Management of Mental Health Patient's Estate Upheld with Modifications

The Court of Appeal reviewed the management of a person's estate under the Mental Health Act 2009, affirming the lower court's decisions with some modifications to the management of proceeds from the sale of a specific bequest.

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: [NAME] v [NAME] [2012] NSWCA 39 Hearing dates: 13 December 2011 Decision date: 19 March 2012 Before: [NAME] at [1] [NAME] at [189] Sackville AJA at [197] Decision: (1) Appeal allowed. (2) In lieu of the answer given in the court below to question 2 in the amended summons, substitute the answer: "[ADDRESS] declines to answer this question." (3) Revoke the declaration numbered 5 in the court below. (4) Replace Order 7 in the court below with:

7. The income from the [NAME] is to be retained in the [NAME], and the question of entitlement to the income is to await further determination by the [NAME] or the Court. (5) Add to the orders made in the court below:

9. Without prejudice to how the moneys spent pursuant to this order are ultimately borne between the net proceeds of sale of the shares in [COMPANY], interest that accrues on those net proceeds and other money that makes up [NAME], until further order of the court or further direction of the [NAME] moneys that are spent for PBL's benefit or on PBL's care or for the management of PBL's estate are to be paid from [NAME] other than so much of [NAME] as represents net proceeds of sale of shares in [COMPANY] and interest that accrues on those net proceeds.

10. Orders 6, 7 and 9 are in substitution for previous directions of the [NAME] concerning the setting aside of a separate fund from the proceeds of sale of the Darlinghurst garage of PBL and the manner in which that fund should be used. (6) [NAME]'s costs of the appeal on the indemnity basis to be paid from [NAME] other than the [NAME] and so much of [NAME] as represents the net proceeds of sale of shares in [COMPANY]. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: MENTAL HEALTH - management and administration of property - garage on separate certificate of title bequeathed to neighbour in [NAME] - [NAME] subsequently subject to a management order - garage sold with [NAME] by manager - where [NAME] has made an order [NAME] s 83 [NAME] and [NAME] Act 2009 for the investing of the proceeds from the sale of a [NAME] bequest in a separate fund - merely accounting device to hold in separate fund, as moneys are available for [NAME] on exhaustion of [NAME] pool of funds available for the maintenance of the person - it is generally appropriate to also segregate income and interest from the separate fund from the [NAME] pool of funds

MENTAL HEALTH - management and administration of property - garage on separate certificate of title bequeathed to neighbour in [NAME] - [NAME] subsequently subject to a management order - garage sold with [NAME] by manager - whether disposal of subject matter of bequest by manager of [NAME]'s estate adeems the bequest - found that disposal does adeem the bequest provided the disposal is effected with proper authority - manager disposed of property with authority of [NAME] and in the best interests of the [NAME] - disposal adeemed the [NAME] bequest - not necessary that the disposal be known to the [NAME] for ademption to occur

MENTAL HEALTH - management and administration of property - garage on separate certificate of title bequeathed to neighbour in [NAME] - [NAME] subsequently subject to a management order - garage sold with [NAME] by manager - whether the [NAME] had power [NAME] and [NAME] Act 2009 to order separate investment of proceeds from devised asset - [NAME] did have such power - separate investment was an appropriate action in accordance with legislative intent and proper principles of managing [NAME] - history and manner of operation of s 83 [NAME] and [NAME] Act 2009 - amendments made to orders of court below

MENTAL HEALTH - management and administration of property - management of [NAME] estate that includes real or personal property subject to [NAME] bequests - [NAME] regard to be had to maintenance of [NAME] - secondary regard to be had to preservation of bequests - to the extent that the [NAME] is properly maintained, [NAME] bequests (or their proceeds of sale) should be preserved

SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - construction and effect of testamentary dispositions - ademption of [NAME] bequest - circumstances in which sale, in [NAME]'s lifetime, of specifically bequeathed property does not adeem bequest - history of ademption generally

PRACTICE - commencement of proceedings - parties - failure to joinder parties who would be affected by a judicial opinion on the correct disposal of a [NAME] bequest for a [NAME] not yet [NAME] - these parties included [NAME] and residual beneficiaries - not appropriate in circumstances to joinder parties after conclusion of hearing - decision of court is not to bind parties not joined

WORDS AND PHRASES - "ademption" Legislation Cited: Administrative Decisions Tribunal Act 1997 An Act for consolidating and amending the Law relating to Property belonging to Infants, Femes Coverts, Idiots, [NAME] and Persons of unsound Mind" (Imp) (11 Geo IV & 1 Wm IV c 65) [NAME] Act 1987 Imperial Acts Adoption Act 1834 (5 Wm IV No 8) Lunacy Act 1879 (42 Vic No 7) (NSW) Lunacy Act 1890 (Imp) (53 Vic c 5) Lunacy Act 1898 (NSW) Lunacy Regulation Act 1853 (Imp) (16 & 17 Vic c 70) Mental Health Act 1983 (UK) Mental Health Act 2007 [NAME] Act 2009 [NAME] 2008 Powers of [NAME] Act 2003 Probate and Administration Act 1898 [NAME] Act 1983 [NAME] (17 Edw II stat 1) Succession Act 2006 [NAME] Act 1925 Wills Act 1837 (Imp). Cases Cited: [NAME] v [NAME] of [NAME] (1887) 12 App Cas 672 Banks v National Westminster Bank plc [2005] EWHC 3479 (Ch); [2006] WTLR 1693; [2005] All ER (D) 159 Brown v Heffer (1967) 116 CLR 344 [NAME] v [NAME] (NSWSC, [NAME] J, 2 March 1995, unreported) Commonwealth v [COMPANY] (1949) 79 CLR 497 Durrant v Friend (1852) 5 De G & Sm 343; 64 ER 1145 Ensor v Frisby [2009] QSC 268; [2010] 1 Qd R 146; 4 ASTLR 169 Ex parte [NAME] (1749) Amb 80; 27 ER 50 Ex parte [NAME] (1801) 6 Ves Jun 8; 31 ER 911 Ex parte [NAME] (1792) 1 Ves Jun 453; 30 ER 434 Ex parte [NAME] (1791) 1 Ves Jun 296; 30 ER 352 Ex parte [NAME] (1772) Amb 706; 27 ER 458 Ex parte [NAME] (1828) 5 Russ 154; 38 ER 985 Ex parte [NAME] (1812) 19 Ves Jun 118; 34 ER 463 Fairweather v Fairweather (1944) 69 CLR 121 Harrison v Jackson (1877) 7 Ch D 339 Holmes v Goodworth (1829) 7 LJ (Ch) 128 In re Alston [1917] 2 Ch 226 In re [NAME] (1879) 4 CPD 336 In re [NAME] [1994] 1 WLR 282 In [NAME]; Freer v Freer (1882) 22 Ch D 622 In re Harding [1934] Ch 271 In Re [NAME]'s Trusts [1919] 2 Ch 189 In re [NAME] (1887) 37 Ch D 310 In re Palmer [1945] Ch 8 In Re Palmer; National Provincial Bank v Barwell [1944] Ch 374 In re [NAME] (1882) 20 Ch D 514 In Re Silva [1929] 2 Ch 198 In Re [NAME] [1907] 1 Ch 665 In re Walker [1921] 2 Ch 63 Jenkins v Jones (1866) LR 2 Eq 323 Johnston v Maclarn [2002] NSWSC 97 Jones v Green (1868) LR 5 Eq 555 [NAME] v Newcastle City Council (No 2) [2005] NSWSC 826; (2005) 220 ALR 757 Lord Leitrim v Enery (1844) 6 Ir Eq 357 Moylan v Rickard [2010] QSC 327 Mr Justice Dormer's Case (1724) 2 PWms 262; 24 ER 723 Mulhall v Kelly [2006] VSC 407 Orr v Slender [2005] NSWSC 1175; (2005) 64 NSWLR 671 Oxenden v Lord Compton (1793) 2 Ves Jun 69; 30 ER 527 Perpetual Trustee Co (Ltd) v Robbins (1967) 85 WN (Pt 1) (NSW) 403 Pohlner v Pfeiffer (1964) 112 CLR 52 Power v Power [2011] NSWSC 288 Public Trustee v Lee [2011] QSC 409 Quinn v Leathem [1901] AC 495 R v Beserick (1993) 30 NSWLR 510 Re [NAME] (1808) Collinson on Lunacy (Reed, London, 1812) Vol 2 [NAME] (1881) 17 Ch D 241 Re [NAME] [2009] VSC 184; (2009) 25 VR 27 Re Estate of Pearl Swoyer, [NAME] 439 NW 2d 823 (SD 1989) Re Gell [2005] NSWSC 566; (2005) 63 NSWLR 547 Re [NAME]; ex parte the [NAME] (WASC, [NAME] J, 9 December 1997, unreported) Re [NAME] (1865) 6 New Reports 246 [NAME] [1996] QSC 66; [1997] 1 Qd R 110 [NAME] v [NAME]; [NAME] [2011] NSWSC 200 Shaftsbury v Shaftsbury (1716) 2 Vern 747; 23 ER 1089 Simpson v Cunning [2011] VSC 466 Taylor v Taylor (1853) 10 Hare 475; 68 ER 1014 Texts Cited: Jarman on Wills, 8th ed (1951) [NAME], Practical Treatise of the [NAME], Idiots, and Persons of Unsound Mind (London 1847) [NAME], A Concise History of the Common Law, 5th ed (1956) [NAME], A History of English Law, [NAME], 7th ed (1956) Category: [NAME] judgment Parties: PBL by her Manager RNL (Appellant) [NAME] (Respondent) Representation: Counsel [NAME]; [NAME] (Appellant) [NAME] (Respondent) Solicitors [NAME] (Appellant) [NAME] Solicitor (Respondent) File Number(s): 2011/148140 Decision [NAME] appeal Jurisdiction: 9111 Citation: [NAME] v [NAME]; [NAME] [2011] NSWSC 200 Date of Decision: 2011-03-23 00:00:00 Before: Hallen AsJ File Number(s): P37/2010

Judgment

Nature of the Case 1CAMPBELL [NAME] : This judgment concerns the manner in which the manager of the estate of an [NAME] is obliged to invest the net proceeds of sale of an asset that was the subject of a [NAME] legacy in the last [NAME] that the [NAME] made before becoming [NAME]. It also concerns the extent, if any, to which the manager is free to use the proceeds of sale of that asset for the benefit of the [NAME]. In particular, it addresses whether the manager is obliged to segregate the proceeds of sale of the asset that had been the subject of the [NAME] legacy, and to resort to those proceeds of sale to pay expenses of the [NAME] only if no other assets are available for the payment of those expenses. 2The [NAME] judge decided that the net proceeds of the specifically devised asset should be invested separately from the other assets of the estate, and resorted to only after the other assets were exhausted: [NAME] v [NAME]; [NAME] [2011] NSWSC 200. I have come to the conclusion that the result at which the [NAME] judge arrived was in broad terms correct, though I have reached that conclusion through different reasoning. I have also come to the conclusion that some aspects of the judicial advice given and declarations and orders made in the court below should be amended. 3Though this appeal requires leave, leave has already been granted.

[ADDRESS] to the Case 4Ms PBL is a lady of advanced years, who is presently [NAME] in a [NAME]. She never married, and had no children. Her only sibling was a brother, who predeceased her. That brother had three children, who are still alive. The eldest of those children is Ms [NAME]. 5On 10 January 2006 PBL was admitted to the [NAME] in which she currently resides. She is now at least 95 years old, and suffering from advanced Alzheimer's disease. 6On 31 January 2006 the [NAME] Tribunal ordered that [NAME] be subject to management, and that [NAME] be appointed manager. The terms of the order were: "1. The estate of [PBL] be subject to management [NAME] the provisions of the [NAME] Act 1983 and 2. The manager of [PBL's] estate be [[NAME]] of [address] subject to such conditions, including the giving of security, as [NAME] considers appropriate." The [NAME] 7At the time that [NAME] was appointed manager, the property of PBL consisted of: + A strata title [NAME] in Darlinghurst in which PBL had lived until being admitted to the [NAME], worth about $740,000.00 + C.B.A. Pensioner Account $35,079.32 + [NAME] Management Account $12,802.44 + [NAME] $3,000.00 + [COMPANY] $588.68 + [NAME] worth about $50,000.00 + 200 shares in [COMPANY] worth about $1,860.00

8There were three separate certificates of title for the [NAME] - one for each of the [NAME] space, a car space, and a lock-up garage. Initial Directions to the Manager 9On 7 March 2006 [NAME] issued to [NAME] an 8 page document containing directions and authorities, said to be issued pursuant to s 30 of the [NAME] Act 1983 . One of the directions was to submit a proposal within three months for the investment of PBL's estate, and to hold PBL's existing investments in their present form pending receipt of that proposal. [NAME] direction was: "Having regard to the financial resources available to [PBL] to pay on her behalf the following expenses - (a) All reasonable amounts properly incurred for the cost of [NAME] and including - (i) Accommodation; (ii) Care; (iii) Medical expenses; (b) All petty expenses necessarily and properly incurred incidental to the management of the estate ..." 10Certain other types of expenditure were also authorised. Power was conferred to lease the Darlinghurst property from time to time (subject to [NAME] submitting to [NAME] the front page of each lease entered). The document continued: "Should circumstances change which require the sale of the above property then the manager shall submit a written proposal and recommendation for the approval of [NAME] in accordance with the annexed Guidelines for Sale of Real Estate by Private Managers (Annexures "A" and "B")." 11It also provided: "Subject to the provisions of these Directions and Authorities and to any further or other order or Directions and Authorities hereafter given, the assets and liabilities of [PBL] shall not be dealt with in any manner without the prior approval of [NAME]." 12The annexed Guideline for Sale of Real Estate included: "Unless otherwise directed, the [NAME]'s share of the net sale proceeds of real estate must be lodged with [NAME] pending receipt of a proposal from the manager for the investment of the funds having regard to the provisions of Section 14C of the [NAME] Act , 1925 ." PBL's [NAME] 13On 30 July 1999 PBL had made what presently appears to be the last [NAME] that she made before becoming [NAME]. It left three legacies. It also left a [NAME] devise to a neighbour, "Mr A", of "my lock up garage for his sole use and benefit absolutely" . It left the residue to [NAME] and her two brothers. 14Of the three legacies, two were pecuniary legacies each of $6,000. The [NAME] was a [NAME] legacy to a grandnephew of "any shares held by me in [COMPANY]" . As mentioned earlier, at the time she became [NAME] owned 200 shares in [COMPANY]. As I understand it, that is the same company as [COMPANY]. If that is right, then, unless [NAME] of the shares has consented to some other course being taken, consistency in administration would suggest that the shares that were the subject of the [NAME] legacy should be dealt with in the same way as the garage that was the subject of the [NAME] devise. However, that is not a matter that I need decide. Sale of the [NAME] 15When PBL first entered the [NAME], most of her personal effects were sold, and the [NAME] was rented. However, the net rents did not meet her expenses, and her other assets were being gradually depleted to pay those expenses. 16The [NAME] gave a written direction that the real estate not be sold without Mr A being first asked for his opinion concerning the sale. When asked whether he consented to the sale, Mr A replied "[t]he answer is no, as I wish to retain the garage ..." . 17On 1 July 2009, as mentioned more fully at [40] below, [NAME] ceased to have any function in relation to [NAME], and the [NAME], sometimes referred to as the [NAME], took over what had formerly been the functions of [NAME]. The operations of the [NAME] are regulated by the [NAME] Act 2009 (" the 2009 Act "). 18Notwithstanding Mr A's opposition, the [NAME] gave permission on 21 August 2009 for the real estate to be sold. Before the sale, an officer of the [NAME] wrote to [NAME] on 24 August 2009 saying: "In due course the sale proceeds of the garage [NAME] need to be set aside, however, this does not preclude the use of the funds for [PBL's] ongoing care if required." 19The [NAME] permitted all three items of real estate to be sold as a single line, rather than separately, seemingly because it was the most effective way of maximising the return from the real estate. The contract for the sale of the real estate did not allocate the sale price between the garage and the other two items of real estate. However, all relevant parties to the present dispute have agreed, after obtaining valuations, that the garage was worth $75,000. 20Settlement of the sale of the [NAME] occurred on 20 November 2009. From the proceeds an accommodation bond of $210,000 was paid to the [NAME]. Payment of that bond had the effect of reducing the periodical charges of the [NAME] for PBL's care. 21Following the sale, on a "without prejudice" basis, [NAME] and an officer of the [NAME] agreed that $75,000 from the net proceeds should be paid into a separate account, with the balance of the net proceeds available for PBL's welfare. That had the effect that, at least at that stage, the $75,000 bore no part of the expenses associated with selling the [NAME]. [NAME] be said on this at [101] below. The Dispute Emerges 22RL sought advice from counsel about whether the [NAME] had power to require that the $75,000 be "earmarked" . That advice was to the effect that there was no such power. When informed of that advice, an officer of the [NAME] replied on 10 June 2010, saying: "We do not accept that the [NAME] cannot direct you to ensure the amount of $75,000 is set aside. Therefore, as manager, you are again directed to set aside these funds as per the previous conditions stated. I have enclosed a set of Appeal Guidelines should you not agree with this direction. Should there be no response from you within 14 days, consideration [NAME] be given to referral to the [NAME] Tribunal for a review of the management order." 23Pursuant to s 70 of the 2009 Act , and clause 43 of the [NAME] 2008 , the Administrative Decisions Tribunal (" ADT ") has power to review all decisions made by the [NAME] in connection with the exercise of the [NAME]'s functions [NAME] 1 of Part 4.5 of the 2009 Act . The enclosed Appeal Guidelines informed of the requirement, [NAME] the Administrative Decisions Tribunal Act 1997 , for a person who disagreed with a decision made by the Office to seek an internal review of that decision, and that such an internal review was a necessary prerequisite to appealing to the ADT concerning the decision. 24On 15 July 2010, [NAME] requested that an internal review occur. 25By the time the internal review was sought, the disagreement that had emerged between [NAME] (based on counsel's advice that she had received) and the [NAME], was whether s 83 of the 2009 Act required the separate preservation of the sum of $75,000. The internal review conducted by the [NAME] observed, correctly, that the rationale for the original decision of the [NAME]: "... appears to be solely based on the mandatory need to give effect to the requirements of section 83 of the [NAME] and [NAME] Act 2009 . There is no suggestion, implied or otherwise that [[NAME]] is not effectively and efficiently fulfilling the responsibilities of being the financial manager of [PBL's] affairs." Section 83 of the 2009 Act is reproduced at [48] below. 26RL was advised of the outcome of the internal review on 2 August 2010. The internal reviewer disagreed with the counsel's advice that [NAME] had obtained. The conclusion reached by the internal review was that: "a correct interpretation of section 83 of the [NAME] and [NAME] Act 2009 is that the section has immediate effect and that pursuant to subsection (5) of same the Court has reserved powers to make any orders that it sees fit to make following an application to it concerning the effect of its application on the applicant." 27The review concluded: "I have determined to affirm this decision. In so doing however, I wish to make very clear to [[NAME]] that Mr [A], in accordance with the Act is not entitled to any interest earned on the sum of $75,000 and that [PBL] if required can draw down on this sum to meet her accommodation and support needs into the future and up to the time of her death and that it is only the residue (if any) remaining that may be claimable by Mr [A] [NAME] [PBL's] [NAME]. I would however add a word of caution here. The $75,000 impacted on by section 83 of the [NAME] and [NAME] Act 2009 cannot be used by [[NAME]] as Private Manager as the first accounting 'port-of-call' to fund such costs of [PBL]. The balance of [PBL's] funds must be used first to do this." 28The direction given on 10 June 2010 had required the $75,000 to be set aside, but said nothing about whether it should be used to fund PBL's expenses only after other available assets had been applied to that purpose. Section 53(5) ADT Act provides that on an internal review the reviewer has power to affirm, vary or set aside the decision. Section 53(8) ADT Act provides that the decision on an internal review is taken to have been made by the administrator. The "word of caution" in the internal review, requiring other assets to be resorted to before the $75,000, was apparently intended to operate as a variation of the direction given on 10 June 2010. Litigation Begins 29Rather than exercise the right of appeal to the ADT, [NAME] commenced proceedings, initially ex parte, seeking judicial advice pursuant to s 63 [NAME] Act 1925 or in the alternative [NAME] s 83(5) of the 2009 Act . The court directed that the [NAME] be joined as a defendant to those proceedings. The [NAME] took an active role in them. In what I gather was an informal fashion, Mr A was given the opportunity to participate in the proceedings, but he did not do so. He is not a party to the present appeal. The Legislative Background [NAME] Act 1987 30The [NAME] Tribunal is a body established by s 49 of the [NAME] Act 1987 . In the form it had on 31 January 2006, the date the Tribunal appointed [NAME] as manager of PBL's estate, s 25E [NAME] Act empowered the Tribunal to order that the estate of a person be subject to management [NAME] the [NAME] Act 1983 . Such an order was called a "financial management order" : s 25D. 31Section 25M [NAME] Act relevantly provided: "(1) If the Tribunal makes a financial management order in respect of the estate (or part of the estate) of a person, the Tribunal may, by order: (a) appoint a suitable person as manager of that estate, or (b) commit the management of that estate to [NAME]. (2) Despite section 68(1), an order [NAME] subsection (1)(a) does not authorise the person appointed as manager to interfere in any way with the estate concerned unless: (a) such directions of the Supreme Court as are relevant to the management of the estate have been obtained, or (b) [NAME] has, [NAME] section 30(3) of the [NAME] Act 1983 , authorised the person to exercise functions in respect of the estate." [NAME] Act 1983 32The [NAME] Act has been repealed effective from 1 July 2009. However, it remains relevant to the present litigation concerning events that occurred before that repeal. 33Section 5 [NAME] Act created the office of [NAME]. [NAME] was, pursuant to s 5B of that Act, a corporation sole. 34As at 31 January 2006, section 30(3) [NAME] Act provided: "If a person is appointed by the [NAME] Tribunal [NAME] section 25M(1)(a) of the [NAME] Act 1987 as manager of the estate of a [NAME] may, by order: (a) authorise the person appointed as manager to have: (i) all, or any specified, functions necessary and incidental to the management and care of the estate, and (ii) such other functions as [NAME] may direct or authorise the manager to have or exercise, and (b) make such orders, and give such authorities and directions, of the kind referred to in section 32 or 33 as appear to [NAME] to be necessary or expedient or that [NAME] thinks fit (as if a reference in those sections to the Court were a reference to [NAME]), and (c) give the person appointed as manager such directions in respect of the orders, authorities and directions authorised by this subsection as [NAME] thinks fit." 35The relevant powers given to the Supreme Court by ss 32 and 33 as at 31 January 2006, that were also conferred on [NAME] pursuant to s 30(3)(b), were: "32(1) [ADDRESS] may make such orders as appear to it necessary for rendering the property and income of a [NAME] available for the payment of the debts of, and the maintenance and otherwise for the benefit of, the [NAME] and the family of the [NAME] and otherwise as it thinks necessary or desirable for the care and management of the estate of a [NAME]. ... (2) Without limiting the generality of subsection (1) ..., the Court may: (a) order that any property of a [NAME] ... be sold, charged, mortgaged, dealt with or disposed of as the Court thinks most expedient for the purpose of raising or securing or repaying with or without interest money which is to be or which has been applied to any one or more of the following purposes: [list of purposes] (b) authorise and direct the application of money comprising the whole or any part of the estate of the [NAME] ... to any one or more of the following purposes: ... (iii) the investment of money, being money not required for the time being for any of the foregoing purposes, in such manner as the Court thinks fit. ... 33(1) [ADDRESS] may make such orders as it thinks fit in relation to the administration and management of the estates of [NAME] .... (2) [ADDRESS] may also make such orders as it thinks fit in connection with authorising, directing, supervising and enforcing the exercise of the functions of managers [NAME] this Act." 36Section 48 of the [NAME] Act provided, as at 31 January 2006: "(1) [NAME] ..., and any other person being an [NAME], administrator or assign of a [NAME] ... shall have the same interest in any surplus money or other property arising from any sale, mortgage, charge or disposition of any property or other dealing with property [NAME] this Act as the person would have had in the property the subject of the sale, mortgage, charge, disposition or dealing, if no sale, mortgage, charge, disposition or dealing had been made. (2) The surplus money or other property arising as referred to in subsection (1) shall be of the same nature as the property sold, mortgaged, charged, disposed of or dealt with. (3) Except as provided by subsection (4), money received for equality of partition and exchange, and all fines, premiums and sums of money received upon the grant or renewal of a lease where the property the subject of the partition, exchange, or lease was real estate of a [NAME] ... shall, subject to the application thereof for any purposes authorised by this Act, be considered as real estate. (4) Fines, premiums and sums of money received upon the grant or renewal of leases of property of which a [NAME] ... was tenant for life shall be personal estate of the [NAME] ... (5) In order to give effect to this section the Court may make such orders and direct such conveyances, deeds and things to be executed and done as it thinks fit." 37Section 70A provided: "A person must not fail to comply with any direction that is given to the person by [NAME] in accordance with [NAME]'s functions [NAME] this Act." 38None of the provisions of the [NAME] Act that I have quoted changed before that Act was repealed. [NAME] Act 2009 39The 2009 Act came into effect on 1 July 2009. Section 4 repealed the [NAME] Act . Section 5 constituted a corporation called the [NAME]. Pursuant to a definition in s 3(1) that entity was also referred to in the 2009 Act as the "[NAME]" . [NAME] s 6 it has the status of a "NSW Government agency" . 40Transitional provisions in Schedule 1 of the 2009 Act have the effect, in broad terms, of putting the [NAME] into the place of [NAME] for all purposes. As the transitional provisions are not the subject of dispute in this litigation, it is unnecessary to spell out the detail of how this happens, or whether there might be any exceptions to the [NAME] position I have set out. 41Chapter 4 of the 2009 Act runs from s 38 to s 100. It deals with the management of the property and affairs of persons who are [NAME] of managing their affairs. Such a person could be a [NAME] over whom a management order [NAME] the [NAME] Act is in force, a patient (within the meaning of the Mental Health Act 2007 ) whose estate is subject to management [NAME] the 2009 Act , or a [NAME] (cf Re Gell [2005] NSWSC 566; (2005) 63 NSWLR 547). 42Section 39 relates to the whole of Chapter 4 of the 2009 Act : "It is the duty of everyone exercising functions [NAME] this Chapter with respect to [NAME] or patients to observe the following principles: (a) the welfare and interests of such persons should be given paramount consideration, (b) the freedom of decision and freedom of action of such persons should be restricted as little as possible, (c) such persons should be encouraged, as far as possible, to live a normal life in the community, (d) the views of such persons in relation to the exercise of those functions should be taken into consideration, (e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised, (f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs, (g) such persons should be [NAME] from neglect, abuse and exploitation." The [NAME] Act had not contained any analogous explicit statement of objectives. 43Division 2 of Part 4.5 of the 2009 Act runs from s 63 to s 70. Section 63 provides: "This Division applies in respect of the estate of a [NAME] for whom a manager (other than the [NAME]) has been appointed, whether [NAME] this Act or [NAME] section 25M of the [NAME] Act 1987 ." 44Section 64 provides: "(1) The Supreme Court or the [NAME] may make such orders as it thinks fit in relation to the administration and management of the estates of [NAME] persons. (2) The Supreme Court or the [NAME] may also make such orders as it thinks fit in connection with authorising, directing and enforcing the exercise of the functions of managers [NAME] this Act. (3) The Supreme Court may also make such orders as it thinks fit in connection with supervising the exercise of the functions of managers [NAME] this Act. (4) An order by the [NAME] is subject to the regulations or to any direction by the Supreme Court or to any order of the [NAME] Tribunal (in the case of a [NAME])." 45Section 65 of the 2009 Act provides, relevantly: "(1) [NAME] power The Supreme Court or the [NAME] may make such orders as appear to it necessary for rendering the property and income of a [NAME] available for the following purposes: (a) the payment of the debts and engagements of, and otherwise for the benefit of, the person, (b) the maintenance and benefit of the family of the person, (c) otherwise as it thinks necessary or desirable for the care and management of the estate of the person. (2) Orders as to disposal of estate Without limiting the generality of subsection (1), the Supreme Court or the [NAME] may order that any property of the person be sold, mortgaged, dealt with or disposed of as the Court or the [NAME] thinks most expedient for the purpose of raising or securing or repaying with or without interest money which is to be or which has been applied to any one or more of the following purposes: (a) payment of the person's debts or engagements, ... (c) payment of any debt or expenditure incurred for the maintenance (including future maintenance), or otherwise for the benefit, of the person, ... (3) Orders as to application of money Without limiting subsection (1), the Supreme Court or the [NAME] may authorise and direct the application of money comprising the whole or any part of the estate of the person to any one or more of the following purposes: ... (c) the investment of money, being money not required for the time being for any of the other purposes specified in this subsection, in such manner as the Court or the [NAME] thinks fit. (4) An order by the [NAME] is subject to the regulations or to any order of the Supreme Court or to any order of the [NAME] Tribunal (in the case of a [NAME])." 46Section 118 of the 2009 Act makes it a criminal offence for a person, without reasonable excuse, to fail to comply with an order or direction given to the person by the [NAME] in accordance with that Act. There are no particular formal requirements for the making of such an "order or direction" . 47Division 3 of Part 4.5 of the 2009 Act runs from s 71 to s 84. It relates to the management of estates generally. Thus, it is capable of applying to the full range of persons whose estates might come to be subject to management. 48It includes the following provisions, s 83 of which being roughly analogous with s 48 of the [NAME] Act : "82 Protection of interests of [NAME] on partition If property is exchanged [NAME] this Act on behalf of a [NAME], it is subject to the same uses, trusts, charges, dispositions, devices [sic] and conditions that the property given in exchange would have been subject to if it had not been exchanged. 83 Protection of interests in property of beneficiaries and other persons (1) [NAME] and any [NAME] has the same interest in any surplus money or other property arising from any sale, mortgage or disposition of any property or other dealing with property [NAME] this Act as [NAME] or [NAME] would have had in the property the subject of the sale, mortgage, disposition or dealing, if no sale, mortgage, disposition or dealing had been made. (2) The surplus money or other property arising as referred to in subsection (1) is taken to be of the same nature as the property sold, mortgaged, disposed of or dealt with. (3) Except as provided by subsection (4), money received on or for equality of partition and exchange, and all fines, premiums and sums of money received on the grant or renewal of a lease where the property the subject of the partition, exchange or lease was real estate of [NAME] are to be considered as real estate. (4) Fines, premiums and sums of money received on the grant or renewal of leases of property of which [NAME] was the tenant for life are to be considered as personal estate of [NAME]. (5) [ADDRESS] may make such orders as it thinks fit to give effect to this section. (6) In this section: [NAME] means a [NAME] a [NAME] of the person or an [NAME], administrator or assign of [NAME]." 49Some of the terminology in ss 82 and 83 is explained by the fact that s 16 of the 2009 Act confers many functions on the [NAME] when acting in a trust capacity or [NAME] capacity. As well as powers to sell, mortgage and lease, there is [NAME] power [NAME] s 16(1)(k) to "exchange or join in a partition of property and give or receive money for equality of exchange or partition." 50The word "devices" in s 82 is fairly clearly a typographical error for "devises". "Devices" does not make sense, and it was the word "devises" that appeared in the corresponding sections in s 121 Lunacy Act 1890 (Imp) (53 Vic c 5) and s 151 Lunacy Act 1898 (NSW), referred to at [70] and [73] below.

The Relief Claimed Below 51The relief that [NAME] claimed in an Amended Summons was, firstly, the court's opinion advice and direction [NAME] s 63 [NAME] Act , and/or s 83(5) of the 2009 Act , or in the court's inherent jurisdiction on the following questions: "Whether the plaintiff as manager of the Estate of her Aunt, [PBL], [NAME] the Financial Management Order of the [NAME] Tribunal made 31 January 2006 would be justified in treating the whole of the net proceeds of sale of the [NAME]'s former residence at [address] Darlinghurst as funds available without differentiation to be applied for the purposes authorised by s 59 and/or s 65(1) and (3) of the [NAME] Act 2009 ("the Act"). Whether the plaintiff as manager of the Estate of her Aunt, [PBL], [NAME] the Financial Management Order of the [NAME] Tribunal made 31 January 2006 would be justified in treating the purported direction or requirement of the office of the [NAME] to treat $75,000 of those funds as having been already appropriated by s 83 of the Act for the purpose of satisfying a prospective claim by a [NAME] the presumptive most recent [NAME] of the [NAME], as being void and not authorised by the Act." 52Alternatively, [NAME] sought: "... an order [NAME] section 83(5) that section 83 of the Act does not operate to render any of proceeds of sale of the [NAME]'s former residence at [address] Darlinghurst, being any portion thereof attributable to the garage unit, liable to be set aside for the benefit of any person other than the [NAME], or exempted from being immediately available to meet expenditure authorised by section 59 of the Act administered in accordance with section 39." 53The Amended Summons also sought such directions as the court thought necessary [NAME] s 61(1) of the 2009 Act , and an order that the costs of the application be paid out of [NAME]. 54The application for directions [NAME] s 61(1) of the 2009 Act was inappropriate. Section 61(1) enables the Supreme Court to give to the [NAME] such directions as the Court thinks necessary with respect to the exercise by the [NAME] of its functions in its [NAME] capacity. However, s 61 appears in Division 1 of Part 4.5 of the 2009 Act . Section 55 of the 2009 Act says that that Division applies in respect of the estate of a [NAME] that is committed to the management of the [NAME]. Thus, s 61 was not applicable concerning PBL's estate because the [NAME] was not appointed as manager. However, s 64 of the 2009 Act conferred on the Supreme Court, in relation to estates [NAME] by someone other than the [NAME], a power that was broadly comparable to s 61 (though exercised by order, rather than by direction). 55The hearing in the court below revealed a change of stance on the part of the [NAME] to the justification for its decision. Its counsel submitted that its authority to issue the direction to "earmark" the $75,000 derived explicitly from the powers granted by ss 65 and 66 of the 2009 Act . On the appeal [NAME] SC, for the [NAME], has also relied on s 64 of the 2009 Act as empowering the making of both the direction of the [NAME] and the orders that the Court below has made. The Decision Appealed Against 56Concerning each of the questions for which judicial advice was sought ([51] above) the [NAME] judge answered "No" . [ADDRESS] made the following declarations: "3. The sale of the lock up garage only adeems the devise of the lock up garage to [A] [NAME] the [NAME] executed by PBL on 30 July 1999 (if that [NAME] is found to be the last valid [NAME] of PBL upon her death and if he survives PBL) to the extent that the moneys from the [NAME] are spent on PBL's benefit, care and management.

4. The [NAME], or that part of it that is left at the date of PBL's death, constitutes the devise of the lock up garage to A [NAME] the clause of the [NAME] made on 30 July 1999, (if that [NAME] is found to be the last valid [NAME] of PBL upon her death and if he survives PBL).

5. The [NAME] is not to be spent unless, or until, [NAME] are exhausted." 57The Court also made the following orders:

6. The net proceeds of the sale of the lock up garage formerly owned by PBL (being the whole of the property comprised in Certificate of Title [reference] are to be invested in a fund ("the [NAME]") separate to [NAME] in the personal estate of PBL ("[NAME]").

7. The income from the [NAME] is to be paid, annually, to [NAME]. 8. [ADDRESS] orders the plaintiff's costs be paid out of the Other Fund on an indemnity basis." As agreed by the parties, no order was made for payment of the costs of the [NAME]. 58The parties accepted in the court below that the Supreme Court had jurisdiction to resolve the substantial questions that have been brought before it, regardless of the precise source of that jurisdiction. That consensus of the parties explains, but does not completely justify, what would be the otherwise impermissible step of a summons seeking judicial advice resulting in the making of substantive orders and declarations. There is a procedural problem concerning the orders, in that declarations 3, 4 and 5 in their terms seem to detrimentally affect the interests of [NAME]'s brothers as [NAME] beneficiaries [NAME]'s [NAME], yet they have never been parties to the proceedings. That is a problem that should have been dealt with at the time of the proceedings making their informal conversion from a summons for judicial advice to adversary litigation. However, when the amount of money involved in this case is so small, and it was the question of principle concerning the manner of operation of s 83 2009 Act that led the court to grant leave to appeal, I am reluctant to order that further procedural steps be taken now to remedy the situation. The preferable way of coping with an undesirable procedural situation is to state clearly, now, that the declarations made in the court below are binding only between the parties to the proceedings. 59The [NAME] judge recorded that there was no dispute that the purpose of s 83 of the 2009 Act was: "... to save a gift made by [NAME] in her [NAME], which gift would, otherwise, be adeemed by activities carried out, not by her, but by her financial manager. In this way, the financial manager is able to take steps required to manage [NAME]'s property in a way that respects her needs, as well as her wishes made in a [NAME], at a time when she is [NAME] of managing her affairs on her own." 60The learned [NAME] judge expressed the following views about s 83 of the 2009 Act , at [81]: "(a) The section refers to both [NAME] and to any [NAME]; (b) The [NAME] includes a [NAME] a [NAME] of that person; (c) [NAME] the section, each has the same interest as he, or she, would have had in the property the subject of the sale, mortgage, disposition or dealing, if no sale, mortgage, disposition or dealing had been made; (d) The surplus money, or other property arising, is taken to be of the same nature as the property sold, mortgaged, disposed of or dealt with; (e) The interest that [NAME], or any [NAME] has, is in any surplus money, or other property, arising from the sale, mortgage, disposition, or other dealing, of the property [NAME] the Act; (f) "Surplus" in this context refers to the net proceeds of any such sale; (g) The surplus, or such part of it that remains, must exist, in an identifiable form, at the date of death." 61The [NAME] judge expressed the view, at [93], that s 83 was speaking at both the time at which the sale, mortgage, disposition or dealing with the property took place, and at the date of death of [NAME]. 62A central portion of the judgment is at [94]-[96]: "The key to the interpretation of the section, and the one that provides the answer to the questions posed, is sub-section (2), which explicitly requires the 'surplus' to be taken to be as 'of the same nature as' the property sold, mortgaged, disposed of, or dealt with. In other words, there is upon the sale, mortgage, disposition, or dealing with, the property, a deemed preservation of the character of the property converted. That concept requires the notion of comparability, despite the fact that the property sold, mortgaged, disposed of, or dealt with, becomes different, qualitatively and quantatively. In this case, the nature of the property sold is real estate, and it is notionally 'as real estate' that the surplus must be taken to be likened, or equated, to. Thus, as in the present case, if there is money available in [NAME]'s estate that would have formed part of the residue of her estate, which money can be used for the benefit, care and management of [NAME], it should, first, be used for those purposes. It is when there are no other moneys available for those purposes, that the surplus proceeds of sale mortgage, disposition, or dealing with, property that has been specifically devised may be used. Until that time, the surplus proceeds of sale of that specifically devised property, is treated as if it were real estate and is not able to be used." 63Concerning whether income of the separate fund should be accumulated, the [NAME] judge said, at [98]: "Because one is required to treat the surplus funds as of the 'same nature' as the property sold, it appears to me that the income, from time to time, earned on the surplus, should not, in this case, form part of the surplus, but may be added to the other moneys which are used for the benefit, care and management of [NAME]." 64There is no appeal in relation to the [NAME] judge's decision that the income of the separate fund is available to pay [NAME]'s expenses.

Statutory Predecessors of Section 83 2009 Act 65Section 83 of the 2009 Act has a lengthy legislative history. In order to understand its scope and intent, I [NAME] examine first the historical development of equivalent provisions in England, and second, the adoption or adaptation of those laws in New South Wales. English Predecessors 66The history of the provision starts with an English Act of 1830 entitled "An Act for consolidating and amending the Law relating to Property belonging to Infants, Femes Coverts, Idiots, [NAME] and Persons of unsound Mind" (Imp) (11 Geo IV & 1 Wm IV c 65) (" the 1830 English Act" ). Section 28 of that Act empowered the Lord Chancellor to sell, charge or encumber the "land" of any [NAME]: "... for the Purpose of raising Money for Payment of the Debts or Engagements of such [NAME], the Discharge of any Incumbrances on his Estates, the Costs of applying for and obtaining the Commission of Lunacy and in opposition thereto, and all [NAME] the said Commission, and the Costs of such Sales, Mortgages, Charges, and Incumbrances, and other Dispositions, or for any of such Purposes as aforesaid ..." 67The section empowered the monies arising from such a transaction to be applied for those purposes in such manner as the Lord Chancellor directed. Section 29 went on to state: "Provided always, and be it further enacted, That on any Sale, Mortgage, Charge, Incumbrance, or other Disposition which shall be made in pursuance of this Act, the Person whose Estate shall be sold, mortgaged, charged, incumbered, or otherwise disposed of, and his or her Heirs, [NAME], Administrators, and [NAME], shall have such and the like Interest in the Surplus which shall remain, after answering the Purposes aforesaid, of the Money raised by such Sale, Mortgage, Charge, Incumbrance, or other Disposition, as he, she, or they would have had in the Estate by the Sale, Mortgage, Charge, Incumbrance, or other Disposition of which such Monies shall be raised, if no such Sale, Mortgage, Charge, Incumbrance, or other Disposition had been made; and such Monies shall be of the same Nature and Character as the Estate so sold, mortgaged, charged, incumbered, or disposed of; and it shall be lawful for the said Lord Chancellor, intrusted as aforesaid, to make such Orders, and to direct such Acts and Deeds to be done and executed, as shall be necessary for carrying the aforesaid objects into effect, and for the due Application of such Surplus Monies." 68Section 2 of that Act contained a definition whereby "land" extended to certain types of property that would not be land in [NAME] sense of that word. 69The Lunacy Regulation Act 1853 (Imp) (16 & 17 Vic c 70) contained in ss 118 and 119 provisions substantially identical to ss 28 and 29 of the 1830 Act. It likewise contained, in s 2, an extended definition of "land" . 70The provisions to which I have referred in the 1853 Act had a close analogy in the Lunacy Act 1890 (Imp) (53 Vic c 5). The provisions in the 1890 Act were somewhat wider, in that s 120 of that Act authorised the judge to direct the [NAME] of the estate of a [NAME] to sell "any property" belonging to [NAME], and enter into various other types of transaction - ie, the power was not restricted to "land" , even in an extended sense. Section 123(1) of the 1890 Act provided: "[NAME], his heirs, [NAME], administrators, [NAME], and [NAME], shall have the same interest in any moneys arising from any sale, mortgage, or other disposition, [NAME] the powers of this Act which may not have been applied [NAME] such powers, as he or they would have had in the property the subject of the sale, mortgage, or disposition, if no sale, mortgage, or disposition, had been made, and the surplus moneys shall be of the same nature as the property sold, mortgaged, or disposed of." New South Wales Predecessors 71The 1830 English Act was adopted in New South Wales by the Imperial Acts Adoption Act 1834 (5 Wm IV No 8). Later legislation in New South Wales largely followed subsequent developments in England. 72The Lunacy Act 1879 (42 Vic No 7) of NSW conferred a power on the court to sell or otherwise deal with any real or personal property of an [NAME]. Section 155 of that Act was in terms only stylistically different from s 29 of the 1830 English Act. However, as the Lunacy Act 1879 did not contain any extended definition of "land" , s 155 does not appear to have applied to the proceeds of sale of personal property. 73The 1879 Act was replaced, in due course, by the Lunacy Act 1898 , the immediate predecessor of the [NAME] Act . It contained, in ss 150 and 153, provisions that, so far as presently relevant, were identical with those of ss 120 and 123 of the Lunacy Act 1890 (Imp). 74The [NAME] relevant New South Wales legislation was s 48 of the [NAME] Act, quoted at [36] above. 75There is one respect in which s 48(1) and (2) [NAME] Act and s 83(1) and (2) of the 2009 Act may be wider than their English models and New South Wales predecessors. The English provisions to which I have referred, and the New South Wales predecessors of the [NAME] Act related only to surplus money. The provisions in the [NAME] Act and the 2009 Act relate to "surplus money or other property arising" . The additional words assist in making clear that it is not only the "surplus money" that might arise from a dealing with the property of [NAME], but also any traceable proceeds of that money on which s 83(3) operates.

Principles of [NAME] in Administering Estates of [NAME] 76This line of statutes needs to be understood against a background of practices of [NAME] concerning the administration of the estates of [NAME] people. Before enactment of the 1830 English Act it was well established that if an asset of a [NAME] was sold or converted into a different type of property [NAME] proper legal authority, then upon the death of [NAME] the assets devolved in accordance with the form that they had at the date of death: Ex parte [NAME] (1749) Amb 80; 27 ER 50; Ex parte [NAME] (1772) Amb 706; 27 ER 458; Oxenden v Lord Compton (1793) 2 Ves Jun 69; 30 ER 527 per Lord Loughborough LC; Ex parte [NAME] (1812) 19 Ves Jun 118; 34 ER 463 per [NAME]; Holmes v Goodworth (1829) 7 LJ (Ch) 128. A particular application of that principle was that if the court authorised the sale of an item of property that had been the subject of a [NAME] legacy or [NAME] devise in [NAME]'s last [NAME] before losing capacity, the gift was adeemed. Rather than interrupt the main flow of the judgment, I trace in Appendix A to these reasons ([114]-[124] below) how the principle developed. The act of the court in authorising the sale or conversion of the property was treated as though it was the act of [NAME] himself: [NAME] v [NAME] at 129; Jones v Green (1868) LR 5 Eq 555 at 560. ( [NAME] v [NAME] is authority for this proposition because, even though it was decided in 1868, it concerned a sale of property that was not "land" within the meaning of the 1853 English Act). The gift in the [NAME] was adeemed even if the whole of the proceeds of sale was not expended for the purposes that had led the court to authorise the sale. 77A [NAME] legacy or devise was not adeemed if the property that was its subject matter was sold or otherwise disposed of without authority: Taylor v Taylor (1853) 10 Hare 475; 68 ER 1014; Jenkins v Jones (1866) LR 2 Eq 323; In re [NAME] (1887) 37 Ch D 310. However, the sale in present case was clearly with legal authority. 78The purpose of s 29 of the 1830 English Act, and the sections in both England and New South Wales that had been based on it was to provide a limit to the circumstances in which such ademption could occur: In Re Walker [1921] 2 Ch 63 at 66. Section 28 of the 1830 English Act empowered the raising of money for certain specified purposes. Section 29 applied to "the surplus which shall remain, after answering the purposes aforesaid" . In other words, it contemplated that the surplus could be ascertained once the purpose for which the money had been raised had been carried out. 79The section conferred rights in that "surplus" on a variety of people - [NAME] "and his or her Heirs, [NAME], Administrators and [NAME]" . However, a [NAME] had no legal interest in any of the property of [NAME] while [NAME] remained alive. Such an interest could arise only following the death of [NAME] when the last valid [NAME] of [NAME] operated to give effect to the legacy. 80There was a clear principle that in administering the property of [NAME] the court would seek to provide, including by sale of assets, that [NAME] "should have every comfort that his circumstances [NAME] reasonably enable him to enjoy, without any thought of keeping property for the benefit of [NAME] or other expectants" : Mr Justice Dormer's Case (1724) 2 PWms 262; 24 ER 723 per Lord Macclesfield; Oxenden v Lord Compton (1793) 2 Ves Jun 69; 30 ER 527 at 72, 528 per Lord Loughborough; Ex parte [NAME] (1791) 1 Ves Jun 296; 30 ER 352 per Lord Thurlow LC; Ex parte [NAME] (1801) 6 Ves Jun 8; 31 ER 911. In accordance with that principle, the "surplus" that remained after satisfying the purposes that caused the court to approve the sale or other dealing with the specifically bequeathed property might be eroded, or disappear, during the life of [NAME]. 81At least from the passing of the [NAME] (17 Edw II stat 1) in 1324, English law recognised a distinction between idiots and [NAME]. Section 9 of that statute presupposed that idiots would never recover from their condition, while s 10 recognised that [NAME] could have lucid intervals, and that they might recover ( "come to right Mind" ). In particular, there was a possibility that during a lucid interval, or after recovery, [NAME] might make a different [NAME]. 82Even if [NAME]'s condition is such that there is no realistic prospect that he or she [NAME] recover testamentary capacity and then make a [NAME] in different terms to the last one made before becoming [NAME], it is now at least in theory possible that the court could make a "statutory [NAME]" that is different to that last [NAME]. The court's power to do so arises [NAME] ss 18-26 Succession Act 2006 . The possibility that such a [NAME] might be made means that one can never be sure that the last [NAME] that a [NAME] made before losing capacity [NAME], at the time of their death, be his or her final [NAME]. 83Notwithstanding the possibility that the last [NAME] made before becoming [NAME] might not be the last [NAME] made before death, [NAME] principle that the Court adopted in administering the estate of [NAME] was that the Court would not vary or change the property of [NAME], or alter rights of succession to it, beyond what was necessary for his or her maintenance: Ex parte [NAME] (1828) 5 Russ 154; 38 ER 985 at 155, 986 per Lord Lyndhurst LC; Lord Leitrim v Enery (1844) 6 Ir Eq 357; [NAME] v [NAME] of [NAME] (1887) 12 App Cas 672 at 688-9 per Lord Macnaghten; In re [NAME] (1882) 20 Ch D 514 at 515 per Jessell MR (Lindley LJ concurring); In Re Alston [1917] 2 Ch 226 at 231; In Re Silva [1929] 2 Ch 198 at 205 per Romer J; In Re Palmer [1945] 1 Ch 8 at 12 Lord Greene MR . In Ex parte [NAME] Lord Lyndhurst LC refused to order the sale of certain furniture that a [NAME] had made the subject of a [NAME] bequest, on the ground that " he would not defeat the intention that [NAME] had manifested, when sane " . Sir [NAME], when holding office as Lord High Chancellor of Ireland, explained in Lord [NAME] v [NAME] at 363 one reason why the court alters rights concerning the estate of [NAME] as little as possible: "The person entrusted by the [NAME] with the custody of the persons and properties of [NAME], ought not wantonly change the nature of the property; for if [NAME] recovers, he may reasonably expect to find his property in the same state as when he became of unsound mind: and although the persons who at his death would be his [NAME] and [NAME] have no interest in the property, yet the Holder of the Great Seal, representing the [NAME] in this respect, should not without cause do any act which would have the effect of altering their respective rights." 84Sometimes the reluctance of the Chancellor to permit an alteration that would affect the ultimate rights of succession to property of [NAME] arose from the jurisdiction of the Chancellor concerning the property of [NAME] being one that the Monarch vested in him personally. In that respect it was unlike the jurisdiction of the Chancellor over the property of infants, which the Lord Chancellor exercised as the Court of Chancery: Ex parte [NAME] at 122, 464. Partly because of the obligation of the [NAME] to keep the land of [NAME] " without waste and destruction " ([88] below), and partly because there were difficulties in obtaining a review of a decision that the Chancellor made in this personal jurisdiction, the Chancellors took the minimum action necessary for the welfare of [NAME], or else to urged the parties to take out a bill to institute a suit in equity: Ex parte [NAME] at 124-125, 464-465; Ex parte [NAME] (1792) 1 Ves Jun 453; 30 ER 434 at 463, 439. However even when a bill was taken out the same caution applied - [NAME] v [NAME] was an equity suit instituted by bill, at the urging of Lord Thurlow LC in Ex parte [NAME] . 85In [NAME] at 688, Lord Macnaghten said: "The principles on which the Court acts in dealing with the property of [NAME] its care are not open to question. The leading principle, the paramount consideration, is the interest of [NAME]. Consistently with that principle it is settled that in [NAME] course of managing a [NAME]'s estate, the Court pays no regard to the interests or expectations of those who may come after, but it is equally well settled that in matters outside [NAME] course of management, it is the duty of the Court so far as may be possible not to alter the character of [NAME]'s property, or to interfere with any rights of succession." 86At 689 his Lordship said: "If the rule which guards against alteration in the character of a [NAME]'s property should seem to require authority over and above that derived from the statute of [NAME], and the long continued practice of the Court, such authority may, I think, be found in the views of the Legislature as declared in the Lunacy Regulation Act 1853 and the earlier enactments embodied in that statute." He went on to state the terms of ss 118 and 119 of the Lunacy Regulation Act 1853 . 87Lord Macnaghten claimed the justification of these statutes for one of the principles that his Lordship dealt with, namely not altering the character of [NAME]'s property. However, he did not claim justification in the statutes concerning the other principle with which he dealt: not interfering with any rights of succession. That is the relevant principle concerning the present case. That may have been because the issue in [NAME] was whether land that had been purchased with the approval of the court using spare money of a [NAME] was liable for probate duty that was levied on the personal estate of [NAME] - ie it related to the effect of a change in character of [NAME]'s property, not any change of rights or succession - but the fact remains that the claim was not made. 88De Prerogativa Regis showed some recognition of preservation of rights of succession concerning property on [NAME], but not in the situation with which [NAME] was concerned, nor in the situation with which the present case is concerned. That statute aimed to limit the rights of the [NAME] concerning income of the land of [NAME] people, and to preserve the rights of inheritance of land that existed by law. The relevant sections said: "9. The [NAME] shall have the custody of the lands of natural fools, taking the profits of them without waste or destruction, and shall find them their necessaries, of whose fee soever the land be holden. And after the death of such idiots he shall render it to the right heirs, so that such idiots shall not alien, nor their heirs be disinherited.

10. Also the [NAME] shall provide, when any (that beforetime hath had his wit and memory) happen to fail of his wit, as there are many per lucida intervalla , that their lands and tenements shall be safely kept without waste and destruction, and that they and their household shall live and be maintained competently with the profits of the same, and the residue besides their sustentation shall be kept to their use, to be delivered unto them when they come to right mind; so that such lands and tenements shall in no wise be aliened [[NAME] notes 'within the time aforesaid']; and the [NAME] shall take nothing to his own use. And if the party die in such estate, then the residue shall be distributed for his soul by the advice of [NAME]." (my modernisation of the spelling of the translation from the Latin contained in [NAME], The Statutes at Large, from Magna Charta to the End of the Last Parliament, 1761 (1769), vol 1 at 181). 89At that time it was, in [NAME], not possible to leave land by [NAME], and disposition of personalty by [NAME] was constrained by [NAME] being obliged to provide one-[NAME] for his widow and one-[NAME] for his children, with only the remaining one-[NAME] "soul's part" able to be left by [NAME]: [NAME], A Concise History of the Common Law , 5th ed (1956) Butterworths at 734-739. The role of [NAME] involved granting probate of wills, and distributing the estates of intestates. At the time of [NAME] the court of [NAME] itself distributed the estates of intestates, but "its conduct was so negligent and even fraudulent that the legislature interfered" ([NAME], A History of English Law , [NAME], 7th ed (1956) vol 1 at 627), and in 1357 a statute was passed requiring [NAME] to appoint an administrator of the goods of the intestate (31 Edw III c 1 cap XI). It is hard to see in the words "and if the party shall die in such estate, then the residue shall be distributed for his soul by the advice of [NAME]" in [NAME] anything about administration of the estate of [NAME] being conducted in a way that respected his or her testamentary dispositions. 90While it is clear that s 119 of the 1853 English Act required the surplus money arising from sale of a [NAME]'s land to "be of the same nature and character as the estate sold" , it provided only analogical support for the principle of not altering the character of [NAME]'s property in the reverse situation that was involved in [NAME] , where personalty had been converted to land. That statutory provisions like s 119 of the 1853 English Act are not the source of the principle whereby the court does not interfere with right of succession to property is most clearly shown by the fact that that principle is recognised in cases that predate the earliest of the statutes in the line, that of 1830. Examples are given in [NAME] at 682.

Decision 91We were referred to a line of first instance cases stemming from [NAME] [1996] QSC 66; [1997] 1 Qd R 110. They held that if the property of [NAME] was disposed of pursuant to an enduring [NAME], the disposition would not effect an ademption of a [NAME] gift of that property in the [NAME] of [NAME]. The cases contemplate the such a result could arise even if there is no ground for challenging the disposition arising from it being carried out dishonestly or in excess of authority or in some other fashion wrongfully. I have come to the view that, notwithstanding those cases, if PBL had retained capacity and sold the garage, the bequest to Mr A would have been adeemed. I have come to the conclusion that when [NAME] sold the garage with proper legal authority from the [NAME] to do so, that sale would likewise have effected an ademption of the bequest, were it not for the existence of a statutory provisions such as s 83 of the 2009 Act . The reasons for reaching that conclusion are lengthy, and involve consideration of numerous cases. Rather than interfere with the main flow of the reasoning in this judgment, I have set them out in Appendix B to these reasons ([125]-[187] below). 92In the present case the directions that [NAME] gave to [NAME] in 2006 required the approval of [NAME] to any dealing with an asset of PBL's estate, except for the making of the authorised types of expenditure. Since the [NAME] has taken over the functions of [NAME], the direction has the effect of requiring that the approval of the [NAME] be obtained to such transactions. Pursuant to the direction, the approval of the [NAME] was needed both to the sale of the Darlinghurst real estate, and to the investment of the proceeds. Approval of the investment of the proceeds would include whether the proceeds should be invested as a single lump sum or as segregated sums. 93Section 64 of the 2009 Act confers on the [NAME] power to make such orders as it thinks fit in relation to the administration and management of the estates of [NAME] persons, and such orders as it thinks fit in connection with directing the exercise of the functions of managers. As the direction to set aside the $75,000 related to the management of PBL's estate, and was a directing of the exercise of the functions of [NAME] as manager, it is within the literal words of s 64. Section 65(1) of the 2009 Act is clumsily drafted, in that the chapeau and para (c) do not fit together very well, but the preferable construction is that one of the powers conferred on the [NAME] is to make such orders as it thinks necessary or desirable for the care and management of the estate of the [NAME]. The order to segregate the $75,000 falls within the words of s 65(1)(c). As well it falls within the words of s 65(3)(c), as a direction for the investment of money not required for the other identified purposes in a manner that the [NAME] thinks fit. 94A statutory power that is in terms confined only by being "in relation to" or "in connection with" some particular topic [NAME] be construed as being required to be exercised consistently with the purposes of the legislation that confers the power. It cannot be said, in my view, that a direction to segregate the net proceeds of sale of the garage would be inconsistent with the purposes of the legislation. That is so even though until the death of PBL it would not be known whether there was a "surplus" that would pass to Mr A [NAME] the [NAME] devise as operated upon by s 83, or the quantum of any such "surplus" . It is so even though Mr A [NAME] have no legal right to any asset of PBL until she has died and it is known whether the [NAME] that is now thought to be likely to be her last one is indeed her last one. The segregation is justified because s 83 can operate concerning the proceeds of sale of specifically devised property only if one is in a position to identify any "surplus" and its quantum when PBL has died and the time for distribution of her estate arrives. In my view, s 83 by implication gives rise to an obligation on [NAME] and the [NAME] to take steps to administer the estate in such a way that, on PBL's death, it [NAME] be possible to identify what is the "surplus" , if any, that s 83 then operates upon. That in itself would require them to identify whether any payment of expenses that was made from the estate was being paid, in whole or part (and if so, what part), from the $75,000. A convenient way of achieving that objective is to keep the net proceeds in a separate fund. Putting them into a different fund does not mean that the legal rights that relate to them are any different to those relating to any other part of the assets of PBL's estate. It is purely a convenient accounting device for keeping track of whether or not any part of the net proceeds of sale of the garage are being spent. It was within the discretion of the [NAME] to require that the net proceeds be kept in a separate fund. 95It is a separate question whether s 83 dictates that the fund that is kept separate in that way should be resorted to last for payment of PBL's expenses. In my view, s 83 imposes no such requirement. Even the " surplus money " that arises from the sale of a specifically devised asset is available for payment of proper expenses of [NAME]. If the fund arising from the " surplus money" were to be used to pay such expenses it would be whatever remained in the fund after payment of those expenses that would become the " surplus money " to which the [NAME] became entitled pursuant to s 83 at the death of PBL. However, neither is s 83 inconsistent with the separate fund being resorted to last for payment of expenses. The order in which assets of PBL are resorted to for payment of her expenses depends on other considerations. 96While s 39 of the 2009 Act ([42] above) sets out certain objectives that should be advanced by decisions relating to administration of the estate of [NAME], it is not an exhaustive statement of such objectives. One legitimate consideration for the [NAME] to take into account is the longstanding practice of the courts concerning the way in which they administer the estates of [NAME] persons. The first consideration in deciding which of several available assets is to be resorted to for payment of expenses is always the welfare of [NAME]. If there was an expense to be met and the only readily saleable asset from which it could be met was the subject of a [NAME] gift in what was likely to be the last [NAME] of [NAME], the court would not hesitate to authorise the sale of that asset. However, no such consideration arises in the present case, where all the available assets (apart from the accommodation bond) are now in the form of cash. Where there is a choice about which of the assets of [NAME] should be used for payment of expenses, the practice of the court has been to use assets that are not the subject of a [NAME] legacy or devise before assets that are the subject of a [NAME] legacy or devise. It was within the scope of the [NAME]'s power to issue directions that require that practice to be followed concerning PBL's estate. 97One justification for this practice is that it is consistent with the order of application of assets in a [NAME] estate. If an expense had been incurred for the maintenance of [NAME] but that expense had not been paid at the time of his or her death, the order of application of assets [NAME] s 46C and the [NAME] Schedule of the Probate and Administration Act 1898 would require the expense to be paid out of the [NAME] estate before it was paid from any asset that was the subject of a [NAME] gift. It is consistent that the burden should fall in the same way if the expense is paid during the lifetime of [NAME]. Indeed, it would be anomalous if where the burden of an expense fell depended on the chance of whether the manager of [NAME]'s estate was fast or slow in paying bills for expenses. 98These views are consistent with the decision of [NAME] J (as his Honour was then) in [NAME] v [NAME] (NSWSC, [NAME] J, 2 March 1995, unreported). I mention it because it appears to be the only NSW case that considers s 83 of the 2009 Act or any of its predecessors. There, a lady made a [NAME] devise of certain real estate in her last [NAME] before becoming [NAME]. After she became [NAME], a management plan was drawn up authorising the sale of that real estate to pay certain of her debts. Contracts were exchanged before she died, but were not completed by the time of her death. Some of the debts were paid prior to her death out of the deposit. There was a contest between the [NAME] and the [NAME] beneficiaries of the lady's estate concerning the manner in which s 48 [NAME] Act would affect the sale proceeds, when ultimately received. [NAME] J said, at 10-11: "In my view, s 48(5) does not introduce a [NAME] discretion into the operation of s 48(1), but only gives some flexibility to the means of putting it into effect. I accept that s 48(1) only operates so long as 'surplus money' arising from a sale to which it applies is identifiable as such. In my view, the word 'surplus' indicates that the section only applies to the net proceeds of any such sale, and only to so much of these as remain identifiable at the date of death. Here, so much of the deposit as was used prior to the death of [NAME] to pay debts would not be affected by s 48, nor would any other part of the deposit which was applied so as to lose its character as proceeds of sale. However, the balance of the purchase money received after the death of [NAME] could not be considered as other than money arising from the sale, and in my view, could not be affected by the management plan devised before [NAME]'s death. In my view, therefore, at least the balance of the purchase money, less any expenses of the sale which were deducted from it and less any debts which were secured on the property, would be surplus proceeds of sale within s 48(1); and in my view, that section would be effective to produce the result that that money be treated as representing [ADDRESS] for the purposes of giving effect to the [NAME]." 99One argument put for [NAME] was that s 83(5) of the 2009 Act conferred on the Court, but not on the [NAME], the power to make orders to give effect to s 83. While that is clearly so, I see no reason why s 83(5) should limit the scope of the powers of the [NAME] ss 64 and 65. 100The directions of the [NAME] had a statutory force of their own. As well, the advice given and orders and declarations made in the court below provide an independent source of rights and obligations so far as the administration of PBL's estate is concerned. The appeal to this court is against the advice given and orders and declarations made in the court below, not against any decisions of the [NAME]. 101There is one respect in which the orders and declarations of the Court differ in substance from the direction of the [NAME]. The direction of the [NAME] related to the setting aside of $75,000, while the orders and declarations of the court were cast in terms dependent upon the defined term "[NAME]" , which was defined as the "net proceeds" of sale of the garage. As I understand it, [NAME] accepts that the "net proceeds" of sale of the garage should be $75,000 minus the appropriate proportion of the costs of selling the real estate that are attributable to the sale of the garage. He is right to accept that position. 102The reasoning by which the [NAME] judge arrived at his conclusions was, with respect, not compelling. That s 83 requires that the surplus money arising from sale of the garage be regarded as " of the same nature " as the garage means that it is still to be categorised as real estate. Whether an asset was real estate or personal estate was important in some factual situations in which real estate not specifically disposed of by [NAME] descended to an [NAME] at law while personalty descended to [NAME] or [NAME] (eg, In re Alston [1917] 2 Ch 226 at 230-231; In re Harding [1934] Ch 271) . It was important in [NAME], where land that had been purchased with the approval of the court using spare money of a [NAME] was held to be liable for probate duty that was levied on the personal estate of a [NAME]. It would also be important if separate gifts were made by [NAME] of real estate (generally) and personal estate (generally). However, it is not important in this case. PBL's [NAME] does not make any gift by reference to whether it is real estate or personal estate. In any event, treating the proceeds as realty would not lead to any conclusion about whether they should, or could, be resorted to for payment of PBL's expenses. There is no inhibition about the court selling real estate, if the proceeds are needed for the benefit of [NAME]. 103However, it follows from my reasoning so far that it is only in certain very limited respects that there is occasion to alter the advice, orders and declarations made below. 104Insofar as the direction of the [NAME] that was substituted by the internal review presupposed that s 83 imposed a legal obligation not to resort to the net proceeds of sale until other assets were exhausted, its basis was mistaken. That does not mean that the substance of the direction was beyond power or (apart from relating to the full $75,000) in some other way erroneous. In accordance with usual and proper administration, an expense would properly be paid from the net proceeds only if, for some reason evident when the expense fell due for payment, it was not practicable for the expense to be paid from the assets that were likely to fall on PBL's death into residue of her estate. When PBL's assets are nearly all cash and she is quite old, I cannot at present see how that situation [NAME] arise. In that situation it was, in my view, open to the [NAME] to direct that the net proceeds should be resorted to last (or, perhaps, last but pari passu with the net proceeds, if any, of the shares in [COMPANY]). Any such direction is inherently revocable, and if circumstances not presently foreseeable meant that there was a reason to change it, it would have been open to [NAME] to seek to have the direction altered, or for the [NAME] to alter or vary it on its own initiative. 105The situation has now been changed by the declaration numbered 5 that the [NAME] judge made ([56] above). Such a declaration could be justified only by the [NAME] having given a direction that the net proceeds be resorted to last, not by reference to any mandatory obligation in s 83. But the direction given by the [NAME] related to spending a fund of $75,000 last, not to spending a fund of the net proceeds last. Thus in my view there was no binding legal obligation that the net proceeds be resorted to last, that could be the subject matter of the declaration. In my view the appropriate course is to revoke declaration 5, but for the Court to give an order [NAME] s 64 of the 2009 Act that is consistent with these reasons, and that leaves open the unresolved question about the order in which the [COMPANY] shares or their proceeds of sale should be resorted to. 106The second of the questions on which the court's advice was sought ([51] above) seems to me to mis-state the direction or requirement of the [NAME] by stating it to be more definitive than it really is. The only direction that could be referred to in that question is the "word of caution" at the end of the internal review. The "word of caution" characterises the $75,000 as being "impacted upon" by s 83 - a statement that, while imprecise, is not inaccurate: the relevant impact is that s 83 justifies it being separately invested. When the second question put to the court mischaracterises the direction of the [NAME] (which, in any event has now been overtaken), it is preferable not to answer it. 107Order 6 ([57] above]) is correct in principle. However, it is inconsistent with the direction of the [NAME] that $75,000 be set aside. While this may well be implicit in the Court's orders, it is desirable to state that they are in lieu of previous directions of the [NAME] on the topic. 108Order 7 is problematic from a procedural point of view. It might affect the substantive rights of Mr A, yet he has never been a party to the proceedings in the court below or on this appeal. We are not well informed about the nature of the opportunity to participate that he was given, or about whether he has made a clear choice never to raise the question of entitlement to the interest that accrues on the net proceeds of sale of the garage. There seems to be legitimate room for argument about whether " surplus money ... arising from any sale" " in s 83 of the 2009 Act extends to income earned by the fund that is set aside between the time of sale and the time of PBL's eventual death. The words " arising from " could be argued to envisage a causal enquiry - one asks what is the money that exists at the time of the [NAME]'s death that the sale has caused to come into existence. If that construction is right the " surplus money " might extend to interest or other income derived from the net proceeds of sale. Such a construction might also be argued to be broadly consistent with the policy of s 83, in that if the garage had remained in specie it would presumably have increased in value with time. It could be argued that, in a broad way, it would be administering the estate in a way that does least damage to PBL's intentions expressed in the [NAME], in the changed circumstances where sale of the garage has been necessary to provide for PBL's welfare, if the [NAME] legacy were to attach to the net proceeds of sale, plus interest it earned, but minus any amount that is spent from that fund to make proper provision for PBL. 109The way these proceedings are constituted at the moment does not permit us to make any final decision about these matters. It would be procedurally possible to order that, even at this stage, Mr A should be made a party, and there should be further argument in the appeal. However, I would be reluctant to order that that step be taken, when the amount of money that is involved is likely to be so small. The preferable course is to amend Order 7 so that the question of whether Mr A is entitled to interest is not foreclosed. While the replacement order that I propose contemplates that the entitlement to the interest [NAME] be decided later by the [NAME] or the Court, I have put it that way because there has to be provision for an eventual final determination of the question. But I should stress that the new Order 7 does not prevent Mr A and the [NAME] beneficiaries of PBL's estate from taking the eminently sensible course of reaching an agreement concerning that topic. 110The effect of the reasons so far is that the appeal should be allowed, and some modifications made to the advice declarations and orders made in the court below. Success on an appeal justifies the appellant in receiving an order for the costs of the appeal, unless there is reason why such an order should not be made. In my view there are some reasons for questioning the appropriateness of such an order in the present case. The substantial objective of this appeal was to establish that the net proceeds of sale of the whole of the Darlinghurst realty, including the garage, could be resorted to on an equal footing for the payment of PBL's expenses. That objective has not been achieved. Further, the modifications to the advice, declarations and orders that I propose are, as a matter of substance, fine-tuning rather than a major change in outcome. 111Against that, the reasons for that outcome are different to the reasons given by the [NAME] judge. Further, it was the [NAME] that initially contended that s 83 required the proceeds of sale of the garage to be resorted to last. [NAME]'s contention that s 83 does not require that conclusion has been held to be correct in this court, but was not upheld in the court below. 112In all these circumstances I propose to make no order as to the costs of the appeal. However, to the extent that [NAME] bears her own costs, I would allow her to recoup them from PBL's estate.

Orders 113I propose the following orders:

1. Appeal allowed.

2. In lieu of the answer given in the court below to question 2 in the amended summons, substitute the answer: "[ADDRESS] declines to answer this question."

3. Revoke the declaration numbered 5 in the court below.

4. Replace Order 7 in the court below with:

7. The income from the [NAME] is to be retained in the [NAME], and the question of entitlement to the income is to await further determination by the [NAME] or the Court.

5. Add to the orders made in the court below:

10. Orders 6, 7 and 9 are in substitution for previous directions of the [NAME] concerning the setting aside of a separate fund from the proceeds of sale of the Darlinghurst garage of PBL and the manner in which that fund should be used. 6. [NAME]'s costs of the appeal on the indemnity basis to be paid from [NAME] other than the [NAME] and so much of [NAME] as represents the net proceeds of sale of shares in [COMPANY].

Appendix A 114If an asset of a [NAME] was sold or converted into a different type of property [NAME] proper legal authority, then upon the death of [NAME] the assets devolved in accordance with the form they had at the date of death. This principle was developed in contexts outside that of ademption of [NAME] gifts, but was stated in quite [NAME] terms that could be (and eventually was) applied to ademption of [NAME] gifts. 115In Ex parte [NAME] the [NAME] had inherited from his father heavily encumbered land in Scotland. He also acquired on his father's death rights in a fund of money that his maternal grandfather had left to be laid out on land in England that would be settled on the [NAME]' father and his male issue, with a reversion to the heirs of the [NAME]' mother. The [NAME] was an infant at the time of his father's death. The court ordered (perhaps in exercise of its power concerning the estates of infants, though the report is not clear) that the fund should be used to discharge the encumbrances on the Scottish land before it was laid out in purchase of English land. That manner of using the fund was also authorised by a (seemingly specially obtained) Act of Parliament. After he attained his majority the [NAME] became a [NAME]. The [NAME]' mother sought a court order requiring the money lent on the Scotch securities to be called in and applied in the purchase of land in England, and that the accrued interest be treated as English property that would pass to the [NAME]' [NAME] law, if he should die without recovering. Lord Hardwicke refused the order. He said, at 81, 51: "In cases of lunacy, the first care of the Court is the maintenance of [NAME]; and after that, it is a rule never departed from, not to vary or change the property of [NAME], so as to affect any alteration as to the succession to it .... [ADDRESS] ordered the money to be lent on the Scotch estate, for the convenience the of [NAME] and his family. The [NAME] not now make any difference, but keep to the rule." 116In Ex parte [NAME] a [NAME] was entitled to the equity of redemption in land that was subject to two mortgages. Lord Northington ordered that the mortgages be paid off from savings of [NAME], but required the mortgages be assigned " to attend the inheritance " . After the death of [NAME] held that the [NAME] to whom the mortgages had been assigned should be held to be a [NAME] for [NAME] in the amount that had been paid off, plus interest. The report in Ambley relates to a rehearing of [NAME]'s decision, in which [NAME] varied his own previous order, by removing a declaration that the [NAME] held the mortgages partly on trust for [NAME] of [NAME]. He held that Lord Northington's order had been right. This was because although it was " a [NAME] rule not to alter the nature of a [NAME]'s estate" (707, 458), it was subject to the principle that " in the management of [NAME]'s estate, the ruling principle is, to do what is for the benefit of [NAME] " (708, 459). The reason that [NAME] gave for reversing his previous decision was (708, 459): "To lay it down as a rule that all the savings out of the real estate shall in all cases go to [NAME], is inverting the principle". 117In other words, the basis of the decision was that the property was to be taken in the condition in which it was found, after the court's order had operated. I mention that that is the way in which Lord Loughborough, who had appeared as counsel in the case, understood it as having been decided: [NAME] v [NAME] at 76, 530. 118Oxenden v [NAME] arose after the Court had authorised the cutting of certain timber on land of a [NAME]. The basis for that order was that it was for the benefit of [NAME] because some of the timber was decayed and its remaining there was harming the rest of the timber. After the death of [NAME] his [NAME] brought a bill in Chancery seeking that the personal representative of [NAME] should account for the proceeds of sale of the timber, and pay to the [NAME] any surplus that remained after payment of the debts of [NAME]. Lord Loughborough dismissed the application. He commented on the confused nature of the order that the bill sought - when the bill allowed the proceeds of sale of the timber to be used for payment of [NAME]'s debts it acknowledged that the proceeds were in the form of personalty, yet it sought to have any excess treated as though it were realty. His Lordship could see no equity between the [NAME] and the [NAME] that would require that to be done. He said, at 70, 528: "Both are volunteers. Each must take what they find that the death of the person entitled for life in the condition, in which they find it. The legal right is not questioned: then upon what equity must I make this transmutation for the benefit of a person equally a volunteer?" 119In the course of a lengthy discussion of how the court made orders concerning administration of the property of a [NAME] he qualified his remarks by saying (at 73, 529): "... great care must be taken, that nothing extraordinary is to be attempted; as estates to be bought, or interests to be disposed of. Alteration of property is as far as possible to be avoided consistently with the idea of preserving the interest of the proprietor." 120He said at 74, 530: "The order [authorising the cutting of the timber], which is perfectly right, is now in full force. I have no right to vary or add to it; as there is no appeal. The effect of it is, that it has created by the execution of it a fund of personal assets; in which condition I find it." 121In other words, because the order had lawfully authorised the conversion of real estate (standing timber) into personal estate (money) rights of succession to [NAME]'s property were to proceed on the basis that the money had the character of personalty. [NAME], Practical Treatise of the [NAME], Idiots, and Persons of Unsound Mind (London 1847) at 300, summarised the case as: "... the [NAME] had no claim to the surplus produce above the purposes for which the timber was felled, there was no equity between the real and [NAME], since both claimed as volunteers; and the legal right ought therefore to decide to whom the property belonged." 122Ex parte [NAME] arose after the court had authorised spare money in a [NAME]'s estate to be used in redeeming land tax. [NAME] of [NAME], after [NAME]'s death, sought to have it declared that the land should be held to be subject to a charge in favour of [NAME] for the amount that had been spent to redeem the land tax. [NAME] refused the application on the basis that [NAME] had no equity. Though the reasoning is brief, Ex parte [NAME] and [NAME] v [NAME] were both cited in argument, and the decision is justified by the same reasoning as was applied in those cases. 123Holmes v [NAME] saw the principle that had been explained in [NAME] v [NAME] applied to a [NAME] devise. The decision is accurately summarised in the headnote: "[NAME] devises Black Acre to A and White Acre (which is of equal value) to B; afterwards, a commission of lunacy having issued against him, White Acre is sold by order of the Lord Chancellor, for the payment of [NAME]'s debts: A is not entitled to have any compensation out of the land is devised to B, for the loss of the land is devised to him, A". 124Sir John Leach MR is reported at 129 as having held: "... there was no equity in the case stated by the bill, and that the plaintiffs were not entitled to compensation. The act of the Court must be considered, as if it had been the act of [NAME] himself." **********

Appendix B

How Ademption Operates 125Section 30 Succession Act 2006 provides: (1) A [NAME] takes effect, with respect to the property disposed of by the [NAME], as if it had been executed immediately before the death of [NAME]. (2) This section does not apply if a contrary intention appears in the [NAME]. 126A provision no different in substance appeared in previous NSW legislation, and in s 24 Wills Act 1837 (Imp). As a consequence of such provisions, if some [NAME] item of property is given by a [NAME], and immediately before the death of the [NAME] he or she does not own property that meets the description of the gift, there is no subject matter to which the gift in the [NAME] can attach, unless there is some contrary intention appearing in the [NAME]. The failure of a gift of [NAME] property contained in a [NAME] to take effect because the [NAME] no longer owns property of that type immediately before his or her death is called ademption of the legacy or devise. 127There is a separate principle of ademption of a legacy by a portion. It applies, broadly, when someone such as a parent, with an obligation to provide for [NAME], makes a [NAME] containing a gift to that person, but later in the lifetime of the donor makes a substantial gift to the donee. In such a case the gift inter vivos is taken to be a satisfaction pro tanto of the gift in the [NAME]. However, that type of ademption is not relevant to the present case. 128The possibility of ademption of a [NAME] legacy or devise has long been recognised in the law of England and Australia, though at some times in the past there has been debate about the basis on which it operated. The principle applies equally to a gift of a [NAME] item of real estate as to a gift of a [NAME] item of personalty: Fairweather v Fairweather (1944) 69 CLR 121 at 129, 139, 142; Brown v Heffer (1967) 116 CLR 344 at 348. As Windeyer J explains in Pohlner v Pfeiffer (1964) 112 CLR 52 at 76, the purpose of provisions such as s 24 Wills Act 1837 (Imp) is to make a gift by [NAME] of a [NAME] item of property operate in the same way, and fail in the same sort of circumstances, regardless of whether the property in question is real estate or personality. 129Sometimes the failure of a testamentary gift of an item of real estate that [NAME] no longer owns at the time of his death has been called "revocation by alteration of estate" rather than "ademption" , but the difference is purely one of nomenclature: Jarman on Wills , 8th ed (1951) [NAME], vol 2 at 943. Some, but by no means all, judges speak as though there can only be ademption if there is a gift of property that is identified as at the date of the [NAME], and by the time of death [NAME] or [NAME] no longer owns that property. Such judges regard the situation where a [NAME] makes a gift of property that is to be identified as at the date of death, but where at the date of death there is no property that matches the description, as operating by a principle separate to ademption. However, in that sort of case the gift still fails. I shall use " ademption " to refer to both of these modes by which a [NAME] gift in a [NAME] might fail. 130The basis on which ademption occurs is that no property that meets the description of the subject matter of the [NAME] gift is found amongst the property of [NAME] at the time of his or her death: Harrison v Jackson (1877) 7 Ch D 339 at 341; [NAME] at 129, 136, 142; [NAME] at 348. Subject to a qualification recognised in In Re [NAME] [1907] 1 Ch 665, even if it is possible to identify property into which the specifically given item has been converted, the donee of the gift does not receive that property: [NAME] v [NAME] at 343-344; [NAME] at 136, 142; In re [NAME] (1879) 4 CPD 336. 131In re [NAME] concerned a [NAME] whose [NAME] gave a [NAME] legacy of his investment in [COMPANY]. By the time of his death, the undertaking of the [COMPANY] had been transferred by a statute to the [NAME], and [NAME] had received a certain amount of [NAME] stock as compensation. [ADDRESS] of Appeal held that the legacy had been adeemed. [NAME] said at 671-672: "There was a time when the Courts held that ademption was dependent on [NAME]'s intention, on a presumed intention on his part; and it was therefore held in old days that when a change was effected by public authority, or without the [NAME] of [NAME], ademption did not follow. But for many years that has ceased to be the law, and I think it is now the law that where a change has occurred in the nature of the property, even though effected by virtue of an Act of Parliament, ademption [NAME] follow unless the case can be brought within what I may call the principle of [NAME] v [NAME] 9 Hare in which Turner V-C held that a bequest of shares in a railway company was not revoked by the subsequent change of those shares into stock by reason of a vote of the company [NAME] the powers of their special Act. At the end of his judgment the Vice-Chancellor says this (9 Hare 672): '[NAME] had this property at the time he made his [NAME], and it has since been changed in name or form only. The question is, whether a [NAME] has at the time of his death the same thing existing, it may be in a different shape, -- yet substantially the same thing.' Remembering the extraordinary accuracy of the language used by Turner V-C, I think there is great force in these words which he used 'changed in name or form only ... yet substantially the same thing.'" 132Cozens-[NAME] MR went on to hold that the [NAME] stock was not substantially the same thing as the [COMPANY]'s stock, and thus the gift had been adeemed. He said, at 672: "I feel bound myself to adopt the view taken not in one case only, but in many, that you have to ask yourself, Where is the thing which is given? If you cannot find it at [NAME]'s death, it is no use trying to trace it unless you can trace it in this sense, that you find something which has been changed in name and form only, which is substantially the same thing." 133Windeyer J quoted that passage with apparent approval in [NAME] v [NAME] at 74-75. 134In Perpetual Trustee Co (Ltd) v Robbins (1967) 85 WN (Pt 1) (NSW) 403 (a decision of the Court of Appeal) Wallace P and [NAME] at 407 accepted and applied the principle stated by [NAME] in In Re [NAME] at 672.

English Cases Concerning Ademption of a [NAME] in a [NAME]'s [NAME] 135One needs some understanding of the institutional structures through which lunacy law was administered in England in the 19th century to follow the cases concerning how ademption operates where the subject matter of a [NAME] gift in [NAME]'s [NAME] has been disposed of while the person is [NAME]. The [NAME] of a [NAME] was the person or group of people to whom custody of the person, or of the estate, of [NAME] was committed (eg, s 66 Lunacy Regulation Act 1853 (Imp)). However, any dealing with the property of a [NAME] required the authority of the Lord Chancellor (eg, s 116-138 Lunacy Regulation Act 1853 (Imp)). Section 139 of the 1853 Act said: "Every Surrender, Lease Agreement, Deed, and Conveyance Mortgage, or other Disposition granted, accepted, made, or executed by virtue of this Act shall be as valid and legal to all Intents and Purposes as if the Person in whose Name or Place or on whose Behalf the same was granted, accepted, made, or executed had being of sound Mind, and had granted, accepted, made, or executed the same." 136Conversely, without legal authority, an action of the [NAME] was of no more legal effect that if it had been carried out by an intermeddling [NAME]. 137In Jones v Green (1868) 5 Eq Cas 555 shares that a [NAME] had specifically bequeathed had been sold pursuant to court order and the proceeds invested in consolidated stock ("consuls"). [NAME] said at 560: "All the authorities shew that the conversion must be treated as a lawful conversion, exactly as if [NAME] had himself converted the shares into consuls. Such an act on his part would clearly have adeemed the gift." 138In In [NAME]; Freer v Freer (1882) 22 Ch D 622 specifically bequeathed shares of a [NAME] were sold pursuant to a court order. The proceeds of sale were paid into a separate account that identified them as being the proceeds of the sale of the shares. The proceeds were then used for the purchase of consuls that were identified as being held for that same account. After the death of [NAME] the question arose of whether the sale had adeemed the legacy. The argument put for the [NAME] was (at 624-625): "The sale of the stock ought not to be allowed to defeat [NAME]'s obvious intention as expressed by his [NAME]: Ex parte [NAME] 5 Russ 154; and we therefore submit that the proceeds of the sale should for all purposes represent the property sold. The doctrine of ademption does not apply to a case where, after a [NAME] has given a [NAME] thing, and without his knowledge, perhaps against his wishes, [NAME] has sold it or altered its character: [NAME] v [NAME] 2 Eq 323; or where the nature of the legacy has been changed by mere act or operation of law: [NAME] on Legacies 3rd Ed vol i p 289. In [NAME] v [NAME] t Tal 226 the Lord Chancellor said: 'All cases of ademption of legacies arise from a supposed alteration of the intention of [NAME].' [NAME] had nothing to do with the sale of the stock, the sale being made entirely without his knowledge. It would surely be inequitable to hold that his expressed intentions should be defeated by circumstances over which he neither had nor could have any control whatever. Moreover, the order to carry the proceeds to a separate account shews that it was not intended by the Court that the sale should alter the rights of the parties as fixed by [NAME] himself. It was equivalent to a direction that, although the stock must be sold, the proceeds should represent it for all purposes. That the Lord Chancellor in Lunacy has power to make such a direction in an order for sale, so that the proceeds may be ear-marked for the benefit of those persons who would have been entitled to the property had it remained unconverted, is clear from Lord [NAME]'s observations in [NAME] v [NAME] 5 Eq 555, where he says [Law Rep 5 Eq 560], 'There might, no doubt, have been a direction accompanying the order, that the proceeds of the shares were to belong to the same persons as were the owners of the original shares.' In proceedings in Lunacy relating to the estate of a [NAME], care is always taken not to alter the rights of the persons interested in the estate." 139Chitty J rejected the argument emphatically, and held that the legacy had been adeemed. He said, at 627-628: "The [NAME] law upon the subject is clear. If [NAME] himself not being a [NAME], had sold the stock and placed the proceeds to a separate account in his books, with a memorandum that for all purposes the proceeds were to stand in the place of the stock, the Wills Act would have stood in the way, and the memorandum would not have affected the rights of parties inter se : and to my mind, all that has been done in the present case [NAME] the lunacy jurisdiction amounts to nothing more than what I have stated; for the law places the estate of [NAME] in the same position as if there had been no lunacy, except for the 119th section of the Lunacy Regulation Act , 1853 , which provides that the proceeds of land shall, notwithstanding its conversion, preserve the character of land, and belong to the same persons who would have been entitled to the land if there had been no conversion. [His Lordship read the section.] Why was that provision made? There were found to be defects in the lunacy jurisdiction, and therefore it was intended by the Legislature, by means of the Lunacy Regulation Act , 1853 , to give the persons intrusted with [NAME] a greater power than they formerly possessed. Accordingly sect 118 empowered the Lord Chancellor intrusted with the administration of [NAME]' estates, to order that moneys directed to be expended in improving [NAME]'s land should be a charge on his interest in such land; and then sect 119 went on to provide, in the terms I have read, for the destination of the proceeds of any land sold or otherwise disposed of in the lunacy." 140In In Re [NAME] Sir Gorrell Barnes P observed, at 675: "In one or two of the cases where stock originally held by a [NAME] has been sold [NAME] the order of the Court the sale has been treated as being a sale, in effect, by [NAME], although effected by those who represented his estate for the time being, and in those cases there has been considered to be an ademption or an extinction of the interest." 141In In Re [NAME]'s Trusts [1919] 2 Ch 189 a lady's [NAME] had made a [NAME] legacy of certain consuls. After her estate had come [NAME] administration a court order authorised the sale of £1000 worth of consuls, and the sale of a further amount of consuls to enable costs of £54 to be paid. Peterson J referred to the provisions of s 123 of the 1890 English Act, and said at 193-194, concerning that £54: "It was not, and could not be, contended that the proceeds of the sale of Consuls had not been applied [NAME] the powers of the Act. So far therefore as that amount is concerned, the [NAME] have no claim." 142A second order later authorised the sale of enough consuls to raise £1004, and the appropriation of £4 of that amount for payment of costs. On the same basis, Peterson J held that the [NAME] likewise had no claim concerning that £4. The second order was obtained through a mistake, because, although the current [COMPANY] account of [NAME] was at the time overdrawn, the [NAME] overlooked the fact that income that would have been sufficient to meet current expenses of [NAME] was due, and indeed was shortly afterwards credited to the [COMPANY] account. However, before that crediting occurred the [NAME] paid £48 from the account for expenses. Peterson J held, at 196, at a [NAME] is likewise had no claim concerning that £48. This provides further clear examples of how a sale of a [NAME]'s property that was carried out with proper legal authority operated as an ademption of any [NAME] gift of that property, leaving s 123 of the 1890 Act to operate concerning any of the proceeds of sale that remained unspent. 143In re Walker [1921] 2 Ch 63 does not relate directly to whether an order of the court in administration of a lunacy has the effect of adeeming a [NAME] legacy or devise, but it illustrates how an act done [NAME] such an order has the same legal effect as if [NAME] had had full capacity, and had done the act himself or herself, unless s 123 of the English Act of 1890 operates to save any unspent proceeds. A [NAME] gave a [NAME] legacy of his stock. After his estate came [NAME] administration, some spare cash was invested, [NAME] a court order, in stock. Russell J held that the stock that had been purchased passed [NAME] the [NAME] legacy, and that s 123 of the 1890 Act did not have the effect of preserving the interest that a [NAME] would have had in property that has been applied pursuant to a court order. He said, at 65-66: "In my opinion this case is not covered by that section. It deals (so far as [NAME] are concerned) with cases in which [NAME] property has in the administration of a [NAME]'s estate been converted into cash and part of that cash has been applied, leaving a balance. The section protects [NAME] of a [NAME] any [NAME] which he may have made, in regards to unapplied proceeds of the sale of property comprised in the [NAME] bequest. If part of his estate has been converted in the course of the lunacy proceedings and there remain unapplied moneys part of the proceeds of conversion the [NAME] of the converted property is to have the unapplied balance. He is to have the same interest in the proceeds as he would have had in the property if no conversion had been made. This section does not in terms apply, and cannot, I think, by inference be applied, to a case like the present - a conversion of cash into stock." 144He went on to quote the remarks of Chitty J in In [NAME] that I have set out above. 145In In Re Palmer; National Provincial Bank v Barwell [1944] Ch 374 (Uthwatt J) the [NAME] in question gave all stocks which should at the [NAME]'s death be standing in her name or at her disposal and were "in the care custody or possession of [COMPANY]" to certain nephews. At the time of the [NAME] she had some stock that was inscribed in her name in the [COMPANY], concerning which she had given a mandate to the [COMPANY] to pay all interest on the stocks to her account at [COMPANY]. After her estate came [NAME] administration the court ordered the stocks to be transferred into court. Uthwatt J, adopting the narrower of the views I have mentioned at [129] above of when ademption occurred, said that no question of an ademption arose, because the gift was of stock that met a particular description at the date of [NAME]'s death. Uthwatt J said that, subject to the operation of s 123 of the 1890 Act: "... the old law, as stated by Chitty J in In [NAME] still prevails, namely that the fact of lunacy does not result in any particular rule of law being applicable in determining the effect of the [NAME] of [NAME]". 146He did not decide whether, before the order that the stock be transferred into court had been made, the stock would have met the description in the [NAME]. He referred to some cases in which a [NAME] gift of property identified in part by being at a particular location was not adeemed if the property was usually at that location but at the date of [NAME]'s death had been removed for some temporary purpose. He continued, at 378: "Once the stocks had been transferred into court there was not a temporary removal, but a permanent removal. The stocks would remain in court until transferred out of court pursuant to an order, and if that were done, the former mandate possessed by [COMPANY] would not be revived. The disassociation with [COMPANY] was complete. I, therefore, hold that neither of these stocks passed to the nephews." 147That decision was affirmed on appeal. In In re Palmer [1945] Ch 8 Lord Greene MR assumed that the stock would have fallen within the language of the bequest if the court order had not been made (11). He said at 12: "It is said as a [NAME] proposition (and I do not in the least to wish to dispute it) that, in the administration of the estates of [NAME], the court [NAME] always be careful not to disturb the actual condition in which the estate of [NAME] is found more than is necessary for the care of [NAME] and the due administration of [NAME]'s estate. Apart from statute, however, the proper principle to apply appears to me to be that acts done pursuant to, or as a consequence of, any order in lunacy are as effective as, and produce precisely the same results as, acts done by [NAME] himself save in so far as the statute may otherwise provide or save insofar as, [NAME] some statutory discretion, a different provision may be made by the judge in lunacy or the master on his behalf."

[NAME] It 148Re [NAME] [1997] 1 Qd R 110 involved a situation where a couple who were [NAME] of a [NAME]'s house had also been appointed as her [NAME] an enduring [NAME]. After the [NAME] had become [NAME], and in ignorance of the gift to them in the [NAME], the [NAME] sold the house. [NAME] held that it was a disposition of which the [NAME] was not aware, and was probably one of which she would have disapproved. He held, "with some hesitation" (110), that there had been no ademption of the [NAME] devise. He did so on the basis that "the rule recognised by [NAME] in [NAME] v [NAME] [(1866) LR 2 Eq 323] above is an historical exception to the consequences of ademption and that the present circumstances fall within that exception." 149No question arises of whether [NAME] should be followed in New South Wales, because a statutory provision covers the type of situation with which [NAME] was concerned. The statutory provision is s 22 Powers of [NAME] Act 2003 , which states: "(1) Any person who is [NAME] as a [NAME] (a [NAME]) [NAME] the [NAME] of a [NAME] who executed an enduring [NAME] has the same interest in any surplus money or other property arising from any sale, mortgage, charge or disposition of any property or other dealing with property by the [NAME] the [NAME] as the [NAME] would have had in the property the subject of the sale, mortgage, charge, disposition or dealing, if no sale, mortgage, charge, disposition or dealing had been made. (2) The surplus money or other property arising as referred to in subsection (1) is taken to be of the same nature as the property sold, mortgaged, charged, disposed of or dealt with. (3) Except as provided by subsection (4), money received for equality of partition and exchange, and all fines, premiums and sums of money received on the grant or renewal of a lease where the property the subject of the partition, exchange, or lease was real estate of a [NAME] are to be considered as real estate. (4) Fines, premiums and sums of money received on the grant or renewal of leases of property of which the [NAME] was tenant for life are to be considered as the personal estate of the [NAME]. (5) This section has effect subject to any order of the Supreme Court made [NAME] section 23. (6) A person is [NAME] as a [NAME] a [NAME] for the purposes of this section if: (a) the person is referred to by name in the [NAME] as being a [NAME], or (b) the person answers a description of a [NAME], or belongs to a class of persons specified as beneficiaries, [NAME] the [NAME]. (7) This section does not apply to any person to whom section 83 of the [NAME] Act 2009 applies." 150It is apparent that s 22 is designed to perform the same function, concerning dispositions of property [NAME] an enduring [NAME], as was achieved by s 48 [NAME] Act , and is now achieved by s 83 2009 Act , concerning dispositions of property made with legal authority in the course of an administration of the estate of [NAME]. 151In my view [NAME] has come to an incorrect view of the law. It accepts the sort of argument that was put, and rejected, in In [NAME] ([138] above). 152Jenkins v [NAME] , on which the decision in Re Viertal purported to be based, was a case where a farmer had made a [NAME] that appointed his wife and son as [NAME]. The [NAME] gave a [NAME] bequest to his son of certain of his farming stock. The farmer became [NAME], following which his wife and son sold the farming stock. However, they did not have any authority to deal with his estate at that time. That lack of authority would have amply justified the court's conclusion that the legacy had not been adeemed. By contrast, in [NAME] the [NAME] had full legal authority to sell the house. 153However, it must be recognised that in [NAME] v [NAME] did not base his decision explicitly upon the lack of authority of the son and wife. After recognising the [NAME] situation that a legacy was adeemed if its subject matter did not exist at the time of [NAME]'s death, he continued at 328: "But quite [NAME] consideration arises where, after [NAME] has given a [NAME] thing, and without his knowledge, perhaps against his wishes, or tortiously, [NAME] has sold it or has done enough to wholly alter its character." 154He recognised at 328 that the insanity of [NAME] made him "consequently [NAME] of exercising any act of volition either in regard to revoking the gift which he had made, or as to converting it." 155He then said at 328-329: "The case most nearly approaching to the present is Re [NAME] [(1865) 6 New Reports 246], where the bonds which [NAME] gave specifically were converted by no act of his own, but by a resolution of the company - they no longer remained the [NAME] things which [NAME] had given. It seemed to me clear that [NAME] had shown no intention to deprive [NAME] of the property in its converted state. He had done nothing to deprive [NAME] of the things given, and as they were found to exist, though in a different shape, I decided that they passed to [NAME]. What is this case? The farming stock ceased to exist, but the money was placed in a [COMPANY] and there remained, and it clearly represented the value of the subject-matter of the bequest. The person who changed the character of the chattels was [NAME], to whom and for whose benefit they had been specifically bequeathed. The case of [NAME] v Friend [(1852) 5 De G & Sm 122; 64 ER 1145] is a more extraordinary one than the present. [NAME], in his judgment, made use of observations which seem to me to have a very pregnant meaning as applied to the facts of this case. There property which had been specifically given was insured, and [NAME] and the [NAME] things bequeathed were lost at sea, and the legacy failed. But [NAME] said that if, at the death of [NAME], the things which he had given had remained in specie, the policy of insurance would have been something to hold in trust for the [NAME]. Though I think that the decision in that case was a strong one, still I do not desire to raise a doubt as to its being sound law. I think that as it was by no act of [NAME] that the chattels were converted, for he never intended any conversion, but intended that the [NAME] should have his farming stock, I ought to refuse the motion ... It has been said that [NAME] v [NAME] does not govern this case; that it does not go so far, inasmuch as although there was an agreement for a sale of the [NAME] things bequeathed, still they existed in the same state as at the death of [NAME]. But in what respect does that case differ materially from the present? The intention of [NAME] in this case is clear. The conversion of the stock was inevitable, and I cannot hold that the [NAME]'s claim to the proceeds ought to be rejected." (emphasis added) 156In [NAME] at 112 [NAME] quoted the passages I have emphasised from [NAME] v [NAME] . He clearly regarded those passages as the decisive ones, as immediately quoting them he said that [NAME] " therefore accepted [NAME]'s claim to the proceeds ". However, to understand the [NAME] words that [NAME] used it is necessary that they be read in their context: Quinn v Leathem [1901] AC 495 at 506; Commonwealth v [COMPANY] (1949) 79 CLR 497 at 637-638; R v Beserick (1993) 30 NSWLR 510 at 517; [NAME] v Newcastle City Council (No 2) [2005] NSWSC 826; (2005) 220 ALR 757 at [75]-[84]. The context may be discovered by examining in more detail the cases cited in the key passages of [NAME] v [NAME] quoted at [155] above. 157Re [NAME] (1865) 6 New Reports 246 involved a [NAME] who had made a [NAME] legacy of some bonds in an American company. [NAME] legislation a scheme of arrangement was entered that involved the formation of a new company and an exchange of the bonds for securities of the new company. [NAME] accepted the benefit of the arrangement, and paid money to enable the exchange of securities to occur. He made a codicil that confirmed his [NAME] after this exchange of securities had occurred. [NAME] held that the new securities passed to the [NAME]. He said, at 247: "Now there might be cases ... where it would appear that the [NAME] chattel fixed upon by [NAME] as answering the description of what was given to him would not be allowed to pass to him by the description; for if by the mere voluntary act of [NAME], with no motive whatever but that of changing the chattels for his own purposes, he sold the [NAME] chattel and invested the exact sum of money in [NAME] chattel, the result was that by his own voluntary act he annihilated the subject matter of the gift, and it could not be held that what he had thus altered in specie was covered by the description of the [NAME] chattel given by the [NAME]. In the present case what was done, although in a sense a voluntary act of [NAME], was done with reference to a particular quality of the subject matter of the bequest, which made the operation, if not essential, yet an act of importance with a view to the value of the particular chattel which was given" 158He held that the bequest was not adeemed because, at 247: "How could it be said that there was here nothing remaining upon which the terms of the bequest could operate, when, owing to the peculiar quality of the chattel that was described, it might undergo a change, which it did undergo, and had undergone at the time [NAME] made his codicil? He thought, looking at the quality of these bonds, and the way in which they had been dealt with by [NAME] before his codicils, that the chattels now averred to answer the description of the bequest were the chattels properly intended by the words of the [NAME]; and that upon the true construction of the [NAME] it passed, and the Court was bound to give effect to the [NAME] bequest." 159Fairly clearly, [NAME]'s knowledge that the conversion had taken place at the time he made his codicil is a piece of surrounding circumstances that could properly enter into a construction of the gift. 160Durrant v Friend (1852) 5 De G & Sm 343; 64 ER 1145 involved a [NAME] legacy of some items that had been insured. The goods perished at sea, and [NAME] drowned. [NAME] V-C held that the insurance money fell into the residue of the estate of [NAME]. His reasoning, at 346, 1147 was: "... if [NAME] had died before the destruction of the chattels, then an interest in them would have vested in the [NAME], and the [NAME] would have been trustees of the policy of insurance for them; but if the chattels had perished, and [NAME] had subsequently died, the benefit of the policy would not have passed to the [NAME], but it would have been a right of action in [NAME] in his lifetime, and the loss would have fallen on the [NAME], but the benefit of the policy would have constituted part of [NAME]'s estate. In this case [NAME] and the chattels had perished together, and it was difficult to say how such a case should be dealt with; it was essential to the right of the [NAME] that they should have some interest in the chattels; but as they were destroyed at the same time that [NAME] lost his life, the [NAME] never had, as he thought, any interest in them; and, therefore, their claim to the money in which the chattels were insured must fail." 161If [NAME] had died before the chattels were destroyed the [NAME] would have operated to pass the chattels to [NAME]. The effect of the subsequent destruction of the chattels would be decided in accordance with principles that govern what is to happen if a specifically given item of property is destroyed after [NAME]'s death and before it is transferred to [NAME]. That is quite a different situation to that of a [NAME] whose property is converted without his authority, or other proper legal authority. 162Taylor v [NAME] concerned a shopkeeper who became [NAME]. His wife, the people [NAME] as [NAME] of his [NAME] and the [NAME] in that [NAME] joined in an agreement for the sale of the leasehold premises and stock in trade. That was done without any proceedings in lunacy having been taken. [NAME] died before the contract of sale was completed. Sir W Page Wood V-C held, in an action brought concerning the administration of a [NAME] estate of [NAME], that it was appropriate for the agreement to be carried into effect. However, he also said, at 479-480, 1016 that: "... the stock in trade consists of property which in its nature required to be dealt with. No one can entertain a doubt that it was right that this property should be disposed of, the lady being [NAME] herself of carrying on the business. In strictness, however, the proper course would have been to have taken out a commission of lunacy, but that was not done; and, not being done, there was no person in a position to do any act which could confer a lawful title to any portion of the property, except the title which would be given by the sale of articles to customers, which passed by delivery in [NAME] course of trade. Sales effected in that manner not analogous to the preceding which was taken, and, perhaps, very properly in this case ... it was not an agreement which at the time of [NAME]'s death was binding on his property, and therefore, there being no equity between [NAME], the [NAME] must take it, according to the trust declared by the [NAME], in its converted state. I found my decision on this -- that at the time of [NAME]'s death this portion of his estate consisted in fact, not of money, but of the leasehold premises and stock in trade, which passed by that description to his [NAME]." 163That case clearly recognised the lack of authority of the widow, [NAME] and [NAME] to effect a sale that had the effect of adeeming the legacy. 164Against this background, it seems to me that [NAME] v [NAME] was based upon the conversion of the farming stock, in the particular circumstances, not effecting a change in substance in the subject matter of the bequest. That is a decision (perhaps a dubious decision, but it is unnecessary to decide) very specifically tied to the facts of the case. It is not in my view a decision that when a [NAME] who has become [NAME] does not know of the sale of an asset, or does not intend to sell the asset, precludes ademption occurring. Even though he referred to [NAME] v [NAME] took it to be an example of a sale in circumstances of necessity, that did not alter the substance of a bequest. In my view, that overlooks a significant part of the ratio in [NAME] v [NAME] , arising from the lack of authority of those who effected the conversion of the assets. 165Jenkins v [NAME] has not been treated in subsequent English authority as establishing the principle requiring knowledge or intention on the part of a [NAME] before a [NAME] gift can be adeemed. It was referred to in argument in [NAME] v [NAME] two years later (at 588), yet Sir [NAME] V-C regarded it as quite clear that a sale of a [NAME]'s property effected with authority could adeem a [NAME] gift ([137] above). It was referred to in the argument in In [NAME] ([138] above), but cut no ice with Chitty J. 166The decision in [NAME] was also based on Re [NAME] , a case in which a dealing by the [NAME] of a [NAME] without authority from the court to carry out that dealing was held not to affect the way in which [NAME]'s [NAME] would otherwise have operated. However, the essential fact for the outcome in Re [NAME] was that the action of the [NAME] was carried out without legal authority. 167Re [NAME] also relied on the decision in In re [NAME] [1994] 1 WLR 282. [NAME] held that there was no ademption of a gift of "the balance of my [NAME] higher deposit account number 10327719" when an [NAME] with an enduring [NAME] closed that account and paid the proceeds into a different account of the same branch of [COMPANY]. That conclusion was arrived at because: - as a matter of construction of the [NAME], the legacy "was effectively reference to a fund of money" (287), and the fund of money still existed, in the new account; and - there was great similarity in the terms on which the two accounts were held, so the second account was substantially the same thing as the first account (287). 168At 288 Neuberger QC makes some additional observations concerning "the conclusion I have come to" - that is to say, those observations are not the reason for the conclusion. It is at that stage that he says that: "... the conclusion I have come to appears to me to accord almost certainly with what [NAME] would have intended had she known of the removal of the monies from the first account to the second account. I think it unlikely that she knew of the transfer from the first account to the second account. It was the [NAME] defendant who effected the transfer on her behalf, and he was unaware of its potential effect on the terms of the [NAME]. Of course, in accordance with the observations I have cited from In re [NAME] [1907] 1 Ch 665, 675, the act of a [NAME] agent, as the [NAME] defendant was, must bind an estate with regard to ademption with all the same consequences as if it had been the act of [NAME]. However, in the same passage Sir Gorell Barnes P does appear to indicate that [NAME]'s knowledge of the facts that give rise to the alleged ademption is important, presumably because in the absence of such knowledge [NAME] would not have had an opportunity of altering his [NAME]." (emphasis added) 169The decision in [NAME] at 112 drew upon the portions I have emphasised from this section of the decision in [NAME] . Those portions are not part of the ratio. They refer to facts that might provide a judge with comfort that the decision arrived at for other reasons is in accordance with the merits of the case, but they do not provide legitimate reasons for concluding that no ademption had taken place. It is the passage that I have not emphasised that in my view should have been of critical importance in [NAME] . 170Though [NAME] also considered various American and Canadian authorities, it did not consider the English line of authorities that I have discussed at [137]-[147] above, relating to when a [NAME] gift of a person who had become [NAME] was adeemed. 171Overall, the American and Canadian authorities discussed in [NAME] revealed a division of opinion, but [NAME] made special mention of Re Estate of Pearl Swoyer, [NAME] 439 NW 2d 823 (SD 1989), a decision of the Supreme Court of South Dakota. I do not agree with a view of Judge Rich QC in Banks v National Westminster Bank plc [2005] EWHC 3479 (Ch); [2006] WTLR 1693; [2005] All ER (D) 159 at [22] that the decision in Swoyer proceeds on the construction of the statutes which regulate ademption in South Dakota. Rather, in Swoyer , Sabers J had recognised at [1]-[3] that South Dakota authority established that ademption statutes were exclusive and the court did not need to address common law rules. However, he then said that the relevant South Dakota statutes " do not address a situation where [NAME] is mentally incompetent from before the time her property was sold until her death" . Thus, Sabers J went on to consider the [NAME] law, and it was the [NAME] law that determined the outcome. At [4] he described the division in American opinion on the topic as follows: "A minority apply the 'identity test' which considers only whether the property is part of [NAME]'s estate at the time of death ... If the property is not among the decedent's assets, there has been an ademption.... The majority of jurisdictions considered [NAME]'s intention as material and a testamentary gift is adeemed only where it appears that such was [NAME]'s intent ... The courts focusing on [NAME]'s intent holds that there is no ademption where [NAME] becomes incompetent and the subject matter of a [NAME] bequests or devise is sold by a guardian." He preferred what he described as the " majority rule" . 172In my view there is an insuperable obstacle to applying this reasoning in Australia. It is that English authority from times when English authority was regarded as stating relevant Australian law, and current Australian authority, both hold that ademption operates in accordance with the principle that is the minority view in the United States. 173The conclusion in [NAME] at 116, was: " The result should be no different than if a [NAME] had converted or misapplied an asset in circumstances where the proceeds of the asset can be traced." I do not agree. Rather, the only circumstance in which it is legitimate for the proceeds of sale of a specifically given item of property to pass to the intended donee of that property, other than where the sale has been effected without authority or in some other fashion wrongfully, is where the specifically given asset has not been changed in substance. That is the law as stated in the passage from In Re [NAME] at 672 that I have quoted at [132] above, as stated in the High Court in [NAME] v [NAME] and [NAME] v [NAME] ([130] and [135] above) and as accepted in this Court in Perpetual Trustees Co v [NAME] ([134] above). 174Re [NAME]; ex parte the [NAME] (WASC, [NAME] J, 9 December 1997, unreported) is a decision on an ex parte application for advice to the administrator of [NAME]'s estate. The likely last [NAME] made a [NAME] devise of [NAME]'s house. The house was her only asset of significance. [NAME] J noted that the case before him differed from [NAME] in that in [NAME] the administrator who was proposing to sell the house knew of the terms of the [NAME]. However he held that "heart of" the reasoning in [NAME] "turns on the sale of property by a person other than [NAME] at a time when [NAME] is [NAME] of selling the property or of altering and existing [NAME] to give effect to [NAME]'s intentions in the changed circumstances" . He held it was not a material distinction whether or not the person effecting the sale knew of the terms of the [NAME]. I agree with that aspect of the decision. [NAME] J advised the administrator that if the proceeds of sale of the house were paid into a separate fund the sale would not adeem the devise. No mention was made of there being any legislation in Western Australia analogous to s 83 of the 2009 Act . In my view this decision is mistaken, for the same reasons that [NAME] is mistaken. It is because the sale of the house by a person with authority to do so would have the effect of adeeming the [NAME] devise that legislation like s 83 was enacted. 175Johnston v Maclarn [2002] NSWSC 97 is a decision of [NAME] (as His Honour then was) on a pleading point. In the course of it his Honour said: 13 [NAME] on Legacies , 4th ed ([NAME], London, 1847) at pp 329 and following, sets out the [NAME] rule with respect to the ademption of [NAME] legacies. The learned author says: "The word 'ademption' when applied to [NAME] legacies of stock or of money ... must be considered as synonymous with the word 'extinction'. For it should be observed, that if stock, securities, or money, so bequeathed, be sold or disposed of, there is a complete extinction of the subjects, and nothing remains to which the words of the [NAME] can apply (a): for if the proceeds from such sale or disposition were to be substituted and permitted to pass, the effect would be ... to convert a [NAME] into a [NAME] legacy." ... 15 As [NAME] notes at p 331, this view of ademption means that [NAME]'s intention is irrelevant. The only thing to be ascertained is whether [NAME] possessed the property in the [NAME] gift at the time of his death. If he did not, the legacy is adeemed by annihilation of the subject. 16 [NAME]'s approach has been followed ever since; see eg In re Rudge [1949] NZLR 752, 761, where Callan J affirms that: "In questions of ademption ... the [NAME] inquiry is not for [NAME]'s intention. The test appears to be whether at his death the property of which [NAME] has made a [NAME] gift in his ... [NAME] still belonged to him." 176I gratefully adopt those statements as correctly reflecting Australian law. 177In [NAME] v [NAME] J said that ademption depends on the intention of [NAME] as disclosed by the [NAME], although not upon any subsequent intention. He also said that if "the intention disclosed by the [NAME] is to give particular real estate and nothing else, then it does not matter how [NAME] ceased to have the real estate to give." However, those statements do not differ in substance from those of [NAME]. It is by a process of construction that one identifies the intention of [NAME] as disclosed in the [NAME]. As with any "intention" derived by a process of construction of a document, this is an objective intention, namely what the well-informed bystander would take from the words of the [NAME] to be the intention of the [NAME] of the [NAME]. It can be ascertained with the aid of evidence of surrounding circumstances, that enable the court to carry out the thought experiment of placing itself in [NAME]'s armchair for the purpose of construing the [NAME]. If the objective intention so ascertained is that a particular donee [NAME] receive a particular item of property, and as a matter of fact the donor does not own such an item of property at the time of his or her death, the gift is adeemed. [NAME] v [NAME] provides no justification for treating any subjective intention of a [NAME], or lack of it, as affecting how ademption operates. 178In [NAME] v [NAME] continued at [17]-[19]: ".... there is authority that there is an exception [to a gift being adeemed if its subject matter does not belong to [NAME] at the time of his death] where it can be shown that the property ceased to be part of [NAME]'s estate because of the unauthorized action of an agent (see eg Basan v Brandon (1836) 3 Sim 171; 59 ER 68) or [NAME] in lunacy; see eg Re [NAME] (1887) 37 Ch D 310). In Jenkins v Jones (1866) LR 2 Eq 323, 328, [NAME] considered that there was an exception to the ademption rule where the annihilation had taken place without [NAME]'s knowledge, even if it had occurred with implied authority. He based himself on Shaftsbury v Shaftsbury (1716) 2 Vern 747; 23 ER 1089, to which I shall return. Other cases can be found to the footnotes of Jarman on Wills , 8th ed Vol 2 ([NAME], London, 1951) at p1068. Although, it is a tad difficult to reconcile these cases with principle, see In re [NAME] [1907] 1 Ch 665, 671, they remain good law. This was the conclusion reached by [NAME] in [NAME] [1997] 1 Qd R 110 after reviewing all the authorities including American and Canadian cases and texts. 179He explained [NAME]'s Case at [22]: "... [NAME] of [NAME] made a [NAME] giving the contents of his leased house to [NAME]. He then went to Naples for his health and died without returning to England. Whilst he was away, a steward negotiated the surrender of the lease and removed the contents to [NAME] site. The steward wrote to [NAME] who approved the arrangement. The court held that [NAME] took nothing, but said that, had the goods been removed by fraud to disappoint the legacy or by a tortious act, the result would have been otherwise." 180For the reasons given earlier I respectfully disagree that [NAME] v [NAME] established an exception to the ademption rule "where the annihilation had taken place without [NAME]'s knowledge, even if it had occurred with implied authority." In [NAME] v [NAME] , the wife and son had no authority at all to sell the farming stock. 181Banks v National Westminster Bank plc [2005] EWHC 3479 (Ch); [2006] WTLR 1693; [2005] All ER (D) 159 was an ex parte decision. It arose from facts that differed from those of [NAME] only in that in [NAME] the [NAME] who effected the sale knew of the provisions of the [NAME]. Judge Rich QC at [14] said that that difference is "does not appear to me to be a sensible ground for distinguishing the present case" . 182Judge Rich at [22]-[23] is [NAME] a misapprehension that it was only by s 101(1) Mental Health Act 1983 (Eng) that a provision analogous to s 83 2009 Act was introduced into the law of England, but that error does not in my view affect his ultimate conclusion. He noted at [26] that [NAME] v [NAME] was decided two years after [NAME] v [NAME] , and that [NAME] v [NAME] was cited in it but not commented on. After setting out the ratio of [NAME] v [NAME] including the passage I have quoted at [137] above he continued, at [28]-[29]: "It seems to me that that conclusion stands with the decision in [NAME] v [NAME] only if [NAME] v [NAME] is confined to cases where the disposal which would otherwise result in an ademption is not only made without [NAME]'s knowledge but also without either his or any other lawful authority. In [NAME] v [NAME] the decision does not depend upon the ignorance of [NAME]; it is the absence of his intention to convert the property, because of course his family were acting without either his consent or other lawful authority, which, in my judgment, justifies the court's decision. I accept [NAME]'s view that [NAME] v [NAME] had not been overruled. It is not, however, in my judgment, authority for the proposition for which [NAME] contends. It is authority only for what was adumbrated in [NAME]'s case , namely that if the subject-matter is extinguished by fraud or by tortious acts unknown to [NAME] then an ademption would not follow." 183In my view this conclusion misstates the basis on which [NAME] decided [NAME] v [NAME] . Further, it is the presence of legal authority to convert the property that should have been critical in Re Vietel . Absent matters such as dishonest dealings, a [NAME] is bound by the acts of his [NAME] within the scope of the authority conferred, even if the [NAME] has no intention to carry out the [NAME] act that the [NAME] has carried out. This is no different to the way in which [NAME] is bound by acts, performed with proper legal authority, of whoever is administering his or her affairs, whether that administration is occurring [NAME] a court or [NAME] Tribunal management order or an enduring [NAME]. 184Orr v Slender [2005] NSWSC 1175; (2005) 64 NSWLR 671 arose concerning an [NAME] whose only substantial assets were a [NAME] and a sum of money. His [NAME] made a [NAME] devise of the [NAME], and gave the residue to the plaintiff. He also appointed the plaintiff as his [NAME] an enduring [NAME]. A consequence of the legislation establishing the institution of enduring powers of [NAME] was that the [NAME] did not have authority to do any act "as a result of which a benefit would be conferred on the [NAME]" . After the man became [NAME], the [NAME] sold the [NAME], and used a large part of the proceeds to pay for an accommodation bond at a hostel. [NAME] held that the [NAME] gift was thereby adeemed. He adopted the explanation of ademption given by [NAME] at [13] and [15] of [NAME] v [NAME] , and noted its consistency with the decisions in [NAME] v [NAME] and [NAME] v [NAME] . He held, at [30]-[31], that the limitation on the [NAME]'s authority did not apply to the sale of the [NAME], because that limitation applied only where the act of the [NAME] was a direct cause of a benefit to him. Hence he held it did not prevent an indirect benefit to the [NAME], such as arose when the sale of a [NAME] had the indirect consequence that the [NAME] became entitled to any surplus proceeds of the sale by virtue of being the [NAME] the [NAME]. I note that the sale occurred before, in particular, s 22 Powers of [NAME] Act 2003 became applicable, and that s 22 would now have the effect that it was the [NAME] who would receive the surplus proceeds. Even so, his Honour was in my view correct in holding that the [NAME] devise was adeemed by the sale. The cases of [NAME] and [NAME] v [NAME] were cited in argument, but not discussed in the judgment. 185Re [NAME] has been followed in several other first instance decisions: Mulhall v Kelly [2006] VSC 407; Ensor v Frisby [2009] QSC 268; [2010] 1 Qd R 146; Moylan v Rickard [2010] QSC 327; Simpson v Cunning [2011] VSC 466; Public Trustee v Lee [2011] QSC 409. Other first instance decisions have noted the conflict in the authorities concerning the correctness of [NAME] but did not need to decide whether [NAME] was correct: Re [NAME] [2009] VSC 184; (2009) 25 VR 27 at [55]; Power v Power [2011] NSWSC 288 at [36]. 186When one is considering whether the disposition of an asset of [NAME] has adeemed a [NAME] gift made by that person's [NAME], there is no legitimate basis of principle on which a disposition effected pursuant to an enduring [NAME] should operate in any different way to a disposition effected pursuant to the authority of the court, or of the [NAME]. [NAME] did not consider the whole of the well-established line of English cases that show that the disposition of an asset of [NAME] in accordance with the court order results in an ademption of a [NAME] gift of that asset. Insofar as it considered [NAME] v [NAME] and In Re [NAME] from that line of cases, it did not appreciate the basis upon which they had been decided. 187Victoria has an analogue to s 83 to the 2009 Act , but does not have an analogue to s 22 Powers of [NAME] Act . Hargrave J noted this in [NAME] v [NAME] , and at [42] said that "there is no sound reason why a sale by an administrator, appointed to fill the gap where there is no enduring [NAME], should lead to a different result that a sale by an [NAME] in like circumstances." As a matter of social policy, I agree. However, if one is considering what the law actually is, it seems to me that it is of critical importance that the only reason why a sale by an administrator does not adeem the subject matter of the [NAME] gift totally is because there is a statute that permits any surplus proceeds arising from a sale by an administrator to be notionally treated as being themselves the subject matter of the [NAME] gift. The reason why the statutory provision was enacted was precisely because, absent the statutory provision, ademption occurs as a result of such a sale. When there is no analogous Victorian statutory provision concerning sales effected [NAME], proper application of principle must require that the ademption occur. 188YOUNG [NAME] : I am indebted to [NAME] for his deep scholarship, particularly that exhibited in Appendix B. 189Going back to examine the law of lunacy and the law of inheritance in the early 19 th Century is no easy task. Not only does one find inconsistent decisions, succession to land and succession to personal property were dealt with by different court systems and lunacy cases were often dealt with on the basis of what the judge thought [NAME] would have done in a particular case. Thus, in Re [NAME] (1808) Collinson on Lunacy (Reed, London, 1812) Vol 1 p 297, Vol 2 p 574, [NAME] LC allowed a gift to a son of [NAME] for the premium to allow him to be articled to a solicitor. 190When I first considered this matter, it seemed to me that the line of cases in Queensland which have had some following elsewhere, commencing with [NAME] [1997] 1 Qd R 110 and particularly Ensor v Frisby [2009] QSC 268; [2010] 1 Qd R 146; 4 ASTLR 169 were well reasoned decisions which might provide assistance in the instant appeal. 191However, when one reads extensively and carefully the 19 th century cases, one reaches the reluctant view that the Queensland judges were misled in those cases by misapplication of the 19 th century law in some of the authorities on which their decisions were based. 192As [NAME] points out, those decisions read what [NAME] said in Jenkins v Jones (1866) LR 2 Eq 323, 328 literally, though expansively. When one considers the cases to which [NAME] referred, particularly Shaftsbury v Shaftsbury (1716) 2 Vern 747; 23 ER 1089 and Durrant v Friend (1852) 5 De G & Sm 343; 64 ER 1145, one can see that the rule is that ademption applies even if the loss of the property occurs without [NAME]'s knowledge or consent and innocently, such as the loss by shipwreck in [NAME] v Friend. 193It would be appropriate for those [NAME] who issue indices for noting up purposes to consider that [NAME] v [NAME] and [NAME] v [NAME] were not followed in this appeal insofar as they state the principle of ademption too widely. 194The only other comment I would make is that care must be taken in the future as to how the money set aside is to be treated. It is clear that resort may be had to it to maintain the [NAME]. Management consideration needs to be given as to whether any part of the interest on the money set apart should augment the fund in recognition that, had the realty not been sold, it would have most likely appreciated in value. 195Further, cases such as [NAME] (1881) 17 Ch D 241, 245 and [NAME] (1882) 22 Ch D 622, 627 note that merely setting proceeds of sale apart in a separate account may not be sufficient to alter the rights of parties. Particularly as Mr A is not a party to the present proceedings, it must be made clear that the proper [NAME] of the moneys set apart when the [NAME] dies is not being decided in this appeal. 196Accordingly, I agree with the orders that [NAME] proposes for the reasons he gives. 197SACKVILLE AJA : I am grateful to [NAME] for setting out the facts and the legislation relevant to this appeal. I agree with the orders proposed by his Honour and generally with his Honour's reasons, but I wish to make some observations of my own. 198The present case has some curious procedural features. The appellant (" [NAME] ") applied [NAME] s 63 of the [NAME] Act 1925 (" [NAME] Act ") or, alternatively, [NAME] s 83(5) of the [NAME] Act 2009 (" Guardian Act "), for judicial advice in relation to two questions. The questions are set out by [NAME] (at [51]). In addition, [NAME] sought an order, pursuant to s 83(5) of the Guardian Act, that s 83 of the Act did not operate to require any of the proceeds of sale attributable to the garage to be set aside for the benefit of any person, other than the [NAME] (" PBL "). 199RL commenced the proceedings because she was dissatisfied with the direction given by the [NAME] (" [NAME] ") on 10 June 2010. The [NAME] directed [NAME] to set aside the sum of $75,000, being the agreed value of the garage. As [NAME] has explained, the garage was specifically devised to Mr A [NAME] the terms of PBL's [NAME], made before PBL became a [NAME]. 200The direction made by the [NAME] contemplated that the sum of $75,000 could be used, if required, for PBL's continuing maintenance and welfare. The direction was affirmed on an internal review. However, the review decision added a " note of caution " that the earmarked sum of $75,000 could not be used for PBL's maintenance or welfare until the balance of her funds had been exhausted. As [NAME] has observed (at [28]), the note of caution was apparently intended as a variation of the direction given on 10 June 2010. 201RL could have sought review of the [NAME]'s decision in the Administrative Decisions Tribunal (" ADT "), pursuant to s 70(1) and (3) of the Guardian Act, since the decision was a " reviewable decision " as defined in s 8 of the Administrative Decisions Tribunal Act 1997 (" ADT Act "). The ADT, upon an application for a review of a reviewable decision, is to decide what the correct and preferable decision is having regard to the material before it, including any relevant factual material and any applicable law: s 63(1) ADT Act. The ADT has power to join a person as a party to the proceedings if the ADT considers that the person ought to have been joined as a party or is a person whose joinder is necessary to the determination of all matters in dispute in the proceedings: s 67(4) ADT Act. Had an application for review been made to the ADT, it could have made an order joining Mr A as a party, since he clearly had an interest in the preservation of the fund representing the proceeds of sale of the garage. 202Instead of instituting proceedings in the ADT for review of the [NAME]'s decision, [NAME] elected to seek judicial advice in the Supreme Court. The advice was initially sought ex parte , but the Court directed that the [NAME] (a statutory corporation) be joined and it acted, in effect, as a contradictor. It appears that Mr A was given notice of the proceedings but, despite his obvious interest in the outcome, was never joined as a party. No point was taken by either as to the consequences, if any, of Mr A's non-joinder. 203RL's summons sought only judicial advice on the questions identified by the [NAME] Judge and did not seek additional relief, except the order [NAME] s 83(5) of the Guardian Act and the customary prayer for such " further or other orders as the Court thinks appropriate ". The summons was subsequently amended to seek directions pursuant to s 61(1) of the Guardian Act but, as [NAME] has pointed out (at [54]), the amendment was misconceived. 204RL's decision to seek judicial advice rather than review by the ADT perhaps may have been influenced by a belief that the application was more likely to result in an order that [NAME]'s costs be paid out of PBL's estate. In certain circumstances, the ADT has power to award costs in relation to proceedings before it: ADT Act, s 88(1A), (2). However, it is not entirely clear whether the statutory criteria the ADT is required to take into account would permit it to order that the costs of parties on the review of a decision of the [NAME] be paid out of the estate of [NAME]. 205The [NAME] Judge construed s 83(5) of the Guardian Act as supporting declarations and orders that the " [NAME] " was not to be spent until the " [NAME] " were exhausted and that the [NAME] was to be invested separately from [NAME]. His Honour took the view that because s 83(2) of the Guardian Act requires the " surplus money " arising from any sale to be of the same nature as the property sold, the surplus money had to be preserved until [NAME] in [NAME]'s estate were exhausted (at [94], [99]). 206His Honour did not merely answer the questions that had been submitted to the Court for judicial advice. In addition, he made what were described in this Court as " freestanding " declarations and orders. These declarations and orders had not been sought by [NAME] and the [NAME] had not filed a cross-claim. Nonetheless, Mr [NAME] SC, who appeared for the [NAME] both before the [NAME] Judge and on appeal, assured this Court that [NAME]'s representatives had not objected to the declarations and orders being made. 207In my view, the reasoning of the [NAME] Judge reads too much into s 83 of the Guardian Act. Section 83(2) states that the " surplus money " arising from the sale of real property is taken to be of the same nature as the property sold. However, this statutory direction does not necessarily lead to the conclusion reached by the [NAME] Judge. It is one thing for proceeds of the sale of a garage to retain their " nature " as real property. It is [NAME] to read the legislation as requiring the proceeds of sale of an asset to be set aside in order to preserve a [NAME] devise or bequest of the asset (where the gift is in a [NAME] made by [NAME] before she became [NAME]). In other words, the statutory direction that the proceeds of sale of the garage retain their nature as real property does not establish that the proceeds of sale should be segregated from other assets of PBL and preserved intact until the other assets are exhausted. In substance, I agree with the reasoning of [NAME] on this issue (at [96], [103]). 208On the appeal, as [NAME] points out, Mr [NAME] relied on ss 64 and 65 of the Guardian Act to support the declarations and orders made by the [NAME] Judge. No notice of contention was filed (as it should have been) on behalf of the [NAME]. Nonetheless, [NAME], who appeared with [NAME] for [NAME], did not object to Mr [NAME] relying on ss 64 and 65. 209For the reasons given by [NAME], I think that ss 64 and 65 of the Guardian Act support the declarations and orders made by the [NAME] Judge, subject to the exceptions and modifications proposed by his Honour. I agree that, having regard to the small sum at stake in the litigation, the orders deal appropriately with the procedural difficulties I have identified. I therefore agree with the orders proposed by [NAME]. 210RL has in substance failed in her appeal against the answers, declarations and orders made by the [NAME] Judge. It follows that no order for costs of the appeal should be made in her favour against the [NAME]. 211I do not doubt that the Supreme Court had jurisdiction to entertain [NAME]'s application for judicial advice. This is so notwithstanding that [NAME] could have challenged the [NAME]'s decision by seeking review of the decision in the ADT, perhaps at less cost. But the existence of the jurisdiction to entertain [NAME]'s application does not necessarily mean that this Court should order that [NAME]'s costs should be paid out of PBL's estate, whether on an indemnity basis or otherwise. An applicant's choice of forum should not dictate a favourable costs order regardless of the outcome of the application. 212RL is one of the three [NAME] beneficiaries [NAME]'s [NAME] (see the [NAME] judgment, at [6]). She therefore has had a personal interest in pursuing the appeal, although she shares that interest with the other two [NAME] beneficiaries (her siblings). Bearing in mind that [NAME]'s appeal has been unsuccessful, if there was any risk that an order for the payment of [NAME]'s costs out of PBL's estate would leave PBL without adequate resources for her ongoing maintenance and welfare, I would not make such an order. However, in the particular circumstances of this case, there appears to be no risk that [NAME] be left without adequate resources.

Accordingly, I also agree with the costs orders proposed by [NAME]. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 March 2012