Pappas v Commissioner for Revenue - [2023] ACAT 24

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

PAPPAS v COMMISSIONER FOR REVENUE [2023] ACAT 24

AT 74/2022

Catchwords: ADMINISTRATIVE REVIEW – revenue – Duties Act 1999 – statutory interpretation – partial conformity with a will – meaning of “the property” in section 232D of the Duties Act – “The property” must refer to definite and identifiable property
Legislation cited: Civil law (Property) Act2006 s 21
Duties Act 1999 s 232D
Duties Act 1997 (NSW) s 63
Legislation Act 2001 ss 138,139, 140, 141
Taxation Administration Act 1999 s 101
Trustees Act 1925 (NSW) s 46

Cases cited:Alexander v Chief Commissioner of State Revenue [2017] NSWCATAD 180
Australian Crime Commission v AA Pty Ltd (2006) 149 FCR 540
Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502
Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694
Darcy v Commissioner of Stamp Duties (unreported, Sup Ct, NSW CA 11 September 1967)
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Federal Commissioner of Taxation v Swift and Others [1989] FCA 413
Official Receiver in Bankruptcy v Schultz [1990] HCA 45
Sanders v Chief Commissioner of State Revenue [2002] NSWADT 251
Sanders v Chief Commissioner of State Revenue (NSW) [2003] NSWADTAP 22

Tribunal:Presidential Member H Robinson

Date of Orders:  28 April 2023
Date of Reasons for Decision:      28 April 2023
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          AT 74/2022

BETWEEN:

BILL PAPPAS
Applicant

AND:

COMMISSIONER FOR REVENUE
Respondent

TRIBUNAL:Presidential Member H Robinson

DATE:28 April 2023

ORDER

The Tribunal orders that:
(a)The decision under review is confirmed.
(b)The application is dismissed.

………………………………..
Presidential Member H Robinson

REASONS FOR DECISION

The applicant seeks review of the decision of the respondent dated 9 August 2022 determining the amount of duty payable by the applicant under the Duties Act 1999 (the Duties Act) for the conveyance of a residential property in Weston (the Weston property) in partial conformity with a will under which he was a beneficiary.

Background

The facts of this matter are not in contest.
The testator, the late Mrs Eugenia Pappas died in February 2021 (the Deceased). She left a will dated 30 January 2014 (the will). As at that date, she was the owner of the Weston property, which was her principal place of residence.
The deceased was the mother of three children, Bill, Paul and Georgina (the beneficiaries). Under clause 5 of the terms of the will, each of the deceased’s children were entitled to an equal and undifferentiated share of the residue of their mother’s estate.[1] Bill was appointed as executor and trustee under the will.
[1] The Will provided:
To avoid confusion, I will refer to the beneficiaries by their first names in these reasons.
It is not clear in which capacity the applicant brings this application, but that does not matter for the purpose of the issue under review.
Probate of the will was granted to Bill by the ACT Supreme Court on 22 April 2021. The estate was determined to consist of assets worth $1,357,229.42 consisting of:
(a)The Weston property, valued by Egan National Valuers $1,000,000;
(b)Proceeds of bank accounts held with St George Bank $328,764.17; and
(c)Proceeds of bank accounts held with ANZ bank $28,465.25.
The three beneficiaries reached an agreement as to how the estate is to be divided equally between them.
The will contained a provision that expressly empowered the Trust “to appropriate any part of the real property of the estate in satisfaction of a share of any person in the estate” (Clause 6.1(n)).
The applicant wished to receive his share in the estate by way of an in specie transfer[2] of the Weston property, while each of the others would receive their interest in the estate in cash.
[2] In specie is Latin for “in actual form”. It means transfer of non-monetary assets without the need to convert them to cash
To give effect to this, the parties agreed that the applicant and his wife Helen would purchase the balance of the estate’s interest in the Weston property from the estate to enable a full transfer of the Weston property to them. To facilitate this arrangement, the executor and the beneficiaries agreed to enter into a Deed of Family Arrangement (the Deed). The Deed was signed on 28 October 2021, with Bill signing it in his capacity as both executor and beneficiary, and by Paul and Georgina in their capacities as beneficiaries.
Under the Deed it was agreed that:
(a)Each party was entitled to approximately $450,000 (after expenses) (clause 3.1(d));
(b)Bill would receive his entitlement by way of an in specie appropriation of the Weston property to the value of $450,000 (clause 3.1(e))
(c)Bill would purchase an additional share in the Weston property such that he would receive a 50% interest in the Weston property as a tenant‑in‑common (Clause 3.1(f)(i));
(d)Helen would purchase the remaining share in the Weston property as a tenant-in-common with Bill (clause 3.1(f)(ii)).
On 28 October 2021 a title search of the Weston property was performed showing the title held in the name of Bill as executor. On 4 November 2021 a transfer from Bill as executor, to Bill and Helen as tenants-in-common in equal shares was prepared. The transfer was prepared in anticipation of a settlement at which the Commonwealth Bank would produce funds to enable Bill and Helen to purchase the balance of the Estate’s interest in the Weston property, after an appropriation to Bill, from the Estate.
On 24 November 2021 a settlement was effected whereby the Commonwealth Bank, on behalf of Bill and Helen, paid $570,000 into the Estate in return for receipt of a signed transfer from Bill as Executor to Bill and Helen as tenants-in-common in equal shares. This sum was made up of:
(a)$552,430.46 purchase funds; and
(b)$17,569.54 excess funds on account of anticipated conveyance duty and legal costs.
On 25 November 2021 a cheque received from the Commonwealth Bank in the sum of $570,000 was banked into the KJB Law Practice Trust Account as funds in the Estate. Once the cheque from the Commonwealth Bank was cleared, a sum of $921,208.63 was held on account of the estate of the Deceased.
On 1 December 2021 a draft Distribution Statement was approved without amendment. In accordance with the calculations shown in the Distribution Statement, after expenses each beneficiary was entitled to a distribution from the Estate of the Deceased to the value of $447,569.54.
On 1 December 2022, cash distributions of $447,569.54 were made to each of Paul and Georgina in satisfaction of their respective entitlements to a 1/3^rd share of the residue of the estate. Bill received an appropriation of the Weston property to the value of $447,569.54. In addition to the appropriation, Bill received a dutiable transfer of real property to the value of $52,430.46 and Helen received a dutiable transfer of real property to the value of $500,000.35.
On 5 January 2022 the respondent’s office issued a Conveyance Duty Notice of Assessment in respect of the Weston property in the sum of $18,597.12. That sum was calculated on the basis that:
(a)the transfer to Bill and Helen was a transfer made “under, but only partly in conformity with” a trust contained in the will, and was therefore covered by section 232D(3) of the Duties Act; and
(b)the “dutiable value” on the Property was $666,600, being two-thirds the value of the Weston property (i.e. two thirds of the value of the dutiable property transferred).
By letter dated 23 February 2022 the applicant, via his lawyers, objected to the respondent’s assessment. The applicant says that the dutiable value is $550,000, being the dutiable value of the Weston property, after allowing for his interest in that property transferred under the will i.e., $1,000,000 minus his entitlement under the will (minus the value of his appropriation under the will, rather than just the value of the portion of the Weston property transferred).

The Legislative Framework

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

The dispute

The dispute arises from the interpretation and application of section 232D(3), and particularly how to calculate the variable ‘Y’ for the purposes of the test of X – Y set out therein.
In summary:
(a)The parties agree that ‘X’ is the value of Weston property, being $1,000,000;
(b)In relation to ‘Y’:
(i) The Commissioner says that the value of ‘Y’ is $333,400, being one third the value of the dutiable property transferred, or one third the value of the Weston property (in other words, the Commissioner focuses only that part of the disposition that is dutiable); and
(ii) The applicant says that ‘Y’ is $447,000, being one third the unencumbered value of the interest under the will transferred (in other words, not one third not the value of the Weston property as it was initially set by the will, but the sum total of the property appropriated to Bill in specie under the deed).
The parties agree that some of the transfer of the Weston property to Bill and Helen was in conformity with the trusts established under the will, but there is some dispute over what part of it.

The Tribunal’s role

The role of the Tribunal is to consider the relevant facts proved on the evidence before it and to decide based on those facts what the correct or preferable decision is.[3]

The onus

[3] Federal Commissioner of Taxation v Swift and Others [1989] FCA 413; Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589 per Bowen CJ and Dean J

This being a revenue matter, the applicant bears the onus of establishing that his objection should be sustained as per section 101(3) of Taxation Administration Act (TAA).

The applicant’s reasoning

The applicant and respondent agree that there are two questions to be resolved:
(a)what is the value of the property transferred? and
(b)has that transfer been done in conformity with the will.
The applicant’s starting position is that the estate consists of a single dwelling and cash savings. The will provided for the division of the estate between the deceased three children in equal and undifferentiated shares, with no special dispositions. As such, upon the distribution of the estate, Bill was to receive a 33.33% undifferentiated shared as a tenant in common with his siblings.
The will contained a provision that expressly empowered the trustee to “‘to appropriate any part of the real property of the estate in satisfaction of a share of any person in the estate” (clause 6.1 (n)).
Pursuant to the Deed, Bill received an in specie appropriation of his share through an appropriation of the property equivalent to his interest in the estate under the will, and then he ‘purchased’ an additional share to take his portion to 50%. Helen then purchased the additional 50%, the two of them effectively purchasing the estate under the will from the executor. Accordingly, the “unencumbered value of the express beneficial interest in the property transferred in conformity with the trust”, the applicant says, is the value of Bill’s portion of the estate – $447,000.00.
In support of this argument, the applicant drew the Tribunal’s attention to two cases that dealt with the nature of an interest under the will – Commissioner of Stamp Duties (Qld) v Livingstone[4] (Livingstone) and Official Receiver in Bankruptcy v Schultz[5] (Schultz). Both cases are concerned with the nature of the interest held by a beneficiary in an undifferentiated estate at the point of the death of the testator. In Livingstone a beneficiary under a will died prior to the will being administered and her share determined, and the question was whether she had an interest at her time of death. In Schultz the question was whether an undischarged bankrupt had an interest in an unadministered will. In both cases it was held that the interest held was not in the assets per se, but rather was in the form of a chose in action, being the right to insist on the due administration of the estate; there was no “beneficial interest” until such time as the estate has been fully administered and which point it is possible to point to a piece of property.[6] On this basis, the applicant says, it is artificial to divide the estate into portions of dutiable and non-dutiable or real and other property in the way that the Commissioner proposes. Rather, as a matter of law, the applicant had no interest in the Weston property that would equate to a beneficial interest until the expenses had been paid and administration brought to an end, and then it was simply an interest valued at $447,000.00 or 1/3^rd of the total estate. Hence, the applicant says, in calculating ‘Y’, it is appropriate to look to “the [entire] property transferred in conformity of the Bill” and not to “the [dutiable] property transferred”, as contended by the respondents.
[4] Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694
[5] Official Receiver in Bankruptcy v Schultz [1990] HCA 45
[6] Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694 at See Living – [16], [18], [37]; Official Receiver in Bankruptcy v Schultz [1990] HCA 45 at [317].
In terms of the meaning of “in conformity with the will”, the applicant noted the limited authorities, all of which related to the question of when entire distributions were in conformity with the will, rather than the ‘partial’ provided for under the ACT legislation. The applicant, very properly, drew the Tribunal’s attention to the several cases where dispositions were not in conformity, and then sought to distinguish them.
The first authority is Sanders v Chief Commissioner of State Revenue [2003] NSWADTAP 22 (Sanders).[7] In this case, the applicant and his two siblings were the beneficiaries under a will under which real property was the principal asset. The will provided, in part, that “if at the date of my death I stand possessed of any real estate, such is to be sold for the best price reasonably obtained and the proceedings to be paid to my trustees …” and then provided that if one the beneficiaries wished to purchase any of the real estate “the property is to be valued … and sold by my trustees … to such named beneficiary.” The applicant, Mr Sanders wanted to purchase the real property. Under the terms of the will he had a 40% entitlement to the residue of the estate, which meant he had to fund 60% of the purchase amount. When the matter came before the respondent for duty assessment, the Commissioner calculated duty based on the full consideration of $335,000, while the applicant suggested it should be 60% of $335,000, or $201,000.
[7] An appeal from Sanders v Chief Commissioner of State Revenue [2002] NSWADT 251
The case turned on the interpretation of section 63 of the Duties Act 1997 (NSW Act) which relevantly provided that:
63. Deceased Estates
Duty of $10 is chargeable in respect of:
A transfer of dutiable property not made for valuable consideration by the legal personal representative of a deceased person to a beneficiary, being:
(i) a transfer made under and in conformity with the trusts contained in the will of the deceased person or arising on an intestacy; or
(ii) a transfer of property the subject of a trust for sale contained in the will of the deceased person…
In considering the case, the Appeal Panel of the Administrative Decisions Tribunal (ADT) adopted what it called “the critical dicta in Darcy’s case”.[8] This dicta is referred to by in by the New South Wales Tribunal at first instance in the case,[9] where the Tribunal draws from commentary in Hills Duties Legislation (at page 1431) on section 63 of the Duties Act 1997 9(NSW).[10] The Appeal Panel then summarised the dicta as:
The transfer must be both under and in conformity with the trusts upon which the property is held. It is not sufficient that the transfer not be inconsistent with those trusts. Where there has been a family arrangement to vary the trusts of a will, a transfer to give effect to that arrangement will not be a transfer under and in conformity with the will[11]
[8] Sanders v Chief Commissioner of State Revenue (NSW) [2003] NSWADTAP 22 at [9]; referring to Darcy v Commissioner of Stamp Duties (unreported, Sup Ct, NSW CA 11 September 1967).
[9] Sanders v Chief Commissioner of State Revenue [2002] NSWADT 251 at [14]
[10] While both parties in this case referred to Darcy’s case, unfortunately neither were able to find it The Tribunal has now done so. The case considered section 73(1)(b) of the then NSW Stamp Duties Act which dealt with conveyances “…not made for valuable consideration and made to a beneficiary by a trustee under and in conformity with the trusts contained in a conveyance, declaration of trust or other instrument on which stamp duty imposed by any Act…”. His Honour opined that:
For the conveyance must be made “in conformity” with the “trusts” of a conveyance etc. or with the “trusts” contained in a will etc. This means in my opinion that the trusts must be actually set forth and expressed in the conveyance and not merely incorporated into it by reference to some other or earlier instrument which conceivably may not at the relevant time have been itself duly or correctly assessed to duty and the duty thereon paid. Apart from this aspect, I cannot read the words “contained in” appearing in this context, as meaning other than “expressed and stated therein”….
[11] Sanders v Chief Commissioner of State Revenue (NSW) [2003] NSWADTAP 22 at [9]

Applying the dicta from Darcy’s Case, the ADT determined that what was bequeathed to the applicant was not a 40% interest in the real property, but a 40% interest in the residual estate. The will provided for what would happen were the property to be sold, which did not happen. The transfer to him of 100% of property was therefore not in conformity with the trust.
Relevantly, section 63 of the NSW Act is an “all or nothing” provision, with no allowance for “partial conformity” as per the ACT’s Duties Act.
The Appeals Tribunal agreed with the ADT. Significantly, it did allow for a situation where 40% of the applicant’s entitlement was set off, but it also determined that in this case what was envisaged by the testator was that the property be sold. A transfer in specie was therefore not in conformity, because the will required sale, not transfer.
The applicant says that the present case is distinguishable from Sanders because there is no requirement in the deceased’s will that the property be sold – it simply confers a one third interest in the total estate. It therefore, the Applicant says, avoids the Sanders problem of a prescriptive will that is not complied with.
The second case relied upon by the Applicant is that of Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502 (Bloore). In this case, a mother deposed a will that divided the residual estate, including four properties, and savings, equally between three siblings. The executors agreed to appropriate one of the properties to the plaintiff, but the value of that property exceeded her entitlement under the will.
This case concerned section 63(3)(a)(iii) of the NSW Act, which provided for reduced duty as follows:
Duty of $50 is chargeable in respect of:
…
(iii) An appropriation of the property of the deceased person (as preferred to in section 46 of the Trustees Act 1925) in or towards satisfaction of the beneficiary’s entitlement under the trusts contained in the will of the deceased person.
Section 46 of the Trustees Act 1925 (NSW) provided, relevantly, that:
(1) A trustee may appropriate any part of … the real or personal estate of the testator ... in the actual condition or state of investment thereof in or towards satisfaction of a legacy or any share or interest in the … estate, whether settled or not, as to the trustee may seem just or reasonable, according to the person rights of the persons interest in the … estate….
The Supreme Court had to consider whether, having regard to these provisions, the appropriation to the plaintiff was “in or towards satisfaction of the beneficiary’s entitlement under the trust contained in the will of the deceased person”, where that appropriation was greater than her interest under the will. Stevenson J held it was not:
Although no words such as “not in excess of it” appear in the subsection, “satisfaction” normally means “the payment of a debt in fulfilment of an obligation.[12]
[12] Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502 at [29]
Significantly, his Honour concluded that because the property appropriated to the applicant was greater in value that her entitlement under the will, it could not have been an appropriation “in or towards” her entitlement, and therefore did not fall within the scope of the exception. conclusion was based on a plain reading of the words in the legislation.
His Honour’s conclusion was based on the ordinary meaning of the words used in the NSW Act. The wording in the Duties Act is different.
In the alternative, the plaintiff in Bloore argued that the transmission was made under an agreement or family arrangement to which concessional duty under section 63(2) of the NSW Act applied. This subsection provided:
If a transfer of dutiable property is made by a legal personal representative of a deceased person to a beneficiary under an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy, the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will or arising on intestacy.
The applicant in Bloore could not establish as a matter of fact that there had been an agreement between the beneficiaries to vary the trusts as per section 63(2) of the NSW Act (emphasis added). That such an agreement was made in the present case is not in doubt.[13] Accordingly, the applicant says the present case is distinguishable from Bloore because in this case there is clearly a deed of family arrangement, and also that in this case there is to be an appropriation of a proportion of the estate in satisfaction of the entitlement, not in excess of it.
[13] I note, however, that while he did not need to do so, Stevenson J went on to consider how he would have calculated duty had section 63(2) applied, and I consider that further below.
I note, for completeness, that the plaintiff in Bloore also attempted to argue that it was open to the executors in their discretion to determine the value of the property. His Honour did not accept this argument.[14]

The respondent’s position

[14] “The scheme of the Act suggests, strongly, that the matter is not to be determined by the executors’ assessment of the situation. Rather the assessment to take place by examination of the monetary value of the property appropriated compared to the of the beneficiary’s entitlement.” (Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502 at [49])

The respondent also applied the two-stage test, being:
(a)what is the value of the property transferred? and
(b)has that transfer been done in conformity with the will.
The respondent’s focus was on the meaning of the variables in the test set out in section 232D of the Duties Act. When considering this formula, the respondent says, that ‘Y’ must be viewed in the context of ‘X’. It is therefore with the meaning of ‘X’ that the respondent says we must start.
‘X’, the respondent says, establishes a scenario based on “all” of the “dutiable property” being transferred in conformity with the trusts under the will.
In this case, everyone agrees that the only dutiable property is the Weston property. Following this:
The definition of “Y” in section 232D follows directly after the definition of “X” …
The meaning of “the property” as set in relation to the meaning of “Y” is not defined. In context… “the property” can only refer to the same property as mentioned in the immediately preceding definition of “X”, namely the dutiable property.”[15]
[15] Respondent’s submissions, at [23]-[24]
On this basis, the respondent says, the only result that can follow is that ‘Y’ references only dutiable property, and therefore the value of non-dutiable property would not be relevant for the purposes of that calculation. The beneficial interests conferred on each of the respondents in relation to the dutiable property was a one third interest in the Weston property. Hence, ‘Y’ is 1/3^rd value of the Weston Property, or about $333,000.
This would mean that:
Dutiable value = X – Y
= (value of all dutiable property) – (value of the dutiable property transferred in accordance with the trust contained under the will)
= $1,000,000 – $333,4000
= $666,600
The respondent further says that this is consistent with the principles of estate law. It is presumed that multiple beneficiaries of an estate will take their interests as tenants in common.[16] There is nothing contrary to that principle in the will. Accordingly, upon administration of the estate, the applicant was entitled to a one third share of the property. The assets could have been dealt with in a way that did not require administration – e.g., if the property had just been sold by the executor and the proceeds distributed in one third shares, then no duty would be payable. However, in this case what happened is that there was a transfer of the property, a variation to what could have occurred, in that the applicant got a larger share of the real property than he was allocated until the will. While “not inconsistent with the will [it] was different.”
[16] Civil law (Property) Act2006 section 21
In this regard, the respondent says that Sanders, while not binding, is of assistance. Similarity to the present circumstances, the plaintiff in Sanders was entitled to a 40% interest in the real property, but he received the entire property and effectively paid for the remaining 60% of it. Per the dicta in Darcy’s case, it is not sufficient that the transfer is “not inconsistent” with those trusts – “where there has been a family arrangement to vary the trusts of a will, a transfer to give effect to that arrangement will not be a transfer under and in conformity with the will.” The present situation the applicant says, is comparable, and the terms of section 63(1) of the NSW Act not materially different.
The respondent also noted that in Darcy’s case, the applicant had argued that he was only purchasing 20%, but the Court determined that he had an entitlement to the residue and not the property at all. Hence, in Bloore, where there was a distribution of four properties between three people, with the plaintiff’s transfer exceeding her entitlement under the will, this was in into conformity with the will for the purposes of section 63(1)(a)(3) of the NSW Act. Only a transfer consistent with the devised proportion would be in conformity.
The respondent agrees that where the Duties Act is materially different to the NSW Act in its treatment of transfers of partial conformity with a will. It says that the ACT legislation is designed to ameliorate some the harsher consequences of a requirement for complete conformity, with section 232D(3) of the Duties Act allowing concessional duty on that part of a transfer that is in conformity with the will, even if other parts are not. Hence, in a situation like Sanders, the Duties Act would have allowed for reduced duty for the 40% of the property that was transferred in compliance with the will. The respondent submits that partial amelioration of this kind is the purpose of sections 232D(2) or (3), and the legislation does not need to go further than that.
In making these arguments, the respondent acknowledged the somewhat “unreal task” of dividing an undifferentiated estate into parts, but says that this is what sections (2) and (3) require to be done where an estate of dutiable and non-dutiable property is bequeathed in an undifferentiated way.

Consideration

The starting position is that the Duties Act imposes duty on all dutiable transactions, including the transfer of crown leases for property in the Territory. Section 232D is an exception to that general principle.
As set out above, under section 232D, the dutiable value of the transfer is worked out as follows:
X – Y
Where:
‘X’ means, if all the dutiable property were transferred in conformity with the trust, the unencumbered value of the property.
‘Y’ means the unencumbered value of the express beneficial interest in the property transferred in conformity with the trust.
It is common ground that ‘X’ is $1 million, being the value of the Weston property, the only dutiable property in the estate. The question to be determined is whether ‘Y’ means the ‘dutiable property’ transferred in conformity with the trust, or simply the ‘property’ transferred in accordance with the trust (effectively, whether Y is $333,000 or $447,430.46).
Unfortunately, there is no jurisprudence from the Territory on the interpretation of section 232D(3), and that from other jurisdictions relates to materially different statutory regimes that do not provide for ‘partial conformity’ in the way that the ACT legislation does.
As the meaning of ‘Y’ is fundamentally a statutory interpretation issue, the starting point is the Legislation Act 2001 (Legislation Act). The Legislation Act provides that in working out the meaning of an Act, the Court is to prefer to any other interpretation, “the interpretation that would best achieve the purpose of the Act” and that is the case whether or not there is an express statement of the Act’s purpose.[17] “Working out the meaning of an Act” means resolving an ambiguity, confirming or displacing the apparent meaning of the Act, finding the meaning of the Act when its apparent meaning leads to a result that is manifestly absurd or is unreasonable, or finding the meaning of the Act in any other case.[18] In performing the exercise of working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole.[19] In working out the meaning of an Act, material not forming part of the Act may be considered in certain circumstances, and it provides for the matters to be taken into account in deciding if these circumstances exist, and the weight that material should be given.[20] Section 142 provides a non-exhaustive list of the materials which may be considered in working out the meaning of an Act or statutory instrument.
[17] Legislation Act 2001 section 139
[18] Legislation Act 2001 section 138
[19] Legislation Act 2001 section 140
[20] Legislation Act 2001 section 141
Starting with the words of the definition of Y alone, ‘Y’ is defined to means “the unencumbered value of the express beneficial interest in the property transferred in conformity with the trust’. In this case, “[t]he property transferred in conformity with the trust” is that property that is transferred to Bill in conformity with the trust. There are no words of limitation nor reference to “dutiable property” in the definition of ‘Y’. This supports the applicant’s argument.
However, each individual provision of the Duties Act must be read in the context of the Act as a whole.[21] The respondent says that this means that the tribunal must look not just to ‘Y’, but to ‘X’, “because Y follows from X”. I agree.
[21] Legislation Act 2001 section 140
The reference to ‘property’ in the definition of “Y” is preceded by the word ‘the’ i.e. the reference is to ‘the property’. ‘The’ is the definite article in English. As the Full Court of the Federal Court observed in Australian Crime Commission v AA Pty Ltd (2006) 149 FCR 540:
The Cambridge Australian English Style Guide, describes the definite article as signalling ‘that a noun is to follow, and it very often implies that the noun is one with which the reader is already acquainted’ so that ‘the’ says: “You know which one I mean”, and reminds us of an earlier reference to the same thing in the text’ (emphasis in original): Peters, P, Cambridge Australian English Style Guide (Cambridge University Press, 1995) pp 747-748.” Similarly, in Tamas v Victorian Civil and Administrative Tribunal (2003) 9 VR 154; [2003] VSCA 113 (at [8]), Callaway JA pointed out: “it is a natural and correct use of English to employ the definite article when one is referring to a person or thing already identified expressly or by implication”.[22] (emphasis added)
[22] Australian Crime Commission v AA Pty Ltd (2006) 149 FCR 540 at [28]
In other words, ‘the’ must refer to something identifiable or definite in the context of the section. “The property” must refer to definite and identifiable property, in the context of Y.
Looking at section 232D of the Duties Act as a whole, subsection (1) of 232D sets out an exemption from duty for various transfers of property of a deceased estate, including, in subparagraph (1)(a)(i), a transfer of dutiable property made “in conformity” with trusts in a will. Subsection (2) then provides a further exemption for a transfer made “only partly in conformity” with a trust in a will. Subsection (3) sets out how duty is calculated where a transfer is in partial conformity.
In broad terms, subsection (2) od 232D provides that subsection (3) applies to “a transfer of dutiable property” made partially in conformity with a trust. It takes an indefinite article ‘a’ transfer of dutiable property and sets out when subsection (3) may apply to it (when it is transferred partially in conformity with the will). Subsection (3) then refers to when duty is payable for the transfer of “the property”. In other words, we have moved from the indefinite (‘a’ transfer of dutiable property) to something define (‘the property’). The most straightforward reading of the definite article ‘the’ in this context is that ‘the property” means the property identified in subparagraph (2) – being “the dutiable property … transferred in conformity with the trust”.
Hence, while it is possible “the property” can be read as all the property transferred under the will, read in the context of the definition of ‘X’, the provision in subsection 2 and the entirety section 232D, the better argument is that it is referring to ‘all the dutiable property’, being the dutiable property captured by subsection (2) and the kind of property that the exception is about (emphasis added).
In other words, the purpose of the equation is to deduct from the total dutiable property ‘X’, the value of the applicant’s interest in the dutiable property transferred in conformity with the will.
Still, the wording is tortuous. It is therefore useful to look to supplementary materials to determine whether this interpretation accords with the intention of the legislation.
Section 323D was inserted into the Duties Act by the Revenue Legislation Amendment Act 2017. The Explanatory Statement to the relevant Bill provides:
Section 232D Deceased estates
This section exempts transfers of dutiable property relating to deceased estates from payment of duty.
Subsections (2) and (3) provide that concessional duty is payable for a transfer made in partial conformity with a will. This concession applies only in relation to transactions under chapter 2 of the Act which are transfers of dutiable property.
Although not particularly helpful, this at least confirms that the intention was to carve out “transfers of dutiable property” under a will and give allow for relief from full duty where a transfer is made only partly in conformity with the will. It does not appear to be aimed at expanding what may be in conformity with a will or a family arrangement.
In terms of putting this intention in context it is illustrative to refer back to the decision of Stevenson J in Bloore. As set out above, in Bloore his Honour was not satisfied that section 63(2) of the NSW Act, which provided an exemption for a transfer in conformity with a family arrangement, applied, because he was not satisfied that there had, in fact, been a family arrangement. However, he went on to consider how he would have calculated the duty, had there been such a family arrangement in place. Relevantly, Bloore concerned a transfer of one property out of four. In summary, his Honour opined that:
(a)“dutiable property” is referred to three times in section 62(3):
If a transfer of dutiable property is made by a legal personal representative of a deceased person to a beneficiary under an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy, the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will or arising on intestacy (emphasis added).
(b)It was common ground that the first two references to “dutiable property” were to the particular property being transferred;
(c)There were two possible interpretations of the third reference to “dutiable property” in section 63(2) being either:
(i) the particular dutiable property the subject of the dutiable transaction (the property transferred to the plaintiff), or
(ii) all dutiable property to which the beneficiaries had an entitlement under the will (the four properties);
(d)the language of the section is ambiguous, but the Second Reading Speech and the Explanatory Note suggest that Parliament intended that the reduction in dutiable value of the transferred property be calculated by reference to the beneficiary’s entitlement to the particular dutiable property;[23] and
(e)has a family arrangement been in effect, his Honour “would favour the conclusion”[24] that Senior Member Currie came to in Alexander v Chief Commissioner of State Revenue [2017] NSWCATAD 180 that the section 63(2) reduction is to be calculated by reference to the proportion of the beneficiary’s entitlement to the particular dutiable property the subject of the dutiable transaction.
[23] Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502 at [90]
[24] Bloore v Chief Commissioner for State Revenue [2020] NSWSC 502 at [92]

Although the facts are different, a similar reasoning process applies in the case presently before the Tribunal. What was relevantly transferred under the will was not one third of the estate, but rather a distinct one third the value of the real property. The Deed of Family Arrangement that alters this arrangement, creating an entitlement in the real property that is not in conformity with the will.
I note that the consequences of the decision for the applicant in Bloore were harsh; because the NSW legislation required a transfer in conformity with the will, they ended up paying the full stamp duty on the property, despite some of the transfer being in conformity with the will. The Territory legislation mitigates that, allowing for a partial exemption for transfers that are only in partial conformity with the will, calculated by reference to the beneficiary’s proportion of all dutiable property. This appears to have been the intention of the legislature, and that intention accords with the interpretation preferred by the respondent.
Nonetheless, I note Counsel for the applicant’s submission that:
[Counsel for the respondent] goes back to the 1/3 interest given under the will, and that has to be somewhat artificial in the sense that it is an undifferentiated estate. Even assuming you can do that that it not what is transferred. All that is done in conformity with he trusts in the will. The deed of family arrangement accords with what is in the will.
I agree with the applicant’s counsel that the division of the estate into different components, distinguished by whether they are dutiable or not, is a somewhat unreal exercise in a situation where the testator gave the beneficiaries equal, undifferentiated shares. It is likely at odds with both what the testator intended and how the beneficiaries see their share of the estate in practice. Nonetheless, the differentiation is both consistent with property law principles[25] and necessitated by the Duties Act effectively imposing duty on some kinds of transfers and not others.
[25] E.g. Civil Law (Property) Act 2006 (ACT) s 210, which provides that “ A disposition of the beneficial interest in property (whether or not with the legal estate) to or for 2 or more people together beneficially is taken to be made to or for them as tenants in common, and not as joint tenants”, subject to certain exemptions.
Accordingly, I am satisfied that the reference to “the property” in section 232D(3) can only reasonably mean “the dutiable property.” Accordingly, the value of ‘X’ is $1 million, and the value of ‘Y’ is $333,400, being one third of the dutiable property transferred. The dutiable value is $666,6000.00. The Commissioner’s calculation is correct.

Conclusion

The decision under review is confirmed.
………………………………..

Presidential Member H Robinson

Date(s) of hearing:	16 December 2022
Solicitors for the Appellant:	Andrew Freer, KJB Law
Solicitors for the Respondent:	Sonja Gasser, ACT Government Solicitor

5. Distribution of Estate

5.1 My executors hold my estate on trust:
(a) … to divide the whole of my estate equally among those of my children …. who survive me.