Koh v Samuel Conrad Buckeridge as executor of the estate of Leonard Walter Buckeridge [No 3] - [2023] WASC 42

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   KOH -v- SAMUEL CONRAD BUCKERIDGE as executor of the estate of LEONARD WALTER BUCKERIDGE [No 3] [2023] WASC 42
CORAM:   SMITH J
HEARD:   26 - 28 APRIL 2022
DELIVERED          :   17 FEBRUARY 2023
FILE NO/S:   CIV 2244 of 2020
BETWEEN:   SIOK PUAY KOH
Plaintiff
AND
SAMUEL CONRAD BUCKERIDGE as executor of the estate of LEONARD WALTER BUCKERIDGE
First named First Defendant
ANDREW BENJAMIN BUCKERIDGE as executor of the estate of LEONARD WALTER BUCKERIDGE
Second named First Defendant
RATHENAU INVESTMENTS PTY LTD as trustee of THE SAMUEL BUCKERIDGE TRUST
Second Defendant
ANDREW BENJAMIN BUCKERIDGE AND BI-YUY as trustees of THE ANDREW BUCKERIDGE ESTATE
Third Defendant
THE TRUSTEE FOR THE JOSHUA BUCKERIDGE TESTAMENTARY TRUST
Fourth Defendant
SAMUEL CONRAD BUCKERIDGE AND LISE FRANCES BUCKERIDGE as trustees of THE LISE BUCKERIDGE TESTAMENTARY TRUST
Fifth Defendants
OUTSIDE OF SOCIETY PTY LTD as trustee of THE RACHEL BUCKERIDGE TESTAMENTARY TRUST
Sixth Defendant
TESPERANCE PTY LTD as trustee of THE ESPERANCE STEPHEN TESTAMENTARY TRUST
Seventh Defendant
TALBA PTY LTD as trustee of THE ALBA STEPHEN TESTAMENTARY TRUST
Eighth Defendant
SIOK PUAY KOH AND ANDREW BOON SAN TEO as trustees of THE KOH FAMILY TESTAMENTARY TRUST
Ninth Defendants
SAMUEL CONRAD BUCKERIDGE AND JULIAN THEODORE ROSSLYN AMBROSE as trustees of THE BUCKERIDGE GRANDCHILDREN
Tenth Defendants
SAMUEL CONRAD BUCKERIDGE
Eleventh Defendant
ANDREW BENJAMIN BUCKERIDGE
Twelfth Defendant
RACHEL JANE BUCKERIDGE
Thirteenth Defendant
LISE FRANCES BUCKERIDGE
Fourteenth Defendant
JOSHUA ANTHONY BUCKERIDGE
Fifteenth Defendant
JULIAN THEODORE ROSSLYN AMBROSE
Sixteenth Defendant

Catchwords:

Wills - Amended will by consent orders in settlement of family provision claims - Construction of the terms of the amended will - Application of principles of construction of wills, contracts and where applicable the law of trusts as modified by the Family Provision Act 1972 (WA) considered

Trusts - Plaintiff entitled to a gift of $115 million - Plaintiff's gift a specific legacy - Plaintiff not a beneficiary of either an express or implied trust under the terms of the amended will in respect of her gift - Plaintiff had no beneficial interest in the specified source of the funds out of which her gift was to be paid - Plaintiff only had an equitable chose in action to compel the executors to correctly administer the estate

Taxation law - Whether plaintiff is a 'beneficiary of a trust estate' for the purposes of s 97 of the Income Tax Assessment Act 1936 (Cth) and was 'specifically entitled' or 'presently entitled' to an amount of franked dividends within the meaning of pt 3 ‑ 6, sub div 207B of the Income Tax Assessment Act 1997 (Cth) not determined

Relief - Taxable facts - Declarations made as to proper construction as to the amended will - Relief refused in respect of the declarations and orders sought that relate to alleged breaches of the executors' duty to administer the amended will by making particular resolutions and payment records - Whether executors in breach turns upon the meaning and effect of provisions of the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 - Court should decline to determine whether the executors are in breach in the absence of the Federal Commissioner of Taxation as a party to the proceedings

Legislation:

Family Provision Act 1972 (WA)
Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Act 1997 (Cth)
Rules of the Supreme Court 1971 (WA)
Succession Act 1981 (Qld)
Tax Laws Amendment (2011 Measures No. 5) Act 2011 (Cth)
Taxation Administration Act 1953 (Cth)

Result:

Declarations made as sought in par 1 of prayer for relief
Declarations and orders sought in pars 2 to 4 of prayer for relief refused

Category: B

Representation:

Counsel:

Plaintiff	:	Mr B Dharmananda SC, Mr B Jones SC & Ms R Young SC
First named First Defendant	:	Mr B J Sullivan SC & Mr R A Jedrzejzyk
Second named First Defendant	:	Mr B J Sullivan SC & Mr R A Jedrzejzyk
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	Mr M T Flynn KC
Fifth Defendants	:	Mr A Hochroth
Sixth Defendant	:	Mr M T Flynn KC
Seventh Defendant	:	No appearance
Eighth Defendant	:	No appearance
Ninth Defendants	:	No appearance
Tenth Defendants	:	No appearance
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	No appearance
Fourteenth Defendant	:	Mr A Hochroth
Fifteenth Defendant	:	No appearance
Sixteenth Defendant	:	Mr M Sims

Solicitors:

Plaintiff	:	Iffla Wade
First named First Defendant	:	Jackson McDonald
Second named First Defendant	:	Jackson McDonald
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	Rigby Cooke
Fifth Defendants	:	McLachlan Thorpe
Sixth Defendant	:	Croftbridge
Seventh Defendant	:	Kings Park
Eighth Defendant	:	Kings Park
Ninth Defendants	:	No appearance
Tenth Defendants	:	No appearance
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	Croftbridge
Fourteenth Defendant	:	McLachlan Thorpe
Fifteenth Defendant	:	Rigby Cooke
Sixteenth Defendant	:	Murcia Pestell Hillard

Cases referred to in decision:

Bahr v Nicolay [No 2] [1988] HCA 16; (1988) 164 CLR 604
Barns v Barns [2003] HCA 9; (2003) 214 CLR 169
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Blenkinsop v Herbert [2017] WASCA 87; (2017) 51 WAR 264
Brooks v Young [2018] SASCFC 81; (2018) 131 SASR 365
Buckeridge v Buckeridge [2018] WASC 187
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694; [1964] 3 All ER 692
Commissioner of Taxation v Bamford [2010] HCA 10; (2010) 240 CLR 481
Federal Commissioner of Taxation v Carter [2022] HCA 10; (2022) 96 ALJR 325
Federal Commissioner of Taxation v Thomas [2018] HCA 31; (2018) 264 CLR 382
Federal Commissioner of Taxation v Whiting [1943] HCA 45; (1943) 68 CLR 199
Gangemi v Sparta [2021] WASC 441
Gray v Sirtex Medical Ltd [2009] WASC 126
Harmer v Commissioner of Taxation [1991] HCA 51; (1991) 173 CLR 264
Hart v JGC Accounting and Financial Services Pty Ltd [2015] WASCA 22; (2015) 47 WAR 582
In re Schebsman; Ex parte Official Receiver v Cargo Superintendents (London) Ltd [1944] Ch 83
Koh v Samuel Conrad Buckeridge as executor of the estate of Leonard Walter Buckeridge [No 2] [2021] WASC 148
Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 255 CLR 62
Lord Sudeley v Attorney General [1897] AC 11
Marley v Rawlings [2014] UKSC 2
McBride v Hudson (1962) 107 CLR 604
Mercanti v Mercanti (2016) 50 WAR 495
MillCity Pty Ltd v West Coast Liquor Merchants WA Pty Ltd [2009] WASC 292
Muir v Winn [2009] NSWSC 857
Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306
Pagels v MacDonald (1936) 54 CLR 519
Pateman v Heyen (1993) 33 NSWLR 188
Perpetual Trustee Co Ltd v Wright (1987) 9 NSWLR 18
Pringle v Pringle [2010] WASC 206
Rapaich v Rapaich [2021] NSWSC 992
Reid v Hubbard [2003] VSC 387
Re-Pollock; deceased [1964] VR 554
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45
Taylor v Commissioner of Taxation [1970] HCA 10; (1970) 119 CLR 444
Wheatley v Lakshmanan [2022] NSWSC 583

Table of Contents

1.0 Background

2.0 The relief sought by the plaintiff

3.0 The material terms of the Amended Will providing for the gift to the plaintiff

4.0 The threshold issues to be determined in the proceedings

5.0 Principles of construction applicable to the Amended Will

6.0 Scheme of the Amended Will

6.1 The division of property of the estate

6.2 The trusts established by the Amended Will

6.3 What is the nature and character of the gift to the plaintiff in cl 3(g) of the Amended Will and is the plaintiff a beneficiary of the trust established by cl 3.1(a) of the Amended Will (the Executors' Trust to realise the Buckeridge Securities)?

6.3.1 The nature and character of the gift in cl 3(g)

6.3.2 Is the gift in cl 3(g) a gift of, or a gift from, the net proceeds of the Realisation, and was the plaintiff to receive the gift as a beneficiary of a trust?

7.0 The records of payments made to the plaintiff and the beneficiaries of the cl 4 trusts, the resolutions made by the Executors on 17 June 2020, and the private tax rulings

7.1 The relevant duties and obligations of the Executors

7.2 The private rulings sought by the Executors from the Commissioner of Taxation, and the resolution of the Executors made on 17 June 2020

7.3 The plaintiff's contentions as to why she claims that the treatment by the Executors of the payments made to her in satisfaction of her gift was in breach of their duties of administration of the estate

7.4 Does the dispute between the plaintiff and the Executors as to whether the Executors have breached their duties of administration raise matters that are 'taxable facts' that are independent of and antecedent to the interpretation of the taxation Acts?

7.4.1 Should the court to determine whether it was incorrect for the Executors to make the relevant statements in the records of payment insofar as they applied to the plaintiff and the resolutions on 17 June 2020 when the Commissioner is not a party to the proceedings?

7.4.2 The court should not make any findings as to whether the resolutions and payment receipts made by the Executors have no basis and of no effect

8.0 The declarations as to the proper construction of the Amended Will that should be made by the court, and orders as to costs

SMITH J:

1.0 Background

This action was commenced by the filing of a writ of summons on 18 December 2020.
Leonard Walter Buckeridge died on 11 March 2014 leaving his spouse the plaintiff, five children and a number of grandchildren.
Mr Buckeridge's estate was worth over $2.5 billion,[1] and consisted primarily of the deceased's shareholding in BGC (Australia) Pty Ltd and Esther Investments Pty Ltd.
[1] Exhibit B, 20.
The Executors obtained a grant of probate on 22 January 2015 of the will dated 10 June 2008.[2] The will was subsequently amended by consent orders made by the court on 23 February 2018 (Amended Will).[3]
[2] Exhibit A Tab 1, 1.
[3] Exhibit B, 136 ‑ 206; The consent orders were made by Chaney J on 23 February 2018 in CIV 1960 of 2015.
The plaintiff, as a beneficiary of a gift of $115 million under the Amended Will, claims the executors of the Amended Will, the first and second named first defendants, Samuel Conrad Buckeridge and Andrew Benjamin Buckeridge (Executors) are in breach of their duties of administration.
The amendments to Mr Buckeridge's will came about as a consequence of settlement of proceedings brought by his eldest daughter, Ms Lise Frances Buckeridge. In these proceedings a number of Mr Buckeridge's family members, including the plaintiff, as a seventh defendant made claims against his estate under the Family Provision Act 1972 (WA).
The Executors, among others were defendants in the family provision proceedings.
After a lengthy mediation process, the parties to the family provision proceedings agreed to settle the claims brought against Mr Buckeridge's estate, including part of the provision claim made by the plaintiff. It was agreed that subject to the plaintiff's sale of her 'A' class share back to BGC for $8 million she was to be gifted $115 million.
The settlement of the family provision claims, by the others, and the part settlement of the plaintiff's claim for provision, resulted in amendments being made to the will by consent orders. The settlement allowed for a claim by the plaintiff for further provision in addition to the amount in which it was agreed she should receive pursuant to the consent orders.
On or about 14 December 2017, the parties to the family provision proceedings, all of whom were legally represented, entered into an agreement titled 'Heads of Agreement'.
Under cl 1 of the Heads of Agreement, the parties agreed to move the court for an agreed form of orders.
The agreed form of orders were made by consent by Chaney J on 23 February 2018.[4] The consent orders recorded in the preamble to the orders:
Pursuant to Order 43 Rule 16 of the Rules of the Supreme Court 1971 (WA) and BY CONSENT and the Court being of the opinion that the disposition of the estate of the abovementioned deceased effected by his will does not make adequate provision for the proper maintenance support and advancement in life of the plaintiff, second defendant, fifth defendant, seventh defendant, ninth defendant and tenth defendant and the parties:
(a)being agreed that there should be additional provision to the seventh defendant pursuant to an amendment to the Will of $115,000,000.00 (one hundred and fifteen million dollars) but there remains an issue between them for agreement or determination as to whether there should be any further provision for the seventh defendant pursuant to the Family Provision Act 1972 (WA) ('the Issue'); and
(b)being agreed that in respect of the plaintiff, second, fifth, seventh, ninth and tenth defendants there should be the amendments to the Will provided for by these orders …
[4] Exhibit B, 207 ‑ 228.
Clause 3 of the Heads of Agreement provided, relevantly, that subject to the consent orders, the parties (other than the plaintiff) agreed to mutual releases in respect of claims against the estate under the Family Provision Act.
Clause 6 of the Heads of Agreement stated, relevantly, that each of the parties, including the Executors, would 'promptly take all steps reasonably open to them to facilitate':
(a)the sale of 'Buckeridge Securities' as defined in the new cl 3.1 that was to be inserted into Mr Buckeridge's will, pursuant to the consent orders; and/or
(b)the 'sale of all assets and undertakings held by the entities in which the Buckeridge Securities are held and their respective subsidiaries and the realisation of the value of the Buckeridge Securities following such sale by procuring that the proceeds from those realisations are paid (whether by dividend, return of capital or other distribution) by each entity to its shareholders and ultimately to the [Executors] as the holders of the Buckeridge Securities pursuant to the Will as soon as practicable following receipt of the proceeds of such sale'.
Relevantly, the 'Buckeridge Securities', as defined in cl 6(a) of the Heads of Agreement and cl 3.1 of the Amended Will, included shares Mr Buckeridge held in each of BGC and Esther.
Clause 8 of the Heads of Agreement provided that the agreement was 'subject to, and conditional on', first, the board of directors of each of BGC and Esther making certain resolutions in the forms annexed to the Heads of Agreement; and second, the board of BGC passing a resolution to make an offer to buy back the plaintiff's 'A' class share in BGC for consideration of $8 million.
There is no dispute that the purchase of the plaintiff's 'A' class share by BGC was effected in accordance with the Heads of Agreement and that the second of the conditions referred to in cl 8 of the Heads of Agreement was thereby fulfilled. No issue concerning that transaction arises for determination in these proceedings.
The plaintiff did not pursue her application for further provision, and made an application for leave to discontinue. On 25 June 2018, Chaney J made an order that the plaintiff's application (for further provision) be discontinued.[5]
[5] Buckeridge v Buckeridge [2018] WASC 187.
The dispute that led to the plaintiff bringing the proceedings against the Executors arises out of the proper construction of the provisions of the Amended Will which provides for her the gift of $115 million, and whether resolutions made by the Executors to satisfy payment in part of the gift breached their duties and obligations as Executors in an attempt to cause the plaintiff to be liable for tax on her gift.

2.0 The relief sought by the plaintiff

In the plaintiff's Re‑amended Writ of Summons Indorsed with a Re‑Amended Statement of Claim, lodged on 28 February 2022, the plaintiff seeks the following relief:
(1)declarations as to the proper construction of the Amended Will including:
(a)a declaration that, on the proper construction of the Amended Will, the plaintiff is entitled to a gift of $115 million which is to be satisfied out of the Net Realisation Receipts as defined in cl 3.1(d) of the Amended Will;
(b)a declaration that, on the proper construction of the Amended Will, the plaintiff was entitled to a gift of $115 million but had no legal or equitable interest (either vested in interest or vested in possession) in the dividends or other income received by the Executors that comprised the Realisation Receipts (as defined in cl 3.1 of the Amended Will);
(c)a declaration that, on the proper construction of the Amended Will, the process in cl 3.1 of the Amended Will (including cl 3.1(d)) is the mechanism by which payment of the gift of $115 million is to be made;
(2)a declaration that the purported resolutions of the Executors made on 17 June 2020, have no basis, and are of no effect insofar as they concern the plaintiff and her entitlement to a gift of $115 million;
(3)a declaration that payments made to the plaintiff by the Executors totalling $66,726,865.61 are payments made from Net Realisation Receipts to satisfy payment in part of the gift of $115 million required to be made under the Amended Will;
(4)an order that the Executors take steps to ensure that the purported resolutions made on 17 June 2020 are treated as having no effect insofar as they concern the plaintiff and her entitlement to the gift of $115 million; and
(5)an order that the Executors take steps to treat an account for the payments totalling $66,776,865.61 as payments made from Net Realisation Receipts to satisfy payment in part of the gift of $115 million required to be made under the Amended Will.
Although the plaintiff commenced the action by a writ of summons, after service of the writ an issue arose between the parties as to whether the proceedings ought to be in commenced by originating summons under O 58, r 2 and r 10 of the Rules of the Supreme Court 1971 (WA).
On 3 June 2021, Master Sanderson, in an appeal against a decision of a registrar ordered that the action proceed as if it had been commenced by originating summons.[6]
[6] Koh v Samuel Conrad Buckeridge as executor of the estate of Leonard Walter Buckeridge [No 2] [2021] WASC 148.

3.0 The material terms of the Amended Will providing for the gift to the plaintiff

Clause 2, cl 3 and cl 3.1 of the Amended Will provides as follows:[7]
[7] The amendments made by the consent orders are shown as underlined.
2.Executors
I appoint my sons SAMUEL CONRAD BUCKERIDGE and ANDREW BENJAMIN BUCKERIDGE to be my executors of this will and trustees of the trusts arising under it other than those referred to in clause 4 below where separate appointments are made within the clause.
3.Gifts
(a)I give to PATRICIA CASTLEY the sum of FIFTY THOUSAND DOLLARS ($50,000);
(b)I give to AVIS CLEMENTS the sum of FIFTY THOUSAND DOLLARS ($50,000);
(c)I give to GAIL WARD the sum of FIFTY THOUSAND DOLLARS ($50,000);
(d)I give to my former wife JUDITH the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000) and express the wish that any assets purchased with this sum be passed on to our five children, to be divided equally between them according to value;
(e)If they are owned by me at the date of my death, I give to:
(i)LISE FRANCES BUCKERIDGE the property described as situate in Bronte New South Wales more fully described in certificate of title Volume 1 Folio 650944; and
(ii)RACHEL JANE BUCKERIDGE the property situate in Randwick New South Wales more fully described in certificate of title Volume 35 Folio 1902.
(f)I give to SIOK PUAY KOH all furniture, personal effects and any motor vehicles which I may own at the date of my death.
(g)Subject to the sale of her "A" class share back to BGC (Australia) Pty Ltd for a consideration of $8,000,000 (eight million dollars), I give to SIOK PUAY KOH the sum of $115,000,000 (one hundred and fifteen million dollars) together with any further sum or provision as may be determined by the Court in accordance with the Family Provision Act 1972 ("the Issue") absolutely to be paid to her:
(i)without the accrual of interest;
(ii)solely from 50% of the net proceeds of the Realisation referred to in clause 3.1.
3.1I give to my Executors the securities or shares which I hold (or are held on my behalf) in BGC (Australia) Pty Ltd, Esther Investment Pty Ltd, Buckeridge & Associates Pty Ltd and The PAW Unit Trust and any other entity owned by me at the date of my death ("Buckeridge Securities") on trust:
(a)to realise the Buckeridge Securities to the best advantage of the beneficiaries by either or both of:
(i)sale of the Buckeridge Securities; or
(ii)a sale by each of those entities and their respective subsidiaries of the whole or part of its assets and undertaking, and the distribution of the proceeds of such sale to my Executors as the holders of the Buckeridge Securities (whether by special dividend, return of capital or otherwise)
(the "Realisation")
(b)and for the sole purpose of effecting the Realisation my Executors:
(i)shall have all the powers stated in clause 6 and Schedule 1 of my will (except the power to postpone a sale or retain that part of my estate) with the terms of clause 6 to prevail in the event of any inconsistency between clause 6 and the terms in Schedule 1; and
(ii)must do all things necessary, including by exercising any powers or rights to which they may be entitled as the holders of the Buckeridge Securities, to facilitate the Realisation in a timely fashion;
(c)to receive the proceeds of:
(i)the Realisation ("Realisation Receipts"); and
(ii)to the extent they do not arise as a consequence of the Realisation, any dividends or distributions, as applicable, of those entities or any other receipts as the result of the ownership of the Buckeridge Securities ("Other Receipts"), (together "the Receipts"); and
(d)subject to clauses 3.1(e), 3.1(f) and 4(f), to immediately thereafter distribute the Realisation Receipts after the payment or accrual of taxes and expenses ("Net Realisation Receipts") as follows:
(i)as to the first $230,000,000 of the Net Realisation Receipts:
A50% in payment of the gift in clause 3(g) above; and
B50% to the testamentary trusts declared in clause 4 of my will ("testamentary trusts") in the same proportions specified in clause 4 of my will; and
(ii)as to the Other Receipts, to the testamentary trusts in the same proportions specified in clause 4 of my will;
(e)upon:
(i)the discharge of the gift of $115,000,000 in clause 3(g) above; and
(ii)a distribution or distributions in the total sum of $115,000,000 to the testamentary trusts in the same proportions declared in clause 4 of my will, to refrain from distributing to the testamentary trusts any more than 50% of the Net Realisation Receipts until the court determines the Issue or 31 December 2019 whichever is the earlier; and
(f)after 31 December 2019, to withhold from any distributions in accordance with clause 3.1(d)(i)(B) such amount as is reasonable to provide for any further provision for Siok Puay Koh as may be determined by the court in deciding the Issue.

4.0 The threshold issues to be determined in the proceedings

At the heart of the dispute between the plaintiff and the Executors, the fourth, fifth, sixth and fourteenth defendants is whether the Executors or the plaintiff is liable to pay income tax upon the gift of $115 million.
The plaintiff does not seek a declaration or order that it is the Executors who are liable to pay income tax upon her gift. This is an issue between the Executors and the Federal Commissioner of Taxation, and between the Commissioner and the plaintiff.
The plaintiff contends that the issues in this case turn on the proper construction and effect of the Amended Will.
The Executors and the fourth, fifth, sixth and fourteenth defendants argue that the tax consequences to the plaintiff of the receipt and distribution of the Realisation Receipts are to be determined principally by div 6 and div 6E of the Income Tax Assessment Act 1936 (Cth) and sub div 207 – B of the Income Tax Assessment Act 1997 (Cth), and the application of those provisions do not depend in any way upon the character of the gift to the plaintiff in the Amended Will.
Thus, the Executors and the fourth, fifth, sixth and fourteenth defendants claim there is no utility in these proceedings because the tax treatment of the payments made to her properly turn upon the application of tax legislation and does not depend upon any issue of construction of the Amended Will.
The Executors also argue that the plaintiff has chosen the wrong forum for determining her claims regarding the characterisation for tax purposes of the amounts paid to her in satisfaction of the gift under the Amended Will. The remedy provided by statute is for her to seek a private ruling from the Commissioner of Taxation and, in the event that she does not obtain a ruling with which she agrees, to lodge an objection and subsequently commence appeal proceedings in the Federal Court of Australia under pt IVC of the Taxation Administration Act 1953 (Cth). The Executors contend that the plaintiff has chosen to ignore those statutory procedures for resolving taxation issues by bringing these proceedings, and the court should not, for that reason, exercise the discretion to grant declaratory relief.
In addition, the Executors contend the claim for declaratory relief is misconceived because, in line with the decision of the High Court in Federal Commissioner of Taxation v Thomas,[8] neither the Commissioner nor the Federal Court will be bound by any decision of this Court regarding the plaintiff's liability to tax on the amounts distributed to her pursuant to cl 3.1(d) of the Amended Will. On that basis, the relief sought by the plaintiff in these proceedings is inutile and the court should not exercise its discretion to make the declarations and orders for which the plaintiff contends.
[8] Federal Commissioner of Taxation v Thomas [2018] HCA 31; (2018) 264 CLR 382.
The plaintiff contends that her claims of breach of obligations by the Executors and the relief she seeks depends on the proper construction of the Amended Will. The plaintiff argues that it is only once the proper construction of the Amended Will is decided by this court under the general law, and the rights inter se between the relevant parties under the Amended Will are determined, the Commissioner is to treat those 'taxable facts' as effective against the Commissioner even though the Commissioner is not a party to this action and will not be bound by any ruling as to the operation of the relevant taxing statute.
Consequently, the court is confronted with two opposing approaches to resolution of the issues in dispute between the plaintiff and the Executors. The Executors and the fourth, fifth, sixth and fourteenth defendants claim the tax consequences of the matters in dispute are to be determined principally by div 6 and div 6E of the Income Tax Assessment Act 1936 and sub div 207–B of the Income Tax Assessment Act 1997.
Whereas the plaintiff and the sixteenth defendant claims that the issues in dispute depend upon the proper construction of the Amended Will as construed by the general law and not the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997, or any tax ruling.
I agree, in part, that the plaintiff's approach is correct. Some of the disputed issues before the court turn on the proper construction of the terms of the Amended Will. However, for the reasons given in 7.0 to 7.4.2 below, I have declined to resolve the disputed matters between the parties that require this court in these proceedings to decide how the taxing Acts operate.
There are preliminary issues that can be determined by this court as to the proper construction of the relevant provisions of the Amended Will. Relevantly, the former Chief Justice of the High Court, the Hon Murray Gleeson AC, KC pointed out when speaking extrajudicially in a speech to the Taxation Institute of Australia in 2009:[9]
Much of the structure of our legislation employs concepts of common law and equity as building blocks. The income tax legislation is a good example. The term 'income tax' describes a tax upon gains of a certain kind. The distinction between gains on capital account and gains on revenue account, or income, was originally, and remains, of importance in trust law. In the administration of a settled estate, entitlements of life tenants and remaindermen turn upon that distinction. The distinction was taken up, in the United Kingdom, and in Australia, as a method of identifying a kind of gain that would attract certain fiscal consequences. The distinction can be difficult to apply. In recent years, Parliament has extended its taxing ambitions, but the difference between income and capital gains is still there. Similarly, many provisions within the Act turn upon established legal or equitable concepts. A simple example is Div 6 of Pt III of the 1936 Act, dealing with trust income. Section 96 says that, except as provided in the Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate. Where there is a beneficiary of a trust estate who is not under any legal disability and is presently entitled, s 97 provides that the beneficiary's share of the income of the trust estate is part of the assessable income of the beneficiary. Later provisions deal with various circumstances in which the trustee will be liable to pay income tax on the income of the trust estate. The application of this part of the Act depends upon an understanding of concepts of trust law. Fiscal consequences are to be worked out by applying the words of the Act to the legal rights and obligations that have emerged from the facts of the case and the conduct of the taxpayer and any other relevant party. An accurate analysis of the facts, and the legal rights and obligations upon which the Act is to operate, is an essential first step in applying the law expressed in the statute.
Subject to a qualification to which I will return, income tax legislation takes the factual and legal circumstances of the case as it finds them. In general, people are taxed by reference to the income they have, in fact and in law, derived; and the expenses they have, in fact and in law, incurred. This elementary point is a contextual matter of pervasive importance in the interpretation of the 1936 and 1997 Acts ('the Acts').
[9] Gleeson AC, KC, 'Statutory Interpretation' (Address delivered to the Taxation Institute of Australia, 24^th National Convention, Justice Hill Memorial Lecture, Sydney, 11 March 2009) (footnotes omitted); M Gleeson stated in his speech that the exception to the principle that income tax legislation takes the factual legal circumstances of the case as it finds them, is found in the Anti‑Avoidance provisions in pt IVA of the Income Tax Assessment Act 1936 (Cth), which provisions are not relevant to the disposition of this matter.
It is established that a court may apply the general law to determine the rights inter se, as between relevant parties under a will in respect of 'taxable facts', and the Commissioner is to treat those 'taxable facts' as effective against the Commissioner even though he or she will not be bound by any ruling as to the operation of the relevant taxing statute.
In Federal Commissioner of Taxation v Thomas, Gageler J explained:[10]
Tax lawyers often speak of 'taxable facts'. They mean by that expression to refer to more than just facts. They mean by it to refer to the combination of events that have occurred and legal consequences of events that have occurred on which a taxing statute fixes to impose a taxation liability or to confer a taxation benefit.
Most often, taxable facts are independent of and antecedent to their taxation consequences. That is because, most often, a taxing statute will operate upon 'the result of a taxpayer's activities as it finds them'.
Executor Trustee & Agency Co of South Australia Ltd v Deputy Federal Commissioner of Taxes (SA) was concerned with identification, on an appeal against an assessment, of taxable facts of that independent and antecedent nature.
The taxpayer in Executor Trustee was the trustee of the unsold residue of land devised by a will. The taxpayer claimed certain deductions from land tax. The taxing statute permitted those deductions only if the remaining beneficiaries under the will were each 'entitled to … the income' from the land. The Commissioner disallowed the deductions by the taxpayer in assessing the taxpayer to land tax. The taxpayer appealed against the assessment. The appeal was to the High Court in its original jurisdiction. The taxpayer argued on the appeal that the will, properly construed, gave each of the remaining beneficiaries a life interest in the income from the land held on trust.
The difficulty for the taxpayer was that, nearly 20 years before the tax year to which the assessment related, the Full Court of the Supreme Court of South Australia had construed the will differently in a proceeding to which the trustee and all persons having an apparent interest in the will had been parties.
…
Put in other words, whether the Supreme Court of South Australia had been 'right' or 'wrong' in its construction of the will, the Supreme Court had in fact made an order which operated under the general law finally to determine the legal entitlements of the beneficiaries as between them, the trustee and all other persons who had an apparent interest in the will. The legal entitlements of the beneficiaries under the will, as declared in the order made by the Supreme Court, were the taxable facts on which the taxing statute operated.
[10] Federal Commissioner of Taxation v Thomas [2018] HCA 31; (2018) 264 CLR 382 [84] ‑ [93] (footnotes omitted).
The plurality in Federal Commissioner of Taxation v Thomas also relevantly stated:[11]
Executor Trustee is authority for the proposition that the general law rights of trustee and beneficiary inter se, to the extent that they are defined by a decision made in duly constituted proceedings, are defined as against the Commissioner unless the decision is set aside. In Executor Trustee, the earlier proceedings had determined rights inter se. There was no question of res judicata or of issue estoppel, and the separate declaration did not generate rights in rem against third parties. And, importantly, the earlier proceedings did not determine the application of the taxation law to those rights.
It follows that Executor Trustee is not authority for the proposition that the Commissioner, or a court under Pt IVC, should determine the application of the taxing acts otherwise than according to law. 'When the revenue authorities come to impose a tax in relation to such rights [defined by order of the court], they must … take them as they in fact actually exist between the parties' (emphasis added). But directions made under the equivalent of s 96 of the Trusts Act do not bind the Commissioner in the application of the taxation laws.
[11] Federal Commissioner of Taxation v Thomas [2018] HCA 31; (2018) 264 CLR 382 [54] - [55] (footnotes omitted).
In Federal Commissioner of Taxation v Thomas it was found that an order and declarations made by the Supreme Court of Queensland could not conclusively bind the Commissioner of Taxation in the application of taxation laws of the Commonwealth, in particular, the application of pt 3-6, div 207 of the Income Tax Assessment Act 1997. The impugned orders and declarations were not 'taxable facts' which existed independently of and antecedently to the operation of the relevant taxing statute, and were founded upon a flawed assumption about the effect of the Bifurcation Assumption under div 207.[12]
[12] Federal Commissioner of Taxation v Thomas [2018] HCA 31; (2018) 264 CLR 382 [97] (Gageler J); [37] ‑ [40] ( Kiefel CJ, Bell, Keane, Nettle, Gordon & Edelman JJ).
Consequently, the High Court has recognised that Supreme Courts are able to determine facts which can properly found to be 'taxable facts'. Gageler J described 'taxable facts' as facts that are independent of and antecedent to their taxation consequences, but not those facts that exist only through the operation of a taxing statute.[13]
[13] Federal Commissioner of Taxation v Thomas [2018] HCA 31; (2018) 264 CLR 382 [97].
I agree that to determine whether the plaintiff should be entitled to the relief she seeks, the Amended Will must be first construed by applying to the applicable principles of construction of wills and contracts, any applicable principles of the law of trusts, and the Family Provision Act before then turning to whether the Executors breached their executor obligations to determine whether the validity and effect of those resolutions are in part or wholly founded upon the operative effect of the provisions of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.
The first issue to be determined in the proceedings is whether the character of the gift of $115 million was a general or specific legacy. This issue is considered in 6.0 to 6.3.2 below.
The second, and perhaps the most important issue in the proceedings is whether, on the proper construction of the terms of the Amended Will, in respect of the gift of $115 million the plaintiff is to receive (or has in fact received) the gift as a beneficiary of a trust under the general law, or as a beneficiary of a deemed trust estate by operation of the definition of 'trustee' in s 6 and s 97(1)(a) of the Income Tax Assessment Act 1936 and other relevant statutory provisions of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.
Part of this second issue is whether the gift is conferred only by cl 3(g) of the Amended Will or whether the plaintiff's entitlement to the gift arises as a beneficiary of the Realisation proceeds given to the Executors on trust under cl 3.1 of the Amended Will.
The resolution of this second issue depends on whether the answer to this question constitutes a finding of a 'taxable fact' or findings of 'taxable facts' to be determined by the proper construction of the terms of the Amended Will as construed by the Family Provision Act, the common law and principles of equity. Alternatively, whether the plaintiff was to receive or had in fact received the gift of $115 million as a share of the net income as a beneficiary of a trust estate can only be properly construed in light of the relevant provisions of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.
The second issue is considered in 6.3 to 6.3.2 and in 7.0 to 7.4.2 below.
The third issue is whether the Executors breached their duties to administer the estate's assets in accordance with the Amended Will by recording certain matters and making resolutions to the effect that the plaintiff should be treated as a beneficiary of a trust in respect of the payments made to her in satisfaction of her gift of $115 million. In particular by treating the payments made to the plaintiff as distributions of trust income, were the Executors in breach of their duties. In respect of this issue, before any consideration can be given as to whether the Executors breached their duties by making the records and the resolutions, it must first be determined whether the resolution of this part of the dispute can only be properly determined in light of the relevant provisions of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.
The third issue is considered in 7.0 to 7.4.2 below.

5.0 Principles of construction applicable to the Amended Will

The plaintiff contends that the principles that should apply to the construction of the Amended Will are those general principles that apply to construing a will.
The general principles were comprehensively summarised by Kenneth Martin J in Pringle v Pringle as follows:[14]
[14] Pringle v Pringle [2010] WASC 206 [25].
1.The object of construing a will is to ascertain the testator's intention as expressed in the will itself. In a passage frequently cited from Perrin v Morgan [1943] AC 399, 406, Lord Simon LC famously observed:
[T]he fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case - what are the 'expressed intentions' of the testator.
2.The overriding consideration is always the language used in the testamentary instrument. In Parnell v Hinkley [2007] WASC 102 [12] and [15], Master Newnes (as he then was) observed:
The Will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the Will, read in the light of the circumstances in which the Will was made. The language employed in the Will should be read in the sense which the testator appears to have attached to the expressions used, albeit it is not to be construed on the basis of what it is suspected the testator intended, other than as expressed in the terms of the Will: Fell v Fell (1922) 31 CLR 268 at 273; WA Trustee, Executor & Agency Co Ltd v Birkbeck (1921) 23 WALR 27 at 29, 31 ‑ 32; Perrin v Morgan [1943] AC 399 at 406, 414 ‑ 415, 416, 420; Borlaug v The University of Western Australia [2001] WASCA 425 at [15]. The overriding consideration is the language used by the testator and the Court can neither ignore the plain meaning of words nor unnecessarily introduce words to give effect to an intention that is not expressed: In re Crocombe (decd) [1949] SASR 302 at 315.
…
There is a presumption against intestacy, namely that the will should, if possible, on a fair and reasonable construction, be construed so as to lead to a testacy rather than an intestacy or partial intestacy: Fell v Fell (supra) at 275 - 276, 284; Hamersley v Newton (2005) 30 WAR 568 at 583. But the presumption against intestacy 'is not a strong presumption': Marks v Pope [2001] NSWSC 105 at [17]. A court should not lean too heavily against a construction that produces an intestacy and, cannot, in order to avoid an intestacy, misconstrue the language of the will: In re Edwards; Jones v Jones [1906] 1 Ch 570 at 574; Re Wragg (decd); Hollingsworth v Wragg [1959] 1 WLR 922 at 929
3.The testamentary instrument must obviously be read as a whole. Surrounding clauses may be helpful in explaining, amplifying or modifying the scope of a provision: see Ritchie v Magree [1964] HCA 10; (1964) 114 CLR 173, 181 (Kitto J), Dalton v Dalton [2008] WASC 56 [76] ‑ [77] (Beech J) referring to Brennan v Permanent Trustee Company of New South Wales [1945] HCA 17; (1945) 73 CLR 404. In Brennan, Dixon J said (significantly, I think, in the circumstances of the present application):
When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared (414).
4.In Dalton, Beech J observed by reference to the above passage in Dixon J's reasons in Brennan, that the approach is to be applied only when a court is able to identify from the will as a whole, 'the main purpose and intention of the testator' [77].
5.As to use of surrounding circumstances in the exercise of interpretation, in Bakranich v Robertson [2005] WASC 12, Master Newnes approved a passage at [13] from Williams on Wills, 8th ed, Butterworths (2002) Vol 1 at 586 as follows:
The meaning of the will is dependent upon the intention of the testator and in the court of construction the primary evidence of the testator's intention is the will itself but extrinsic evidence of circumstances may be given the nature and effect of which is to explain what the testator has written, but not what he intended to write. Thus, extrinsic evidence is admissible to make intelligible something in the will which without that evidence would not be intelligible. (Footnotes omitted)
6.Section 28A of the Wills Act 1970 (WA) now, of course, expressly permits the use of extrinsic evidence, including evidence of a testator's intention, to clarify a will. However, s 28A is not applicable in present circumstances, since Mrs Pringle died before s 22 of the Wills Amendment Act 2007 (WA) brought s 28A into operation.
7.The so‑called 'armchair principle', by reference to the observations made in Boyes v Cook (1880) 14 Ch D 53 at 56, allows a court to consider the circumstances which surrounded a testator or testatrix, at the time he or she made their will. In Mustard v Oikonomov (Unreported, WASC, Library No 980468, 19 August 1998), Owen J (as he then was) said of the armchair principle:
This principle allows the court to admit extrinsic evidence about the testator's property, family, acquaintances and friends for the purpose of putting the court in a position to read the will as the testator would have read it. That is, the court will allow evidence to be admitted of factual circumstances surrounding the testator when the will was made: Layer v Burns Philp Trustee Co Ltd (1986) 6 NSWLR 60 at 65. Under this approach, evidence as to the testator's intentions is not admissible. If after the admission of this factual evidence the words still remain ambiguous, then (except in the case of equivocation) no further evidence will be admitted and the disposition will be void for uncertainty (7).
8.But the armchair principle is not to be stretched to a point of giving words or phrases a meaning which they are incapable of bearing or reaching the point of the court, in effect, making a fresh will for the testator or testatrix: see Higgins v Dawson [1902] AC 1, 4 ‑ 6 (Earl of Halsbury LC); Perrin.
9.Broadly, the same principles are applicable to the construction of codicils. If possible, a court will attempt to construe a codicil that does not contain a revocation clause, as standing together with the will as one instrument, representing, when read together, the last will and testament of the testator or testatrix.
10.Under the above approach, the later testamentary instrument would usually prevail over the earlier, to the extent of an express inconsistency.
11.In general, however, an earlier testamentary instrument would be disturbed only to the extent necessary, by reference to an inconsistency identified: see Re the Estate of Collins (No 2) [2000] NSWSC 407 [6] ‑ [8] (Young J).
12.If after applying the principles of construction, a court is still unable to ascertain the testator's intention, the provision must be assessed to be void for uncertainty, see Bakranich [14].

The Executors properly point out that these settled principles of construction of a will have limitations in the context of the construction of the provisions of a will that has been amended as a consequence of the settlement of family provision proceedings by agreement between the parties. In these circumstances, the provisions inserted in a will cannot be found to reflect the intention of the testator. As the fifth and fourteenth defendants point out the court cannot in these circumstances construe the relevant provisions of the Amended Will that provide for the gift of $115 million to the plaintiff by placing itself in the deceased's armchair.
The parties agree that the essence of the consent orders made in the family provision proceedings change the testamentary intention of the testator. The parties also agree that the consent orders, in turn, reflect the compromise agreed between the parties in the Heads of Agreement.
It is common ground that the Amended Will was made by consent orders, following a mediation where the issues mediated included the plaintiff's claim under s 6(1) of the Family Provision Act on the basis that inadequate provision had been made for her under the original will.
Each of the defendants contend that the Amended Will needs to be construed on the basis that it reflects the court's orders following a settlement.
The Family Provision Act is part of the relevant context that assists the proper construction of the Amended Will.
The plaintiff points out that s 6(1) of the Family Provision Act provides that the court may make adequate provision from a deceased's estate if it considers that adequate provision was not made in the deceased's will. Section 6(4) provides that the court may order a lump sum payment. Section 10 provides that the court's order operates as a codicil to the will.
Section 14(1) of the Family Provision Act provides that every order in which provision is made must specify the part of the deceased's estate out of which the adequate provision is to be paid. Section 14(2) provides that the burden of any provision shall, as between the persons beneficially entitled to the estate, be borne by those persons in proportion to the value of their respective interests in the estate.
The fifth and fourteenth defendants argue that whilst the orders of Chaney J take effect as if made as a codicil to the will, immediately prior to Mr Buckeridge's death, it does not follow that the orders are to be construed as if they were such a codicil because an order for family provision remains in essence a court order. This constructional point cannot be accepted because to do so would be to ignore the express statutory command in s 10 of the Family Provision Act that orders for provision, must necessarily include the orders made by Chaney J, are in effect, and for all purposes, a codicil to the will.
The Executors make a submission that the interpretation of a will that has been amended by consent orders made in family provision proceedings should be governed by the principles that apply to the construction of contracts. In support of their submission, the Executors refer to a decision of Sackar J in Rapaich v Rapaich.[15] In that matter his Honour was called upon to construe an order made following settlement in family provision proceedings which made provision for a portable life estate. The dispute was whether the words 'sum not exceeding $550,000' in order 2 of the order was to be paid to or for the benefit of the plaintiff in respect of services other than accommodation, and as a lump sum rather than a capped amount. In a very short decision his Honour observed:[16]
The principles dealing with construction which are applicable in my view here are not in doubt. They have been stated and restated in number of decisions of the High Court, examples are as follows; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 245 CLR 104; [2015] HCA 37, Toll (FGCT) Pty Ltd v Alphapham Pty Ltd (2004) 219 CLR 165; [2004] HCA 52.
In short the rights and liabilities of parties under contracts are determined objectively by reference to the contract's text, context and purpose. Particular emphasis is to be placed therefore on the actual language used, the surrounding circumstances known to the parties and the purpose and objects to be secured by the contract.
A detection of what is often called a common intention is a reference to what is to be understood by what a reasonable person would understand by the language of the contract.
[15] Rapaich v Rapaich [2021] NSWSC 992.
[16] Rapaich v Rapaich [2021] NSWSC 992 [17] ‑ [19].
The Executors argue that support for this approach can also be found in the decision of the Supreme Court of the United Kingdom in Marley v Rawlings where Lord Neuberger observed that in interpreting wills the approach in construing a commercial contract should be applied, that is, the aim is to identify the intention of the parties to the document by interpreting the words used in the documentary, factual and commercial context.[17]
[17] Marley v Rawlings [2014] UKSC 2 [19] ‑ [21] (Lord Clarke, Lord Sumption & Lord Carnwath agreed).
The fifth and fourteenth defendants point out that the payment of the gift, in cl 3(g) of the Amended Will, is conditional (and reflects an order made under s 6 and s 7 of the Family Provision Act, in that it is subject to the sale of the plaintiff's 'A' class share back to BGC for $8 million. This was a condition of, and provided for by, the Heads of Agreement.
The fourth and sixth defendants contend this payment is consistent with the nature of the Amended Will as embodying a commercial compromise between many parties in respect of a valuable estate.
I do not agree. As a general principle, a will amended by consent orders made in family provision proceedings cannot be construed by applying the principles that apply to the construction of 'commercial' contracts. This is because a will is not a contract, there is no commercial purpose or object of parties to be found in a will, and just because amendments are made to a will by consent in settlement of family provision proceedings it does not necessarily follow that the purpose of doing so is because of a commercial purpose or object.
However, it is well established that the general principles relating to the construction of written contracts apply to the construction of a trust deed.[18] A trust, like a will, is not a contract.
[18] Blenkinsop v Herbert [2017] WASCA 87; (2017) 51 WAR 264 [106]; applying Mercanti v Mercanti (2016) 50 WAR 495 [72]; Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [53]; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 [9] ‑ [10].
The gift to the plaintiff in cl 3(g) is a partial compromise of the plaintiff's family provision claim because this payment expressly did not prejudice the plaintiff from pursuing a claim for any further sum or provision in the family provision proceedings.
Whilst the consent orders involved a very valuable estate, there is nothing that emerges from a reading of the Heads of Agreement or the reasons for decision of Chaney J in Buckeridge v Buckeridge[19] (which reasons dealt with the plaintiff's application for her costs in the family provision proceedings) that indicates that the partial settlement of the plaintiff's family provision claim was a compromise in the sense that it was for a commercial purpose, or was in the nature of a commercial contract.
[19] Buckeridge v Buckeridge [2018] WASC 187.
Where there is ambiguity in an agreement or a court order, a court may refer to extrinsic materials to assist in construction of the language used, but there is no suggestion by any party in this case that resort to extrinsic materials would assist in the proper construction of the terms of the Amended Will.
Leaving aside the principles that apply to the ascertainment of the commercial purpose of a contract, and the principles that apply to the use of extrinsic material which is not relevant to the task of construction of the Amended Will, the relevant principles of statutory construction of contracts that have application in the task of construction of the Amended Will are those principles that were comprehensively summarised by the Court of Appeal in Black Box Control Pty Ltd v Terravision Pty Ltd as follows:[20]
[20] Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42] (footnotes omitted).
(1)The process of construction is objective. The meaning of the terms of an instrument is to be determined by what a reasonable person would have understood the terms to mean.
(2)The construction of a contract involves determination of the meaning of the words of the contract by reference to its text, context and purpose.
…
(6)To the extent that a contract, document or statutory provision is referred to, expressly or impliedly, in an instrument, that contract, document or statutory provision can be considered in construing the instrument, without any need for ambiguity or uncertainty of meaning.
(7)There are important limits on the extent to which evidence of surrounding circumstances (when admissible) can influence the proper construction of an instrument. Reliance on surrounding circumstances must be tempered by loyalty to the text of the instrument. Reference to background facts is not a licence to ignore or rewrite the text. The search is for the meaning of what the parties said in the instrument, not what the parties meant to say.
(8)There are also limits on the kind of evidence which is admissible as background to the construction of a contract, and the purposes for which it is admissible. Insofar as such evidence establishes objective background facts known to the parties or the genesis, purpose or objective of the relevant transaction, it is admissible. Insofar as it consists of statements and actions of the parties reflecting their actual intentions and expectations it is inadmissible. Such statements reveal the terms of the contract which the parties intended or hoped to make, and which are superseded by, or merged into, the contract.
…
(10)An instrument should be construed as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed so as to have some operation.
(11)Definitions do not have substantive effect. A definition is not to be construed in isolation from the operative provision(s) in which the defined term is used. Rather, the operative provision is ordinarily to be read by inserting the definition into it.
In addition to these principles, as the fourth and sixth defendants point out, it is relevant to ascertain the scheme of the will if it is possible, to ascertain, which scheme the deceased (and in this matter the consent orders) had conceived for dealing with the estate, and then to construe the Amended Will as if it is possible, to give effect to the scheme so revealed.[21]
[21] Perpetual Trustee Co Ltd v Wright (1987) 9 NSWLR 18, 33 (Bryson J); Muir v Winn [2009] NSWSC 857 [24] (Bryson AJ); Wheatley v Lakshmanan [2022] NSWSC 583 [171] (Ward CJ in Eq).
In this matter, the scheme of the Amended Will is to be ascertained not only from the provisions of the original will that remain unamended but also the new and amended provisions that were inserted into the Amended Will by the consent orders.

6.0 Scheme of the Amended Will

6.1 The division of property of the estate

The scheme of the Amended Will is that the property of the estate to be divided is comprised of the Buckeridge Securities and other assets.
Pursuant to cl 3.1 of the Amended Will, the proceeds of the Realisation of the Buckeridge Securities by the Executors are to be used to pay the plaintiff's gift in cl 3(g) providing that she has sold her 'A' class share back to BGC for $8 million, and the remaining proceeds of the Realisation and 'Other Receipts' are to be paid to the testamentary trusts established in cl 4 of the Amended Will.
Clause 4 provides that the proceeds of realisation from the Buckeridge Securities are to be distributed among nine testamentary trusts as follows:
(1)30% of the Receipts in respect of BGC and 35% of all other Receipts to a trust set up for Samuel Buckeridge and other related beneficiaries (cl 4(a)) (The Samuel Buckeridge Trust);
(2)30% of the Receipts in respect of BGC and 35% of all other Receipts to a trust set up for Andrew Buckeridge and other related beneficiaries (cl 4(b)) (The Andrew Buckeridge Trust);
(3)13% of the Receipts in respect of BGC and 3% of all other Receipts to a trust established for Joshua Buckeridge (cl 4(c)) (Joshua Buckeridge Testamentary Trust);
(4)3% of the Receipts to a trust established for Lise Buckeridge (cl 4(c)(A)) (Lise Buckeridge Testamentary Trust);
(5)3% of the Receipts to a trust established for Rachel Buckeridge (cl 4(c)(B)) (Rachel Buckeridge Testamentary Trust);
(6)3.625% of the Receipts to a trust established for Esperance Stephen (cl 4(c)(C)) (Esperance Stephen Testamentary Trust);
(7)3.625% of the Receipts to a trust established for Alba Stephen (cl 4(c)(D)) (Alba Stephen Testamentary Trust);
(8)10% of the Receipts to a trust set out for the plaintiff, her son Julian Theodore Roslyn Ambrose, and his children (cl 4(d)) (Koh Family Testamentary Trust); and
(9)3.75% of the Receipts to a trust set up for Buckeridge grandchildren (cl 4(e)) (Buckeridge Grandchildren Trust).
Clause 4(f) of the Amended Will provided that the gift of $115 million to the plaintiff from the first $230 million of the Net Realisation Receipts was to be paid before the gifts to the trusts in cl 4.
Clause 4(f), in effect, provides that certain of the testamentary trusts (namely, the Samuel Buckeridge Trust as to 1/3; the Andrew Buckeridge Trust as to 1/3; the Joshua Buckeridge Testamentary Trust as to 1/6; the Lise Buckeridge Testamentary Trust as to 1/24; the Rachel Buckeridge Testamentary Trust as to 1/24; the Esperance Stephen Testamentary Trust as to 1/24; and the Alba Stephen Testamentary Trust as to 1/24 are to bear the ultimate liability for the gift to the plaintiff of $115 million on the basis that adjustments will be made to their entitlement to receive further distributions so as to reduce their further entitlement by the above proportions until $115 million is reached.
Not all of the nine trusts established in cl 4 are required to bear this ultimate liability; the Koh Family Testamentary Trust and the Buckeridge Grandchildren Trust are excluded from this ultimate liability.
Pursuant to cl 5 of the Amended Will the residue of the estate is to be held on trust, to pay debts and testamentary and executorship expenses, to pay all duties payable on Mr Buckeridge's death in respect to property passing under his will and to hold the remainder of his property on trust for distribution in equal shares to Samuel Buckeridge, Andrew Buckeridge, Rachel Buckeridge, Lise Buckeridge, Joshua Buckeridge and Julian Ambrose.

6.2 The trusts established by the Amended Will

As set out in [73] of these reasons, there are nine express trusts in cl 4 that are to receive proceeds of realisation from the Buckeridge Securities. Each of these trusts in cl 4 names the Specified Beneficiaries of each of the nine trusts.
There are two other express trusts declared in the terms of the Amended Will.
The first of the other express trusts is created by cl 3.1(a). The Executors are given the Buckeridge Securities on trust to realise the Buckeridge Securities to the best advantage of the beneficiaries. No beneficiaries of this trust are expressly named or otherwise specified in cl 3.1. To distinguish this trust from the other express trusts created by the provisions of the Amended Will it is referred to in these reasons as the 'Executors' Trust to realise the Buckeridge Securities'.
The other express trusts are the trusts created by cl 5. Each of the persons named in cl 5 are residual beneficiaries.
Although the word 'beneficiary' or 'beneficiaries' is not defined in cl 3.1(a), pursuant to cl 3.1(b)(i) the Executors have all the powers stated in cl 6 (except the power to postpone a sale or retain that part of the estate) for the sole purpose of effecting the Realisation. The powers in cl 6 includes the power to apply for the maintenance, education (including travel) advancement or benefit of a beneficiary the whole or any part of the capital and income of that part of the estate to which that beneficiary is entitled or may in the future be entitled (cl 6(c)), but cl 6 does not define whether the word 'beneficiary' in this clause is confined only to the Specified Beneficiaries of the trusts in cl 4.
However, it is clear that the powers of the Executors in sch 1 in respect of the Executors' Trust to realise the Buckeridge Securities, (created by cl 3.1(a)) only apply to the Specified Beneficiaries of the trusts created in cl 4. This is because the word 'beneficiary' in sch 1 is defined in cl 1.2 of sch 1 to mean any of the General Beneficiaries and, the words 'General Beneficiaries' is defined in cl 1.7 of sch 1 to mean the 'Specified Beneficiary' or the 'Specified Beneficiaries' and others, including the grandparents, parents, brothers etc of the Specified Beneficiaries, particular entities formed in Australia or elsewhere, and other such persons, corporations and trusts named, described or defined in sch 2 as additional members of the class of General Beneficiaries. None of these categories of General Beneficiaries includes the plaintiff other than in her capacity as a Specified Beneficiary of the Koh Family Testamentary Trust.
Schedule 1B of the Amended Will provides for the terms upon which each of the assets of the nine express trusts created by cl 4 are held in trust.
The scheme of these express trusts created by the Amended Will is that no express trust arises in respect of the gift to the plaintiff of $115 million in cl 3(g) of the Amended Will.

6.3.1 The nature and character of the gift in cl 3(g)

6.3.1.1 The parties' submissions

The plaintiff argues that the gift in cl 3(g) is a gift of $115 million, and as such is a demonstrative pecuniary legacy, or alternatively a specific legacy which legacy is to be paid from the net proceeds of the Realisation, and not a gift of the actual proceeds from the Realisation.
The defendants argue that it is irrelevant whether a gift is of an asset or from an asset. In addition, such characterisation is said to have no bearing on the tax consequences of the gift in cl 3(g).
Leaving this issue aside, the fourth and sixth defendants argue that the plaintiff's gift in cl 3(g) is not a demonstrative legacy. The fifth and fourteenth defendants submit there is little to be gained from any attempt to characterise an order for provision under the Family Provision Act as a legacy or a pecuniary legacy. However, if a label is to be attached to the $115 million provision, it is best characterised as a specific pecuniary legacy, to be paid only from the proceeds realised under cl 3.1.
The sixteenth defendant supports the plaintiff's construction and argues that the gift in cl 3(g) is a gift of a sum of money absolutely. It is not a gift of any income of the estate, nor a gift of any proceeds of the Realisation, in whatever form such proceeds may be received by the Executors.

6.3.1.2 The gift in cl 3(g) is a specific legacy

Under the general law, a specific legacy is a gift of an identifiable piece of property as at the date of the will or as at the testator's death and is distinguished by the intention of the testator as ascertained from his or her will to separate it in his or her disposition from the rest of his or her property for the purpose of bequeathing it as the distinct subject of a testamentary disposition.[22]
[22] McBride v Hudson (1962) 107 CLR 604, 617 (Dixon CJ), 627 ‑ 628 (Taylor J), 630 ‑ 632 (Windeyer J).

A pecuniary legacy is usually a general legacy unless the will specifies it as a particular fund or as particular items of currency (in which case it is a specific legacy) or nominates it as payable out of a particular fund (in which case it is a demonstrative legacy).
A demonstrative legacy is a general legacy, but it is directed to be satisfied out of a specific fund or a specified part of the estate.[23]
[23] Re-Pollock; deceased [1964] VR 554, 556 (Gillard J).
The court leans against construing the wills as making a specific gift and, where possible, will construe a gift as a general gift particularly where it is a pecuniary legacy, unless there is an insurmountable and clear indication otherwise.[24]
[24] McBride v Hudson (1962) 107 CLR 604, 616 ‑ 617 (Dixon CJ).
An identifiable fund of money set aside by a testator can be a specific legacy if the words of the will indicate that if the specified fund is non‑existent, the gift is to fail and is defeated by the rules of ademption. Whereas, with a demonstrative gift it is paid first and is unaffected by the non‑existent or insufficient fund.
A demonstrative legacy must be made in such a way as to show a separate and independent intention that the gift requires the payment of money to be paid to the legatee in any event.[25]
[25] Ross Martyn et al, Theobald on Wills (18th ed, 2016) 15‑012 and the cases cited; Haines DM, Construction of Wills in Australia (2007) 30.6 and the cases cited; Hardingham IJ, Neave MA and Ford HAJ, The Law of Wills (1977) 156 ‑ 157; Gangemi v Sparta [2021] WASC 441 [10] (Sanderson M).
The plaintiff contends she is entitled to a gift of the sum of $115 million and no more. The plaintiff argues that the fact that cl 3(g)(i) provides that the sum of $115 million is to be paid without the accrual of interest is an indication or expression of intention that it is a demonstrative pecuniary legacy, not a specific legacy.
The plaintiff also contends that she has no specific entitlement to the money from which her gift is to be paid. The gift is required to be paid to her pursuant to cl 3.1(d)(i)(A) 'immediately' after Realisation Receipts are received by the Executors (and after the payment of or accrual of taxes and expenses).
Although the gift to the plaintiff in cl 3(g) was to be paid immediately and before any payments were made to any of the trusts established in cl 4 of the will, and no interest was payable on the gift, the plaintiff's gift is a specific legacy because the gift is a gift of money to be paid solely from the net proceeds of the Realisation, which fund was identified separately from the other assets of Mr Buckeridge's estate. Consequently, if the net proceeds of the Realisation had not been sufficient to satisfy the gift of $115 million, the gift would have failed in part by application of the rules of ademption.
The finding that the gift was a specific legacy is not determinative of the issue as to whether the gift of $115 million was a gift of, or a gift from the net proceeds of the Realisation.
In any event, it is immaterial to the critical issues in dispute in these proceedings, which go to whether the declarations and orders sought by the plaintiff should be made, whether the gift was a demonstrative pecuniary legacy or a specific legacy.

6.3.2 Is the gift in cl 3(g) a gift of, or a gift from, the net proceeds of the Realisation, and was the plaintiff to receive the gift as a beneficiary of a trust?

6.3.2.1 The parties' submissions

The plaintiff claims that her gift of $115 million (subject to the condition that she met for the sale of her 'A' class share in BGC) is a simple gift.
In the plaintiff's submissions filed on 22 November 2021, and prior to the filing of the Re‑amended Writ of Summons Indorsed with a Re‑Amended Statement of Claim on 28 February 2022, it was the plaintiff's case that the gift was a gift of a capital sum.
However, in the plaintiff's Re-Amended Statement of Claim and in her reply submissions filed on 28 February 2022, the plaintiff retracted her argument that the gift is a gift of a capital sum.
Instead, the plaintiff puts a submission that it is irrelevant whether the gift could be characterised as capital and says that the nature of the gift, is that it is a gift of a sum of money, and does not carry with it any beneficial or present entitlement vested in interest and in possession, because the plaintiff was not to receive the gift as a beneficiary of any trust.[26]
[26] See the submissions made by senior counsel for the plaintiff, ts 117 ‑ 119.
The sixteenth defendant agrees with the plaintiff's submission and says that cl 3(g)(ii) of the Amended Will does no more than identify the source of the money to be used by the Executors to pay the plaintiff's gift. That source is the 'net proceeds' of the Realisation.
The Executors argue that the plaintiff did receive her gift as a beneficiary of a trust because the Executors pursuant to cl 3.1 of the Amended Will held the Buckeridge Securities on trust, to realise the Buckeridge Securities and that because the plaintiff was a beneficiary of the net proceeds of the Realisation she was a beneficiary of a trust. Leaving aside the express trust created by cl 3.1 of the Amended Will, the Executors also argue the effect of s 6(1) of the Income Tax Assessment Act 1936 is that they are deemed to be trustees for tax purposes, and it necessarily follows that all beneficiaries including the plaintiff under the Amended Will are deemed to be beneficiaries of a deemed trust for tax purposes.[27]
[27] See the submissions made by senior counsel for the Executors, ts 195 ‑ 196.
The fourth and sixth defendants make the same submission as the Executors.[28]
[28] See the submissions made by senior counsel for the fourth and sixth defendants, ts 242 ‑ 243.
The fourth and sixth defendants also make a submission that the effect of cl 3.1(a) of the Amended Will, in the circumstances that occurred, was to make the plaintiff, substantially an income beneficiary. They contend correctly construed, the nature of the plaintiff's gift depends upon the nature of the fund from which it was paid. If the Executors had realised the Buckeridge Securities by selling them (in accordance with cl 3.1(a)(i)) instead of the companies selling their assets and distributing the proceeds (in accordance with cl 3.1(a)(ii)) they say the fund used to pay the plaintiff's gift would have been capital. But because the Buckeridge Securities sold their assets and distributed the proceeds in accordance with cl 3.1(a)(ii), the fund consisted almost entirely of income.
The fifth and fourteenth defendants argue that the fact that (the consent orders provided for) provision of $115 million together with any further sum or provision) is made 'absolutely' merely indicates that the payment, when made, is not subject to a trust. However, they argue that this provision cannot be construed as an indication that the sum is and was not the subject of a trust before any payments were made in satisfaction of the gift.

6.3.2.2 The plaintiff was not to receive her gift in cl 3(g) as the beneficiary of a trust under the general law

Pursuant to s 10 of the Family Provision Act the gift to the plaintiff in cl 3(g), having been made by an order pursuant to the provisions of the Family Provision Act, takes effect as a codicil to the will.
Further, as the plaintiff contends, s 6(4) of the Family Provision Act permitted the order by the court of provision to the plaintiff of a lump sum, and as required by s 14(1) of the Family Provision Act, cl 3(g) of the Amended Will specified the source of and the part of the estate from which provision of the lump sum of $115 million was required to be raised from or to be paid.
Section 14(1) of the Family Provision Act importantly provides:
Every order in which provision is made or altered shall specify the part or parts of the estate of the deceased or, where applicable, the part or parts of the distributed estate out of which such provision shall be raised or paid, and prescribe the manner of raising and paying such provision.
In light of s 14(1) and in the absence of any evidence to the contrary, as the plaintiff contends no indication that the parties to the settlement of the family provision claims manifested any intention that the plaintiff was to have a beneficial right vested in interest and vested in possession to any part of the Realisation Receipts or to any part of the estate can be drawn from the terms of the Amended Will or the Heads of Agreement. The agreed order and the Heads of Agreement confirms the aim was to make additional provision for the plaintiff out of the estate, which additional provision was the gift of the lump sum of $115 million.
In addition, cl 4(f) of the Amended Will complies with the requirements of s 14(2) of the Family Provision Act. Section 14(2) and (3) of the Family Provision Act provide:
(2)Subject to subsection (3), and unless the Court otherwise orders, the burden of any provision shall, as between the persons beneficially entitled to the estate of the deceased, be borne by those persons in proportion to the value of their respective interests in such estate.
(3)The estates and interests of persons successively entitled to any property which is settled by the will of a testator shall not, for the purposes of this section, be separately valued, but the proportion of the provision to be borne by such property shall be raised or charged against the corpus of such property.
Clause 4(f) of the Amended Will, as required by s 14(2) of the Family Provision Act in effect, provides for each of the separate nine testamentary trusts to bear the burden of the gift to the plaintiff and for these testamentary trusts to obtain proportionately less in further distributions after the plaintiff had been paid her gift in full. The gift to the plaintiff of $115 million is and was not distributable to her through any of the testamentary trusts in cl 4 of the Amended Will.
The different treatment of the gift to the plaintiff and the amounts distributable to the testamentary trusts in cl 4 of the Amended Will cannot and should not be ignored.
Importantly, the Executors in their capacity as trustees pursuant to cl 3.1(b) of the Amended Will (acting in their capacity as trustees of the Executors' Trust for the sole purpose to realise the Buckeridge Securities) were expressly provided with the powers in cl 6 and sch 1 pursuant to cl 3.1(b)(i) to carry out the Realisation. However, they were not given any powers in sch 1 in respect of the gift in cl 3(g).[29]
[29] See [82] and [83] of these reasons.
Consequently, the powers in sch 1, could and can only be exercised by the Executors in carrying out their functions to realise the Buckeridge Securities under cl 3.1 of the Amended Will for the distributions to the nine testamentary trusts declared in cl 4 of the Amended Will.
Importantly, it is not open to find that insofar as the Executors held the Buckeridge Securities on trust for the Realisation, that they held part of those proceeds to distribute to the plaintiff to satisfy her gift under cl 3(g) of the Amended Will, pursuant to an implied trust in favour of the plaintiff. If such a trust could be implied in her favour the plaintiff would necessarily be the beneficiary of that implied trust.
Absent an express declaration of trust, the court must determine whether intention is to be imputed. It does so by reference to the language of the documents or (where applicable oral dealings).[30] As du Parcq LJ stated In re Schebsman; Ex parte Official Receiver v Cargo Superintendents (London) Ltd unless an intention to create a trust is clearly to be collected from the language used in the circumstances of the case, the court ought not to be astute to discover indications of such an intention.[31]
[30] Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [103] (Heydon & Crennan JJ); Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 255 CLR 62 [3] (French CJ).
[31] In reSchebsman; Ex parte Official Receiver v Cargo Superintendents (London) Ltd [1944] Ch 83, 104; approved in Bahr v Nicolay [No 2] [1988] HCA 16; (1988) 164 CLR 604, 618 (Mason CJ & Dawson J); Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [49] (Gummow & Hayne JJ).
Although cl 3(g), cl 3.1 and sch 1 of the Amended Will were not provisions of the original will, and cl 4 was substantially amended, each of these provisions became operative as part of the Amended Will as a codicil to the will, pursuant to s 10 of the Family Provision Act (by the parties to the family provision proceedings entering into the terms of the Heads of Agreement, the terms of which required the parties to consent to the consent orders).
In circumstances:
(a)where the gift to the plaintiff in cl 3(g) is not expressly stated to be given in trust;
(b)where the Amended Will expressly declares trusts in cl 3.1, cl 4 and cl 5 of Amended Will; and
(c)leaving aside the Executors' powers in cl 6, pursuant to cl 3.1(b)(i) of the Amended Will the express powers conferred on the Executors in sch 1 are conferred for the sole purpose of effecting the Realisation which powers only apply insofar as they are required to effect the Realisation for the benefit of the testamentary trusts in cl 4 of the Amended Will;
no intention in the Amended Will to create a trust in respect of the gift given in cl 3(g) can be found.
In particular, it is significant that the terms of the Amended Will made express provision for a number of trusts and trust relationships, none of which apply to the plaintiff's gift. The absence of such provision indicates that there is no intention to imply an implied trust in favour of the plaintiff in respect of her gift of the lump sum in cl 3(g).
For these reasons, the proper construction of the plaintiff's gift of $115 million in cl 3(g) when read with cl 3.1, cl 4 and the powers conferred by sch 1 of the Amended Will is that the plaintiff was not to receive payment of the gift as the beneficiary of a trust.
In addition, the plaintiff had a right to payment of the lump sum but did not acquire any interest in the property comprising the Realisation or the proceeds of the Realisation.
The plaintiff's entitlement to the gift in cl 3(g) is similar to that of a debtor, in that pursuant to the Heads of Agreement, on satisfaction of the condition precedent of the sale of her 'A' class share in BGC she had a contractual entitlement to the gift which arose directly out of the terms of the settlement of the family provision proceedings. However, the fact that she had a contractual entitlement to payment is not determinative because her gift in cl 3(g) took effect as a codicil to the will, and as a specific legacy.
As a legatee and not being a beneficiary of an express or implied trust, it cannot be found that the plaintiff had equitable rights to the Net Realisation Receipts held by the Executors on trust pursuant to cl 3.1.
Prior to the receipt of the gift in cl 3(g) in full, whilst the plaintiff had no beneficial interest in the Net Realisation Receipts, the plaintiff had an equitable chose in action to compel the Executors to correctly administer the estate, and as part of that right to due administration, the plaintiff could have during the course of administration, and prior to the receipt of her gift, or part of her gift, asserted any proprietary interest against third parties in the absence of action by the Executors.[32]
[32] Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694; [1964] 3 All ER 692, 700 (Viscount Radcliffe).
In Barns v Barns, Gummow and Hayne JJ said of the interest of a residuary legatee:[33]
The whole of the property of the testator is held by Mr Malcolm Barns, as executor, for the purpose of carrying out the functions and duties of administration; equity does not recognise or create for Mrs Barns, the residuary legatee, a beneficial interest in any particular asset in the hands of Mr Malcolm Barns during the course of the administration. What Mrs Barns has is a right to due administration of the assets in accordance with the duties of the executor; it is in that sense that she may be said to have an interest in the entire estate, which is capable of transmission both by her under her will, and by operation of law, as in Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 313 ‑ 314.
[33] Barns v Barns [2003] HCA 9; (2003) 214 CLR 169 [50] (footnote omitted).
In Barns v Barns, Mrs Barns also had a contractual right to administration because the testator covenanted in a deed, with his wife and son, 'not to revoke' his will which devised and bequeathed to his executor the whole of his real and personal estate.
In addition, the words used in cl 3(g) that the gift of $115 million together with any further sum or provision is made 'absolutely' indicates that the payment when made to the plaintiff, is and was not subject to a trust.
As the plaintiff submits, the Executors' Trust declared in cl 3.1 is, and was, a trust limited to a trust for sale of the Buckeridge Securities.
The property and the mechanism requiring sale of the Buckeridge Securities to provide funds to pay the gift is, and was, subject to a trust, namely the Executors' Trust to realise the Buckeridge Securities, which trust was a limited trust requiring the Executors to realise the Buckeridge Securities by either or both of the sale of the Buckeridge Securities or a sale by each of the Buckeridge Securities entities and their respective subsidiaries of the whole or part of their assets and undertaking the distribution of the proceeds.
Recently, Edelman J distinguished a common law gift from an entitlement under a trust in Federal Commissioner of Taxation v Carter in the course of rejecting an argument that the consent of a beneficiary is necessary for the creation of a trust or increase in the value of equitable rights. Relevantly, his Honour observed:[34]
The second faulty premise underlying the assumption about the role of assent in the creation of a trust or the increase in the value of equitable rights echoes the view, derived from a mistaken understanding of the writing of Sir Arthur Underhill, that "a trust [is] the equitable equivalent of a common-law gift". That premise ignores a fundamental difference between common law property rights and equitable rights under a trust. A gift at common law, such as a gift of a chattel, will involve a transfer of rights. But a declaration of trust involves a creation of equitable rights and obligations, not a transfer of rights: "it is fundamental that the creation of a trust involves the creation of new equitable obligations, which are annexed to the trust property" or "engrafted" or "impressed upon it". As Maitland explained more than a century ago, it is because the creation of equitable rights does not involve the transfer of any property rights that the law of trusts does not contradict basic principles of the common law of property. Thus, as Professor Hyland observed of the difference between a gift of common law rights and the creation of equitable rights, under the general law the creation of equitable rights can occur 'by a gratuitous declaration of trust without delivery, deed, writing, notice to the donee, or acceptance".
[34] Federal Commissioner of Taxation v Carter [2022] HCA 10; (2022) 96 ALJR 325 [41] (footnotes omitted).
As Edelman J makes it clear from this passage, a common‑law gift of a sum of money involves a transfer of rights to the property by the payment of the sum, whereas a trust does not. A trust involves the creation of equitable rights and obligations prior to the receipt of any trust property. However, prior to the transfer of a common law gift by payment no interest in the gift by the donee arises.
When these principles are applied, it is clear that pursuant to the terms of the Amended Will, because the plaintiff was to receive a common‑law gift she had no legal or equitable interest in the Buckeridge Securities and only had an interest in the proceeds from the sale of the Buckeridge Securities in the sense that she only has and had a right to have the estate properly administered.

8.0 The declarations as to the proper construction of the Amended Will that should be made by the court, and orders as to costs

As the fourth and sixth defendants point out, the court has power to grant declaratory relief under s 25(6) of the Supreme Court Act 1935 (WA) the declaration must produce useful, foreseeable consequences for the parties, otherwise it will be refused.[86]
[86] The applicable principles were comprehensively considered by Le Miere J in Gray v Sirtex Medical Ltd [2009] WASC 126 [48] ‑ [55]; Beech J in MillCity Pty Ltd v West Coast Liquor Merchants WA Pty Ltd [2009] WASC 292 [10] ‑ [31]; Murphy JA in Hart v JGC Accounting and Financial Services Pty Ltd [2015] WASCA 22; (2015) 47 WAR 582 [53] ‑ [58].
The declarations sought by the plaintiff in par 1 of the prayer for relief are not hypothetical, nor abstract. They are based upon the facts found on the proper construction of the Amended Will, by the application of the relevant principles that apply under the general law.
I do not agree that the declarations will be of little practical value. The declarations sought in par 1 if made resolve the controversy between the Executors and the plaintiff as to the nature and character of her gift in cl 3(g) of the Amended Will under the general law.
For these reasons, I am satisfied that the declarations in par 1 should be made.
I will hear further from the parties as to the appropriate orders that should be made as to costs, including hearing from any party to the proceedings who did not participate in the trial by counsel and wishes to be heard as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

TS
Associate to the Honourable Justice Smith

17 FEBRUARY 2023

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: KOH -v- SAMUEL CONRAD BUCKERIDGE as executor of the estate of LEONARD WALTER BUCKERIDGE [No 3] [2023] WASC 42 (S)
CORAM:   SMITH J
HEARD:   ON THE PAPERS
DELIVERED          :   28 MARCH 2023
FILE NO/S:   CIV 2244 of 2020
BETWEEN:   SIOK PUAY KOH
Plaintiff
AND
SAMUEL CONRAD BUCKERIDGE as executor of the estate of LEONARD WALTER BUCKERIDGE
First named First Defendant
ANDREW BENJAMIN BUCKERIDGE as executor of the estate of LEONARD WALTER BUCKERIDGE
Second named First Defendant
RATHENAU INVESTMENTS PTY LTD as trustee of THE SAMUEL BUCKERIDGE TRUST
Second Defendant
ANDREW BENJAMIN BUCKERIDGE AND BI-YUY as trustees of THE ANDREW BUCKERIDGE ESTATE
Third Defendant
THE TRUSTEE FOR THE JOSHUA BUCKERIDGE TESTAMENTARY TRUST
Fourth Defendant
SAMUEL CONRAD BUCKERIDGE AND LISE FRANCES BUCKERIDGE as trustees of THE LISE BUCKERIDGE TESTAMENTARY TRUST
Fifth Defendants
OUTSIDE OF SOCIETY PTY LTD as trustee of THE RACHEL BUCKERIDGE TESTAMENTARY TRUST
Sixth Defendant
TESPERANCE PTY LTD as trustee of THE ESPERANCE STEPHEN TESTAMENTARY TRUST
Seventh Defendant
TALBA PTY LTD as trustee of THE ALBA STEPHEN TESTAMENTARY TRUST
Eighth Defendant
SIOK PUAY KOH AND ANDREW BOON SAN TEO as trustees of THE KOH FAMILY TESTAMENTARY TRUST
Ninth Defendants
SAMUEL CONRAD BUCKERIDGE AND JULIAN THEODORE ROSSLYN AMBROSE as trustees of THE BUCKERIDGE GRANDCHILDREN
Tenth Defendants
SAMUEL CONRAD BUCKERIDGE
Eleventh Defendant
ANDREW BENJAMIN BUCKERIDGE
Twelfth Defendant
RACHEL JANE BUCKERIDGE
Thirteenth Defendant
LISE FRANCES BUCKERIDGE
Fourteenth Defendant
JOSHUA ANTHONY BUCKERIDGE
Fifteenth Defendant
JULIAN THEODORE ROSSLYN AMBROSE
Sixteenth Defendant

Catchwords:

Costs - Whether the success and failure of the parties on issues raised in the trial can be discretely separated - Relevant principles - Where the plaintiff was partly successful and partly unsuccessful, and the opposing defendants were partly successful and partly unsuccessful, there should be no order as to costs of the proceedings

Legislation:

Rules of the Supreme Court 1971 (WA), O 66
Supreme Court Act 1935 (WA), s 37

Result:

There be no order as to costs

Representation:

Counsel:

Plaintiff	:	No appearance
First named First Defendant	:	No appearance
Second named First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance
Fifth Defendants	:	No appearance
Sixth Defendant	:	No appearance
Seventh Defendant	:	No appearance
Eighth Defendant	:	No appearance
Ninth Defendants	:	No appearance
Tenth Defendants	:	No appearance
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	No appearance
Fourteenth Defendant	:	No appearance
Fifteenth Defendant	:	No appearance
Sixteenth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Iffla Wade
First named First Defendant	:	Jackson McDonald
Second named First Defendant	:	Jackson McDonald
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	Rigby Cooke
Fifth Defendants	:	McLachlan Thorpe
Sixth Defendant	:	Croftbridge
Seventh Defendant	:	Kings Park
Eighth Defendant	:	Kings Park
Ninth Defendants	:	No appearance
Tenth Defendants	:	No appearance
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	Croftbridge
Fourteenth Defendant	:	McLachlan Thorpe
Fifteenth Defendant	:	Rigby Cooke
Sixteenth Defendant	:	Murcia Pestell Hillard

Case(s) referred to in decision(s):

Amaca v Hannell [2007] WASCA 158 (S)
Citic Ltd v Mineralogy Pty Ltd [No 7] [2021] WASC 371
Federal Commissioner of Taxation v Whiting [1943] HCA 45; (1943) 68 CLR 199
Frigger v Lean [2012] WASCA 66
Koh v Buckeridge [No 3] [2023] WASC 42
KSG Investments Pty Ltd v Open Markets Group Ltd (No 2) [2021] VSC 359
Latoudis v Casey (1990) 170 CLR 534
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (S)
Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96

SMITH J:

1.0 The applications for costs following trial

The parties each make applications for costs orders in their favour following a three day trial in April 2022 and delivery of judgment on 17 February 2023 in Koh v Buckeridge [No 3].[87]
[87] Koh v Buckeridge [No 3] [2023] WASC 42.
The plaintiff instituted proceedings relating to the due administration of the estate of Leonard Walter Buckeridge in respect of the payment of a gift from the estate to the plaintiff of $115 million. The plaintiff sought declaratory and consequential relief against the Executors of the estate. Upon the delivery of judgment, the court made three declarations. These were as follows:
1.It is declared that the proper construction of the will and testament of Leonard Walter Buckeridge dated 10 June 2008 as amended by the orders of this Honourable Court on 23 February 2018 in action CIV 1960 of 2015 (Amended Will) is that:
(a)the plaintiff is entitled to a gift of $115,000,000 which is to be satisfied out of the Net Realisation Receipts as defined in cl 3.1(d) of the Amended Will;
(b)the plaintiff was entitled to a gift of $115 million but had no legal or equitable interest (either vested in interest or vested in possession) in the dividends or other income received by the Executors that comprised the Realisation Receipts (as defined in cl 3.1 of the Amended Will);
(c)the process in cl 3.1 of the amended Will (including cl 3.1(d)) is the mechanism by which payment of the gift of $115,000,000 is to be made.
The court declined to make the remaining declarations and orders sought by the plaintiff, and made an order that the proceedings be otherwise dismissed. The declined relief proposed declarations and orders that raised issues which went to the question whether the Executors had breached their obligations of due administration of the estate by passing resolutions and creating records which affected whether the plaintiff was in fact 'specifically entitled' to an amount of franked dividends and 'presently entitled' to a certain share of Net Realisation Receipts of a trust estate within the meaning of the Income Tax Assessment Act 1936 (WA) and the Income Tax Assessment Act 1997 (Cth).
Notwithstanding that the court declined to grant all of the relief sought by the plaintiff, the plaintiff claims that she was the successful party in the proceedings because the declarations that were made by the court were the essential declarations in the dispute between the parties.
Accordingly, the plaintiff seeks an order in effect that the Executors, and the fourth, fifth, sixth and fourteenth defendants, on a joint and several basis, pay the plaintiff's costs, including any reserved costs, to be taxed, if not agreed, without regard to the Scale. Alternatively, the plaintiff seeks special costs orders in her favour (against the Executors, and the fourth, fifth, sixth and fourteenth defendants on a joint and several basis) pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA).
The Executors and the other beneficiaries of the estate, who appeared in the proceedings to oppose the plaintiff's claim, are in furious disagreement with the plaintiff's claim that she was the successful party in the proceedings. Their primary position is that she did not succeed.
Accordingly, the Executors seek an order that the plaintiff pay their costs of the action to be taxed, if not agreed. Alternatively, the Executors seek special costs orders in their favour payable by the plaintiff, pursuant to s 141 (3) of the Legal Profession Uniform Law Application Act. Their fallback position is that in the event the court forms the opinion that the plaintiff obtained only limited declaratory relief of very limited significance to the resolution of the dispute between the parties, the appropriate order is that the plaintiff pay a proportion of the Executors' costs, such proportion to be determined by the court.
The fourth and sixth defendants seek an order that the plaintiff pay their costs. They also seek a special costs order in their favour pursuant to s 141 (3) of the Legal Profession Uniform Law Application Act. They argue that although the plaintiff had a minor success in the proceedings, she failed to obtain the declarations that would directly affect her tax liability to pay tax on her gift of $115 million. In the alternative, the fourth and sixth defendants submit there should be no order as to costs, to reflect the success of the opposing sides on different issues.
The fifth and fourteenth defendants seek similar costs orders to the fourth and sixth defendants. They also seek an order that the plaintiff pay their costs, or a proportion of their costs, to reflect their overall success in the proceedings. In the alternative, they also submit there should be no order as to costs, to reflect that the court has found for both sides on different issues.
On the basis that if the court is minded to make an order for costs in the plaintiff's flavour, the fifth and fourteenth defendants put a submission that the court should:
(a)reduce the plaintiff's recoverable costs to reflect her limited degree of success;
(b)not allow costs of a third counsel, because the plaintiff engaged a third counsel primarily to address an issue upon which she lost (taxing statute construction issues);
(c)nonetheless order the plaintiff to pay the fifth and fourteenth defendants' costs of the proceedings up until her late amendment of her claim (by withdrawing the characterisation of her gift as a capital sum) on 28 February 2022; and
(d)order that the plaintiff's recoverable costs be limited to the period from 28 February 2022, to reflect the significant very late shift in the plaintiff's case.
As to the point raised in [10(c) and (d)], as the plaintiff submits, and I agree, the characterisation of her gift as a capital sum was irrelevant, and ultimately did not in essence raise a different case put by the plaintiff.
When judgment was delivered, counsel for the sixteenth defendant informed the court that the sixteenth defendant sought an order that his costs be paid from the estate. However, on 15 March 2023, the sixteenth defendant filed a notice of intention to abide the decision as to costs of the proceedings, except as to any decision that would affect him in that capacity on costs, and he agreed to bear his own costs.
The remaining defendants to the proceedings who did not participate in the hearing of the plaintiff's claim, all filed notices of intention to abide, except as to any decision that would affect each of them in that capacity on costs.

2.0 Disposition

Pursuant to orders 3 to 5 of my orders made on 17 February 2023, the matter of costs is to be determined on the papers.
Having considered the written submissions filed on behalf of the plaintiff, the Executors, the fourth and sixth defendants, and the fifth and fourteenth defendants, and the discrete issues raised (and determined and not determined) in the proceedings, for the reasons that follow, I am of the opinion that the only order that should be made is there be no order as to costs.

2.1 Principles that apply when considering making orders for costs including apportionment

The discretion to order costs under s 37 of the Supreme Court Act 1935 (WA) and O 66 r 1 of the Rules of the Supreme Court 1971 (WA) is very wide.[88] The court's discretion must be exercised judicially, so as to achieve what is fair and just as between the parties according to the circumstances of the particular case.[89]
[88] Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 [39].
[89] Frigger v Lean [2012] WASCA 66 [53] (Allanson J) (Newnes & Murphy JJA agreed); Latoudis v Casey (1990) 170 CLR 534, 558.
The usual rule as to costs is that costs are to follow the event, that is, the successful party to an action is entitled to recover their costs.
Although costs will normally follow the event, this principle will not necessarily be applied where a party, although generally successful in the matter has, by the introduction of some issue or issues on which they failed, increased the costs of the proceedings. In this event, pursuant to O 66 r 1(3), the court may order the successful party to pay the costs of the issues on which they failed.
Order 66 r 1(3) only applies where the failed issue has increased costs.
An 'issue' in O 66 r 1(3) does not mean a precise issue in the technical pleading sense, but means any disputed question of fact or law. A court's discretion to render an award of costs by undertaking an assessment conducted by reference to trial issues won or lost, should only be exercised in the clearest of cases.[90]
[90] KSG Investments Pty Ltd v Open Markets Group Ltd (No 2) [2021] VSC 359 [8] (Nichols J); applied Citic Ltd v Mineralogy Pty Ltd [No 7] [2021] WASC 371 [25] (Kenneth Martin J).
An exercise of the court's discretion as to costs by some evaluation conducted towards issues 'won or lost' may be more appropriate where discrete and severable issues can be readily identified and upon which the otherwise generally successful party can be seen to have failed especially where the determination of such issues is discerned to have added to the cost of the proceedings in a significant way.[91]
[91] Citic Ltd v Mineralogy Pty Ltd [No 7] [2021] WASC 371 [30] (Kenneth Martin J); applying Amaca v Hannell [2007] WASCA 158 (S) [7] (Martin CJ, Steytler P & McLure JA).
It is to be expected that a generally successful party will fail on some issues.[92] In a case in which the generally successful party has failed on only a minor issue, which did not materially add to the costs of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the general rule, unless the conduct of the generally successful party in relation to that issue had been unreasonable. In the event of unreasonableness, different considerations may apply.[93]

2.2 Disposition – All of the parties were partly successful and partly unsuccessful in the proceedings

[92] McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (S) [179] (Beech J).

[93] Amaca v Hannell [2007] WASCA 158 (S) [2007] WASCA 158 (S) [7] (Martin CJ, Steytler P & McLure JA); Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96 [48] ‑ [52] (Murphy, Mitchell & Pritchard JJA).

This matter is unusual in that all of the parties were partly successful, and they were also all partly unsuccessful in the resolution of the issues in dispute. It is also one of those rare cases where the discrete issues on which the plaintiff won and lost, and the defendants won and lost, can be clearly delineated.
The issues that the plaintiff was successful in, and the relief she obtained can properly be considered to be divisible and separate from the failed issues raised by the plaintiff in respect of which she obtained no relief.
Although at the heart of the dispute between the plaintiff and the Executors, the fourth, fifth, sixth and fourteenth defendants is whether the Executors or the plaintiff is liable to pay income tax upon her gift of $115 million, the plaintiff did not seek a declaration or order that it is the Executors who are liable to pay income tax upon her gift. The plaintiff concedes that this is an issue to be resolved on another day between the Executors and the Federal Commissioner of Taxation, and as between the Commissioner and the plaintiff.
The plaintiff sought in the proceedings declarations as to the proper construction of the Amended Will in accordance with the general law.
The plaintiff was successful in all of her arguments pressed at trial in respect of the issues which concerned the proper construction of the terms of the Amended Will under the general law as modified by the Family Provision Act 1972 (WA). The defendants were all unsuccessful in respect of their arguments in respect of these issues.
The substantive and threshold question in the proceedings was whether, on the proper construction of the Amended Will under the general law, the plaintiff had been given $115 million as a beneficiary of a trust under the general law or as a beneficiary of a deemed trust estate. If the plaintiff did not succeed on this threshold question she could not have succeeded in seeking any of the relief that she sought, including the declarations and orders that she sought about the making of resolutions by the Executors in respect of tranches of payments made to her in satisfaction of her gift.
The second part of the proceedings concerned the plaintiff's claim that the Executors had breached their duties of due administration. The plaintiff sought a declaration and an order that certain resolutions made by the Executors had no basis and were to be treated as having no effect so far as they concern the plaintiff and her entitlement to the gift of $115 million. The plaintiff also sought a declaration about the effect of payments made to the plaintiff from Net Realisation Receipts and an order that the Executors take steps to treat an account for the payments as payments made from Net Realisation Receipts to satisfy payment of the gift of $115 million required to be made under the Amended Will. The plaintiff was unsuccessful in obtaining the declarations and orders to this effect.
I declined to determine whether this relief should be granted because I found that the tax consequences to the plaintiff of the receipt and distribution of the Realisation Receipts and whether the Executors had breached their duties of due administration by making the resolutions and records sought to be impugned by the plaintiff requires a consideration of the operative effect and construction of div 6 and div 6E of the Income Tax Assessment Act 1936 and sub div 207 ‑ B of the Income Tax Assessment Act 1997.

Whilst I ultimately declined to make any rulings in respect of the arguments put by the parties as to the proper construction of the taxing statutes, after carefully analysing each of the complex and comprehensive arguments put by the parties as to the effect of the relevant taxing provisions as construed by the authorities, I observed that that none of the arguments raised by the plaintiff or by the opposing defendants including the Executors could be found to be entirely without merit or without doubt. I also observed that none of the cases referred to by the parties specifically dealt with all of the key points in issue between the parties and there was a proper argument to be considered by a court in proceedings to which the Commissioner was a party about the effect of the principles set out by the High Court in Federal Commissioner of Taxation v Whiting.[94]
[94] Federal Commissioner of Taxation v Whiting [1943] HCA 45; (1943) 68 CLR 199.
What is also unusual about this matter is that it was found that there was utility in the court making some of the declarations sought by the plaintiff, which declarations may be of assistance to the plaintiff as taxable facts in respect of the proper construction of the terms of the Amended Will in any future litigation between the plaintiff and the Commissioner of Taxation as to whether the plaintiff should be required to pay tax on her $115 million gift.
As the fifth and fourteenth defendants point out in their written submissions on costs, the issues in relation to taxation legislation were discrete and severable from the issue of construction of the Amended Will under the general law, and were treated by the parties and the court as such. It cannot be avoided by the plaintiff that she was unsuccessful in seeking the declarations and orders which she sought which depend upon the tax issues.
It is clear that the tax issues added significantly to the cost of the proceedings. The taxation issues and the associated issues concerning the alleged breach of duty by the Executors was the subject of approximately 50% of the parties' oral and written submissions and occupied approximately half of the reasons for decision.
In the result, each side had their successes and failures that occupied substantial court time. In these circumstances, it is clear that the court should in effect declare a draw on the issue of costs and require each party to bear their own costs.
An order to this effect will in turn have the effect that the Executors will be entitled to claim an indemnity from the estate for their costs, which will result in the residual beneficiaries of the estate having to bear the burden of those costs. However, such an outcome is not unusual in proceedings when the terms of a will are in dispute. In any event, in this particular matter there are no circumstances raised by the Executors which could lead the court to draw an inference that the Executors' costs in defending the proceedings will place an onerous financial burden on the assets of the estate.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SO
Associate to the Judge

28 MARCH 2023