PAPPAS v COMMISSIONER FOR ACT REVENUE

Summary of decision

3. For the appeal to succeed, the applicant needed to satisfy the Appeal Tribunal that when section 232D was applied to the dutiable transaction in this case the assessed duty would be lower than the original assessment. Implicit in this task was the need to satisfy the Appeal Tribunal that the interpretation of section 232D(3) taken by the Original Tribunal was incorrect and the interpretation proffered by the applicant, or another interpretation resulting in less duty being payable, should be adopted.

4. The Appeal Tribunal is not satisfied that the interpretation of section 232D(3) proposed by the applicant is correct, and does not adopt that interpretation. The Appeal Tribunal is not satisfied that the correct interpretation and application of section 232D would result in a lower assessment of duty. Accordingly, the decision of the Original Tribunal confirming disallowance of the objection to the assessment is confirmed.

5. On the interpretation of section 232D preferred by the Appeal Tribunal, there is no exemption or reduction in stamp duty for transfers of dutiable property giving

1 In these reasons, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Appeal Tribunal’ or ‘Tribunal’ refers to the presently constituted tribunal. When discussing the first instance decision, the Tribunal uses the expressions ‘Original Proceedings’, ‘Original Decision’, ‘Original Tribunal’ and ‘Presidential Member’. In the Original Proceedings, the appellant was the applicant, and the appeal respondent was the respondent. The Tribunal frequently refers to the appeal respondent in these reasons as the ‘Commissioner’. effect to a share of a residual estate. If section 232D is intended to apply in such situations, this should be clarified by legislative amendment.

Background

6. The facts of this matter are not in dispute and were summarised by the Original 2 Tribunal in the Original Decision as follows: 3. The testator, the late Mrs Eugenia Pappas died in February 2021 (the Deceased). She left a will dated 30 January 2014 (the will). As at that date, she was the owner of the Weston property, which was her principal place of residence. 4. The deceased was the mother of three children, Bill, Paul and Georgina (the beneficiaries). Under clause 5 of the terms of the will, each of the deceased’s children were entitled to an equal and 3 4 undifferentiated share of the residue of their mother’s estate. Bill was appointed as executor and trustee under the will. … … 7. Probate of the will was granted to Bill by the ACT Supreme Court on 22 April 2021. The estate was determined to consist of assets worth $1,357,229.42 consisting of: (a) The Weston property, valued by Egan National Valuers $1,000,000; (b) Proceeds of bank accounts held with St George Bank $328,764.17; and (c) Proceeds of bank accounts held with ANZ bank $28,465.25. 8. The three beneficiaries reached an agreement as to how the estate is to be divided equally between them. 9. The will contained a provision that expressly empowered the Trust “to appropriate any part of the real property of the estate in satisfaction of a share of any person in the estate” (Clause 6.1(n)).

2 Pappas v Commissioner for Revenue [2023] ACAT 24 (Original Decision) 3 When used in this decision, the terms ‘residue’ and ‘residual estate’ refer to that part of a deceased estate which remains after payment of debts, liabilities, expenses and specific gifts in the will: In the Will of Harvey [1990] 2 Qd R 508 at 511–12 4 The Will provided: 5. Distribution of Estate 5.1 My executors hold my estate on trust: (a) … to divide the whole of my estate equally among those of my children …. who survive me. 10. The [appellant] wished to receive his share in the estate by way of an 5 in specie transfer of the Weston property, while each of the others would receive their interest in the estate in cash. 11. To give effect to this, the parties agreed that the [appellant] and his wife Helen would purchase the balance of the estate’s interest in the Weston property from the estate to enable a full transfer of the Weston property to them. To facilitate this arrangement, the executor and the beneficiaries agreed to enter into a Deed of Family Arrangement (the Deed). The Deed was signed on 28 October 2021, with Bill signing it in his capacity as both executor and beneficiary, and by Paul and Georgina in their capacities as beneficiaries. 12. Under the Deed it was agreed that: (a) Each party was entitled to approximately $450,000 (after expenses) (clause 3.1(d)); (b) Bill would receive his entitlement by way of an in specie appropriation of the Weston property to the value of $450,000 (clause 3.1(e)) (c) Bill would purchase an additional share in the Weston property such that he would receive a 50% interest in the Weston property as a tenant-in-common (Clause 3.1(f)(i)); (d) Helen would purchase the remaining share in the Weston property as a tenant-in-common with Bill (clause 3.1(f)(ii)). 13. On 28 October 2021 a title search of the Weston property was 6 performed showing the title held in the name of Bill as executor. On 4 November 2021 a transfer from Bill as executor, to Bill and Helen as tenants-in-common in equal shares was prepared. The transfer was prepared in anticipation of a settlement at which the Commonwealth Bank would produce funds to enable Bill and Helen to purchase the balance of the Estate’s interest in the Weston 7 property, after an appropriation to Bill, from the Estate. 14. On 24 November 2021 a settlement was effected whereby the Commonwealth Bank, on behalf of Bill and Helen, paid $570,000 into the Estate in return for receipt of a signed transfer from Bill as Executor to Bill and Helen as tenants-in-common in equal shares. This sum was made up of: (a) $552,430.46 purchase funds; and (b) $17,569.54 excess funds on account of anticipated conveyance 8 duty and legal costs.

5 In specie is Latin for “in actual form”. It means transfer of non-monetary assets without the need to convert them to cash 6 Applicant’s statement dated 10 November 2022 at [20] 7 Applicant’s statement dated 10 November 2022 at [22]-[24] 8 Applicant’s statement dated 10 November 2022 at [25] 15. On 25 November 2021 a cheque received from the Commonwealth Bank in the sum of $570,000 was banked into the KJB Law Practice Trust Account as funds in the Estate. Once the cheque from the Commonwealth Bank was cleared, a sum of $921,208.63 was held on 9 account of the estate of the Deceased. 16. On 1 December 2021 a draft Distribution Statement was approved without amendment. In accordance with the calculations shown in the Distribution Statement, after expenses each beneficiary was entitled to a distribution from the Estate of the Deceased to the value of 10 $447,569.54. 17. On 1 December 202[1], cash distributions of $447,569.54 were made to each of Paul and Georgina in satisfaction of their respective rd entitlements to a 1/3 share of the residue of the estate. Bill received an appropriation of the Weston property to the value of $447,569.54. In addition to the appropriation, Bill received a dutiable transfer of real property to the value of $52,430.46 and Helen received a 11 dutiable transfer of real property to the value of $500,000.35. 18. On 5 January 2022 the respondent’s office issued a Conveyance Duty Notice of Assessment in respect of the Weston property in the sum of $18,597.12. That sum was calculated on the basis that: (a) the transfer to Bill and Helen was a transfer made “under, but only partly in conformity with” a trust contained in the will, and was therefore covered by section 232D(3) of the Duties Act; and (b) the “dutiable value” on the Property was $666,600, being two-thirds the value of the Weston property (i.e. two thirds of the 12 value of the dutiable property transferred). 19. By letter dated 23 February 2022 the [appellant], via his lawyers, objected to the respondent’s assessment. The [appellant] says that the dutiable value is $550,000, being the dutiable value of the Weston property, after allowing for his interest in that property transferred under the will i.e., $1,000,000 minus his entitlement under the will (minus the value of his appropriation under the will, rather than just 13 the value of the portion of the Weston property transferred).

7. In the objection referred to in the previous paragraph, solicitors acting for the appellant advised that they had had previous matters with similar circumstances in which the duty payable had been assessed by reference to the value of the entire

9 Applicant’s statement dated 10 November 2022 at [27] 10 Applicant’s statement dated 10 November 2022 at [30]-[31]] 11 Applicant’s statement dated 10 November 2022 at [32]-[34] 12 Tribunal documents at T5, T11 and T14 13 Tribunal documents at T38-T39 14 estate and not just on the value of the property. The Commissioner disallowed the objection (Commissioner’s decision) and the assessment of duty was maintained.

8. On 16 September 2022, the appellant commenced proceedings (original proceedings) in ACAT seeking review of the Commissioner’s decision. A hearing was conducted on 16 December 2022. The Original Tribunal on 28 April 2023 provided its decision (original decision) confirming the Commissioner’s decision.

9. On 26 May 2023 the appellant lodged an appeal from the original decision. The tribunal made orders for the conduct of the appeal on 21 June 2023. On that day the tribunal ordered that the appeal would proceed as a review of the original decision.

10. A hearing was held in the appellate division of the tribunal on 15 September 2023. At the end of the hearing the Appeal Tribunal made orders that allowed the parties to provide further submissions, and otherwise reserved its decision.

11. In addition to the documents lodged by the parties in the original proceedings, the Appeal Tribunal had before it the following documents filed in the appeal: (a) Appellant’s supplementary submissions dated 3 August 2023 (b) Commissioner’s outline of submissions dated 29 August 2023 (c) Appellant’s submissions, Error Identified for Purposes of the Rehearing, handed up at hearing dated 15 September 2023 (d) Appellant’s supplementary submissions dated 9 October 2023 (e) Commissioner’s outline of submissions dated 30 October 2023 (f) Appellant’s supplementary submissions – reply dated 8 November 2023.

12. The delay in delivering this decision is unacceptable, and I take full responsibility and apologise to the parties for it. There are no excuses, but the parties deserve an explanation. The Appeal Tribunal as originally constituted consisted of myself

14 Tribunal documents at T39 (presiding) and Presidential Member Spender. A comprehensive draft was prepared by Presidential Member Spender in the first part of 2024. Finalisation of the decision was delayed due to my competing commitments in the tribunal, which never seemed to allow the length of time necessary to read back into, research and fully grapple with the legal issues. Ultimately, Presidential Member Spender became unavailable from December 2025 and on 10 December 2025 the Appeal Tribunal was reconstituted to consist of myself alone. The legislative framework

13. Part 2.1 of the Duties Act 1999 (Act) provides that a transfer of land in the ACT is a form of “dutiable transaction” which requires the transferee to pay the assessed duty to the Territory government.

14. The relevant parts of sections 7 and 10 state as follows: Section 7: Imposition of duty on certain transactions concerning dutiable property (1) This chapter charges duty on— (a) a transfer of dutiable property … (2) A transfer or transaction mentioned in subsection (1) is a dutiable transaction for this Act. Section 10: Dutiable property (1) Dutiable property is any of the following: (a) land in the ACT. …

15. In certain circumstances stipulated in the Act, duty will not be payable if the transfer occurs as part of the administration of a deceased estate. This is dealt with in section 232D as follows: 232D Deceased estates (1) Duty under this Act is not payable in relation to the following: (a) a transfer of dutiable property not made for valuable consideration by the legal personal representative of a deceased person to a beneficiary if the commissioner is satisfied that the transfer is— (i) a transfer made under and in conformity with the trusts contained in the will of the deceased person or arising on an intestacy; or (ii) a transfer of property the subject of a trust for sale contained in the will of the deceased person; (b) a consent by a legal representative of a deceased person if the commissioner is satisfied that the consent is to a transmission application by a beneficiary; (c) a transmission application to a devisee if the commissioner is satisfied the devisee is also the sole legal representative; (d) a chapter 3 transaction made consequent on the death of a person if the transferor is the executor of the will of the deceased person, the administrator of the estate of the deceased person or a beneficiary of the will or estate of the deceased person; (e) an application to register a motor vehicle made by— (i) a person in whom an interest in the vehicle has vested as a personal representative of a deceased person in whose name the vehicle was registered in the ACT; or (ii) a person who has become beneficially entitled to the vehicle following the death of a person in whose name the vehicle was registered in the ACT; or (iii) a person who has become beneficially entitled to the vehicle by a right of survivorship following the death of a former joint owner if, at the time of the death of the former joint owner, the vehicle was registered in the ACT. (2) Subsection (3) applies to a transfer of dutiable property in relation to which duty is payable under chapter 2 (Transactions concerning dutiable property) if the commissioner is satisfied that the transfer is made under, but only partly in conformity with, a trust contained in the will of a deceased person or arising on an intestacy (the trust). (3) The dutiable value of the property is worked out as follows: X – Y X means, if all the dutiable property were transferred in conformity with the trust, the unencumbered value of the property. Y means the unencumbered value of the express beneficial interest in the property transferred in conformity with the trust. Example—dutiable value Under a will, Brad is entitled to a 2/3 share in a house and Josh is entitled to a 1/3 share. The unencumbered value of the house is $480 000. Josh and Brad agree that Brad will buy Josh’s share in the house. With the consent of Josh and Brad, the legal personal representative of the deceased person under the will transfers the whole of the interest in the house to Brad. The commissioner determines that the unencumbered value of the express beneficial interest in the property transferred to Brad in conformity with the trust under the will is $320 000. The dutiable value of the transfer is $160 000. (4) For subsection (3), a person does not have an express beneficial interest in property the subject of a discretionary trust. (5) In this section: interest— (a) means a proprietary interest; and (b) includes an entitlement to a proprietary interest under the will, or on the intestacy, of a deceased person.

16. Focussing on the relevant aspects of this provision, section 232D(1)(a)(i) provides that duty will “not be payable if the transfer in question is not ... for valuable consideration by the legal personal representative of a deceased person to a beneficiary [and] if the Commissioner is satisfied that the transfer is ... made under and in conformity with the trusts contained in the will of the deceased person”. As is discussed in detail in the authorities referred to by the parties, the word ‘conformity’ is strictly interpreted in this context to mean completely identical – no more and no less.

17. Subsections 232D(2) and (3) deal with the situation where a transfer of land is ‘made under, but only partly in conformity with’ the trusts contained in a will. As stated by the Original Tribunal ‘[i]n effect, section 232D establishes an exception to the requirement to pay duty for transfers made “in conformity with trusts established under a will”, and a partial exception for transfers partly in conformity 15 with a will’.

18. The Act is a ‘tax law’ for the purposes of the Taxation Administration Act 1999 (Taxation Administration Act), so a taxpayer may object to an assessment of their liability to pay duty. If the objection is disallowed by the Commissioner the taxpayer may seek merits review of the relevant decision in the tribunal, as 16 happened here. While merits review is a de novo hearing, the Original Tribunal was not operating at large to put in place an assessment of duty that it considered appropriate. The Original Tribunal stood in the same position as the Commissioner in considering the objection to duty, and just as before the

15 Original Decision at [21] 16 Sections 107A(1)(a) and 108A Taxation Administration Act Commissioner the applicant bore the onus of establishing to the satisfaction of 17 the Original Tribunal that their objection should be allowed.

19. The task of the Appeal Tribunal is yet a further step removed from the original assessment decision. Recently in Saunders v South Canberra Holdings Pty Ltd ACN 606 747 602 (Saunders) the tribunal stated the principles that apply in the appellate jurisdiction as follows: The appellant is required to show that the Original Tribunal made an error of fact or law that was material to the result. An appeal tribunal must determine whether the decision appealed against is wrong because an original tribunal fell into an error of law, made a finding of fact that is clearly wrong or exercised a discretion on a wrong principle or in a way 18 that is clearly wrong. The error must have affected the result.

20. On appeal, then, it is for the appellant to satisfy the Appeal Tribunal that the Original Tribunal had fallen into error in a material way when confirming the Commissioner’s decision to disallow the objection.

Summary of the parties’ arguments about the interpretation of section 232D

21. The parties agreed that subsections 232D(2) and (3) applied to this dispute, that is, the transfer had been made under but only partly in conformity with a trust contained in the will of a deceased person.

22. The major issue arising at first instance and in this appeal was the interpretation and application of section 232D(3), and in particular how to calculate the variable ‘Y’ for the purposes of the test of X – Y set out therein. To quote from the Original Decision: (a) The parties agree that ‘X’ is the value of Weston property, being $1,000,000; (b) In relation to ‘Y’: (i) The Commissioner says that the value of ‘Y’ is $333,400, being one third the value of the dutiable property transferred, or one third the value of the Weston property (in other words, the Commissioner focuses only that part of the disposition that is dutiable); and

17 Section 101(3) Taxation Administration Act 18 Saunders v South Canberra Holdings Pty Ltd ACN 606 747 602 [2023] ACAT 34 at [7] (footnotes omitted) (ii) The appellant says that ‘Y’ is $447,000, being one third the 19 unencumbered value of the interest transferred under the will.

23. This point may be further streamlined by stating that the parties disagreed about the reference to ‘the property’ in the definition of ‘Y’ in section 232D(3). The Commissioner said it means the taxpayer’s interest in ‘dutiable property’ whereas the appellant argued that the concept is broader and means the taxpayer’s interest in the estate.

24. At first instance the Original Tribunal found that the reference to ‘the property’ in section 232D(3) can only reasonably mean the dutiable property and on that basis confirmed the decision under review.

The grounds of appeal and appellant’s submissions

25. The appellant argued that the Original Tribunal had erred in law at paragraphs [47], [77] and [81] of the Original Decision.

26. Paragraph [47] of the Original Decision states: The applicant in Bloore could not establish as a matter of fact that there had been an agreement between the beneficiaries to vary the trusts as per section 63(2) of the NSW Act (emphasis added). That such an agreement was made in the present case is not in doubt. Accordingly, the [appellant] says the present case is distinguishable from Bloore because in this case there is clearly a deed of family arrangement, and also that in this case there is to be an appropriation of a proportion of the estate in satisfaction of the entitlement, not in excess of it. (footnotes omitted)

27. The appellant argued that when the Original Tribunal stated (in the second sentence of the paragraph) “That such an agreement was made in the present case is not in doubt”, this was in error. The appellant submitted that in the current case 20 there was no agreement between the beneficiaries to vary the trusts in the will.

28. Paragraphs 77 and 81 of the Original Decision read: [77] What was relevantly transferred under the will was not one third of the estate, but rather a distinct one third the value of the real property. The Deed of Family Arrangement that alters this

19 Original Decision at [23] 20 Appellant’s submissions, Error Identified for Purposes of the Rehearing, handed up at hearing dated 15 September 2023, page 1 arrangement, creating an entitlement in the real property that is not in conformity with the will. [81] Accordingly, I am satisfied that the reference to “the property” in section 232D(3) can only reasonably mean “the dutiable property.” Accordingly, the value of ‘X’ is $1 million, and the value of ‘Y’ is $333,400, being one third of the dutiable property transferred. The dutiable value is $666,6000.00. The Commissioner’s calculation is correct.

29. In the application for appeal filed on 26 May 2023, the appellant argued the Original Tribunal was in error in paragraphs [77] and [81] of the Original Decision for the following reasons: The Original Tribunal erred in law in holding for the purposes of Section 232D(3) Duties Act 1999, that the value of the dutiable property transferred to Bill under, but only partly in conformity with the trust contained in, the will was $333,400 and not $447, 569, in circumstances where: a. the executor held the estate on trust contained in the will to divide it between the three children of the testator; b. the trust contained in the will empowered the executor to appropriate part of the real property of the estate to one child in satisfaction of that child's share in the estate; c. the value of Bill's 1/3 share in the estate was $447,569; d. exercising the power of appropriation under the trust contained in the will, the executor appropriated part of the real property equal in value to $447,569 to Bill; e. in furtherance of the obligation to divide the estate, the executor transferred to Bill a 50% interest in the real properly (being dutiable property) consisting of i. the appropriated part, and ii. a further part equal in value to $52,200; f. with result that the appropriated part was transferred to Bill under, 21 but partly in conformity with the trust contained in, the will. 22

30. Relying on Dirkis v Public Trustee and Guardian & Ors and Gonzales v 23 Claridades, the appellant argued that: (a) There is no point prior to end of the administration that any beneficiary has anything more than a one-third interest in the residue of the estate.

21 Application for appeal filed on 26 May 2023 22 [2023] ACAT 49 23 [2003] NSWCA 227 (b) During the period of administration a beneficiary cannot point to any particular piece of property which is theirs. (c) The administration is not ended until the executor/trustee has made all appropriations. (d) The trusts of the will do not crystallise until the moment the administration ends. (e) When the executor/trustee has made the appropriation and then stands ready to transfer a beneficiaries' interest to them, what is being transferred 24 in conformity with the trust is delineated.

31. The appellant contended that it is critical to appreciate the legal effect of the express power of appropriation under clause 6.1 (n) of the will. It was submitted that nowadays competently drawn wills invariably incorporate an express power of appropriation. The appellant argued that in circumstances where there are a mix of assets forming the residue of the estate a testator will commonly desire the executor to have the ability to stream specific assets to specific beneficiaries using the power of appropriation, and that such desire is consistent with the beneficial 25 nature of the act of giving to a beneficiary. It was pointed out that even if not expressly included in the instructions of the testator, the power of appropriation 26 is granted by statute.

32. The appellant argued that the exercise of the power of appropriation is an action that is itself fully in conformity with the trusts of a will if it results in the 27 beneficiaries receiving what the testator provided for them to receive.

33. The appellant further argued that in the present case there was no variation of the trusts in the will because each beneficiary was entitled to an undivided one-third share of the residue of the estate. Each beneficiary was not entitled to a one-third share of the real property forming part of the residue of the estate. In the present case no beneficiary received more (or less) than they were entitled to under the

24 Appellant’s Submissions, Error Identified for Purposes of the Rehearing, handed up at hearing dated 15 September 2023 25 Appellant’s submission dated 3 August 2023 at [2] -[5] 26 See, for example, section 46 of the Trustee Act 1925 (ACT) 27 Appellant’s submission dated 3 August 2023 at [5] trusts in the will. Each beneficiary has received precisely the entitlement expressly provided for in the will. Each beneficiary has received their entitlement in a form expressly provided for in the will. Whilst the Deed of Family Arrangement has recorded the exercise of the power of appropriation contained in clause 6.1 (n), it does so only to create a written record of the manner in which 28 the trusts in the will had been carried out. It does not vary the trusts in the will.

34. The appellant submitted that the operation of section 232D should be approached on the basis that there has been no variation to the trusts of the will. Their submissions continue as follows: 15. 'Y' for the purposes of the formula in Section 232D(3) is defined: 'Y' means the unencumbered value of the express beneficial interest in the property transferred in conformity with the trust. 16. It is common ground that Bill's interest in the estate has a value of $447,569. 17. ln conformity with the trusts of the will, Bill is entitled to receive his entire interest in the form of an appropriation of real property to the value of $447,569. Bill in fact received an appropriation of real property to the value of $447,569 in satisfaction of his entire interest in the estate. 18. 'Y', being the unencumbered value of the express beneficial interest in the property in conformity with the trust, is $447,569. 19. The balance of the property transferred, not in conformity with the trusts of the will, which is dutiable is 'X - Y' = $1,000,000 - $447,569 = $552,43L. 20. Section 232D(2) of the Duties Act reads: Subsection (j) applies to a transfer of dutiable property in relation to which duty is payable under chapter 2 (Transactions concerning dutiable property) if the commissioner is satisfied that the transfer is made under, but only partly in conformity with, a trust contained in the will of a deceased person... [emphasis added] 21. ln this case, the transfer to Bill of real property to the value of $447,569,was made fully in conformity with the trust contained in the will of the Nioula utilising the power of appropriation, ln addition to the appropriated part, a further part equal in value to $52,431, being of dutiable property, was transferred, which is why 29 subsection (3) applies.

28 Appellant’s submissions dated 3 August 2023 at [6]- [12] 29 Appellant’s submissions dated 3 August 2023 at [15]-[21] The Commissioner’s submissions 30

35. The Commissioner relied upon its submissions in the appeal as well as its 31 written outline of submissions filed in the Original Proceedings.

36. The Commissioner argued there is no dispute that what has been transferred is an express beneficial interest in the Crown Lease. That is, the legal and beneficial interest in the Weston property has been transferred to William Pappas and Helen Pappas respectively, to be held as tenants in common in shares of 50 per cent each. The issue, therefore, in finding the meaning of Y is determining the meaning 32 of ‘in conformity with the trust’.

37. Clause 5 of the Will provides that the Estate is held on trust by the Executors ’to divide the whole of my estate equally among those of my children, … who survive me’. As all three children survived the testatrix, the whole of the Estate was to be divided equally in thirds.

38. The Commissioner pointed out that section 139 of the Legislation Act 2001 (Legislation Act) stipulates that, in working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation. ln this instance, the apparent meaning of the phrase ‘property transferred in conformity with the trust’ is property transferred in compliance with the trusts in the will. The will itself does not indicate the intended meaning of the word ‘equally’. ln succession law, however, those words are commonly understood as words of severance which would operate with the 33 effect that beneficiaries of a class would take property as tenants in common.

39. Moreover, in the Territory, even without words of severance, a disposition of a beneficial interest in property to or for two or more people beneficially is taken to be made to or for them as tenants in common, and not as joint tenants unless the instrument (here, the will) expressly provides that the beneficiaries take as

30 Commissioner’s submissions dated 30 August 2023 31 Commissioner’s outline of submissions dated 29 November 2022, referred to in Commissioner’s submissions dated 30 August 2023 at [6] 32 Tribunal documents at T7 33 Hutley's Australian Wills and Precedents (10th Edition), Lexis Nexis 2021 at [27 .8] 34 joint tenants. It is apparent from these rules, argued the Commissioner, that each child was entitled to a third of the Weston property as tenants in common (and a third of all other assets of the estate, noting there were no express gifts). In other words, each was entitled to a divided interest of one third of the property.

40. This conclusion was submitted to be supported by relevant judicial guidance in relation to the phrase ‘in conformity with the trusts contained in the will’. ln 35 Sanders v Chief Commissioner of State Revenue, NSW Administration Decision Tribunal Appeal Panel, stated the following: The Tribunal considered the commentary on the provision in a standard service (Hills Duties Legislation) which referred to a Court of Appeal 36 decision in Darcy v Commissioner of Stamp Duties. The Tribunal also 37 referred to Vickery v Woods. … Both of these cases dealt with whether particular circumstances involved transactions that were 'in conformity with the trusts contained in the will'. The critical dicta in Darcy's case are referred to in the decision of the Tribunal at [first instance]. They are: 'The transfer must be both under and in conformity with the trusts upon which the property is held. It is not sufficient that the transfer not be inconsistent with those trusts. Where there has been a family arrangement to vary the trusts of a will, a transfer to give effect to that arrangement will not be a transfer under and in conformity with the will.'

41. Applying the above interpretation to the facts and more specifically, applying the formula in s 232D(3) of the Act, the Commissioner argued that the dutiable amount of the property using the formula X - Y was correctly assessed as being $666,600 (allowing for differences in rounding). The X figure is $1,000,000, that being the unencumbered value of the Weston property. The Y figure is $333,300, which is the ‘unencumbered value of the express beneficial interest in the property transferred in conformity with the trust’. The Weston property was transferred to one beneficiary (Bill) and one non-beneficiary (Helen), with each to hold 50 per cent as tenants in common. Under the will, each beneficiary was bequeathed 33 per cent of the estate (as tenants in common). Therefore, the

34 Referring to section 210 Civil Law (Property) Act 2006 35 [2003] NSWADTAP 22 at [7]-[9] 36 Unreported 11 September 1967 37 [1952] HCA 7 express beneficial interest in the property transferred in conformity with the trust 38 is 33 per cent of the value of the Weston property.

42. The Commissioner pointed out that the ordinary grammatical meaning of subsection 232 D(3) – particularly the significance of the use of the definite article “the” to refer to “property” in the definition of “Y” - was analysed in detail in the 39 decision in the Original Proceedings. The Commissioner adopted the analysis 40 of the Original Tribunal. The Commissioner said that once the above proposition is accepted, there can only be one result from the application of section 232D(3) in the present case, which is that the deceased estate contained only one item of dutiable property: the Weston residence. The unencumbered value of the Weston property was agreed to be $1 million. The unencumbered value of the express beneficial interest in that property transferred in conformity with the trusts contained in the deceased’s will was one-third, namely $333,400 (rounded). The deed of family arrangement provided for a different proportion of the Weston property to be transferred to the appellant and to the extent that it did so, it was not a transfer of the “express beneficial interest” in the Weston property 41 transferred in conformity with the will.

43. The Commissioner initially contended that, properly analysed, the effect of the deceased’s will in the present case was that it did entitle each beneficiary to a one third share of the Weston property (as tenants in common), just as it entitled each beneficiary to a one third share of each of the other assets in the estate. It was then up to the executor to use his powers under the will to achieve an overall distribution of one third of the value of the estate to each beneficiary. One way that could have been achieved, which would not have resulted in any liability for duty, would have been to convey the Weston property from himself as executor to himself and the other beneficiaries as tenants in common in the proportions of one third each. That course of action would have been in accordance with the

38 Commissioner’s reasons statement dated 9 August 2022 at T9 39 Commissioner’s submissions dated 29 August 2023 at [8] 40 Commissioner’s submissions dated 29 August 2023 at [7] referring to Original Decision at [69] - [70] 41 Commissioner submissions dated 29 August 2023 at [8] express beneficial trust in the Weston property created by the will. This it is not 42 what occurred.

44. The Commissioner further argued that the case is on all fours with Sanders because what ultimately occurred here was the transfer to an individual beneficiary of a share in the dutiable property which was greater than that to which he was entitled by reason of the will. As in Sanders, the conclusion should be that, to that extent, the transfer was not “in conformity with the trust” contained 43 in the will.

45. The Commissioner also made submissions about the purpose of section 232D(2) and (3), arguing they are already ameliorative and avoid what might potentially 44 be seen as harsh outcomes of the decisions requiring strict conformity. As noted 45 by the Original Tribunal, the Explanatory Statement to the Revenue Legislation Amendment Bill 2016 (No 2) made clear that the purpose of the provision was to carve out “transfers of dutiable property” and provide relief in that context where a transfer was made partly in conformity with a will. There is nothing to suggest the provision was aimed at altering the existing law regarding interpretation of 46 wills and the “trusts” conferred under them.

46. The Commissioner submitted that the fact that clause 6.l(n) of the will of the deceased confers an express power of appropriation on the executor is not to the point. No issue is raised as to the whether the executor had power, under the will, to transfer real property; the sole question is whether, to the extent that the executor transferred more than one-third of the value of the Weston property to the appellant, the executor did so in accordance with the express beneficial trust in that property created by the will. The clear answer is that he did not. The express beneficial interest in the Weston property, created by the will itself (as

42 Commissioner’s submissions dated 29 August 2023 at [10] 43 Commissioner’s submissions dated 29 August 2023 at [11] 44 Commissioner’s submissions dated 29 August 2023 at [12] referring to Sanders and Bloore 45 Original Decision at [74] 46 Commissioner’s submissions dated 29 August 2023 at [13] opposed to the Deed of Family Arrangement) was no more and no less than one- 47 third per beneficiary.

Post hearing submissions

47. At the hearing, the Appeal Tribunal invited the parties to make further submissions in relation to the other words used in section 232D(3). The Tribunal queried the use of the term “express beneficial interest”, and how that term is to be applied when a will disposes of dutiable property not by specific devise or gift, but by inclusion in the residual gift.

48. The appellant noted that the term ‘express beneficial interest’ is not defined and submitted that the words should be read in the context of the sentence in which they are contained, namely ‘the express beneficial interest in the property 48 transferred in conformity with the trust’. In reply, the appellant also argued that the term ‘express beneficial interest’ in the property being transferred in section 232D(3) simply means the property that is actually being transferred, not property 49 that existed notionally in the estate before the administration is completed.

49. The appellant further submitted that, applied to the facts in this case, this term means Bill’s one third undivided share in the Weston property pursuant to the will supplemented by a further share of the Weston property by way of appropriation, which once appropriated and transferred, constituted Bill’s 50 beneficial interest in one third of the residue of the estate pursuant to the will. Therefore: 14. Once Bill’s beneficial interest in one third of the residue has been appropriated and transferred, the duty payable by Bill, if any, can then be calculated in accordance with the Act. 15. Applying section 232D(3) to the specific facts of this case identifies a. 44.8 percent interest in the Weston property (“the first interest”), consisting of Bills’ one third undivided share in the Weston property pursuant to the will supplemented by a further share by way of appropriation in satisfaction of his Bill’s one third undivided share of the cash assets of the estate

47 Commissioner’s submissions dated 29 August 2023 at [14] 48 Appellant’s submissions dated 9 October 2023 at [11] 49 Appellant’s supplementary submissions – reply dated 8 November 2023 at [9] 50 Appellant’s submissions dated 9 October 2023 at [13] pursuant to the will, was transferred to Bill under and in conformity with the trusts of the will; and b. 5.2 percent interest in the Weston property (“the second interest”) was transferred to Bill on payment of $52,430.36; and c. a 50 percent interest in the Weston property (the third interest”) was transferred to Helen on payment of $500,000.00 with the result that the first interest transferred, having a value of $447,569.54, is exempt from duty under section 232D(2) and the second and third interests transferred 51 are not exempt from duty.

50. In the post hearing submissions, the Commissioner referred to section 63(2) Duties Act 1997 (NSW) (NSW Duties Act) which deals specifically with agreements “to vary the trusts contained in a will” and provides that in such circumstances “the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will”. The Commissioner relied upon Alexander v Chief Commissioner of State Revenue 52 (Alexander) (which discussed section 63(2) of the NSW Duties Act) to support 53 their interpretation of section 232D. In Alexander the NSWCATAD explicitly rejected the proposition that the provision permitted the value of the whole of the estate to be included in the calculation (as opposed to just the value of the dutiable 54 property). Although section 63(2) is differently worded to section 232D, the 55 Commissioner submitted that the reasoning in that decision is persuasive. The appellant argued that Alexander cannot be used as authority because the decision 56 does not rely upon the exercise of the power of appropriation.

51. The thrust of the Commissioner’s post hearing submissions may be summarised in the following quote: 12. The respondent accepts the applicant's submissions to the effect that existing case law in Australia (dealing with the administration of

51 Appellant’s submissions dated 9 October 2023 at [14]- [15] 52 Alexander v Chief Commissioner of State Revenue [2017] NSWCATAD 180 53 Commissioner’s submissions dated 30 October 2023 at [10] 54 [2017] NSWCATAD 180 55 Commissioner’s submissions dated 30 October 2023 at [10] 56 Appellant’s supplementary submissions - reply dated 3 8 November 2023 at [11] estates) is to the effect that no beneficiary has an enforceable interest in each item of property comprising a residuary estate. 13. The [appellant's] emphasis on this issue, however, conflates a general question relating to the administration of estates at common law with the separate statutory interpretation question of how "the trusts in the will", as referred to in the ACT Act and various interstate Acts should be interpreted. The respondent submits that the effect of Bloore [as discussed below] and all other available decisions is that a reference to "the trusts in the will" in the context of duty legislation only permits reference to the beneficiary's potential entitlement under the will to the specific item of dutiable property in question, not to the value of the estate as a whole. 14. Further, it is the individual statute which has to be interpreted and applied. For the reasons previously articulated by the respondent, the respondent submits that s 232D(3) itself makes clear the concession is to be calculated only by reference to the beneficiary's potential entitlement under the will to the specific item of dutiable 57 property in question, not to the value of the estate as a whole. Consideration Was the transfer in conformity (section 232D(1)) or partly in conformity (section 232D(2)) with the trusts in the will?

52. To summarise, the appellant argued that under the will in this case each beneficiary is entitled to an undivided one-third share of the residue of the estate. Each beneficiary is not entitled to a one-third share of the real property forming 58 part of the residue of the estate. By contrast, the Commissioner argued that properly analysed, the effect of the deceased’s will in the present case was to entitle each beneficiary to a one-third share of the Weston property (as tenants-in-common), just as it entitled each beneficiary to a one-third share of each of the other assets in the estate. It was then up to the executor to use his powers under the will to achieve an overall distribution of one-third of the value of the estate to each beneficiary. One way that could have been achieved, which would not have resulted in any liability for duty, would have been to convey the Weston property from himself as executor to himself and the other beneficiaries as tenants-in-common in the proportions of one-third each. That course of action would have

57 Commissioner’s submissions dated 30 October 2023 at [10] 58 Appellant’s submissions dated 3 August 2023 at [8] been accordance with the express beneficial trust in the Weston property created 59 by the will. It is not what occurred.

53. The Tribunal notes the comments made in the Original Decision about these arguments: In making these arguments, the Commissioner acknowledged the somewhat “unreal task” of dividing an undifferentiated estate into parts, but says that this is what sections (2) and (3) require to be done where an estate of dutiable and non-dutiable property is bequeathed in an undifferentiated 60 way.

54. The Appeal Tribunal accepts the appellant’s submissions about the nature of the powers of appropriation and notes the important arguments that had been raised by him regarding the interface between the Act and the administration of estates.

55. The Appeal Tribunal notes that the dicta in Darcy’s case (which was relied upon by the respondent in the present case) is strict. Therefore, it may be argued that any divergences from the statements made in the will about the distribution of the beneficiaries’ entitlement may constitute an arrangement that is not in conformity with the trusts in the will. This is the logical extension of the statement that is 61 made in Darcy’s case which is quoted by the Appeal Panel in Sanders above.

56. Despite its submissions about the case law, the Commissioner argued that section 232D(2) and (3) applied to this case. As stated by the appellant: Even the [r]espondent concedes that in the present case, “Y” is at least $333,000, because to argue anything less leaves … Section 232D(2) and 62 (3) with no work to do.

57. The latter sentence is not correct. Section 232D(2) and (3) may be left with no work to do in the case of a transfer to give effect to a share of a residual estate, as here. But those sections would have ample work to do in relation to transfers of dutiable property in cases where there had been a specific devise of that property (as per the example to the provision).

59 Commissioner’s submissions dated 29 August 2023 at [12]-[14] 60 Original Decision at [59] 61 Sanders v Chief Commissioner of State Revenue [2002] NSWADT 251 at [14] 62 Appellant’s supplementary submissions – reply dated 8 November 2023 at [8]

58. The submissions of the Commissioner, relying upon the case law and then retreating from its full application in interpretation of the statute, seem inconsistent. This attempt to extend the ameliorative effect of section 232D beyond the apparent meaning of the words used might however be justified by reference to the definition of ‘working out the meaning of an Act’ in section 138 of the Legislation Act:

138 Meaning of working out the meaning of an Act—pt 14.2 In this part: working out the meaning of an Act means— (a) resolving an ambiguous or obscure provision of the Act; or (b) confirming or displacing the apparent meaning of the Act; or (c) finding the meaning of the Act when its apparent meaning leads to a result that is manifestly absurd or is unreasonable; or (d) finding the meaning of the Act in any other case.

59. The Appeal Tribunal queried whether the appellant relied upon section 232D(1) and the appellant submitted that the transfer was partially in conformity with the trusts in the will but the transfer of what is referred to in their submissions as the ‘second interest’ and ‘third interest’ was what took the arrangement outside what might have been otherwise dealt with under section 232D(1).

60. While the Appeal Tribunal had some reservations, both parties argued that section 232D(2) was satisfied, their point of difference being the application of section 232D(3).

If section 232D(2) is satisfied, how is 232D(3) interpreted and applied?

61. In relation to the meaning of the words ‘the property’ the Appeal Tribunal has concluded that the appellant has not demonstrated an error in the reasoning of the Original Tribunal as regards the textual analysis of these provisions, the use of extrinsic material and the application of persuasive cases. These elements of the Original Tribunal’s reasoning will be dealt with in turn below. Textual analysis of section 232D(2) and (3)

62. The Original Tribunal provided a detailed analysis of the text and ordinary 63 grammatical meaning of section 232D. The Appeal Tribunal quotes at length from this: 69. Looking at section 232D of the Duties Act as a whole, subsection (1) of 232D sets out an exemption from duty for various transfers of property of a deceased estate, including, in subparagraph (1)(a)(i), a transfer of dutiable property made “in conformity” with trusts in a will. Subsection (2) then provides a further exemption for a transfer made “only partly in conformity” with a trust in a will. Subsection (3) sets out how duty is calculated where a transfer is in partial conformity. 70. In broad terms, subsection (2) of 232D provides that subsection (3) applies to “a transfer of dutiable property” made partially in conformity with a trust. It takes an indefinite article ‘a’ transfer of dutiable property and sets out when subsection (3) may apply to it (when it is transferred partially in conformity with the will). Subsection (3) then refers to when duty is payable for the transfer of “the property”. In other words, we have moved from the indefinite (‘a’ transfer of dutiable property) to something define (‘the property’). The most straightforward reading of the definite article ‘the’ in this context is that ‘the property” means the property identified in subparagraph (2) – being “the dutiable property … transferred in conformity with the trust”. 71. Hence, while it is possible “the property” can be read as all the property transferred under the will, read in the context of the definition of ‘X’, the provision in subsection 2 and the entirety section 232D, the better argument is that it is referring to ‘all the dutiable property’, being the dutiable property captured by subsection (2) and the kind of property that the exception is about (emphasis added). 72. In other words, the purpose of the equation is to deduct from the total dutiable property ‘X’, the value of the [appellant’s] interest in the 64 dutiable property transferred in conformity with the will.

63. The Appeal Tribunal is persuaded that this textual analysis, particularly its focus upon the use of the definite and indefinite articles in the language of the provisions, is correct.

63 Commissioner’s submissions dated 29 August 2023 at [7]-[8] 64 Pappas v Commissioner for Revenue [2023] ACAT 24 at [70]-[72] (Original Decision) Extrinsic materials

64. The Appeal Tribunal has also concluded that the Original Tribunal’s analysis of the supplementary materials is not in error. The Original Tribunal noted that: 74. Section 232D was inserted into the Duties Act by the Revenue Legislation Amendment Act 2017. The Explanatory Statement to the relevant Bill provides: Section 232D Deceased estates This section exempts transfers of dutiable property relating to deceased estates from payment of duty. 75. Subsections (2) and (3) provide that concessional duty is payable for a transfer made in partial conformity with a will. This concession applies only in relation to transactions under chapter 2 of the Act which are transfers of dutiable property.Although not particularly helpful, this at least confirms that the intention was to carve out “transfers of dutiable property” under a will and give … relief from full duty where a transfer is made only partly in conformity with the will. It does not appear to be aimed at expanding what may be in conformity with a will or a family arrangement.

65. The Appeal Tribunal finds no error in this reasoning.

66. There are further extrinsic materials that also assist the interpretation of section 232D. The predecessor to section 232D was section 69 of the Duties Act. The Explanatory Statement to the Revenue Legislation Amendment Bill 2015, which inserted section 69 of the Duties Act, states as follows: To determine the dutiable value of a conveyance, the unencumbered value of all dutiable property the subject of the transfer will be reduced by the unencumbered value of the dutiable property that the transferee holds as an express beneficial interest in accordance with the trusts contained in the will of the deceased person or arising on intestacy.

67. The relevant text of the provision did not change when it was converted from section 69 to section 232D in the Revenue Legislation Amendment Act 2017. The wording of section 69(2)-(3) and section 232D(2)-(3) is identical.

68. The underlined reference explains how to interpret ‘Y’ in section 232D(3) and refers to dutiable property. In my view, this clearly demonstrates that the reference to “the property” in that provision refers to dutiable property. Purpose

69. In combination with the references in the extrinsic materials to ‘dutiable property,’ the Tribunal is also persuaded by the Commissioner’s arguments about the purpose of section 232D. As stated previously, section 139 of the Legislation Act requires the Tribunal in working out the meaning of an Act, to prefer an interpretation that would best achieve the purpose of the Act.

70. Section 232D is situated in a revenue statute and the purpose of the Act is to collect revenue via dutiable transactions. Section 232D allows the Territory to ameliorate the harshness of a strict focus upon revenue raising where transfers occur in pursuit of the administration of an estate. Section 232D(1) provides amelioration in situations where the transfer is fully in accordance with the trusts in the will (i.e. complete conformity). Subsections 232D(2) and (3) extend the amelioration to circumstances where there is partial conformity with the trusts in the will and relieves the imposition of duty to the extent of that conformity. As stated by the Commissioner, subsections (2) and (3) are already ameliorative and avoid what might potentially be seen as the harsh outcomes in Sanders and Bloore 65 v Commissioner for State Revenue (as discussed below) where duty was ultimately charged on 100% of the value of the real properties in question. The Tribunal agrees that there is nothing in the Act nor in the background relating to the insertion of section 232D and its predecessors which suggests that the 66 legislature intended the ACT legislative response to the problem to go further.

71. It is clear the purpose of section 232D is to be ameliorative – but to what extent?

72. Had the legislature intended section 232D to operate in relation to residual estates in the manner suggested by the appellant, there are examples of wording from other jurisdictions, in place in 2015 and earlier, which would have clearly achieved that outcome. See for example section 124 Duties Act 2001 (Qld), which sets out: 124 Exemption—deceased person’s estate Transfer duty is not imposed on the following dutiable transactions—

65 [2020] NSWSC 502 66 Commissioner’s submissions dated 29 August 2023 at [12]-[13] a transfer, or agreement for the transfer, of dutiable property to the extent that it gives effect to a distribution in the estate of a deceased person; …

73. The Appeal Tribunal had asked the parties what the term ‘express beneficial interest’ in section 232D(3) meant. Is it a reference to the interest ultimately held by the beneficiary after the transfer, or is it a reference to an express beneficial interest in the dutiable property, held pursuant to the trust in the will, prior to transfer? The analysis of the Commissioner was that at the conclusion of administration, and before exercise of the power of appropriation, the residuary beneficiary’s express beneficial interest in the dutiable property is crystallised in the proportion in which the beneficiary was entitled to a share of the residual. No 67 authority was provided to support this analysis as a matter of common law . Instead, the Commissioner asked the Appeal Tribunal to adopt this approach as a matter of statutory interpretation.

74. Both parties were united in their opposition to the alternative interpretation which was suggested by the Appeal Tribunal: that a residuary beneficiary – even after administration and exercise of the power of appropriation – has no express beneficial interest in dutiable property forming part of the residual estate. If this interpretation were to be adopted, that would mean that section 232D(2) does not apply in the case of a residuary beneficiary both because no part of the transfer is in conformity with the trusts in the will, and because no express beneficial interest in the property is held under the trust in the will, meaning the value of Y is zero. This reduction in the range of cases in which section 232D would apply was unpalatable to both parties.

Interstate cases considering similar legislation

75. One of the consequences of the Commissioner’s arguments, is that, for the purposes of section 232D, the estate is divided into different components, distinguished by whether they are dutiable or not. The appellant contended that this is an unreal situation in circumstances where the testator gave the 68 beneficiaries equal, undifferentiated shares. The appellant, relying on cases

67 The law having historically treated interests in land as a special category, it would be unsurprising if an interest in real property held in a residual estate was held to exist at the end of administration. 68 See Original Decision at [80] 69 such as Commissioner of Stamp Duties (Qld) v Livingstone and Official 70 Receiver in Bankruptcy v Schultz said that the interest held by the beneficiary was not in the assets per se, but is in the form of a chose in action. To quote the Original Tribunal the chose in action is: the right to insist on the due administration of the estate; there was no “beneficial interest” until such time as the estate has been fully administered and which point it is possible to point to a piece of 71 property. Therefore, as a matter of law, the appellant had no interest in the Weston property that would equate to a beneficial interest until the expenses had been paid and administration brought to an end, and then it rd was simply an interest valued at $447,000.00 or 1/3 of the total estate. Hence, the [appellant] says, in calculating ‘Y’, it is appropriate to look to “the [entire] property transferred in conformity of the will” and not to 72 “the [dutiable] property transferred”, as contended by the respondent.

76. Taking these arguments into account and continuing the quest to understand the meaning of Y in section 232D(3), the Appeal Tribunal considered cases relied upon by the Commissioner that have been decided in New South Wales. As stated above, New South Wales has a comparable provision: section 63(2) of the NSW Duties Act which states: If a transfer of dutiable property is made by a legal personal representative of a deceased person to a beneficiary under an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy, the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will or arising on intestacy.

77. In Bloore’s case, a mother made a will that divided the residual estate, including four properties, and savings, equally between three siblings. The executors agreed to appropriate one of the properties to the plaintiff, but the value of that property exceeded her entitlement under the will. The appellant in the present case argued that Bloore is distinguishable on its facts because, under the arrangements that were put in place, the plaintiff received more than her entitlement under the will.

69 Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694 70 Official Receiver in Bankruptcy v Schultz [1990] HCA 45 71 Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694 at See Living – [16], [18], [37]; Official Receiver in Bankruptcy v Schultz [1990] HCA 45 at [317] 72 Original Decision at [31]

78. Although the Appeal Tribunal agrees that Bloore is distinguishable on this basis, and others, Stevenson J’s judgment provided several strands of reasoning that brought its facts closer to the case before us. The Original Tribunal provided a careful analysis of the judgment in Bloore, analysing the permutations created by Stevenson J and concluded that a similar reasoning process applied to the present 73 case. We quote the consequences of the final permutation of the facts in Bloore which are relevant to the present case: [Had] a family arrangement been in effect, his Honour “would favour the 74 conclusion” that Senior Member Currie came to in Alexander v Chief Commissioner of State Revenue … that the section 63(2) reduction is to be calculated by reference to the proportion of the beneficiary’s entitlement to 75 the particular dutiable property the subject of the dutiable transaction.

79. The Appeal Tribunal notes the appellant’s arguments (discussed above) that Alexander cannot be used as an authority in the present case. We agree that there are factual and process differences between Alexander and the present case, but it is Stevenson J’s acceptance in Bloore of the ratio in Alexander that is significant. In Bloore, Stevenson J makes a general statement that supports the Commissioner’s argument in the present case that the reduction in duty applies to the beneficiary’s entitlement to the particular dutiable property that is subject to the dutiable transactions.

80. The Commissioner expressed concern that a strict interpretation of ‘conformity’ in relation to interests in residual estates would mean that when there was a will gifting an entire undifferentiated estate to a single beneficiary, that beneficiary would not be entitled to exemption from duty under section 232D(1). That would seem to be an unintended and perverse consequence. It is a basic principle of statutory interpretation that words or phrases repeated in a statute usually have the same meaning in each provision, however neither party developed this argument in their oral or post hearing submissions, and it was outside the scope of this matter to delve into the case law on a single beneficiaries entitlement.

81. Both Alexander and Bloore are relatively recent decisions that base their interpretive reasoning upon the premise that the relevant provision is situated

73 Original Decision [76]-[77] 74 Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502 at [92] 75 Original Decision at [76(e)] within a revenue statute. In that sense the Appeal Tribunal agrees with the Commissioner’s submission that the appellant's overall arguments conflate a general question relating to the administration of estates at common law with the separate statutory interpretation question of how phrases such as “the trusts contained in the will”, are interpreted in revenue legislation both in the ACT and in other jurisdictions. It is however difficult to see how the Appeal Tribunal can conclude that unique legal terms used in a statute, in the factual context in which the unique legal meaning has developed, not be given their accepted legal meaning. One would expect a statutory definition of the unique term, at the least, if a different meaning were intended.

82. The Appeal Tribunal agrees with the respondent’s submissions that the reasoning in Bloore and Alexander is persuasive and consequently that a reference to “the trusts in the will” only permits reference to the beneficiary's potential entitlement under the will to the specific item of dutiable property in question, not to the value 76 of the residual estate as a whole.

Conclusion

83. The applicant had challenged the statement at [77] of the Original Decision that “[w]hat was relevantly transferred under the will was not one third of the estate, 77 but rather a distinct one third the value of the real property”.

84. There is much force in the submission of the applicant – the meaning of the word ‘under’ in the Legislation Act being very broad: under, in relation to an Act or statutory instrument, includes the following: (a) by; (b) by virtue of; (c) for or for the purposes of; (d) in accordance with; (e) in pursuance of; (f) pursuant to; (g) within the meaning of.

76 Commissioner’s submissions dated 30 October 2023 at [14] 77 Original Decision at [77]

85. The applicant argued that the Original Tribunal was incorrect when it said: “The Deed of Family Arrangement alters this arrangement, creating an entitlement in 78 the real property that is not in conformity with the will.”

86. I agree with the applicant’s submission. The Deed did not create any entitlement in the real property but rather recorded an agreement as to how the residual estate was to be distributed between the beneficiaries, subject to finance.

87. It is difficult to be sure how significant these two errors were to the reasoning of the Original Tribunal. In any event, because I have reached the conclusions set out below, the decision of the Original Tribunal to disallow the objection was in my view correct.

88. As is apparent from the preceding reasons, the submissions and oral argument of the parties ranged widely. Drawing all of these threads together, the Appeal Tribunal interprets section 232D(2) as follows: (a) Under… a trust contained in the will is to be interpreted broadly as per the Legislation Act definition and includes transfer for the purposes of a trust in a will. A transfer of dutiable property from the residual estate to give effect to a beneficiaries entitlement to a share of the residual estate would fall within this term. (b) Partly in conformity with, a trust contained in the will is to be interpreted more strictly and narrowly by reference to case law on the concepts of conformity and partial conformity. A transfer of dutiable property can only be in conformity or partly in conformity with a trust in a will if there is a specific devise or gift of that property (or part of it) to the beneficiary. A transfer of dutiable property to give effect to a gift of a share of the residual estate which includes the property does not satisfy this definition.

89. In relation to terms used in section 232D(3): (a) the property refers to the dutiable property; and

78 Original Decision at [77] (b) in conformity with the trust has the same strict and narrow meaning by reference to the case law as partly in conformity.

90. These conclusions are different to the approach suggested by either party.

91. Under the Appeal Tribunal’s interpretation, section 232D would continue to operate to provide amelioration from the test of strict conformity for transfers of dutiable property which give effect to specific bequests or gifts. Indeed, that is consistent with the example provided in the Act for the operation of 232D.

92. Where however the will provides a gift of a share of the undifferentiated residual estate, subject to powers of sale and appropriation, it is difficult to see how the transfer of property to give effect to that gift, is to any extent in conformity with the trust.

93. The decision of the Original Tribunal to confirm the Commissioner’s decision to disallow the objection is correct, although there were some errors in the Original Tribunal’s reasons. The Appeal Tribunal with the benefit of further argument and consideration, has applied a different interpretation of the operative words in section 232D, however the outcome – that the decision to disallow the objection be confirmed – must be the same. Orders 1. The orders of the original tribunal are confirmed.

……………………………….. President M-T Daniel

Date of hearing: 15 September 2023 Solicitor for the Appellant: Mr A Freer Solicitor for the Respondent: ACT Government Solicitor Counsel for the Respondent: Mr M Hassall