Hill v Hill

The case of *Hill v Hill* concerned a dispute over the incidence of death duties in New South Wales. The testator, Frank Hill, had in 1914 created a trust over certain property, retaining a life interest with remainder to his widow and children. Upon his death in 1931, his will directed his trustees to pay his debts, funeral, and testamentary expenses, explicitly including New South Wales probate duty and Commonwealth estate duty, out of the proceeds of his residuary estate. The question before the High Court of Australia was whether the death duty attributable to the testator's share in the 1914 trust property should be borne by that property or by the testator's residuary estate.

The central legal issue was whether the testator's will contained a clear intention to negative the statutory obligation imposed by section 120(1) of the *Stamp Duties Act 1920-1931* (N.S.W.). This section requires that where property included in a deceased person's dutiable estate is vested in someone other than the administrator, the duty payable in respect of that property shall be paid by the person entitled to it to the administrator. The testator's will included a direction to pay testamentary expenses, defined to include death and estate duties, out of his residuary estate. The Supreme Court of New South Wales had held that this direction meant the duty attributable to the settled property should be paid out of the residue.

A majority of the High Court, comprising Rich, Starke, Dixon, and McTiernan JJ., held that the provision in the will did not demonstrate a clear intention to override section 120(1) of the *Stamp Duties Act*. They reasoned that while the testator directed his executors to pay duties out of residue, this was a common testamentary clause intended to define the ultimate residue and manage the payment of debts and expenses from the actual estate. Such a clause, they found, was not sufficient to create a legacy for beneficiaries outside the will, thereby relieving them of their statutory obligation to reimburse the estate for the death duty attributable to their property. The Court emphasised that displacing the statutory liability required clear and explicit language indicating an intention to confer a bounty on those outside the will.

Consequently, the appeal was allowed, and the High Court declared that the death duty payable in respect of the testator's share in the property subject to the 1914 indenture should be borne by that share. Evatt J. dissented, finding that the testator's explicit inclusion of death and estate duties within the definition of testamentary expenses to be paid from residue demonstrated a clear intention to relieve all beneficiaries, including those of the settled property, from this burden.