is no particular reason to suppose that he intends the former fund to pay the debts and the latter to be protected. On the other hand, pecuniary legacies have a character of liquidity which specific legacies lack and if specific legacies and devises were to be made to share the payment of debts with the fund reserved for the payment of pecuniary legacies, properties the subject of specific legacies and devises would have to be sold more often to bring about the proportionate abatement required. We doubt whether a testator would really wish this, particularly where the subject matter of a specific legacy has some sentimental value. Accordingly, we propose to retain the existing order in this respect.

15.113 A “demonstrative legacy” is a pecuniary legacy payable out of a particular fund,⁹⁸ for example, a gift of “$500 charged on my property Blackacre”.⁹⁹

(i) Advantages of a demonstrative legacy

15.114 Compared with general pecuniary legacies, demonstrative legacies are in a preferred position in relation to the payment of the debts of a deceased estate. Lee describes the advantages enjoyed by demonstrative legacies in the following terms:¹⁰⁰

A demonstrative legacy enjoys the advantage of a general legacy inasmuch as it is not adeemed if the security on which it is charged does not exist or has been disposed of, in which case the legacy is regarded as a general legacy. On the other hand, if the security on which it is charged does form part of the deceased’s estate, the legacy will be regarded as specific, which may place the legatee at an advantage in respect of the liability to contribute towards the payment of the deceased’s debts out of the benefit left to her or him. If the fund on which the legacy is charged is only partly sufficient to meet it, the legacy is specific to the extent of the fund but general as to the rest. [notes omitted]

(ii) Application of the principle of rateability to a secured demonstrative legacy

15.115 Ordinarily, where a legacy is charged on a particular asset, the law provides that:¹⁰²

In the absence of a contrary indication in the will, a legacy charged on an asset specifically given has priority over the asset itself.

15.116 The Queensland Law Reform Commission explained the injustice of the traditional rule as follows:¹⁰³

At present, where property bequeathed is charged with the payment of a legacy the legatee on whose legacy the legacy is charged has to meet the entire burden of the legacy but no allowance is made for that in determining the contribution which he must make towards the payment of debts. Thus a property worth $10,000, charged with a legacy of $5,000, is valued for the purposes of determining its obligation to pay debts within its class at $10,000. If more than 50% is needed from that class to pay debts, the legatee will get nothing, and indeed the legacy charged on the asset will have to be utilised.

Property within each class as aforesaid shall be applied in the discharge of the debts and, where applicable, the payment of pecuniary legacies rateably according to value; and where a legacy is charged on a specific property the legacy and the property shall be applied rateably. [emphasis added]

15.118 The National Committee considered whether:

(1) a provision to the effect of section 60 of the Succession Act 1981 (Qld) should be included in the model legislation, so that pecuniary legacies are paid out of the residuary estate, and, to the extent that the residuary estate is insufficient to pay them all in full, abate proportionately;

(2) if yes to (1), the provision should be expressed to be subject to a contrary intention by any admissible evidence, rather than by a contrary intention expressed only in the will.

(f) The National Committee’s preliminary view

(i) The payment of legacies

15.119 The National Committee has already proposed that there should be only two classes of property to be applied for the payment of debts: the residuary estate and specific assets, with property in the residuary estate being used first.¹⁰⁴ This raises the question whether general legacies (that is, legacies that are not legacies of specific assets) should be paid out of the residuary estate only. That approach would be consistent with the law as it presently stands in all Australian jurisdictions.

15.120 The effect of the current law can be seen in the following scenarios:

Scenario 1

A testator leaves the family farm (valued at $200,000) to his son and a pecuniary legacy of $200,000 to his daughter. On his death, the debts of the estate are $200,000. After paying the debts, the only remaining asset is the farm.

As the residuary estate is exhausted by the payment of the debts, the son will receive the farm, but the daughter will receive nothing.

Scenario 2

A testator leaves her house and contents to her husband, and a pecuniary legacy of $10,000 to a charity. After paying the debts of the deceased, the estate consists of the house and contents (together worth $90,000) and the sum of $5,000 in a bank account.

At present, the testator’s husband would receive the house and contents and the charity would receive the sum of $5,000. If however, the pecuniary legacy were to be treated as a specific legacy, it would not be limited by the value of the residuary estate, but would abate proportionately along with the dispositions of the house and contents. The beneficiaries would each receive 95 percent of the value of the gifts left to them. Consequently, the pecuniary legatee would receive $9,500 of the $10,000 legacy. The additional $4,500 would, if the husband did not have that sum to pay the pecuniary legatee, have to be raised from the sale of either the home or its contents. The husband would receive $85,500.

15.122 It is not possible to say that one position or the other more closely reflects the probable intentions of a testator. Where the pecuniary legacy is very small, it is perhaps arguable that a testator would not want specific assets sold in order to pay the legacy. However, as the Queensland Law Reform Commission observed when it considered this issue in its 1978 Report,¹⁰⁶ it is difficult – where the pecuniary legacy is a relatively substantial one – to make the assumption that the testator intends for the pecuniary legacy to pay the debts while the specific legacy is protected.

15.123 The National Committee was not entirely persuaded by the argument that money is an amorphous thing and, for that reason alone, should be treated differently from specific assets. However, the National Committee was conscious of the fact that, if pecuniary legacies are treated on the same footing as specific legacies, this may complicate the administration of estates, in that it could require many assets the subject of specific legacies to be sold in order to pay pecuniary legacies in circumstances where the residuary estate is insufficient.

15.124 On balance, the National Committee was of the view that, subject to the expression of a contrary intention, pecuniary legacies should be paid out of the residuary estate after the payment of debts. However, the National Committee specifically seeks submissions on whether a pecuniary legacy should be treated as a specific gift along with assets specifically devised or bequeathed.

15.125 The Registrars of Probate agreed with this approach.

15.126 When the National Committee considered this question, it did not advert to the fact that a pecuniary legacy is usually a type of general legacy and that, in some jurisdictions,¹⁰⁷ the term “pecuniary legacy”, as used in the statutory order for the payment of debts, includes a general legacy. Because general legacies – whether pecuniary or non-pecuniary – have traditionally been treated the same, this raises the question whether, if a general pecuniary legacy, such as a gift of $5,000, should be treated as a specific legacy, a non-pecuniary general legacy should also be treated as a specific legacy.¹⁰⁸

(ii) Expression of a contrary intention

15.127 The National Committee was also of the view that the expression of a contrary intention should not be limited to one found in the will.

15.128 The Registrars of Probate also agreed with this view.

(iii) Application of the principle of rateability to a secured demonstrative legacy

15.129 Although the National Committee has generally accepted the principle of rateability in relation to the application of assets within a particular class,¹⁰⁹ it did not specifically consider whether the principle of rateability should be extended to legacies secured on specific property.

Proposal 78

Subject to the expression of a contrary intention:

(1) pecuniary legacies should be paid out of the residuary estate after the payment of debts;¹¹⁰ and

(2) if the residuary estate is insufficient, after the payment of debts, to pay the pecuniary legacies in full, they should abate proportionately.

The National Committee also proposes that the expression of a contrary intention should not be confined to one found in the will.

Questions for discussion

15.7 Should a pecuniary legacy (for example, a legacy of $5,000) be treated as a gift of specific property?¹¹¹

15.8 If yes to 15.7, should a non-pecuniary general legacy also be treated as a gift of specific property?¹¹²

15.9 Should the principle of rateability – previously proposed by the National Committee in relation to the application of assets within a particular class¹¹³ – be applied to demonstrative legacies so that they abate proportionately with the property on which they are charged (as occurs under section 59(2) of the Succession Act 1981 (Qld))?¹¹⁴

QLD	61	WA117	28
ACT115	109	NT
VIC	40	TAS	35
NSW116	145	UK	35
SA	52 (applies to realty only)	NZ	34

(a) Introduction

15.130 There already exists one substantial exception to the rule that residuary assets should pay debts ahead of specific assets. That exception, briefly stated, is that mortgaged property should pay off its own mortgage. This exception follows the Real Estate Charges Act 1854 (UK) – known as Locke King’s Act – which has since been replaced with modifications by section 35 of the Administration of Estates Act 1925 (UK). There are equivalent provisions in all Australian jurisdictions except the Northern Territory. In Queensland, the provision when first enacted was confined to mortgages of realty.¹¹⁸ The existing provision in Queensland – section 61 of the Succession Act 1981 (Qld) – is not so confined.

15.131 Section 61(1) of the Succession Act 1981 (Qld) reads:

Payments of debts on property mortgaged or charged

Where a person dies possessed of, or entitled to, or under a general power of appointment by will disposes of, an interest in property, which at the time of his or her death is charged with the payment of any debt, whether by way of mortgage, charge or otherwise, legal or equitable (including a lien for unpaid purchase money), and the deceased has not by will signified a contrary or other intention, the interest so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the debt; and every part of the said interest, according to its value, shall bear a proportionate part of the charge of the whole thereof.

15.133 The principal contemporary reason for retaining the rule is that, whatever the rule might be about the payment of debts from assets, lenders cannot be denied their rights of recovery against property mortgaged or charged. In addition, particularly in the context of a deceased person who at the time of death owned a home that was subject to a mortgage, the ordinary view would be that the testator’s beneficial interest in the home was its value less the amount of the debt charged upon it; and that would be the value intended by any devise of the home to a devisee. The same argument is applicable to a bequest of personalty charged with the payment of debt.

15.134 It is therefore desirable that the principle of Locke King’s Act should be retained. It is a simple and well understood rule. If a testator wishes to shift the burden of paying a particular debt away from property charged with it, the testator should include a specific provision to that effect in his or her will.

(b) Contrary intention

15.135 Section 61(2) of the Succession Act 1981 (Qld) reads:

A contrary or other intention is not signified by a general direction, charge or trust for the payment of debts or of all the debts of the testator out of the testator’s estate or out of the testator’s residuary estate or by a gift of any such estate after or subject to the payment of debts.

(c) A possible modification to Locke King’s rule

15.136 In some circumstances, the usual formulation of Locke King’s rule may not necessarily reflect the probable intention of a testator, and a modification to the rule might enable it to reflect more closely the probable intention of the testator. For example, a testator might mortgage or charge an asset with a debt for purposes connected with the asset itself, for example, to acquire, improve or maintain it. On the other hand, the testator might burden an asset with a debt for purposes unconnected with the asset itself, for example, to raise money for an unconnected project or purpose.

15.137 Where a debt is raised on a specifically bequeathed asset for purposes connected with the asset itself, it is easy to accept that the probable intention of a testator is that the asset should devolve subject to the debt. However, where a debt is raised on a specifically bequeathed asset for purposes not connected with the asset itself, it may not be as likely that the testator would have wanted the asset to pass to the beneficiary subject to the debt; rather the testator may have wanted the asset to pass to the beneficiary free of the debt, and for the debt to be paid together with the other debts of the testator. In most cases, this would mean that the mortgage debt would first be paid out of the residuary estate.

15.138 Effect could be given to this modification by a provision in the following terms:

Where –

(a) a person dies possessed of, or entitled to, or under a general power of appointment by will disposes of, an interest in property, which at the time of that person’s death is charged with the payment of any debt, whether by way of mortgage, charge or otherwise, legal or equitable (including a lien for unpaid purchase money); and

(b) the debt is wholly or in part referable to the purchase, preservation, maintenance or improvement of the asset; and

(c) the deceased has not signified a contrary or other intention by will or in any other way which can be established by admissible evidence,

that part of the interest so charged which is referable to the purchase, preservation, maintenance or improvement of the asset shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the debt; and every portion of that part of the said interest, according to its value, shall bear a proportionate portion of the charge of the whole of that part.

15.139 The above provision involves making an assumption that the testator intended that only that part of the mortgage debt that was referable to the purchase, preservation, maintenance or improvement of the mortgaged asset should be primarily liable for the mortgage debt.

15.140 It is arguable that legislation should avoid as far as possible making assumptions about a testator’s intention. While in some circumstances the modification may result in a closer approximation to the testator’s intention, in other circumstances the operation of the modified rule could have as arbitrary a result as the existing rule.

15.141 Suppose, for instance, that a testator mortgages the family home in order to inject the sum borrowed into a business. The testator then devises the family home to the surviving spouse, his or her business to one child, and the residue of the estate to two other children. There is no good reason for suggesting that the testator intended the two other children to pay the moneys borrowed for the purpose of the business.

15.142 A further reason for retaining the current formulation of the rule is its simplicity. If it were modified as suggested, in every case where property forming part of an estate was subject to a mortgage, the rule would require an investigation into how the money borrowed had been applied. In the meantime, the lender might have sold the mortgaged property leaving a beneficiary of the mortgaged property with the task of trying to prove how the money had been spent.

15.143 Such a rule could greatly hinder the non-litigious distribution of deceased estates.

(e) Issues considered by the National Committee

15.144 The National Committee considered whether:

(1) a provision embodying Locke King’s Act should be included in the model legislation;

(2) if yes to (1), a provision to the effect of section 61 of the Succession Act 1981 (Qld) should be included in the model legislation;

(3) the model provision should be subject to a contrary intention expressed by the testator;

(4) if yes to (1), the traditional formulation of the rule should be changed to provide that, to the extent that a debt is raised on a specifically bequeathed asset for purposes connected with the asset, that asset should be primarily liable for the payment of the debt, or whether the rule should remain that, subject to the expression of a contrary intention, mortgaged property should discharge its own debts, regardless of how the moneys raised on security of the asset have been applied.

(f) The National Committee’s preliminary view

15.145 The National Committee agreed that a provision to the effect of section 61 of the Succession Act 1981 (Qld) should be included in the model legislation. The National Committee also agreed that the provision should be subject to the expression of a contrary intention.

15.146 The Registrars of Probate agreed with this approach.

15.147 The National Committee rejected the suggestion that the rule should be modified to attempt to reflect more closely the testator’s intention.¹²² The National Committee was of the view that the provision has been widely accepted, and that any change to the principle that mortgaged property should discharge its own mortgage debt would be very disruptive, particularly in rural communities.

15.148 A further reason for rejecting the suggested modification was that, in every case where mortgaged property formed part of a deceased estate, it would be necessary to inquire into how the money secured by the mortgage had been disbursed. The National Committee was of the view that this was an undesirable complication to introduce into the administration of assets.

15.149 The Registrars of Probate agreed that the suggested modification should not be made.

Proposal 79

A provision to the effect of section 61 of the Succession Act 1981 (Qld) should be included in the model legislation.

Proposal 80

The model provision should be subject to the expression of a contrary intention, although it should not be necessary for the contrary intention to be found in the will.

Question for discussion

15.10 Should the model legislation stipulate what should or should not constitute a contrary intention for the purposes of the model provision?

1. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1101.

2. For example, in relation to the payment of debts in solvent estates, South Australia and Western Australia still retain the traditional list of classes. All other Australian jurisdictions have developed their own statutory lists. With the exception of Queensland, these statutory lists are based on the Administration of Estates Act 1925 (UK). See para 15.38-15.45 of this Discussion Paper for a discussion of the various statutory lists.

3. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 39.

4. For example, principle (5).

5. See proposal 79 of this Discussion Paper.

6. See proposal 78 of this Discussion Paper.

7. See proposal 77, 78 and 80 of this Discussion Paper.

8. See proposal 75 of this Discussion Paper.

9. Provisions to the same effect are also found in s 37 of the Administration and Probate Act 1958 (Vic) and s 32(1) of the Administration and Probate Act 1935 (Tas).

10. The Laws of Australia, art 3.14, Chapter 1, Part A, para 1.

11. Bankruptcy Act 1966 (Cth) s 244.

12. Bankruptcy Act 1966 (Cth) s 247.

13. A petition shall not be brought unless, at the time of his or her death, the deceased:

(a) was personally present or ordinarily resident in Australia;

(b) had a dwelling house or place of business in Australia;

(c) was carrying on business in Australia, either personally or by means of an agent or manager; or

(d) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners, or of an agent or manager.

See Bankruptcy Act 1966 (Cth) s 244(6)(b), 247(2).

15. Bankruptcy Act 1966 (Cth) s 244(1)(b).

16. Bankruptcy Act 1966 (Cth) s 244(1)(c).

17. Bankruptcy Act 1966 (Cth) s 244(6)(a).

18. Bankruptcy Act 1966 (Cth) s 108.

19. Bankruptcy Act 1966 (Cth) s 109.

20. Bankruptcy Act 1966 (Cth) s 109(1A), referring to s 50 of the Child Support (Registration and Collection) Act 1988 (Cth) and s 221YHJ(3), (4) and (5), s 221YHZD(3), (4) and (5) and s 221YU of the Income Tax Assessment Act 1936 (Cth).

21. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 40.

22. Ibid.

23. These expenses currently have priority in Queensland, the Australian Capital Territory, Victoria, the Northern Territory, New South Wales, Western Australia and Tasmania. See the table of provisions at para 15.11 of this Discussion Paper. Legislation in South Australia does not give priority to these expenses.

24. As noted at para 15.12-15.14 of this Discussion Paper, one of the requirements for administering a deceased estate under the Bankruptcy Act 1966 (Cth) may not be present, making it impossible to administer the estate under that Act. Alternatively, there might not be a creditor who wishes to present a petition to have the estate administered under the Act and the personal representative may not wish to incur the further expense of making the necessary application.

25. Administration of Estates Act 1971 (UK).

26. Halsbury’s Laws of England (4th ed) Vol 17 at para 1144.

27. The Laws of Australia, art 7.7, Chapter 2, Part B at para 14.

28. For example, Re Wester Wemyss; Tilley v Wester Wemyss [1940] Ch 1; Attorney-General (UK) v Jackson [1932] AC 365.

29. Halsbury’s Laws of England (4th ed) Vol 17 at para 1144.

30. Id at para 1143.

31. See Administration and Probate Act 1935 (Tas) s 34(2).

32. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 41.

33. Section 58 of the Succession Act 1981 (Qld) was based on s 10 of the Administration of Estates Act 1971 (UK). See Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 41.

34. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 41.

35. Ibid.

36. This information was provided by Mr W A (Tony) Lee.

37. [1969] Qd R 8 at 22-23.

38. Lee suggests that “residuary personalty” means, in this context, both personalty bequeathed by a residuary provision in the testator’s will and personalty undisposed of by the will: W A Lee, Manual of Queensland Succession Law (1975) at para 101. The discussion of the old classes has not been included in later editions of that text. See also In Re Kempthorne; Charles v Kempthorne [1930] 1 Ch 268 per Maugham J at 277 for a similar view.

39. In Calcino v Fletcher [1969] Qd R 8 at 23, Hoare J observed that “a mere general direction to pay debts has the effect of moving these assets from this class and placing them in Class 4”.

40. Administration and Probate Act 1929 (ACT) s 41; Wills, Probate and Administration Act 1898 (NSW) s 46 and 46A; Administration and Probate Act (NT) s 57; Succession Act 1981 (Qld) s 56; Administration and Probate Act 1919 (SA) s 51; Administration and Probate Act 1935 (Tas) s 32; Administration and Probate Act 1958 (Vic) s 37; Administration Act 1903 (WA) s 10(1).

41. Administration of Estates Act 1925 (UK) s 34, Schedule 1 Part 2.

42. It has been held that Class 1 includes a lapsed share of residue: see In Re Kempthorne; Charles v Kempthorne [1930] 1 Ch 268 per Maugham J at 277, 278:

I have no doubt that the language of that section [Class 1] is sufficient to include a lapsed share of residue ...

It is plain that the old law as to application of assets is there being altered to the detriment of people entitled upon an intestacy.

The Court of Appeal in that case did not reach a final conclusion on that point: In Re Kempthorne, Charles v Kempthorne [1930] 1 Ch 268 per Lord Hanworth MR at 296 and per Lawrence LJ at 298-299.

44. A gift of “all my real estate” has been held to be a residuary gift for the purpose of Class 2: In re Wilson, Decd, Wilson v Mackay [1967] 1 Ch 53 per Pennycuick J at 69-70:

[It was argued] that a devise is only residuary if there has been a previous devise, so that the residuary devise operates upon what remains after the previous devise has taken effect. That is a grammatically good point. ...

The only alternative in the context of paragraph 2 is to treat a general or universal gift as a specific gift, and that I should have thought certainly it was not. This construction would produce an wholly illogical result, that is, as regards payment of debts; on the one hand a residuary devise following a specific devise, that would be a residuary gift for the purpose of paragraph 2; on the other hand, a general or universal devise would be a specific devise and would fall, not within paragraph 2, but paragraph 6. I cannot think that is right.

46. Wills, Probate and Administration Act 1898 (NSW) Schedule 3 Part 2. This list contains the first six of the English classes with a slight variation in terminology.

47. Administration and Probate Act (NT) Schedule 4 Part 1. The Northern Territory schedule appears to contain two misprints – “Assents” for “Assets” in Class 1 and “unappropriated” for “appropriated” in Class 3. This list contains the first six of the English classes with a slight variation in terminology.

48. Administration and Probate Act 1935 (Tas) Schedule 2 Part 2.

49. Administration and Probate Act 1958 (Vic) Schedule 2 Part 2.

50. The Queensland Law Reform Commission in its 1978 Report saw no reason to place the rules in a Schedule to the Act, and preferred to set them out in the section itself: Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 41.

51. See the discussion of s 55 of the Succession Act 1981 (Qld) at para 15.51-15.55 of this Discussion Paper.

52. The other Australian jurisdictions differ as to where these two types of property come in their respective lists.

53. If class 1, as set out above, were included in the model legislation, it would have the effect in New South Wales that classes 3 and 4 in Part 2 of Schedule 3 of the Wills, Probate and Administration Act 1898 (NSW) would be merged. Thus, the present New South Wales Class 3, “Assets specifically appropriated or disposed of by will ... for the payment of debts”, and Class 4 “Assets charged with or disposed of by will ... subject to a charge for the payment of debts” would be merged to form the first class above the present first and second classes, which would themselves be merged to form one class. This merged class would become the second class, available for the payment of debts after the first class, and would consist of assets comprised in the residuary estate, as well as assets undisposed of by will.

54. Section 55 of the Succession Act 1981 (Qld) is set out at para 15.51 of this Discussion Paper.

55. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 42.

56. This is illustrated by the extent of the literature on the subject. See Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 39-41.

57. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 42.

58. See Succession Act 1981 (Qld) s 29(1)(b) and Wills Act 1997 (Vic) s 35.

59. See National Committee for Uniform Succession Laws, Consolidated Report to the Standing Committee of Attorneys General on the Law of Wills (QLRC MP 29, 1997) at 63-73; New South Wales Law Reform Commission, Report, Uniform Succession Laws: The Law of Wills (R 85, 1998) at para 6.1-6.36, where provisions similar to s 29 have been recommended by the National Committee.

60. See, for example, Re Lamb; Vipond v Lamb [1929] 1 Ch 722 and Re Kempthorne; Charles v Kempthorne [1930] 1 Ch 268.

61. Ibid.

62. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 39. As regards personalty, this was the law in Queensland even before the enactment of the Succession Act 1981 (Qld). However, other jurisdictions still make property undisposed of by will primarily liable for the payment of deceased’s debts: see the statutory lists set out at para 15.39-15.41 of this Discussion Paper.

63. See para 15.58-15.63 of this Discussion Paper.

64. See the discussion of dispositions of mortgaged property and the effect of Locke King’s Act at para 15.130-15.149 of this Discussion Paper.

65. See the discussion of the expression of a contrary intention at para 15.82-15.89 of this Discussion Paper.

66. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1106.

67. A gift of personal property in anticipation of death.

68. These gifts were Class 8 of the case law derived list, which is set out at para 15.36 of this Discussion Paper.

69. The Queensland classes are set out at para 15.42 of this Discussion Paper.

70. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 42-43. See Re Korvine’s Trust; Levashoff v Block [1921] 1 Ch 343 at 348.

71. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 43. See para 15.39-15.42 of this Discussion Paper where the various statutory lists are set out. Property appointed by will under a general power is Class 7 in the statutory lists of all Australian jurisdictions except Queensland.

72. See s 28(d) of the Succession Act 1981 (Qld) and cl 35 of the draft Wills Bill 1997 attached to the National Committee for Uniform Succession Laws, Consolidated Report to the Standing Committee of Attorneys General on the Law of Wills (QLRC MP 29, 1997); New South Wales Law Reform Commission, Report, Uniform Succession Laws: The Law of Wills (R 85, 1998). The latter clause provides:

What does a general disposition of property include?

(1) A general disposition of all or the residue of the testator’s property, or of all or the residue of his or her property of a particular description, includes all the property of the relevant description over which he or she has a general power of appointment exercisable by will and operates as an exercise of the power.

(2) This section does not apply if a contrary intention appears (whether in the will or elsewhere).

74. See the comments on s 55 of the Succession Act 1981 (Qld) (Definition of “residuary estate”) at para 15.51-15.55 of this Discussion Paper.

75. See National Committee for Uniform Succession Laws, Consolidated Report to the Standing Committee of Attorneys General on the Law of Wills (QLRC MP 29, 1997) at 62-73; New South Wales Law Reform Commission, Report, Uniform Succession Laws: The Law of Wills (R 85, 1998) at para 6.1-6.36.

76. See para 15.36 of this Discussion Paper where the case law derived classes of assets are set out.

77. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1001.

78. See proposal 74 of this Discussion Paper.

79. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1003.

80. Id at para 1002.

81. Id at para 1003. References omitted.

82. Id at para 1004. Note, however, that, in some circumstances, a pecuniary legacy may be a specific legacy, for example, when a testator makes a bequest of “all the money in the ivory box in my desk”: W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1004.

83. See para 15.103-15.105 of this Discussion Paper.

84. There has been some confusion under the English statutory list (and consequentially under the Australian lists that have adopted the English list) about the order in which different classes of assets are applied towards the payment of pecuniary legacies: see Halsbury’s Laws of England (4th ed) Vol 17 at paras 1283 and 1284 and Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 43. Both of the first two classes of the English list refer to the retention of a fund to meet pecuniary legacies. While it might be assumed that assets in Class 1 should be first applied towards the payment of legacies, the difficulty is that the list prescribes an order for the payment of debts – not for the payment of legacies. The legislation does not make it entirely clear that assets in the first class should be exhausted to pay pecuniary legacies before assets in the second class are applied. There is divergent case law on this point: see Halsbury’s Laws of England (4th ed) Vol 17 at para 1284, note 2. By merging assets undisposed of by will with assets forming the residue – as occurs in the Queensland Class 2, and has been suggested at para 15.50-15.55 of this Discussion Paper – this ambiguity can be avoided: Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 43.

85. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1110.

86. See para 15.39 and 15.41 of this Discussion Paper.

87. Succession Act 1981 (Qld) s 60, which is discussed at para 15.110-15.112 of this Discussion Paper.

88. See Succession Act 1981 (Qld) s 5; Administration and Probate Act 1958 (Vic) s 5; Administration and Probate Act 1935 (Tas) s 3; and Administration of Estates Act 1925 (UK) s 55(1)(ix). The definitions of “pecuniary legacy” in the Victorian, Tasmanian and United Kingdom legislation are virtually identical to the Queensland definition.

89. Succession Act 1981 (Qld) s 5.

90. R F Atherton and P Vines, Australian Succession Law: Commentary and Materials (1996) at para 18.7.6.

91. Ibid, citing L G Certoma, The Law of Succession in New South Wales (2nd ed 1992) at 287-288.

92. R F Atherton and P Vines, Australian Succession Law: Commentary and Materials (1996) at para 18.7.6.

93. But see the discussion below of demonstrative legacies. Under the rules derived from case law, secured demonstrative legacies are included in Class 6, devises of land and specific legacies, so that they are included with the property on which they are charged. So if a will devised Blackacre to A and made a gift of $500 to B charged on Blackacre, as long as Blackacre is part of the testator’s estate on the testator’s death, the legacy of $500 is regarded as a specific legacy and is paid along with other specific devises and legacies in that class. See W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1005.

94. See para 15.38-15.41 of this Discussion Paper.

95. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1110.

96. The property comprised in Class 2 of s 59 of the Succession Act 1981 (Qld) is property comprising the residuary estate of the deceased, which includes – by virtue of s 55 of the Succession Act 1981 (Qld) – property not effectively disposed of by the will. This is the same as the first of the two classes recommended by the National Committee for the payment of debts. See proposal 74 of this Discussion Paper.

97. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 42.

98. Halsbury’s Laws of England (4th ed) Vol 17 at para 1230.

99. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 1005.

100. Ibid.

101. See the definition of “pecuniary legacy” in s 5 of the Succession Act 1981 (Qld), in s 5 of the Administration and Probate Act 1958 (Vic), in s 3 of the Administration and Probate Act 1935 (Tas), and in s 55(1)(ix) of the Administration of Estates Act 1925 (UK).

102. R S Geddes, C J Rowland and P Studdert, Wills, Probate and Administration Law in New South Wales (1996) at para 46C.04 citing Re Sloan; Stevens v Sloan [1943] VLR 63. This is the current law in New South Wales.

103. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 43.

104. See proposal 74 of this Discussion Paper.

105. See National Committee for Uniform Succession Laws, Report to the Standing Committee of Attorneys General on Family Provision (QLRC MP 28, 1997).

106. See para 15.112 of this Discussion Paper.

107. See para 15.102 of this Discussion Paper.

108. See question 15.8 where the National Committee seeks submissions on this issue.

109. See para 15.71-15.76 of this Discussion Paper.

110. But see question 15.7 where submissions are sought on whether pecuniary legacies should be treated as specific gifts.

111. See the discussion at para 15.119-15.125 of this Discussion Paper.

112. See the discussion at para 15.121-15.125 of this Discussion Paper.

113. See para 15.71-15.76 of this Discussion Paper.

114. See the discussion at para 15.126 of this Discussion Paper.

115. Conveyancing and Law of Property Act 1898 (NSW) s 109 as in force in the ACT. Section 109 applies only to realty and does not apply to vendors’ liens: Davies v Littlejohn (1923) 34 CLR 174.

116. Conveyancing Act 1919 (NSW).

117. Wills Act 1970 (WA).

118. See s 78 of the Equity Act 1867 (Qld).

119. See Chapter 12 of this Discussion Paper in relation to the vesting of property.

120. See para 15.82-15.89 of this Discussion Paper.

121. See proposal 74 of this Discussion Paper.