Equity & the Intestacy of a Beneficiary prior to distribution

As a law student I remember my first week of Equity very clearly. The first case that we studied was Commissioner of Stamp Duties v Livingston [1965] AC. Prior to studying succession law I was perplexed by the decision of the Privy Council regarding the interest held by the widow who was a named beneficiary but died intestate prior to the completion of administration by the executors named in the Will.

Hugh Livingston died in New South Wales in 1948 with real and personal property in both New South Wales and Queensland. Hugh left one-third of his estate (”the estate”) to his widow Jocelyn; who died intestate in New South Wales before the estate could be fully administered, following remarriage, and having taken her new husband’s surname, becoming the late Mrs Jocelyn Coulson.

Upon death a Will Maker’s estate automatically vests with their executors until administration has been completed and the estates assets have been distributed to the beneficiaries named in the Will.

Hugh’s executors held his property as they had not completed administration therefore they could not transfer the residue of the estate to the trustees to hold on trust for Jocelyn.

At the time under Queensland’s tax law, succession duty would be payable on all of Hugh’s Queensland property on both his and Jocelyn’s death if she held a “beneficial interest” in the Queensland property.

Beneficial ownership is an equitable interest in the economic benefit of the property; beneficial owners have a right to income from the property including the proceeds of sale. Legal owners (not always the same as the beneficial owners) hold the beneficial ownership on trust for the beneficial owners.

Equity – the short answer

Equity provides remedies in situations in which precedent or statutory law might not; Equity arose following from common-law courts limited relief in civil cases to the payment of damages, the recovery of property, or both, refusing to extend relief to meet the needs of new and more complex situations.

As early as the thirteenth century the Kings common law courts were limited in providing restitution. Aggrieved litigants sought more effective justice by petitioning the King with the petitioners being referred to the King’s principal minister, the Lord Chancellor; by the middle of the fourteenth-century petitioners approached the Lord Chancellor directly, leading to the Court of Chancery being recognized as a distinct court that fashioned novel equitable remedies

Privy Council

The Privy Council had to decide whether Joycelyn had a beneficial interest in Hugh’s Queensland Property when it was being held by the executors; finding Jocelyn was not entitled to any beneficial interest in any property in Queensland at the date of her death. However Jocelyn was entitled to a chose in action in respect of her rights under Hugh’s will, capable of being invoked for any purpose connected with the proper administration of his estate.

A Chose in action is an intangible property right which can only be claimed or enforced by (legal) action.

A beneficiary under an estate has no interest in the property to be administered, but only a right to require the estate to be duly administered, and to receive an appropriate proportion of the nett estate.

The estate of a deceased comes to the executor ‘virtute officii . . in full ownership, without distinction between legal and equitable interests’ but they hold the estate ‘for the purpose of carrying out the functions and duties of administration, not for [their] own benefit’.

The question was whether Jocelyn’s share in Hugh’s real and personal estate in Queensland, a share that had devolved on her death to those entitled under her intestacy, was subject to Queensland succession duty.

The Privy Council held that Jocelyn did not have a beneficial interest and therefore no succession duty was payable on her death.

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