Hutchinson, an Application [1984] PGLawRp 469; [1984] PNGLR 71 (19 April 1984)

Papua New Guinea Law Reports - 1984

[1984] PNGLR 71 - Application of Heather Joan Hutchinson 

[1984] PNGLR 71

N457

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

RE APPLICATION OF HEATHER JOAN HUTCHINSON

Waigani

McDermott J

18-19 April 1984

TRUSTS AND TRUSTEES - Vesting order - Real property - Partnership asset - Assignment of partnership interest prior to death - No transfer of legal estate - Nature of interest in partnership and devolution thereof - Interest of Public Curator prior to probate - Vesting order made - Vesting order does not create new interest - Consent of Minister not required - Trustees and Executors Act (Ch. No. 289), s. 29(1)(f) and (h) - Wills Probate and Administration Act (Ch. No. 291), s. 44 - Partnership Act (Ch. No. 148), s. 21 - Land Act (Ch. No. 185), s. 69.

PARTNERSHIP - Real property - Partnership asset - Vesting order sought - Assignment of partnership interest prior to death - No transfer of legal estate - Nature of interest in partnership and devolution thereof -Partnership Act (Ch. No. 148), s. 21 - Trustees and Executors Act (Ch. No. 289), s. 29(1)(f) and (h).

REAL PROPERTY - Vesting order - Partnership asset - Vesting order does not create interest - Consent of Minister not required - Land Act (Ch. No. 185), s. 69.

On an application for a vesting order pursuant to s. 29(1)(f) and (h) of the Trustees and Executors Act (Ch. No. 289) over certain real property being part of the assets of a partnership, the interest of one of the partners in which had been assigned to the applicant prior to his death, the partner having no real or personal estate within the jurisdiction:

Held

N1>(1)      Where real property is the subject of partnership assets, wherever the legal estate may be, the beneficial interest belongs to the partnership with an implied trust for sale for the purpose of realizing the assets and winding up the partnership.

In re Bourne, Bourne v. Bourne [1906] UKLawRpCh 95; [1906] 2 Ch. 427 at 432, and Re George Livanos deceased [1955] St. R. Qd. 362 at 366, followed.

N1>(2)      Where real property is the subject of partnership assets and the legal interest is vested in a deceased partner, the Public Curator, in whom a deceased’s property vests until probate or administration pursuant to s. 44 of the Wills. Probate and Administration Act (Ch. No. 291), has no interest in the partnership asset as distinct from the deceased’s interest in the partnership.

Re George Livanos deceased [1955] St. R. Qd. 362 at 367, followed.

N1>(3)      A vesting order was in the circumstances appropriate.

N1>(4)      As no new interest is created by a vesting order the approval of the Minister is not required under s. 69 of the Land Act (Ch. No. 185).

Re Strathblaine Estates Ltd [1948] 1 All E.R. 162, applied.

Cases Cited

Bourne, In re; Bourne v. Bourne [1906] UKLawRpCh 95; [1906] 2 Ch. 427.

Livanos, Re George, deceased [1955] St. R. Qd. 362.

Strathblaine Estates Ltd, Re [1948] 1 All E.R. 162

Summons

This was an application for a vesting order, in respect of real property the subject of partnership assets, and brought pursuant to s. 29(1)(f) and (h) of the Trustees and Executors Act (Ch. No. 289).

Counsel

I. Shepherd, for the applicant.

Cur. adv. vult.

19 April 1984

MCDERMOTT J: The applicant sought a vesting order over certain real property pursuant to s. 29(1)(f) and (h) of the Trustees and Executors Act (Ch. No. 289). I made the order on 19 April 1984 and now publish my reasons.

The application arises from an assignment for consideration by William Henry Johns of his interest in a business partnership known as South Pacific Beverages (Madang), to his daughter, Heather Joan Hutchinson, on 1 January 1980. In February 1982, a new partnership agreement was entered into by Mrs Hutchinson with the other three partners following Mr Johns’ death on 31 January 1982. He died leaving no real or personal estate in this country. It is submitted he was the trustee of his tenant in common partnership interest in real property for the assignee.

The partnership contracted with Rabtrad Madang Pty Ltd in October 1983 to sell all the partnership assets. Completion is conditional upon the partners producing to the purchaser transfers of the various properties in registrable form. As Mr Johns’ name still appears on the title deeds, substitution of Mrs Hutchinson’s name for that of her father on the title deeds is required.

Pursuant to a vesting order, the Registrar of Titles can give effect to it by altering the title deeds (s. 111 of the Land Registration Act 1981). Until probate or administration is granted, the deceased’s property vests in the Public Curator, (s. 44 of the Wills Probate and Administration Act (Ch. No. 291)) but, he considers, and has stated in affidavit, that he has no interest and, if held to be entitled, would renounce in favour of the legal representative. Mrs Johns is such person and she resides out of the jurisdiction.

Does the legal personal representative have an interest? I have been referred to s. 21 of the Partnership Act (Ch. No. 148) and to In re Bourne, Bourne v. Bourne [1906] UKLawRpCh 95; [1906] 2 Ch. 427 at 432 and Re George Livanos Deceased [1955] St. R. Qd. 362 at 366 where the following from the earlier case was cited as the legal position:

“It is to be borne in mind that the real interest of the partnership in real estate is of a personal character, because wherever the legal estate may be, whether it is in the partners jointly or in one partner or in a stranger it does not matter, the beneficial interest in the real estate belongs to the partnership, with an implied trust for sale for the purpose of realizing the assets and for the purpose of giving to the two partners their interest when the partnership is wound up and an account taken”.

The Queensland case is particularly apposite as it is dealing with statutory provisions very similar to our own in the Acts to which I have referred, in particular s. 21 of the Partnership Act (Ch. No. 148), which says as follows:

N2>(1)      Partnership property shall be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.

N2>(2)      The legal estate or interest in any land that belongs to the partnership devolves according to its nature and tenure and the general rules of law applicable to such land, but in trust, so far as necessary, for the persons beneficially interested in the land under this section.

As O’Hagan J. said (supra at 367):

“Section 23 [equivalent to s. 21] gives statutory recognition to the trusts of which Romer L.J. speaks in In re Bourne (supra). Subsection (2) does not create a new trust. The land is to be held for the persons beneficially entitled who are the surviving partners or the surviving partner. No other person can be said to be beneficially entitled. What passes on the deceased’s death to his administrator is not any interest in any asset of the partnership but the deceased’s interest in the partnership, which is a different thing”.

Section 21 of the Partnership Act (Ch. No. 148) in providing for the vesting of the legal estate of land held by a deceased partner says that the legal estate is to devolve according to law. The relevant law is found elsewhere and I have already referred to it.

It is clear to me that reliance upon a vesting order will enable the sale of the partnership property to be concluded. The applicant seeks an order to vest the property in the remaining partners. That too appears to be the practical solution.

There is one further consideration — whether the approval of the Minister for certain dealings as required by s. 69 of the Land Act (Ch. No. 185) is necessary. It is submitted that no new interest is created by a vesting order and the section is not applicable to the transaction which will affect the present title deed. I have been referred to Re Strathblaine Estates Ltd [1948] 1 All E.R. 162 where the company was voluntarily wound up but certain real estate owned by it was not transferred to shareholders in accordance with an earlier resolution. A vesting order was sought in respect of the legal interest in the unsold property which was held to be in trust and was not determined by the dissolution. A new legal estate was not created. That case is analogous to what is before me.

I therefore, order that the interest of William Henry Johns as tenant in common of the partnership properties vest in the partners, Madang Lollywater Pty Ltd, Thurston Holdings Pty Ltd, and Thomas William Abberton.

Orders accordingly.

Lawyers for the applicant: Beresford Love Francis & Company.