If however your clients are agreeable to abandon the Bird Cameron proposal and agree to my sensible proposal to divide the shares in a manner that does not create fractions in the separate parcels then the distribution of $2 million can proceed at the earliest. I will, however, require that your clients put that agreement in writing and for the agreement to carry their signatures. This requirement is because from your past experience your clients feel it is their prerogative to change their minds at any whim irrespective of what you have agreed to on their behalf in your letters.
61 Her agreement was to distribute $2 million, not $2,100,000 as Mr Neal had proposed. Mr Neal's proposal would have left money in the order of $282,000 in hand to meet obligations. The defendant attempted to explain in evidence why she chose $2,000,000 but I am satisfied that, as appears on its face, it was an attempt by her to diminish the advantage of a distribution to the plaintiffs. The interposition of conditions for the distribution of available cash was plainly inappropriate.
62 The call for the plaintiffs to agree that Daniel Jones be able to receive his full entitlement in cash, as a condition for other beneficiaries to receive any distribution of cash was plainly inappropriate and a highly partisan requirement in the interests of the defendant's son. The later passage of the letter referring to circumstances in which she would require that her own full entitlement be paid in cash is highly partisan in her own interests and manifestly without justification.
63 If the terms of the will were carried out, what the sub-trust of which Dr Jones' son was beneficiary would get would be one twenty-fourth of each parcel of shares: and the number of shares would be no more nor less on account of any actual or potential tax liability to fall on him. It was in my opinion an irrelevant consideration for trustees who were administering a trust under which they were to distribute shares in specie to consider what beneficiaries would do with the shares to which they were entitled, and what brokerage or taxation liabilities would fall on them when and if they disposed of them. There is no way of predicting when a particular beneficiary will dispose of shares, what the beneficiary's income will be at the time, or what the tax law will then be. It was for the executors to appropriate six-twenty-fourths of the shares, parcel by parcel, to each of the testator's three daughters and three-twenty-fourths, two-twenty-fourths and one-twenty-fourth to the sub-trusts for their respective children: what each did as trustee in one of the sub-trusts was not the responsibility or concern of the others.
64 The defendant maintained that distribution of shares by whole shareholdings, not by acquisitions, was inappropriate, and did so in oral evidence with some vehemence. The underlying difficulty is that, as she contended (and she appears to be correct in this) there is no statutory basis for adoption of averaging or any like approach; CGT is imposed in terms which relate to the cost base of the shares sold. She saw the problem as going further than the expected outcome in some dealings with the ATO about an acceptable basis for assessment, to the duty of the beneficiary as taxpayer to make an accurate disclosure.
65 The most prominent of the concerns which the defendant interposed in the path of distributing money and shares was her concern about whether and how the distribution in specie of shares would create obligations to pay CGT by the executors, or by beneficiaries, and the ability of the executors and beneficiary to calculate and self-assess CGT liabilities on the disposal of shares and to establish the correct basis of calculation in dealings with the Australian Taxation Office (ATO). To do this in a completely exact way it is necessary to have information in detail about each acquisition by the testator of shares (and all occurred after 20 September 1985 when CGT was imposed). The executors sold some of the testator's shareholdings but the Formula refers to 13 April 2007 when there were shares or listed investments in 15 companies. (It seems that by 21 May 2007 two of these had been sold.)
66 To illustrate the difficulties I refer to the testator's shareholding of 15,000 shares in AGL Energy Ltd (AGK). He acquired these shares in seven different acquisitions, each with its own cost base, number of shares and price, the first on 24 January 1997 and the last on 16 October 2001. To treat each one twenty-fourth share of residue under the will as including 625 AGK shares masks the difficulty of ascertaining the cost base and the acquisition to which the shares transferred should be attributed. The defendant made calculations which produced a value for shares in each of the seven acquisitions on the assumption that the shares was disposed of on 13 April 2007 at $15.88 which was the price at close of trading. According to her calculation, if an AGK share were attributed to the first parcel of 5000 shares bought on 24 January 1997 at a cost of $4.62 each its value after deducting the CGT attributable to its disposal would be $13.63. By contrast, if a share was attributed to the last parcel of 571 shares acquired on 16 October 2001 at a cost of $5.55 each, the amount which its sale on 13 April 2007 would produce after CGT would be $13.81. The lowest value net of tax in her calculation was $13.63, the highest was $13.90, a difference of 27 cents. 625 shares (a one-twenty-fourth parcel) attributed to the acquisition which produces the worst outcome would yield after CGT 27 cents per share less than shares attributed to the acquisition which produces the best outcome; less by $168.75 of $9,925 or 1.7%.
67 The resolution of difficulties relating to CGT proposed by the defendant was to make a separate distribution of the shares in each acquisition. There would be seven different distributions of shares in AGK. The distribution of shares from the testator's first acquisition of AGK shares would relate to 5000 shares which he acquired on 24 January 1997. Those entitled to six twenty-fourth shares would each receive 1250 of these shares; those entitled to one twenty-fourth share would each receive 208 of these shares, and two shares could not be allocated by this method. (Indeed for most parcels this method produces unallocated shares representing fractional entitlements.) One acquisition of AGK shares, 3000 on 1 July 1997, is exactly divisible by 24 and produces no fractions. The other six produce fractions of various sizes. The last acquisition of 571 shares on 16 October 2001 produces 142 shares and a fractional entitlement to three-quarters of a share for each holder of six twenty-fourth shares and each holder of one twenty-fourth share has 23 shares and a fractional entitlement to nineteen twenty-fourths of a share. 30 AGK shares are not allocated in this method and remain in the executors' hands as residual shares. In the defendant's proposal, a major beneficiary would accept residual shares and pay for them and the proceeds would be distributed among those entitled to fractions.
68 It is an assumption of this method that the identification of shares transferred to beneficiaries with particular acquisitions by the testator would be maintained when shares were transferred. To maintain this identification it would be necessary (at the least) to make a separate transfer of each part of each acquisition to the beneficiaries, and to the sub-trusts; six transfers, seven acquisitions, and 42 transfers of AGK shares. (Disposing of the shares representing fractions would require one or more additional transfers.)
69 The exercise of distributing shares in specie in some way which allocates each distributed share to a particular acquisition rather than taking all the testator's holding of shares in a particular company and not differentiating in their distribution, was worthy of consideration. The calculations which the defendant put forward, although complex, attempted to meet some real concerns. One was that the share price on the ASX on the day of distribution, which does not differentiate between shares according to the CGT position of the vendor, is not an exhaustive expression of all aspects of the value of the share to a beneficiary when transferred, because when the beneficiary disposes of the shares, the beneficiary incurs CGT calculated by reference to the cost base on which the testator acquired the particular shares which the beneficiary received. In concept a beneficiary whose shares were all traceable to an acquisition with a low cost base would be worse off than a beneficiary whose shares were all traceable to an acquisition with a high cost base. (There is also a time factor.) For some of the shareholdings the difference which could conceivably exist is so small that it is not significant: for some of the shareholdings a beneficiary would be recognizably disadvantaged if the shares distributed to that beneficiary were drawn from acquisitions with low cost bases. Whether the outcomes would be different in any material way depends on future circumstances which cannot be known; a beneficiary may sell the shares immediately, or may hold them for many years or for the whole of the beneficiary's lifetime, and the shares may be disposed of in some circumstances of share price, inflation and taxation law which reduces the different cost bases to irrelevance. If trustees distribute shares without regard to cost bases they in effect make no assumptions about the CGT position or future dealing by the beneficiary with the shares; and in particular they do not assume that the beneficiary will sell the shares at market value and incur capital gains tax immediately.
70 Executors cannot involve themselves in a beneficiary's taxation affairs and in my opinion they act reasonably if they distribute each holding of shares in specie among beneficiaries according to each beneficiary's proportionate entitlement. At the same time executors should act even-handedly among beneficiaries and should not act to the disadvantage of one beneficiary relative to others by, for example, allocating shares to one beneficiary wholly to an acquisition by the testator with a relatively low cost base.
71 The defendant's Formula contains elaborate calculations which can be used to show the impact, according to the principles which underlie the Formula, of CGT on the position of a beneficiary according as the shares are allocated to one acquisition by the testator or to another. The outcomes for a beneficiary who receives one twenty-fourth of the testator's holding in a particular company can vary widely. For PPT shares the Formula shows that there were 1500 shares and the price on ASX at close of business on 13 April 2007 was $81.20: the 1500 shares were worth $121,800 and one-twenty-fourth or 62.5 shares were worth $5075: there were two acquisitions and two cost bases, and the calculations in the Formula show a difference of three cents between the values of shares in these acquisitions: so that a beneficiary all of whose shares were allocated to the acquisition with the lower cost base receives a parcel of shares which, on the assumptions on which the Formula is based, is worth $1.87 less than a parcel of shares allocated to the acquisition with the higher cost base. For shares in AGK the possible range of outcomes is $11.25 in a parcel worth $9,925, for BHP the possible range is $10 in a parcel worth $4,975 and for RIO the possible range is $35.83 in a parcel worth $6,850. For shares in WBK there is no range as the testator made only one acquisition.
72 However for some shareholdings the range is wide enough to claim attention, by which I mean wider than $100. For shares in AAN the range is $378.54, for shares in CBA it is $752.28. For shares in NSWLV it is $404.25, for shares in NAB it is $215, for shares in SSX it is $140.00, for shares in SOL it is $1,451.25 in a twenty-fourth worth $10,721.25, and in WBC it is $7,076.25 in a twenty-fourth worth $55,866.25. It would in concept be possible to impose significant disadvantage on a beneficiary by taking care to allocate the shares transferred to that beneficiary from the acquisitions with the lowest cost base.
73 The defendant's Formula had the object of producing complete equality of treatment by distributing, not the shares in each company but the shares in each acquisition by the testator. In oral evidence she asserted that it was possible to differentiate the shares in each acquisition, and that identification had not been lost by agglomerating the total shareholding into a single certificate for each company, as happens with the CHESS system. She said that none were in the CHESS system and all were Issuer Sponsored Holdings: but more importantly, records kept by the testator distinguished the acquisitions. The distribution Formula has great purity to principle, but it also has great complexity. For AGK shares there will be seven different distributions in each of which there would be six share transfers, one to each of the major beneficiaries who each received six twenty-fourth of the shares in each acquisition, and one to each of the trustees of sub-trusts who received respectively three, two and one twenty-fourth shares. As there are 105 acquisitions in the Formula there would be 105 distributions and 630 transfers of shares, not 13 distributions of shares (and there were two other classes of securities which are not shares). (Two of the 15 parcels of securities had been sold by the time this litigation began: this made little change to the complexity.)
74 Another concern which the defendant sought to meet by the Formula was that each beneficiary should be in a position to disclose fully and exactly information about the cost base of the shares held by that beneficiary when the occasion came to assess CGT. This is an appropriate concern. According to the defendant's contention it is imperative for the executors to ensure that beneficiaries are furnished with information to enable them to do this. This overstates what is required of the executors, who in my opinion are obliged to make all information they have bearing on the estate affairs, including cost bases, available to beneficiaries.
75 Another concern which the defendant expressed with great emphasis, and dealt with in the share distribution Formula, relates to fractions of shares. As not all share parcels are evenly divisible by twenty-four, and distribution of the parcels which are not cannot be done with complete exactitude; there will be some fractions, and it is not possible to transfer a fraction of a share. To deal with all beneficiaries with complete equality in this respect, executors should take the number of shares in each parcel, ascertain the next lower number evenly divisible by 24 and make the distribution of that number of shares, leaving the remainder, conceivably as many as 23 shares, in their hands. Then they should take the next lower number evenly divisible by 4 and make whatever distribution of whole shares can be made to the trust of eighteen-twenty-fourths, the subtrust for three-twenty-fourths and the subtrust for two-twenty-fourths. There will be remainder shares incapable of distribution in specie; the executors would continue to hold them on trust in appropriate proportions, with continuing obligations to manage the assets, collect and distribute dividends and other proceeds, and keep accounts. This is evidently inconvenient but would continue until the trustees agreed together to sell the remainder shares in exercise of their powers of sale and distribute the proceeds, or until all beneficiaries held vested interests and unanimously required them to do that. The executors have power but not a duty to sell the shares, so a resolution of their ownership of the remainder shares would require some further agreement among them.
76 The defendant's Formula does not deal with fractions in an exactly correct way in the respect that it deals with all beneficiaries of sub-trusts in the same way; whereas the will provides for distribution of three twenty-fourths of residue to one sub-trust, two twenty-fourths to another and one twenty-fourth to another; and where a distribution of one twenty-fourth yields a fraction, a distribution of two or three twenty-fourths may not yield a fraction, or may yield a different fraction. By requiring distribution of each acquisition rather than each shareholding the Formula increases the number of distributions in which fractions are encountered. For example the holding of 15,000 AGK shares is evenly divisible by 24 and there are no undistributed fractions if the whole parcel is distributed as one. By contrast the Formula produces a residue of 30 shares which cannot be distributed in specie.
77 In the Formula, the residual shares would be transferred to one of the major beneficiaries, and the major beneficiary would pay (or, presumably be charged in a distribution) $9,887.48 which would be distributed among the beneficiaries. This would have the substance (but not the form) of a sale by the executors to one of their number. The will does not authorise or require this.
78 The defendant expressed what seems in the circumstances extreme concern about problems relating to fractions of shares and the view which in her understanding would be taken of entitlements to fractions of shares by the Australian Taxation Office (ATO) when dealing with CGT assessments, and perhaps in other contexts. She said to the effect that the ATO does not recognize fractions of shares, and that they are dead shares; her evidence did not explain in a clear way what underlay this concern, but it can relate only to a small number of shares and to small amounts
79 Another concern of the defendant was that in her concept it is an effect of a distribution of shares which took place under orders made by consent by Registrar Finlay on 4 June 2007, two weeks after the commencement of these proceedings, that she and her son are unable to sell or otherwise deal with shares because of difficulties in disclosing appropriate information and obtaining assessment of CGT on a proper basis arising from the shares distributed to them not being allocated to particular cost bases, and to the allocation of fractions.
80 She may have other concerns.
81 The share distribution Formula which the defendant insisted that the plaintiffs agree to would give effect to purity of principle, carried to an extreme, indeed to the uttermost, in seeking to establish and preserve the identity of each distributed share with a particular acquisition by the testator and cost base. In my opinion the Formula sacrifices significant pragmatic considerations in its search for purity. For some of the shareholdings in which there is a wide range of cost bases, the allocation of distributed shares to one acquisition or another could produce or mitigate disparities in the treatment of beneficiaries, but those disparities are unlikely to be produced unless some care were taken in choosing the acquisitions which were to be the source of shares allocated to a particular beneficiary, with the deliberate intention of producing disadvantage; it is not likely that significant disadvantage would be produced by random allocation, and it would not be produced by an undifferentiated allocation followed by adoption of average cost base when calculating CGT.
82 One object which distribution in accordance with the Formula would achieve would be equality of outcomes for all beneficiaries on the assumption that they all sold the distributed shares and incurred CGT on the day of distribution. This very unlikely to happen, and the exercise has a correspondingly limited value as a demonstration of the inequality of outcomes of any other distribution Formula. The Formula is also based on the assumption that all beneficiaries incur CGT at the same rate; and as their incomes may vary widely, this assumption may not be correct.
83 While the share distribution Formula can be seen as a pursuit, with great vigour, of exactitude in principle, it does not in my opinion adhere to principle perfectly, and there are respects in which it is open to reasonable observation or debate. It deals in different ways with the major beneficiaries and minor beneficiaries in problems relating to fractions, as it assumes that the shares referable to fractions would be disposed of to one major beneficiary, although no major beneficiary has an obligation to take them and the other trustees might reasonably have felt concerns about disposing of shares to one of their own number. On a more important level, the share distribution Formula was open to debate on the question whether it was appropriate to do anything but proceed on the basis that all shares in a parcel were worth the same amount, the valuation suggested by daily market experience. However the defendant insisted on the adoption of her share distribution Formula in terms which excluded room for debate or discussion and severely limited the time available for consideration. If what she proposed had been entirely and unarguably correct this would still not have been appropriate: but it was not.
84 Evidence in the proceedings dealt with the treatment of the distributed shares for the purpose of assessment of CGT. Mr Robert Andrew Sykes, a chartered accountant employed by the firm which conducted the testator's taxation affairs and (at the time he spoke) also conducted estate taxation affairs, saw the matter as one to be handled by an averaging process, in which the shares transferred to a beneficiary were treated as having their source in an average of the acquisitions (and hence cost bases) relating to the shares in the hands of the testator. In my understanding Mr Sykes saw this as likely to be acceptable by the ATO in a context where exact demonstration of the relation between shares held by the beneficiary and a particular acquisition by the testator was difficult to establish or could not be shown, and in the context of self-assessment. In treating matters this way Mr Sykes acted on the basis of treatment by the ATO of another situation which he regarded as analogous, not specifically on practice relating to CGT on shares distributed from the estate of a testator who had acquired them in different acquisitions with different cost bases.
85 In her letter to Mr Neal of 21 February 2007 the defendant referred to advice which Mr David Beattie had given (and he spoke on the basis of the same view while giving evidence before me) to support her position that each parcel of shares with a common cost base should be distributed so that the cost base of each share should be ascertainable after distribution. It appears to me that Mr Beattie's view of what is appropriate is strictly based on what the legislation requires, while Mr Sykes' view is pragmatically based on how he expects business to be conducted with the ATO. This kind of difference between advice from lawyers and advice from chartered accountants is not unfamiliar.
86 Shares distributed in specie will be sold at some time and their then owner will incur CGT; it will then be necessary for the owner to establish the cost bases of the testator's acquisitions of the shares; or in any event there will be a large advantage in establishing the cost bases. Where there were a number of different acquisitions that could be very complex and it could be very difficult to establish the details of acquisitions after many years. The problem does not precipitate itself until shares are sold and there is a capital gain. Mr Beattie knew that it was important to determine what were the cost bases on which the testator had purchased each parcel of shares, that this could not be ignored and the information picked up as a later time after distribution. He advised accordingly at an early stage. In view of the complexity of the estate assets he regarded it as obvious that the executors should not simply transfer all the shares in specie to beneficiaries equally as would be done in a simple straightforward estate; the executors would need to know the cost bases in order to pay the correct capital gains tax at the end of the day. In Mr Beattie's understanding (and he did not claim to be a taxation expert) the beneficiary can make an election to which acquisition and cost base in a parcel the shares the beneficiary disposes of should be attributed.
87 In Mr Sykes' view (t21) when a beneficiary disposes of shares and incurs CGT the cost bases should be determined on an average basis; this applied when there would be unreasonable administrative expense in determining the cost bases or where it was not possible to determine the cost bases of the shares transferred; this applied when shares had been transferred to the beneficiary from a legal personal representative. RSM Bird Cameron's letter and spreadsheet of 12 February 2007 proceeded on the basis of aggregating all acquisitions of shares by the testator without making any differentiation when transferring shares to beneficiaries. If this approach was adopted (and, I add, accepted by the ATO) each share would have the same cost base. It was his evidence that ultimately it was up to the ATO to determine whether to accept the aggregation of distributed shares in this way (t24).
88 Mr Sykes referred to ATO rulings in relation to the holdings of shares by superannuation funds where there were unreasonable administrative expenses; he said that the ATO does not rule directly on estate matters, and it appears that he assumed that the ATO would make the same approach as with superannuation funds. In my understanding of his evidence (t28) shares transferred by a legal personal representatives to beneficiaries lose their character of being individual parcels of shares, by which I understand they lose their identification with particular acquisitions of shares by the testator. The shares are aggregated and the cost bases are also aggregated. He said that it is not open (t25) to state what the position would be if information were clearly available to beneficiaries identifying the cost bases of a particular share transferred to them. Other practitioners might take different views. He also said (t.40) that there may be circumstances special to a particular beneficiary which make the assumptions of the Formula about the effect of CGT inapplicable.
89 Overall, it appears to me that executors would comply with their duty if they distributed shares in a listed company on the basis that all such shares were of the same value, and if they passed on to beneficiaries all information available to the executors relating to the cost bases on which the shares had been acquired and the relation between shares acquired in a particular acquisition and the shares transferred to the beneficiary. Executors certainly should not take any steps with the intention of differentiating among beneficiaries and producing relatively better or worse CGT outcomes for particular beneficiaries, but unless they behave in that unlikely way the CGT outcomes for beneficiaries when and if they incur CGT on an eventual disposal, or an immediate disposal, is not the responsibility of the executors.
90 It is my opinion that the basis of distribution proposed by Mr Sykes in February 2007 was reasonably open to further consideration and discussion. There may have been some advantage for beneficiaries in some future event if transfers of shares took place in a way which specifically preserved the identification of the shares transferred with the underlying acquisitions and cost bases. If it were established that the ATO would accept election or averaging of cost bases, there would be no relative disadvantage for a particular beneficiary arising from aggregating shares transferred to them. The defendant maintains that there is no statutory basis for the ATO to act on this basis; and it appears that this is right; I was not told otherwise. When addressing the advantages of adopting a more elaborate method it has to be considered what advantage can follow from the additional cost, pains and trouble involved in carrying out the more elaborate method. For all but a few shareholdings the detailed attention suggested by the Formula would eliminate the risk of only very minor variations in the value of a one twenty-fourth share. There are a few shareholdings for which this observation cannot be made. The defendant did not call for Mr Sykes' proposal to be discussed, examined and modified. She insisted on the entire acceptance of her own proposal without qualification, and imposed conditions for which it was not reasonable for her to ask.
91 Cross-examination both on behalf of the defendant and on behalf of the plaintiff confirmed the conflictual nature of dealings among executrices and the extreme unlikelihood of future concurrence in decision and action. Some matters which were the subject of cross-examination and for which the conduct of the plaintiffs was impugned were extremely slight. One subject which received undue attention was the circumstances in which the subscription to Post Office Box 241 Northbridge was terminated by Dr Schaverien on 4 April 2006. The testator had subscribed for that Post Office Box during his lifetime. Then all three executors subscribed for the box. In applying to cancel the box and redirect the mail Dr Schaverien told the Post Office to the effect that she acted on behalf of all three executors whereas in fact she did not have the defendant's authority to do so; the defendant had not been consulted. The defendant was then overseas. Dr Schaverien was cross-examined with some severity on the subject and it was suggested that she had committed an offence against some law relating to the conduct of the Post Office.
92 The arrangements Dr Schaverien made were arrangements to redirect mail addressed to the testator and to the estate, so that the Post Office would deliver it to Mr David Beattie who was then acting for the executors as the estate solicitor (and still does). As is clearly shown by correspondence and otherwise, relations among the executors were already severely strained. Dr Schaverien foresaw a period when both she and the defendant, who both lived in suburbs near Northbridge, would be overseas and attending at the Post Office Box might be inconvenient. In my mind it was an unremarkable and efficient step to arrange that mail go to Mr Beattie rather than go to the Post Office Box and be collected, in circumstances open to complaint, by one or other of the executors. Mr Beattie agreed to accept delivery of the mail; and he did so at the request of Dr Schaverien only. Finally, Dr Schaverien did not have to be a customer of the Post Office for a Post Office Box if she did not want to be.
93 Dealings with the Post Office Box received significant further attention until June 2006 as the defendant attempted to reinstate the subscription, which she was unable to do as the box had been allocated to somebody else. The events relating to the Post Office Box are significant mainly for showing that minor matters have been the subject of prolonged complaint and difference.
94 The treatment of the mail when it reached Mr Beattie's office gives me much more serious concerns. In view of the state of estrangement, for Mr Beattie to receive the mail and circulate copies of all significant documents to all executors seems a reasonable and prudent arrangement, a better arrangement than that whichever executor happened to clear the box should have responsibility for circulating documents and be exposed to complaints about performance of this responsibility. What happened however is that the plaintiffs told Mr Beattie that he was not to send copies of correspondence to the defendant but he could provide a summary of mail received every fortnight, and the documents were to be available for the defendant to inspect when she came into Mr Beattie's office; and having been told that by the majority of the executors he felt constrained to comply. From April to December 2006 copies were not sent to the defendant, and from time to time she came into the office and took copies of documents she required. The plaintiffs explained this in terms of a wish to control expense. This is not a reasonable or believable explanation, in relation to an estate worth over $5 million or in relation to the defendant's duties and responsibilities, and her need and interest to know what happened in estate affairs. To require her to go to Mr Beattie's office for information was quite needless, and indicates in my finding that the plaintiffs were dealing with the defendant in a bad spirit and were prepared to create an unnecessary difficulty for her.
95 Another matter which received attention which I regard as undue and was put forward as a criticism of the conduct of the plaintiffs related to the Power of Attorney in estate affairs dated 26 October 2006 given by the defendant to two persons, her son Mr Daniel Jones, and to Gregory Richard Donovan, who was referred to in evidence as Dr Donovan and spoken of by the defendant as her partner, although evidence reveals very little of him. The document conferred Power of Attorney jointly and severally on those two men in matters relating to her duties in the estate in her absence, with a limit of two years. The Power of Attorney provided for consent of the plaintiffs as co-trustees to the appointment of attorneys; they were not willing to consent to the appointment of Dr Donovan, and they struck through his signature and wrote against it the word "deleted", with their initials and dates. They signed the consent in an amended form so as to consent only to the appointment of Mr Daniel Jones. The document was registered and took effect in this limited way. Mr Daniel Jones signed an authority relating to putting the house property on the market, and it seems that otherwise the Power of Attorney was not exercised. Endeavours were made to criticise the conduct of the plaintiffs, but I see no ground for doing so; if they did not think it appropriate for Dr Donovan to have this part in estate affairs and the duties of an executor and trustee, it was their duty to withhold their consent.
96 The plaintiffs accessed the testator's Safe Deposit Box at a bank in June 2006, apparently several times, during the defendant's absence overseas and without her knowledge, emptied the box and delivered the contents to Mr Beattie for safekeeping. This led to controversy, as the defendant claims to be the owner of some of the contents of the box. Ownership has not been resolved, but is not before me for adjudication. The plaintiffs were entitled to have access to the Safe Deposit Box, but in the context of disputes it was markedly imprudent of them to remove property from the box without the concurrence and without the knowledge of the defendant.
97 There is also a body of evidence dealing with information or rulings which the defendant has obtained or sought to obtain from the ATO. Attempts by the plaintiffs to establish what the defendant has done and to see relevant documents have led to some business under the Freedom of Information Act and to pending proceedings in the Administrative Appeals Tribunal. When challenged in cross-examination over aspects of her conduct the defendant's position was to the effect that she sought rulings in her private capacity and not as executor. I do not think that this subject had the importance which its treatment in evidence suggested. She explained her having given her own name but not the names of the plaintiffs to the ATO as executors when she applied for a Tax File Number by saying there was not enough room on the form. I do not regard this as credible, or as an excuse.
98 When the proceedings were commenced estate affairs were in deadlock, and distribution was prevented because the defendant was making, in intractable terms, demands which it was not possible to comply with, required attention to detail far beyond what was reasonably necessary, with inappropriate conditions which it was impossible to accept. In my finding the plaintiffs had no other course available to them than to ask the Court to remove the defendant.
99 Adverse appraisal of the plaintiffs' not having achieved co-operative action with the defendant is tempered by the difficulties of acting co-operatively with her. Correspondence with her is likely to evoke and often has evoked replies of baffling length and detail extending far beyond the subject in hand, replete with accusations of wrong conduct and belittling or otherwise offensive observations. A letter about anything tends to become a letter about everything.
100 The defendant has a personal characteristic of intensity, evident in her letters, and also evident in her manner and delivery in the witness box, where intensity sometimes got the better of her as she sought to establish something she thought was important without real regard to the question put to her. Characteristically she takes a highly combative approach to all communications and business connected with the subjects of her father's estate and of her sisters. In correspondence she often has adopted a style which was vituperative, intransigent, not open to debate or discussion and closed off the possibility of reconsidering her own position. This defeats communication.
101 So far as I can see the defendant's position has at its centre a correct view of how complete equality of treatment of beneficiaries can be maintained, but she has greatly overstated the difficulties which flow from agglomerating all acquisitions, and the potential difficulties of dealing with the ATO. Mr Sykes' method does not create significant differences in outcomes. For many of the shareholdings the differences in outcomes which could occur are very small. For some, care should be taken, if shares are distributed by acquisitions and not agglomerated, that no particular beneficiary or sub-trust receives an unfair proportion of shares with low cost bases. Most trustees who had to distribute shares to sub-trusts for their own children, nephews or nieces would overcome the problem by allocating the shares with the lower cost bases and the highest potential CGT liability to themselves. Any problems associated with fractions lend themselves to similar pragmatic solutions. The defendant constructed several mountains out of a small molehill, and behaved impossibly while doing so.
102 There may well have been room for consideration in detail of a basis for distribution of shares in specie in which regard is paid to possible operation of CGT on shares in the hands of beneficiaries. In the case of the shareholdings where there was, potentially, some significant difference in outcomes if one beneficiary received a disproportionate number of shares with low cost bases, there is room to take care that there are no significant anomalies. The beneficiaries' CGT position is ordinarily outside the responsibility of trustees, but there is some room for consideration of what should be done to avoid the creation of any significant anomaly. There was a need to address the practicalities of maintaining the identification of shares distributed with the shares acquired by the testator in particular acquisitions. The terms in which the defendant required compliance with her Formula left no room for consideration or discussion and in practical terms no time. It is not my object to take under consideration and decide what was the best way to arrange these matters. They were arranged very soon once litigation began, in circumstances not conducive to mature consideration.
103 Overall the events I have set out demonstrate, in an unmistakably clear way, the complete impossibility that in the future estate affairs would be managed properly, or indeed managed at all, if all three executors appointed by the will continue to hold the court's grant of probate. The alternative which courts usually consider if appointing a trustee company or professional trustees cannot be taken; no such person is available. There have been shortcomings in the conduct of the plaintiffs, although when I contrast them with the defendant's behaviour, they are of minor significance, although unfortunate. I have to make a pragmatic disposition, with a view to seeing that the estate is in fact administered and the beneficiaries have the assets to which they are entitled.
104 The conflict, and the course of affairs as conflict progressed appear to me to be quite deplorably unfortunate. The need for the intervention of the Court is regretted, but I have no doubt that it is required. If it were open for me to do so I would not leave any of the executors appointed by the will to conduct estate affairs under the authority of probate granted by the Court; but there is no one else. The most expedient course available to see that estate affairs are conducted and are not deadlocked is to revoke the existing grant and grant probate to the plaintiffs only.
105 My Orders are: