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House of Assembly - Fifty-Third Parliament, First Session (53-1)
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Administration and Probate (Removal of Requirement for Surety) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 21 May 2014.)

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (12:29): I rise to speak on the Administration and Probate (Removal of Requirement for Surety) Amendment Bill 2014. It seems that in this morning's debate we move from entitlement to a title to entitlement to property, and this is what the principal act is all about: that is, ensuring that people's estates are distributed either according to their testamentary intent—usually in the form of a will—and/or to be administered according to the law where a person does not leave a valid will; the default provisions as set out in the law will then apply.

It is an important area of our law because it sets out the rules for the administration of the estates of deceased persons. In my experience—and it is probably that of others—there are few things that bring out the worst in people more than the distribution of estates and the grief that it sometimes causes in families, apart from the extraordinary amount of energy and time and tears that are invested in the distribution of estates. Even if the will of the deceased person or the testator is crystal clear, unfortunately there are few of areas of litigation which bring such pain and such zealous application of people to bear.

I think it is regrettable, but unfortunately emotions often run high, family rivalries and historical relationships seem to bubble to the top, we have an incredible amount of litigation, and a lot of pain is suffered. Tragically, I think that in a number of situations some families are fractured for the life of those who are left. The law tries to handle this as best it can so it sets out a regime of how it is to work. Essentially, it means that if you have a valid will—and assuming for the moment that there has been either no dispute, or if there has been a dispute it has been settled—as to the validity of other wills, you end up with one valid will.

We have a probate process where in certain circumstances—such as the existence of real property as a part of the estate—there is a process to go through for the Supreme Court to declare that that will is the valid will to be probated and therefore to be declared the official text as to how the estate is to be distributed. Then there are processes that go through that. So we have a special regime for that and we have a special regime for a court to declare how an estate is to be administered and who is to be appointed as the administering party for an estate where no valid will has been left at all, or left standing.

It is quite an extensive area of the law and it is complemented by the Inheritance Family Provision Act which sets out another regime of law to deal with people who are usually not in the will and want to challenge it and want to be able, in certain circumstances, to satisfy a court that they should have a legitimate share, or make some challenge to a portion of the estate. So it is complex and it is fuelled with emotion when it comes to disputes in this area, and I do not think that is going to change.

One of the ways that the management of this difficult area is aided is to have trustees, executors and administrators of these estates who are either appointed by virtue of the testators leaving that in their will or, ultimately, by court, to provide for a person or entity to have the responsibility of management. So, to facilitate the dispute resolution through a court or through some mediation, and then ultimately when the dust has settled or a court has made the determination, to have the responsibility to administer the estate—these are very important roles.

Obviously where there is some friction or level of emotion amongst the prospective beneficiaries in these cases, sometimes the person who is appointed to be in charge is under enormous pressure. They should not be, but sometimes they are a member of the family to which the dispute relates and so some extra resilience is needed for that person if they are in that role. Sometimes the court appoints an institutional entity—the Public Trustee or a private executor company or a person who is not a blood relative of the deceased, but an accountant or someone else who has a role to play in the administration.

One of the things that the law has historically done is made sure that if you are going to be an administrator or a trustee or an executor you have to comply with certain standards, the first of which is that you are not allowed to run away with the money. There are a whole lot of things that sit underneath that, obviously, but we understand the point, that is, that you have a responsibility, and the law imposes on you a certain obligation, to ensure that you diligently apply the terms of the judgment of the will document to ensure that it is distributed ultimately in accordance with that.

There may be lawful deduction of fees necessary for the persons who are employed to identify assets, value assets, transfer assets and the like, and that is usually a myriad lawyers and others who come into that role. But, nevertheless, you are the person in the end, either on behalf of an entity or individually, who has an obligation to do that. The Trustee Act, for example, which sets out a whole lot of rules about what you should and should not do and sets out another regime of law to make sure people in these roles do the right thing.

I think most people want to do the right thing. Some people do not understand the complexity of it or, having understood the complexity of it, a very small portion I think are tempted into getting some benefit themselves that they should not. When maladministration occurs when somebody is either tempted or has, in fact, had a clear intention to take what should not be theirs, then the lawful beneficiaries miss out in some way. Therefore, we have had in the past a provision for surety guarantees and for administration bonds etc.

So that is the history of this. The bill that is before us now (I think it came through from the Legislative Council) had its origin in making amendment to the law that relates to the Administration and Probate Act from the South Australian Law Reform Institute's recommendations. They provided a report titled, Sureties' guarantees for letters of administration' that was released on 23 October last year.

That report set out a significant summary of the current situation in respect of the protection of the management of estates when they are distributed, and identified some weaknesses. One of them, particularly, was the law in relation to the securities that are provided by guarantee. So, this bill has taken from that report only a small portion of what has been recommended, I think, but nevertheless not an unimportant one, extracted that recommendation and translated it into this bill.

Specifically the bill then will amend the principal act to which I have referred—the Administration and Probate Act 1919—to implement the first set of the reforms of the report to which I have referred, and remove specifically in the act the requirement and references to surety guarantees. The laws, as I have indicated, requiring a form of security against maladministration in South Australia, as currently enacted in the principal act, provide for an administration bond.

In 2003 the act was amended, first, to replace the requirement for an administration bond with the requirement for a guarantee and, secondly, to allow the Supreme Court to dispense with the requirement for a surety guarantee where satisfied that it is 'beneficial or expedient to do so' and requires a further or additional guarantee or a reduction in the amount guaranteed. The necessity, historically, to have a bond and then to have a guarantee with this escape clause via Supreme Court declaration, is obvious (and I hope I have adequately covered the reasons for the origin of this): to ensure that we protect against those small number of persons who might abuse or be overly tempted to dip their fingers into the pool of asset and take what should not be theirs. We have had this historical provision and it has developed along this way.

However, what has actually happened, on our understanding, in practice is that in almost all cases with an application the court takes advantage of the amendment and dispenses with the requirement altogether, or significantly reduces the amount of the guarantee. Sometimes there is apparently the appointment of a different administrator, a support or another administrator so that there is protection by having a dual person—like having a second signatory to a cheque account with the bank, so even if tempted or one has the opportunity and the will, they are barred from being able to do it, because they cannot get pass that threshold. I suppose you could forge the signature, but I am not here to give people ideas.

I just make the point, though, that we have had a significant relaxation, and this is one of the problems that happens as a result of a few people doing the wrong thing and everyone having to be burdened in this area of the law. Most people eventually have to deal with it one way or another amongst their family. Some escape having to deal with it, but in the end everyone is going to die, and somebody has to deal with what has to be resolved, even if they die a pauper.

We need to understand that we have developed a regime that has been unnecessarily oppressive for the overwhelming majority of people who do the right thing, who want to do the right thing and will continue to do the right thing. They were required originally either to put up a bond or, more recently, provide a surety, or go through the process of going off to the Supreme Court to get exemption to be able to press their case that they are a good, trustworthy, reliable administrator and that there are other means by which there can be protection.

I think the second reading contribution was by the Attorney. At least the first paragraph of it was; the rest was incorporated. I am not quite sure how that works when it starts in the other place, but I think at some stage we received it from the other place; somewhere along the line, the Attorney has given a second reading speech on it. I say that in the full knowledge that I am probably admitting I have not read your special contribution, Attorney, to this debate, but I am sure it is pretty similar to what was said in the other place. In any event, what we are told by the government is that there is really no evidence that anyone in South Australia has suffered a loss from an administrator acting wrongfully or that anyone has enforced a surety guarantee.

Unsurprisingly, the South Australian Law Reform Institute was asked to identify areas of succession law that were most in need of review. I think this is a quick and easy one to deal with. They identified it as being unnecessary and presented this for our consideration. The institute has recommended that, in the interest of effective administration of deceased estates, this reform should not wait upon the preparation of other amendments for reform which are more complex and will need attention to detail.

As I understand it, through some announcement (I cannot recall whether it was in this house or through a press release when the report was published) the government have indicated that they will look at the Law Reform Institute's work and the recommendations they have made, but this is one which they say you can press ahead with. Its individual attention and resolution of the ill to be cured as such, and the costly process that it would avoid, can be done now and done without having an adverse effect on other reform that will follow, we hope, from the other recommendations and the work they have done.

I thank the Law Reform Institute for the work on its report, and Professor John Williams, as director as at November last year, provided the opposition with a copy. I thank him and the institute for their continued work in this area and look forward to reading other contributions they will make. I think the institute is going to survive the budget in a couple of days—I certainly hope so. I think it still operates from the Adelaide Law School at the University of Adelaide. It is an important institution to South Australia and has been one that was consistent with Liberal Party policy in the time I have been here, so I am pleased that the government did ultimately provide an institute so that we could have law reform carefully examined and presented in a non-political way by the institute for our consideration.

All too often, I pick up The Advertiser—our only daily newspaper—or go online to find an announcement of the government by press release about what needs to be done or about what they are going to do to cure some social ill, in a fairly flamboyant and alarmist way often, which is disappointing. I think that we should be looking at law reform in a way that protects all South Australians but also understands that we do not make legislation in here as a knee-jerk reaction to persons, who may be in a very small minority of victims, and subsequently impose a wall of obligation on the whole community because of the conduct of a few that has affected a few.

In the 12 years I have been here that is something we have repeatedly done, and it always concerns me, not because we do not act in a way to try to protect those who might have fallen foul of someone's inappropriate or antisocial behaviour by making it illegal or by making it more difficult to be able to carry out certain behaviour by everybody, but just to do with that without looking at other options about how we might deal with that I think is a shame. So I value the work of the institute; I think it is important.

This report on succession law, apart from some minor amendments that were presented by the former attorney, was the first time I can recall when there has been a comprehensive review of our succession law. From time to time we have had to deal with the Public Trustee in South Australia, usually sadly because of some adverse report on the behaviour of one or others in it. As to actually reforming our succession law, which is really important to so many people in the public, I think it has been hopelessly ignored.

One person I can think of who was a very strong advocate for this was David Haines QC, who passed away recently. Year after year he would say to me, 'Why isn't the parliament, Vickie, dealing with fixing up our laws in this area?' All this oxygen is going into bikie legislation, confiscating assets, cranking up the sentencing in our criminal law, yet no-one is giving any attention to the area of law which actually affects most people on a day-to-day basis.

I think it is timely that we have this legislation; I thank the Attorney for bringing it, having been alerted to it by the institute, and I thank the institute for its continued hard work. I am pleased to see by the nod of the Attorney that it is going to survive the announcements on Thursday. I think its work is valuable and long live its providing of law reform advice to South Australia.

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice Reform, Minister for Planning, Minister for Housing and Urban Development, Minister for Industrial Relations) (12:52): I thank the honourable member for Bragg for her contribution. I want to say a couple of things about it. First, I hope this augurs well for the new role the honourable member has as shadow attorney because already today we have an ecumenical moment where the two of us are here, we are of the same mind, we are both wishing to congratulate the Law Reform Institute, and I join with the member in saying what a great job they are doing.

The honourable member might be interested to know that the actual genesis of the Law Reform Institute, as far as I am aware, came to me as a member of the Law Foundation when Justice David Bleby, as he then was, came to the Law Foundation some years ago asking for money for the establishment of a law reform body, and he made a very compelling argument for it, but unfortunately the funds were not available on a recurrent basis from the Law Foundation. There would have been an initial grant but not a recurrent one, and that strong representation made by Jonathan Wells QC along with Justice Bleby stuck with me.

When I was fortunate enough to become Attorney, I started a conversation with the University of Adelaide and the Law Society with a view to having this tripartite arrangement which is now operating and which, as the honourable member for Bragg said, operates very well out of Adelaide University. I also take my hat off to Professor Williams who has done an excellent job, as have his staff and the students who work there—they have done a great job.

One of the fantastic things about the institute, from my point of view, and I am sure the member for Bragg will share this enthusiasm, is that we have academic people, we have people who are practical lawyers who are engaged through the Law Society, and I pay particular tribute to Mr Ray Frost, who is actually a driving force in this particular area—

Ms Chapman interjecting:

The Hon. J.R. RAU: Is he your lawyer?

Ms Chapman interjecting:

The Hon. J.R. RAU: He is—

Ms Chapman: Not probate yet, but—

The Hon. J.R. RAU: No, I have to confess that if I have anybody who has an issue about wills or anything I always say, 'Go to see Ray. He's brilliant.' I was talking to Ray one day and I said, 'Surely, you have some stuff that you are interested in,' and he said, 'Yes, nobody ever pays any attention to us. They think we are all just sitting in a cupboard.' I would like to acknowledge the work of Ray and his team in the Law Society. They have a subcommittee called probably something like 'succession and probate', which I think Ray chairs; they have done a fantastic job, and it is a great credit to them that this work is being done.

There is a virtual circle here: we have these dedicated practitioners putting forward good ideas, we have academics working them, and also students who get the opportunity to work in what is real legal research leading to real outcomes. Today, for the first time, that circle has come all the way around—from an idea to a project to an interaction between all these people to a recommendation coming to me, that recommendation going to the people in policy and legislation, the people in policy and legislation taking it to parliamentary counsel, parliamentary counsel giving it to me, we bring it into parliament, the parliament debates it and today it will pass.

I would like to congratulate the Law Reform Institute on having achieved what I think is its first major victory. It will be one of many to come. I can assure the member for Bragg that we will be following up those other recommendations from the probate area. It is my intention to bring as many recommendations as possible from the institute to the parliament so they are given decent hearing.

I note the remarks of the member for Bragg about how important it is to have an apolitical thinking body out there, not formulating policy in the heat of the moment but working it through. We are doing some very exciting work in the privacy area, which I hope the member for Bragg will be equally enthusiastic about when it comes here. I think it is fabulous that this is going through and I very much appreciate the support of the opposition. I am sure all those involved in the institute will be absolutely delighted when they read Hansard and see how highly regarded their work has been.

Bill read a second time.

Third Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice Reform, Minister for Planning, Minister for Housing and Urban Development, Minister for Industrial Relations) (12:57): I move:

That this bill be now read a third time.

Bill read a third time and passed.

Sitting suspended from 12:58 to 14:00.

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