Chapter 5. Administration of Assets

Updates and background for this project (Digest)

• Part 1 Property for payment of debts
• Part 2 Solvent estates
• Part 3 Interest
• Part 4 Insolvent estates

5.1 The provisions in this chapter deal with the administration of the assets of an estate. The manner in which a personal representative distributes assets to creditors and beneficiaries will depend on whether the estate is solvent or insolvent. Part 1 generally identifies what property in the estate will be an asset for the payment of debts. Part 2 deals with the payment of debts and the distribution of assets in solvent estates, while Part 4 deals with the payment of debts and the distribution of assets in insolvent estates.

PART 1 PROPERTY FOR PAYMENT OF DEBTS

500 Property that is an asset available for the payment of debts

(1) The following property is an asset for the payment of the debts of a deceased person’s estate—

(a) property in the estate that, on the deceased’s death, vests in his or her executor or the [public trustee];

Notes—

1 Property that, in the exercise of a general power of appointment, the deceased disposes of by will also vests in his or her executor or the [public trustee] because of sections 200 and 201.

2 Property of which the deceased was trustee is not an asset for the payment of the deceased’s debts. See section 200 (Initial vesting on death).


(b) property to which the deceased’s personal representative becomes entitled, as personal representative, after the deceased’s death.

(2) Any disposition by the deceased’s will inconsistent with subsection (1) is void as against creditors of the estate, and the Supreme Court may, if necessary, administer the property for the payment of the debts.

(3) This section does not affect the rights of a mortgagee or other encumbrancee.

5.3 The identification of what constitutes assets for the payment of debts has important consequences when a creditor brings an action against a personal representative. In some cases the personal representative can plead the defence of plene administravit, that is, that the personal representative is not holding any assets that could satisfy the claim.¹

5.4 Paragraph 500(1)(a) is based on the first half of s 56(1) of the Succession Act 1981 (Qld). It identifies as assets for the payment of debts any property that vests, upon the deceased’s death, in the executor or in the NSW Trustee under cl 200. Under cl 200(5) that property is defined as:

property to which a person was entitled at the time of his or her death, but does not include—

(a) property of which the person was a trustee; or

(b) an interest in property that ceased on the person’s death.

5.6 Paragraph 500(1)(b) is new. It has been included because cl 500(1)(a) deals only with property that vests on a person’s death. The National Committee considered it important to ensure that any property that vests after the death of a person in his or her personal representative will also be an asset for the payment of debts.⁵

5.7 Sub-clause 500(2) is based on the second half of s 56(1) of the Succession Act 1981 (Qld).

5.8 Sub-clause 500(3) is based on s 56(2) of the Succession Act 1981 (Qld). It states that this clause does not prejudice the rights of mortgagees or other encumbrancees. It has no counterpart in NSW. While acknowledging that the effect of this sub-clause is declaratory only and not strictly necessary, the National Committee nevertheless considered such a provision desirable “as it provides a clear statement about the effect of the model provision”.⁶

PART 2 SOLVENT ESTATES

5.9 When an estate is solvent, there will be sufficient assets to pay all of the estate’s debts, liabilities and expenses. The personal representative, therefore, does not need to consider the question of priority among creditors as he or she would have to do in the case of an insolvent estate.⁷ However, the order in which particular assets are used to meet the debts of the estate will, ultimately, determine what the personal representative can distribute to particular beneficiaries or classes of beneficiaries. This Part deals with the issues arising in such circumstances.

Division 1 Application

501 Application of part

This part applies if a deceased person’s estate is sufficient to pay, in full, the debts of the estate.

Division 2 Classes of property for payment of debts

502 Payment of debts

(1) The debts of the estate are, subject to sections 506 and 507, to be paid from the estate as follows—

(a) first, from the following property (class 1 property), if any—

(i) property specifically appropriated or given by will (either by a specific or general description) for the payment of debts;

(ii) property charged by will with, or given by will (either by a specific or general description) subject to a charge for, the payment of debts;


(b) second, from property (class 2 property) comprising—

(i) the residuary estate; and

(ii) any property in relation to which a disposition by will operates under [insert local equivalent of the Succession Act 1981 (Qld), section 33J] as the exercise of a general power of appointment;


(c) third, from property (class 3 property), if any, specifically given by will, including property specifically appointed under a general power of appointment, and any legacy charged on the property given or appointed.

(2) Property within each class must be applied in the discharge of the debts and, if applicable, in the payment of pecuniary legacies rateably according to value.

Example—


Assume class 1 property and class 2 property have been applied fully in the discharge of the debts and there are still debts of $20000 to be paid out of class 3 property. Assume further that class 3 property is comprised of jewellery valued at $40000, which is given to A, and a parcel of shares valued at $60000, which is given to B. To discharge the remaining debts, $20000 (20% of the value of the class 3 property) is required to be applied for the purpose.

In this example, the rule requiring property in the class to be applied in the discharge of debts rateably according to value requires 20% of each of the jewellery and parcel of shares to be applied in the discharge of the debts. As a result, A receives a distribution to the value of $32000 (80% of $40000) and B receives a distribution to the value of $48000 (80% of $60000).


(3) Also, if a specific property must be applied in the discharge of the debts and a legacy is charged on the specific property—

(a) the legacy and the specific property must be applied rateably according to value; and

(b) for the purpose of paragraph (a), the value of the specific property must be reduced by the amount of the legacy charged on it.


Example—

Assume a deceased person’s estate has a total value of $200000. It is comprised of two properties, Blackacre and Whiteacre, each of which has a value of $100000. Assume further that, under the deceased’s will, Blackacre is given to A, Whiteacre is given to B and a legacy of $50000, charged on Whiteacre, is given to C. The estate has unsecured debts of $50000.

In this example, the rule in paragraph (a) requires that Blackacre, Whiteacre and the legacy charged on Whiteacre be applied in the discharge of the debts rateably according to value. However, for the purpose of paragraph (a), paragraph (b) provides that the value of Whiteacre is $50000 ($100000 less the amount of the legacy that is charged on Whiteacre). So the total value of the class 3 property is $200000. Because the debts are $50000 (25% of the value of the class 3 property), 25% of the value of Blackacre and Whiteacre and of the legacy will be applied in the discharge of the debts. As a result, A receives a distribution to the value of $75000 (75% of $100000), B receives a distribution to the value of $37500 (75% of $50000) and C receives a distribution of $37500 (75% of $50000).


(4) If the deceased left a will, the order in which the estate is to be applied towards the discharge of debts, and the incidence of rateability as between different properties within each class, may be varied by a contrary intention appearing in the will.

5.11 Sub-clause 502(1) sets out the order for the application of property for the payment of debts in a solvent estate. It has its origins in s 59(1) of the Succession Act 1981 (Qld). This model provision reflects the National Committee’s aim to achieve “a much simpler and more rational order for the application of assets towards the payment of debts”. The National Committee observed that this may lead to “greater certainty in relation to the application of assets” and may “reduce opportunities for litigation”. It also felt that the shorter the list of classes, the easier it would be to understand the effect of a direction in a will to pay debts.⁸

5.12 The National Committee, having acknowledged that “the law has always preferred a rule that debts should be paid out of residuary assets ahead of specific assets”,⁹ concluded that the personal representative should use assets comprising the residuary estate to pay debts (class 2 property) before using assets that are specifically disposed of by the will (class 3 property).¹⁰

5.13 Class 1 property. The inclusion of this class of property in the model bill has been questioned because, arguably, cl 502(4), in providing that the statutory order is subject to the testator expressing a contrary intention, renders it unnecessary to list property that the will has specifically appropriated for, or made subject to a charge for, the payment of debts.¹¹ There are a number of reasons for the inclusion of cl 502(1), including that it will provide clear guidance to personal representatives as to the order in which they should use such property¹² and that it will avoid uncertainty where the will specifically appropriates some property for the payment of debts and also subjects other property to a charge for the payment of debts.¹³ The latter reason is important in light of the possibility that the general rule may reassert itself that personal representatives must use property left on trust to pay debts ahead of property subject to a charge for the payment of debts.¹⁴ Other Australian jurisdictions, including NSW, currently rank property specifically appropriated for the payment of debts ahead of property made subject to a charge for the payment of debts.¹⁵ The National Committee, however, considered that there was “no cogent reason” to suppose that a testator who included both kinds of direction in a will would intend to use one class of property ahead of the other.¹⁶

5.14 Class 2 property. Residuary estate is defined in the Dictionary in schedule 3 to include not only property that is residue under a will but also property that has not been disposed of by a will, that is, subject to either a partial or a total intestacy.¹⁷ This follows the current approach in Queensland which has combined, in the one class, property to which residuary beneficiaries are entitled and property to which intestacy beneficiaries are entitled.¹⁸ This is different to the current situation in NSW, where assets undisposed of by will are ranked ahead of residuary estate in the order for the payment of debts.¹⁹ The Queensland Law Reform Commission, in recommending the relevant provisions, in 1978, noted that it was rare that intestacy beneficiaries and residuary beneficiaries would exist side by side, especially in light of provisions intended to avoid partial intestacies. It could find no necessary reason to prefer residuary beneficiaries over intestacy beneficiaries.²⁰ A provision intended to avoid partial intestacies of shares of the residuary estate has now been enacted in NSW.²¹ The National Committee has observed that, in light of these developments, “there may be little point in maintaining the difficult distinction between assets undisposed of by the will and assets forming part of a residuary gift”.²²

5.15 Class 2 of the current Queensland provision includes in property comprising the residuary estate, “property in respect of which any residuary disposition operates as the execution of a general power of appointment”.²³ The National Committee was concerned that this wording was not sufficiently broad to encompass a general disposition of all of the testator’s property or all of the testator’s property of a particular description. The National Committee, therefore, recommended, for the sake of clarity, that the model provision refer to the types of dispositions in a will that operate as an exercise of a general power of appointment as set out in s 33J of the Succession Act 1981 (Qld).²⁴ The equivalent provision in NSW is s 37 of the Succession Act 2006 (NSW).

5.16 Class 2 property does not refer to pecuniary legacies because they “do not consist of specific property”.²⁵ However, in order for pecuniary legacies to be met from class 2 property in accordance with cl 504, the “residuary estate”, which is defined in the dictionary as including property not otherwise disposed of and any residuary disposition, must also be taken to include the “fund” that will meet any pecuniary legacies.

5.17 Class 3 property. The inclusion of property specifically appointed under a general power of appointment in cl 502(1)(c) is consistent with the current position in NSW whereby property that is specifically appointed is applied rateably alongside other property that is specifically given by the will.²⁶ The National Committee recommended this provision as being consistent with the identification of class 3 property in the current Queensland provision.²⁷

Rateability of property in the same class

5.18 Sub-clause 502(2) deals with a situation where not all of the property in a particular class is required for the payment of debts and, if necessary, the payment of pecuniary legacies. In these circumstances, the intended beneficiaries of the property in that class must bear the loss equally, that is, the personal representative must distribute the remaining property among the intended beneficiaries rateably according to value. The provision is based on the first part of s 59(2) of the Succession Act 1981 (Qld).²⁸ In NSW, rateability does not apply to all classes of property, but only to the class of assets that are specifically disposed of by will, if required.²⁹

Rateability of property in the same class that is also subject to a demonstrative legacy

5.19 A demonstrative legacy is a pecuniary legacy payable out of a particular fund or property. A demonstrative legacy is regarded as a specific legacy to the extent that it can be paid out of the property on which it is charged, and is regarded as a general legacy to the extent that it cannot be paid out of that property. This arrangement is reflected in paragraph (c) of the definition of “pecuniary legacy” in the Dictionary in schedule 3.

5.20 Sub-clause 502(3) deals with the situation where a specific item of property is required to contribute to the payment of debts and is also required to satisfy a demonstrative legacy. In such circumstances, the value of the specific property must be reduced by the amount of the legacy and the personal representative must use the balance of the value of the property and the demonstrative legacy to pay the debts rateably according to value. It is based on the second part of s 59(2) of the Succession Act 1981 (Qld). The Queensland Law Reform Commission originally recommended this provision because it considered that the old rule, which still applies in NSW,³⁰ was unfair to the intended beneficiary of the property on which the demonstrative legacy was charged.³¹ The National Committee agreed with this position.³² The old rule requires that the whole value of the property must be taken into account in determining the extent to which the property will be used in paying the estate’s debts. This means that, in some cases, little or nothing will be left for the intended recipient of property that has met its rateable share of the debt and also satisfied a demonstrative legacy. This model provision will ensure that, when not all of the property in a class is required to meet debts, the debts will be paid off and the beneficiary of the demonstrative legacy and the beneficiary of the property so charged will each obtain some benefit.

Contrary intention

5.21 Sub-clause 502(4) allows a testator to vary the statutory order and the incidence of rateability by expressing a contrary intention in the will. It derives from part of s 59(3) of the Succession Act 1981 (Qld).³³ The current NSW provision merely states that the payment of debts according to the statutory order is subject to “the provisions, if any, contained in the deceased person’s will”.³⁴

5.22 The expression of contrary intention is limited to that expressed in the will, rather than in other extrinsic material. The National Committee decided on this limitation in order to avoid uncertainty as to whether a testator has varied the statutory order and, thereby, avoid costly disputes on the question.³⁵ The National Committee also observed that the proposed provision, coupled with a broad dispensing power in relation to the execution of wills,³⁶ would allow sufficient flexibility in determining a contrary intention.³⁷

Gifts in contemplation of death

5.23 At common law, a person may deliver property to another, in contemplation of death, the gift being conditional upon the donor’s death and revocable at any time before that death. Traditionally referred to as a donatio mortis causa, such a gift is not traditionally included among the statutory classes of property available for the payment of a deceased’s debts.

5.24 The National Committee decided not to follow the Queensland model of including donationes mortis causa among the statutory classes of property available for the payment of debts,³⁸ considering that an estate that cannot be administered without resort to such property should, properly, be regarded as insolvent.³⁹ However, the National Committee did recommend that the model legislation should not prevent proceedings being brought to recover a donatio mortis causa that is necessary to pay the debts of an estate.⁴⁰

503 Effect of general direction or disposition for the payment of debts

The appearance of either or both of the following in a will does not constitute the estate or the residuary estate as class 1 property and is not a contrary intention for the purposes of this part—

(a) a general direction, charge or trust for the payment of debts, or of all the debts, out of the estate or the residuary estate;

(b) a disposition of the estate or the residuary estate after, or subject to, the payment of debts.

5.26 It is derived from part of s 59(3) and from s 61(2) of the Succession Act 1981 (Qld). These provisions each provide that certain statements do not amount to a contrary intention for the purposes of provisions that are the equivalent of cl 502(4) (in relation to the payment of debts generally) and cl 506 (in relation to encumbered property).

5.27 The Queensland Law Reform Commission proposed s 59(3), in 1978, in order to overcome the old position that a mere general direction for the payment of debts out of an estate was sufficient to move property that was subject to a specific disposition into the class of property charged with the payment of debts.⁴¹ The QLRC considered that, in the past, “disproportionate significance” had been attached to such directions “for historical reasons now irrelevant”. The Commission was of the view that it was “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”.⁴²

5.28 However, the position in NSW is that the old rule of construction does not apply to the statutory order because the legislation “has drastically altered the rules as to the order of administration which were applicable under the earlier law”.⁴³ The National Committee nevertheless considered cl 503 desirable to “put beyond doubt that a general direction for the payment of debts out of the estate cannot affect the operation of the model statutory order”.⁴⁴

5.29 The Queensland Law Reform Commission proposed s 61(2), which is based on existing English and Australian precedents in relation to real property, to set out what expressions are insufficient to indicate an intention contrary to the rule that encumbered property should be primarily liable for its own debts.⁴⁵ The National Committee considered that commonly-used expressions that merely direct a personal representative to do what the law requires (that is, for example, pay debts out of the residuary estate) “do not sufficiently demonstrate that a testator has turned his or her mind to the question of negativing the principle that would otherwise apply”.⁴⁶ The current relevant provision in NSW may be found in s 145(2) of the Conveyancing Act 1919 (NSW).

5.30 The reference to directions and dispositions not constituting the estate or the residuary estate as class 1 property has been included “because the existence or otherwise of class 1 property will be critical in determining which of [cl 506 or cl 507] applies in a particular situation”.⁴⁷ Clauses 506 and 507 deal with the question of whether particular encumbered assets of an estate are liable for their own debts.

Division 3 Pecuniary legacies

504 Payment

(1) Pecuniary legacies must be paid out of available class 2 property.

(2) However, to the extent that available class 2 property is insufficient to pay the pecuniary legacies, the legacies must abate proportionately.

Example—


Assume a deceased person, by will, gives pecuniary legacies totalling $4000 to A, B and C. A is to receive $500, B is to receive $1500 and C is to receive $2000. However, available class 2 property has a value of $2000.

In this example the rule requires the pecuniary legacies to abate proportionally. So as only 50% of the value of the gifts is available to meet them, each gift must abate by 50%. As a result, A receives $250, B receives $750 and C receives $1000.


(3) Subsections (1) and (2) are subject to a contrary intention appearing in the deceased person’s will.

(4) In this section—


available class 2 property means class 2 property or, if debts are to be discharged from the property, class 2 property after the discharge of the debts.

5.32 The National Committee acknowledged that, under this proposal, people entitled to pecuniary legacies appear to be treated less favourably than the beneficiaries of specific gifts, since specific gifts do not abate in order to allow pecuniary legacies to be paid. However, the National Committee noted that other principles operated to the advantage of beneficiaries of pecuniary legacies. First, provisions to the effect of Locke King’s legislation⁵⁰ make encumbered property primarily liable for the payment of its own debt, thereby leaving the residuary estate available to meet pecuniary legacies. Secondly, pecuniary legacies are not subject to the doctrine of ademption and will be paid if there is sufficient property in the residuary estate, unlike specific gifts which adeem when the testator disposes of the property in question before death.⁵¹

5.33 Clause 504 is based on s 60 of the Succession Act 1981 (Qld). In recommending this provision, the National Committee also considered an alternative proposal to treat pecuniary legacies as if they were specific legacies (that is, class 3 property). The National Committee rejected it because it would disturb other settled principles, such as Locke King’s legislation and the doctrine of ademption and would “necessitate reverting to a more complicated order for the payment of debts, without necessarily producing a result, in terms of the distribution of the estate, that better reflects the intentions of the testator”.⁵² The Queensland Law Reform Commission, in its 1978 report, even though it considered it difficult to justify a distinction between pecuniary legacies and specific legacies, noted that, if pecuniary legacies were also to be met from property in class 3 (that is, specific legacies), the personal representative would need to sell such property more often in order to achieve abatement and added:

We doubt whether a testator would really wish this, particularly where the subject matter of a specific legacy has some sentimental value.⁵³

5.35 Sub-clause 504(3) states that this provision is subject to a contrary intention expressed in the will.⁵⁶ This also derives from s 60 of the Succession Act 1981 (Qld).

Division 4 Encumbered property

5.36 Provisions in almost all of the Australian jurisdictions, commonly referred to as “Locke King’s legislation”,⁵⁷ establish a significant statutory exception to the order of application of assets for the payment of debts set out above.⁵⁸ In NSW, the relevant provision may be found in s 145 of the Conveyancing Act 1919 (NSW). Such provisions generally state that property that is charged with a debt must bear that debt and any person taking that property takes it subject to that debt.

5.37 In recommending a provision to the effect of Locke King’s legislation, the National Committee noted that the principle argument in favour of its inclusion was that “it provides a simple, settled rule for the administration of assets where a person dies leaving property charged with the payment of a debt”.⁵⁹ The National Committee also observed that there would be a great many wills drafted on the basis that Locke King’s legislation would continue to apply.⁶⁰ This would be particularly so, since Locke King’s provisions are available in all Australian jurisdictions except the Northern Territory.⁶¹

5.38 Clauses 506 and 507 have been drafted to clarify the situations where a testator intends to negative the effect of Locke King’s legislation by creating class 1 property, that is, property in the estate appropriated or subject to a charge for the payment of debts.⁶² Clause 506 deals with the situation where the testator has not identified class 1 property and cl 507 deals with the situation where the testator has identified class 1 property.

505 Definitions for division

In this division—

encumbered property, of the deceased person, means property, or an interest in the property, that at the time of the deceased’s death is charged with the payment of any property debt.

property debt includes mortgage and charge, whether legal or equitable (including a lien for unpaid purchase money).

5.40 By the operation of the definition of “property” in the Dictionary in schedule 3, the property referred to in these definitions includes both real property and personal property.⁶⁶ This is consistent with the approach of most Australian jurisdictions, including NSW, and with the view identified by the National Committee that there is no reason in principle why personal property that secures a debt should be treated any differently to real property that secures a debt through a mortgage.⁶⁷

506 Payment of property debts if there is no class 1 property

(1) This section applies if, on the person’s death—

(a) the person is entitled to encumbered property; and

(b) there is no class 1 property in the person’s estate.


Note—

Under section 201, a testator is taken to have been entitled at his or her death to any interest in property in relation to which a disposition contained in his or her will operates as an exercise of a general power of appointment.

(2) The encumbered property is, as between the different persons claiming through the deceased person, primarily liable for the payment of the property debt with which it is charged and each part of the encumbered property, according to its value, is to bear a proportionate part of the property debt.

Example—


Assume that a deceased person’s estate has a total value of $300000. It is comprised of Blackacre, which has a value of $200000 and other property with a value of $100000. Assume further that the estate has total debts of $80000. This is comprised of a property debt of $50000 secured by mortgage on Blackacre and unsecured debts of $30000. The deceased’s will gives Blackacre to A and B in equal share as tenants in common and the residuary estate to C. The estate does not include class 1 property.

In this example, the rule in subsection (2) requires that Blackacre is primarily liable for the payment of the property debt of $50000 with which it is charged. As a result, the debt secured on Blackacre must be paid out of Blackacre and not out of class 2 property. As a result, C receives a distribution to the value of $70000 ($100000 less the unsecured debts of $30000).

Because the rule in subsection (2) further requires that each part of Blackacre, according to its value, is to bear a proportionate part of the property debt, A and B each receive a distribution to the value of $75000 ($100000, which is half the value of Blackacre, less $25000, which is a proportionate part of the property debt).


(3) Subsection (2) does not apply if a contrary intention appears in the deceased person’s will.

5.42 The contrary intention mentioned in cl 506(3) is subject to cl 503 which provides that a general direction or disposition for the payment of debts out of the estate or residuary estate does not amount to a statement of contrary intention.⁶⁹ This is consistent with the current NSW provision.⁷⁰ However, the model provision, in referring only to the deceased’s will, is narrower than the NSW provision which allows that the contrary intention may be expressed in a “will, deed, or other document”.⁷¹ The National Committee recommended the restriction to expressions in the will, having considered criticisms that wider provisions incorporating statements in other documents were not justified⁷² and presented problems of proof and left open the possibility of fraud.⁷³ The National Committee also observed that the dispensing powers now available to the Court⁷⁴ gave a wider meaning to the term “will” than was previously the case.⁷⁵

507 Payments of property debts if there is class 1 property

(1) This section applies if, on the person’s death—

(a) the person is entitled to encumbered property; and

(b) there is class 1 property in the person’s estate.


Note—

Under section 201, a testator is taken to have been entitled at his or her death to any interest in property in relation to which a disposition contained in his or her will operates as an exercise of a general power of appointment.

(2) The class 1 property must be applied rateably towards discharging—

(a) the property debt to which the encumbered property is subject; and

(b) the unsecured debts of the deceased person’s estate.


(3) If the class 1 property is not sufficient to discharge the property debt to which the encumbered property is subject—

(a) the encumbered property is, as between the different persons claiming through the deceased person, primarily liable for the payment of the remainder of the property debt after the application of the class 1 property; and

(b) each part of the encumbered property, according to its value, is to bear a proportionate part of the property debt.


Example—

Assume that a deceased person’s estate has a total value of $240000. It is comprised of two properties, Blackacre and Whiteacre, each of which has a value of $90000, and other property with a value of $60000. Assume further that the estate has total debts of $120000. This is comprised of a property debt of $80000 secured by mortgage on Blackacre and unsecured debts of $40000.

Under the deceased’s will, Blackacre is given to A and the residuary estate is given to B. The executors are directed to pay ‘all my debts’ out of Whiteacre, which is therefore class 1 property.

In this example the rule in subsection (2) requires that Whiteacre, as class 1 property, must be applied rateably towards discharging the property debt of $80000 to which Blackacre is subject and the unsecured debts of $40000. Because the value of Whiteacre ($90000) is 75% of the total amount of the debts ($120000), Whiteacre will be applied to pay 75% of the property debt of $80000 ($60000) and 75% of the unsecured debts of $40000 ($30000).

The rule in subsection (3) further requires that, because Whiteacre is not sufficient to discharge the property debt to which Blackacre is subject, Blackacre is primarily liable for the payment of the remainder of the property debt of $20000.

As a result A receives a distribution of $70000 ($90000 less the remaining property debt of $20000). As Whiteacre has been fully applied, the unsecured debts of $10000 that remain after the application of Whiteacre must be paid out of class 2 property. B, as the residuary beneficiary, therefore receives a distribution to the value of $50000 ($60000 less the remaining unsecured debts of $10000).


(4) Subsections (2) and (3) do not apply if a contrary intention appears in the deceased person’s will.

5.44 First, it provides that the personal representative should use the class 1 property to discharge the debt to which the encumbered property (the “secured debt”) is subject and also to discharge the estate’s unsecured debts. If the class 1 property is insufficient to discharge all the debts, it should be applied rateably to both the secured debt and the unsecured debts. The remaining unsecured debt must, then, be paid out of the encumbered property and the personal representative must pay the unsecured debts out of any class 2 property and, if necessary, out of class 3 property.

5.45 The contrary intention mentioned in cl 507(4) is subject to cl 503.⁷⁷

508 Abolition of rule in Lutkins v Leigh

(1) The rule in Lutkins v Leigh is abolished.

Note—


Lutkins v Leigh (1734) Cases T Talbot 53; 25 ER 658

(2) Consequently, if, for section 506 or 507—

(a) a contrary intention appears in the deceased person’s will; and

(b) as a result of the contrary intention, all or part of a property debt charged against encumbered property is payable out of class 2 property;

the person to whom the encumbered property is specifically given by the will or appointed under a general power of appointment is not required to restore to class 2 property any amount applied from class 2 property towards the discharge of the property debt charged against the encumbered property.

5.47 A testator who gives property that is subject to a mortgage can negative the operation of the Locke King’s provisions in cl 506 or cl 507 in a number of ways, one of which is simply stating that the beneficiary is to take the property free of the mortgage. The effect of such a provision is that the personal representative must treat the mortgage debt as an unsecured debt and pay it out of the estate according to the statutory order.⁷⁹ However, the Rule in Lutkins v Leigh provides that, if the personal representative must use funds that would otherwise be used for pecuniary legacies to satisfy the mortgage debt, the beneficiaries of the pecuniary legacies are entitled to have restored to the fund the amount that has been paid towards the mortgage debt. This effectively means that the fund retained for the payment of pecuniary legacies cannot be used to satisfy the mortgage debt.

5.48 The National Committee, having considered various criticisms of the rule,⁸⁰ concluded that it would undermine the operation of the model statutory order for payment of debts set out in cl 502 and would be inconsistent with the specific wishes of the testator that the encumbered property be given free of the mortgage to which it is subject.⁸¹

509 Division does not affect other rights to payment

This division does not affect the right of a person entitled to a property debt charged against an encumbered property to obtain payment for, or satisfaction of, the property debt out of the other assets of the deceased person’s estate or otherwise.

5.50 The National Committee observed that, strictly, such a provision is not necessary since cl 506 and cl 507 refer only to the resolution of issues “between the different persons claiming through the deceased person”.⁸² However, it acknowledged that, since all Australian jurisdictions, apart from Queensland, include such a provision in relation to their Locke King’s provisions, “the omission of the provision from the model legislation could give rise to confusion in those other jurisdictions”.⁸³ The model provision is, therefore, based on s 500(5) of the Civil Law (Property) Act 2006 (ACT). The equivalent provision in NSW is s 145(3) of the Conveyancing Act 1919 (NSW).

PART 3 INTEREST

510 General legacies

(1) The personal representative must pay interest at the prescribed rate on a general legacy to the beneficiary of the legacy as provided under this section.

(2) Interest is payable on the general legacy—


(a) from the first anniversary of the deceased person’s death until the general legacy is paid; or

(b) if, under the will, the general legacy is payable at a future date—from that date until the general legacy is paid.


(3) Payment of interest on the general legacy is subject to a contrary intention in the will about any of the following—

(a) whether interest is payable on the general legacy;

(b) the time from when interest is payable on the general legacy;

(c) the rate of interest that is payable on the general legacy.


(4) In this section—

prescribed rate, of interest, means the rate that is 2% above the cash rate last published by the Reserve Bank of Australia before 1 January in the calendar year in which interest begins to accrue.¹

1 See <http://www.rba.gov.au/Statistics/cashrate_target.html>.


Drafter’s note: In some jurisdictions, year may be defined under its interpretation legislation to mean calendar year.

5.52 General legacies are usually either gifts of sums of money (pecuniary legacies) or of other property (but not specific items of property) which may be given directly from the estate, or purchased by the estate, or its value given to the beneficiary as a sum of money. The fund necessary to satisfy general legacies must be obtained from the assets of the estate.

5.53 The position at law has long been that a general legacy carries interest calculated from one year after the death of the testator until it is eventually paid⁸⁴ or, if the will specifies a future date for payment, from that date until it is eventually paid.⁸⁵ The justification for this arrangement being that residuary beneficiaries should not stand to benefit from interest earned because of delays in the payment of general legacies at the expense of the beneficiaries of those general legacies.⁸⁶ The model clause is based on s 52(1)(e) of the Succession Act 1981 (Qld) which is consistent with the rules under the general law.⁸⁷

5.54 Currently, in NSW, the relevant provisions merely state that, if interest is payable on any legacy, the annual rate is 2% above the cash rate last published by the Reserve Bank of Australia before 1 January in the calendar year in which interest begins to accrue.⁸⁸

5.55 The definition of “prescribed rate” in cl 510(4) is consistent with the National Committee’s proposals in its report on intestacy.⁸⁹ This new provision renders unnecessary a provision, like those in Queensland and NSW,⁹⁰ that allows the Court to set a different rate either generally, or to suit a specific case.⁹¹

PART 4 INSOLVENT ESTATES

5.56 Currently, when a person dies, if his or her estate is insolvent and not already being administered under the Bankruptcy Act 1966 (Cth), or if the estate is later found to be insolvent, the personal representative essentially has two options available. He or she may either seek to have the estate administered under Part 11 of the Bankruptcy Act 1966 (Cth)⁹² or seek to have the estate administered under the administration of estates provisions that deal with the administration of insolvent estates. This Part of the model legislation deals with the administration of insolvent estates for those who choose the second option.

5.57 The National Committee, having noted that it is not mandatory for a personal representative to administer an estate under the Bankruptcy Act 1966 (Cth),⁹³ and having noted concerns about the additional costs, expense and delay that may arise in an administration under the Bankruptcy Act,⁹⁴ concluded that it was “essential” for there to be a regime for the administration of insolvent estates that are not being administered under the Bankruptcy Act.⁹⁵

511 Application of part

This part applies if a deceased person’s estate—

(a) is insufficient to pay, in full, the debts of the estate; and

(b) is not being administered under the Bankruptcy Act 1966 (Cwlth).

5.59 The relevant NSW provision states that insolvent means “insufficient for the payment in full of the debts and liabilities of the deceased”.⁹⁷

5.60 According to s 109 of the Constitution (Cth), the model provisions will not apply when an insolvent estate is being administered under the Bankruptcy Act 1966 (Cth). It is, therefore, not necessary to include a provision to the effect of paragraph (b). However, the National Committee considered that such a provision would serve to alert people to the potential application of the Bankruptcy Act 1966 (Cth).⁹⁸

512 Application of bankruptcy rules

(1) The bankruptcy rules as in force at the date of the deceased person’s death apply to the following—

(a) the rights of secured and unsecured creditors against the deceased’s estate;

(b) the debts and liabilities provable against the deceased’s estate;

(c) the valuation of annuities and future and contingent liabilities of the deceased’s estate;

(d) the priorities of debts and liabilities of the deceased’s estate.


(2) A demand, in relation to which proceedings are maintainable against the deceased’s estate, is provable against the estate despite being a demand in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust.

(3) For the purpose of applying the bankruptcy rules for this part—


(a) a reference to either of the following—

(i) the date of the order for administration under Part XI;

(ii) the date on which the administration under Part XI is deemed to have commenced;


is taken to be a reference to the date of the deceased’s death; and

(b) a reference to the Court is taken to be a reference to [insert relevant court of local jurisdiction].


(4) In this section—

bankruptcy rules means the provisions of the Bankruptcy Act 1966 (Cwlth) and the regulations under that Act applying in relation to the administration of estates of deceased persons in bankruptcy.

5.62 This means that the priorities established by the Bankruptcy Act apply to the payment of debts in an insolvent estate. This accords with the National Committee’s aim that “the administration of insolvent estates will continue to be largely assimilated with the position under the Bankruptcy Act 1966 (Cth)”.⁹⁹

5.63 Under cl 512(1), the bankruptcy rules are those in force at the date of the deceased’s death. The National Committee considered that this expression provides more certainty than the alternative, used in some jurisdictions,¹⁰⁰ of “in force for the time being”.¹⁰¹ This expression accords with the formulation in the relevant NSW provision.¹⁰²

5.64 Sub-clause (2) is intended to deal with the unfair operation of s 82(2) of the Bankruptcy Act 1966 (Cth) in relation to deceased estates. Under s 82(2), “demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust” are not provable in an administration under the Act. When a living bankrupt is discharged, he or she is only released from the debts that were provable in the bankruptcy.¹⁰³ This means that a bankrupt is not normally released from demands in the nature of unliquidated damages arising from, for example, negligence in tort. However, in the case of a bankrupt deceased estate, the bar on such claims effectively operates for all time. The National Committee, therefore, proposed the inclusion of a provision, based on one in WA,¹⁰⁴ that overrides the effect of s 82(2).¹⁰⁵

5.65 Sub-clause 512(3) makes some necessary adaptations of the relevant bankruptcy rules to administration under the model legislation. In particular, it provides that a reference in the bankruptcy rules to the date on which an order for administration under the rules was made, or the date on which that administration commenced, is to be read as a reference to the deceased’s date of death. The National Committee noted that it was not necessary to include a reference to the date of a sequestration order¹⁰⁶ since the Bankruptcy Act¹⁰⁷ already provides that such a reference is to be read as a reference to an order for administration of an estate under that Act.¹⁰⁸

5.66 In cl 512(4), the term “bankruptcy rules” is defined to mean provisions of the Bankruptcy Act 1966 (Cth) that apply in relation to the administration of the estate of a deceased person. The National Committee preferred this formulation, which derives from s 57(b) of the Succession Act 1981 (Qld), because the bankruptcy rules that are thus imported will be “framed in terms that are more appropriate in the context of the administration of [an] estate”.¹⁰⁹ The current NSW provision contains a reference to the more general “law of bankruptcy with respect to the assets of persons adjudged bankrupt”.¹¹⁰

5.67 This model provision differs from the provisions in most Australian jurisdictions, including NSW,¹¹¹ in that it does not purport to give priority to the payment of funeral, testamentary and administration expenses. The National Committee noted the priority given in such provisions is “to a large degree, illusory”, for example, because of the payment of certain liabilities that arise under the Child Support (Registration and Collection) Act 1988 (Cth), and the Income Tax Assessment Act 1936 (Cth).¹¹² The National Committee considered it “more important to maintain consistency with the priorities that apply under the Bankruptcy Act 1966 (Cth) unless there is a compelling reason to depart from those priorities”.¹¹³

5.68 The adoption of the priorities that apply under the Bankruptcy Act 1966 (Cth) renders unnecessary provisions, such as s 82 of the Probate and Administration Act 1898 (NSW), that abolish the old common law priorities in relation to the payment of debts.¹¹⁴

513 Preference, right of retainer and the payment of debts by personal representatives

(1) A personal representative’s right to prefer creditors and right of retainer are abolished.

(2) A personal representative—


(a) must pay the debts of the deceased person’s estate rateably according to the priority required by law; and

(b) must not—


(i) exercise any right to give preference as between creditors of the deceased person’s estate of equal standing; or

(ii) prefer his or her own debt only because he or she is the personal representative.

(3) However, a personal representative who, acting genuinely, pays an amount to a creditor is not liable to account to a creditor of equal standing to the paid creditor for the amount paid to the paid creditor if—

(a) it subsequently appears that the estate is insolvent; and

(b) the personal representative—


(i) if subparagraph (ii) does not apply—pays the debt of any person, including himself or herself, who is a creditor of the estate; or

(ii) if the personal representative is a person to whom a grant of letters of administration has been made only because he or she is a creditor of the estate—pays the debt of another person who is a creditor of the estate.

(4) In this section—

acting genuinely, in relation to a personal representative, means acting in good faith and at a time when the personal representative has no reason to believe that the deceased’s estate is insolvent.

5.70 The National Committee recommended the abolition of rights of preference and of retainer, preferring instead that all debts of equal priority should be paid proportionately.¹¹⁷ In making this recommendation, the National Committee noted that the protection of a personal representative who paid creditors before the full liabilities of the estate is known is no longer a valid reason for retaining the right of preference.¹¹⁸ It also noted the observation of the Law Commission of England and Wales¹¹⁹ that advertising an intention to distribute was now the method by which personal representatives protected themselves from unknown claimants.¹²⁰ The National Committee also noted the Law Commission’s view that the traditional reason for the right of retainer, namely that a personal representative required compensation for his or her inability to sue the estate and thus convert his or her claim into a judgment debt, is no longer relevant because judgment debts are no longer payable in priority to others and the abolition of the right of retainer would not impact on a personal representative’s right to pay his or her debt proportionately with the others.¹²¹

5.71 Sub-clause 513(2) follows the National Committee’s recommendation that the model legislation should not simply abolish the two principles by name, but should also state the obligations of the personal representative following the abolition.¹²²

5.72 However, cl 513(3) protects a personal representative from claims of creditors if he or she pays other creditors at a time when he or she had no reason to believe the estate was insolvent. This provision is based on s 58(2) of the Succession Act 1981 (Qld).¹²³ Both the Queensland Law Reform Commission and Law Reform Commission of Western Australia have previously recommended similar provisions, recognising that a personal representative might well pay debts in good faith and without knowledge of an impending insolvency.¹²⁴ The National Committee considered that, in these circumstances, it is “difficult to argue that the personal representative should generally be in a worse position than other creditors”.¹²⁵ However, cl 513(3)(b)(ii) makes special provision for a personal representative who holds office merely by reason of being a creditor to the estate, so that such a personal representative is only protected when he or she pays another creditor and not when he or she pays him or herself.¹²⁶ The National Committee was of the view that such a provision “provides an added degree of protection to other creditors in circumstances where the personal representative may be more likely to suspect that an estate is insolvent”.¹²⁷

1. See Harriton v Macquarie Pathology Services Pty Ltd (No 3) (unreported, NSW Supreme Court, Harrison M, 7 July 1998) 71-75. See also E V Williams, A Treatise on the Law of Executors and Administrators (12th edition, Sweet and Maxwell, London, 1930) vol 2, 1240.

2. The National Committee considered cl 201 necessary because it “clarifies the basis on which a personal representative is entitled to call for the appointed property” when the personal representative must sell appointed property in order to satisfy the debts of the estate: Queensland Law Reform Commission, Administration of Estates of Deceased Persons: Report of the National Committee for Uniform Succession Laws to the Standing Committee of Attorneys General, Report 65 (2009) (“QLRC, Report 65”) [10.164].

3. Probate and Administration Act 1898 (NSW) s 46A(1).

4. Probate and Administration Act 1898 (NSW) s 46A(1).

5. QLRC, Report 65 [15.20].

6. QLRC, Report 65 [15.33], [15.36].

7. See Chapter 5 part 4.

8. QLRC, Report 65 [17.34].

9. QLRC, Report 65 [17.37].

10. QLRC, Report 65 [17.40].

11. QLRC, Report 65 [17.63]. See also Queensland Law Reform Commission, The Law Relating to Succession, Report 22 (1978) (“QLRC, Report 22”) 42.

12. QLRC, Report 22, 42. See also QLRC, Report 65 [17.75].

13. QLRC, Report 65 [17.68], [17.75].

14. QLRC, Report 65 [17.71].

15. See, eg, Probate and Administration Act 1898 (NSW) s 46C(2), sch 3 pt 2 class 3 and 4.

16. QLRC, Report 65 [17.68].

17. See para S3.34.

18. See Succession Act 1981 (Qld) s 55, s 59(1).

19. Probate and Administration Act 1898 (NSW) s 46C(2), sch 3 pt 2 class 1 and 2.

20. QLRC, Report 22, 40.

21. See, eg, Succession Act 2006 (NSW) s 42(2).

22. QLRC, Report 65 [17.47].

23. Succession Act 1981 (Qld) s 59(1).

24. QLRC, Report 65 [17.89].

25. W A Lee and A A Preece, Lee’s Manual of Queensland Succession Law (5th edition, LBC Information Services, 2001) [1115].

26. That is, they are ranked with assets in class 6 under Probate and Administration Act 1898 (NSW) sch 3 pt 2: R S Geddes, C J Rowland, and P Studdert, Wills, Probate and Administration Law in New South Wales (LBC Information Services, 1996) 388.

27. Succession Act 1981 (Qld) s 59(1).

28. QLRC, Report 65 [17.113].

29. Probate and Administration Act 1898 (NSW) s 46C(2), sch 3 pt 2 class 6.

30. See QLRC, Report 65 [18.25].

31. QLRC, Report 22, 43.

32. QLRC, Report 65 [18.76].

33. QLRC, Report 65 [17.119].

34. Probate and Administration Act 1898 (NSW) s 46C(2).

35. QLRC, Report 65 [17.130].

36. See Succession Act 2006 (NSW) s 8.

37. QLRC, Report 65 [17.129].

38. Succession Act 1981 (Qld) s 59(1) Class 4.

39. QLRC, Report 65 [17.102].

40. QLRC, Report 65 [17.103]. This went against the Law Reform Commission of Western Australia’s recommendation that a donatio mortis causa should not be available as a last resort to meet an estate’s debts: Law Reform Commission of Western Australia, The Administration of Assets of the Solvent Estates of Deceased Persons in the Payment of Debts and Legacies, Report, Project No 34 pt 7 (1988) [5.17], [6.2].

41. Calcino v Fletcher [1969] QdR 8, 23.

42. QLRC, Report 22, 43. The Law Reform Commission of Western Australia has supported this reform: Law Reform Commission of Western Australia, The Administration of Assets of the Solvent Estates of Deceased Persons in the Payment of Debts and Legacies, Report, Project No 34 pt 7 (1988) [4.39].

43. Nield v Fowler [1961] NSWR 85, 91.

44. QLRC, Report 65 [17.137].

45. QLRC, Report 22, 44. See cl 505-509.

46. QLRC, Report 65 [17.216].

47. QLRC, Report 65 [17.232].

48. See cl 502; para 5.14-5.16.

49. This overcomes the problem that pecuniary legacy is not currently defined for this purpose in NSW: R F Atherton and P Vines, Australian Succession Law: Commentary and Materials (1996) [18.7.6].

50. See cl 506 and cl 507.

51. QLRC, Report 65 [18.46]-[18.47].

52. QLRC, Report 65 [18.67].

53. QLRC, Report 22, 42.

54. Probate and Administration Act 1898 (NSW) sch 3 pt 2, class 1, 2 and 5.

55. In light of the proposed changes to the statutory order, the Queensland Law Reform Commission did not consider it necessary to make separate provision for the pecuniary legacies fund: QLRC, Report 22, 42.

56. See QLRC, Report 65 [18.80]-[18.81].

57. The Locke King legislation encompassed provisions in the Real Estate Charges Act 1854 (Eng); Real Estate Charges Act 1867 (Eng); and Real Estate Charges Act 1877 (Eng).

58. See cl 502.

59. QLRC, Report 65 [17.161].

60. QLRC, Report 65 [17.161]. See also New South Wales Law Reform Commission, Uniform Succession Laws: Administration of Estates of Deceased Persons, Discussion Paper 42 (1999) [15.147] where the National Committee suggested that any changes to the traditional formulation would be disruptive.

61. QLRC, Report 65 [17.145].

62. QLRC, Report 65 [17.227]-[17.228]. See para 5.13.

63. See QLRC, Report 65 [17.155].

64. QLRC, Report 65 [17.186].

65. QLRC, Report 65 [17.189]. The NSW provision is in Conveyancing Act 1919 (NSW) s 145(1).

66. QLRC, Report 65 [17.184].

67. QLRC, Report 65 [17.181]. See also Law Reform Commission of British Columbia, Wills and Changed Circumstances, Report 102 (1989) 59-60.

68. The NSW provision is in Conveyancing Act 1919 (NSW) s 145(1).

69. See para 5.26.

70. Conveyancing Act 1919 (NSW) s 145(2).

71. Conveyancing Act 1919 (NSW) s 145(1).

72. R A Woodman, Administration of Assets (2nd ed, Law Book Company, 1978) 93.

73. Law Reform Commission of Western Australia, The Administration of Assets of the Solvent Estates of Deceased Persons in the Payment of Debts and Legacies, Report, Project No 34, pt 7 (1988) [3.29].

74. Succession Act 2006 (NSW) s 8.

75. QLRC, Report 65 [17.200].

76. QLRC, Report 65 [17.228].

77. See para 5.42.

78. Lutkins v Leigh (1734) Cases T Talbot 53; 25 ER 658.

79. See para 5.13.

80. Re Smith [1899] 1 Ch 365, 371; Re McIntosh (No 2) (1902) 2 SR (NSW) Eq 247, 253; Law Reform Commission of Western Australia, The Administration of Assets of the Solvent Estates of Deceased Persons in the Payment of Debts and Legacies, Report, Project No 34 pt 7 (1988) [3.43].

81. QLRC, Report 65 [18.90].

82. QLRC, Report 65 [17.233], [17.236].

83. QLRC, Report 65 [17.237].

84. Permanent Trustees Co of NSW Ltd v Royal Prince Alfred Hospital (1944) 45 SR (NSW) 339; Walford v Walford [1912] AC 658, 662-663.

85. Donovan v Needham (1846) 9 Beav 164, 167; 50 ER 306, 307.

86. See Re Wyles; Foster v Wyles [1938] Ch 313, 315-316.

87. See also QLRC, Report 65 [18.105], [18.117]-[18.118].

88. Probate and Administration Act 1898 (NSW) s 84A(1) and (3).

89. New South Wales Law Reform Commission, Uniform Succession Laws: Intestacy, Report 116 (2007) [4.61]. The proposed provision has now also been adopted in Probate and Administration Act 1898 (NSW) s 84A(3).

90. Succession Act 1981 (Qld) s 52(1)(e); Probate and Administration Act 1898 (NSW) s 84A(1).

91. QLRC, Report 65 [18.124].

92. Bankruptcy Act 1966 (Cth) s 247.

93. QLRC, Report 65 [16.64].

94. QLRC, Report 65 [16.62], [16.63]. See also Law Reform Commission of Western Australia, Administration of Deceased Estates: Administration of Deceased Insolvent Estates, Working Paper, Project No 34, pt 3 (1977) [86].

95. QLRC, Report 65 [16.64].

96. QLRC, Report 65 [16.69]. The provision is derived, in part, from Administration and Probate Act 1929 (ACT) s 41C(2) and Administration and Probate Act (NT) s 57(2).

97. Probate and Administration Act 1898 (NSW) s 46C(3).

98. QLRC, Report 65 [16.75]-[16.76].

99. QLRC, Report 65 [16.86].

100. See, eg, Succession Act 1981 (Qld) s 57(b).

101. QLRC, Report 65 [16.88].

102. Probate and Administration Act 1898 (NSW) sch 3 pt 1 class 2.

103. Bankruptcy Act 1966 (Cth) s 153.

104. Administration Act 1903 (WA) sch 5 cl 2.

105. QLRC, Report 65 [16.104]-[16.105].

106. As is the case under Probate and Administration Act 1898 (NSW) sch 3 pt 1 class 2.

107. Bankruptcy Act 1966 (Cth) s 248(3)(a).

108. QLRC, Report 65 [16.92]-[16.93].

109. QLRC, Report 65 [16.87].

110. Probate and Administration Act 1898 (NSW) sch 3 pt 1 class 2.

111. Probate and Administration Act 1898 (NSW) sch 3 pt 1 class 1.

112. QLRC, Report 65 [16.112]-[16.113].

113. QLRC, Report 65 [16.115].

114. QLRC, Report 65 [16.144].

115. Lyttleton v Cross (1824) 3 B&C 317; 107 ER 751.

116. Probate and Administration Act 1898 (NSW) s 82(2) has abolished retainer in NSW.

117. QLRC, Report 65 [16.161].

118. QLRC, Report 65 [16.157].

119. England and Wales, Law Commission, Administration Bonds, Personal Representatives’ Rights of Retainer and Preference and Related Matters, Report 31 (1970) [8].

120. QLRC, Report 65 [16.157].

121. QLRC, Report 65 [16.158] quoting England and Wales, Law Commission, Administration Bonds, Personal Representatives’ Rights of Retainer and Preference and Related Matters, Report 31 (1970) [8].

122. QLRC, Report 65 [16.168].

123. Which, in turn, was based on Administration of Estates Act 1971 (Eng) s 10.

124. QLRC, Report 22, 41; Law Reform Commission of Western Australia, Administration of Deceased Insolvent Estates, Report, Project No 34, pt 3 (1978) [2.42].

125. QLRC, Report 65 [16.181].

126. In the case of a grant to a creditor, administration bonds were used to exclude the administrator’s rights of retainer and preference: England and Wales, Law Commission, Administration Bonds, Personal Representatives’ Rights of Retainer and Preference and Related Matters, Report 31 (1970); QLRC, Report 65 [9.7].

127. QLRC, Report 65 [16.182].